Posted: Mon Mar 01, 2010 8:58 am Post subject: Euro Collapse=NWO agenda for One World Currency?
Why Greece? Why Now?
7 February 2010 - Issue : 872
For the winds to set sail for the troops of the Greek coalition and battle against Troy in the world of Ancient Empires, the Gods wanted the leader of the expedition Agamemnon, to sacrifice his daughter Iphigenia. And, so he did according to the last play by Euripides, written around 408 BC.
Twenty five centuries later, Europe is in deep trouble facing the worst economic crisis ever. Catastrophe is imminent and an Iphigenia is badly needed. The Euro, the common European currency, officially launched on 16 December 1995 was at the time given a life expectancy of 15 years by Milton Friedman. We are now in 2010 and facts prove that Friedman was correct.
Now, Europe needs its scapegoat and this was chosen to be Greece. Not because the Greeks are more corrupt than the Germans or the British neither because Greece has committed any sacrilege. We can give you many examples of British or German corruption cases having occurred with the blessing of the European Commission. Greece is too small to be dishonest by European administration standards. Greece was simply chosen to be, because it has a new government, all honest people acting in good faith with little experience and certainly unaware of how corporate gangs operate in the “civilized” world.
Greece also has a big public deficit accumulated over the last 30 years. Those mainly responsible for the accumulation of this huge deficit are the European Central Bank and the European Commission who allowed the debt to accumulate. The Commission and the ECB were responsible all these years for auditing Greece and all other European economies. The argument that the Greeks were cheating in their statistics all this time is beyond a joke. Indeed, if Greek civil servants at a salary of 800 Euro per month were capable of 30 years of cheating in the face of the auditing “super-brains” of Brussels and Frankfurt who enjoy salaries of 15.000 and 20.000 Euro per month, then Jose Barroso and his colleagues in the College, should turn to something stronger and perhaps more illicit to avoid reality...
In this context, I have to add that the Greek government and the Greek administration claim that Greece is suffering an across-the-board unethical offense by financial speculators. Although it looks to be true, I think that the Greek authorities, in defending their case, have a very limited view of the issue, and therefore are missing the real target of the speculators. That is the European currency itself – The Euro is under fire. The Euro is the target of the speculators where there is real profit.
Why else would two of the world’s leading financial newspapers attack Greece on their front pages every single day?
What is it worth?
No, Greece is not worth that much bad publicity.
The Euro is the target and the target hides political and speculative reasons. The end of the Euro is coming and it is coming soon, as since its introduction, Europe although it had a common currency, did not manage to get a common budget.
Indeed, the common budget would signify the political unification of Europe, foreign and defense policies would have come under, and the combination of a common currency and a common budget, would have brought political unification.
Last but not least, we reprint here above last Friday’s front page of one of the leading financial papers of the world which speaks of the so-called (in Brussels) “the four PIGS” (Portugal, Italy, Greece and Spain). Indeed, what I as a journalist with common sense do not understand is why, among the four PIGS, “Ailing Greece infects market,” when it is the smallest of the four, and from the published table, Greece seems to have the best performance than any the other three.
California is a greater risk than Greece, warns JP Morgan chief
Jamie Dimon, chairman of JP Morgan Chase, has warned American investors should be more worried about the risk of default of the state of California than of Greece's current debt woes.
By James Quinn, US Business Editor in New York
Published: 8:20PM GMT 26 Feb 2010
Comments 216 | Comment on this article
Arnold Schwarzenegger - California is a greater risk than Greece, warns JP Morgan chief
Governor Arnold Schwarzenegger is desperately trying to reduce California's $20bn deficit Photo: BLOOMBERG
Mr Dimon told investors at the Wall Street bank's annual meeting that "there could be contagion" if a state the size of California, the biggest of the United States, had problems making debt repayments. "Greece itself would not be an issue for this company, nor would any other country," said Mr Dimon. "We don't really foresee the European Union coming apart." The senior banker said that JP Morgan Chase and other US rivals are largely immune from the European debt crisis, as the risks have largely been hedged.
California however poses more of a risk, given the state's $20bn (£13.1bn) budget deficit, which Governor Arnold Schwarzenegger is desperately trying to reduce.
Greece's 'worst fears' confirmed says PM Papandreou
Germany debt chief hints at Greek rescue
UK debt chief Stheeman sees no risk of crisis
Britain's deficit third worst in the world, table
Concerns grow over China's sale of US bonds
China orders retreat from risky dollar assets
Earlier this week, the state's legislature passed bills that will cut the deficit by $2.8bn through budget cuts and other measures. However the former Hollywood film star turned politician is looking for $8.9bn of cuts over the next 16 months, and is also hoping for as much as $7bn of handouts from the federal government.
Earlier this week, John Chiang, the state's controller, said that if a workable plan to reduce the deficit and increase cash levels is not reached soon, he will have to return to issuing IOU's, forcing state workers to take additional unpaid leave and potentially freezing spending.
Last summer, California issued $3bn of IOU's to creditors including residents owed tax refunds as a way of staving off a cash crisis.
"I can't write checks without money; that's against the law. My main goal is to keep the state afloat, but I won't be able to do it without the help of new legislation," said Mr Chiang.
IMF chief pushes for more power, new global currency
By Stephen C. Webster
Saturday, February 27th, 2010 -- 11:16 am
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imfchief IMF chief pushes for more power, new global currencyThe International Monetary Fund wants more power to police the global financial system and a bigger role in emergency financing, managing director Dominique Strauss-Kahn said Friday.
In a speech to the Bretton Woods Committee, a finance reform think tank in Washington, D.C., he claimed that a stronger IMF also warrants a new global reserve currency that would serve as an alternative to the U.S. dollar.
"Strauss-Kahn said such an asset could be similar to but distinctly different from the IMF's special drawing rights, or SDRs, the accounting unit that countries use to hold funds within the IMF," ABC News reported. "It is based on a basket of major currencies."
"One day, the Fund might even be called upon to provide a globally issued reserve asset, similar to -- but in important respects different from -- the SDR," he said.
Strauss-Kahn added that "having several suppliers of reserve assets would limit the extent to which the international monetary system as a whole depends on the policies and conditions of a single, albeit dominant, country."
Story continues below...
"The challenge ahead is to find ways to limit the tension arising from the high demand for precautionary reserves on the one hand and the narrow supply of reserves on the other," he also said, according to ABC.
Both China and Moscow support such a plan, but U.S. leaders have vehemently insisted that empowering the IMF's special drawing rights, or establishing another fund with a global pull similar to the dollar, is not necessary.
The United Nations Conference on Trade and Development has also offered its support to the idea, suggesting that an as-yet-unformed regulatory committee oversee the new currency, which would be traded almost exclusively by governments.
European leaders such as British Prime Minister Gordon Brown and French President Nicolas Sarkozy have also called for an expanded role for the IMF in the emerging global economy.
The IMF's special drawing rights were created in 1969 as a way of supplementing countries' currency reserves. Their value is determined by a formula based on the values of the US dollar, the British pound, the Japanese yen and the Euro. The IMF has been using SDRs to help shore up the finances of poorer nations amid recent economic uncertainty.
"There may be a need for a clearer mandate to pursue risks for global economic stability, but also -- I stress -- for financial stability," Strauss-Kahn said.
"During the crisis, the Fund proved its worth to the world."
But Strauss-Kahn said that as the world slowly emerges from the worst financial crisis since the Great Depression, "we must build on this positive momentum: to transform the Fund into an institution even better equipped to meet the challenges of the post-crisis era."
The bulk of the IMF's efforts today are conducted on a country-specific basis, but this will not be sufficient to avoid or even dampen a major crisis in the future.
The 186-nation IMF already provides economic assessments of individual member countries and publishes reports on the world economic outlook and the stability of the global financial system.
But in the years preceding the crisis, the Fund did not foresee the risk from a US housing meltdown that led to a credit crisis and a financial firestorm that engulfed the globe.
"We are floating the idea of a new multilateral surveillance procedure. This would allow -- indeed require -- the Fund to assess the broader and systemic effects of country-level policies, and the associated risks, in a fundamentally different way," Strauss-Kahn said.
The role of guardian of systemic stability would be backed up by new financial firepower.
The IMF has tripled its lending capacity over the past year, to 850 billion dollars, thanks to loans from member countries. The expanded financial resources "should be sufficient to meet demand in the coming period," he said.
Strauss-Kahn recalled that in the global crisis, key emerging market economies seeking financial lifelines had not turned to the Fund as the "first responder," but instead approached the US Federal Reserve and other central banks for currency swaps.
"In this context, we are currently exploring various options -- including for short-term, multi-country credit lines that the Fund might extend in a systemic crisis," he said.
Strauss-Kahn proposed increasing the flexibility and accessibility of the new Flexible Credit Line that the IMF created last March.
Available to any member country whose economy is deemed well-managed by the Washington-based institution, the facility currently allows Mexico, Colombia and Poland to tap credit as needed.
Strauss-Kahn also suggested the IMF could work with "regional reserve pools" which he said "can be a positive and stabilizing force in international financing."
He cited the IMF's recent cooperation with European Union lending to help three EU members: Hungary, Latvia and Romania.
Whichever currency is used for oil trade gets a major free lunch. As I said earlier.
The US has two ways of stopping the petroeuro. Invade the countries that dare sell in Euros (Iraq, Iran etc.) or bring down the currency. I guess that if the Euro has a serious breakdown soon, then perhaps the rhetoric against Iran will severely subside!
As for SDRs, these will not work unless Oil gets priced in them. This may never happen. The US has its economic equivalent of the CIA (in the form of GS) to take out any pretenders to the crown. They wouldn't want to share out the magic chequebook with the other currencies in the SDR basket.
The only thing that could stop the US from its blatant milking of the petrodollar is for a Chinese led coup for a more robust trading currency. If they have any sense they will insist on a structure of SDR that is both an international reserve currency for settling balance of payments and (more importantly) for settling the purchase of oil, ultimately with some form of tangible backing such as Gold. From the fantasy era of the petrodollar to the austere era of petrogold.
Hang on to your hats its going to be a bumpy ride these next few years!
Bank For International Settlements (BIS): How The Rothschilds Control And Dictate To The World
by William Dean A. Garner
For decades, people have urged me, pushed me, prodded me, practically peeled off my skin, pulled out my eyes, and yanked out my brain to prove it, i.e. show them the data, the results, the books, manuals, pamphlets, journals, monographs, voice and video recordings, all the resources I have used to make the statements I do about the Brzezinski Cartel and the Rothschilds.
On the evening of St. Patrick’s Day 2010, I feel now is the time . . . but with a twist.
The list below shows 165 different ways how The First Sphere of Influence (Rothschilds and Brzezinski Cartel) controls the world. One hundred and sixty-five reasons to believe what I say to be 100% accurate and true.
Each entry is a separate and distinct central bank, located in a separate and distinct part of the world. These central banks cover the globe and know absolutely no boundaries, effectively erasing borders between even sworn enemies.
The BIS (pronounced BIZZ) is the Rothschild’s piggy bank, a veritable deep-pit mine, the equivalent of quadrillions of dollars.
What’s the significance of having a central bank within a country and why should you concern yourself, your family and colleagues?
