Other property funds have made similar moves to restrict access to their assets in order to prevent a Northern Rock-style run on their resources.
Scottish Equitable, a giant £2billion commercial property fund, said that 129,000 of its small investors will be unable to remove their money for up to a year as cash reserves are now running low.
Scottish Equitable has halted cash withdrawals in order to prevent a Northern Rock-style run on their resources
The fund, which is invested in shopping centres across the country and London office blocks, says its cash reserves are down to 1 per cent of total assets, compared to the usual 10-15 per cent.
Last month, Friends Provident, stopped access to its £1.2bn portfolio, while Scottish Widows is rumoured to be on the verge of imposing restrictions on withdrawals.
Fears of a recession brought on by the global credit crunch has resulted in belt-tightening among many financial institutions, causing commercial property values to dive as demand dries up.
Scottish Equitable's parent group, Aegon UK, confirmed restrictions on withdrawals came into effect yesterday.
A spokesman said: "AEGON UK is introducing a deferment for certain payments from the Scottish Equitable Property fund, Select Reserve fund and Select Distribution fund.
"AEGON UK has decided to take this step to protect investors following a significant level of customer withdrawals from the UK property fund market.
"This move enables AEGON UK to manage the funds in the interests of both long term investors and those who wish to exit the funds.
The Financial Tsunami: The Financial Foundations of the American Century
by F. William Engdahl, Part II ( part 1 here )
The ongoing and deepening global financial crisis, nominally triggered in July 2007 by an event involving a small German bank holding securitized assets backed by USA sub-prime real estate mortgages, can best be understood as an essential part of an historical process dating back to the end of the Second World War—the rise and decline of the American Century.
The American Century, proudly proclaimed by Time-Life founder and establishment insider, Henry Luce in a famous 1941 Life magazine editorial, was built on the preeminent role of New York banks and Wall Street investment banks which had by then clearly replaced the City of London as the center of gravity of global finance. Luce’s American Century was to be built in a far more calculated manner than the British Empire it replaced.1
A then top-secret Council on Foreign Relations postwar planning group, The War & Peace Studies Group, led by Johns Hopkins President and geo-political geographer, Isaiah Bowman, laid out a series of studies designed to lay the foundations of their postwar world, already beginning 1939, well before German tanks had rolled into Poland. The American Empire was to be an empire indeed. But it would not make the fatal mistake of the British or other European empires before, namely to be an empire of open colonial conquest with costly troops in permanent military occupation.
Instead, the American Century would be packaged and sold to the world, above all the emerging countries of Africa, Latin America and Asia, as the guardian of liberty, democracy. It would clothe itself as the foremost advocate of end to colonial rule, a stance which uniquely benefited the only major power without large colonies—namely, the United States.
The new American Century world was to be led by the champion of free trade everywhere, which also uniquely benefited the strongest economy in the early postwar years, the United States. It was a brilliant, if fatally flawed concept. As State Department planning head, George F. Kennan wrote in a confidential internal memo in 1948, “We have about 50% of the world’s wealth but only 6.3% of its population…Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity without positive detriment to our national security.” 2
The core of the War & Peace Studies, which were designed for and implemented by the US State Department after 1944, was to be the creation of a United Nations organization to replace the British-dominated League of Nations. A central part of that new UN organization, which would serve as the preserver of the US-friendly postwar status quo, was creation of what were originally referred to as the Bretton Woods institutions—the International Monetary Fund and the International Bank for Reconstruction and Development or World Bank.3 The GATT multinational trade agreements were later added.
The US negotiators in Bretton Woods New Hampshire, led by US Treasury deputy Secretary Harry Dexter White, imposed a design on the IMF and World Bank which insured the two would remain essentially instruments of an “informal” US empire, an empire, initially based on credit, and later, after about 1973, on debt.
New York and the New York Federal Reserve Bank were the heart of the new empire in 1945. The United States held the overwhelming majority of world central bank monetary gold reserves. The postwar Bretton Woods Gold Exchange Standard uniquely benefited the role of the US dollar, then and even now world reserve currency.
All IMF member country currencies were to be fixed in value to the US dollar. In turn, the US dollar, but only the US dollar was fixed to a preset weight of gold at $35 per ounce of gold. At this fixed rate, foreign governments and central banks could exchange dollars for gold.
Bretton Woods established a system of payments based on the dollar, in which all currencies were defined in relation to the dollar. It was ingenious and uniquely favorable to the emerging financial power of New York, whose bankers actively shaped the final agreements.
In those days, in stark contrast to the present, the dollar was “as good as gold." The US currency was effectively the world currency, the standard to which every other currency was pegged. As the world's key currency, most international transactions were denominated in dollars.
Maintaining the role of the US dollar as world reserve currency has been the foremost pillar of the American Century since 1945, related to but more strategic even than US military superiority. How that dollar primacy has been maintained to now encompassed the history of countless postwar wars, financial warfare, debt crises, and threats of nuclear war to the present.
Important to place the emergence of the asset securitization revolution in global finance which is now impacting the world financial system in wave after wave of new shocks and dislocations, and to appreciate Alan Greenspan’s substantial contribution to preserving the dominance of the dollar as world reserve well beyond the point the US economy ceased being the world’s most productive industrial manufacturer, a brief review of the distinct phases in postwar dollar hegemony is useful.
Katie Allen in London and Justin McCurry in Tokyo,
Guardian.co.uk, Monday January 21 2008
Shares in London plunged today following heavy losses in Asia overnight, as intensifying fears over the state of the US economy triggered a wave of selling and talk of market meltdown.
The FTSE 100 index of leading shares was a sea of red, opening nearly 3% lower this morning and steadily ploughing new depths.
At one stage the FTSE was down 323.7 points - a loss of 5.48% - its biggest percentage loss since September 11 2001 when it lost 5.71% of its value. By midday the index stood 5.3% down at 5,588.8, a 312.9 point drop. Analysts were predicting it could be on track for its biggest percentage fall since October 26 1987, when the index lost 6.19%.
Miners and financial institutions were among the biggest fallers, as investors were unimpressed by a stimulus package for the ailing US economy announced by George Bush on Friday.
A few risers stood out, with Northern Rock surging 23p, or 35%, to 87.5p. Insurer Friends Provident was the FTSE 100's lone riser. It jumped 6p, or 4%, to 158.5p after US private equity firm JC Flowers confirmed it was considering a takeover bid.
Oil prices also slipped, with US crude dropping more than $1 a barrel to below $89 - indicating that traders expect demand may fall on the back of a slowdown in the world's biggest economy. That knocked energy-related shares in London, with Cairn Energy one of the FTSE 100's biggest fallers down over 8% at £23.09.
Bush's emergency $145bn (£74bn) package of tax cuts spooked the US financial markets on Friday, wiping out early Wall Street gains. Some analysts saw the plan as "too little, too late", while others said it suggested the problems in the US economy are even worse than previously thought.
In Japan, the Nikkei stock average today slumped almost 4% to a two-year low of 13,325 points, taking it back to the level it was at on October 25 2005. The Japanese market has lost almost 13% since the start of the year – compared with the FTSE's fall of around 12% since January 1.
Tokyo stocks had rallied briefly at the end of last week in the run-up to Bush's announcement, but analysts said expectations were too high. After a slow start to the year the Nikkei put on a combined 2.6% over Thursday and Friday.
"I think the 13,300 level is about bottom but you need a catalyst for a major recovery in stock prices," Kasuhiro Takahashi, general manager at Daiwa Securities, told Guardian Unlimited.
He said the stimulus could come when major corporations announce their third-quarter results next week. "If the October to December results are favourable then the earlier expectation that earnings will decline will have proved too pessimistic."
The fall in Japanese shares was also triggered by mounting concerns about the health of the domestic economy. Consumption is still weak and more trouble for the US economy will hit corporate income and wage hikes in the spring.
"A lot of today's problem is that Japan expected too much of the economic plan last Friday and stocks rose too far," Takahiko Murai at Nozomi Securities told Reuters. "Of course, it's only natural. The US economy makes up several percent of the world GDP so when it has economic problems the rest of the world suffers."
