In These New Times

“In these new times, in spite of the dangers, the most brutal force, the most fearful night, we are engaged in the fight to survive.” No Novo Tempo-Ivan Lins, Vitor Martins

Archive for July, 2010

A small “I-told-you-so” on bank stocks

Posted by seumasach on July 21, 2010

David Goldman

18th July, 2010

On July 13, when I posted my last note urging investors to avoid bank stocks, the BKX bank stock index closed just over 51; on Friday it fell to just over 46, a decline of almost 8%. Bank of America’s results showed just what the aggregate data should have made clear in advance: the collapsing loan books of banks makes them dependent on the thin gruel of the Treasury carry trade. With the collapse in yields during the past few weeks, the carry trade is harder and harder to bring off (58 basis points on 2-year Treasuries just doesn’t do very much). True, banks have shed bad loans, but they can’t find good ones, either. So the banks will continue their zombie existence indefinitely as the equivalent of public utilities, with occasional small crises to worry their shareholders. It’s just not worth being involved.

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If you can’t beat them, join the euro!

Posted by seumasach on July 20, 2010

Cailean Bochanan

20th July, 2010

As David Cameron and Barak Obama meet in Washington there is a lot of silly talk about the so-called special relationship being over. Britain may be the junior partner as Cameron puts it, but is nonetheless a crucial one. There will be no divergence over core issues such as covering up the scale of the disaster in Afghanistan or covering up the scale of the disaster in the Gulf of Mexico. Nor will the much noted divergence between London and Washington over stimulus versus austerity lead to sparks flying. Britain and the US remain joined at the hip and the only puzzle to emerge out of these talks will be why exactly the special relationship remains so enduring, for better or for worse, richer or poorer.

Most of us had some sense that the transatlantic connection had something to do with economies based on “financial services”. The last couple of years have made it much clearer what these “services” amount to. But it is the events of the past months which have clarified more than anything what the Atlantic alliance is really about. Britain and the US, or, rather, the City and Wall Street have combined in a bid to undermine the euro and derail the european project. We have been engaging in a currency war whose scarely veiled goal has been to boost the dollar and the pound by knocking out the leading rival to  reserve currency status. In the process the dollar and the pound have been confirmed as joint pillars of the atlanticist system, the twin pillars of anglo-saxon financial hegemony. Logically, the pound should simply be merged into the dollar, but that is hardly realistic from a political point of view. The pound continues to exist as the weak link in the system: the junior partner. So whereas the US can continue to call the bluff of the markets, expanding credit like there’s no tomorrow, knowing that, for China and others, divesting from  the dollar is the Samson option, there is no logical reason for the pound to stay afloat given the unrivalled levels of indebtedness of Britain at personal, corporate, local and national government level. For the sake of the alliance the pound must be saved since its decline would lead to irresistible pressure to join the euro and one of the twin pillars of the empire would be gone.

Of course, it didn’t all have to end in tears if the anti-euro assault had succeeded. The alliance was right to spot the weakness inherent in the Eurozone and right to expect the response of the European elite, still dreaming the American dream, to be dithering.  Only German Christian Democrats responded appropriately with Merkel’s ban on naked short selling while leftists governments in Greece and Spain failed to get to the heart of the matter, the speculative attack by hedge funds operating largely out of the City, and, instead, limited themselves to hacking at the limbs.

Anglo-America understood as well that this was about politics, about war and that they disposed, as usual, of the weapons of mass destruction: the rating agencies, the hedge funds and the media. They also had a trojan horse, the European left, within the enemy camp. Why, then, did it fail as it now seems clear it has?

The West has been slow to pick up on multipolarity and they had failed to see that the success of the European project was key element in the new multipolar framework. Were China and Russia really going to stand by as Europe and the euro were knocked out of the equation? How then could they break out of the dollar straightjacket? Was it in their interest to return to a cold war against a consolidated, unified West led from Washington and London? Russian diplomacy, in particular, is aimed at drawing Europe out of the Atlanticist sphere of influence whereas a fragmented Europe would be one under US/UK tutelage. Russia has made concessions elsewhere in order that romance should finally blossom between Angela Merkel and President Medvedev. And with what chivalry have they deferred to Europe in allowing a European peace-keeping force in Kirgyzstan, their own back yard!

