Global Monetary System Nearing its End - May 19 2010

Hello everyone,

This will be the final email I send out regarding what’s going on with our economy and the world’s financial system. I have a blog – and will continue to add to it – but this stuff is becoming repetitive – and I’m not sure that sending you updates at this point really benefits anyone. These things are not exactly uplifting and it’s getting worse every day.

So – here’s what you need to know. There are four – very important things you need to understand as events unfold in the coming days/months.

1. The world’s economy is collapsing – and has been collapsing for the past 3 years. It has always been unsustainable – we just happen to be alive at the end of our exponential debt/money growth curve. Exponential growth always ends with a steep incline up – then a catastrophic fall – always. Unlike our political and financial leaders – math doesn’t lie. You may not believe this now – but it will become clear to everyone very soon. Things are accelerating rapidly. At some point – you’ll begin hearing the talking heads on TV using the term ‘free fall’ quite often. If you don’t understand why everyone isn’t saying this now – ask yourself how many times (high school, college, economists, etc.) you’ve heard someone explain how our banking/monetary system works. Enough said. If you want a refresher – here are a couple of links to related blog posts:

http://endtimediscussions.blogspot.com/2006/09/our-monetary-system.html

http://endtimediscussions.blogspot.com/2006/09/our-monetary-system-part-ii-market.html

2. This global economic collapse is not an accident or random event – nor is it going to be a surprise to many of the world’s political and financial leaders. There is an agenda at work here – and it is evil. No other way to say it. The people behind this are the richest, most powerful people in the world – and they have been scheming for hundreds of years – to bring the world to the brink of the abyss. Why? They have used their financial strength to cause financial panics in the past to move their plans forward – we’re watching the same game plan play out before us on a global scale. The goal has always been a one world socialist government (very similar to the USSR or China) with the global elite running the show. If you think Obama appears to lean toward Socialism – you’d be correct – but probably not in the way you think. George W. had his role as well. Alice – this rabbit hole goes far deeper than most people know.

3. Regardless of what you’re told - all of the government stimulus plans, positive media spin and central bank ‘actions’ over the past 2 years have been done for one purpose – to give the impression that the world’s governments and world’s central banks have done everything possible to save the system. They are attempting to shift the focus (blame) for all of this to sovereign fiscal mismanagement, individual and corporate debt loads, bad mortgages, etc. What they don’t tell you is that exponential debt growth is required for the system to function. The problem today is that the global system is now saturated with debt – a direct result of the debt based monetary system itself. This is why trying to solve a debt problem with more debt (see U.S. and European bailouts) is doomed to failure. Systemic failure may happen today, tomorrow, next month – but it is coming – and there is nothing that anyone can do that will prevent this (except changing the system). Again – math doesn’t lie. At some point – even mainstream media will begin acknowledging that something is seriously wrong – you’ll know we’re at the end when this happens.

4. Don’t panic. If God could see these people and their evil plans since the foundation of the earth – and told us about them 2,000 years ago (Revelation 13, 17, & 19 are some of His references to these people) – I feel confident that He has a plan for His people to stand against them. He always has a plan for His people – and He always will. Regardless of what happens here – our focus needs to remain with Him. If this makes you uncomfortable – time to pick-up a Bible and start learning the truth. We have allowed our enemy to blind us – time to turn things around and focus on what’s important.

There are some very intelligent money managers/institutional investors/Economists/Arm-chair quarterbacks, etc. – who are now saying what I’ve been trying to tell people since 2005 – the system appears to be unsustainable – and it’s going to lead to some very unpleasant things. Read the exerpts below.

As for today – we’re seeing some massive Central Bank intervention and German efforts (ban on naked short selling) to save the Euro and keep all of the balls in the air. Other than a possible short term uplift - it won’t help. We followed the same game plan in 2008 – and the result was not good (See: Lehman Brothers bankruptcy). Asian and European stocks are tanking again today (down 2% on average) and the Dow is currently down 120 after plunging 200 points earlier. Over 80% of the stocks on the NYSE are currently declining (same story as yesterday). Expect this type of volatility to increase until we experience another ‘event’ like May 6th – then – all bets are off. Wealthy people will then find out that they have built their lives on a foundation of sand. Sound familiar? If not – again – it’s time to pick-up a Bible and start learning how to build your life on a solid foundation.

Take Care,

John – May 19, 2010
__________________________
Bears Come Roaring Forth

By Barry Ritholtz - May 19th, 2010, 9:30AM

I am on an email list that is from a group smart hedgies and strategists. The discussions range far and wide, and while I sometimes disagree with the conclusions, but I always find the conversation provocative.

Lately, they’ve been emailing a collection of warnings of various fund managers and strategists:

• Long time Dow Theorist Richard Russell set out this dire warning:

“Do your friends a favor. Tell them to “batten down the hatches” because there’s a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and don’t need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won’t recognize the country. They’ll retort, “How the dickens does Russell know — who told him?” Tell them the stock market told him.”

• Reuters reported that well regarded hedge fund manager Seth Klarman “sees few bargains in the current environment and predicted on Tuesday that the stock market could suffer another lost decade without any gains.” Klarman is concerned that we could see “another 10 years of zero returns.” He has 30 percent of assets at his $22 billion Baupost Group in cash, he said. (His firm started in 1982 with $27 million and has averaged 20 percent annual gains ever since).

• Raoul Pal of Global Macro Investor got even more specific warning in his newsletter: Crash Is Coming In Two Days-To-Two Weeks. He sees as an “archetypal crash pattern — a sharp decline followed by a failed rally followed by a collapse.”

• But as Art Cashin of UBS pointed out in his morning missive, stark bear warnings are not restricted to equities. He cites Nouriel Roubini warned on the U.S. Treasury Market:

“Bond market vigilantes have already woken up in Greece, in Spain, in Portugal, in Ireland, in Iceland, and soon enough they could wake up in the U.K., in Japan, in the United States, if we keep on running very large fiscal deficits,” Roubini said at an event at the London School of Economics yesterday. “The chances are, they are going to wake up in the United States in the next three years and say, ‘this is unsustainable.”
_______________________

Global Macro's Raoul Pal: Here's Why A Crash Is Coming In Two Days-To-Two Weeks

Joe Weisenthal
May. 18, 2010, 2:15 PM


We don't mean for it to be doom and gloom day, but Richard Russell isn't the only big name pundit to be calling for a fall.

Raoul Pal, who writes Global Macro Investor newsletter, and whose bio cites stints at GLD and Goldman Sachs, is out with a very specific crash call. In his latest note he calls for a big move down in just two days to two weeks.

That's refreshingly specific!

So what's the reason?

It's all about what he sees as an archetypal crash pattern -- a sharp decline followed by a failed rally followed by a collapse.

It looks like this:

Image: Global Macro Investors

That's an unspecific chart, but here's a more specific one, based on the current post-flash crash market.

Image: Global Macro Investors

And now, here's the kicker. It's the current market vs. 1929, which is what prompts him to see a crash as imminent.

Image: Global Macro Investors

And finally, here's the flash crash vs. 1987

Image: Global Macro Investors

Get the picture?

Volcker Makes a Comeback as Part of Obama Brain Trust

Do you ever wonder why the same people always seem to be recycled into new positions of power? We now have a Presidential candidate who is seeking economic guidance from someone who led the institution that is systematically destroying our economy. Does anyone see a problem here?

jg – Oct 21, 2008
__________________________
OCTOBER 21, 2008

Volcker Makes a Comeback as Part of Obama Brain Trust
By MONICA LANGLEY

NEW YORK -- At 81 years old, former Federal Reserve chairman Paul Volcker is getting a second chance to shape his legacy with a presidential hopeful more than 30 years his junior.
Mr. Volcker has emerged as a top economic adviser to Sen. Barack Obama during a presidential campaign dominated by a global financial crisis. Their growing bond is paying dividends for each man.

Mr. Volcker delivers gravitas and credibility to Sen. Obama, people in the Obama camp say, as well as ideas and approaches to the economic crisis. "Volcker whispering in Obama's ear will make even Republicans comfortable, because he's a hero of the right and a supporter of a strong dollar," says John Tamny, a supply-side economist and Republican.

On Tuesday, Mr. Volcker is scheduled to appear on the campaign trail with Sen. Obama for the first time. At a round-table discussion with voters in Lake Worth, Fla., he'll "give his view on the state of the economy and the credit markets, and what needs to be done to fix them," says one campaign adviser. Longtime Fed watchers are amused that Mr. Volcker, known for his muttered statements during Fed meetings in the 1980s, will be in a political role on the stump.

For Mr. Volcker, a connection with Sen. Obama could help burnish his record as Fed chairman. The cigar-chomping central banker from 1979 to 1987, he received blame for driving up interest rates and tipping the U.S. into the deepest recession since the Great Depression. But Mr. Volcker is just as well known for taming the runaway inflation of that era. His stock has risen in recent months as his gruff warnings about the risks of deregulating the financial sector have come to look prescient. His successor's reputation, meanwhile, has come under a cloud. Alan Greenspan is under criticism that the low interest rates and deregulatory ideology of his tenure contributed to today's crisis.

With nearly every day presenting a fresh financial emergency, Sen. Obama has persuaded Mr. Volcker, who travels the globe for economic meetings and occasionally disappears on fly-fishing trips, to be at the ready; Mr. Volcker now keeps a cellphone on him at all times. And though he still doesn't own a computer (his assistant prints out emails for him), he's gotten used to Sen. Obama's rapid-fire messages sent from a BlackBerry device.

The Obama-Volcker relationship continues to evolve, campaign advisers say. At the start, Sen. Obama sought advice from Mr. Volcker and other outside voices through his economic adviser, Austan Goolsbee, a 39-year-old University of Chicago professor. But starting with the demise of Bear Stearns Cos. in March and continuing today, Sen. Obama speaks directly and often with Mr. Volcker about the intricacies of the financial crisis and possible solutions. They've become "collaborators," as one aide puts it.

For example, when the U.S. Treasury put forth a plan to set up a $700 billion rescue fund to buy up toxic assets, Sen. Obama quickly backed it on the advice of Mr. Volcker. Like other prominent economists, Mr. Volcker also advocated early on for the recapitalization of banks. On this advice, Sen. Obama proposed direct equity infusions in banks in his frequent conference calls with Treasury Secretary Henry Paulson. The idea, initially rejected by Mr. Paulson, was finally proposed last week by the administration, in an effort to get banks lending again to businesses and each other.