The banking sector suffered big losses amid continued fears over the knock-on effects of the US sub-prime loan crisis. Mitsubishi UFJ Financial, Japan's largest bank by market value, fell 6.2% to ¥915 (£4.42), while Sumitomo and Mizuho were down 5.2% and 4.6%, respectively.
Major exporters also suffered, with Toyota and Honda both losing out. Matsushita, the world's biggest producer of consumer electronics, lost 4% to close at ¥2,050.
International experts foresee collapse of U.S. economy
Posted By Hielema, Bert
And you thought that I had a gloomy outlook on the economy. Now the bad news pops up everywhere.
Harry Koza in the Globe and Mail quotes Bernard Connelly, the global strategist at Banque AIG in London, who claims that the likelihood of a Great Depression is growing by the day.
Martin Wolf, celebrated columnist of the U.K.-based Financial Times, cites Dr. Nouriel Roubini of the New York University's Stern School of Business, who, in 12 steps, outlines how the losses of the American financial system will grow to more than $1 trillion - that's one million times $1 million. That amount is equal to all the assets of all American banks.
Every day now, thousands of people all over the U.S. and Great Britain are walking away from their homes - simply mailing their house keys to the banks - as housing bailout plans fail.
With unemployment growing, the next phase will hit commercial real estate making the financial institutions the unwilling owners not only of quickly depreciating houses, but also of empty strip malls and even larger shopping centres.
The next domino to fall will be credit card defaults, and after that... who knows? There are so many exotic funds out there, with trillions of dollars in paper - or rather computer-screen money - all carrying assorted acronyms, and all about to disintegrate into nothingness. Over the next couple of years, scores of banks that have thrived on these devices, based on quickly disappearing equities, will fail.
The most frightening forecast so far comes from the Global Europe Anticipation Bulletin (GEAB), available for 200 euros - about $300 - for 16 issues annually. Its prediction is quite specific.
Where my warnings never spelled out an exact date, this think tank has it pegged precisely. Here are its very words:
"The end of the third quarter of 2008 (thus late September, a mere seven months from now) will be marked by a new tipping point in the unfolding of the global systemic crisis.
"At that time indeed, the cumulated impact of the various sequences of the crisis will reach its maximum strength and affect decisively the very heart of the systems concerned, on the front line of which (is) the United States, epicentre of the current crisis.
"In the United States, this new tipping point will translate into - get this - a collapse of the real economy, (the) final socio-economic stage of the serial bursting of the housing and financial bubbles and of the pursuance of the U.S. dollar fall. The collapse of U.S. real economy means the virtual freeze of the American economic machinery: private and public bankruptcies in large numbers, companies and public services closing down."
The report goes on to say that we are entering a period for which there is no historic precedent. Any comparisons with previous situations in our modern economy are invalid.
We are not experiencing a "remake" of the 1929 crisis nor a repetition of the 1970s oil crises or 1987 stock market crisis.
What we will have, instead, is truly a global momentous threat - a true turning point affecting the entire planet and questioning the very foundations of the international system upon which the world was organized in the last decades.
The report emphasizes that it is, first and foremost, in the United States where this historic happening is taking an unprecedented shape (the authors call it "Very Great U.S. Depression").
It continues to predict that, although this crucial event is global, it will be the beginning of an economic 'decoupling' between the U.S. and the rest of the world. However, non 'decoupled' economies will be dragged down the U.S. negative spiral.
Concerning stock markets, the GEAB anticipates that international stocks would plummet by 40 to 80 per cent depending where in the world they are located, all affected in the course of the year 2008 by the collapse of the real economy in the U.S. by the end of summer.
The European authors of this report - it appears simultaneously in French, German and English - state that they simply and without prejudice try to describe in advance the consequences of the ominous trends at play in this 21st-century world, and to share these with their readers, so that they can take the proper means to protect themselves from the most negative effects.
So there you have it. Three reports from three different sources, all well regarded, and all pointing to a disastrous fall-out from our monetary moves.
Posted: Mon Mar 10, 2008 1:43 am Post subject: not so terrifying
So they've finally said it , when it comes to pass , what an opportunity
The world will have exactly the same resources
The Factories will still be there
The Oil will still be there
The labour will still be there
The food will still be there
The water will still be there
The Homes will still be there
Somebody will have to own it all and we will all be able to identify them
those who have deliberately engineered this crisis cannot hide
Invest in Tar and feathers or better still hemp rope we owe it to our children. _________________ Democracy is about representation we are being ruled Claim back our country.
Catastrophe Risk Rising (Dr. Roubini)
Why did the Fed ease the Fed Funds rate by a whopping 125bps in eight days this past January? It is true that most macro indicators are heading south and suggesting a deep and severe recession that has already started. But the flow of bad macro news in mid-January did not justify, by itself, such a radical inter-meeting emergency Fed action followed by another cut at the formal FOMC meeting.
To understand the Fed actions one has to realize that there is now a rising probability of a “catastrophic” financial and economic outcome, i.e. a vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe. The Fed is seriously worried about this vicious circle and about the risks of a systemic financial meltdown.
That is the reason the Fed had thrown all caution to the wind – after a year in which it was behind the curve and underplaying the economic and financial risks – and has taken a very aggressive approach to risk management; this is a much more aggressive approach than the Greenspan one in spite of the initial views that the Bernanke Fed would be more cautious than Greenspan in reacting to economic and financial vulnerabilities.
To understand the risks that the financial system is facing today I present the “nightmare” or “catastrophic” scenario that the Fed and financial officials around the world are now worried about. Such a scenario – however extreme – has a rising and significant probability of occurring. Thus, it does not describe a very low probability event but rather an outcome that is quite possible.
Start first with the recession that is now enveloping the US economy. Let us assume – as likely - that this recession – that already started in December 2007 - will be worse than the mild ones – that lasted 8 months – that occurred in 1990-91 and 2001. The recession of 2008 will be more severe for several reasons: first, we have the biggest housing bust in US history with home prices likely to eventually fall 20 to 30%; second, because of a credit bubble that went beyond mortgages and because of reckless financial innovation and securitization the ongoing credit bust will lead to a severe credit crunch; third, US households – whose consumption is over 70% of GDP - have spent well beyond their means for years now piling up a massive amount of debt, both mortgage and otherwise; now that home prices are falling and a severe credit crunch is emerging the retrenchment of private consumption will be serious and protracted. So let us suppose that the recession of 2008 will last at least four quarters and, possibly, up to six quarters. What will be the consequences of it?
Here are the twelve steps or stages of a scenario of systemic financial meltdown associated with this severe economic recession…
First, this is the worst housing recession in US history and there is no sign it will bottom out any time soon. At this point it is clear that US home prices will fall between 20% and 30% from their bubbly peak; that would wipe out between $4 trillion and $6 trillion of household wealth. While the subprime meltdown is likely to cause about 2.2 million foreclosures, a 30% fall in home values would imply that over 10 million households would have negative equity in their homes and would have a big incentive to use “jingle mail” (i.e. default, put the home keys in an envelope and send it to their mortgage bank). Moreover, soon enough a few very large home builders will go bankrupt and join the dozens of other small ones that have already gone bankrupt thus leading to another free fall in home builders’ stock prices that have irrationally rallied in the last few weeks in spite of a worsening housing recession.
Second, losses for the financial system from the subprime disaster are now estimated to be as high as $250 to $300 billion. But the financial losses will not be only in subprime mortgages and the related RMBS and CDOs. They are now spreading to near prime and prime mortgages as the same reckless lending practices in subprime (no down-payment, no verification of income, jobs and assets (i.e. NINJA or LIAR loans), interest rate only, negative amortization, teaser rates, etc.) were occurring across the entire spectrum of mortgages; about 60% of all mortgage origination since 2005 through 2007 had these reckless and toxic features. So this is a generalized mortgage crisis and meltdown, not just a subprime one. And losses among all sorts of mortgages will sharply increase as home prices fall sharply and the economy spins into a serious recession. Goldman Sachs now estimates total mortgage credit losses of about $400 billion; but the eventual figures could be much larger if home prices fall more than 20%. Also, the RMBS and CDO markets for securitization of mortgages – already dead for subprime and frozen for other mortgages - remain in a severe credit crunch, thus reducing further the ability of banks to originate mortgages. The mortgage credit crunch will become even more severe.
