China fears depreciation of $2.45 trillion of reserves still heavy in dollars

China offered a rare insight into its foreign exchange reserves with confirmation that the vast majority are held in dollars

Roughly 65pc of China's foreign currency reserves are held in dollars, according to a report. Photo: AFP

The Chinese Government holds the largest stockpile of currency reserves at $2.45 trillion (£1.59 trillion), with 65pc held in dollars, 26pc in euros, 5pc in pounds, and 3pc in yen.

The report was published in official newspaper the China Securities Journal and confirmed analysts' estimates that about two-thirds of the reserves are invested in dollars. Until now the allocation of China's foreign exchange reserves was considered a state secret.

Separately Hu Xiaolian, a vice governor with the People's Bank of China, warned that depreciation was a risk for the foreign exchange reserves held by developing countries.

"Once a reserve currency's value becomes unstable, there will be quite large depreciation risks for assets," she wrote in an article that appeared in the latest issue of China Finance, a central bank magazine.

"The outbreak and spread of the global financial crisis has highlighted the inherent deficiencies and systemic risks in the current international currency system," she said.

"A diversified international currency system will be more conducive to international economic and financial stability," she added, calling for greater cross-border use of the yuan.

China has signalled a shift away from dollar assets in recent months, in a bid to diversify. It has sharply increased its net purchases of Japanese debt, and has raised its holdings of South Korean bonds.

The latest data also shows it has moderately reduced its holdings of US Treasuries, to $843.7bn in June from $894.8bn at the beginning of the year.

China however remains the biggest single holder of US Government bonds, and the China Securities Journal suggested that further significant diversification away from dollar assets in the short-term was unlikely.

"It is unlikely that China will increase purchases of Japanese bonds in the coming months because the yen might weaken at any time," it said.

"China is very likely to increase purchases of US Treasuries in September. The possibility for China to buy more Korean bonds can't be ruled out."

Analysts have also said the diversification represents investor desires to take advantage of the best opportunities.

George carlin Bankers

More War Lies

Lies aren’t used just to start wars, but also to escalate them, continue them, and even reduce or end them. And we got a pile of war lies from the president Tuesday evening.

Obama claimed the war on Iraq was initially a war to disarm a state. Really? And then “terrorist” Iraqis attacked our troops in their country. Yet if they had done that in our country, I suspect they would still be the terrorists. And then it became a civil war which we were innocently caught up in. Uh huh.

U.S. participants in this crime are heroes, always and everywhere. That’s sacred. The troops’ mission has involved protecting the Iraqi people, and by golly they’ve done a superb job, as long as we don’t mention the complete devastation of Iraq, the million dead, the millions of refugees, and the intense resentment of those remaining toward our country for what we’ve done to theirs.

The Iraqi people now (dead, in exile, in a ruined nation) have a chance that they supposedly didn’t have before we destroyed their country, a country that was actually a better place to live in in every way in 2003 than it is now, and in 1989 than in 2003. To hear President Obama, this war has been for the benefit of the Iraqi people, and these wars have been about al Qaeda and 9-11.

Obama slid into nonsense about al Qaeda after discussing Iraq and before mentioning Afghanistan, a Bushian maneuver if ever I saw one:

“No challenge is more essential to our security than our fight against al Qaeda.”

Never mind that al Qaeda barely existed before these wars became recruiting tools. “We will disrupt, dismantle, and defeat al Qaeda” in Afghanistan, the president promised, even though al Qaeda isn’t there. Troop reductions in Afghanistan will begin next August, he said, although the prepared transcript said July, and will be determined by conditions on the ground, even though Afghanistan is not yet as bad as Iraq is.

Obama modeled the future bloodletting in Afghanistan on the myth of the successful escalation in Iraq, ignoring factors that have contributed to the reduction of violence in Iraq, including the promise of complete withdrawal, the beginning of withdrawal, and prior to those factors the incredible level of death and displacement, negotiations and bribes. The test for a “surge” in Afghanistan failed in Marja, and Obama simply behaves as if it succeeded.

And here at home “it is time to turn the page.” Never mind the commission of the supreme international crime of aggression. Never mind the mass murder. Obama said he talked with George W. Bush earlier in the day. Obama lied that the two of them had never agreed on the war, a war Obama voted to fund repeatedly in the Senate. And he lied that Bush was committed to U.S. security, knowing full well that this war has made us all less safe.

“There were patriots who supported this war, and patriots who opposed it. And all of us are united in appreciation for our servicemen and women, and our hope for Iraq’s future.”

Except for the majority of Americans who believe the war never should have begun, that it should be immediately ended, and that its architects — starting at the top with Bush, not the bottom with the troops — must be held criminally accountable. Participation in this crime is not a service to anyone.

The most honest part of the speech was this:

“We have spent over a trillion dollars at war, often financed by borrowing from overseas. This, in turn, has short-changed investments in our own people, and contributed to record deficits. For too long, we have put off tough decisions on everything from our manufacturing base to our energy policy to education reform. As a result, too many middle class families find themselves working harder for less, while our nation’s long-term competitiveness is put at risk.”

That’s a remarkable point for the president to dare to make. But there was no mention of the hundreds of billions yet in the works to be wasted in Iraq and Afghanistan, not to mention Pakistan and numerous other countries deserving of our favors.

The big lie, of course, is that the combat mission is, once again, completed. The soldiers in Iraq and the mercenaries and contractors are there for combat. That there are fewer soldiers is movement very much in the right direction, and very much to be applauded, but pretending that those remaining are something else is not accurate. Many of them may see less combat, but I’ll believe they’re not there for combat when their weapons are taken away.

The big question, of course, is what will be done about the deadline of December 31, 2011. Here’s what Obama said on this key point:

“Going forward, a transitional force of U.S. troops will remain in Iraq with a different mission: advising and assisting Iraq’s Security Forces; supporting Iraqi troops in targeted counter-terrorism missions; and protecting our civilians. Consistent with our agreement with the Iraqi government, all U.S. troops will leave by the end of next year. As our military draws down, our dedicated civilians — diplomats, aid workers, and advisors — are moving into the lead to support Iraq as it strengthens its government, resolves political disputes, resettles those displaced by war, and builds ties with the region and the world. And that is a message that Vice President Biden is delivering to the Iraqi people through his visit there today. This new approach reflects our long-term partnership with Iraq — one based upon mutual interests, and mutual respect. Of course, violence will not end with our combat mission.”

Violence will not end. We just won’t call it combat. It’ll be an overseas contingency. But what about all U.S. troops leaving by the end of next year? Obama doesn’t seem to hedge on this the way he does later in the speech on a future withdrawal from Afghanistan, saying that will be “subject to conditions on the ground.” And that’s a good thing. The same day as this speech, the war-loving Washington Post printed a column by Ryan Crocker, U.S. ambassador to Iraq from 2007 to 2009, which pushed for a longer occupation with these words:

“And it may be that a new Iraqi government will request a U.S. military presence beyond the end of 2011. If so, I hope we will listen carefully.”

