domenica 31 gennaio 2010

Oliver Stone: bankers helped Hitler

Oliver Stone: bankers helped Hitler

Oscar-winning director adds to storm he kicked up earlier this month over his upcoming TV documentary, The Secret History of the United States

Oliver Stone talking to students in Bangkok on 25 January 2010

An education … Oliver Stone talking to students in Bangkok. Photograph: Sakchai Lalit/AP

Adolf Hitler was aided in his rise to power by western bankers who appreciated his tough line on communist agitators and worker power, Oliver Stone told reporters in Bangkok yesterday.

Following on from the comments he made to TV critics in Pasadena earlier this month about his upcoming 10-hour TV documentary on The Secret History of the United States, the film-maker said the German dictator had seduced the nation's military industrial complex with his ambitious promises.

In the Thai capital to deliver a lecture to high-school students on the role of film in peace-building, Stone said: "Hitler is a monster. There is no question. I have no empathy for Hitler at all. He was a crazy psychopath.

"But, like Frankenstein was a monster, there was a Dr Frankenstein. He is product of his era," he added.

The Oscar-winning director said his documentary, made in collaboration with two historians, was aimed at providing an analysis of 20th-century history that might be useful to Barack Obama. "What has America become? How can we in America not learn from Germany in the 1930s?" he asked.

The director of Platoon and Born on the Fourth of July is certainly no stranger to kicking up a storm in his four-decade long career, as he admitted himself earlier in the day, when he told about 300 students that 1991's JFK had been his most controversial film, due in part – he felt – to America's reluctance to accept that its head of state may have been assassinated by anyone other than Lee Harvey Oswald.

The film centred on claims by New Orleans district attorney Jim Garrison that the president's death was part of a massive CIA conspiracy which had framed Oswald in order to cover up its own role. Garrison accused Louisiana businessman Clay Shaw of having a central role in the assassination, but his theories were thrown out by a court in 1967.

"To this day, many key Americans in power are in total denial about this story," said Stone. "It is a national fairy tale.

"It's an amazing story and I did it," he said of the film. "I thought I would be respected for it, and I was lambasted in the establishment press. I was called a myth-maker, a propagandist. I didn't see it coming. I thought the Kennedy murder was safe."

The Secret History of the United States will be screened on the cable channel Showtime later this year.

200,000 Indian farmer suicides

200,000 Indian farmer suicides

Quantcast

Yesterday, I watched an excellent discussion about the role of media (essentially the TRP-driven TV Channels) on the IBN 7 Channel. This one hour programme did a lot of introspection with some senior journalists on the panel, and I was mighty impressed with the anchor who didn’t feel shy in asking some difficult questions and therefore was able to extract the right answers.

If media begins to really introspect and take corrective steps I am sure it can resurrect its poor image. Otherwise, the media, which is now a laughing stock, will sonner than expected slide into the dustbin of history.

I wake up in the morning, pick up my daily newspapers, and realise that it may not be that easy for the media to walk the talk. There are huge versted interests, which are quite clearly visible. Newspapers are business entities, and therefore market the products surruptiously in the garb of news. I draw your attention to a front page news in The Indian Express today: First time in 4 years, annual suicide tally in Vidharbha is below 1,000.

The blurb below spills out the business connection. It says – Key to the dip: Rs 1,300-crore loan waiver, Bt cotton crop, market prices. Now this line played up by the newspaper will leave an impression on you that Bt cotton was the saviour. Knowing that the Corporate giant Reliance has been backing Indian Express, and knowing that the newspaper has time and again carried unsubstantiated reports promoting Bt cotton, you are not surprised at this sub-head.

But then, the average reader is unable to draw the connection. The headline therefore leaves a wrong impression on him, and he/she thinks that Bt cotton is a good technology. And if you read the report carefully, except for a mention of Bt cotton, there is nothing to support this argument.

Even Kishore Tiwari, who heads the Vidharbha Jan Andolan Samiti, is quoted in the report as saying that the falling figure of suicides is a welcome sign. Positive measures like loan waiver, release of credit and good prices of cotton have undoubtedly helped. Nowhere does he talk about the role Bt cotton played in mitigating suicides. In fact, we all know by now, Bt cotton had created more problems in the Vidharbha belt, and has actually been responsible for thousands of farmers to take the fatal route.

That 90 per cent of the cotton seed being used by farmers belong to the Bt cotton variety is no reason to celebrate its success. What is not known is that the seed companies, and the government, have worked hard to ensure that the non-Bt cotton seed disappears from the market. So if you go to the Vidharbha region, and ask for non-Bt cotton seed from seed dealers in the market, you will not be able to get even 100 gms.

The only option left for the farmers therefore is to buy what is available, and its only Bt cotton seed that is available.

Economists will not take this aspect into their analysis and for obvious reasons. You therefore have faulty and biased economic analysis coming out from institutes even as respected as Tata Institute of Social Sciences. In fact, I have been saying for long that agricultural economists are in a way also responsible for the prevailing agrarian crisis. They had all these years been telling farmers how much they can earn from farming using the chemical inputs. They painted a rosy picture luring gullible farmers into a virtual trap. They weaved figures (of profits) which turned out to be eventually untrue.

No wonder, 40 per cent farmers want to quit agriculture if given a choice. And over 200,000 have taken to gallows since 1997.

I will bring you more about the Bt cotton story as we go along. Meanwhile, you can read the Indian Express report by clicking on this link:

http://epaper.indianexpress.com/IE/IEH/2010/01/10/ArticleHtmls/10_01_2010_001_008.shtml?Mode=1

Farmer Suicides In Vidharbha Come In Handy

To Promote Bt Cotton By Devinder Sharma, 10 January, 2010

Devinder Sharma Blog

Dove finiscono le donazioni ad Haiti...

Donazioni per pagare un debito abietto?
di Eric Toussaint e Sophie Perchellet - 31/01/2010

Fonte: Come Don Chisciotte [scheda fonte]



Una delle più grandi operazioni di soccorso della storia potrebbe essere molto simile a quella fatta dopo lo tsunami del 2004, tranne che il modello di ricostruzione adottato è radicalmente diverso. Haiti è stata parzialmente distrutta in seguito ad un terremoto di magnitudo 7. Tutto il mondo la compiange e i mezzi di comunicazione, offrendo immagini apocalittiche, continuano a riproporci modi e maniere in cui i generosi Stati si prodigheranno. Ci viene detto che bisogna ricostruire Haiti, quel paese vinto dalla miseria e dalla “catastrofe”. Ci ricordano impetuosamente che è uno dei Paesi più poveri del mondo, ma senza spiegarci il motivo di tutto ciò. Ci lasciano credere che questa povertà è un fatto irrimediabile, senza motivo plausibile: “Sono colpiti dalla sfortuna”.

E’ fuor di dubbio che quest’ultima catastrofe naturale ha causato danni umani e materiali tanto enormi quanto inaspettati. Siamo tutti d’accordo nell’ affermare che misure d’aiuto urgenti siano d’obbligo. Tuttavia la povertà e la miseria che contraddistinguono questo Paese non sono dovuti a questo terribile terremoto. Bisogna ricostruire il Paese perché già prima era stato privato dai mezzi necessari per farlo. Haiti non è un paese né libero né sovrano.

Negli ultimi anni la sua politica interna è guidata da un governo costantemente sotto pressione da influssi esterni e manovrata da gruppi di potere locali.
Haiti è stata tradizionalmente denigrata e spesso descritta, nel migliore dei casi, come un paese violento, povero e repressivo. Non ci sono note che ci ricordino la conquista dell’indipendenza avvenuta nel 1804 dopo una crudele lotta contro le truppe napoleoniche. Anziché sottolineare il profilo umanitario e la lotta per i diritti umani, saranno la barbarie e la violenza le caratteristiche attribuite agli haitiani. Eduardo Galeano parla della “maledizione bianca”: “Al confine di stato, dove finisce la Repubblica Dominicana ed inizia Haiti troviamo un grande cartello che avverte: 'Il varco maledetto. Dall’altra parte troverete l’inferno. Sangue e fame, miseria e pestilenze'”[2]

È essenziale ricordare la lotta di liberazione condotta dal popolo haitiano, perché in rappresaglia a questa doppia rivoluzione, anti-schiavista ed anti-coloniale, il paese ebbe ad affrontare "il salvataggio francese di indipendenza”, corrispondente a 150 milioni di franchi in oro (ovvero il bilancio annuale della Francia all'epoca). Nel 1825, la Francia decise che "gli attuali abitanti della parte francese di Santo Domingo versassero alla cassa federale erariale della Francia, anno dopo anno in cinque rate annue, il primo a scadenza 31 dicembre 1825, la somma di centocinquanta milioni di franchi, come riscatto d’indennizzo agli antichi coloni che chiedevano un risarcimento”[3]. Oggi si parlerebbe di 21.000 milioni di dollari. E cosi che dall'inizio della sua indipendenza Haiti parte con un debito molto alto, debito che sarebbe lo strumento neocoloniale per facilitare l’accesso alle numerose risorse naturali del paese.

