Sunday, February 24, 2008

Protests and inspiration around the world, Kosovo is the issue that will decide which side of Bush's new world order you come down on!

I have talked for years and often that Bush practiced the politics of division to accomplish what he wants. These Rove taught 3D Politics (divisive, deceptive, deceitful, Politics) are used daily on us to create his new societal order and are now being employed by those running for office today. Underhanded Politics are the new norm. Lies are the new truth! bush has created division here and around the world to be used to get what he wants! He uses it routinely in the middle east to create what he thinks will be his new middle east order. He is using it around the entire world creating division wherever he can get a toe hold.

* Kosovo is the straw that broke the camels back. Kosovo's declaration of independence backed by some but vowed illegal by others including Russia who has declared a possibility of war over the issue because Bush is upsetting world order. What they do not understand is that is bush's whole idea! Earlier Palestine said that a Kosovo style Independence with a neutral police force might be the way for them to go. I don't know! I do not see peace there or anywhere on Bush's terms. All of this will only lead to a total world breakdown Bush has been working on since 2003. Following is the latest!

The first week of Kosovan independence as brought nothing but increased division around the world and promises to step it up that here too will not be denied. Kosovska Mitrovica in a seventh day of demonstrations denouncing Kosovo's independence. They listened to a Belgrade rock band play on a stage decorated with a poster of Russian President Vladimir Putin and a sign reading: "Russia Help!" Moscow supports Serbia's resistance and has declared Kosovo's independence illegal.

Serbs also organized anti-independence rallies Sunday in other European capitals. In the Austrian capital of Vienna, about 5,000 protesters waved pro-Serbia banners, and a few burned, spit or stomped on American flags before some demonstrators fanned out across the city, throwing bottles as riot police pursued them. In Geneva, 3,000 people massed outside U.N. offices, and in Brussels, Belgium, several hundred Serbs gathered outside EU offices chanting "Kosovo is Serbia" and waving placards that read "Ask any lawyer" and "Don't legalize it."

Sunday's protest in Mitrovica was peaceful, and the smallest of daily rallies held there for a week _ a stark difference from the rioting that broke out Thursday in Belgrade, where demonstrators stormed the U.S. Embassy and set part of it ablaze. The U.S. ambassador to Serbia warned leaders in Belgrade to prevent future violence against diplomatic missions. "I'm very angry at what happened. It had better not happen again," Ambassador Cameron Munter told The Associated Press in an interview. First week of Kosovan independence marked with world protests
Is it not the turn of Punjab (Khalistan) to declare its' independence next? Kosovo, a province of the Republic of Serbia, has unilaterally declared its’ independence on February 17Is it not the turn of Punjab (Khalistan) to unilaterally declare its’ independence next? Sikhs take inspiration from Kosovo
Protests are planned in Canada: Organizers of a pair of weekend demonstrations against Kosovo's declaration of independence say they are working to make sure the rallies stay peaceful after a chaotic scene erupting at a protest in Belgrade on Thursday has police prepared for violence in Toronto and Vancouver. In the Toronto protest, organized by five Canadian-Serbian university students and scheduled for 5 p.m. today, up to 10,000 people are expected to gather across the street from the U.S. Consulate on University Avenue to urge the Canadian government not to recognize Kosovo's declaration, according to organizer Jovan Filipovic, a student at Ryerson University. “We're saying, ‘Canadians, we cannot allow this to happen,' ” he said. “If anything, it will bring awareness.”

The west is being warned to tread carefully on Kosovo: Kosovo's declaration of independence from Serbia less than a week ago has prompted strong reactions around the world. Serbia signaled it will withdraw its ambassador from any country that recognizes the new state. Many of Canada's most important allies – including the United States, the United Kingdom and France – have already recognized Kosovo's independence. However, Ottawa has been silent on the issue so far. Canadiens warn over Kosovo
Meanwhile around the world you have protests and recognition depending on your own stability and selfish interest! First in line for recognition: Afghanistan was among the first to recognize Kosovo's independence, leaping at the chance to acknowledge a majority Muslim nation in Europe. Some in the war-ravaged Central Asian country said the decision was about maintaining strong relations with Washington. George Tsai of Taipei's Chinese Cultural University said the Taiwanese move to recognize Kosovo was an attempt to score points against Beijing, a staunch supporter of Serbia.

Wait and see: Many Arab nations, such as Syria and Egypt, have declined to commit, and no Arab country has recognized Kosovo. "Our Arab region in particular is full of groups of many religions, faiths, identities and nationalities," an editorial in Egyptian paper Al-Akhbar said. "What if Iraq should split into four or five countries, and Lebanon into six regions?" Similar fears have held back many nations in Africa, where only Senegal has recognized Kosovo's independence.

