The Collapse of the U.S. Economy and Government Finances

America’s Fiscal Collapse: Obama’s Budget Will Impoverish America

March 16, 2009

Global Research - The administration’s 2010 budget will entail the most drastic curtailment in public spending in American history, leading to social havoc and the potential impoverishment of millions of people. Defense spending and bank bailouts will consume all government revenue resulting in fiscal collapse that will lead to the privatization of the state...

As General Motors Goes, So Goes the Nation

March 11, 2009

The Cutting Edge News - General Motors was founded in 1908 in Flint, Michigan and grew to be the largest corporation in the world... The story of General Motors is in many ways the story of America... GM’s rise to power and decline towards insolvency parallels the rise and fall of the Great American Republic. Overconfidence, hubris, lack of courage, foolish decisions made and crucial decisions deferred have been the hallmarks of GM and U.S...

Congress Approves Massive $410 Billion Spending Bill

March 10, 2009

AP – Congress on Tuesday sent President Barack Obama a once-bipartisan bill to fund the domestic Cabinet agencies that evolved instead into a symbol of lawmakers' free-spending ways and penchant for back-home pet projects. The Senate approved the measure by voice after it cleared a key procedural hurdle by a 62-35 vote. Sixty votes were required to shut down debate.

Obama is expected to sign the measure Wednesday to avoid a partial shutdown of the government. But the White House has kept the bill at arm's length, calling it last year's business. Obama is also set to announce steps aimed at curbing lawmakers' so-called earmarks.

The $410 billion bill is chock-full of those pet projects and significant increases in food aid for the poor, energy research and other programs. It was supposed to have been completed last fall, but Democrats opted against election-year battles with Republicans and former President George W. Bush...

The the bill ran into an unexpected political hailstorm in Congress after Obama's spending-heavy economic stimulus bill and his 2010 budget plan forecasting a $1.8 trillion deficit for the current budget year. And Republicans seized on Obama's willingness to sign a bill packed with earmarks after he assailed them as a candidate...

Cash-Starved States Need to Play the Banking Game: North Dakota Leads the Way

March 7, 2009

Web of Debt - Forty-six of fifty states are insolvent and could be filing Chapter 9 bankruptcy proceedings in the next two years. One of the four states that is not insolvent is an unlikely candidate for the distinction – North Dakota. What does the State of North Dakota have that other states don’t? The answer seems to be: its own bank...

Criminal Aliens Invading U.S. While President Obama Fiddles

March 5, 2009

Canada Free Press - It’s old news that the Mexican government exports Mexico’s poorest citizens into the United States for a number of reasons: It relieves them of the responsibility of providing social and healthcare services for them; it provides their country’s economy with an influx of US cash when these illegal workers send money they earn in the US back home; and it defuses problems with far-left groups who are usually successful in using the poor to advance their political agenda...

U.S. Debt Limit Hike to $12.1 Trillion in Stimulus

February 12, 2009

Reuters - U.S. borrowing authority would rise to $12.1 trillion under an economic stimulus bill rapidly moving through Congress, congressional aides said on Thursday.

Congress must authorize any increases in the federal government’s credit limit, which currently is set at $11.3 trillion. But with government spending rapidly escalating — because of financial industry bailouts, the Iraq war, increasing costs of retirement and health care programs and the $789 billion economic stimulus bill moving through Congress — the Treasury Department is rapidly closing in on the limit.

The U.S. debt currently is slightly more than $10.7 trillion. When President George W. Bush took office in 2001, the U.S. debt limit was around $5.7 trillion and debt rapidly rose through the eight years of his presidency.

The Right to Keep and Bear Arms

Giant Shipment of Weapons Seized at Airport

March 26, 2009

Local 12 - U.S. Customs agents say they’ve stopped a massive shipment of weapons from entering the United States through the Cincinnati Northern Kentucky International Airport...

Obama Pledges American Agents to Fight Mexican Drug Cartels

March 22, 2009

Washington Post - Obama is finalizing plans to move federal agents, equipment and other resources to the border with Mexico to support Mexican President Felipe Calderón’s campaign against violent drug cartels, according to U.S. security officials...

U.S. National Guard Stationed Along Mexican Border States

March 25, 2009

AP - ...Texas Gov. Rick Perry last month asked for 1,000 troops be sent to bolster border security in his state. Napolitano said Tuesday officials were still considering whether to station National Guard troops along the Arizona and Texas borders with Mexico, which some governors have requested.

In addition, officials said they will increase the number of immigrations and customs agents, drug agents, and antigun-trafficking agents operating along the border. The government also will allow federal funds to be used to pay for local law enforcement involved in Southwestern border operations and send more U.S. officials to work inside Mexico.

At the same time, U.S. prosecutors say they will boost efforts to go after those smuggling guns and drug profits from the U.S. into Mexico, and allowed that the problem was not only one of supply, but of demand for illicit narcotics in America.

Those steps come in addition to a three-year, $1.4-billion-dollar Bush administration-era program known as the Merida Initiative through which Congress already has approved $700 million to support Mexico's efforts to fight the cartels. Obama has said he wants to revamp the initiative...

Fears of Regulation, Crime Spur Sales of Firearms and Ammo

March 23, 2009

PostStar - ...Across the country, gun dealers are reporting a big uptick in sales of both firearms and ammunition. Requests for federal background checks for prospective gun buyers have surged since last fall, with the U.S. Bureau of Alcohol, Tobacco and Firearms reporting a nearly 50 percent increase after the election of President Barack Obama.

Tom King, president of the New York State Rifle and Pistol Association, said gun and ammunition sales around the country have risen in recent months. He said many are concerned a Democratic president and Democratic-controlled Congress will change gun laws and could potentially ban certain types of firearms, like those commonly referred to as assault rifles. Democratic lawmakers are generally viewed as less friendly to gun owners than their Republican counterparts.

"We're hearing it around the country. People are concerned about losing their guns," King said. "If they buy them now, they'll be grandfathered if the laws are changed."

Locally, gun dealers are seeing a number of trends when it comes to sales and purchases of firearms and ammunition. Most said gun sales are up, while others said they are steady. Ammunition sales have risen dramatically, they agreed.

"We're selling a lot of guns. It's been that way since November," said Kevin Zacharewicz, owner of Zack's Sport's in Round Lake. "Handgun sales are up; self-defense shotguns are up. People are worried about what's going on financially..." At MacGregor's Gun Shop in Queensbury, New York, owner Scott MacGregor said he's seen a "sudden influx" of customers wanting to buy "home defense-type weapons," like shotguns.

Everyone interviewed by The Post-Star for this story agreed ammunition of all calibers has gotten tougher to find, as gun owners stock up. Prices skyrocketed in recent years as metal prices went up, which caused many gun owners to stock up in anticipation of rising ammunition prices. There are also concerns that some larger calibers, or those used by military-type weapons, could be banned, restricted or taxed more heavily.

One northern Warren County, New York, resident found out recently the government is paying attention to such ammunition sales. West said a customer of his recently stocked up on .223-caliber rounds, a caliber often used in assault-style weapons. The customer bought 1,000 rounds a few months ago through a mail order company. Shortly after the purchase, he received a visit from the U.S. Department of Homeland Security, whose interest was apparently piqued by a large-scale purchase of that caliber. "His wife was home. He was at church," West said.

