CHICAGO (MarketWatch) –

Berkshire Hathaway Chairman Warren Buffett told shareholders Saturday that 2008 was the company’s worst year on record, as the per share book value of both the Class A and Class B stock fell 9.6%. In his annual letter, Buffett said neither he nor Charlie Munger, his partner in running Berkshire, can predict winning and losing years in advance, and that no one else can. “We’re certain, for example, that the economy will be in shambles throughout 2009 - and, for that matter, probably well beyond - but that conclusion does not tell us whether the stock market will rise or fall.” Commenting on the federal government’s actions to resolve the economic crisis, Buffett said: “Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome aftereffects.”

http://tinyurl.com/b7bxar

BY CHRIS PETHERICK

To understand private banking in the United States, you must not only probe the country’s periodic financial crises manufactured by the greed of bankers, but the regulations that came about as a result of the ensuing panics. One such regulation involved state laws that were established to prohibit banks from setting up branches across state lines. Designed to spread the risk by limiting the formation of massive financial behemoths, the rule was eventually ignored by bankers, who knew, as Lord Meyer Amschel Rothschild reportedly said in the late 1830s: “Let me have the power to issue and control a nation’s money, and I care not who writes its laws.”*

Throughout this nation’s short history, honest men knew that the power to saddle a country with debt is dangerous business. Wise men knew that money should be used solely as a means of exchange by many and should not be controlled for profit by the few.

That explains, in part, why, historically, states had reserved the right to regulate banks and prohibited them from opening or owning branches across borders.

Contrary to popular belief, it was not the Federal Reserve Act of 1913 that created the national banking system. That law passed by Congress created the beast we now know as our privately owned and operated central bank. In fact, it was the National Banking Act, signed into law by President Lincoln in 1863 in an effort to fund the Civil War, that encouraged a national currency and chartered banks nationally.

Despite Lincoln’s early federalization of banks, states still managed to retain control over what is commonly referred to today as “interstate branching”—a banker’s ability to branch out across borders—and most of them prohibited it. The idea was that Main Street would be better served if banks were locally owned and operated. The risk could be better managed as banks would be kept small and would be spread thinly across the entire country, rather than having them consolidate under massive, global financial behemoths like they are today.

That held until the 1970s, when so-called bank holding companies (BHCs), the corporations that own commercial banks, began popping up. These came under the bailiwick of the Federal Reserve and provided a way for bankers to reach out across state lines and gobble up small, independently owned banks. In a nutshell, BHCs worked with states to liberalize banking laws in order to allow these corporations to acquire banks across the country.

Finally, in 1994, Congress put the final nail in the coffin of community banks by passing the Riegle-Neal Interstate Banking and Branching Efficiency Act, which made a federal case out of branch banking. With Federal Reserve Chairman Alan Greenspan and a cadre of private bankers in attendance, President Bill Clinton, who many blame for selling out the Democratic Party and the country to Wall Street, signed the bill into law on Sept. 29, 1994, ominously saying: “Under this law, as you’ve already heard, banks will be able to operate in more states with less trouble. We wipe away obsolete government-created restrictions, something I’m determined to do in many other areas.”

The Independent Bankers Association of America vehemently opposed interstate branching provisions, arguing that it was “bad public policy; it provides no benefits for community bankers; and it is little more than special-interest legislation to allow our nation’s biggest banks to consolidate their empires.”

But it was all for naught. Under the new federal law, states were given the option of spurning interstate banking, but most rolled over and accepted the change, heralding a new era of mergers and consolidation that was unprecedented in history.

Since that time, under a flurry of mergers, banks were increasingly gobbled up by financial behemoths like Citibank and Bank of America. In 1999, the Federal Deposit Insurance Corporation, the quasi-private organization created by the Glass-Steagall Act of 1933 and tasked with insuring Americans’ bank deposits, reported a worrying trend: “At year-end 1990, the 25 largest banking organizations held approximately 22 percent of industry assets; by year-end 1998, this figure had increased by more than two-thirds to approximately 54 percent . . . the consolidation that took place between 1990 and 1997 increased the risk of [Bank Insurance Fund] insolvency by approximately 50 percent, and [the] megamergers that took place or were announced during the 18 months between year-end 1997 and midyear 1999 increased the risk of insolvency further. . . .”

Since that report, bank mergers have only increased in the United States.

As most Americans now know, the current financial crisis and the multi-trillion dollar bank bailouts have only furthered this process, with five global powerhouses now ruling the roost: Bank of America, David Rockefeller’s JPMorgan Chase Bank, Wells Fargo Bank, Citigroup and Warren Buffet’s SunTrust.

http://www.heartlandnews.us/02_19_09_laissezfairebank.html

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By Jack Phillips

Which of these is more important to American politicians—drug company profits or kids? Judging from the recent action of the government of the state of New Jersey, drug company profits win hands down. Late last year New Jersey parents were ordered to have their children get flu shots before Dec. 31, 2008, if they wanted them to attend school or day care establishments.

These flu shots contain 25 micrograms of mercury in the form of thimerosol. This contains 50% mercury and breaks down in the body to form ethyl mercury, a very toxic compound. According to a recent article in the Journal of the American Association of Physicians and Surgeons, children who receive three flu shots are 27 times more likely to develop autism than those who do not.

Years ago the same thimerosol used in vaccines was tested as a topical ointment for cure of umbilical cord infection. Children whose bodies couldn’t excrete mercury fast enough died. Physicians involved in the test recommended that thimerosol be banished from hospitals.

Dr. Boyd Haley, chairman of the Department of Chemistry at the University of Kentucky, after disclosing these facts at a meeting, asked: “Knowing this who, in his right mind, would inject this substance into the bodies of young children?”