Also add to the woes and losses of the financial institutions the meltdown of hundreds of billions of off balance SIVs and conduits; this meltdown and the roll-off of the ABCP market has forced banks to bring back on balance sheet these toxic off balance sheet vehicles adding to the capital and liquidity crunch of the financial institutions and adding to their on balance sheet losses. And because of securitization the securitized toxic waste has been spread from banks to capital markets and their investors in the US and abroad, thus increasing – rather than reducing systemic risk – and making the credit crunch global.
Third, the recession will lead – as it is already doing – to a sharp increase in defaults on other forms of unsecured consumer debt: credit cards, auto loans, student loans. There are dozens of millions of subprime credit cards and subprime auto loans in the US. And again defaults in these consumer debt categories will not be limited to subprime borrowers. So add these losses to the financial losses of banks and of other financial institutions (as also these debts were securitized in ABS products), thus leading to a more severe credit crunch. As the Fed loan officers survey suggest the credit crunch is spreading throughout the mortgage market and from mortgages to consumer credit, and from large banks to smaller banks.
Fourth, while there is serious uncertainty about the losses that monolines will undertake on their insurance of RMBS, CDO and other toxic ABS products, it is now clear that such losses are much higher than the $10-15 billion rescue package that regulators are trying to patch up. Some monolines are actually borderline insolvent and none of them deserves at this point a AAA rating regardless of how much realistic recapitalization is provided. Any business that required an AAA rating to stay in business is a business that does not deserve such a rating in the first place. The monolines should be downgraded as no private rescue package – short of an unlikely public bailout – is realistic or feasible given the deep losses of the monolines on their insurance of toxic ABS products.
Next, the downgrade of the monolines will lead to another $150 of writedowns on ABS portfolios for financial institutions that have already massive losses. It will also lead to additional losses on their portfolio of muni bonds. The downgrade of the monolines will also lead to large losses – and potential runs – on the money market funds that invested in some of these toxic products. The money market funds that are backed by banks or that bought liquidity protection from banks against the risk of a fall in the NAV may avoid a run but such a rescue will exacerbate the capital and liquidity problems of their underwriters. The monolines’ downgrade will then also lead to another sharp drop in US equity markets that are already shaken by the risk of a severe recession and large losses in the financial system.
Fifth, the commercial real estate loan market will soon enter into a meltdown similar to the subprime one. Lending practices in commercial real estate were as reckless as those in residential real estate. The housing crisis will lead – with a short lag – to a bust in non-residential construction as no one will want to build offices, stores, shopping malls/centers in ghost towns. The CMBX index is already pricing a massive increase in credit spreads for non-residential mortgages/loans. And new origination of commercial real estate mortgages is already semi-frozen today; the commercial real estate mortgage market is already seizing up today.
Sixth, it is possible that some large regional or even national bank that is very exposed to mortgages, residential and commercial, will go bankrupt. Thus some big banks may join the 200 plus subprime lenders that have gone bankrupt. This, like in the case of Northern Rock, will lead to depositors’ panic and concerns about deposit insurance. The Fed will have to reaffirm the implicit doctrine that some banks are too big to be allowed to fail. But these bank bankruptcies will lead to severe fiscal losses of bank bailout and effective nationalization of the affected institutions. Already Countrywide – an institution that was more likely insolvent than illiquid – has been bailed out with public money via a $55 billion loan from the FHLB system, a semi-public system of funding of mortgage lenders. Banks’ bankruptcies will add to an already severe credit crunch.
Seventh, the banks losses on their portfolio of leveraged loans are already large and growing. The ability of financial institutions to syndicate and securitize their leveraged loans – a good chunk of which were issued to finance very risky and reckless LBOs – is now at serious risk. And hundreds of billions of dollars of leveraged loans are now stuck on the balance sheet of financial institutions at values well below par (currently about 90 cents on the dollar but soon much lower). Add to this that many reckless LBOs (as senseless LBOs with debt to earnings ratio of seven or eight had become the norm during the go-go days of the credit bubble) have now been postponed, restructured or cancelled. And add to this problem the fact that some actual large LBOs will end up into bankruptcy as some of these corporations taken private are effectively bankrupt in a recession and given the repricing of risk; convenant-lite and PIK toggles may only postpone – not avoid – such bankruptcies and make them uglier when they do eventually occur. The leveraged loans mess is already leading to a freezing up of the CLO market and to growing losses for financial institutions.
Eighth, once a severe recession is underway a massive wave of corporate defaults will take place. In a typical year US corporate default rates are about 3.8% (average for 1971-2007); in 2006 and 2007 this figure was a puny 0.6%. And in a typical US recession such default rates surge above 10%. Also during such distressed periods the RGD – or recovery given default – rates are much lower, thus adding to the total losses from a default. Default rates were very low in the last two years because of a slosh of liquidity, easy credit conditions and very low spreads (with junk bond yields being only 260bps above Treasuries until mid June 2007). But now the repricing of risk has been massive: junk bond spreads close to 700bps, iTraxx and CDX indices pricing massive corporate default rates and the junk bond yield issuance market is now semi-frozen. While on average the US and European corporations are in better shape – in terms of profitability and debt burden – than in 2001 there is a large fat tail of corporations with very low profitability and that have piled up a mass of junk bond debt that will soon come to refinancing at much higher spreads. Corporate default rates will surge during the 2008 recession and peak well above 10% based on recent studies. And once defaults are higher and credit spreads higher massive losses will occur among the credit default swaps (CDS) that provided protection against corporate defaults. Estimates of the losses on a notional value of $50 trillion CDS against a bond base of $5 trillion are varied (from $20 billion to $250 billion with a number closer to the latter figure more likely). Losses on CDS do not represent only a transfer of wealth from those who sold protection to those who bought it. If losses are large some of the counterparties who sold protection – possibly large institutions such as monolines, some hedge funds or a large broker dealer – may go bankrupt leading to even greater systemic risk as those who bought protection may face counterparties who cannot pay.
Ninth, the “shadow banking system” (as defined by the PIMCO folks) or more precisely the “shadow financial system” (as it is composed by non-bank financial institutions) will soon get into serious trouble. This shadow financial system is composed of financial institutions that – like banks – borrow short and in liquid forms and lend or invest long in more illiquid assets. This system includes: SIVs, conduits, money market funds, monolines, investment banks, hedge funds and other non-bank financial institutions. All these institutions are subject to market risk, credit risk (given their risky investments) and especially liquidity/rollover risk as their short term liquid liabilities can be rolled off easily while their assets are more long term and illiquid. Unlike banks these non-bank financial institutions don’t have direct or indirect access to the central bank’s lender of last resort support as they are not depository institutions. Thus, in the case of financial distress and/or illiquidity they may go bankrupt because of both insolvency and/or lack of liquidity and inability to roll over or refinance their short term liabilities. Deepening problems in the economy and in the financial markets and poor risk managements will lead some of these institutions to go belly up: a few large hedge funds, a few money market funds, the entire SIV system and, possibly, one or two large and systemically important broker dealers. Dealing with the distress of this shadow financial system will be very problematic as this system – stressed by credit and liquidity problems - cannot be directly rescued by the central banks in the way that banks can.
Tenth, stock markets in the US and abroad will start pricing a severe US recession – rather than a mild recession – and a sharp global economic slowdown. The fall in stock markets – after the late January 2008 rally fizzles out – will resume as investors will soon realize that the economic downturn is more severe, that the monolines will not be rescued, that financial losses will mount, and that earnings will sharply drop in a recession not just among financial firms but also non financial ones. A few long equity hedge funds will go belly up in 2008 after the massive losses of many hedge funds in August, November and, again, January 2008. Large margin calls will be triggered for long equity investors and another round of massive equity shorting will take place. Long covering and margin calls will lead to a cascading fall in equity markets in the US and a transmission to global equity markets. US and global equity markets will enter into a persistent bear market as in a typical US recession the S&P500 falls by about 28%.
