Tuesday, June 28, 2011

Enter the dragon 'to save the euro’

It is in the interest of cash-rich China to help resolve the eurozone debt crisis, but Chinese premier Wen Jiabao, who is visiting Britain and Continental Europe, will want a share of the West’s buying power in return . 

Enter the dragon 'to save the euro’
Chinese premier Wen Jiabao realised that his economy needs struggling Europe to keep buying its goods. 
As Wen Jiabao, the Chinese premier, stepped off his plane in Birmingham on Saturday, it was difficult to avoid the feeling that the UK, and Europe, have never looked weaker in Chinese eyes.
In private, senior Chinese diplomats are now openly scornful of Britain’s economic prospects and have even asked why Mr Wen should grace such a weak trading partner with three days of his time.
Indeed, it is telling that the first stop on Mr Wen’s tour is Longbridge, the old MG Rover car factory that passed into Chinese hands in 2005. Once a byword for poor productivity, wildcat strikes and trade union power in its British Leyland and Austin Rover days, the plant is now host to China’s biggest industrial presence in the UK. Owned by Shanghai Automobile Industry Corporation, the factory designs and assembles MG cars in the UK made from car parts manufactured in China.
However, the Longbridge site remains the only major example of Sino-British co-operation, something that the Prime Minister, David Cameron, whose advisers have helped co-ordinate the visit, is determined to change.
On Mr Cameron’s visit to China last year, a target was announced for increasing bilateral UK-China trade to $100bn by 2015, from its 2010 total of $63bn and Number 10 sources said yesterday that they believe that “progress has been made” on hitting that figure.

Whether much more can be achieved depends partly on the success of the visit, which includes a formal summit in London tomorrow with a 35-strong Chinese delegation including China’s foreign minister Yang Jiechi, vice-minister for foreign affairs, Fu Ying, and minister of commerce, Chen Deming.
In formal business and personal conversations between Mr Wen and the British trade minister and former HSBC chairman Lord Green, who is accompanying the premier around Longbridge today, the UK message will be about further strengthening state and business ties with a view to achieving growth and sending that bilateral figure higher.
Meanwhile, Culture, Media and Sport Cabinet minister, Jeremy Hunt, who is accompanying Mr Wen to William Shakespeare’s birthplace of Stratford-upon-Avon, will be seeking to set up a formal structure of future summits to develop better “people” relationships between the countries with a particular focus on education, science and culture.
In London, where Mr Wen may go, apparently, for a jog in Hyde Park, the main topics for discussion will be the weighty topics of climate change (China is now one of the world’s leaders in green technology), the global economy, international security and development.
While Number 10 was refusing to comment yesterday on what else could be on the agenda, the Middle East and the economic crisis in Greece are also expected to come up for discussion.
Yesterday, at the start of his European visit in Hungary, Mr Wen gave a strong pledge of China’s support for the embattled euro, saying that China will buy Hungarian government bonds and “consistently” support the euro as Europe attempts to fight its way out of a sovereign debt crisis. “China is a long term investor in Europe’s sovereign debt market,” he said at a press conference with the Hungarian Prime Minister, Viktor Orban. “In recent years we have increased by quite a big margin our holdings of government bonds. We will consistently continue to support Europe and the euro.”
Whilst in the UK, the Chinese are determined to be aggressive with their British counterparts in private discussions during three days, demanding access to every area of UK technological expertise. China feels it now has the whip hand, after years of eyeing the West with suspicion. The West’s need for Chinese goods and investment (China has a significant current account surplus) are increasingly outweighing concerns about the way China does business or the low value of its currency. The UK knows it has to compete for business with other EU members as well as North and South America, the rest of Asia, Australia and Africa.
Now only 3pc of export licences fall foul of the European Union’s “dual-use” regulations, which forbid goods to be sent to China that could conceivably be also used for military purposes.
Instead, it is British companies themselves who have held back their technology, worried that it will simply be pirated once it has arrived in China, and concerned that the playing field for foreign companies in China is still not level.
For Chinese leaders, who are used to instructing their state-owned companies in how to conduct business, the apparently laissez-faire attitude of the British Government towards its companies, is a black mark.
Similarly, the Chinese ambassador to the UK, Liu Xiaoming, has called for China to be handed the contracts to build the UK’s new high-speed rail link. “There’s a lot of talk about getting more Chinese investment but we need more action,” he said ahead of the visit.
“Chinese businesses will compare why they should invest in the UK and not in France or Germany. We need to identify flagship projects and high-speed rail might be one of them”.
Again, there seems to be a culture gap. “They are very keen to do the rail link, and they do not really understand our tender process,” said one source close to the negotiations.
China also has its own issues to contend with. Economic analysts at Credit Suisse last week revised down their forecast of China’s GDP growth for 2012 from 8.9pc to 8.5pc, still well above European levels. They said they believed that persistent inflation, slowing growth and continued fiscal tightening are likely to play out not only in the second half of this year but also well into 2012.
They also expect the financial stress in China’s small and medium size enterprise sector to spread to other parts of the economy. If the situation does not improve soon, they expect weakened demand and rising debt.
The export outlook has dimmed recently and the analysts say they would not be surprised to see zero growth in exports in the second half of this year. Meanwhile, the report expects inflation to peak soon, but say it is likely to stay at elevated levels as services inflation takes off.
So what can we expect to be achieved from the Wen visit, the fourth by a senior Chinese leader to Europe in the past six months? There will be plenty of hand-shaking and even a new slogan: “Partners for Growth”. Officials from both sides will earnestly discuss the “mutual complementarities” of the Chinese and British economies. Some deals will be signed. The Chinese have said they will leave the UK with a bounty of $4 billion worth of deals. The UK, meanwhile, says the actual value is “several hundred million pounds”.
There has been no word on whether a key deal by Diageo, the drinks company, to buy a Chinese spirits maker, will finally go through. Despite ticking all the boxes, and intense pressure from George Osborne, the Chancellor, the deal has been stalled for years by Chinese obsfuscation which some say is tantamount to protectionism.
The portents for summits in between EU and China in recent years have been anything but auspicious, however, as Raffaello Pantucci points out in a paper for ISN Insights. He recalls that a 2008, summit was “spooked” by tensions during the Beijing Olympics and attitudes to Tibet. When the French and sitting EU President, Nicolas Sarkozy, made time to meet the Dalai Lama in December 2008, the Chinese responded by pulling the plug on that year’s summit.
2010 also proved tricky when Mr Wen – who believed that China would be granted the long-awaited Market Economy Status, conferring EU recognition that China is a market economy and providing some anti-dumping protections – was instead handed a list of demands during his Brussels visit. The meeting collapsed and a planned press conference was cancelled.
This time, the constant theme of how to resolve Europe’s debt crisis will run behind the diplomacy. China, which has invested heavily in Greek infrastructure, is likely to cast itself as a magnanimous saviour.
Making sure that “certain European nations” overcome their difficulties is “extremely important for us”, said Fu Ying, the vice foreign minister, last week.
But while the Chinese media will sell any intervention as a grand favour to impoverished Europe, it is worth remembering that Europe remains China’s biggest export market. And with the latest surveys indicating that Chinese factories have slowed to almost flat growth, China needs Europe to keep on buying its goods or face difficulties in what remains one of the key pillars of its economy. China may be the world’s fastest-growing major economy, but it still needs moribund old Europe.

