Monday, February 28, 2011
Ireland's Prelude to Revolution: IMF Bankster Party Tossed From Power In Crushing Defeat For Bank Bailouts
Ireland's Fine Gael party will take control of the government after winning in yesterday's elections. A few weeks ago, they were threatening to give haircuts to bank bondholders, but now most "serious" people in government and the media believe this will never actually happen. However, the wildcard in all of this is the Irish people themselves -- they're expecting real change, not half measures. And some of them are openly talking of a "revolution."
It remains to be seen whether the moment of truth has finally arrived for Ireland's bank bondholders. As predicted, Ireland's opposition party, Fine Gael (pronounced "feena gail"), did very well in yesterday's elections and will likely form a coalition government with Ireland's Labour party. As we reported earlier, Fine Gael played to voters' anger over the bailouts by engaging in a good deal of tough talk about unilaterally restructuring the debts of Ireland's bailed out banks.
However, the tough talk will likely turn out to be nothing but talk. Fine Gael's pre-election threats to bank bondholders were promised to be carried out only if they were unable to restructure the terms of the IMF "bailout." Such restructuring would only amount to tinkering around the edges of the agreement, not rejecting it outright. The main point of contention amongst "serious" people has been the 6% interest rate Ireland was saddled with, not the obvious injustice of making the Irish people debt slaves for the benefit of Deutsche Bank and Soc. Gen.
Photo - Campaign gimicks: Fine Gael's Enda Kenny kisses babies and threatens bondholders.
Indeed, as Reuters reported last week, Fine Gael has already backpedaled on its threats to whack senior bank bondholders:
Feb 15 (Reuters) - Ireland's main opposition party withdrew on Tuesday a previous threat to unilaterally restructure bank debt if it wins power, as expected, this month in an election dominated by a controversial EU/IMF bailout.
The centre-right Fine Gael party's election manifesto said imposing losses on senior bondholders in Irish banks would only be extended as part of a European-wide framework and would focus on state-run lenders Anglo Irish Bank [ANGIB.UL] and Irish Nationwide [IRNBS.UL], which are being wound down.
In its banking strategy published earlier this month, Fine Gael warned that if some of its proposals for dealing with the banking crisis were not implemented it could unilaterally impose losses on unguaranteed senior bonds, estimated at around 15 billion euros. [ID:nLDE71318V]
"I don't think there has been a particular softening of our position on banking and on burden-sharing," Michael Noonan, Fine Gael's finance spokesman and a likely contender to be finance minister after the Feb. 25 poll, told a news conference.
"It might be slightly more nuanced."
It's a little-known fact, but "nuanced" is etymologically related to an obscure Old Irish word meaning "empty." As in, "empty promises and idle threats cynically used to fool the Irish people into voting for us, with the hope that we don't actually have to do anything so bold as mess with our banking masters who, if we're being honest, are really in charge of this country."
The Wall St. Journal today ("Irish Voters Reject Government, But Accept Austerity Program") doesn't even entertain the possibility that yesterday's election was a popular rejection of the bailouts, characterizing it instead simply as a rejection of the outgoing ruling party, Fianna Fáil (pronounced "feena fall"):
DUBLIN (Dow Jones)--Irish voters have decisively rejected the political party most closely associated with the rise and fall of the Celtic Tiger economy, but have largely accepted an austerity program intended to repair the government's tattered finances....
"It is fairly predictable that we will have a Fine Gael-Labour coalition," said Diarmaid Ferriter, professor of modern history at University College Dublin.
Ferriter said that the Irish electorate had expressed deep anger about the country's economic crisis not through violent street demonstrations but by casting ballots to drive Fianna Fail from power.
"The answer was in the polling booths," he said.
Labour wants the budget cuts to take place over a longer time frame and a different balance between spending cuts and tax rises. But both parties are committed to renegotiating some of the terms of the bailout package, including lowering the 6.0% interest rate charged by the EU.
It is absolute nonsense to pretend that the election yesterday was an endorsement of the bank bailouts and the austerity measures being put in place to finance them. The very reason Fianna Fáil was booted from power is voter anger over the bailouts and the austerity measures being put in place to finance them.
The notion that Irish voters will be placated by merely symbolic "change," which is what a reduction of the 6% interest rate would amount to, sounds to us like wishful thinking on the part of the ruling class and their handmaidens in the media. What professor Ferriter, for instance, fails to take into account is what the Irish people will do once they realize they have been summarily duped by Fine Gael. That's the wildcard in all of this. At some point, it may not matter what the government wants to do, because the people may force their hand. Can anyone say Egypt? Or Tunisia, Bahrain or Libya? College Green could be the next Tahrir Square.
Photo - Irish writer and newspaper columnist, Bruce Arnold, calls for a "national referendum" on the bailouts.
In this vein, the influential Irish Independent columnist, Bruce Arnold, offers Fine Gael and its leader, Enda Kenny, some sage advice:
Forcing us to sell our national assets to pay off our debt is a polite form of robbery
It is reassuring to know that Enda Kenny, who is likely to be the next Taoiseach, will, in his own words, "hit the ground running". Much of what follows is designed to ensure that he will be running in the right direction.
There has to be a European solution and it has to be radical. Nothing that has been said or done by the departments of Foreign Affairs and Finance, not to mention the outgoing ministers who got us into this mess by their craven approach to the EU, indicates any real understanding of how deeply we are in trouble.
The seriousness was recognised by David McWilliams, in his column in this paper on Wednesday, when he pointed out that the interest on our debt could reach €12bn by the end of next year. This would eat up roughly 85pc of income tax revenue. That is an impossible burden and clearly unsustainable. That is just a beginning.
We are required by the EU to take on the debts of the European banks and pay with the sale of national assets, like Greece selling beaches and Portugal selling its unique Port vineyards.
This is a polite form of robbery and runs in the teeth of everything Europe has stood for, in Irish eyes, since we joined the Common Market 40 years ago. Luckily, as McWilliams also says, "there are many more democrats in European politics than there are central bankers".