So, in  the end, the anti-euro campaign was more like a bit of guerrilla warfare  which brought some temporary gains for the dollar and the pound. Now it’s back to reality with Britain in the eye of the storm. If anyone doubts that thinking the euro is thinking the unthinkable, read the British press or dwell on the fact that not a single political tendency from the far right and the Tory little englanders to the no longer-smirking Blairites (or Millibandites) and the far left backwoodsmen dares to come out in any serious way for the euro. Visceral opposition is the norm, it unites the British race. One of the great things about the new coalition is that it effectively defangs the only possible exception, the Lib-Dems: any pro-European sentiment is now definitively disenfranchised.

So with all escape routes sealed the slaughter can begin. The British people are to be sacrificed to shore up the Atlantic alliance. They have yet to learn of the ruthless and predatory nature of the British elite: it will be a crash course. What makes it all the more horrific is its utter futility. No amount of cutting can alter the fact that, with Anglo-American power ebbing away by the hour, the complete and utter bankruptcy of Britain lies exposed and the pound can only fall.

It is this recognition of the hopeless state of British finances, largely hidden up to now with an accountant’s slight of hand, that has made me hesitate to call for our adoption of the euro. How is it possible for Europe to add the burden of British debt to its own? But it is a mistake to look at things from the point of view of economics alone. We live in a moment of history where geopolitics trumps mere economics. For Europe it might just be better if we weren’t there , but we are and our full engagement with the European project is strategic necessity for Europe and a lifeline for ourselves. The problems of Britain are those of Europe carried to the ultimate extreme and can be resolved inside Europe. Together we must learn that prosperity is the fruit of labour, our own labour and not some God-given right of the West, of the white man. A service- based , consumer economy is mere fantasy and finance must be at the service of the reconstruction of industry and agriculture, of the real economy.

The unanimity of British society against the euro, reflecting the complete triumph of the ruling class point of view,  should suggest that this can be the focus of any putative opposition. There is now, for the first time in history a complete disconnect between the interests of the British people and our financier elite. Suddenly, it is becoming clear that the perspectives of the latter have nothing to do with any British national interest. The need for an opposition is then an urgent one and given the ravages of thirty years of Thatcherism, the near complete destruction of our economy at the behest of oligarchy only reconstruction within a European context provides a way out.

Posted in Battle for Europe | Tagged: , | 2 Comments »

Support for EMF researcher goes global, puts Karolinska Pres. Wallberg-Henriksson in spotlight to respond

Posted by seumasach on July 20, 2010

John Wiegel

Controversy surrounding research into the effects of microwave radiation has acceleratedwith doctors and researchers from both sides of the Atlantic calling for Harriet Wallberg-Henriksson, president of the Karolinka Institute in Stockholm, to intervene and protect theinstitute’s reputation for academic freedom.

Read full article here

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Peter Schiff: China and the dollar

Posted by smeddum on July 20, 2010

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US gripped with offshore economy. Max Keiser Interview with Paul Graig Roberts

Posted by smeddum on July 20, 2010

Sun, 18 Jul 2010
Jobs are becoming scarcer and scarcer particularly in the United States. Is it cyclical or is it structural? Is it something that America has completely turned its back on in a way that could potentially be a factor for decades going forward?

Max Keiser discusses this issue with Dr. Paul Craig Roberts who was in the Regan treasury, a former editor at the Wall Street Journal. He was inducted into the French legion honor. He is also an author; his latest book is How the economy was lost.

The following is the transcript of the interview: Read the rest of this entry »

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Requiem for the Antiwar Movement by Cindy Sheehan

Posted by seumasach on July 19, 2010

Cindy Sheehan’s Soapbox

9th July, 2010

“When you vote for war, don’t be surprised when you get it.”

Cindy Sheehan

“I will send at least two additional combat brigades to Afghanistan.”

Presidential Candidate Barack Obama

“This war (Iraq) prevents us from tackling every serious threat that we face, from a resurgent al-Qaeda in Afghanistan to a hostile Iranian regime intent on possessing nuclear weapons.”

Candidate Barack Obama

“And if we have actionable intelligence about high-level al-Qaeda targets (in Pakistan), we must act if Pakistan will or cannot.”
Candidate Barack Obama

This article and these observations are going to piss some people off—but oh well. You will be angry with me, even though I am not the one who is ordering more war, paying for more war, torturing people and imprisoning them without due process, destroying the economy and the environment, blah, blah, blah. I have developed an incredibly thick skin and if I rankle, it’s because I think time is running out to halt the disastrous trajectory this planet (via the US Military Corporate Complex) is on. I promise that I am not writing this because I am holding protests and no one is coming—these thoughts have been percolating in me for months now. (Note: Remember that old saying: “What if they gave a war and nobody came?” Well, here in DC I am living the opposite: “What if they gave an antiwar protest and nobody came?”)

