BIS in 2007 - World on brink of 1930s like depression

[TonyGosling]

Bank of International Settlements: Credit Boom May Spark Depression
Monday, June 25, 2007

The Bank of International Settlements (BIS) is warning that the global economy could be on the brink of a major depression similar to the one that passed in the 1930s.

The BIS said that years of loose monetary policy have fueled a dangerous credit bubble leaving the global economy more vulnerable to an economic catastrophe than is generally understood.

http://www.newsmax.com/money/archives/st/2007/6/25/154818.cfm
http://www.bilderberg,org/bis.htm

In its 77th Annual Report for the financial year April 1, 2006-March 31, 2007 that was submitted to the BIS' annual general meeting held in Basel on June 24, the BIS - which one source described as "the ultimate bank of central bankers" - noted that the Great Depression that began in 1929 caught many off guard and unprepared.........(more)

[Disco_Destroyer]

lol credit boom ay? not a design by elites to instill fear and panic! and probably to create the willing for the next draught!

[TonyGosling]

It is satisfying when I see someone on the other side of the world who I've a lot of respect for come to the same conclusion. Never mind all the distractions about aliens, lizards and the like. This is going to affect every person on the planet. And the elite will scoop up a fortune at the same time. El diablo, the devil, the divider, will divide rich and poor like never before. Sounds like the opening words of my latest hit single. Only trouble is if it got to Number 1 it would precipitate a global meltdown because the whole global economy is based upon nothing but blind faith in bankers. Not suprising some people like me still wind up going to church, God bless you all!!

Loads more on the coming economic collapse here - from the annals of Mike Rivero

US Banking System Faces Imminent Collapse
http://www.wakeupfromyourslumber.com/node/2322

[mark_e]

i am by no means an accounts or financially orientated person, but i have felt for some years now that the level of credit are just unsustainable. where is all this money - it doesn't exist - it is mostly just a concept as it is not linked to anything. particularly interest. a bar of gold doesn't get bigger just because you lend it to someone.

In fact my idea about the concept of an 'end time event' or beginning of new era starting at the end of 2012 (as predicted by the Mayan culture and many others) has a lot to do with the collapse of the global financial systems, probably precipitated by an energy crisis / peak oil announcement.

[wepmob2000]

[TonyGosling]

And the Kennedy assassination got an excellent airing this morning on BBC Radio 4! Was Kennedy assassinated for economic reasons?
Brilliant American economist Richard Parker on Start The Week this morning talking about precicely this issue:

Economics as religion - as a system of faith, trust and belief.... and here he is

[TonyGosling]

Richard C. Cook is the author of “We Hold These Truths: The Hope of Monetary Reform,” scheduled to appear by September 1, 2007. A retired federal analyst, his career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, and NASA, followed by twenty-one years with the U.S. Treasury Department.

The Crashing U.S. Economy Held Hostage
Our Economy is on an Artificial Life-support System
http://www.globalresearch.ca/index.php?context=va&aid=6239
by Richard C. Cook
Global Research, July 7, 2007

Remember when the U.S. was the world’s greatest industrial democracy? Barely thirty years ago the output of our producing economy and the skills of our workforce led the world.

What happened? It’s hard to believe that in the space of a generation our character and capabilities just collapsed as, for example, did our steel and automobile industries and our family farming. What then are the causes of the decline?

Here’s how I would put it today: our economy is on an artificial life-support system, a barely-breathing hostage in a lunatic asylum. That asylum is the U.S. and world financial systems which are on the verge of collapse.

The inmates are the world’s central bankers, along with most of the financial magnates big and small. The fact is that the economy of much of the world is in a decisive downward slide which the financiers cannot stop because the systems they operate are the primary cause. As often happens, the inmates rule the asylum.

The problems aren’t confined to the U.S. Unemployment worldwide is increasing, debt is rampant, infrastructures are crumbling, and commodity prices are rising.

In such an environment, crime, warfare, terrorism, and other forms of violence are endemic. Only the most naïve, self-centered, and deluded jingoist could describe such a scenario in terms of the freedom-loving Western democracies being besieged by the “bad guys.”

Rather what is happening highlights the growing failures of Western globalist finance whose impact on political stability has been so corrosive. As many responsible commentators are warning, we are likely to see major financial shocks within the next few months. The warnings are even coming from high-flying institutional players like the Bank of International Settlements and the International Monetary Fund.

We may even be seeing the end of an era when the financiers ruled the world. At a certain point, governments or their military and bureaucratic establishments are likely to stop being passive spectators to the onrushing disorder. It is already happening in Russia and elsewhere.

The countries that will be least able to master their own destiny are those like the U.S. where governments have been most passive to economic decomposition from actions of their financial sectors. The financiers are the ones who for the last generation have benefited most from economies marked by privatization, deregulation, and speculation, but that may be about to change. Whether the change will be constructive or catastrophic is yet to be seen.

THE HOUSING BUBBLE SETS THE STAGE FOR THE U.S. COLLAPSE

Within the U.S., foreign investors, above all Communist China, have been propping up our massive trade and fiscal deficits with their capital. To keep them happy, interest rates—after six years of “cheap credit”—must now be kept relatively high. Otherwise the Chinese, et.al., might bail-out, leaving us to fend for ourselves with our hollowed-out shell of an economy.

Even so, these investors are increasingly uneasy with their dollar holdings and are bailing out anyway. Foreign purchase of U.S. securities has plummeted. And our debt-laden economy, where our manufacturing base has been largely outsourced, is no longer capable of providing our own population with a living by utilizing our own productive resources.

For a while we were floating on the housing bubble, but those days are now history when, according to a Merrill-Lynch study, the artificially pumped-up housing industry, as late as 2005, accounted for fifty percent of U.S. economic growth.

As everyone knows, the Federal Reserve under Chairman Alan Greenspan used the housing bubble, like a steroid drug, to pump liquidity into the economy. This worked, at least for a while, because consumers could borrow huge amounts of money at relatively low interest rates for the purchase of homes or for taking out home equity loans to pay off their credit cards, finance college education for their children, buy new cars, etc.