Unfortunately, the Center for Disease Control would. They promoted multiple vaccinations of young children, with vaccines containing 12.5 micrograms of mercury per shot, even before their blood brain barriers and digestive systems were fully operational. Moreover they persisted for more than 15 years after Haley first brought it to their attention.

As a result of about 20 years of multiple vaccinations of our children, we have experienced an epidemic of autism, a new American disease first reported as just four cases by a physician at Johns Hopkins University. Devastated families, overloaded schools and billions of dollars of medical expense have resulted from this ill-conceived program. Autism and autism spectrum disease preferentially affect males. The female hormones are protective against these diseases.

The ratio of males to females with autism is about 4:1. A whole generation of our young men has suffered brain damage which is showing up in our universities. At Harvard some classes, which used to contain mostly young men, now have a majority of young women. At the University of Kentucky, points have to be added to test scores of young men to get them into law and medical schools.

Courtesy of our federal government, taxpayers, not drug companies or other members of the medical monopoly, are responsible for the damages caused by these vaccines. Only a few claims of injured children have been adjudicated. Meanwhile the drug medical monopoly is hard at work trying to obscure the facts about mercury and the American Dental Association is continuing to claim that its “silver” fillings, which also contain mercury, do no harm.

http://www.americanfreepress.net/html/autism-vaccine_link_169.html

By Michael Collins Piper

The New York Times published a flat-out untruth on Feb. 7 about the Federal Reserve Act of 1913. And the untruth came from the pen of a distinguished American academic who is author of many much-touted works of history.

In a commentary in the Times, entitled “The Value of Other People’s Money,” Dr. Melvin I. Urofsky, a professor at Virginia Commonwealth University, reflected on the origins of the congressional measure that created the Federal Reserve System. He said that the measure “allowed Congress to take away banks’ control over currency.” In fact, nothing could be further from the truth.

Dr. Urofsky was dead wrong. The New York Times was guilty of perpetrating a falsehood, something which should come as no surprise, considering the fact that The New York Times—which fancies itself America’s newspaper of record—has long been the daily media voice in the United States of the international banking dynasties that control the American money system through their domination of the Fed.

The truth about the nature of the Fed is no secret to Americans who have access to independent newspapers such as AMERICAN FREE PRESS, historical journals such as THE BARNES REVIEW and radio outlets such as Republic Broadcasting (which can be found on the Internet at republicbroadcasting.org).

In fact, as far back as the 1920s, the great American industrialist Henry Ford was warning Americans of the venal nature of the Fed and the plutocratic money masters who created the Fed and who controlled it then as they do today. Ford wrote:

What the people of the United States do not understand and never have understood is that while the Federal Reserve Act was governmental, the whole Federal Reserve System is private. It is an officially created private banking system.

Examine the first 1,000 people you meet on the street, and 999 of them will tell you that the Federal Reserve System is a device whereby the United States government went into the banking business for the benefit of the people. They have an idea that like the Post Office and the Custom House the Federal Reserve is part of the government’s official machinery. . . .

Take up the standard encyclopedias and while you will find no misstatements of fact in them, you will find no statement that the Federal Reserve System is a private banking system; the impression carried away by the lay reader is that it is a part of the government.

The Federal Reserve System is a system of private banks, the creation of a banking aristocracy within an already existing system of aristocracy, whereby a great proportion of banking independence was lost, and whereby it was made possible for speculative financiers to centralize great sums of money for their own purposes, beneficial [to the people of the United States] or not.

In addition, while there has been much written on the Federal Reserve and the reality of what it constitutes— a privately owned and privately controlled money monopoly in the hands of banking institutions—the fact that the Rothschild family of Europe was, ultimately, the primary force behind the establishment of the system on American soil, is not something that is fully understood.

For example, because there were no people named “Rothschild” at the famous meeting off the coast of Georgia at Jekyll Island where the framework for the Federal Reserve was put forth and where the planning for the Federal Reserve Act of 1913 established the Fed, there are those who would divorce the Rothschild family altogether from the circumstances. However, the fine hand of Rothschild was indeed on the scene, represented by Paul Warburg of the New York-based Kuhn, Loeb Company, which was under the control of longtime Rothschild associate Jacob Schiff.

http://www.americanfreepress.net/html/new_york_times_falsifies_169.html

By Mark Glenn

In an admission stunning for its frankness Rep. Paul Kanjorski, (D-Pa.) chairman of the House Capitol Markets subcommittee admitted on C-SPAN that the current economic problems were the result of an “electronic run on the bank” that resulted in the hemorrhaging of $550 billion in just “an hour or two.”

Kanjorski was accosted by an irate American caller charging that the economic stimulus package is solely for the benefit of fat cats on Wall Street rather than for Joe Six-pack on Main Street. With barely concealed
panic in his voice, the congressman tried explaining the severity of the financial problem with the following comments:

Why did we do that? We did that because. . . .Look, I was there when the secretary of the treasury and chairman of the Federal Reserve came and talked with members of Congress about what was going on, it was about Sept. 15. . . . Here’s the facts; and we don’t even talk about these things.

“On the previous Thursday [Sept. 11] at about 11 a.m. the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to the tune of 550 billion dollars, being drawn out in the matter of about an hour or two. The Treasury opened up its window to help, pumped $105 billion in the system and quickly realized they could not stem the tide. . . . We were having an electronic run on the banks. They decided to close the operation, close down the money accounts and announce a guarantee of $250,000 per account so there wouldn’t be further panic out there. If they had not done this, their estimation was that by 2 o’clock that afternoon, 5.5 trillion dollars would have been drawn out of the money market system of the United States, [which] would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed. . . .