Moody's Warns Of "Severe Greek Bank Cash Shortage" Due To Accelerating Deposit Flight

We have long been warning that by fat the biggest risk to the Greek banking system is not whether or not its retains its access to the ECB funding window (it will, probably even in the case of a Greek bankruptcy through covert pathways), but domestic confidence in the financial institutions as expressed by deposits, or rather, the lack thereof. Today, as part of its Weekly Credit Outlook, Moody's issued for the first time a very stark warning that should the rate of attrition in domestic deposits (and to see where these are going merely look at the daily EURCHF chart) persist, or accelerate, the results would be disastrous. To wit: "a sustained decline of deposits by more than 35% (roughly equal to the consolidated banking system’s liquid assets and ECB funding availability) within a short period of time, would cause a severe shortage of cash among banks."  Bottom line, it is unclear if even the existing deterioration in the deposit base can ever be undone due to the banks unprecedented reliance on the ECB for day to day funding, now that the bulk of domestic Greek capital is stashed away, safely, somewhere in the Swiss Alps: "With the decline in customer deposits, we expect Greek banks to find it increasingly challenging to reduce their ECB funding dependence, which is their primary objective based on their funding plans committed to the Central Bank of Greece."
From Moody's:
Our discussions with rated Greek banks last week and public information lead us to estimate that private-sector customer deposit outflows in the banking system amount to around 8% since the beginning of 2011, which is a key credit negative for Greek banks. The potential for further deposit outflows constitutes a major liquidity risk for banks as depositor sentiment is affected by negative political developments and Greece’s capability for timely repayment of its debt obligations. We expect Greek banks to find it increasingly challenging to lower their dependence on ECB repo funding as deposit balances continue to decline.
Private-sector deposits have been declining since late 2009, while outflows in May and June accelerated, as shown in the exhibit below. Greece’s heated political tensions (government reshuffling and resistance to the new austerity package) and the uncertainties regarding the Troika’s (European Union, European Central Bank, and International Monetary Fund) commitment to continue funding support to Greece are driving deposits elsewhere.
However, the roughly 8% deposit decline so far in 2011 also reflects the “cash-burn” effect of the country’s recession, with the economy expected to decline by 3.8% this year. We estimate that more than half of the year-to-date deposits decline is due to a steady draw-down of deposits to compensate for lower income by individuals and companies.
Based on recent media reports, confidence-sensitive depositors concerned about local banks’ financial health have also been transferring funds abroad and converting their deposits into gold coins, while others have been placing their cash into bank safety-boxes. The increasing liquidity risk for the banks is compounded by the volatile nature of government deposits, which are not incorporated in the exhibit above, and account for 6.7% of total deposits in April 2011 and are utilised to repay maturing government securities.
An acceleration of deposit outflows is one of the key risks for Greek banks and something that is beyond the control of either local or European authorities. A sustained decline of deposits by more than 35% (roughly equal to the consolidated banking system’s liquid assets and ECB funding availability) within a short period of time, would cause a severe shortage of cash among banks. This estimate takes into account the imminent availability of an additional €30 billion of government guarantees that can also be used for ECB funding, providing an extra buffer to any future deposit outflows, although these funds are yet to be dispersed. The availability of ECB funding through repo transactions would mitigate liquidity pressures, provided this method of funding remains available in the event of a sovereign default.
ECB funding has increased significantly since January 2010, as capital markets and the inter-bank market are still closed to Greek banks. The latest available data show that at the end of April 2011, overall ECB funding stood at €87 billion, comprising more than 21% of the banks’ total liabilities, compared to 59.4% for deposits. With the decline in customer deposits, we expect Greek banks to find it increasingly challenging to reduce their ECB funding dependence, which is their primary objective based on their funding plans committed to the Central Bank of Greece.