Il pagamento del riscatto è stato quindi un elemento fondante dello Stato haitiano. In termini giuridici ciò significa che esso è stato contratto da un regime dispotico e usato contro gli interessi della popolazione. La Francia e poi gli Stati Uniti, la cui area di influenza si consolida ad Haiti dal 1915, sono interamente responsabili. Anche se sarebbe stato possibile affrontare le dolorose responsabilità del passato nel 2004, la Commissione Régis Debray [4], scelse di scartare l'idea di una restituzione della somma, sostenendo che era "priva di fondamento giuridico” e che avrebbe potuto aprire un "vaso di Pandora”. Le richieste del governo di Haiti furono respinte dalla Francia: non c'è posto per le riparazioni. La Francia non ha riconosciuto il suo ruolo nel dono infame che fece al dittatore "baby doc" Duvalier [Jean-Claude Duvalier, figlio di Francois Duvalier,”papa doc”] nel suo esilio, offrendogli l’immunità e lo status di rifugiato politico.


Il regno dei Duvalier iniziò nel 1957 con l’aiuto degli Stati Uniti, e finì nel 1986 quando il figlio “baby doc” fu rovesciato da una rivolta popolare. La violenta dittatura, ampiamente sostenuta dall'Occidente, governò per quasi 30 anni ed è stata caratterizzata da una crescita esponenziale del debito. Tra il 1957 e il 1986, il debito estero aumentò del 17,5%. Al momento della fuga di Duvalier, ammontava a 750 milioni di dollari. Successivamente aumentato, con gli interessi e le sanzioni, arrivò a più di 1.884 milioni di dollari [5]. Questo debito, lungi dal servire per la popolazione, che continuò a impoverirsi, aveva lo scopo di arricchire il regime. Quindi si tratta di un debito abbietto. Recenti ricerche hanno dimostrato che le fortune personali della famiglia Duvalier (ben protette in conti bancari occidentali) ammontavano a circa 900 milioni di dollari, ovvero un importo superiore al debito totale del paese al momento della fuga di “Baby Doc “. Vi è un processo in corso presso la giustizia svizzera per la restituzione allo Stato haitiano dei beni mal amministrati durante la dittatura dei Duvalier. Tali beni sono però, attualmente, congelati dalla banca svizzera UBS, che impone condizioni intollerabili per la restituzione di quei fondi [6]. Jean Baptiste Aristide, in un primo momento eletto con molto entusiasmo dal popolo, fu in un secondo tempo accusato di corruzione e deposto. A costo di diventare un fantoccio degli Stati Uniti è stato riportato al potere solo per essere, infine, catturato ed espulso dalle truppe di coloro a cui doveva il potere. Aristide, purtroppo, non è stato immune all’uso improprio e alla malversazione dei fondi stabilito da Duvalier. Inoltre, secondo la Banca mondiale, tra il 1995 e il 2001, il servizio del debito, cioè gli interessi più l'ammortizzamento del capitale, ha raggiunto la notevole quantità di 321 milioni di dollari.

Tutti gli aiuti finanziari proclamati fino a questo momento a causa del terremoto sono già compromessi per il pagamento del debito estero.

Secondo le ultime stime, oltre l'80% del debito estero di Haiti è di proprietà della Banca Mondiale e della Banca Interamericana di Sviluppo [Inter-American Development Bank (IDB)], ciascuna con il 40%. Sotto il loro controllo, il governo ha applicato i "piani di aggiustamento strutturale" camuffati sotto il nome di "Piani strategici per la riduzione della povertà” (DSRP). In cambio del rilancio dei prestiti, vennero concesse ad Haiti delle riduzioni o annullamenti del debito, insignificanti in sé, ma mirati ad edulcorare l’immagine di “buona volontà” dei creditori. L’inclusione di Haiti nella Iniciativa Paises Pobres Muy Endeudados (PPME) [Paesi Poveri Molto Indebitati] è una tipica manovra di riciclaggio del ripugnante debito, come egualmente è avvenuto nella Repubblica Democratica del Congo[7]. Così facendo si rimpiazza l’ esecrabile debito già esistente con altri nuovi, che si presumono legittimi. CADMT ritiene tali nuovi prestiti sempre parte dei vecchi odiosi debiti, giàcche servono sempre per estinguere a monte; c’è per tanto una continuità del delitto.


Nel 2006, quando il FMI, la Banca Mondiale e il Club di Parigi decisero che Haiti dovesse far parte dell'iniziativa PPME, il totale complessivo di debito pubblico estero era di 1.337 milioni di dollari. Nel momento clou dell’iniziativa (giugno 2009), il debito era 1.884 milioni di dollari. Fu deciso l'annullamento del debito per un importo di 1.200 milioni di dollari per far si che questo “fosse sostenibile”. Nel frattempo, piani di adeguamento strutturale distruggevano tutto il paese, in particolare il settore agricolo, i cui effetti portarono alla crisi alimentare del 2008. L'agricoltura contadina haitiana fu succube dello smaltimento dei prodotti agricoli americani. "Le politiche macroeconomiche sostenute da Washington, l'ONU, il FMI e della Banca mondiale non si preoccupano per nulla del bisogno di sviluppo e di protezione del mercato interno. L'unica preoccupazione di queste politiche è la produzione a basso costo per l'esportazione verso il mercato mondiale "[8]. È quindi sconvolgente sentire che il FMI si dice “pronto ad esercitare le proprie funzioni con un adeguato sostegno nei settori di competenza".[9]

Come espresso nel recente appello internazionale, “Haiti ci chiama alla solidarietà e al rispetto per la sovranità popolare": "Negli ultimi anni, insieme a molte organizzazioni haitiane, abbiamo denunciato l'occupazione militare da parte delle truppe ONU, l'impatto della dominazione imposta dal debito esterno, il commercio senza regole, il saccheggio della natura e la propagazione di interessi globali. Le condizione di vulnerabilità del paese di fronte ad eventi naturali - causate in gran parte dalla devastazione dell'ambiente, dalla assenza di infrastrutture di base, dalla impossibilità dello Stato ad agire - non sono lontane dalle azioni che storicamente attentano contro la sovranità popolare.”



"È giunto il momento per i governi che fanno parte della MINUSTAH [“United Nations Stabilization Mission in Haiti “ N.d.r.], le Nazioni Unite e in particolare la Francia e gli Stati Uniti, i governi fratelli di Sudamerica, di rivedere le politiche che lavorano contro i bisogni fondamentali della popolazione haitiana. Noi sollecitiamo questi governi e le organizzazioni internazionali a sostituire l'occupazione militare con una vera missione di solidarietà, così come la urgente cancellazione del debito estero che altro non è che una illegittima azione che Haiti sta ancora pagando sulla sua pelle”[10].


Al di là della questione del debito, si teme che gli aiuti facciano la stessa fine che fecero nella triste tragedia dello tsunami del dicembre 2004 in diversi Paesi dell'Asia (Sri Lanka, Indonesia, India e Bangladesh)[11], oppure dopo l’uragano Jeanne nella stessa Haiti nel 2004. Le promesse non sono state soddisfatte e una gran parte dei fondi sono stati utilizzati per arricchire le società straniere o cupole locali. Queste “generose donazioni” provengono soprattutto da parte dei creditori del paese. Piuttosto che fare donazioni, non sarebbe preferibile l’annullamento dei debiti che Haiti ha con loro, immediatamente senza indugi e senza obblighi? Possiamo veramente parlare di aiuti, sapendo che la maggior parte di questo denaro servirà a coprire il debito estero o ad accrescere “progetti di sviluppo nazionale”, in conformità agli interessi dei creditori e di quelle stesse oligarchie locali? È chiaro che, senza queste donazioni sarebbe impossibile esigere il rimborso immediato di un passivo la cui metà, almeno, corrisponde ad un ripugnante debito. Le grandi conferenze internazionali di qualsiasi G8 o G20 ampliato alle IFI [“International financial institutions”, istituzioni finanziarie internazionali N.d.r], non contribuiranno a far progredire lo sviluppo di Haiti, bensì serviranno per ricostruire gli strumenti a loro necessari per ristabilire solidamente il controllo neocoloniale del Paese. Cercheranno di garantire il proseguo del rimborso del debito, sul quale si basa la sottomissione, come è già successo negli ultimi tentativi di ridimensionamento del debito.

Al contrario, è la sovranità nazionale la condizione fondamentale per far sì che Haiti possa ricostruirsi degnamente. La completa ed incondizionata cancellazione del debito haitiano dovrebbe essere il primo passo di una politica più generale. Un modello nuovo di sviluppo alternativo alle politiche delle IFI e agli accordi finanziari (APE firmato nel dicembre 2008, Collaborazione Hope II, ecc.) è necessario ed urgente. I Paesi industrializzati che sistematicamente sfruttarono Haiti, iniziando dalla Francia e dagli Stati Uniti, devono elargire riparazioni attraverso un fondo per il finanziamento della ricostruzione controllato dalle organizzazione popolari haitiane.

Eric Toussaint è il presidente del CADTM Belgio (Comitato per l’ Annullamento del Debito del Terzo Mondo, www.cadtm.org). E’ l’ autore di “Banca del Sur y Nueva Crisis Internacional”, Viejo Topo, Bcn, Gennaio 2008; “La Bolsa o la Vida”, Clacso, Buenos Aires, 2004; coautore con Damien Millet di “60 preguntas/60 respuestas sobre la Deuda, el FMI y el Banco Mundial”, Icaria/Intermon Osfam, Bcn,2010.

Sophie Perchellet è vicepresidentessa del CADTM-Francia.

[2] Eduardo Galeano, “La Maldicion Blanca”, pag. 12, Buenos Aires, 4 aprile 2004.