Central banks are illegally created PRIVATE banks that are owned by the Rothschild banking family. The family has been around for more than 230 years and has slithered its way into each country on this planet, threatened every world leader and their governments and cabinets with physical and economic death and destruction, and then emplaced their own people in these central banks to control and manage each country’s pocketbook. Worse, the Rothschilds also control the machinations of each government at the macro level, not concerning themselves with the daily vicissitudes of our individual personal lives. Except when we get too far out of line.
The grand plan of The First Sphere of Influence is to create a global mononation. Please do not confuse this with the term globalization. Mononation and globalization couldn’t be more different in concept, scope and purpose. Mononation is one state. It has one government. One set of laws for all ordinary citizens, no laws for the elite. Globalization refers to communicating, trading, interacting, etc. among separate, different, independent, sovereign countries.
The grand plan of The First Sphere of Influence is to create a global mononation.
Our own Federal Reserve is an illegally emplaced private bank that is directly responsible for creating all the US’s depressions, recessions, and the inflation and deflation of our dollar. The Fed controls the printing of our own currency, and then charges the US government interest on those loans. The interest is growing each year, making it difficult if not impossible for our government to pay it. How do we pay this interest? By the US Personal Income Tax. This tax goes to the Rothschild family.
In the coming months, as I continue to gather intel and write a book about The First Sphere of Influence, I will share more and more. For now, I kindly ask that you read each of the 165 lines below. One hundred and sixty-five reasons to believe my intel. You can click on each bank and visit its website. I’ve seen each one. They’re real. And they’re one of the reasons why each country is in such deep debt to this insidious family, the Rothschilds.
By the way, if you’re curious what the US debt is to the BIS, please refer to the table at the end of this article, taken from the latest statistical results provided by the Joint External Debt Hub, which receives data from the BIS, International Monetary Fund, World Bank, and the Organization for Economic Cooperation and Development.
Representative Office for Asia and the Pacific
78th floor, Two International Finance Centre
8 Finance Street, Central
Special Administrative Region of the People’s Republic of China
Fax: (+852) 2878 7123
Representative Office for the Americas
Rubén Darío 281 – 17th floor
Col. Bosque de Chapultepec
Del. Miguel Hidalgo
11580 México, D.F.
Telephone: (+52) 55 91380290
Fax: (+52) 55 91380299
The Rothschild-Owned Central Banks of the World
Afghanistan: Bank of Afghanistan
Albania: Bank of Albania
Algeria: Bank of Algeria
Argentina: Central Bank of Argentina
Armenia: Central Bank of Armenia
Aruba: Central Bank of Aruba
Australia: Reserve Bank of Australia
Austria: Austrian National Bank
Azerbaijan: Central Bank of Azerbaijan Republic
Bahamas: Central Bank of The Bahamas
Bahrain: Central Bank of Bahrain
Bangladesh: Bangladesh Bank
Barbados: Central Bank of Barbados
Belarus: National Bank of the Republic of Belarus
Belgium: National Bank of Belgium
Belize: Central Bank of Belize
Benin: Central Bank of West African States (BCEAO)
Bermuda: Bermuda Monetary Authority
Bhutan: Royal Monetary Authority of Bhutan
Bolivia: Central Bank of Bolivia
Bosnia: Central Bank of Bosnia and Herzegovina
Botswana: Bank of Botswana
Brazil: Central Bank of Brazil
Bulgaria: Bulgarian National Bank
Burkina Faso: Central Bank of West African States (BCEAO)
Burundi: Bank of the Republic of Burundi
Cambodia: National Bank of Cambodia
Cameroon: Bank of Central African States
Canada: Bank of Canada - Banque du Canada
Cayman Islands: Cayman Islands Monetary Authority
Central African Republic: Bank of Central African States
Chad: Bank of Central African States
Chile: Central Bank of Chile
China: The People’s Bank of China
Colombia: Bank of the Republic
Comoros: Central Bank of Comoros
Congo: Bank of Central African States
Costa Rica: Central Bank of Costa Rica
Côte d’Ivoire: Central Bank of West African States (BCEAO)
Croatia: Croatian National Bank
Cuba: Central Bank of Cuba
Cyprus: Central Bank of Cyprus
Czech Republic: Czech National Bank
Denmark: National Bank of Denmark
Dominican Republic: Central Bank of the Dominican Republic
East Caribbean area: Eastern Caribbean Central Bank
Ecuador: Central Bank of Ecuador
Egypt: Central Bank of Egypt
El Salvador: Central Reserve Bank of El Salvador
Equatorial Guinea: Bank of Central African States
Estonia: Bank of Estonia
Ethiopia: National Bank of Ethiopia
European Union: European Central Bank
Fiji: Reserve Bank of Fiji
Finland: Bank of Finland
France: Bank of France
Gabon: Bank of Central African States
The Gambia: Central Bank of The Gambia
Georgia: National Bank of Georgia
Germany: Deutsche Bundesbank
Ghana: Bank of Ghana
Greece: Bank of Greece
Guatemala: Bank of Guatemala
Guinea Bissau: Central Bank of West African States (BCEAO)
Guyana: Bank of Guyana
Haiti: Central Bank of Haiti
Honduras: Central Bank of Honduras
Hong Kong: Hong Kong Monetary Authority
Hungary: Magyar Nemzeti Bank
Iceland: Central Bank of Iceland
India: Reserve Bank of India
Indonesia: Bank Indonesia
Iran: The Central Bank of the Islamic Republic of Iran
Iraq: Central Bank of Iraq
Ireland: Central Bank and Financial Services Authority of Ireland
Israel: Bank of Israel
Italy: Bank of Italy
Jamaica: Bank of Jamaica
Japan: Bank of Japan
Jordan: Central Bank of Jordan
Kazakhstan: National Bank of Kazakhstan
Kenya: Central Bank of Kenya
Korea: Bank of Korea
Kuwait: Central Bank of Kuwait
Kyrgyzstan: National Bank of the Kyrgyz Republic
Latvia: Bank of Latvia
Lebanon: Central Bank of Lebanon
Lesotho: Central Bank of Lesotho
Libya: Central Bank of Libya
Lithuania: Bank of Lithuania
Luxembourg: Central Bank of Luxembourg
Macao: Monetary Authority of Macao
Macedonia: National Bank of the Republic of Macedonia
Madagascar: Central Bank of Madagascar
Malawi: Reserve Bank of Malawi
Malaysia: Central Bank of Malaysia
Mali: Central Bank of West African States (BCEAO)
Malta: Central Bank of Malta
Mauritius: Bank of Mauritius
Mexico: Bank of Mexico
Moldova: National Bank of Moldova
Mongolia: Bank of Mongolia
Montenegro: Central Bank of Montenegro
Morocco: Bank of Morocco
Mozambique: Bank of Mozambique
Namibia: Bank of Namibia
Nepal: Central Bank of Nepal
Netherlands: Netherlands Bank
Netherlands Antilles: Bank of the Netherlands Antilles
New Zealand: Reserve Bank of New Zealand
Nicaragua: Central Bank of Nicaragua
Niger: Central Bank of West African States (BCEAO)
Nigeria: Central Bank of Nigeria
Norway: Central Bank of Norway
Oman: Central Bank of Oman
Pakistan: State Bank of Pakistan
Papua New Guinea: Bank of Papua New Guinea
Paraguay: Central Bank of Paraguay
Peru: Central Reserve Bank of Peru
Philippines: Bangko Sentral ng Pilipinas
Poland: National Bank of Poland
Portugal: Bank of Portugal
Qatar: Qatar Central Bank
Romania: National Bank of Romania
Russia: Central Bank of Russia
Rwanda: National Bank of Rwanda
San Marino: Central Bank of the Republic of San Marino
Samoa: Central Bank of Samoa
Saudi Arabia: Saudi Arabian Monetary Agency
Senegal: Central Bank of West African States (BCEAO)
Serbia: National Bank of Serbia
Seychelles: Central Bank of Seychelles
Sierra Leone: Bank of Sierra Leone
Singapore: Monetary Authority of Singapore
Slovakia: National Bank of Slovakia
Slovenia: Bank of Slovenia
Solomon Islands: Central Bank of Solomon Islands
South Africa: South African Reserve Bank
Spain: Bank of Spain
Sri Lanka: Central Bank of Sri Lanka
Sudan: Bank of Sudan
Surinam: Central Bank of Suriname
Swaziland: The Central Bank of Swaziland
Sweden: Sveriges Riksbank
Switzerland: Swiss National Bank
Tajikistan: National Bank of Tajikistan
Tanzania: Bank of Tanzania
Thailand: Bank of Thailand
Togo: Central Bank of West African States (BCEAO)
Tonga: National Reserve Bank of Tonga
Trinidad and Tobago: Central Bank of Trinidad and Tobago
Tunisia: Central Bank of Tunisia
Turkey: Central Bank of the Republic of Turkey
Uganda: Bank of Uganda
Ukraine: National Bank of Ukraine
United Arab Emirates: Central Bank of United Arab Emirates
United Kingdom: Bank of England
United States: The Dirty Nasty Stinky Fed, Federal Reserve Bank of New York
Uruguay: Central Bank of Uruguay
Vanuatu: Reserve Bank of Vanuatu
Venezuela: Central Bank of Venezuela
Vietnam: The State Bank of Vietnam
Yemen: Central Bank of Yemen
Zambia: Bank of Zambia
Zimbabwe: Reserve Bank of Zimbabwe
Joint BIS-IMF-OECD-World Bank Statistics on United States’ External Debt (in Millions US$)
2008Q4 2009Q2 2009Q3 2009Q4
a. Loans and other credits
01_Cross-border loans from BIS reporting banks 3,707,538 3,388,795 3,530,286 ..
02_Cross-border loans from BIS banks to nonbanks 1,363,191 1,337,188 1,330,606 ..
03_Official bilateral loans, total .. .. .. ..
04_Official bilateral loans, aid loans .. .. .. ..
05_Official bilateral loans, other .. .. .. ..
06_Multilateral loans, total .. .. .. ..
07_Multilateral loans, IMF 0 0 0 0
08_Multilateral loans, other institutions .. .. .. ..
09_Official trade credits, total, all maturities .. .. .. ..
10_Official trade credits, nonbanks, all maturities .. .. .. ..
101_SDR allocation 7,547 7,605 55,953 55,364
b. Debt securities
11_International debt securities, all maturities 5,275,668 5,849,272 5,937,740 6,034,582
12_International debt securities, nonbanks 3,540,768 4,074,795 4,174,716 4,259,775
13_International debt securities, Brady bonds .. .. .. ..
c. Supplementary information:
14_Insured export credit exposures, Berne Union 99,113 100,938 102,692 104,039
15_Insured export credit exposures short term (BU) 61,873 58,664 60,227 56,901
16_Debt securities held by nonresidents 4,866,185 .. .. ..
161_Paris Club claims (ODA) .. .. .. ..
162_Paris Club claims (non ODA) .. .. .. ..
d. Loans and other credits (Debt due within a year)
17_Liabilities to BIS banks (cons.), short term 1,074,620 981,718 892,617 ..