Federal Reserve Secrets and Lies

Dees Illustration
Greg Hunter
USA Watchdog

The Federal Reserve has been a clandestine organization since its inception.  It is not really part of the federal government; it is merely a subcontractor for monetary policy.  The Fed is basically a cartel of both U.S. and European banks.   It has pulled the levers in the economy from behind a curtain of secrecy since 1913 and has always enjoyed a certain degree of respect and admiration.  All that changed when the economy melted down in 2008.  The respect and admiration of the Federal Reserve is being shredded right along with its veil of secrecy.

The Fed allowed everyone to think the cost of controlling the 2008 financial crash was just a measly $3.3 trillion.  This giant lie was exposed after Senator Bernie Sanders of Vermont put a provision in last year’s financial reform bill that forced the Fed to come clean on $9 trillion in additional emergency loans and bailout money.  The Fed funneled cash to foreign banks and companies right along with American banks and companies.  It basically rewarded reckless and illegal behavior of  greedy Wall Street bankers that caused the mess we are in now.
Nothing is fixed and nothing has really changed.  The economy is still a wreck, and the Fed still wants its secrets.  CNBC reported last week that the Fed refuses to tell how much cash it sent to Iraq just after the invasion because it came from the “oil for food” program.

The Fed claims it has to obey “rules.”  The report said, “The Fed’s lack of disclosure is making it difficult for the inspector general to follow the paper trail of billions of dollars that went missing in the chaotic rush to finance the Iraq occupation, and to determine how much of that money was stolen.” (Click here for the CNBC story.)

Taxpayers would be on the hook for the missing cash that the Defense Department says is $6.6 billion.  This could represent the largest theft in history.  The Fed didn’t obey any “rules” when it hid $9 trillion in bailout money.  Doesn’t the Fed work for the U.S.?  Apparently not.

Read Full Article

Greece forced to auction off beaches, casinos, palaces, airports and marinas to pay off debts

Prince Philip’s family at Mon Repos, Easter 1922
A Royal palace on Corfu where the Duke of Edinburgh was born will this week emerge as the focus point of protests on the Greek islands against the sale of the national heritage to pay off the country’s debts.
Prince Philip’s birthplace centre of Greek heritage sale row

Daily Mail | Jun 26, 2011

By Fiona Govan, Corfu
Islanders are preparing to join mainland industrial workers in protests against government plans to raise 50 billion euros fron the sale of state assets.
Residents of Corfu, one of the largest of the Greek islands and a popular holiday destination, are furious at the idea of the state auctioning off its prime locations to the highest bidder.
“Greece may be on the verge of bankruptcy but surely it’s not a good idea to sell off the family silver,” said Spiros Avramiotis, a local olive oil producer, seated in a cafe on a cobbled square in the Venetian quarter of Kerkyra.
“We have to stand up and send a message to the politicians in Athens — Corfu is not for sale, not one inch of it. Full stop.”
Mon Repos Palace in Corfu, where a museum records the site as the birthplace of Prince Philip, the Duke of Edinburgh, 90 years ago, is one of several state-owned properties included the package. The firesale will beaches, casinos, palaces, airports and marinas auctioned off around Greece.
A suggestion by German MPs last year that Greece should sell off some of its islands or even the Acropolis to pay its debt infruiated Greeks. Rumours that Qatari sheikhs and Russian oligarchs were being lined up to buy on Corfu has incensed the locals.
“The fear is that places such as this will be sold off to private foreign buyers and closed off forever to the public,” explained Harry Tsoukalas, 47, a local entrepreneur. “But it belongs to the people of Corfu and should be preserved for future generations.” There are those who argue that the sites should be turned over to Corfu itself to be run as profitable concerns.
“For decades since tourism took off here we have been subsidising the rest of Greece and got nothing in return,” argues Nikos Palavitinis, 59 a property developer and head of the newly formed “Ionian League Organisation”, a movement that calls for greater autonomy for the archipelago from Athens and that plans to field candidates in the next elections.
Mons Palace is a regency style villa set in 250 acres of lush grounds atop a hill overlooking the Ionian Sea was once used a summer residence by the Greek Royal family who fled Greece after the military coup in 1967, but now contains a small neglected museum charting the long and turbulent history of the island.
But George Nikitiadis, Greece’s Deputy Minister for Culture and Tourism insisted that the government would not go to such extremes.
“We are not selling off the islands” he told the Daily Telegraph. “There isn’t enough money in the world that can pay for even our smallest island.” “But we would welcome international investors to come and invest in our treasures, to profit from our islands, it could be beneficial for them and for us.”
Prime Minister George Papandreou’s government must pass the latest round of unpopular austerity measures in a parliamentary vote on Wednesday to secure the release of the next tranche of the 110 billion rescue package from the EU-IMF.
The programme combines spending cuts and tax increases with a privatisation plan aimed at raising 50 billion over the next five years through selling off stakes in state owned industries including energy, telecoms, banks, transport and the postal service.