[3] http://www.haitijustice.com/jsite/images/stories/files/pdfs/Ordonnance_de_X_de_1825.pdf

[4] haiti.pdf http://www.diplomatie.gouv.fr/fr/IMG/pdf/rapport

[5] http://www.imf.org/external/pubs/ft/scr/2009/cr09288.pdf (pagina 43)

[6] http://www.cadtm.org/Le-CADTM-exige-que-la-restitution

[7] Si veda la pubblicazione CADTM, audit Pour audit de la dette congolaise, Liegi, 2007, sul sito http://www.cadtm.org/spip.php?page=imprimer&id_article=2599

[8] Cfr. http://www.cadtm.org/Haiti-Le-gouvernement-mene-une

[9] http://www.liberation.fr/monde/0101613508-haiti-l-aide-internationale-se-mobilise-apres-le-seisme

[10] http://www.cadtm.org/Solidaridad-y-respeto-a-la

[11] Cfr. Damien Millet e Eric Toussaint, “Gli Tsunami dei debiti”, Editorial Icaria, Barcelona, 2006


Titolo originale: "¿Donaciones para pagar una deuda odiosa?"

Fonte: http://www.rebelion.org
Link
20.01.2010

Traduzione per www.comedonchisciotte.org a cura di MARISA CRUZCA

At Davos, Bankers Are on the Run

At Davos, Bankers Are on the Run

Source: WSJ, 29 Jan 2010

DAVOS, Switzerland—Not so long ago, financiers ruled the roost at the glitzy annual gathering of the global economic elite here in the Swiss Alps. At this year's gathering of the World Economic Forum, the unofficial theme seems to be, "First, kill all the bankers."

The ire directed at bankers from all sides is palpable, acknowledged Donald Moore, chairman of Morgan Stanley in Europe, as he stood alone reading some charts amidst the hubbub at the forum's Global Village cafe. Asked which other groups of people have been similarly unpopular in Davos in the past, he said: "terrorists."

The quip reflects the mounting alarm with which bankers have come to view their besieged profession—even in Davos, a usually cozy gathering.

The scorn poured on the industry at this year's get-together in the Swiss ski resort is a sign of a mounting international backlash against the financial sector. Popular anger about banks' role in the financial crisis, and their behavior in its aftermath, has spilled over to the world's elite business executives, politicians and regulators. Since gathering here Wednesday, they have been aiming sometimes bitter recriminations at the tainted masters of the banking universe.

[more for subscribers]

Economia europea: crack nel 2010?

Play/Pause Video

Economia europea: crack nel 2010?

22/01 19:06 CET

Presidenza dell'UE

Costantino De Miguel, Euronews:
Professor Nino Becerra, lei preconizza un crak per il 2010. Come è possibile, visto che i mercati e l’economia stanno migliorando?

Nino Becerra:
Il crak che predico è la conclusione della pre crisi che è iniziata nel 2007 con il problema dei mutui sub-prime. Il nostro modello economico è alla fine della corsa. Abbiamo raggiunto il limite nel ciclo vizioso “prestito-consumo-debito”. Se i mercati sono in ascesa è per pura speculazione e anche perchè il denaro, usato per salvare le banche, sta arrivando sul mercato. Credo che questa bonanza non durerà più di due mesi.

Euronews
In che mese dunque possiamo aspettarci che questo catastrofico crak finanziario si verifichi?

Nino Becerra: Credo verso la metà di luglio del 2010, diciamo tra giugno e agosto.

Euronews
Allora è meglio non progettare le vacanze…

Nino Becerra:
A dire il vero le vacanze saranno un periodaccio. Non solo per il crak, ma anche perchè non ci sarà denaro per le famiglie per finanziare le ferie. Senza parlare dei prestiti per l’imprenditorie. Sarà molto difficile avere la liquidità per permettersi anche le piccole cose. Uno studio mosta che in Spagna il 60 % delle famiglie fa fatica ad arrivare a fine mese. E’ preoccupante.

Euronews
In cocnlusione, lei dice che questo sarà l’ esame finale per l’Europa: se non riusciamo a vincere la crisi, allora ciascuno per la sua strada…La situazione è così seria?

Nino Becerra:
L’Europa ha perso tempo sin dal trattato di Roma nel 1957, intendo dire che si è agitata a destra e a manca per fare qualcosa. E’ vero che gli stati membri hanno compiuto grandi passi, come il mercato unico, ma ora la situazione è troppo difficile: c‘è un eccesso di capacità produttiva, un eccesso di forza lavoro disponibile. C‘è bisogno di coordinare. A mio avviso, quando le cose andavano bene, l’Europa non è riuscita a unire, quando andavano male, non è riouscita neppure allora, e adesso che le cose andranno veramente male sarà per l’Europa l’ultimo appello. O ci si unisce ora o mai più.

Euronews
Grazie professor Nino Becerra.
E ora occupiamoci di un altra importante questione per l’Europa, quella della parità tra i sessi.

Copyright © 2010 euronews

DAVOS: “First, kill all the bankers”

Bankers get a scolding at Davos

By Laurie Bennett

Muckety, January 31, 2010 at 7:42am

The common man isn’t the only one who resents bankers these days.

The power elite gathered at Davos for the annual World Economic Forum have given financiers the cold shoulder.

As the Wall Street Journal writes, the unofficial motto of this year’s meeting is, “First, kill all the bankers.”

In the opening keynote address, French President Nicholas Sarkozy pointed to the “indecent behavior” of financiers.

“That those who create jobs and wealth may earn a lot of money is not shocking,” he said. “But that those who contribute to destroying jobs and wealth also earn a lot of money is morally indefensible.”

The sentiment, along with a general call for more regulation, led to an event Saturday that wasn’t on the meeting’s official agenda.

Regulators, central bankers and finance ministers met for two hours with bank executives.

Barney Frank, chairman of the House Financial Services Committee, emerged from the session saying that even the bankers recognize that tougher oversight is inevitable.

“There’s going to be regulation, they understand that,” Frank said.

Others attending the meeting, according to the Associated Press, included Bank of America CEO Brian Moynihan, JPMorgan Chase Chairman Jacob Frenkel and Jean-Claude Trichet, president of the European Central Bank.

BOE: The Old Lady’s Untruthful Accounts

The Old Lady’s Untruthful Accounts: Another Fine Mess

Julian D. A. Wiseman

Abstract: two recent documents from the Bank of England further illustrate the dysfunctional complexity of the implementation of monetary policy.

Publication history: only at www.jdawiseman.com/papers/finmkts/untruthful_accounts.html. Usual disclaimer and copyright terms apply.

Contents: Introduction; The Speech of Paul Fisher; The Statement on the Emergency Liquidity Assistance.


Introduction

The Bank of England has just published two documents that are revealing about the inadequacies of the BoE’s interaction with financial markets. First, a speech given on 19th November 2009 by Paul Fisher, the Bank of England’s Executive Director Markets: The Bank of England’s Balance Sheet: Monetary Policy and Liquidity Provision during the Financial Crisis. This speech that appears to be an explanation and justification of the Bank’s “Sterling Monetary Framework”, this being “the means by which the Bank implements monetary policy, and offers liquidity insurance to the banking system” (¶3, all such paragraph labels being within that speech). The second document, which has attracted much more press attention, dated 24th November 2009, is the Statement on the Emergency Liquidity Assistance (ELA) extended to two institutions, RBS and HBOS, in the Autumn of 2008. This reveals that, at the peak of the credit crisis, the BoE lent £61.6bn to the two banks.

Paul Fisher’s speech contains several misdescriptions. These are only partly the fault of Mr Fisher, who now has the tough job of justifying decisions pre-dating his tenure. Alas the Bank’s implementation of monetary policy has long been needlessly complicated and dysfunctional, and as the required fundamental change in reasoning would sweep away the previous labours of his superiors, is likely to remain so for some years. The second document reveals some of the messy consequences of this complexity.

The Speech of Paul Fisher

¶4: “The SMF [Sterling Monetary Framework] has to control the amount of money in the economy consistent with monetary policy objectives.
This lies somewhere between misleading and wrong. The net amount of money provided by the BoE to the banking sector is, roughly, the size of the note issue, less the quantity of money lent by the BoE to its own customers (primarily the UK government and foreign central banks). Thus the size of the note issue is determined by growth in the economy, by inflation, by some seasonal factors, and by the behaviour of its (usually well behaved) customers. Thus the net amount of money to be added is not, and cannot be, determined by the SMF. If the BoE were to supply more than this sum, and not drain the money by borrowing it back from the markets, then the excess would sit in some banks’ accounts at the BoE—effectively borrowed back overnight. The job of the SMF should be to implement monetary policy, that is to set traded short-term non-credit interest rates. If done well, this would be done so robustly that emergency changes and secret actions would not be needed, even in a crisis.

¶8: “In normal circumstances, we would implement the desired monetary policy stance by setting interest rates.
The BoE should do so, but never has. Instead the BoE has supplied fixed quantities to the banking system, and allowed access to extra funds at a rate described by the Old Lady as “penal” (¶13). The Bank has attempted to de-stigmatise loans by making them secret. It would be more robust to make a price, without fixating on quantity. Rephrased, choose one: price or quantity.

