Article 43
Saturday, November 29, 2008
International Central Bank
But, if the watchman see the sword come, and blow not the trumpet, and the people be not warned; if the sword come, and take any person from among them, he is taken away in his iniquity; but his blood will I require at the watchman’s hand.
- Ezekiel 33:6
Ron Paul Warns Of Secret Plans To Create International Central Bank
Says plans will remain under wraps until government and banking elite see fit.
By Steve Watson
Infowars
November 28, 2008
Texas Congressman Ron Paul has warned that international forces are planning the creation of a global central bank that will see a new fiat monetary system come to dominate the world economy.
The 2008 presidential candidate also warned that Barack Obama’s administration will only represent a change in faces and not in policies.
Speaking about the recent G20 meeting Paul told Russia Today:
“I think something will come of it but you probably didn’t hear about it yet. There was some pomp and ceremony that the public knew about, but behind the scenes they were talking about the future and what they are going to do to try to internationalize all regulations, going in the opposite direction of free market and more towards international regulations. I’m sure they even talked about an international central bank.”
Paul also pointed out that global bankers have been holding their own talks on the same matter:
“At the same time the G20 was meeting, we also had the central banks meeting in Europe. Bernanke was over there, and they are doing the same type of planning, so real planning will not be out in the open, until they want us to know about it.”
“The system that we have today where the fiat dollar is a reserve currency of the world, it’s losing that status and they have to replace it. Hopefully they’ll have enough sense to realise that another international agreement along the Bretton Woods will be no more successful than the last one.”
The Congressman argued that more regulations administered by central banks, rather than placed on to central banks, represents a dangerous move away from the free market.
“We could restructure by getting rid of all the central banks, then you would have honest money come up because nobody could commit fraud. Governments get away with committing fraud - that’s what fiat money is.”
The Congressman warned that an Obama presidency offers no alternative to the economic policies that have led the U.S. and the world to the brink of economic meltdown. Paul Described the kind of change Obama offers as:
“Just change in faces and change in party labels. Both parties represent the same special interests, they both have to represent big business. Obama’s supposed to be a man of the people, well he collected $750 million, more money than anybody else ever collected. Wall Street supported him, the media supported him, all the big money supported him, so his change is not going to be much change at all. He’s not talking about changing monetary policy, the Federal Reserve or getting rid of the income tax or bringing our troops home.”
Paul also commented that he does not believe Obama will withdraw troops from Iraq and pointed out that he has never said he will close down the military bases throughout the country and eliminate the huge embassy in Baghdad.
“Policy will remain interventionist,” the Congressman warned. “We will remain in the middle east and we will not be coming home, we’ll stay in Korea, we’ll stay in Europe, we’ll be in eastern Europe, we’ll be doing all these things. Even though Obama benefited tremendously from ‘change’, all we are changing is the face of our government.”
Paul also warned that the stage has been set for fresh terrorist attacks in the U.S. as a consequence of a sustained interventionist foreign policy.
Watch the entire interview HERE.
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Thursday, November 27, 2008
Thanksgiving 2008
The form of law which I propose would be as follows: In a state which is desirous of being saved from the greatest of all plagues - not faction, but rather distraction - there should exist among the citizens neither extreme poverty nor, again, excessive wealth, for both are productive of great evil . . . Now the legislator should determine what is to be the limit of poverty or of wealth.
- PlatoAn imbalance between rich and poor is the oldest and most fatal ailment of all republics.
- PlutarchWe stand for a living wage. Wages are subnormal if they fail to provide a living for those who devote their time and energy to industrial occupations. The monetary equivalent of a living wage varies according to local conditions, but must include enough to secure the elements of a normal standard of living--a standard high enough to make morality possible, to provide for education and recreation, to care for immature members of the family, to maintain the family during periods of sickness, and to permit of reasonable saving for old age.