Maybe we should start listening very careful right now. The president speaks of a long-term partnership with Iraq. How do you have that if you’re gone? The answer may be that you aren’t gone, that you maintain a significant military force in the country consisting of mercenaries employed by the State Department.

Here’s what the Bush-Maliki Unconstitutional Treaty says:

“All U.S. forces are to withdraw from all Iraqi territory, water and airspace no later than the 31st of December of 2011.”

However, the same document, as Raed Jarrar pointed out to me, carefully defines U.S. forces to allow exceptions:

“Definition of Terms . . .

‘U.S. Forces’ refers to the entity that includes all the personnel of the American Armed Forces, the civilian personnel connected to them and all their possessions, installations and equipment present on Iraqi territory.

‘Member of the U.S. Forces’ refers to any person that belongs to the army of the United States, its navy, air force, marine force or coast guard.

‘Civilian element member’ refers to any civilian working for the U.S. Department of Defense. And this term does not include the personnel usually resident in Iraq.”

The trick is that not all imaginable U.S. forces have to work for the so-called Department of Defense. If they work for any other department, they’re in the clear. But Iraqis are in their gun sights.

CIA money behind Wi-Fi Positioning System (WPS)

How amazing would it be if you could walk into McTaco King and order that mid-morning bacon taco meal with Mountain Dew Big Gulp from your mobile device? Just imagine… as you approach the restaurant, a menu pops up on your screen, the phone makes suggestions and helps you super-size your order, before you even set foot in the restaurant!

Is there anything the IPad won’t do?

This advertiser’s wet dream is about to become reality, thanks to WPS (Wi-Fi Positioning System) infrastructure pioneered by CIA front company Skyhook (formerly Quarterscope) and currently being implemented by several other intelligence-connected companies, including Google, Apple, and Navizon (which is supplying data to Microsoft).

WPS geolocates wireless network devices using a database of known wireless access points, such as in coffee shops. Since at least 2004, WPS companies like Skyhook and Google have been war-driving for access point data. More about the technical aspects of this later.

How did you conclude that Skyhook is an intelligence front company?

Follow the money.

In 2008 former CIA director George Tenet became Managing Director of Allen & Company, an investment bank that provided funding for Skyhook’s WPS development and Google’s IPO (Initial Public Offering) in 2004, while he was still director of the CIA.

Skyhook was also funded by shadowy investment firm Alliance Capital. Frank Savage, Alliance Capital’s former board chairman, also served on the board of Lockheed Martin and Enron. Alliance was Enron’s largest shareholder.

Read Entire Article

Want To Make A Lot Of Money As A CEO? Fire People

CEOs who fire people tend to make more money. That's been the trend recently, according to 'CEO Pay and The Great Recession' from the Institute for Policy Studies.

IPS:

The 50 top CEO layoff leaders received $12 million on average in 2009, compared to the S&P 500 average of $8.5 million. Each of the corporations surveyed laid off at least 3,000 workers between November 2008 and April 2010. Seventy-two percent of the firms announced mass layoffs at a time of positive earnings reports.

...

At a time when we should be pulling together to strengthen our shared economic futures, CEOs should not be rewarded for slashing jobs," says IPS Senior Scholar Chuck Collins. "Realigning the interests of CEOs with their employees and the rest of our country would be good for the economy and national morale."

It's disturbing that down-sizing CEOs have earned more recently, but it would be extremely disturbing if the government could control companies behavior in this regard.

So while far from an optimal situation, we're not sure what could be done about it for private companies, without massively infringing on the rights of individuals (business owners). For example, some companies owners might want their paid managers (CEOs) to reduce staff. Still, it's horrible to be on the receiving end for sure. It's a tricky situation. You can see examples of the highest-paid 'Layoff Leaders' here.

Tags: Management, Stocks | Get Alerts for these topics »

Five Years After and We Still Don’t Know

In the five years since three World Trade Center buildings collapsed into their own footprints in virtually free fall time, the convincing power of the official explanation of that day’s events has evaporated. Polls show that 36% of Americans do not believe the official account.

As Lev Grossman writes in Time magazine (September 3, 2006), "Thirty-six percent adds up to a lot of people. This is not a fringe phenomenon. It is a mainstream political reality."

Grossman acknowledges that alternative explanations of 9/11 are more compelling than the official explanation. Grossman offers a psychological explanation for the success of alternative explanations: "a grand disaster like Sept. 11 needs a grand conspiracy behind it."

However, Grossman’s psychological explanation fails on its own terms. Which is the grandest conspiracy theory? The interpretation of 9/11 as an orchestrated casus belli to justify US invasions of Afghanistan and Iraq, or the interpretation that a handful of Muslims defeated US security multiple times in one short morning and successfully pulled off the most fantastic terrorist attack in history simply because they "hate our freedom and democracy"? Orchestrating events to justify wars is a stratagem so well worn as to be boring. Indeed, it is the fantastic conspiracy of the official explanation that makes it unbelievable.

The scientists, engineers, and professors who pose the tough questions about 9/11 are not people who spend their lives making sense of their experience by constructing conspiracy theories. Scientists and scholars look to facts and evidence. They are concerned with the paucity of evidence in behalf of the official explanation. They stress that the official explanation is inconsistent with known laws of physics, and that the numerous security failures, when combined together, are a statistical improbability.

The call by 9/11 skeptics for an independent investigation by an international panel of experts is not a conspiracy theory. In principle there is nothing wrong with such an investigation. In practice, it might be difficult to create a truly independent panel. How many physicists, for example, have careers independent of government grants, and how many engineering firms would risk being branded "unpatriotic" and lose business by coming down on the "wrong" side of the issue?

Nowhere is there a surfeit of brave men.

I do not know what happened on 9/11, and I don’t expect to ever find out. Neither government nor media show any interest in providing us with anything except a political commission’s report.

9/11 skeptics have pointed out a large number of problems with the 9/11 Commission Report. Here is a very short list:

(1) There appears to be a very large energy deficit in the official explanation of the collapse of the two WTC towers, and no explanation for the collapse of WTC 7. What is the source of the energy that brought down the three buildings?

In the PBS documentary, "America Rebuilds", broadcast in September 2002, Larry Silverstein, who had the lease on the World Trade Center, said that WTC 7 was brought down by a decision of the authorities on the scene: "I remember getting a call from the, er, fire department commander, telling me that they were not sure they were gonna be able to contain the fire, and I said, ‘We’ve had such terrible loss of life, maybe the smartest thing to do is to pull it.’ And they made that decision to pull and we watched the building collapse."