18_Official bilateral loans, total, short term .. .. .. ..
19_Official bilateral loans, aid, short term .. .. .. ..
20_Official bilateral loans, other, short term .. .. .. ..
21_Multilateral loans, IMF, short term .. .. .. ..
22_Official trade credits, nonbanks, short term .. .. .. ..
e. Debt securities (Debt due within a year)
23_International debt securities, short term 856,968 850,176 888,271 871,759
24_Intnl debt securities, nonbanks, short term 481,950 491,997 529,169 514,819
f. Memorandum items –selected foreign assets/liabilities
25_International reserves (excluding gold) 66,607 70,448 123,255 119,719
251_SDR holdings 9,340 9,437 57,945 57,814
26_Portfolio investment assets 4,267,865 .. .. ..
27_Cross-border deposits with BIS rep. banks 3,752,843 3,846,483 3,973,186 ..
28_Cross-border dep. with BIS banks, nonbanks 1,802,268 1,628,098 1,716,537 ..
29_Liabilities to BIS banks, locational, total 5,289,063 4,917,133 5,078,389 ..
30_Liabilities to BIS banks, consolidated, total 2,761,479 2,680,326 2,590,003 ..
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The eurozone "lurched towards the endgame" yesterday as Standard & Poor's finally relegated Greece's sovereign credit rating to "junk" status, downgraded Portugal by two steps to A-, and the yields on Greek debt climbed beyond 15 per cent, a signal that the market regards a default as virtually certain.
The contagion that many feared is threatening to overwhelm the entire single currency area in a remarkably short time. The course of events has parallels with the banking crises of the autumn of 2008, when successive institutions came under attack and their interrelationships and size devastated confidence in the financial system, famously so after the failure of Lehman's.
* Greek instability threatens to topple Merkel's government
* UK sovereign debt worries ease despite election fears
* David Prosser: Time running out to stem euro contagion
* Search the news archive for more stories
For many observers yesterday, it was a matter of "for Lehman's, read Greece", as sovereign debt became the new sub-prime. Again there was classic domino effect: bond yields also rose in the other so-called PIIGS group of highly indebted nations – Ireland, Spain and even Italy, as investors demanded higher risk premia to take on these governments' debts. It raises fears of a sovereign debt crisis on a pan-eurozone scale, and beyond even the resources of Germany and France to resolve, and could leave the very future of the euro in doubt, a little past its tenth birthday celebrations.
Should that happen, or appear remotely likely, then it could plunge the world economy into a further crisis of confidence, jeopardising shaky growth prospects. Investor nervousness was signalled by the fall in the FTSE 100 index – down 2.6 per cent to close at 5603.5 – its biggest one-day fall since last November.
UK and European banks, with varying exposure to Greece, slid and the euro fell a further 1 per cent against the dollar. German Bund futures hit a session high as institutions caught the flight to safety, also driving up US Treasury bills and gold. European equities suffered their biggest losses in two months. British banks have a near-£100bn exposure to the struggling European economies, of which £8bn is to Greece, including public and private entities.
There will also be a capital loss for the European Central Bank, which has taken an undisclosed sum in Greek government bonds as collateral for loans.
A more substantial worry would be if there was an indiscriminate dumping of PIIGS paper, freezing the market in much the same way the interbank market closed down in 2008. Banks, insurance companies and fund managers that hold vast quantities of these bonds would find them effectively unmarketable and valueless – hence "the new subprime" label.
The turmoil prompted officials in Berlin to step up their efforts to get the €45bn IMF/eurozone rescue package ready by the time the next instalment payment on Greek sovereign debt falls due, 19 May. Eurozone leaders are discussing the possibility of a special summit in Brussels on 10 May to activate the aid package.
Colin Ellis, economist at Daiwa Securities, said; "The euro area crisis lurches towards the end game. Portugal's situation illustrates that, quite apart from the tragedy unfolding in the Hellenic Republic, European leaders need to move swiftly to bolster the credibility of the whole economic governance structure in the euro area."
After the biggest bailout in Europe ever not many will remember the past only because like a drunken sailor they had a blackout...
Tuesday, May 11, 2010
The Second Leg of the Great Depression Was Caused by European Defaults
Many Americans know that the Great Depression was started by the bursting of the giant Wall Street bubble of the 1920's (fueled by the use of bank deposits on speculative gambling, which is why Glass-Steagall was passed) , which in turn caused a run on American banks.
But most Americans don't know that the second leg of the Depression was caused by European defaults.
As Yves Smith reminds us:
Recall that the Great Depression nadir was the sovereign debt default phase.
The second leg down of the Depression was larger than the first, as shown by this chart of the Dow:
[Click here for full chart]
The second leg down was primarily initiated by the failure of the Creditanstalt bank in Austria. Creditanstalt (also spelled Kreditanstalt) declared bankruptcy in May 1931.
As Time Magazine noted on November 2, 1931:
May 14 : First thunderclap of the present crisis: collapse in Vienna of Kreditanstalt, colossal Rothschild bank, which is taken over by the Austrian Government, shaking confidence in related German banks.
A book written by Aurel Schubert, published by Cambridge University Press, points out that:
Austria played a prominent role in the worldwide events of 1931 as the largest bank in Central and Eastern Europe, the Viennese Credit-Anstalt, collapsed and led Europe into a financial panic that spread to other parts of the world. The events in Austria were pivotal to the economic developments of the 1930s ....
As Megan McArdle points out:
The Great Depression was composed of two separate panics. As you can see from contemporary accounts ... in 1930 people thought they'd seen the worst of things.
Unfortunately, the economic conditions created by the first panic were now eating away at the foundations of financial institutions and governments, notably the failure of Creditanstalt in Austria. The Austrian government, mired in its own problems, couldn't forestall bankruptcy; though the bank was ultimately bought by a Norwegian bank, the contagion had already spread. To Germany. Which was one of the reasons that the Nazis came to power. It's also, ultimately, one of the reasons that we had our second banking crisis
, which pushed America to the bottom of the Great Depression, and brought FDR to power here.
Not that I think we're going to get another Third Reich out of this, or even another Great Depression. But it means we should be wary of the infamous "double dip" that a lot of economists have been expecting.
The EURO is still on its deathbed having being given a critical attack on Friday once more. The bailout may not actually cope....
How the euro – and the EU – teetered on the brink of collapse
French president Nicolas Sarkozy dramatically forced German chancellor Anglela Merkel to retreat
* Ian Traynor, Brussels
* guardian.co.uk, Friday 14 May 2010 19.39 BST
* Article history
Even by his own high standards, Nicolas Sarkozy excelled himself. The French president bounded out of the emergency summit of European leaders and on to a specially made-for-TV stage.
The tensions were palpable, the theatrics mesmerising. It was well past midnight and the leaders, charged with saving the euro, were getting nowhere fast after a fine Friday supper. Greece might be saved. But Portugal? Ireland? Spain? Even Italy?
Assorted weary diplomats and eurocrats in the corridors of the unlovely Justus Lipsius building in Brussels were predicting an all-nighter when the text messages started pinging and the closed-circuit TV screens flashed the message: "Sarkozy press conference".
The summit was over. It was 12.30am. Sarkozy and his entourage swept into the French delegation's media room, which had been given a makeover – fancy lighting, a big blue backdrop with a special summit logo behind the president, the 16 flags of the eurozone countries.
Sarkozy claimed the political leadership of the 16 members, announced a defining victory against the markets and the "speculators" wrecking the currency. The metaphors were all martial. Europe was at war. He would not give away his "lines of defence". But by the time the markets opened on Monday morning, the enemy would have learned its lessons and beat a retreat.
In the previous hour upstairs at the summit, Sarkozy had thrown a wobbly. "It was really a drama," said an experienced European diplomat. "A very abrupt end to a summit – because Sarkozy said he had had enough and really forced Merkel to face her responsibility."
A European Commission official added: "He was shouting and bawling. The Germans were being very difficult, and not only the Germans. It was a big fight between Sarkozy and Merkel."
A French finance ministry official said: "Our beloved and fearless leader loves this kind of situation. It may have been that he was a little forceful, and I think that he would have been right to be, because it was a serious situation in there."
Deadly serious. Merkel said this week that the crisis triggered initially by Greece's debt problems had called the EU's future into question – that the EU was facing its biggest challenge since 1990, the collapse of communism and the unification of Germany.
According to senior Spanish government officials quoted by Spain's El Pais, Sarkozy called Merkel's bluff on what, 48 hours later, turned into a massive financial package that has rewritten the way the single currency functions and changed the European Union in fundamental ways that may take years to play out.
"If at a time like this, with all that is happening, Europe is not capable of a united response, then the euro makes no sense," Sarkozy told the eurozone leaders, according to El Paistoday. It quoted the Spanish prime minister, José Luis Rodríguez Zapatero, as telling his colleagues this week that Sarkozy threatened to quit Europe's monetary union.
"Sarkozy went as far as banging his fist on the table and threatening to leave the euro," one unnamed Zapatero colleague told the paper. "That obliged Angel Merkel to bend and reach an agreement."
The French had Spain, Italy, Portugal and the European Commission lined up behind them. On the other side stood Germany, ranged alongside the Dutch, the Austrians and the Finns, all quietly hoping Merkel would prevail.
The leaders' after-dinner debate signalled that Europe was in the throes of an existential crisis, according to diplomats and officials familiar with the proceedings. "This discussion touched on the very sinews of the state," said one diplomat.
"It was a fundamental discussion about sovereignty, about the role of the member state, about what the EU is for, the role and power of the European Commission," said a second diplomat.
Sarkozy claimed the outcome as a famous victory. In fact, he had bought himself some time, with the leaders agreeing to convene an emergency session of the EU's 27 finance ministers the next day to agree the fine print.
By 2.15am on Monday, the deal was done: a €750bn (£639bn) safety net for the single currency, made up of three elements – a fast-track fund run by the European Commission, a much larger system of loans and loan guarantees from the 16 eurozone governments, with the International Monetary Fund putting up one euro for every two from the Europeans.
Europe was opting for shock and awe. Repeatedly in the past two weeks, Merkel has declared that "politics has to reassert primacy over the financial markets". This was the attempt.
But a decisive factor in swaying the argument may have come not from Berlin, Paris, or Brussels, but from Washington. Since their first summit on the Greek crisis on 11 February, the Europeans had been prevaricating, agonising, and quarrelling. Prompt action in an emergency is not the strongest suit of a union of 27 governments. Washington was frustrated.
"The Americans were complaining that there was no credibility in the way the Europeans take decisions," said one diplomat.
By last week, Washington had had enough as the crisis threatened to spiral out of control. In Brussels and Madrid, Joe Biden, the US vice-president, privately told European leaders to get their act together. A few hours before the Sarkozy show on 7 May, Timothy Geithner, the US treasury secretary, pressed European finance ministers for a big decision and promised help from the US Federal Reserve or central bank.
Then last Sunday, President Barack Obama went on the phone to Sarkozy and Merkel. "The €750bn fund was the idea of the Americans, who insisted on the need to mobilise massive money to impress the markets and to stop bleeding confidence. That was their concrete message," said a diplomat.