We talked about what would happen—it would have been the end of our economic and political system as we know it, and that’s why we had to act and do things quickly. Why? Because if you don’t have a banking system you don’t have an economy, and although we did that it wasn’t enough. The economy has been falling and we’re really no better off today than we were three months ago, as other assets are going sour by the moment. . . .

Somebody threw us in the middle of the Atlantic Ocean without a life raft and we’re trying to determine which is the closest shore and whether
there’s any chance in the world to swim that far. We don’t know. . . .

Put in less “gentle” terms, the 2-hour/half-a trillion dollar/$4.6 billion-per-minute event Kanjorski described was the equivalent of having a major economic artery “Jack-the-Rippered” in a way that threatened the very existence of not only the U.S. but the entire world whose economies and political stability are intrinsically tied to the monetary good mood of the land of the free and home of the brave. According to some of the economic experts interviewed for this piece (who insisted upon anonymity,
due to the “sensitive” nature of the topic) it is one of the largest—if not the largest—singular transfers of money in history in such a short time frame.

Furthermore, the general consensus of those interviewed is that had the bloodletting been permitted to run its course—meaning the evaporation of 5.5 trillion dollars—it would have resulted in the elimination of 90% percent of America’s liquidity (again the “blood” that keeps the economic body alive) in the span of just five hours.

Based upon the unnerving words of the congressman in this television exchange, what is known is as follows:

First, that the potentially apocalyptic events leading up to the bailout of America’s banks are not “talked about,” something to remember when President Obama or his monetary magicians are promising “this and that” with regard to curing America’s economic ills. By the very words of Rep. Paul “Vallachi” Kanjorski, a “code of silence” exists among the “made members” of the political and financial elite preventing them from telling the
truth. The fact that it took close to five months for this information concerning a deliberate run on the banks to be made public is proof that the captain and crew of the Titanic have decided to allow the passengers to go about their lives unencumbered while they try to find a way to “deal with” the current situation.

Second, that on Sept. 15, Treasury Secretary Paulson and Chairman of the Federal Reserve Ben Shalom Bernanke testified before Congress that on the previous Thursday, Sept. 11, an “electronic run” on the U.S. banking system took place between the hours of 9 and 11 am. . . . That had stop-gaps not been executed, by 2 p.m. (again, on Sept. 11) the hemorrhaging of “$5.5 trillion” would have taken place, resulting in the collapse of not only “the entire economy” of the United States but as well of the world within just “24 hours,” leading to “the end of our economic and political system as we know it.”

Eliminating the possibility that the event was all part of some fluke or “market correction,” the congressman ended his comments by saying “someone” was responsible for the slashing of that financial jugular that nearly bled America to death, as well as indicating the worries on the part of the power elite in Washington as to whether or not at the end of the day America would survive it, despite the unprecedented transfusions.

The date on which the hemorrhaging is said to have taken place, Sept. 11, is the same date America’s financial headquarters were attacked seven years earlier. It started the “war on terror” benefiting a certain ethno-theocratic state in the Middle East. The time frame this monetary hemorrhaging is said to have taken place was between 9 and 11 a.m., which coincides with the time frame of the terror attacks of Sept. 11, 2001,* with the first tower being struck by an airliner shortly before 9 a.m. and the second tower collapsing at roughly 10:30 a.m.

People who note the hundreds of “odd” items dealing with 9-11, including but not limited to the arrest of hundreds of Israeli intelligence operatives, some seen cheering as the Twin Towers were crumbling, will consider that
the current financial crisis—rather than being an “accident”—may be another act of sabotage on the part of the same malicious entity.”

http://www.americanfreepress.net/html/collapse_an_orchestrated_169.html

A NEW ISRAELI CONNECTION to the tragic events of Sept. 11, 2001 has recently been unveiled. Buried in a New York Times story on Feb. 19 was the eye-opening revelation that a Lebanese Muslim Arab who has been taken into custody by the Lebanon—which has accused him of being a spy for some 25 years for Israeli intelligence—just happens to be a cousin of one of the Muslims alleged to have been one of the 9-11 hijackers.

Although Ali al-Jarrah was—publicly—an outspoken proponent of the Palestinian cause, it now turns out that he was actually working as a paid asset of the Mossad for more than two decades, betraying his own nation and conducting spying operations against Palestinian groups and the pro-Palestinian party Hezbollah.

The New York Times, reporting on the al-Jarrah affair, revealed this: “It is not the family’s first brush with notoriety. One of Mr. Jarrah’s cousins, Ziad al-Jarrah, was among the 19 hijackers who carried out the terrorist attacks of Sept. 11, 2001.” The Times added that the men were 20 years apart in age and “do not appear to have known each other well.”

The gratuitous Times suggestion that the two cousins “do not appear to have known each other well” is intriguing, inasmuch as it is an admission that they did, in fact, know one another. And that could be very telling, for there are those who are now suggesting that the older cousin may indeed have recruited his younger cousin as an asset for Israeli intelligence.

The circumspect stance taken by the Times is no surprise, considering the fact that the Times is quite aware of the fact that there have been many sources—including American Free Press—which have alleged that the 9-11 conspiracy was infiltrated, if not controlled outright, by Israeli intelligence from the beginning.

If the younger al-Jarrah was indeed an Israeli asset inside the 9-11 conspiracy, this would not be the first time that a Muslim Arab was involved, acting as a Mossad agent, in an attack on the World Trade Center. As far back as August 3, 1993, investigative reporter Robert I. Friedman revealed in New York’s Village Voice that Ahmad Ajaj, a 27-year-old West Bank Palestinian held in federal custody for conspiracy in the first attack on the World Trade Center in 1993, may have been a Mossad mole, according to Friedman’s sources.

Ajaj was arrested at Kennedy Airport on Sept. 1, 1992, after he arrived on a Pakistani International flight from Peshawar carrying a forged Swedish passport and bombmaking manuals. He was taken into custody, and subsequently pleaded guilty to entering the country illegally.

Ajaj’s traveling companion was Ramzi Ahmed Yousef, an Iraqi who law enforcement sources say was a “key player” in the first World Trade Center bombing.

And it should be noted that it was Ajaj who was the source of the famed “al Qaeda terrorist manual” that was widely touted by the FBI in the wake of the second World Trade Center attack in 2001. In addition, Ajaj’s colleague—Ramzi Yousef—is the nephew of Khalid Sheikh Mohamad, whom the U.S. government has said was the “mastermind” of the 9-11 attacks.

In this regard, it is also important to point out that, for many years even prior to the first attack on the World Trade Center, there were many figures in Islamic circles who believed that Mohamad and Yousef were actually undercover assets for Israel.

Although the FBI identified Ajaj as a senior intifada terrorist, with links to Hamas (the Palestinian Islamic fundamentalist organization), Kol Ha’ir, a respected Hebrewlanguage weekly published in Jerusalem, said Ajaj was
never involved in intifada activities or with Hamas or even the Palestine Liberation Organization.

Instead, according to Kol Ha’ir, Ajaj was actually a petty crook arrested in 1988 for counterfeiting U.S. dollars out of a base in East Jerusalem. Ajaj was convicted of the counterfeiting charges and then sentenced to two-anda- half years in prison.

According to Friedman, writing in The Village Voice: “It was during his prison stay that Mossad, Israel’s CIA, apparently recruited him, say Israeli intelligence sources. By the time he was released after having served just one year, he had seemingly undergone a radical transformation.”

Friedman reported that Ajaj had suddenly become a devout Muslim and an outspoken hard-line nationalist. Then, Ajaj was arrested for smuggling weapons into the West Bank, supposedly for Fatah al-Islam, a faction of the PLO.

But Friedman says this was actually a sham. Friedman’s sources in Israeli intelligence say that the arrest and Ajaj’s subsequent deportation were “staged by Mossad to establish his credentials as an intifada activist. Mossad allegedly ‘tasked’ Ajaj to infiltrate radical Palestinian groups operating outside Israel and to report back to Tel Aviv.

Israeli intelligence sources say that it is not unusual for Mossad to recruit from the ranks of common criminals.”

After Ajaj’s “deportation” from Israel, he showed up in Pakistan, where he turned up in the company of the anti-Soviet mujahideen rebels in Afghanistan. (Incidentally, Andrew Allen, a wealthy San Francisco character who likes to take on assignments for the CIA to prevent boredom, admitted under oath “running” supplies into Afghanistan. He was also instrumental in destroying Librty Lobby and its newspaper, The Spotlight.)

This could indicate that Ajaj was working for the Mossad, for—according to Covert Action Information Bulletin (September 1987)—the funding and supply lines for the mujahideen were not only the “the second largest covert operation” in the CIA’s history, but they were also, according to former Mossad operative Victor Ostrovsky (writing in The Other Side of Deception), under the direct supervision of the Mossad. Ostrovsky wrote:

It was a complex pipeline, since a large portion of the mujahideen’s weapons were American-made and were supplied to the Muslim Brotherhood directly from Israel, using as carriers the Bedouin nomads who roamed the demilitarized zones in the Sinai. After Ajaj’s ventures with the mujahideen, he popped up in New York and purported to befriend members of a small so-called “radical” clique surrounding the blind Sheikh Abdel-Rahman, who was accused of being the mastermind of the World Trade Center bombing.

On Feb. 26, 1993, the actual day of the World Trade Center bombing, Ajaj was “safe” in federal prison serving a six-month sentence for entering the country on a forged passport. Later, he was indicted for conspiracy in the WTC bombing.

According to Robert Friedman, “If Ajaj was recruited by Mossad, it is not known whether he continued to work for the Israeli spy agency after he was deported. One possibility, of course, is that upon leaving Israel and meeting radical Muslims close to the blind Egyptian sheikh, his loyalties shifted.”

However, Friedman also reported another frightening possibility: “Another scenario is that he had advance knowledge of the World Trade Center bombing, which he shared with Mossad, and that Mossad, for whatever reason, kept the secret to itself. If true, U.S. intelligence sources speculate that Mossad might have decided to keep the information closely guarded so as not to compromise its undercover agent.”

By Oleg Shchedrov

Fri Feb 27, 2009 1:28pm GMT

NOVO-OGARYOVA, Russia, Feb 27 (Reuters) - Russian Prime Minister Vladimir Putin warned opposition critics on Friday not to use the economic crisis as an excuse to challenge his government and told them to abide by the law.

Unrest across Russia over economic upheaval has been muted, with the biggest protests so far taking place in the Far East port of Vladivostok where hundreds were arrested in January demonstrations over car tax.

Speaking at a meeting with leaders of Russia’s dominant political party, United Russia, ahead of regional elections this weekend, Putin said that criticism of the Russian government during a crisis was allowed, but only within the laws.

“If opposition actions go outside the law, it means they are not pursuing the goals of improving people’s lives, but their own selfish goals and the state has the right to defend itself properly,” Putin said at his residence outside Moscow.

Russia has tight controls that restrict opposition groups from holding rallies or marches without official sanction. Applications from groups like chess grandmaster Garry Kasparov’s ‘Other Russia’ movement are frequently rejected.

Putin and other senior Russian officials have criticised “people’s revolutions” in ex-Soviet Georgia and Ukraine which propelled pro-Western leaders to power through street protests.

“We won’t allow events to happen like in some other countries, to which I will not point a finger now. At the same time, we won’t limit lawful forms of protest,” Putin said.

ELECTORAL TEST

The ballot will mark the first electoral test for Putin since the global slowdown hit Russia last summer.

Opposition groups this month started a series of protests across Russia and are hoping to expand their limited base of support to those affected by the dramatic slowdown in the Russian economy that has sent unemployment soaring.

After a decade of steady growth, the economy is set to shrink by at least two per cent this year, which economists say will push up the jobless rate, now standing at over 8 percent.

Putin’s comments were dismissed by opposition figure Ilya Yashin of the newly-formed Solidarity group who said authorities define any criticism as a threat to national interests.

“This is an indicator of the nervousness of the authorities which understand how huge is the probability of public unrest,” said Yashin. (Reporting by Oleg Shchedrov and Aydar Buribayev, writing by Conor Sweeney)

http://uk.reuters.com/article/latestCrisis/idUKLR597758?sp=true

As the global economic crisis deepens, tempers around the world are getting shorter. French and British trade unions are organizing strikes, Putin is sending troops into the streets and Beijing is trying to buy itself calm.

REUTERS
A rally against car import duties in Krasnoyarsk, Russia: Citizens around the world are protesting against their governments’ handling of the economic crisis.

In the cabinet of French President’s Nicolas Sarkozy, there was talk of a “Black Thursday,” and from Sarkozy’s perspective, that was exactly what Jan. 29, 2009 turned out to be. Schools were closed, and so were railroads, banks and stock markets. Theaters, radio stations and even ski lifts were shut down temporarily. Trash receptacles were set on fire in Paris once again, and a crowd gathered on the city’s famed Place de l’Opéra to sing the “Internationale,” the anthem of revolution.

The global financial crisis has already reached France, bringing business failures, mass layoffs for some workers and reduced working hours for others. On that infamous Thursday, it drove up to 2.5 million people into the streets, in cities from Marseilles to Brest and Bordeaux. The situation was not like in May 1968, when France was in a state of emergency. Nevertheless, the country’s unions called the demonstrations “historic,” characterizing them as the most important protest movement to date against the current French president.

Paris is not the only place plagued by unrest. Across the English Channel in Britain, workers protested at a refinery near Immingham in Lincolnshire, triggering solidarity strikes in 19 other locations in the United Kingdom. The demonstrations became a symbol for the fears of the British lower classes, because the country — according to the International Monetary Fund — faces the worst downturn among all highly developed economies. Prime Minister Gordon Brown’s approval rating is following the decline of the British pound.

In Russia, dismal labor statistics have driven Communists and anti-government protestors into the streets from Pskov to Volgograd in recent days, and in Moscow members of the left-wing opposition even ventured onto Red Square. They ripped up pictures of Prime Minister Vladimir Putin, until police arrested and removed them.

In China, workers returned from festivities marking the spring festival to hear shocking news from their own government. Beijing announced that about 20 million migrant workers — more than the combined populations of Denmark, Sweden and Norway — would likely become unemployed in the coming months. The fast pace of economic growth that has lent legitimacy to the Communist Party’s hold on power until now has slowed considerably. According to a government spokesman, 2009 will be the “most difficult” year since the turn of the millennium.

About 50 million jobs could be lost worldwide in the next 11 months and more than 200 million people could drift into total poverty, warns the International Trade Union Confederation (ITUC). Guy Ryder, the group’s general secretary, believes that these changes represent a “social time bomb,” and that the resulting instability could become “extremely hazardous to democracy” in some countries.

In the West, the crisis could cost heads of state their jobs, as was recently the case with the prime minister of Iceland. But what does it mean for the giant countries in the East? Could the regime in Beijing falter as the country faces its greatest challenge since the beginning of market reforms? Are the Russian people terminating their political moratorium with the government, because prices are rising while the ruble falls, or could the middle class even be about to rebel?

Cabinets in London, Moscow, Beijing and Paris have been overcome by a sense of helplessness. Self-confessed workaholic Gordon Brown is trying to cope with calamity by taking constant countermeasures, while Putin sends his police officers into the street and Beijing distributes gifts to the poorest of the poor. French President Sarkozy, on the other hand, remained silent for a full seven days after the first major, large-scale demonstration.

The French president, who usually seizes every possible opportunity to grab the limelight, waited an entire week before finally reacting to nationwide strikes. Last Thursday evening, on instructions from the Elysée Palace, 90 minutes of broadcast time was made available for a television interview, and Sarkozy quickly switched into propaganda offensive mode on multiple TV and radio stations. The gist of his message was that there would be no change in direction, and that the government would continue to emphasize reforms.

In light of what he dubbed a “crisis of brutal proportions,” the president knowingly pointed to “hardships” and “worries” and massaged the soul of the nation with therapeutic platitudes. But that was the extent of it, because Sarkozy knows that the Jan. 29 demonstrations did not reach critical mass by a long shot. The motley alliance of protesting professors, nurses, steel workers and students lacked a shared list of economic and political demands. Their banners made a case for wage increases, purchasing power parity or the repeal of tax reforms for the rich. At the same time, however, the protests revealed a deep-seated malaise that penetrates deeply into the conservative electorate of the governing UMP. The overwhelming majority of the French are plagued by fears of unemployment, lower incomes and shrinking savings.

The galloping decline in the economy has further damaged the president’s standing. Now that his approval rating has dropped to only 39 percent, Sarkozy is very much on edge. After being booed by angry citizens during a visit to the normally tranquil town of Saint-Lô, the president reacted by imposing a disciplinary transfer on the town’s prefect and chief of police.