Arnold gets all the main points right -- the unfairness of the bailout, the undemocratic nature of the bailout decision, and, most importantly, the impossibility of actually being able to pay it off. But here's where the wildcard comes in and things get really interesting:
So let us appeal to [Europe's central bankers] and do so by a national referendum, under Article 27 of the Constitution, where a matter of "such national importance that the will of the people thereon ought to be ascertained" is authorised.
It could be argued that the mandate in this general election obviates such a course. Yet the mandate, as I indicate above, is not that clear cut. Though the enormity of the botched bailout was at the heart of public anger during the campaign, the threat of this to the country's future was vaguely and imperfectly assessed.
The debates on it were on the fringe of the issues, and were largely concerned with the difference between Fianna Fail smugness about us not being able to do anything and opposition tinkering with minor details, like getting a better interest rate on borrowed tranches of money and introducing a share-out with bondholders. Its threat to us is far more serious than that.
The situation involves default and is getting progressively worse. It is still focused on the banks and the haemorrhage of money is growing.
It's clear that Arnold gets it. Tinkering around the edges of the bailout settlement is an inadequate response to both the anger of voters and to Ireland's extremely precarious fiscal situation. It's unlikely that there actually will be a national referendum in Ireland in the way that Arnold calls for, but there is absolutely no doubt, that in such a referendum, the bailouts would be overwhelmingly rejected.
However, if the politicians won't give the people the opportunity to vote down the bailouts -- and there is zero indication that they will -- there remains the distinct possibility that the Irish people will hold their own national "referendum" in the streets of Dublin. We've already seen flashes here and there of bailout anger and a few, large protests over the bailouts, but all of these were before the election that was supposed to change everything. When the people see that almost nothing has changed, and especially when it becomes clear -- as Arnold points out -- that Ireland's very sovereignty and solvency are at stake, things will get very interesting indeed.
Just yesterday I was listening to NPR on the radio and they were interviewing a young unemployed woman in Dublin about the election and what people were most concerned about. Bailouts and austerity were the main focus of the conversation. But at the end of the interview the young woman was asked whether she would be glad if Fine Gael won and a new administration put in place. She half-heartedly said that she would, but then said, with an understated frankness, and just a slight hesitation that suggested she really meant it, "I'd rather call for a revolution, actually -- if I could."
Photo - Days of Rage: Chicago, 1968.
Photo - It used to be "Brits Out," but now it's the IMF.
First Peaceful European Revolt, As Irish Tsunami Ends 60 Years Of Fianna Fail Rule Following Banker Bailout Fury
Angela Merkel is carefully observing what can only be classified as a peaceful revolution in Ireland, where a stunning amount, over 70% by some estimates, of voters turned out to punish the ruling Fianna Fail party for its betrayal of the Irish people and for the latest (and what some say last) broad banker bailout. The Telegraph reports that "Exit polls and early tallies from Ireland's general election heralded political annihilation for Fianna Fail (FF), the party which has ruled Ireland for more than 60 years of the Irish Republic's eight decades of independence." Bloomberg adds: "Counting will continue today to fill the 166-seat parliament, with an exit poll giving Fine Gael and the Labour Party a combined 57 percent of the vote. Support for Fianna Fail, which has ruled for the last 14 years, dropped to 15 percent from 42 percent in the 2007 election, the poll showed." In other words, the Irish people have voted for a direct confrontation with the EU, and indirectly, for austerity: "Fine Gael leader Enda Kenny, likely to become prime minister, wants to re-negotiate the interest rate on the emergency loans and speed up planned spending cuts to narrow the budget gap. Labour is pushing for more tax increases." And the reason Merkel is not going to sleep much tonight is that Germany is next. The country, where the CDU saw a comparable annihilation in a recent Hamburg vote, faces several regional elections as early as a few weeks from now, and the political scene is expected to change drastically, as a warning to anyone who feels like putting the banking kleptocracy (again) over the interests of the taxpaying majority. But what is most troublesome for all those who think that the EURUSD at 1.38 is remotely credible, is that the European Nash Equilibrium is now completely destroyed, and the game theory defections are about to start in earnest: "Declan Ganley, the Irish businessman who led the 2008 No vote to the Lisbon Treaty, said Ireland must "have the balls" to threaten debt default and withdrawal from the single currency. "We have a hostage, it is called the euro," he said. "The euro is insolvent. The only question is whether Ireland should be sacrificed to keep the Ponzi scheme going. We have to have a Plan B to the misnamed bailout, which is to go back to the Irish Punt." Funny nobody even pretends that modern economics is even a remotely viable concept. Also, the Fed's plan of keeping the USD artificially low against most currencies is about to crash and burn mercilessly.
From the Telegraph:
According to exit polling carried out by the Irish RTE broadcaster, Fine Gael (FG), Ireland's main centre-right opposition, had won 36.1 per cent of the vote. Labour, traditional FG's traditional coalition partner, took 20.5 per cent, its best result ever. Fianna Fail took just 15.1 per cent share of the vote, representing a loss of 58 seats.
Sinn Fein, usually outsiders in southern Irish politics, recorded its own best result with 10.1 per cent, up almost five per cent on the last 2007 election. The vote share for Greens, FF's junior coalition partner, plummeted to 2.7 per cent, possibly robbing the party of MPs.
"The political landscape of Ireland is completely and utterly redrawn," said Roger Jupp, the chairman of the Millward Brown Lansdowne pollsters which conducted the exit polls for RTE.
Enda Kenny, Fine Gael's leader, will later on Sunday, start to form a new government, almost certainly with Labour, after full election results under Ireland's complicated PR system come through.
Both Mr Kenny and Eamonn Gilmore, Labour's leader, have promised Irish voters that they will renegotiate the EU-IMF austerity programme to reduce the burden for taxpayers and to force financial investors to shoulder some of the bank debts currently paid out of the public purse.