Tellingly, the White House confirmed that Merkel, not Sarkozy, was the main obstacle to a decision staggering in its scale and ambition. Obama and Sarkozy "agreed" on the need for urgent action, while Obama and Merkel "discussed" the need for urgent action.
By early on Monday, the finance ministers were rushing to meet Sarkozy's promise that the huge rescue package would be ready by the times the markets opened in the far east. They missed the deadline for Australia and New Zealand.
Outline agreement had been reached on the European fund of €500bn. But who would control it? The Germans insisted it had to be national governments, not the European Commission. They won that argument and Christine Lagarde, the French finance minister, pushed for a rapid conclusion before the Tokyo traders switched on their computer screens. As argument continued over how to label the rescue, the Dutch conjured a new concept that kept everyone happy – a "special purposes vehicle". The deal was done. France had won. Germany had lost.
"This was supposed to be a German euro. It's turned into a French euro," complained a German expert.
By Wednesday, with the implications of Europe's giant leap in the dark beginning to dawn, José Manuel Barroso, president of the European Commission, went further. Seeking to build on last weekend's breakthrough, he proposed even stronger measures to shore up the euro. The safety net agreed, despite German hostility, is temporary – for three years. Barroso said it should be permanent.
He wanted member states' budgets to be "peer reviewed" by his boffins and European finance ministries before they went before national parliaments. A direct assault on national sovereignty and parliamentary democracy, complained many.
Barroso's argument was for full-fledged harmonisation of tax and spending policies among the countries sharing the currency, otherwise the euro had no future.
"Let's be clear. You can't have a monetary union without having an economic union," he said. "Member states should have the courage to say whether they want an economic union or not. And if they don't, it's better to forget monetary union altogether."
And in Aachen the next day, Merkel started talking about "the pound, the deutschmark, the franc, and the drachma". It sounded almost nostalgic for the old, simpler days of Germans' love affair with their national currency, though her speech was to advertise her credentials as a fervent European.
Last Monday, following the most momentous weekend in Brussels for years, the euro rallied on the markets.
By yesterday, however, it was back at its lowest point against the dollar in 18 months and leading German bankers were warning German taxpayers they would probably not get back the billions they were "lending" Greece.
Sarkozy's famous victory is less than final – and he might yet regret his showdown with a chancellor of Germany.
Additional reporting by Giles Tremlett in Madrid and Lizzy Davies in Paris
Could France really quit?
Not without bringing the whole project crashing down. Technically it can quit and reinvent the franc, below, in the same way Greece could leave and start paying for things with drachmas. But the 16-member eurozone would struggle to survive if one of its two main economies pulled out. Germany alone would have to underpin the finances of Italy, Ireland, Spain, Portugal and Austria, which have all borrowed heavily from lenders who are nervous they might not get their money back.
How would it cope?
France It would find life difficult: it has low growth and high levels of debt. Sarkozy has kept his head down over the past year with only the occasional speech delivering the message that France is pootling along fine. However, below the surface, its banks are struggling: Credit Agricole, one of Europe's largest, is high on the list of troubled institutions, having bought all kinds of loans related to the sub-prime crash and a lot of Greek bonds.
Then there are measures like labour productivity growth, which is lower than the UK's over the 12 years from 1997 to 2009. It is lLow productivity and growth that is the crux of the issue and France is in much the same position as other European nations, including Britain. Investors ask how it will grow its way out of the crisis when demand in Europe is flat and its goods cost too much to sell in other parts of the world.
Would the economy be affected by life outside the euro
What would happen to its economy?
Like Britain, France would probably find its currency devalued against the euro. That helps cut the debt burden, because it would be valued in the new currency, which is suddenly worth less. But import costs would go up; and, much more importantly, without German protection, financial markets would get nervous and the cost of interest payments on its debt would rise.
What about the Germans?
Angela Merkel has denied the French threatened to quit. Her advisers believe the story of Sarkozy's table-thumping, sourced to figures in the Spanish government, is more likely to come from the mouths of rumour-mongering hedge funds that have placed bets on the collapse of the euro. Yet it could be that her nose is out of joint because she wants to be the first to quit. Certainly there is a strong sense inside Germany that it should stop bailing out profligate southern European nations. Rumours abound – probably put about by hedge funds – that Merkel is printing deutschmarks in preparation for a split.
Would that help them?
German banks hold billions of euros of Greek debt. Around half the mortgage loans raised by Spanish construction companies to build flats on the Costas were funded by German banks. Spaniards and Greeks buy Audis and VWs by the truckload. In short, the German economy is inextricably linked to Europe. The savings of ordinary Germans are invested in things that are now worth much less than they were: much of their cash was behind property speculation in Greece, Ireland and Spain. Without German loans, a property boom would not have happened. Most economists argue the euro countries need to stand together or they will fall apart – and fall a long way.
Without knowing it, and without having asked their opinion, 440 million Europeans have just joined a new country, Euroland, of which some already share the currency, the Euro, and of which all now share the indebtedness and the joint means to solve the serious problems posed in the context of the global systemic crisis. The budgetary and financial decisions taken during the Summit of the weekend of the 8th May in terms of a response to the European public debt crisis can be evaluated differently according to one’s analysis of the crisis and its causes. LEAP/E2020 will roll out its own analyses on the subject in this issue N°45 but, without doubt, a radical unraveling of European governance has just taken place: a collective continental governance has just brutally emerged, ironically 65 years after the end of the Second World War, moreover celebrated with a big display in Moscow the same day (5) as the holiday celebrating the creation of the European Coal and Steel Community, the common ancestor of the EU and Euroland. This simultaneity isn’t a coincidence (6) and marks an important step forward in global geopolitical dislocation and the reconstitution of new global balances. Under the pressure of events set off by the crisis, the Eurozone has thus undertaken to grasp its independence with regard to the Anglo-Saxon world still expressed via the financial markets. This 750 billion Euros and this new European governance (of the 26) constitutes, at the one and the same time, the putting in place of the fortifications against the next storms caused by draconian Western indebtedness, and which will affect the United Kingdom and then the United States (cf. issue N°44 causing disturbances of which the « Greek crisis » has only given a small preview.
May 20, 2010
Euro in danger: Germans trigger panic over future of single currency
David Charter, Berlin
Shell-shocked European ministers are preparing for crisis talks to shore up the single currency after markets were plunged into turmoil by panic measures in Germany.
Angela Merkel stunned EU capitals by warning that the euro was in danger and triggered fears of a fresh financial meltdown by announcing a surprise ban on risky trading practices by market speculators. The German Chancellor’s actions opened up new cracks in the single currency, drawing sharp criticism from France and prompting Brussels to issue an appeal for unity.
In a bruising day for financial markets, shares in London plunged by nearly 3 per cent, with similar falls in Paris, Berlin and Madrid. The euro plummeted to a new low against the dollar before making a slight recovery.
European finance ministers, who have barely had time to catch their breath after hammering out a massive rescue plan for Greece, will hear controversial calls from Germany at a meeting tomorrow for changes to the Lisbon treaty to give Brussels powers to co-ordinate national budgets.
* Euro slumps as ‘wolf pack’ hits markets
* Quitting the euro club is no longer unthinkable
* Markets plunge on Merkel euro warning
Ms Merkel believes that the EU should have stronger powers to organise the “orderly insolvency” of countries such as Greece that set giveaway budgets with no means of paying for them. After announcing a ban on speculative share trading in Germany’s top financial institutions and the bonds of eurozone countries until next March she warned: “This challenge is existential and we have to rise to it. The euro is in danger. If we don’t deal with this danger, then the consequences for us in Europe are incalculable . . . if the euro fails, then Europe fails.”
Her apocalyptic warnings came as David Cameron prepared to start his first visit as Prime Minister to Paris and Berlin, where he is likely to come under pressure to commit more British funds to EU bailout programmes.
His desire to build relations with Ms Merkel will be tempered by his reluctance to see any more powers transferred to Brussels. However, with 54 per cent of the UK’s exports going to Europe, the economy is not immune to the effects of the euro’s problems.
Ms Merkel may have intended her words to be a rallying cry to stop the crisis of confidence spreading from Greece to Portugal, Spain and Italy. But the markets were shaken because Germany is seen as the bedrock of the euro, which was introduced just ten years ago and now covers 16 countries.
Fears are growing at the highest level in the European Commission over the size of Italy’s national debt and its ability to cope if markets turn on it. Further turmoil is possible today as Asian investors prepare to dump huge amounts of euros on the market.
Mr Cameron will meet President Sarkozy of France tonight and Ms Merkel tomorrow. He will resist her demand to reopen the Lisbon treaty to beef up European Commission powers to scrutinise national budgets.
The meeting of EU finance ministers was called by Herman Van Rompuy, the European Council President, in response to Ms Merkel’s demands for a treaty change. Christine Lagarde, the French Economy Minister, said: “It seems to me that one ought to at least seek the advice of the other member states concerned by this measure.”
Michel Barnier, the EU Commissioner for Internal Markets and Financial Regulation, said: “It is important that member states act together.”
Whatever Germany does, the euro as we know it is dead;
Angela Merkel has called for 'honest' advice ahead of a Germany's vote on a euro bailout; Bloomberg
Angela Merkel's response to the euro crisis is 'doomed to fail' Photo: Bloomberg
"Money can't buy you friends, but it does get you a better class of enemy" – Spike Milligan
For Angela Merkel, leader of the eurozone's richest country, a queue is forming of high-quality adversaries. As she tips German Geld und Gut into the furnace of a rescue package for the euro, while going it alone in a misguided ban on market "manipulators", the brass-neck Chancellor has infuriated domestic voters, angered her EU partners (in particular the French) and invited the so-called wolf pack of global traders to do its worst.
Edmund Conway: Britain no longer has the worst deficit in Europe
Ian Cowie: London Stock Exchange ‘next victim’ of global storm
Tracy Corrigan: Does US Senate finance bill set a pattern for the rest of us?
'Europe isn’t perfect but it’s not about to crash and burn’
Stock market: tracker funds take a tumble
Germany to ban paintball in wake of high school shooting
In one respect, Mrs Merkel is right: "The euro is in danger… if the euro fails, then Europe fails." What she has not yet admitted publicly is that the main cause of the single currency's peril appears beyond her control and therefore her impetuous response to its crisis of confidence is doomed to fail.
The euro has many flaws, but its weakest link is Greece, whose fundamental problem is that for years it spent too much, earned too little and plugged the gap by borrowing in order to enjoy a rich man's lifestyle. It flouted EU rules on the limits to budget deficits; its national accounts were a moussaka of minced statistics, topped with a cheesy sauce of jiggery-pokery.
By any legitimate measure, Greece was unworthy of eurozone membership. That it achieved card-carrying status was down to the sleight-of-hand skills of its Brussels fixers and the acquiescence of central bank bean-counters. Now we know the truth, jet-hosing it with yet more debt makes no sense. Another dose of funny money will delay but not extinguish the need for austerity.
This is why the euro, in its current form, is finished. The game is up for a monetary union that was meant to bolt together work-and-save citizens in northern Europe with the party animals of Club Med. No amount of pit props from Berlin can save the euro Mk I from collapsing under the weight of its structural dysfunctionality. You cannot run indefinitely a single currency with one interest rate for 16 economies, when there are such huge fiscal disparities.
