In its attempt to quell rising uneasiness in the wake of the failed German bond sale last week, the establishment magazine The Economist rushed in over the weekend with a series of four separate articles promoting its globalist and internationalist perspective on the matter.
The first article noted that the risk to the euro within the next few weeks is “alarmingly high” unless measures are taken. The article blamed lack of leadership — “denial, misdiagnosis and procrastination” — for the unfolding and accelerating crisis. First, a recession appears to be imminent as the austerity measures are taking hold across the euro zone and slowing already shaky economies.
Second, there is evidence of a run on banks holding large positions in the sovereign debt of the weaker countries. As the banks are facing a June 2012 deadline to improve their capital positions they are now seizing this opportunity to unload as much of that debt as they can, thus explaining the significant rise in interest rates all across the zone. This reflects the simple fact that the banks have loaned money to each other — loans that exceed their deposits, according to The Economist — and now are unwilling to continue to make those loans. This is putting the various spendthrift — “feckless” is their word for it — governments at risk of default when they can’t borrow the money to pay their bills. Especially at risk is Italy, which has to roll over $42 billion of debt the last week in January and another $62 billion at the end of February.
By every appearance, we are entering the final, calamitous act of the European debt crisis, a sprawling, slow-motion debacle that is about to engulf the world in financial turmoil more acute than the American meltdown of 2008. For roughly two years, European authorities have struggled to keep the debt crisis from spinning out of control, doling out bailouts to small, heavily indebted nations such as Ireland, Portugal, and Greece. “Contagion” — the notion that a sovereign default in, say, Athens, might trigger a cascade of woes elsewhere — has been and remains the watchword.
But, with Italy now propelled into the company of the desperately indebted, the Europeans have all but run out of options. Unlike Greece and Portugal, Italy, with its $2.6-trillion debt, is far, far too large to be bailed out. Italy’s political leadership — like America’s — has been absolutely unwilling to cut the expense of government, clinging like ivy to cherished government programs that cannot be sustained by any level of taxation. Over the past couple of weeks, markets have finally taken notice, driving interest rates, or “yields,” on most Italian government bonds to over seven percent. Today, for example, the Italians managed to auction off $10.6 billion worth of six-month bonds at yields of 6.504 percent. Two-year bonds, meanwhile, were selling for 7.64 percent, and 10-year bonds for 7.26 percent. By comparison, consider that six-month Italian bonds were selling for a mere 3.535 percent only last month, while two-year bonds were just above 4.1 percent in early October and at 2.3 percent in mid-March. Borrowing rates for Italy have more than tripled in a few months.
The “disastrous” failure of the German bond auction on Wednesday when buyers failed to bid the offering and Germany’s Central Bank — the Bundesbank — had to step in and purchase nearly 40 percent of the offering came just a day after SpiegelOnline posted an article critical of the country’s finances. The article virtually accused Chancellor Angela Merkel and her Finance Minister, Wolfgang Schauble, of “cheerleading” the economy’s supposed strength while ignoring major weaknesses. Merkel says her country has “a clear compass for reducing debt [and that] getting our finances in order is good for our country.” Schauble was an echo: Germany is a “safe haven [because] the entire world has great confidence in both the performance and soundness of the fiscal policies of the Federal Republic of Germany.”
Cracks in Germany’s economy were noted by Professor Wilhelm Hankel of Frankfurt University back in November of 2010: “Germany cannot keep paying for bail-outs without going bankrupt itself. This is frightening people.” He added,
You cannot find a bank safe deposit box in Germany because every single one has already been taken and stuffed with gold and silver. It is like an underground Switzerland within our borders. People have terrible memories of 1948 and 1923 when they lost their savings.
GOP presidential candidate Herman Cain styles himself a Washington “outsider,” an “anti-politician,” and a businessman who is just what America needs at this critical moment in its history to turn itself around. Only someone of Cain’s peculiar background, he would have us believe, only someone uncorrupted by the insatiable hunger for power from which all career politicians suffer, can restore America’s greatness in the world.
Again, this is the self-image that Cain works inexhaustibly to project.
There is one question, though: is it true?
The first fact that must not be lost upon us is that while Cain is a reasonably successful businessman, and while he is not a professional politician, the notion that he is the “Mr. Smith” of our time who is about to take Washington by storm is a fiction of the first order.
Cain, you see, was at one time a Federal Reserve chairman. (He was deputy chairman of the board of directors of the Federal Reserve Bank of Kansas City from 1992 to 1994, and chairman from 1995 to 1996.)
Thursday’s article in The New York Times by writers Jack Ewing and Nicholas Kulish about the “rift” between factions over the role of the European Central Bank (ECB) was a distraction and misdirected attention from what is really happening there. The piece makes it sound as though the ECB is standing firm against pressures to have it buy up the debt from Greece and Italy in order to keep the debt “contagion” from spreading elsewhere.