Sen. Obama's team of economic advisers includes two former Treasury secretaries, Robert Rubin and Lawrence Summers, and in some decisions, Mr. Volcker doesn't reign supreme. The candidate's latest proposal, for example, a $60 billion stimulus package, was initially fought by the former Fed chief on the grounds that Americans were already overspending. Moreover, he is unlikely to take a long-term role in any Obama administration.

Paul Volcker, delivering a lecture last week in Singapore, where he warned that the U.S. and Europe are facing recession from the financial crisis.

But for now, and going into the campaign's final weeks, aides say Sen. Obama is increasingly relying on Mr. Volcker. His staff now routinely reviews policy proposals and speeches with Mr. Volcker. Conference calls and face-to-face meetings of the Obama economic team are often reorganized to accommodate his schedule. When the team discusses the financial crisis, "The most important question to Obama: What does Paul Volcker think?" says Jason Furman, the campaign's economic-policy director.

The two men have developed an ease with each other, say aides, even as their styles appear to differ: Sen. Obama, who tends to use the Socratic method from his law-school training, examines all points of view and debates them. With a more formal and direct demeanor, Mr. Volcker likes to go straight to solutions.

In last week's final presidential debate, after Republican John McCain raised questions about his rival's ties, Sen. Obama said, "Let me tell you who I associate with. On economic policy, I associate with Warren Buffett and former Fed Chairman Paul Volcker...who have shaped my ideas and who will be surrounding me in the White House."

Some Democrats have speculated that, if elected, Sen. Obama could name Mr. Volcker to a post, possibly even as Treasury secretary, for a limited time. Banking and Wall Street executives are pushing the two campaigns to name a new secretary shortly after the election to reassure markets during the transition. The Obama campaign wouldn't comment on possible appointments.

"I just want to be helpful, because I believe Sen. Obama -- in his person, in his ideas and in his ability to understand and articulate both our needs and our hopes -- brings the strong and fresh leadership we need," Mr. Volcker said in an interview in New York. Mr. Volcker wouldn't provide details of his policy suggestions or his personal relationship with Sen. Obama.
After leaving the Fed 20 years ago, Mr. Volcker stopped smoking cigars, became a professor at Princeton University and spent more time fly-fishing. His corner office overlooking Fifth Avenue is filled with photographs and statues of fish, as well as a pillow inscribed: "Work is for people who don't know how to fish."

Following a stint as chairman of a boutique investment-banking firm, Mr. Volcker largely steered clear of joining any Wall Street companies. He set up his own office in Rockefeller Center, where he consults for companies and governments. He has served on a few corporate boards, such as UAL Corp., Prudential Insurance Co. of America and Nestlé SA. He also participated on commissions including the United Nations committee to investigate corruption in its oil-for-food program, and an inquiry launched by Swiss banks to determine which accounts belonged to Holocaust victims.

The bond between Messrs. Obama and Volcker started with a dinner invitation. In June 2007, Mark Gallogly, co-founder of Centerbridge Partners, a New York private-investment firm, and an early supporter of Sen. Obama, invited a dozen financial executives to meet the senator, including Goldman Sachs Group Inc. President Gary Cohn, Merrill Lynch & Co. President Greg Fleming and Mr. Volcker.

Along with the invitation, Mr. Volcker received from Mr. Gallogly a "briefing package" containing some speeches by Sen. Obama and news articles about him. Mr. Volcker also read the two books written by the senator.

In the private dining room at a Capitol Hill restaurant, Mr. Gallogly seated Mr. Volcker directly across from Sen. Obama, who at the time was considered a long shot to win the Democratic nomination over Sen. Hillary Clinton. Returning late that night on a flight to New York, Mr. Volcker told the group he was "genuinely impressed" with the Illinois senator.

That message was eventually passed along to Sen. Obama's advisers in New York, Michael Froman, a friend from Harvard Law School and a Citigroup Inc. executive, and Jenny Yeager, a fund-raiser. Ms. Yeager told Obama headquarters in Chicago that Mr. Volcker seemed "interested" in the candidate, but in two months no one had followed up with the ex-central banker for fund raising or anything else.

When Sen. Obama's economics adviser, Mr. Goolsbee, heard about Mr. Volcker's interest, he immediately got excited. "Paul Volcker is a legend! We don't want to use his contacts for money, we want to pick his brain," he recalls saying to a campaign operative.

Starting in late summer 2007, Mr. Goolsbee had regular discussions with Mr. Volcker. He incorporated Mr. Volcker's ideas, including his early concern that the housing downturn would snowball into a larger financial crisis, into Sen. Obama's policy positions. In a September 2007 speech at Nasdaq, Sen. Obama predicted that because of oversight lapses and abusive practices that cause the public to doubt financial results, "the markets will be ravaged by a crisis in confidence."

In early January 2008, when Sen. Clinton was pounding her rival over his lack of experience and stature, Sen. Obama phoned Mr. Volcker to ask for his endorsement. (At that time, billionaire investor Warren Buffett had refused to take sides between the Democratic contenders, saying he would support whoever got the nomination.) Mr. Volcker, a long-time Democrat who had mostly stayed out of partisan politics, agreed, and wrote out his statement in longhand.

The presidential candidate's first big economic address took place in March at Cooper Union in New York. Mr. Volcker's fingerprints were evident in the speech. The onetime central banker had long been vigilant about strong regulatory oversight; as Fed chairman he rejected big banks' attempts to repeal Depression-era laws to engage in more risky practices like investment banking. New financial institutions and instruments have since led to the repeal or relaxation of those laws, and Mr. Volcker told Sen. Obama that the U.S. regulatory structure must be strengthened and updated for the 21st century.

With Mr. Volcker sitting in the front row, Sen. Obama told the audience at Cooper Union that the current financial-regulatory framework must be "revamped." He faulted deregulation for the growing economic crisis. "Our free market was never meant to be a free license to take whatever you can get, however you can get it."

Once Sen. Obama became the expected Democratic nominee in June, and the economy became the central campaign issue, his chats with Mr. Volcker picked up. Mr. Goolsbee would get emails from Sen. Obama's traveling aide Reggie Love or his senior strategist David Axelrod with the message: "BO wants to call Volcker. What's his number again?"

In the past two months, financial crises have come one after another, picking up speed with the federal government's July effort to bolster big mortgage insurers Fannie Mae and Freddie Mac. As the contagion from the subprime mortgages and risky mortgage credit swaps threatened to topple other institutions, Sen. Obama asked for "emergency meetings" with his economic team, about a dozen advisers including Mr. Volcker and Mr. Buffett.

At the first group meeting in Washington in late July, Sen. Obama said he wanted to hear from each adviser on the worsening economic downturn and asked Mr. Volcker to go first. "The very health of the credit markets is at stake," Mr. Volcker said, according to one attendee. He urged strong action to restore confidence, particularly in the U.S. banking system.

When Sen. Obama raised the prospect of a package of spending and tax measures to "stimulate" the economy, Mr. Volcker disapproved. "Americans are spending beyond their means," he told the group. A stimulus package would delay the belt-tightening and savings needed, he added, proposing instead better regulation and assistance to banks.

Laura Tyson, economics adviser for President Bill Clinton and a professor at University of California, Berkeley, disagreed. "Americans can't help but spend beyond their means because they've had no income growth while their costs on gas and food have skyrocketed." She suggested spending money to rebuild infrastructure and create jobs. Even as some others agreed with Ms. Tyson, Mr. Volcker didn't budge. Sen. Obama delayed putting out a new stimulus package, but stressed that he wanted to find the "right balance" of possible assistance.

When the bailout bill became a political football and the markets seized up, Sen. Obama called the second in-person meeting of his financial team on Sept. 26 in Miami. Mr. Volcker initially said he would have to call in because he was leaving for Europe that day. Sen. Obama, according to campaign aides, called him with a personal plea.

The next morning, the senator seated Mr. Volcker beside him, an arrangement that was photographed by the media entourage covering the campaign. Mr. Volcker told the group he had changed his mind about an economic-stimulus package due to the global recession, but he couldn't stay to hear the discussion about the approach because he had to catch a plane to Europe.

In the past two weeks, with the stock market's drastic volatility and weak economic indicators, Sen. Obama presented his $60 billion package, which contains tax cuts and spending to provide public-works jobs to struggling Americans.

On Monday, Fed Chairman Ben Bernanke endorsed the idea of another stimulus package, giving a boost to Democratic lawmakers who are considering one. But congressional Republicans have so far shown little interest in a second spending bill.

Write to Monica Langley at monica.langley@wsj.com
______________________________________

February 10, 2009

Here’s another article that relates to the article above. This is an article from the Loose Change website. I encourage you to research these things on your own.

jg

Obama’s Trilateral Commission Connections, Council on Foreign Relations Sellouts and Wartime Military/National Guard Draft Re-Instatement Issues that the Republicans Don’t Even Talk About

By Patrick Wood, EditorThe August Review, Global elite research center
January 30, 2009

[Ed. note: For clarity, members of the Trilateral Commission appear in bold type.]
As previously noted in Pawns of the Global Elite, Barack Obama was groomed for the presidency by key members of the Trilateral Commission. Most notably, it was Zbigniew Brzezinski, co-founder of the Trilateral Commission with David Rockefeller in 1973, who was Obama’s principal foreign policy adviser.

The pre-election attention is reminiscent of Brzezinski’s tutoring of Jimmy Carter prior to Carter’s landslide election in 1976.

For anyone who doubts the Commission’s continuing influence on Obama, consider that he has already appointed no less than eleven members of the Commission to top-level and key positions in his Administration.

According to official Trilateral Commission membership lists, there are only 87 members from the United States (the other 337 members are from other regions). Thus, in less than two weeks since his inauguration, Obama’s appointments encompass more than 12% of Commission’s entire U.S. membership.

Is this a mere coincidence or is it a continuation of dominance over the Executive Branch since 1976? (For important background, read The Trilateral Commission: Usurping Sovereignty.)