Haven't, and won't: The main reason for opposition - in Spain, Slovakia and elsewhere - appears to be homegrown. Slovakia, part of Czechoslovakia until 1993, has a sizable Hungarian minority and fears encouraging ethnic tensions at home. Spain has dealt for decades with the violent Basque separatist group ETA, which wants to carve out a homeland between Spain and France. Other Spanish regions - most notably economic powerhouse Catalonia - have pressed for more autonomy in moves some say could lead to the country's eventual breakup. as you know, amidst warnings from Washington to tone it down Russia has threatened to use brute military force if it had to, to stop this. Chaos as world ponders Kosovo

* Bush has the Division he needs! It kills me Bush seems to purposely seek out the the most tenuous unstable parts of the world create division and say he must have his way. What the hell is wrong with this idiot? You have to believe division and creating his Forever War is his ulterior motive. No one can be this stupid! I reiterate: Even as I watch Bush ignore all common sense in his drive to totally control us and the entire World I never seem to be blown away by Bush's in your face ignorance of world order and what anyone thinks as he pursues his creation of a new societal, middle east, and World (dis)order! Bush will not quit as he has the entire world in turmoil and it is just beginning. He will soon have more than enough cause to Declare martial order to control us and fight his future wars! We must come together if we are to save our country. It is up to the world now as to what Bush's purposely created division will do to the world and her future!

James Joiner
Gardner Ma


betmo said...

the neo cons call it 'controlled chaos'

they think that they are in control of the chaos because they are controlling the american media and because they are keeping tabs on dissidents. one cannot ignore the militarization of africa and the thousands of mercenary troops from blackwater to the fortune 500 infraguard. there is a reason that the nasco highway is going ahead as planned despite opposition- and the fact that it is largely being done corporately- not governmentally. and there's a reason that the border fence with mexico is proceeding despite opposition. they are securing the secure first and letting the hot spots fight each other. then- they can make nice with the victors.

an average patriot said...

You're all right! I believe you know but this chaos will not be controlled. It is just starting and the idiot will not stop creating new chaos.
I have to laugh! bush has created so much chaos through his idiocy he reminds me of the statement that hell we're not retreating we're attacking in reverse.
Everything with the NAU will go as planned because it is not for us it is for business and the rest of the world. We and our America do not even matter.
That friggen fence is a farce. At 38 miles long on a 171 mile border it is a joke and a facade.
Betmo we will be okay but I will guarantee you that all we surmise will come to fruiotion!

Larry said...

Good News Jim:

Chuck Buckley is back and posted on his blog today!

Larry said...

Here's one for you Jim:

The Evil That Parties Do

Ted Lang

General George Washington

I am not one of those disciples of the state, nor that student of politics, that offers that the United States Constitution is “the greatest document ever written.” My choice would be instead, the Declaration of Independence. It was the Declaration that cleverly transferred the power of Divine Right from a nation’s monarch to each and every single, solitary citizen of a nation. It was that document that established and reaffirmed John Locke’s “life, liberty and property” as the human means by which we can all enjoy the Creator’s gifts. It was the Declaration that established government as an artificial entity, one whose only purpose was to guarantee individual human freedom, and that when government fails in this regard, citizens had a right to abolish it and to create a better one to replace it.

The astonishing luck the Continental Army enjoyed under General George Washington was just that. In spite of their ragtag nature, lack of uniforms, lack of boots, constant shortage of gunpowder, cannonball and shot, and in spite of their horrific lack of discipline, this ragtag collection of farmers, drunks, vagrants and street rabble succeeded against a precision and disciplined professional army and the then-most powerful navy of the then-most powerful nation on Earth. Its victory was nothing short of a miracle.

In addition to the totally undersupplied and undisciplined nature of our “army” of farmers, other problems in our nation’s struggle for liberty abounded. Among these were the lack of a coordinated and effective means to obtain money to pay the volunteer army, and the failure on the part of the Continental Congress to provide ammunition, uniforms and even the manpower needed in the form of volunteers from the joint and several colonies [“states”]. The state legislatures dragged their collective feet in supporting the cause for freedom that was the American Revolution. There was continual infighting and bickering relative to this needed national support among both the state legislatures and the Continental Congress.

And no one was more frustrated than Washington himself. It was he that wrote a long string of letters and appeals to Congress for help; for the most part, they went unheeded. But as Randolph Bourne has observed, “war is the health of the state.” And Federalists Washington, John Adams [“walls of wood”] and Benjamin Franklin, vividly remembered the military struggles as well as the legislative conflicts that eventually gave us our freedom from the British monarchy when they considered “rewriting” the Articles of Confederation. Bourne contrasts the difference between “government” and the “state.”

Bourne offers: “Government is obviously composed of common and unsanctified men, and is thus a legitimate object of criticism and even contempt. If your own party is in power, things may be assumed to be moving safely enough; but if the opposition is in, then clearly all safety and honor have fled the State.”

He goes on in his 1918 essay, “With the shock of war, however, the State comes into its own again. The Government, with no mandate from the people, without consultation of the people, conducts all the negotiations, the backing and filling, the menaces and explanations, which slowly bring it into collision with some other Government, and gently and irresistibly slides the country into war. For the benefit of proud and haughty citizens, it is fortified with a list of the intolerable insults which have been hurled toward us by the other nations; for the benefit of the liberal and beneficent, it has a convincing set of moral purposes which our going to war will achieve; for the ambitious and aggressive classes, it can gently whisper of a bigger role in the destiny of the world.”