Bernanke Public Approval Falls To New LOW, Another Layer of the Mortgage Mess: "Zombie Notes" ....

Fed's Fisher On Ron Paul, The Stagflation Nightmare Scenario, Keynes Vs. Hayek, Bernanke's Unpopularity, Unfunded Liabilities, And The 'End The Fed Movement'

Bloomberg Interview - Dalls Fed President Richard Fisher - June 24, 2011
Outstanding interview.

A Balanced Budget? Ha! What A Crock!

I made a call earlier this year that the debt ceiling would be raised after a Contrived Drama plays out in Washington. I became even more emphatic in April when I said that you can “Count On It!” The reason for my bold assertion is because I know that our debt based monetary system MUST have a constant expansion of debt in order to function. Our money IS debt and they are on in the same. Debt needs to be increased every year in excess of the debt AND interest accrued the year before or we would face a catastrophic deflationary crash. And since bankers profit from creating debt/money and politicians gain control from spending money/debt,they will not end this game willingly. They will put on a huge act to reign in our expectations,but this head fake will only result in a higher debt ceiling and QE3.
The government must act as the spender of last resort since the Boomers are entering their elder years. Boomers have been wiped out from the stock market and housing bubbles and now they are worried about their jobs and retirement. The economy is now feeling the permanence of this demographic shift from the largest and most debt enamored generation slowing down. Businesses,large and small,are scaling back their endeavors to reflect a growing reality of a new normal. The slow down in the largest consuming nation is sending ripples around this globalized world. Countries see the economic slow down of consumer spending that makes up 70% of the economy and no longer want to invest their capital with so many problems on the horizon both here and in their own countries.
This leaves the Federal government as the spender of last resort to keep the music going. They not only have to worry about the $1.4 trillion dollar budget deficit,they have about $4 Trillion in short term debt that needs to be rolled over in the next two years. Who will spend to keep the music playing if not the spender of last resort,the Federal government? Who will buy this debt if not for the lender of last resort,the Fed? And how can the Fed buy more debt if the government has a pesky debt ceiling?
We are now playing a big game of chicken. The Fed says no more money/debt and the government says no more debt/money. Who are they fooling? They are like junkies saying they are going to sober up as they head out the door with Charlie Sheen. They desperately want more debt and money,because that is where their power comes from. They also know that if they do not get it,they will have a catastrophe on their hands. The key is fooling you to accept another shackle on your chain,because you are the one that pays for this game.
The Fed made the first head fake,by announcing the end of QE2 and that there would not be a QE3. The Fed is managing economic expectations so as not let the public panic and leave all paper assets en masse. The Fed knows that if the public ever truly saw the amount of money printing they create,people would lose faith in the currency. Can you imagine Ben Bernanke saying,“yeah,we are going to print trillions of dollars and give it to our buddies so that hey can continue gambling and this should create 20% inflation and more job losses.”If that happened,people would dump their dollars and they would cease to have any value. Gold,silver,food and fuel would sky rocket as more and more dollars chased after a limited amount of real assets. This would collapse all paper assets,including and not limited to,stocks,bonds and real estate. A collapse of that system would destroy the Elites power structure. The Elite is never going to choose that course of action. They must extend and pretend. They must inflate or die.
This CONfidence game must be played so that you believe that the dollars you hold actually have some intrinsic value. The banksters must put on a good show of dour economists spouting economic gibberish. The breathless reporters will then report that we should meet these economic terrorists demands or the world will end. This leaves the political roadblock.
AIPAC’s newest tool,Republican Eric Cantor,is proposing a Balanced Budget Amendment to the Constitution. Obama is talking tough too. Both parties are putting on a political show for their constituents with all the drama of a WWE Smackdown. In reality,the Republicrats are managing political expectations so as not let the public out of this false left-right paradigm of choosing the lesser of two evils. This act is to contain the political anger of 20%+ real unemployment and the massive spending that has resulted in NO jobs. The Republicrats do not want any real change to come to their very well scripted game. They would not want a third party to gain power that would end the wars,bring home the troops from 777+ military bases. They do not want some party to shut down most of the federal government so that states would have more power. And they certainly do not want any real change to the economic system that would end the debt based monetary system or the fractional reserve banking and usury that enables this system. No,they are going to battle hard and at the last second they will reach a “huge”bipartisan compromise for the “good”of the nation. Our heroes…