When the final history of the housing bubble is written, its beginnings will be dated as early as 1989-90, when credit restrictions on the purchase of real estate first began to be eased. According to mortgage industry insiders interviewed for this article, they began to be taught the methods for getting around consumers’ weak credit reports and selling them homes anyway in the mid to late 1990s.

The Fed started inflating the housing bubble in earnest around 2001, after the collapse of the dot.com bubble, which failed with the stock market decline of 2000-2002. Then, over a trillion dollars of wealth, including working peoples’ retirement savings, simply vanished.

Also according to mortgage specialists, it was in March 2001, two months after George W. Bush became president, that a “wave of intoxicated fraud” started. Mortgage companies began to be instructed, by the creditors/lenders, on how to package loan applications as "master strokes of forgery," so that completely unqualified buyers could purchase homes.

There could not have been a sudden onset of industry-wide illegal activity without direction from higher-up in the money chain. It could not have continued without reports being filed by whistleblowers with regulatory agencies. Today the government is prosecuting mortgage fraud, but they certainly had to know about it while it was actually going on.

The bubble was coordinated from Wall Street, where brokerages “bundled” the “creatively-financed” mortgages and sold them as bonds to retirement and mutual funds and to overseas investors. Portfolio managers were directed to buy subprime bonds as other bonds matured. It’s the subprime segment of the industry that has now collapsed, triggering, for instance, the recent highly-publicized demise of two Bear Stearns hedge funds.

And it’s not just lower-income home purchasers who are affected. The Washington Post has reported that for the first time in living memory foreclosures are happening in Washington’s affluent suburban neighborhoods in places like Fairfax, Loudon, and Montgomery Counties.

The subprime bonds were known to be suspect. One reason was that they were based on adjustable rate mortgages that were actually time bombs, scheduled to detonate a couple of years later with monthly payments hundreds of dollars a month higher than when they were written. Many of these mortgages will reset to higher payments this October.

Purchasers were lied to when they were told they could re-sell their homes in time to escape the payment hikes. Now the collapse of the market has made further resale at prices high enough to escape without losses impossible.

One way the system worked was for mortgage lenders to maximize the “points” buyers were required to finance, making the mortgages more attractive to Wall Street. Of course bundling and selling the mortgages relieved the banks which originated the loans from exposure, pushing a considerable amount of the risk onto millions of small investors. This was in addition to the normal sale of mortgages to quasi-public agencies like Freddie Mac and Fannie Mae.

Was it a scam? Of course. Did the Federal Reserve know about it? They had to. Did Congress exercise any oversight? No.

What did the White House know?

Amy Gluckman, an editor of Dollars and Sense, reported in the November/December 2006 issue: “During the Clinton administration, Greenspan was relatively ‘unembedded’—averaging only one meeting per month at the White House….

“But when George W. Bush moved into 1600 Pennsylvania Ave., Greenspan’s behavior changed. During 2001, he averaged 3.3 White House visits a month, more than triple his rate under Clinton and much more often with high-level officials like Vice President Cheney. His visits rose to 4.6 a month in 2002 and 5.7 in 2003.

“Whatever White House officials were whispering in Greenspan’s ear, it worked: Greenspan abruptly changed his tune on tax cuts, lending critical support to Bush’s massive 2001 and 2003 tax giveaways, and he loosened the reins by cutting Fed-controlled interest rates repeatedly beginning in January 2001, a gift to the Republicans in power.”

Along the way, the bubble caused housing prices to inflate drastically, which officialdom touted as economic “growth.” Even today, periodicals like Barron’s naively boast that this inflation boosted American’s “wealth.”

But this source of liquidity for everyday people has been maxed out, like our credit cards, and there is nothing to replace it. There is no cash cushion anymore, because years ago people stopped earning enough money for personal or household savings.

As purchasers lose their homes to foreclosure, the real estate is being grabbed at bankruptcy prices by the banks and by any other investors with ready money. Whole neighborhoods of cities like Cleveland or Atlanta are turning into boarded-up ghost towns.

What we are seeing are the results of an economic crime on a fantastic scale that implicates the highest levels of our financial and governmental establishments. It spanned three presidential administrations—Bush I, Clinton, and Bush II—though the worst of it came with the surge of outright lending fraud after 2001.

As usual when hypocrisy is rampant only the small fry are being called to account. Commentators, including a sleepwalking Congress, have self-righteously railed at consumers who got in over their heads. The Mortgage Bankers Association is even lobbying Congress to allocate $7 million more to the FBI to go after the supposedly rogue brokers within their own industry who are being scapegoated.

THE BUBBLES ARE ONLY SYMPTOMS

But there’s much more to it than that. These bubbles are symptoms. They are created because our wage and salary earners lack purchasing power due to stagnant incomes and various structural causes. These causes include the outsourcing of our manufacturing industries to China and other cheap labor markets and the super-efficiency of the remaining U.S. industry which is able to manufacture products with ever-fewer workers.

Also, our farming, mining, and other resource-based industries are in a long-term slide. This and the decline of hard manufacturing have been going on since our oil production peaked in the 1970s, followed by the Federal Reserve-induced recession of 1979-83. Next came the deregulation of the financial industry. It was all part of the economic disintegration that led to today’s “service economy.”

Now, for the first time in modern U.S. history, there are no new economic engines at all. The last real engine was the internet which has now reached maturity with marginal players being weeded out.

Our biggest sources of new private-sector jobs today are food service, processing of financial paperwork, health care for the growing numbers of retirees, and menial low-paying jobs, like landscaping and building maintenance. These are increasingly being performed by immigrants who are also underpricing U.S. citizens in many service jobs like childcare and auto repair.

Today the rank-and-file of our population must increasingly turn to borrowing in order to survive. Only the banks and the credit card companies are the beneficiaries. The total societal debt for individuals, businesses, and government is over $45 trillion and climbing. This is happening even while the real value of wages and salaries is decreasing.

What I have just been saying is bad enough, but here’s where the real lunacy enters in.

A major factor connected to the decline in the value of employee earnings is dollar devaluation in the overarching financial economy due to the proliferation of huge quantities of bank credit being used to keep the stock market afloat and to fuel the speculative games of equity, hedge, and derivative funds.

In other words, while our factories continue to shut down, the Wall Street gambling casino—like its Las Vegas counterpart—is running full-bore, 24/7. This, along with financing of the massive federal deficit, is what critics are talking about when they speak of the Federal Reserve “printing money.”