Two-thirds of the French believe that their government — despite the €26 billion ($34 billion) economic stimulus package, which even includes plans to renovate churches, government ministries and prisons — is not engaging in effective crisis management.

Politically speaking, the man in charge at the Elysée Palace will remain unchallenged until 2012. Sarkozy has a solid majority in both the National Assembly and the Senate. The Communists have shrunk to the point of insignificance, and the Socialists are crippled by internecine feuds. This week, however, the alliance of trade unions is discussing new battleground tactics, and it knows that it can depend on the support of the majority of French people.

“The sympathy for the strike movement highlights the ever-deepening rift between the French and their president,” warns political scientist and opinion researcher Stéphane Rozès. “We are on the brink of a new epoch, one that will be marked by growing political instability.”

‘The Fight Goes On’

British Prime Minister Gordon Brown’s popularity is falling even faster than Sarkozy’s. Despite a temporary boost last fall, when Brown showed leadership strength at home and internationally with his plan to recapitalize the banks, fewer and fewer Britons are now confident that the man at 10 Downing Street has the right recipe for the crisis.

According to recent polls, the opposition Tories have further widened their lead to a comfortable 10 to 12 percent, while only one in three Britons would vote for Labour today. The drop in the approval ratings of Brown and Chancellor of the Exchequer Alistair Darling is especially dramatic on issues of economic competence, where the pair lost a full 12 percentage points within only a month.

These are disconcerting numbers, especially for Brown’s Labour party, which almost kicked the prime minister out of office last summer. Coming to grips with the public’s growing anger will be one of the prime minister’s most important tasks. Although Brown’s smart, academic analyses against protectionism are impressive to listeners in places like Davos, the premier is increasingly alienating concerned traditional voters like the folks in Lincolnshire.

In better times, for example, the strike in front of the Lincolnshire refinery would have elicited nothing but a shrug from most British workers. The operator of the plant, the French energy company Total, had wanted to use 300 skilled workers from Italy and Portugal, provided by an Italian subcontractor, for a construction project. According to the unions, the workers were being paid less than they should have been, which Total denied.

After days of unruly strikes, the parties reached an agreement last Wednesday, in which Total agreed to provide 102 additional jobs for British workers. It was a courtesy gesture by the company to preserve the peace. Under the current law, there was nothing illegal about temporarily employing the Italian and Portuguese workers.

The 102 additional jobs are the price the company paid for social peace, but whether it will last is more than questionable. “We may have won the battle, but the fight goes on,” says Shaune Clarkson of the GMB union. No one knows whether the message has reached Brown in London, where more and more observers believe that the prime minister lost touch with the public long ago.

Buying Patience

If anyone has a receptive ear for angry grumbling in the streets, it is governments like those in Beijing and Moscow. Both China and Russia experienced serious crises in the 1990s, when their old communist, state-owned enterprises were shut down. In China, 50 million people became unemployed within a short space of time, and in Russia the economic crash almost cost President Boris Yeltsin his reelection in 1996. But both regimes persevered, because both the Chinese and the Russians, after long years of communist planned economies, were undemanding. But in the wake of the economic boom of recent years and the growing prosperity of large segments of the middle class, those days are over.

Ironically, in the year in which the Chinese Communist Party plans to celebrate the 60th anniversary of its rule with a great deal of pomp, the country, for the first time in a long while, will not be able to boast impressive economic statistics. The economy grew by only 6.8 percent in the last quarter. To keep high-school and university graduates employed, China must increase its manufacturing production or the services it provides by about 8 percent annually.

No one truly believes that Communist Party leader Hu Jintao or Premier Wen Jiabao could suffer the fate of former Indonesian President Suharto, who was swept away by the 1998 Asian economic crisis after ruling the country for more than 30 years. Nevertheless, “Chinese society will likely be confronted with more conflicts and clashes in 2009, which will test the abilities of the party and government even further,” warned the government-owned magazine Outlook.

Preventing unrest is the order of the day, and to that end Beijing has approved an economic stimulus package worth €460 billion ($598 billion). A portion of the money is to be spent on better social insurance programs, so that people will save less and consume more. A plan to raise the minimum wage has been postponed. Nevertheless, local governments handed out so-called “red envelopes,” each containing 100 to 150 yuan (€11-17 or $14-22), to the poorest of the poor during the spring festival so they can buy food.

In addition, Beijing came up with an unusual program. As of Feb. 1, farmers are receiving a cash rebate from the government equivalent to 13 percent of the purchase price when they buy television sets, washing machines, motorcycles or refrigerators. The Communist Party hopes the program will increase consumption — but also that it will buy it patience and sympathy.

The party is especially concerned about migrant workers, who are losing their jobs at a breathtaking rate. There is hardly any one left in their native villages for farming. The tenseness of the situation is palpable in China’s so-called “job markets,” such as the one in Canton’s Huadu district. Last week, on a side street wedged between factories, shops and apartment buildings, hundreds of men and women jostled up to tables at several leather factories that make bags for the domestic, Russian and American markets. Jobs were available — for a 10-hour day and without employment contracts.

Nevertheless, the mood in Canton still seems relaxed. And yet no one can predict how long the public’s confidence will last. Those who, despite all efforts, can no longer afford the tuition to send their children to school or their parents to the doctor may eventually lose patience with the authorities. In recent weeks, several protests in front of factory gates have turned violent, with police vehicles going up in flames and workers ransacking party offices.

The party is especially concerned about students, who have rarely dared to take to the streets since the 1989 Tiananmen Square massacre. But this could change when their dreams of enjoying a successful career in return for the hard work of their student years threaten to evaporate.