"People are buying a lot of ammunition in bulk these days," said Kathie Ferullo, owner of Discoveries USA, an outdoors outfitter in Warrensburg that sells guns and ammo. "For some types, we have to wait on a waiting list."

The down economy is also causing people to liquidate some of their valuable assets, including guns. West said his business hasn't seen a big rise in gun sales, but it has seen a rise in people wishing to sell guns to his store for economic reasons. He said one man recently brought in an 80-year-old antique rifle to sell because he needed money. "We've had guys come in with three or four guns to sell," he said.

Obama’s Gun Ban List Is Out

March 13, 2009

Infowars - Remember, the first step in establishing a dictatorship is to disarm the citizens... Gun bans will impact our freedoms under search and seizure, due process, confiscated property, states’ rights, free speech, right to assemble and more, in addition to the Second Amendment...

DOD Ends Sale of Expended Military Brass to Remanufacturers

March 16, 2009

The Shootist - AND SO IT BEGINS… We all wondered when it was going to start.

...It is an end-run around Congress. They don’t need to try to ban guns – they don’t need to fight a massive battle to attempt gun registration or limit "assault" weapon sales. Nope. All they have to do is limit the amount of ammunition available to the civilian market, and when bullets dry up, guns will be useless...

New York: Albany County Staging Attack on Ammunition Sales

SPP: Updating the Militarization and Annexation of North America

March 14, 2009

Global Research - The SPP is a military-backed corporate coup d’etat against the sovereignty of three nations, their populations and legislative bodies.

The Security and Prosperity Partnership of North America (SPP), also known as the North American Union, was formerly launched at a March 23, 2005 Waco, Texas meeting attended by George Bush, Mexico’s President Vincente Fox, and Canadian Prime Minister Paul Martin. It’s for a tri-national agreement, below the radar, for greater economic, political, and security integration with secret business and government working groups devising binding policies with no public knowledge or legislative debate.

In short, it’s a military-backed corporate coup d’etat against the sovereignty of three nations, their populations and legislative bodies. It’s a dagger through the heart of democratic freedom in all three, yet the public is largely unaware of what’s happening.

Last April, New Orleans hosted the last SPP summit. Ever since, progress may have stalled given the gravity of the global economic crisis and top priority need to address it. Nonetheless, what’s known to date is updated below plus some related information.

Last September, the Army Times reported that the 3rd Infantry’s 1st Brigade Combat Team in Iraq would be re-deployed at home (October 1) as “an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks.”

“This marks the first time an active unit has been given a dedicated assignment to NorthCom, a joint command established in 2002 to provide command and control for federal homeland defense efforts and coordinate defense support of civil authorities.”

Then on December 1, the Washington Post reported that the Pentagon will deploy 20,000 troops nationwide by 2011 “to help state and local officials respond to a nuclear attack or other domestic catastrophe.” Three “rapid-reaction” combat units are planned. Two or more others may follow. They’ll be supplemented by 80 smaller National Guard units trained to respond to chemical, biological, radiological, nuclear, high-yield explosive, and other domestic “terror” attacks or disturbances. In other words, homeland militarization and occupation are planned using troops trained to kill.

The pretext is national security. In fact, they’ll be on-call against another major terrorist attack, real or contrived, as well as civil unrest given the gravity of the economic crisis, its affect on millions, and likelihood that sooner or later they’ll react. Armed combat troops will supplement militarized local police in case security crackdowns are ordered or martial law declared.

“Catastrophic Emergency” procedures are in place to react to situations, “natural or manmade,” according to DHS/FEMA’s March 2008 “Preparedness for the Next Catastrophic Disaster” policy paper. Should conditions warrant, initiatives to suspend the Constitution and declare martial law are in place, but militarizing America for business is also at issue.

Last October 1, the Canadian Action Party posted a “COUP IN USA ALERT” after the Bush administration announced the homeland deployment of troops with “$100 billion (bailout) dollars” to do it...

Destabilizing Mexico

March 14, 2009

Global Research (Excerpt)

KNX News radio station, a subsidiary of Columbia Broadcasting System (CBS), reported this week that most of the guns that land in the hands of the drug cartel allegedly came from the black market in the United States. Ironically, most of the drugs that enter the United States from Mexico have been funneled to the Mexican drug lords through rendition flights from Columbia (cocaine) and Afghanistan (opium) to Mexico , then rerouted to the U.S. through the Mexican drug lords.

It would make sense to assume that Mexico is going to become a national security risk for the United States, which in turn will justify our Samaritan military aid and intervention to help the Mexican government contain the Mexican drug cartel. Therefore, Mexico will become a safer place for transnational corporations like Chevron and Exxon-Mobil. In addition, this process will pave the way for the Security and Prosperity Partnership to unravel, as well as the privatization of Mexico’s oil and natural resources and their takeover by the global corporations. As a result, a massive transfer of wealth and power to the new North American Union Government will unfold.

Is the American public aware and in agreement with the SPP?

Are we going to witness more conflict within our borders due to economic woes, or contrived attacks, which in return will solidify further the iron hand of our new democratic-socialist government?

Are we going to witness another major economic collapse like the prospective commercial real estate disaster that will cause major reverberations in the stock market, which will induce further impoverishment of the population, and which will lead to more bailouts leading to higher inflation, new currency, and poorer standard of living?

Are we heading toward civil unrest incited by the economic woes that will lead to the balkanization of America?

Or, are we simply going to be led like sheep to the slaughter house where we will give up our freedom to satisfy our primal needs like food, shelter and safety, then become totally impoverished, micro-chipped and controlled, and finally be forced into accepting the new global order?

Who Benefits from the Destabilization of Mexico?

March 13, 2009

Infowars - In order to solve the problem of violence associated with the drug cartel war in Mexico, Rep. John Tierney (D-Mass) said during a House subcommittee hearing on Thursday that the government should think about imposing further restrictions on the Second Amendment. “Let’s examine our gun laws, let’s cut down on U.S. drug consumption, let’s ask there to be more resources to root out drug money laundering,” said Tierney...

Mat Rodina - By summer of this year, Mexico will enter a full blown war with large scale gun battles in most of the cities. Most civil wars push out refugees. If even 10% of the 110 million living in Mexico start running north, that will collapse the governments of the American border states, already bankrupt from the Bank Panic of 2008 and the Economic Collapse of 2009. Most civil wars actually push out closer to 30-40% of a population, thus anywhere between 30-50 million people could head north.

But it gets even worse. A large chunk of the former U.S. industry is located in northern Mexico, already in the war zone. U.S. companies suffering in the present economic climate will further sink or collapse with the loss of these facilities, and their closing will force even more economic and war refugees north. A large percentage of the U.S. fruits and vegetables also come from Mexico, as does U.S. oil. It is not difficult to imagine that small groups of Mexican bandits could easily take to the water in speed boats and begin to raid the various oil platforms, freighters and cruise ships sailing in the Gulf of Mexico and the southern Caribbean Seas. Somalia has already proven how effective this is.

