Friday, November 28, 2008

PART 1: Krisis Ekonomi. Bagaimana mengembalikan keyakinan pengguna supaya berbelanja?


So how will Geithner and Summers deal with the problems they'll be facing just two months from now? They'll do whatever they need to do to stabilize the financial system and to get consumers spending again. That means at least another $2 trillion added to the ballooning national debt and some extremely dodgy ways of getting liquidity into the system.(With the Fed Funds rate already at 1 percent, monetary policy is limited) Larry Summers, who will serve as Obama's chief economics advisor, summed up his plan like this to Bloomberg News: "At first I believed that any stimulus package should be timely, targeted, and temporary. But the situation has deteriorated so significantly from that point that I would now go for speedy, substantial, and sustained over a several year interval."

Read More......


Anda cuba bayangkan kiranya pengguna akan terus mengurangkan perbelanjaan dan mengubah cara hidup untuk terus berjimat cermat dalam keadaan yang tidak yakin dengan keadaan kedudukan ekonomi yang berpunca dari krisis kewangan antarabangsa. Dalam keadaan normal pengguna akan menukar kenderaan kepada kerita model baru setelah menggunakan kenderaan lamanya selama lima atau enam tahun. Kini kerita lama akan terus digunakan walaupun keinginan tinggi dan kemampun masih ada. Pengguna akan membawa bekal dari rumah walaupun mampu makan di restoran. Contoh ini hanyalah sebahagian dari perubahan cara hidup kerana pengguna lebih berwaspada atau berhati-hati akibat situasi dan kedudukan ekonomi yang tidak menentu.

Beberapa bulan yang lalu, apabila harga minyak melambung tinggi, ramai pengguna yang mengurangkan penggunaan minyak kerita. Jalan-jalan cari makan dengan keluarga kena difikirkan dua kali. Perjalanan jauh dan bersiar-siar banyak yang terbatal atau dibatalkan. Malah ramai yang memilih menggunakan kenderaan awam dalam banyak urusan.

Di Barcelona misalnya ramai pengguna memilih untuk menggunakan basikal sebagai alternatif. Kenderaan kecil pula mula meningkat permintaannya sekaligus mengurangkan penggunaan minyak. Bayangkan akibatnya KIRANYA JUTAAN PENDUDUK MENGURANGKAN PERBELANJAANYA SEBANYAK rm500. sebulan

Akibat dari perubahan cara berbelanja dan cara hidup ini, pengusaha dan para peniaga akan menerima akibat. Hasil jualan mereka akan turun dan mendapatan mereka akan merosot. Apabila keadaan ini berlaku, para peniaga atau firma akan terpaksa mengurangkan kos operasi yang akan menyebabkan pengurangan pekerja atau kemungkinan mengalami kerugian. Kiranya keadaan berterusan kemungkinan firma mereka akan terpaksa ditutup dan pekerja-pekerja akan kehilangan pekerjaan sekaligus kehilangan sumber pendapatan. Pengangguran akan berlaku dan ekonomi akan menjadi lemah dan kemelesetan atau recesion berlaku.

Kiranya pengguna terus memilih menggunakan kenderaan lamanya atau memilih menggunakan kenderaan awam atau basikal, apa akan terjadi kepada perusahaan membuat automobil dan station minyak? Bagaimana nasib pekerja-pekerja mereka?. Kiranya pengguna terus memilih untuk membawa bekal dari rumah, apa akan terjadi kepada pemilik restoran dan pengusaha bekalan makanan? Bagaimana nasib pekerja-pekerjan mereka? Apa kan terjadi kepada pengusaha pelancongan dan hotel-hotel kiranya vacation dikurangkan, ditangguhkan malah dilupakan? bagaimana nasib pekerja pelancongan, hotel dan pemandu bas pelancong?. Akhirnya bagaimana hasil kutipan cukai ?

Gambaran di atas menunjukkan kuasa pengguna mampu menjadi penyumbang kepada keadaan recession yang di alami samada yang berlaku di luar negara atau dalam negeri. ORANG KATA "CUSTOMER IS THE KING". Isu pengaliran wang keluar ke luar negara juga perlu di ambil kira.

Bagaimana mengembalikan keadaan ini kepada keadaan normal?. Jawaban normalnya adalah mudah; "kembalikan keadaan yang meyakinkan pengguna untuk berbelanja dan kedudukan pendapatan "boleh guna" mereka dalam keadaan normal. Dalam hal ini. diskusi "siapa dulu, telur atau ayam" akan mengambil tempat.
PART II (Menyusul)

Thursday, November 27, 2008

Financial Collapse: The Fate of Citigroup Bank

Financial Collapse: The Fate of Citigroup. CRG E-Newsletter‏
From: (
Sent: Monday, 24 Nov, 2008 9: 12 PM

Colossal Financial Collapse: The Truth behind the Citigroup Bank "Nationalization"

On Friday November 21, the world came within a hair’s breadth of the most colossal financial collapse in history according to bankers on the inside of events with whom we have contact. The trigger was the bank which only two years ago was America’s largest, Citigroup. The size of the US Government de facto nationalization of the $2 trillion banking institution is an indication of shocks yet to come in other major US and perhaps European banks thought to be ‘too big to fail.’ The clumsy way in which US Treasury Secretary Henry Paulson, himself not a banker but a Wall Street ‘investment banker’, whose experience has been in the quite different world of buying and selling stocks or bonds or underwriting and selling same, has handled the unfolding crisis has been worse than incompetent. It has made a grave situation into a globally alarming one.

‘Spitting into the wind’

A case in point is the secretive manner in which Paulson has used the $700 billion in taxpayer funds voted him by a labile Congress in September. Early on, Paulson put $125 billion in the nine largest banks, including $10 billion for his old firm, Goldman Sachs. However, if we compare the value of the equity share that $125 billion bought with the market price of those banks’ stock, US taxpayers have paid $125 billion for bank stock that a private investor could have bought for $62.5 billion, according to a detailed analysis from Ron W. Bloom, economist with the US United Steelworkers union, whose members as well as pension fund face devastating losses were GM to fail.

That means half of the public's money was a gift to Paulson’s Wall Street cronies. Now, only weeks later, the Treasury is forced to intervene to de facto nationalize Citigroup. It won’t be the last. Paulson demanded, and got from a labile US Congress, Democrat as well as Republican, sole discretion over how and where he can invest the $700 billion, to date with no effective oversight. It amounts to the Treasury Secretary in effect ‘spitting into the wind’ in terms of resolving the fundamental crisis.

It should be clear to any serious analyst by now that the September decision by Paulson to defer to rigid financial ideology and let the fourth largest US investment bank, Lehman Brothers fail, was the proximate trigger for the present global crisis. Lehman Bros.’ surprise collapse triggered the current global crisis of confidence. It was simply not clear to the rest of the banking world which US financial institution bank might be saved and which not, after the Government had earlier saved the far smaller Bear Stearns, while letting the larger, far more strategic Lehman Bros. fail.

Some Citigroup details

The most alarming aspect of the crisis is the fact that we are in an inter-regnum period when the next President has been elected but cannot act on the situation until after January 20, 2009 when he is sworn in.

Consider the details of the latest Citigroup government de facto nationalization (for ideological reasons Paulson and the Bush Administration hysterically avoid admitting they are in the process of nationalizing key banks). Citigroup has more than $2 trillion of assets, dwarfing companies such as American International Group Inc. that got some $150 billion in US taxpayer funds in the past two months. Ironically, only eight weeks before, the Government had designated Citigroup to take over the failing Wachovia Bank. Normally authorities have an ailing bank absorbed by a stronger one. In this instance the opposite seems to have been the case. Now it is clear that the Citigroup was in deeper trouble than Wachovia. In a matter of hours in the week before the US Government nationalization was announced, the stock value of Citibank plunged to $3.77 in New York, giving the company a market value of about $21 billion. The market value of Citigroup stock in December 2006 had been $247 billion. Two days before the bank nationalization the CEO, Vikram Pandit had announced a huge 52,000 job slashing plan. It did nothing to stop the slide.

The scale of the hidden losses of perhaps the twenty largest US banks is so enormous that if not before, the first Presidential decree of President Barack Obama will likely have to be declaration of a US ‘Bank Holiday’ and the full nationalization of the major banks, taking on the toxic assets and losses until the economy can again function with credit flowing to industry once more.

Citigroup and the government have identified a pool of about $306 billion in troubled assets. Citigroup will absorb the first $29 billion in losses. After that, remaining losses will be split between Citigroup and the government, with the bank absorbing 10% and the government absorbing 90%. The US Treasury Department will use its $700 billion TARP or Troubled Asset Recovery Program bailout fund, to assume up to $5 billion of losses. If necessary, the Government’s Federal Deposit Insurance Corporation (FDIC) will bear the next $10 billion of losses. Beyond that, the Federal Reserve will guarantee any additional losses. The measures are without precedent in US financial history. It’s by no means certain they will salvage the dollar system.

The situation is so intertwined, with six US major banks holding the vast bulk of worldwide financial derivatives exposure, that the failure of a single major US financial institution could result in losses to the OTC derivatives market of $300-$400 billion, a new IMF working paper finds. What’s more, since such a failure would likely cause cascading failures of other institutions. Total global financial system losses could exceed another $1,500 billion according to an IMF study by Singh and Segoviano.

The madness over a Detroit GM rescue deal.

The health of Citigroup is not the only gripping crisis that must be dealt with. At this point, political and ideological bickering in the US Congress has so far prevented a simple emergency $25 billion loan extension to General Motors and other of the US Big Three automakers—Ford and Chrysler. The absurd spectacle of US Congressmen attacking the chairmen of the Big Three for flying to the emergency Congressional hearings on a rescue loan in their private company jets while largely ignoring the issue of consequences to the economy of a GM failure underscores the utter lack of touch with reality that has overwhelmed Washington in recent years.

For GM to go into bankruptcy risks a disaster of colossal proportions. Although Lehman Bros., the biggest bankruptcy in US history, appears to have had an orderly settlement of its credit defaults swaps, the disruption occurred before-hand, as protection writers had to post additional collateral prior to settlement. That was a major factor in the dramatic global market selloff in October. GM is bigger by far, meaning bigger collateral damage, and this would take place when the financial system is even weaker than when Lehman failed.

In addition, a second, and potentially far more damaging issue, has been largely ignored. The advocates of letting GM go bankrupt argue that it can go into Chapter 11 just like other big companies that get themselves in trouble. That may not happen however, and a Chapter 7 or liquidation of GM that would then result would be a tectonic event.

The problem is that under Chapter 11 US law, it takes time for the company to get the protection of a bankruptcy court. Until that time, which may be weeks or months, the company would need urgently ‘bridge financing’ to continue operating. This is known as ‘Debtor-in-Possession or DIP financing. DIP is essential for most Chapter 11 bankruptcies, as it takes time to get the plan of reorganization approved by creditors and the courts. Most companies, like GM today, go to bankruptcy court when they are at the end of their liquidity.