Eleventh, the worsening credit crunch that is affecting most credit markets and credit derivative markets will lead to a dry-up of liquidity in a variety of financial markets, including otherwise very liquid derivatives markets. Another round of credit crunch in interbank markets will ensue triggered by counterparty risk, lack of trust, liquidity premia and credit risk. A variety of interbank rates – TED spreads, BOR-OIS spreads, BOT – Tbill spreads, interbank-policy rate spreads, swap spreads, VIX and other gauges of investors’ risk aversion – will massively widen again. Even the easing of the liquidity crunch after massive central banks’ actions in December and January will reverse as credit concerns keep interbank spread wide in spite of further injections of liquidity by central banks.
Twelfth, a vicious circle of losses, capital reduction, credit contraction, forced liquidation and fire sales of assets at below fundamental prices will ensue leading to a cascading and mounting cycle of losses and further credit contraction. In illiquid market actual market prices are now even lower than the lower fundamental value that they now have given the credit problems in the economy. Market prices include a large illiquidity discount on top of the discount due to the credit and fundamental problems of the underlying assets that are backing the distressed financial assets. Capital losses will lead to margin calls and further reduction of risk taking by a variety of financial institutions that are now forced to mark to market their positions. Such a forced fire sale of assets in illiquid markets will lead to further losses that will further contract credit and trigger further margin calls and disintermediation of credit. The triggering event for the next round of this cascade is the downgrade of the monolines and the ensuing sharp drop in equity markets; both will trigger margin calls and further credit disintermediation.
Based on estimates by Goldman Sachs $200 billion of losses in the financial system lead to a contraction of credit of $2 trillion given that institutions hold about $10 of assets per dollar of capital. The recapitalization of banks sovereign wealth funds – about $80 billion so far – will be unable to stop this credit disintermediation – (the move from off balance sheet to on balance sheet and moves of assets and liabilities from the shadow banking system to the formal banking system) and the ensuing contraction in credit as the mounting losses will dominate by a large margin any bank recapitalization from SWFs. A contagious and cascading spiral of credit disintermediation, credit contraction, sharp fall in asset prices and sharp widening in credit spreads will then be transmitted to most parts of the financial system. This massive credit crunch will make the economic contraction more severe and lead to further financial losses. Total losses in the financial system will add up to more than $1 trillion and the economic recession will become deeper, more protracted and severe.
A near global economic recession will ensue as the financial and credit losses and the credit crunch spread around the world. Panic, fire sales, cascading fall in asset prices will exacerbate the financial and real economic distress as a number of large and systemically important financial institutions go bankrupt. A 1987 style stock market crash could occur leading to further panic and severe financial and economic distress. Monetary and fiscal easing will not be able to prevent a systemic financial meltdown as credit and insolvency problems trump illiquidity problems. The lack of trust in counterparties – driven by the opacity and lack of transparency in financial markets, and uncertainty about the size of the losses and who is holding the toxic waste securities – will add to the impotence of monetary policy and lead to massive hoarding of liquidity that will exacerbates the liquidity and credit crunch.
In this meltdown scenario US and global financial markets will experience their most severe crisis in the last quarter of a century.
Can the Fed and other financial officials avoid this nightmare scenario that keeps them awake at night? The answer to this question – to be detailed in a follow-up article – is twofold: first, it is not easy to manage and control such a contagious financial crisis that is more severe and dangerous than any faced by the US in a quarter of a century; second, the extent and severity of this financial crisis will depend on whether the policy response – monetary, fiscal, regulatory, financial and otherwise – is coherent, timely and credible. I will argue – in my next article - that one should be pessimistic about the ability of policy and financial authorities to manage and contain a crisis of this magnitude; thus, one should be prepared for the worst, i.e. a systemic financial crisis.
Billionaire Investor Sees Bank Failures Ahead
Monday March 10, 10:52 am ET
Billionaire investor Wilbur Ross says the current market downturn differs from previous slumps in that no American banks have yet failed this time, but he suggests that's about to change.
"I think that's going to be the next wave, and coupled with problems in the commercial real estate market; I think they'll be the next bubbles that burst," the chairman and CEO of W. L. Ross and Company told CNBC's "Squawk Box" in an exclusive interview.
He was asked about the risks to big banks.
"I think that the big banks won't fail in the sense that they will go to zero and depositors would lose money," Ross replied. "I think the Fed and other regulators will make things happen.| I think it's the medium-sized banks, and particularly some of those that got overextended with the subprime and other kind of mortgage debt.| I think those are the ones that had the serious mismatch, making 20- and 30-year loans based on 90-day deposits."
Ross's comments echo those made by Federal Reserve Chairman Ben Bernanke, who told a Senate committee on Feb. 28 that some smaller regional banks that heavily invested in real estate could go under.
Ross and other high-profile investors have made recent moves in the credit markets, explaining that they have done so to snap up bargains. Last week it was reported that Ross had invested $1 billion into municipal bonds.
In the meantime, Ross said he didn't think the U.S. economy would recover any time soon.
"I think at best we're in for stagflation," Ross said, referring to the combination of higher inflation and weak economic growth. "I think the consumer has been tapped out for quite a while and is frightened by the poverty effect of seeing the house go down."
Straightening out the problems in the bond industry, particularly the situation of the insurers who backstop bond offerings, would go a long way toward fixing the current paralysis in the credit markets, Ross intimated. That process is underway, he suggested, with the current reassessment by ratings agencies of the bond insurers.
"Making real triple-As will solve a lot of the problem," he said. "The problem is we've had a lot fake triple-As before."
_________________ "The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell.
Stripped Bear
Mar 14th 2008 | NEW YORK
From Economist.com
A CENTURY after John Pierpont Morgan bailed out Wall Street, his bank is at it again. In a dramatic move on Friday March 14th, the Federal Reserve Bank of New York and JPMorgan Chase made emergency funding available to Bear Stearns after other market players lost confidence in the beleaguered investment bank as a trading partner. As the credit crunch has deepened and broadened, the worst fear of many on Wall Street has been the collapse or forced rescue of a big bank or broker. That moment is now upon them.
JPMorgan Chase is Bear’s clearing bank and will act as a conduit for Fed funding. In a special vote, the central bank’s governors chose to allow JP Morgan Chase to bring collateral from Bear, including mortgage assets, to the Fed discount window in return for 28-day loans. Bear does not have direct access to the window because it is not a depository institution. The Fed has agreed not to hold JPMorgan Chase liable for any losses on the collateral posted. The central bank has resorted to such an arrangement only twice before, in the depression of the 1930s and in the 1960s.
The meltdown at Bear, which began last summer when two of its hedge funds blew up, is a classic example of how liquidity problems and ebbing confidence can quickly turn into a solvency crisis, especially for investment banks, which are more reliant on short-term funding than commercial banks. Bear has spent much of the last year strengthening its funding structure. But in the past week doubts grew over its ability to meet its obligations. Other banks refused to step in as counterparties to Bear in credit-derivatives contracts. Bear’s boss, Alan Schwartz, admitted that his bank had struggled to dispel rumours and “parse fact from fiction”, and that its liquidity position was thus deteriorating at an alarming pace.
Bear’s shares initially jumped on news of the bail-out but crashed after the market opened on Friday. At one point, half of its market value had been wiped out—an unprecedented one-day fall for a big Wall Street firm in modern times. According to reports, clients were desperately trying to pull assets out of Bear on Friday. But the bank insisted that its capital ratios remained strong. It also said it would bring its first-quarter earnings announcement forward to March 17th.
The Fed’s concern is understandable. If it had failed to intervene on Friday, few doubt that Bear would have gone down the tubes. The timing of the move shows just how desperate the situation had become at Bear. If the bank could have held on until March 27th it would have been able to borrow directly from the central bank under a new facility announced earlier this week.
Though Bear is the smallest of the “big five” Wall Street investment banks, it is the most exposed to credit markets, particularly mortgages, relative to its size. Its larger peers can take comfort in being more diversified, but they too are largely at the mercy of short-term funding markets and the confidence of counterparties. Others will be losing sleep, too. Bear’s woes will only exacerbate worries about highly-leveraged hedge funds, an increasing number of which are finding it hard to stay afloat as their prime brokers jack up margin calls. A fund affiliated with Carlyle Group, a big private-equity firm, crashed this week.