The main growth factors for federal spending are Middle East war expenditures and interest on the national debt. But within the private sector it’s leveraged loans to businesses which The Economist recently said “mirror….interest-only and negative-amortization mortgages” in the subprime market. But here’s the big difference: in the leveraged business economy, the amount of assets at stake are even greater than with the housing bubble.

The financial world, which Dr. Michael Hudson calls the FIRE economy—Finance, Insurance, and Real Estate—has been producing millionaires and billionaires among those who know how to play the game.

The Wall Street hedge funds stand out as the most irresponsible financial scams in history. Unregulated and secretive, they account for a third of all stock trades, own $2 trillion in assets, and pay their individual managers over $1 billion a year. Think about this the next time someone you know has their job outsourced to China or when his adjustable rate mortgage resets and drives up his monthly house payment past the level of affordability.

The hedge funds borrow huge sums from the banks which generate loans under their Federal Reserve-sanctioned fractional reserve privileges. Often this money is used by the hedge funds to “short the market,” thereby earning profits when stock prices decline.

In other words, the hedge funds and their banking enablers use banking leverage to bet against the producing economy. In doing so, they may actually drive stock prices down, causing ordinary investors to lose a portion of their own wealth. Can this be called anything other than a crime?

The livelihood of much of the U.S. workforce and perhaps half of the rest of the world’s population—maybe three billion people—is being threatened by such financial lawlessness. The justification that was first used for financial deregulation and tax cuts for the rich was that the trickle-down effect of wealthy peoples’ earnings would spill over to the rank-and-file.

The Reagan administration ushered in these policies in the 1980s under the heading of “supply-side economics.” But the opposite has happened. The system has institutionalized an increasingly stratified worldwide culture of haves and have-nots.

THE ROOT CAUSE OF THE CATASTROPHE

How did today’s looming tragedy come to pass?

Looking for causes is like peeling an onion. What we are really seeing are the terminal throes of a failed financial system almost a century old. It’s happening because, since the creation of the Federal Reserve System in 1913—even during the period of the New Deal with its Keynesian economics aimed at full employment—our economy has been based almost entirely on fractional reserve banking.

This means that under the regime of the world’s all-powerful central banking systems, money is brought into existence only as debt-bearing loans. Interest on this lending tends to grow exponentially unless overtaken by real economic growth.

Remember that every instance of bank lending, from purchase of Treasury Bonds, to credit cards, to home mortgages, to billion-dollar loans to hedge funds for leveraged buyouts or sheer speculation, must eventually be paid back somewhere, somehow, sometime, by somebody, with interest. In the end, it all comes back to people who work for a living, whether in the U.S. or elsewhere, because that is the only way the world community ever creates real wealth.

In an anemic economy like that of the U.S., growth cannot catch up with interest in a deregulated financial marketplace where interest rates are high. Rates may not seem high compared with, say, the twenty percent-plus rates of the early 1980s, but they are high in an economy with, at best, a two percent GDP growth rate.

And they have been high on average since the 1960s, as the banking industry became increasingly deregulated. Interestingly, since 1965, the U.S. dollar has lost eighty percent of its value, which tends to validate the contention by some observers that higher interest rates not only do not reduce inflation, as the Federal Reserve contends, but actually cause it.

The situation today is worse in many respects than 1929, because the debt “overhang” vs. real economic value is much higher now than it was then. The U.S. economy was in far better shape in the 1920s, because so much of our population was gainfully employed in factories or on farms.

The question is not when will the system start to come down, because this has already begun. It’s shown most clearly by the fact that according to Federal Reserve data, M1, the part of the money supply most readily available for consumer purchases, is not only lagging behind inflation but has actually decreased in eleven of the last twelve months. This means that the producing economy is already in a recession.

The federal government is trying to figure out what to do. Their biggest concern is that foreign investors have started to pull out of dollar-denominated markets.

The government’s “plunge protection team”—known officially as the President’s Working Group on Financial Markets—is trying to engineer what they call a “soft landing.” It’s been likened to the process by which you cook a frog in a pot where you raise the temperature one degree a day. The frog doesn’t hop out because the heat goes up gradually, but before long it’s too late. The frog has been cooked.

Even if the plunge protection team succeeds, and the frog cooks slowly, there will be a massive de facto default on dollar-denominated debt and a long-term degradation of the U.S. standard of living. The inside word is that we are likely to see major monetary shocks and a possible stock market crash as early as December 2007.

The worst off will be people locked into retirement funds which have a heavy load of mortgage-related securities. Entire investment portfolios are likely to disappear overnight.

The banks, along with the bank-leveraged equity and hedge funds, are preparing for the biggest fire sale in at least a generation. Insiders are going liquid to get ready. If you think Enron was “the bomb,” you won’t want to miss this one.

WHAT CAN BE DONE?

There are so many flaws in the system that it’s time for real change.

As I have been pointing out in articles over the last several months, the key to a rational solution would be immediate monetary reform leading to a fundamental shift in how the world conducts its financial business. It would mean taking control of the world’s economy out of the hands of the private bankers and giving it back to democratically elected governments.

I spent twenty-one years working for the U.S. Treasury Department and studying U.S. monetary history. For much of our history we were a laboratory for diverse monetary systems.

During and after the Civil War (1861-5) we had five different sources of money that fueled our economy. One was the Greenbacks, an extremely successful currency which the government spent directly into circulation. Contrary to financiers’ propaganda, the Greenbacks were not inflationary.

Another was gold and silver coinage and specie-backed Treasury paper currency. The third was notes lent into circulation by the national banks. The fourth was retained earnings—individual savings and business reinvestment of profits—which was the primary source of capital for industry. The fifth was the stock and bond markets.

After the Federal Reserve Act was passed by Congress in 1913, the banks and the government inflated the currency through war debt and destroyed most of the value of the Greenbacks and coinage. The banks never entirely displaced the capital markets but eventually took them over during the present-day era of leveraged mergers, acquisitions, and buyouts, while the Federal Reserve created and deflated asset bubbles.