All of this would require a large amount resources that the U.S. no longer has to spare and will push the Americans into a grave political crisis. Stay tooned, dear readers, this is starting to get ugly.

Obama’s USA Service Website Hosts Gun “Buy Back” Event

Obama has pledged to to make the assault weapons ban permanent and promised to push for childproofing guns. He said he wanted to close the gun show loophole, which permits sales of firearms at gun shows without requiring a background check.

February 27, 2009

Infowars - The usaservice.org website was originally set in place to facilitate Obama’s “call to service” on the national Martin Luther King Day of Service, a federally mandated “holiday” cooked up by Congress and Bill Clinton in 1994. “Individuals, businesses, non-profits, and churches from Baptist to Mormon to Scientologist are employing the site to publicize events and recruit volunteers,” writes Mark Bergin for World, a Christian magazine. “In many ways, such online organizing and activity is a picture of compassionate conservatism: privately initiated and funded opportunities to render social services.”

As it turns out, usaservice.org is being used as a platform for activity that is anything but the picture of compassionate conservatism. In the “Health & Public Safety” section of the website, there is a post for a gun “buy back” event that was presumably held in Chicago on Sunday, February 15. Bryan Garcia, host of the event, offered to pay $1,500 per gun and $6,000 for four guns. “We will prevent hundreds of people being shot from gang violence and other forms of gun violence,” writes Garcia. “The money given these anonymous gun donors has to be high, high enough to outweigh the need for gun owners...”

Obama to Seek New Assault Weapons Ban

February 27, 2009

ABC News - The Obama administration will seek to reinstate the assault weapons ban that expired in 2004 during the Bush administration, Attorney General Eric Holder said today. “As President Obama indicated during the campaign, there are just a few gun-related changes that we would like to make, and among them would be to reinstitute the ban on the sale of assault weapons,” Holder told reporters.

Holder said that putting the ban back in place would not only be a positive move by the United States, it would help cut down on the flow of guns going across the border into Mexico, which is struggling with heavy violence among drug cartels along the border...

The Final Push for World Government

Rudd Meets Kissinger to Discuss Asia Pacific Union

March 27, 2008

abc.net.au - Prime Minister Kevin Rudd has discussed his proposal for an Asia Pacific community with the former Nixon administration’s secretary of state, Henry Kissinger.

Mr Rudd talked to the former diplomat and national security adviser during his visit to New York, ahead of the G20 leaders’ meeting in London.

A spokesman for Mr Rudd says they discussed the evolving strategic and economic landscape in the Asia Pacific region and Mr Rudd’s long term goal of developing a new regional grouping, the Asia Pacific community...

UN ‘Climate Change’ Plan Would Likely Shift Trillions to Form New World Economy

March 27, 2009

Fox News - A United Nations document on “climate change” that will be distributed to a major environmental conclave next week envisions a huge reordering of the world economy...

IMF Director Warns of War

March 25, 2009

World Socialist Web Site - Dominique Strauss-Kahn, managing director of the International Monetary Fund, warned on Monday that the global economic situation is "dire" and could lead to social upheaval and war. The statement is the latest in a series of worried pronouncements from leading international figures in the financial and political establishment.

The IMF is projecting a 1 percent decline in the global economy this year, which Strauss-Kahn noted would be "the first setback of the world economy in over 50 years." The IMF chief was speaking before a meeting of the International Labour Organization (ILO) in Geneva, Switzerland.

The economic crisis, Strauss-Kahn said, would affect "dramatically unemployment for many countries. It will be at the roots of social unrest, some threats to democracy and maybe for some cases, it can also end in war." Without citing specific countries, Strauss-Kahn also warned of regions of the world where "the financial collapse risk does exist..."

Global Investors Ponder Implications of U.S. Dollar Collapse

March 26, 2009

World Socialist Web Site - ...The administration's printing or borrowing of trillions of dollars that it hands out to Wall Street and major U.S. banks has undermined confidence in the dollar, the currency in which most international trade is conducted. Administration claims that the dollar is strong are a glaring falsehood: the U.S. dollar is already below historic benchmarks against other major currencies...

Geithner Assures CFR Puppet Masters He’s 'Open' To Global Currency

March 26, 2009

Prison Planet - As we reported yesterday, Obama, Geithner and Bernanke on Tuesday publicly defended the dollar and denounced proposals by China and Russia to supplant the greenback with a new global currency, and yet the very policies of the Obama administration, the Treasury and the Federal Reserve are creating the perfect storm for the dollar’s death and its replacement with a new international reserve currency.

“Would you categorically renounce the United States moving away from the dollar and going to a global currency as suggested by China?” a lawmaker asked Treasury Secretary Geithner on Tuesday.

Geithner immediately responded, “I would.”

However, just a day later, Geithner told the CFR in a speech that he was “open” to the Chinese proposal to replace the dollar with a new international reserve system.

“I haven’t read the governor’s proposal. He’s a very thoughtful, very careful distinguished central banker. I generally find him sensible on every issue,” said Geithner, before adding, “We’re actually quite open to that suggestion – you should see it as rather evolutionary rather building on the current architecture rather than moving us to global monetary union.”

However, any move away from the dollar and towards an international reserve system, including the use of “special drawing rights” – a synthetic multinational currency maintained by the IMF, cannot be defined as anything other than a move towards a global monetary union.

The continued use of the dollar as a reserve currency, he added, “depends... on how effective we are in the United States… at getting our fiscal system back to the point where people judge it as sustainable over time...”

Obama Denounces Global Currency While Creating the Very Means for Its Introduction

March 25, 2009

Prison Planet - The endgame... can mean little else but the creation of a global currency that can be tightly regulated and controlled by international bodies such as the IMF and World Bank, therefore Bernanke’s public denouncement of a “global currency” is nothing more than a two faced stunt.

In addition, as Ron Paul has warned, Bernanke’s policies are leading to the destruction of the dollar and the creation of a vacuum that would create the perfect pretext for the introduction of a global currency.

Trillions upon trillions of freshly printed federal reserve notes that are being used to throw good money after bad, pay corrupt banker’s bonuses and bailout failed, inept and incompetent banks and corporations at the expense of the taxpayer are going to create a hyperinflationary holocaust that will plunge the dollar into a crisis never before experienced and will undoubtedly put massive pressure on China and Japan to liquidate their holdings of U.S. debt and replace it with a new form of international reserve currency...

China and Russia Voice Support for New Global Currency to Replace Dollar

March 23, 2009

Prison Planet - China has expressed support for Russia’s proposal to hand the IMF the power to create a new supra-national global currency in response to the call for an alternative to the U.S. dollar as the world reserve currency. Last week the Kremlin called for the “creation of a supranational reserve currency to be issued by international institutions as part of a reform of the global financial system.”

The Russian proposal stated that the IMF should take the lead in establishing a “superreserve currency accepted by the whole of the international community.” China today expressed support for the initiative and said it was ready to discuss the proposal at the upcoming G20 meeting in London on April 2...