Secretary of Treasury, Tim Geithner
Ambassador to the United Nations, Susan Rice
National Security Advisor, Gen. James L. Jones
Deputy National Security Advisor, Thomas Donilon
Chairman, Economic Recovery Committee, Paul Volker
Director of National Intelligence, Admiral Dennis C. Blair
Assistant Secretary of State, Asia & Pacific, Kurt M. Campbell
Deputy Secretary of State, James Steinberg
State Department, Special Envoy, Richard Haass
State Department, Special Envoy, Dennis Ross
State Department, Special Envoy, Richard Holbrooke

There are many other incidental links to the Trilateral Commission, for instance,
Secretary of State Hillary Clinton is married to Commission member William Jefferson Clinton.
Geithner’s informal group of advisors include E. Gerald Corrigan, Paul Volker, Alan Greenspan and Peter G. Peterson, among others. His first job after college was with Henry Kissinger at Kissinger Associates.

Brent Scowcroft has been an unofficial advisor to Obama and was mentor to Defense Secretary Robert Gates.

Robert Zoelick is currently president of the World Bank. The World Bank Group is comprised of five agencies that make loans or guarantee credit to 177 member countries. Its stated aim is to help countries reduce poverty by making long-term loans to governments for large-scale projects such as dams or pipelines, or to back economic reform programs. However, World Bank loans have often had very negative effects on countries putting them in situations of precarious debt and setting conditions on which countries can receive loans, conditions which often have a devastating impact on the lives of citizensLaurence Summers, White House Economic Advisor, was mentored by former Treasury Secretary Robert Rubin during the Clinton administration.
There are many other such links, but these are enough for you to get the idea of what’s going on here.

Analyze the positions

Notice that five of the Trilateral appointees involve the State Department, where foreign policy is created and implemented. Hillary Clinton is certainly in line with these policies because her husband, Bill Clinton, is also a member.What is more important than economic recovery? Paul Volker is the answer.What is more important than national intelligence? Gen. James Jones, Thomas Donilon and Adm. Dennis Blair hold the top three positions.

What is more important than the Treasury and the saving of our financial system? Timothy Geithner says he has the answers.

The State Department is virtually dominated by Trilaterals: Kurt Campbell, James Steinberg, Richard Haass, Dennis Ross and Richard Holbrooke.

This leaves Susan Rice, Ambassador to the United Nations. The U.N. is the chosen instrument for ultimate global governance. Rice will help to subvert the U.S. into the U.N. umbrella of vassal states.

Conflict of interest

Since 1973, the Commission has met regularly in plenary sessions to discuss policy position papers developed by its members. Policies are debated in order to achieve consensuses. Respective members return to their own countries to implement policies consistent with those consensuses.

The original stated purpose of the Trilateral Commission was to create a “New International Economic Order.” Its current statement has morphed into fostering a “closer cooperation among these core democratic industrialized areas of the world with shared leadership responsibilities in the wider international system.” (See The Trilateral Commission web site)

U.S. Trilateral members implement policies determined by a majority of non-Americans that most often work against the best interests of the country.

“How,” you say?

Since the administration of Jimmy Carter, Trilaterals held these massively influential positions:

Six out of eight World Bank presidents, including the current appointee, Robert Zoelick
Eight out of ten U.S. Trade Representatives
President and/or Vice-President of every elected administration (except for Obama/Biden)
Seven out of twelve Secretaries of State
Nine out of twelve Secretaries of Defense

Is this sinking in? Are you grasping the enormity of it?

Endgame is at hand

For the Trilateral crowd, the game is about over. The recent reemergence of original members Henry Kissinger, Zbigniew Brzezinski, Brent Scowcroft and Paul Volker serves to reinforce the conclusion that the New International Economic Order is near.

The Trilateral Commission and its members have engineered the global economic, trade and financial system that is currently in a state of total chaos.

Does that mean that they have lost? Hardly.

In the article Chorus call for New World Order, they are using the crisis to destroy what remains of national Sovereignty, so that a New World Order can finally and permanently be put into place. Sovereignty is the principle that the state exercises absolute power over its territory, system of government, and population. Accordingly, the internal authority of the state supersedes that of all other bodies.

Conclusion on Obama’s Trilateral Commission Connections

The Obama presidency is a disingenuous fraud. He was elected by promising to bring change, yet from the start change was never envisioned. He was carefully groomed and financed by the Trilateral Commission and their friends.In short, Obama is merely the continuation of disastrous, non-American policies that have brought economic ruin upon us and the rest of the world. The Obama experience rivals that of Jimmy Carter, whose campaign slogan was “I will never lie to you.”

When the Democrat base finally realizes that it has been conned again (Bill Clinton and Al Gore were members), perhaps it will unleash a real political revolution that will oust Trilateral politicians, operatives and policies from the shores of our country.

If the reader is a Democrat, be aware that many Republicans and conservatives are still licking their wounds after finally realizing that George Bush and Dick Cheney worked the same con on them for a disastrous eight years of the same policies!

A who’s who guide to the people poised to shape Obama’s foreign policy.

U.S. policy is not about one individual, and no matter how much faith people place in President-elect Barack Obama, the policies he enacts will be fruit of a tree with many roots. Among them: his personal politics and views, the disastrous realities his administration will inherit, and, of course, unpredictable future crises. But the best immediate indicator of what an Obama administration might look like can be found in the people he surrounds himself with and who he appoints to his Cabinet. And, frankly, when it comes to foreign policy, it is not looking good.
Obama has a momentous opportunity to do what he repeatedly promised over the course of his campaign: bring actual change. But the more we learn about who Obama is considering for top positions in his administration, the more his inner circle resembles a staff reunion of President Bill Clinton’s White House. Although Obama brought some progressives on board early in his campaign, his foreign policy team is now dominated by the hawkish, old-guard Democrats of the 1990s. This has been particularly true since Hillary Clinton conceded defeat in the Democratic primary, freeing many of her top advisers to join Obama’s team.

“What happened to all this talk about change?” a member of the Clinton foreign policy team recently asked the Washington Post. “This isn’t lightly flavored with Clintons. This is all Clintons, all the time.”

Amid the euphoria over Obama’s election and the end of the Bush era, it is critical to recall what 1990s U.S. foreign policy actually looked like. Bill Clinton’s boiled down to a one-two punch from the hidden hand of the free market, backed up by the iron fist of U.S. militarism. Clinton took office and almost immediately bombed Iraq (ostensibly in retaliation for an alleged plot by Saddam Hussein to assassinate former President George H.W. Bush). He presided over a ruthless regime of economic sanctions that killed hundreds of thousands of Iraqis, and under the guise of the so-called No-Fly Zones in northern and southern Iraq, authorized the longest sustained U.S. bombing campaign since Vietnam.

Under Clinton, Yugoslavia was bombed and dismantled as part of what Noam Chomsky described as the “New Military Humanism.” Sudan and Afghanistan were attacked, Haiti was destabilized and “free trade” deals like the North America Free Trade Agreement and the General Agreement on Tariffs and Trade radically escalated the spread of corporate-dominated globalization that hurt U.S. workers and devastated developing countries. Clinton accelerated the militarization of the so-called War on Drugs in Central and Latin America and supported privatization of U.S. military operations, giving lucrative contracts to Halliburton and other war contractors. Meanwhile, U.S. weapons sales to countries like Turkey and Indonesia aided genocidal campaigns against the Kurds and the East Timorese.

The prospect of Obama’s foreign policy being, at least in part, an extension of the Clinton Doctrine is real. Even more disturbing, several of the individuals at the center of Obama’s transition and emerging foreign policy teams were top players in creating and implementing foreign policies that would pave the way for projects eventually carried out under the Bush/Cheney administration. With their assistance, Obama has already charted out several hawkish stances. Among them:

– His plan to escalate the war in Afghanistan;
– An Iraq plan that could turn into a downsized and rebranded occupation that keeps U.S. forces in Iraq for the foreseeable future;
– His labeling of Iran’s Revolutionary Guard as a “terrorist organization;”
– His pledge to use unilateral force inside of Pakistan to defend U.S. interests;
– His position, presented before the American Israel Public Affairs Committee (AIPAC), that Jerusalem “must remain undivided” — a remark that infuriated Palestinian officials and which he later attempted to reframe;
– His plan to continue the War on Drugs, a backdoor U.S. counterinsurgency campaign in Central and Latin America;
– His refusal to “rule out” using Blackwater and other armed private forces in U.S. war zones, despite previously introducing legislation to regulate these companies and bring them under U.S. law.

Obama did not arrive at these positions in a vacuum. They were carefully crafted in consultation with his foreign policy team. While the verdict is still out on a few people, many members of his inner foreign policy circle — including some who have received or are bound to receive Cabinet posts — supported the invasion and occupation of Iraq. Some promoted the myth that Saddam had weapons of mass destruction. A few have worked with the neoconservative Project for the New American Century, whose radical agenda was adopted by the Bush/Cheney administration. And most have proven track records of supporting or implementing militaristic, offensive U.S. foreign policy. “After a masterful campaign, Barack Obama seems headed toward some fateful mistakes as he assembles his administration by heeding the advice of Washington’s Democratic insider community, a collective group that represents little ‘change you can believe in,’” notes veteran journalist Robert Parry, the former Associated Press and Newsweek reporter who broke many of the stories in the Iran-Contra scandal in the 1980s.

China Backs Europe's Push for Oversight

Another country lining up to support additional oversight of financial markets. We’ve seen the U.S., Latin America, Europe (Italy, Britain, France, Germany) and now China support a move for more regulation – all within the past 2 weeks. We’re going to see more and more articles like this in the coming months as the global elite continue to push their agenda forward.

jg

OCTOBER 27, 2008

China Backs Europe's Push for Oversight

By IAN JOHNSON
Wall St. Journal

BEIJING -- After several days of talks between European and Asian leaders, China apparently has allied itself with Europe in calling for a vigorous system of international regulation.

In closed-door talks with European leaders Friday and Saturday, senior Chinese officials said they would back Europe's effort to overhaul international regulatory systems, European diplomats present at the meetings said. China most strongly stated its position Friday in a talk between Chinese President Hu Jintao and José Manuel Barroso, president of the European Commission.

Mr. Hu, according to diplomats at the meeting, said China would "actively cooperate" with the EU, which has been pushing an ambitious new system of global oversight. Formal talks on the new overhauls would begin in mid-November in Washington.
"The Chinese said they'd back more vigorous reforms," a senior European diplomat said in an interview. "They rely on the global economy and are afraid it's become very unstable."