DIP is specifically for companies in, or on the verge of bankruptcy, and the debt is generally senior to other outstanding creditor claims. So it is actually very low risk, as the amount spent is usually not large, relatively speaking. But DIP lending is being severely curtailed right now, just when it is most needed, as healthier banks drastically cut loans in the severe credit crunch situation.

Without access to DIP bridge financing, GM would be forced into a partial, or even a full liquidation. The ramifications are horrendous. Aside from loss of 100,000 jobs at GM itself, GM is critical to keep many US auto suppliers in business. If GM failed soon most, possibly even all of the US and even foreign auto suppliers will go under. Those parts suppliers are important to other auto makers. Many foreign car factories would be forced to close due to loss of suppliers. Some analysts put 2009 job losses from a GM failure as high as 2.5 million jobs due to the follow-on effects. If the impact of that 2.5 million job loss is seen in terms of the overall losses to the economy of non-auto jobs such as services, home foreclosures caused and such, some estimate total impact would be more than 15 million jobs.

So far in the face of this staggering prospect, the members of the US Congress have chosen to focus on the fact the GM chief, Rick Wagoner, flew in his private company jet to Washington. The Congressional charade conjures up the image of Nero playing his fiddle as Rome goes up in flames. It should not be surprising that at the recent EU-Asian Summit in Beijing, Chinese officials mooted the idea of trading between the EU and Asian nations such as China in Euro, Renminbi, Yen or other national currencies other than the dollar. The Citigroup bailout and GM debacle has confirmed the death of the post-1944 Bretton Woods Dollar System.

The real truth behind Citigroup bailout

What neither Paulson nor anyone in Washington is willing to reveal is the real truth behind the Citigroup bailout. By his and the Republican Bush Administration’s adamant earlier refusal to take an initial resolute action to immediately nationalize the nine or so largest troubled banks, he has created the present debacle. By refusing on ideological grounds to instead reorganize the banks’ assets into some form of ‘good bank’ and ‘bad bank,’ similar to what the Government of Sweden did with what it called Securum, during its banking crisis in the early 1990’s, Paulson and company have created a global financial structure on the brink.

A Securum or similar temporary nationalization would have allowed the healthy banks to continue lending to the real economy so the economy could continue operating, while the State merely sat on the undervalued real estate assets of the Swedish banks for some months until the recovering economy made the assets again marketable to the private sector. Instead, Paulson and his ‘crony capitalists’ in Washington have turned a bad situation into a globally catastrophic one.

His apparent realization of the error of his initial refusal to nationalize came too late. When Paulson reversed policy on September 19 and presented the nine largest banks with an ultimatum to accept partial Government equity ownership, abandoning his original bizarre plan to merely buy up the toxic waste asset-backed securities of the banks with his $700 billion TARP taxpayer money, he never revealed why.

Under the original Paulson Plan, as Dimitri B. Papadimitriou and L. Randall Wray of the Jerome Levy Institute at Bard College in New York point out, Paulson sought to create a situation in which the US ‘Treasury would become an owner of troubled financial institutions in exchange for a capital injection—but without exercising any ownership rights, such as replacing the management that created the mess. The bailout would be used as an opportunity to consolidate control of the nation’s financial system in the hands of a few large (Wall Street) banks, with government funds subsidizing purchases of troubled banks by "healthy" ones.’

Paulson soon realized the scale of crisis, largely triggered by his inept handling of the Lehman Brothers case, had created an impossible situation. Were Paulson to use the $700 billion to buy up toxic waste ABS assets from the select banks at today’s market price, the $700 billion would be far too little to take an estimated $2 trillion ($2,000 billion) in Asset Backed Securities off the books of the banks.

The Levy Economics Institute economists state, ‘It is probable that many and perhaps most financial institutions are insolvent today -- with a black hole of negative net worth that would swallow Paulson's entire $700 billion in one gulp.’

That reality is the real reason Paulson was forced to abandon his original ‘crony bailout’ TARP plan and opt to use some of his money to buy equity shares in the nine largest banks.

That scheme as well is ‘dead on arrival’ as the latest Citigroup nationalization scheme underscores. The dilemma Paulson has created with his inept handling of the crisis is simple: If the US Government paid the true value for these nearly worthless assets, the banks would have to write down huge losses, and, as Levy economists put it, ‘announce to the world that they are insolvent.’ On the other hand, if Paulson raised the toxic waste purchase price high enough to protect the banks from losses, $700 billion ‘will buy only a tiny fraction of the 'troubled' assets.’ That is what the latest nationalization of Citigroup is about.

It is only the beginning. The 2009 year will be one of titanic shocks and changes to the global order of a scale perhaps not experienced in the past five centuries. This is why we should speak of the end of the American Century and its Dollar System.

How destructive that process will be to the citizens of the United States who are the prime victims of Paulson’s crony capitalists, as well as to the rest of the world depends now on the urgency and resoluteness with which heads of national Governments in Germany, the EU, China, Russia and the rest of the non-US world react. It is no time for ideological sentimentality and nostalgia of the postwar old order. That collapsed this past September along with Lehman Brothers and the Republican Presidency. Waiting for a ‘miracle’ from an Obama Presidency is no longer an option for the rest of the world.
Colossal Financial Collapse: The Truth behind the Citigroup Bank "Nationalization"
By F. William Engdahl

MORE ON CITIGROUP:................

Tuesday, November 25, 2008

Dulie Haji Marie Menyertai SAPP.

Saya pada awalnya agak skiptikal bila diberi tahu bahawa sahabat lama saya , Dulie Haji Marie menyertai Parti KeADILan Rakyat, PKR, sempena lawatan Yang Berhormat Dato' Seri Anwar ke Sabah pada sabtu dan Ahad (22-23 November 2008). Bagaimanapun, saya tidak menolak kemungkinan. Lalu saya melayari blog-blog yang mungkin berminat melapurkan peristiwa itu namun saya tidak menemuinya.

Saya agak jarang membaca surat khabar tempatan tetapi melayarinya melalui internet. saya membacanya online, percuma dan menjadi kebiasaan saya.

Puas saya mencari, lalu saya bertanya sahabat saya di mana source mengenai "Dulie Haji Marie' menyertai PKR...

Beliaupun memberikan saya surat khabar lamanya dan saya teliti. Rupanya ia di bawah tajuk "Oil Royalty: SAPP not giving up" Daily Express 23 November, 2008. Rupanya, Dulie menyertai SAPP BUKAN PKR dan bergiat di Kawasan Putatan, Sabah.... So, sahlah kini...Dulie Haji Marie menyertai Parti Maju Sabah-SAPP.


Sunday, November 23, 2008

Call for a code of ethics for bloggers

Quiet word: Syed Hamid (right) having a conversation with Ahirudin at the Blogger’s Buff 2008 conference In Kuala Lumpur Saturday.

Sunday November 23, 2008

KUALA LUMPUR: Blogging is no longer a part-time job and it is time bloggers had a code of ethics to promote accountability, said Home Minister Datuk Seri Syed Hamid Albar.“Blogging is touching the lives of more and more Malaysians. With such a powerful tool, bloggers are able to influence their readers and shape their perspectives.“They can unite communities and they can divide them. The dangers of distortions and inaccuracies in blogging are very real and it is capable of destroying lives.

“Thanks in part to the blogosphere, dangerous assumptions often travel faster than truths,” Syed Hamid said at the Blogger’s Buff 2008 conference yesterday.


Sabah PKR not facing crisis

Sabah PKR is not facing a leadership crisis, says party adviser Datuk Seri Anwar Ibrahim.Admitting that state PKR chief Ansari Abdullah had submitted his resignation, Anwar said they had asked him to remain in the post as all positions would automatically dissolve in a few weeks’ time, ahead of the party convention.

“The party will then decide on new appointments and they may retain the incumbent or make changes,” he told reporters here after a two-day visit to the state.Anwar said this in reference to the apparent differences between Ansari and PKR vice-president Datuk Dr Jeffrey Kitingan, who is the steering committee chairman for Sabah and Sarawak.“Differing views is not a crisis,” Anwar said, adding that the party would take into consideration the views of the divisions in its appointment of the state liaison chairman.

On fuel prices, he said the Government should further reduce them to reflect the current global oil prices. Anwar said the Government benefited through royalties and taxation on oil companies and it should not burden the people further. Let the market mechanism work, he said, adding that under current prices consumers were subsiding the Government.



Pakatan hasn’t invited SAPP

KOTA KINABALU: No offer has been made to Sabah Progressive Party (SAPP) to join Pakatan Rakyat.

“No, we have not yet reached that stage. We discussed issues facing the people and we have many common issues. SAPP is closer to us on these issues than with Barisan Nasional,” Anwar said when asked if he had invited SAPP to join Pakatan.

This Is Not A Normal Recession. CRG E-Newsletter‏
From: (
Sent: Saturday, 22 Nov, 2008 11: 17 PM
This Is Not A Normal Recession: Moving on to Plan B
By Mike Whitney
Global Research, November 21, 2008

"The Winter of 2008-2009 will prove to be the winter of global economic discontent that marks the rejection of the flawed ideology that unregulated global financial markets promote financial innovation, market efficiency, unhampered growth and endless prosperity while mitigating risk by spreading it system wide." Economists Paul Davidson and Henry C.K. Liu "Open Letter to World Leaders attending the November 15 White House Summit on Financial Markets and the World Economy" The global economy is being sucked into a black hole and most Americans have no idea why. The whole problem can be narrowed down to two words; "structured finance".
Structured finance is a term that designates a sector of finance where risk is transferred via complex legal and corporate entities. It's not as confusing as it sounds. Take a mortgage-backed security (MBS), for example. The mortgage is issued by a bank (the loan originator) which then sells the mortgage to a brokerage where it is chopped up into tranches (pieces of the loan) and sold in a pool of mortgages to investors that are looking for a rate that is greater than Treasurys or similar investments. The process of transforming debt ("the mortgage") into a security is called securitization. At one time, the MBS was a reasonably safe investment because the housing market was stable and there were relatively few foreclosures. Thus, the chance of losing one's investment was quite small.

Friday, November 21, 2008

Shahrizat lawan Rafidah

GAMBAR fail Rafidah dan Sharizat pada majlis Wanita Bersama Pemimpin
di PWTC, Ogos lalu.
Oleh Misiah Taib, Norfatimah Ahmad, Faiza Zainudin, Nazura Ngah

Ketua Wanita Umno tekad pertahan jawatan

KUALA LUMPUR: Naib Ketua Wanita Umno, Datuk Seri Shahrizat Abdul Jalil, semalam mengumumkan akan bertanding jawatan ketua pergerakan itu, manakala Tan Sri Rafidah Aziz tetap bertegas mahu mempertahankan jawatan berkenaan pada pemilihan parti, Mac depan. Keputusan itu sekali gus melenyapkan pelan peralihan kuasa Wanita Umno pada Jun 2009 yang diumumkan Rafidah pada Ogos lalu dan dijangka bakal mencetuskan kemelut baru dalam kepemimpinan pergerakan yang menjadi sayap kanan parti itu.