¶10: “commercial bank reserve accounts … act like current accounts for commercial banks.
They should, but don’t. A current account can be overdrawn (up to some limit), or it can contain a positive balance. Instead reserve accounts cannot be overdrawn; money must be borrowed via a different means. The availability of such borrowing is intermittent, or at a penal rate. Therefore, in times of market stress, commercial banks wishing to avoid stigma should hoard some money. This hoarding of precautionary balances exacerbates that market stress. Indeed, the BoE could and should do is allow commercial banks a current account. Such an account would allow collateralised overdrafts (up to some large limit), costing the policy rate. And a positive balance (again, up to some large limit) would be remunerated, at slightly below the policy rate (typically 10bp below). So with the policy rate at 0.5%, the BoE would be making a market in overnight money at 0.4%/0.5%. That is, a large amount could be deposited at 0.4%; and a virtually unlimited amount could be borrowed at 0.5%. Commercial banks could have access to effectively unlimited sums of GBP merely by parking the collateral at the BoE.

To emphasise, the BoE does not offer current accounts to banks. Commercial have to borrow via the BoE’s “standing facilities and open market operations” (¶12), the money being paid into their reserve accounts, which may not be overdrawn. In a crisis the difference is huge: with a true single-account model, eligible collateral is liquidity: collateral is left in the payment system, allowing payments out, which—if not returned by the end of the day—automatically and unfussily become overnight secured overdrafts charged at the policy rate. But with the BoE’s current model, eligible collateral is only the right to queue for liquidity at certain times, or to access it at that which is in practice a penal rate.

¶14: “The Bank’s Open Market Operations (or OMOs) are the means through which we provide sufficient money to the system so that banks can collectively meet their targets for reserves accounts.
¶15: “OMOs take the form of lending money against high-quality collateral … for a fixed term. These loans could, in principle, be exclusively done via short-term operations.
¶16: “However, effective implementation of monetary policy does not require the Bank to roll over its entire stock of loans each week. Such ‘churn’ would be inefficient. … In order to avoid too high a churn in its assets, part of the notes issue can be backed by instruments with a longer maturity.
Because banks must actively borrow via OMOs, there is indeed a transaction cost to such activity, and so some of the BoE’s loans to the market can indeed be long term. But if the BoE were instead providing overdraft facilities, these loans would be redundant and marginally unhelpful. If a commercial bank can borrow overnight, every night, merely by finishing the day overdrawn (of course, against good collateral), then there would be no advantage to committing to borrowing for a longer period. If the BoE were to make a market, it could cease the needless complexity of this additional step.

¶21: “During the Autumn of 2007, it was clear that the lack of liquidity in markets was preventing banks from funding themselves through normal means. Initially, we provided additional 3 month operations, offering 4 auctions of £10 billion each, against wider collateral and at a penalty rate. These were not taken up by the banks. By December 2007, bank funding markets had become even more difficult. So, there was a co-ordinated approach by the major central banks who all announced additional measures. In the UK, we offered further expanded 3 month repos. This time without a penalty, against a much wider range of collateral than accepted previously.
¶33: “That meant that there was more central bank money in the system than was needed to meet the demand for banknotes and reserve accounts. … So our liquidity insurance operations were creating a challenge for monetary policy control. We needed a new instrument to drain money from the system. That new instrument was the one-week Bank of England bill. … At their peak, over £100 billion of bills were issued on 8 January 2009
So the Bank started lending money to the market for three months, and then borrowed it back at one week. Why? The lending was to allow commercial banks to know that they had access to funds with which to make payments. But, since the money wasn’t needed to make payments, the BoE’s borrowing took it away again. It would have been simpler, more understandable, and more robust, just to provide commercial banks with an overdraft limit. A bank with collateral can then be sure of being able to make payments—even though most of that collateral would typically go unused.

The Statement on the Emergency Liquidity Assistance

Next we turn to the announcement dated 24th November 2009, the Statement on the Emergency Liquidity Assistance (ELA) extended to two institutions, RBS and HBOS, in the Autumn of 2008.

From 1 October 2008 the Bank provided ELA to HBOS and from 7 October also provided ELA to RBS. The RBS facility was repaid by 16 December 2008, and the HBOS facility by 16 January 2009.

Use of the facilities peaked at £36.6bn for RBS (on 17 October) and at £25.4bn for HBOS (on 13 November). Total use of ELA across both banks peaked at £61.6bn on 17 October. At this point the two banks provided the Bank with collateral (residential mortgages, personal and commercial loans and UK government issued debt) with a total value in excess of £100bn. The banks were charged fees for the use of the facilities.

The borrowing of £61.6bn was collateralised >1.6×, that being a substantial over-collateralisation, especially as the collateral was presumably mostly £-denominated. Also note that the peak of the total lending (£61.6bn) was very close to the sum of the peaks of the separate loans (£36.6bn + £25.4bn = £62.0bn ± rounding). With the dates provided, that suggests that HBOS borrowed almost the same amount on 17th October as on 13th November: presumably HBOS borrowed the maximum and held it as a precautionary balance.

So why has the BoE made this so difficult? If the two banks had had large overdraft facilities, the precautionary element of this borrowing would be redundant. The two banks would have parked their eligible collateral at the BoE, giving them plenty of immediate access to liquidity. Instead of which, as a result of this complication, “the Bank decided to use its powers to limit the extent of disclosure in its financial statements in the 2009 Annual Report”: in other words, henceforth the published accounts of the BoE cannot be assumed to be true or fair.

As the central bank of a solidly triple-A country, that untruthfulness might be tolerable. But if the BoE were to become the central bank of a country less than triple-triple, that could really matter. Did the top management of the BoE really decide that the ever-changing and dysfunctional complication of the current regime of implementing monetary policy was really worth that loss of reputation? Which would be worse: they did consider it; or they didn’t?

Governor, please, stop this flailing around and instead implement monetary policy—a price of short term money—simply by making a price in short term money, in the form of a narrow passive corridor.

— Julian D. A. Wiseman
Paris, 27th November 2009
www.jdawiseman.com

Also see the letter to Paul Tucker of November 2008 entitled The Implementation of Monetary Policy: The Next Attempt; and the essay of 16th March 2009 entitled On Quantitative Easing.

Greeks protest over debt crisis

George Papandreou faces mounting unrest as he tries to fix the €300bn debt problem

greece/protests

A firefighter hold a flare as demonstrators chant slogans outside the Greek Parliament in Athens. Photograph: Petros Giannakouris/AP

For the first time in the modern history of Greece, anti-government protesters last night pitched tents outside the large standstone building of the Athenian parliament amid growing public anger and unprecedented international concern over the country's dire public finances.

As Greeks attempt to get to grips with an economic crisis that has begun to spill over the borders of their tiny state into the rest of Europe, the sight of tents lined up in Sydagma Square has conjured the mood of the nation: one that is veering, perilously, between bewilderment and despair.

"It is a simple issue of survival," said Anna Tsounara, a protester sitting in a tent lined with sleeping bags and blankets. "I am a divorced mother-of-two. I have never demonstrated like this before but now I want answers. All of us here worked in the public sector on contracts for years and now we are told the state is bankrupt by a government that comes in and says it wants to get rid of us. Just like that. That's not fair."

Tsounara is not alone. For the generations raised on state patrimony, the prospect of such largesse running dry because of runaway public debt has come as a rude awakening. That Greece should find itself at the centre of a financial maelstrom – amid fears of it defaulting on that debt – with unforeseen consequences for the stability of the eurozone, is, for many, even more baffling.

Yesterday, as farmers staged a tractor blockade of the country's highways for the third week, tax officers prepared to walk off the job and civil servants prepared for a mass strike, many Greeks were asking: how could it come to this?

"People are afraid and confused," said Asimakis Palapanis, 34, who has worked for years in a kiosk at the opposite end of Sydagma square. "They don't know what is wrong or what is right, or what to think anymore. All they know," he said, wagging a finger towards the Greek parliament, "is that they have to deal with 300 people they no longer believe in."

Pavlos Tzimas, a leading political commentator, put it another way: "People are puzzled. They spent the best part of the last decade thinking 'it's over, we made it, we're rich' and then suddenly they're told the country's bankrupt. Like the past conservative government, many bought into the illusion that borrowing was OK. And now they, too, are weighed down by debt."

Amid continuing social unrest, it has been left to a socialist Pasok government, in office barely three months, to fix an economy whose total debt exceeds €300bn (£259).

For Prime Minister George Papandreou, who has laid bare Greece's ills as never before – speaking openly of its endemic problems of corruption, cronyism and culture of deceit – the answer is simple: either the Greeks mend their ways and change their scandal-plagued politics or the country "sinks" under a mountain of debt.

The new leader has announced radical reforms aimed not only at a thorough clean up of the gargantuan public sector, but at altering attitudes and traditions that have obstructed the country's progress. The reforms, it is hoped, will modernise the fabric of Greek society, as well as the way Greeks think and work.

"This government rightly understands that long-term results will only come if the monster state that we have created is also changed," said Paschos Mandravelis, another political commentator. "The problem is that these are not changes that produce results overnight and markets are always shortsighted. They want results now."

Change will not be easy. All agree that while the key to success is political, Prime Minister Papandreou must walk a tightrope as never before.

"Most Greeks have understood the severity of the situation. They have seen that the politics we have pursued these past 35 years [since the collapse of military dictatorship] have not solved our problems," said Gerasimos Papafloratos who runs a tourist shop in Athens' ancient city centre. "Our country should not be in this situation. Spain and Portugal entered the EU after us and they are much better off."

