The man who trades freedom for security does not deserve nor will he ever receive either. – Benjamin Franklin
More than 100 local councils, charities, churches, hospitals and nursing homes across Australia are sitting on a $2 billion black hole after buying subprime investments structured by Wall Street banks during the bull market but which are now potentially worthless.
Melbourne’s Metropolitan Ambulance Service and local councils are among those facing losses of hundreds of millions of dollars in the subprime meltdown because of bad debt they bought through a global investment bank.
The National Australia Bank’s decision to write off 90 per cent of its US conduit loans will have dramatic repercussions around the world. Wall Street will be deeply shocked when they understand the repercussions of what NAB has done. It is clear global banks have nowhere near provided for their exposures to US housing loans which in the words of John Stewart are experiencing a “meltdown”.
We are now way beyond sub-prime. NAB says that it is suffering a 55 per cent loss on American housing loans – an event that has never happened in the history of a developed country in recent memory. This is an unprecedented event and means that the cost of bailing out the US financial system is now far beyond the highest estimates. A US recession is now locked in, but more alarmingly, 55 per cent loan losses point to the possibility of a depression.
I called the death of Indymac Bancorp on Monday, July 7th. The Federal Deposit Insurance Corporation seized Indymac on Friday, July 11th.
I called the implosion of the two Government Sponsored Entities in the mortgage business, Fannie Mae and Freddie Mac on Wednesday, July 9th. Sunday, July 13th the White House announced a bailout for them.
Related article: Fed: No more bailouts, except Fannie Mae and Freddie Mac
Want to know what happens next? It’s ape ass ugly and it’s going to happen to you, so don’t say I didn’t warn you.
Something is going to break, and soon. Banks are insolvent and failing by the hundreds if not thousands. Hedge funds are on the edge of oblivion. Only a tiny percentage of toxic waste losses in real estate and other asset classes of collateral, which will eventually amount to over $1.4 trillion in the US alone, has to date been recognized by the lying bankster fraudsters. Bonds are producing negative rates of return even based on ludicrously understated official rates of inflation (until this month, when we finally got some data bordering on the truth).
NEW YORK (Reuters) – The nightmare scenario for U.S. economic authorities is here: confidence in their ability to rescue the country from a housing-led financial panic is now at its lowest level since the crisis began.
This means losses for investors, already totaling nearly half a trillion dollars, could mount even further over the next few months, with implications for business investment and the overall health of the economy.
“You see a massive potential for financial meltdown on a global scale,” said T.J. Marta, fixed-income strategist at RBC Capital Markets.
Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson, testified before Congress this week on the country’s precarious financial state. They were met with unusually fierce questions from lawmakers on the feasibility of a plan to provide extra funding for mortgage finance giants Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz).
Read moreAs faith in bank bailouts dims, losses set to deepen
“As I write this column, Congress has run this country into a $9,498,511,404,143.63 debt. That’s just under $9.5 TRILLION “dollars.””
I really hope that you will find time to read this article. 🙂
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Arthur Henning of the Chicago Tribune said back in 1935, “The New Deal will bring the Communist Party within striking distance of overthrow of the American form of government…” Mark Sullivan of the Buffalo Evening News also expressed alarm in 1935: “The New Deal is to America what the early phase of Nazism was to Germany…”
The nation is awash in fear because they are coming to realize that while they’ve been buying all the hype from the cabal of gangsters in Washington for decades, reality is now setting in as poverty is slamming millions who used to belong to the middle class. From dangerous lending practices to the derivatives time bomb waiting to go off and inflation getting ready to launch into hyper inflation, the situation is more grim by the week. A financial catastrophe so many have been warning about for decades, it’s all coming home to roost. The “perfect storm” as it’s being called. The beast is now devouring itself and we the people are caught in their cross fire.
Unfortunately, most Americans haven’t been listening. They’re either addicted to sports, shopping, porn, drugs or yaking on their cell phones while the world has been heading for financial Armageddon.
Read moreFREDDIE & FANNIE UNCONSTITUTIONAL BAIL OUT USING WHAT?
This is article very important, because…
“The credit crisis has obviously entered into a new phase – the government has one bailout left in them, and this is it,” said Jeffrey Gundlach, chief investment officer of TCW Group in Los Angeles, which invests $160 billion.
And now all the related articles below make much more sense and here comes the meltdown of the financial markets.
If you do not know how to prepare yourself: Solution
If you want to know more on what is going on: World Situation
Take care. – The Infinite Unknown
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NEW YORK – The U.S. government is signaling it won’t throw a lifeline to struggling financial companies – except for mortgage linchpins Fannie Mae and Freddie Mac – marking a shift to a new and potentially more volatile phase of the credit crisis.
Such an approach could mean beaten-down investment banks like Lehman Brothers Holdings Inc. and regional banks must now fend for themselves as they try to recover from billions of dollars in mortgage-related losses. That is bound to unnerve an already turbulent Wall Street and make investors even more anxious as they await financial companies’ earnings reports that are expected to be down a stunning 69 percent from a year ago when all the numbers are in.