Chinese officials had no comment on the closed-door meeting. In public statements, Chinese leaders issued milder endorsements of reforms. At the close of the seventh Asia-Europe Meeting on Saturday, for example, Chinese leaders backed the 45 nations' statement, which expressed "the need to improve the supervision and regulation of all financial actors, particularly their accountability."

Foreign diplomats have been keen to see how China would come down on the issue of regulation. On one hand, China values stability and thus would seem naturally to support regulation. On the other, it likely doesn't want international institutions that curb its sovereignty or constrain its financial flows.

In Brussels, EU officials said they weren't surprised China agreed to side with the EU in pushing for new rules for financial markets. "They want a seat at the table in whatever is going to happen," said an EU official who attended an Oct. 15-16 summit that drafted the EU's plan.

U.S. officials said that the Beijing meetings underscore the importance of President Bush's global economic summit, scheduled for Nov. 15 in Washington after the presidential election. The White House hopes to use the summit to discuss the crisis's underlying causes, analyze responses and develop principles to reform the global financial architecture.

Bush administration officials acknowledged their concerns that some countries could seek to use the financial crisis to move against free trade and promote more centralized economic models. "Whatever else we do, the summit needs to enhance our commitment to free markets and free trade -- the fundamental policies that have increased standards of living," said a U.S. Treasury Department official.

—John W. Miller in Brussels and Jay Solomon in Washington contributed to this article.

Write to Ian Johnson at ian.johnson@wsj.com

Treasury Considers Stakes in Insurance Companies

Now we see that the Treasury is going to buy equity stakes in insurance companies with the bailout money. To date, not one ‘toxic’ security has been purchased. The treasury has been given a blank check – and instead of helping homeowners or actually buying distressed securities – they are buying stakes in all types of financial/banking companies. Why? I believe they are doing this to gain more control. The question is – what happens when things begin to get even worse?

jg

OCTOBER 24, 2008, 2:32 P.M. ET

Treasury Considers Stakes in Insurance Companies
By DEBORAH SOLOMON

WASHINGTON -- The Treasury Department is considering taking equity stakes in insurance companies, a sign of how the government's $700 billion program has become a potential piggybank for a range of troubled industries.

The availability of government cash is drawing requests from all corners, with insurance firms, automakers, state governments and transit agencies lobbying for a piece of Treasury's pie. While Treasury intended for the program to apply broadly, the growing requests could rapidly deplete the $700 billion, an amount that initially stunned many as being quite large.

Among those expected to benefit from Treasury's program are insurance firms. Most insurance companies are financially sound but have seen their long-term investments and stock prices hurt by the recent market turmoil.

Treasury wants insurance companies to participate in its program, dubbed TARP, and is considering taking equity stakes in certain firms, according to people familiar with the matter.

For now, however, only certain insurance firms would be eligible for a capital infusion. Under the terms of Treasury's program, insurers would have to have a financial institution holding company that was regulated at the federal level.
Insurers would also be able to sell its bad assets to the government under a separate element of the program.

Write to Deborah Solomon at deborah.solomon@wsj.com

Mergers, Acquisitions and the Bailout

As I’ve mentioned in previous posts, we haven’t seen any of the $700 billion bailout used to buy distressed securities. What we have seen is the U.S. Treasury buying equity stakes in banks and the possibility that this buyout will extend to insurance companies. As you will read in the articles below – one of the consequences of these actions is that banks are taking these funds and are planning to acquire other banks. It appears that the same scenario will play out with insurance companies. Those banks and insurance companies lucky enough to be ‘chosen’ will have a significant advantage over those without access to these funds. How would you like to be one of the banks/companies without government funding trying to fight off a takeover in this current business environment? If it doesn’t sound fair – that’s because it isn’t. Don’t think for a minute that this wasn’t planned. You are seeing a forced consolidation of banks and companies across the board.

In order to see what is really happening, you must look past all of the rhetoric. We were told that this bailout was absolutely necessary or we faced an economic meltdown. It was absolutely necessary to buy billions of dollars of ‘toxic’ securities or face the consequences. Well, no securities have been purchased and the economy hasn’t melted down yet. What has happened is that the Federal Reserve and the U.S. Treasury are gaining ever more control over our banks and corporations by buying equity in these companies. Today, the Federal Reserve began lending directly to corporations (see article below). So, what we actually see is our government and an international banking cartel gaining more control over us as industries are forced to consolidate and the government continues to buy equity stakes.

There are very few people that recognize that all of these problems (mortgage foreclosures, bankruptcies, reduced lending, stock market volatility, banking instability, etc.) are merely symptoms of the underlying disease – our monetary system. Central Banks and governments have the world focused on the symptoms – while the disease destroys the world’s economy. You can’t simply treat the symptoms and expect a cure. If you want to be cured – you must cure the disease. To truly get free of this mess – the Federal Reserve must be removed and the U.S. must begin to manage its own money supply.

Remember - based on what we’ve learned – our economy is destined to collapse. This is not a mystery to the leaders of the Fed and it’s not a mystery to the highest echelon of power within our government. So, when they tell us that we must submit to their demands to ‘save’ our economy, what is really happening? They are simply forcing us to go along with their plans – knowing that we are destined for collapse. They are now consolidating power (bank/corporation consolidation & government equity stakes) for the time when our economy does collapse. This will usher in a new round of regulation and control as we move closer to world government and a world financial system. As I’ve said many times before – very ingenious. Evil - but ingenious. This ‘beast’ continues to deceive the world – just as the Bible tells us it would do.

The last comment I’ll make in this post is this – do we really want our government managing banks and corporations? Think about this for a minute. This is the same group of people (the Federal Reserve, Congress, Senate, Presidential administrations, U.S. Treasury, etc) that have led our nation to the brink of economic ruin – which could eventually lead to the collapse of the United States. This is a group of people (the term ‘leaders’ definitely does not apply here – leaders are worthy of our respect) that is extremely corrupt and focused on worldly wealth and glory for themselves. Do we really want this same group of people to gain even more control over us? Would you really want George W. Bush, Nancy Pelosi, Barney Frank or Ben Bernanke running your company? The thought of this keeps me up at night.

I’m sure there will be much more to discuss in coming days. Things are moving so fast that it’s difficult to keep up with the changes.

jg – Oct 28, 2008
______________

October 28, 2008

Plan Could Push Insurers Into Mergers

More Corporate Lending Also Could Be Sparked Under the Government's Rescue Program
By LESLIE SCISM

If the Treasury Department's capital-infusion program for the banking sector expands to insurers, industry consolidation may follow.

Some of the life insurers whose names have emerged as supportive of a widening of the Treasury's $700 billion rescue program, the possibility of which emerged Friday, are considered by ratings firms to be financially healthy and capable of acquisitions. One is New York-based MetLife Inc. Industry analysts say it could be a contender to acquire at least some of the U.S. life-insurance operations of American International Group Inc.

The financial-services conglomerate has said it is trying to sell business units, including these and part of its foreign life-insurance operations, to pay back an $85 billion rescue loan it received last month from the federal government in exchange an 80% equity stake. That rescue, by the Federal Reserve, is separate from the $700 billion Treasury program.

Raising large sums of money for acquisitions is a tough challenge for any financial company right now, with credit markets still tight and stocks beaten down. Analysts say the infusion of low-cost government capital into a potential acquirer could prove crucial for AIG's efforts to strike deals in the months ahead.

A MetLife spokesman said the company wouldn't comment on any potential acquisition plans. An AIG spokesman said: "AIG is moving forward aggressively with its plan to permanently resolve its liquidity problems, sell a number of our world-class businesses and repay the Fed loan. We also continue to evaluate other possible options to restore AIG as a healthy competitor." He declined to elaborate.
Banking-industry analysts interpreted Friday's announcement that PNC Financial Services Group Inc. has agreed to acquire National City Corp. as an indication that the government is using the rescue plan as ammunition to push weak banks into the arms of strong ones. PNC will sell $7.7 billion of preferred shares and warrants to the Treasury Department to finance the stock-and-cash deal.

Colin Devine, a stock analyst at Citigroup Global Markets, said in a note to clients Monday that he anticipates "a wave of M&A activity" among life insurers, with Treasury infusions taking "the form of facilitated deal financing such as" PNC will receive. He rates MetLife a top pick, saying it has a strong capital position and is "uniquely situated" to acquire U.S. units from AIG. MetLife shares rose 3 cents, or 0.11%, to $26.21 Monday.

Meanwhile, Evan Greenberg, chairman of trade group American Insurance Association, said a substantial majority of AIA's members "do not support the inclusion of property-casualty insurers" in the Treasury program and wouldn't participate if it becomes available. Mr. Greenberg, chairman of ACE Group, said AIA members are "well-capitalized." Members include Chubb Corp., Travelers Cos. and W. R. Berkley Corp. Property-casualty carriers tend to have more-liquid investments than life insurers, and their core businesses aren't as volatile as the overall economy because cars, homes and businesses continue to be insured.

One goal of any potential expansion of the Treasury program appears to be trying to ramp up the insurance industry's role as a lender.

On Sunday, New York Life Insurance Co., one of the highest-rated insurers in the U.S., said that Treasury officials recently asked it and others in the life-insurance industry "for help in developing solutions for strengthening the financial system. We agreed to work with other industry leaders and Treasury so we could play a constructive role in helping shape this important discussion." The insurer, which is mutually owned, doesn't require additional capital and hasn't made any decision to accept capital, if offered, a spokesman said.

Write to Leslie Scism at leslie.scism@wsj.com
______________

OCTOBER 28, 2008

U.S. May Offer GM $5 Billion Loan
By DEBORAH SOLOMON and STEPHEN POWER
Wall St. Journal

The U.S. Department of Energy is working to release $5 billion in loans to General Motors Corp., according to a person familiar with the matter, a move that could help ease the way for the auto maker's discussed merger with Chrysler LLC.
GM and Chrysler's majority owner, Cerberus Capital Management LP, have been negotiating a complex deal in which GM would end up owning its smaller Detroit rival, but the parties have struggled to line up financing. The combined entity would need about $10 billion in new equity to cover the cost of laying off workers, closing plants and integrating the two companies, according to people involved in the talks.