What was once deemed unthinkable is now, I believe, inevitable: withdrawal from the eurozone of one or more of its member countries. At the bottom end, Greece and Portugal are favourites to be forced out through weakness. At the top end, proposals are already being floated in the Frankfurt press for a new "hard currency" zone, led by Germany, Austria and the Benelux countries. Either way, rich and poor are heading in opposite directions.
When asked on Sky if, in five years' time, the euro will have the same make-up as it does today, Jeremy Stretch, a currency analyst at Rabobank, the Dutch financial services giant, told me: "I think it's pretty unlikely." The euro was a boom-time construct. In the biggest bust for 80 years, it is falling apart.
Telegraph loyalists with long memories will be shocked by none of this. In 1996, Sir Martin Jacomb, then chairman of the Prudential, set out with great prescience in two pieces for The Sunday Telegraph why a European single currency, without full political integration, would end in disaster. His prognosis of the ailments that might afflict the eurozone's sickliest constituents reads as if it was penned to sum up today's turmoil.
"A country which does not handle its public finances prudently will find its long-term borrowing costs adjusted accordingly," Sir Martin predicted. "Although theory says that default is unlikely, nevertheless, a country that spends too much public money, and allows its wage costs to become uncompetitive, will experience rising unemployment and falling economic activity. The social costs may become impossible to bear."
Welcome to the headaches of George Papandreou. The bond markets called his country's bluff. Greece is skint, but its unions don't want to admit it. There is insufficient political will to tackle incompetence and corruption, never mind unaffordable state spending. But, locked into the euro, Greece cannot devalue its way out of trouble, so it relies on the kindness of strangers.
Dishing out German largesse to profligate Athens, with little expectation of a reasonable return, is a sure way for Mrs Merkel to join Gordon Brown as a political has-been. Fully aware of the revulsion felt by Mercedes and BMW employees at the prospect of their taxes being used to pay for a Hellenic car crash, she has resorted to creating a bogeyman – The Speculator.
By announcing a ban on the activities of short-sellers (those who bet to profit from falling prices in financial markets), she is hoping her decoy will avert German attention from the small print of Berlin's support for Greece, which talks of developing processes for "an orderly state insolvency". This sounds ominously like a softening-up process for a form of default.
Greece's severe difficulties were home-made. The euro has come under pressure not from dark forces of speculation but respectable investors, many of them traditional pension funds, which, quite correctly, worked out that when the crunch came, the Brussels elite would sanction an abandonment of its no bail-out rule and cough up for a messy fudge.
In 1990, the late Lord Ridley, when still a government minister, caused a storm by telling The Spectator that Europe's planned monetary union was "a German racket designed to take over the whole of Europe". One knew what he was getting at, but it has not turned out that way.
Protecting the euro has become a project via which profligate states dip their fingers in Berlin's till. Germany is taking on nasty obligations without gaining ownership of the assets. Germany's version of The Sun, Bild Zeitung, feeds its readers a regular diet of stories about the way ordinary Germans are being taken for mugs. Trust has turned to suspicion. Next stop is divorce.
As for the United Kingdom, we must be grateful that those frightfully clever Europhiles, such as Lord Mandelson and Kenneth Clarke, did not get their way. Had they been able to scrap the pound and embrace the euro this country would be even closer to ruin. Without a flexible currency, the colossal deficit clocked up by Mr Brown would have crushed us completely. We have little to thank him for, but it would be churlish to deny that his decision to reject Tony Blair's blandishments in favour of the euro was a life-saver.
Sterling's devaluation has not been pretty, but it is helping to keep our exports competitive while the coalition Government begins rebuilding the nation's finances. Siren voices from across the Channel, calling for closer integration between Britain and the rest of the EU, can be confidently rejected. As for joining the euro, I find it impossible to imagine any circumstances under which it would be in the UK's interest to do so.
Euro unlikely to last five more years: FTSE in fresh falls as economists predict currency break up
By Geoffrey Foster
Last updated at 1:08 PM on 7th June 2010
* Euro starts week at four-year low against the dollar
* Currency will not survive coalition term - economists
* Greek sovereign debt crisis 'has not gone away'
* FTSE falls more than 1.6% over double-dip fears
The euro will break up within five years, according to a survey of leading economists.
The dire state of the public finances of Greece and other eurozone members such as Portugal, Spain, Italy and Ireland have driven the single currency to a four-year low against the dollar and cast doubts over its future.
The currency started the week by dropping to another new low against the dollar - falling below $1.19 for the first time since March 2006.
In London, the FTSE 100 Index was down more than 1.6 per cent in early trade because of fears Europe's debt problems could spread.
Chancellor Angela Merkel
Death throes: German Chancellor Angela Merkel's cabinet is due to hold a special session on today to discuss efforts to bolster the euro
Markets continued to come under pressure after Friday's disappointing US job figures, which sent the Dow Jones Industrial Average on Wall Street down by 3 per cent .
Sentiment was hit further by mounting worries that Europe's debt problems could spread after Hungarian officials signalled last Friday that the nation was at risk of a Greek-style fiscal crisis.
In the first major test of opinion in the City since the election, 25 leading economists said the eurozone in its current form would not survive beyond the end of the British coalition parliament in five years' time - compared with eight who suspected it would.
Andrew Lilico, chief economist of the Policy Exchange think-tank, said there was 'nearly zero chance' of the euro surviving.
* HARRY PHIBBS: Trying to make one currency fit all is a recipe for crisis, not stability
* Prepare for years of pain: Cameron warns spending cuts 'will affect our whole way of life'
* We won't punish savers, says Cameron in new hint on CGT
* What next for the pound? (thisismoney.co.uk)
* What next for the UK stock market? (thisismoney.co.uk)
He added: 'Greece will certainly default on its debts, and it is an open question whether Greece will experience some form of revolution or coup and I would put the likelihood of that over the next five years as one in four.'
Douglas McWilliams, of the Centre for Economics and Business Research, said the euro 'may not even survive the next week'.
David Blanchflower, a former Bank of England policymaker, added: 'The political implications (of euro disintegration) are likely to be far-reaching - Germany are opposed to paying for others and may well quit.'
In the survey by the Sunday Telegraph, Tim Congdon of International Monetary Research, said: 'The eurozone will lose three or four members - Greece, Portugal, maybe Ireland - and could break up altogether because of the growing friction between France and Germany.'
European Central Bank President Jean-Claude Trichet
Defence: European Central Bank President Jean-Claude Trichet told a meeting of G20 Finance Ministers with weekend that the euro was still a 'solid' currency'
The comments on the euro's precarious position will not go down well in the City.
It has been taking the view that the £691billion emergency bailout package had for the moment solved the sovereign debt crisis equation.
But Jeremy Batstone-Carr, global economic strategist at broker Charles Stanley, said: 'This is categorically not the case'.
'Greek debt will rise aggressively as a result of the IMF/EU bailout programme. The IMF itself estimates that Greece will owe 150pc of gross domestic product by 2015, up from 115pc, currently forecast.
'Net indebtedness will rise, again according to the IMF, by €110bn. The bottom line is that the Greek sovereign debt crisis has not gone away. In fact it has hardly even begun. '
Jean-Claude Juncker, chairman of the Eurogroup of euro zone finance ministers, yesterday dismissed concerns that Hungary might face a Greek-style debt crisis and said the current level of the euro did not worry him.
Chancellor George Osborne could witness Eurozone meltdown, according to leading economists
This morning stock markets suffered further turmoil after Asian equities tumbled overnight amid renewed concerns over Europe and fears for global economic recovery.
The FTSE 100 Index fell more than 1.6 per cent following falls of nearly 4 per cent in Asia.
Markets continued to come under pressure after Friday's disappointing US job figures, which sent the Dow Jones Industrial Average on Wall Street down by 3 per cent .
Sentiment was hit further by mounting worries that Europe's debt problems could spread after Hungarian officials signalled last Friday that the nation was at risk of a Greek-style fiscal crisis.
The euro hit fresh four-year lows against the dollar over the weekend - at 1.188 dollars - before recovering slightly.
It also lost further ground against the pound, which is now trading at nearly 1.21 - its highest level since November 2008.
Oil prices have slumped to near 70 dollars a barrel after last week's poor jobs data cast recovery doubts over the world's biggest economy.
News that US employers added a worse than expected 431,000 jobs in May knocked already fragile confidence and Hungary's woes added to concerns of a double-dip recession.
The response on Asian markets saw Japan's Nikkei 225 closed down 3.8 per cent, having been down 4 per cent at one point, while Hang Seng fell 2.2 per cent.
Hungary is part of the European Union, but keeps its national currency, the forint, which dropped around 5 per cent last week.
The country's state secretary sought over the weekend to play down comments likening Hungary to Greece, saying Hungary was aiming to meet the 3.8 per cent of gross domestic product budget deficit target previously agreed with the International Monetary Fund and the European Union.
He added that emergency cabinet meetings were taking place over the weekend and into today.
But economists at Barclays Capital said: 'It is far too early to say that the worst is over for Hungarian markets.
'Moreover, investors will demand more risk premia from Hungarian assets for the policy uncertainty and the very poor track record on communication by the new government.'
Banking and commodity stocks were among those worst-off in trading on the Footsie today.
Part-nationalised Lloyds Banking Group was down 4 per cent, while Royal Bank of Scotland fell 3 per cent.
BP was one of only a handful of stocks on the rise - up 1 per cent - as the under-pressure oil group benefited from signs of success from latest efforts to contain the devastating Gulf of Mexico oil spill.
That's just the tactic of the Insiders to make money from crisis they created. The bigger the crisis is, more profit they will make. This time it's Euro, next time it's dollar.
629. Attack the Euro (3/13/2010)
Since Iran abandons dollar for Euro in its oil trading, a weak Euro would significantly hit Iran's economy. I saw in each attempt to have a war on Iran, it used to be followed with a plot to hit the Euro. The typical samples were: In January 2007, Russia had a dispute with Belarus and shut off the oil pipe for several days. In August 2008, Russia invaded Georgia where there was gas pipe line to Europe. In both events, if the crisis broadened, The oil and gas to Europe would have been cut. The European's economy would have been hurt and Euro would have depreciated. So would be Iran.
See "462. The collapse of Euro and worldwide economic crisis (1/20/07)", and "565. Georgia war and Russia, their role in Iran war (8/19/0"
The resource to sabotage the Euro by the failures of energy supply exhausted. The plan to have war on Iran doesn't go through yet. What's next? We see the international financial speculators again.
You may have noticed that started from later January, the financial crisis of Greece became a hot topic in media. In article "The Bond Vigilantes who left Greece in Ruins" (Business Week 2/22/2010), the writer says, "On Feb.10, striking labor unions shut down schools.....
As of Feb. 10, European officials seemed to be angling for a compromise plan to aid Greece but on such harsh terms that no one else would want such a deal. .....
In the month through Feb.10, the yield on the Greek government's three-month bills soared from less than 1% to 4%....."