The banking system which rules the economy through the Federal Reserve System has produced the crushing debt pyramid of today. The system is a travesty. Banks, which can be useful in facilitating commerce, should never have this much power. Many intelligent people have called for the Federal Reserve to be abolished, including former chairmen of the House banking committee Wright Patman and Henry Gonzales and current Republican presidential candidate Ron Paul.

Some might call such a program a revolution. I prefer to call it a restoration—of national sovereignty. Central to the program would be the elimination of the Federal Reserve as a bank of issue and restoration of money-creation to the people’s representatives in Congress. This is what our Constitution says too. It’s the system we had before 1913.

THE MONETARY PRESCRIPTION

The fundamental objectives of monetary policy should be to secure a healthy producing economy and provide for sufficient individual income. The objectives should not be to produce massive profits for the banks, fodder for Wall Street swindles, and a blank check for out-of-control government expenditures.

Note I referred to income. I did not say “create jobs.” That is the Keynesian answer, because Keynes was a collectivist, and the main thing collectivists like to come up with is to give everyone more work to do, even if it’s just grabbing a shovel and digging ditches like they did with the WPA during the Depression.

It’s what President Clinton did with his welfare-to-work program that threw hundreds of thousands of mothers off the welfare rolls and into a job market where sufficient work at a living wage did not exist. It’s another reason the government is constantly borrowing more money to fuel the military-industrial complex by creating more military, bureaucratic, and contractor jobs.

Back to income. The idea of “income,” as opposed to “jobs,” is a civilized and humane idea. When are we going to realize that everyone doesn’t need a paying job in order for an industrial economy to provide all with a decent living? When are we going to realize that the productivity of the modern economy is part of the heritage of all of us, part of the social commons?

Why can’t mothers have the choice of staying home with the kids like they could a generation ago? Why can’t some people choose to do eldercare? Why can’t others comfortably go into lower-paying occupations like teaching or the arts? Why can’t some just opt to study or travel for a while or learn new skills or start a business without facing financial ruin as they often must today? Why can’t retirees enjoy their retirement instead of having to stay in the job market or worrying about Social Security going broke?

The U.S. and world economies are on the brink of collapse due to the lunacy of the financial system, not because we can’t produce enough.

Contrary to so many doomsayers, the mature world economy is capable of providing a decent living for everyone on the planet. It cannot because the monetary equivalent of its bounty is skimmed by interest-bearing debt.

These are things that monetary reformers have known about for decades. The first steps within the U.S. would be 1) a large-scale cancellation of debt; 2) a guaranteed income for all at about $10,000 a year, not connected to whether a person has a job; 3) an additional National Dividend, fluctuating with national productivity, that would provide every citizen with their rightful share in the benefits of our incredible producing economy; 4) direct spending of money by the government for infrastructure and other necessary costs without resort to taxation or borrowing; 5) creation of a new system of private lending to businesses and consumers at non-usurious rates of interest; 6) re-regulation of the financial industry, including the banning of bank-created credit for speculation, such as purchase of securities on margin and for leveraging buyouts, acquisitions, mergers, hedge funds, and derivatives; and 7) abolishment of the Federal Reserve as a bank of issue with retention of its functions as a national financial transaction clearinghouse.

While these proposals are basically simple, the overall program is so different from what we have today with our financier-controlled system that it takes careful reading and a great deal of thought to understand exactly how it would work. One way to approach it is to look at the likely effects.

These measures would immediately shift the basis of our economy from borrowing from the banks to a mixed system that would include the direct creation of credit at the public and grassroots level. The size of government would shrink, our producing economy would be reborn, debt would come down, economic democracy would become a reality, and the financial industry could be right-sized. Finally, the international situation could be stabilized because we would no longer be driven to a constant state of warfare to seize other nations’ resources as with Iraq and to prop up the dollar as a reserve currency abroad.

Such a system would work by creating indigenous sources of credit needed to mobilize the natural wealth and productivity of the nation. There are people who could implement this program. Systems to do so could be installed within the U.S. Treasury and the Federal Reserve within a matter of months.

Fundamental monetary reform implemented to restore economic democracy is what America’s real task should be for the twenty-first century. One thing is for certain. The out-of-control financial system that has wrecked the U.S. and world economies over the last generation cannot be allowed to continue.

How the outcome will play out may well depend on whether there is a Jefferson, Lincoln, or Roosevelt waiting in the wings. The success of each of these great leaders was due to one critical factor: their ability to implement monetary reform at a time of national emergency.


Richard C. Cook is the author of “We Hold These Truths: The Hope of Monetary Reform,” scheduled to appear by September 1, 2007. A retired federal analyst, his career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, and NASA, followed by twenty-one years with the U.S. Treasury Department. His articles on monetary reform, economics, and space policy have appeared on Global Research, Economy in Crisis, Dissident Voice, Arizona Free Press, Atlantic Free Press, and elsewhere. He is also author of “Challenger Revealed: An Insider’s Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age.” His website is at www.richardccook.com . He appears frequently on internet radio at www.themicroeffect.com on Saturday mornings at 11 a.m. Eastern.

[Whitehall_Bin_Men]

JOAN VEON’S EXCLUSIVE INVERVIEW WITH DR. MALCOLM KNIGHT, MANAGING DIRECTOR, BANK FOR INTERNATIONAL SETTLEMENTS
http://www.womensgroup.org/Bank-for-International-Settlements-and-Glob al-Currency.htm
June 30, 2003

EDITOR’S NOTE: The Bank for International Settlement-BIS represents the brains of how the world monetary system is managed. All of the world’s central banks meet at the BIS, which decides global monetary policy. Federal Reserve Chairman Alan Greenspan meets with the G10 counterparts to establish monetary policy on a monthly basis. When I covered the 2003 Annual Meeting of the Bank for International Settlements-BIS, I was asked to do an exclusive interview with the new managing director. To prepare for this important one hour interview, I spent 30 hours reading key BIS speeches, G7 Finance Ministers speeches, Alan Greenspan speeches and Dr. Carroll Quigley’s writings about the central bank and global economic structure in his book, Tragedy and Hope.