Wednesday, November 19, 2008

The Financial Crisis and the G-20 Washington Summit

The Financial Crisis and the G-20 Washington Summit
The Birth of the Mount-by Fidel Castro Ruz

Global Research, November 18, 2008 - 2008-11-16

From: (
Sent to:

Bush seemed happy to have Lula sitting to his right during dinner on Friday. On the other hand, Hu Jintao, whom he respects for the enormous market in his country, the capacity to produce consumer goods at low cost and the volume of his reserves in US dollars and bonds was sitting to his left.

Medvedev, whom he offends with the threat of locating strategic radars and missiles not far from Moscow, was assigned a seat rather distant from the White House host.

The King of Saudi Arabia, a country that in a near future will produce 15 million tons of light oil at highly competitive prices was also sitting at his left, at Hu’s side.

Meanwhile, Gordon Brown, the Prime Minister of the United Kingdom and his most faithful ally in Europe, could not be seen close to him in the pictures.

Nicolas Sarkozy, who is rather disappointed at the present architecture of the financial order, was far from him looking embittered.

The President of the Spanish Government, Jose Luis Rodriguez Zapatero, a victim of Bush’s personal resentment attending the conclave in Washington, I could not even see in the television images of the dinner.

That’s how those attending the banquet were sitting.

Anyone would have thought that the following day there would be a profound debate on the thorny issue.

On Saturday morning, the press agencies were reporting on the program that would unfold at the National Building Museum in Washington, D.C. Every second was covered. There would be an analysis of the current crisis and the actions to be taken. It would start at 11:30 a.m. local time. First, there would be a photo op, or “family picture” as Bush called it, and twenty minutes later the first plenary session would start followed by a another one in the second half of the day. Everything was strictly planned, even the fine sanitary services.

The speeches and analysis would last approximately three hours and 30 minutes. Lunch would be at 3:25 local time, immediately followed by the final declaration at 5:05. One hour later, at 6:05, Bush would be leaving for Camp David to rest, have dinner and have a pleasant sleep.

Those following the event were impatient to see the day going by and trying to know how the problems of the earth and the human specie would be dealt with in such a short time. A final declaration had been announced.

The fact is that the Summit’s final declaration was worked out by previously chosen economic advisors, very much in line with neoliberal ideas, while Bush in his statements prior to the summit and after its conclusion claimed more power and more money for the International Monetary Fund, the World Bank and other world institutions under strict control of the United States and its closest allies. That country had decided to inject 700 billion dollars to bailout its banks and multinational corporations. Europe had offered an identical or even higher figure. Japan, its strongest pillar in Asia, has promised a 100 billion dollars contribution. In the case of the People’s Republic of China, which is developing increasing and convenient relations with Latin American countries, they are expecting another contribution of 100 billion dollars from its reserves.

Where would so many dollars, euros and pound sterlings come from if not from the deep indebtedness of new generations? How can the structure of the new world economy be built on paper money, which is what is really circulating in the short run, when the country issuing it is suffering from an enormous fiscal deficit? Would it be worthwhile traveling by air to a place on the planet named Washington to meet with a President with only 60 more days left in government and signing a document previously designed to be adopted at the Washington Museum? Could the US radio, TV and press be right not to pay special attention to this old imperialist game in the much-trumpeted meeting?

What is really incredible is the final declaration adopted by consensus in the conclave. It is obviously the participants’ full acceptance of Bush’s demands made before and during the summit. Some of the attending countries had no choice but to adopt it; in their desperate struggle for development, they did not want to be isolated from the richest and most powerful and their financial institutions, which are the majority in the G20.

Bush was really euphoric as he spoke. He used demagogic phrases which mirror the final declaration.

He said: “The first decision I had to make was who was coming to the meeting. And obviously I decided that we ought to have the G20 nations, as opposed to the G8 or the G13. But once you make the decision to have the G20 then the fundamental question is, with that many nations, from six different continents, who all represent different stages of economic development, would I be possible to reach agreements, and not only agreements, would I be possible to reach agreements that were substantive? And I’m pleased to report the answer to that question was, absolutely.”

“The United States has taken some extraordinary measures. Those of you who have followed my career know that I’m a free market person –until you are told that if you don’t take decisive measures then it’s conceivable that our country could go into a depression greater than the Great Depression.”

1. “we just started on the $700 billion fund to start getting money out to our banks.”

2. " we all understand the need to work on pro-growth economic policies.”

3. “Transparency is very important so that investors and regulators are able to know the truth.”

The rest of what Bush said goes more or less along this line.

The final declaration of the summit, which takes half an hour to read in public due to its length, is clearly defined in a number of selected paragraphs:

“We, the leaders of the G20 have held a first meeting in Washington, on November 15, in the light of serious challenges to the world economy and financial markets…”

“1. we should lay the foundations for a reform that will make this global crisis less likely to happen again in the future. Our work should be guided by the principles of the free market, free trade and investment….”

“2. the market players sought to obtain more benefits failing to make an adequate assessment of the risks and they failed…”

“The authorities, regulators and supervisors from some developed nations did not realize or adequately warned about the risks created in the financial markets…”

“…insufficient and poorly coordinated macroeconomic policies as well as inadequate structure reforms, led to an unsustainable macroeconomic global result.”

“Many emerging economies, which have helped sustain the world economy, are increasingly suffering from the world brakes.”

“We note the important role of the IMF in response to the crisis; we salute the new short-term liquidity mechanism and urge the constant reviewing of its instruments to ensure flexibility.”

“We shall encourage the World Bank and other multilateral developing banks to use their full capacity in support of their agenda for assistance…”

“We will make sure that the IMF, the World Bank and other multilateral developing banks have the necessary resources to continue playing their role in the solution of the crisis.”

“We shall exercise a strong monitoring of the credit agencies through the development of an international code of conduct.”

“We pledge to protect the integrity of the world financial markets by reinforcing protection to the investor and the consumer.”

“We are determined to advance in the reform of the Bretton Woods institutions so that they reflect the changes in the world economy to increase their legitimacy and effectiveness.”

“We shall meet again on April 30, 2009, to examine the implementation of the principles and decisions made today.”

“We concede that these reforms will only be successful if they are based on a serious commitment to the principles of free market, including the rule of law, respect for private property, free trade and investment, efficient and competitive markets and effectively regulated financial systems.”

“We shall refrain from erecting new barriers to investment and trade in goods and services.”

“We are aware of the impact of the current crisis on the developing nations, especially on those most vulnerable.”

“We are certain that as we advance through cooperation, collaboration and multilateralism we will overcome the challenges and restore stability and prosperity to the world economy.”

This technocratic language is beyond grasp of the masses.

The empire is treated courteously; its abusive methods are not criticized.

The IMF, the World Bank and the multilateral credit organizations are praised despite the fact that they generate debts, enormous bureaucratic expenses and investments while supplying raw materials to the large multinationals which are also responsible for the crisis.

This goes on like that until the last paragraph. It’s a boring declaration full of the usual rhetoric. It doesn’t say anything. It was signed by Bush, the champion of neoliberalism, the man responsible for genocidal wars and massacres, who has invested in his bloody adventures all the money that would have sufficed to change the economic face of the world.

The document does not have a word on the absurd policy promoted by the United States of turning food into fuel; or the unequal exchange of which the Third World countries are victims; or about the useless arms race, the production and trade of weapons, the breakup of the ecological balance and the extremely serious threats to peace that bring the world to the brink of annihilation.

Only a short four-word phrase in the long document mentions the need “to face climate change.”

The declaration reflects the demand of the countries attending the conclave to meet again in April 2009, in the United Kingdom, Japan or any other country that meets the necessary requirements --nobody knows which- to examine the situation of the world finances, dreaming that the cyclical crisis with their dramatic consequences never happen again.

Now is the time for the theoreticians from the left and the right to offer their passionate or dispassionate criteria on the document.

From my point of view, the privileges of the empire were not even touched upon. Having the necessary patience to read it completely, one can see that is simply a pious appeal to the ethic of the most powerful country on earth, both technologically and militarily, in the era of economic globalization; it’s like begging the wolf not to eat up little red riding hood.

translated from the Spanish

Global Research Articles by Fidel Castro Ruz

Monday, November 17, 2008

The Great Depression of the 21st Century.

The Great Depression of the 21st Century.
From: (
Sent: Sunday, 16 Nov, 2008 5: 38 PM

November 15, 2008

The financial crisis is deepening, with the risk of seriously disrupting the system of international payments. This crisis is far more serious than the Great Depression. All major sectors of the global economy are affected. Recent reports suggest that the system of Letters of Credit as well as international shipping, which constitute the lifeline of the international trading system, are potentially in jeopardy.

The proposed bank "bailout" under the so-called Troubled Asset Relief Program (TARP) is not a "solution" to the crisis but the "cause" of further collapse. The "bailout" contributes to a further process of destabilization of the financial architecture. It transfers large amounts of public money, at taxpayers expense, into the hands of private financiers. It leads to a spiraling public debt and an unprecedented centralization of banking power. Moreover, the bailout money is used by the financial giants to secure corporate acquisitions both in the financial sector and the real economy.

In turn, this unprecedented concentration of financial power spearheads entire sectors of industry and the services economy into bankruptcy, leading to the layoff of tens of thousands of workers. The upper spheres of Wall Street overshadow the real economy. The accumulation of large amounts of money wealth by a handful of Wall Street conglomerates and their associated hedge funds is reinvested in the acquisition of real assets. Paper wealth is transformed into the ownership and control of real productive assets, including industry, services, natural resources, infrastructure, etc.

Collapse of Consumer Demand

The real economy is in crisis. The resulting increase in unemployment is conducive to a dramatic decline in consumer spending which in turn backlashes on the levels of production of goods and services. Exacerbated by neoliberal macro-economic policy, this downward spiral is cumulative, ultimately leading to an oversupply of commodities. Business enterprises cannot sell their products, because workers have been laid off. Consumers, namely working people, have been deprived of the purchasing power required to fuel economic growth. With their meager earnings, they cannot afford to acquire the goods produced.

Overproduction Triggers a String of Bankruptcies

Inventories of unsold goods pile up. Eventually, production collapses; the supply of commodities declines through the closing down of production facilities, including manufacturing assembly plants. In the process of plant closure, more workers become unemployed. Thousands of bankrupt firms are driven off the economic landscape, leading to a slump in production. Mass poverty and a Worldwide decline in living standards is the result of low wages and mass unemployment. It is the outcome of a preexisting global cheap labor economy, largely characterized by low wage assembly plants in Third World countries.

The current crisis extends the geographic contours of the cheap labor economy, leading to the impoverishment of large sectors of the population in the so-called developed countries (including the middle classes).

In the US, Canada and Western Europe, the entire industrial sector is potentially in jeopardy.

We are dealing with a long-term process of economic and financial restructuring. In its earlier phase, starting in the 1980s during the Reagan Thatcher era, local and regional level enterprises, family farms and small businesses were displaced and destroyed. In turn, the merger and acquisition boom of the 1990s led to the concurrent consolidation of large corporate entities both in the real economy as well as in banking and financial services.