Informant offers Germany secret Swiss bank data

Informant offers Germany secret Swiss bank data

By Hans-Edzard Busemann and Sarah Marsh, Reuters

Saturday, 30 January 2010

An informant has offered to sell the German government the data of 1,500 possible tax evaders with bank accounts in Switzerland, a respected German daily reported today, without identifying its sources.

The informant is asking for €2.5 million (£2.1m) for the confidential data, which tax investigators believe could rake in 100 million euros for German state coffers, the Frankfurter Allgemeine Zeitung wrote.

German Finance Minister Wolfgang Schaeuble is considering whether to go ahead with the transaction, the paper added. A ministry spokesman declined to comment on the report.

In 2008 Germany purchased data on tax evaders from an informant about clients of a Liechtenstein bank.

The case snared former Deutsche Post chief Klaus Zumwinkel, who was given a suspended jail term last year for evading nearly a million euros in taxes using a Liechtenstein trust.

Schaeuble's predecessor Peer Steinbrueck clashed repeatedly with Germany's neighbours Switzerland, Liechtenstein and Luxembourg over bank secrecy, accusing them of serving as havens for German tax evaders.

The three countries have taken steps in the last year to improve transparency on taxes.

OBAMA FINDS $20 BILLION IN CUTS...

Are We Supposed To Be Impressed?
By Devvy
Rense.com, 1-31-10

Headlines right now on the Drudge Report:
OBAMA FINDS $20 BILLION IN CUTS
Twenty billion "dollars".
Cheers and shouting can be heard across the land! The Washington establishment elites believe we are all idiots, so they feed us this kind of drivel.
The national debt is created by Congress borrowing from the privately owned Federal Reserve. Congress rents their fiat currency and the interest is the fruits of our labor.
On January 28, 2010, the interest we all 'owe' to this cabal was:
$12,274,431,428,037.28
What that means is the people's purse, the U.S. Treasury, is over drawn $12.2 TRILLION dollars.
By what means shall this $20 billion be saved?
"One of the proposals would eliminate the "Advanced Earned Income Tax Credit," which allows eligible taxpayers with children to get a portion of the a tax credit paid out in their paychecks throughout the year.
"The White House said only 514,000 people -- 3 percent of those eligible -- claimed the credit and the error rate for the program was high, with 80 percent of recipients not complying with one or more of the program's requirements.
"This ineffective and prone-to-error program should be eliminated," White House Communications Director Dan Pfeiffer said in the statement."
I wonder what the total cost in man hours for government payroll has been during the duration of that program that has been found to be "ineffective" and "error prone"?
Right now, you and I 'owe' $112,998.00 to the banking cartel for the interest on the debt created by both parties. If you've never seen how the interest racks up, it will make you sick:
http://www.usdebtclock.org/
"Then I say, the earth belongs to each of these generations during its course, fully and in its own right. The second generation receives it clear of the debts and encumbrances of the first, the third of the second, and so on. For if the first could charge it with a debt, then the earth would belong to the dead and not to the living generation. Then, no generation can contract debts greater than may be paid during the course of its own existence." --Thomas Jefferson to James Madison, 1789. ME 7:455, Papers 15:393

Poor prize for the world top chess player

Magnus Carlsen, the world’s highest rated player, won the 10,000-euro first prize in the 72nd annual Corus Chess Tournament Sunday. Coached by former world champion Gary Kasparov, the 19-year-old Norwegian played attacking chess throughout to collect 8.5 points for a tournament score of five wins, seven draws and one loss. His aggressive style almost came to cost him dearly in his final-round game from a Ruy Lopez against Italy’s Fabiano Caruana but after 56 moves, he managed to salvage a draw.

Rapporto shock: metà dei sopravvissuti alla Shoah vive in povertà

A parole sono tutti bravi

Rapporto shock: metà dei sopravvissuti alla Shoah vive in povertà

La denuncia della Jewish Claims Conference: ben 259.500 deportati nei lager, testimoni dell'orrore, vivono sotto la soglia dell'indigenza Tra loro 104.000 sono in condizione di miseria assoluta

Lura Lucchini


La metà dei 517.000 sopravvissuti all'Olocausto ancora in vita si trova oggi a vivere sotto la soglia della povertà. Con questa statistica alla mano, la Jewish Claims Conference (Jcc) ha ricordato, nella vigilia del giorno della memoria, che i testimoni diretti dovrebbero essere al centro dell'attenzione in questo momento. A causa della loro tragica esperienza però molti di loro sono indigenti, soli e con problemi di salute. Oltre ad essere, naturalmente, anziani. «La Germania e l'Europa sono loro debitrici», ha detto Julius Barman, presidente della Jcc.

Più di settant'anni dopo l'inizio della seconda guerra mondiale e dell'eliminazione sistematica e pianificata su scala industriale degli ebrei di tutta Europa, si assottiglia la generazione delle vittime sopravvissute alle persecuzioni naziste. La maggior parte di loro ha da tempo superato gli ottant'anni. La preoccupazione riguardo alla scomparsa di tutti i testimoni dei campi di sterminio riguarda un futuro non lontano. Tra non molti anni nessuno potrà raccontare direttamente cos'è successo. Il dubbio insinuato da una generazione di negazionisti e il passare del tempo potrebbero fare affievolire la memoria che si celebra tutti gli anni il 27 febbraio.

Il giorno della memoria dovrebbe quindi essere soprattutto il giorno dei superstiti ancora in vita, in tutto 517.000 concentrati soprattutto in Israele, Stati Uniti e nell'ex Unione Sovietica. Eppure uno studio realizzato dalla Jewish Claim Conference (Jcc, la conferenza delle rivendicazioni ebree) di cui dava notizia uno dei principali quotidiani tedeschi, il Süddeutsche Zeitung, presenta una realtà desolante. La metà delle vittime vive al giorno d'oggi in una situazione di povertà. Il numero totale dei sopravvissuti che vivono oggi al disotto della soglia della povertà è di 259.500, in particolare in israele (74.000) e nell'ex Unione Sovietica (120.000). Del totale, 104.000 sono in povertà totale e hanno bisogno d'aiuto.

Le cause di questa situazione sono simili nella maggior parte dei casi, secondo quanto ha segnalato la Jcc: un'educazione negata, le esperienze traumatiche del ghetto e dei campi di concentramento, così come, molto spesso, la perdita dell'intera famiglia, hanno reso impossibile a molti sopravvissuti la costruzione di una vita lavorativa di successo che potesse garantire loro una vecchiaia sicura. «Non dobbiamo perder di vista che, molti di coloro che tutt'ora sopravvivono, sono costretti a una situazione di povertà o indigenza», ha detto Georg Hetiberger, rappresentante tedesco della Jcc, «i sopravvissuti dovrebbero essere al centro dell'attenzione nel giorno della Memoria».

Non solo la povertà, ha ricordato Hetiberger, ma anche la malattia e la solitudine gravano su queste persone, «abbiamo la responsabilità di garantire a questi anziani sopravvissuti una vecchiaia dignitosa. La Jcc insieme a altre organizzazioni ebraiche ha espresso in questo giorno della memoria la necessità di discutere a livello mondiale i programmi di aiuto alle vittime».

«Sessantacinque anni fa queste persone oggi cosi acciaccate sono riuscite a sfuggire a quella condanna a morte universale che i nazisti avevano appeso sulla testa del popolo ebraico. Fa male pensare che oggi, 65 anni dopo la liberazione di Auschwitz, siano così povere da dover decidere tra l'acquisto di medicinali o cibo - ha detto Julius Barman presidente della Claim Conference - il miglior modo per restituire un pezzo di giustizia è prendersi cura di loro nel momento del bisogno. In questo la Germania e l'Europa sono loro debitrici».

L'Unità 28/1/2010

Beware Counterfeiters

January 2010
SPROTT ASSET MANAGEMENT LP
Beware Counterfeiters
By: Kevin Bambrough & David Franklin

Long time readers know that we have written about gold many times over the last ten years, starting with an October 2001 article entitled “All that Glitters is Gold”. We first invested in the precious metal based on the belief that central bank sales were filling a fundamental supply deficit that existed in the gold market. We also wrote that if you believed in gold as a financial instrument you might envision a gold price appreciation of 45% to US$400 per ounce, or even higher, as investors sought to protect their wealth in the ‘bear market’ that followed the 2000 stock meltdown. What a difference nine years have made. In 2010, Central Banks are now close to becoming net buyers of gold while mine output continues to decline. With major indices returning nothing to investors over the last ten years it has been a lost decade for stocks but an excellent decade for gold.

Gold’s recent appreciation in US dollars has led some market commentators to question its fair value. This is nothing new for gold – it has been criticized and downplayed as an asset ever since it came off its previous peak in 1980 of US$850 per ounce. In our view, however, it is not gold’s value that is in question; it is the value of paper money.

Let us consider the supply and demand fundamentals of paper money. Clearly, the supply of paper money is technically infinite. This has, of course, not always been the case. For millennia, money was commodity based - its value was linked to goods produced from land and labour. It was impossible to counterfeit wheat, nickel, copper or other commodities and therefore impossible to counterfeit money. Money was viewed as a link to, or representative of, productive capacity. If you had money, you had the right to trade it in for something real, and therefore possessed real wealth.