Quid pro quo, Clarice:
At a summit of centre-right EU leaders in Helsinki next Friday, Mr Kenny will use his position as Ireland's new Prime Minister to beg the German Chancellor, Angela Merkel, and French President, Nicolas Sarkozy, for concessions ahead of an emergency March 11 Brussels summit to restructure the euro zone.
But neither the two European leaders nor the European Central Bank or EU will permit any substantial changes, despite the huge popular Irish revolt against the bailout.
Chancellor Merkel will tell Mr Kenny that if he wants to reduce the high, punitive 5.8 per cent interest rate charged on EU loans then Ireland will have to give up its low corporate tax rates - a measure regarded as vital to Ireland's recovery and one of the few economic policies it has not yet handed over to Brussels or Frankfurt.
And, of course, Mutually Assured Destruction:
The new Irish premier will also be warned that there is no question of forcing privately-owned financial institutions to assume Ireland's £85 billion bank debts because the resulting market panic would spread to Germany and France, tearing the euro single currency apart.
As Irish voters headed for the polling booths on Friday, the European Commission bluntly declared that the terms of the EU-IMF bailout "must be applied" whatever the will of Ireland's people or regardless of any change of government.
"It's an agreement between the EU and the Republic of Ireland, it's not an agreement between an institution and a particular government," said a Brussels spokesman.
A European diplomat, from a large eurozone country, told The Sunday Telegraph that "the more the Irish make a big deal about renegotiation in public, the more attitudes will harden".
"It is not even take it or leave it. It's done. Ireland's only role in this now is to implement the programme agreed with the EU, IMF and European Central Bank. Irish voters are not a party in this process, whatever they have been told," said the diplomat.
So is everything about to disintegrate, or will the status quo continue after all is said and done?
Dessie Shiels, an independent candidate in Donegal, said: "People have not been given the basic right of deciding whether or not they should have their taxes increased in order to repay bondholders who have lent to the banks."
David McWilliams, an economist and former official at the Ireland's Central Bank, has led calls for a popular vote under Article 27 of the Irish constitution, which requires on a matter of "such national importance that the will of the people ought to be ascertained".
"We have to re-negotiate everything," he said. "Obviously, the first way to do this is to make them aware that if they force us to pay everything, we will default and they will get nothing. So they had better get a little bit of something, than all of nothing. To make this financial pill easier to swallow, we must take the initiative politically. We can do this via a referendum.
However, just like in MENA, the Irish people, who have already sacrificed a part of their pension to keep the kleptocratic oligarchy fully funded and with another year of record bonuses, is increasingly ready and willing to throw the dice:
"If the Irish people hold a referendum on the bank debts now, we can go to the EU with a mandate from the people which says No. This will allow our politicians to play hard-ball, because to do otherwise would be an anti-democratic endgame."
Declan Ganley, the Irish businessman who led the 2008 No vote to the Lisbon Treaty, said Ireland must "have the balls" to threaten debt default and withdrawal from the single currency.
"We have a hostage, it is called the euro," he said. "The euro is insolvent. The only question is whether Ireland should be sacrificed to keep the Ponzi scheme going. We have to have a Plan B to the misnamed bailout, which is to go back to the Irish Punt."
And should that happen, the beinning of the end of the global Ponzi will be a fact. After so much posturing, will Ireland finally have the guts to what is right, or will nothing more than empty Dublin rhetoric rule the day even as the African revolutions spread to all middle east countries, and then to France...
The Global Economic Elite have launched a war on 99.9% of the US public, we must unite and rally together. Unions have played a key role in uprisings from Europe to the Middle East. We must seize this opportunity and let Wisconsin be a spark to light the fires of non-violent rebellion throughout the United States.
There is a rule of war that many people are failing to understand: “Do not fight the last war.” In The 33 Strategies of War, Robert Greene calls this “The Guerrilla-War-Of-The-Mind Strategy:”
“What most often weighs you down and brings you misery is the past, in the form of unnecessary attachments, repetitions of tired formulas, and the memory of old victories and defeats. You must consciously wage war against the past and force yourself to react to the present moment. Be ruthless on yourself; do not repeat the same tired methods.”
The sad truth is that most people are still fighting yesterday’s war. The Republican vs. Democrat charade — good cop, bad cop nonsense — is a mere smokescreen. Don’t be confused by obsolete preconceptions and propaganda. There is one war being fought, The Global Economic Elite Vs. The People .
A global banking cartel has looted nation after nation, the world over, the United States is no exception. They’ve looted trillions from the US public and now they are trying to cut the throat of the public unions. While in the process of attacking private-sector workers and small businesses throughout the country, they are also cracking down on the last layer of worker protections within the public-sector.
The same economic central planners that have systematically exploited workers in Europe, the Middle East, Africa, Australia and Asia, have exploited American workers as well. One-tenth of one percent of the population got luxurious life boats, while 99.9% of us are being left behind to drown in a sea of debt and social upheaval.
We are all on the same sinking ship – me, you, teachers, construction workers, fire fighters, police, Egyptians, Europeans. We are all under attack by the same people . The sooner you understand this, the better off we will be.
The bottom line is this: It is imperative that 99.9% of the US population actively supports the public unions uprising against the occupying economic imperialists  who have conquered our country. If the economic imperialists think they’re going to continue their attacks, by cutting more American workers’ wages and benefits, after looting the nation of trillions, they are going to get a much deserved rude awakening. If they want to steal trillions, increase the price of food and oil, and make further cuts into our income, they are going to get crushed. 239 million Americans are currently living paycheck to paycheck. Push them another inch, and the global bankers might as well go hang with Gaddafi and Mubarak.
Seriously, think about this: They’re going to cut pensions on people who make $25k per year, while all-time record-breaking profits and bonuses are raining down on the economic top one-tenth of one percent. That is sick and twisted. Lloyd Blankfein gets five-times the annual salary of Wisconsin public employees when he simply gives a 30-minute speech on “doing God’s work.”