Of the roughly 5.6 million Chinese who graduated from universities and technical colleges in 2008, about a million are still without work. This year, the number of graduates entering the job market will be even higher, at 6.1 million. “If you are worried, you can rest assured that I am even more worried,” Premier Wen told a group of students.

Strong Steps

These are not the kinds of words Russians hear from their prime minister. Since the fall, when Putin was still publicly denying that the world financial crisis posed a threat to Russia, Moscow has primarily been preparing itself for one thing: to keep its own people in check if worse comes to worst.

The rulers’ fear of the ruled has plagued every Russian government since the days of the czars. It suddenly reappeared when Yevgeny Gontmacher, a respected social economist, published his essay “Novocherkassk 2009,” in which he warned against uprisings in the provinces. The essay alluded to the riots that broke out in the southern Russian industrial city of Novocherkassk in June 1962, following price increases. Five thousand angry workers took to the streets, and the police and army were ordered to shoot the protestors. More than 20 people died, and seven ringleaders were executed.

The mere mention of this long-suppressed drama was enough for the authorities to threaten to withdraw the license of the liberal business magazine Vedomosti, which had published Gontmacher’s article. The magazine was accused of “incitement to extremism” — and this despite the fact that the author had held an important post under Putin.

But in taking this approach, the Kremlin merely confirmed Gontmacher’s core thesis, namely that the Putin system, which increasingly emphasized central control and repression of political foes already during times of economic growth, is incapable of responding flexibly in a serious crisis. Indeed, the government reacted in panic immediately after the first demonstrations by angry merchants in Vladivostok, who were incensed over an increase in import duties for Western used cars, by portraying the protestors as the victims of foreign intelligence services.

Pavel Verstov, a member of Putin’s United Russia party until recently, can also attest to the Kremlin’s helplessness. Verstov, a local journalist, had reported on suicides at the largest steel mill in Magnitogorsk, an industrial city in the Ural Mountains region. Four workers had killed themselves because they could no longer repay their debts. Hundreds of thousands of Russians are now under similar pressure, after having taken out euro or dollar loans from banks to buy houses or cars. But now that the ruble has lost 47 percent of its value against the dollar since last September, the borrowers’ salaries are no longer sufficient to service their debt.

Verstov was expelled from the government party. A local party official branded him as a “troublemaker” and declared: “the security forces will take strong steps to thwart all attempts to destabilize society.” He called upon his fellow party members to stand behind President Dmitry Medvedev and Prime Minister Vladimir Putin.

The two men are still strong in the polls, with Putin’s approval rating at 83 percent. However, polls conducted by the public opinion research institute Levada Center show that confidence in the government is vanishing almost as quickly as the country’s financial reserves. While only 27 percent believed that the country is moving “in a wrong direction” in October 2008, that number had already risen by half by the end of December. Almost one in two citizens fears that “the government cannot effectively combat inflation and salary losses.”

To bolster the banks, the ruble and heavily indebted major companies, the government has already spent a third of its once formidable foreign currency reserves. After a still-respectable economic growth figure of 5.6 percent in 2008, German Gref, a former economics minister who now heads the country’s largest bank, now expects three years of recession and stagnation. “The government does not have a plan to cope with the crisis,” says Gref.

In this situation, it is not Garry Kasparov, the leader of the extra-parliamentary opposition, who poses a threat to the Moscow power elite, because the former world chess champion has far more supporters in the West than in Russia. And Communist Party leader Gennady Zyuganov, for his part, has made his peace with the powers that be.

The real threat comes from another direction. The Kremlin fears that members of the middle class, loyal Putin supporters, will withdraw their support if the prosperity of recent years vanishes. In December alone, disposable income sank by 11.6 percent, and 5.8 million people are already officially unemployed. Arkady Dvorkovich, economic advisor to President Medvedev, believes that the unofficial figure is closer to 20 million.

So far, few have protested in Putin’s giant realm. But the fact that there have already been open calls for Putin to resign — as in Vladivostok — shows how quickly supposedly stable power can be eroded.

A respected Moscow political scientist points to a dangerous disaffection between the “ruling elite” and the passive majority, warning that there are no longer any functioning relations between the country’s rulers and its population, television excluded. In times like these, he says, this could prove to be devastating — and it could ruin the Putin system.

THOMAS HÜETLIN, ANDREAS LORENZ, CHRISTIAN NEEF,
MATTHIAS SCHEPP, STEFAN SIMONS

Translated from the German by Christopher Sultan

‘We’re Not Paying For Your Crisis!’

02/26/2009 06:13 PM

Anger rises in Germany as the economy falls. Trade unions and globalization-critical protesters are planning demonstrations in Berlin and Frankfurt under the banner: “We’re not paying for your crisis.” Alexis Passadakis, 31, an activist from the group Attac, tells SPIEGEL what’s wrong with the system.

DDP
Attac activists stage a protest action at the Frankfurt Stock Exchange in Germany: “Disarm the Financial Markets!”

SPIEGEL: What do you mean with your battle cry, “We’re not paying for your crisis”? Don’t you want to pay taxes anymore?Passadakis: We believe that the cost of the economic crisis should be footed by those who profited most from globalization.

SPIEGEL: As a leading exporter, Germany too has profited.

Passadakis: No, the majority of people have not earned much from the boom — instead they have had to deal with restraint in their wage agreements. The rich, on the other hand, have seen strong increases in their wealth. So it is only fair that they should pay extra duties.

SPIEGEL: You want to fleece the Aldi brothers and the Klatten and Otto families (Germany’s richest people) among others?

Passadakis: Yes, they in particular should be ordered to come to the check out. We are calling for the rich to pay out between 5 and 20 percent of their wealth.

SPIEGEL: And by doing so, they should provide enough money to finance the economic stimulus packages?