We are going to have exponential growth of debt leading to hyperinflation.
The big question remains what will come first,the crisis or the compromise? If the Elite feels that there is real resistance to the raising of the debt ceiling,they will spring a economic shock to scare the people with a little taste of deflation like they did in 2008. If they can get away with raising the debt ceiling,the Fed will announce further easing measures to keep the music going later on this summer. I personally believe that we will see a crisis no matter what happens,because that is where the Elite make their biggest gains. With all of this in mind,I encourage everyone to get ahead of the curve and get out of all paper assets now and buy real tangible assets. (Read:The Silver Bullet and the Silver Shield.)
For the record,it is not that I am opposed to a balanced budget,it is just not realistic. In order to truly have a balanced budget we would need to change everything we are,starting with what our money is. We cannot have a debt based monetary system and a balanced budget. It does not work long term since there is never enough in the system to pay the debt AND interest. For those of you that still believe we had a balanced budget during the Clinton years,look at what happened to our social security fund. Look at all of the unfunded liabilities we now face. If you wanted to work towards fiscal sanity,we could start by bringing home all of the troops and using that money here at home. Even that would not last too long,because we have too many now starting to take from the generational Ponzi scheme. Also it would result in the collapse of the Petro dollar,as we would no longer be able to muscle the world to use our money for oil.
The only way out of this mess is a total collapse.
There is no reforming the system.
It must die of its own cancerous excesses and leave a generational scar so that we never again create a system based off of debt and war.
To learn more about what you can do to prepare for this mathematically inevitable collapse,  join the Son of Liberty Academy. See how you can be aware and prepared.

Is the US in denial over its $14tn debt?

Is America in denial about the extent of its financial problems, and therefore incapable of dealing with the gravest crisis the country has ever faced?
This is a story of debt, delusion and - potentially - disaster. For America and, if you happen to think that American influence is broadly a good thing, for the world.
The debt and the delusion are both all-American: $14 trillion (£8.75tn) of debt has been amassed and there is no cogent plan to reduce it.
Chart showing size of US budget gap
The figure is impossible to comprehend: easier to focus on the fact that it grows at $40,000 (£25,000) a second. Getting out of Afghanistan will help but actually only at the margins. The problem is much bigger than any one area of expenditure.
The economist Jeffrey Sachs, director of Columbia University's Earth Institute, is no rabid fiscal conservative but on the debt he is a hawk:

Start Quote

David Frum
The debt is not a financial problem, it is a political problem”
David Frum Former speechwriter to George W Bush
"I'm worried. The debt is large. It should be brought under control. The longer we wait, the longer we suffer this kind of paralysis; the more America boxes itself into a corner and the more America's constructive leadership in the world diminishes."
The author and economist Diane Coyle agrees. And she makes the rather alarming point that the acknowledged deficit is not the whole story.
The current $14tn debt is bad enough, she argues, but the future commitments to the baby boomers, commitments for health care and for pensions, suggest that the debt burden is part of the fabric of society:
"You have promises implicit in the structure of welfare states and aging populations that mean there is an unacknowledged debt that will have to be paid for by future taxpayers, and that could double the published figures."
Richard Haass of the Council on Foreign Relations acknowledges that this structural commitment to future debt is not unique to the United States. All advanced democracies have more or less the same problem, he says, "but in the case of the States the figures are absolutely enormous".
Mr Haass, a former senior US diplomat, is leading an academic push for America's debt to be taken seriously by Americans and noticed as well by the rest of the world.
He uses the analogy of Suez and the pressure that was put on the UK by the US to withdraw from that adventure. The pressure was not, of course, military. It was economic.
Angry opponents of the health care reform during a town hall meeting Many so-called "Tea Party" supporters fiercely oppose tax raises.
Britain needed US economic help. In the future, if China chooses to flex its muscles abroad, it may not be Chinese admirals who pose the real threat, Mr Haass tells us. "Chinese bankers could do the job."
Because of course Chinese bankers, if they withdrew their support for the US economy and their willingness to finance America's spending, could have an almost overnight impact on every American life, forcing interest rates to sky high levels and torpedoing the world's largest economy.
Not everyone accepts the debt-as-disaster thesis.
David Frum is a Republican intellectual and a former speech writer to President George W Bush.
He told me the problem, and the solution, were actually rather simple: "If I tell you you have a disease that will absolutely prostrate you and it could be prevented by taking a couple of aspirin and going for a walk, well I guess the situation isn't apocalyptic is it?
"The things that America has to do to put its fiscal house in order are not anywhere near as extreme as what Europe has to do. The debt is not a financial problem, it is a political problem."
Mr Frum believes that a future agreement to cut spending - he thinks America spends much too big a proportion of its GDP on health - and raise taxes, could very quickly bring the debt problem down to the level of quotidian normality.
'Organised hypocrisy' I am not so sure. What is the root cause of America's failure to get to grips with its debt? It can be argued that the problem is not really economic or even political; it is a cultural inability to face up to hard choices, even to acknowledge that the choices are there.
I should make it clear that my reporting of the United States, in the years I was based there for the BBC, was governed by a sense that too much foreign media coverage of America is negative and jaundiced.
A dog sled team mushes down a street in the Alaskan capital, Anchorage Are Alaskans fooling themselves about the viability of their state?
The nation is staggeringly successful and gloriously attractive. But it is also deeply dysfunctional in some respects.
Take Alaska. The author and serious student of America, Anne Applebaum makes the point that, as she puts it, "Alaska is a myth!"
People who live in Alaska - and people who aspire to live in Alaska - imagine it is the last frontier, she says, "the place where rugged individuals go out and dig for oil and shoot caribou, and make money the way people did 100 years ago".
But in reality, Alaska is the most heavily subsidised state in the union. There is more social spending in Alaska than anywhere else.
To make it a place where decent lives can be lived, there is a huge transfer of money to Alaska from the US federal government which means of course from taxpayers in New York and Los Angeles and other places where less rugged folk live. Alaska is an organised hypocrisy.
Too many Americans behave like the Alaskans: they think of themselves as rugged individualists in no need of state help, but they take the money anyway in health care and pensions and all the other areas of American life where the federal government spends its cash.
The Tea Party movement talks of cuts in spending but when it comes to it, Americans always seem to be talking about cuts in spending that affect someone else, not them - and taxes that are levied on others too.