Related articles and videos:
– More Than 300 US Banks to Fail, Says RBC Capital Markets Analyst
– Run on banks spells big trouble for US Treasury
– US: Total Crash of the Entire Financial System Expected, Say Experts
– The Dollar is doomed and the Fed will fail
– Fannie, Freddie insolvent, Poole tells Bloomberg
– Foreclosures Rose 53% in June, Bank Seizures Triple
– Small Banks: Billions in Troubled Construction Loans
– Financial market losses could top 1,600 billion dollars: report
– Dow suffers worst 1st half since ‘70
– Fortis Bank Predicts US Financial Market Meltdown Within Weeks
– Barclays warns of a financial storm as Federal Reserve’s credibility crumbles
– Jim Rogers: Avoid The Dollar At All Costs
– Ron Paul on Iran and Energy June 26, 2008
– Marc Faber: ‘Misleading’ Fed Should Let Banks Fail
– This recession could easily tip into a depression
And, for consumers already squeezed by tightening credit standards, it could mean getting a mortgage will become even harder.
Read moreFed: No more bailouts, except Fannie Mae and Freddie Mac
NEW YORK, July 13 (Reuters) – U.S. banks may fail in far greater numbers following the collapse of the big mortgage lender IndyMac Bancorp Inc, straining a financial system seeking stability after years of lending excesses.
More than 300 banks could fail in the next three years, said RBC Capital Markets analyst Gerard Cassidy, who had in February estimated no more than 150.
Related articles and video:
– Fed: No more bailouts, except Fannie Mae and Freddie Mac
– Run on banks spells big trouble for US Treasury
– US: Total Crash of the Entire Financial System Expected, Say Experts
– The Dollar is doomed and the Fed will fail
– Jim Rogers: Fannie Plan a `Disaster’; Goldman Says Sell
Banks face pressure as credit losses once concentrated in subprime mortgages spread to other home loans and debt once-thought safe. This has also led to investor worries about the stability of mortgage finance companies Fannie Mae and Freddie Mac; IndyMac is not related to either.
Read moreMore Than 300 US Banks to Fail, Says RBC Capital Markets Analyst
I have found the leaked information on this closed session of Congress in March, but the source was not really reliable.
Now, since there is more than enough proof that the economy is going down the toilet (US: Total Crash of the Entire Financial System Expected, Say Experts), I have come across this information again at another website and so I have finally decided to publish it.
It would be very wise to prepare yourself, no matter weather this is true or not.
Have a look at the “World Situation” and the “Solution“. – The Infinite Unknown
On March 13th 2008 there was a secret closed door meeting of The United States House Of Representatives in Washington. In the history of The United States this is only the fourth time a secret meeting was held by the house. Even though Representatives are sworn to secrecy by House Rules XVII, some of the members were so shocked, horrified, furious, and concerned about the future of America by what was revealed to them inside the secret meeting, that they have started to leak this secret information to independent news agencies around the world. The mass media said almost nothing about the secret meeting of the House, mentioning only one of the items being discussed. (The new surveillance techniques that are going to be used by the U.S. Government to watch all American citizens). The story was first released in a newspaper out of Brisbane, Australia revealing the contents of the secret U.S. Government meeting and plans for America including all of it’s citizens. Shortly there after, David J. Meyer from Last Trumpet Ministries found it and made it more available for the world to see.
Here is what was revealed:
Except for a few hundred thousand U.S. Patriots, most Americans have no clue what has really been going on within The United States over the past 100 years, and the sad thing is that most do not want to know the truth. The further you look into the rabbit hole, the deeper it gets. Go to any currency conversion site and convert U.S. dollars to Euros so you can see for yourself the massive decline of the dollar. Look at how much money is and has been spent on the Iraq War to date, ($12 billion per month). Look at our currency and when it stopped being backed by gold.
The Federal Reserve is not federal but a private bank who does not have Americans best interests at heart. We no longer have any manufacturing really based out of America and there is no way that our economy can survive this incredible strain very much longer. The IRS strong arms every American yearly with income taxes, yet there are no laws saying an income tax is to be paid.
The CIA is involved in everything from global drug trafficking and covert military missions, to assassinations around the world and including U.S. Soil. Look at JFK for instance. It did not take long after JFK announced that he was going disband the CIA that he was shot in Texas. America’s new StasiThe Department Of Homeland Security is and has been slowly eradicating our rights for a few years now. based organization called
House Bill H.R. 1955/S-1959 was read by the senate and then sent to DHS for some reason, but is now back and sure to pass. Once passed, this bill introduced by Jane Harman (D/CA), will be the proverbial last nail hammered into every American patriots coffin. H.R. 4279 or the Prioritizing Resources and Organization for Intellectual Property Act of 2008 which was recently passed by the U.S. House of Representatives, will give the government draconian powers to do just this. This legislation gives the government the power to seize property that facilitates the violation of intellectual property laws. The legislation also mandates the formation of a formal Intellectual Property Enforcement Division within the office of the Deputy Attorney General to enforce this insanity…
It has been revealed that F.E.M.A. has been building internment camps all over America granting Halliburton a massive $385 million dollar construction contract to make this happen. Most of these sites only need refurbished because they are mostly closed prisons, old WW2 internment camps still intact and other facilities taken over by the government. Some people have referred to them as F.E.M.A. Death Camps where the infamous Red list/Blue Lists will be used to decide who goes where.
Whether you believe that The NWO/Illuminati/Globalization is real or not, there is a lot of proof that exposes definite plans or plots by the rich, political and religious elite to bring on an era of the end times. It is almost like some individuals are trying to make bible prophecy come true in their own sick and twisted ways. Not to mention that the world only has about 10 to 15 years of drinking water left before the wars fought for oil today will be fought for water in the near future. It has been said that these powers want to depopulate the planet of over 30% of it’s human inhabitants in the coming years. Examine all of the executive orders that have been signed into place allowing the president to basically become dictator in control of all government from tribal to federal in the event of any national emergency.
If you did not know, In late 2006, Congress revised the Posse Comitatus Act and the Insurrection Act to make it far easier for a president to declare martial law. Those changes were repealed at the end of this January as part of Public Law 110-181 (HR 4986), the National Defense Authorization Act for Fiscal Year 2008 (signed into law by President Bush on January 28, 2008). Unfortunately it is not the great victory in which one might think because of the total militarization of all local and State police forces all across America.
Will there be martial law? Is martial law coming soon to America? When you see law enforcement being armed with automatic weapons, bullet proof vests and riot gear in small towns that have not had a murder or crime in years, then you have to ask yourself why.
The United States has more people locked up in prisons today than Russia and China combined. It comes out to one in every hundred Americans is behind bars. Our once great country that our ancestors fought and died for has become exactly the tyrants they were fighting. Fascists! When has America ever used words like Homeland? Never!
If you spend a few weeks reading all the info, watching the videos and following the links at The U.A.F.F., you will then have a better understanding of what has led to The Decline And Fall Of America. Remember that Knowledge is power! Learn, look, listen, read, share, prepare, train, stock up on food and water supply for one year.
Fill your pantry with non perishable foods, medicines, cooking oils, tinned meats and veggies. Flour, oats dried corn peas, beans and lentils.. Teach your self how to preserve food for storage. Check out your local potable/ drinking water supplies, non perfumed chlorine bleach is a good sterilizer for water, about 2 teaspoons full per 2 gallon bucket, stirred well and allowed to stand for at least 24 hours with a lid on it or until it no longer smells of bleach. Boiling water helps but it is not always enough to kill off the bacteria which can resist high temperatures.
(There are healthier ways to treat water – The Infinite Unknown)
Americans have been warned for years of the things to come, but have blindly looked away from the truth, which has been available for all to see. There are no more excuses not to prepare for the possible future. The time to act is now before it is too late.
Investors are fleeing from the U.S. stock market, Sending the Dow to Worst June Since Depression, looking for places to secure their wealth.
There is an unprecedented cash flow of ‘hot money’, which is usually defined as short-term global speculative funds moving among financial markets in search of the highest short-term return, moving into China:
Is China flooded with ‘hot money’ because of an expected meltdown in the U.S.?
– Fortis Bank Predicts US Financial Market Meltdown Within Weeks
We have seen the Dow suffering it’s worst 1st half since ‘70 accompanied by a lot of bad news for the economy like:
– US: Big Trouble for General Motors, Crysler and Ford
– America’s Aviation System About To Collapse
– Starbucks to cut as many as 12,000 positions
And now the corporations are cheating you at the supermarkets: America’s Shrinking Groceries
The Dollar is being destroyed by the Federal Reserve, which has created in the last three years 4 Trillion Dollars of new money out of thin air: Ron Paul on Iran and Energy June 26, 2008
Ron Paul is further warning that: This coming crisis is bigger than the world has ever experienced
and that: We are at the beginning of a huge Dollar bubble.
The US Federal Reserve intentionally created inflation and that is why its credibility has fallen “below zero” and that is why Barclays warns of a financial storm as Federal Reserve’s credibility crumbles.
More dire warnings:
– RBS issues global stock and credit crash alert
– Morgan Stanley warns of ‘catastrophic event’ as ECB fights Federal Reserve
– Central bank body warns of Great Depression
– Credit crisis expands, hitting all kinds of consumer loans
– How Low Can The Dollar Go? Zero Value
Investors like Jim Rogers are telling us to “Avoid The Dollar At All Costs” and have told us that the Federal Reserve will fail and that Bernanke should be fired (alhough that isn’t possible because of his contract), because he has created the worst recession in the end and thats why he said: “Abolish the FED” on CNBC 2008.03.12.
The Fed is only doing good for the big corporations on Wall Street. If you would continuously come close to bankruptcy, because you have irresponsibly wasted your money, who will continuously give you billions of Dollars and bail you out, because you might fail? So I agree totally with Marc Faber: ‘Misleading’ Fed Should Let Banks Fail.
Well those corporations are said to be to “Big to Fail”, but they eventually will fail, because the entire system will fail and the Dollar is being destroyed in the process and so the people will end up with nothing, because their life savings are worthless paper. You are already paying the price for this policy, but maybe you haven’t looked at it that way:
The Price Of Food: 2007 – 2008
What inflation really is, is a taxation on monetary assets. And guess who is paying for all of that?
I just love this video. A must see:
The Stock Market and the Monetary System are on the verge of collapse!
Read moreUS: Total Crash of the Entire Financial System Expected, Say Experts
Related articles and videos:
– Ron Paul: This coming crisis is bigger than the world has ever experienced
– Dow suffers worst 1st half since ‘70
– Fortis Bank Predicts US Financial Market Meltdown Within Weeks
– Barclays warns of a financial storm as Federal Reserve’s credibility crumbles
– Jim Rogers: Avoid The Dollar At All Costs
– Ron Paul on Iran and Energy June 26, 2008
– Marc Faber: ‘Misleading’ Fed Should Let Banks Fail
BEIJING, July 1 (Xinhua) — China has taken a series of increasingly aggressive measures in the past several months to blunt the impact of so-called “hot money,” amid the explosive growth of its foreign exchange reserves, which have soared beyond what can be explained by trade and investment flows.
The inflows have been so massive as to raise alarms over the country’s financial security.
According to the State Administration of Foreign Exchange (SAFE), as of the end of May, forex reserves stood at 1.797 trillion U.S. dollars.
During the first five months of 2008, forex reserves increased by 18.7 percent year-on-year, or 268.7 billion U.S. dollars, SAFE figures showed.
Where is all that money coming from, and where is it going?
HOW MUCH IS “HOT MONEY”?
What caught the attention of analysts was that forex reserves jumped at the same time as the current-account surplus and foreign direct investment (FDI) into the fixed-asset field declined year-on-year.
Set against the increased forex reserves in the first five months of this year, there was the 78.02 billion U.S. dollars represented by the trade surplus, which was down 8.6 percent year-on-year.
Another 42.78 billion U.S. dollars was connected with FDI in the first five months, which soared nearly 55 percent year-on-year. But FDI going into fixed assets (longer-term investment), actually fell 3.5 percent in the same period.
Jiang Zheng, a macro-economist at a Beijing-based securities firm, has closely tracked these figures and analyzed the data.
Deducting the trade surplus and the FDI, there was an unexplained 147.9 billion U.S. dollars in the forex reserve increase figure, which Jiang and numerous other analysts consider to be “hot money”, which is usually defined as short-term global speculative funds moving among financial markets in search of the highest short-term return.
The government doesn’t release official figures on this category of funds; in fact, it doesn’t even use the term “hot money”. So analysts can only make estimates.
Jiang said the “hot money” figures deduced by analysts might even be underestimates. “There is a tricky decline among the FDI figures, i.e. the drop of fixed-asset investment,” he explained.
“Foreign direct investment in the first five months soared about 55 percent. But strangely, fixed-asset FDI in the first five months fell 3.5 percent from last year’s figure,” Jiang said.
Jiang said it appeared that some speculative money had managed to move into China in the guise of FDI.
But there are many other channels for “hot money” to flow into China. These include falsified international trade with over-invoiced exports and underground private banks, according to Jiang.
Jiang and other analysts maintained that as much as 600 billion U.S. dollars in “hot money” had surged into the country, most of it after 2005.
Read moreIs China flooded with ‘hot money’ because of an expected meltdown in the U.S.?
He will introduce this statement as a special order and insert it into the Congressional Record next week. Fortunately, we have the opportunity to debut it first on the Campaign for Liberty blog. It reads as follows:
I have, for the past 35 years, expressed my grave concern for the future of America. The course we have taken over the past century has threatened our liberties, security and prosperity. In spite of these long-held concerns, I have days-growing more frequent all the time-when I’m convinced the time is now upon us that some Big Events are about to occur. These fast-approaching events will not go unnoticed. They will affect all of us. They will not be limited to just some areas of our country. The world economy and political system will share in the chaos about to be unleashed.
Though the world has long suffered from the senselessness of wars that should have been avoided, my greatest fear is that the course on which we find ourselves will bring even greater conflict and economic suffering to the innocent people of the world-unless we quickly change our ways.
America, with her traditions of free markets and property rights, led the way toward great wealth and progress throughout the world as well as at home. Since we have lost our confidence in the principles of liberty, self reliance, hard work and frugality, and instead took on empire building, financed through inflation and debt, all this has changed. This is indeed frightening and an historic event.
The problem we face is not new in history. Authoritarianism has been around a long time. For centuries, inflation and debt have been used by tyrants to hold power, promote aggression, and provide “bread and circuses” for the people. The notion that a country can afford “guns and butter” with no significant penalty existed even before the 1960s when it became a popular slogan. It was then, though, we were told the Vietnam War and a massive expansion of the welfare state were not problems. The seventies proved that assumption wrong.
Related articles and videos:
– Dow suffers worst 1st half since ‘70
– Fortis Bank Predicts US Financial Market Meltdown Within Weeks
– Barclays warns of a financial storm as Federal Reserve’s credibility crumbles
– Jim Rogers: Avoid The Dollar At All Costs
– Ron Paul on Iran and Energy June 26, 2008
– Marc Faber: ‘Misleading’ Fed Should Let Banks Fail
Read moreRon Paul: This coming crisis is bigger than the world has ever experienced
Citigroup forecasts that “gold is likely to regain $1,000/oz by end-08 and to work higher through 2009-2010.”
In their recent Gold Commodity Update, Citigroup metals analysts John H. Hill and Graham Wark also predicted that “longer term, we believe that gold is capable of doubling or tripling from current levels.”
The Citi global metals forecasts have an upward bias, at $906/$950/1000 average in 2008/09/10.
The analysts said “secular and seasonal factors favor gold” during the second half of this year. “We remain positive on gold, based on macro and supply/demand factors. The forces that have propelled gold for 5 years are firmly in place.”
During the second quarter of this year, gold has averaged $896/oz, up 34% from the same quarter of 2007 and down 3% from the first quarter of this year. “Following a series of downside fundamental tests gold appears to have found a floor, and quietly climbed back to $917/oz.”
“Despite extensive hand-wringing, the ‘floor in the dollar’ has inflicted minimal damage,” the analysts noted. “We believe the drivers of the gold bull market remain intact, heading into a favorable period.”
“We see gold as well-positioned heading into Autumn, when fabrication tends to heighten the market,” they added.
Related articles and videos:
– Dow suffers worst 1st half since ‘70
– Fortis Bank Predicts US Financial Market Meltdown Within Weeks
– Barclays warns of a financial storm as Federal Reserve’s credibility crumbles
– Jim Rogers: Avoid The Dollar At All Costs
– Ron Paul on Iran and Energy June 26, 2008
– Marc Faber: ‘Misleading’ Fed Should Let Banks Fail
The Dollar is being destroyed, Wall Street is collapsing, the U.S. are broke.
Of course Gold and Silver! will double and then triple.
Gold and Silver are the only safe haven in the coming meltdown of the financial markets.
It takes an extraordinary bright analyst to come to that conclusion!
More Information here: World Situation & Solution – The Infinite Unknown
Nevertheless, Hill and Wark warned, “It will be important for seasonal/volatility dampened fabrication demand to recover, before gold can move higher.” However, they added,” Longer term, we would not be surprised to see gold double from current levels as the global policy prescriptions for the credit crunch remain powerfully and uniformly re-flationary.”
Read moreCitigroup says long-term gold price could double or even triple
Related articles and videos:
– Fortis Bank Predicts US Financial Market Meltdown Within Weeks
– Barclays warns of a financial storm as Federal Reserve’s credibility crumbles
– Jim Rogers: Avoid The Dollar At All Costs
– Ron Paul on Iran and Energy June 26, 2008
– Marc Faber: ‘Misleading’ Fed Should Let Banks Fail
NEW YORK (Reuters) – The Dow and S&P 500 were little changed on Monday on the final trading day of the second quarter as record oil boosted energy shares, offsetting weak financial stocks amid nagging concerns of further credit losses.
But even with the pause on Monday, the Dow and S&P posted their worst one-month drop since September 2002. The Dow also suffered its worst first half since 1970.
The Nasdaq ended the session lower, hurt by a drop in the shares of Yahoo as it battles with shareholders after takeover talks with Microsoft fell apart.
They say that pictures speak a thousand words, so let’s start this with a picture:
Today, the Dow crashed through its eight-year support level at 11,750. There isn’t much below now to keep it from dropping all the way back down to the 7,500-range. What that will do to American investor psychology and worse, consumer confidence, and therefore spending, and therefore the economy, is only too apparent.
The gold-attack on Monday obviously didn’t take. Gold recovered the following day and powered up by $26 the very next day to close in NY at $911. On Friday, gold confirmed its breakout, which means there will be little holding it back – just like there is now very little that’s holding the Dow up.
Unsurprisingly, the US war machinery is in full swing at this time. Troop and military asset movements into the Iranian theater are nearly complete, the Israelis have flown their practice-attack of 100-plus fighter jets over the Mediterranean, and Congress has again prostrated itself before its banking-guild rulers who want total government (and therefore banking) of all economic activity.
Congress did this by passing the FISA Amendments Act of 2008 to give retroactive immunity to telcoms spying for the government, and by proposing a resolution (the already infamous H. Con. Res. 362) by which Congress demands that Bush completely blockade Iran in order to force it to stop enriching uranium. This, naturally, is a perfect setup for unleashing the long-planned bombing campaign on Iran. Congressmen know that Iran will not accede to these international demands.
End result: We will probably get another war because of all this, just like we got one back in 2002-03 when the Dow plunged into the chasm this recently broken support level has bridged for these past eight years (see chart above).
The problem is that this time, it is a bipartisan gang of US war mongers in our Congress who all appear hell-bent on forcing Bush to attack Iran with a preemptive strike, possibly even an unprovoked nuclear first strike – something that human history so far has not had to deal with.
It is also something that will cause the US to forfeit any legitimate claims of world leadership for the remainder of that history.
The War Currency
Wars are rarely fought over national security issues, as political leaders often claim. At rock bottom, they are mostly fought over economic issues.
Iraq and Iran (if Congress and the administration get their way) are the only two countries the US has ever attacked preemptively. They are also the only two oil-producing countries that ever went off the petrodollar. The alleged nuclear ambitions of a terrorist-sponsoring country cannot be the real reason for the planned attack – because terrorist-sponsor North Korea was not only allowed to develop nuclear weapons unmolested, it was even allowed to test-launch a potentially nuclear-tipped ICBM at the US without any military repercussions whatsoever.
There goes the “national security” rationalization for this planned attack.
This fact exposes the attacks for what they really are. tools of US monetary policy. The dollar has no real value internationally, save for the fact that the now militarily enforced necessity for countries to buy dollars in order to buy oil creates artificial demand.
The euro’s existence threatens all of this, now. Oil countries have a dollar-alternative in the euro, and so does the rest of the world. The euro is designed to not be quite as inflationary as the dollar is and has been. This is done by virtue of the ECB’s exclusive mandate of “price stability”, another word for inflation fighting.
Yet Another War Currency
BRUSSELS / AMSTERDAM (DFT) – Fortis expects within the next few days to weeks to complete the collapse of the U.S. financial markets.
That explains the bank insurers interventions of the series Thursday at dealing with € 8 billion.
“We are ready at the last minute. It goes in the United States much worse than thought, “said Fortis chairman Maurice Lippens, who maintains that CEO Votron to live. Fortis expects bankruptcies of 6000 U.S. banks that now lack coverage. “But Citigroup, General Motors, there begins a complete meltdown in the U.S..”
Fortis took yesterday € 1.5 billion with a share issue. At the end of last year was the Belgian-Dutch group € 13 billion of new shares for the takeover of ABN Amro, for which it paid € 24 billion. Lippens bases its concern on interviews with bankers. “Two months ago we knew not so bad that it is in America. And it will be much worse. We have a thick mattress needed for the next eighteen months to come when we can bring to ABN Amro. ”
Two weeks ago reported the U.S. investment bank and adviser to Fortis Merrill Lynch certainly € 6.2 billion in additional capital was needed. The VEB yesterday demanded clarification of Fortis: CEO Jean-Paul Votron stopped in late april Fortis maintains that after the purchase of ABN Amro does not need on the capital market. In one year € 30 billion in market capitalization destroyed. After Votron last confession kelderde the share price by 19.4%, although yesterday climbed by 4.4% to € 10.65.
The massive unrest around the bank insurers, especially with our neighbours in Belgium as a bomb broken. While the fuss arose in the Netherlands to the limited financial world, it is with our neighbours the call of the day. Not only is the bank dominates the streetscape, but by the mokerslag for the Belgian volksaandeel are also hundreds of thousands of small investors hit hard.
All Belgian newspapers opened yesterday with real rampenkoppen, where the free fall of the bank insurers was wide coverage. ‘Fortis crashes, “” Rampdag for Fortis’ and’ Fortis loses 5.3 billion, “opened three leading newspapers.
Read moreFortis Bank Predicts US Financial Market Meltdown Within Weeks
Vincent Quinones works on the floor of the New York Stock Exchange Wednesday after the Federal Reserve issued a mixed assessment of the economy. Yesterday, the Dow Jones industrial average closed down 358 points. (By Andrew Harrer — Bloomberg News)
So much for that second-half rebound.
Truth be told, that was always more of a wish than a serious forecast, happy talk from the Fed and Wall Street desperate to get things back to normal.
It ain’t gonna happen. Not this summer. Not this fall. Not even next winter.
This thing’s going down, fast and hard. Corporate bankruptcies, bond defaults, bank failures, hedge fund meltdowns and 6 percent unemployment. We’re caught in one of those vicious, downward spirals that, once it gets going, is very hard to pull out of.
Only this will be a different kind of recession — a recession with an overlay of inflation. That combo puts the Federal Reserve in a Catch-22 — whatever it does to solve one problem only makes the other worse. Emerging from a two-day meeting this week, Fed officials signaled that further recession-fighting rate cuts are unlikely and that their next move will be to raise rates to contain inflationary expectations.
Since last June, we’ve seen a fairly consistent pattern to the economic mood swings. Every three months or so, there’s a round of bad news about housing, followed by warnings of more bank write-offs and then a string of disappointing corporate earnings reports. Eventually, things stabilize and there are hints that the worst may be behind us. Stocks regain some of their lost ground, bonds fall and then — bam — the whole cycle starts again.
It was only in November that the Dow had recovered from the panicked summer sell-off and hit a record, just above 14,000. By March, it had fallen below 12,000. By May, it climbed above 13,000. Now it’s heading for a new floor at 11,000. Officially, that’s bear market territory. We’ll be lucky if that’s the floor.
In explaining why that second-half rebound never occurred, the Fed and the Treasury and the Wall Street machers will say that nobody could have foreseen $140 a barrel oil. As excuses go, blaming it on an oil shock is a hardy perennial. That’s what Jimmy Carter and Fed Chairman Arthur Burns did in the late ’70s, and what George H.W. Bush and Alan Greenspan did in the early ’90s. Don’t believe it.
Truth is, there are always price or supply shocks of one sort or another. The real problem is that the underlying fundamentals had gotten badly out of whack, making the economy susceptible to a shock. The only way to make things better is to get those fundamentals back in balance. In this case, that means bringing what we consume in line with what we produce, letting the dollar fall to its natural level, wringing the excess capacity out of industries that overexpanded during the credit bubble and allowing real estate prices to fall in line with incomes.
The last hope for a second-half rebound began to fade earlier this month when Lehman Brothers reported that it wasn’t as immune to the credit-market downturn as it had led everyone to believe. Lehman scrambled to restore confidence by firing two top executives and raising billions in additional capital, but even that wasn’t enough to quiet speculation that it could be the next Bear Stearns.
Since then, there has been a steady drumbeat of worrisome news from nearly every sector of the economy.
American Express and Discover warn that customers are falling further behind on their debts. UPS and Federal Express report a noticeable slowdown in shipments, while fuel costs are soaring. According to the Case-Shiller index, home prices in the top 20 markets fell 15 percent in April from the year before, and Fannie Mae and Freddie Mac report that mortgage delinquency rates doubled over the same period — and that’s for conventional home loans, not subprime. United Airlines accelerates the race to cut costs and capacity by laying off 950 pilots — 15 percent of its total — as a number of airlines retire planes and hint that they may delay delivery or cancel orders of new jets from Boeing and Airbus. Goldman Sachs, which has already had to withdraw its rosy forecast for stocks, now admits it was also too optimistic about junk bond defaults, and analysts warn that Citigroup and Merrill Lynch will also be forced to take additional big write-downs on their mortgage portfolios.
June 19 (Bloomberg) — High-net worth individuals, those coveted financial-services customers with at least $2 million to invest, are shifting assets from brokerages and large global banks to smaller, more conservative alternatives.
“For the first time in my career, I saw concern about the location of one’s assets,” said Robert Balentine, the head of Wilmington Trust Corp.‘s investment management group. “We’ve seen tangible evidence of very wealthy clients shifting assets out of brokerage firms in great numbers.”
Trust companies like Wilmington are benefiting from record subprime-infected losses at companies led by Zurich-based UBS AG, the world’s biggest money manager for the rich. UBS clients probably withdrew a net $39 billion during the past three months after the company reported more than $38 billion of writedowns and credit-market losses in the past year, London-based analysts at JPMorgan Chase & Co. estimate.
Clients may say “if UBS can’t manage its own capital, then what the hell are they going to do with mine?” said David Maude, a financial services consultant in Verona, Italy, who calls UBS the “Rolls Royce” of the industry. “It does tarnish their reputation, certainly.”
UBS contacted 2.5 million Swiss consumer and wealth- management customers last month after losing 11.5 billion francs ($10.9 billion) in the first quarter and seeing a net withdrawal of 12.8 billion francs in its asset and wealth-management units.
The company has responded with “proactive, ongoing communication” with clients, said Jim Pierce, co-head of UBS’s U.S. Wealth Management Advisory Group, in an e-mailed response to questions. UBS is “willing to have the difficult conversations,” Pierce said.
U.S. Market
Read moreWealthy Investors Shift Funds From Global Banks to Reduce Risks
The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.
“A very nasty period is soon to be upon us – be prepared,” said Bob Janjuah, the bank’s credit strategist.
(Got Gold and Silver? More under “Solution” – The Infinite Unknown)
A report by the bank’s research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as “all the chickens come home to roost” from the excesses of the global boom, with contagion spreading across Europe and emerging markets.
Such a slide on world bourses would amount to one of the worst bear markets over the last century.
RBS said the iTraxx index of high-grade corporate bonds could soar to 130/150 while the “Crossover” index of lower grade corporate bonds could reach 650/700 in a renewed bout of panic on the debt markets.
“I do not think I can be much blunter. If you have to be in credit, focus on quality, short durations, non-cyclical defensive names.
“Cash is the key safe haven. (No way!!! Yet it is still good to have some cash. – The Infinite Unknown)
This is about not losing your money, and not losing your job,” said Mr Janjuah, who became a City star after his grim warnings last year about the credit crisis proved all too accurate.
RBS expects Wall Street to rally a little further into early July before short-lived momentum from America’s fiscal boost begins to fizzle out, and the delayed effects of the oil spike inflict their damage.
“Globalisation was always going to risk putting G7 bankers into a dangerous corner at some point. We have got to that point,” he said.
US Federal Reserve and the European Central Bank both face a Hobson’s choice as workers start to lose their jobs in earnest and lenders cut off credit.
The authorities cannot respond with easy money because oil and food costs continue to push headline inflation to levels that are unsettling the markets. “The ugly spoiler is that we may need to see much lower global growth in order to get lower inflation,” he said.
“The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets,” he said.
Downward spiral: Chinese stocks have slumped by almost 50pc since October while Mumbai’s BSE index has lost 27pc of its value
Central banks across much of Asia, Latin America, and Eastern Europe will soon have to jam on the breaks or risk a serious crisis as inflation spirals into the danger zone. As the stark reality becomes ever clearer, this year’s correction in emerging market bourses and bond markets has now accelerted into a full-fledged rout.
Shanghai’s composite index touched a fourteen-month low of 2,900 yesterday. It follows moves this week by the central bank raised reserve requirement yet again, draining a further $60bn from the banking system. Chinese stocks have now slumped by almost 50pc since peaking in October.
In India, Mumbai’s BSE index has lost 27pc of its value as the exodus of foreign funds accelerates. The central bank has raised rates to 8pc to curb inflation and halt a run on the rupee, but critics still say the country waited too long to tackle overheating. The current account deficit has shot up to near 3.5pc of GDP. A plethora of subsidies has pushed the budget deficit to 9pc of GDP.
Russia, Brazil, India, Vietnam, South Africa, Indonesia, Nigeria, and Chile – among others – have all had to raise interest rates or tighten monetary policy in recent days. Most are still behind the curve.
“The inflation genie is out of the bottle: easy money is the culprit,” said Joachim Fels, chief economist at Morgan Stanley.
“Weighted global interest rates are 4.3pc, while global inflation is above 5pc. The real policy rate in the world is negative,” he said
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The currencies of Korea, Thailand, the Philippines, and Malaysia have come under pressure this week as investors scramble for dollars in moves that echo the East Asia crisis in 1997-1998. Several countries have had to intervene to slow the currency slide.
The sudden shift in sentiment appears to follow comments by Ben Bernanke and Tim Geithner, the heads of the US Federal Reserve and the New York Fed, leaving no doubt that Washington has lost patience with the crumbling dollar.
It is almost unprecedented for Fed officials to take a public stand on the Greenback. The orchestrated move is clearly aimed at halting the vicious circle in the oil markets, where crude prices are feeding off dollar weakness – with multiples of leverage.
The “strong dollar” campaign has switched into high gear. US Treasury Secretary Hank Paulson has conducted an aggressive lobbying drive behind the scenes in the Middle East and Asia. America’s friends and foes have been left in no doubt that the enormous strategic might of the United States is now firmly behind the currency. From now on, they cross Washington at their peril.
The markets are now pricing in two rate rises by the Fed this year. Investors no longer doubt that the US – and Europe – will do what is needed to restore credibility. This display of resolve has suddenly switched the focus to the very different universe of emerging markets, where a host of countries have repeated the errors of the 1970s.
Richard Cookson, a strategist at HSBC, advises clients to slash their holdings in these regions.
“Inflation looks like a very real problem in Asia, and the risk is that investors will lose faith in the region’s currencies. Although markets have fallen savagely from their peaks, they’re still looking pricey. We’ re lopping exposure even further, to zero,” he said.
“Where to put the money? We think corporate debt is stunningly cheap compared with equities. Seven-year to ten-year ‘BBB’ [rated] corporate bonds in the US haven’t been this cheap since the Autumn of 2002,” he said.
“Until and unless policy makers in the emerging world – especially those in China – tighten policy dramatically, the inflation rates are unlikely to fall much. Our guess is that most don’t have much will to tighten pre-emptively,” he said.
Russia’s inflation is 15.1pc, yet interest rates are 10.75pc. Vietnam’s inflation is 25pc; rates are 12pc. Fitch Ratings has put the country on negative watch and warns of brewing trouble in the Ukraine, Kazakhstan, the Balkans, and the Baltic states. The long-held assumption that emerging markets are strong enough to shrug off US troubles is now facing a serious test. The World Bank has slashed its global growth forecast to 2.7pc this year. The IMF and the World Bank define growth below 3pc a “global recession”.
There is a dawning realization that China is facing a major storm as inflation (7.7pc), the rising yuan (up 5pc this year), soaring oil prices, and an economic downturn in the key export markets of North America and Europe all combine to crush profit margins. China uses five times as much energy as the US to produce a unit of GDP. It is acutely vulnerable to the energy crisis.
A quarter of the 800 shoe factories in the Guangdong region have shut down in recent months, and several thousand textile workshops are battling to stay afloat. Hong Kong’s industry federation has warned that 10,000 firms operating in the South of China may soon go out of business.
By Ambrose Evans-Pritchard
Last Updated: 13/06/2008
Source: Telegraph
A group called the Gold Anti-Trust Action Committee claims that the U.S. government has defrauded the American people out of the nation’s wealth. Specifically, the group claims that the U.S. has secretly sold, leased or otherwise frittered away half of its entire gold reserves to pay for past military adventures abroad and other ill-conceived actions. Furthermore, the group claims that the government has intentionally covered up this loss of gold reserves through accounting fraud.
Are they right?
Well, as described by Darryl Robert Schoon !!! in his book “How to Survive the Crisis and Prosper in the Process”:
Economics is not rocket science. Neither is power.
Depressions are monetary phenomena caused by central bank issuance of excessive credit. In 1913, the newly created US central bank, the Federal Reserve, began issuing credit-based money in the US. Within ten years, the central bank flow of credit ignited the 1920s US stock market bubble; and shortly thereafter, following the collapse of the bubble in 1929, the world entered its first Great Depression in 1933.
Investment banks are the undoing of central banking. While all banks, central, commercial and investment, view credit as the opportunity to exploit society’s growth and productivity, investment bank exploitation of growth and productivity exposes society to extreme risks—for investment banks use society’s savings to make their volatile and speculative bets.
The speculative risks undertaken by investment banks is done by leveraging the savings of society; and, when investment bank bets are sufficiently large enough and the bets go bad—as they inevitably do as the luck of investment bankers is due more to their proximity to credit than to their ability to foresee the future—it is society that will bear the brunt of the pain in the loss of its savings.
Inevitably, investment bankers cannot resist the temptations of excessive credit and, like the buyers of teaser-rate home mortgages, they will always overreach themselves—an overreaching that will have disastrous consequences for the society whose savings they bet.
The leveraged overreaching by investment banks in the 1920s caused the Great Depression of the 1930s and their more recent overreaching in this decade, the 2000s, is about to cause another Great Depression in the next, the 2010s.
WASHINGTON (AP) — A rising tide of late mortgage payments and home foreclosures poses considerable dangers to the national economy, Federal Reserve Chairman Ben Bernanke warned anew as he urged Congress to take additional steps to alleviate the problems.
“High rates of delinquency and foreclosure can have substantial spillover effects on the housing market, the financial markets and the broader economy,” Bernanke said Monday in a dinner speech to Columbia Business School in New York. “Therefore, doing what we can to avoid preventable foreclosures is not just in the interest of lenders and borrowers. It’s in everybody’s interest,” he said.
Some 1.5 million U.S. homes entered into the foreclosure process last year, up 53 percent from 2006, Bernanke said. The rate of new foreclosures looks likely to be even higher this year, he said.
Read moreBernanke urges more action to stem home foreclosure crisis
We need to overturn food policy, now!
GRAIN
For some time now the rising cost of food all over the world has taken households, governments and the media by storm. The price of wheat has gone up by 130% over the last year.[1] Rice has doubled in price in Asia in the first three months of 2008 alone,[2] and just last week it hit record highs on the Chicago futures market.[3] For most of 2007 the spiralling cost of cooking oil, fruit and vegetables, as well as of dairy and meat, led to a fall in the consumption of these items. From Haiti to Cameroon to Bangladesh, people have been taking to the streets in anger at being unable to afford the food they need. In fear of political turmoil, world leaders have been calling for more food aid, as well as for more funds and technology to boost agricultural production. Cereal exporting countries, meanwhile, are closing their borders to protect their domestic markets, while other countries have been forced into panic buying. Is this a price blip? No. A food shortage? Not that either. We are in a structural meltdown, the direct result of three decades of neoliberal globalisation.
Farmers across the world produced a record 2.3 billion tons of grain in 2007, up 4% on the previous year. Since 1961 the world’s cereal output has tripled, while the population has doubled. Stocks are at their lowest level in 30 years, it’s true,[4] but the bottom line is that there is enough food produced in the world to feed the population. The problem is that it doesn’t get to all of those who need it. Less than half of the world’s grain production is directly eaten by people. Most goes into animal feed and, increasingly, biofuels – massive inflexible industrial chains. In fact, once you look behind the cold curtain of statistics, you realise that something is fundamentally wrong with our food system. We have allowed food to be transformed from something that nourishes people and provides them with secure livelihoods into a commodity for speculation and bargaining. The perverse logic of this system has come to a head. Today it is staring us in the face that this system puts the profits of investors before the food needs of people.