The $5 billion would come from the pool of $25 billion in low-interest loans that was approved by Congress and is being administered by the Energy Department. The loans are aimed at helping Detroit retool plants to meet new fuel-efficiency standards. It isn't clear how quickly the money could be made available or whether it would come with strings attached.

Although the loans are supposed to speed the availability of fuel-saving technologies, the money could help steady GM's finances and make it easier for the struggling auto giant and Cerberus to persuade investors to back a deal. Any transaction would involve both Chrysler and GMAC LLC, which loans money for car purchases and other purposes. Cerberus owns 51% of GMAC and GM owns the rest.
Both GM and Chrysler are losing money. Analysts believe each company could start to run short of cash within 12 months.

The auto makers and Michigan's congressional delegation have proposed at least three plans in recent weeks to unlock federal money for a GM-Chrysler merger. One is to seek an equity investment from the government. Another would draw money for the auto makers from the $700 billion Troubled Asset Relief Program, or TARP, set up ostensibly to help financial firms. A third possibility is accelerating the $25 billion in loans that the Energy Department is managing.

On Monday, White House spokeswoman Dana Perino, speaking of GM, Chrysler and Ford Motor Co., said "it's a possibility that they could qualify" for Treasury funds under the $700 billion rescue fund, either through a direct investment or participation in the administration's asset-purchase plan.

Treasury officials, however, are for now playing down that possibility, noting that any immediate federal aid will likely come from the Energy Department.
An Energy Department spokeswoman said Monday the agency is "in the process of developing the rules for the loan program" and that it would be "premature" to set a timetable for when the funds will be available.

The agency has come under criticism from prominent Michigan lawmakers in both parties after initially saying in September it could take "at least six to 18 months or more" to disburse the loans.

—John D. Stoll and Jeffrey McCracken contributed to this article.

Write to Deborah Solomon at deborah.solomon@wsj.com and Stephen Power at stephen.power@wsj.com
______________

OCTOBER 28, 2008

Federal Reserve Starts Lending Plan
By ANUSHA SHRIVASTAVA
Wall St. Journal

The Federal Reserve has kicked off a much-awaited lending program aimed at jump-starting the $1.45 trillion commercial-paper market, but investors say it could take days or weeks before short-term financing for U.S. companies loosens up.

Under its new Commercial Paper Funding Facility, the Fed is offering to lend money to highly rated companies for as long as three months. The goals are to persuade investors to lend to top-tier companies and give borrowers a backstop if funds can't be obtained in the open market.

The program's impact was muted Monday. Fewer companies came to market looking for financing than last week, and most were limited to uncomfortably short overnight loans. Rates rose modestly for debt maturing in 30 days.

"It will be a few more days before we have a good idea on the impact," said Ira Jersey, interest-rate strategist at Credit Suisse.

The test will be whether rates established in the commercial-paper market are lower than the somewhat punitive rates on the Fed's loans, which are intended to be a source of financing in emergencies rather than the first stop for companies seeking funds.

A related indicator of success will be how little companies borrow from the Fed. Data on borrowings will be released Thursdays.

For Monday, the Fed set its rates on three-month commercial paper at 2.88%, including a surcharge. For asset-backed commercial paper, the rate was set at 3.88%. New rates will be set daily.

The few companies looking for three-month loans in the open market Monday -- including heavy issuers American Express Co. and General Electric Co. -- offered to pay rates similar to those set by the Fed, according to Kevin Giddis, head of fixed income at Morgan Keegan.

It isn't clear whether investors agreed to lend at those rates.

GE and American Express have registered for the new program, giving them the option of selling to the Fed. They didn't respond to calls about whether they plan to actually use it. The Fed has said several dozen companies have signed up for its commercial-paper program, but isn't naming them.

Market participants also are waiting for the start-up of another Fed program -- the Money Market Investment Funding Facility -- which is aimed at supporting money-market funds, the single largest group of investors in the commercial-paper market.
This facility will buy commercial paper and other short-term debt from money-market funds, in theory giving them confidence that they can get out of investments if they need to raise cash to cover redemption requests from their own investors.

Money-market funds have shied away from the commercial-paper market since Lehman Brothers collapsed in mid-September. Investors have been more reluctant to take on the new debt companies need to issue to fund basic operating needs such as rent and supplies.

—Kellie Geressy contributed to the report.
Write to Anusha Shrivastava at anusha.shrivastava@dowjones.com

Brown Expects Support for a Global Crisis Fund

Here we see Gordon Brown talking once again about ‘coordinated responses’ to the ongoing financial crisis.

jg – November 3, 2008
_____________________________

NOVEMBER 3, 2008

Brown Expects Support for a Global Crisis Fund

By LAURENCE NORMAN
Wall St. Journal

U.K. Prime Minister Gordon Brown said he believes there is support for a global fund to help stem the spread of the financial crisis.

British Prime Minister Gordon Brown with Saudi Foreign Minister Prince Saud Al Faisal at Riyadh Airport before boarding his plane bound for Qatar Sunday.

Speaking to the British Broadcasting Corp. from Riyadh, Saudi Arabia, Sunday, Mr. Brown said he has found support in the region for his proposal. "The Saudis will, I think, contribute like other countries, so that we can have a bigger fund world-wide to avoid the contagion, to avoid this spreading to different parts of the world," he said.

Mr. Brown last week said the roughly $250 billion in funds available to the International Monetary Fund to help stem the crisis isn't enough. He called on oil-rich nations and other countries with large foreign-exchange reserves to boost the resources.

Mr. Brown said he hopes to win support for an expanded fund in time for the Nov. 15 summit of world leaders in Washington. "I see the world moving closer together to work to solve these problems, and the reason I'm here is to make sure that all countries in the world, those with big resources like the Gulf states, those with big surpluses like China are working with Europe and America to find a solution to these problems, which are global," he said.

He said the world economy will get through the downturn much faster if there is "common action and coordinated responses" to the crisis.

He suggested further monetary-policy easing in the U.K. and elsewhere is appropriate. "Now that inflation is brought under control, we are going to see -- as we have seen -- two cuts in interest rates, and I believe that the trend around the world...is to respond to the fall in oil price and the falling food prices that we're seeing at the moment," he said.

Mr. Brown said the Nov. 15 summit would see further "coordinated" policy response to the financial crisis.

The Bank of England cut its benchmark interest rate by one-half percentage point on Oct. 8, part of a coordinated cut by several central banks. The Monetary Policy Committee meets again Nov. 5-6. The Bank of England is expected to make another 0.5 percentage-point cut, to 4%, when it announces the results of its monthly rate-setting meeting Thursday.

Mr. Brown, who met with Saudi King Abdullah on Saturday, reiterated his call for low and stable oil prices.

"There's a determination that we have a more stable energy market, not this volatility, not this really bad time when so many people saw the petrol prices go up so quickly," he said. "I want to see more stability as well as lower prices."

He also called on U.K. companies to respond more quickly to the sharp fall in oil prices by cutting prices. "I hope we'll see the companies that haven't yet followed the faster move down doing so in the next few days," he said.

Mr. Brown also commented on reports of a possible second bidder for U.K. bank HBOS PLC, which is set to be merged with Lloyds TSB Group PLC.

He said the government would consider any new offer. However, he noted that had the government not intervened to encourage a merger with Lloyds, the company "would have fallen altogether."

"Of course we'll look at every offer, and of course that's part of the process of shareholders sorting out what the future is," he said, "but let's remember the problems that HBOS had and why we had to intervene with so much money in the first place."

Write to Laurence Norman at laurence.norman@dowjones.com

On Crisis Stage, FDIC Plays Tough

It’s nice to know that the FDIC is now driving banking mergers. Here we see that the FDIC and the Treasury continue to pick and choose who wins and who loses. The gradual destruction of free markets continues.

jg – November 3, 2008
___________________________

NOVEMBER 3, 2008

On Crisis Stage, FDIC Plays the Tough

Wells Filing on Wachovia Deal Shows Agency Acting Quickly, Decisively

By DAN FITZPATRICK
Wall St. Journal

In a further sign of the U.S. government's get-tough approach with banks, the Federal Deposit Insurance Corp. threatened to seize Wachovia Corp. last month if it didn't find a buyer, passed on an initial government-assisted takeover by Wells Fargo & Co. and rejected an 11th-hour option that would have allowed the Charlotte, N.C., bank to remain independent, according to a Wells Fargo securities filing Friday.

Before Wachovia's sale, the FDIC gave an ultimatum: sell or be seized. Here, employees at a meeting after the sale.

The FDIC also was a central player in Wells Fargo's surprise re-emergence as the winning bidder on Oct. 3, edging out Citigroup Inc.

The details offer fresh evidence of a government strategy of trying to rid the banking industry of its weakest performers.

This approach, employed in recent takeovers of Wachovia, Seattle thrift Washington Mutual Inc. and Cleveland-based National City Corp., has drawn some criticism as the Treasury moves to shore up certain banks. In agreeing to acquire National City last month, Pittsburgh-based PNC Financial Services Group Inc. used a federal pledge of $7.7 billion in new capital and potentially billions more in tax savings, prompting Ohio politicians to ask why National City was not offered the same sort of U.S. assistance.

"It is still unclear what factors, terms and conditions Treasury and the various regulators are using to make capital investment decisions," Ohio Sen. George Voinovich said in an Oct. 30 letter to Treasury Secretary Henry Paulson. Without a clearer explanation, the senator added, "people start questioning whether Treasury officials are picking winners and losers."

Wachovia's problems emerged before the Treasury rescue plan was available. In mid-September, management and the board considered an array of alternatives: selling core assets, raising $10-15 billion of new capital, offering an investor 20%-40% of Wachovia's voting shares or combining with another company. But after negotiations with two different merger partners didn't work out and a potential deal with the new investor fell through, Wachovia went into the weekend of Sept. 27-28 with concerns about a deposit runoff and its ability to fund its banking activities on Monday, the 29th. If Wachovia couldn't find a partner by the 29th, management told its board, the FDIC would place the company's bank subsidiaries into receivership.