Two striking facts jump out from this quote. One is that fire was not raging in WTC 7. The other is that "to pull" a building means to bring it down by engineered demolition. For WTC 7 to be pulled on the late afternoon of September 11, it would already have had to be wired for demolition. Why was WTC 7 wired for demolition?

Brigham Young University Professor of Physics Steven Jones has suggested that thermite, or some other powerful, high temperature, high explosive capable of slicing the powerful steel columns that comprised the WTC towers central core, provided the energy missing in the official account.

In a September 1, 2006, New York Times article, "U.S. moves to debunk ‘alternative theories’ on Sept. 11 attacks", Jim Dwyer reports that the National Institute of Standards and Technology, an agency of the U.S. Dept. of Commerce, disputes Professor Jones’ suggestion. NIST believes that such "enormous quantities of thermite would have to be applied to the structural columns to damage them" that engineered demolition is not feasible.

Gentle reader, note what NIST is saying. If no reasonable quantity of the explosive thermite, which is used for engineered demolition, could damage the powerful buildings, the measly energy from an airliner, a bit of jet fuel, and gravity could not have collapsed the buildings.

The fact of the matter is that there has been no investigation of why the three buildings collapsed. Bill Manning, the editor-in-chief of "Fire Engineering" got it right when he wrote in the January 2002 issue of that publication that "the ‘official investigation’ blessed by FEMA and run by the American Society of Civil Engineers is a half-baked farce that may already have been commandeered by political forces whose primary interests, to put it mildly, lie far afield of full disclosure. . . . As things now stand . . . the investigation into the world Trade Center fire and collapse will amount to paper- and computer-generated hypotheticals."

Manning complained about the "destruction of evidence . . . of the largest fire-induced collapse in world history" and wrote that nowhere in the "national standard for fire investigation" is there "an exemption allowing the destruction of evidence."

Obviously, we were not meant to know why the buildings collapsed.

This conclusion does not automatically lead to the conclusion that some elements of the US government and/or Israeli intelligence destroyed the buildings, using airliners as cover, in order to justify invasions to achieve US/Israeli hegemony in the Middle East or US control of oil supplies. No doubt, neoconservatives in the Bush administration used 9/11 for this purpose. However, perhaps the buildings failed for reasons that involve enormous liabilities, and those liabilities were covered up with a bogus explanation.

According to news reports, insurance payments to Silverstein for the buildings were many multiples larger than the price he paid for the lease. If the reports are correct, perhaps money explains the story.

(2) The belief that Muslims pulled off the attacks is based on the concreteness of the 19 names identified as the hijackers by the FBI. The fact that the FBI attests to the identity of the hijackers is the source of the official story’s credibility.

Considering the official story’s dependence on the identity of the hijackers, how is it possible for the official story to survive for 5 years after the BBC’s report ( September 23, 2001) that a number of the alleged hijackers are alive and well?

According to BBC News World Edition, "Saudi Arabian pilot Waleed Al Shehri was one of five men that the FBI said had deliberately crashed American Airlines flight 11 into the World Trade Centre on 11 September. His photograph was released, and has since appeared in newspapers and on television around the world. Now he is protesting his innocence from Casablanca, Morocco. He told journalists there that he had nothing to do with the attacks on New York and Washington, and had been in Morocco when they happened. He has contacted both the Saudi and American authorities, according to Saudi press reports. He acknowledges that he attended flight training school at Daytona Beach in the United States, and is indeed the same Waleed Al Shehri to whom the FBI has been referring."

Obviously, Waleed Al Shehri would not be alive if he had crashed an airliner into the World Trade Center. It would appear that the FBI’s confidence in the identity of the hijackers is more public relations than reality. As the FBI has been proven wrong about the identity of a number of the hijackers, how do we know the FBI is right about any of them?

There are many holes in the official 9/11 story and very little evidence in its behalf. Did the government, terrified by possible public reaction to the catastrophe and expected to have an explanation for the terrifying event, simply concoct a story?

The reason so many people doubt the 9/11 story is not because they have psychological needs for conspiracies, but because the 9/11 story is not believable.

======================================================

COPYRIGHT CREATORS SYNDICATE, INC.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan Administration. He is the author of Supply-Side Revolution : An Insider's Account of Policymaking in Washington; Alienation and the Soviet Economy and Meltdown: Inside the Soviet Economy, and is the co-author with Lawrence M. Stratton of The Tyranny of Good Intentions : How Prosecutors and Bureaucrats Are Trampling the Constitution in the Name of Justice.

BBC Correspondent says MOSSAD did 9/11 and Iran doesn't want Nukes SEE I...

Interview: Science journalist files suit alleging H1N1 ‘swine flu’ a hoax to sell vaccines

Interview with Jane Burgermeister, a science journalist who has filed criminal charges against the World Health Organization, U.S. officials and business executives. She alleges that the H1N1 “swine flu” pandemic is a hoax designed to sell vaccines.

Jane Burgermeister, an Austrian science journalist and investigative reporter has filed criminal charges with the FBI against the World Health Organization, the United Nations, and high ranking U.S. officials and business executives. She alleges that officials conspired to use a virus – the H1N1 “swine flu” – that was engineered in a lab to create a flu pandemic in order to sell vaccines.

She calls it an act of bioterrorism.

Her accusations are extremely bold, yet carefully researched and documented and rely on evidence from published scientific research, legal actions, and interviews with prominent scientists. What Burgermeister has done is connect the dots, but has she come to the right conclusion?

The U.S. government has classified the bird flu and swine flu vaccines as bioweapons which would appear to some as incriminating, given the circumstances and the long strange tale of how vaccines become weapons.

One of the key points of Burgermeister’s suit is that the new strain of flu is a synthetic structural recombinant containing genes from birds, humans, and pigs from different continents. Burgermeister said it’s reasonable to assume it came out of a laboratory, specifically a bioweapons laboratory. “Mother Nature does not naturally recombine bird, swine and three human influenza viruses,” asserts Burgermeister. Further, some respected scientists who examined H1N1 say the virus contains strains of the 1918 Spanish Pandemic flu. That flu strain was reassembled by molecular pathologists at the Armed Forces Institute of Pathology in Washington, D.C. and distributed to other agencies, the WHO and pharmaceutical companies around the world.

Another is that Baxter released contaminated vaccines onto the general public in Austria which resulted in death and sickness. She also warns of plans to make the vaccines compulsory in several countries in reaction to the manufactured pandemic.

On the surface the charge appears outrageous, and yet the evidence Burgermeister has gathered is compelling.

It’s also a lot to digest so I contacted Burgermeister to summarize her allegations.

F&S: You've gathered a mountain of evidence. Is the FBI conducting its own investigation? Are you confident that they will pursue these allegations?