These banks were bailed out after causing this mess, the American people own them now as far as I’m concerned. Let’s stab the vampires in the heart. Seize their assets and all these budget problems disappear. Break these bloodsuckers up. Spin them off, free the market, free the people, free the planet from this global banking cabal.
We can easily let hard-working Americans keep their pensions and health benefits.
Do you want to start on the state and individual level, before breaking up the big rackets? Fine. Look at how easy it is to solve Wisconsin’s budget deficit, as Paul Jay stated on The Real News Network:
“How about Wisconsin passes a law that takes the estate tax level back to 2001? And let’s say the first million’s tax free. The collective net worth of the esteemed group on the Forbes 400 from Wisconsin comes to around $21.7 billion. That would make Wisconsin’s share of their estates at the time of passing around $4 billion. We just paid down the debt.”
Look at that. Deficit eliminated.
As I wrote in The Economic Elite Vs. The People :
“When you take the time to research and analyze the wealth that has gone to the economic top one percent, you begin to realize just how much we have been robbed. Trillions upon trillions of dollars that could make the lives of all hard-working Americans much easier have been strategically funneled into the coffers of the Economic Elite. The denial of wealth is the key to the Economic Elite’s power. An entire generation of massive wealth creation has been strategically withheld from 99% of the US population.”
In a report entitled, “Nine Pictures of the Extreme Income/Wealth Gap,” Dave Johnson helps make the point:
“Many people don’t understand our country’s problem of concentration of income and wealth because they don’t see it. People just don’t understand how much wealth there is at the top now. The wealth at the top is so extreme that it is beyond most people’s ability to comprehend. If people understood just how concentrated wealth has become in our country and the effect it has on our politics, our democracy and our people, they would demand our politicians do something about it….
Top 1% owns more than 90% of us combined….
400 people have as much wealth as half of our population.”
In this context, every American should take it personally. They’ve already robbed 99.9% of us. Now they want to further limit our rights and income, with talks of QE3 already creeping up. Satan is overreaching. Survival instincts are going to kick in within the US just like they are throughout the rest of the world. They shall reap what they sow.
The Global Economic Elite better watch their assets, hell is about to freeze over. Say hello to your puppets Mubarak and Gaddafi on the way down.
As for your US puppet, one more statement of caution for the American people: Do not let Obama fool you, yet again, with his public statements in support of the people of Wisconsin. Obama is using the exact same playbook in Wisconsin that he used in Egypt, which is to publicly declare support for the people, while working behind the scenes to undermine them. Obama is a divide and conquer imperial puppet. Never forget that. Do not let his rhetoric confuse you. Just look at his chief of staff  and head economic adviser , a former JP Morgan executive and a NAFTA thug. It’s clear  whose side he is on.
As a great Anonymous poet wrote:
The people begin to see through
chokes your oxygen
I becomes we
Down goes the
The global awakening is taking shape, from Cairo to Madison, the revolution has begun.
We’re fighting today’s war! And we have a whole lot of friends…
Results from constituencies across the country are showing electoral meltdown for Fianna Fáil, with Fine Gael poised to lead the next government.
While poised to fall short of an overall majority, Fine Gael is on course for its strongest showing in more than 28 years.
The Labour Party is enjoying its best result in a general election to date, with Fianna Fáil suffering its worst since the foundation of the party.
The share of first preference votes was: Fine Gael 36.1 per cent, Labour 19.4 per cent, Fianna Fáil 17.4 per cent, Sinn Fein 9.9 per cent, Independents 15.2 per cent and Green Party 1.8 per cent.
Latest counting suggests Fine Gael will win 76 seats, Labour will take 36 and Fianna Fáil will get 25, including outgoing Ceann Comhairle Seamus Kirk. Sinn Féin looks set to take 12, Independents will win 13, the United Left Alliance will take four and the Green Party will lose all six of their seats. The turnout was 70.1 per cent.
Fine Gael leader Enda Kenny, who was elected on the first count in Mayo, said the people of Ireland had given his party a “massive endorsement” to form the next government.
In an interview with RTÉ tonight, Mr Kenny said his party would be in government but it was too early to tell if it would be in power alone or in coalition with Labour. He said his priority would be to rebuild Ireland's economy.
“This little country will be seen to be the best in the world by 2016, to do business, raise a family and to grow old with dignity and respect," he said.
Fianna Fáil has been particularly badly hit in the Dublin area, where Brian Lenihan looks to be the only one of the party's 13 TDs in the capital contesting the election to retain their seat.
Taoiseach Brian Cowen conceded it had been a "difficult day for Fianna Fáil" but insisted his party took tough but necessary decisions while in office to stabilise the country's finances. Mr Cowen congratulated Fine Gael and Enda Kenny on "an outstanding performance".
Fianna Fáil leader Micheál Martin, elected on the first count in Cork South Central, said the result was “disappointing” for the party. “We were aware that we had a huge challenge in this election for a variety of reasons," he said. Former tánaiste Mary Coughlan was eliminated on the seventh count in Donegal South West, where Sinn Féin's Pearse Doherty was comfortably returned on the first count with 14,262 first preference votes, well ahead of the 10,816 quota.
Labour leader Eamon Gilmore, elected on the first count in Dún Laoghaire, said this afternoon it was too early to speculate on the formation of the next government.
Fine Gael’s Micheal Noonan, elected on the first count in Limerick City, said Labour would be his favoured option as coalition partners. He said he was not inclined to do business with Independents, “because they are high maintenance”.
Labour's Joan Burton became the first TD to be elected to the 31st Dáil this afternoon, topping the poll in Dublin West with 9,627 votes. Fine Gael's Leo Varadkar, became his party's first winner when he was elected on the second count. The United Left Alliance’s Joe Higgins was elected on the third count in the constituency and Brian Lenihan got through on the fourth count without reaching the quota.
“Labour has had a very good day," Ms Burton said, adding that she expected a large number of seats to go down to the wire late tomorrow.