Qaddafi Named Chairman of African Union

Originally Reported on February 2, 2009

Newser – Muammar Qaddafi vowed to pursue his dream of creating a united, pan-African government after being named chairman of the African Union today, Reuters reports. Elected by African heads of state for a 1-year term, the Libyan leader said the organization must consider his proposal for a “United States of Africa” at the next summit in July.

Qaddafi said only opposition from a majority of African countries would stop his proposal. “If we don’t have a quorum for rejection, that means we have accepted it,” Qaddafi said. While all members of the AU say they support the creation of an African state in theory, Qaddafi’s plan is likely to meet opposition from many nations, including South Africa.

South American Union Will Also Have Common Currency

Originally Reported on June 21, 2008

NaturalNews - Brazilian President Luiz Inacio Lula da Silva recently revealed that the South American countries are planning for a common currency as part of the integration of the individual countries into the Union of South American Nations. This integration is patterned after the formation of the European Union, and parallels the plan for the North American Union...

43-Nation Mediterranean Union Created

Originally Reported July 13, 2008

AP — French President Nicolas Sarkozy urged the disparate and conflicted countries around the Mediterranean Sea on Sunday to make peace as European rivals did in the 20th century, as he launched an unprecedented Union for the Mediterranean...

"The European and the Mediterranean dreams are inseparable," Sarkozy told leaders from more than 40 nations in Europe, the Middle East and North Africa. "We will succeed together; we will fail together."

The union Sarkozy championed as a pillar of his presidency brought together around one table for the first time dignitaries such rival nations as Israel and Syria, Algeria and Morocco, Turkey and Greece.

Coping with age-old enmities involving their peoples and others along the Mediterranean shores will be a central challenge to the new union encompassing some 800 million people.

"We will build peace in the Mediterranean together, like yesterday we built peace in Europe," Sarkozy said. He insisted the new body would not be "north against south, not Europe against the rest ... but united."

Sarkozy went to special efforts to bring Syria into the international fold for the summit: Assad met Lebanese President Michel Suleiman and German Chancellor Angela Merkel, separately, both for the first time. And he met Sarkozy, after years of chill between their countries.

Egypt's President Hosni Mubarak, co-presiding the summit with Sarkozy, said: "We are linked by a common destiny." He said the union has better chances of success than a previous cooperation process launched in Barcelona in 1995 because the new body focuses on practical projects parallel to efforts toward Mideast peace.

Mubarak called on the new union to tackle reducing the wealth "gap" between north and south, and cited other southern Mediterranean "challenges" as education, food safety, health and social welfare. "The success of the Union will depend on ... reforms and durable development," Mubarak said.

A draft declaration obtained by The Associated Press shows that summit participants will announce "objectives of achieving peace, stability and security" in the region. The six firm measures it names include a region-wide solar energy project, a cross-Mediterranean student exchange program and a plan to clean up the polluted sea.

The draft declaration says the Union for the Mediterranean is to be operational by the end of this year, and unlike any previous body, it will be jointly run by all its members. It will have a dual presidency, held jointly for rotating terms by one country within the European Union and one country on the Mediterranean shore.

The draft also speaks of democratic principles, human rights and fundamental freedoms--values Western critics have accused such union members as Syria of violating.

Algeria's President Abdelaziz Bouteflika said he hoped the union would make it easier for North Africans to receive visas for Europe. "Our common Sea should bring us closer together, not separate us," the president said in an interview with official Algerian news agency APS. He also questioned whether the union would have enough money to get things done and whether "the EU really wants to contribute to bringing southern Mediterranean countries up to speed."

Germany's Merkel said, though, that the project would have about US$20.6 billion that has not yet been spent by the Barcelona Process--the forerunner of the Mediterranean union. Merkel, who pushed to expand Sarkozy's idea to include all 27 EU nations, called Sunday's meeting "a very good start" and said it could help the Middle East conflict.

The Union for the Mediterranean is Sarkozy's brainchild and was timed to coincide with the French presidency of the European Union. Paris holds the rotating post until the end of this year. But Sarkozy's ambitious plan overlapped with EU projects already in progress, and it was melded into EU efforts and expanded to include 27 members of the European Union, not just those on the Mediterranean coast.

Sunday's meeting was seen as more significant for the bodies gathered than for any immediate progress it is expected to achieve.

Israel's Olmert said: "We are closer than ever to a possible (peace) agreement today" with the Palestinians--and said he hoped for direct contacts "soon" with enemy Syria.

Earlier Sunday, France's foreign minister urged the countries to unite to deal with global warming, growing migration and shrinking water and energy resources. "To do nothing would be a risk. We are fragile. Our world is fragile. Latent tensions and growing disparities are too dangerous for this unstable epoch. We have everything to gain by reinforcing our ties," Bernard Kouchner said.

On Sunday morning, Sarkozy met with Turkish Prime Minister Recep Tayyip Erdogan, who had shown reticence about coming to the summit. The leadership of the mostly Muslim country fears that the Mediterranean grouping is designed to keep Turkey out of the full EU membership that it seeks.

The Mediterranean gathering will be capped Monday with more than dozen leaders attending France's national Bastille Day military parade as special guests.

The new union is to include at least 43 nations, nearly all of which sent a president or prime minister to the summit. Libyan leader Moammar Gadhafi objected to the whole idea and refused to come.

Central American Nations Agree on New Currency

Originally Reported on December 5, 2008

Panal Legal – The leaders of the Central American nations met for the 33rd Summit of the Central American Integration System. They issued statements in response to the world financial crisis. One of the measures they intend to implement is the start of a new currency. We assume this is to be called the Central American Dollar and will be tied to a basket of other currencies to avoid fluctuations that a single currency is subject to...

An Emerging Block of Arab Nations

March 12, 2009

COGwriter - Today, the Saudis took another step towards Islamic unity without Iranian dominance... It is interesting to see how much the Arabs hope that President Obama will be able to help them with their plans.

Surpluses Will Drive Gulf Cooperation Council Growth

March 14, 2009

Arab News - ...“The fall in oil prices, decline in asset prices and a limited access to global credit are main reasons behind the volatility in the Middle East markets,” said Sheikh Mohammed, who addressed the Wharton Global Alumni Forum held in Dubai. He said the crisis in the Gulf Cooperation Council (GCC) region was “not structural,” and the surpluses of the Gulf economies would drive its recovery...

Caribbean Community Leaders Converge on Belize for Inter-Sessional Meeting

March 13, 2009

Caribbean Net News - "The economic and financial woes of the last ten months or so have left no country unscathed and even the most optimistic observer see no early emergence from this predicament." (Edwin Carrington, CARICOM Secretary General)

With that sobering outlook, the Twentieth Inter-Sessional Meeting of the CARICOM Heads of Government opened in Belize on Thursday morning.

With a packed agenda, CARICOM Leaders from the Bahamas in the north, to Guyana in the south are meeting to discuss key issues confronting the region, chief among them the global financial crisis...

Asean Leaders Call for EU-Style Union

March 2, 2009

Southeast Asian leaders called Sunday for urgent cooperation and reform to tackle the global financial crisis, as they pushed on with their dream of forming an EU-style community by 2015.