JB: I have no confirmation the FBI are investigating but I was assured they have to by law investigate if there is credible evidence of a threat or else they expose themselves to the charge of being corrupted.

F&S: Are any other government entities pursuing an investigation into any of the allegations?

JB: The police here are investigating Baxter but Baxter is very powerful and the health minister and key politicians are all covering up and it will be difficult for any police to convict half the government!

I have evidence to this and will file fresh charges next week hence not much time right now.

F&S: How did you gain access to information that led you to conclude this was a mass conspiracy?

JB: I have no inside information. I am in Austria where the evidence of a deliberate contamination of 72 kilos by the very company that will supply the vaccines and I built up step by step from the verifiable evidence, examining Baxter and WHO's activities in different countries and seeing parallels in the legal framework.

F&S: There have been suggestions by scientists that the H1N1 could only have been manufactured in a lab. Are any government or scientific authorities supporting your claims?

JB: My claims are based on evidence.

Also, I am not a scientist and leave these matters to those who are experts and supply me with the genome analysis, etc., but even Adrian Gibbs, respected Australian virologist, said on record the swine flu was lab made. He said it was released by accident but I believe he was choosing his words carefully.

Also, a respected Paris organization has said the swine flu is a never before seen virus and has nothing to do with pigs, whereupon even WHO was forced to officially rename the virus.

My argument is these are not vaccines but bioweapons. The disease was genetically engineered and the virus deliberately released to trigger mass compulsory injections with a substance that is classified as a bioweapon according to the U.S. government.

F&S: Is there any chance that the H1N1, or H5N1 for that matter, came about due to negligence or incompetence? Why would Baxter, WHO and others named go to such lengths to deceive?

JB: There is always a motive for any well planned crime - and that is usually greed. What do Baxter and WHO gain by starting a pandemic and killing millions if not billions?

A great deal. Turns out legislation is in place to allow WHO and the UN to take over the USA and WHO and the EU will take over Europe if millions or billions die from the forced vaccination sparked by a so called "pandemic." So we have a motive for the crime too, a clear benefit.

F&S: Finally, you are challenging some very powerful people. Are you worried for your safety?

JB: I do not fear for my safety as I have no secret contacts, channels of information, am not an agent of any kind and have no real power. I am just a person who researches this kind of thing as part of their job and who found out from their neighbor about the Baxter incident when she handed me a report in the local newspaper.

Burgermeister has published articles on biotechnology and climate change for international research journals and publications including the British Medical Journal, Nature, and The Scientist.

Documents pertaining to her charges are posted online at Scribd.

• Evidence compiled by Burgermeister alleging that vaccines have been developed for use as bioweapons

• Burgermeister charges filed in Austria

• Burgermeister charges filed in Switzerland

• Burgermeister charges filed in United States
  

• Charge document for individuals

Obama vows to expand 'thriving middle class'

US President Barack Obama on Saturday vowed to expand a prosperous middle class and help his compatriots achieve the American Dream as the country prepared to celebrate Labor Day.

"This Labor Day, we should recommit ourselves to our time-honored values and to this fundamental truth: to heal our economy, we need more than a healthy stock market; we need bustling main streets and a growing, thriving middle class," Obama said in his weekly radio address.

"That?s why I will keep working day-by-day to restore opportunity, economic security, and that basic American Dream for our families and future generations," he said.

The comments came after a new Labor Department report released Friday showed the economy lost 54,000 jobs last month and the unemployment rate edged up to 9.6 percent.

Although the job losses were much less than the 120,000 slump expected by Wall Street economists, hiring was not substantial enough to help millions of crisis-hit Americans to return to work.

Obama said his administration was doing everything it can to accelerate job creation and added he was pushing for a law that would provide tax breaks to businesses that create jobs in America.

"But strengthening our economy means more than that," he said.

"We?re fighting to build an economy in which middle class families can afford to send their kids to college, buy a home, save for retirement, and achieve some measure of economic security when their working days are done."

Obama stressed that the United States did not become the world's most prosperous nation "by rewarding greed and recklessness," but rather "by rewarding hard work and responsibility."

The president is expected to tout the new policies in a heavy slate of economy-themed events next week, including travel to the hard-hit Midwest and in a major press conference next Friday.

A Taxpayer's Political Glossary

Download Video Now

It's time to talk: Spain's ETA terrorist group declares a 'cease-fire'

Basque terror group ETA has declared a ceasefire in its bloody campaign for independence.

Three masked militants announced the truce in a statement released on video yesterday.

Spanish politicians reacted with caution to the announcement, the third time in the past 12 years ETA has declared a ceasefire.

Enlarge

Truce: Members of Basque separatists ETA declaring a ceasefire. The rebel group has decided to no longer carry out armed attacks

The latest pledge to halt more than four decades of murder and mayhem came 14 months after ETA's last deadly attack in Spain on the holiday island of Majorca.

Two policemen were killed after a car bomb exploded in the popular resort of Palmanova in July last year when thousands of British tourists were caught up in a lockdown as authorities tried to stop the assassins fleeing the island.

ETA's violent campaign for independence for seven provinces in northern Spain and south-west France has led to more than 820 deaths over the past 40 years.

It has often targeted Costa holiday resorts in the summer in an attempt to disrupt the country's lucrative tourist trade.

Spanish cabinet ministers were still studying the ETA declaration last night and made no immediate official statement.

But sources close to Prime Minister Jose Luis Rodriguez Zapatero said the government considered the announcement 'insignificant' and 'insufficient'.

ETA's statement came only days after two Basque pro-independence parties asked the terror group to declare an internationally verifiable ceasefire.

Enlarge

A boy watches on the Basque journal GARA's website a video of ETA armed Basque group deaclaring a ceasefire

Enlarge

A family watches TV as an image of ETA armed Basque group is displayed informing about the ceasefire declared by the group in the northern Spanish Basque town of Guernica

The terror group, which made its statement in Basque, did not mention the words cease-

or truce. They said instead ETA had decided some months ago not to carry out 'offensive armed actions'.

It had previously declared ceasefires in 1998 and 2006 before returning to violence.

Last night analysts said they did not expect the truce announcement to persuade the Spanish government back to the negotiating table.

One said: 'ETA has renounced violence for good in the past and then gone back on its word.

The Spanish government has held a firm line now for some time, renounce violence for good and disarm, or there are no talks.

This ETA statement addresses neither of these issues.' Ebbing support for violence among the Basque people and increased co- operation between the Spanish and French security services have weakened ETA in recent years.

Earth's surface 'lurches 11ft to the right' as New Zealand earthquake rips new fault line

The earthquake that devastated a city in New Zealand tore open a new 11ft faultine in the Earth’s surface.