- Teddy Roosevelt 1912I look forward confidently to the day when all who work for a living will be one with no thought to their separateness as Negroes, Jews, Italians or any other distinctions. This will be the day when we bring into full realization the American dream—a dream yet unfulfilled. A dream of equality of opportunity, of privilege and property widely distributed; a dream of a land where men will not take necessities from the many to give luxuries to the few; a dream of a land where men will not argue that the color of a man’s skin determines the content of his character; a dream of a nation where all our gifts and resources are held not for ourselves alone, but as instruments of service for the rest of humanity; the dream of a country where every man will respect the dignity and worth of the human personality.
- Martin Luther King, Jr 1968We measure progress by how many people can find a job that pays the mortgage; whether you can put a little extra money away at the end of each month so you can someday watch your child receive her college diploma. We measure progress in the 23 million new jobs that were created when Bill Clinton was President when the average American family saw its income go up $7,500 instead of down $2,000 like it has under George Bush.
- Barak Obama 2008Do unto others as you would have others do unto you.
- Matthew 7:12
We all have traumatizing personal ordeals.
Some make us stonger.
Some make us weaker.
THANKSGIVING 2005 was probably one of the worst days of my life. I sat at home alone, after LOOSING ANOTHER JOB as a DISPOSABLE DAY LABORER, a year and a half after loosing my career at AT&T. For the second time.
It was a day of clear recognition that the policies and rulers of this country are behind the EROSION of our SOCIETY - and middle-class people like me are the ones experiencing it’s effects today, effects that are growing and enveloping us all in an ugly, black, aura of the three BUDDHIST sins - greed, ill-will, and delusion.
This year, I have a lot more to be thankful for - a job with medical insurance.
But overall things are GETTING WORSE.
A recent Infoworld ARTICLE predicts OUTSOURCING will GROW as JOB LOSSES IN AMERICA INCREASE, and our recession deepens.
.
I MET EDUARDO AT SPRINT early in 2005. He was working there two years as a temp the day I arrived.
I couldn’t believe it. A temp for two years! Why didn’t they hire him yet?
Because they can get away with using him as a DISPOSABLE DAY LABORER.
At the time I wasn’t that up on OUTSOURCING, CORPORATE GREED and WORKER EXPLOITATION.
For awhile, he and I have been down the same path, but I got a real job a couple of years ago, still have that job, and managed to hold on to the house.
This year I can afford to get a POOR kid a bike for Christmas.
Eduardo hasn’t been as lucky.
He still can’t find a real job, and lost almost everything - his wife, his home, his money - but not his HOPE.
For me, he’s a symbol of strength of the human spirit.
How do some people stay optimistic, and not have their spirits broken?
Faith?
Not me.
I have LESS FAITH in THE SYSTEM these days than ever before, and see the SUFFERING of people in our country in deepening shades of gray.
Being of the crowd that believes religion and politics need to give way to spirituality and science, I don’t put my faith in a Catholic God, embrace Jesus as our savior, repent for my sins and hope to be born again, or believe the newage nonsense that everything’s perfect in this perfectly perfect universe.
Maybe it’s the LACK OF COMPASSION people have for eachother nowadays.
Maybe I’m just SICK AND TIRED OF SEEING the world for WHAT IT IS.
Maybe it’s time to get me a pair of ROSE COLORED GLASSES.
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Wednesday, November 26, 2008
Colossal Financial Collapse
The Truth Behind The Citigroup Bank Nationalization
By F. William Engdah
Global Research
November 24, 2008
On Friday November 21, the world came within a hairs breadth of the most colossal financial collapse in history according to bankers on the inside of events with whom we have contact. The trigger was the bank which only two years ago was AmericaҒs largest, CITIGROUP. The size of the US Government de facto nationalization of the $2 trillion banking institution is an indication of shocks yet to come in other major US and perhaps European banks thought to be too big to fail.ђ
The clumsy way in which US Treasury Secretary Henry Paulson, himself not a banker but a Wall Street investment bankerђ, whose experience has been in the quite different world of buying and selling stocks or bonds or underwriting and selling same, has handled the unfolding crisis has been worse than incompetent. It has made a grave situation into a globally alarming one.