Leaders from the 10-member Association of Southeast Asian Nations (Asean) issued a joint statement on the meltdown on the final day of a summit dominated by concerns about their export-driven economies. In the statement, they called for “bold and urgent reform of the international financial system” to tackle the worsening crisis, while agreeing to “stand firm against protectionism”...

Germany Does Not Have a Financial Crisis

March 9, 2009

Bob Thiel, COGWriter - Since early Fall of 2008, I have reported a lot about the financial crisis and its effects on many nations around the world. As I stated then, the problems seem to be allowing for the formation of the German-led European Union to take over the premier leadership in the world economy from the USA and its Anglo-allies– who have had it for about a century or so.

While there are some economic concerns in Germany, Germany appears to be highly determined to be in a solid position to take on the economic leadership role. Unlike the USA and UK which seem to wish to increase debt as quickly as possible, Germany appears confident that its more limited, more patient, economic approach is best at this time...

South America Integrating Defense

March 9, 2009

Prensa Latina - Defense ministers from 12 Union of South American Nations (UNASUR) are to analyze cooperation issues here on Monday and Tuesday in the first South American Defense Council (SADC).

According to organizers of the meeting, the SADC is an integration mechanism aimed at discussing realities and defense needs of the country members, reducing conflicts and distrust and paving the way for the future formulation of a common policy...

Gordon Brown Appeals to U.S. Congress for Help to Save the World

March 5, 2009

Telegraph - In becoming only the fifth Prime Minister to address a joint session of Congress, he lavished praise on America, hailing it as the “indispensable nation.” But he also laid down a challenge to the U.S. not to retreat into protectionism and to help to protect the world’s poor, calling on America’s politicians to join him in forging a global agreement to solve the financial crisis...

Civil Liberties, Health Care, Food Policies

Government Panel Recommends All Teens Be Tested for Depression

March 30, 2009

Associated Press - An influential government-appointed medical panel is urging doctors to routinely screen all American teens for depression — a bold step that acknowledges that nearly 2 million teens are affected by this debilitating condition...

Author Claims 'Gardens Won’t Help'

March 25, 2009

Infowars - The Food Safety Modernization Act of 2009, as it has been styled, is this: “The safety and security of the food supply require a systemwide [sic] approach to prevent food-borne illness involving the integrated efforts of Federal, State and local agencies; a thorough, broad-based, and coordinated approach to basic and applied science; and intensive, effective, and efficient management of the Nation’s food safety program.”

Sounds nice but the reality is that this law is so broad that it will give the federal government control of the production and distribution of all food in this nation. No thanks.

Here are only a few points to consider:

If you like buying shrimp right off the shrimp boats in Corpus Christi, too bad for you.

If you like to buy fresh produce from your local farmer’s market, too bad for you.

If you like growing food in your own garden or in a community garden, or if you like to buy organically produced eggs from a local farmer, you will be flat out of luck.

So the same folks who brought you the Social Security Administration and the out-of-control EPA – which harasses property-owners who have the misfortune of harboring some “endangered” species, but which does nothing to the real polluters of the earth – will bring you a new, giant, powerful agency. Hands up! Drop your garden hoe! We’re the Food Police!..

Parking Meter Rate Hike in Chicago Sparks a Rebellion

March 23, 2009

Chicago Sun-Times - By handing over municipal parking meters to a private company, the city has given its citizens a colossal case of sticker shock. The cost of most meters will quadruple by 2013...

TSA to Conduct “More Aggressive” Gate Searches

March 18, 2009

USA Today — A new, more aggressive effort by airport screeners aims to halt randomly selected passengers for a security check just before they step onto their departing plane, according to a government memo obtained by USA TODAY...

Passengers can be selected at random or for suspicious behavior, according to a TSA memo dated last Thursday. The program primarily targets riskier flights, according to the memo, which doesn’t specify how flights are singled out.

Banking Crisis: Money-Spinning Operation for the Financial Giants

Obama Administration Plan for 'Toxic Assets:' a Windfall for Wall Street

March 23, 2009

World Socialist Web Site - The Obama administration is expected to provide more details today of its plan to enable Wall Street banks to offload up to $1 trillion of their bad mortgage loans and other "toxic" assets at public expense.

Over the weekend, the administration leaked to the press key features of the scheme, to be announced by Treasury Secretary Timothy Geithner. The press reports make clear that the plan is designed to provide a windfall for the very banks and investment firms which precipitated the deepest economic crisis since the 1930s by speculating on high-risk investments that generated extraordinary returns—until the housing and debt bubbles burst—and sustained the multi-million-dollar pay packages of Wall Street CEOs.

According to the reports, the plan will have three major components, all of which involve the use of taxpayer money to guarantee large profits for hedge funds, private equity firms and insurance companies who agree to use low-cost government loans to purchase virtually worthless mortgage loans and securities that are weighing down the balance sheets of the banks.

The government will put up as much as 97 percent of the cash to carry out the purchases and agree to absorb 75 percent or more of any losses that might result from the deals. At the same time, the government will expand a Federal Reserve program launched last week to revive the dormant market in asset-backed securities, otherwise known as the "shadow banking system," to enable the Wall Street billionaires who participate in the scheme to eventually repackage and resell the assets they take off of the hands of the banks at a substantial profit.

As for the banks, the plan will enable them to not only offload their failed investments at public expense, but profit handsomely from a resulting rise in the price of their stock...

Geithner Wants Private Sector to Buy Toxic Assets

March 22, 2009

Reuters - U.S. Treasury Secretary Timothy Geithner said on Sunday that help from the private sector was critical to get toxic assets off banks’ balance sheets and help resolve a credit crisis...

Geithner's Toxic-Loan Solution Could Be Toxic for Banks

Geithner Readies Latest Bankster Debt Slavery Plan

March 21, 2009

Kurt Nimmo, Infowars - Allah be praised, we now have a plan for “troubled mortgages and related assets from financial institutions,” or so reports the New York Times. Little Timmy Geithner will unveil his “long-delayed plan” this coming week. “The plan is likely to offer generous subsidies, in the form of low-interest loans, to coax investors to form partnerships with the government to buy toxic assets from banks,” write the scribes.

Medea Benjamin, leader of the controlled opposition group Code Pink that receives millions from the Ford Foundation, tells the Financial Services Subcommittee what she thinks of Geithner. Even if Obama bounces Geithner, the bankster plan to enslave America will continue unabated.

In other words, Timmy and the banksters are going to stick it to you… again. Short of implementing this scam, the New York Times warns, toxic assets will continue to clog up the system and prevent normal lending.

Yves Smith calls this cobbled together rip-off a “private public partnership abortion program.”

Part three of this supposed strategy to unstuff the credit pipes is something called the Term Asset-Backed Securities Loan Facility, originally slotted to roll off the ramp in February. It is said TALF — you got to love these acronyms — will bestow “immediate benefits to students, to credit cards, to small businesses, to consumer loans,” according to Federal Reserve don Bernanke. Under TALF, the Fed will buy securities backed by different types of debt, including credit card, auto, student and small business loans.

It is reasoned that since the banks will not (cannot) lend to borrowers, the Fed has to step in and dole out loans, thus cranking the money supply up through the stratosphere.