And even back then, Bourne had virtually all our presidents figured out, including today’s Bush administration: “The result is that, even in those countries where the business of declaring war is theoretically in the hands of representatives of the people, no legislature has ever been known to decline the request of an Executive, which has conducted all foreign affairs in utter privacy and irresponsibility, that it order the nation into battle. Good democrats are wont to feel the crucial difference between a State in which the popular Parliament or Congress declares war, and the State in which an absolute monarch or ruling class declares war. But, put to the stern pragmatic test, the difference is not striking. In the freest of republics as well as in the most tyrannical of empires, all foreign policy, the diplomatic negotiations which produce or forestall war, are equally the private property of the Executive part of the Government, and are equally exposed to no check whatever from popular bodies, or the people voting as a mass themselves.”

Randolph Bourne was right on the money! All the checks and balances, the carefully-planned delineated authority of a separation of governmental power, are trumped when the government advances to the universal patriotic action of a state of war, a war of, by and for the state. And the Internet has made a difference in terms of overriding the American state and president’s propaganda as delivered by the mass media to camouflage the “need” for war. But, the media’s hope is to provide mass impetus, as Bourne points out: “The moment war is declared, however, the mass of the people, through some spiritual alchemy, become convinced that they have willed and executed the deed themselves. They then, with the exception of a few malcontents, proceed to allow themselves to be regimented, coerced, deranged in all the environments of their lives, and turned into a solid manufactory of destruction toward whatever other people may have, in the appointed scheme of things, come within the range of the Government’s disapprobation. The citizen throws off his contempt and indifference to Government, identifies himself with its purposes, revives all his military memories and symbols, and the State once more walks, an august presence, through the imaginations of men. Patriotism becomes the dominant feeling, and produces immediately that intense and hopeless confusion between the relations which the individual bears and should bear toward the society of which he is a part. The patriot loses all sense of the distinction between State, nation, and government.”

Clearly, the unification of patriotic purpose of a people whose citizens opt for a war between their government and that of another, calls into play great sacrifices that are required for the collective objective of military victory. Nothing can be more effective in assuring the health of the state. Yet, our Founding Fathers, opting for individual freedom as opposed to the unlimited authority of a monarch or an “Executive,” progressed in their thinking to where they in effect accomplished just the opposite of their intended purposes. Individual freedom and civil rights, as offered in the greatest document for human freedom, made it clear that individual freedom and the unbridled power of the state are incompatible.

Political expediency and the almost devastating effect of Congressional quibbling over funding for the military support needed to protect the fledgling American state began to gnaw away at the concept of citizens’ rights and replace it with the awesome power needed to sanctify and elevate the state. Those Founders believing this favored a strong Constitution establishing “a more perfect union” of centralized, national power. These “Federalists” of course included those frustrated patriots that experienced a “do-nothing” Congress. Yet anti-Federalists, led by Thomas Jefferson, Patrick Henry, Samuel Adams, George Mason and the like, stayed the course and wanted to ensure civil liberties and protection from an all powerful state. The anti-Federalists compromised when the Bill of Rights was added to amend the Constitution.

But the Constitution failed in one important regard: it failed to take into account the evil that men do. Understandably at the time, there was a heavy dependency upon religion and the worship of the Creator. Our agrarian-based economy depended upon the farmer, and the farmer depended upon the weather and the avoidance of blights and crop failures. Religion was a high priority in those days. Entire Sundays were blocked out for worship and church-led community dinners and religious celebration. And this emphasis involved each citizen and promoted among them all the concepts of humility, morality and unselfish acts of service to the community.

And it is precisely this level of early collective citizen morality that the Founders relied upon in crafting their Constitution. As the Founders were somewhat aware of the possibility of immoral, criminal collusion, and built “checks and balances” into their design for a great unified collection of states, as well as the concept of a “separation of powers,” they overly relied upon these elements alone when restricting the purpose and operation of government hoping to avoid creating a freedom-crushing errant state. But as previously offered, they were too optimistic in this regard. The Federalists’ primary concern was in overcoming a citizenry and its elected representatives’ from being apathetic and unmotivated, as Bourne points out, in rallying to their state to unite and oppose a future enemy.

And as the unification and collective “patriotism” of a nation’s people is required to secure military victory, it contributes to the health of the state, and as Bourne also points out, reverts back to a monarchial, totalitarian dimension of statist power! As the Founders failed to recognize that a powerful central government can be commandeered by an evil totalitarian individual, even as they made this possible, they did recognize the inherent evil in political parties. In fact, to bolster the Federalist cause for a more perfect union, The Federalist Papers were published to convince states, especially New York, to embrace a more centralized and powerful national government. The Federalist Papers were authored by James Madison, Alexander Hamilton and John Jay. Hamilton was the primary proponent of a national central bank, the wealthy cabal of money counterfeiters we now identify as the “Federal Reserve.” A strong central bank, along with its complimentary individual income tax, are the cornerstones of Karl Marx’s Communist Manifesto.