Spitting into the wind
A case in point is the secretive manner in which Paulson has used the $700 billion in taxpayer funds voted him by a labile Congress in September. Early on, Paulson put $125 billion in the nine largest banks, including $10 billion for his old firm, Goldman Sachs. However, if we compare the value of the equity share that $125 billion bought with the market price of those banks stock, US taxpayers have paid $125 billion for bank stock that a private investor could have bought for $62.5 billion, according to a detailed analysis from Ron W. Bloom, economist with the US United Steelworkers union, whose members as well as pension fund face devastating losses were GM to fail.
That means half of the public’s money was a gift to PaulsonҒs Wall Street cronies. Now, only weeks later, the Treasury is forced to intervene to de facto nationalize Citigroup. It wont be the last.
Paulson demanded, and got from a labile US Congress, Democrat as well as Republican, sole discretion over how and where he can invest the $700 billion, to date with no effective oversight. It amounts to the Treasury Secretary in effect ґspitting into the wind in terms of resolving the fundamental crisis.
It should be clear to any serious analyst by now that the September decision by Paulson to defer to rigid financial ideology and let the fourth largest US investment bank, LEHMAN BROTHERS fail, was the proximate trigger for the present global crisis. Lehman Bros.Ғ surprise collapse triggered the current global crisis of confidence. It was simply not clear to the rest of the banking world which US financial institution bank might be saved and which not, after the Government had earlier saved the far smaller Bear Stearns, while letting the larger, far more strategic Lehman Bros. fail.
Some Citigroup details
The most alarming aspect of the crisis is the fact that we are in an inter-regnum period when the next President has been elected but cannot act on the situation until after January 20, 2009 when he is sworn in.
Consider the details of the latest Citigroup government de facto nationalization (for ideological reasons Paulson and the Bush Administration hysterically avoid admitting they are in the process of nationalizing key banks). Citigroup has more than $2 trillion of assets, dwarfing companies such as American International Group Inc. that got some $150 billion in US taxpayer funds in the past two months. Ironically, only eight weeks before, the Government had designated Citigroup to take over the failing Wachovia Bank. Normally authorities have an ailing bank absorbed by a stronger one. In this instance the opposite seems to have been the case. Now it is clear that the Citigroup was in deeper trouble than Wachovia. In a matter of hours in the week before the US Government nationalization was announced, the stock value of Citibank plunged to $3.77 in New York, giving the company a market value of about $21 billion. The market value of Citigroup stock in December 2006 had been $247 billion. Two days before the bank nationalization the CEO, Vikram Pandit had announced a huge 52,000 job slashing plan. It did nothing to stop the slide.
The scale of the hidden losses of perhaps the twenty largest US banks is so enormous that if not before, the first Presidential decree of President Barack Obama will likely have to be declaration of a US Bank Holidayђ and the full nationalization of the major banks, taking on the toxic assets and losses until the economy can again function with credit flowing to industry once more.
Citigroup and the government have identified a pool of about $306 billion in troubled assets. Citigroup will absorb the first $29 billion in losses. After that, remaining losses will be split between Citigroup and the government, with the bank absorbing 10% and the government absorbing 90%. The US Treasury Department will use its $700 billion TARP or Troubled Asset Recovery Program bailout fund, to assume up to $5 billion of losses. If necessary, the Governments Federal Deposit Insurance Corporation (FDIC) will bear the next $10 billion of losses. Beyond that, the Federal Reserve will guarantee any additional losses. The measures are without precedent in US financial history. ItҒs by no means certain they will salvage the dollar system.
The situation is so intertwined, with six US major banks holding the vast bulk of worldwide financial derivatives exposure, that the failure of a single major US financial institution could result in losses to the OTC derivatives market of $300-$400 billion, a new IMF working paper finds. Whats more, since such a failure would likely cause cascading failures of other institutions. Total global financial system losses could exceed another $1,500 billion according to an IMF study by Singh and Segoviano.
The madness over a Detroit GM rescue deal
The health of Citigroup is not the only gripping crisis that must be dealt with. At this point, political and ideological bickering in the US Congress has so far prevented a simple emergency $25 billion loan extension to General Motors and other of the US Big Three automakersҗFord and Chrysler. The absurd spectacle of US Congressmen attacking the chairmen of the Big Three for flying to the emergency Congressional hearings on a rescue loan in their private company jets while largely ignoring the issue of consequences to the economy of a GM failure underscores the utter lack of touch with reality that has overwhelmed Washington in recent years.