Of course, this will simply add to the astronomical debt already piled up by the private bankers. The entire money supply consists of debt owed to the international bankers. I am reminded of something Sir Josiah Smith, director of the Bank of England, said in 1927: “…if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.”

Geithner’s “private public partnership abortion program” is another bankster devised slavery program...

Socialism for Bankers and Hedge Fund Managers

Treasury's Toxic Asset Plan Could Cost $1 Trillion

March 22, 2009

AP - The Obama administration is using a multi-pronged attack to get at the heart of the nation's financial crisis — a mountain of toxic assets weighing on banks' balance sheets.

The plan developed by Treasury Secretary Timothy Geithner aims to purchase as much as $1 trillion in troubled assets, utilizing the resources of the $700 billion bank bailout fund, the Federal Reserve, and the Federal Deposit Insurance Corp.

The initiative — details are set for release on Monday — will seek to entice private investors, including big hedge funds, to participate by offering billions of dollars in low-interest loans to finance the purchases and also sharing risks if the assets fall further in value...

Beware the Madoff Diversion!

March 19, 2009

Counterpunch - Simply put: Giant business and financial corporations govern. The few who run them make the governing decisions that dictate people’s work, living conditions, health and the nature of our communities...

Sure, Madoff and his ilk are major crooks. They’ve caused great harm to many people. There are laws aplenty to deal with such obvious crooks -- so they’ll end up in jail and good riddance. But after the Madoffs of every generation are all locked up, most of the corporate directors and managers who “legally” plunged the nation into these messes continue governing over the nation. They keep instructing people that the source of the nation’s problems is “greed and excesses” and “crooks.” They keep spending the people’s money to set things right. And they keep writing 'We the People’s' laws.

Isn’t that what’s happening today? Corporate directors and managers count on our being desperate to return to the way things were, on our not changing who’s calling the shots or the laws of the land which have long enabled a corporate class to rule...

A Program of Financial Concentration: Was the Bailout Itself a Scam?

March 19, 2009

Paul Craig Roberts - Professor Michael Hudson (CounterPunch, March 18) is correct that the orchestrated outrage over the $165 million AIG bonuses is a diversion from the thousand times greater theft from taxpayers of the approximately $200 billion “bailout” of AIG. Nevertheless, it is a diversion that serves an important purpose. It has taught an inattentive American public that the elites run the government in their own private interests...

Senate Quietly Stripped Measure Restricting Bonuses from Bailout Legislation

March 18, 2009

Raw Story - A new revelation in the scandal surrounding AIG’s decision to pay multi-million dollar bonuses to executives — a provision that would have restricted companies receiving federal government bailout aid from paying bonuses was quietly stripped from a bill last month...

Collapse of the Global Economy

45 Percent of World's Wealth Destroyed

March 14, 2009

Reuters - Private equity company Blackstone Group LP (BX.N) CEO Stephen Schwarzman said on Tuesday that up to 45 percent of the world's wealth has been destroyed by the global credit crisis. "Between 40 and 45 percent of the world's wealth has been destroyed in little less than a year and a half," Schwarzman told an audience at the Japan Society. "This is absolutely unprecedented in our lifetime."

But the U.S. government is committed to the preservation of financial institutions, he said, and will do whatever it takes to restart the economy.

U.S. Treasury Secretary Timothy Geithner plans to unfreeze credit markets through a new program that will combine public and private capital in a fund that would buy bank toxic assets of up to $1 trillion...

The Size of Derivatives Bubble = $190,000 Per Person on Planet

March 17, 2009
Silicon Valley Watcher

1. The entire GDP of the US is about USD 14 trillion.

2. The entire US money supply is also about USD 15 trillion.

3. The GDP of the entire world is USD 50 trillion. USD 1,144 trillion is 22 times the GDP of the whole world.

4. The real estate of the entire world is valued at about USD 75 trillion.

5. The world stock and bond markets are valued at about USD 100 trillion.

6. The big banks alone own about USD 140 trillion in derivatives.

7. Bear Stearns had USD 13+ trillion in derivatives and went bankrupt in March. Freddie Mac, Fannie Mae, Lehman Brothers and AIG have all ‘collapsed’ because of complex securities and derivatives exposures in September.

8. The population of the whole planet is about 6 billion people. So the derivatives market alone represents about USD 190,000 per person on the planet.

IMF Chief Warns World Entering 'Great Recession'

March 10, 2009

AFP – The World Bank said Sunday that the global economy will shrink this year for the first time since World War II and that the global financial crisis will make it tougher for poor and developing nations to access needed financing.

Trade is forecast to fall to its lowest point in 80 years in 2009, as economic hardship ripples across the globe, the bank said. The most drastic trade slowdowns are expected in East Asia, where growth had been robust, the bank said in a paper prepared for a meeting of finance ministers and central bank officials this week.

The ramifications of the growing financial crisis on the world's poorest nations will likely remain for some time, the bank said. Because richer nations are borrowing more, developing nations are being squeezed out and many financial organizations that have provided financing to lower-income countries "have virtually disappeared."

In Europe, the European Central Bank has forecast a 2.2-3.2 percent fall and in gross domestic product over 2009 in the 16 countries that share the euro. The euro-zone economy contracted by a record 1.5 percent in the last three months of 2008, dropping even more sharply than in the U.S as collapsing world trade hit the region's export-rich economies, figures showed last month.

The drop in output for the fourth quarter compared to the third was the biggest since the euro was created in 1999 and the third quarterly fall in a row.

Global Financial Assets Lost $50 Trillion Last Year

March 8, 2009

Bloomberg - The value of global financial assets including stocks, bonds and currencies probably fell by more than $50 trillion in 2008, equivalent to a year of world gross domestic product...

Canada Falls Hard Into Deep, Widespread Recession in Final Quarter

March 3, 2009

The Canadian Press - There’s no sign Canada is close to pulling out of an alarming economic nosedive that began last fall, resulting in the worst quarterly contraction in nearly two decades...

EU Resists Eastern Bailout Pleas

March 2, 2009

Spiegel Online - There will be no EU regional bailout for struggling Eastern European economies, leaders decided at a Sunday summit. But neither will the 27-member-bloc succumb to protectionist instincts. Still, fears persist that Western Europe is putting local economic interests ahead of EU unity.

As European Union member states struggle to deal with the impact of the global economic crisis, cracks in the 27-member bloc are beginning to appear. Increasingly that division seems to be between the old Western European nations and the former communist states to the east.

On Sunday the leaders of the EU countries gathered in Brussels for an emergency meeting to address ways to tackle the crisis as Eastern European states voiced fears that moves towards protectionism in the bloc's richer countries would leave poorer countries to struggle on their own.

The crisis has hit Eastern and Central European countries particularly hard because many of their economies are highly reliant on credit from Western sources, and like elsewhere that credit has all but dried up. Hungary and the Baltic States have been particularly badly affected by the downturn and ahead of Sunday's summit the Hungarian Prime Minister Ferenc Gyurcsany had called for a massive bailout for the Eastern European region, recommending a fund of up to €190 billion euros ($240 billion.) He warned that the EU should not allow the recession to cause new divisions in Europe. "We should not allow a new 'Iron Curtain' to ... divide Europe into two parts."