The 7.1-magnitude quake which hit Christchurch, the country’s second-largest city, destroyed about 500 buildings and caused an estimated £930million of damage.

But hundreds of lives were saved by tough building rules, it was claimed. Only two injuries were reported.

Enlarge

Cracked up: Taylor Strowger, 10, from Darfield explores earthquake damage to Highfield Road, 30km west of Christchurch

Enlarge

Destruction: A man walks over a damaged road in Paiapoi, 13 miles south of Christchurch after the city was hit by an earthquake Saturday

The quake was caused by the continuing collision between the Pacific and Australian tectonic plates, said Professor Mark Quigley, of Canterbury University.

‘One side of the Earth has lurched to the right ... up to 11ft and in some places been thrust up,’ he said. ‘We went and saw two houses that were completely snapped in half by the earthquake.’

The quake cut power across the region, roads were blocked by debris and gas and water supplies were disrupted.

Christchurch mayor Bob Parker said power was back to 90 per cent of the city and water supply had resumed for all but 15 to 20 per cent of residents.

This US Geological Survey (USGS) shows on image of a ShakeMap of the South Island of New Zealand on Friday as an earthquake with a magnitude of 7.2 on the Richter scale struck

Enlarge

A seismogram made available by Geosciences Australia of the early morning earthquake which hit west of the southern city of Christchurch

Portable toilets had been provided and tanks of fresh water placed around the city. Mr Parker said it would take a long time to fix fully some core services such as water and sewerage. ‘Our first priority is just people,’ he said. ‘That’s our worry.’

The fact that no one was killed was put down to the timing of the quake and strict building codes.

More...

• Teenage Moto rider Shoya Tomizawa dies after shocking crash in San Marino
• Will damaged 300-ton blowout preventer raised from the Gulf of Mexico reveal cause of BP oil spill?

‘New Zealand has very good building codes which mean the buildings are strong compared with, say, Haiti,’ said Professor Martha Savage of Victoria University in the capital Wellington.

‘It’s about the same size quake as Haiti, but the damage is so much less. Though chimneys and some older facades came down, the structures are well built.’

New Zealand lies along the intersection between the Australian and Pacific tectonic plates

The Pacific plate is gradually being pushed beneath the Australian plate, which caused Friday's massive earthquake

Enlarge

A walking bridge just about remains over the Avon River in Avonside, Christchurch. A severely damaged chimney stands on Kilmarnock Street

Enlarge

Rubble-strewn street: Experts said the low number of injuries in the powerful quake reflected the country's strict building codes

Enlarge

A man on a pushbike (R) photographs a damaged building in New Zealand's second largest city Christchurch

The Anglican Dean of Christchurch, the Rev Peter Beck, added: ‘Thank God for earthquake strengthening ten years ago.’

Prime Minister John Key said it was a miracle no one was killed. He put that down to the building codes and because the quake happened just before dawn on Saturday.

‘If this had happened five hours earlier or five hours later there would have been absolute carnage in terms of human life,’ he said. Parts of the city look like they’ve been put in the tumble dryer.’

Up to 90 extra police officers had flown in to Christchurch to help and troops were likely to join the recovery effort today. Engineering teams have begun assessing damage to all central areas.

Enlarge

Unstable buildings standon Columbo Street: Civil Defence declared a state of emergency and there has been considerable damage across the city and surrounding areas

Enlarge

A workman (top-R) uses a hose near a water main as he works near a large hole in a street in New Zealand's second largest city

Enlarge

Rebuilding infrastructure such as roads, water and sewerage systems 'would be a major cost' that the government would have to meet

Schools across the region will remain closed for the next two days to allow time to check whether they were safe.

Roger Bates, whose dairy farm at Darfield was close to the quake’s epicentre 19 miles west of Christchurch, said the new faultline had ripped up the surface across his land.‘The whole dairy farm is like the sea now, with real soil waves right across the dairy farm.

‘We don’t have physical holes (but) where the fault goes through it’s been raised a metre or metre and a half.’

New Zealand records more than 14,000 earthquakes a year, but only about 150 are felt by residents. Fewer than ten a year do any damage.

Enlarge

Enlarge

New Zealand's last major earthquake registered magnitude 7.8 and hit South Island's Fiordland region on July 16, 2009, moving the southern tip of the country 12ins closer to Australia

Analysts: Iraq war ‘partly to blame’ for financial crisis

Stiglitz and Bilmes: Recession will be longer because of war

The financial crisis that rocked the world in 2008 and still reverberates today was "due at least in part" to the Iraq war, which also made it more difficult for the government to react when economic problems happened, argue two prominent policy makers.

In an article in Sunday's Washington Post, former Clinton-era economic adviser Joseph Stiglitz and Harvard University public policy lecturer Linda J. Bilmes say that the Iraq war forced the US to take on more debt than it had to, and caused in part the rising oil prices that resulted in large amounts of money flowing out of the US economy.

To counter the effects of those trends, fiscal policy makers had to keep interest rates unnaturally low, causing the securities and real estate bubbles that burst at the start of the recession, the authors say.

The authors also amended their assessment from several years ago that the Iraq war's true cost is around $3 trillion, saying new information suggests that the cost goes "beyond" that estimate.

Saying what might have been is always difficult, especially with something as complex as the global financial crisis, which had many contributing factors. Perhaps the crisis would have happened in any case. But almost surely, with more spending at home, and without the need for such low interest rates and such soft regulation to keep the economy going in its absence, the bubble would have been smaller, and the consequences of its breaking therefore less severe. To put it more bluntly: The war contributed indirectly to disastrous monetary policy and regulations.

The Iraq war didn't just contribute to the severity of the financial crisis, though; it also kept us from responding to it effectively. Increased indebtedness meant that the government had far less room to maneuver than it otherwise would have had. More specifically, worries about the (war-inflated) debt and deficit constrained the size of the stimulus, and they continue to hamper our ability to respond to the recession. With the unemployment rate remaining stubbornly high, the country needs a second stimulus. But mounting government debt means support for this is low. The result is that the recession will be longer, output lower, unemployment higher and deficits larger than they would have been absent the war.

Stiglitz and Bilmes estimate that about a quarter of the debt increase the US saw during the first five years of the war are attributable to the war -- about $900 billion of a $3.6 trillion rise in the debt. They also estimate that the war added about $10 to the cost of a barrel of oil, amounting to a cost of $250 billion to the US economy.

In articles in the Times of London and the Washington Post two years ago, Stiglitz and Bilmes estimated that the cost of the war, including the costs to the US economy, amounted to $3 trillion. At the time, the Pentagon questioned their assertion.

"It appears that our $3 trillion estimate (which accounted for both government expenses and the war's broader impact on the U.S. economy) was, if anything, too low," the authors state.

"Reimagining history is a perilous exercise. Nonetheless, it seems clear that without this war, not only would America's standing in the world be higher, our economy would be stronger," the authors conclude.

EU austerity policies risk civil war in Greece, warns top German economist Dr Sinn

Greece’s austerity measures cannot prevent default and will lead to a breakdown of the political order if continued for long, a leading German economist has warned.

Hans-Werner Sinn, head of Germany's prestigious IFO Institute, said it was impossible to cut wages and prices by 30pc without major riots. Photo: EPA

“This tragedy does not have a solution,” said Hans-Werner Sinn, head of the prestigious IFO Institute in Munich.

“The policy of forced 'internal devaluation', deflation, and depression could risk driving Greece to the edge of a civil war. It is impossible to cut wages and prices by 30pc without major riots,” he said, speaking at the elite European House Ambrosetti forum at Lake Como.

“Greece would have been bankrupt without the rescue measures. All the alternatives are terrible but the least terrible is for the country to get out of the eurozone, even if this kills the Greek banks,” he said.

Dr Sinn said Greece is an entirely different case from Spain and Portugal, which still have manageable public debts and can bring their public finances back into line with higher taxes.

“Greece would have defaulted in the period between April 28 and May 7, had the money not been promised by the European Union,” he said, describing the failure of the EU’s bail-out strategy to include a haircut for the banks as an invitation to moral hazard.

“There should be a quasi-insolvency procedure for countries. Creditors have to accept a haircut before any money flows for rescue plans, otherwise we’ll never have debt discipline in the eurozone,” he said.

Greek society has so far held together well, despite a wave of strikes and street violence in the early months of the crisis. However, unemployment is rising fast and political fatigue with such austerity policies typically sets in the second year.

Under the rescue deal, the eurozone pledged €80bn of new loans at 5pc interest and the International Monetary Fund offered a further €30bn.

The joint bail-out was hoped to safeguard Greece against the pressure from global capital markets for two and half years, but the relief rally proved short. Spreads on longer-term Greek government debt have surged back to crisis levels of about 800 basis points, implying a high risk of default.

“We are in the second Greek crisis right now, today,” said Dr Sinn.

Greece is undergoing what amounts to an IMF austerity package but without the IMF cure of debt restructuring or devaluation that usual for a country with a spiralling public debt and a chronic loss of competitiveness.

The IMF says Greece’s debt will rise to 150pc by 2013-2014 even if Athens complies fully, a strategy viewed as self-defeating by several ex-IMF officials. There is a strong suspicion that the real objective is to bail-out North European banks with heavy exposure to Southern Europe, rather help Greece.

Dr Sinn said the Germany is now was super-competitive after clawing back 18pc in competitiveness during its long slump. “We’re in a new phase of history. The toggle switch has turned and we are going to see a mirror image of the last 15 years. This time it is Germany that will have an internal boom,” he said.

Germans will not recyle their savings in the Club Med region. They will invest at home.

Marijuana better than pharmaceuticals at treating chronic pain, improving mood

(NaturalNews) Experts from different persuasions often argue about the alleged benefits of using marijuana for pain relief, but a new study out of McGill University Health Centre (MUHC) and McGill University (MU) has conclusively found that cannabis, the genus name for marijuana, is better than pharmaceutical drugs at relieving chronic neurological pain, and without all the harmful side effects.

Appearing in the latest issue of the Canadian Medical Association Journal, the study reveals that tetrahydrocannabinol (THC), the active ingredient in marijuana that gives it psychoactive and analgesic properties, is linked to relieving chronic pain, improving mood and inducing better sleep in those with severe neurological pain.

Patients who took a single inhalation of marijuana smoke three times a day experienced moderate pain reduction within just a few days. The effects were more pronounced with marijuana containing ten percent THC versus varieties with less than ten percent.

"This is the first trial to be conducted where patients have been allowed to smoke cannabis at home and to monitor their responses, daily," explained Dr. Mark Ware, lead author of the study, Director of Clinical Research at the Alan Edwards Pain Management Unit at MUHC, assistant professor of anesthesia in McGill University's Faculty of Medicine and neuroscience researcher at the Research Institute of the MUHC.

"The patients we followed suffered from pain caused by injuries to the nervous system...and which was not controlled using standard therapies," he went on further to say. "This kind of pain occurs more frequently than many people recognize, and there are few effective treatments available. For these patients, medical cannabis is sometimes seen as their last hope."

For legitimate chronic pain caused by post-traumatic and post-surgical injuries, marijuana can be a safer alternative than prescription medications. As always, though, it is important not to abuse marijuana for non-therapeutic purposes.

Sources for this story include:

Washington Faces Possible Armageddon Unlike Any Since Civil War

The U.S. debt crisis represents a unique, unparalleled, and unimaginable convergence of circumstances yet, despite the utter gravity of our plight, nothing is being done to change our course. Washington must either muster the courage — and the support of the people — to accept the pain and make the sacrifices of a lifetime … or face the downfall of America. Words: 938

Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com, provides below further reformatted and edited [..] excerpts from Martin Weiss’ (http://www.moneyandmarkets.com) original article* for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article reposting to avoid copyright infringement.) Weiss goes on to say:

The United States government and its agencies have, by far;
1. the largest pile-up of interest-bearing debts ($15.6 trillion),
2. the largest accumulation of unsecured obligations (over $60 trillion),
3. the largest yearly deficit ($1.6 trillion) and
4. the greatest indebtedness to the rest of the world ($4.8 trillion)… of any country in the world.

In proportion to the size of its economy, one important country, Japan, does have more debt than the U.S. Unlike Washington’s debts, however, nearly all of Japan’s are financed by its own citizens — loyal, long-term savers who are far less likely to pull out in a storm.

Despite the utter gravity of our plight, nothing is being done to change our course. To whit …

Consequence #1: Higher Interest Rates
Due to the avalanche of government borrowing to finance the deficit, there is no power on Earth that can avert sharply higher interest rates.

Consequence #2: Higher Bond Yields
All long-term bonds — whether issued by other government agencies, corporations, states, or municipalities — will also collapse, driving their yields through the roof because, when Uncle Sam has to pay more to borrow, they inevitably have to pay more as well.

Consequence #3: Higher Mortgage Rates
Rates on mortgages and car loans will surge. Why? For the simple reason that they’re also tied at the hip of long-term Treasury rates. If you want to take out a 30-year fixed mortgage (now close to 5 percent) on a median-priced home ($178,300), and you can afford a 10 percent down payment just …
a) a 1 percent rise in rates will drive your monthly payment from $861 to $962 [that's $1212 a year!]
b) a 2 percent increase will drive it to $1,068 [that's $2,484 a year!!) ...
c) and the kinds of rate increases possible in a bond-market collapse could drive it to levels only Midas could afford. Worse, if you go for variable-rate mortgages, balloon mortgages, or other now hard-to-get alternatives, the impact of surging interest rates will be even more traumatic.

Consequence #4: Stagnant Recovery
The fledgling recovery in housing and auto sales — the pride and joy of Washington's bailout brigades — will be toast.

Consequence #5: Lower Long-term Bond Yields
Institutions and individual investors holding piles of lower yielding long-term bonds will get killed which includes:
a) the U.S. households stuck with $801 billion in Treasuries, $979.5 billion in municipal bonds, plus a whopping $2.4 trillion in corporate bonds
b) banks and credit unions holding $199 billion in Treasuries, $228 billion in munis, $1.066 trillion in corporate bonds and, worst of all, $1.408 trillion in government agency (and GSE) bonds
c) insurance companies buried in Treasuries ($196 billion), munis ($444 billion), agency bonds ($469 billion) and a TON of corporate bonds ($2.180 trillion) and
d) private pension funds, state and local governments, and even their employees' retirement funds [which are] all loaded with similarly vulnerable bonds.

Not all of the [the above] holdings are of the long-term variety, but most are, and investors and institutions who own them, on behalf of millions of retirees, will suffer shocking declines in the market value of their portfolios. [In addition,] they could suffer a chain reaction of defaults, gutting their income stream and, worst of all, they now have some reason to fear the de facto default of the biggest debtor of all — the government of the United States of America. I doubt very much we will see THAT happen but two events are very possible, even likely, [namely]:
1. America will lose its triple-A rating
If the Wall Street rating agencies don’t have the moral fiber to announce downgrades, the marketplace will do it for them.
2. Our leaders will face an Armageddon unlike any since the Civil War.

Like California and Greece … like every household and any company … our government MUST cut back and accept the rest of the consequences:
#6: Declining home values
#7: Falling stock prices
#8: The end of the recovery
#9: And many, many more [dire consequences]!

Washington… will no doubt seek every [possible] alternative and try every other trick [to avoid either of the above scenarios] but, alas, no printing press can run faster than our foreign creditors can sell their U.S. bonds. No one will bail out America.

Ultimately, there is NO choice. Washington must either muster the courage — and the support of the people — to accept the pain and make the sacrifices of a lifetime … or face the downfall of America. Yes, we MUST bite the bullet!

http://www.munknee.com/2010/08/10709/

Heavy in dollars, China warns of depreciation

China on Friday offered a rare glimpse into its foreign exchange reserves, confirming that they are overwhelmingly allocated in dollars, while a central banker said the mountain of cash could face depreciation risks.

The Chinese government's currency reserves, the world's largest such stockpile at $2.45 trillion, are held roughly in line with what was described as the global average: 65 percent in dollars, 26 percent in euros, 5 percent in pounds and 3 percent in yen.

The report in the China Securities Journal, an official newspaper, cited unnamed reserve managers.

The allocation of Chinese foreign exchange reserves is considered to be a state secret, but analysts have long estimated that about two-thirds are invested in dollar assets.

Separately, Hu Xiaolian, a vice governor with the People's Bank of China, warned that depreciation loomed as a risk for foreign exchange reserves held by developing counties.

"Once a reserve currency's value becomes unstable, there will be quite large depreciation risks for assets," she wrote in an article that appeared in the latest issue of China Finance, a Chinese-language magazine published under the central bank.

She reiterated China's long-standing discomfort with a global financial system dominated by a single currency in the dollar.

"The outbreak and spread of the global financial crisis has highlighted the inherent deficiencies and systemic risks in the current international currency system," she said.

"A diversified international currency system will be more conducive to international economic and financial stability," she added.

To that end, developing countries must speed up reform of their financial markets, and China would work to promote greater cross-border use of the yuan, she said.

DIVERSIFICATION

There have been signs in recent months that Beijing has stepped up the pace of diversification of its foreign exchange reserves away from dollar assets.

Chinese net buying of Japanese debt has surpassed 1.7 trillion yen this year, far surpassing its record of 255.7 billion yen in 2005. [ID:nTOE67802Z]

China has also raised holdings of South Korean bonds by 2.48 trillion won ($2.11 billion) in the first seven months of this year from 1.87 trillion won at the end of last year. However, Chinese investors only started buying South Korean bonds in the middle of 2009. [ID:nTOE67I05M]

At the same time, China has slightly cut back its vast holdings of U.S. Treasuries, from $894.8 billion at the start of the year to $843.7 billion in June, according to the most recent data. China remains the biggest single holder of U.S. government debt. [ID:nN16255591]

But analysts have also warned against reading too much into the apparent shifts in the flow of cash from China. Like any investor with commercial interests in mind, Beijing has shown a readiness to shift its strategy depending on what it sees as good buys at the time.

The China Securities Journal laid out the prospects for a shift back to the dollar in the near term.

"It is unlikely that China will increase purchases of Japanese bonds in the coming months because the yen might weaken at any time," the newspaper said.

"China is very likely to increase purchases of U.S. Treasuries in September. The possibility for China to buy more Korean bonds can't be ruled out," it added.

(Editing by Ken Wills)

Eugenics: Professor David Marsland Calls for Forced Sterilization, Human...

UPDATE 2-Taxpayers likely to face initial loss on GM IPO-sources

Treasury to sell first shares below break-even-sources

* 61 pct Treasury sale could take several years-sources

* Taxpayer break-even is around $70 bln GM market value (Adds details on government stake, GM Q2 results, pension shortfall)

By Clare Baldwin, Soyoung Kim and Kevin Krolicki

NEW YORK/DETROIT, Sept 3 (Reuters) - The U.S. government is likely to take a loss on General Motors Co [GM.UL] in the first offering of the automaker's stock, six people familiar with preparations for the landmark IPO said.

Subsequent offerings of the government's holdings may be profitable depending on how investors trade the newly listed stock, the sources said.

But the question of whether taxpayers are ultimately made whole on GM's $50 billion bailout could be left open for years, the people said.

It could take more than three years for the Treasury to sell down its remaining stake in GM after the IPO, one person said. That would push a final accounting into the next presidential term.

A decision to price the initial GM shares below the cost to taxpayers would follow the usual Wall Street practice of giving the first investors in a new stock a discount, but it could also help allay investor concern in the face of the slow recovery of the U.S. economy and flat auto sales.

Preparations for GM's IP0 remain confidential. Both GM and the U.S. Treasury have declined to comment, citing restrictions by U.S. securities regulators.

The Obama administration has pledged to exit its investment in GM as quickly as possible while holding out the prospect that taxpayers could ultimately be paid back in full.

Treasury spokesman Mark Paustenbach declined to comment. GM spokesman Tom Wilkinson also declined to comment.