Read the rest of this entry »

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The dollar’s predicament

Posted by seumasach on July 19, 2010

Reuters on Friday quoted China’s Prime Minister Wen Jiabao: “I want to say that at this time, when some European countries are suffering sovereign debt crises, China has always held out a helping hand.”

Clearly, it’s a major development that Chinese deep pockets have come to the eurozone’s aid. There are reasons for China’s policymakers to see it in their country’s best interest to purchase European debt. At the top of the list, euro weakness provided an opportunity to diversify some of its $2.45 trillion – and counting – of international reserves. The markets have been focused on European structural debt issues. But perhaps the Chinese, from a longer-term strategic point of view, see European investment as more favorable than accumulating additional US debt.

Doug Noland

Asia Times

20th July, 2010

According to the Federal Reserve’s Z.1 “flow of funds” data, Rest of World (ROW) holdings of US financial assetsended the 1980s at about US$1.9 trillion and closed the nineties at $5.6 trillion. By the end of 2009, ROW holdings had ballooned to $15.3 trillion. During the past decade, the world’s holdings of our financial assets surged to 108% of US GDP from 60%.

Gigantic and unending US current account deficits were the major force behind the extraordinary foreign accumulation of our (largely debt) securities. This implies structural deficiencies in both the credit system and real economy. It would also be quite unusual for such a fundamental backdrop to support a strong currency.

To better gauge the soundness of the dollar, one must attempt some necessarily subjective assessment of underlying US financial and economic structures. Over the past 20 years, total system credit rose from $12.830 trillion to $52.328 trillion – or from a historically very high 234% of GDP to an unprecedented 367%. The important question then becomes, did this historic increase in debt correspond with an expansion of production/wealth-producing investment? Does our economy have the wherewithal to pay back our foreign creditors? When will it matter in the marketplace?

Read full article here

Posted in Battle for Europe, Financial crisis | Tagged: | Leave a Comment »

Radio: interview with John Williams of Shadow Stats

Posted by smeddum on July 19, 2010

http://www.kingworldnews.com/kingworldnews/Broadcast_Gold+/Entries/2010/7/17_John_Williams.html

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Asia plays new role as global power broker

Posted by smeddum on July 18, 2010

Irish Times

17/7/2010


Despite talk of  the double dip recession,  in terms of recent articles, this is one of the few that recognises the increasing role of multipolarity in the world economy

Growth in dynamic Asian region can help to avoid double-dip international recession, writes PAUL GILLESPIE

‘ASIA’S TIME has come. No one can doubt that Asia’s economic performance will continue to grow in importance.” Dominique Strauss-Kahn, managing director of the International Monetary Fund made this remark at a meeting in Daejeon, South Korea this week on the region’s economy. His pledge to increase Asian voting rights in the IMF bore it out.

So did his apology for the policy mistakes made by the IMF in handling the Asian financial crisis of 1997-98. Asian growth at 7.75 per cent will be key to avoiding a double-dip international recession, he said. Read the rest of this entry »

Posted in Multipolar world | Leave a Comment »

US and UK credit rating downgraded by Chinese

Posted by smeddum on July 18, 2010

Markets fall; Hong Kong shares; stockmarket

But after failure of Western credit rating agencies to foresee financial crisis, has Chinese upstart got a point?

JULY 13, 2010

While the European Union considers regulating the activities of the credit rating agencies Fitch, Moody’s and Standard & Poor’s – and perhaps even setting up a new agency to supplant them – a Chinese body has attempted to revolutionise the whole sector by summarily downgrading the US and Britain. Read the rest of this entry »

Posted in Financial crisis, UK economy, Uncategorized | Leave a Comment »

UK public sector could have £4 trillion of hidden debts

Posted by smeddum on July 18, 2010

The UK’s public sector debt could be nearly £4 trillion higher than headline figures suggest, according to new research that highlights the scale of the economic challenges facing the Government.

By Jonathan Sibun, Assistant City Editor
14 Jul 2010

Telegraph

Clegg and Cameron outside the Treasury - UK public sector could  have £4 trillion of hidden debts 

The economic hallenge facing the new Government could be even greater than feared Photo: Paul Grover

The Office for National Statistics (ONS) released a study revealing that the public purse could be faced with £4.84 trillion of liabilities compared with the current public sector net debt figure of £903bn.

David Hobbs of the ONS described the public sector balance sheet as an “open-ended concept” as he outlined liabilities that are considered to be “off-balance sheet” or not covered in official debt measures. Read the rest of this entry »

Posted in Financial crisis, UK economy | Leave a Comment »

 
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