In recent developments, however, the concentration of bank power has been at the expense of big business. What is distinct in this particular phase of the crisis, is the ability of the financial giants (through their overriding control over credit) not only to create havoc in the production of goods and services, but also to undermine and destroy large corporate entities of the real economy.

Bankruptcies are occurring in all major sectors of activity: Manufacturing, telecoms, consumer retail outlets, shopping malls, airlines, hotels and tourism, not to mention real estate and the construction industry, victims of the subprime mortgage meltdown. General Motors has confirmed that "it could run out of cash within a few months, which could prompt one of the biggest bankruptcy filings in U.S. history". (, November 11, 2008)) In turn this would backlash on a string of related industries. Estimates of job losses in the US auto industry range from 30,000 to as much as 100,000.(Ibid).

Collapse of General Motors Share Price
In the US, consumer retail companies are in difficulty: the share prices of JC Penney and Nordstrom department store chains have collapsed. Circuit City Stores Inc. filed for Chapter 11 protection. The shares of Best Buy, the electronics retail chain, have plunged.
The Vodafone Group PLC, the world's biggest mobile phone company not to mention InterContinental Hotels PLC are in difficulty, following the collapse of stock values. (AP, Nov 12, 2008). Worldwide, over two dozen airlines have gone under in 2008, adding to a string of airline bankruptcies in the course of the last five years. (Aviation and Aerospace News, 30 October 2008).
Denmark's Second commercial airline Stirling has declared bankruptcy. In the US, a growing list of real estate companies have already filed for bankruptcy protection.

Vodophone. Collapse of Share PriceInterContinental Hotels PLC
In the last two months, there have been numerous plant closures across America leading to the permanent layoff of tens of thousands of workers. These closures have affected several key areas of economic activity including the pharmaceutical and chemical industries, the automobile industry and related sectors, the services economy, etc.

US factory orders have declined dramatically. Research firm Autodata reported in October that "sales of cars and light trucks in September had declined 27 percent compared with a year earlier."(Washington Post, October 3, 2008) UnemploymentAccording to the US Bureau of Labor Statistics, an additional 240,000 jobs were lost during the month of October alone:

"Nonfarm payroll employment fell by 240,000 in October, and the unemployment rate rose from 6.1 to 6.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. October's drop in payroll employment followed declines of 127,000 in August and 284,000 in September, as revised. Employment has fallen by 1.2 million in the first 10 months of 2008; over half of the decrease has occurred in the past 3 months. In October, job losses continued in manufacturing, construction, and several service-providing industries...

Among the unemployed, the number of persons who lost their job and did not expect to be recalled to work rose by 615,000 to 4.4 million in October. Over the past 12 months, the size of this group has increased by 1.7 million." (Bureau of Labor Statistics, November, 2008)

The official figures do not describe the seriousness of the crisis and its devastating impact on the labor market, since many of the job losses are not reported.

The situation in the European Union is equally disturbing. A recent British report points to the potential plight of mass unemployment in North Eastern England. In Germany, a report published in October, suggests that 10-15% of all automotive jobs in Germany could be lost.

Job cuts have also been announced at General Motors and Nissan-Renault plants in Spain. Sales of new cars in Spain plummeted by 40 percent in October in relation to sales in the same month last year.

Workers of Nissan automaker protest in front of the Japanese company's building in Barcelona (AFP)

Bankruptcies and Foreclosures: A Money-spinning Operation for the Financial Giants

Among the companies on the verge of bankruptcy are some highly lucrative and profitable operations. The important question: who takes over the ownership of bankrupt giant industrial corporations?

Bankruptcies and foreclosures are a money-spinning operation. With the collapse in stock market values, listed companies experience a major collapse of the price of their stock, which immediately affects their creditworthiness and their ability to borrow and/ or to renegotiate debts ( which are based on the quoted value of their assets).

The institutional speculators, the hedge funds, et al have cashed in on their windfall loot.

They trigger the collapse of listed companies through short selling and other speculative operations. They then cash in on their large scale speculative gains.

According to a report in the Financial Times, there is evidence that the plunge of the US automobile industry was in part the result of manipulation: "General Motors and Ford lost 31 per cent to $3.01 and 10.9 per cent to $1.80 despite hopes that Washington may save the industry from the brink of collapse. The fall came after Deutsche Bank set a price target of zero on GM." (FT, November 14, 2008, emphasis added)

The financiers are on a shopping-spree. America's Forbes 400 billionaires are waiting in limbo.

Once they have consolidated their position in the banking industry, the financial giants including JP Morgan Chase, Bank of America, et al will use their windfall money gains and bailout money provided under TARP, to further extend their control over the real economy.

The next step consists in transforming liquid assets, namely money paper wealth, into the acquisition of real economy assets.

In this regard, Warren Buffett's Berkshire Hathaway Inc. is a major shareholder of General Motors. More recently, following the collapse in stock values in October and November, Buffett boosted his stake in oil producer ConocoPhillips, not to mention Eaton Corp, whose price on the NYSE tumbled by 62% in relation to its December 2007 high (Bloomberg).

The target of these acquisitions are the numerous highly productive industrial and services sector companies, which are on the verge of bankruptcy and/or whose stock values have collapsed.

The money managers are picking up the pieces.
Ownership of the Real Economy

As a result of these developments, which are directly related to the financial meltdown, the entire ownership structure of real economy assets is in turmoil.

Paper wealth accumulated through insider trading and stock market manipulation is used to acquire control over real economic assets, displacing the preexisting ownership structures.

What we are dealing with is an unsavory relationship between the real economy and the financial sector. The financial conglomerates do not produce commodities. They essentially make money through the conduct of financial transactions. They use the proceeds of these transactions to take over bona fide real economy corporations which produce goods and services for household consumption.

In a bitter twist, the new owners of industry are the institutional speculators and financial manipulators. They are becoming the new captains of industry, displacing not only the preexisting structures of ownership but also instating their cronies in the seats of corporate management.

No Reform Possible under the Washington-Wall Street Consensus

The November 15 G-20 Financial Summit in Washington upholds the Washington-Wall Street consensus.
While formally presenting a project to restore financial stability, in practice, the hegemony of Wall Street remains unscathed. The tendency is towards a unipolar monetary system dominated by the United States and upheld by US military superiority. The architects of financial disaster under the 1999 Gramm-Leach-Bliley Financial Services Modernization Act (FSMA) have been entrusted with the task of mitigating the crisis, which they themselves created. They are the cause of financial collapse.

The G20 Financial Summit doesn't question the legitimacy of the hedge funds and the various instruments of derivative trade. The final Communiqué includes an imprecise and blurred commitment "to better regulate hedge funds and create more transparency in mortgage-related securities in a bid to halt a global economic slide."

A solution to this crisis can only be brought about through a process of "financial disarmament", which forcefully challenges the hegemony of the Wall Street financial institutions including their control over monetary policy. "Financial disarmament" would also require freezing the instruments of speculative trade, dismantling the hedge funds and democratizing monetary policy. The term "financial disarmament" was initially coined by John Maynard Keynes in the 1940s.

Obama Endorses Financial Deregulation

Barack Obama has embraced the Washington-Wall Street consensus. In a bitter twist, former Congressman Jim Leach, a Republican who sponsored the 1999 FSMA in the House of Representatives is now advising Obama on formulating a timely solution to the crisis.

Jim LeachJim Leach, Madeleine Albright and former Treasury Secretary Larry Summers, who also played a key role in pushing through the FSMA legislation, were in attendance at the November 15 G-20 Financial Summit, as part of President-elect Barack Obama's advisory team:

"President-elect Barack Obama and Vice President-elect Joe Biden announced that former Secretary of State Madeleine Albright and former Republican Congressman Jim Leach would be available to meet with delegations at the G-20 summit on their behalf. Leach and Albright are holding these unofficial meetings to seek input from visiting delegations on behalf of the president-elect and vice president-elect. (, November 15, 2008)
The Great Depression of the 21st Century: Collapse of the Real Economy
By Michel Chossudovsky
URL of this article:

Sunday, November 16, 2008

PRO Perlu Kreatif Sampaikan Maklumat Terkini.

PRO Perlu Kreatif Sampaikan Maklumat Terkini, Kata Shabery

KUALA LUMPUR, 15 Nov - Pegawai Perhubungan Awam (PRO) di setiap kementerian, jabatan dan agensi kerajaan perlu bertindak kreatif dalam menyebarkan maklumat serta peranan agensi mereka secara berkesan.

Menteri Penerangan Datuk Ahmad Shabery Cheek berkata mereka perlu berfikir lebih kreatif dalam menyampaikan dasar kerajaan kepada orang ramai tanpa bergantung kepada Kementerian Penerangan.

“Kementerian tidak boleh bergantung kepada RTM sahaja untuk sebarkan informasi mereka tetapi perlu cari alternatif lain yang lebih menarik. Sebaliknya RTM juga bersaing dengan stesen televisyen lain,” katanya pada Majlis Malam Mesra Media sempena pelancaran sistem e-Press di sini.

Sistem e-Press adalah perkhidmatan sebaran nota kepada pengarang dan siaran media secara online mengenai aktiviti kementerian, jabatan, agensi kerajaan dan kenyataan rasmi pemimpin negara sama ada di peringkat pusat dan peringkat negeri.Mengulas lanjut, Ahmad Shabery berkata kewujudan blog penulisan yang diilhamkan dari kemajuan teknologi mencetuskan situasi di mana tidak memerlukan organisasi media yang besar untuk menyebarkan maklumat.

Katanya, dalam lima tahun akan datang, generasi muda mungkin menerima blog dan ruangan perbualan seperti “facebook”, “skype”, “yahoo messenger” dan “YouTube” sebagai media aliran utama mereka berbanding televisyen, radio dan suratkhabar.

“Ini cabaran kepada pegawai perhubungan awam kita supaya bertindak lebih pantas lagi. Kalau anak umur 15 tahun sudah ada facebook, tahu guna You Tube, blog…jadi kita memerlukan pendekatan baru dengan e-Press,” katanya.

Beliau berkata Sistem e-Press akan memudahkan dan mempercepatkan sebaran maklumat terkini kepada semua media tempatan mengenai aktiviti pemimpin negara untuk dibuat liputan.
Perkhidmatan e-Press boleh dilayari secara percuma di laman web Jabatan Penerangan Malaysia iaitu

Who are the Architects of Economic Collapse?

From: (
Sent: Sunday, 9 Nov, 2008 9: 42 PM

Who are the Architects of Economic Collapse? CRG E-Newsletter‏
Will an Obama Administration Reverse the Tide?

By Michel Chossudovsky
Global Research, November 9, 2008

Most Serious Economic Crisis in Modern History

The October 2008 financial meltdown is not the result of a cyclical economic phenomenon. It is the deliberate result of US government policy instrumented through the Treasury and the US Federal Reserve Board.

This is the most serious economic crisis in World history.