Bear’s fate now hangs in the balance. It said on Friday that it was in talks with JPMorgan Chase over “permanent” financing, but that there could be “no assurance that any strategic alternatives will be successfully completed”—a possible reference to a takeover. And Bear was reportedly shopping itself to competitors with the help of another bank. The Fed and other regulators will work hard to ensure that Bear ends up under the wing of a stronger rival.
But would-be buyers have reason to be wary. Bear’s books are stuffed with complex “structured” mortgage-related assets, the value of which is hard to calculate. As a result, so is the value of Bear’s equity. A full-blown collapse cannot be ruled out if the value of its collateral—to whose credit risk the Fed is now exposed—continues to fall.
Ironically, the intervention came a day after Standard & Poor’s, a rating agency, said that the worst of banks’ write-downs related to subprime mortgages—Bear’s biggest weakness—may soon be over. But if the extraordinary events of the past day demonstrate anything, it is that investment banks are black boxes, and what really matters is not what sits in them but what their counterparties fear may be lurking inside. If others find themselves in Bear’s awful predicament, there will be little the Fed can do to forestall a rout.
_________________ "The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell.
Last edited by blackcat on Tue Mar 18, 2008 6:55 am; edited 1 time in total
Prior to 1901, neither the Justice Department nor the courts showed any interest to comply with the Sherman Act. Instead the act was perverted into a weapon for attacking labor unions. Since the Civil War, notwithstanding the Sherman Act, 5,300 separate firms were combined into 318 large corporations by 1904, with 236 of these combinations taking place between 1898 and 1903.
The development of public utilities fell largely into private hands. Coal, steel and railroads, three interconnected industries, fell under private control from the beginning. Hard anthracite coal soon passed to the control of the railroads, while soft bituminous coal continued to be mined by thousands of small operators. _________________ 'Come and see the violence inherent in the system.
Help, help, I'm being repressed!'
“The more you tighten your grip, the more Star Systems will slip through your fingers.”
Leading Economic Writer: Financial Meltdown A "Gigantic Fraud" Says Americans "duped" by "serpent-tongued" elite
Steve Watson, Infowars.net, Monday, March 17, 2008
A leading economic journalist has described the current financial crisis as a "gigantic fraud", the fallout of a deliberate and preconceived profit agenda to enslave the middle classes in a debt bubble.
The economics editor of the London Guardian, Larry Elliott, has hit out at the global financial elite in a refreshing piece that marks a rare shift away from the establishment hackery we are used to from the corporate media.
In an article titled America was conned - who will pay? Elliot writes:
Indeed, it is somewhat surprising that there is not already rioting in the streets, given the gigantic fraud perpetrated by the financial elite at the expense of ordinary Americans.
Business, of course, needs consumers to carry on spending in order to make money, so a way had to be found to persuade households to do their patriotic duty. The method chosen was simple. Whip up a colossal housing bubble, convince consumers that it makes sense to borrow money against the rising value of their homes to supplement their meagre real wage growth and watch the profits roll in.
As they did - for a while. Now it's payback time and the mood could get very ugly. Americans, to put it bluntly, have been conned. They have been duped by a bunch of serpent-tongued hucksters who packed up the wagon and made it across the county line before a lynch mob could be formed.
Elliot also states that the debate is now not about whether the US faces a recession, but is about how deep it will be and how long it will last, comparing the downturn to the South Sea Bubble crisis in 1720, and declaring that the "Ponzi securitisation scam has been exposed."
A Ponzi scheme, named after Charles Ponzi, is one that offers abnormally high short-term returns in order to entice new investors. The high returns that a Ponzi scheme advertises and pays require an ever-increasing flow of money from investors in order to keep the scheme going, meaning it is inevitable that it will eventually collapse.
Elliot, like former chief economist of the World Bank turned whistleblower, Joseph Stiglitz, points a finger of blame squarely at former Fed chairman Alan Greenspan, stating:
"In the longer term, lessons must be learnt from the turmoil. One is that you don't solve the problems of a collapsing bubble by blowing up another, which is what Alan Greenspan did after the dotcom fiasco in 2001 - the most irresponsible behaviour of any central banker in living memory."
Last week we highlighted the fact that Greenspan, instead of trying to act to reverse the damage he has done to the US economy, is actively encouraging its further demise by urging foreign states to abandon their dollar peg.
Another cogent point Larry Elliot makes is the following:
"If this is, heaven help us, The Big One, one of the only consolations will be that the repugnance at the orgy of speculation that has sapped the strength of the US economy will put a new New Deal on the political agenda."
It should be added that, given that this crisis has been engineered by a financial elite Ponzi scheme, we should be extremely wary of any "new deal" that is brokered by the financial and political elite posing as our saviors.
There are already talks of a "new world order" emerging from the fallout of the current economic meltdown. A consolidation among the big financial institutions does not spell good news for ordinary Americans and people across the world who have been effectively herded into this current crisis by the financial elite.
We, along with others such as Stiglitz, have repeatedly warned of the quickening of an agenda of economic catastrophe allied to the "solution" of predatory globalism.
Nevertheless, while CNN and other mainstream outlets continue to parade economic "experts" who ludicrously suggest that the destruction of the dollar and the economic downturn is "not necessarily a bad thing" for America, it is a refreshing change to read a mainstream report that actually hints at the reality of the situation the US and the rest of the world now faces at the hands of the elite.
_________________ "The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell.
COMPETITION has intensified in the mobile phone market with rival companies offering a medium-sized bank with every new handset.
T-Mobile's Nokia/Lloyds TSB deal includes built-in GPS and 63,000 staff.
Vodafone are tempting new customers with a Motorola V9 or a Samsung G600 and their choice of HBOS, the Woolwich or Bradford and Bingley.
A Vodafone spokesman said: "The HBOS deal is going well, but a lot of people are saying they would rather just have the phone without being saddled with the Woolwich's over-valued mortgage book."
Carphone Warehouse said it has attracted thousands of new sign ups with its range of Nokia deals, which include a bluetooth headset and a seat on the board of Alliance and Leicester.
A company spokesman said: "We don't want to overwhelm people. At the end of the day they are buying a phone, not a bank."
Meanwhile O2 is enhancing its Apple iPhone offer with 200 free minutes, 100 free texts and a controlling stake in BNP-Paribas.
Roy Hobbs, deputy chief economist at Madeley-Finnigan, said: "More and more people are transferring their assets out of banks and into Tupperware. And then putting the Tupperware on a secret shelf inside the chimney breast.
"Inevitably this means warehouses filled with worthless banks that have to be given away for nothing before they start to stink like rotting cheese."
Hunt for £100m rogue trader after attack on HBOS share price
By Robert Winnett and Philip Aldrick
Last Updated: 8:32pm GMT 19/03/2008
A hunt has been launched for a stock market trader who may have made £100 million in a "modern day bank robbery" after an attack on the share price of the country's biggest mortgage lender.
HBOS: target of crisis speculation
HBOS: target of crisis speculation
Shares in Halifax Bank of Scotland fell by 17 per cent as traders attempted to make a fortune by betting on the bank's falling stock.
Malicious rumours circulated by speculators were blamed for the run, which saw more than £3 billion wiped off the bank's value.
Britain's financial watchdog launched a criminal investigation to hunt down "ruthless" rogue traders, including one speculator thought to have made £100m from buying and selling shares during the day.
A senior HBOS executive said: "This is the modern day version of bank robbery."
The day's developments - which followed several days of turmoil on the world's stock markets - were triggered by the circulation of false information the state of HBOS's finances.
An email circulated in the City by an anonymous banker, seen by The Daily Telegraph, falsely alleged that a newspaper was to run an article today on problems at HBOS which "will raise the spectre of a run on the bank".
It was also falsely alleged that HBOS, Britain's biggest mortgage lender, had sought emergency talks with the Bank of England over the Easter weekend.
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In the current febrile atmosphere - following the collapse of American investment bank Bear Stearns last week - the malicious rumour quickly spread causing consternation in the City and the share price fell sharply.
The selling of shares also spread to other banks and helped push down the FTSE-100 index, which has seen wild fluctuations in recent days.
In an unprecedented intervention, the Bank of England issued a statement denying that any major high street bank was in difficulty.