The timing reminded me of the Feb. 13 Chinese New Year's dinner plot. The Greek's financial problem was created for that plot. If the 2/13 plot went through, then there would be "terror attacks" which would have justify the war on Iran. At the same time Iran would have suffered a blow in its finance too - a devalued Euro. All these didn't go true because the 2/13 plot went soured.
Who created that crisis? In a meeting with President Obama on Mar.9, Greek Prime Minister George Papandreou called for a clampdown on financial speculators he blamed for worsening his country's situation. Who are those international speculators? Goldman Sach was picked up particularly: "Goldman stars in this Greek tragedy - The firm's currency and bond deals for Greece have drawn fire" (Business Week 3/1/2010)
Russia had disputed over its neighbor countries(Belarus, Ukraine, Georgia) with attempt to shut down the oil and gas supply to Europe. Now it's the PIG'S four countries. (Greece, Ireland, Portuguese and Spain). They will appear in turn to pull down the Euro once there comes a renewed Iran war plot.
634. Pope and Roman Catholic under attack (5/5/2010)
Here are some excerpts from news articles of San Jose Mercury News in recent weeks.
"Sex abuse scandal taints Palm Sunday services
....Cardinal Sean Brady.... as a youthful priest 35 years ago, had two boys sign papers not to reveal scandal. "The inquiry had the effect of shielding and prolonging the career of a priest who was exposed 15 years later as the most notorious child-abuser in the history of Irish church. But the Vatican has been buffeted by recent disclosures of inaction as well."
(New York Times, 3/30/2010)
"AP: Abuse case delayed for years
Vatican waited 12 years to defrock Arizona priest" (A.P. 4/3/2010)
"Vatican defends pope, criticizes New York Times
... an article describing failed efforts by Wisconsin church officials to persuade the Vatican to defrock a priest who had abused as many as 200 deaf boys from 1950 to 1974. The pope, then Cardinal Joseph Ratzinger, was head of the Vatican’s doctrinal office when the case was referred there in 1996." (New York Times, 4/2/2010)
"Pope delayed defrocking
A former East Bay priest with a long record of sexually abusing children remained in the clergy for years while then-Cardinal Joseph Ratzinger, now Pope Benedict XVI, bucked pleas from the from the Oakland Diocese to defrock him in the 1980s, according to an A.P. report citing church documents." (firstname.lastname@example.org , 4/10/2010)
"Pope's link to '90s Austrian abuse case under scrutiny" (New York Times, 4/27/2010)
"News of abusive priest hit Vatican year earlier
Rome was warned of molester in '95, not '96 as claimed" (A.P. 4/23/2010)
What do you learn from these news?
1. The cases mostly took place in '80s and '90s, some even were 50 years ago.
2. Most reports target at Benedict XVI when he was a Cardinal.
3. All these news appear in later March and April. It is exactly what Vatican called as a "campaign of attacks on the pope and the church.
What is the purpose of this propaganda campaign? Since this January, the Inside group works hard to frame a drug case and then to start the war on Iran. The war effort was especially active in April. As a leader of Catholic, Pope Benedict XVI is against war. Then we saw this campaign. It lowers the moral image of the Pope. Once the war starts, his anti-war voice would be weakened. How can Vatican criticize others when its own profile is tainted?
Media played important role in propaganda for the Iraq war. Now it beats the drum again for another war.
The Barclay's computer failure over the weekend certainly proved they had central control! (Any decent computer system would not a single point of failure - therefore the shut down was either a deliberate or accidental failure of a central control mechanism).
Joined: 25 Jul 2005 Posts: 15924 Location: St. Pauls, Bristol, England
Posted: Mon Aug 23, 2010 9:48 am Post subject:
Or a dry run for when they hit us with their fascist 'oh deary me the money system appears to have collapsed' power.
scienceplease 2 wrote:
The Barclay's computer failure over the weekend certainly proved they had central control! (Any decent computer system would not a single point of failure - therefore the shut down was either a deliberate or accidental failure of a central control mechanism).
Joined: 25 Jul 2005 Posts: 15924 Location: St. Pauls, Bristol, England
Posted: Thu Nov 18, 2010 5:39 pm Post subject:
David Prosser: Ireland's defiant stand against a bailout shames the bullies in the eurozone
Independent - Thursday, 18 November 2010
Few dispute Ireland has sufficient funds until next year, which fuels the suspicion the EU wants to use it as a bailout guinea pig
One can't fail to be impressed by the stubbornness with which the Irish have resisted the efforts of their eurozone partners to force them to ask for a bailout they do not want and believe they do not need. But what's even more impressive is that in public at least, Ireland's leaders have managed to keep their temper, despite finding themselves in a storm not of their own making.
I say "not of their own making" because while Ireland has only itself (and its banks) to blame for the indebtedness it is now facing, its finances are in no worse a state than they were three weeks ago, when there was no clamour at all for the European Union to ride to the country's rescue.
It wasn't an Irish politician who triggered this crisis, or even a banker, but Angela Merkel, with her ill-judged attempt to appease those in her own country who fear they are being asked to underwrite the debts of less fiscally responsible members of the eurozone.
By announcing that she planned to persuade other EU members to adopt a new framework for responding to financial crises in the eurozone – and one that would see investors take a much greater share of the pain – the German Chancellor triggered a market panic. Investors in existing sovereign debt wondered whether they too might be affected by the Germans' new hardball approach, and started selling out of bonds issued by those countries considered particularly risky. Ireland found itself in the firing line, despite there having been no material change in its circumstances.
To add insult to injury, having seen Germany drop the Irish in the drink, the rest of the eurozone has rushed to hold their heads under. No one in Brussels, or elsewhere in Europe, disputes the Irish insistence that they have funds in place to keep them going until the middle of next year. No, Ireland is being asked to take one for the team; to accept a humiliating – and presumably painful – bailout in order to shore up confidence in the rest of the eurozone.
It gets worse. Many in themarket now suspect Ireland is being used as a guinea pig. The European Financial Stability Facility, they point out, actually has not a cent of the €440bn (£391bn) in emergency funding it is theoretically able to offer. Should the facility be called upon, the money would be raised by selling bonds – these would be guaranteed by EU governments, but use the indebted nations' own bonds as collateral.
What happens, wonder many in Brussels, if investors don't fancy buying those issues? Well, were it to be Portugal in need of the money – it has €4bn of debt due to mature before the end of the year – or Spain – the eurozone's third-largest economy – crisis could quickly turn into catastrophe. Ireland, though, has time on its side, so it might be the perfect test case for the efficacy of the new facility. This is not a fair fight. It may well be that the reluctance of EU officials to call publicly on Ireland to ask for help reflects their shame about the bullying that has gone on, rather than what they say is a desire to leave the decision to Dublin. Either way, one of the more remarkable aspects of this crisis is that the Irish have yet to come out swinging.
Joined: 25 Jul 2005 Posts: 15924 Location: St. Pauls, Bristol, England
Posted: Mon Nov 22, 2010 12:50 am Post subject:
Quite simply, this Government mindlessly, on that September night in 2008, gave priority to satisfying the international financial community over the welfare of its own people. It was done on the pretext that unless this was done there would be no functional banking system, liquidity would dry up and businesses would fail.
So they gave the guarantee and we have no functional banking system, there is no liquidity and businesses are failing. The decision was born in deference and in indifference. Deference to the financial moguls and indifference to the people, especially the less rich here who will bear the brunt of the calamity.
Oh, the deficit. Yes there is an obvious and fair strategy there. Double the old age pension, double unemployment assistance, at a cost of about €2 billion.
Remove all the tax breaks for private pensions, saving some €3.5 billion (we would be then cherishing all the old people of the nation equally), seek redundancies in the public service of about 30,000, which would take three years to organise, ultimately at an annual saving of about €3 billion – the redundant public servants would have their redundancy payments and the doubled unemployment assistance, plus the doubled old age pension when they got to 66.
And – sorry about this – get rid of all public service pensions. Altogether. More treating the old people of the nation equally. That would deal with the deficit. [would it???]
But, of course, they wouldn't do that and won't do that and there will be €70 billion hanging over the heads of future generations.
Joined: 25 Jul 2005 Posts: 15924 Location: St. Pauls, Bristol, England
Posted: Mon Nov 22, 2010 1:04 pm Post subject:
Ireland's "Suicide Pact" With the E.U.
By Mike Whitney
November 18, 2010 "Information Clearing House" -- -Ireland could be the next Lehman Brothers. That's what has the markets worried. If Irish leaders refuse to accept a bailout from the EU's new European Financial Stability Facility (EFSF), then bondholders will be forced to take haircuts on their investments which will leave banks in Germany and France short of capital. Bonds yields will rise sharply slowing activity in the credit markets. An Irish default will trigger hundreds of billions of dollars in credit default swaps (CDS), which will push weaker counterparties into bankruptcy and domino through the financial system. Contagion will spread to Portugal, Greece, Spain and Italy widening bond yields and forcing governments to increase their borrowing at the ECB. Business activity will sputter, unemployment will rise, and growth will shrink. It will be a second financial meltdown.
But no one believes that will happen. Most people think that Ireland will "take its medicine" and spare bondholders any losses. Irish leaders would rather accept a decade of EU-imposed austerity measures and the loss of sovereignty, then leave the euro and start fresh. It's disappointing. The euro is not designed to meet the needs of the smaller, less industrialized countries like Ireland. They need their own, flexible currency to ease the effects of cyclical downturns. But Irish leaders are still captivated by the idea of a united Europe. So they will cast aside the independence they earned through centuries of struggle for a pipedream and the elusive promise of prosperity.
At present, the Irish government is underwriting the toxic debts of its main banks. Unfortunately, those debts far exceed the revenues of the state. According to BBC's Robert Peston, the liabilities are "equivalent to an oppressive 700% of GDP when banking, public sector and private sector debts are added together." So far, the ECB has helped to keep Irish banks operating by providing 130 billion euros of emergency liquidity. But the wholesale markets no longer accept Irish debt as collateral and bond yields are in nosebleed territory. Irish politicians still maintain they have sufficient funds to get through the middle of next year, but that does not include funding for the banks. In fact, if the ECB stopped lending to the banks today, the system would crash overnight.
So the situation is tense and getting tenser. Even so, everyone expects Ireland's Finance Minister Brian Lenihan to cave in and accept a bailout. That will shift all the losses onto Irish taxpayers.
Joined: 25 Jul 2005 Posts: 15924 Location: St. Pauls, Bristol, England
Posted: Mon Nov 22, 2010 7:23 pm Post subject:
Brian Cowen addressed this year's Trilateral Commission conference in Dublin
No crisis for Cowen as he keeps the economic big-wigs waiting
By RONALD QUINLAN - Sunday May 09 2010
IT draws its membership from the ranks of the world's most powerful political and business leaders. Its private deliberations are widely held to inform the decisions of governments across the globe, from Washington to Beijing.
So when it comes to making a good impression on the Trilateral Commission, it probably didn't help Ireland's cause very much that Taoiseach Brian Cowen showed up half an hour late to deliver the opening address to its annual plenary meeting as it got under way last Friday at Dublin's Four Seasons Hotel.
Among the 200 delegates left waiting patiently for Mr Cowen's grand entrance were the former US secretary of state Henry Kissinger as well as the chairman of US President Barack Obama's Economic Recovery Advisory Board, Paul Volcker.