The "bailout" proposed by the US Treasury does not constitute a "solution" to the crisis. In fact quite the opposite: it is the cause of further collapse. It triggers an unprecedented concentration of wealth, which in turn contributes to widening economic and social inequalities both within and between nations.

The levels of indebtedness have skyrocketed. Industrial corporations are driven into bankruptcy, taken over by the global financial institutions. Credit, namely the supply of loanable funds, which constitutes the lifeline of production and investment, is controlled by a handful of financial conglomerates.

With the "bailout", the public debt has spiraled. America is the most indebted country on earth. Prior to the "bailout", the US public debt was of the order of 10 trillion dollars. This US dollar denominated debt is composed of outstanding treasury bills and government bonds held by individuals, foreign governments, corporations and financial institutions.

"The Bailout": The US Administration is Financing its Own Indebtedness

Ironically, the Wall Street banks --which are the recipients of the bailout money-- are also the brokers and underwriters of the US public debt. Although the banks hold only a portion of the public debt, they transact and trade in US dollar denominated public debt instruments Worldwide.

In a bitter twist, the banks are the recipients of a 700+ billion dollar handout and at the same time they act as creditors of the US government.

We are dealing with an absurd circular relationship: To finance the bailout, Washington must borrow from the banks, which are the recipients of the bailout.

The US administration is financing its own indebtedness.

Federal, State and municipal governments are increasingly in a straightjacket, under the tight control of the global financial conglomerates. Increasingly, the creditors call the shots on government reform.

The bailout is conducive to the consolidation and a centralization of banking power, which in turn backlashes on real economic activity, leading to a string of bankruptcies and mass unemployment.

Will an Obama Administration Reverse the Tide?

The financial crisis is the outcome of a deregulated financial architecture.

Obama has stated unequivocally his resolve to address the policy failures of the Bush administration and "democratize" the US financial system. President-Elect Barack Obama says that he is committed to reversing the tide:

"Let us remember that if this financial crisis taught us anything, it’s that we cannot have a thriving Wall Street while Main Street suffers. In this country, we rise or fall as one nation, as one people." (President-elect Barack Obama, November 4, 2008, emphasis added)

The Democrats casually blame the Bush administration for the October financial meltdown.

Obama says that he will be introducing an entirely different policy agenda which responds to the interests of Main Street:

"Tomorrow, you can turn the page on policies that put the greed and irresponsibility of Wall Street before the hard work and sacrifice of men and women all across Main Street. Tomorrow you can choose policies that invest in our middle class and create new jobs and grow this economy so that everybody has a chance to succeed, from the CEO to the secretary and the janitor, from the factory owner to the men and women who work on the factory floor.( Barack Obama, election campaign, November 3, 2008, emphasis added)
Is Obama committed to "taming Wall Street" and "disarming financial markets"?

Ironically, it was under the Clinton administration that these policies of "greed and irresponsibility" were adopted.

The 1999 Financial Services Modernization Act (FSMA) was conducive to the the repeal of the Glass-Steagall Act of 1933. A pillar of President Roosevelt’s "New Deal", the Glass-Steagall Act was put in place in response to the climate of corruption, financial manipulation and "insider trading" which resulted in more than 5,000 bank failures in the years following the 1929 Wall Street crash.
Bill Clinton signs into law the Gramm-Leach-Bliley Financial Services Modernization Act, November 12, 1999

Under the 1999 Financial Services Modernization Act, effective control over the entire US financial services industry (including insurance companies, pension funds, securities companies, etc.) had been transferred to a handful of financial conglomerates and their associated hedge funds.

The Engineers of Financial Disaster
Who are the architects of this debacle?

In a bitter irony, the engineers of financial disaster are now being considered by President-Elect Barack Obama's Transition Team for the position Treasury Secretary:

Lawrence Summers played a key role in lobbying Congress for the repeal of the Glass Steagall Act. His timely appointment by President Clinton in 1999 as Treasury Secretary spearheaded the adoption of the Financial Services Modernization Act in November 1999. Upon completing his mandate at the helm of the US Treasury, he became president of Harvard University (2001- 2006).

Paul Volker was chairman of the Federal Reserve Board in the l980s during the Reagan era. He played a central role in implementing the first stage of financial deregulation, which was conducive to mass bankruptcies, mergers and acquisitions, leading up to the 1987 financial crisis.

Timothy Geithner is CEO of the Federal Reserve Bank of New York, which is the most powerful private financial institution in America. He was also a former Clinton administration Treasury official. He has worked for Kissinger Associates and has also held a senior position at the IMF. The FRBNY plays a behind the scenes role in shaping financial policy. Geithner acts on behalf of powerful financiers, who are behind the FRBNY. He is also a member of the Council on Foreign Relations (CFR)

Jon Corzine is currently governor of New Jersey, former CEO of Goldman Sachs.

Larry Summers (left) and Timothy Geithner

At the time of writing, Obama's favorite is Larry Summers, front-runner for the position of Treasury Secretary.

Harvard University Economics Professor Lawrence Summers served as Chief Economist for the World Bank (1991–1993). He contributed to shaping the macro-economic reforms imposed on numerous indebted developing countries. The social and economic impact of these reforms under the IMF-World Bank sponsored structural adjustment program (SAP) were devastating, resulting in mass poverty.

Larry Summer's stint at the World Bank coincided with the collapse of the Soviet Union and the imposition of the IMF-World Bank's deadly " economic medicine" on Eastern Europe, the former Soviet republics and the Balkans.

In 1993, Summers moved to the US Treasury. He initially held the position of Undersecretary of the Treasury for international affairs and later Deputy Secretary. In liaison with his former colleagues at the IMF and the World Bank, he played a key role in crafting the economic "shock treatment" reform packages imposed at the height of the 1997 Asian crisis on South Korea, Thailand and Indonesia.

The bailout agreements negotiated with these three countries were coordinated through Summers office at the Treasury in liaison with the Federal Reserve Bank of New York and the Washington based Bretton Woods institutions. Summers worked closely with IMF Deputy Managing Director Stanley Fischer, who was later appointed Governor of the Central Bank of Israel.

Larry Summers became Treasury Secretary in July 1999. He is a protégé of David Rockefeller. He was among the main architects of the infamous Financial Services Modernization Act, which provided legitimacy to inside trading and outright financial manipulation.

Larry Summers and David Rockefeller

"Putting the Fox in Charge of the Chicken Coop"

Summers is currently a Consultant to Goldman Sachs and managing director of a Hedge fund, the D.E. Shaw Group, As former Treasury Secretary and his contacts on Wall Street, Summers had valuable inside information on the movement of financial markets. Under the helm of Larry Summers and as a direct result of the financial meltdown, the D. E. Shaw Group made record profits. At the end of October 2008, at the height of the financial meltdown, the Shaw Group announced $7 billion in revenue, a 22 percent increase over the previous year, "with nearly three times more cash on hand than a year ago" (, 31 October 2008).

Putting a Hedge Fund manager (with links to the Wall Street financial establishment) in charge of the Treasury is tantamount to putting the fox in charge of the chicken coop.

The Washington Consensus

Summers, Geithner, Corzine, Volker, Fischer, Phil Gramm, Bernanke, Hank Paulson, Rubin, not to mention Alan Greenspan, al al. are buddies, they play golf together; they have links to the Council on Foreign Relations and the Bilderberg; they act concurrently in accordance with the interests of Wall Street; they meet behind closed doors; they are on the same wave length; they are Democrats and Republicans.

While they may disagree on some issues, they are firmly committed to the Washington-Wall Street Consensus. They are utterly ruthless in their management of economic and financial processes. Their actions are profit driven. Outside of their narrow interest in the "efficiency" of "markets", they have little concern for "living human beings". How are people's lives affected by the deadly gamut of macro-economic and financial reforms, which is spearheading entire sectors of economic activity into bankruptcy.

The economic reasoning underlying neoliberal economic discourse is often cynical and contemptuous. In this regard, Lawrence Summers' economic discourse stands out. He is known among environmentalists for having proposed the dumping of toxic waste in Third World countries, because people in poor countries have shorter lives and the costs of labor are abysmally low, which essentially means that the market value of people in the Third World is much lower. According to summers, this makes it far more "cost effective" to export toxic materials to impoverished countries. A controversial 1991 World Bank memo signed by of Chief Economist Larry Summers reads as follows (excerpts, emphasis added):

DATE: December 12, 1991 TO: Distribution FR: Lawrence H. Summers Subject: GEP

"'Dirty' Industries: Just between you and me, shouldn't the World Bank be encouraging MORE migration of the dirty industries to the Less Developed Countries? I can think of three reasons:

1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality.... From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.

2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I've always though that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.

3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. [the demand increases when income levels increase]. The concern over an agent that causes a one in a million change in the odds of prostrate cancer is obviously going to be much higher in a country where people survive to get prostrate cancer than in a country where under 5 mortality is is 200 per thousand.... "

Summers stance on the export of pollution to developing countries had a marked impact on US environmental policy:

In 1994, "virtually every country in the world broke with Mr. Summers' Harvard-trained "economic logic" ruminations about dumping rich countries' poisons on their poorer neighbors, and agreed to ban the export of hazardous wastes from OECD to non-OECD [developing] countries under the Basel Convention. Five years later, the United States is one of the few countries that has yet to ratify the Basel Convention or the Basel Convention's Ban Amendment on the export of hazardous wastes from OECD to non-OECD countries. (Jim Valette, Larry Summers' War Against the Earth, Counterpunch, undated)

The 1997 Asian Crisis: Dress Rehearsal for Things to Come

In the course of 1997, currency speculation instrumented by major financial institutions directed against Thailand, Indonesia and South Korea was conducive to the collapse of national currencies and the transfer of billions of dollars of central bank reserves into private financial hands. Several observers pointed to the deliberate manipulation of equity and currency markets by investment banks and brokerage firms.

While the Asian bailout agreements were formally negotiated with the IMF, the major Wall Street commercial banks (including Chase, Bank of America, Citigroup and J. P. Morgan) as well as the "big five" merchant banks (Goldman Sachs, Lehman Brothers, Morgan Stanley and Salomon Smith Barney) were "consulted" on the clauses to be included in the Asian bail-out agreements.

The US Treasury in liaison with Wall Street and the Bretton Woods institutions played a central role in negotiating the bailout agreements. Both Larry Summers and Timothy Geithner, were actively involved on behalf of the US Treasury in the 1997 bailout of South Korea:

[In 1997] "Messrs. Summers and Geithner worked to persuade Mr. Rubin to support financial aid to South Korea. Mr. Rubin was wary of such a move, worrying that providing money to a country in dire straits might be a losing proposition..." (WSJ, November 8, 2008)

What happened in Korea under advice from Deputy Treasury Secretary Summers et al, had nothing to do with "financial aid".

The country was literally ransacked. Undersecretary of the Treasury David Lipton was sent to Seoul in early December 1997. Secret negotiations were initiated. Washington had demanded the firing of the Korean Finance Minister and the unconditional acceptance of the IMF "bailout".

A new finance minister, who happened to be former IMF and World Bank official, was appointed and immediately rushed off to Washington for "consultations" with his former IMF colleague Deputy Managing Director Stanley Fischer.