HBOS also warned that the rumour was "unfounded and malicious" and the Financial Services Authority (FSA) launched an investigation, likely to be the biggest in its history.
The FSA has criminal powers and is likely to want to set an example if it uncovers wrongdoing.
The day's events took place shortly after trading started at 8am. By 8.50am shares in HBOS had reached a new low of 398p, down 17 per cent.
Half an hour later the bank officially denied the rumour it had applied for emergency funding from the Bank of England. At 10.10am the Bank issued a statement also denying the claims and at 12.30pm the FSA announced the launch of its investigation.
Following these public statements, HBOS's share price recovered to close at 446 1/4p, down around seven per cent.
HBOS is one of Britain's biggest banks and holds the mortgages of one in five people in this country. It is also the country's biggest savings bank with £240 billion of customer deposits.
The regulators were concerned that the events on the stock market may, if left uncorrected, have triggered a run on the bank and the flase rumour would become self-fulfilling.
Danny Gabay, a former Bank of England official now at Fathom Financial Consulting, said: "If this is pure market abuse, they [the traders] should be prosecuted quickly and aggressively.
"This not just threatens investors but real jobs and real people, and given HBOS's central role in the UK mortgage market it could have had wider ramifications. In these febrile times, this is the last thing we need.''
Over the past few days, the FSA has become increasingly wary of hedge funds and bank traders taking large "short" positions to profit from falls in banking shares.
Short sellers sell shares they do not own in the belief they can buy them back cheaper at a later date.
On Wednesday more than £1 billion of HBOS shares are understood to have been shorted. The process is not illegal but any attempt to manipulate the share price - such as by spreading false rumours - is against the law.
There is also concern that financial institutions may have large vested interests in important banks failing which is against the national interest.
In one of the strongest statements issued by a regulator, Sally Dewar, a managing director at the FSA, said: "There have been a series of completely unfounded rumours about UK financial institutions in the London market over the last few days, sometimes accompanied by short-selling. We will not tolerate market participants taking advantage of the current market conditions to commit abuse by spreading false rumours and dealing on the back of them."
An HBOS spokesman said: "There is not a shred of substance whatsoever in these unfounded and malicious rumours. This is a classic case of a lie being half way round the world before truth has its boots on. It is deeply concerning these rumours are circulating the markets.
"HBOS is one of the strongest financial institutions in the world with a balance sheet of £660bn. The group also has the largest deposit base in the UK. We are one of the most respected names in the wholesale and capital markets. HBOS is a very strong financial institution."
Within the City, the events of Wednesday have shone an unwelcome spotlight on the shadowy world of hedge funds and investment bank trading desks and their aggressive behaviour.
Christopher Miller, chief executive of Allenbridge HedgeInfo, which analyses hedge funds said: "The banks and their traders have started to realise that they have got to pull themselves together as this sort of thing is not acceptable. They may well have a vested interest in shares falling but they don't want to trigger financial Armageddon."
David Buik of the spread betting firm Cantor Index, said: "Every investor in the world knows that the banking sector is under the cosh. But what is unforgiveable is to perpetrate rumours about a pillar of financial society without foundation.
"For market spivs and vagabonds to attempt to capitalise unfairly on the weakness of the sector with vituperative rumours is wholly unacceptable."
However, several hedge funds defended their actions. Firms including Odey Asset Management and Lansdowne Partners, which made £500m from the collapse of Northern Rock, have long-held short positions in banks including HBOS which they believe are over-valued on the stock market and will fall in value.
They are thought to have made millions of pounds on Wednesday and have acted entirely legally. There is no suggestion that either Odey or Lansdowne was involved in the false rumour.
City insiders point out that Bear Stearns also denied any problems last week and blamed the share price fall on unfounded speculation. They were forced to accept a cut-price takeover bid at the weekend after seeking emergency funding.
The Bank of England will today meet with the country's leading banks to discuss ways in which they can help to alleviate the growing credit crisis.
Mervyn King, the Bank's Governor, will come under pressure to extend more credit to British banks who claim they are at a disadvantage to foreign banks who they claim are being given more support by their governments and central banks.
Several smaller building societies, including Bath and Earl Shilton pulled their mortgage deals for new customers. Bank of Scotland also reduced its range.
The news came as analysts Capital Economics warned that the UK economy could follow the United States into a sharp consumer slowdown triggered by falling house prices.
Almost two years old but all the better as it needs no hindsight to see what the problem is with the current financial state of affairs.
Quote:
July 2006 – 'THE FEDERAL RESERVE: FRAUD OF THE CENTURY'
While millions of Americans look with awe to the Federal Reserve to protect the nation's financial well being, millions more mistrust the Fed, seeing it as an unaccountable, private banking cartel siphoning off citizens' wealth and manipulating America's economy for the benefit of a hidden elite.
Where does the truth lie? That's the question that's asked – and answered in-depth – in the July issue of WorldNetDaily's acclaimed monthly Whistleblower magazine.
Titled "THE FEDERAL RESERVE: FRAUD OF THE CENTURY," Whistleblower documents authoritatively and with uncommon clarity how the "Federal Reserve" – which is neither part of the federal government, nor does it rely on monetary reserves – is an unconstitutional, unelected cartel that literally creates the devastating problems it was supposed to prevent.
Today, the entire Western financial world holds its breath every time the Fed chairman speaks, so influential are the central bank's decisions on markets, interest rates and the economy in general. Yet the Fed, supposedly created to smooth out business cycles and prevent disruptive economic downswings like the Great Depression, has actually done the opposite.
"From the Great Depression, to the stagflation of the seventies, to the burst of the dotcom bubble" in 2001, charges U.S. Rep. Ron Paul, "every economic downturn suffered by the country over the last 80 years can be traced to Federal Reserve policy."
While many Fed defenders claim it worked valiantly to prevent or minimize the ravages of the Great Depression, in reality the Fed caused the Depression and greatly increased the severity of its effects.
In fact, as July's Whistleblower documents, the Fed's new chairman, Ben Bernanke, admits that the Federal Reserve was responsible for the Great Depression. "We did it," Bernanke said, adding, "We're very sorry."
But the Fed's sins go way beyond the Great Depression. "Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy," said Paul, the congressman best known for his steadfast commitment to the U.S. Constitution.
"In addition," said the Texas Republican, "most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve's inflationary policies. This represents a real, if hidden, tax imposed on the American people."
And that's just the beginning. In this special Whistleblower issue , the crucial subject of economics and money – often deliberately made overly complicated and confusing – is laid out in the clearest way possible.
Whistleblower takes readers on a stunning time-travel journey back to 1913, to a train on its way to Jekyll Island, just off the coast of southern Georgia, where America's wealthiest and most influential bankers got together in secret and hatched their plan for creating the private banking cartel that would control the American economy. It would deceptively be named the Federal Reserve to create the impression it is part of the federal government.
Without resorting to financial jargon or doubletalk, Whistleblower explains in plain, commonsense language exactly how the Fed works and how Americans' formerly gold-backed currency has been corrupted and much of their buying power lost, thanks to the Fed, and how this continues into the present.
Although today the governors of the Federal Reserve are literally the gods of the nation's money supply and financial policy, in previous eras of American history, leaders warned specifically against an unaccountable, unelected central bank:
"I sincerely believe ... that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale." – Thomas Jefferson
"Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money." – Daniel Webster
"Whoever controls the volume of money in any country is absolute master of all industry and commerce." – James A. Garfield
"All the perplexities, confusion and distresses in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation." – John Adams
"For this issue of Whistleblower," said David Kupelian, managing editor of WND and Whistleblower, "we tried to remedy John Adams' concern over Americans' 'ignorance of the nature of coin, credit, and circulation.' So we worked very hard to come up with the most credible, most understandable, yet comprehensive analysis of the Fed possible."
Kupelian added. "This issue will go a long way toward giving you the understanding you need – not only regarding this nation's extraordinarily deceitful banking and money system, but also, to help you make better financial and life decisions for the sake of yourself and your family."
_________________ "The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell.
"The day the dollar died". Video with English subtitles. Its in Dutch but still well worth viewing. _________________ "The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell.
http://youtube.com/watch?v=Nq7Li1MOF2Y
Ten minute video discussing getting rid of the Federal Reserve. Jim Cramer and Ron Paul. _________________ "The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell.