For GM to go into bankruptcy risks a disaster of colossal proportions. Although Lehman Bros., the biggest bankruptcy in US history, appears to have had an orderly settlement of its credit defaults swaps, the disruption occurred before-hand, as protection writers had to post additional collateral prior to settlement. That was a major factor in the dramatic global market selloff in October. GM is bigger by far, meaning bigger collateral damage, and this would take place when the financial system is even weaker than when Lehman failed.
In addition, a second, and potentially far more damaging issue, has been largely ignored. The advocates of letting GM go bankrupt argue that it can go into Chapter 11 just like other big companies that get themselves in trouble. That may not happen however, and a Chapter 7 or liquidation of GM that would then result would be a tectonic event.
The problem is that under Chapter 11 US law, it takes time for the company to get the protection of a bankruptcy court. Until that time, which may be weeks or months, the company would need urgently bridge financingђ to continue operating. This is known as Debtor-in-Possession or DIP financing. DIP is essential for most Chapter 11 bankruptcies, as it takes time to get the plan of reorganization approved by creditors and the courts. Most companies, like GM today, go to bankruptcy court when they are at the end of their liquidity.
DIP is specifically for companies in, or on the verge of bankruptcy, and the debt is generally senior to other outstanding creditor claims. So it is actually very low risk, as the amount spent is usually not large, relatively speaking. But DIP lending is being severely curtailed right now, just when it is most needed, as healthier banks drastically cut loans in the severe credit crunch situation.
Without access to DIP bridge financing, GM would be forced into a partial, or even a full liquidation. The ramifications are horrendous. Aside from loss of 100,000 jobs at GM itself, GM is critical to keep many US auto suppliers in business. If GM failed soon most, possibly even all of the US and even foreign auto suppliers will go under. Those parts suppliers are important to other auto makers. Many foreign car factories would be forced to close due to loss of suppliers. Some analysts put 2009 job losses from a GM failure as high as 2.5 million jobs due to the follow-on effects. If the impact of that 2.5 million job loss is seen in terms of the overall losses to the economy of non-auto jobs such as services, home foreclosures caused and such, some estimate total impact would be more than 15 million jobs.
So far in the face of this staggering prospect, the members of the US Congress have chosen to focus on the fact the GM chief, Rick Wagoner, flew in his private company jet to Washington. The Congressional charade conjures up the image of Nero playing his fiddle as Rome goes up in flames. It should not be surprising that at the recent EU-Asian Summit in Beijing, Chinese officials mooted the idea of trading between the EU and Asian nations such as China in Euro, Renminbi, Yen or other national currencies other than the dollar. The Citigroup bailout and GM debacle has confirmed the death of the post-1944 Bretton Woods Dollar System.
The real truth behind Citigroup bailout
What neither Paulson nor anyone in Washington is willing to reveal is the real truth behind the Citigroup bailout. By his and the Republican Bush Administrationђs adamant earlier refusal to take an initial resolute action to immediately nationalize the nine or so largest troubled banks, he has created the present debacle. By refusing on ideological grounds to instead reorganize the banks assets into some form of ґgood bank and ґbad bank, similar to what the Government of Sweden did with what it called Securum, during its banking crisis in the early 1990Ғs, Paulson and company have created a global financial structure on the brink.
A Securum or similar temporary nationalization would have allowed the healthy banks to continue lending to the real economy so the economy could continue operating, while the State merely sat on the undervalued real estate assets of the Swedish banks for some months until the recovering economy made the assets again marketable to the private sector. Instead, Paulson and his crony capitalistsђ in Washington have turned a bad situation into a globally catastrophic one.
His apparent realization of the error of his initial refusal to nationalize came too late. When Paulson reversed policy on September 19 and presented the nine largest banks with an ultimatum to accept partial Government equity ownership, abandoning his original bizarre plan to merely buy up the toxic waste asset-backed securities of the banks with his $700 billion TARP taxpayer money, he never revealed why.