The bank's two remaining options were Citigroup Inc. and Wells Fargo. Citigroup Chief Executive Officer Vikram Pandit had already placed four unsolicited calls to Wachovia in recent weeks to explore a possible transaction, and Wells Fargo Chairman Richard Kovacevich had first discussed the topic with Wachovia CEO Robert Steel on Sept. 20, according to the securities filing.

As the weekend began, Mr. Kovacevich was willing to consider a purchase of Wachovia without any government assistance but backed away from that idea around 7 p.m. on Sunday, Sept. 28, saying the timetable was too tight. FDIC Chair Sheila Bair, feeling that Wachovia's problems posed "systemic risk" to the banking system, told Wachovia she would try to push through a FDIC-assisted transaction over the next several hours.

Sheila Bair

At 12:30 a.m., on Monday the 29th, Wachovia's final effort at keeping its stand-alone status was a proposal that the FDIC provide loss-sharing protection on certain loans, take an equity stake and allow the bank to raise $10 billion in new capital. Wachovia argued its proposal involved less risk to the FDIC than a transaction with Citigroup.

Wells Fargo also came back to the table that morning, discussing a loss-sharing agreement with the FDIC that would limit Wells Fargo's exposure.

The FDIC at 4 a.m. rejected both options in favor of a government-assisted sale of Wachovia's banking subsidiaries to Citigroup, with the FDIC providing the New York bank with protection on a certain Wachovia loan portfolio. If Wachovia's board hadn't accepted the agreement during a 6:30 a.m. meeting that day, the FDIC would have placed Wachovia's banking subsidiaries in receivership and Wachovia Corp. would likely have filed for bankruptcy, according to the filing.

When Wells Fargo re-emerged later that week with a new offer for Wachovia, it was Ms. Bair of the FDIC who first notified Wachovia's Mr. Steel that such a proposal would be forthcoming, and she "encouraged" him to give it serious consideration. Ms. Bair also discussed the matter with Wachovia's general counsel and relayed a message back to Wells Fargo's Mr. Kovacevich that Wachovia needed to see a board-approved merger agreement.

At that point Citigroup and Wachovia had not yet agreed on their final acquisition document, and there were "substantive issues of disagreement" between the two companies, according to the filing.

When Wachovia's board met at 11 p.m. on Oct. 2 to consider the new offer from Wells Fargo, they were told again that FDIC would place the company's banking subsidiaries into receivership over the coming weekend if a merger proposal was not signed by Oct. 3. After board approval, Ms. Bair of the FDIC joined Mr. Steel and Wachovia's general counsel in breaking the news to Citigroup's Mr. Pandit.

Mr. Pandit asked Ms. Bair to consider "the effect of this development on systemic issues unrelated to Wachovia" but the appeal fell flat. Citigroup declined comment for this article but said in an Oct. 9 release that Wachovia approached Citigroup, instead of the other way around, and that "we stood by while others walked away."
Wells Fargo and Wachovia announced their agreement at 7 a.m. on Oct. 3. It now is scheduled to close by the end of the year.

Write to Dan Fitzpatrick at dan.fitzpatrick@wsj.com

Central Banks and Governments Continue to 'Fight' Crisis

We continue to see central banks and governments around the world ‘fight’ the current financial crisis. Now that it appears deflation (and rapidly slowing global growth) is the key problem (not runaway inflation), we’re seeing central banks around the world cut interest rates and reduce loan reserve restrictions in an attempt to inject additional liquidity into the world market. We also see governments (see article below on Korea) increasing spending or talking about doing so. Central bankers also continue to recommend additional government spending to help the crisis.

The reason that we’re seeing these actions is that private banks around the globe are failing or are in serious trouble. As we’ve learned, the current global monetary system requires continual debt creation – someone has to provide new money or the system collapses. Everyone continues to treat the symptoms (loan defaults, credit ‘crisis’, slowing economic growth, etc.) while the disease (world’s debt-based monetary system) continues to wreak havoc on the world’s economies.

Also notice that we’re starting to see where central banks are saying that they have reduced interest rates and have provided additional liquidity – so there’s not much more they can do. What they’re saying is that the world is running out of options – get ready for a new global ‘solution’ as things rapidly deteriorate. I’m very interested to hear what is announced after the upcoming economic summit of world leaders in Washington D.C. on November 15.

jg – Nov 3, 2008
______________________________________
NOVEMBER 3, 2008

Italian Central Banker Tells States to Act

By LUCA DI LEO
Wall St. Journal

ROME -- European Central Bank board member and Italian central bank Gov. Mario Draghi called on governments to sustain demand by boosting spending or cutting taxes, warning that the scope for using monetary policy to boost the economy is limited.

"Given the minimum level reached by America's official interest rates and the ample liquidity put in circulation by central banks, the room for monetary-policy maneuver is reduced," Mr. Draghi told a meeting of Italy's top bankers Friday.

"To sustain demand on a global level, the anticyclical action of budget policy may be required," Mr. Draghi said, warning that the world economy would stagnate until at least mid-2009.

Central banks around the world last week unleashed a new assault on the global economic downturn. The U.S. Federal Reserve on Wednesday cut its key rate by half a percentage point to 1%. Its move was accompanied by cuts in China and Norway. ECB President Jean-Claude Trichet last week signaled that the central bank is likely to cut its key rate this week from its current 3.75% level.

Mr. Draghi said European Union budget rules, which call on states to keep their deficit below 3% of gross domestic product, allowed for increased spending during tough times. His remarks indicate that central banks want governments to act since they are running out of ammunition.

Mr. Draghi, a former Goldman Sachs executive, said the crisis made state intervention more desirable.

Mr. Draghi effectively gave the green light to Prime Minister Silvio Berlusconi's government to approve further measures to shore up banks. But Mr. Berlusconi's cabinet, which has boosted liquidity and guaranteed bank debt this month, on Friday disappointed those in the market who were expecting further moves.

"It is not the government's duty to have banks. Having shares in banks can only be a transitory necessity," Economy Minister Giulio Tremonti told the same banking conference, adding that government intervention could be harmful.

His remarks were taken as a sign that no move by the government is imminent.
Write to Luca Di Leo at luca.dileo@dowjones.com

_____________________________________________
NOVEMBER 3, 2008

India and Pakistan Ease Lending to Help Growth

By ABHRAJIT GANGOPADHYAY and NEELABH CHATURVEDI
Wall St Journal

NEW DELHI -- The Reserve Bank of India unexpectedly cut its key lending rate on Saturday for the second time in as many weeks, and also lowered the amount of money banks have to keep in reserve as a deepening global financial crisis threatens to stall growth.

The Indian central bank said it cut the repurchase rate -- its main short-term lending rate -- by 0.5 percentage point to 7.5% to ease the impact of the global liquidity crisis on India. It had cut the repurchase rate by one percentage point on Oct. 20, its first such cut since March 2004.

The central bank also cut its cash-reserve ratio -- the proportion of deposits that banks have to set aside as cash -- by one percentage point to 5.5%. The cut in the cash-reserve requirements will release 400 billion rupees ($8.11 billion) into the banking system.

In Pakistan, the central bank said Saturday that a one-percentage-point reduction to its cash-reserve ratio will take effect immediately, instead of the previous plan to implement it on Nov. 15. The State Bank of Pakistan has cut the cash-reserve ratio by four percentage points to 5% since Oct. 11, including the rate cut that was moved forward. Pakistan's foreign reserves have fallen steadily since November 2007, as foreigners pulled out money over rising political uncertainty and the weakening economy.

Meanwhile, the New Zealand government Saturday announced it would guarantee banks' wholesale funding on an opt-in basis to ensure domestic financial institutions can access funds. Finance Minister Michael Cullen said the decision will ease access to international funding markets for New Zealand banks.

The global financial crisis has had a rapid and deep effect on India's economy, which has been seen as a candidate to help the world weather the current downturn. Just a few weeks ago, the overriding concern for policy makers was containing inflation, especially in the run-up to a national election expected early next year. Inflation is a particularly sensitive political issue here because of the impact it has on India's hundreds of millions of poor.

But as the financial crisis has deepened, the threat to India's economic growth has increased. The central bank recently downgraded its estimate for gross domestic product growth in the year ending March 31, 2009, to a range of 7.5% to 8%, from 8% previously.

—Haris Zamir, Shri Navaratnam and Jackie Range contributed to this article.

Write to Abhrajit Gangopadhyay at Abhrajit.gangopadhyay@dowjones.com and Neelabh Chaturvedi at neelabh.chaturvedi@dowjones.com
____________________________________

NOVEMBER 3, 2008

China Drops Strict Loan Caps on Banks
Central-Bank Move to Help Growth Marks First Acknowledgment of Lending Curbs

By ANDREW BATSON
Wall St. Journal

BEIJING -- China's central bank said it is no longer capping the amount of loans that commercial banks can make, abandoning a frequently criticized policy as it redoubles efforts to sustain the nation's economic growth amid the global financial crisis.

A spokesman for the People's Bank of China clarified the bank's policy in a dispatch by the official Xinhua news agency during the weekend following a string of three interest-rate cuts, the most recent unveiled Wednesday.

Some economists had questioned whether the rate cuts would help boost flows of credit to households and businesses because the central bank since late 2007 also has imposed strict limits on the amount of new loans that banks can make.
Those limits were designed to keep China's economy from overheating at a time when growth was still running relatively high.

The central-bank spokesman, Li Chao, said those credit curbs are no longer being enforced. "At present, the central bank is no longer applying hard constraints to the lending plans of commercial banks," Mr. Li was quoted as saying by Xinhua.
Mr. Li defended the original decision to impose the credit curbs as being justified by the economic conditions at the time, which included high inflation and the threat of excess capacity. "These policies were necessary and effective," he said.
Mr. Li's comments mark the first time the central bank has formally acknowledged the existence of the credit curbs.

Top-Down Instructions

Although the controls on lending were open secrets among businesses and in the press, the central bank never publicly discussed them. Its instructions on how much banks could lend were delivered orally to top executives, a practice that business groups criticized as unnecessarily secretive and arbitrary.

The loan limits were partially eased, though not removed, at the beginning of August.
The use of credit quotas -- a practice that had been largely phased out in recent years as China's state-controlled banks were reorganized to run on a more commercial basis -- was an attempt to curb growth in bank lending without raising interest rates.

The measures appeared to be effective, reducing growth in lending from a pace of above 17% last year to nearer 14% in recent months.

Critics, however, have said that much of the growth in credit simply ended up in harder-to-track areas like underground lenders or off-balance-sheet vehicles set up by banks.

News of the end of the credit quotas came amid further signs of a slowdown in China's economy, which is being battered by weakening in overseas demand and in the domestic housing market.

Economic Outlook Dims

The purchasing managers' index published by the China Federation of Logistics & Purchasing declined in October to its lowest level since the index was launched in January 2005.

The reading of 44.6, down from 51.2 in September, indicates a sharp contraction in manufacturing activity, led by a decline in new export orders and demand for construction materials like steel.

The worsening economic outlook for China, which has deteriorated more rapidly than most analysts expected, had already generated calls for the removal of the loan constraints.

In a commentary published last week, Fan Jianping, the chief economist of the State Information Center, a major government think tank, suggested canceling the loan-quota system in 2009.

The willingness to abandon the policy before then gives some backing to Chinese officials' repeated vows to be flexible and open-minded in finding ways to deal with the impact of the financial crisis and global economic slowdown.

"To guard against the economic and financial impact of this crisis on China, we will flexibly adjust economic policies, including monetary policy, when necessary, and strive to minimize the possible negative effects of this crisis," said Mr. Li, the central-bank spokesman.

Write to Andrew Batson at andrew.batson@wsj.com
___________________________________
NOVEMBER 3, 2008

South Korea Plans $11 Billion in Tax Cuts, Other Stimulus
By EVAN RAMSTAD
Wall St. Journal

SEOUL -- The South Korean government early Monday proposed a fiscal stimulus plan of tax cuts and new government spending amounting to 14 trillion won, about $11 billion, for next year to help cope with the likelihood of slower economic growth.

Of the total, 11 trillion won will come from new spending and 3 trillion won will come from tax cuts. Government officials have been discussing ideas for stimulating the economy for the past two weeks. Monday's announcement marked the first time officials placed a value to their planning. Shares on South Korea's stock market were trading up 3% after the announcement and, in currency trading, the South Korea won was slightly lower against the U.S. dollar.

The Ministry of Strategy and Finance said 90% of the new spending will be sent to provincial and local governments for infrastructure and construction projects. Almost two-thirds of the spending will occur in the first half of next year, a step that recognizes how quickly the global slowdown may impact South Korea.
The country has been relatively insulated from the economic troubles that began with the collapse of the U.S. housing market, in large part because South Korean banks didn't buy many securities tied to subprime mortgages.

But when the economic crisis spread to credit markets and consumer purchasing, South Korea became more vulnerable because of its banks' borrowing on foreign markets and its heavy reliance on the manufacturing and exporting of products like TVs, cellphones, cars and steel.

Because of the global slowdown, government officials have said they expect South Korea's economic growth to slow next year to below 4%. Economists' forecasts for the nation's growth next year range from 2.5% to 3.5%. South Korea's annual growth this year is now expected to be just below 4%. That's down from earlier projections of 4.5% to 5%. The stimulus package amounts to about 4% of the government's annual budget.

Write to Evan Ramstad at evan.ramstad@wsj.com

Rescue Cash Lures Thousands of Banks

This quote from the article below says it all:

"There's a perception in the market that the government is actively picking winners and losers...we wanted it well-known in the market that we're on the list of survivors,"

Now that the government has gotten into the banking business – free markets are being turned upside down. No one wants to be left out – so the tentacles of government continue to spread throughout our banking system.

Everyone is running in fear – and they can’t see the danger.

jg
___________________________________
NOVEMBER 3, 2008

Rescue Cash Lures Thousands of Banks

By ELIZABETH WILLIAMSON
Wall St. Journal

WASHINGTON -- Treasury and banking regulators say as many as 1,800 publicly held institutions could apply for government investments in coming weeks, out of concern that failing to do so could make them losers in a banking sector reshaped by the Treasury's $700 billion rescue plan.

Depending upon conditions still being crafted by Treasury, thousands more private banks could apply for government capital as well, a Treasury spokeswoman said Sunday.

Only days ago, many healthy banks were saying they didn't need taxpayer money under the Troubled Asset Relief Program. These healthy banks said they worried that taking government investments could unfairly tar them as in need of a bailout. In the past week, that perception has been reversed, due in large part to efforts by Treasury, banking lobbyists and legal advisers to sell the TARP.

Henry Paulson, secretary of the Treasury Department, which has been making efforts in the past week to persuade banks to apply for capital infusions from the government as part of the financial-rescue package.

Now institutions across the U.S. worry that if they don't try for the money, the market will judge them as too unhealthy to qualify, or lacking the savvy to deploy cheap government capital on acquisitions and investments.

"There's a perception in the market that the government is actively picking winners and losers...we wanted it well-known in the market that we're on the list of survivors," said Roy Whitehead, chairman, president and CEO of Washington Federal Inc. in Seattle, one of about 20 regional banks approved by Treasury for the program last week.

In the past week, Treasury said, hundreds of publicly traded institutions have applied for the program, or signaled their intent to do so by the Nov. 14 deadline. Responding to lobbying by banking trade groups and their members, Treasury last week extended that deadline for private banks to give them a chance to apply as well.

Under the program, Treasury takes an equity stake in an institution in exchange for an investment of as much as 3% of risk-weighted assets, to a maximum of $25 billion.
Treasury spokeswoman Jennifer Zuccarelli said architects of the Treasury program anticipated the huge interest, and that the $125 billion remaining for the program after the first nine big banks committed to the funds in October will be enough.

But with new types of institutions -- last week, Treasury said insurers would be eligible -- being added almost weekly, some banks and their advisers say they aren't so sure. They are scrambling to commit to the program, worried they will be left out in the cold when the deadline passes.

"It seemed like the consensus in the industry was...go out and get this," said William Marsh, president and chief executive of Farmers National Bank of Emlenton, in Emlenton, Pa. Mr. Marsh said his bank is healthy and viable without government money, but he leans toward taking the money anyway.

Helping banks to understand and apply for the Capital Purchase Program has become a cottage industry in Washington, where firms with lobbyists and lawyers under the same roof have been adding banking clients by the dozens.

In a seafood restaurant in Washington's Georgetown neighborhood Friday, Norman Antin, a partner in Patton Boggs's banking and regulatory group, read a note on his BlackBerry. House Financial Services Chairman Barney Frank, it said, is joining other Democratic leaders in demanding government money be used for lending first, not acquisitions. Banks and their lobbyists, like those at Patton Boggs, oppose such restrictions. They are in constant contact with bank regulators and lawmakers on Capitol Hill, and send dispatches on developments in the ever-changing program to clients in real time.

Patton Boggs partner Kevin Houlihan said the firm's banking and regulatory group now spends half its time on TARP, though the firm declines to break out the revenue created by the sector. Last week, after Treasury re-emphasized that only healthy banks would qualify for the program, five bankers contacted him in a day. He encouraged them all to apply.

"It's cheap capital, cheap insurance and a bonus for the institutions that are participating," he said.

Lawyers at Skadden, Arps, Slate, Meagher & Flom, whose Washington office is located 50 yards from the Treasury, are marrying banks with private investors to improve their financial picture -- and their chances of being approved for TARP.

Some banks are still reluctant to participate in the government program. Last week, Cullen/Frost Bankers Inc. one of Texas' largest banking institutions, issued a news release explaining why it won't apply for government funds. "Cullen/Frost is well capitalized now and for the foreseeable future, with sufficient capital to grow our business and take advantage of acquisition opportunities," Cullen/Frost Chairman and CEO Dick Evans said in the statement.

Such banks are now in the minority, said Hal Reichwald, co-chair of the financial-services group at Manatt, Phelps & Phillips LLP in Los Angeles. About 100 Manatt clients, old and new, are considering TARP capital, and more are in the pipeline.
—Daniel Fitzpatrick contributed to this article.

Write to Elizabeth Williamson at elizabeth.williamson@wsj.com

Economic Crisis Continues

A few highlights from articles in today’s Wall St. Journal. People are placing their hope with Central Banks (rate cuts, increased liquidity, etc) and governments – which I’ve said before - is not a wise move. The question becomes – how long before stock markets figure out what’s happening with the rest of the economy? You know it’s serious when experienced business executives issue quotes like this:

"the worst month in the post-World War II era"
"This is clearly a severe, severe recession."
"Never in all of the years I've been in business have I seen a worse outlook for the economy"
“never in all my years as a bookseller have I seen a retail climate as poor as the one we are in. Nothing even close."

What about the bailout? Not helping – but it is adding significant debt to the U.S.:

“The U.S. Treasury estimated it will borrow a record $550 billion in marketable debt in the October-December quarter to pay for a slew of emergency programs aimed at easing the credit crunch.”

jg – Nov 3, 2008

DETROIT--U.S. auto sales in October plunged an estimated 31% to about 850,000 vehicles, as the financial crisis and tightening credit kept buyers away from showrooms. It was the first time since February 1993 that auto makers sold fewer than 900,000 cars and light trucks in a month. When adjusted for increases in the U.S. population, October was "the worst month in the post-World War II era," Michael DiGiovanni, the top sales analyst at General Motors Corp., said in an conference call. "This is clearly a severe, severe recession."

WASHINGTON -- Amid uncertainty about the economic outlook, U.S. banks continued to tighten their standards on loans to households and businesses in the third quarter, according to a Federal Reserve survey of bank executives."Large net fractions of domestic institutions reported having continued to tighten their lending standards and terms on all major loan categories over the previous three months," said the survey, released Monday. Additionally, banks said the uncertain economic outlook and their reduced tolerance for risk also prompted them to reduce credit limits on existing credit card accounts to both prime and nonprime borrowers.

Manufacturing activity in the U.S. slowed sharply in October, falling to the lowest level since 1982 and signaling that a recession is at hand. On the eve of Election Day, the Institute for Supply Management reported that overall activity sank to 38.9 last month from 43.5 in September. Only two industries—computer and electronic products and apparel—reported growth, while 16 industries, including furniture, plastics and petroleum products, reported contraction. It was the first ISM reading this year to herald a recession.