In Joseph Ellis’ biography of anti-Federalist, Thomas Jefferson, American Sphinx, The Character of Thomas Jefferson [© 1997 Alfred A. Knopf – New York], the following reference is made to political parties: “The most novel and wholly unforeseen development of the era was the emergence of political parties. Not that modern-day political parties, with their mechanisms for raising money, selecting candidates and waging election campaigns, were fully formed in the 1790s. (Full-scale political parties with all the institutional accoutrements we associate with the term date from the 1830s and 1840s.) Nevertheless, what we might call the ‘makings’ of political parties originated during Jefferson’s time as secretary of state, and he had a critical role in their creation. The trouble was that the term ‘party,’ and the very idea for which it stood, had yet to achieve any measure of respectability.” Respectability?

Deferring to Ellis’ naivety at the time, and considering it was then 1997, it is difficult to imagine political parties as having any modicum of respectability. Consider the current mudslinging now transpiring and involving top runners for the office of “Executive” this coming November! Consider the objectives of the Nazi Party, the Communists, Mussolini’s fascists, and our own Boss Tweed and Tammany Hall. Respectability?

Here’s David McCullough’s take citing the mindset of Federalist John Adams in his book, John Adams [© 2001 Simon & Schuster – New York]: “Like Washington and many others, Adams had become increasingly distraught over the rise of political divisiveness, the forming of parties or factions. That political parties were an evil that could bring the ruination of republican government was doctrine he, with others, had long accepted and espoused. ‘There is nothing I dread so much as a division of the Republic into two great parties, each arranged under its leader and converting measures in opposition to each other,’ Adams had observed to a correspondent while at Amsterdam, before the Revolution ended. Yet this was exactly what had happened. The ‘turbulent maneuvers’ of factions, he now wrote privately, could ‘tie the hands and destroy the influence’ of every honest man with a desire to serve the public good.”

Reflect upon that latter observation from John Adams, and then consider the candidacy of Congressman Ron Paul!

In his Federalist Paper No. 10, which concerned itself with precisely the “factions” feared by both Federalists and anti-Federalists, Madison offered the soothing nepenthe of a “diversity” of interests, which would nullify the harmful effects of political polarization and selfishness that could sap national purpose. Elaborating on the term “faction,” here’s more from Ellis: “A ‘party,’ as the term was commonly understood, was nothing more than a “faction,” meaning an organized minority whose very purpose was to undercut the public will, usually by devious and corrupt means. To call someone a member of a political party was to accuse him of systematic selfishness and perhaps even outright treason.” But, how does this concept of factionalism differ from Bourne’s observation regarding the systematic selfishness of the Executive in privatizing and keeping secret for personal reasons designs for war?

Here again are Bourne’s words on this political phenomenon: “In the freest of republics as well as in the most tyrannical of empires, all foreign policy, the diplomatic negotiations which produce or forestall war, are equally the private property of the Executive part of the Government, and are equally exposed to no check whatever from popular bodies, or the people voting as a mass themselves.”

Wouldn’t it therefore greatly profit the “Executive” to arrange a war in his honor? If war is the health of the state, then what can be said as regards the health of the political state of the Executive? Wouldn’t war and the unbridled power of the state translate to the unbridled power of the monarchial presidency as well?

Larry said...

The New World Order Financial Collapse Jim:

Speculative Onslaught. Crisis of the World Financial System: The Financial Predators had a Ball
Financial Tsunami, Part V

By F. William Engdahl

Colossal Collateral Damage

The multi-trillion dollar US-centered securitization debacle began to unravel in June 2007 with the liquidity crisis in two hedge funds owned by Bear Stearns, one of the world’s largest and most successful investment banks. The funds were heavily invested in sub-prime mortgage securities. The damage soon spread across the Atlantic to a little-known German state-owned bank, IKB. In July 2007, IKB’s wholly-owned conduit, Rhineland Funding, had approximately €20 billion of Asset Backed Commercial Paper (ABCP). In mid-July, investors refused to rollover part of Rhineland Funding’s ABCP. That forced the European Central Bank to inject record volumes of liquidity into the market to keep the banking system liquid.

Rhineland Funding asked IKB to provide a credit line. IKB revealed it didn’t have enough cash or liquid assets to meet the request of its conduit, and was only saved by an emergency €8 billion credit facility provided by its state-owned major shareholder bank, the Kreditanstalt für Wiederaufbau, ironically the bank which led the Marshall Plan reconstruction of war-torn Germany in the late 1940’s. It was soon to become evident to the world that a new Marshall Plan, or some financial equivalent, was urgently needed for the United States economy; however, there were no likely donors stepping up to the plate this time.

The intervention of KfW, rather than stopping the panic, led to reserve hoarding and to a run on all commercial paper issued by international banks’ off-books Structured Investment Vehicles (SIVs).

Asset Backed Commercial Paper was one of the big products of the asset securitization revolution fostered by Greenspan and the US financial establishment. They were the stand-alone creations of the major banks, set up to get risk off the bank’s balance sheet.