Joined: 30 Jul 2006 Posts: 6060 Location: East London
Posted: Sun Mar 23, 2008 5:48 pm Post subject:
'Money as Debt' (Brasscheck 50mins):
http://www.brasschecktv.com/page/135.html _________________ 'And he (the devil) said to him: To thee will I give all this power, and the glory of them; for to me they are delivered, and to whom I will, I give them'. Luke IV 5-7.
This sort of analysis might just help us prepare for the current global financial disaster when it kicks in.
Virtually nobody seems to have a programme to deal wih it except guess who - Mr Webster Tarpley again. That's why I like this guy so much, he keeps cropping up as someone who has genuinely thought things through ahead of schedule.
I can hardly believe that almost nobody else has sussed out this 'Angel Is Next' stuff
29crash.doc
Description:
BRITISH FINANCIAL WARFARE: 1929; 1931- 33
HOW THE CITY OF LONDON CREATED THE GREAT DEPRESSION
If not before then certainly after Waterloo Britain fell into thrall of the Rothschild invisible empire. Agents of Zion have been pulling strings ever since. Balfour declaration being one shining example. Jewish bankers caused the Crash of 1929, just as Jewish Fed chairmen stoked up the current even larger (potentially) crash.
Tarpley is good for a lot of stuff.
Royal Family real name is Guelph or Guelf. I think they are in intimately bound up with Rothschild _________________ Belief is the Enemy of Truth www.dissential.com
Richard C. Cook is a former U.S. federal government analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, NASA, and the U.S. Treasury Department.
Is an International Financial Conspiracy Driving World Events?
by Richard C. Cook
Global Research, March 27, 2008
"They make a desolation and call it peace." -Tacitus
Was Alan Greenspan really as dumb as he looks in creating the late housing bubble that threatens to bring the entire Western debt-based economy crashing down?
Was something as easy to foresee as this really the trigger for a meltdown that could destroy the world’s financial system? Or was it done, perhaps, "accidentally on purpose"?
And if so, why?
Let’s turn to the U.S. personage that conspiracy theorists most often mention as being at the epicenter of whatever elite plan is reputed to exist. This would be David Rockefeller, the 92-year-old multibillionaire godfather of the world’s financial elite.
The lengthy Wikipedia article on Rockefeller provides the following version of a celebrated statement he allegedly made in an opening speech at the Bilderberg conference in Baden-Baden, Germany, in June 1991:
"We are grateful to the Washington Post, the New York Times, Time magazine, and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during these years. But the world is now more sophisticated and prepared to march towards a world government which will never again know war, but only peace and prosperity for the whole of humanity. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in the past centuries."
This speech was made 17 years ago. It came at the beginning in the U.S. of the Bill Clinton administration. Rockefeller speaks of an "us." This "us," he says, has been having meetings for almost 40 years. If you add the 17 years since he gave the speech it was 57 years ago—two full generations.
Not only has "us" developed a "plan for the world," but the attempt to "develop" the plan has evidently been successful, at least in Rockefeller’s mind. The ultimate goal of "us" is to create "the supranational sovereignty of an intellectual elite and world bankers." This will lead, he says, toward a "world government which will never again know war."
Just as an intellectual exercise, let’s assume that David Rockefeller is as important and powerful a person as he seems to think he is. Let’s give the man some credit and assume that he and "us" have in fact succeeded to a degree. This would mean that the major decisions and events since Rockefeller gave the speech in 1991 have probably also been part of the plan or that they have at least represented its features and intent.
Therefore by examining these decisions and events we can determine whether in fact Rockefeller is being truthful in his assessment that the Utopia he has in mind is on its way or has at least come closer to being realized. In no particular order, some of these decisions and events are as follows:
The implementation of the North American Free Trade Agreement by the Bill Clinton and George W. Bush administrations has led to the elimination of millions of U.S. manufacturing jobs as well as the destruction of U.S. family farming in favor of global agribusiness.
Similar free trade agreements, including those under the auspices of the World Trade Organization, have led to export of millions of additional manufacturing jobs to China and elsewhere.
Average family income in the U.S. has steadily eroded while the share of the nation’s wealth held by the richest income brackets has soared. Some Wall Street hedge fund managers are making $1 billion a year while the number of homeless, including war veterans, pushes a million.
The housing bubble has led to a huge inflation of real estate prices in the U.S. Millions of homes are falling into the hands of the bankers through foreclosure. The cost of land and rentals has further decimated family agriculture as well as small business. Rising property taxes based on inflated land assessments have forced millions of lower-and middle-income people and elderly out of their homes.
The fact that bankers now control national monetary systems in their entirety, under laws where money is introduced only through lending at interest, has resulted in a massive debt pyramid that is teetering on collapse. This "monetarist" system was pioneered by Rockefeller-family funded economists at the University of Chicago. The rub is that when the pyramid comes down and everyone goes bankrupt the banks which have been creating money "out of thin air" will then be able to seize valuable assets for pennies on the dollar, as J.P. Morgan Chase is preparing to do with the businesses owned by Carlyle Capital. Meaningful regulation of the financial industry has been abandoned by government, and any politician that stands in the way, such as Eliot Spitzer, is destroyed.
The total tax burden on Americans from federal, state, and local governments now exceeds forty percent of income and is rising. Today, with a recession starting, the Democratic-controlled Congress, while supporting the minuscule "stimulus" rebate, is hypocritically raising taxes further, even for middle-income earners. Back taxes, along with student loans, can no longer be eliminated by bankruptcy protection.
Gasoline prices are soaring even as companies like Exxon-Mobil are recording record profits. Other commodity prices are going up steadily, including food prices, with some countries starting to experience near-famine conditions. 40 million people in America are officially classified as "food insecure."
Corporate control of water and mineral resources has removed much of what is available from the public commons, and the deregulation of energy production has led to huge increases in the costs of electricity in many areas.
The destruction of family farming in the U.S. by NAFTA (along with family farming in Mexico and Canada) has been mirrored by policies toward other nations on the part of the International Monetary Fund and World Bank. Around the world, due to pressure from the "Washington consensus," local food self-sufficiency has been replaced by raising of crops primarily for export. Migration off the land has fed the population of huge slums around the cities of underdeveloped countries.
Since the 1980s the U.S. has been fighting wars throughout the world either directly or by proxy. The former Yugoslavia was dismembered by NATO. Under cover of 9/11 and by utilizing off-the-shelf plans, the U.S. is now engaged in the military conquest and permanent military occupation of the Middle East. A worldwide encirclement of Russia and China by U.S. and NATO forces is underway, and a new push to militarize space has begun. The Western powers are clearly preparing for at least the possibility of another world war.
The expansion of the U.S. military empire abroad is mirrored by the creation of a totalitarian system of surveillance at home, whereby the activities of private citizens are spied upon and tracked by technology and systems which have been put into place under the heading of the "War on Terror." Human microchip implants for tracking purposes are starting to be used. The military-industrial complex has become the nation’s largest and most successful industry with tens of thousands of planners engaged in devising new and better ways, both overt and covert, to destroy both foreign and domestic "enemies."
Meanwhile, the U.S. has the largest prison population of any country on earth. Plus everyday life for millions of people is a crushing burden of government, insurance, and financial fees, charges, and paperwork. And the simplest business transactions are burdened by rake-offs for legions of accountants, lawyers, bureaucrats, brokers, speculators, and middlemen.
Finally, the deteriorating conditions of everyday life have given rise to an extraordinary level of stress-related disease, as well as epidemic alcohol and drug addiction. Governments themselves around the world engage in drug trafficking. Instead of working to lower stress levels, public policy is skewed in favor of an enormous prescription drug industry that grows rich off the declining level of health through treatment of symptoms rather than causes. Many of these heavily-advertised medications themselves have devastating side-effects.
This list should at least give us enough to go on in order to ask a hard question. Assuming again that all these things are parts of the elitist plan which Mr. Rockefeller boasts to have been developing, isn’t it a little strange that the means which have been selected to achieve "peace and prosperity for the whole of humanity" involve so much violence, deception, oppression, exploitation, graft, and theft?