Under the original Paulson Plan, as Dimitri B. Papadimitriou and L. Randall Wray of the Jerome Levy Institute at Bard College in New York point out, Paulson sought to create a situation in which the US Treasury would become an owner of troubled financial institutions in exchange for a capital injectionїbut without exercising any ownership rights, such as replacing the management that created the mess. The bailout would be used as an opportunity to consolidate control of the nations financial system in the hands of a few large (Wall Street) banks, with government funds subsidizing purchases of troubled banks by “healthy” ones.Ғ
Paulson soon realized the scale of crisis, largely triggered by his inept handling of the Lehman Brothers case, had created an impossible situation. Were Paulson to use the $700 billion to buy up toxic waste ABS assets from the select banks at todays market price, the $700 billion would be far too little to take an estimated $2 trillion ($2,000 billion) in Asset Backed Securities off the books of the banks.
The Levy Economics Institute economists state, ґIt is probable that many and perhaps most financial institutions are insolvent today—with a black hole of negative net worth that would swallow Paulson’s entire $700 billion in one gulp.
That reality is the real reason Paulson was forced to abandon his original ґcrony bailout TARP plan and opt to use some of his money to buy equity shares in the nine largest banks.
That scheme as well is ґdead on arrival as the latest Citigroup nationalization scheme underscores. The dilemma Paulson has created with his inept handling of the crisis is simple: If the US Government paid the true value for these nearly worthless assets, the banks would have to writedown huge losses, and, as Levy economists put it, ґannounce to the world that they are insolvent. On the other hand, if Paulson raised the toxic waste purchase price high enough to protect the banks from losses, $700 billion ґwill buy only a tiny fraction of the ‘troubled’ assets. That is what the latest nationalization of Citigroup is about.
It is only the beginning. The 2009 year will be one of titanic shocks and changes to the global order of a scale perhaps not experienced in the past five centuries. This is why we should speak of the end of the American Century and its Dollar System.
How destructive that process will be to the citizens of the United States who are the prime victims of PaulsonҒs crony capitalists, as well as to the rest of the world depends now on the urgency and resoluteness with which heads of national Governments in Germany, the EU, China, Russia and the rest of the non-US world react. It is no time for ideological sentimentality and nostalgia of the postwar old order. That collapsed this past September along with Lehman Brothers and the Republican Presidency. Waiting for a miracleђ from an Obama Presidency is no longer an option for the rest of the world.
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Monday, November 24, 2008
The $70-Per-Hour Lie
By brownsox
Daily Kos
November 21, 2008
HAVE YOU HEARD THE ONE ABOUT the UNION autoworker making more than $70 PER HOUR, forcing American auto companies into bankruptcy?
There are two very small PROBLEMS with that. First, there’s SOMETHING WRONG with workers making a good living? As wrong for a blue-collar worker to make $70 as for a CEO to make $11,000?
Second, IT’S NOT TRUE. Average wages for Big Three workers are around $28 per hour.
But then what’s the source of that $70 hourly figure? It didn’t come out of thin air. Analysts came up with it by including the cost of all employer-provided benefits--namely, health insurance and pensions--and then dividing by the number of workers. The result, they found, was that benefits for Big Three cost about $42 per hour, per employee. Add that to the wages--again, $24 per hour--and you get the $70 figure. Voila.
Except ... notice something weird about this calculation? It’s not as if each active worker is getting health benefits and pensions worth $42 per hour. That would come to nearly twice his or her wages. (Talk about gold-plated coverage!) Instead, each active worker is getting benefits equal only to a fraction of that--probably around $10 per hour, according to estimates from the International Motor Vehicle Program. The number only gets to $70 an hour if you include the cost of benefits for retirees--in other words, the cost of benefits for other people.
Rather slick and cheeky of them, it must be said, to craft this particular line of bull.
Needless to say, if we had universal healthcare, enemies of unions wouldn’t be able to tell this particular lie, and American auto companies would be doing a lot better financially. The plight of this industry should shore up our resolve for healthcare reform. And in the interim, as we watch one industry after another ask for government assistance, we ought not to place the blame for a single industry’s problems on the backs of its unionized workers.