"The Korean Legislature had met in emergency sessions on December 23. The final decision concerning the 57 billion dollar deal took place the following day, on Christmas Eve December 24th, after office hours in New York. Wall Street’s top financiers, from Chase Manhattan, Bank America, Citicorp and J. P. Morgan had been called in for a meeting at the Federal Reserve Bank of New York. Also at the Christmas Eve venue, were representatives of the big five New York merchant banks including Goldman Sachs, Lehman Brothers, Morgan Stanley and Salomon Smith Barney. And at midnight on Christmas Eve, upon receiving the green light from the banks, the IMF was allowed to rush 10 billion dollars to Seoul to meet the avalanche of maturing short-term debts.

The coffers of Korea’s central Bank had been ransacked. Creditors and speculators were anxiously awaiting to collect the loot. The same institutions which had earlier speculated against the Korean won were cashing in on the IMF bailout money. It was a scam. (See Michel Chossudovsky, The Recolonization of Korea, subsequently published as a chapter in The Globalization of Poverty and the New World Order, Global Research, Montreal, 2003.)

"Strong economic medicine" is the prescription of the Washington Consensus. "Short term pain for long term gain" was the motto at the World Bank during Lawrence Summers term of as World Bank Chief Economist. (See IMF, World Bank Reforms Leave Poor Behind, Bank Economist Finds, Bloomberg, November 7, 2000)

What we dealing with is an entire " old boys network" of officials and advisers at the Treasury, the Federal Reserve, the IMF, World Bank, the Washington Think Tanks, who are in permanent liaison with leading financiers on Wall Street.

Whoever is chosen by Obama's Transition team will belong to the Washington Consensus.

The 1999 Financial Services Modernization Act
What happened in October 1999 is crucial.

In the wake of lengthy negotiations behind closed doors, in the Wall Street boardrooms, in which Larry Summers played a central role, the regulatory restraints on Wall Street’s powerful banking conglomerates were revoked "with a stroke of the pen".

Larry Summers worked closely with Senator Phil Gramm (1985-2002),chairman of the Senate Banking committee, who was the legislative architect of the the Gramm-Leach-Bliley Financial Services Modernization Act, signed into law on November 12, 1999 (See Group Photo above). (For Complete text click US Congress: Pub.L. 106-102). As Texas Senator, Phil Gramm was closely associated with Enron.

In December 2000 at the very end of the Clinton mandate, Gramm introduced a second piece of legislation, the so-called Gramm-Lugar Commodity Futures Modernization Act, which paved the way for the speculative onslaught in primary commodities including oil and food staples.

"The act, he declared, would ensure that neither the sec nor the Commodity Futures Trading Commission (cftc) got into the business of regulating newfangled financial products called swaps—and would thus "protect financial institutions from overregulation" and "position our financial services industries to be world leaders into the new century." (See David Corn, Foreclosure Phil, Mother Jones, July August 2008)

Phil Gramm was McCain's first choice for Secretary of the Treasury.

Under the FSMA new rules – ratified by the US Senate in October 1999 and approved by President Clinton – commercial banks, brokerage firms, hedge funds, institutional investors, pension funds and insurance companies could freely invest in each others businesses as well as fully integrate their financial operations.

A "global financial supermarket" had been created, setting the stage for a massive concentration of financial power. One of the key figures behind this project was Secretary of the Treasury Larry Summers, in liaison with David Rockefeller. Summers described the FSMA as "the legislative foundation of the financial system of the 21th century". That legislative foundation is among the main causes of the 2008 financial meltdown.

Financial Disarmament

There can be no meaningful solution to the crisis, unless there is a major reform in the financial architecture, implying inter alia the freezing of speculative trade and the "disarming of financial markets". The project of disarming financial markets was first proposed by John Maynard Keynes in the 1940s as a means to the establishment of a multipolar international monetary system. (See J.M. Keynes, Activities 1940-1944, Shaping the Post-War World: The Clearing Union, The Collected Writings of John Maynard Keynes, Royal Economic Society, Macmillan and Cambridge University Press, Vol. XXV, London 1980, p. 57).

Main Street versus Wall Street

Where are Obama's "Main Street appointees"? Namely individuals who respond to the interest of people across America. There are no labor or community leaders on Obama's list for key positions.

The President-elect is appointing the architects of financial deregulation.

Meaningful financial reform cannot be adopted by officials appointed by Wall Street and who act on behalf of Wall Street.

Those who set the financial system ablaze in 1999, have been called back to turn out the fire.

The proposed "solution" to the crisis under the "bailout" is the cause of further economic collapse.

There are no policy solutions on the horizon.

The banking conglomerates call the shots. They decide on the composition of the Obama Cabinet. They also decide on the agenda of the Washington Financial Summit (November 15, 2008) which is slated to lay the groundwork for the establishment of a new "global financial architecture".

The Wall Street blueprint has already been discussed behind closed doors: the hidden agenda is to establish a unipolar international monetary system, dominated by US financial power, which in turn would be protected and secured by US military superiority.

Neoliberal with a "Human Face"

There is no indication that Obama will break his ties to his Wall Street sponsors, who largely funded his election campaign.

Goldman Sachs, J. P. Morgan Chase, Citigroup, Bill Gates' Microsoft are among his main campaign contributors.

Warren Buffett, among the the world's richest individuals, not only supported Barak Obama's election campaign, he is a member of his transition team, which plays a key role deciding the composition of Obama's cabinet.

Warren Buffett

Unless there is a major upheaval in the system of political appointments to key positions, an alternative Obama economic agenda geared towards poverty alleviation and employment creation is highly unlikely.

Barack Obama. November 7 Press Conference.
Joe Biden (far left), newly appointed chief of staff Rahm Emanuel (far right). Photo: Charles Dharapak

What we are witnessing is continuity.

Obama provides a " human face" to the status quo. This human face serves to mislead Americans on the nature of the economic and political process.

The neoliberal economic reforms remain intact.

The substance of these reforms including the "bailout" of America's largest financial institutions ultimately destroys the real economy, while spearheading entire areas of manufacturing and the services economy into bankruptcy.

Global Economic Tremors. CRG E-Newsletter‏
From: (
Sent: Wednesday, 12 Nov, 2008 1: 32 PM

Global Economic Tremors
By Stephen Lendman
URL of this article:

November 12, 2008

On October 28, the Financial Times' columnist Martin Wolf wrote: "Preventing a global slump must be the priority." He cited Nouriel Roubini back in February listing "twelve steps to financial disaster," all of which the US took and dragged the whole world down with it. Priority one is to rescue it and avoid a possible depression. "Given the near-disintegration of the western world's banking system, the flight to safe assets, the tightening of credit to the real economy, collapsing equity prices, turmoil on currency markets, continued steep declines in house prices, rapid withdrawal of funds from hedge funds and ongoing collapse of the so-called "shadow banking system."

More worrisome is that "next year could be far worse" so what does Wolf think should be done?Nothing to purge past excesses or everything possible to prevent the worst of all possible outcomes. Wolf calls the former path "a recipe for xenophobia, nationalism and revolution" and in combination like "let(ting) a city burn in order to punish someone who smoked in bed."

In short, madness at a time world economies need huge amounts of proactive remedies:-- to prevent deflation;-- help the private sector delever with liberal amounts of government debt;-- sustain lending inside and among economies; if banks won't do it, central banks must;-- aid hard-hit emerging economies and keep them afloat; and-- rebuild domestic demand with substantial fiscal measures.At risk is the "legitimacy of the open market economy itself." It's wobbly and on life support because of what Roubini spotted early on. All having occurred or now happening. His 12-stage "systemic financial meltdown" scenario:(1) the worst ever US housing recession with prices falling up to 30% from their peak and matching their Great Depression decline; most recently Roubini thinks a 40% drop is likely with a market bottom still way off;(2) the subprime disaster causing hundreds of billions in losses and throwing millions of homeowners into foreclosure;(3) a sharp increase in other defaults - credit cards, auto and student loans, and other borrowing; add bank losses to the mix (including from their securitized assets), and we've got a severe credit crunch;(4) monoline losses will mount more severely than expected and other writedowns will follow;(5) commercial real estate will be impacted; the housing crisis will cause a bust in non-residential construction; (6) large regional or national banks may go bankrupt and worsen the already severe credit crunch;(7) losses from large leveraged loans will impair banks' ability to syndicate and securitize them; today the market is dead; earlier losses froze it up; these assets were then stuck on bank balance sheets at well below par values and are headed lower; they're still there at undisclosed valuations most likely scraping bottom because no buyer will touch them above fire sale prices and most often not even those;(8) a massive wave of corporate defaults will accompany a severe recession;(9) the shadow banking system (hedge funds and the like) is heading for serious trouble;(10) world stock markets will price in a severe recession; at the time, Roubini saw the S & P 500 falling about 28% or around the average decline for US recessions; it fared much worse, and he now sees a far lower valuation ahead;(11) the worsening credit crunch will cause liquidity to dry up; it will require massive central bank intervention; and(12) "a vicious circle of losses, capital reduction, credit contraction, forced liquidation and fire sales of assets at below fundamental prices will ensue leading to a cascading cycle of losses and further credit contraction."

The massive credit crunch will spread around the world. Monetary and fiscal measures won't prevent a systemic financial meltdown "as credit and insolvency problems trump illiquidity" ones. As a result, US and global financials will experience their most severe crisis in the last quarter of a century."Roubini now sees the greatest one since the 1930s. Grudgingly, only small numbers of economists agree with him, and the majority think the worst is past and 2009 will bring recovery. Barrons economics editor, Gene Epstein, for one. He asks: "How long will the slump linger? (It's) already under way. But hopefully, it won't extend into 2009."

An astonishing assessment at a time virtually all macro data point to hard times in the new year, and the big unknown is how hard and protracted.It's the reason for unprecedented global amounts of monetary stimulus with limited effect so far. It's also why Congress may add hundreds of billions more in fiscal medicine on top of an orgy of past and upcoming government borrowing. The Treasury already announced $550 billion more in Q 4. An amount greater than the announced FY 2008 $455 billion fiscal deficit. In addition, Goldman Sachs now believes Washington will have to borrow $2 trillion to finance an $850 billion federal deficit, buy $500 billion in toxic assets, and roll over $561 billion in maturing Treasury securities.