Sinn Féin has also made gains. All its sitting TDs are expected to be returned and Seán Crowe regained the seat in Dublin South West he lost in 2007. Party president Gerry Adams was elected on the first count in Louth.
The Green Party has been wiped out. Party leader John Gormley, who was eliminated in Dublin South East after the fifth count, said tonight it was a sad day for the party, which had six TDs in the last Dáil. “We have suffered a major defeat, but the party will regroup, we will continue. We’re a party with a set of beliefs and values and a vision for the future,” he said.
In the five-seat Wicklow constituency, Fianna Fáil's Dick Roche appears to be struggling, while Fianna Fáil deputy leader Mary Hanafin and her running mate Barry Andrews have conceded defeat in Dún Laoghaire.
Former Fianna Fáil Ceann Comhairle and minister for justice John O’Donoghue was eliminated on the third count in Kerry South.
Independent Senator Shane Ross topped the poll in the five-seater Dublin South. He was elected on the first count, having exceeded the quota by nearly 5,000 votes.
In Wexford, Independent candidate Mick Wallace was elected on the first count, while Independent Luke ‘Ming’ Flanagan took a seat in Roscommon South Leitrim. Former Fine Gael minister Michael Lowry, who is now running as an Independent, was elected in Tipperary North on the first count.
Peter Oborne is the Daily Telegraph's chief political commentator.
Empires can collapse in the course of a generation. At the end of the 16th century, the Spanish looked dominant. Twenty-five years later, they were on their knees, over-extended, bankrupt, and incapable of coping with the emergent maritime powers of Britain and Holland. The British empire reached its fullest extent in 1930. Twenty years later, it was all over.
Today, it is reasonable to ask whether the United States, seemingly invincible a decade ago, will follow the same trajectory. America has suffered two convulsive blows in the last three years. The first was the financial crisis of 2008, whose consequences are yet to be properly felt. Although the immediate cause was the debacle in the mortgage market, the underlying problem was chronic imbalance in the economy.
For a number of years, America has been incapable of funding its domestic programmes and overseas commitments without resorting to massive help from China, its global rival. China has a pressing motive to assist: it needs to sustain US demand in order to provide a market for its exports and thus avert an economic crisis of its own. This situation is the contemporary equivalent of Mutually Assured Destruction (MAD), the doctrine which prevented nuclear war breaking out between America and Russia.
Unlike MAD, this pact is unsustainable. But Barack Obama has not sought to address the problem. Instead, he responded to the crisis with the same failed policies that caused the trouble in the first place: easy credit and yet more debt. It is certain that America will, in due course, be forced into a massive adjustment both to its living standards at home and its commitments abroad.
This matters because, following the second convulsive blow, America’s global interests are under threat on a scale never before seen. Since 1956, when Secretary of State John Foster Dulles pulled the plug on Britain and France over Suez, the Arab world has been a US domain. At first, there were promises that it would tolerate independence and self-determination. But this did not last long; America chose to govern through brutal and corrupt dictators, supplied with arms, military training and advice from Washington.
The momentous importance of the last few weeks is that this profitable, though morally bankrupt, arrangement appears to be coming to an end. One of the choicest ironies of the bloody and macabre death throes of the regime in Libya is that Colonel Gaddafi would have been wiser to have stayed out of the US sphere of influence. When he joined forces with George Bush and Tony Blair five years ago, the ageing dictator was leaping on to a bandwagon that was about to grind to a halt.
In Washington, President Obama has not been stressing this aspect of affairs. Instead, after hesitation, he has presented the recent uprisings as democratic and even pro-American, indeed a triumph for the latest methods of Western communication such as Twitter and Facebook. Many sympathetic commentators have therefore claimed that the Arab revolutions bear comparison with the 1989 uprising of the peoples of Eastern Europe against Soviet tyranny.
I would guess that the analogy is apt. Just as 1989 saw the collapse of the Russian empire in Eastern Europe, so it now looks as if 2011 will mark the removal of many of America’s client regimes in the Arab world. It is highly unlikely, however, that events will thereafter take the tidy path the White House would prefer. Far from being inspired by Twitter, a great many of Arab people who have driven the sensational events of recent weeks are illiterate. They have been impelled into action by mass poverty and unemployment, allied to a sense of disgust at vast divergences of wealth and grotesque corruption. It is too early to chart the future course of events with confidence, but it seems unlikely that these liberated peoples will look to Washington and New York as their political or economic model.
The great question is whether America will take its diminished status gracefully, or whether it will lash out, as empires in trouble are historically prone to do. Here the White House response gives cause for concern. American insensitivity is well demonstrated in the case of Raymond Davis, the CIA man who shot dead two Pakistanis in Lahore. Hillary Clinton is trying to bully Pakistan into awarding Davis diplomatic immunity. This is incredible behaviour, which shows that the US continues to regard itself as above the law. Were President Zardari, already seen by his fellow countrymen as a pro-American stooge, to comply, his government would almost certainly fall.
Or take President Obama’s decision last week to veto the UN Security Council resolution condemning Israeli settlements. Even America itself accepts that these settlements are illegal. At a time when the Middle East is already mutinous, this course of action looks mad.
The biggest problem is that America wants democracy, but only on its own terms. A very good example of this concerns the election of a Hamas government in Gaza in 2006. This should have been a hopeful moment for the Middle East peace process: the election of a government with the legitimacy and power to end violence. But America refused to engage with Hamas, just as it has refused to deal with the Muslim Brotherhood in Egypt, or to acknowledge the well-founded regional aspirations of Iran.
The history of the Arab world since the collapse of the Ottoman caliphate in 1922 can be divided schematically into two periods: open colonial rule under the British and French, followed by America’s invisible empire after the Second World War. Now we are entering a third epoch, when Arab nations, and in due course others, will assert their independence. It is highly unlikely that all of them will choose a path that the Americans want. From the evidence available, President Obama and Secretary of State Clinton are muddled and incapable of grasping the nature of current events.
This is where the British, who have deep historical connections with the region, and whose own loss of empire is still within living memory, ought to be able to offer wise and practical advice. So far the Prime Minister, a neophyte in foreign affairs, has not done so. His regional tour of Middle Eastern capitals with a caravan of arms dealers made sense only in terms of the broken settlement of the last 50 years. His speeches might have been scripted by Tony Blair a decade ago, with the identical evasions and hypocrisies. There was no acknowledgment of the great paradigm shift in global politics.
The links between the US and British defence, security and foreign policy establishments are so close that perhaps it is no longer possible for any British government to act independently. When challenged, our ministers always say that we use our influence “behind the scenes” with American allies, rather than challenge them in the open. But this, too, is a failed tactic. I am told, for example, that William Hague tried hard to persuade Hillary Clinton not to veto last week’s Security Council resolution, but was ignored. It is time we became a much more candid friend, because the world is changing faster than we know.
As it once stood, the argument that Israel is the only free democracy in the region as the cause celeb for our billions in yearly support is becoming a 21st century non-starter.
In fact, A Veterans Today informal phone poll shows that 76% of American Citizens no longer support financial aid to Israel.
Some cite the flowering calls for freedom, liberty, and justice in the Arab world as the reasons for their questioning our billions sent to Israel. Some say pay them for what? Let them manage their own affairs.
But after further digging, it’s much more apparent that economics as home is a much more powerful engine driving this change in public attitude.
For example, the union fight between the workers of Wisconsin and the GOP bent on breaking the unions is one very serious issue that is breaking America’s back.
Furthermore, with scenes being played out all across the nation in places like Braddock Pennsylvania where cities are dying and jobs are flying away seem to be the bigger driving force for the new “we don’t want to pay for others, we need to invest at home” attitudes.
While Veterans Today believes that the U.S. should absolutely stand for liberty, freedom, and justice across the globe, it is tacitly more fundamental to our success that we invest at home first.
Instead of giving nationalists who live in lands far far away monies that we at home never get the benefits from, it’s far more sane and right to invest our monies on Main Street in places like Braddock PA and invest in our education, workers, industries, and infrastructure so that our future remains seeded for 21 century success.
The biggest obstacle to having the wishes of the American public respected and honored by the U.S. Congress who has been continually giving over $ 10 billion a year in cash and defense contracts to Tel-Aviv is getting them to get off the lobbyist payola shake down which will be easier said then done. All this means that we may have to overthrow our own congress before we can extract the AIPAC lobby tumor from our system.
Your comments are appreciated.
Celente: “When the money stops flowing down to the man in the street, the blood starts flowing in the streets.”
In his latest Trend Alert® to subscribers, Celente discusses the revolutions breaking out in the middle east and provides a different reasoning than mainstream pundits and politicians for why it is happening and why it will spread to Europe and the US:
As we wrote before Tunisia and Egypt erupted, the outbreaks would go global and the reasons behind the unrest would be more about bread and butter issues than politics. As economies decline, unemployment rises, taxes are raised and services cut – while those at the top get richer and most everyone else gets poorer – revolutions will continue to spread.Politics is playing a small role. For 30 years Egyptians lived under the rule of President Mubarak. For 30 years we heard how great Egypt was from the people that lived there, as well as our own media. Then, from one day to the next, everything changed and Mubarak was a dictator. A similar story was presented in other parts of the middle east that are now in turmoil.
But that’s not the way it’s being represented by the same people who didn’t see it coming. The media, pundits and politicians have misrepresented the historic geopolitical events that have occupied the news since the onset of the New Year. Virtually overnight, the revolutions have been glorified as courageous fights for freedom and liberty by democracy-hungry-masses.
But it is not hunger for democracy that drives them. Democracy, autocracy, theocracy, monarchy – right, center, left – it is mostly a gut issue…an empty gut issue. When the money stops flowing down to the man in the street, the blood starts flowing in the streets. It’s a simple equation. A few at the top have too much, and too many others have too little.
In response to the current Middle East uprisings, gold has broken above $1400 an ounce and Brent Crude climbed to $113 a barrel. There is no end in sight to market volatility. As the violence escalates and expands, the fallout will be felt around the world.
From the onset of the financial crisis that began in August 2007, and through the ensuing Panic of ’08, Washington, the Federal Reserve and central banks have managed to forestall a Great Depression-grade meltdown by way of a variety of multi-trillion dollar rescue packages, bailouts and stimulus programs. For three years the programs were able to induce an illusory and superficial recovery that, barring a major external geopolitical jolt, might have continued to run its course until the inevitable denouement.
But now the jolt felt around the world is in the process of shattering the recovery illusion. Whether deliberately (as calculated policy) or as fallout from fear-based denial, the pieces are not being put together. The current unrest is not confined to the Middle East and North Africa, and as we had forecast, it will spread to Europe and other parts of the world. The more volatile and widespread the insurrections, the greater the probability that some combination of events (e.g., oil shock, terror attack, cyber wars and regional wars) will crash already fragile economies, and roil sound ones.
Conditions are spinning out of control. In some countries, bank and stock market closures are real possibilities, as is the imposition of martial law. We reiterate our forecast for gold $2000. We recommend keeping cash and necessities on hand to help weather emergency situations. If the worst does not happen, nothing is lost. If the worst happens and you are not prepared, you are lost.
Source: The Trends Journal Subscriber Trend Alert (February 24, 2011)
This is not about deposing leaders for political reasons, though it may seem like it based on how it’s being presented in the media.
Consider the latest union protests in Wisconsin. It was portrayed by the media as a partisan issue – a fight between republicans and democrats. But had a democrat governor been forced to take similar action, the unions would have been in the streets protesting anyway.
This is happening because the flow of easy money is being systematically withdrawn from Main Street (the world over).
This is happening to public and private sector workers alike. No one is immune.
Keeping the arguments in a political space diverts the focus of the masses so that they hate each other, as opposed to targeting the fundamental reasons for why we’re in the position we are in the first place.
We’ve suggested it before, and we will yet again: As the people get broker and hungrier, and they lose their jobs, their homes and finally realize there will be no return to the boom times of the 80′s, 90′s and early 2000′s, the unrest will foment and spread.
Author: Mac Slavo
Source: Total Investor
(Audio only) How the bankers take down societies, short break down.
Catherine on Her Soapbox
I would like to propose a contrary theory to the dire views of those looking behind the veil of recent economic statistics.
First, if you look at the amount of money that has been stolen or shifted out of the economy it is more than enough to take care of all that ails us IF we convert to behaving productively.
Of course that means that we can not organize society to support unproductive corporations and food and health systems based on rigged profits and lies.
It also means that our culture will have to adopt old timely values. Take care of your business and your family. Good manners. Hard work. Discipline. Caring about those around you. Keeping your word.
So it seems to me that the problem is that we — all of us from the gangsters to the spoiled many - are not behaving like mature adults and all solutions require that we do.
Friendly fascism, lies, covert operations and warfare continue to be the proposed manner of dealing with this. This is part of the assumption that people can not and will not behave intelligently or responsibly - an assumption that is not true IMO. However, fascism ultimately will not work. Which leaves the rest of us asking the question, “How do we implement responsibility on a self organizing basis?” That is not all that is needed. However, it is a critical step.
Most of our discussion assumes that most everyone is going to continue to behave like a pig. Perhaps so. But if that is the case, then there are no solutions. But it is not because there is an economic or financial
When a society runs at a total negative return on investment (we do when you integrate public and private capital) there is never enough money. However, if you change to running on a total positive return on investment on a basis of integrated public and private capital, there is plenty of money. (For more on Solari investment strategy, click here)
The debt bubble was never intended as a financial system. It is a control system — one that permits the controllers to engage in a radical re-engineering of planetary resource management and governance.
So - bottom line - are we prepared to shift from an investment model that is focused on immediate investment returns or which is held to a standard of positive returns for investor and total?
Conceptually, it is a relatively easy change.
Cap and trade reflects a negative solution - a top down taxation system easily gamed. However, there is a positive way to do it. Make government investment transparent by place, optimize government spending according to traditional standards of performance and accountability and allow equity to flow based on markets to both places (yes municipalities can be financed with equity) and enterprises rather than through rigged systems and force.
What I am proposing at the root is a U.S. debt for equity swap that will work and create astonishing new wealth if we are prepared to function with equity responsibilities and incentives and combine it with sound money systems both globally and locally.
None of this assumes that the human race changes - just that the guys who control the spaceships and guns are prepared to live with something that creates more wealth than massive depopulation. Since they now control the funds that would become the majority of the equity in the debt for equity swap, there should be a way.
That said, depopulation may be considered a safer, more practical solution. I would suggest that prototyping the debt for equity swaps would be a prudent insurance policy. I submitted a deal structure to the CIA through a back door on a way to prototype it using the FHA Fund back in 2000. Someone at Langley should dust it off and reconsider it.
The tricky negotiation, of course, is how such a system can continue to tithe to the black budget. And how do we rehabilitate or otherwise cleanse several generations of varmints whose only skills relate to criminal conspiracies. These, however, are details.
Economic collapse and depression is not necessary as an economic or financial matter. What is necessary is a plan that faces what needs to be faced and lets communities and markets deal with it. So is it possible to fashion the political consensus? Or, perhaps the question is how much pain do we need to endure before we can create the political consensus?
I anticipate that many of you feel it is impossibility. However, “faith is the substance of things hoped for, the evidence of things not seen.” A I have said before, now is not the time in the history of our
people for a failure of imagination.
Source: Catherine on Her Soapbox
So let's just cut that Gordian knot right now: what America needs isn't some complicated system of tariffs, but a flat tariff, the same on every imported good and service.
A flat tariff would also create the right balance of special-interest pressures: some interests would favor a higher tariff, others a lower one. This is a prerequisite for fruitful debate, as it means both views will find institutional homes and political patrons.
A flat tariff's uniformity across industries would avoid the problems that occur when upstream but not downstream industries get tariff protection. For example, if steel-consuming industries do not get a tariff when steel gets one, they will become disadvantaged relative to their foreign competitors by the higher cost of American-made steel. And why should steelworkers be protected from foreign competition at the price of forcing everyone else to pay more for goods containing steel? The only reasonable solution is that steelworkers should pay a tariff-protected price for the goods they buy, too. This logic ultimately means that all goods should be subject to the same tariff.
A flat tariff would have other benefits, too. For one thing, it would avoid the danger of getting stuck with a tariff policy that made sense when it was adopted but gradually became an outdated captive of special interests over time, always a risk with tariffs. Although it is a fixed policy, it would not be fixed in its effects, but would automatically adapt to the evolution of industries over time. In 1900, it would have protected the American garment industry from foreign (then mostly European) competition. It wouldn't do that today. As which industries are good industries changes over time, which industries it protects will change accordingly.
A flat tariff would trigger the relocation back to the U.S. of the right industries. For example, a 30% tariff would not cause the relocation of the apparel industry back to the U.S. from abroad. The difference between domestic and foreign labor costs is simply too large for a 30% premium to tip the balance in America's favor in an industry based on semi-skilled labor. But a 30% tariff quite likely would cause the relocation of high-tech manufacturing like semiconductors. This is key, as these industries are precisely the ones we should want to relocate. These capital-intensive, knowledge-intensive industries support high wages and have bright technological futures.
The political bickering that a tariff varying by industry would cause also militates in favor of a flat tariff. The inability of different industries to coalesce around a common tariff proposal sabotaged efforts to achieve a tariff in 1972-74, but this is a policy around which the greatest possible number of industries can unite.