Analysis is on BBC Radio 4 on Monday, 27 June 2011 at 2030 BST and Sunday 3 July at 2130 BST
And nobody talks about raising taxes. Jeffrey Sachs has a theory about why this is.
America's two main political parties are so desperate to raise money for the nation's constant elections - remember the House of Representatives is elected every two years - that they can do nothing that upsets wealthy people and wealthy companies.
So they cannot touch taxes.
In all honesty, I am torn about the conclusions to be drawn. I find it difficult to believe that a nation historically so nimble and clever and open could succumb to disaster in this way.
But America, as well as being a place of hard work and ingenuity, is also no stranger to eating competitions in which gluttony is celebrated, and wilful ignorance, for instance regarding (as many Americans do) evolution as controversial.
The debt crisis is a fascinating crisis because it is about so much more than money. It is a test of a culture.
It is about waking up, as the Americans say, and smelling the coffee. And - I am thinking Texas here - saddling up too, and riding out with purpose.
Analysis is broadcast on BBC Radio 4 on Monday 27 June at 2030 BST and repeated on Sunday 3 July at 2130 BST. Listen again via the BBC iPlayer or download the podcast.

Banks are worried as Wall Street crumbles

Watch this video.....http://revolutionarypolitics.tv/video/viewVideo.php?video_id=15480

Nail That Coffin Shut!


How many nails does it require to whack down forever the coffin lid on European social democracy? Lenin, outraged in 1914 at the sight of Social Democratic parties across Europe rallying behind their national flags and voting war credits to unleash the horrors of the First World War, would have been caustically unsurprised just over a century later at the current spectacle in Athens.

Here, last Wednesday, Greek Prime Minister George Papandreou won a no-confidence vote for what Michael Hudson describes in his article on this site today as a program for national suicide, which can only be thwarted by a national referendum. All 155 deputies of the ruling social democratic PASOK party voted for the government, the 143 MPs from all other parties voted against it. Two independent deputies were absent from the vote.

The confidence vote was to ram through an austerity package, amounting to over €78 billion, against the furious protests and resistance of the Greek people. Around €28 billion of the total is to be raised through spending cuts and increased revenue, while €50 billion will be raised through the privatization of state enterprises.

It really is a bit rich to hear preachments from Germany about the importance of paying debts. Ninety per cent of all Germans oppose a bailout for Greece on the grounds of the latter's aversion to paying reparations for its supposed profligacy.

Never has a country flourished more mightily than Germany from flouting reparations and debts.

Albrecht Ritschl, a professor at the London School of Economics, points out in an interview in Der Spiegel that Germany welshed on loans from the US to pay the reparations levied by the Allies after World War One. After Wold War 2, a divided German was excused reparations to countries, such as Greece, it had invaded. Under a 1953 treaty, the issue of reparations was on the table after reunification in 1990. But Ritschl says: "With the exception of compensation paid out to forced laborers, Germany did not pay any reparations after 1990 - and neither did it pay off the loans and occupation costs it pressed out of the countries it had occupied during World War II. Not to the Greeks, either." Ritschl reckons Germany was "the biggest debt transgressor of the 20th century."

DSK: Is the Fix In?

Let's move now to the case of Dominique Strauss-Kahn. Lenin would have given yet another caustic laugh at the sight of Strauss-Kahn calculating that the post of managing director of the IMF – bludgeon of the major capitalist powers to extort money from the poorer nations – as a fine qualification to be the presidential candidate of the French social democrats. To assist in this cause, Mark Hosenball revealed recently for Reuters that he retained TD International, a Washington DC consulting firm run by former CIA officers and U.S. diplomats, to promote his quest for the IMF post. Lately Strauss-Kahn's legal team has informally sought public relations advice from TD International.

Now for the present status of the case. It's been set up as a battle of moralities, in the simplest terms: the poor immigrant black African, Nafissato Diallo, versus the rich, white Dominique Strauss-Kahn, with the principals and their lawyers going mano a mano in a trial presently scheduled to begin on July 18.

This side of the Atlantic, Americans have been thumping themselves on the back for the supposedly robust ethos of one-law-for-the-rich-and-poor-alike that has seen the Manhattan District Attorney Cyrus Vance Jr press charges of rape and kindred sexual offences against the powerful former managing director of the IMF. A New York judge set stringent and costly conditions of bail for the accused. If convicted he faces a prison term.

Meanwhile some French whine, without any convincing evidence, that DSK is the victim of conspiracy. Others say this is a wake-up call. Emboldened feminists roll out charges that rich French men regularly get away with serious unwanted sexual onslaughts, dint of money, power, cultural attitudes.

Of course money counts in the justice system, on both sides of the Atlantic. Probably more rich people end up in prison in the US than in France, but most rich crooks don't. They don't even get charged. Ask the bankers, bonds rating agencies and hedge fund operators who bankrupted America with egregious fraud in 2008.