The call, though, fell on deaf ears in Brussels with German Chancellor Angela Merkel leading the rejection of any regional bailout. "I see a very different situation here," she said on her way into the meeting. "You cannot compare Slovenia or Slovakia with Hungary."

There are indeed huge disparities in how the crisis is affecting European countries. While Budapest has been forced to ask for a loan from the International Monetary Fund to prevent a complete collapse of the Hungarian economy, countries like Poland and Slovakia are on a much sounder footing and even expect to see modest growth this year. In contrast, older EU states like Greece, Spain and Ireland are seeing their economies contract considerably. Meanwhile, Germany, the biggest contributor to the EU coffers, is also in recession and Chancellor Merkel is unwillingly to throw an expensive lifeline to all of Eastern Europe in a difficult election year...

East Europe Social Collapse Threatens Rest of Europe

March 1, 2009

Times Online - Twenty years after the fall of the Berlin Wall, Western leaders were told yesterday that five million jobs could be lost in the “new” European Union countries of the East unless radical action were taken to bail them out. The spectacular collapse of some of the post-communist tiger economies led to demands at an EU summit in Brussels for a rescue fund of €190 billion (£170 billion) to stop social collapse in the Eastern nations spilling over into the rest of Europe...

International Organizations Pledge €24.5 Billion to Shore Up Eastern Europe

February 27, 2009

International Herald Tribune - With the former communist nations of Eastern and Central Europe reeling from the global economic crisis, three major lenders said Friday that they would inject €24.5 billion, or $31 billion, over two years into the region's banks...

Next Wave of Banking Crisis to Come from Eastern Europe

February 19, 2009

AP - European banks face an entirely new wave of losses in coming months not yet calculated in any government bank rescue aid to date. Unlike the losses of U.S. banks which derive initially from their exposures to low-quality sub-prime real estate and other securitized lending, the problems of western European banks, most especially in Austria, Sweden and perhaps Switzerland arise from the massive volumes of loans they made during the 2002-2007 period of extreme low international interest rates to clients in eastern European countries.

The problems in Eastern Europe, which are just now emerging with full force are, if you will, an indirect consequence of the libertine monetary policies of the Greenspan Fed from 2002 until 2006, the period where Wall Street’s asset backed securitization Ponzi Scheme took off.

The riskiness of these eastern European loans is now coming to light as the global economic recession in both east and west Europe is forcing western banks to pull back, refusing to renew loans or ‘rollover’ the credits, leaving thousands of borrowers with unpayable loan debts. The dimension of the eastern European emerging loan crisis pales anything yet realized. It will force a radical new look at the entire question of bank nationalizations in coming weeks regardless what nice hopes politicians in any party entertain...

Failure to Save East Europe Will Lead to Worldwide Meltdown

February 16, 2009

Telegraph - If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung...

Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region’s GDP. Good luck. The credit window has slammed shut.

"This is the largest run on a currency in history," said Mr Jen. Not even Russia can easily cover the $500bn dollar debts of its oligarchs while oil remains near $33 a barrel. The budget is based on Urals crude at $95. Russia has bled 36pc of its foreign reserves since August defending the rouble. "This is the largest run on a currency in history," said Mr Jen...

Government Takeover of Banks and Businesses

Greenspan Backs Bank Nationalization

February 19, 2009

Financial Times - The U.S. government may have to nationalize some banks on a temporary basis to fix the financial system and restore the flow of credit, Alan Greenspan, the former Federal Reserve chairman, has told the Financial Times...

Illegal Aliens & the Mortgage Mess

Originally Published on September 24, 2008

New York Post - AS panicked politicians prepare to fork over $1 trillion in taxpayer funding to rescue Wall Street, they've fingered regulation, deregulation, Fannie Mae and Freddie Mac, the Community Reinvestment Act, Jimmy Carter, Bill Clinton, both Bushes, greedy banks, greedy borrowers, greedy short-sellers and minority-home-ownership promoters for blame.

But there's one villain that has slipped notice: how illegal immigration, crime-enabling banks and open-borders Bush policies fueled the mortgage crisis. It's no coincidence that the areas hardest hit by the foreclosure wave - Loudoun County, Va., California's Inland Empire, Stockton and San Joaquin Valley, and Las Vegas and Phoenix - also happen to be some of the nation's largest illegal alien sanctuaries. Half of the mortgages to Hispanics are subprime. A quarter of all those subprime loans are in default and foreclosure...

IRS Rules Opened Back Door for Illegal Aliens to Enter U.S. Credit Market

Originally Published on October 19, 2008

CNSNews - Internal Revenue Service rules have opened up a back-door through which illegal immigrants can obtain an Individual Taxpayer Information Number (ITIN), which in turn helps them enter the U.S. credit market.

The IRS uses ITINs to process tax payments owed by people who are not eligible for a Social Security Number. It is issued regardless of immigration status to people living both inside and outside the country.

Although the IRS states explicitly that ITINs are not to be used for any purpose other than tax administration, banks across the country are accepting ITINs to open new accounts and extend lines of credit to customers who are not eligible for a Social Security Number...

Exxon Mobil Shatters U.S. Record for Annual Profit

January 30, 2009

AP - Exxon Mobil Corp. (the Rockefeller family has the primary ownership/control of Exxon) on Friday reported a profit of $45.2 billion for 2008, breaking its own record for a U.S. company, even as its fourth-quarter earnings fell 33 percent from a year ago. The previous record for annual profit was $40.6 billion, which the world's largest publicly traded oil company set in 2007.

The extraordinary full-year profit wasn't a surprise given crude's triple-digit price for much of 2008, peaking near an unheard of $150 a barrel in July. Since then, however, prices have fallen roughly 70 percent amid a deepening global economic crisis...

Rothschild Investment Banking Posts Record Results

November 21, 2008

Seeking Alpha - The inability of the current investment banking model to withstand the ongoing liquidity crisis has forced many investment bankers out of business or those few that have survived to get by on reduced or no bonuses this year. However, as lenders globally continue to write off and provision for a significant volume of soured loans, U.K.’s Rothschild group, one of the world’s leading investment banking organizations, has posted record results. The bank has been able to maintain its very strong performance again this year, despite the credit crunch, economic slowdown and the threat of a U.S. recession, with investment banking and corporate banking businesses both producing record revenues.

The bank, according to Timesonline - reported a 31%, 459 million euro, improvement in profits. In addition, record results from the organization’s advisory and private banking operations enabled the bank to pay record bonuses to its 2,700 people in June.

The bank’s chairman David de Rothschild, following unconventional investment banking strategies, has steered his organization clear of proprietary trading, prime broking and other activities that have devastated rivals as a result of an environment where asset prices keep falling while liabilities remain fixed. The bank however, still wrote off 96 million euro because of souring loans. At some point, considering the global financial system is galloping off a cliff - today’s difficulties in investment banking will prompt an overhaul of the system favoring those players that have shown themselves to be the most cautious during this cycle.

Alongside its pro-forma group-wide results, Rothschild also unveiled that it had entered into a co-operation agreement in the field of M&A and Equity Capital Markets advisory in the food and agriculture sectors on a global basis with Netherlands’ Rabobank, a premier global financial institution providing financing and other services to food and agri business clients around the world.