The SIV would typically issue Commercial Paper securities backed by a flow of payments from the cash collections received from the conduit’s underlying asset portfolio. The ABCP was a short-term debt, generally no more than 270 days. Crucially, they were exempt from the registration requirements of the US Securities Act of 1933. ABCPs were typically issued from pools of trade receivables, credit card receivables, auto and equipment loans and leases, and collateralized debt obligations.

In the case of IKB in Germany, the cash flow was supposed to come from its portfolio of sub-prime US home mortgages, mortgage backed Collateralized Debt Obligations (CDOs). The main risk faced by ABCP investors was asset deterioration—that the individual loans making up the security default—precisely what began to cascade through the US mortgage markets during the summer of 2007.

The problem with CDOs was that once issued, they were rarely traded. Their value, rather than being market-driven, were based on complicated theoretical models.

When CDO holders around the world last summer suddenly and urgently needed liquidity to face the market sell-off, they found the market value of their CDOs was far below book value. So, instead of generating liquidity by selling CDOs, they sold high-quality liquid blue chip stocks, government bonds, precious metals.

That simply meant the CDO crisis led to a loss of value in both CDOs and stocks. The drop in price of equities triggered contagion to hedge funds. That dramatic price collapse wasn’t predicted by the theoretical models built into quantitative hedge funds and led to large losses in that part of the market, led by Bear Stearns’ two in-house hedge funds. Major losses by leading hedge funds further fed increasing uncertainty and amplified the crisis.

That was the beginning of colossal collateral damage. The models all broke down.

Lack of transparency was at the root of the crisis that had finally and inevitably erupted in mid-2007. That lack of transparency was due to the fact that instead of spreading risk in a transparent way as foreseen by accepted economic theory, market operators chose ways to "securitize" risky assets by promoting high-yielding, high-risk assets, without clearly marking their risk. Additionally, credit-rating agencies turned a blind eye to the inherent risks of the products. The fact that they were rarely traded meant even the approximate value of these structured financial products was not known.

Ignoring lessons from LTCM

With that collapse of confidence among banks in the international inter-bank market, the heart of global banking and which trades in Asset Backed Commercial Paper, the banking system stared a systemic crisis in the face. A crisis now threatened of a domino collapse of banks akin to that in Europe in 1931, when the French banks for political reasons pulled the plug on the Austrian Creditanstalt. Greenspan’s New Finance was at the heart of the new instability. It was his Age of Turbulence, to parody the title of his ghost-written autobiography.

The world financial system had faced a systemic crisis threat as recently as the September 1998 collapse of the Long-Term Capital Management (LTCM) hedge fund in Greenwich, Connecticut. Only extraordinary coordinated central bank intervention then, led by Greenspan’s US Federal Reserve, prevented a global meltdown.

That LTCM crisis contained the seed crystal of all that is going wrong with the multi-trillion dollar asset securitization markets today. Curiously, Greenspan and others in positions of responsibility systematically refused to take those lessons to heart.

The nominal trigger of the LTCM crisis was an event not foreseen in the hedge fund’s risk model. Its investment strategies were based on what they felt was a predictable mild range of volatility in foreign currencies and bonds based on data from historical trading experience. When Russia declared it was devaluing its rouble currency and defaulting on its Russian state bonds, the risk parameters of LTCM’s risk models were literally blown out of the water, and LTCM with it. Sovereign debt default was an event that was not "normal."

Unlike the risk assumptions of every risk model used by Wall Street, the real world was also not normal, but rather highly unpredictable.

To cover their losses LTCM and its banks began a panic sell-off of anything it could liquidate, triggering panic selling by other hedge funds and banks to cover exposed positions. In response, the US stock market dropped 20%, while European markets fell 35%. Investors sought safety in US Treasury bonds, causing interest rates to drop by over a full point. As a result, LTCM’s highly leveraged investments started to crumble. By the end of August 1998, it lost 50% of the value of its capital investments.

In the summer of 1997 amid the hedge fund-led attacks on the vulnerable currencies of Thailand, Indonesia, Malaysia and other Asian high-growth "Tiger" economies, Malaysia’s Prime Minister Mahathir Mohamad openly called for greater international control on the murky speculation of hedge funds. He named the name of one of the largest involved in the Asian attacks, George Soros’ Quantum Fund. Because of US pressure from the Treasury Department by Secretary Robert Rubin, the former head of Goldman Sachs, and from the Greenspan Fed, no oversight of opaque offshore hedge funds was ever undertaken. Instead they were let to grow into funds holding more than $1.4 trillion in assets by 2007.

Fatally flawed risk models

The point about that LTCM crisis that rocked the foundations of the global finance system, was who was involved and what economic assumptions they used—the very same fundamental assumptions used to construct the deadly-flawed risk models of the asset securitization debacle.