Historically, gold, principally because of its preciousness, has been the commodity into which paper money has been convertible. Each paper note represented tangible, stored gold and included a promise to convert that piece of paper into a specific quantity of gold on demand. That “promise” provided an inherent protection to the holder and ensured that governments couldn’t print money indiscriminately.

The link between paper money and gold has been lost for many decades. With respect to the US dollar, the world’s reserve currency, it was severed during the last century during two stressful economic periods. The first official break took place during the Great Depression. The second break took place during the Nixon-era in the 70s. These events are instructive and warrant brief consideration. While there are several contributing factors to the Great Depression, it was the money supply growth in the preceding years under the supervision of the Federal Reserve that was, in our opinion, the greatest contributor. The Federal Reserve System was created in 1913 on a promise of stabilizing the banking system. What followed instead was an unprecedented growth in fractional reserve banking, as well as the money supply, which helped fuel the roaring 20’s. The aggressive money printing created inflated values in bonds and stocks, which peaked in 1929. When the market began its precipitous slide, and the public began to realize that stock and bond values were artificially high, the populace began to convert its cash holdings into gold. The government lacked the ability to satisfy that demand and was thus forced to renege on the currency’s founding promise of gold convertibility. It’s important to point out that without this original promise of convertibility for citizens, the currency may never have been adopted.

In 1933, The Gold Reserve Act was passed by Congress and formalized into law the breaking of the gold standard. This law provided for a controlled-currency issue through the Federal Reserve System which was non-redeemable in gold. Although the link to anything tangible had been broken, the citizens had little choice but to continue using these non-redeemable dollars as a medium of exchange. The currency had already been broadly accepted, proven convenient and a perception of safety had already become entrenched.

After forty years of continued dollar printing, in August, 1971, President Nixon effectively declared the US dollar to be a completely “fiat” currency by refusing to allow foreign governments to convert their US dollar holdings into gold. The right of conversion which had been granted under the post World War II, Bretton Woods agreement could not be honoured because of decades of money supply expansion. The original ‘promise’, which had vaulted US dollar to its status as a global reserve currency and a stable store of value, was now completely broken.

These historical events resulted in a world in which all currencies are fiat; they are not backed by gold or any other tangible asset. The supply is infinite. In fact, the production of today’s newly created paper money in relation to historical commodity-based money is akin to counterfeiting. A US dollar printed today has no ties to anything tangible and as a result carries only four cents of the equivalent purchasing power of a gold-backed dollar of 1913. It is ironic that in a poor choice of wording on Wikipedia, the definition of counterfeiting states that “it is usually pursued aggressively by all governments.” It is only because the evolution of money has occurred slowly over generations that the obvious flaw with fiat currency is not widely understood.

The demand for paper money in its various forms has remained, in our view, surprisingly high. The public has, for the most part, been content to trust paper money and hold it in various forms (cash, money-market funds and bonds), even without any yield. Presumably, this is because it is perceived as being “safe”. Bonds continue to be viewed and treated as highly conservative and ultimately “safe” monetary instruments. We are of the view that long-dated government bonds are one of the most speculative asset classes commonly held today. In order to truly value a long-dated government bond one must speculate what its future proceeds will be able to purchase in real goods and services. A prospective purchaser must try to determine the expected “real return”. In the current environment of excessive government deficits and increased debt issuance, we feel certain that long-term bond holders will be disappointed. Quantitative Easing, a radical form of monetary policy which allows for the direct printing of money by central banks in order to purchase government debt (or other undesirable bonds of even lower quality) will ensure all varieties of paper money will not enjoy nearly as much purchasing power in ten or twenty years as they do today. We believe the yields being offered today on such instruments, when compounded over their duration, will prove to be immaterial considering the total loss of purchasing power suffered by their holders.

We are gold investors because we have made a specific and calculated bet against paper money. Simply put, we are betting against paper money as a store of value. We believe its supply will continue to increase. We do not believe that the world’s major governments have any stake left in protecting it. Government debt loads have grown so massive that printing them away has become obligatory - there is no longer any other feasible option left. In our view, the savers of the world should already be outraged by the dilution they have been forced to suffer at the hands of the Central Banks. Are we to infer that the limited reaction of savers to the combination of zero interest rates and debasement of currency is a result of “learned helplessness”?

For those that don’t accept savings dilution as the ordinary course of business, how do investors protect themselves from this loss of purchasing power? We feel a conservative approach would be to ignore nominal prices entirely and focus on building real wealth with a strong weighting towards tangible investments. As currencies are debased it is ‘relative values’ that investors should use to make investment decisions, since nominal prices can be distorted. In the case of gold, it is pointless to debate its value in US dollars. There is no longer any tie between the two and it’s clearly the value of paper money that should now be on trial, not gold. In future editions of Markets at a Glance we will continue to explore the investment themes and businesses that we feel that meet this strong relative valuation criteria.

We also wanted to prepare our readers and clients for the next leg of the gold bull market as it will prove to be extremely volatile. Gold bull markets are unique in that buying becomes driven by both fear and greed. Gold is quickly moving into the hands of those who are unwilling to gamble on fiat currencies or bonds as a store a value. The new owners of gold are unconcerned with its lack of yield but instead are focused on its historic ability to preserve wealth and its unquestionable value.

Given the difficulty we have valuing paper money, it becomes extremely difficult to come up with a reasoned price target for gold. Today’s gold market is significantly different from the gold market of the 1970s for two reasons: 1) Central Banks are more likely to be buyers of gold today and 2) They clearly have little ability to dramatically raise interest rates with the massive increases in government issued debt. Thus, it is easy to envision a similar twenty-five fold increase in the gold price that was seen between 1970 and 1980, which would result in a gold price today above $6,000 per ounce.

We expect the often quoted “1980 inflation adjusted high” of approximately $2,200 to be achieved in short order. These targets may well prove to be irrelevant, however, as the quality of our lives will be more greatly impacted by the continued evolution of our money and how the general public chooses to value it, or not.

Now Fire Geithner and Summers

Now Fire Geithner and Summers

The new restraints on bank lending for speculation proposed yesterday by President Barack Obama follow the advice of former Fed Chairman Paul Volcker but will be much more credible if the president now fires Secretary of the Treasury Timothy Geithner and National Economic Council director Lawrence Summers.

What President Obama is calling the “Volcker Rule” would take us back in the direction of the 1932 Glass-Steagall Act which kept commercial and investment banking separate for 67 years, until 1999 when it was foolishly repealed by President Bill Clinton. Then-Treasury Secretary Summers strongly supported the repeal.

It was the demise of Glass-Steagall that allowed commercial banks to create the vast amounts of unbacked credit which fueled the gigantic financial bubbles in housing, commercial real estate, hedge funds, equities, and derivatives during the catastrophic years of the George W. Bush presidency. It was the blowing up of these bubbles that brought the financial crash of 2008-9, the multi-trillion dollar bailouts of the financial industry by the Treasury and Federal Reserve, and the worst recession since the Great Depression.

American financiers became filthy rich in the meantime. Timothy Geithner, as president of the Federal Reserve Bank of New York from 2003-2009, worked closely with Bush’s Treasury Secretary Henry Paulson in overseeing the bailouts of Bear Stearns and AIG. He also favored reducing the capital required to operate a bank which would have exposed the financial system to even greater risk of failure.

Since becoming charter members of the Obama administration, both Geithner and Summers favored a much milder approach to bank reform. According to the Washington Post, industry executives were “startled and disheartened that Geithner was overruled” in favor of Volcker’s approach. Under Geithner’s watch, though, the banks have been using taxpayers’ money not to restart lending but to take over smaller banks, invest in the stock market, and continue to pay their executives obscene bonuses.

The poor bankers, now standing like deer in the headlights, are breaking our hearts. Their flight from the stock market, which began yesterday, caused an immediate drop in the Dow Jones Industrial Average of over 200 points. It shows the stranglehold the banks have had on the nation’s wealth. But in reality, the proposed “Volcker Rule” should be only the first step in the nation’s recovery from the worst financial crime spree in history.

Think about it for a minute. Banks are allowed to create credit “out of thin air” only under a public charter. It is a fiduciary trust that should be regarded as sacrosanct. One way this trust has been abused has been for banks to use this created credit to buy companies whose employees are then fired and assets stripped before the company is sold at a profit to pay off the loans and the bankers’ brokerage fees. If this isn’t a crime against the national interest, what is?

This type of scenario has been repeated in endless permutations since the long wave of financial industry deregulation began with the “Reagan Revolution” a generation ago. It continued under President Clinton and reached a nadir with the vast amounts of credit that pumped up the housing bubble through “liar’s loans” and subprime mortgages while regulatory agencies looked the other way. The banks packaged these loans and sold them as asset-backed securities worldwide, knowing they were worthless.

Geithner and Summers were part of this sordid history and must go. But this should only be a start. There are rumors that the Justice Department may soon release indictments against a number of Wall Street crooks involved in the abuses of the era. One only hopes it were so. The road back from financial hell will be a rocky one and will take a long time to travel. But the alternative is too grim to contemplate.

Copyright 2010 by Richard C. Cook

Richard C. Cook is a former federal government analyst. His website is www.richardccook.com. His latest book is We Hold These Truths: The Hope of Monetary Reform.

Barter may have saved Russia in 1998

In time of crisis, barter works and may have saved Russia in 1998

After the collapse of the Soviet Union caused it to split up into its components, the newly-established nations each faced an economic crisis. In Russia the crisis lasted for a decade. Inflation had destroyed the currency. There was no banking sector to speak of. And the central government had failed to monetize the nation’s potential production through a functioning monetary system.