GM plans to begin a roadshow for its IPO immediately after the Nov. 2 U.S. midterm congressional elections, paving the way for a stock debut on Nov. 18, sources have said. [ID:nN01172283]

GM in August filed paperwork for an IPO that could potentially be worth as much as $20 billion, making it one of the biggest IPOs of all time.

The U.S. Securities and Exchange Commission is now reviewing the automaker's S-1 filing.

Analysts and potential investors have projected a market value for GM of between $50 billion to around $90 billion, based on projections for the automaker's cash flow, comparisons with rival Ford Motor Co (F.N) and trading in bonds in the old GM which are convertible into shares in the new company.

A market value at the high end of that range would be above the roughly $70 billion in market capitalization that GM needs to achieve for the U.S. government to break even on its $43 billion remaining investment in the automaker.

But IPOs typically price at a discount of 10 percent to 15 percent to theoretical fair value to reward investors for taking a risk on a new issue and pave the way for future stock floats. In tough market conditions, that discount can be even larger.

"You have to sell people on the notion that there is an upside to what they are buying," one of the sources said.

Another of the sources said the discount could be as much as 20 percent on the GM IPO compared with the U.S. Treasury's break-even point.

Preparations for the GM stock offering remain in the early stages. A number of the sources cautioned that the size and value of the deal and the size of the stake to be sold by the U.S. government have not been determined and will not be set for weeks.

GOVERNMENT STAKE IN 'GOVERNMENT MOTORS'

The U.S. government pumped $49.5 billion worth of taxpayer money into the automaker and took nearly 61 percent of its common stock.

GM has paid back $6.7 billion in debt to the Treasury and returned another $700 million in interest and dividends. The U.S. government also holds $2.1 billion in perpetual preferred shares in the automaker.

That leaves the government with a roughly $40 billion investment in the GM common stock that will debut in an IPO along with a new class of preferred shares that will convert into common shares under a mandatory provision.

In the days leading up to GM's August S-1 filing, Republican Senator Charles Grassley asked a special Treasury Department watchdog for an analysis of the GM IPO and how much money would be returned to taxpayers.

In its pitch to potential investors, GM will tout its global reach, recent gains in quality and pricing in its home market, and its sharply lower cost of operations after its 2009 bankruptcy, sources have said.

GM's $1.3 billion second-quarter profit was its biggest since 2004, when industry-wide U.S. sales were near 17 million vehicles compared with the 11.5 million sales rate of August.

But GM will have to address investor concern that growth in industry car sales in the U.S. in the second half of 2010 and into 2011 will likely be slower than analysts had expected just a few months ago.

At the same time, GM will have to confront a pension shortfall that remains a liability from its pre-bankruptcy operations.

GM eliminated about $40 billion in unsecured debt and other obligations in bankruptcy, but the automaker still needs to address a pension shortfall estimated at about $26 billion.

A successful IPO would be a political victory for the Obama administration and would help GM distance itself from critics who dubbed it "Government Motors" after its bailout. (Reporting by Clare Baldwin and Soyoung Kim in New York and Kevin Krolicki in Detroit; editing by Carol Bishopric)

No defence left against double-dip recession, says Nouriel Roubini

The United States, Japan and large parts of Europe have exhausted their policy arsenal, leaving them defenceless against a double-dip recession as recovery slows to ‘stall speed’.

Nouriel Roubini said the US growth rate was likely to fall below 1pc in the second half of the year

“The US has run out of bullets,” said Nouriel Roubini, professor at New York University, and one of a caste of luminaries with grim forecasts at the annual Ambrosetti conference on Lake Como.

“More quantitative easing (bond purchases) by the Federal Reserve is not going to make any difference. Treasury yields are already down to 2.5pc yet credit spreads are widening again. Monetary policy can boost liquidity but it can’t deal with solvency problems,” he told Europe’s policy elite.

Dr Roubini said the US growth rate was likely to fall below 1pc in the second half of the year, despite the biggest stimulus in history: a cut in interest rates from 5pc to zero, a budget deficit of 10pc of GDP, and $3 trillion to shore up the financial system.

The anaemic pace compares with rates of 4pc-6pc at this stage of recovery in normal post-war recoveries.

“We have reached stall speed. Any shock at this point can tip you back into recession. With interbank spreads rising, you can get a vicious circle like 2008-2009,” he said, describing a self-feeding process as the real economy and the credit system hurt each other.

“There is a 40pc chance of double-dip recession in the US, and worse in Japan. Even if it is not technically a recession it will feel like it,” he added.

Hans-Werner Sinn, head of Germany’s IFO Institute, said the US would have to purge its debt excesses the hard way.

“The bitter truth is that there is no way out of this with monetary and fiscal policy. They will just have to see their living standards go down. I see a decade of difficulties for the US,” he said.

Dr Sinn said the US the market for mortgage securities (CDOs) had collapsed from $1.9 trillion in 2006 to just $50bn last year, leaving the US property market reliant on federal agencies.

“The world is simply not willing to buy these dubious financial products again. Germany is leaving, China is no longer there, and Japan is pulling away. The US system of mortgage finance is on government life support and that cannot drive a sustainable upswing,” he said.

Harvard Professor Niall Ferguson said the US has exhausted fiscal stimulus given warnings from the Congressional Budget Office that interest payments as a share of tax revenues will reach 20pc by 2020 and 36pc by 2030 without drastic retrenchment.

“The fiscal crisis seems to be out of control. The 'big crossover’ is approaching when the US spends more on debt service costs than on security, and historically that is the tipping point for any global power,” he said.

Mr Ferguson said the “Chimerica” marriage of recent years is on the rocks. China is no longer willing to fund the US Treasury bond market, cutting its share of holdings from 13pc to 10pc of the total debt stock.

While China must find ways to recycle its trade surplus and hold down the yuan, it is doing this by stockpiling commodities, buying hard assets around the world, or rotating into Asian bonds.

Dr Roubini said US companies have plenty of cash but are boosting profits by a policy of “slash and burn” on labour costs. “We’ve lost 8.4m jobs and if you include the loss of hours worked it is equivalent to another 3m. We need to generate an extra 450,000 jobs every month for three years to get it back,” he said.

The US non-farm payrolls data released on Friday was better then expected but still showed a net loss of 54,000 jobs.

Dr Roubini said average public debt in the rich countries would rise to 120pc of GDP by 2015 in the rich countries, leaving no scope for a further fiscal stimulus. If they push their luck, they too risk the sort of bond crises seen in Southern Europe this year.

In the US, the fiscal boost has faded, switching to tightening over coming months The lift from the inventory cycle is finished. Capex spending by companies has held up well, but this slowed sharply in July. Housing is already in a double dip. The last support for the US economy is consumption, barely growing at 1pc.

“All we did was kick the can down the road and stole demand from the future,” he said.