Several weeks earlier I covered the G8 meeting in Evian, France. I have provided you with one article written for worldnetdaily.com which describes the meeting, an interview and the final press briefing with President Jacques Chirac.
------------------------
Dr. Knight was formerly a Senior Deputy Governor of the Bank of Canada which he joined in 1999 after 24 years at the IMF as Deputy Director. Dr. Knight holds a Bachelor’s degree in economics and political science from the University of Toronto and a Masters and PhD degree in economics from the London School of Economics and Political Science-LSE. He has taught at the University of Toronto and the LSE.

VEON: You are an apex power-that is what Carroll Quigley called the Bank. As such, I sort of think of you-maybe I am wrong-as running the monetary systems of the world.
KNIGHT-actually we don’t do that. The world monetary system is controlled in two ways: first of all it is controlled by the policies of the central banks of the systemically important countries-the big countries -both industrial countries and emerging market countries and in recent years, those central banks have operated policies of maintaining low-predictable and stable inflation and that over time does contribute to financial stability in the world and also to better long-term real performance of the world economy so I think that it is really the fact that the central banks come to Basel and we provide a lot of economic analysis for their discussions. But it is really the dialogue that takes place around the tables here in Basel among the central bank governors and with the financial regulators, which are what I think, contributes to the stability of the international monetary and financial system. We are facilitators.

VEON: As such, being facilitators, when you take a look at the world economy which has been adequately set forth in the Annual Report and the press briefing, what do you see given the current trends in the next 5 - 10 years and what kind of other systems or committees or policies will the BIS have to put in place to meet some of the very apparent changes today.
KNIGHT-I think you are right in putting it in a 5-year context. First of all we have to achieve a set of policies which over time will assure us, steady, sustainable non-inflationary long term growth and I think over the past 5 years or so, central banks have established a good record in maintaining inflation-low, stable and predictable. But that is a necessary condition for insuring good growth performance but it is not a sufficient condition. Over the past year and a half with the sharp decline in equity markets two years ago and with all of the geo-political uncertainties associated with Iraq there has been a weakening of demand in a number of countries and it is primarily because in times of uncertainty business firms are more reluctant to invest and to engage in major projects.....................................................
http://www.womensgroup.org/Bank-for-International-Settlements-and-Glob al-Currency.htm
UN WATCH! Helping YOU to Connect the Global to the Local

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Vol. 5, Issue 4 July-August, 2003 Published March, 2004
www.womensgroup.org

[karlos]

[rodin]

On thursday FTSE had biggest fall in 5 years. BIS are close to elite group controlling all of this. Would they lie to us? Yes. But not all the time otherwise we could act accordingly in contrarian manner.

[karlos]

[TonyGosling]

U.S. Stocks Tumble on Credit Concerns; Banks, Brokers Retreat
By Michael Patterson
Aug. 9 (Bloomberg) -- U.S. stocks tumbled as subprime mortgage contagion and hedge fund losses halted a three-day rally and sent brokerage shares to their worst rout since 2002.
``The fear is feeding on itself,'' said Jeffrey Kleintop, who helps oversee more than $173 billion as chief market strategist at LPL Financial Services in Boston. ``It's what you don't know that seems to be taking over the market.''..................
http://www.bloomberg.com/apps/news?pid=20601087&sid=amWLaQ.zKg5k&refer =home

[TonyGosling]

For the first time, Britons' personal debt exceeds Britain's GDP
http://money.independent.co.uk/personal_finance/loans_credit/article28 91207.ece

Another worrying milestone on a nation's journey deeper into debt
By Martin Hickman, Consumer Affairs Correspondent
Published: 24 August 2007

Britons have racked up so much debt on loans and credit cards that the total borrowed now exceeds the entire value of the economy, new research shows today. The financial consultant Grant Thornton is forecasting that gross domestic product (GDP) will hit £1.33 trillion this year, less than the £1.35trn which was outstanding on mortgages, credit cards and personal loans in June.

The symbolic overtaking is the first time that the country's 60 million people owe more to the banks than the value of everything made by every office and factory in the country. It prompted a warning that personal borrowing was so out of control that many more people would be pushed over the "financial edge". The runaway housing market is the biggest reason why consumer debt has spiralled, totalling £1.131trn. Debt on personal loans and credit cards totals £214bn. Overall, individuals owe the staggering sum of £1,344,721,000,000.

Grant Thornton ascribed the level of borrowings to a "buy now, pay later" culture and warned that interest rate rises could impose a significant burden on families and individuals. "Fortunately, most consumer debt is secured and can be repaid over several years otherwise we would be technically bankrupt," its chief economist, Stephen Gifford, said.

The research further darkens the storm clouds gathering over the British economy. Repossessions, personal insolvencies and debt judgments have all risen by about a third in the past year as borrowers have struggled to cope with the impact of five rate rises in a year.

Yesterday the financial website moneyexpert.com suggested that 2.5 million people were "very concerned" about their personal financial situation.

In the United States, the sudden failure of the poor to repay home loans in recent months has sparked a "sub-prime" crisis that has spooked the financial markets and wiped billions of pounds off share prices.

Responding to the latest figures, the Bank of England predicted debts would remain a "social" rather than an "economic" problem, indicating it believes indebtedness will be contained to individuals rather than threaten businesses.

Grant Thornton's notional payback date for personal debt has advanced markedly through the calendar during the past 10 years. In 1997 the UK took until 23 August to pay off its debt, but this year the date will be 5 January the following year, 2008.

Mark Allen, a personal insolvency partner, said it was not uncommon to encounter individuals with debts of £50,000 spread across five credit cards on top of a mortgage. "In our experience these are the sort of people walking a perilous financial tightrope," he said. "All it takes is an increase in costs or, as is the present case, a rise in mortgage premiums due to higher interest rates, to force people to default on their repayments - hence the increase in bankruptcies and individual voluntary arrangements."

Repossession leapt 30 per cent in the first six months of this year compared with the first half of last year. County court judgments rose 32. 5 per cent and personal insolvencies in England and Wales 33 per cent to more than 62,000 last year.

Mortgage payments are making ever-larger dents in household income, rising from 12.5 per cent in 1997 to 17.6 per cent in May this year. Datamonitor, the independent financial analyst, warned this week that the total number of Britons credit blacklisted by 2011 will jump by 20 per cent to 8.6 million.

Moneyexpert.com suggested in its survey that 7 per cent of adults were "very concerned" about their ability to keep on top of their debts, which would amount to 2.5 million adults. However, 40 per cent of the 2,000 respondents were unconcerned about their ability to manage their borrowings.