At the beginning of 1998, LTCM had capital of $4.8 billion, a portfolio of $200 billion, built from its borrowing capacity or credit lines loaned from all the major US and European banks hungry for untold gains from the successful fund. LTCM held derivatives with a notional value of $1,250 billion. That is one unregulated, offshore hedge fund held a portfolio of options and other financial derivatives nominally worth one and a quarter trillion dollars. Nothing of that scale had ever before been dreamed of. The dream rapidly turned into a nightmare.

In the argot of Wall Street, LTCM was a highly geared fund, unbelievably high. One of its investors was the Italian central bank, so awesome was the fund’s reputation. The major global banks who had poured their money into LTCM hoping to coattail the success and staggering profits included Bankers Trust, Barclays, Chase, Deutsche Bank, Union Bank of Switzerland, Salomon Smith Barney, J.P.Morgan, Goldman Sachs, Merrill Lynch, Crédit Suisse, First Boston, Morgan Stanley Dean Witter; Société Générale; Crédit Agricole; Paribas, Lehman Brothers. Those were the very banks that were to emerge less than a decade later at the heart of the securitization crisis in 2007.

Speaking to press at the time, US Treasury Secretary Rubin declared, "LTCM was a single isolated instance in which the judgment was made by the Federal Reserve Bank of New York that there were possible systemic implications of a failure, and what they did was to organize or bring together a group of private sector institutions which then made a judgment of what was in their economic self interest."

The source of the awe over LTCM was the "dream team" who ran it. The fund’s CEO and founder was John Meriwether, a legendary trader who had left Salomon Brothers following a scandal over purchase of US Treasury bonds. That hadn’t dented his confidence. Asked whether he believed in efficient markets, he once modestly replied, "I MAKE them efficient." The fund’s principal shareholders included the two eminent experts in the "science" of risk, Myron Scholes and Robert Merton. Scholes and Merton had been awarded the Nobel Prize for economics in 1997 for their work on derivatives by the Swedish Academy of Sciences. LTCM also had a dazzling array of professors of finance, doctors of mathematics and physics and other "rocket scientists" capable of inventing extremely complex, daring and profitable financial schemes.

Larry said...

Another financial one Jim:

By Emily Spence

Too often news coverage focuses on discreet current events at the expense of a more synthetic approach to notable happenings. While it is important that the public learns of major incidents in the world as they take place, sometimes this can lead to some observers “not seeing the forest for the trees.”

On account, it might be easy to miss the connection between the global recession (and possible future depression) with the ongoing decline of environmental well-being and increase in human population. All the same, these three areas are deeply intertwined. Here are a few details concerning the relationship.

Let’s start with the present economic decline: Part of the reasons that there are global jitters involving the weakening of the $ USD is that it provides a means to assess worth of other holdings. In short, many countries and individuals, directly and indirectly, assign their own fiscal strength based on the dollar’s standard. This is especially the case when they are carrying the US public debt, which is currently well over $9 Trillion dollars.

In addition, practically all of the US national debt owned by foreigners is held by private investors except for central banks, which hold 64%. Further, the size of the foreign-owned portion of this amount owed is practically three times the total amount of currency in circulation! Indeed, the numbers given by the Federal Reserve for June 2007 put its amount at US $755 billion.

In tandem, the average US family’s credit card balance is now almost 5 % of its annual income (with a median U.S. household income presently at $43,200), more that 40 % of American families spend more than they earn, personal bankruptcies in US have doubled in the last decade and the overall consumer debt has reached $2.46 Trillion as of June 2007 (excluding the $440 billion of revolving home equity loans, $600 Billion owed for second mortgages and an overall $9 Trillion in mortgage debt). As such, the total US consumer revolving debt grew to $904 Billion last summer.

Why has this happened? In part, it is because real wages of most workers languished or declined since 1975. So, many Americans reacted by taking on loans to maintain or raise their living standards.

As Polonius, Shakespeare’s character in Hamlet cautioned, “neither a borrower, nor a lender be” and, certainly, there is trouble with being either. However, everyone, even an individual with neither role, can be in trouble when the value of the currency that he maintains plummets.

So, why is the American money losing clout? The answer is partly dependent upon the way that it gained worth in the first place and, indeed, its relative merit is created by any number of factors. These include the country issuing it having a robust economy (a trade surplus rather than being a debtor nation), having something of universal worth tied to it for which it stands, such as precious metal from which the $ USD was effectively severed in 1971 when the US government refused to exchange a relative small sum of dollars held by several other governments for gold, or some other coveted resource for which the currency alone must be traded, something like OPEC petroleum. (The latter contingency is the reason that some dollar holders find the Iran Bourse, with its plans to reject the $ USD as payment for oil, threatening and suspect that the recent cable failures were a deliberate attempt to postpone its arrangements being set in place.) In short, without a monetary standard having it’s worth assigned by being attached to something deemed of unquestionable worth, it tends to have uncertain value.

Meanwhile, the US economy, itself, can’t grow. Partly, this is due to globalization of industry, which has created jobs in second and third world countries by taking many of them away from Americans, who cannot continue their high rates of consumption of products due to the increasing deficit of employment opportunities, diminished fiscal returns, raising prices for goods (including staples) and advancing inflation. So, it is no wonder that, while oil and food prices are rising, so are the number of home foreclosures while home worth, in general, is depreciating across the board.

