fuTuRe sHOcK

John Hoefle
We are now witnessing the death of that entire system, as banks, hedge funds, and others, frantically attempt to save themselves from the ramifications of that 2007 event. The kings of Wall Street, the giant investment banks, are all gone, either through failure, merger, or conversion to bank holding companies; and the collapse is spreading through the rest of the system, the hedge funds, private equity funds, the money market funds, et al. The system itself is being liquidated, a huge pyramid scheme which has failed. The financial instruments that were once treated as if they had great value, have been revealed to be worthless. The holders of these worthless instruments, however, are not going quietly to meet their fate. Instead, they have demanded, and received, huge bailouts from the governments, and the people. It is the largest transfer of wealth in history, the biggest swindle ever–but still they want more.

The British are leading the charge, calling for the central banks to “print” as much money as required to cover the losses. They know full well that such actions would create a hyperinflationary explosion, but they don’t care. They want their money, and they want it now. The good folks at HSBC, the bank that says we need a new Hjalmar Schacht, is openly demanding that the presses be fired up, and that the Fed begin buying corporate bonds, in addition to mortgage-backed and asset-backed securities. The London Economist has demanded an end to the supposed “cautious incrementalism” of the bailout, as if $8 trillion in one year was not wildly insane already. In the United States, the Democrats are discussing a new stimulus in the $500 billion range, with some economists calling for $1 trillion or more.

Federal Reserve chairman Ben Bernanke, long a believer in the printing press approach, gave a speech Nov. 21, 2002, to the National Economists Club in Washington, in which he noted that “the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost,” and can always defeat deflation by creating money. “Injections of money,” he said, “will ultimately always reverse a deflation.” Under the Emergency Economic Stabilization Act, Treasury has created a “Systemically Significant Failing Institutions Program,” in the hopes of stopping the failure of any single institution from triggering a chain reaction collapse. At this point, the Fed and the Treasury are keeping parts of the system functioning on life-support, but they are losing ground, as the damage spreads far beyond their ability to contain it. More…

Bloomberg filed a lawsuit under the Freedom of Information Act on November 7, requesting details from the USFed on Congressional TARP fund confiscation. The Freedom of Information Act obliges federal agencies to make government documents available to the press and public. The USFed operates as a contractor agency, but possibly with as much scrutiny permitted as Halliburton on basic fraud. The Bloomberg lawsuit is Bloomberg LP vs Board of Governors of the Federal Reserve System, 08-CV-9595, US District Court, Southern District of New York (Manhattan).

Incredibly, with shock to many, the USFed will continue to withhold internal memos as well as information about trade secrets and commercial information. Are you kidding me? TRADE SECRETS BY AN AGENCY HIRED TO MANAGE THE DOLLAR AND TREASURYS??? That is quantum levels more preposterous than defying the USCongress when it pursued accounting of the gold status owned by the nation. Anger has erupted within the USCongress. The USFed appears to be hiding information so as to shield its own corruption, as its public response cites ’substantial multiple harms’ being avoided. Harm to whom? Is this Nixon all over again citing ‘Executive Privilege’ to conceal crimes and misdemeanors? The USFed is scared and on the defensive. The Board usually does not go into such detail about its position. Lee Levine is from the law firm Levine Sullivan Koch & Schulz. He said, “This is uncharted territory. The Freedom of Information Act was not built to anticipate this situation. That is evident from the way the Fed tried to shoehorn their argument into the trade secrets exemption.”

This case is worth watching, but strangely receives very little attention. It could be a landmark case that holds together the nation’s financial purse strings. My conjecture is that the USFed is intent on hiding numerous transactions that hide the tracks of deep Wall Street corruption in bond redemption, with powerful motive to avert international lawsuits, and a pervasive desire to prevent grassroots solutions since mortgage bond securities have very little legal standing in legitimacy. WE ARE WATCHING THE DENOUEMENT OF THE BIGGEST BOND FRAUD IN MODERN HISTORY. USFed Chairman Ben Bernanke and Treasury Secy Henry Paulson said in September they would meet demands for transparency in a $700 billion bailout of the banking system. They lied. Both the antagonists and the USFed might soon realize that a battle has been waged, one against a crime syndicate.

Can you say Supreme Court? Could a test come of the national sovereignty versus crime syndicates? If the case reaches the highest court, it will likely be stuck on its front steps. IMPLICATIONS TO STABILITY AND SECURITY OF MONEY ITSELF INVITES A HUGE HIDDEN GOLD MOTIVE. A CANCER IS GROWING UNDER THE USDOLLAR AND USTREASURY BONDS, WHOSE ALTERNATIVE IS CLEARLY GOLD. More…

Steve Lendman
Worse Than the Great Depression?
According to The New York Times, “leaders of 20 countries agreed Saturday to work together to revive their economies, but they put off thornier decisions about how to overhaul financial regulations until next year (when it plans) its next meeting for April 30, 101 days after (Obama) is sworn into office.” Whatever is finally agreed on, this much for certain is clear. Unchanged Washington/Wall Street dominance is planned along with putting the IMF in charge of global “neoliberalizing” with all its destructive fallout.

A Long-Term View on the Depression:

It’s from noted sociologist, social scientist and world-systems analyst Immanuel Wallerstein, now a Senior Research Scholar at Yale where he covers world-systems in three ways:

– the historical development of the modern world-system;

– the contemporary crisis of modern world-economy capitalism; and

– structures and knowledge.

He’s authored numerous books and writes regular commentaries on major world and national topics. A recent October 15 one is titled “The Depression: A Long-Term View.” It’s started in his view. We’re “at the beginning of a full-blown worldwide depression with extensive unemployment almost everywhere. It may take the form of a classic nominal deflation (or less likely) a runaway inflation, which is simply another way in which values deflate.” What caused it, he asks? Derivatives? Subprime mortgages? Oil speculators? It’s a “blame game of no real importance.”

Understanding it calls for far more revealing factors, such as “medium-term cyclical swings (and) long-term structural trends.” Over several hundred years at least, he describes two major ones. “One is the so-called Kondratieff cycles that historically” lasted 50 - 60 years. The other is called “hegemonic cycles” that are much fewer in number but last far longer.

America contended for hegemony as early as 1873, achieved it fully in 1945, and has been declining since the 1970s. “George W. Bush’s follies have transformed a slow decline into a precipitate one. And as of now, we are past any semblance of US hegemony. We have entered, as normally happens, a multipolar world. The United States remains a strong power, perhaps still the strongest, but it will continue to decline relative to other powers in the decades to come.” Nothing can change this.

Kondratieff cycles are timed differently. Its last B-phase ended in 1945, followed by “the strongest A-phase upturn in the history of the modern world-system.” It peaked around 1967 - 73, and headed down. “This B-phase has gone on much longer than previous (ones) and we are still in it.”

Its characteristics are as follows:

– “profit rates from productive activities go down, especially in those types of production that have been most profitable;”

– it directs capitalists to financialization and speculation for higher returns; and

– “productive activities, in order not to become too unprofitable, tend to move from core zones (like America) to (lower cost) parts of the world-system.”

Speculative bubbles are profitable while inflating, but they always burst. “If one asks why this Kondratieff B-phase has lasted so long, it is because the powers that be (the Treasury, Fed, IMF, and western European and Japanese collaborators) have intervened in the market regularly and importantly” to shore it up at times of economic disruptions - 1987, the 1989 S & L crisis, 1997 Asian contagion, 1998 Long Term Capital Management debacle, the 2001 - 2002 corporate scandal period, and more than ever today with big unanswered questions whether this time it will work.

It doesn’t matter because we’ve reached the limits of what can be done - “as Henry Paulson and Ben Bernanke are learning to their chagrin and probably amazement. This time, it will not be so easy, probably impossible, to avert the worst.” The present system won’t survive. A new one will replace it. It will not be capitalism as we know it, but may be far worse or far better (more democratic and egalitarian). Determining the outcome is “the major worldwide political struggle of our times.” More

Larry Edelson
The G-20’s Secret Debt Solution
The G-20’s motive for a new monetary system: It’s driven by and based upon this very simple proposition. If we can’t print money fast enough to fend off another deflationary Great Depression, then let’s change the value of the money. I call it “The G-20’s Secret Debt Solution”. It would be a strategy designed to ease the burden of ALL debts — by simultaneously devaluing ALL currencies and re-inflating ALL asset prices. That’s what central banks and governments around the world are going to start talking about this weekend — a new financial order that includes new monetary units that helps to wipe clean the world’s debt ledgers. It won’t be an easy deal to broker, since the U.S. is the world’s largest debtor. But remember: Debts are now going bad all over the world. So everyone would benefit.

Fed Chairman Ben Bernanke, Treasury Secretary Paulson, President Bush, President-elect Obama, former Fed Chairman Paul Volcker, Warren Buffett, and central bankers and politicians all over the world agree a new monetary system is needed. So they’ll start hashing out the details to get the new financial architecture deployed as quickly as possible. If you think I’m crazy or propagating some kind of conspiracy theory, then consider the historical precedent: To end the Great Depression in 1933 Franklin Roosevelt devalued the dollar via Executive Order #6102, confiscating gold and raising its price 69.3%, effectively kick starting asset reflation. Only this time, it won’t be just the U.S. that devalues its currency. The world is too interconnected. Instead, the world’s leading countries will propose a simultaneous and universal currency devaluation. This time, they will NOT confiscate gold. There would be riots all over the globe if they even mentioned the “C” word. But they don’t have to confiscate gold. Here’s one scenario — They cease all gold sales and instead, raise the current official central bank price of gold from its booked value of $42.22 an ounce [???] — to a price that monetizes a large enough portion of the world’s outstanding debts.

That way, just like in 1933, the debts become a fraction of re-inflated asset prices (led higher by the gold price). And this time, instead of staying with the dollar as a reserve currency, the G-20 issues three new monetary units of exchange, each with equal reserve status. The three currencies will essentially be a new dollar, new euro, and a new pan-Asian currency. (The Chinese yuan may survive as a fourth currency, but it will be linked to a basket of the three new currencies.) More

Also See: Jim Willie - New world currency coming soon

Marc Faber: US will go bankrupt

“Marc Faber was born in Zurich and schooled in Geneva, Switzerland. He studied Economics at the University of Zurich and, at the age of 24, obtained a Ph.D. in Economics magna cum laude. Faber resides in Thailand and is best known for the Gloom Boom Doom newsletter…Faber is famous for advising his clients to get out of the stock market one week before the October 1987 crash.”

Marc Faber said US long term treasury bonds should have “junk” ratings and US government will go bankrupt; it’s only a matter of time.

Max Keiser - Special Liquidity Schemes, Gold and the Dollar

Note: 5 second delay before Video begins
Max Keiser on Aljazeera English news. “I’m looking for gold to go to $2000 an ounce because people are sick and tired of the lies from Hank Paulson, from Ben Bernanke, from all the central bankers, from Goldman Sachs, from JP Morgan, lies, more lies, nothing but lies.”

Patrick Barron
Forget all the pronouncements from Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke. Their attempts to explain how monetary expansion in the form of a government bailout of Fannie and Freddie will cure the subprime lending crisis is as scientific as a witchdoctor’s explanation of how his chants and powders will chase away demons. The government is following the same monetary policies it pursued to such horrific ends during the Great Depression of the 1930s. At that time of falling prices in general, not just housing prices as now, the government passed the Wagner Act, granting special privileges to labor unions which forced major unionized industries to negotiate with them. This had the effect of raising the cost of labor in the face of a general fall in the price level. Like any other overpriced good, the demand for labor shrank dramatically. But rather than rescind the Wagner Act, which was one of the major causes of massive unemployment, British economist John Maynard Keynes convinced governments around the world to inflate their currencies. This had the effect over a very long period of time of causing all other prices to rise, as the market attempted to restore the relationship of the cost of labor to all other prices within the market. Overpriced labor’s purchasing power was gradually sapped away. Wages weren’t reduced, but all other prices rose, which had the same effect.

That will be the result of the present administration’s monetary stimulus efforts. It will not allow housing prices to fall, so that the market can re-establish the proper relationship between the cost of housing and all other goods in the market. That would cause pain in the politically connected businesses that benefited for so many years from the boom in real estate. Instead it will create the conditions for rising prices generally over the next several years. Already this process has started, with energy and food prices leading the way. Austrian school economists know that the price level is not a pond that rises and falls in a uniform manner. Excess money enters the market at certain points, causing prices to rise in certain industries and certain parts of the country. Plus, all other factors affecting an economy are still at work. But over time all prices will be higher than they would have been in an uninhibited market. Then we will have become inured to high priced housing because the prices of everything else will be much higher too. More

Paul Mladjenovic
Let’s first break this question down into the two types of inflation; monetary inflation and price inflation. Price inflation is the general rise in prices of goods and services. This is the one everyone talks about. You here the complaint “Gee…how expensive “fill in the blank” has gotten!” It is important to point out that price inflation is not a problem; it is a symptom. This is a very crucial difference. If price inflation is a symptom, then what is the problem? The problem is monetary inflation. “Monetary inflation” is a fancy phrase meaning the creation (really “excessive” creation) of a particular currency. In our case, it is the excessive creation of dollars. Those dollars can be infused into the economy either through the actual printing (or electronic creation) of dollars or through credit ultimately issued by a central bank. In any case, monetary inflation is the cause of price inflation.

When you hear the Federal Reserve chairman, Ben Bernanke talking about “price inflation” and “keeping a close eye on what happens with rising prices” and how ”rising prices are inflationary” and so forth, it has to make a logical and discerning person scratch his/her head. It is much like a prolific arsonist wondering out loud about suspicious fires. Find out for yourself; here’s a research tip: Read (or listen to) Mr. Bernanke’s recent speeches. He will talk very much about price inflation but little (anything?) about monetary inflation. The last speech I heard, he made inflation almost sound like the weather as if it “just happened” and it was out there floating around in the atmosphere. At congressional hearings, you’ll even hear him say things like “the Fed will do everything it can to contain inflation”. At what point will those politicians just say “stop printing so much damn money and price inflation will come down!” It would be like the authorities saying to the arsonist “If you would just stop setting fires there would be less stuff burning down!” Get the picture? More

Interview with Dennis Kucinich regarding the Federal Reserve and Impeachment. Kucinich explains his introduction of Articles of Impeachment is in no way symbolic. “George Bush has committed offenses that should cause him to be impeached and removed from office. On the Federal Reserve: “The Federal Reserve is not federal and whatever they have in reserve doesn’t belong to the people.The Federal Reserve is there to protect the position of the banks.”

Gabor Steingart in Washington
Humiliation for Mr. Dollar: Ben Bernanke, the chairman of the United States Federal Reserve Bank, faces a general investigation by the International Monetary Fund. Just one more example of the Fed losing its power. The United States Federal Reserve Bank, or Fed, seems as much a part of America as Coca-Cola or Pizza Hut. But at least one difference has become apparent in recent days. While the pizza chain and soft-drink maker are likely to expand their scope of influence in the age of globalization, the US central bank is finding that its power is shrinking.

No Fed chief in US history has been forced to submit to the kind of humiliation that Ben Bernanke is facing. This is partly down to circumstances. Inflation is going up and up, and this year’s average will likely top 4 percent. But this time Mr. Dollar is also Mr. Powerless. He can raise interest rates in the fall, or he can pray, which would probably be the better choice. At least prayer would not prevent the US economy from growing, a highly likely outcome if interest rates go up.

After years of growth, the United States is now on the brink of a recession, one that is more likely to be deepened than softened by a tight money policy. Investments will automatically become more expensive, consumer spending will be curbed and economic growth will slow down, immediately affecting unemployment figures and wages. More