Malcolm Hurlston, the chairman of the Consumer Credit Counselling Service, said Grant Thornton's research made a symbolic point. "Basically speaking, it's just a mathematical question: the relationship between GDP and borrowing. It's really another way of saying that house prices have been going up quicker than wages," he said. "But what is happening is that unsecured debt is less of a problem than it used to be, whereas secured debt is the problem, and I think the Council of Mortgage lenders is expecting the figures for repossessions to get worse."

He added: "The problem on the secured front - mortgages - is getting worse because of the rising gap between house prices and incomes. In terms of volume, it's not going to be as bad as the early 1990s because the mortgage companies are gearing up for it - this time they will be trying to avoid repossessions as much as possible. But there's going to be a lot of activity and a lot of people will find that they can't pay the money back."

Mr Gifford said: "The level of debt has so far not caused much of a problem for the UK economy. Interest rates have been historically low and the UK economy has been ticking along healthily. But with five interest rate rises in the past year the picture is changing and becoming a burden for families and households."

[TonyGosling]

**** !!! URGENT !!! ****

FEDERAL RESERVE BOARD OF GOVERNORS MEETING TO TAKE PLACE AT "C.O.G." FACILITY
IN JACKSON HOLE, WYOMING ON AUGUST 31 !

C.O.G. STANDS FOR "CONTINUITY OF GOVERNMENT" AND IS A SUPER-HIGH-SECURITY, UNDERGROUND MILITARY INSTALLATION DESIGNED AS A SANCTUARY FOR GOVERNMENT
http://mparent7777-2.blogspot.com/2007/08/fed-something-big-is-going-t o-happen.html

IF THE U.S. IS HIT WITH NUKES OR SUFFERS OTHER CATASTROPHIC DISASTER

Why would the Fed Board of Governors decide to meet in such a place unless they KNOW something terribly huge is going to happen to the United States next month? This information on top of the stories below are unmistakable signals to us that something terrible is going to happen and the big shots already know it. . . . . .
http://mparent7777-2.blogspot.com/2007/08/fed-something-big-is-going-t o-happen.html

[rodin]

[blackcat]

[Cruise4]

I can't have it any other way than we have deliberately been set up by a Mafia style organisation to rob us blind in full co-operation with the Government, Lawyers, Judges and Media.

Since seperation from the Gold Standard and the adoption of Fractional Banking Practises the economy has really been an extortion racket.

Its transferred resources from the people to the elite and its a fraud. Pure and simple.

[Rowan Berkeley]

The only thing that made 'the Gold Standard' remotely tolerable to our rulers was the fact that they owned the gold. How they came to own it is discussed interestingly in Hobson's "Imperialism", a book which influenced Lenin, though he did not follow Hobson so far as to talk of "a peculiar race of bankers":
http://www.econlib.org/LIBRARY/YPDBooks/Hobson/hbsnImp.html

[TonyGosling]

How real is the threat of an economic crash? How big will it be? Meet Martin Summers, the Former East European projects officer for the New Economics Foundation as he tells us a little of what is happening in the world of finance at the moment.

Link

http://documentally.blogspot.com/2007/09/financial-showdown.html

[Reflecter]

Well that's a cheery video for a Monday. Any luck with that bulk tinned food search Uselesseater?

[TonyGosling]

World's top banker set to quit today over £3bn loss
By ANDREW LEACH 3rd November 2007

The world's biggest bank will hold crisis meetings today in a bid to stave off a financial disaster that could spread across the globe.

New York-based Citigroup, which employs more than 300,000 people worldwide and 12,000 in Britain, is facing a £3.3billion loss and a 57 per cent slump in profits.

Now shareholders are demanding that the bank's chairman and chief executive, Chuck Prince, stands down at an emergency board meeting.

http://www.dailymail.co.uk/pages/live/articles/news/worldnews.html?in_ article_id=491602&in_page_id=1811

Shareholders are demanding bank chairman and chief executive Chuck Prince stands down

Analysts hope the move will relieve the gloom within the company – and also prevent panic from spreading to the rest of the banking world.

Justin Urquhart Stewart of UK-based Seven Investment Management said the news from Citigroup could hit banking shares across the sector.

"Investors in the financial-services sector will need to be braced," he said.

"No one believes the banks any more about the scale of the problem and if the world's biggest bank comes out with more write-offs, people will be nervous other banks will follow suit.

"This is not just a boardroom coup, this has repercussions across all banks."

While the US banks have borne the brunt of the credit-crunch fallout – with Prince's departure coming just days after rival Merrill Lynch ousted its boss Stan O'Neal – UK banks have suffered greatly.

The biggest loser has been Northern Rock where, ironically, Citigroup is one of its advisers.

Unable to borrow from other banks and faced with savers withdrawing their money – in the first run on a British bank for a century – Northern went cap in hand to the Bank of England, which has so far lent it more than £20billion.

Banking shares here have collapsed in recent months and last week the rumour mill was suggesting problems at Barclays, whose share price is at its lowest level for more than two years.

Citigroup's main UK office is a skyscraper in London's Canary Wharf, and it has hundreds of thousands of British customers and more than 1.1billion customers around the world.

It has been hit by huge losses in its high-risk sub-prime mortgage business. Last week, the group's shares fell 11 per cent.

The £90billion group's share price is now below the level it was when Prince joined in 2003 and financial analysts had warned he was at risk of being axed.

"The buck has to stop with the boss," said one banking insider.

Prince earned more than £27million during four years running the group.

Authorities have reacted to try to help sustain confidence in the banks and also to ease the burden on borrowers. The US authorities cut interest rates last week and this week the Bank of England will meet to set rates here.

Although it is under pressure to help mortgage payers and other borrowers and cut the rate, most economists expect the cost of borrowing to stay on hold at 5.75 per cent


The National Debt has continued to increase an average of
$1.44 billion per day since September 29, 2006!
http://www.brillig.com/debt_clock/

[TonyGosling]

Citi boss Charles Prince deposed as credit crisis deepens
Dominic Rushe and Ben Laurance
http://business.timesonline.co.uk/tol/business/industry_sectors/bankin g_and_finance/article2799341.ece

CHARLES PRINCE, boss of the banking giant Citigroup, is expected to resign today, becoming the latest high-profile victim of the credit crunch rocking the world’s financial markets.