While a spokesman for the Taoiseach insisted that he had arrived less than 10 minutes late, the Sunday Independent timed his entrance at 2.50pm -- some 35 minutes after he was due to deliver his address to the assembled delegates.
Clearly conscious of the highly influential audience he was speaking to, Mr Cowen made a concerted effort in his speech to distance Ireland's economy from that of Greece and the other EU countries currently coming under attack by the markets, claiming, for instance, that we had enjoyed "first-mover advantage" by taking early and decisive action in 2008 as the global financial crisis had begun to unfold.
As former chairman of the US Federal Reserve under both presidents Jimmy Carter and Ronald Reagan, Paul Volcker, for one, appeared to be unconvinced.
Mr Volcker took the opportunity to question the Taoiseach on the future of the EU and the euro.
In addressing Mr Cowen, Mr Volcker -- a key member of Mr Obama's economic advisory team -- said that while "historically" he had been "very much attracted to the euro", it was now "challenged".
On this, he said: "You face some very difficult decisions here, but the general question of having an independent central bank, the common interest rate, the common currency . . . I'm just curious in your mind as to whether that does raise questions on the general governing structures of Europe?
"You're not in favour of more centralisation as I understand it, although other people are, but what does this crisis mean for how Europe moves ahead?"
Responding to Mr Volcker, the Taoiseach conceded that the euro faced problems with its credibility..............
http://www.independent.ie/national-news/no-crisis-for-cowen-as-he-keep s-the-economic-bigwigs-waiting-2173425.html _________________ www.lawyerscommitteefor9-11inquiry.org www.rethink911.org www.patriotsquestion911.com www.actorsandartistsfor911truth.org www.mediafor911truth.org www.pilotsfor911truth.org www.mp911truth.org www.ae911truth.org www.rl911truth.org www.stj911.org www.v911t.org www.thisweek.org.uk www.abolishwar.org.uk www.elementary.org.uk www.radio4all.net/index.php/contributor/2149 http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
US Dollar Fights the Euro in a Battle With No Victor
by Bill Bonner
Recently by Bill Bonner: Debt Delenda Est
We awoke to a blizzard. After a few months away, we had forgotten how miserable London’s weather can be. As near as we can tell, the sun doesn’t reach this part of the world – at least, not in the winter months. And the winter hasn’t even begun.
Snow, sleet, rain – it is all coming down. But Londoners don’t seem to mind. They trudge to work over their slippery sidewalks…march over their frozen bridges…
Seeing them coming over Blackfriar’s bridge, we remembered T.S. Eliot’s line about how surprising it was that “death had left so many undone.”
Eventually, death gets us all. And not just us… Banks. Corporations. Trends. Bull markets. Paper currencies. Monetary systems. Empires…
For example, death seems to be stalking the euro as well as the dollar.
“Irish rescue fails to appease markets,” says the front page of The Financial Times.
Europe’s leaders came up with €85 billion that was supposed solve the Irish problem. It was especially important that it create a buffer between Ireland’s banking and funding issues and those of the rest of Europe.
Well, it took about 24 hours for the buffer to give way. Now, Spain’s bolsa is in freefall. Portugal’s asset prices are giving way. And there’s pressure on Italy and even France. Even the biggest banks are slipping (see below).
Yes, dear reader…and you thought you had problems.
We had not paid much attention to the European financial issues. We thought we had enough to worry about already, what with Ben Bernanke trying to destroy the dollar and the US going broke.
But hey…that’s just the beginning.
Since Bernanke announced his program to undermine the dollar, the old greenback has actually risen against its main rival – the euro. How do you like that? Bloomberg reports:
The dollar gained the most since August against six major counterparts as concern that Europe’s debt problem will worsen and military action in Korea will escalate boosted demand for the US currency as a refuge.
The greenback rose against the yen for a fourth straight week, the longest streak in 20 months, after North Korea shelled a South Korean island and said “escalated confrontation” will lead to war. The euro fell for a third week versus the greenback as investors speculated Portugal and Spain will be the next European countries to need a financial rescue. The US added jobs in November for a second month, data next week may show.
“The euro has further to fall against the dollar,” said Kathy Lien, director of currency research at online currency trader GFT Forex in New York. “If there is a war amongst the Koreas, the yen would fall off aggressively against the dollar.”
The problem with the euro is that it is too good for many Europeans. Everyone wants a flexible currency these days. That is, they want one that will act like a good dog…one that will “get down” off the furniture when it is told to do so.
Alas, all the currencies are unruly mutts. The dollar won’t go down, even though Ben Bernanke pulls the rug out from under it and gives it the old “bitch slap” with the back of his hand. And the euro won’t go down because the Germans don’t want it to go down.
Of course, this doesn’t make the Germans very popular with the Spanish…the Irish…and the rest of the peripheral crowd. They want a cheap currency so they can pay their debts. The Germans, on the other hand, must have a kind of race memory for the horrors of the Weimar days…when you could take a wheelbarrow full of paper money to the store and not be able to buy a loaf of bread.
The more you look at the European banking and sovereign debt crisis the more dangerous and insoluble it seems. Try to fix one part of the problem and you make another part worse.
The Germans don’t want to pay to bailout the Spaniards…and the Italians…et al.
But German banks have nearly half a trillion euros worth of their debt.
The Irish taxpayer doesn’t want to pay to bail out the banks either. He’s already facing austerity measures that would choke and appall Americans.
Yesterday, the Obama team proposed freezing federal salaries – that is, leaving them 50% to 100% higher than private sector wages – for the next two years.
“We are going to have to budge on some deeply held positions,” said the decider.
His proposal would save…are you sitting down, dear reader…$2 billion by the end of 2011. Let’s see, that would cut the deficit by approximately 3 tenths of one percent…BFD.
In Ireland, government workers already agreed to a pay cut. And now the Irish feds are supposed to fire 10% of their public workforce…with another 10%, probably, a few years from now.
How much austerity will the Irish be willing to take in order to protect banks from their losses? They could leave the euro…revive the punt…and shirk their commitments in the old-fashioned way – by devaluing their currency.
But wait… If the Irish opt out of the euro…the whole shebang could come falling down.
“If the euro fails, Europe will fail,” says Ms. Merkel, chancellor of Germany.
And if the euro fails…banks fail…companies fail…trade fails…and then US companies fail…US banks fail…
Who knows where this would lead? And only we seem to want to find out.
But what to do? A colleague warns us:
“It’s time to save every possible penny. Next year is going to be worse than 2008 – a lot worse.
1. The euro is going to fail. Ireland, Spain, and Italy’s sovereign debt cannot be financed.
Shares of even the biggest and strongest of Europe’s banks (Deutsche Bank) have begun to “roll-over.”
More QE in Europe and America will make it much more difficult for businesses to invest across borders. That will result in massive trade problems and could easily cause a global famine. Most people don’t realize how dependent the world has become on free trade for basics, like food. Here’s what agriculture prices have done since July when QE II began. Vastly higher ag prices are not bullish for financial markets or world order.
Housing in the US is going to collapse, again. The various games that have been played to prop up the housing market in the US have failed. Tax credits, etc. haven’t worked…and they never had a chance. I have good contacts in this industry and it is completely bleak. With foreclosed properties making up 25%–50% of the inventories, housing prices will continue to fall 10%–15% a year – or more. There will be no new net demand for homes for a long time. Several major homebuilders will go bankrupt, including the largest, Pulte.
Lots of major US corporations – see GE – have unsustainable debt loads. These companies will end up bankrupt and will fire at least 50% of their employees over the next three years.
Muni/State finance: You guys have seen all of the numbers. Probably half of the states and munis in the US are being run in a way that’s completely unsustainable. As these cuts are made it will have a big impact on the economy. See what happened to Cisco last quarter, all because of cutbacks at the local government level.
“The problems of 2008 haven’t gone away. We’ve just borrowed a lot more money to make people think everything would be okay. As the veneer wears off, there’s going to be a real panic; and this time it will be worse, because there’s zero trust and confidence left in the government or the bankers…
“If I were in your shoes, I’d make sure every business unit I controlled was being run in a very prudent way, with a big-cash flow buffer. I’d make sure they were ready to cut overhead by 50% in 30 days…”
December 4 , 2010
Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century and The New Empire of Debt: The Rise Of An Epic Financial Crisis and the co-author with Lila Rajiva of Mobs, Messiahs and Markets (Wiley, 2007).
Global Research is pleased to announce the publication of a new book entitled The Global Economic Crisis, The Great Depression of the XXI Century, Michel Chossudovsky and Andrew Gavin Marshall, Editors.
“This important collection offers the reader a most comprehensive analysis of the various facets – especially the financial, social and military ramifications – from an outstanding list of world-class social thinkers.”
Since the launching of the book in early June, we have been flooded with orders, and excellent reviews continue to come in. This title is available at a special introductory price for Global Research readers for $15.00 plus s&h (list price $25.95).
The book is also available on Amazon and in selected bookstores in the US (distributed by Ingram).
The following excerpt is from a chapter by Andrew Gavin Marshall on ``The Political Economy of Global Government.``
For the rest of the chapter, order the book here.
Help us spread the word about this in-depth new book by `liking`the book on Facebook and sharing with your friends.
Capitalism has always changed and morphed; it has adapted to changes in the world and has forced the world to adapt to its changes. Capitalism has never, and never will be, entirely consistent in its structure and institutions. The global economic crisis has sped up developments that have been underway for a long time, specifically within the last century. In the midst of a global crisis, these changes, which have been slow and evolutionary, are being rapidly sped up and accelerated.
The global political economy is being transformed into a global government structure at the crossroads of a major financial crisis. However, far from the assumptions of many students of Capitalism and the global political economy, these changes are not natural and inevitable; these changes are planned, organized, socialized and institutionalized. The process towards creating a global government is not a new one; several institutions and organizations throughout the world have slowly been directing the world down this path.
This chapter examines the process of constructing a global government, with a particular focus on the major organizations that have and are currently shaping this transformation. What is being undertaken is the deconstruction of the global economy and national polity in order to rebuild the global political economy into a singular governance structure. Thus, destruction becomes a form of creation; the global economic crisis must be viewed in this context.
The Council on Foreign Relations
Nearing the end of the 19th century, American bankers and industrialists, specifically J.P. Morgan, were gaining close connections with major European banking interests. On the European side, specifically in Britain, the elite was largely involved in the Scramble for Africa at this time. Infamous among them was Cecil Rhodes, who made his fortune in diamond and gold mining in Africa, monopolizing the gold mines with financial help from Lord Rothschild. Interestingly, "Rhodes could not have won his near-monopoly over South African diamond production without the assistance of his friends in the City of London: in particular, the Rothschild bank, at that time the biggest concentration of financial capital in the world." As historian Niall Ferguson explained, "It is usually assumed that Rhodes owned De Beers, but this was not the case. Nathaniel de Rothschild was a bigger shareholder than Rhodes himself; indeed, by 1899 the Rothschilds’ stake was twice that of Rhodes."