Simultaneously, it is no surprise that US wages are kept depressed by the existence of a proliferation of out-of-work laborers relative to the smaller amount of jobs in existence. At the same time, the already huge homeless population, as would be expected, is skyrocketing. In fact, the number of persistently homeless Americans, ones with repeated episodes or who have been homeless for long periods, involves between 847,000 to 3,470,000 individuals, many of whom are children and unemployed veterans. Posed another way, close to 3.5 million people, of whom roughly 1.35 million are minors, are likely to experience homelessness in any given year in the US (National Law Center on Homelessness and Poverty, 2007).

At the same time, further outsourcing of labor guarantees that more jobs will be cut with the outcome that US citizens will possess even less money to buy either locally manufactured or imported goods. In relation, economic growth in other countries is, also, due to slow down, as exports are no longer quickly snapped up in the US. However, this consequence was long set to develop, given that, since 2000, a total of 3.2 million — one in six factory jobs — have disappeared from the American shores and the lowest rate of US job growth in four years occurred as recently as December 2007 when, simultaneously, the unemployment rate shot up 0.3 percentage points to almost 5 %. By factoring in huge losses in other work positions — such as the ones related to construction, fiscal services and retail sales — it is easy to see that American spending, even for relatively inexpensive foreign made goods, was bound to take a nosedive. How could it not do so when adequate job provision and reasonable salaries have, in effect, largely disappeared?

All the same, this overall arrangement has not been bad for those in the top economic tier as their capacity to pay meager second and third world wages, coupled with receipt of high income from finished products acquired by first world customers, has created an economic boon. Indeed, by mechanisms such as these, the ranks of millionaires and billionaires, during the past few years, has greatly expanded. (The number of millionaires in the world swelled to 8.7 million and the number of billionaires around the world rose to a record 793, the latter of which hold $2.6 trillion in assets and personally garner an extraordinary amount of resources.) So have the overall profit margins of many transnational companies, such as the pharmaceutical, oil and other industrial giants.

All considered, there is no way that many Americans, even with the minimum wage set at a measly $5.85/ hour, can compete with overseas $1/ day wages, nor subsume the fundamental costs associated with their rents, mortgages, the increase in food and oil prices, rising medical insurance payments and other basic expenses. On account, an overall decline in purchases has, recently, taken place in the US and, while this is not good for suppliers, it does give the environment a break.

The reason that it does is that the slow down in business, while ominous from an economic standpoint, is good for the environment, that cannot continue to be assaulted at an ever higher level in order to make an ever higher financial gain off of its largely finite resources. As it is, ecologists anticipate that, if present rates of deforestation continue, rainforests will disappear from the planet within this century, which would kill off an inordinate amount of the world’s animal and plant species while effecting global climate in unpredictable ways. (Presently, the global annual rate of deforestation is .8 percent.)

The outlook for the ocean life is just as grim with currently 71-78 % of it being “fully exploited,” “over exploited” or “significantly depleted” according to the United Nations. In addition, many types of aquatic plants and animals are on the verge of total extermination and 90 % of all big fish are already gone.

Add to this that, according to recent UN studies, arid lands prone to desertification cover more than one third of the planet’s landmass, which supports more than twenty percent of the human population. While requirements from these delicate environments grow, they increasingly become incapable of supporting life. As such, the global rate of desertification is rapidly escalating, although the actual rates vary by locality.

All of this in mind, we cannot keep expecting ever greater economic growth, nor an ever enlarging human population. Instead, we collectively need to drastically cut back on personal resource use, curtail manufacturing (due to stresses on the environment caused by global warming and other industrial impingements) and face a world that is likely to provide a dwindling supply of jobs.

In actuality, we cannot even endure a 5.5 to 7 degree F. (3 to 4 degree C.) rise in temperature due to carbon loading from industry and transportation of goods. This is because our doing so would all but ensure that human life would be unsupportable over much of the globe and likely prevent pollination for many major crops. Along with the resultant changed rainfall patterns, the lack of pollination would prompt a tremendous decrease in food production.

Regardless of whether this extreme heat occurs or not, the global population, according to the International Data Base, is expected to increase from 6 billion in 1999 to 9 billion by 2042, an increase of 50 percent that will require a mere 43 years. This, of course, has alarming implications for the maxed out natural world (including its water supplies), the labor market, food availability, product price and ever higher global warming.

So, just how are we to cope with these assorted dismal factors? First, we need to recognize the absolute need to stymie growth of GDP in every country, proactively delimit population and reduce general consumption. Put another way, we cannot have any positive outcomes from expecting myriad environments to yield up an unlimited cornucopia of goods, especially as our very lives depend on our severely lowering greenhouse gases and maintaining a large diversity of healthy intact natural environments. Second, we must, quickly, develop a wide array of “green jobs” to make up for the scarcity of ones that will come to pass on account of policies mandating deliberate curtailment of energy intensive manufacturing. Third, we need to quickly create business capable of providing, on an extensive basis, electricity derived from benign alternatives to fossil fuels.