His departure threatens to trigger a fresh sell-off in shares in banks amid mounting evidence that the credit crunch is having a devastating impact on global markets.

Insiders say Citi, one of the world’s largest financial institutions with more than 300,000 staff worldwide, may tomorrow reveal further losses from sub-prime loans, and that the Securities and Exchange Commission may investigate whether it improperly juggled its books to hide the full extent of the problem.

Prince, 57, has been chief executive at Citi since 2003, when he took over from Wall Street legend Sandy Weill. It is not clear what pay-off he will receive - he has no contract of employment, and holds stock options worth about $90m....

[TonyGosling]

Bank warns of sharp slowdown
Inflation forecasts revised up; Report signals two rate cuts next year; Risk of further shocks
By Sean O'Grady, Economics Editor
Published: 15 November 2007

The Bank of England did not use the trendy new word "slowflation" in its Inflation Report yesterday, but it is clearly signalling a combination of slower growth, higher inflation and lower interest rates for the UK next year – "not an outcome we've seen very often" in the words of the Bank's Governor, Mervyn King. Indeed, the Bank already believes that "GDP growth may have begun to slow in the fourth quarter", with what Mr King termed a "dichotomy" between the housing and financial sectors, hit by the credit squeeze, and the rest of the economy.

http://news.independent.co.uk/business/news/article3160888.ece

In a markedly more gloomy outlook than in its last round of forecasting in August, the Bank believes GDP growth will slow to around 2.4 per cent next year, from more than 3 per cent for 2007. That compares with a central projection of about 2.7 per cent for 2008 in the August report.



Mr King admitted growth would "slow sharply" and that there was a risk of a bigger slowdown than predicted. Reflecting much general uncertainty in Bank circles, the report stated: "Although conditions in some markets have since improved, the global financial system remains vulnerable to further shocks. The possible impact on spending of recent and prospective developments in financial markets represents a key uncertainty surrounding the outlook."

Mr King expressed a degree of surprise that equity markets are as bullish as they are – "there must be some downside risks in this".

The possibility of a recession – two quarters of "negative growth" – does not appear on the likely range of Bank expectations, partly because of a technical point about the way it charts GDP trends.

The Bank's forecasts are predicated on expectations that the Bank rate will fall from 5.75 per cent now to 5.5 per cent in the first quarter of next year, to 5.3 per cent in the second half of the year, and then to 5.1 per cent to 5.2 per cent in early 2009. That may provide some respite for homeowners who have seen their disposable incomes squeezed. It may also aid those more marginal borrowers – households and companies – the Bank has identified as being at risk as banks tighten their lending criteria. In any case, the Bank says "consumer spending may not be particularly sensitive to modest falls in house prices".

Overall, the Bank says that the "risks to growth are on the downside, while those to inflation are balanced". The relative confidence about inflation, notwithstanding the blip, is because "past increases in bank rate, tighter credit conditions, lower house price inflation and heightened uncertainty are expected to dampen spending growth".

The Bank indicated its central prediction was for inflation to remain at about 2.25 per cent for most of 2008 because of higher energy prices, before easing back to the official target of 2 per cent by mid-2009. Thus the Bank is signalling inflation will stay close to target – even with interest rate cuts and the price of oil approaching $100 a barrel, and increasingly volatile.

However, it will be looking at data on inflationary expectations, credit conditions and on pay and labour markets (such as yesterday's small rise in joblessness) especially carefully. Yesterday unemployment rose again. Mr King said that "trying to describe the outlook in terms of adjectives is less helpful than in terms of numbers. It's a matter of data, not a matter of time."

Analysts agreed that the immediate prospect is for rates to come down, with some envisaging a cut by Christmas. Alan Clark of BNP Paribas said: "We now believe the MPC will deliver the first interest rate cut at the December MPC meeting ... and the Inflation Report suggests that February is the latest that we should expect a cut to be delivered." The Bank of England signalled that interest rates will need to fall in the coming months as it downgraded growth forecasts for next year in its first quarterly inflation report since the global credit crisis swept financial markets in August.

"The ... report is markedly more dovish and indicates that at least two interest rates cuts are likely," said Global Insight economist Howard Archer. "However, it remains somewhat uncertain as to when exactly the first cut in interest rates will occur, with [Bank of England Governor] Mervin King indicating that the timing will be driven by the data."

The Bank said that the key risks to growth were posed by a potential slowdown in the US economy and reduced household spending and business investments due to tighter credit conditions.

"Recent financial market events are likely to bear down on demand growth, although it is too early to assess the full impact," it said.

King 'did not consider quitting'

* Mervyn King said that he had had "more important things" on his mind than whether he was going to serve a second term as Governor after June 2008, and replied "no" when asked if he had considered resigning over Northern Rock. He will leave consideration of his position until the new year. More broadly, Mr King added: "I would urge everyone to see the losses in the context of past profits and the capital cushion of the banks... about £100bn of profits. They will provide the cushion which guarantees the stability of the banking system and it is strong and stable."

[TonyGosling]

Another kick in the eye for the 'let the market decide' brigade who seem to have done a runner, with the loot...

Markets dive on fresh credit crisis fears
By Stephen Foley in New York - 20 November 2007

The FTSE 100 plunged back towards the lows it reached when the credit crisis first emerged in the summer, caught up in a worldwide sell-off on equity markets and fears of solvency problems throughout the global banking system.

In the UK, tens of millions of pounds were wiped off the value of mortgage lenders such as Northern Rock and Alliance & Leicester, while, on the other side of the Atlantic, Citigroup shares fell after a rival bank suggested it could be forced into a rescue fundraising or a fire sale of assets.

Reflecting a sharp slide on Wall Street, selling in the UK accelerated through yesterday afternoon and the FTSE 100 fell 170.4 to 6,120.8. That is its lowest since 21 August, when fear of losses related to US mortgages paralysed many parts of the credit markets.