Passadakis: The German government has now pledged €480 billion ($613 billion) in guarantees and cash injections for banks. In the year 2002 alone, private assets in Germany increased by almost €800 billion. There is lots to draw on. We just can’t keep going on as we have been until now.

SPIEGEL: Why not?

Passadakis: The European Commission estimates in a secret paper that the banks are still sitting on toxic assets worth several trillions of euros. To guarantee such sums would be beyond the means of any public fund. Instead, it would be better to let the banks go bankrupt in a controlled fashion, then put them under public control and then recapitalize them. Then the billions of taxes would be used in a sensible way.

SPIEGEL: Do you think many people will participate in your protest?

Passadakis: The crisis is still very abstract for many people. But still our membership numbers are rising fast. After the protests in France we are holding demos in Germany on March 28, shortly before the global finance summit in London.

By Brett Neely

Feb. 27 (Bloomberg) — When Berlin resident Simone Klostermann returned from vacation and couldn’t find her Mercedes SLK, she thought it had been towed. Police told her the 35,000- euro ($45,000) car had been torched.

“They’d squirted something flammable into the car’s engine block in the gap between the windshield and the hood,” said Klostermann. “The engine was completely destroyed.”

The 34-year-old’s experience isn’t unique in the German capital. At least 29 vehicles were destroyed in arson attacks this year, most of them luxury cars, according to police. The number is already about 30 percent of the total for 2008. The latest to go up in flames was a Porsche, on Feb. 14, two days after a Mercedes was set alight in a public car park.

While youths in Athens protest by throwing Molotov cocktails, in Paris by toppling barricades, and in Budapest by hurling eggs at politicians, protesters in Berlin rage at their economic plight by targeting the most expensive cars — symbols of German wealth and power.

A group calling itself BMW — the initials stand for Movement for Militant Resistance in German — has claimed responsibility for several attacks in left-wing magazines and Web sites, police spokesman Bernhard Schodrowski said.

One-third of the incidents are classed as “political,” prompting officers to assign a special unit to investigate, Schodrowski said. No arrests have been made. Schodrowski attributed the arson to “a protest against the world economy and rising rents.”

‘Quick to Attack’

German unemployment began to rise last November after almost three years of declines. Deutsche Bank AG Chief Economist Norbert Walter predicts the German economy, Europe’s biggest, may shrink by more than 5 percent this year.

The worst recession since World War II is fueling anger among youths across Europe who “perceive their future as rather precarious,” said Margit Mayer, a politics professor at Berlin’s Free University.

“Whether you look at the Berlin events or these anarchist groups in other European cities and countries, they are all making reference to the deepening economic crisis and how the various governments are dealing with them,” said Mayer, a specialist in urban social and protest movements.

Some groups are “very quick to attack whoever they can make out as responsible for having robbed them of decent life prospects,” according to Mayer.

The Berlin car burnings have been concentrated in up-and- coming neighborhoods such as Prenzlauer Berg, where Klostermann’s car was destroyed in May.

‘Don’t Move in Here’

There, new housing and building redevelopments are pushing out the squatter scene that flourished after East and West Berlin were reunited in 1990, said Andrej Holm, a sociologist at Goethe University in Frankfurt who has studied the change.

Rents that were about half the city average 10 years ago are now about 40 percent above the average, and the car attacks are an attempt to drive wealthy newcomers away, Holm said.

“It means: ‘rich people, don’t move in here — your cars will be trashed, we don’t want you here’,” he said.

Representatives from Porsche Automobil Holding SE, Daimler AG, the maker of Mercedes, and Bayerische Motoren Werke AG declined to comment on the attacks. Daimler spokeswoman Ute von Fellberg said the matter was about security in Berlin.

Berlin Matter

“This is not a matter for the producer, rather it’s a matter for the city of Berlin,” BMW spokesman Alexander Bilgeri said today in a phone interview.

While Prenzlauer Berg and other central neighborhoods such as Friedrichshain and Kreuzberg are thriving, at least in parts, Berlin as a whole remains Germany’s “subsidy capital” almost 20 years after the Berlin Wall fell, said Tobias Just, a real-estate economist with Deutsche Bank in Frankfurt. Unemployment, at 14.1 percent in February, is almost double the national average.

Oliver Kappelle, who moved with his wife and two children to Friedrichshain, is unfazed by the perceived threat.

One night last month, Kappelle came across a “heap of junk that used to be a Porsche the night before,” he said. “I was just relieved that he didn’t park in the empty space behind me.”

Baader-Meinhof

Berlin has a history of political protest, with anarchist demonstrators regularly clashing with police on the streets of Kreuzberg during May 1 marches. Kreuzberg, which abutted the Berlin Wall, is represented in parliament by the Green Party’s Hans-Christian Stroebele, a former lawyer who defended members of the Baader-Meinhof gang in court.

Likewise, arson attacks on cars are not new: a Web site, “Burning Cars,” was set up to track the incidents in May 2007, one month before a summit in the northern German resort of Heiligendamm of the Group of Eight industrialized nations. There have been 290 attacks on cars since then, among them 55 Mercedes and 29 BMWs damaged or destroyed by fire, the site records.

“I wouldn’t advise someone to park their Porsche on the street” in Kreuzberg, Berlin police commissioner Dieter Glietsch told the Taz newspaper in June last year.

As the frequency of attacks increases, Klostermann, a company manager who has lived in Prenzlauer Berg for 12 years, remains unbowed.

“I would never want to be regarded as someone who can be driven out of a place where I enjoy living,” she said.

To contact the reporter on this story: Brett Neely in Berlin bneely3@bloomberg.net.

Last Updated: February 27, 2009 07:37 EST

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