For instance, the article quotes Spain’s Prime Minister, Jose Luis Rodriguez Zapatero, as saying that he expected the ECB to do whatever was necessary, for “this is what we transferred power for … [to] defend the common policy and its countries.” Of course Zapatero would have to say that or he would be gone, just as unelected bankers replaced elected leaders in Greece and Italy. Just a reminder as to who is in charge was reflected by the recent rise in Spain’s borrowing costs, the highest since 1997, and exceeding the “default” level of 7 percent on its 10-year bond. But nothing was said in the article that Zapatero’s comments reflected a desire to save his skin.
In fact the ECB has been taking an active role economically and politically by buying up the debt of those countries in massive amounts, already in excess of $250 billion, and manipulating interest rates to favor the newly installed rulers Mario Monti in Italy and Lucas Papademos in Greece. But authors Ewing and Kulish prefer to present the ECB as being run by “fiercely conservative stewards” who have “steadfastly resisted letting it take up the mantle of lender of last resort.” And to support that falsehood the authors enlisted the help of experts closely tied to the creation of the ECB and to its ultimate purpose as a tool to install a European dictatorship.
Evidence shows that CNBC manipulated its online poll following a debate and that its action is part of CBS policy to ignore certain candidates and prop up others. This has placed CBS and CNBC under harsh scrutiny. However, according to Murray Sabrin — professor of finance in the Anisfield School of Business at Ramapo College in New Jersey, 2008 Republican nominee for the U.S. Senate, and regular writer for LewRockwell.com — the main motivation behind the media’s bias against Ron Paul has been Paul’s harsh criticism of the Federal Reserve.
In his Forbes magazine article published Thursday, Nathan Lewis makes it sound easy to get back to a gold standard. After all, it has been accomplished numerous times in history around the world, including in America following the Civil War.
The first way is a “return to prior parity,” which would mean making a dollar redeemable in gold at $35 an ounce. Lewis points out that this would be impossible as it would entail a huge shrinkage in the money supply and a consequent depression. So option one is out.
The second way is to make a dollar redeemable in gold at a figure close to gold’s current price at between $1,500 and $1,700 an ounce. Lewis notes that this would also require a major restructuring — “a long price adjustment” — in his words, and “would probably cause a recession.” Not such a good option.
Lewis says there is a third option: Simply replace the currency with another one and make it redeemable in gold at some arbitrary value that the present gold supply would support. He points out that although the dollar is weak and getting weaker, few are ready for this. This option would apply only after the complete destruction of the dollar, something similar to what happened in the German Weimar Republic in the early 1920s. So that option isn’t feasible either. At least not yet.
It remains unclear exactly why or how the Gadhafi regime went from “a model” and an “important ally” to the next target for regime change in a period of just a few years. But after claims of “genocide” as the justification for NATO intervention were disputed by experts, several other theories have been floated.
Oil, of course, has been mentioned frequently — Libya is Africa‘s largest oil producer. But one possible reason in particular for Gadhafi’s fall from grace has gained significant traction among analysts and segments of the non-Western media: central banking and the global monetary system.
According to more than a few observers, Gadhafi’s plan to quit selling Libyan oil in U.S. dollars — demanding payment instead in gold-backed “dinars” (a single African currency made from gold) — was the real cause. The regime, sitting on massive amounts of gold, estimated at close to 150 tons, was also pushing other African and Middle Eastern governments to follow suit.
And it literally had the potential to bring down the dollar and the world monetary system by extension, according to analysts. French President Nicolas Sarkozy reportedly went so far as to call Libya a “threat” to the financial security of the world. The “Insiders” were apparently panicking over Gadhafi’s plan.
“I think that the Zionist Jews who are running these big banks and our Federal Reserve, which is not run by the federal government — they need to be run out of this country,” declared Patricia McAllister from the speaker’s platform at Occupy Los Angeles. It’s a timeworn message, the myth of the almighty Jews behind the curtain, pulling the strings to exploit humanity and drain economies.
Fed Chairman Ben Bernanke’s news conference on November 2 included the admission that the Fed is depending on hope and patience to see if its continuing strategies of Operation Twist and zero interest rates will grow the economy out of recession. In his session with reporters, Bernanke defended Fed actions in the face of increasing criticism from both the left and the right.
Three years after the Federal Reserve's massive and continuing interventions in the financial markets, Bernanke was forced to admit that “recent indicators point to continuing weakness in overall labor market conditions and the unemployment rate remains elevated ... and consequently [the Fed] anticipates that the unemployment rate will decline only gradually.... Moreover, there are significant downside risks to the economic outlook.” He added that “we did underestimate the pace of recovery for some fundamental reasons,” including the continuing declines in the real estate markets and “a certain amount of bad luck.”
Bernanke was forced to reduce further his estimates about the rate of economic growth, now predicting that the U.S. economy will grow at only 1.6 percent to 1.7 percent in 2011, and that 2012 growth will range between 2.5 percent and 2.9 percent, nearly a full percentage point below his previous estimates. He also sees unemployment remaining sticky at between 8.5 percent and 8.7 percent, higher than the 7.8 percent predicted in June. What little growth he has seen in the last month amounts to nothing more than consumers' reaction to the decrease in gasoline prices and Japan’s recovery from the earthquake and tsunami last spring.