Despite $50bn (£24.4bn) of write-downs on mortgage-related securities across the global finance industry, investors still fear more to come and banks have again become more cautious about lending to each other. The closely watched UK inter-bank interest rate, three-month Libor, was yesterday up to its highest level in two months, after a seventh straight session of gains...........................
http://news.independent.co.uk/business/news/article3177076.ece

[TonyGosling]

Financial Crisis: Asset Securitization-- The Last Tango
Endgame: Unregulated Private Money Creation
by F. William Engdahl
Global Research, February 8, 2008

The Financial Tsunami, Part IV.
Endgame: Unregulated Private Money Creation

What had emerged going into the new millennium after the 1999 repeal of Glass-Steagall was an awesome transformation of American credit markets into what was soon to become the world’s greatest unregulated private money creation machine.

The New Finance was built on an incestuous, interlocking, if informal, cartel of players, all reading from the script written by Alan Greenspan and his friends at J.P. Morgan, Citigroup, Goldman Sachs, and the other major financial houses of New York. Securitization was going to secure a "new" American Century and its financial domination, as its creators clearly believed on the eve of the millennium.

Key to the revolution in finance in addition to the unabashed backing of the Greenspan Fed, was the complicity of the Executive, Legislative and Judicial branches of the US Government right to the Supreme Court. In addition, to make the game work seamlessly, it required the active complicity of the two leading credit agencies in the world—Moody’s and Standard & Poors.

It required a Congress and Executive branch that would repeatedly reject rational appeals to regulate over-the-counter financial derivatives, bank-owned or financed hedge funds or any of the myriad steps to remove supervision, control, transparency that had been painstakingly built up over the previous century or more. It required that the major government-certified rating agencies give their credit AAA imprimatur to a tiny handful of poorly regulated insurance companies called Monolines, all based in New York. The monolines were another essential part of the New Finance.

The interlinks and consensus behind the massive expansion of securitization among all these institutional players was so clear and pervasive it might have been incorporated as America New Finance Inc. and its shares sold over NASDAQ.

Alan Greenspan anticipated and encouraged the process of asset securitization for years before his actual nurturing of the phenomenal real estate bubble in the beginning of the first decade of the new Century. In a pathetic attempt to deny his central role after the fall, Greenspan last year claimed that the problem was not mortgage lending to sub-prime customers but the securitization of the sub-prime credits. In April 2005, he sung a quite different hymn to sub-prime securitization. Addressing the Federal Reserve System’s Fourth Annual Community Affairs Research Conference, the Fed chairman declared,

"Innovation has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants. Such developments are representative of the market responses that have driven the financial services industry throughout the history of our country. With these advances in technology, lenders have taken advantage of credit-scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers…The mortgage-backed security helped create a national and even an international market for mortgages, and market support for a wider variety of home mortgage loan products became commonplace. This led to securitization of a variety of other consumer loan products, such as auto and credit card loans."

That 2005 speech was about the time he later claimed to have suddenly realized securitization was getting out of hand. In September 2007 once the crisis was full force, CBS’ Leslie Stahl asked why he did nothing to stop "illegal or shady practices you knew were taking place in sub-prime lending." Greenspan replied, "Err, I had no notion of how significant these practices had become until very late. I didn’t really get it until late 2005 and 2006." (emphasis added-w.e.)................................

http://www.globalresearch.ca/index.php?context=va&aid=8032

[fish5133]

My standard life shares dipped below £2 after being over £3

[blackcat]

http://www.prisonplanet.com/articles/february2008/150208_dollar.htm

[suraci]

The most successful country on the planet has very little real industry, and an economy based mainly on tourism and banking. It sidesteps little inconveniences like fighting fascists in world wars, and instead holds everyones coats and wallets. It has no armed services to speak of, becaue it doesn't need them presumably. It has bank vaults full of gold, real money in other words, and yet the Nazis never went anywhere near the place, even though they were well known for lifting anything of value that wasn't bolted to the floor. They even respected it's air space, flying around it which must have been an enormous inconvenience during time of war, one they fully expected to win as a step to dominating all of Europe, including presumably this odd little country.

Maybe Switzerland has a secret or two, one that protects it in a dangerous world, in the coming world financial crash, and in the rush to sign us all up to Europe.

[blackcat]

http://www.prisonplanet.com/articles/february2008/190208_b_Banks.htm

[quote]Wall St. Banks Confront a String of Write-Downs

JENNY ANDERSON,NY Times, Tuesday February 19, 2008

Wall Street banks are bracing for another wave of multibillion-dollar losses as the crisis that began with subprime mortgages spreads through the credit markets.
In recent weeks one part of the debt market after another has buckled. High-risk loans used to finance corporate buyouts have plummeted in value. Securities backed by commercial real estate mortgages and student loans have fallen sharply. Even auction-rate securities, arcane investments usually considered as safe as cash, have stumbled.

The breadth and scale of the declines mean more pain for major banks, which have already written off more than $120 billion of losses stemming from bad mortgage-related investments.

The deepening losses might make banks even more reluctant to make the loans needed to prod the slowing American economy. They also could force some banks to raise more capital to bolster their weakened finances.

The losses keep piling up. Leading brokerage firms are likely to write down the value of $200 billion of loans they have made to corporate clients by $10 billion to $14 billion during the first quarter of this year, Meredith Whitney, an analyst at Oppenheimer, wrote in a research report last week.

Those institutions and global banks could suffer an additional $20 billion in losses this year on commercial mortgage-backed securities and other debt instruments tied to commercial mortgages, according to Goldman Sachs, which predicts commercial property prices will decline by as much as 26 percent.

Analysts at UBS go further, predicting the world’s largest banks could ultimately take $123 billion to $203 billion of additional write-downs on subprime-related securities, structured investment vehicles, leveraged loans and commercial mortgage lending. The higher estimate assumes that the troubled bond insurance companies fail, a possibility that, for now, is relatively remote.

Such dire predictions underscore how the turmoil in the credit markets is hurting Wall Street even as the Federal Reserve reduces interest rates. Already, once-proud institutions like Merrill Lynch, Citigroup and UBS have gone hat in hand to Middle Eastern and Asian investors to raise capital. “You don’t have a recovery until you have the financial system stabilized,” Ms. Whitney said. “As the banks are trying to recover they will not lend. They are all about self-preservation at this time.”

[simplesimon]

These maggots have been playing this trick for a long time: