Monday, June 15, 2009

Air France Crash Spurs Debate Over Lawsuit Locations (Update1)

June 15 (Bloomberg) -- While investigators scour the Atlantic for clues to the cause of the crash of Air France Flight 447, lawyers in Brazil, France and the U.S. are taking steps to determine the proper forum for any lawsuits.

Sophie Bottai, whose client was the first granted victim status in a French criminal probe, said the nation’s courts should review any claims as many passengers were French as were the airline and the airplane, an Airbus SAS A330-200.

“The plane is French, the carrier is French,” said Bottai, representing a 38-year-old Frenchman’s family, who she said wishes to remain anonymous. “The jurisdiction is French.”

Debate over jurisdiction issues may get even more heated with families making the ultimate decision based on where they can receive the most compensation. In addition to where the claims are filed, the amount of any award depends on the victim’s age, family status and work situation, according to lawyers specializing in aviation disasters.

“It’s not black and white,” said Robert Clifford, a Chicago lawyer specializing in aviation-related cases. “At this moment, it would be premature to select a venue without knowing more regarding the cause. If you make the wrong choice of forum, then you’re stuck.”

June 1 Flight

Investigators are searching an area in the Atlantic Ocean between Brazil and Senegal that’s 70 kilometers (44 miles) in radius for clues the Rio de Janeiro to Paris flight on June 1 and haven’t located the “black box” flight-data recorders.

“With the investigation at such an early stage, we need patience and time to establish all the facts,” said Justin Dubon, an Airbus spokesman. “It would be wrong to add fuel to any speculation.”

Air France-KLM Group declined to comment on legal jurisdiction, said Brigitte Barrand, a spokeswoman for the airline in Paris.

“For Brazilian passengers of the Air France flight, the best option is to start legal claims in Brazil,” said Flavia Fornaciari, a partner with Sao Paulo-based law firm Clito Fornaciari Jr. Advocacia.

Air France complained in a letter to Brazil’s bar association about lawyers soliciting victims’ families at a hotel where the airline was housing them. The bar association said it may launch a formal probe of possible ethics violations.

Carrier Liability

Victims’ families are certain to receive a portion of compensation from Air France, regardless of where they bring suits, because a carrier has “primary liability” when one of its planes crash, regardless of the cause, according to James Healy-Pratt, head of the aviation group at the Stewart’s Law firm in London, which has worked on major air-disaster cases.

Compensation for families depends on not only where they eventually pursue their claims but also on criteria such as the victim’s age, family status and work situation, according to lawyers specializing in aviation disasters. The passengers came from almost three dozen countries, further complicating issues.

International accords limit the families to five places to bring claims: where the carrier is based, its main place of business, the victim’s home country, the passenger’s ultimate destination, and where the ticket was purchased. The 1999 accord didn’t apply to high-profile crashes such as the 1988 Lockerbie disaster and the crash of Trans World Airlines flight 800 in 1996, Healy-Pratt said.

Victim Status

Bottai said that her clients, who received approval from the judge leading France’s criminal probe last week, asked for civil party status because they believed “everything isn’t being said” by the investigators.

Gaining victim status, also known as civil-party status, will allow Bottai access to case files to track the probe and quicker answers to questions about the investigation.

The largest number of victims in the Air France crash were French, with 61 passengers, according to Air France. Next were Brazilians, with 58 passengers, followed by 26 Germans. Another 30 nationalities were represented onboard, including two U.S. citizens.

“It’s not a simple matter of this is a French accident, it’s all going to happen in France and French lawyers should be doing it all,” said Healy-Pratt, who has been contacted by lawyers for victims’ families in several countries for advice.

“You need to sit back, and very considered, calmly think of what is best for the families, rather than what’s best for the lawyers,” he said.

Internet Ticket Agents

While Brazilian courts can be almost as generous as U.S. courts in awards of compensation, they’re slow, said Healy- Pratt. Claims related to a 1996 crash in Brazil are still being resolved in court, he said.

U.S. courts may be limited to the two American victims’ families, but any eventual finding by investigators that the failure of a component made in the U.S. contributed to the crash would open the way for litigation there.

It’s an open question whether tickets bought on the Internet from travel sites based in the U.S. establish a right to sue in U.S. courts, lawyers said.

Litigation in the U.S. is more focused on getting answers and changing company policy through high compensation awards and a broad fact-finding process, said Floyd Wisner, a specialist in aviation law in St. Charles, Illinois. Victims’ families tend to make a priority out of finding the causes of a crash and preventing a recurrence, he said.

“If you want to get to the bottom of something, if you want answers, probably the best place in the world is a U.S. court,” said Wisner. “When you hit them where it hurts and they have to pay damages and in the interest of preventing such expenditures in the future, they make changes.”

By Heather Smith

U.S., Global Stocks Drop as MSCI World Falls Most in 2 Months

June 15 (Bloomberg) -- U.S. stocks extended a global slide, sending the MSCI World Index down the most in two months, as falling oil and metal prices weighed on commodity producers. Treasuries rose and the dollar strengthened.

Alcoa Inc., Caterpillar Inc. and DuPont Co. lost at least 4.2 percent to help spur the broadest slump since January on the New York Stock Exchange as a weaker-than-estimated report on manufacturing also dragged stocks lower. Freeport-McMoRan Copper & Gold Inc. slid 4.1 percent as copper sank by the daily limit in Shanghai on speculation supply may outpace demand in China, the largest consumer of the metal. Benchmark indexes for Europe and Asia sank as BP Plc and BHP Billiton Ltd. tumbled.

“There’s no clear trajectory for moving us out of a recessionary environment,” said Wayne Wicker, who oversees $33 billion as chief investment officer at Vantagepoint Funds in Washington. “Given the shellshock of the last year and a half, you have a lot of people who don’t think this market is sustainable.”

The S&P 500, which had climbed 40 percent from a 12-year low on March 9, decreased 2.6 percent to 921.02 at 11:29 a.m. New York time. The Dow Jones Industrial Average, which last week erased its 2009 loss, tumbled 207.76, or 2.4 percent, to 8,591.5 as all 30 companies in the gauge declined. Twenty-five stocks fell for each that rose on the NYSE. The MSCI World Index of developed nations plunged 2.8 percent, the most since April 20.

Europe’s Dow Jones Stoxx 600 Index lost 2.4 percent after Group of Eight finance ministers, who met in Italy over the weekend, began drawing up contingency plans for rolling back budget deficits and bank bailouts as the economy shows signs of recovery and investors start worrying about inflation.

Empire Manufacturing

The VIX, the benchmark gauge for U.S. stock volatility, jumped the most since May 21 as the Federal Reserve Bank of New York’s general economic index fell to minus 9.4 from in June from minus 4.6. Readings below zero signal manufacturing is shrinking. Economists in a survey predicted minus 4.6. U.S. stocks fell even as the International Monetary Fund raised its outlook for the U.S. economy.

The S&P 500’s rally since March left the index valued at 14.9 times its companies’ earnings, near the highest level since October. Last week, the Dow average became the latest major U.S. stock gauge to give investors a profit for the year amid growing optimism the worst recession since World War II is ending after the government and Federal Reserve pledged $12.8 trillion to revive economic growth.


“We’re starting to see wariness in the markets about where we go from here,” said James Gaul, who helps oversee $1.5 billion at Boston Advisors LLC in Boston. “We’re still in a recession and we’re still losing jobs. The economy’s struggling.”

The MSCI World Index has rebounded from a 13-year low in March. The rally pushed the index’s value to 18.2 times the earnings of its 1,655 companies, the most expensive level since December 2004, weekly data compiled by Bloomberg show. The Stoxx 600 Index trades at 25.4 times the earnings of its companies, the most in five years.

Russian Finance Minister Alexei Kudrin said the dollar is in “good shape,” further affirming that there’s no substitute for the world’s reserve currency.

“It’s too early to speak of an alternative,” Kudrin said in an interview two days ago in Italy after meeting officials from the G-8 nations.

Treasuries Gain

Kudrin’s comments helped U.S. Treasuries climb for a third day, the longest streak in a month, even after international holdings of long-term U.S. financial assets rose at a slower pace in April as China, Japan and Russia trimmed holdings of Treasuries. Purchases of long-term equities, notes and bonds rose a net $11.2 billion, compared with buying of $55.4 billion in March, the Treasury said today in Washington.

Exxon Mobil Corp., the biggest U.S. oil company, lost 1.8 percent to $72.42, while rival ConocoPhillips retreated 3.6 percent to $42.78.

Crude oil for July delivery dropped as much as 3.1 percent to $69.83 a barrel in New York Mercantile Exchange trading as the dollar rose the most in a week against the euro, limiting investors’ need to use commodities as a hedge against inflation.

Freeport-McMoRan, the world’s biggest publicly traded copper producer, slid 4.1 percent to $56.11 as gold declined to a three-week low.

Inventories of copper in Shanghai warehouses grew for a second week to 60,647 metric tons last week, the highest since the week of March 20, 2008, the exchange said after the market closed June 12. China’s imports of the metal and its products increased 6 percent in May from April to 422,666 tons.

Wal-Mart Stores Inc. lost 2.4 percent to $48.63 after Goldman Sachs Group Inc. cut the largest retailer to “neutral” from “buy,” saying it sees “little near-term positive catalysts to drive shares higher.”

‘Golden Cross’

The S&P 500 may struggle to reach a so-called golden cross as trading volume decreases, according to a technical analyst at RBC Capital Markets.

A golden cross, considered a buy signal by analysts who make predictions based on patterns in price charts, occurs when the 50-day moving average, which is currently at 889.24 for the S&P 500, rises above the 200-day moving average, which is at 911.65, according to Bloomberg data. The U.S. benchmark index ended last week at 946.21.

The major stock indexes “are back above their 200-day averages, and it’s increasingly tempting to conclude that a new bull market is under way,” Toronto-based Ray Hanson wrote in a report dated June 12. However, the S&P 500 “has not yet achieved a golden cross” and “the steadily declining volume since early May suggests caution,” he said.

The VIX, as the Chicago Board Options Exchange Volatility Index is known, added 8.8 percent to 30.63. The index, which measures the cost of using options as insurance against declines in the S&P 500, is down from a record 80.86 in November yet above its 20 average over its 19-year history.

By Jeff Kearns and Sarah Jones

How long Can the U.S. Dollar Last as the World’s Reserve Currency?

Bob Chapman writes: The big question is how long can the dollar last as the world’s reserve currency? Needless to say, that is not an easy question to answer. We recently called the top on the dollar at 89.50 on the USDX. The USDX is six currencies versus the dollar on a weighted basis. More than a year ago the dollar hit a low on the USDX at 71.18. A phenomenal rally ensued from that level expedited by de-leveraging and the closing out positions within the carry trade. A good example of the carry trade was when a bank in NYC borrowed yen. At ½% interest, sold the yen for dollars and bought dollar denominated securities.

All of that is now history as the dollar comes under increasing pressure. We believe the dollar could test 71.18 this year. We also believe the dollar could break down to 40 to 55 over the next few years. The collapse of the dollar is certain. The Treasury and the Fed have committed the American taxpayer to $13.8 trillion of debt and before the dollar goes where it is ultimately going that figure could reach $30 trillion.

In modern times such fiscal and monetary irresponsibility is unparalleled. This abdication of moral responsibility has already begun the process of dollar deterioration and rising interest rates. The result will soon be hyperinflation.

The collapse may be disastrous for all countries, but it is going to be equally disastrous for the corrupt who have brought us to this sad situation. Hopefully as painful as it will be it could create many new opportunities for some. One thing we see as certain is that the elitists will find themselves targets of civil and criminal charges and targets of contempt and derision. The new world order they so arrogantly and confidentially predicted with one world government will again have been a failure.

There is no question where China is headed in this currency war to dump the dollar. They continue to accumulate gold with the intention of having a gold backed currency - something America is, we believe, incapable of doing. Such an ongoing pressing event has to put continual downward pressure on the dollar. China is already by passing the dollar reserve system by settling in other currencies, using barter and through swap arrangements, major changes are in the process of taking place. We do not believe the yuan will be the reserve currency of the future. A better idea is to have a weighted basket of 10 major currencies as a world benchmark. China is heavily dependent on exports and as yet does not have domestic demand to relieve pressure when exports fall. They are also still a dictatorial, communist society in power by force. They also still have an enormous population and wages are still dreadful even though they have increased 10-fold over the past 15 years. Politically both China and the US face populations that are profoundly unhappy and if major changes are not made in both societies, both are ripe for revolution.

Wednesday’s 10-year Treasury auction wasn’t all it was cracked up to be. The yield was 3.99% with 46.8% allotted at the high bid. The bid/cover was 2.62 versus the average of the past ten auctions of 2.40. Indirect participation, of foreign central banks was 34.2% versus an average of the past ten auctions of 28.23%. The only reason the sale went well was that the note had to be lifted 13 bps to 3.99% in order to attract buyers. In addition the Fed had to buy $3.5 billion in longer term maturity bonds and prop up the auction. They cannot fool us. The system sinks into deeper trouble every day. All we can say is you had better own gold and silver. What the Fed did was buy 18.4% of the auction with money they created out of thin air – more monetization.

Goldman Sachs CEO, Lloyd Blankfein says he believes the current upturn in world markets was probably not a full recovery from crisis and said he expects a further long recession. There is no reason to think this is it – so many things have to be sorted out. Why, would this be the recovery?

Nouriel Roubini says those are yellow weeds, not green shoots. He has nine reasons for pessimism. Employment is still falling sharply, which is bad news for consumption and the size of bank losses. He said this is a crisis of solvency, not just liquidity, but true de-leveraging has not really started, because private debts of households, financial institutions, and corporations are not being reduced, but rather socialized. Lack of de-leveraging will limit the ability of banks to lend, households to spend and firms to invest.

In countries running current account deficits, consumers need to cut spending and save much more for many years. Consumers have been hit by a wealth shock, that is falling house prices, stock market, rising debt-service ratios, and falling incomes and employment.

The financial system has been severely damaged, so the credit crunch will not ease quickly.

Profitable, owing to high debts and default risk, low economic and revenue growth and persistent deflationary pressure on companies margins businesses, will continue to be constrained from willingness to produce, hire workers, and invest.

Rising government debt ratios will eventually lead to increases in real interest rates that may crowd out government spending and even lead to sovereign refinancing risk.

The monetization of fiscal deficits is not inflationary in the short run – slack production and labor markets imply massive deflationary forces. If banks do not find a clear exit strategy from policies that double or triple the monetary base, eventually either goods price inflation or another dangerous asset and credit bubble, or both, will ensue.

We’ll interject here that we disagree with Mr. Roubini. That monetization causes inflation immediately, which later becomes hyperinflation. The central banks, the Fed in our case, have no clear exit strategy. What they have done and are doing has no fallback or battle orders for withdrawal.

Some emerging market economies with weaker economic fundamentals may not be able to avoid a severe financial crisis, despite massive IMF support.

Our comment is no one is going to escape. Decoupling is a myth and we’ve had that proven already.

At the beginning of the year the yield on the 10-year T-note was 2.35%. We figured it would go to 3.50%. Thus far it has gained to 4.00%. That is 1.65% in less than six months. The yield has risen 135 points since the Fed announced in March that it was going to buy Treasuries, some $300 billion worth for starters.

Rates are up due to $2.2 trillion in monetization, that they are already committed to, and that is just the beginning. Commodity prices in many instances have doubled, inflation expectations are high, equity prices are up 30% plus and gold and silver have remained strong so it is no wonder rates in the real market have moved substantially higher.

Massive new issuance will be high for sometime to come.

Retail gasoline prices have moved up more than 40 days in a row as gas rose $1.00 from its lows. That displaces $130 billion in discressionary spending.

The high rates have also caused a 60% fall in mortgage refinancing.

Subprime problems may generally be over but we have another year of ALT-A loans and three more years of Option-ARM, pick-and-pay loans to get through. In the first quarter due to rising unemployment 50% of foreclosures were concentrated in prime mortgages where the default rate is now 2.40%, more than double 1.10% yoy. Over the next few years this problem will worsen.

Home mortgage debt outstanding was 73% of GDP last year, the 3rd highest reading on record, after the 75% plus bubble years of 2006 and 2007. In order to return this debt to the average of the 1990s at 46%, Americans would have to cut margin debt to $6.6 trillion from $10.5 trillion. The solution to reduce such debt is to rebuild sayings and for banks to boost capital. We see little chance of either happening, hence the inevitable result.

As we know with the result of down payments, mortgage defaults proliferated. In a desperate attempt to buoy the housing market our government has brought back those same loans. This is monetizing an $8,000 tax credit. The FHA steers funds to cover closing costs directly – in some cases even offsetting the 3.5% minimum down payment FHA loans require. That is enough to cover most or all of the down payment and fees for homes up to the median price, now about $169,000. As you can see the government anxious to move foreclosed properties for the banks are breaking the rules and creating another subprime crisis. The NAHB says this will add 160,000 original sales. The FHA doesn’t care. Fifty percent will default. If they run out of money they’ll get another $500 billion from Congress, so that minorities can buy homes.

The American Empire Is Bankrupt ( 2 )

“China is trying to get rid of all the dollars they can in a trash-for-resource deal,” Hudson said. “They will give the dollars to countries willing to sell off their resources since America refuses to sell any of its high-tech industries, even Unocal, to the yellow peril. It realizes these dollars are going to be worthless pretty quickly.”

The architects of this new global exchange realize that if they break the dollar they also break America’s military domination. Our military spending cannot be sustained without this cycle of heavy borrowing. The official U.S. defense budget for fiscal year 2008 is $623 billion, before we add on things like nuclear research. The next closest national military budget is China’s, at $65 billion, according to the Central Intelligence Agency.

There are three categories of the balance-of-payment deficits. America imports more than it exports. This is trade. Wall Street and American corporations buy up foreign companies. This is capital movement. The third and most important balance-of-payment deficit for the past 50 years has been Pentagon spending abroad. It is primarily military spending that has been responsible for the balance-of-payments deficit for the last five decades. Look at table five in the Balance of Payments Report, published in the Survey of Current Business quarterly, and check under military spending. There you can see the deficit.

To fund our permanent war economy, we have been flooding the world with dollars. The foreign recipients turn the dollars over to their central banks for local currency. The central banks then have a problem. If a central bank does not spend the money in the United States then the exchange rate against the dollar will go up. This will penalize exporters. This has allowed America to print money without restraint to buy imports and foreign companies, fund our military expansion and ensure that foreign nations like China continue to buy our treasury bonds. This cycle appears now to be over. Once the dollar cannot flood central banks and no one buys our treasury bonds, our empire collapses. The profligate spending on the military, some $1 trillion when everything is counted, will be unsustainable.

“We will have to finance our own military spending,” Hudson warned, “and the only way to do this will be to sharply cut back wage rates. The class war is back in business. Wall Street understands that. This is why it had Bush and Obama give it $10 trillion in a huge rip-off so it can have enough money to survive.”

The desperate effort to borrow our way out of financial collapse has promoted a level of state intervention unseen since World War II. It has also led us into uncharted territory.

“We have in effect had to declare war to get us out of the hole created by our economic system,” Lanchester wrote in the London Review of Books. “There is no model or precedent for this, and no way to argue that it’s all right really, because under such-and-such a model of capitalism ... there is no such model. It isn’t supposed to work like this, and there is no road-map for what’s happened.”

The cost of daily living, from buying food to getting medical care, will become difficult for all but a few as the dollar plunges. States and cities will see their pension funds drained and finally shut down. The government will be forced to sell off infrastructure, including roads and transport, to private corporations. We will be increasingly charged by privatized utilities—think Enron—for what was once regulated and subsidized. Commercial and private real estate will be worth less than half its current value. The negative equity that already plagues 25 percent of American homes will expand to include nearly all property owners. It will be difficult to borrow and impossible to sell real estate unless we accept massive losses. There will be block after block of empty stores and boarded-up houses. Foreclosures will be epidemic. There will be long lines at soup kitchens and many, many homeless. Our corporate-controlled media, already banal and trivial, will work overtime to anesthetize us with useless gossip, spectacles, sex, gratuitous violence, fear and tawdry junk politics. America will be composed of a large dispossessed underclass and a tiny empowered oligarchy that will run a ruthless and brutal system of neo-feudalism from secure compounds. Those who resist will be silenced, many by force. We will pay a terrible price, and we will pay this price soon, for the gross malfeasance of our power elite.

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By Chris Hedges

The American Empire Is Bankrupt ( 1 )

This week marks the end of the dollar’s reign as the world’s reserve currency. It marks the start of a terrible period of economic and political decline in the United States. And it signals the last gasp of the American imperium. That’s over. It is not coming back. And what is to come will be very, very painful.

Barack Obama, and the criminal class on Wall Street, aided by a corporate media that continues to peddle fatuous gossip and trash talk as news while we endure the greatest economic crisis in our history, may have fooled us, but the rest of the world knows we are bankrupt. And these nations are damned if they are going to continue to prop up an inflated dollar and sustain the massive federal budget deficits, swollen to over $2 trillion, which fund America’s imperial expansion in Eurasia and our system of casino capitalism. They have us by the throat. They are about to squeeze.

There are meetings being held Monday and Tuesday in Yekaterinburg, Russia, (formerly Sverdlovsk) among Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization. The United States, which asked to attend, was denied admittance. Watch what happens there carefully. The gathering is, in the words of economist Michael Hudson, “the most important meeting of the 21st century so far.”

It is the first formal step by our major trading partners to replace the dollar as the world’s reserve currency. If they succeed, the dollar will dramatically plummet in value, the cost of imports, including oil, will skyrocket, interest rates will climb and jobs will hemorrhage at a rate that will make the last few months look like boom times. State and federal services will be reduced or shut down for lack of funds. The United States will begin to resemble the Weimar Republic or Zimbabwe. Obama, endowed by many with the qualities of a savior, will suddenly look pitiful, inept and weak. And the rage that has kindled a handful of shootings and hate crimes in the past few weeks will engulf vast segments of a disenfranchised and bewildered working and middle class. The people of this class will demand vengeance, radical change, order and moral renewal, which an array of proto-fascists, from the Christian right to the goons who disseminate hate talk on Fox News, will assure the country they will impose.

I called Hudson, who has an article in Monday’s Financial Times called “The Yekaterinburg Turning Point: De-Dollarization and the Ending of America’s Financial-Military Hegemony.” “Yekaterinburg,” Hudson writes, “may become known not only as the death place of the czars but of the American empire as well.” His article is worth reading, along with John Lanchester’s disturbing exposé of the world’s banking system, titled “It’s Finished,” which appeared in the May 28 issue of the London Review of Books.

“This means the end of the dollar,” Hudson told me. “It means China, Russia, India, Pakistan, Iran are forming an official financial and military area to get America out of Eurasia. The balance-of-payments deficit is mainly military in nature. Half of America’s discretionary spending is military. The deficit ends up in the hands of foreign banks, central banks. They don’t have any choice but to recycle the money to buy U.S. government debt. The Asian countries have been financing their own military encirclement. They have been forced to accept dollars that have no chance of being repaid. They are paying for America’s military aggression against them. They want to get rid of this.”

China, as Hudson points out, has already struck bilateral trade deals with Brazil and Malaysia to denominate their trade in China’s yuan rather than the dollar, pound or euro. Russia promises to begin trading in the ruble and local currencies. The governor of China’s central bank has openly called for the abandonment of the dollar as reserve currency, suggesting in its place the use of the International Monetary Fund’s Special Drawing Rights. What the new system will be remains unclear, but the flight from the dollar has clearly begun. The goal, in the words of the Russian president, is to build a “multipolar world order” which will break the economic and, by extension, military domination by the United States. China is frantically spending its dollar reserves to buy factories and property around the globe so it can unload its U.S. currency. China is frantically spending its dollar reserves to buy factories and property around the globe so it can unload its U.S. currency. This is why Aluminum Corp. of China made so many major concessions in the failed attempt to salvage its $19.5 billion alliance with the Rio Tinto mining concern in Australia. It desperately needs to shed its dollars.

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The Coming Economic Collapse

Today's essay details the ongoing collapse of the US economy with a focus on why this coming fall will prove the "worst is over" crowd wrong yet again. Earlier this week, I detailed three major developments. They were:
  • The US's economic shift from manufacturing to services (mainly financial)
  • The massive drop in US incomes
  • The beginning of the debt bubble

Today, we're addressing how the debt bubble encapsulated the US government as well as why Obama's Stimulus Plan won't fix anything.

To revisit the above three points, the US began outsourcing jobs in earnest soon after we re-opened trade with China in 1971. As outsourcing spread to higher and higher skilled jobs, this meant fewer jobs in the US market. This resulted in US consumers having to use credit to maintain their standard of living. It also meant more than one parent working to make ends meet.

On a national level, the US government began living beyond its means as well. Adjusted for inflation, gross tax receipts have only risen 40% in the last 39 years. However, over the same time period, total government spending increased 2,600%!!!

To fund this insanity, the US issued debt in the form of Treasuries. Foreign governments (most notably China) which were generally getting richer selling us stuff loaded up. The whole scheme is similar to buying a toy from the store, then having the store lend you money to buy another toy… ad infinitum: hardly a sensible long-term plan for financial solvency.

Now, everyone knows we run deficits. But not everyone knows that the deficits we publish are unbelievably understated. Corporations, in order to qualify for generally accepted accounting principles (GAAP) have to count their pension and healthcare expenses for retirees.

Uncle Sam doesn't.

John Williams of notes that official US deficit statistics do NOT include net present value of unfunded social security OR Medicare expenses. A lot of folks have made a big deal about the US running a $1 trillion deficit this year. Well, if you included the net value of those unfunded Social Security and Medicare expenses we cleared a $1 trillion deficit in 2007, a $5 TRILLION deficit in 2008 and are on course to clear a $9 TRILLION deficit this year.

To give you an idea of how big a problem these deficits are, consider that the US government could tax its citizens 100% of their earnings and NOT have a balanced budget.

In light of these issues, the government's $787 billion stimulus package doesn't exactly breed confidence in an economic turnaround. Incomes have lagged inflation in this country for 30+ years. Creating a bunch of temporary positions related to construction and the like is NOT going to alter this in any significant way.

Moreover, most of the job growth in the last 10 years has come from Bubbles: two out of five jobs created between 2002 and 2007 came from the housing industry. The irony here, of course, is that the Stimulus Plan is merely following this trend, creating jobs from our latest (relatively unreported) Bubble: the bubble in government spending and employment.

Bottomline: the US needs to create sustained job growth involving skilled professionals with high wage earning potential, NOT more guys laying concrete. We need fundamental structural changes to the US economy, NOT temporary positions resulting from one-time government projects.

And with a $9 trillion deficit in the works, $787 billion doesn't really mean much in terms of increased tax receipts. Also, and this is bit of a personal aside, it's hard to believe that throwing $787 billion towards creating jobs really shifts our economy away from financial services when we've thrown $2 trillion+ towards Wall Street and the banks (via direct loans and lending windows).

The US has a MAJOR debt problem. Including future social security and Medicare expenses we owe $65 TRILLION. Because we live in a world in which the words, "billion" get thrown around with too much ease, I'd like to put that number into perspective.

Let's say you have a stack of $1,000 bills. $1 million would be a stack eight inches high. $1 billion would be a stack 800 feet high (think the Washington Monument). And $1 trillion would be a stack 142 miles high. Total US debt, if laid on its side, would be a stack of $1,000 stretching more than 1/3 of the way around the earth.

Ok, so where is the US economy REALLY at right now?

Year over year real employment, real industrial orders, real housing starts, and real retail sales are all posting their largest drops since the production shutdown following WWII. Put another way, the last time the US economy fell this hard this fast, we were intentionally shutting down the monster than was the US war machine in WWII.

This is no recession. We are already on our way to a Depression (a GDP contraction of 10%) possibly even another Great Depression. One in nine Americans are currently receiving food stamps. Real unemployment (without birth/death seasonal nonsense and all the other Federal gimmicks) stands at 20%.

So I don't buy the "green shoots" theory at all. Having things get horrendous at a slightly slower rate is NOT a sign of a recovery. Green shoots can pop up anywhere including the asphalt in the parking lot outside my office. That doesn't mean the parking lot is about to become a lush meadow.

No, the US is heading for a really, really rough time. The US monetary base has doubled in the last year. We owe $65 trillion in liabilities. The US government could tax every company and every American 100% of their annual incomes AND NOT PAY THIS OFF. The Feds will have to inflate this mess away. And they've got a master money printer Ben Bernanke overseeing this situation.

Now, I cannot foretell precisely how this will all play out. Typically when a bubble bursts it takes 10+ years, possibly an entire generation, before the assets that participated in the Bubble return to new highs (sometimes they NEVER do).

Now, we just got off the biggest credit/ debt bubble in the world's history. I'm talking about 30+ years of spending money we don't have culminating in a period in which Americans were speculating in the single largest asset they ever purchase (a house) without putting a cent of their own money at risk (0% down NINA loans).

We also saw a bubble in stocks, Treasuries, and most every other asset you can invest in. So the idea that we can recover from this in a couple of years seems over enthusiastic to say the least.

Remember, Japan experienced a similar Bubble (though they had higher savings than we did) and "lost" a decade of economic growth. It's worth noting that Japan WAS NOT an Empire like the US. Japan did not have with bases in 170 countries, a world reserve currency, and a crippled job market (history rhymes, it does not repeat).

So in terms of the real US economy, I don't foresee a recovery anytime soon. The stock market may soar thanks to the Fed's money printing, but a jump in financial speculation is NOT an economic recovery. If the S&P 500 goes to 20,000, but we're drinking $1,500 beer and wiping ourselves with $100 bills, we haven't gotten richer (never mind the fact that an S&P 500 of 20,000 DOESN'T create jobs).

So how will we know when a bottom is in and the economy will recover? I've postulated a few signs (some humorous, others not so pleasant). Bear in mind, much of this in tongue in cheek. But like all sarcasm, there's a grain of truth.

We will bottom WHEN:

  • CNBC and Bloomberg start firing anchors and cutting their coverage time by hours, not minutes.
  • Maria Bartiromo and Jim Cramer start telling investors to short the market with all they've got.
  • Questions like "do you think we're heading for a recovery" result in the questioner getting punched in the face or ignored like a loony tune.
  • People HATE stocks and stock ownership has plummeted back to one in ten Americans (the pre-401(k) levels).
  • Investing is no longer a hobby and people fight tooth and nail to retain their nest egg (honestly what the hell is "play" or "speculative" money?)
  • The number of mutual funds has fallen by at least half (why are we paying fees for people who can't beat the market?).
  • People no longer want to get an MBA to become a broker or a financial advisor.
  • Our economy is based on "making something," not "offering advice."
  • Books about Warren Buffett no longer comprise an entire publishing industry (seriously, Amazon lists 5,000+ books on him).
  • The Richest 500 people in the world are no longer all billionaires (never happened before in history… how's that for concentration of wealth?)
  • Guys like me are no longer writing about finance or investing but instead take up a respectable profession.

Then… we will have probably hit bottom. In the meantime, I've prepared a FREE Special Report detailing three investments that will soar when the Second Round of the Financial Crisis hits. I call it the Financial Crisis Round Two Survival Kit. Swing by to pick up your free copy today.

Italy’s financial police Seize $134.5 billion US Bonds on the Border between Italy and Switzerland: Smuggling Or Counterfeit

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Jawboning delivers dollar gains

LONDON (MarketWatch) - U.S. Treasury Secretary Timothy Geithner appears to have won a respite for the U.S. dollar, economists said Monday, after various officials voiced confidence in the greenback following the weekend meeting of the Group of Eight finance ministers in Italy.

The most dramatic signal of support for the dollar came from Russian Finance Minister Alexei Kudrin on the sidelines of the G8 gathering in Lecce. Kudrin said the dollar's role as the world's main reserve currency wasn't likely to change any time soon.

"It is hard to say that in the next few years this system will change significantly," Kudrin said, according to news reports.

That marked a change of emphasis for Kudrin and other Russian officials. Russian and Chinese officials have this year repeatedly called for changes in the global financial system that would downgrade the dollar's role as the world's primary reserve currency.

Officials have said they fear massive U.S. borrowing will erode the value of the greenback and the value of their reserves. China is the largest holder of dollar reserves. Japan is second and Russia is third.

Meanwhile, International Monetary Fund Managing Director Dominique Strauss-Kahn told reporters that the dollar was "correctly valued" by the markets and likely wouldn't be pressed lower in the near term.

And just ahead of the G8 meeting, Japanese Finance Minister Kaoru Yosano told Bloomberg that the government's trust in U.S. Treasuries was "absolutely unshakeable."

On Sunday an aide to Russian President Dmitry Medvedev told reporters in Moscow that the meeting of leaders of Brazil, Russia, India and China -- the BRIC nations -- won't discuss alternative reserve currencies at their summit meeting in Yekaterinburg, Russia, on Tuesday, news reports said.

The dollar rose versus most major currencies Monday and remained 1% higher versus the euro, with the shared currency exchanging hands at $1.3881. See Currencies.

"It's a little bit interesting" that officials made a range of dollar-friendly comments after meeting with Geithner and other U.S. officials, said Daragh Maher, currency strategist at Calyon.

"There seems to be a concerted effort not to dollar bash," he said.

Simon Derrick, chief currency strategist at Bank of New York Mellon, said the weekend developments were among "growing signs of an indirect campaign of verbal intervention to support the U.S. dollar."

Derrick, in a research note, said the apparent campaign has been having an impact ever since Geithner's trip to Beijing earlier this month.

Chinese officials subsequently changed their emphasis, downplaying talk of downgrading the dollar's role as an international reserve.

Kudrin's remarks "seem to indicate that he has also been persuaded that there is little to be gained from talking down the value of the U.S. dollar given Russia's existing exposure," Derrick said.

But economists questioned how much mileage dollar bulls can get from the comments.

After all, remarks underlining the dollar's medium-term role as the world's premier reserve currency don't necessarily contradict a long-term desire to reduce exposure to the greenback, Maher said.

But the pace of the dollar's recent decline may have spooked big holders of dollar reserves, prompting the change in emphasis, he said.

Meanwhile, with signs that growth of foreign currency reserves are again growing at a fast pace "it seems that the issue of reserve diversification will not go away that easily," Derrick said. "In other words, while officials may feel that it is appropriate to provide verbal support for the greenback, it will ultimately be their actions that matter."

By William L. Watts, MarketWatch

Oils, miners slip in Sydney, Tokyo; property off in Hong Kong

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Airbus urges patience on crash, says A330 safe

PARIS, June 14, 2009 (Reuters) — European planemaker Airbus has warned against speculating on the cause of an Atlantic plane crash but defended the safety record of its A330 jetliner.

An Air France A300 crashed into the Atlantic en route from Brazil to Paris on June 1, killing all 228 people on board in the world's worst aviation disaster in eight years.

"It is safe to say that the aviation community is still under some shock," Airbus Chief Executive Tom Enders told journalists.

"And it certainly doesn't provide consolation to the families that if we look at the statistics of flying compared with 30 years ago, the statistics show that the A330 is one of the safest aircraft that has ever gone into service."

Enders was speaking on Saturday in a briefing ahead of the June 15-21 Paris Airshow alongside EADS Chief Executive Louis Gallois. Contents of the briefing were embargoed for Sunday.

The crash has cast a pall over the world's largest aviation event, adding to economic pressures which have forced airlines to cancel or defer plane orders and travel fears over swine flu.

Gallois appealed for media calm over the cause of the crash.

"Please be patient," he said. "Such an inquiry is long and we should not launch into ideas because it is an issue for families, colleagues and friends. They don't know if what they are reading in newspapers is true or not."

Enders said Airbus personnel had been deployed on rescue ships searching the Atlantic for bodies and wreckage and were ready to lend expertise on the jetliner if required.

"We are supporting Air France. And we are supporting investigating authorities to find out what exactly happened up there in the sky, and we are hoping that the black boxes, the digital data recorder and the voice recorder, will be found soon so that we can find out what happened there," Enders said.

"Any speculation undermines the work that the authorities are doing," he added.

Investigators have said the aircraft sent our automated warning messages to maintenance crews including one suggesting the speed readings were unreliable, prompting speculation that the wide-body aircraft's speed sensors may have been faulty.

Airbus last week denied a newspaper report it was thinking of grounding the worldwide fleet of almost 1,000 A330s as well as A340s, a larger sister model, to change speed sensors and said the planes were safe to fly.

(Reporting by Tim Hepher)

China's dairy firms make new moos

BEIJING, June 15 -- China's dairy sector is struggling to claw its way back from the debilitating effects of last year's tainted milk scandal that saw one producer go bankrupt, losses at several others and an industry reputation in tatters.

The melamine-tainted milk scam claimed the lives of six infants and hospitalized nearly 300,000 others in 2008. The incident forced dairy firms to take their products off the shelves and go into damage control mode, chiefly by way of crisis marketing and quality control.

The industry, which had witnessed a 20 percent growth rate over the past decade, also reported deep losses.

Industry leader Mengniu, for the first time in several years, posted a loss of 948.6 million yuan in 2008, despite strong sales during the first three quarters of the year.

Yili incurred losses of 1.69 billion yuan; Bright Dairy lost 286 million yuan.

Only Sanyuan Food, one of the few producers to escape the crisis, made a profit of 40.76 million yuan in 2008.

Investors too shunned the industry. Yili and Mengniu shares nose-dived. Yili dropped to 6 yuan from 17 yuan, while Mengniu fell to HK$6.4 from HK$24 last August. Bright Dairy shares went down to 3.2 yuan last December from 7.6 yuan in September 2008.

And, in February this year, Sanlu, which was at the heart of the scandal, declared bankruptcy, leaving a dairy market worth 10 billion yuan for other players to grab.

Shaking up

Now, the industry is going through a shake-up of sorts.

Sanyuan Food, a regional brand name in Beijing and Hebei, is gearing up to be a national player after it purchased Sanlu's key assets. Many other regional players are also looking at expansion, although analysts contend that the top two producers, Mengniu and Yili, cannot be replaced that easily.

The industry is also focusing on bettering the source quality of dairy products.

Yili is developing a new cow community model, and plans to organize 20 such communities by the end of 2009. Each community houses 1,000 cows collected from local farmers. Yili is entrusting a professional company with the task of raising the cows to make sure the milk is safe.

"2009 will be the year of quality. Quality means life," Zhang Jianqiu, Executive President, Yili told China Business Weekly.

Used FDI down 20.4% in first five months in China

BEIJING, June 15 (Xinhua) -- China's Ministry of Commerce said Monday the amount of used foreign direct investment (FDI) fell 20.4 percent year on year in the first five months in China.

The January-May figure was 34.05 billion U.S. dollars, said ministry spokesman Yao Jian.

In May, FDI fell 17.8 percent to 6.38 billion U.S. dollars, the eighth straight monthly fall, Yao said.

The drastic change in the world economy pushed companies to cut spending, and was the main reason for the continuous decline of FDI in China, the ministry said in a statement on its website Monday.

In 2008, foreign-invested businesses contributed 29.7 percent of the country's industrial output, 21 percent of tax revenue, 55.3 percent of exports and 54.7 percent of imports. It also created jobs for 45 million people, said the ministry.

"China's economy is facing great uncertainties both at home and abroad, and it is difficult to see growth of foreign direct investment in a short time," said the statement.

Chinese Premier Wen Jiabao said, during a tour in Hunan Province on June 12 and 13, that the foundation was not solid enough to bring the economy to a recovery in China as the outlook of the world economy was still unclear and external demand continued to shrink.

The statement said China will further open the domestic market and further simplify procedures for foreign investment. China will seek to attract foreign investment to high-tech sectors, energy-efficient and environment-friendly sectors, the service industry and the central and western regions.

Yao also said at the news briefing that the Chinese mainland would send purchasing delegations to Taiwan in the early July.

CIA chief believes Cheney almost wants U.S. attacked

WASHINGTON, June 14, 2009 (Reuters) — CIA director Leon Panetta says it's almost as if former vice president Dick Cheney would like to see another attack on the United States to prove he is right in criticizing President Barack Obama for abandoning the "harsh interrogation" of terrorism suspects.

"I think he smells some blood in the water on the national security issue," Panetta said in an interview published in The New Yorker magazine's June 22 issue.

"It's almost, a little bit, gallows politics. When you read behind it, it's almost as if he's wishing that this country would be attacked again, in order to make his point."

Cheney, who was a key advocate in the Bush administration of controversial interrogation methods such as waterboarding, has become as a leading Republican critic of Obama's ban on harsh interrogations and his plan to shut the U.S. military prison at Guantanamo Bay, Cuba.

In a blistering May 21 speech, Cheney said Obama's reversal of Bush-era policies were "unwise in the extreme" that would make the American people less safe.

Panetta called Cheney's actions "dangerous politics."

He told The New Yorker he had favored the creation of an independent truth commission to look into the detainee polices of former President George W. Bush. But the idea died in April when Obama decided such a panel could be seen as politically vindictive.

Chinese president arrives in Yekaterinburg for SCO summit, BRIC meeting

YEKATERINBURG, Russia, June 14 (Xinhua) -- Chinese President Hu Jintao arrived in Yekaterinburg in central Russia on Sunday for a summit of the Shanghai Cooperation Organization (SCO) and a meeting of BRIC countries, namely Brazil, Russia, India and China.

 Chinese President Hu Jintao (2nd L) arrives in Jekaterinburg, Russia, on June 14, 2009, for a summit of the Shanghai Cooperation Organization (SCO) and a meeting of BRIC countries, namely Brazil, Russia, India and China.

Chinese President Hu Jintao (2nd L) arrives in Jekaterinburg, Russia, on June 14, 2009, for a summit of the Shanghai Cooperation Organization (SCO) and a meeting of BRIC countries, namely Brazil, Russia, India and China. (Xinhua/Lu Jinbo)
Photo Gallery>>>

Receiving the Chinese president at the airport were Russian Deputy Foreign Minister Alexei Borodavkin and other Russian officials.

At the annual SCO summit, top leaders of the organization's six members will exchange views on how to tackle the current international financial crisis and how to expand cooperation in political, economic, security and other fields.

"For the first time, the leaders of SCO member states and observers will hold a small-size group meeting, which is a new measure taken by the SCO to strengthen substantial cooperation with its observers," Chinese Vice Foreign Minister Li Hui told a press briefing last Tuesday.

Chinese President Hu Jintao (L) is welcomed by Russian Deputy Foreign Minister Alexei Borodavkin upon his arrival in Jekaterinburg, Russia, on June 14, 2009, for a summit of the Shanghai Cooperation Organization (SCO) and a meeting of BRIC countries, namely Brazil, Russia, India and China. (Xinhua/Lan Hongguang)
Photo Gallery>>>

He said that the summit was expected to further implement the treaty of long-term neighborliness, friendship and cooperation entered into by and between the SCO member states, boost regional cooperation in the sectors of politics, security, economy, cultural and people-to-people exchanges, work together to tackle the global financial and economic crisis, and promote an early economic recovery in the region.

The summit will yield a joint statement as well as other cooperation documents.

In recent years, the SCO has played an increasingly important role in maintaining regional security and economic development.

Founded in 2001, the SCO consists of Kazakhstan, China, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. Mongolia, India, Pakistan and Iran are observers of the organization.

In Yekaterinburg, President Hu will also attend the first formal meeting of BRIC countries, an acronym for the four fast growing developing economies of Brazil, Russia, India and China At the BRIC meeting on Tuesday, the leaders of the four emerging economies will discuss the major issues such as the international financial crisis, reform of the financial institutions, food and energy security, climate change, trade, and the future of BRIC dialogue.

"We expect the BRIC meeting to expand strategic consensus, consolidate mutual trust, coordinate to cope with the global financial and economic crisis and lay out the blueprint for its future development," said Chinese Vice Foreign Minister He Yafei last Tuesday.

Speaking at a meeting of senior BRIC representatives on security issues on May 29, Chinese State Councilor Dai Bingguo said the BRIC countries should work together to enlarge their consensus, exchange views on major international and regional issues of common concern, strengthen coordination and cooperation, and facilitate the settlement of problems.

At present, Dai said, the countries should reinforce their cooperation in dealing with the economic downturn, enhance coordination on macro-economic policies, jointly oppose protectionism in any form, speed up the reform of the international financial system, and advance the creation of an international cooperation mechanism conforming to globalization and multipolarization.

The BRIC countries are all important emerging nations and driving forces for the world's common development. They share the same or similar opinions on many international issues and all have the political desire for further cooperation and communication.

In recent years, the four countries have exchanged views on world economic and developing issues of common concern through various channels.

BRIC countries account for 42 percent of the world's population, 14.6 percent of global Gross Domestic Product (GDP) and 12.8 percent of the global trade volume.

From Yekaterinburg, President Hu will travel to Moscow for a state visit, his first to Russia since President Dmitry Medvedev took office in May of 2008.

Chinese foreign ministry officials said that during the visit, Hu will meet Medvedev and other Russian leaders to exchange views on how to further develop the Sino-Russian strategic partnership of cooperation.

In Moscow, President Hu is also expected to attend the activities marking the 60th anniversary of the establishment of diplomatic relations between China and Russia.

The Chinese president is on a three-nation trip, which will also take him to Slovakia and Croatia.











CIA chief: Cheney almost `wishing` US be attacked

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The Zionist Elephant In The Room

The Elephant In The Room...


Hello all ...
The political creed of Zionism has big ears and a long trunk and I think it's time that was pointed out. It also stampedes through our lives at every level and that needs to be said, too.
It has created a pincer-movement on the human mind by hijacking staggering amounts of political, corporate, banking and media power on one side and by using the fear of being called 'anti-Semitic' if you dare to state the bloody obvious.
They have been able to do this by equating in public perception that Zionism = Jewish people. It does not. Zionism is a political creed introduced by the House of Rothschild to advance the goals of the Illuminati families that are largely controlled by the Rothschilds.
When people think of Zionism they think of Jewish people. When they think of Israel they think of Jewish people. That's understandable given the propaganda, but it is seriously misleading and those instant connections need to be broken if we are going to understand what's going on here.
Zionism means Rothschild just as Israel means Rothschild. When we see the extraordinary number of Zionists in key positions around the world we are looking not at 'manipulating Jews', but manipulating Zionists representing the interests and demands of the Rothschilds.

Significant numbers of Jewish people are not Zionists and oppose that appalling creed while many Zionists are not Jewish. These include the Christian Zionists and Obama's vice-president, Joe Biden, who told Israeli television 'I'm a Zionist'. Here's the clip if you can stand it ... If, as Biden rightly says, you don't have to be a Jew to be a Zionist, how can it be a racial rather than a political movement? It can't. It's just made to appear like that to manipulate public perception because opposing Zionism then becomes opposing Jewish people as a whole and the 'you're a racist' card can be played over and over.
Far from protecting and advancing the interests of the mass of Jewish people it has often been devastating for them and caused millions to be labelled unfairly by the actions of the Zionist elite. On the Jews Against Zionism website one feature highlights how Rothschild Zionism targeted Jews who had lived for generations in Palestine side-by-side with Arabs in peace and harmony:
'The religious Jews who by virtue of their faith, clearly contradicted Zionist nationalism, and who had lived peacefully with their Arab neighbors for generations, became unwillingly identified with the Zionist cause and their struggle with the Arabs.
They requested the United Nations that Jerusalem be designated as a defacto international city. They appealed to the diplomatic corps assigned to Jerusalem -- but to no avail. They were hence confronted with the choice of either becoming a part of the Zionist State, which diametrically opposed the interests of Jews as a religion, or abandoning the land of which their forefathers were the first Jewish settlers.
Let's get this straight. Zionism doesn't give a damn about Jewish people. To the Rothschilds and their Zionist gofers and thugs the Jewish people as a whole are merely cattle to be used and abused as necessary - just like the rest of the human population.
The networks of the House of Rothschild were behind Hitler and the rise of the Nazi Party in the Rothschild heartland of Germany where they had changed their name from Bauer in 18th century Frankfurt and launched the dynasty that was to control global finance.
After the war the Rothschilds used public sympathy for Jewish people targeted by the Nazis to press for a homeland in Palestine. This was the alleged reason for the founding of Zionism, but that is only part of it.


As I show in my books, the campaign to impose a Rothschild fiefdom in Palestine goes back at least to the earlier part of the 19th century and probably long before. It was given a massive boost with the Balfour Declaration in 1917 when the British Foreign Secretary Arthur Balfour declared in a letter his government's support for a Jewish homeland in Palestine.
This letter was sent by Balfour, an inner-circle member of an elite secret society called the Round Table, to Baron (Walter) Rothschild who funded the Round Table.
Today, Rothschild Illuminati fronts like the Council on Foreign Relations, Trilateral Commission, Bilderberg Group, Royal Institute of International Affairs, and others, still answer to the Round Table which string-pulls and coordinates from the shadows. This is why Zionists in government are invariably connected with these Rothschild-controlled organisations.
The Rothschilds funded the early settlers from Europe to relocate in post-war Palestine and they also funded and armed the terrorist groups, like Irgun, which bombed and terrorised Israel into existence in 1948, a campaign which forced 800,000 Palestinians to leave the land of their birth.
Israel is simply the State of Rothschild and how appropriate that they paid for the construction of the Israeli parliament building, the Knesset, and the Israel Supreme Court. The name Rothschild means Red-shield and it originates with the red shield 'Star of David' symbol (not a Jewish symbol before the Rothschilds) which they displayed on their house in Frankfurt ...

... Seen it somewhere before ...?

The very flag of Israel tells you who owns it. There are many reasons why the Rothschilds and their allies wanted to hijack Palestine and one was to keep the Middle East in a state of disruption and turmoil from which a global war can eventually be triggered to usher in the New World Order of world government dictatorship.
The creation of Israel is a means not an end and the Rothschilds will be quite happy to leave the Jewish population to their fate if it suits them. After all, they've done it before.
The world's second biggest Zionist population is in the United States and given that both America and Israel are controlled by the Rothschild networks it is not hard to fathom why that slither of land in the Middle East receives around a third of all US overseas aid.
An average $3 billion a year is handed to the State of Rothschild as a result of decisions made by American administrations that are always, 'Republican' or 'Democrat', controlled by the Rothschilds. One hand of the network hands over the cash to another.
This explains why the United States never talks about the arsenal of nuclear weapons stockpiled by one of the world's most trigger-happy states. Israel refuses to discuss them and the American policy, recently reconfirmed by Obama, is never to ask or bring up the subject.
The last two US administrations are testament to the extent of Zionist (Rothschild) control of America and thus its foreign policy, not least with regard to Iraq, the former land of Sumer and Babylon, which according to some just happens to be part of the 'Greater Israel' that the Zionists seek to secure.
The 'Bush' government was the glove-puppet of the so-called neo-cons, or neoconservatives, whose only political philosophy in truth was the interests of Zionism. At the heart of the Rothschild-controlled neocon cabal were Richard Perle (Zionist), Paul Wolfowitz (Zionist), Dov Zakheim (Zionist), Douglas Feith (Zionist), John Bolton (Zionist), Lewis Libby (Zionist), the list goes on and on. These were the people who orchestrated the invasions of Afghanistan and Iraq on behalf of the Rothschilds.

Economic policy was dictated through the years of Reagan-Bush, Father Bush, Clinton and most of Boy Bush by Alan Greenspan (Zionist), chairman of the privately-owned US 'central bank', the Federal Reserve. Privately owned, that is, by the Rothschilds through a network of front people and organisations.
Greenspan introduced the policies of deregulation that culminated, as designed, in the free-for-all frenzy of greed by banks and financial markets in general that led to the crash in the last weeks of the Bush presidency. Greenspan resigned from the Fed before the consequences of his long-term game-plan exploded in lost homes, jobs and savings. He was replaced by Bernard Bernanke (Zionist).
Greenspan was enthusiastically supported in his deregulation through successive administrations by Treasury Secretaries in the Clinton years, Robert E. Rubin (Zionist) and Larry Summers (Zionist), and also by the President of the Federal Reserve Bank of New York, the most powerful in the Fed cabal, Timothy Geithner (Zionist).
When Mr. Fake Change won the presidency amid the gathering financial crisis, caused by all of the above, and others, he appointed Geithner as his Treasury Secretary and Summers as head of the White House Economic Council. Both are protégés of Robert Rubin who resigned from Citigroup earlier this year for his role in 'advising' it to the brink of collapse.
Obama's Budget Director is Peter Orszag (Zionist) who headed the company that advised the Icelandic Central Bank in the prelude to the crash of Iceland's financial system. This has led to Iceland being fast-tracked into the Rothschild-created European Union to 'save' its economy. Orszag also advised the Russian Treasury when state-owned assets and resources were handed to Zionist oligarchs, including Roman Abramovich who is famous in the UK as the owner of Chelsea Football Club.
Add to all this the fact that the World Bank is headed by Robert Zoellick (Zionist), who replaced Paul Wolfowitz (Zionist), and that the International Monetary Fund, or IMF, is run by Dominique Strauss-Kahn (Zionist).
Anyone still doubt that the Rothschild network controls global finance and therefore the lives and choices of virtually every man, woman and child on the planet?
The Rothschilds are at the heart of the Obama White House in the form of Chief of Staff Rahm Emanuel (Zionist) and Chief White House Advisor David Axelrod (Zionist). Emanuel has served in the Israeli army and his father was an operative with the Rothschild terrorist group, Irgun, as it bombed Israel into being. This included the bombing of the King David Hotel in Jerusalem in 1946 that killed 91 people.

Rahm Emanuel also worked closely Robert E. Rubin (Zionist) during the Clinton years to impose NAFTA, the North American Free Trade Agreement, which was designed from the start to be a stepping-stone to a North American, and eventually an American Union, along the lines of the EU. The Zionist world is very small indeed.
David Axelrod ran Obama's election campaigns and now oversees his every word slavishly read from his teleprompter screens. There is little that Obama says that his Zionist handlers don't tell him or give him to say.
They have also ensured that US policy for Iran and the Persian Gulf is headed by Dennis Ross (Zionist) who has served Israeli interests in successive American administrations. There will not be a cigarette paper behind the scenes between him and that trio of tyranny, Netanyahu, Lieberman, Barak, the prime minister, foreign minister and defence minister of Israel. Rothschild stooges, in other words.
Zionist Mandelson works for the pyramid
The most influential figure by far in the current British government is Peter Mandelson (Zionist) who continues to amass more titles and powers from the beleaguered Prime Minister Gordon Brown. Mandelson is an insider operative for the Rothschilds and has frequently accepted hospitality from his close friend and associate, Nathaniel Rothschild. This week Mandelson called for the UK to join the (Rothschild) single European currency.
Meanwhile, the hapless and hopeless Gordon Brown did as he was told and appointed Ivan Lewis (Zionist) to be minister of state with responsibility for, wait for it ... British policy on the Middle East. Lewis, vice-chair of the Labour Friends of Israel, was an outspoken supporter of Israel's slaughter of the innocent in Gaza this year. Lewis said of his new job:
'My responsibility for the Middle East peace process is particularly poignant. I have never hidden my pride at being Jewish or my support for the State of Israel.'
What chance do the Palestinians have of fairness and justice? None.
In France, as I mentioned last week, President Sarkozy (Zionist) is a long-time asset of Mossad, the Rothschild enforcement agency masquerading as the intelligence agency of Israel. Mossad has been implicated in terror attacks and other horrors all over the world because it represents the Rothschild global agenda and not the people of Israel.

French President Sarkozy (Zionist Jew)
Look also at the Zionist (Rothschild) control of the entertainment and media industry in the form of people like Fox News President Peter Chernin (Zionist); Paramount Pictures Chairman Brad Grey (Zionist); Walt Disney CEO Robert Igor (Zionist); Sony Pictures Chairman Michael Lynton (Zionist); Warner Brothers Chairman Barry Meyer (Zionist); CBS CEO Leslie Moonves (Zionist); MGM Chairman Harry Sloan (Zionist); and NBC/Universal Studios CEO Jeff Zucker (Zionist).

The Rothschilds control America
The Los Angeles Times columnist Joel Stein (Zionist) wrote an article proclaiming that Americans who don't think Jews (Zionists) control Hollywood are just plain 'dumb'. Stein went on:
'The Jews are so dominant. I had to scour the trades to come up with six Gentiles in high positions at entertainment companies. But lo and behold, even one of that six, AMC President Charles Collier, turned out to be a Jew! ... As a proud Jew, I want America to know of our accomplishment. Yes, we control Hollywood.'
And not only Hollywood. Shahar Ilan, a daily features editor with the leading Israeli newspaper, Ha'aretz, wrote: 'The Jews do control the American media. This is very clear, and claiming otherwise is an insult to common knowledge'. Zionists have truly massive influence over the news media with the likes of Rupert Murdoch (Zionist) with his vast television and newspaper empire, and the Sulzberger family (Zionists) who own the New York Times. The list is enormous across television, radio, newspapers and the Internet.
When you look at the number of Zionists in key positions of power and control in politics, banking, corporations, news media, Hollywood and so on, it is sobering to think that Jewish people are just 1.7% of the American population and many of those won't be Zionists.
What if the same situation happened with Arab people or Chinese, Irish or even black Americans? There would be an outcry and questions asked about how one group can have so much influence over the lives of a whole nation, indeed many nations. And I stress again that, in the end, this control system leads to the Rothschilds and the spider they represent at the centre of the web.

B'nai Brith Front Man Harry Abrams

The Rothschilds established B'nai B'rith in 1843 to prevent exposure of the global Zionist networks. The ' BB' is an offshoot of the Scottish Rite of Freemasonry and operates worldwide to brand as 'anti-Semitic' anyone who exposes the Rothschild operation.
In 1913, B'nai B'rith launched an organisation specifically to target and defame researchers, in fact anyone, who questions, criticises or exposes Israel and the ever-gathering Zionist influence across the world. With typical irony they called it the Anti-Defamation League, better known as the ADL, and claimed it was there to protect Jewish people. As Plato said: 'This and no other is the root from which a tyrant springs; when he first appears he is a protector'.
The ADL is, in fact, a sub-agency of the Israeli (Rothschild) centre for covert operations, the Mossad, which, according to a former agent, has the motto: 'By way of deception, thou shalt do war'. If that isn't the motto, it should be. The ADL is behind the introduction of 'hate laws' which are aimed at silencing dissent against Zionism or Israel. The Jewish academic, Noam Chomsky, said this of the ADL in his book, Necessary Illusions:
'The ADL has virtually abandoned its earlier role as a civil rights organization, becoming "one of the main pillars" of Israeli propaganda in the U.S., as the Israeli press casually describes it, engaged in surveillance, blacklisting, compilation of FBI-style files circulated to adherents for the purpose of defamation, angry public responses to criticism of Israeli actions, and so on.
These efforts, buttressed by insinuations of anti-Semitism or direct accusations, are intended to deflect or undermine opposition to Israeli policies, including Israel's refusal, with U.S. support, to move towards a general political settlement.'
The American rabbi, Michael Lerner, agrees:
'The ADL lost most of it credibility in my eyes as a civil rights organization when it began to identify criticisms of Israel with anti-Semitism, still more when it failed to defend me when I was receiving threats to my life from right-wing Jewish groups because of my critique of Israeli policy toward Palestinians (it said that these were not threats that came from my being Jewish, so therefore they were not within their area of concern).'
Firstly, the ADL has never been a civil rights organisation. Its very purpose has been to take them away. Secondly, it is not there to defend anyone, Jewish or otherwise. It's there to represent the sadistic interests of the House of Rothschild and the wider Illuminati.

It is so important that people are aware of this background to Zionism because at the moment it is basically speeding along unchallenged through lack of awareness and fear of being dubbed 'racist'.
Well, I couldn't care less what people say about me with regard to this or anything else. I want to uncover the truth, not win a popularity contest.
Please, let's circulate this information as effectively as we can and bring it from the shadows to public attention. We must refuse to be intimidated into silence over this.
Martin Luther King said: '... we must straighten our backs and work for our freedom. A man can't ride you unless your back is bent.'
It is time to stand up, in every sense.

Who controls The Federal Reserve ?

The Federal Reserve -
Zionist Jewish Private Bankers


Zionist Jews own and run the Federal Reserve Bank that the US government continually borrows from...and is in debt to.
Napoleon said: When a government is dependent for money upon the bankers, they and not the government leaders control the nation. This is because the hand that gives is above the hand that takes. Financiers are without patriotism and without decency.
The Federal Reserve Bank is a consortium of 9 Zionist Jewish-owned & associated banks with the Rothschilds at the head:
$1. Rothschild Banks of London and Berlin.
$2. Lazard Brothers Banks of Paris.
$3. Israel Moses Seif Banks of Italy.
$4. Warburg Bank of Hamburg and Amsterdam.
$5. Lehman Brothers of NY.
$6. Kuhn, Loeb Bank of NY (Now Shearson American Express).
$7. Goldman, Sachs of NY.
$8. National Bank of Commerce NY/Morgan Guaranty Trust (J. P. Morgan Bank - Equitable Life - Levi P. Morton are principal shareholders).
$9. Hanover Trust of NY (William and David Rockefeller & Chase National Bank NY are principal shareholders).
1791-1811: Rothschilds' First Bank of the United States.
1816-1836: Rothschilds' Second Bank of the United States.
1837-1862: Free Banking Era - no formal Central Bank through the efforts of President Andrew Jackson.
1862-1913: System of National Banks through the efforts of President Andrew Jackson.
1913-Current: Federal Reserve Act effects a consortium of privately held Jewish & associated banks called the Federal Reserve Bank. The largest shareholders of the Federal Reserve Bank are the Rothschilds of London holding 57% of the stock which is not available for public trading.
On May 23 1933, Congressman Louis T. McFadden brought impeachment charges against the members of the Federal Reserve Bank. A smear campaign against McFadden ensued and he was poisoned 3 years later.
Here are the Jews that control the government of America:
1) Ben Shalom Bernanke: Chairman of the Board of Governors of Federal Reserve. Term ends 2020.
2) Donald L. Kohn: Vice Chairman of the Board of Governors of Federal Reserve. Term ends 2016.
3) Randall S. Kroszner: Member of Board of Governors of Federal Reserve.
4) Frederic S. Mishkin: Member of Board of Governors of Federal Reserve. Term ends 2014.
5) Alan Greenspan: Advisor to Board of Governors of Federal Reserve. Recent Chairman.
ZIONIST BANKERS PRINT MONEY at heavily-armed & guarded Federal Reserve Bank buildings throughout the US. Then these Jewish bankers of the Federal Reserve Bank *loan* the money to the US government at *interest.*
Since the Federal Reserve Bank is privately owned, the Federal Reserve Bank of New York (and all the others) is listed in Dun & Bradstreet. But according to Article I, Section 8 of the U. S. Constitution, only Congress has the right to issue money and regulate its value.
Thus it is *illegal* for private interests to issue US money. But because influential Jews like Paul Warburg and Jacob Schiff bribed into enactment the Federal Reserve Act of 1913, the stockholders of the Federal Reserve Bank were to be kept a secret. Only recently have the Jewish stockholders of the Federal Reserve Bank come to light.
International cooperation with the Jew-owned Federal Reserve Bank has been intense to coordinate currency. In 1985, officials from the JP Morgan Bank of NY met with the Credit Lyonnais Bank of France. They established the European Currency Unit Banking Association (ECUBA) to get world cooperation for a unified currency.
In October 1987, the Association for the Monetary Union of Europe (AMUE), secretly met and recommended that the ECU (European Currency Unit) replace existing national currencies and that all European Central Banks be combined into one and issue the ECU as the official unified currency. This occurred in 1999 with the issuing of the Euro.
The plan of the international Jewish banking cabal is to have only 3 central banks in the world: The Federal Reserve Bank, the European Central Bank, and the Central Bank of Japan. All of these banks are headed by the Rothschilds.
And Next To Come Will Be The One World Government Run By Anti-Christian Jews.
Read the source article from Real Jew News with links here.
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The Takeover of America, Republic Becomes Oligarchy: America has become an oligarchy (a government ruled by a powerful few) versus a Republic (a government limited by law) as the banking and Wall Street Masters of the Universe continue their tyranny.
P.S. Hey, we have to be slaves and not complain about it. Otherwise we'd be "anti-Semitic." It's "anti-Semitic" to notice what's happening and who's in charge, and it's "anti-Semitic" to complain about it. The FEMA camps will be full of "anti-Semites" otherwise known as "terrorists."