In fact it looks to me as though "our plan for the world" is one that is based on genocide, world war, police control of populations, and seizure of the world’s resources by the financial elite and their puppet politicians and military forces.
In particular, could there be a better way to accomplish all this than what appears to be a concentrated plan to remove from people everywhere in the world the ability to raise their own food? After all, genocide by starvation may be slow, but it is very effective. Especially when it can be blamed on "market forces."
And can it be that the "us" which is doing all these things, including the great David Rockefeller himself, are just criminals who have somehow taken over the seats of power? If so, they are criminals who have done everything they can to watch their backs and cover their tracks, including a chokehold over the educational system and the monopolistic mainstream media.
One thing is certain: The voters of America have never knowingly agreed to any of this.
Joined: 25 Jul 2005 Posts: 18335 Location: St. Pauls, Bristol, England
Posted: Sun Mar 30, 2008 12:03 am Post subject: Broken banks - look at the graph
This 'ere little graph - my friends - is serious.
Global systemic crisis / September 2008 - Phase of collapse of US real economy
Global systemic crisis – End of 2008: Pension funds go off the rails
the graph above shows a catastrophic fall from the August 2007 US credit crunch
Non-Borrowed reserves of US depository institutions - Source Federal reserve of Saint Louis
Remember to move your money into little £35,000 packets - explained here
Guardian wrote:
In the UK, the Financial Services Compensation Scheme guarantees 100% of the first £2,000 and 90% of the next £33,000 held in a savings account, so the maximum protected sum is £31,700 - something to note for anyone with more than £32,000 in any one savings account, perhaps. But as you say, this protection doesn't extend to the Channel Islands or the Isle of Man.
http://www.guardian.co.uk/money/2007/sep/25/consumeraffairs1
Mon, 03/24/2008 - 23:15 — D2
Thanks to Peter Spina of Goldseek.com for digging up this video from the 1992 riots in LA - a reminder of how quickly society's rules can crumble. Peter writes, "From 1992, what similar attitudes and actions could result from upcoming severe economic hardships. Such episodes of sporadic explosions of crime and violence in dense population zones coming back soon to a city near you?"
http://depression2.tv/d2/node/57
Remember to move your money into little £35,000 packets
As soon as I get the next £34,950 I will follow your advice. _________________ "The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell.
P Chidambaram
Greed is overtaking the common good of the world
Indian Finance Minister P Chidambaram has said that it is "outrageous" that developed countries are turning food crops into bio fuels.
He said that countries like the US were doing so while the world's poor are struggling with surging food prices.
Delivering a lecture in Singapore, Mr Chidambaram said that using corn and other crops for fuel was a sign of "lopsided priorities".
He said that such an "uncaring" policy had to be strongly condemned.
The finance minister was also critical of "lax supervision", which he said had led to the US mortgage crisis and global economic uncertainty.
'Deprived of food'
Mr Chidambaram said developing economies were shouldering an "enormous burden" from the relentless rise in prices of food and commodities.
He said the situation was worsened by the diversion of food to produce bio fuels in some countries.
Citing the US as an example, he said nearly 20% of corn goes to making bio fuels.
India village family
Mr Chidambaram said there was now a climate of food insecurity
"It is a sign of the lopsided priorities of certain countries that they will resort to measures that will produce fuel at a cheaper cost in order to meet the transport requirements of a section of their population," Mr Chidambaram said.
He said the pursuit of such policies at a time when many in the world could barely afford to eat was "outrageous and... must be condemned".
Corn, soybeans, sugar cane and other crops are seen as sources of clean and cheap biofuels.
Correspondents say this results in less grain available for human consumption, which drives up the prices for basic foodstuffs.
The finance minister said that the prices of maize, rice and wheat have at least doubled between 2004 and last month, while commodities such as crude oil and metals have also spiralled in price.
He said that these rises were damaging for countries like India, which subsidises food and fuel.
Mr Chidambaram also said the rise in oil prices from about $30 a barrel in 2004 to above $100 this year is another example of "greed overtaking the common good of the world".
"Oil producing countries have struck a gold mine. Demand is very high... they think that this is a great time to reap in the profits," he said.
"I understand that from a commercial point of view, but it's hurting the world economy."
As Jobs Vanish and Prices Rise, Food Stamp Use Nears Record
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By ERIK ECKHOLM
Published: March 31, 2008
Driven by a painful mix of layoffs and rising food and fuel prices, the number of Americans receiving food stamps is projected to reach 28 million in the coming year, the highest level since the aid program began in the 1960s.
The number of recipients, who must have near-poverty incomes to qualify for benefits averaging $100 a month per family member, has fluctuated over the years along with economic conditions, eligibility rules, enlistment drives and natural disasters like Hurricane Katrina, which led to a spike in the South.
But recent rises in many states appear to be resulting mainly from the economic slowdown, officials and experts say, as well as inflation in prices of basic goods that leave more families feeling pinched. Citing expected growth in unemployment, the Congressional Budget Office this month projected a continued increase in the monthly number of recipients in the next fiscal year, starting Oct. 1 — to 28 million, up from 27.8 million in 2008, and 26.5 million in 2007.
The percentage of Americans receiving food stamps was higher after a recession in the 1990s, but actual numbers are expected to be higher this year.
Federal benefit costs are projected to rise to $36 billion in the 2009 fiscal year from $34 billion this year.
“People sign up for food stamps when they lose their jobs, or their wages go down because their hours are cut,” said Stacy Dean, director of food stamp policy at the Center on Budget and Policy Priorities in Washington, who noted that 14 states saw their rolls reach record numbers by last December.
One example is Michigan, where one in eight residents now receives food stamps. “Our caseload has more than doubled since 2000, and we’re at an all-time record level,” said Maureen Sorbet, spokeswoman for the Michigan Department of Human Services.
The climb in food stamp recipients there has been relentless, through economic upturns and downturns, reflecting a steady loss of industrial jobs that has pushed recipient levels to new highs in Ohio and Illinois as well.
“We’ve had poverty here for a good while,” Ms. Sorbet said. Contributing to the rise, she added, Michigan, like many other states, has also worked to make more low-end workers aware of their eligibility, and a switch from coupons to electronic debit cards has reduced the stigma.
Some states have experienced more recent surges. From December 2006 to December 2007, more than 40 states saw recipient numbers rise, and in several — Arizona, Florida, Maryland, Nevada, North Dakota and Rhode Island — the one-year growth was 10 percent or more.
In Rhode Island, the number of recipients climbed by 18 percent over the last two years, to more than 84,000 as of February, or about 8.4 percent of the population. This is the highest total in the last dozen years or more, said Bob McDonough, the state’s administrator of family and adult services, and reflects both a strong enlistment effort and an upward creep in unemployment.
In New York, a program to promote enrollment increased food stamp rolls earlier in the decade, but the current climb in applications appears in part to reflect economic hardship, said Michael Hayes, spokesman for the Office of Temporary and Disability Assistance. The additional 67,000 clients added from July 2007 to January of this year brought total recipients to 1.86 million, about one in 10 New Yorkers.
Nutrition and poverty experts praise food stamps as a vital safety net that helped eliminate the severe malnutrition seen in the country as recently as the 1960s. But they also express concern about what they called the gradual erosion of their value.
Food stamps are an entitlement program, with eligibility guidelines set by Congress and the federal government paying for benefits while states pay most administrative costs.
Eligibility is determined by a complex formula, but basically recipients must have few assets and incomes below 130 percent of the poverty line, or less than $27,560 for a family of four.
As a share of the national population, food stamp use was highest in 1994, after several years of poor economic growth, with an average of 27.5 million recipients per month from a lower total of residents. The numbers plummeted in the late 1990s as the economy grew and legal immigrants and certain others were excluded.
But access by legal immigrants has been partly restored and, in the current decade, the federal and state governments have used advertising and other measures to inform people of their eligibility and have often simplified application procedures.
"As the credit crunch bites and a global economic crisis threatens, Robert Peston reveals how the super-rich have made their fortunes, and the rest of us are picking up the bill. "
BBC2 : 9 pm Tonight April 1 2008 (60 mins) _________________ "The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell.
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