Marc Faber on Coming Sovereign Debt Crisis: Next Countries to Default are the US, Japan and the ‘PIIGS’

Listen to what Marc Faber exactly says in the beginning of the video.

See also:

Experts: Dollar Crisis Looms if US Doesn’t Curb Debt (Reuters)

Fitch: US Must Cut Spending To Save AAA Rating; US December Deficit Nearly Doubles (Telegraph)

The Coming Sovereign Debt Crisis (Forbes)

A global fiasco: Japan is about to blow up (Telegraph)



After every financial crisis there’s a sovereign debt crisis, Marc Faber says. Countries that borrowed too much during the boom times start struggling to pay their competitors back, and eventually some of them default.

The countries most likely to blow up this time around are the “PIIGS”: Portugal, Ireland, Italy, Greece, and Spain.  One ore more of them, Faber says, will likely default in the next couple of years. And, that could result in the death of the Euro currency.

Longer-term, Faber says, Japan and the US are in line for the same fate.

The US crisis won’t hit us this year or next year.  But within 5-10 years, the United States will be forced to quietly default on its debt, most likely by printing money and destroying the value of the currency.

The main problem comes down to two things: 1) ballooning debts and 2) future interest costs.

As these charts from Faber’s Gloom, Boom, And Doom Report show, in the past decade, the U.S. government’s total debt and liabilities have gone through the roof, especially when Fannie, Freddie, Medicare, and Social Security are taken into account.  This trend is unsustainable, and it will correct itself only through a rapid acceleration of economic growth and tax revenues, a new-found financial discipline, or a crisis–or a combination of all three.

Read moreMarc Faber on Coming Sovereign Debt Crisis: Next Countries to Default are the US, Japan and the ‘PIIGS’

China Tells Google and Other Internet Companies to Follow the Law

Google May Close Operations in China (Video):

CNBC interview with David Drummond, chief legal officer at Google, who discusses the Internet giant’s reaction to an assault by hackers who sought to penetrate the e-mail accounts of Chinese human rights activists.

Google considers to shut down business operations in China (Official Google Blog)


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A worker in the lobby of Google’s office Wednesday in Beijing.

BEIJING – Two days after Google announced that it would quit China unless the nation’s censors eased their grip, the Chinese government offered an indirect but unambiguous response: Companies that do business in China must follow the laws of the land.

The comments, by two different officials Thursday, suggested that China was unlikely to give ground on Google’s demands that its search engine results be unfiltered. In announcing its decision Tuesday that it might leave the world’s biggest Internet market, Google also cited a series of cyberattacks aimed at breaching the accounts of human rights advocates on its e-mail service, Gmail.

Several of those who said their e-mail accounts were hacked provided more details about the assaults Thursday.

After a day of silence, the Foreign Ministry said that China welcomed foreign Internet companies but that those offering online services must do so “in accordance with the law.” Speaking at a scheduled news conference, Jiang Yu, a ministry spokeswoman, did not address Google’s complaints about censorship and cyberattacks and simply stated that “China’s Internet is open.”

The remarks, and those of another high-ranking official who called for even tighter Internet restrictions, may speed Google’s departure and increase friction between Beijing and the Obama administration, which has made priorities of Internet freedom and online security.

Read moreChina Tells Google and Other Internet Companies to Follow the Law

Fitch: US Must Cut Spending To Save AAA Rating; US December Deficit Nearly Doubles

The US government has looted the taxpayer through bailouts for Wall Steet banksters and stimulus packages like there is no tomorrow.

Here is what Obama had to say about deficit spending:

“Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren,” Obama said in a 2006 floor speech that preceded a Senate vote to extend the debt limit. “America has a debt problem and a failure of leadership.”
– Barack Obama

Here is what Obama is really doing:

December deficit nearly doubles (CNN Money):

NEW YORK (CNNMoney.com) — The U.S. government posted a deficit of $91.9 billion in December, nearly double the shortfall of a year earlier and marking the government’s 15th straight month in the red, the Treasury Department reported Wednesday.

The shortfall brings the total deficit for the first quarter of fiscal year 2010 to $388.5 billion, up from $332 billion during the same period last year.

It was the second consecutive December the government spent more than it took in. In December 2008, the deficit was $51.8 billion.

Obviously Obama is much, much worse than Bush. A task that I thought was almost impossible to achieve.

This is Obamanomics, looting the US taxpayer until there is nothing left:

Nobel Peace Laureate Obama seeks additional $33 billion for wars, on top of a record request for $708 billion for the Defense Department (AP)

Obama administration posts widest-ever October budget deficit (AP)

–  US budget deficit tripled to a record $1.4 trillion in 2009 (Wall Street Journal)

Many Americans still think that Obama is on ‘their’ side. Here is the truth about Obamanomics:

“When a country embarks on deficit financing and inflationism you wipe out the middle class and wealth is transferred from the middle class and the poor to the rich.”
– Ron Paul

“Deficits mean future tax increases, pure and simple. Deficit spending should be viewed as a tax on future generations, and politicians who create deficits should be exposed as tax hikers.”
– Ron Paul


Fitch Ratings has issued the starkest warning to date that the US will lose its AAA credit rating unless acts to bring the budget deficit under control, citing a spiral in debt service costs and dependence on foreign lenders.

consumers-are-struggling-and-the-deficit-is-out-of-control-in-the-us

Fitch warns the US must cut spending and raise taxes to cut its deficit to save its AAA rating. Despite better-than-expected retail sales in December, consumers are struggling and the deficit is out of control. Photo: AFP

Brian Coulton, the agency’s head of sovereign ratings, said the US is shielded for now by its pivotal role in global finance and the dollar’s status as the key reserve currency, but the picture is deteriorating fast enough to ring alarm bells.

“Difficult decisions will have to be made regarding spending and tax to underpin market confidence in the long-run sustainability of public finances. In the absence of measures to reduce the budget deficit over the next three to five years, government indebtedness will approach levels by the latter half of the decade that will bring pressure to bear on the US’s ‘AAA’ status”, he said.

Fitch expects the combined state and federal debt to reach 94pc of GDP next year, up from 57pc at the end of 2007. Federal interest costs will reach 13pc of revenues, meaning that an eighth of all taxes will go to service debt. Most fiscal experts view this level as dangerously close to the point of no return for debt dynamics.

The rating alert is a reminder that fiscal stimulus and bank rescues across the world have merely shifted private debt on to public shoulders. The bail-outs looked deceptively ‘costless’ at the time, but the damage to sovereign states may take years to repair. The US Treasury says interest payments as a share of GDP will rise to 3.6pc by 2016, the highest since data began in 1940 – when it was 0.8pc.

Read moreFitch: US Must Cut Spending To Save AAA Rating; US December Deficit Nearly Doubles

Dutch Inquiry: Iraq War Was Illegal, Had ‘No Basis In International Law’

“This is the authoritative view of seven commissioners including the former president of the Dutch supreme court, a former judge of the European court of justice, and two legal academics.”

See also:

US and UK knew that Iraq Didn’t Have WMDs

Tony Blair ‘knew Iraq did not have WMD before war started’


Inquiry says conflict had no sound mandate in international law as it emerges UK denied key letter to seven-judge tribunal

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US Marines on the city limits of Kut, 100 miles south of Baghdad in April 2003 AP

The war in Iraq had “no basis in international law”, a Dutch inquiry found today, in the first ever independent legal assessment of the decision to invade.

In a series of damning findings, a seven-member panel in the Netherlands concluded that the war, which was supported by the Dutch government following intelligence from Britain and the US, had not been justified in law.

“The Dutch government lent its political support to a war whose purpose was not consistent with Dutch government policy,” the inquiry in the Hague concluded. “The military action had no sound mandate in international law.”

In a further twist, it emerged that the UK government refused to disclose a key document requested by the Dutch panel.

The document – allegedly a letter from Tony Blair asking for the support of the Dutch prime minister, Jan Peter Balkenende – was handed over in a breach of diplomatic protocol and on the basis that it was for Balkenende’s eyes only, an inquiry official told the Guardian.

“It was a surprise for our committee when we discovered information about this letter,” said Rob Sebes, a spokesman for the Dutch inquiry. “It was not sent with a normal procedure between countries – instead it was a personal message from Tony Blair to our prime minister Jan Peter Balkanende, and had to be returned and not stored in our archives.

“We asked the British government to hand over the letter but they refused,” Sebes said.

Details of the Dutch inquiry’s findings and the refusal of the British government to disclose the letter are likely to increase international scrutiny on the Chilcot inquiry, as it emerged that the UK was instrumental in influencing the Dutch decision to back the war.

“In its depiction of Iraq’s [weapons of mass destruction] programme, the [Dutch] government was to a considerable extent led by public and other information from the US and the UK,” the Dutch report says.

“This report is an objective finding – it was not political, we searched for the truth,” said Sebes. “We think that over 10 months the seven members of committee made a real effort to make a finding of high quality.”

Philippe Sands QC, a professor of international law, who gave evidence to the Dutch inquiry, said: “There has been no other independent assessment on the legality of the war in Iraq and the findings of this inquiry are unambiguous. It concludes that the case argued by the Dutch and British governments, including the then attorney general, Lord Goldsmith, could not reasonably be argued.

“This is the authoritative view of seven commissioners including the former president of the Dutch supreme court, a former judge of the European court of justice, and two legal academics.”

Read moreDutch Inquiry: Iraq War Was Illegal, Had ‘No Basis In International Law’

SEC hides AIG bailout documents until 2018; Federal Reserve Seeks to Protect US Bailout Secrets

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Federal Reserve Seeks to Protect U.S. Bailout Secrets (Bloomberg):

Jan. 11 (Bloomberg) — The Federal Reserve asked a U.S. appeals court to block a ruling that for the first time would force the central bank to reveal secret identities of financial firms that might have collapsed without the largest government bailout in U.S. history.

The U.S. Court of Appeals in Manhattan will decide whether the Fed must release records of the unprecedented $2 trillion U.S. loan program launched after the 2008 collapse of Lehman Brothers Holdings Inc. In August, a federal judge ordered that the information be released, responding to a request by Bloomberg LP, the parent of Bloomberg News.

“This case is about the identity of the borrower,” said Matthew Collette, a lawyer for the government, in oral arguments today. “This is the equivalent of saying ‘I want all the loan applications that were submitted.’”

Bloomberg argues that the public has the right to know basic information about the “unprecedented and highly controversial use” of public money. Banks and the Fed warn that bailed-out lenders may be hurt if the documents are made public, causing a run or a sell-off by investors. Disclosure may hamstring the Fed’s ability to deal with another crisis, they also argued. The lower court agreed with Bloomberg.


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* SEC granted “confidential treatment” last May

* Secrecy order stays in place until November 2018

NEW YORK, Jan 11 (Reuters) – It could take until November 2018 to get the full story behind the U.S. bailout of insurance giant American International Group because of an action taken last year by the Securities and Exchange Commission.

In May, the SEC approved a request by AIG to keep secret an exhibit to a year-old regulatory filing that includes some of the details on the most controversial aspect of the AIG bailout: the funneling of tens of billions of dollars to big banks like Societe Generale, Goldman Sachs, Deutsche Bank and Merrill Lynch.

The SEC’s Division of Corporation Finance, in granting AIG’s request for confidential treatment, said the “excluded information” will not be made public until Nov. 25, 2018, according to a copy of the agency’s May 22 order.

The SEC said the insurer had demonstrated the information in the exhibit, called Schedule A, “qualifies as confidential commercial or financial information.”

The expiration date for the SEC order falls on the 10th anniversary of Federal Reserve of New York’s decision to provide emergency financing to an entity set up to specifically acquire some $60 billion in collateralized debt obligations from 16 banks in the United States and Europe.

Read moreSEC hides AIG bailout documents until 2018; Federal Reserve Seeks to Protect US Bailout Secrets

Haiti President René Préval: Earthquake Devastation ‘Unimaginable’

• Tens of thousands lose homes in 7.0 magnitude quake

• UN headquarters, schools and hospitals collapse


Footage of the earthquake’s aftermath. Contains disturbing images Link to this video

René Préval, the president of Haiti, has described the devastation after last night’s earthquake as “unimaginable” as governments and aid agencies around the world rushed into action.

Préval described how he had been forced to step over dead bodies and heard the cries of those trapped under the rubble of the national parliament. “Parliament has collapsed. The tax office has collapsed. Schools have collapsed. Hospitals have collapsed,” he told the Miami Herald. “There are a lot of schools that have a lot of dead people in them.” Préval said he thought thousands of people had died in the quake.

A 7.0 magnitude quake – the biggest recorded in this part of the Caribbean and the largest to hit Haiti in more than 200 years – rocked Port-au-Prince, destroying a hospital and sending houses tumbling into ravines.

Read moreHaiti President René Préval: Earthquake Devastation ‘Unimaginable’

Google considers to shut down business operations in China

“These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.”


A new approach to China

Google

Like many other well-known organizations, we face cyber attacks of varying degrees on a regular basis. In mid-December, we detected a highly sophisticated and targeted attack on our corporate infrastructure originating from China that resulted in the theft of intellectual property from Google. However, it soon became clear that what at first appeared to be solely a security incident–albeit a significant one–was something quite different.

First, this attack was not just on Google. As part of our investigation we have discovered that at least twenty other large companies from a wide range of businesses–including the Internet, finance, technology, media and chemical sectors–have been similarly targeted. We are currently in the process of notifying those companies, and we are also working with the relevant U.S. authorities.

Second, we have evidence to suggest that a primary goal of the attackers was accessing the Gmail accounts of Chinese human rights activists. Based on our investigation to date we believe their attack did not achieve that objective. Only two Gmail accounts appear to have been accessed, and that activity was limited to account information (such as the date the account was created) and subject line, rather than the content of emails themselves.

Third, as part of this investigation but independent of the attack on Google, we have discovered that the accounts of dozens of U.S.-, China- and Europe-based Gmail users who are advocates of human rights in China appear to have been routinely accessed by third parties. These accounts have not been accessed through any security breach at Google, but most likely via phishing scams or malware placed on the users’ computers.

Read moreGoogle considers to shut down business operations in China

Venezuela Currency Devaluation: Government Inspectors And Soldiers Shut Shops Accused Of Profiteering

US Sellers Suffer Venezuela Hit (Wall Street Journal)


venezuela-soldiers-shut-shops-accused-of-profiteering State television was on hand to show the alleged rises in prices

Government inspectors backed by soldiers have shut more than 70 shops in Venezuela accused of trying to cash in on last week’s currency devaluation.

Soldiers have been on the streets to check prices as people queue to buy imports, fearing prices could rise.

Devaluing the bolivar by at least 17% will aid competition and cut reliance on imports, President Hugo Chavez says.

On Sunday he warned that businesses engaging in what he called speculation would be shut down or taken over.

As soon as trading started again after the president’s comments a series of supermarkets and other businesses across Venezuela were taken over by government tax inspectors.

State-run news agency ABN said food, car parts and other businesses were temporarily closed “for changing the price of products and for speculation”.

The National Guard stepped in at three superstores belonging to the Exito supermarket chain.

State television showed the alleged rises in prices on everything from plasma television screens to packets of cereal.

The bolivar’s official exchange rate, which is set by government decree, had been held steady at 2.45 to the US dollar since the last devaluation in March 2005.

hugo-chavez-said-the-devaluation-would-limit-unnecessary-imports Chavez said the devaluation would limit unnecessary imports

But on Friday, President Chavez announced that it would now have two rates – 2.60 to dollar for “priority” imports, and 4.30 to the dollar for other items considered non-essential – a 50% devaluation.

The BBC’s Will Grant, in Venezuela, says that since the devaluation was announced long queues have formed outside outlets selling electronic goods and technology.

Customers fear that significant price rises are on their way.

Venezuela already has the highest rate of inflation in Latin America – currently at about 25%.

President Chavez says that these measures will rein it in but many economic analysts predict that it will only get worse in the short term.

Oscar Meza, director of a Venezuelan economic think tank, Cendas, predicted the move would push annual inflation above 33%.

‘Irresponsible policy’

“It’s impossible for prices not to be adjusted,” he told the Associated Press. “If they aren’t adjusted, they’ll disappear.”

President Chavez dismissed the criticism on Sunday on his weekly television and radio programme, Alo Presidente, saying there was “no reason for anybody to be raising prices”.

Read moreVenezuela Currency Devaluation: Government Inspectors And Soldiers Shut Shops Accused Of Profiteering

Arizona State Treasurer: Checks Will Bounce Amid Budget Crisis

arizona-state-capitol
Arizona State Capitol

PHOENIX — Arizona state legislators go back to work Monday in an attempt to battle a nearly $1.5 billion dollar deficit.

“The February school payment we can’t make, February payroll there’s no money there,” said State Treasurer, Dean Martin.

Martin said unless the capitol buildings are sold before the end of the month, there will be no more money meaning, “If they continue to issue checks without having money from the sale of the buildings, I have to bounce them.”

That’s because Martin said spending has increased double digits during the first two years of the recession, while revenues were dropping at the same rate.

Martin said the biggest issue is what he calls welfare healthcare.

“Ten years ago AHCCCS was only a $200 million dollar agency, today it’s over $2 billion,” he said.

Read moreArizona State Treasurer: Checks Will Bounce Amid Budget Crisis

The CIA Misspells Al Qaeda Terrorists Names and Bypasses TSA to Let Terrorists Fly


WASHINGTON–(BUSINESS WIRE)–One of the 9/11 hijackers appeared on the no-fly list with a deliberately misspelled name. The CIA supplied that name just like they did Umar Farouk Abulmutallab’s. DCBureau is publishing the page from the 2006 no-fly list with the misspelled 9/11 hijacker’s name.

Veteran investigative reporters Susan and Joseph Trento, who first obtained and exposed the flaws in the no-fly list in 2006, have completed a new investigation of the CIA’s role in airline security. It reveals that the CIA is bypassing other government agencies and following terrorists on airplanes without telling TSA or the airlines involved. It shows how terrorists and nuclear proliferators have been allowed to fly because the CIA has refused to add their correct names or aliases to the no-fly list.

Part I of their two-part investigation –“The No Fly List”– is posted on the DCBureau.org Web site. The two part investigation reveals:

The CIA deliberately misspells names and does not provide aliases of suspected terrorists and criminals who are being targeted for recruitment or have relationships with the agency when it passes names on to the National Counterterrorism Center to be integrated in the Terrorism Identity Datamart Environment (TIDE), Selectee, and no-fly lists.

Khalid al-Mihdhar was known to the CIA as one of two men who had attended a meeting of Al Qaeda officials in Malaysia before coming to the United States. That hijacker was also a Saudi Arabian intelligence agent with the General Intelligence Directorate, the Saudi agency that works closely with the CIA. Al-Mihdhar was on the no-fly list as “al-Midham.” Al-Mihdhar helped fly American Airline Flight 77 into the Pentagon on 9/11. Fourteen other 9/11 hijackers appeared on the list five years after they had supposedly died in the attacks. The report also discloses the CIA refused to share language software that would vastly ease problems in matching Arab names to other government agency lists.

DCBureau reveals that the CIA in 2006 deliberately allowed a flight school associate of the 9/11 hijackers to fly to New Zealand and lost track of him only to have New Zealand authorities learn that he had signed up for airline training.

DCBureau reports that Issa Abdullah (Cleven Holt) is not on the no-fly list even though he was a suspect in the Beirut Marine Barracks bombing and was suspected of planning attacks on US troops in Bosnia during a visit by President Clinton. Holt visited the United States last fall and had no trouble flying into the country.

Read moreThe CIA Misspells Al Qaeda Terrorists Names and Bypasses TSA to Let Terrorists Fly