All in all it's still surprising that the alleged assault at a fancy hotel wasn't promptly covered up, as generally happens, whether the perp is French, American, Arab or indeed African. The difference may have been a new police investigator, a new Manhattan DA, a new union rep, video cameras in the hallway, or some variable making it impossible for the hotel to hush it up.

DSK is married to a very rich woman, Anne Sinclair, granddaughter of Paul Rosenberg, Picasso's principal art dealer through the late 1920s and 1930s. Loyal to her man, vocally complaisant about his sexual activities during their marriage, she seems set to spend what it takes.

The accuser, Nafissato Diallo, is poor, and comes from a poor family in Guinea. Her first lawyer - Jeffrey Shapiro, rather mysteriously described in the immediate aftermath of DSK's arrest on charges of a sexual onslaught on the hotel house-keeper, as a "family friend" - is now off the case. So is the well known civil rights lawyer, Norman Siegel. Neither will say why. As

CounterPunch's Pam Martens reported here last Monday, "Siegel, a stalwart defender of the First Amendment, was uncharacteristically sparse in his explanation by phone: 'I can only say I am not representing her'."
Enter Harvard Law Professor Alan Dershowitz, who recently laid out the arguments for a deal with some verve in Newsweek:

"...my sense is that the victim would like a big payday. Why does she want to make a deal now? Why not wait until the conviction, and then sue? Because the defendant doesn't have much money.

"All the money is his wife's money. And if you win a suit - let's assume she wins a $10 million judgment against him. She's not going to collect it. He'll go bankrupt. Whereas if she settles the case, the wife pays up.

"So the difference is between getting, say, a million right now from the wife, or $10 million from the husband which the lawyer has to spend the rest of his life chasing."

A reporter from Le Figaro asked Dershowitz "how to seal such an agreement without obstructing justice", and the professor responded:

"This is possible through a parent who does not fall under the jurisdiction of New York. The family members of DSK in Paris, for example, do not. If they try to reach an agreement directly with the New York lawyer, they can be charged with obstruction. But they can negotiate directly with the family of the complainant outside the State of New York or Guinea.

"It is an extremely delicate dance to lead... the prosecutor cannot prevent the family from making an agreement. All he can do is threaten to open an investigation for obstruction of justice. He can say: 'If ever I hear of an explicit agreement or implicit exchange of money in order to buy the silence of the victim, you will go to jail.' Then each risk up to five years in prison.
"But it is still difficult for the prosecutor to stop the agreement... the woman's lawyer may want to see justice done, but ultimately, money is more important."

Dershowitz argued that when the accuser's lawyer said he was cooperating with the prosecutor, "it was just a message to the defense that said he expected an offer".

To clarify the issues in Newsweek Dershowitz reached for a helpful parallel:

"The problem is the high-wire dance is going to be very hard to orchestrate here. Because nobody can say: 'I will give you a million dollars, $2 million, $3 million, and you have to not testify.' That's obstruction of justice, that's a crime. So the request essentially has to come from the victim. Did you ever hear of the concept of the Shabbos goy? The Shabbos goy is when an Orthodox Jew wants the light to be on, on a Saturday, and he sees a Gentile. He can't ask the Gentile to turn on the light, because that would be a sin. But he can say to the Gentile, 'Boy, it's really dark here.' And then the Gentile has to come up with the idea, 'Hmmm, it would be nice if I turned on the light.' The defense lawyer, because he's an Orthodox Jew, understands that he needs a Shabbos goy here. He needs somebody who will understand that he can't ask for something that he wants. And what he wants is for this witness to go away."

(This led the Mostly Kosher website to headline the Dershowitz quote "Worst use of a Jewish metaphor" and to ask plaintively, "Couldn't we find a non Jewish metaphor to suggest doing something illegal?")

So, who has Ms. Diallo now got representing her? None other than Thompson Wigdor, a New York law firm that, in Martens's words, "represents the management of large multinational companies against their employees while simultaneously representing the lone employee fighting for justice against, uh, large multinational companies - a David v. Goliath firm or Goliath v. David firm, depending on the particular day's press release."

Martens emphasizes that these are aggressive, well-credentialed lawyers who have scored big wins. She knows what she's talking about. Before retirement she worked for years on Wall Street and saw close-up how the big firms used legal muscle to crush efforts to bring them to book for sexual discrimination and harassment.

In substantive terms, the prime obstruction to a deal is Cyrus Vance Jr, son of a former secretary of state and most definitely a member of the WASP legal elite. He's a favorite of upper-tier liberals. Endorsing his bid to become DA were such figures as Gloria Steinem, Robert F. Kennedy Jr., Barry Scheck of the Innocence Project, Caroline Kennedy and former mayor David Dinkins.
Vance will certainly be reluctant to have his reputation tarnished in a high profile case by rolling over in some deal slathered with Mme Sinclair's cash and clearly designed to outflank the implacable march of justice and the eagerness of progressives to see DSK locked away.

We can assume that the accuser is being buffeted by advocates of possibly opposing strategies. Of course her formal attorney, Kenneth Thompson of Thompson Wigdor, has her ear. According to Martens, "there is no evidence that her colleagues at the New York Hotel and Motel Trades Council union are able to stay in touch with her and provide her a support network."

The New York Times has reported that her brothers in Guinea have been unable to reach her on her cell phone. We can assume that the DA's office knows where she is, and is therefore in a position to make her aware of the legal stakes and issues involved.

There is a recent interesting semi-parallel. In February, the US government was able to spring the CIA agent Raymond Davis from a Lahore jail, after he had been charged with shooting to death two young Pakistanis on January 27 who, he claimed, were trying to kill him.

Informed sources in Pakistan told CounterPunch's Shauquat Qadir that a price tag of about $1.5 million per family was been paid, with US citizenship for a dozen or more members of each family, with job guarantees for those of age and education opportunities guaranteed for children - more than they could ever dream of and sufficiently tempting for them to pardon Davis.
Money in sufficient quantity rarely loses its persuasive powers.

Galleano and Shakespeare … and the Earl of Oxford

Meanwhile in Paris we have had the sad spectacle of former Dior designer John Galliano on trial, dumped by Dior, for a drunken anti-Semitic diatribe to a couple in a café in the Marais in Paris, yet another ludicrous episode in the ongoing repression of free speech. Charge him with being drunk and disorderly maybe, but for verbal ethnic and historical slurs? If DSK makes it back to Paris in the foreseeable future and some says to him in a café, "You dirty sexual pervert" no crime will have been committed. "You dirty Jewish sexual pervert" brings the prospect of heavy fines and even jail time for the perp.
Looking at the photo of poor Galleano, penitent and pathetic, I was struck by a certain resemblance.

I sent these to CounterPuncher Carl Estabrook, a passionate advocate of Edward de Vere, 17th earl of Oxford, as the true author of the Shakespeare canon. Carl promptly wrote back,


You'll note that Galliano looks more like Edward de Vere than he resembles the (purposely laughable) Droeshout portrait of "Shake-spear" (cf. http://shakespearebyanothername.com/).

Those who doubt that the Stratford man was the author of poems & plays are supposed to be terrible conspiracists, according to a recent, awful book (James S. Shapiro, "Contested Will"). So maybe Galliano's troubles are a deep-cover publicity stunt for Roland Emmerich's film "Anonymous" (with Vanessa Redgrave and David Thewlis), due this autumn: look at Rhys Ifans as de Vere ...

Regards, CGE"

These Oxfordians are never at a loss for words, which is just as well.

In Our Latest Newsletter

How the US Government can now lie in court 
and won't be charged with perjury. Sally Eberhardt dissects Federal Judge Cormac Carney's sinister recent decision. PLUS Asset management: Are breast implants and liposuction a better bet than Prozac for jobless women? Mona Chollet explains why in this economic depression cosmetic surgery keeps on booming. PLUS: Jeffrey St Clair and Joshua Frank excavate the New War on Environmentalism.


Annual cost of air conditioning for US war soldiers greater than NASA budget

Excerpt below, article here. Following that is an economics argument from the Marine Corps' most decorated general on how to end US wars of choice, wars for empire (full article here to explain, document, and prove current US wars are Orwellian unlawful).
The amount the U.S. military spends annually on air conditioning in Iraq and Afghanistan: $20.2 billion.
That's more than NASA's budget.
"When you consider the cost to deliver the fuel to some of the most isolated places in the world — escorting, command and control, medevac support — when you throw all that infrastructure in, we're talking over $20 billion," Steven Anderson tells weekends on All Things Considered guest host Rachel Martin. Anderson is a retired brigadier general who served as Gen. David Patreaus' chief logistician in Iraq.
General Smedley Butler (and here) was the most honored man in Marine Corps history upon his retirement after 34 years of service around the world, and privy to top secret war planning conversations. He wrote and publicly spoke that the purpose of US wars is never for democracy or national defense, but for political and economic control for millions and billions in profits for America’s leading “bankers, industrialists, and speculators.” General Butler asserted that all US wars is a “racket:” a deception whereby blood money from American taxpayers to “insiders” is always disguised as noble and necessary ventures. Americans are propagandized into paying again and again, and succeeding generations of loyal and gullible men unwittingly serve as the muscle for oligarchic profits. His recommendation to end war was to end its profit motive:
“Let the officers and the directors and the high-powered executives of our armament factories and our munitions makers and our shipbuilders and our airplane builders and the manufacturers of all the other things that provide profit in war time as well as the bankers and the speculators, be conscripted – to get $30 a month, the same wage as the lads in the trenches get. 
Let the workers in these plants get the same wages – all the workers, all presidents, all executives, all directors, all managers, all bankers – yes, and all generals and all admirals and all officers and all politicians and all government office holders – everyone in the nation be restricted to a total monthly income not to exceed that paid to the soldier in the trenches!
 …Give capital and industry and labor thirty days to think it over and you will find, by that time, there will be no war. That will smash the war racket – that and nothing else.” 

It’s important to distinguish General Butler’s expert testimony concerning a subjective analysis of motive from the objective fact of current unlawful US wars proved by the crystal-clear letter of the laws. The strength of my proposal for Revolution to end unlawful wars is based upon the independently verifiable evidence that is as “emperor has no clothes” obvious as a pitch ten feet over the batter’s head is nowhere close to a strike, and as obvious as Jim Crow laws being in violation of the 14th Amendment to the US Constitution.
You’ve read the laws of war to verify this by now, yes?
Full article here.

CNN lies about poll (used a poll with only 54 votes!)