Circuit City Stores Inc., the second largest consumer electronics chain in the U.S., said it will immediately close and liquidate 155 stores and lay off thousands of employees as it struggles to survive an increasingly dreary holiday shopping season. Citing a deteriorating economy, tightening credit limits by its suppliers, and an updated assessment that found its inventory was worth less than it expected, Circuit City said it would close the stores in 55 U.S. markets Tuesday and immediately begin liquidation sales on Wednesday.

PARIS -- Société Générale SA Monday said net profit in the third quarter fell by 84%, as the French bank increased its provisions and continued to reduce its exposure to risky assets. France's second-largest bank said net profit fell to €183 million ($233.2 million) from €1.12 billion in the same period a year earlier. Third-quarter revenue slid 5% to €5.11 billion from €5.38 billion in the year-earlier period.
Viacom Inc.'s third-quarter net income fell 37% as the media company faced challenges in both its networks and filmed-entertainment segments. "The economic environment and ongoing uncertainty have posed new challenges for the media industry, and Viacom has not been immune to the impact of these forces," said Chief Executive Philippe Dauman.

The souring economy is aggravating the troubles of Whole Foods Market Inc., a onetime Wall Street darling now mired in a nearly three-year slump. Analysts say the upscale grocer probably will have to trim its earnings forecast for the current fiscal year and announce further cuts to capital spending or new-store plans when it reports fiscal fourth-quarter results Wednesday.

WASHINGTON -- The U.S. Treasury estimated it will borrow a record $550 billion in marketable debt in the October-December quarter to pay for a slew of emergency programs aimed at easing the credit crunch. The $550 billion estimate is $408 billion more than what Treasury projected in July 2008. The latest projection for the current quarter would leave the Treasury with an estimated end-of-December cash balance of $300 billion. That figure includes $260 billion for a new program Treasury created in September to help finance new Federal Reserve programs to address liquidity pressures in financial markets. "The increase in borrowing is primarily due to higher outlays related to economic assistance programs, lower receipts, and lower net issuances of state and local government series securities," Treasury said in a notice Monday afternoon.

For months, many mutual-fund investors could take comfort in this: They had endured worse during the tech-stock collapse. The hard lessons learned from that earlier, harrowing ride led many to believe they were better positioned for this bear market. But U.S. stock-market declines during October were so deep and wide that even tame investments were pummeled. Losses from the steep plunge that began just over a year ago now top those from 2000-2002.

Grim. There's no other word for the European Commission's outlook for the euro zone and wider European Union economy in its regular autumn survey. But the outlook may get grimmer yet for those countries with the biggest current account deficits unless the European Central Bank comes up with a series of sharp interest-rate cuts. That would probably see the euro fall even further against the dollar.

The chairman of Barnes & Noble Inc. last week told employees via an internal memo that the nation's largest bookstore retailer is "bracing for a terrible holiday season," and that he expects "the trend to continue well into 2009, and perhaps beyond." "Never in all of the years I've been in business have I seen a worse outlook for the economy," wrote Mr. Riggio. "And never in all my years as a bookseller have I seen a retail climate as poor as the one we are in. Nothing even close."

Private-equity firm KKR & Co. LP won't complete its initial public offering until 2009, once again delaying its going-public plans amid the growing financial crisis.

BRUSSELS -- The euro-zone economy is now in recession and will remain at a standstill for most of next year, the European Commission said Monday in its autumn forecast. The commission, the European Union's executive arm, said financial markets are still in a "precarious" condition, creating significant risks to its already bleak economic outlook.

Debt Pile Looming Over European Firms

I mentioned in my first article on the world’s monetary system that exponential debt creation is required for the world’s economy to function. I used the game of musical chairs as an analogy to show that this debt creation must continue indefinitely – or a worldwide economic collapse will result. The article below shows us what happens when the music stops and someone has removed all the chairs. Most of the large companies in the world (not just European firms) rely on short term debt to fund their operations. What happens when this short term debt financing disappears? Everyone searches the world over for a chair – but there are none. This excerpt from the article below sums it up.

“According to the report, European companies will be forced to pay back or refinance $586.3 billion through 2011, with more than 40% of that debt coming due over the next year.”

So, over the next year, European companies must refinance approximately $235 billion dollars – with no way to refinance. Sound familiar? It should – because the exact same thing is happening in the world’s housing markets. Many people have purchased homes with adjustable rate mortgages or some type of ARM – and now there is no way to refinance. Many more are losing their jobs and simply cannot pay their mortgages – regardless of the terms.

This wonderful game of musical chairs is ending – so the question becomes – who wins the game? Certainly not the players. We’ve all been playing a game that has been setup so that we can’t win. You now know who the winners are – the Central Banks. They created this mess for a reason – so when a systematic failure eventually happens – they own/control everything. This is a simple analogy – but it sums up what’s being done to us. All of the ‘bailouts’, interest rate cuts and liquidity/capital ‘injections’ in the world will not prevent this system from failing. This cartel of international bankers is probably feeling pretty proud of itself. I would tell them the same thing I would tell Bush, Bernanke, Pelosi, Greenspan, the Rothschilds and everyone else involved in this – is it worth it to gain the world and lose your soul? Because that’s exactly what’s going to happen. This ‘beast’ will gain the world – and spend eternity in ‘a lake of fire’. I cannot believe we (humanity) could be so blind – but the sad truth is that we are blind – and these people who must be celebrating that their conquest is almost here – are the most blind of us all. Maybe – when they’re staring at the gates of hell – maybe then they will realize how deceived they truly were. I’ll never know.

I’ll end this with something for you to think about. You really don’t need to know anything about economic theory, exponential growth or higher math to realize that this current banking system is stacked against us. Just think about how you pay your mortgage and how the system manages your debt. As an example, let’s say you buy a home for $200,000 and take out a 30 year fixed rate loan. With interest, you actually owe $400,000. You’ll be making one payment a month for 360 months (one payment a month for 30 years). So, your monthly payment will be $1,111. Let’s say that you always pay on time for 20 years. After 20 years, you lose your job and have some unexpected medical bills that force you to burn through your savings – and you now don’t have the money to pay your mortgage. After 20 years, you’ve made a total of 240 payments of $1,111 or $267,000. When the bank forecloses, do you get any of this money back? Do you at least get what you paid on the principal? No – you get exactly nothing. The banks says thanks for all your money – and up until the housing market began to decline – would then sell your house on the open market and reap the added benefit of the appreciation of your home. So, we really haven’t owned our homes at all – we’ve simply been renting them from banks. Obviously, as long as the housing market was good and the economy was good – this system didn’t really bother us too much because we could always sell our home or refinance. Until now, we never really thought too much about this system – because most of us had jobs and a mortgage we could afford. Now – things are a little different and they’re going to get a lot different. Now – the system is exposed for what it is. It ultimately favors only one group of people (not the private banks – they’re now failing too) – the people behind it all – the people who control the Central banking system.

jg

___________

November 12, 2008

Debt Pile Looming Over European Firms
Companies Are Facing Tougher Terms in a Push to Refinance Their Obligations, Says S&P
By AINSLEY THOMSON, MICHAEL WILSON and CAROL DEAN

LONDON -- European companies, already in the middle of an economic downturn, face another uphill struggle as they seek to refinance $242.6 billion of maturing debt over the coming year, according to credit-ratings firm Standard & Poor's.

With credit still scarce and expensive, Europe's large corporate-debt pile poses an unwelcome challenge to companies, which are having to pay dearly to roll over existing debt and insure against default risk, S&P said in a report published Tuesday.

"Funding pressures in Europe have escalated sharply since September as stress in the global financial system accelerated," the report said.

According to the report, European companies will be forced to pay back or refinance $586.3 billion through 2011, with more than 40% of that debt coming due over the next year.
Many companies are resorting to stop-gap measures such as negotiating the extension of maturities on existing loans, also at hefty mark-ups. Even healthy companies are feeling the added pressure on their books as revenue and cash flow shrink.

The few corporate borrowers able to access medium-term funding in the bond market in recent months have had to sweeten their deals with considerable risk premiums to attract investors, driving up the interest rates they have to pay.

France Telecom had to double the spread over the risk-free mid-swaps benchmark rate when it added a €300 million ($382.2 million) to its existing €1.25 billion 10-year bonds on Nov. 4. The new spread was 2.4 percentage points, from 1.1 points in May, according to the terms of the deal.

No company rated below single-A has managed to access the bond market in recent months, offering little hope for companies further down the ratings scale.

The cost of insuring €10 million of corporate debt against default for five years was €135,000 per year on Monday, up from €23,000 at the beginning of 2007.

Telecommunications is the sector with the largest needs, with $113 billion to refinance by 2011, the S&P report said. That is followed by utilities companies, which are set to repay $79 billion.
In a report published at the start of October, analysts at Unicredit estimated that Deutsche Telekom has the biggest requirement of the telecom companies, with about €4.5 billion expiring before the end of 2009. France Telecom follows closely with €3.9 billion and Telecom Italia with €3.8 billion.

French nonfinancial corporate issuers account for the largest portion of debt to be refinanced, with 26%, followed closely by the U.K., Germany, Netherlands and Italy, which have a combined share of 79%. The report examined all debts rated by S&P including bank loans, notes and bonds.

Companies with refinancing needs are entering into discussions with lenders early to try and secure funding at reasonable costs.

U.K. betting group William Hill PLC confirms it has begun discussion with its lenders to refinance its £1 billion ($1.56 billion) of debt, even though it isn't due to pay the debt back until March 2010.

French construction materials group Compagnie de Saint-Gobain SA said last week that it has agreed with lenders to extend the maturity of its €2.125 billion loan by a year to October 2010.
Saint Gobain didn't reveal pricing details, but people familiar with the matter said it had to accept costlier terms to make the deal. The company agreed to pay 1 percentage point over the Euribor benchmark rate for interbank lending, compared with 0.2 percentage point under the existing loan terms, plus a flat fee of 0.4 percentage point, these people said.

U.K. cable TV and broadband provider Virgin Media Inc. also resorted to restructuring its debt, with its creditors agreeing last week to delay repayments on its £4.3 billion debt for three years. Virgin agreed to a one-time payoff to each lender and added as much as 1.5 percentage points to the interest rate. The changes added an estimated one-off payment of £70 million and an extra £50 million to Virgin Media's annual debt-servicing bill.

Write to Michael Wilson at michael.wilson@dowjones.com and Carol Dean at carol.dean@dowjones.com