Add to it unknown factors and another trillion may be needed.For loans, investments and commitments, Washington already earmarked:-- $700 billion for TARP;-- another $150 billion tacked on to EESA funding for pork barrel spending;-- $200 billion in the Fannie and Freddie takeover, and Fannie now says the amount is inadequate after reporting a record $29 billion loss and its difficulty in issuing and refinancing debt; in a November 10 SEC filing it stated: "This commitment may not be sufficient to keep us in solvent condition or from being placed into (effective bankruptcy) receivership" if further "substantial" losses occur or if the company can't sell unsecured debt;-- $25 billion to the auto companies and another $50 billion more they may get; the industry is effectively insolvent; on November 11, General Motors stock hit a 65 year low and is down over 90% this year; the nation's once largest company is a mere shadow of its former self and won't survive without a bailout; the same holds for Ford and Chrysler;-- $29 billion for Bear Stearns;-- $85 billion to AIG; upped to $129 billion and again to $150 billion after the company reported a $25 billion Q 3 loss; add $15 billion more for its commercial paper with no end of this looting in sight - to a single company, albeit a big one;-- $144 billion to buy mortgage-backed securities, in part included above;-- $300 billion for the Federal Housing Administration Rescue Bill for FHA to insure up to that amount in new 30-year fixed-rate mortgages for at-risk borrowers in owner-occupied homes if their lenders agree to write down loan balances to 90% of the homes' current appraised values;-- $87 billion to JP Morgan Chase for financing bad Lehman Brothers' trades;-- $200 billion in loans to banks under the Fed's Term Auction Facility (TAF);-- $50 billion to support commercial paper held in money market funds; $1.3 trillion worth qualifies so a far greater liability may be incurred;-- $620 billion in currency swaps with developed nations - central banks in Western Europe (the ECB, UK, Denmark, and Switzerland), Japan, Canada, and Australia;-- another $120 billion for emerging markets - to Brazil, Mexico, South Korea and Singapore; and-- potential great liabilities to cover the FDIC's expanded bank deposit insurance up to $250,000 per account.These numbers are staggering in size and may go much higher.

A trillion here, a trillion there, and pretty soon we're talking about real money, but if enough of it swirls around, today's deflation may one day become severe inflation. Two Views on Potential DepressionThe dreaded "D" word. Unmentioned and unconsidered in the mainstream but not off the table given the severity of today's crisis. What Michel Chossudovsky isn't alone calling "the most serious (one) in World history." He says the Treasury "bailout" isn't a solution. Just the opposite - "it is the cause of further collapse. It triggers an unprecedented concentration of wealth, which in turn contributes to widening economic and social inequities both within and between nations" - on top of how inequitable they are already.President of the London-based Independent Strategy consultancy group, David Roche, disagrees in a November 8 Wall Street Journal article headlined "How Far Will Deleveraging Go?" He acknowledges the severity of the crisis and asks: "Will this lead to depression? And, if not, how long and deep will the recession be?" He examines the extent of deleveraging for the answer in the following analysis.He says the amount of a bank's "risk-free" or "tier-one" capital is a "good reverse indicator of how leveraged it is."

Financial institutions globally had about $5 trillion of it at the credit crisis' onset. For America and the EU, it was $3.3 trillion "supporting a loan book of some $43 trillion. Then came the crisis."He gives three answers to the amount they lost:-- using mark-to-market rules (what an asset would bring if sold today), an estimated 85% of their tier-one capital was lost; but this assumes selling today at fire-sale prices which largely isn't happening;-- using "economic value," or the present value of future cash flows (assuming there are any), current losses are about half their mark-to-market valuations; and-- if only so far recognized losses are considered, the amount taken is around $700 billion.Despite these losses, loan portfolios have grown during the crisis. Shrinkage has only occurred for investment banks, prime brokers and hedge funds, Roche believes. All bank losses have been offset by "$420 billion from private sources" and another "$250 billion from governments." At the onset of the crisis, US and EU leverage was about 13 times tier-one capital. Under mark-to-market rules, it's now more than double that. "But using economic value or declared losses reveals that leverage is now back to what it was before the crisis began" because of capital injections. Nonetheless, conditions remain dire, and growth isn't ready to resume.

For three reasons, according to Roche:-- financial sector leverage was too high in the first place, which is why the credit bubble collapsed;-- the world economy uses $4 to $5 of credit for every $1 of GDP growth; a profligate amount; even at half that amount, between a 10 - 15% rate of credit expansion is needed to achieve real GDP growth of 2 - 3%; recapitalization amounts so far are only enough to maintain existing credit assets, not expand them; so the crisis continues; and-- current bank-asset losses don't include allowances for future ones - from recession and its fallout; Roche estimates they'll be another $900 billion for a total $1.7 trillion during the whole crisis period; others estimate a much higher figure; if Roche is right, these losses will deplete new capital infusions and reduce US and EU tier-one capital back to $2.3 trillion at a leverage ratio of over 18 times.Roche believes leverage and credit will shrink even with further capital injections. They're "temporary, expensive, and impose constraints on shareholders and management." It makes them unattractive.In addition, banks need to reduce their "customer funding gap" and focus on "deposit rather than loan growth." It's a slow process during recession and can only be achieved "by reducing assets and liabilities" which means "cutting credit on the asset side of the balance sheet." And do it during a risk aversion period in wholesale and longer-term debt markets. It makes the task a lot harder at a time regulation is coming that "will reduce bank leverage to well below what it was before the crisis began."Bottom line: if further credit losses reduce US and EU tier-one bank capital to where it was before crisis-induced infusions, financial sector credit "would have to shrink 37% just to keep leverage constant at pre-crisis levels," and it it happens we're talking about global depression. But governments are now "part of bank management so may limit credit losses to less than 10%, Roche believes, but a a cost - more capital injections, further longer-term liability guarantees, tolerating higher leverage in "socialized banks," plus more than a little "dirigisme," or directing banks to lend.

Under this scenario, Roche thinks global depression will be avoided - but "at the high long-term cost of a socialized financial system. And it still heralds a very long, gray, global recession as the world learns to use less capital to meet its needs."Financial expert and investor safety advocate Martin Weiss disagrees with Roche and sees depression coming. He's not alone, and he's said it repeatedly, including in his latest commentary titled "Why Washington Cannot Prevent Depression." He cites what he calls "dire reality. Washington is not God. It cannot save the world. It cannot prevent the next depression," and he gives five reasons why:(1) The Debt CrisisIt's far too big to control. Based on Fed Flow of Funds figures, "there are now $52 trillion in interest-bearing debts in the US." According to US Government Accountability Office estimates, add another $60 trillion in contingency debts and obligations - for Social Security, Medicare, Medicaid, and other pensions. In addition, the Bank of International Settlements (BIS) earlier cited a staggering global debt total, including derivatives, of $1 quadrillion, or 1000 trillion. In a separate report, it says $596 trillion, but even this number is unimaginable and unmanageable. So far, reckless government outlays amount only to a fraction of this amount - around $2.7 trillion. Weiss says the numbers aren't directly comparable, but "to get a sense of the magnitude of the problem, compare the size of the debts and (derivatives) bets outstanding" to the tiny amount injected to combat it. It's miniscule and may fall way short of being effective. Weiss is blunt in calling "the debt build-up in the US today far greater than it was on the eve of Great Depression I." Pre-1930, it was between 150 - 160% of GDP.

Today, excluding derivatives, it's nearly 350% or more than double the earlier. Include them, and debt levels go off the charts. Weiss concludes: "government bailouts are too little, too late to end this crisis."(2) Bailout Costs Are Too Great to Be FinancedGiven the dire economy, higher taxes and expenditure cuts are off the table. Going forward, "the government will try to finance its folly largely by borrowing the money." The next tranche - $550 billion in Q 4 and $2 trillion in total, or four times the size of the entire official FY 2008 deficit. As a result, a tsunami of new Treasury supply is coming. It will crowd out private borrowers and pressure interest rates higher when lower ones are desperately needed.(3) Supply Can't Stimulate Lending and/or BorrowingWashington wants households to borrow and spend more, but they're doing the opposite. Banks are also urged to lend, dispense more access to credit cards, and provide capital for troubled businesses. They refuse and are using their handouts for acquisitions, bonuses and dividends. "No matter what the government says, it is the natural survival instinct of billions of people and businesses around the world that will determine the outcome" of today's crisis: "Depression and deflation."(4) Powerful Debt and Deflation CyclesDebt can continue accumulating for years as long as borrowers have enough income to repay it. Deflation (or disinflation) can increase the affordability of homes and other major purchases. But when debt and deflation converge, depression is inevitable. It happened in the 1930s, and (in different form) it's happening today.

"We are witnessing powerful vicious cycles in which deflation brings down debts and debts help accelerate the deflation."For example:-- widespread mortgage delinquencies and foreclosures trigger massive real estate liquidations followed by severe price declines, and more delinquencies and defaults;-- fear of bankruptcies causes equities, bonds, commodities and virtually every type asset to fall; more bankruptcies result the way today they threaten US auto makers; and-- the same downward spiral affects households, small and mid-sized businesses, city and state governments, and entire countries; spending is slashed; workers laid off; assets sold, and revenues lost precipitating more of the same."In every sector of the economy and every corner of the globe, debt defaults are causing deflation; and deflation is causing debt defaults. No government can stop this powerful vicious cycle. It has to play itself out."(5) The Ultimate Power of MarketsWhy can't governments simply print enough money to buy up excess debt and inflate? Because governments need buyers for their bonds and to finance all new planned spending and deficits.

"The power of the market is stronger than any politician or government bureaucrat. It is more powerful than any law. It is even more powerful than the gold standard." Trust is needed to raise money. It's not built by "run(ning) the printing presses or destroy(ing) your money." Instead, deflation and depression must run its course. "It's preposterous to believe that Washington can save every failing individual, company, country and government on this planet."It can't stop investors from dumping their assets or reverse decades of financial excesses. "It cannot win the battle against depression. It cannot stop the Dow or S & P from losing half their value from current levels, if not more. It cannot stop the collapse in real estate, commodities, and corporate bonds." It can't convince people to use their cash to invest or do anything they wish not to do. It can only reap the whirlwind.Two Other Views on the Dire State of ThingsOne from Russian economist Mikhail Khazin in a recent (Russian web site) interview. He predicted the current crisis early on, but his views were largely dismissed. No longer, and today they're more dire than before.In 2000, he wrote an Ekspert magazine article titled: "Is the US Digging for an Apocalypse?" At the time, he saw declining demand destroying 25% of the US economy. Today it's maybe one-third, he believes. Why? Because of an early 1980s policy "to stimulate demand through state support....(by) switch(ing) on the printing press" and building debt at a rate way above GDP growth. He mentioned 8 - 10% in an economy growing at around 2 - 3% or a maximum 4%.It let America "create a very high standard of living by stimulating consumer demand....But it's impossible to live forever in debt.

Household debt has now surpassed the national economy - more than $14 trillion. Now it's time to pay up. Of course, Wall Street tried to postpone this collapse....but this was just a gasp for air before an inevitable death....Whatever decision Wall Street takes right now, the demand is going to fall."It points to "an uncontrollable increase in unemployment, a horrible depression, a sharp increase in the effect of social services on the budget....Now, the US is jumping all over the place doing everything it can to rescue this fraction of the economy (the portion Khazin thinks will evaporate). The government is stimulating banks and manufacturing....But regardless, in 2 - 3 years, the US will face a crisis similar to the Great Depression.