Cecil Rhodes was also known for his radical views regarding America, particularly in that he would "talk with total seriousness of ‘the ultimate recovery of the United States of America as an integral part of the British Empire’." Rhodes saw himself not simply as a moneymaker, but even more so as an "empire builder." As historian Carroll Quigley explained, in 1891, three British elites met with the intent to create a secret society. The three men were Cecil Rhodes, William T. Stead, a prominent journalist of the day, and Reginald Baliol Brett, a "friend and confidant of Queen Victoria, and later to be the most influential adviser of King Edward VII and King George V." Within this secret society, "real power was to be exercised by the leader, and a ‘Junta of Three.’ The leader was to be Rhodes, and the Junta was to be Stead, Brett, and Alfred Milner."
In 1901, Rhodes chose Milner as his successor within the society, of which the purpose was:
The extension of British rule throughout the world, the perfecting of a system of emigration from the United Kingdom and of colonization by British subjects of all lands wherein the means of livelihood are attainable by energy, labor, and enterprise... [with] the ultimate recovery of the United States of America as an integral part of a British Empire, the consolidation of the whole Empire, the inauguration of a system of Colonial Representation in the Imperial Parliament which may tend to weld together the disjointed members of the Empire, and finally the foundation of so great a power as to hereafter render wars impossible and promote the best interests of humanity.
Essentially, it outlined a British-led cosmopolitical world order, one global system of governance under British hegemony. Among key players within this group were the Rothschilds and other leading banking interests.
The creation of the Federal Reserve in the United States in 1913, cemented the connection between European and American banking interests, as the Fed created a very distinct alliance between New York and London bankers.
In the midst of World War I, a group of American scholars were tasked with briefing "Woodrow Wilson about options for the postwar world once the Kaiser and imperial Germany fell to defeat." This group was called, "The Inquiry." The group advised Wilson mostly through his trusted aide, Col. Edward M. House, who was Wilson’s "unofficial envoy to Europe during the period between the outbreak of World War I in 1914 and the intervention by the United States in 1917," and was the prime driving force in the Wilson administration behind the establishment of the Federal Reserve System.
"The Inquiry" laid the foundations for the creation of the Council on Foreign Relations (CFR), the most powerful think tank in the U.S., and "the scholars of the Inquiry helped draw the borders of post World War I central Europe." On May 30, 1919, a group of scholars and diplomats from Britain and the U.S. met at the Hotel Majestic, where they "proposed a permanent Anglo-American Institute of International Affairs, with one branch in London, the other in New York." When the scholars returned from Paris, they were welcomed by New York lawyers and financiers, and together they formed the Council on Foreign Relations in 1921. The "British diplomats returning from Paris had made great headway in founding their Royal Institute of International Affairs." The Anglo-American Institute envisioned in Paris, with two branches and combined membership was not feasible, so both the British and American branches retained national membership, however, they would cooperate closely with one another. They were referred to, and still are, as "Sister Institutes."
The Milner Group, the secret society formed by Cecil Rhodes, "dominated the British delegation to the Peace Conference of 1919; it had a great deal to do with the formation and management of the League of Nations and of the system of mandates; it founded the Royal Institute of International Affairs in 1919 and still controls it." There were other groups founded in many countries representing the same interests of the secret Milner Group, and they came to be known as the Round Table Groups, preeminent among them were the Royal Institute of International Affairs (Chatham House), the Council on Foreign Relations in the United States, and parallel groups in Canada, Australia, New Zealand, South Africa and India. This had the effect of establishing a socializing institution for the elites of each nation, from which they would exert political, economic, academic and social influence.
The CFR, established less than ten years after the creation of the Federal Reserve, worked to promote an internationalist agenda on behalf of the international banking elite. It was to alter America’s conceptualization of its place within the world from an isolationist industrial nation to an engine of empire working for international banking and corporate interests. Where the Fed took control of money and debt, the CFR took control of the ideological foundations of such an empire, encompassing the corporate, banking, political, foreign policy, military, media and academic elite of the nation into a generally cohesive overall world view. By altering one’s ideology to that of promoting such an internationalist agenda, the big money that was behind it would ensure one’s rise through government, industry, academia and media. The other major think tanks and policy institutions in the United States are also represented at the CFR.
Before America even entered World War II in late 1941, the Council began a "strictly confidential" project called the War and Peace Studies, in which top CFR members collaborated with the U.S. State Department in determining U.S. policy, and the project was entirely financed by the Rockefeller Foundation. The post-War world was already being designed by members of the Council who would then go into government in order to make those designs into a reality.
The policy of "containment" towards the Soviet Union that would defined American foreign policy for nearly half a century was envisaged in a 1947 edition of Foreign Affairs, the academic journal of the Council on Foreign Relations. So too were the ideological foundations for the Marshall Plan and NATO envisaged at the Council on Foreign Relations, with members of the Council recruited to enact, implement and lead these institutions. The Council also played a role in the establishment and promotion of the United Nations, which was subsequently built on land bought from John D. Rockefeller, Jr.
In 1944, representatives of the 44 Allied nations met for the Bretton Woods conference (the United Nations Monetary and Financial Conference) in New Hampshire, in an effort to reorganize and regulate the international financial and monetary order following the war. The UK was represented by John Maynard Keynes; the American contingent was represented by Harry Dexter White, an American economist and senior U.S. Treasury department official. It was out of this conference that the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD), now part of the World Bank, and the General Agreement on Tariffs and Trade (GATT), now institutionalized in the World Trade Organization (WTO), originated. They were designed to be the institutionalized economic foundations of exerting American hegemony across the globe; they were, in essence, engines of economic empire.
In 1947, President Harry Truman signed the National Security Act, which created the position of Secretary of Defense overseeing the entire military establishment, and the Joint Chiefs of Staff; it created the CIA modeled on its war time incarnation of the Office of Strategic Services (OSS); the Act also created the National Security Council, headed by a National Security Adviser, designed to give the President further advice on foreign affairs issues separate from the State Department. Essentially, the Act created the basis for the national security state apparatus for empire building.
The founding of the CIA was urged by the War and Peace Studies Project of the Council on Foreign Relations in the early 1940s. The architects of the CIA, designing the shape and organization of the Agency, as well as its functions were all Wall Street lawyers, largely made up of members of the Council on Foreign Relations. The Deputy Directors of the CIA for the first two decades were all "from the same New York legal and financial circles."
The Bilderberg Group
In 1954, the Bilderberg Group was founded in the Netherlands, holding secretive meeting once a year, drawing roughly 130 of the political-financial-military-academic-media elites from North America and Western Europe as "an informal network of influential people who could consult each other privately and confidentially." Regular participants included the CEOs of some of the largest corporations in the world, oil companies such as Royal Dutch Shell, British Petroleum, and Total SA, as well as various European monarchs, international bankers such as David Rockefeller, major politicians, presidents, prime ministers and central bankers of the world.
Joseph Retinger, the founder of the Bilderberg Group, was also one of the original architects of the European Common Market and a leading intellectual champion of European integration. In 1946, he told the Royal Institute of International Affairs (the British counterpart and sister organization of the Council on Foreign Relations), that Europe needed to create a federal union and for European countries to "relinquish part of their sovereignty." Retinger was a founder of the European Movement (EM), a lobbying organization dedicated to creating a federal Europe. Retinger secured financial support for the European Movement from powerful U.S. financial interests such as the Council on Foreign Relations and the Rockefellers. However, it is hard to distinguish between the CFR and the Rockefellers, as, especially following World War II, the CFR’s main finances came from the Carnegie Corporation, Ford Foundation and most especially, the Rockefeller Foundation.
The Bilderberg Group acts as a "secretive global think-tank," with an original intent to "to link governments and economies in Europe and North America amid the Cold War." One of the Bilderberg Group’s main goals was unifying Europe into a European Union. Apart from Retinger, the founder of the Bilderberg Group and the European Movement, another ideological founder of European integration was Jean Monnet, who founded the Action Committee for a United States of Europe, an organization dedicated to promoting European integration, and he was also the major promoter and first president of the European Coal and Steel Community (ECSC), the precursor to the European Common Market.
Declassified documents (released in 2001) revealed that "the U.S. intelligence community ran a campaign in the Fifties and Sixties to build momentum for a united Europe. It funded and directed the European federalist movement." Furthermore:
America was working aggressively behind the scenes to push Britain into a European state. One memorandum, dated July 26, 1950, gives instructions for a campaign to promote a fully-fledged European parliament. It is signed by Gen William J Donovan, head of the American wartime Office of Strategic Services, precursor of the CIA...
Washington’s main tool for shaping the European agenda was the American Committee for a United Europe, created in 1948. The chairman was Donovan, ostensibly a private lawyer by then. The vice-chairman was Allen Dulles, the CIA director in the Fifties. The board included Walter Bedell Smith, the CIA’s first director, and a roster of ex-OSS figures and officials who moved in and out of the CIA. The documents show that ACUE financed the European Movement, the most important federalist organisation in the post-war years...
The leaders of the European Movement - Retinger, the visionary Robert Schuman and the former Belgian prime minister Paul-Henri Spaak - were all treated as hired hands by their American sponsors. The US role was handled as a covert operation. ACUE’s funding came from the Ford and Rockefeller foundations as well as business groups with close ties to the US government.
The European Coal and Steel Community was formed in 1951, and signed by France, West Germany, Italy, Belgium, Luxembourg and the Netherlands. Newly released documents from the 1955 Bilderberg meeting show that a main topic of discussion was "European Unity":
The discussion affirmed complete support for the idea of integration and unification from the representatives of all the six nations of the Coal and Steel Community present at the conference...
A European speaker expressed concern about the need to achieve a common currency, and indicated that in his view this necessarily implied the creation of a central political authority...
A United States participant confirmed that the United States had not weakened in its enthusiastic support for the idea of integration, although there was considerable diffidence in America as to how this enthusiasm should be manifested. Another United States participant urged his European friends to go ahead with the unification of Europe with less emphasis upon ideological considerations and, above all, to be practical and work fast.
Thus, at the 1955 Bilderberg Group meeting, they set as a primary agenda, the creation of a European common market.
In 1957, two years later, the Treaty of Rome was signed, which created the European Economic Community (EEC), also known as the European Community. Over the decades, various other treaties were signed, and more countries joined the European Community. In 1992, the Maastricht Treaty was signed, which created the European Union and led to the creation of the Euro. The European Monetary Institute was created in 1994, the European Central Bank was founded in 1998, and the Euro was launched in 1999. Etienne Davignon, Chairman of the Bilderberg Group and former EU Commissioner, revealed in March of 2009 that the Euro was debated and planned at Bilderberg conferences.
To read the rest of this chapter, click here.
 Carroll Quigley, Tragedy and Hope: A History of the World in Our Time, New York, The Macmillan Company, 1966, p. 130.
 Niall Ferguson, Empire: The Rise and Demise of the British World Order and the Lessons for Global Power, New York, Basic Books, 2004, p. 186.
 Ibid., p. 186-187.
 Ibid., p. 190
 Carroll Quigley, The Anglo-American Establishment, GSG & Associates, 1981, p. 3.
 Ibid., p. 33.
 Ibid., p. 34.
 William Engdahl, A Century of War: Anglo-American Oil Politics and the New World Order, London, Pluto Press, 2004, p. 51.
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