A flat tariff is also more ideologically palatable than most other tariff solutions. Above all, it respects the free market by leaving all specific decisions about which industries a tariff will favor up to the marketplace. It will thus be considerably easier for ideological devotees of free markets to swallow than some scheme in which tariffs are set by a federal agency, leading to that nightmare of free-marketeers: government picking winners. In the real world, zero government intervention in the economy is impossible, so the issue for believers in economic freedom and small government is to design policies that work through the smallest possible, carefully chosen interventions. This is precisely what the natural strategic tariff offers because it operates at the periphery of our economy, leaving most of its internal mechanisms untouched. In fact, the more wisely we control our economic border, the less we will probably need to control the inside of our economy.
(One final note: a flat tariff would need to include a rebate on reexported goods in order to avoid handicapping American exporters. This would include both goods that are transshipped without modification and goods that are exported after value-added processing. The latter includes everything from chocolate made from imported cocoa to computers made from imported chips. This is implied by its intrinsic logic as a tax on domestic consumption. Other nations follow the same logic in rebating VAT to their exporters.)
Video - Sheila Bair for FDIC's "America Saves Week" - Feb. 22, 2011
Sheila's Message: Skip Starbucks And Give More Money To The Banks
This might be the saddest, most ridiculous and infuriating public service announcement since Bert the Turtle's "Duck and Cover." For "America Saves Week," Sheila Bair tells Americans to try to sock away just $10 per week.
"Here's what's amazing," Bair says, "... even if it earns only 1% interest, you will have more than $2,600 in five years and more than $11,500 in twenty years." Ok, let's see how that works out...
- $10 x 52 weeks x 5 years = $2,600
- $10 x 52 weeks x 20 years = $11,500
Wow, Sheila, that is "amazing." In a bygone era, banking officials used to talk about the "wonders of compound interest," but with the Fed holding rates at ZERO, the interest earned on your savings account isn't even worth calculating. And Sheila doesn't even bother. That's amazing. Folks, forget FDIC insured bank accounts, you may as well bury your money in a plastic sack in your back yard.
Here's what an ordinary savings account will earn at today's rates...
1.11% doesn't even make up for inflation -- not even close. Just take a look at gas prices over the past 12 months:
Or how about food prices?
America Saves...??? We should just rename it "America Saves the Banks Week," because that's what it is. Artificially low interest rates are for the benefit of the banks, who can take free money from the Fed and then turn around and "invest" it in Treasuries (which we pay off with our tax dollars), or speculate in commodities like oil and food, which we pay for in the form of higher prices at the pump and at the grocery store.
Of course, if we're being honest, we have to acknowledge that every week is "America Saves the Banks Week." We now know that we subsidized the banks in 2010 to the tune of $130B in bonuses. Yet here we have FDIC chair Sheila Bair telling Americans to skip their afternoon snack or brown bag their lunch so that they can give the banks an extra $10 with which to drive up the price of oil, food and other commodities. When ordinary Americans are dealing with the nuclear fallout from the bankers' fraudulent debt bombs, Bair's advice isn't just insulting, it's the financial equivalent of "Duck and Cover"...
Duck And Cover (1951) Bert The Turtle Civil Defense Film
LAYTON -- More than 32,000 homes in Utah received a foreclosure notice last year.
A lot of those foreclosure notices went to people who thought they were meeting all of the lender's demands while they were following the procedures to apply for a loan modification. One of those people is Steve Curtis, the mayor of Layton.
Two weeks before Christmas, Curtis came home and found a foreclosure notice taped to his door. It said his home would soon be put up for auction -- even though he had never missed a mortgage payment.
This was just one of the many nightmares Curtis encountered by applying for a trial loan modification.
"Naturally our trust was with the bank," he said. "We saw no reason why not to trust. Call it gullibility or whatever."
Curtis says he was stunned to see the foreclosure notice on the home he has lived in for 14 years.
"It was very painful," he said. "Nobody should have to go through that. Nobody."
The foreclosure process on the Curtis home began when Curtis and his wife applied for a loan modification in March. Curtis had been out of full-time work for nine months and was trying to stay current on all of his bills.
Bank of America agreed to a trial loan modification that lowered their mortgage payment by $350.
"All along they said as long as you were making your payments, a foreclosure would not happen," Curtis said. "Even when it got to the underwriter everything looked very good. We were told that and that we would have no problem in qualifying."
So what went wrong? How did a foreclosure notice end up on the Curtis' door in December?
"The payments that they are making actually don't go to the servicing department," said advocate Marco Fields.
According to Fields, it's because departments within Bank of America are not communicating with each other. As soon as the Curtis family applied for the loan modification, their payments went into an escrow account so they showed up as delinquent in the servicing department.
"I think it is a simple fix. It's a computer program that needs to be able to talk to one another," Fields said.
The miscommunication is costing homeowners all over the country a lot of time and money -- and in some cases even their homes. Bank of America now faces consumer class-action suits in several states for persistent failure to modify loans.
"Every homeowner needs to be concerned about this issue because we are having the equity in our homes eroded because of these irresponsible actions by these financial institutions," said Fields.
Fields helped push the Curtis file into the office of Bank of America's CEO. But the company still hasn't been able to find all the right paperwork to straighten out their error.
"This is so far beyond advocacy. This is so far beyond a counselor. At the end of the day you are going to need a five-star attorney," said Fields.
Curtis says it's easy to lose hope. "Legally, no I don't have the resources to fight the big bully Bank of America. They'd crush me."
In order to save their home, the Curtises will have to pay all reinstatement charges. On top of that, they will also have to foot the bill for the legal fees Bank of America racked up when they foreclosed on the Curtis' home.
"I'm thinking that never should've been done in the first place," Curtis said. "So why should I be paying legal fees for something that shouldn't have been in the first place?"
Curtis now has a full-time job and will be able to save his home, but says he will continue to speak.
"I will stand up and fight because my neighborhood matters," he said.
To further illustrate what a mess the whole process has been for the Curtis family -- just two weeks ago they received an e-mail stating that they are not eligible for a loan modification because their loan is in active litigation.
But the only reason the loan is in litigation is because Bank of America wrongly foreclosed.