Further, it would be helpful for people to form into small scale, self-sustaining communities to ride through the recession. Indeed, their establishment would, without doubt, help with the transition away from transnational sweatshops, provide regional employment and curb reliance on oil as less goods, including necessities, would require extensive transportation if produced locally.

The coalescence of a recession, mounting population, peak oil, mass extinction, urgent water shortages, climate change and other disastrous environmental impacts challenge us to take immediate action. Our doing so need not be disastrous if we collectively begin to make the essential changes on the scale needed. If we do not, the results could likely be catastrophic on a scope barely imagined by any of us. With firm resolve, let us all begin to undertake the critical modifications at once.

Brother Tim said...

Be prepared, Jim, as the world bands together to put us in our place. Bush is a megamaniacal moron, who, as my grandpappy used to say, "Has gotten too big for his britches"

It's just like the schoolyard bully: After awhile, his collective victims get together and beat the living crap out of him.

an average patriot said...

I am really glad to hear that about Chuck. You know I feared the worst! I hope his Grandson is alright and everything works out. I will eventually get over there and give him my best!

amphibious said...

Nations are a 18thC concept, useful when linguistic, racial & cultural homogenaity was much greater. In Europe only Britain was a truly "united kingdom" and it took a century of war with the Scots before the the Act of Union and they would have continued had it not been for an accident of primo geniture that resulted in James VI of Scotland becoming James I of England. Italy didn't become a nation until very late in the 19thC and there was no such country as Germany until after WWI.
So all the artificial entities of southern Europe & the ME had temporary at best and prisons of independent cultures at worst. Don't forget that the term 'Balkanisation' was a derogatory term for squabbling small groups of peoples which the Great Powers of the period resolved by forcing them into incohate 'nations'.
Globalisation is now attempting to do the same trick with the world. To paraphrase "what's good for GM is good for...insert multinational bete noire.."

an average patriot said...

I was reading what Ted Lang had to say about the Constitution and the declaration of Independence and I kept coming up with something else I wanted to comment on. in regard to a rag tag force defeating a world class military and Congress being worthless I can only say nothing has changed and history is repeating itself once again this time to our demise!

an average patriot said...

Blogger Larry said...

The New World Order Financial Collapse Jim:

Speculative Onslaught. Crisis of the World Financial System: The Financial Predators had a Ball
Financial Tsunami, Part V

By F. William Engdahl

Colossal Collateral Damage

larry you know in the collapse going on right now I believe Bush instructed Greenspan and engineered the whole thing. It will get much worse too. You also know this financial collapse has to happen so the idiot can thus take total control and pursue his new world order. With his time running out, him bankrupting the country, hi purposely created world chaos, and another timely bail out coming up by the deciding chief idiot, the entire plan whoever s it is, is moving along well and I can not see it being stopped except by world war that he instigated and will not be denied!

an average patriot said...

You know this is true. So, why is the American money losing clout? The answer is partly dependent upon the way that it gained worth in the first place and, indeed, its relative merit is created by any number of factors. These include the country issuing it having a robust economy (a trade surplus rather than being a debtor nation), having something of universal worth tied to it for which it stands, such as precious metal from which the $ USD was effectively severed in 1971 when the US government refused to exchange a relative small sum of dollars held by several other governments for gold, or some other coveted resource for which the currency alone must be traded, something like OPEC petroleum. (The latter contingency is the reason that some dollar holders find the Iran Bourse, with its plans to reject the $ USD as payment for oil, threatening and suspect that the recent cable failures were a deliberate attempt to postpone its arrangements being set in place.) In short, without a monetary standard having it’s worth assigned by being attached to something deemed of unquestionable worth, it tends to have uncertain value.

Meanwhile, the US economy, itself, can’t grow. Partly, this is due to globalization of industry, which has created jobs in second and third world countries by taking many of them away from Americans, who cannot continue their high rates of consumption of products due to the increasing deficit of employment opportunities, diminished fiscal returns, raising prices for goods (including staples) and advancing inflation.
As we continue to discuss, with the environment worsening, ours and the worlds economy being purposely destroyed, and the world racing to a major world war that will leave societies and the world much different than we know and need, you have to wonder?

an average patriot said...

You know you are entirely right and the comeuppance is coming faster than most think. Knowing what Larry just mentioned and we discuss often, you have to wonder if mutual destruction and the end of days is the goal.
The planet can not survive what is about to happen at this point in its cycle of life and still be life sustaining to mankind. The planet is in the nurturing stage and we are ignoring that to our detriment!

an average patriot said...

As usual you are entirely right. You point out: Don't forget that the term 'Balkanization' was a derogatory term for squabbling small groups of peoples which the Great Powers of the period resolved by forcing them into inchoate 'nations'.
Globalization is now attempting to do the same trick with the world. To paraphrase "what's good for GM is good for...insert multinational bete noire.."
Total Chaos and destruction that is the only way this can end. i can only hope that those of us that care about the planet and what is being done to it and us will be around to pick up the pieces!