As part of the deal, notes Timesonline, Rabobank is buying a 7.5% stake in one of the key holding companies in the Rothschild empire, Rothschild Continuation Holdings, which owns the N M Rothschild business in the U.K.

Rabobank becomes the second biggest investor outside the Rothschild family after the trading group Jardine Matheson, which owns 20%. This is Rothschild’s second joint venture with a Dutch bank.

Rothschild advisory clients include Rio Tinto (RTP), which is fighting a hostile bid from BHP, Billiton (BHP), and British Energy in its deal with France’s power giant EDF, a deal that gives the French company a dominant role in the British nuclear industry.

Billions More Needed for Financial Rescue

January 28, 2009

The Obama administration is developing proposals to help rescue the banking system that could cost taxpayers hundreds of billions of dollars beyond the $700 billion bailout Congress already has approved. Details are still being worked out. But the administration is looking to spend hundreds of billions more to address the foreclosure crisis, help banks get out from under weighty bad assets and expand liquidity programs.

Looming above these is a proposal to set up a federal bank — dubbed a "bad bank" — that would buy troubled assets clogging financial institutions' balance sheets. This would free the institutions to lend money and would entice wary investors back into the market, proponents say.

But the government will have to commit far more money than policymakers were discussing even a few weeks ago. "I think we're talking hundreds of billions of dollars," said Brian Gardner, an analyst with the research firm Keefe, Bruyette & Woods. "I don't think there's anyone who doubts the administration will be going back to the Hill for more than the $350 billion" recently released from this fall's $700 billion bailout package...

Fed Says Ready to Buy Debt to Aid Economy

January 28, 2009

Reuters - The Federal Reserve on Wednesday said it is prepared to buy long-term government debt if that would help improve credit conditions and signaled some concern that deflation risks were rising...

"The committee... is prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets," it said. In December, the Fed had said only that it was studying that option.

The panel voted 8-1 in support of the decision. Richmond Federal Reserve Bank President Jeffrey Lacker dissented, saying he thought the Fed should immediately move to a program to purchase government bonds...

What “Bank Nationalization” Means For You

January 21, 2009

Wall Street Journal - It only takes one good bank-stock rout to turn Americans into big believers in government control. Yesterday’s precipitous plummet in shares of Bank of America, PNC Financial, State Street and other financials may have done the job; the controversy of the day centers around “bank nationalization,” or giving our government the license to run U.S. banks.

What does bank nationalization mean? Bank nationalization, in the most practical form, means giving the U.S. government the power to control banks. That could mean taking control of the public shares, to the power to pick and install new management and boards of directors, and set corpotate strategy. The shocks of the credit crisis last fall spurred lawmakers to semi-nationalize the banking sector; nearly 314 institutions have already signed over some of their shares and other securities to the Treasury in return for $350 billion in government aid.

The government has taken a dramatic intermediate step toward nationalization by taking effective control of American International Group, Fannie Mae and Freddie Mac, but leaving some of their shares on the public markets and their management in private hands. Proponents of U.S. bank nationalization now envision a program by which the government would take over only the largest banks, for a short period of time, in order to loosen the ties on lending. The government may also inject more capital into the banks if necessary, but the belief is that the presence of a government overlord acts more as an implied guarantee to soothe customers and prevent assets from going out the door...

Read TIME's Top 10 Financial Collapses of 2008

Big Government Takes Over

November 11, 2008

Business Spectator - Whether we have a recession or a depression, and whether or not Barack Obama turns into a version of FDR and comes up with a New Deal next year, we are already entering a new era of big government. Every day, in every way, the world is looking to government following a rich variety of market-based failures. Yesterday it was the motor industry relief package in Australia, on which Robert Gottliebsen has written brilliantly this morning (Turbo charged losses, November 11) and the 4 trillion yuan stimulus package in China. Last night the US government topped up its rescue of insurer AIG by buying another $US40 billion in preferred equity.

Governments are now so deeply enmeshed in the global financial system, as owners of banks, direct providers of credit and guarantors of deposits, that it is effectively a part of the public service. Soon they will probably own a big part of the car industry. In Australia the government will have to take over a large part of the child-care industry following the collapse of ABC Learning.

The small-government warriors who emerged in the 1980s with Ronald Reagan and Margaret Thatcher, and who morphed into neo-cons during the past decade under George W Bush, are in full retreat.

Governments have become the employers, the spenders and the lenders of last resort.

For China, it’s not such a big step, of course, because of that country’s tentative relationship with capitalism in the first place. There are also questions about how much new money is involved in yesterday’s $A860 billion spending package: much of it appears to have been stuff that was already happening. Nevertheless, it’s quite a lot of money and demonstrates how worried the Chinese leadership is about what they euphemistically call “mass incidents” (riots) as a result of rising unemployment. As a blogger called Macro Man calculates this morning, the money would buy HSBC, JP Morgan, Wells Fargo, Bank of America, Citigroup and Deutsche Bank.

China now sits on the edge of an export-bust precipice and its ability to generate growth internally will be tested as never before. For the rest of us, China qualifies under the heading “too big to fail”, along with the global banking industry, which is now in the hands of governments everywhere, plus AIG, the Australian car industry, General Motors and Ford.

David Roche, who is president of a London-based consultancy called Independent Strategy, and author of the book New Monetarism, had an excellent essay in the Wall Street Journal yesterday in which he set out in the clearest form that I have seen the credit problems that governments are trying to overcome. The global banking system, he says, had $5 trillion of capital on the eve of the credit crisis. Those in the US and Europe had about $3.3 trillion supporting loans of $43 trillion. Recognised losses so far have reached $700 billion, which has been matched by $420 billion of private capital raisings and $250 billion of government capital injections. Leverage is now back to what it was.

So why is the crisis not over? Because leverage was too high and must still be reduced, because capital is only sufficient to maintain existing assets, not to grow them, and mostly because none of this accounts for future losses.

Says Roche: “I estimate that, based on economic values, these losses will amount to a further $800 billion to $900 billion, putting total credit losses north of $1.7 trillion for the whole period of the crisis. Such future losses would eat up all the fresh capital contributions and reduce US and EU financial institutions' tier-one capital to around $2.3 trillion yet again.”

“The bottom line is that, assuming further credit losses from global recession take US and EU tier-one bank capital back to where it was before state injections and capital raisings, then financial-sector credit would have to shrink 37 percent just to keep leverage constant at pre-crisis levels – that's how you get global depression.” “But government is now part of bank management,” he says, concluding that further government intervention is needed to avoid depression...

And now it looks like governments will be forced to take ownership of “real economy” corporations that are too important to fail, such as GM and Ford. The governor of Michigan, Jennifer M Granholm, went on NBC’s Today Show last night and pointed out that the collapse of the US auto industry would cost between 3 million and 5 million jobs adding, superfluously, that “that would have a devastating effect on the American economy".' President-elect Obama’s new chief of staff, Rahm Emanuel, added that it’s an “essential” part of the US economy. The trouble is that a thousand “non-essentials” can add up to one essential.