The answer? Barter! Not only among individuals, but also among businesses and even with the central government. According to a study from the period by Dr. David Woodruff of MIT, “As of early 1998, 50-75 percent of exchange in industry took the form of barter…” With regard to payment of taxes, “In 1997, at least one-quarter of the revenue collected for the federal budget took a non-monetary form.”

At the time, the International Monetary Fund, which was trying hard to impose harsh neoliberal bank-centered policies on Russia, was urging Western governments to take a hard line in trying to force Russian government officials to carry out an anti-barter crackdown. The Russians resisted . Within a couple of more years the Russian economy had begun to move forward again under President Vladimir Putin.

But barter had saved the day. In his study, Woodruff advised against IMF policies, writing: “The rich countries can no longer afford the illusion that they can impose policies on Russia regardless of their domestic support. ”

Source: Dr. David Woodruff, “The Russian Barter Debate: Implications for Western Policy,” November 1998, Ponars Policy Memo 38, Massachusetts Institute of Technology.

Copyright 2010 by Richard C. Cook

Richard C. Cook is a former federal government analyst who writes on public policy issues. His website is www.richardccook.com.

Local Currencies, the Key to Economic Recovery

Local Currencies, Not Washington Post Platitudes, the Key to Economic Recovery


Steven Pearlstein, business columnist for the Washington Post, published a column on January 6 entitled, “Recession Over? Not Unless We Make a Major Shift.” The problem is that the “major shift” Pearlstein writes about won’t solve the problem even if it takes place.

So is the recession ending? The professional cheerleaders from Wall Street think so, now that the Dow-Jones has surged past 10,500. Fed Chairman Ben Bernanke is also cautiously optimistic as the Fed begins to dismantle some of the emergency bailout programs it had implemented to help save the financial system from total collapse after the meltdown of 2008.

How did the apparent turnaround come to pass? Pearlstein notes: “My best guess is that the current upswings in economic output, confidence and financial asset prices are largely a reflection of the extraordinary fiscal and monetary juice provided by Treasury and the Federal Reserve, along with the natural rebound that occurs after a collapse in consumer and business spending like that which occurred in the first half of 2009.”

There is in fact a consensus among commentators that it’s been government money that has made the difference. But the government money has all come from borrowing. It’s why the national debt rose from about $9.5 trillion to almost $12 trillion in a little more than a year. Interest on the debt now approaches $400 billion a year.

But the debt can’t continue growing at such a rate. President Barack Obama has already said that with the emergency behind us the federal deficit must start to come down. The reason Congress is about to pass such a terribly flawed health care bill is that the Congressional Budget Office estimates that it will reduce federal health care costs by forcing millions of uninsured people into the private insurance system, cutting back on Medicare, and imposing a five percent tax surcharge on the wealthy.

So what is the economic engine that will keep the economy on track? Pearlstein dismisses all four of the most likely possibilities.

He says that consumer spending, with unemployment staying high, will not come back, writing, “It’s hard to see how American consumers can again become the engines of the U.S. or global economies.”

On more government spending, he says, “that’s also hard to imagine. State and local governments, in fact, are still cutting back spending in response to falling tax revenue, and there’s no political consensus for running up bigger federal deficits than we are running now.”

Another possible source of growth is new investment, but the economy is already built to overcapacity in many sectors, “including excess hotel rooms, airplanes, office buildings, shopping malls, cargo ships, aluminium smelters and the like.” Regarding another housing boom, forget it. Pearlstein writes, “…with 5 million vacant apartments and another wave of home foreclosures on the horizon, don’t count on the housing sector to lead the way out of this recession.”

Finally, there is trade. But even though the U.S. trade deficit has come down, its persistence “reflects a fundamental reality not likely to change anytime soon: We no longer produce much of what we like to consume, and cannot make up the difference with exports because of trade barriers and an overvalued currency.”

So what is left?

Here Pearlstein returns to a focus on investment by noting that American consumers have started to save again and that during the downturn businesses saved money by living with aging production equipment, physical plant, and computer systems. He comes out in favor of tax breaks for business to encourage investment, along with new government expenditures for infrastructure such as “basic research, clean-energy development and expanded public higher education.” These things, he says, will create new jobs which in turn should lead to more consumer purchasing power.

The trouble is, Pearlstein already dismissed the investment and public expenditure alternatives earlier in his analysis as being insufficient. More government debt could also lead to high levels of inflation and further devaluation of the dollar. Inflation caused by government and central bank “printing of money” kills enterprise at every level.

Pearlstein fails even to mention the severe constriction of bank lending to businesses that has made conditions much worse for the small business sector where half of all start-ups already fail within a year. Business giants can take refuge in their cash reserves, but even they cannot grow if consumers can’t buy more of their products.

Pearlstein’s prescriptions are mainly platitudes. Let’s be frank: without small business and the revitalization of local and regional economies, a real recovery cannot take place, and an unemployment rate that has terrorized the middle class with loss of jobs, incomes, savings, and health care cannot be overcome.

What is the answer then? It’s one that Pearlstein and the Washington Post, being in the mainstream of economic commentary, dare not mention: it’s local currency systems that alone can fill the gap left by the collapse of public finance due to debt and the failure of the banking system to function at all levels of the economy and not just for the benefit of the super-rich global capitalists.

If the federal government announced that it would begin to accept local currencies in payment of taxes, and state and local governments did the same, we would see an economic miracle that would astound the world.

Copyright 2010 by Richard C. Cook

Richard C. Cook is a former government analyst who writes on public policy issues. His website is www.richardccook.com. His new book is “We Hold These Truths: The Hope of Monetary Reform.”

Most of US population is a month away from starvation

Is a Run on the Dollar Starting Soon?

In response to a question from a reader I sent this out today:

Yes, I think a run on the dollar is coming. A lot of people are saying this, including a man named Dmitri Orlov who recently came out with a book entitled “Reinventing Collapse” that compares the crash of the Soviet Union in the 1990s with what he believes is coming here within a short period of time. I heard that at the last meeting of the G20 the U.S. asked Russia and China if they would agree to an orderly devaluation of the dollar, and the answer was “Nyet.” So something big is likely to happen. I don’t know what it will be. A worst case scenario is a wild hyperinflation of the dollar and a total collapse of the monetary system, followed by skyrocketing gasoline prices, etc., and another Great Depression. But the Federal Reserve is too smart just to let that happen, so they will likely try in some way to keep the economy afloat while engaging in an orderly devaluation that will reduce the overall levels of debt. There are many ways to tackle this but it will require strong central planning and maybe even “monetary reform.” The possible scenarios are endless and much depends on the political will of Obama and Congress as to how much control they can exert over the financiers. I am hesitant to predict total gloom and doom, though it is certainly a possibility. One thing that could trigger it would be if the U.S. can no longer buy oil from abroad. That depends also on whether “Peak Oil” really exists or not. But clearly big changes are coming. Our country has become so fragile. Most of our population is a month away from starvation when you look at the food pipeline.

Copyright 2010 by Richard C. Cook. www.richardccook.com

Evils of the Present Monetary System

Evils of the Present Monetary System

From Private Enterprise Money by E.C. Riegel (pub. 1944)

The present money system has three basic evils:

a) It permits money to be issued privately, only by a limited number of persons and corporations who have bank credit, and makes such credit subject to fee. Thus it establishes credit as a privilege rather than a right, and makes it an object of profit rather than a utility to further the production and distribution of wealth. It denies to producers generally the right to issue money, thus making it impossible to expand buying power to potential producing power. This results in defeating the mass production system.

b) It permits the government to issue unbacked money. The only way the government could back its money issues would be to go into the production of goods and services; and this would compete with private business. Thus the problem offers the two horns of a dilemma, both of which lead to socialization. If it backs its money issues with goods and services (and there is no other way it can be backed), it executes a frontal attack on private enterprise. If it issues money without backing it (as it is doing), it executes a flank attack on private business through inflation – since to issue money without creating equivalent values is to inflate.

c) It permits ambitious or designing or fanatical men who are in control of government to light the fires of war, threatening the lives and fortunes of untold millions. This terrible power lies solely in the political money system since armaments spring from money and money springs from government fiat, whereas it should spring only from the fiat of the people who would thus hold the veto power.

Entire text of Private Enterprise Money may be found at Click Here

Economia: Savona, l'intelligence fondamentale

COMUNICATO STAMPA

Economia: Savona, l'intelligence fondamentale per l'interesse nazionale
Lezione al Master sull'Intelligence dell'Universita' della Calabria


Rende, 31 gen. - (Adnkronos) - "Il peso dei fatti economici supera qualunque altro negli equilibri sociali e internazionali. Appunto per questo l'intelligence economica diventa fondamentale per tutelare l'interesse nazionale". È quanto ha affermato il prof. Paolo Savona nel corso della lezione tenuta nell'ambito del Master in Intelligence dell'Università della Calabria, diretto da Mario Caligiuri. Savona ha evidenziato i tre nodi critici per lo sviluppo del settore in Italia, identificandoli nella raccolta molto ampia di informazioni, nella sovrapposizione delle competenze tra servizi di sicurezza dello Stato e strutture responsabili dell'ordine pubblico, nel ritardo nella formazione professionale. Il professore ha quindi evidenziato come sia complesso identificare gli interessi nazionali nel contesto geopolitico, essendo per ora possibile individuare solo codici di condotta. "L'Italia -ha proseguito Savona- presenta un sistema nazionale ingessato". A tale proposito ha individuato alcuni indicatori: il fattore tempo, al quale la pubblica amministrazione non assegna sufficiente valore; l'economia legale, con la quale si può' sradicare la criminalità organizzata; l'interesse razionale, che non coincide con i comportamenti collettivi. Savona ha quindi concluso sostenendo che oggi è fondamentale affrontare il tema del regime di cambio, in quanto nel commercio internazionale il tasso fisso viene utilizzato dalla Cina che ne trae enormi vantaggi dal punto di vista economico nei confronti dell'Europa e dal punto di vista politico riguardo agli Usa.

