Tag: unemployment
Martial Law enacted…if Bailout didn’t pass
by admin on Mar.11, 2009, under Uncategorized
Rep. Brad Sherman Martial Law
Paulson Was Behind Bailout Martial Law Threat !!!
Pentagon to Detail Troops to Bolster Domestic Security
by admin on Mar.11, 2009, under Uncategorized
By Spencer S. Hsu and Ann Scott Tyson
Washington Post Staff Writers
Monday, December 1, 2008; A01
The U.S. military expects to have 20,000 uniformed troops inside the United States by 2011 trained to help state and local officials respond to a nuclear terrorist attack or other domestic catastrophe, according to Pentagon officials.
The long-planned shift in the Defense Department’s role in homeland security was recently backed with funding and troop commitments after years of prodding by Congress and outside experts, defense analysts said.
There are critics of the change, in the military and among civil liberties groups and libertarians who express concern that the new homeland emphasis threatens to strain the military and possibly undermine the Posse Comitatus Act, a 130-year-old federal law restricting the military’s role in domestic law enforcement.
But the Bush administration and some in Congress have pushed for a heightened homeland military role since the middle of this decade, saying the greatest domestic threat is terrorists exploiting the proliferation of weapons of mass destruction.
Before the terrorist attacks of Sept. 11, 2001, dedicating 20,000 troops to domestic response — a nearly sevenfold increase in five years — “would have been extraordinary to the point of unbelievable,” Paul McHale, assistant defense secretary for homeland defense, said in remarks last month at the Center for Strategic and International Studies. But the realization that civilian authorities may be overwhelmed in a catastrophe prompted “a fundamental change in military culture,” he said.
The Pentagon’s plan calls for three rapid-reaction forces to be ready for emergency response by September 2011. The first 4,700-person unit, built around an active-duty combat brigade based at Fort Stewart, Ga., was available as of Oct. 1, said Gen. Victor E. Renuart Jr., commander of the U.S. Northern Command.
If funding continues, two additional teams will join nearly 80 smaller National Guard and reserve units made up of about 6,000 troops in supporting local and state officials nationwide. All would be trained to respond to a domestic chemical, biological, radiological, nuclear, or high-yield explosive attack, or CBRNE event, as the military calls it.
Military preparations for a domestic weapon-of-mass-destruction attack have been underway since at least 1996, when the Marine Corps activated a 350-member chemical and biological incident response force and later based it in Indian Head, Md., a Washington suburb. Such efforts accelerated after the Sept. 11 attacks, and at the time Iraq was invaded in 2003, a Pentagon joint task force drew on 3,000 civil support personnel across the United States.
In 2005, a new Pentagon homeland defense strategy emphasized “preparing for multiple, simultaneous mass casualty incidents.” National security threats were not limited to adversaries who seek to grind down U.S. combat forces abroad, McHale said, but also include those who “want to inflict such brutality on our society that we give up the fight,” such as by detonating a nuclear bomb in a U.S. city.
In late 2007, Deputy Defense Secretary Gordon England signed a directive approving more than $556 million over five years to set up the three response teams, known as CBRNE Consequence Management Response Forces. Planners assume an incident could lead to thousands of casualties, more than 1 million evacuees and contamination of as many as 3,000 square miles, about the scope of damage Hurricane Katrina caused in 2005.
Last month, McHale said, authorities agreed to begin a $1.8 million pilot project funded by the Federal Emergency Management Agency through which civilian authorities in five states could tap military planners to develop disaster response plans. Hawaii, Massachusetts, South Carolina, Washington and West Virginia will each focus on a particular threat — pandemic flu, a terrorist attack, hurricane, earthquake and catastrophic chemical release, respectively — speeding up federal and state emergency planning begun in 2003.
Last Monday, Defense Secretary Robert M. Gates ordered defense officials to review whether the military, Guard and reserves can respond adequately to domestic disasters.
Gates gave commanders 25 days to propose changes and cost estimates. He cited the work of a congressionally chartered commission, which concluded in January that the Guard and reserve forces are not ready and that they lack equipment and training.
Bert B. Tussing, director of homeland defense and security issues at the U.S. Army War College’s Center for Strategic Leadership, said the new Pentagon approach “breaks the mold” by assigning an active-duty combat brigade to the Northern Command for the first time. Until now, the military required the command to rely on troops requested from other sources.
“This is a genuine recognition that this [job] isn’t something that you want to have a pickup team responsible for,” said Tussing, who has assessed the military’s homeland security strategies.
The American Civil Liberties Union and the libertarian Cato Institute are troubled by what they consider an expansion of executive authority.
Domestic emergency deployment may be “just the first example of a series of expansions in presidential and military authority,” or even an increase in domestic surveillance, said Anna Christensen of the ACLU’s National Security Project. And Cato Vice President Gene Healy warned of “a creeping militarization” of homeland security.
“There’s a notion that whenever there’s an important problem, that the thing to do is to call in the boys in green,” Healy said, “and that’s at odds with our long-standing tradition of being wary of the use of standing armies to keep the peace.”
McHale stressed that the response units will be subject to the act, that only 8 percent of their personnel will be responsible for security and that their duties will be to protect the force, not other law enforcement. For decades, the military has assigned larger units to respond to civil disturbances, such as during the Los Angeles riot in 1992.
U.S. forces are already under heavy strain, however. The first reaction force is built around the Army’s 3rd Infantry Division’s 1st Brigade Combat Team, which returned in April after 15 months in Iraq. The team includes operations, aviation and medical task forces that are to be ready to deploy at home or overseas within 48 hours, with units specializing in chemical decontamination, bomb disposal, emergency care and logistics.
The one-year domestic mission, however, does not replace the brigade’s next scheduled combat deployment in 2010. The brigade may get additional time in the United States to rest and regroup, compared with other combat units, but it may also face more training and operational requirements depending on its homeland security assignments.
Renuart said the Pentagon is accounting for the strain of fighting two wars, and the need for troops to spend time with their families. “We want to make sure the parameters are right for Iraq and Afghanistan,” he said. The 1st Brigade’s soldiers “will have some very aggressive training, but will also be home for much of that.”
Although some Pentagon leaders initially expected to build the next two response units around combat teams, they are likely to be drawn mainly from reserves and the National Guard, such as the 218th Maneuver Enhancement Brigade from South Carolina, which returned in May after more than a year in Afghanistan.
Now that Pentagon strategy gives new priority to homeland security and calls for heavier reliance on the Guard and reserves, McHale said, Washington has to figure out how to pay for it.
“It’s one thing to decide upon a course of action, and it’s something else to make it happen,” he said. “It’s time to put our money where our mouth is.”
Brigade homeland tours start Oct. 1
by admin on Mar.11, 2009, under Uncategorized
3rd Infantry’s 1st BCT trains for a new dwell-time mission. Helping ‘people at home’ may become a permanent part of the active Army
By Gina Cavallaro - Staff writer
Posted : Tuesday Sep 30, 2008 16:16:12 EDT
The 3rd Infantry Division’s 1st Brigade Combat Team has spent 35 of the last 60 months in Iraq patrolling in full battle rattle, helping restore essential services and escorting supply convoys.
Now they’re training for the same mission — with a twist — at home.
Beginning Oct. 1 for 12 months, the 1st BCT will be under the day-to-day control of U.S. Army North, the Army service component of Northern Command, as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks.
It is not the first time an active-duty unit has been tapped to help at home. In August 2005, for example, when Hurricane Katrina unleashed hell in Mississippi and Louisiana, several active-duty units were pulled from various posts and mobilized to those areas.
But this new mission marks the first time an active unit has been given a dedicated assignment to NorthCom, a joint command established in 2002 to provide command and control for federal homeland defense efforts and coordinate defense support of civil authorities.
After 1st BCT finishes its dwell-time mission, expectations are that another, as yet unnamed, active-duty brigade will take over and that the mission will be a permanent one.
“Right now, the response force requirement will be an enduring mission. How the [Defense Department] chooses to source that and whether or not they continue to assign them to NorthCom, that could change in the future,” said Army Col. Louis Vogler, chief of NorthCom future operations. “Now, the plan is to assign a force every year.”
The command is at Peterson Air Force Base in Colorado Springs, Colo., but the soldiers with 1st BCT, who returned in April after 15 months in Iraq, will operate out of their home post at Fort Stewart, Ga., where they’ll be able to go to school, spend time with their families and train for their new homeland mission as well as the counterinsurgency mission in the war zones.
Stop-loss will not be in effect, so soldiers will be able to leave the Army or move to new assignments during the mission, and the operational tempo will be variable.
Don’t look for any extra time off, though. The at-home mission does not take the place of scheduled combat-zone deployments and will take place during the so-called dwell time a unit gets to reset and regenerate after a deployment.
The 1st of the 3rd is still scheduled to deploy to either Iraq or Afghanistan in early 2010, which means the soldiers will have been home a minimum of 20 months by the time they ship out.
In the meantime, they’ll learn new skills, use some of the ones they acquired in the war zone and more than likely will not be shot at while doing any of it.
They may be called upon to help with civil unrest and crowd control or to deal with potentially horrific scenarios such as massive poisoning and chaos in response to a chemical, biological, radiological, nuclear or high-yield explosive, or CBRNE, attack.
Training for homeland scenarios has already begun at Fort Stewart and includes specialty tasks such as knowing how to use the “jaws of life” to extract a person from a mangled vehicle; extra medical training for a CBRNE incident; and working with U.S. Forestry Service experts on how to go in with chainsaws and cut and clear trees to clear a road or area.
The 1st BCT’s soldiers also will learn how to use “the first ever nonlethal package that the Army has fielded,” 1st BCT commander Col. Roger Cloutier said, referring to crowd and traffic control equipment and nonlethal weapons designed to subdue unruly or dangerous individuals without killing them.
The package is for use only in war-zone operations, not for any domestic purpose.
“It’s a new modular package of nonlethal capabilities that they’re fielding. They’ve been using pieces of it in Iraq, but this is the first time that these modules were consolidated and this package fielded, and because of this mission we’re undertaking we were the first to get it.”
The package includes equipment to stand up a hasty road block; spike strips for slowing, stopping or controlling traffic; shields and batons; and, beanbag bullets.
“I was the first guy in the brigade to get Tasered,” said Cloutier, describing the experience as “your worst muscle cramp ever — times 10 throughout your whole body.
“I’m not a small guy, I weigh 230 pounds … it put me on my knees in seconds.”
The brigade will not change its name, but the force will be known for the next year as a CBRNE Consequence Management Response Force, or CCMRF (pronounced “sea-smurf”).
“I can’t think of a more noble mission than this,” said Cloutier, who took command in July. “We’ve been all over the world during this time of conflict, but now our mission is to take care of citizens at home … and depending on where an event occurred, you’re going home to take care of your home town, your loved ones.”
While soldiers’ combat training is applicable, he said, some nuances don’t apply.
“If we go in, we’re going in to help American citizens on American soil, to save lives, provide critical life support, help clear debris, restore normalcy and support whatever local agencies need us to do, so it’s kind of a different role,” said Cloutier, who, as the division operations officer on the last rotation, learned of the homeland mission a few months ago while they were still in Iraq.
Some brigade elements will be on call around the clock, during which time they’ll do their regular marksmanship, gunnery and other deployment training. That’s because the unit will continue to train and reset for the next deployment, even as it serves in its CCMRF mission.
Should personnel be needed at an earthquake in California, for example, all or part of the brigade could be scrambled there, depending on the extent of the need and the specialties involved.
Other branches included
The active Army’s new dwell-time mission is part of a NorthCom and DOD response package.
Active-duty soldiers will be part of a force that includes elements from other military branches and dedicated National Guard Weapons of Mass Destruction-Civil Support Teams.
A final mission rehearsal exercise is scheduled for mid-September at Fort Stewart and will be run by Joint Task Force Civil Support, a unit based out of Fort Monroe, Va., that will coordinate and evaluate the interservice event.
In addition to 1st BCT, other Army units will take part in the two-week training exercise, including elements of the 1st Medical Brigade out of Fort Hood, Texas, and the 82nd Combat Aviation Brigade from Fort Bragg, N.C.
There also will be Air Force engineer and medical units, the Marine Corps Chemical, Biological Initial Reaction Force, a Navy weather team and members of the Defense Logistics Agency and the Defense Threat Reduction Agency.
One of the things Vogler said they’ll be looking at is communications capabilities between the services.
“It is a concern, and we’re trying to check that and one of the ways we do that is by having these sorts of exercises. Leading up to this, we are going to rehearse and set up some of the communications systems to make sure we have interoperability,” he said.
“I don’t know what America’s overall plan is — I just know that 24 hours a day, seven days a week, there are soldiers, sailors, airmen and Marines that are standing by to come and help if they’re called,” Cloutier said. “It makes me feel good as an American to know that my country has dedicated a force to come in and help the people at home.”
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Correction:
A non-lethal crowd control package fielded to 1st Brigade Combat Team, 3rd Infantry Division, described in the original version of this story, is intended for use on deployments to the war zone, not in the U.S., as previously stated.
The Army’s Civilian Inmate Labor Program
by admin on Mar.11, 2009, under Uncategorized
Haliburton subsidiary KBR has been quietly working on these camps for the past few years.
The contract, which is effective immediately, provides for establishing temporary detention and processing capabilities to expand existing ICE Detention and Removal Operations Program facilities in the event of an emergency influx of immigrants into the U.S., or to support the rapid development of new programs, KBR said. The contract may also provide migrant detention support to other government organizations in the event of an immigration emergency, as well as the development of a plan to react to a national emergency, such as a natural disaster, the company said.
As Jerome Corsi points out, NSPD-51 gives the President dictatorial powers, indefinite in duration, in the event of a declared emergency. The term “emergency” is quite broadly defined:
The directive loosely defines “catastrophic emergency” as “any incident, regardless of location, that results in extraordinary levels of mass casualties, damage, or disruption severely affecting the U.S. population, infrastructure, environment, economy, or government functions.”
….NSPD-51/ HSPD-20 also makes no reference whatsoever to Congress. The language of the May 9 directive appears to negate any a requirement that the president submit to Congress a determination that a national emergency exists, suggesting instead that the powers of the executive order can be implemented without any congressional approval or oversight. (source)
Now some may believe that our current President would not follow in the previous President’s footsteps and abuse power in this manner. I think the public record speaks for itself:
* Is Obama Embracing the Lawless, Omnipotent Executive?
* Obama Administration Supports Telco Spy Immunity
* Obama Administration Keeps Bush View on Afghanistan Detainees
* Obama Adminstration Tries to Kill E-mail Case
* Obama, Not Bush, Now Seeking Delay of Rove Deposition
* Obama Signals He Isn’t Interested in ‘Truth Commission’ to Investigate Bush Abuses
* Obama Administration Pressing Ahead with an Argument for Preserving State Secrets Involving Rendition and Torture Developed by the Bush Administration
* Biden: US Stands Ready to Take Pre-emptive Action Against Iran
* Obama Sides with Bush in Spy Case
The Federal Reserve is Bankrupt How Did It Happen and What are the Ugly Consequences?
by admin on Mar.11, 2009, under Uncategorized
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By Matthias Chang
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Global Research, March 10, 2009
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The Federal Reserve is bankrupt for all intents and purposes. The same goes for the Bank of England! This article will focus largely on the Fed, because the Fed is the “financial land-mine”. How long can someone who has stepped on a landmine, remain standing – hours, days? Eventually, when he is exhausted and his legs give way, the mine will just explode! The shadow banking system has not only stepped on the land-mine, it is carrying such a heavy load (trillions of toxic wastes) that sooner or later it will tilt, give way and trigger off the land-mine![1] In a recent article, I referred to the remarks of British Prime Minister Gordon Brown and President Obama calling for the shadow banking system to be outlawed. Even if the call was genuine, it is too late. The land-mine has been triggered and the explosion cannot be averted under any circumstances. The only issue is the extent of the damage to the global economy and how long it will take for the world to recover from this fiasco – a financial madness that has no precedent. The great depression is “Mary Poppins” in comparison! The idea of a central bank going bankrupt is not that outlandish. I am by no means the first author who has given this stark warning. What underlies this crisis (which I initially examined in an article in December 2006) is the potential collapse of the global banking system, specifically the Shadow Money-Lenders. Nouriel Roubini, the New York University professor said [2]:
Please read the underlined words again. “Sovereign bank” means central bank. When a central bank “cracks” i.e. becomes insolvent, “all hell breaks lose”, because as the professor correctly pointed out, “any government guarantees will ring hollow and will be useless”. If a central bank goes belly up, it is as good as the government going bankrupt. Period! In another article, Roubini admitted that the pressure on “the financial land-mine” is totally unbearable. He wrote: “The US Financial system is effectively insolvent”. It follows that if the financial system is bankrupt, it is a matter of time before the “sovereign bank” goes belly up. This is a given! He stated further that:
McClatchy newspaper reported (03/08/2009) bad news affecting the banks:
Berkshire Hathaway Chairman, Warren Buffett is so livid by the sheer magnitude of the financial mess that he said:
The above bad news refers to the losses and potential losses that the big banks have suffered and will suffer in the near future. But what is overlooked by many financial analysts is that these very same derivative products have caused another financial organ failure. And there is no way that the said organ can be resuscitated to its former state of health.
The Repo Market is gridlocked! There has been an incestuous relationship between the traditional banking system and the shadow banking system and the link that joined the two together is the Repo Market.[Repurchase Market] This is in fact the weakest link in the entire financial system. This is a very technical subject and I seek your indulgence and patience when reading the remaining part of this article. The gridlock of the repo market is the basis for my assertion that over and above the aforesaid dire financial facts, it is the major contributing factor to the bankruptcy of the Federal Reserve! I want to use a simple analogy. This will make the issue easier to understand. Picture a one-inch diameter thick rope. Such a rope is made up of a few strands of narrower ropes, say 1/10th inch which are twined together to make the thick one-inch diameter rope. Picture again that all the outer strands have been burnt away, and what remains is the middle strand, still lifting the weight. But this strand cannot on its own, lift such a weight and sooner or later, it will snap. When that happens, the weight will come crashing down! The middle strand is the repo market. Alternatively, you can use the analogy that the repo market is the heart that pumps the blood (the cash flow). The financial system is the body and it has suffered a massive heart attack! What is the repo market? The repo market is the market whereby all financial institutions (regulated and unregulated) invariably go to obtain financing to meet reserve requirements, bridging finance, to lend or purchase securities, to hedge and or to invest on short-term basis. It used to be that mainly US Treasuries (bear this in mind at all times) were used as security for Repo transactions, as it is considered as most secure i.e. as good as cash since it is backed by the credit of the US government! This requirement is no longer the case. More of this issue later. The Nature of Repo Transactions In repo transactions, securities are exchanged for cash with an agreement to repurchase the securities at a future date. The securities serve as collateral for what is effectively a cash loan. A distinguishing feature of repos is that they can be used either to obtain funds or to obtain securities. As repos are short-maturity collateralized instruments, repo markets have strong linkages with securities markets, derivative markets and other short term markets such as inter-bank and money markets. [3] Like other financial markets, repo markets are subject to credit risks, operational risks and liquidity risks. However, what distinguishes the credit risks on repos from that associated with uncollateralized instruments is that repos credit exposures arise from volatility (or market risk) in the value of collateral. Bear this in mind at all times. Repos allow institutions to use leverage to take larger positions in financial markets which could add to systemic risks. Bear this in mind at all times. And because of the close linkages between repo markets and securities markets, any shocks will be transmitted quickly, resulting in a gridlock. Bear this in mind at all times. Transactions covered by definition of repos are as follows:
(A) Repurchase Agreement A repurchase agreement involves the sale of an asset under an agreement to repurchase the asset from the same counter-party. Interest is paid on the repurchase agreement by adjusting the sale and purchase price. A reverse repo is the purchase of an asset with an agreement to re-sell the same or a similar asset.
A hold-in-custody repurchase agreement is a trade whereby the repoer (the borrower of cash) continues to hold the collateralizing securities in custody for the lender of cash. The risks are obvious!
A deliver-out repurchase agreement is where securities are delivered to the cash lender for custody in exchange for cash.
A tri-party repurchase agreement is similar to a deliver-out repurchase agreement, except that the security is placed in the custody of a third-party entity. The third-party ensures that the security meets the cash lender’s requirements and provides valuation and margining services. This is the primary form of repurchase agreement for securities dealers in the United States. Bank of New York and JP Morgan Chase are the two main custodians or clearing banks in the US and supervise the vast majority of the tri-party repos. Bear this in mind at all times.
(B) Sell/Buy-Back Agreement A sell buy-back is two distinct outright cash market trades, one for forward settlement. The forward price is set relative to the spot price to yield a market rate of return.
(C) Securities Lending This is where the owner of the security lends them to another person in return for a fee. The borrower of the security is contractually obliged to redeliver a like quantity of the same securities, or return precisely the same securities. Repos can be of any duration but are most commonly over-night loans. Repos longer than over-night are called Term Repos. There are also Open Repos which are transactions which can be terminated by both parties on a day’s notice. The largest players of repos and reverses are the dealers in government securities. There are about 20 primary dealers recognised by the Fed which are authorised to bid for new-issued treasury securities for resale in the market. The dealers are highly leveraged, 50 to 100 times their own capital. To finance the purchase of treasury securities, the dealers need to have repo monies in large amounts on a continuing basis. The institutions that supply such huge funds in the repo market are money funds, large corporations, state and local governments and foreign central banks. The Repo Market and the Financial Crisis As stated earlier when the repo market first started, US treasuries were the preferred security. But when financial engineering exploded and many financial products (i.e. CDOs) were rated AAA by rating agencies, these securities were also traded as described above in the repo market. This was when problems started. According to Gary Gorton [4], the repo market before the crisis was estimated to be worth a whopping $12 trillion as compared to the total assets in the entire US banking system of $10 trillion. The former CEO of Federal Reserve Bank of New York (NYFRB) and now the US Treasury Secretary, Tim Geithner observed in 2008:
Economic historians will argue for another century as to the cause for the run on the repo market. The collapse of Bear Stearns is as good a starting point as any. When the market discovered that its securities were duds, pure junk, shock waves ripped through the system. Recall that I had mentioned earlier that Federal Bank of New York and JP Morgan Chase were the primary clearing banks for repos. The Fed’s rescue of Bear Stearns through JP Morgan was not so much to save the former but rather to shore up the “clearing system” of the repos for which JP Morgan Chase and the Bank of New York were the main pillars. One of the functions of a “clearing bank” for repos is to value and match securities tendered for cash borrowings. If Bear Stearns securities are now valued as junks, the integrity of JP Morgan and Federal Bank of New York as clearing banks in this market is as good as zero! And bearing in mind that the five major investment banks in the US rely heavily on the repo market for their funding, any gridlock in this part of the shadow banking system would tear wide open the entire banking system, including the traditional counter-part. Hence, the FED intervention by the creation of the Primary Dealer Credit Facility (PDCF) which was in effect the backstop for all investment banking using tri-party repos! This was what Bernanke said:
Louis Crandall, economist at Wrightson ICAP observed:
The inherent weakness of tri-party repos is that the counter-party risks of billions worth of funding agreements are shouldered by essentially two players – Federal Bank of New York and JP Morgan Chase. Yet, way back then, they were held up as rock solid. It is almost hilarious to read the then advert of the Federal Bank of New York as to their expertise and service:
Panic swept across the entire repo market. No securities were considered safe enough for repos except US treasuries. Fundings in the repo market grind to a halt. Market players withdrew funds and began hoarding treasuries. The rest who own structured products were slaughtered. I would like to quote Gary Gorton again:
This change led to a sharp increase in the demand for government securities for repo transactions, which was compounded by significantly higher safe-haven demand for US Treasuries and the increased unwillingness to lend such securities in repo transactions. As the crisis unfolded, this combination resulted in US government collateral becoming extremely scarce. [6] I will now turn to the issue of the FED’s solvency. As has been observed, the Fed intervened aggressively to check the run on the repo market. Various measures were taken, but in my view the most dangerous was the widening of the collaterals which the Fed was willing to accept to secure funding of the players in the repo market. The Fed also intervened by lending a huge chunk of its US treasuries in exchange for junks to facilitate credit expansion.
In the result, what happened was that the Fed’s present balance sheet of approximately $2 trillion is made up mostly of junk securities. The Fed is no different from banks in that confidence in the quality of its assets is critical and that if and when the market recovers, there is in fact a market for the junk assets that it took on to unravel the gridlock in the financial markets. By way of analogy, if your high street bank’s balance sheet is made up of junk, what would you do? There are just not enough assets to meet its liabilities. But of course, one can argue that the Fed is not your high street bank. It is the central bank of the mighty USA. It will always be able to “print money” or “digitalise” money and keep the markets going. But beware that the Federal Reserve Note is mere paper, fiat money which cannot be redeemed for anything tangible such as gold. And although it is stated boldly in the notes issued - “In God we trust” - you and I are not actually placing our trust in God when accepting the Federal Reserve Notes as “money”. When Joe Six-Packs realises that the Federal Reserve Note is not even secured by US treasuries and or the FED has real tangible assets, but its balance sheet is littered with junks and toxic waste, there will be a run on the Fed i.e. when Americans and foreigners no longer have faith in the Federal Reserve Notes as “money”. If confidence could vaporise in a second and cause a stampede in what was once considered solid security, the triple A rated bonds in the repo and money markets, the same confidence that is now reposed in the Federal Reserve Notes can likewise disappear into the memory hole. All these years, the con was maintained by the Fed that it was solid because it has on its balance sheet over $800 billion of US treasuries i.e. its notes “were so-called backed by these treasuries”. It could sell its treasuries in the repo market for cash and thereby control the money flows in the economy and vice versa. In their subconscious mind, Americans and stupid foreign central banks and their executives (brain-washed by the Chicago School of Economics) somehow believe in the infallibility of the Fed. Now it has been exposed that the Fed’s “assets” comprise of junk bonds and toxic wastes. The Emperor has no clothes! Paul Volcker, former Chairman of the Federal Reserve may have given the ultimate epitaph: “The bright new financial system – for all its talented participants, for all its rich rewards – has failed the test of the market place.” And it is any wonder that Professor Nouriel Roubini declared:
In my opinion, the Fed has already become “unglued”. Whatever guarantees given to secure the indebtedness of CitiGroup and others to prevent a run on these banks are useless. It is bankrupt! End Notes [1] There are two banking systems in existence today. The Traditional Banking System – i.e. High Street banks and the Shadow Banking System. But the players in both the systems overlap because, the major banks of the traditional system helped spawn the shadow banking system. In fact they are the key players in the use of the so-called “new financial products, the CDOs, CLOs, MBS” etc and which have now turned toxic – worthless, junk to be exact. Matthias Chang is a prominent barrister, author and analyst of the New World Order based in Malaysia.
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Vast Job Losses Warn Of Upheaval
by admin on Mar.09, 2009, under Uncategorized
| Vast Job Losses Warn Of Upheaval | |
| By Peter S. Goodman , New York Times News Service | |
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| Published on 3/7/2009 in Home »Nation, World »Nation Main Photo | |
| As government data revealed that 651,000 more jobs disappeared in February, a sense took hold that growing joblessness may reflect a wrenching restructuring of the U.S. economy.The unemployment rate surged to 8.1 percent, from 7.6 percent in January, its highest level in a quarter-century. In key industries - manufacturing, financial services and retail - layoffs have accelerated so quickly in recent months as to suggest that many companies are abandoning whole areas of business.
”These jobs aren’t coming back,” said John E. Silvia, chief economist at Wachovia in Charlotte, N.C. “A lot of production either isn’t going to happen at all, or it’s going to happen somewhere other than the United States. There are going to be fewer stores, fewer factories, fewer financial services operations. Firms are making strategic decisions that they don’t want to be in their businesses.” This dynamic has proved true in past recessions as well, with fading industries pushed to the brink during downturns before others emerged to create jobs when economic growth inevitably resumed. But with job losses so enormous over such a short period of time, some economists argue that the latest crisis challenges the usual American reaction to harsh economic conditions. For decades, the government has reacted to downturns by handing out temporary unemployment insurance checks, relying upon the resumption of economic growth to restore the jobs lost. This time, the government needs to place a greater emphasis on retraining workers for other careers, these economists say. The grim scorecard of contraction in the American workplace released by the Labor Department on Friday largely destroyed what hopes remained for an economic recovery in the first half of this year, and it added to a growing sense that 2009 is probably a lost cause. Most economists now assume American fortunes cannot improve before the last months of the year, as the Obama administration’s $787 billion emergency spending program begins to wash through the economy. ”The current pace of decline is breathtaking,” said Robert Barbera, chief economist at the research and trading firm ITG. “We are now falling at a near-record rate in the postwar period, and there’s been no change in the violent downward trajectory.” The monthly national employment figures revealed an even bleaker picture as the government revised upward the job losses in December and January. The economy has shed at least 650,000 jobs a month for three straight months, the worst decline in percentage terms over that length of time since 1975. Dysfunctional system Since the recession began, the economy has eliminated a net total of roughly 4.4 million jobs, with more than half of those positions - some 2.6 million - disappearing in the last four months alone. This rapid deterioration has prompted talk that some industries are being partly dismantled. Layoffs are multiplying because of dysfunction in the financial system, which is prompting even healthy companies to shed workers and shut down operations out of concern that they may soon lose access to credit. ”Everybody is so fearful that companies are thinking, “What can we hang on to and what should we liquidate?”’ said Martin N. Baily, a chairman of the Council of Economic Advisers under President Bill Clinton and now a fellow at the Brookings Institution. “A lot of the reduction in employment is businesses deciding to close down operations or get out of a line of certain activity.” American car sales have dropped to an annual pace of 9 million, from some 17 million in 2007. Even if sales increase considerably, that is likely to leave a lot of unneeded auto factories. ”The decimation of employment in legacy American brands such as General Motors is a trend that’s likely to continue,” said Robert E. Hall, an economist at Stanford University’s Hoover Institution. “We have to stimulate the economy to create jobs in other areas.” In February, 168,000 more manufacturing jobs were eliminated, bringing losses over the last year to 1.2 million. In Michigan, where the troubles of the auto industry have been particularly traumatic, the unemployment rate sits at 10.6 percent, the highest of any state. ”The people who do what I do in the Detroit area are a dime a dozen,” said Kim Allgeyer, 46, a machine toolmaker in Westland, Mich., who was laid off in January from a company that makes assembly lines for the automakers. Unable to find another full-time job, he is subsisting on day labor and one-week stints for contractors. “Who’s going to put me to work?” he asked. “Where’s the work at? It’s just a great big black hole.” Much the same can said for financial services, which relinquished 44,000 jobs in February. During the housing boom, banks hired tens of thousands of well-compensated traders, analysts and marketers to sell mortgage-backed securities and other investments. That industry is unlikely to return to its former shape. Retailers are shuttering stores as the era of easy money fueled by rising house prices and abundant credit gives way to a period in which millions of households are forced to confine their spending to their paychecks. The economy lost 39,500 retail jobs in February, and has eliminated more than 500,000 in the last year. President Barack Obama pointed to the latest evidence of distress as justification for a muscular, government-led effort to generate jobs quickly. ”This country has never responded to a crisis by sitting on the sidelines and hoping for the best,” the president said in an appearance in Columbus, Ohio. “Throughout our history we have met every great challenge with bold action and big ideas.” The stimulus spending bill signed last month includes $4.5 billion for job training. That only begins to address an area long neglected, said Andrew Stettner, deputy director of the National Employment Law Project in New York. In current dollars, the nation devoted the equivalent of $20 billion a year to job training in 1979, compared with only $6 billion last year, Stettner said. ”We have to seriously look at fundamentally rebuilding the economy,” he said. “You’ve got to use this moment to retrain for jobs.” Friday’s report reinforced how much the economy is being assailed at once by falling household spending power and the financial crisis, with companies resorting to wholesale layoffs after months of merely declining to hire. Transportation and warehousing lost 49,000 jobs in February. Employment services shrank by 88,000 jobs. Hotels and restaurants lost 32,000 jobs. Health care remained a rare bright spot, adding 30,000 jobs. Some suggested the job cuts reflect the anxiety that has gripped the financial system since Lehman Brothers failed. Borrowing costs have spiked for American companies, making businesses reluctant to expand and hire. And many companies remain spooked by the Wall Street meltdown. ”There was a huge increase in uncertainty and a huge hit to confidence which caused a large rethinking among businesses,” said Ethan Harris, co-head of U.S. economics research at Barclays Capital. In similar crises, like the stock market crash of 1987 and the near-collapse of the enormous hedge fund Long Term Capital Management in 1998, dysfunction continued for about six months, Harris said. But history also shows that when fear lifts, the economy returns to wherever it was when the crisis began, he said, suggesting the economy’s recession is likely to continue for many more months. |
http://www.theday.com/re.aspx?re=c2e00771-6b11-4483-b6ba-5eb91452f651
Obama Meets With British Prime Minister Brown
by admin on Mar.03, 2009, under Uncategorized
CQ Transcripts Wire
Tuesday, March 3, 2009; 1:48 PM
PRESIDENT BARACK OBAMA: Hello, everybody. Good to see you. Where — where are the Brits? (UNKNOWN): They’re over here.
OBAMA: They’re over there, huh?
BRITISH PRIME MINISTER GORDON BROWN: In fact, Barack, they’re everywhere.
OBAMA: Are they? They’re spread out?
All right. My understanding is, we’re going to do four questions. And we’ll just alternate. I’ll start off with Jennifer Loven of A.P.
QUESTION: (OFF-MIKE)
OBAMA: You know, I think that the report that was in the New York Times didn’t accurately characterize the letter. What we had was a very lengthy letter talking about a whole range of issues, from nuclear proliferation to how are we going to deal with a set of common security concerns along the Afghan border and — and terrorism.
And what I said in the letter is the same thing that I’ve said publicly, which is that the missile defense that we have talked about deploying is directed towards not Russia, but Iran. That has always been the concern, that you had potentially a missile from Iran that threatened either the United States or Europe.
And what I said in the letter was that, obviously, to the extent that we are lessening Iran’s commitment to nuclear weapons, then that reduces the pressure for — or the need for a missile defense system. In no way does that in any — does that diminish my commitment to making sure that Poland, the Czech Republic, and other NATO members are fully enjoying the partnership, the alliance, and U.S. support with respect to their security.
So the way it got characterized, I think, was as — as some sort of quid pro quo. It was simply a statement of fact that I’ve made previously, which is, is that the missile defense program, to the extent that it is deployed, is designed to deal with not a Russian threat, but an Iranian threat.
QUESTION: (OFF-MIKE)
OBAMA: Oh, we — well, we’ve had a good exchange between ourselves and the Russians. I’ve said that we need to reset or reboot the relationship there.
Russia needs to understand our unflagging commitment to the independence and security of countries like a Poland or a Czech Republic. On the other hand, we have areas of common concern, and I cited two examples, the issue of nuclear nonproliferation and the issue of terrorism. And at this point, I think we probably have some potential common concerns on the world economic front, as well.
So my hope is, is that we can have a constructive relationship where, based on common respect and mutual interest, we can move forward. BROWN: Nick?
QUESTION: Nick Robertson, BBC News. Mr. President, it’s often been said that you, unlike many of your predecessors, have not looked towards (ph) Europe, let alone Britain. Can you just respond to that comment?
And, also, the prime minister is talking to you about a global New Deal today. Will that actually help hard-pressed American consumers?
And if — if may briefly put a question to the prime minister…
OBAMA: Well, first of all, the special relationship between the United States and Great Britain is one that is not just important to me; it’s important to the American people.
And it is sustained by a common language, a common culture. Our legal system is directly inherited from the English system. Our system of government reflects many of these same values. So — and, by the way, that’s also where my mother’s side of my family came from.
So I think this notion that somehow there is any lessening of that special relationship is misguided. You know, Great Britain is one of our closest, strongest allies. And there is a link, a bond there that will not break. And I think that’s true not only on the economic front, but also on issues of common security.
OBAMA: And, you know, in our conversations here, we talked not only about the need to coordinate around economic policy, but also I expressed to the prime minister America’s extraordinary gratitude for their support in our efforts in Afghanistan and the young men and women of Great Britain, who’ve made enormous sacrifices there.
The — although there — you know, there was a debate obviously around the issue of Iraq, nevertheless, whether you were for or against the war here in the United States, the recognition of Great Britain’s friendship and standing tall with us during that period is something that will never be forgotten. And so rest assured that the relationship is not only special and strong, but will only get stronger as time goes on.
QUESTION: (OFF-MIKE)
BROWN: Let me — let me just thank President Obama for his — for his welcome, for his hospitality, for his leadership of this country, and the inspiration he’s giving the world at this very difficult time.
And I’ve come here to renew our special relationship for new times. It’s a partnership of purpose. It’s a partnership of purpose that is born out of shared values. It’s a partnership of purpose that is founded on a determination to rise to every challenge.
And I think it’s a partnership of purpose that is driven forward now by the need for us all to work together in unity to deal with the world economic problems.
And I’m grateful for the conversations I’m having with President Obama about this and about other things and grateful, too, that Michelle and Sarah will be meeting later this afternoon. And I know they’ll have an enjoyable time, as well.
OBAMA: Absolutely.
QUESTION: (OFF-MIKE) your chancellor has said overnight that it is our collective responsibility (OFF-MIKE) is that a form of apology from the government? Are you apologizing for the problems (OFF-MIKE)
BROWN: Well, there’s got to be big regulatory change. We’ve — we’ve just been talking, Barack and I, about the need for proper supervision of shadow banking systems, of areas where there was bank practices that were unacceptable, where remuneration policies got out of hand and weren’t based on long-term success, but on short-term deals.
And these are the changes that we’ve already announced that we are going to make. So we’ve learned from what has happened over these last 10 years. Things have happened in every part of the world that we’re having to learn about, as well.
And you’ve got an international financial system that we’ve now got to show can be brought to work in the public interest. So every country is learning, and every country is taking action. And what we’re talking about today is how, by us taking action, Britain and America, we can help other countries join us in making for a more stable and effective financial system.
OBAMA: Kara (ph)?
QUESTION: Thank you, Mr. President. The stock market has fallen to lows not seen since 1997 (OFF-MIKE)
OBAMA: Well, let me say this. I’m absolutely confident that they will work, and I’m absolutely confident that credit’s going to be flowing again, that businesses are going to start seeing opportunities for investment, they’re going to start hiring again. People are going to be put back to work.
What I’m looking at is not the day-to-day gyrations of the stock market, but the long-term ability for the United States and the entire world economy to regain its footing.
And, you know, the stock market is sort of like a tracking poll in politics. You know, it bobs up and down day to day. And if you spend all your time worrying about that, then you’re probably going to get the long-term strategy wrong.
Now, having said that, the banking system has been dealt a heavy blow. It has to do with many of the things that Prime Minister Brown alluded to: lax regulation, massive over-leverage, huge systemic risks taken by unregulated institutions, as well as regulated institutions.
And so there are a lot of losses that are working their way through the system. And it’s not surprising that the market is hurting as a consequence. You know, in fact — you know, I think what we’re seeing is that, as people absorb the depths of the problem that existed in the banking system, as well as the international ramifications of it, that, you know, there’s going to be a natural reaction.
OBAMA: On the other hand, what you’re now seeing is — is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long-term perspective on it. I think that consumer confidence, as they see the American Recovery and Reinvestment Act taking root, businesses are starting to see opportunities for investment and potential hiring.
We are going to start creating jobs again. One of the things that Prime Minister Brown and I talked about is, how can we coordinate so that all the G-20 countries, all the major countries around the world, in a coordinated fashion, are stimulating their economies? How can we make sure that there are a common set of principles, in terms how we’re approaching banking, so that problems that exist in emerging markets like Hungary or the Ukraine don’t have these enormous ripple effects that wash back onto our shores? And we’re providing them with some help in a coordinated international fashion, as well.
All of those steps, I think, are going to slowly build confidence, but it’s not going to happen overnight. And — and my main message to the American people is to just recognize that we dug a very deep hole for ourselves. There were a lot of bad decisions that were made. We are cleaning up that mess.
It’s going to be sort of full of fits and starts, in terms of getting the mess cleaned up, but it’s going to get cleaned up. And we are going to recovery, and we are going to emerge more prosperous, more unified, and I think more protected from systemic risk having learned these lessons than we were before.
BROWN: I think President Obama’s absolutely right. And I think the history books will record that what he has done in his first nearly 50 days of office has been momentous in setting the means by which we can see the economic recovery happening.
We’ve had a global banking failure, and it’s happened in every part of the world. It’s almost like a power cup (ph) that went right across the financial system, and we’ve got to rebuild that financial system. We’ve got to isolate the bad assets. We’ve got to underwrite the financial system so that loans can start again to businesses and — and families. And we’ve got to get enough lending into the economy so that people — enough credit so that people are able to go about their normal business again.
And that’s why we’re looking ahead to the G-20 in London in April, because a bad bank anywhere can affect good banks everywhere. So we’ve got to root out the problems that exist in other parts of the world, as well, set principles for the banking system for the future, and make sure that the banks subscribe to lending agreements where they actually increase the lending that is available to — to citizens in every country.
OBAMA: One last one.
QUESTION: (OFF-MIKE) should all governments at this point acknowledge mistakes of policy and regulation (OFF-MIKE) would that be helpful or unhelpful in general? And can I just ask you, an awful lot of ink is used describing the individual relationships between prime ministers and presidents (OFF-MIKE) ask you describe how (OFF-MIKE) working with each other?
OBAMA: Well, I will say that this is my third meeting with — with Prime Minister Brown, and I’d like to think that our relationship is terrific. And I’m sure he won’t dispute me, in front of me, anyway.
The — look, I think that the prime minister has taken the helm of the British economy at a very difficult time. As he noted, I’ve just come in recently. But I think that there are a set of shared values and shared assumptions between us, that we believe in the free market, we believe in a government that is not overbearing and allows entrepreneurs and businesses to thrive, but we also share a common belief that there have to be sufficient regulatory structures in place so that the market doesn’t spin out of control.
OBAMA: I think, on the international front, we have a shared worldview that it is important for us to be true to our values and ideals, of rule of law, of a belief in human rights, a belief in — in our democratic practices, but that we also have to be respectful around the world and to listen and not simply dictate, that, in this new world that we live in, the way to get things done is to build partnerships and alliances as opposed to acting unilaterally.
So I think both on the economy and both — and on foreign policy, we’ve got a shared worldview that allows us to work together very effectively.
And he also has a wonderful family, as I do, so we can always talk about our — our spectacular wives and our wonderful children.
With respect to the first part of your question, look, I think there is no doubt that, setting aside who’s to blame, that in the past there have been some mistakes and lessons learned in terms of how we deal with the financial sector.
Globalization can be an enormous force for good. And one of the things that we’ve talked about repeatedly is that countries in this crisis cannot start turning inward and try to erect protectionist barriers. We should encourage trade.
The fact that we have a global capital system allows money to flow to areas that previously couldn’t get capital. That allows them to develop and to grow. That can grow the economy worldwide, increase trade, and that potentially benefits everybody.
But what is also true is, is that when you’ve got trillions of dollars that can now move at the speed of light, when you’ve got a whole series of unregulated pools of dollars outside of the banking system, but we still have a 1930s’ regulatory system in place in most countries designed from the last great crisis, that we’ve got to update our institutions, our regulatory frameworks, so that the power of globalization is channeled for the benefit of ordinary men and women so that they have jobs, they can purchase a home, they can send their children to college, and prosper and thrive, and — and that the benefits of globalization aren’t just for a small handful of people who are not accountable.
And — and that’s the kind of transformation that we’re, obviously, trying to bring about here in the United States, and I suspect that that’s a view that Gordon shares. BROWN: I’ve enjoyed every conversation that we’ve had, both by the telephone and when we’ve met. I don’t think I could ever compete with you at basketball. Perhaps tennis.
OBAMA: Tennis, I hear you’ve got a game.
BROWN: Yes, we could maybe have a — have a shot.
OBAMA: We haven’t tried it yet.
BROWN: I don’t know. I think you’d be better, but there we are. As far as the common interests that we’re pursuing, look, there is the possibility in the next few months of a global New Deal that will involve all the countries of the world in sorting out and cleaning up the banking system.
And there is the possibility of all the different countries of the world coming together to bring (ph) the expansion in the economy that is necessary to both restore confidence and to give people jobs and growth and prosperity for — for the future.
And there is the possibility of the international institutions for the first time being reformed in such a way that they can do the job that people want them to do and deal with some of the problems that exist in the poorest countries of — of the world.
And there’s a chance, also, that the recovery that we’re talking about can be a green recovery, a low-carbon recovery, where each country in different parts of the world can work on this together.
So the opportunities are there. I’ve said to the president that almost every leader I meet wants the best possible relationship and the most highest degree of cooperation for the future. And so the challenges are momentous and global. The response of leaders around the world is to want to work together.
And I believe that we can make a contribution not just to each of our own economies, but make a contribution to the world economy, helping each economy, if we can actually work together. And that’s why our talk about the G-20 is very important. We hope to make progress on April the 2nd.
And as far as regulation, I — I want the regulatory system to be reformed to meet the needs of our times. When we made changes in 1997, we made changes for the times of 1997. The financial markets have moved global since then, and we need a global means of bringing people together so there’s proper supervision of the system.
You don’t want shadow banking systems. You don’t want regulatory and tax havens. So we’ve got to act as a world together to deal with that. And that’s one of the things we’ll be talking about in April in London.
QUESTION: (OFF-MIKE) Pakistan terror attack (OFF-MIKE) in particular, Mr. President, have made it clear that (OFF-MIKE) see Afghanistan and Pakistan together. How do you think that the world community can support Pakistan?
OBAMA: Well, the details are still coming in, and so I don’t want to be too specific.
(CROSSTALK)
OBAMA: Well, obviously, we’re deeply concerned. But let me just make a general statement.
Both Great Britain and the United States share a deep interest in ensuring that neither Afghanistan nor Pakistan are safe havens for terrorist activity. And we have coordinated effectively in the past, but the truth is, is that the situation in Afghanistan has deteriorated. The safe havens for Al Qaida remain in the frontier regions of Pakistan.
And we are conducting currently a comprehensive review of our policies with respect to Afghanistan, with respect to Pakistan, our coordination with our NATO allies and other members of the international security forces that are there.
I will be making a series of announcements prior to the NATO summit that immediately follows the G-20 summit in terms of the direction that the United States would like to go. What I’m confident in is that our strongest partner in that effort, once again, will be the United Kingdom and — and the prime minister sitting next to me.
OK? Thank you, guys.
QUESTION: Thank you.
END
Popular Rage Grows as Global Crisis Worsens
by admin on Feb.27, 2009, under Uncategorized
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
GERMAN ANTI-GLOBALIZATION CAMPAIGNER
by admin on Feb.27, 2009, under Uncategorized
‘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.
Arsonists Torch Berlin Porsches, BMWs on Economic Woe
by admin on Feb.27, 2009, under Uncategorized
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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