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Another Bank Bailed Out
The people who take a shower before they go to work get bailed out. The people who must take a shower after work get thrown out.
- Leo Gerard, President Steelworkers Union
Citi dodges bullet
Government will guarantee losses on more than $300 billion in troubled assets and make a fresh $20 billion injection.
By David Ellis
CNN
November 24, 2008
The U.S. government on Sunday announced a massive rescue package for Citigroup - the LATEST MOVE to steady the banking giant, whose shares have plunged in the past week.
Citigroup shares rose 56% in premarket trading Monday.
THE PLAN has two key features:
First, the U.S. Treasury and the Federal Deposit Insurance Corporation (FDIC) will backstop some losses against more than $300 billion in troubled assets.
Second, the Treasury will make a fresh $20 billion investment in the bank. The government has already injected $25 billion into Citigroup as part of the $700 billion bailout passed by Congress in October.
In return for the latest intervention, the government will receive an additional batch of preferred shares - $20 billion for its direct investment and $7 billion as compensation for the loan guarantees. Citigroup will pay an 8% dividend rate on those shares.
In addition, the government will get warrants, or the right to purchase $2.7 billion worth Citigroup shares in the future.
The government will impose restrictions as well. Citigroup will be prohibited from paying out a dividend of more than a penny per share for the next three years and will face limits on executive compensation.
Plus, Citigroup will be expected to adjust mortgages for troubled borrowers, using procedures similar to those the FDIC implemented at IndyMac, which it took over last summer.
“With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy,” Treasury, Federal Reserve and the FDIC said in a joint statement.
Under the terms of the Citigroup rescue package, the bank would be on the hook for the first $29 billion in losses on the covered assets, which includes mostly loans backed by residential and commercial mortgages. It would cover 10% of losses above that amount, with the government shouldering the rest.
Despite the massive rescue effort, regulators did not push for a management change at Citigroup. In recent days, there had been speculation that Citigroup CEO Vikram Pandit could step down. There had also been talk that the company was considering replacing Chairman Sir Win Bischoff, although the company denied such reports.
Citigroup has been one of the hardest hit financial firms since the mortgage market first started to unravel in the fall of 2007. Over the past four quarters, the company has recorded close to $21 billion in losses.
Investors seemed encouraged by news of the Sunday night rescue. Major European markets jumped at the open, with Citi shares climbing 35% in Frankfurt. U.S. futures were pointing to a higher open Monday.
A scary week
Federal Reserve Chairman Ben Bernanke and Timothy Geithner, president of the New York Fed, were both involved in the weekend talks over Citigroup’s fate, according to government officials. Geithner is expected to be nominated to be Treasury Secretary by President-elect Barack Obama.
There had been concerns that letting another major financial institution fail would have disastrous consequences for both the U.S. economy as well as the global financial system. The bank had more than $2 trillion in assets as of the end of the third quarter and has operations in more than 100 countries.
Last week, fears about Citigroup’s fate rattled equity markets around the globe and sent shares of the 196-year-old firm plummeting to levels not seen in over a decade.
Citigroup shares lost close to two-thirds of their value for the week, even as the company announced plans to layoff more than 50,000 workers and as its largest individual shareholder upped his stake.
By the close of trading on Friday, Citigroup (C, Fortune 500) shares had dipped below $4 a share, and were down 87% for the year.
The most recent slide in Citigroup stock comes on the heels of news earlier this month that the Treasury Department was abandoning its initial rescue plan to buy troubled assets from banks - Citigroup had been seen as a major beneficiary of that strategy.
Instead, as part of the $700 billion BAILOUT PACKAGE that was signed into law in early October, Treasury has focused on making direct investments in banks. In exchange for equity stakes, the agency has injected $25 billion into Citigroup and an additional $100 billion into eight other major U.S. financial institutions.
Despite the recent events, many industry experts had stressed that Citigroup is relatively healthy. Two veteran banking analysts - Mike Mayo of Deutsche Bank and Ladenburg Thalman’s Richard Bove - both advised clients last week that Citigroup could survive substantial loan losses.
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