La ditta fallisce: operaio perde il lavoro e si dà fuoco

Bergamo. La ditta fallisce: operaio perde il lavoro e si dà fuoco. È gravissimo

invia stampa

BERGAMO (30 gennaio) – Ha tentato il suicidio dandosi fuoco con una tanica di benzina un operaio rimasto senza lavoro. L'uomo si trova ora ricoverato al Centro grandi ustionati di Verona, in condizioni gravissime.

A dare l'allarme due operai e un passante che hanno cercato in tutti i modi di spegnere le fiamme.

Il dramma questa mattina a Brembate nel bergamasco. L'operaio, 35 anni è sposato, due mesi fa aveva perso il lavoro perchè la ditta presso cui lavorava, a Zingonia, era fallita. L'uomo era caduto in uno stato di sconforto e disperazione.

Oggi ha raggiunto in auto la zona industriale di Brembate, e una volta sceso si è cosparso di benzina dandosi fuoco. Alla scena hanno assistito due operai e una donna che passava di lì in auto. La signora è riuscita a spegnere le fiamme usando un estintore che aveva in macchina prima dell'arrivo dei vigili del fuoco e dei sanitari. Del caso si stanno occupando anche i carabinieri della Compagnia di Treviglio (Bergamo).

Vendetta di Consorte: l’ex banchiere porta in tribunale il PD

ilGiornale.it, 31 gennaio 2010, 09:47

Vendetta di Consorte: l’ex banchiere rosso porta in tribunale il Partito democratico

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Il finanziere domani a processo accusa: "D’Alema, Fassino e Veltroni mi hanno sacrificato sull’altare della politica". L'Opa su Bnl, nel 2005 il partito lo spinse all'aquisizione ma ai primi guai lo scaricò.E dice: "Allora come oggi i dirigenti non avevano una linea d'azione"


Milano Sarà un processo, ma lui vorrebbe trasformarlo in un congresso. Un’assise del Pd. Giovanni Consorte assicura di non essere roso dal rancore, ma certo gli deve pesare, eccome, il cordone sanitario steso intorno a lui dai big di un partito che ieri lo riveriva come il Cuccia rosso. Correva il 2005, e i Ds dovevano sciogliersi assieme alla Margherita nel futuribile e sempre nebuloso Pd. Intanto, D’Alema gli gridava al telefono: «Dai, facci sognare» e Fassino, l’ultimo segretario dei Ds, gli chiedeva con la diligenza di uno scolaro piemontese come comportarsi davanti a Luigi Abete. Andava di gran carriera, il Cuccia rosso, e senza troppi pregiudizi e complessi di inferiorità, voleva completare la metamorfosi dell’Unipol, ingoiando l’appetitosa Bnl.
Cinque anni dopo, infranti quei sogni, le ragioni della politica, dell’economia e del cuore sono mescolate e spalmate sull’arida pagina della cronaca giudiziaria. E a Consorte non resta che attaccarsi al processo che comincia domani a Milano e in cui è imputato di aggiotaggio per regolare i conti con chi c’era e gli ha voltato le spalle. Per capirlo, basta scorrere la lista interminabile dei testi che dovrebbero spiegare perché Consorte non era una pallina impazzita nel flipper dei grandi intrecci, ma la punta di diamante di quella finanza rossa che ormai voleva disputarsela alla pari con i grandi del capitalismo. E pensava di poter finalmente coniugare profitto e socialismo, politica e soldi. Consorte, e il suo vice Ivano Sacchetti, evocano come convitati di pietra Massimo D’Alema, Piero Fassino, Ugo Sposetti, il tesoriere, Gavino Angius e Nicola Latorre. Ricordate? Quel Latorre che viveva con l’orecchio incollato alla cornetta e cinguettava: «Compagno Ricucci, all’appello». E poi passava l’apparecchio a D’Alema per farlo sognare con Consorte.
Consorte li vuole tutti in aula, visto che dopo essere precipitato dalla parete delle scalate non ha più trovato nessuno.
Al Corriere della sera l’ha detto chiaro e tondo: «Veltroni, Fassino, D’Alema mi hanno abbandonato. Sacrificato sull’altare del primato della politica. C’era da far nascere il Pd, e a marzo 2006 c’erano le elezioni».
Insomma, la tesi che Consorte ripete con rabbia è terra terra: i big s’inebriarono perché i soldi, la banca, e che banca, il potere muscolare della finanza, sono calamite per tutti. Pure per chi è un comunista, sia pure con il cuscinetto della preposizione ex davanti.
Sappiamo com’è andata a finire: la politica lasciò il passo alla cronaca giudiziaria e Consorte fu relegato all’inferno dei furbetti del quartierino. Ma lui non ci sta. La sua storia è più complessa per essere ridotta a un fumetto, in compagnia dei Ricucci, dei Fiorani, dei Fazio. Semmai, Consorte vorrebbe scavare nel disagio di un partito, il Pd, che non ha mai saputo darsi una strategia chiara sui crinali scivolosi dell’economia e della finanza. Oscillando così fra la tentazione del turbocapitalismo e la deriva moralistica di chi giudica gli altri dall’ambone di una francescana superiorità. Un pasticcio, per dirla tutta, come i balbettii di Fassino che ripeteva: «Abbiamo una banca?» e non si capiva cosa avesse capito e chiedeva e richiedeva dettagli che Consorte si affannava a spiegargli, come un allenatore a bordo campo.
Nell’estate del 2005, l’epoca delle scalate, «il Pd - ci dice Consorte - non era ancora nato ma la sua mancanza di una linea e di un’azione politica precisa ha origine da quella vicenda». Il peccato originale del Pd, battezzato nell’acqua torbida degli affari. Quell’esserci dietro le quinte dei big dei Ds, ma senza volersi sporcare le mani, e dunque più veloci di Bolt a scaricare il Cuccia di via Stalingrado, il quartier generale bolognese dell’Unipol, al primo stormir di Procure.
Il progetto di Consorte era chiaro: con Unipol-Bnl sarebbe nato il terzo gruppo bancario italiano, forte di dieci milioni di clienti. Una rivoluzione, quella vera, mica come le altre, infarcite solo del desolante linguaggio dell’ideologia. Il problema, almeno dal suo punto di vista, è che lui era troppo avanti: la transizione, quella politica, procedeva lenta e farraginosa fra strappi, passetti e passi del gambero, in una mischia confusa. C’era da schiudere l’uovo del Pd, e la componente cattolica, quella dei Rutelli e dei Parisi e di tanti altri temeva l’emarginazione, l’irrilevanza, il diventare solo un alibi per i Ds. E per il loro potere debordante.
Alcuni anni prima, proprio D’Alema aveva benedetto i «capitani coraggiosi», la «razza padana» dei Colaninno e degli Gnutti che si erano lanciati nell’operazione Telecom, e che avevano trovato la sponda rossa di Consorte, convinto di dover sprovincializzare con la giusta ferocia la sonnolenta Unipol. Poi, nel 2005, ecco le intercettazioni, i primi passi della procura di Milano, ed ecco le fibrillazioni della politica L’uovo non si schiude. Parisi attacca: «Torna la questione morale, troppe le commistioni fra politica ed economia». Fassino difende la linea del Piave: «Nessuno può darci lezioni», ma poi le lezioni il gruppo dirigente dei Ds se le fa dare, eccome, con la coda fra le gambe. Spariscono tutti, prendono le distanze, intingendo le parole nel latte dell’etica, non difendono più quelle posizioni che prima trattavano con euforia al telefono.
Le scalate non scalano più nulla, la razza padana scolorisce nella saga dei furbetti, i Ricucci, i Coppola, i Fiorani, e con loro il governatore Fazio, diventato il bersaglio di inchieste multiple, di feroci ironie, di tirate moralistiche. Il duo Consorte-Sacchetti viene abbandonato da tutto e da tutti. Il Cuccia rosso in disarmo diventa l’ex che si è arricchito, il traditore che si è ingrassato con le plusvalenze, sospette già lessicalmente, il cinico finanziere che ha intrecciato la sacralità della falce con la volgarità arraffona dei nuovi borghesi alla Vanzina. Un matrimonio che non si doveva fare e che ricade tutto sulle sue spalle.
Ma lui non ci sta a farsi impiccare con la corda fabbricata dalle mani che prima si spellavano per applaudirlo. Vuole regolare i conti, forse brama la vendetta, anche se nega, certo si attacca al processo che inizia a Milano per spiegare che l’indignazione dei moralisti spesso nascondeva una lotta furibonda per il potere e il salvadanaio. Di più, mostrava che la fusione fra Ds e Margherita era fallita ancor prima di cominciare.