"Harvard president Drew Faust is also alarmed in a recent letter to alumni and friends. She cites the "current global financial situation and its effect on the University." She mentions "extraordinary turbulence, the most serious (uncertainty and financial distress) in decades (as part of) our new economic reality."Despite over three and a half centuries of surviving challenges, "Harvard is not invulnerable to the seismic financial shocks in the larger world. Our own economic landscape has been significantly altered. We will need to plan and act" accordingly.Her focus, of course, is on revenue and the school's endowment. It provides income for over one-third of its operating budget, now severely impacted by today's crisis. Despite past outperformance in turbulent times, Harvard fared poorly in its current fiscal year ending June 2008 (before the worst of today's crisis struck). In FY 2007, an impressive 23% return was registered, and it lifted the total endowment to $34.9 billion. In FY 2008, it fell an estimated 30% or a $10.5 billion hit. Even mighty Harvard is impacted enough to "need to be prepared to absorb unprecedented endowment losses" in the current environment. Drew Faust wants help, of course, but clearly she's worried to the point of alarm at the gravest financial time in our lives.Credit Normalization Is Stuck in a Debt TrapIt affects Harvard and world economies everywhere. Even mighty America isn't immune from its impact. From having lived way beyond our means for years. The chickens are now home to roost - big time.In spite of extraordinary liquidity injections globally, risk markets remain paralyzed. Frozen.

Uncertainty and turbulence continue, and economies are reeling in distress. They're like buckets leaking more out their bottoms than whatever flows in at their tops. Fed credit creation is counterbalanced by deleveraging and collapsing balance sheets, and there's no end to this in sight.True enough, unclogging has occurred in inter-bank and money markets, but it hasn't freed up credit or its price for the vast majority of borrowers. In addition, junk and investment grade bond spreads have widened. Municipal bond yields have soared as their prices fell. Some offer tax-free returns topping 6% compared to taxable 10-year Treasuries under 4%. According to some analysts, they're screaming buys, and so are high-grade corporate bonds that are much more attractive (and safer at a time no financial asset is safe) than equities in the same companies, and a big reason why stock prices are falling. But by no means the only one. The world pre-mid-2007, no longer exists. Risk is a dirty word. Leverage is out the window, and asset-backed securities (ABSs), collateralized debt obligations (ABSs), and securitization markets are closed and padlocked. All the king's horses and all the king's men can't reconstitute them. No amount of liquidity injections, rate-cutting, or high-minded rhetoric will reinflate that air that's now leaving the bubble. Today's debt overhang is unmatched by a factor of more than three to one over any previous period without including derivatives. Add them, and it's unquantifiable in unchartered waters. Issue one for policy makers is how to keep economies from crashing. How to create enough new credit and get it flowing at a time lenders won't lend and borrowers are so indebted they can't assume more if they could get it.

Viable or not, the Fed will keep expanding its balance sheet to never before imagined amounts, and the government will run even greater multi-trillion dollar deficits. Amounts impossible to repay so they never will be with dark forebodings of how that problem will be resolved. It portends a very unpleasant future far worse than most now imagine. It also suggests another vicious downward spiral as recession deepens, and potential depression looms. The likes of which no one has experienced in our lifetimes or wishes to. Today's bubble economy is unlike anything ever in the past. Worse than all post-war excesses and what led to the Great Depression.Can the worst of all possible outcomes be avoided? It's beyond this writer's ability to imagine. It's for the Fed, Treasury, GSEs (government sponsored enterprises like Fannie, Freddie, Sallie, Ginnie, etc.) and banks, if they're able and willing, to try. To create money, get it flowing, inflate or die, but it already may be too late. Things that can't go on forever, won't, and as writer Ellen Brown observes: "The parasite has run out of its food source." The engine is now out of fuel.A Secret Revival Plan for the November 15 G-20 SummitAccording to Webster Tarpley (on, 11/10/08), a "British (and, of course, Washington) steered....confidential strategy paper (aims) to impose (an IMF) dictatorship on the entire planet, wiping out all hope of economic recovery, the modernization of the developing countries, and national sovereignty" as well.It proposes the usual form of IMF orthodoxy - "austerity, sacrifice, deregulation, privatization, union busting, wage reductions, free trade, the race to the bottom, and prohibitions on advanced technologies." Quite literally an agenda from hell. So outlandish that BRIC countries are reportedly objecting - Brazil, Russia, India and China.

China wants policies of the type it may pursue in its just announced $586 fiscal stimulus plan - for various internal needs like infrastructure. The IMF plan is mirror opposite in its five points. To:(1) "require the credit rating agencies to be registered and monitored and submit to rules of governance;(2) halt the principle of a convergence of accounting standards and re-examine the application of the fair market value rule in the financial field, so as to improve its coherence with the rules of prudence and conservatism;(3) resolve that no market segment, territory, or financial institution shall escape from a proportionate and adequate regulation, or at the least, surveillance;(4) set up a code of conduct to avoid excessive risk-taking in the financial industry, including in the area of compensation. Supervisors will have to follow this code in evaluating the risk profiles of financial institutions; (and)(5) entrust to the IMF the primary responsibility, along with the FSF (Financial Stability Forum - Basel), to recommend the necessary measures to restore confidence and stability.

The IMF must be equipped with the essential resources and suitable instruments to support countries in difficulty, and to exert its role of macroeconomic surveillance to the fullest."Translation: This is a Washington-UK-IMF scheme to increase their collective power at the expense of and to the detriment of the civilized world. An attempt to suck more of its wealth to the top by extracting it from all others. Economist Michael Hudson reports that 1% of the US population owns 70% of its wealth, a huge increase over earlier periods. This plan aims to increase it. To turn the US and world economies into banana republics. To make its workers de facto serfs. To crush competition and empower corporate giants. Mostly ones in America. To end any hope for progressive change at a time all humanity craves it. To revive Chicago School fundamentalism when it's totally discredited. To step back from a new direction that appears little more than a pipe dream. To harden the old failed one and suck us deeper into its quicksand. It's hoped enough nations will balk, render this scheme dead on arrival, and consign it back to its hellish origins. The alternative is a view of our future. One too disturbing to imagine. That no one should tolerate and be willing to be disruptingly defiant enough to prevent.Stephen Lendman is a

Research Associate of the Center for Research on Globalization. He lives in Chicago and can be reached at

About This Blog

Dan adapun orang-orang yang takut kepada kebesaran Tuhannya dan menahan diri dari keinginan hawa nafsunya. Maka sesungguhnya syurgalah tempat tinggalnya. (al-Naziat ayat 40-41)

"Of all the enemies to public liberty war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes...known instruments for bringing the many under the domination of the few. . . No nation could preserve its freedom in the midst of continual warfare."
- James Madison, Political Observations, 1795

santapan rohani ii

Al-hadith :ثلاثةٌ قد حَرّمَ اللهُ - تَبَارَكَ وَتَعَالَى - عليهم الجنةَ : مُدْمِنُ الخمر ، والعاقّ ، والدّيّوثُ الذييُقِرُّ في أَهْلِهِ الخُبْثَ . رواه أحمد والنسائيErtinya : "Tiga yang telah Allah haramkan baginya Syurga : orang yang ketagih arak, si penderhaka kepada ibu bapa dan Si Dayus yang membiarkan maksiat dilakukan oleh ahli keluarganya" ( Riwayat Ahmad )


Ingatlah firman Allah Taala:
يَا أَيُّهَا الَّذِينَ آمَنُوا لَا تَتَّخِذُوا بِطَانَةً مِنْ دُونِكُمْ لَا يَأْلُونَكُمْ خَبَالًا وَدُّوا مَا عَنِتُّمْ قَدْ بَدَتِ الْبَغْضَاءُ مِنْ أَفْوَاهِهِمْ وَمَا تُخْفِي صُدُورُهُمْ أَكْبَرُ قَدْ بَيَّنَّا لَكُمُ الْآيَاتِ إِنْ كُنْتُمْ تَعْقِلُونَ (118) هَا أَنْتُمْ أُولَاءِ تُحِبُّونَهُمْ وَلَا يُحِبُّونَكُمْ وَتُؤْمِنُونَ بِالْكِتَابِ كُلِّهِ وَإِذَا لَقُوكُمْ قَالُوا آمَنَّا وَإِذَا خَلَوْا عَضُّوا عَلَيْكُمُ الْأَنَامِلَ مِنَ الْغَيْظِ قُلْ مُوتُوا بِغَيْظِكُمْ إِنَّ اللَّهَ عَلِيمٌ بِذَاتِ الصُّدُورِ (119)

Maksudnya: “Wahai orang-orang yang beriman! janganlah kamu mengambil orang-orang yang bukan dari kalangan kamu menjadi “orang dalam” (yang dipercayai). mereka tidak akan berhenti-henti berusaha mendatangkan bencana kepada kamu. mereka sukakan apa yang menyusahkan kamu. telahpun nyata (tanda) kebencian mereka pada pertuturan mulutnya, dan apa yang disembunyikan oleh hati mereka lebih besar lagi. Sesungguhnya telah Kami jelaskan kepada kamu keterangan-keterangan itu jika kamu (mahu) memahaminya. Awaslah! kamu ini adalah orang-orang (yang melanggar larangan), kamu sahajalah yang suka (dan percayakan mereka, sedang mereka tidak suka kepada kamu. kamu juga beriman kepada Segala Kitab Allah (sedang mereka tidak beriman kepada Al-Quran). dan apabila mereka bertemu dengan kamu mereka berkata: “Kami beriman”, tetapi apabila mereka berkumpul sesama sendiri, mereka menggigit hujung jari kerana geram marah (kepada kamu), Katakanlah (Wahai Muhammad): “Matilah kamu Dengan kemarahan kamu itu”. Sesungguhnya Allah sentiasa mengetahui akan Segala (isi hati) yang ada di dalam dada.” [Ali Imran: 118 & 119]
تُولِجُ اللَّيْلَ فِي النَّهَارِ وَتُولِجُ النَّهَارَ فِي اللَّيْلِ وَتُخْرِجُ الْحَيَّ مِنَ الْمَيِّتِ وَتُخْرِجُ الْمَيِّتَ مِنَ الْحَيِّ وَتَرْزُقُ مَنْ تَشَاءُ بِغَيْرِ حِسَابٍآل عمران : 27

"Engkaulah (Wahai Tuhan) yang memasukkan waktu malam ke dalam waktu siang, dan Engkaulah yang memasukkan waktu siang ke dalam waktu malam. Engkaulah juga yang mengeluarkan sesuatu yang hidup dari benda yang mati, dan Engkaulah yang mengeluarkan benda yang mati dari sesuatu yang hidup. Engkau jualah yang memberi rezeki kepada sesiapa yang Engkau kehendaki, dengan tiada hitungan hisabnya".


“Siapa yang membantahmu tentang kisah Isa-Setelah engkau beroleh pengetahuan yang meyakinkan tentang hal itu, maka katakanlah kepada mereka : Marilah kita panggil (kumpulan) anak-anak kami dan anak-anak kalian, isteri-isteri kami, dan isteri-isteri kalian, diri-diri kami dan diri-diri kalian, kemudian kita bermubahalah kepada Allah, mohon agar Allah menjatuhkan laknat-Nya kepada pihak yang berdusta.” (Ali Imran : 61)