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InsightQuest



Joined: 28 Jul 2006
Posts: 75

PostPosted: Wed Nov 12, 2008 11:28 am    Post subject: Reply with quote

Quote:
Paulson says troubled assets will not be purchased
By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger, Ap Economics Writer
3 mins ago (10:24am CT)

WASHINGTON – Treasury Secretary Henry Paulson said Wednesday the $700 billion government rescue program will not be used to purchase troubled assets as originally planned.

Paulson said the administration will continue to use $250 billion of the program to purchase stock in banks as a way to bolster their balance sheets and encourage them to resume more normal lending.

He announced a new goal for the program to support financial markets, which supply consumer credit in such areas as credit card debt, auto loans and student loans.

Paulson said that 40 percent of U.S. consumer credit is provided through selling securities that are backed by pools of auto loans and other such debt. He said these markets need support.

"This market, which is vital for lending and growth, has for all practical purposes ground to a halt," Paulson said.

The administration decided that using billions of dollars to buy troubled assets of financial institutions at the current time was "not the most effective way" to use the $700 billion bailout package, he said.

The announcement marked a major shift for the administration which had talked only about purchasing troubled assets as it lobbied Congress to pass the massive bailout bill.

Paulson said the administration is exploring other options, including injecting more capital into banks on a matching basis, in which government funds would be supplied to banks that were able to raise capital on their own.
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InsightQuest



Joined: 28 Jul 2006
Posts: 75

PostPosted: Wed Nov 12, 2008 11:32 am    Post subject: Reply with quote

By the way, the AP has altered that story 4 times already (all within about a half hour), with the version from 10:17am CT reading like this:

Quote:
Paulson says troubled assets will not be purchased
By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger, Ap Economics Writer
4 mins ago (10:17am CT)

WASHINGTON – Treasury Secretary Henry Paulson said Wednesday the $700 billion government rescue program will not be used to purchase troubled assets as originally planned.

Paulson said the administration will continue to use $250 billion of the program to purchase stock in banks as a way to bolster their balance sheets and encourage them to resume more normal lending.

He announced a new goal for the program to support financial markets, which supply consumer credit in such areas as credit card debt, auto loans and student loans.

Paulson said that 40 percent of U.S. consumer credit is provided through selling securities that are backed by pools of auto loans and other such debt. He said these markets need support.

"This market, which is vital for lending and growth, has for all practical purposes ground to a halt," Paulson said.

The administration decided that using billions of dollars to buy troubled assets of financial institutions at the current time was "not the most effective way" to use the $700 billion bailout package, he said.

The announcement marked a major shift for the administration which had talked only about purchasing troubled assets as it lobbied Congress to pass the massive bailout bill.

Paulson said the administration is exploring other options, including possibly injecting more capital into banks on a matching basis, in which government funds would be supplied to banks that were able to raise money on their own.

The bailout money also should be used to support efforts to keep mortgage borrowers from losing their homes because of soaring default levels, he said.

A proposal to have part of the bailout funds used to guarantee mortgages that have been reworked to reduce monthly payments for borrowers is an approach the administration continues to discuss, but Paulson did not announce that it would be adopted. Federal Deposit Insurance Corp. Chairman Sheila Bair has pushed for that approach.

Speaking of the first-ever summit of leaders of the Group of 20 major industrial and developing countries, Paulson said this weekend's meeting needs to focus first on how to repair the financial system as a way to bolster the global economy.

Paulson praised a new set of guidelines issued Wednesday by the Federal Reserve and other bank regulators, saying that they addressed a crucial issue of making sure that banks continue to lend at adequate levels.
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Hombre



Joined: 07 Jan 2008
Posts: 967

PostPosted: Wed Nov 12, 2008 12:20 pm    Post subject: Reply with quote

Yes thanks for posting this. I read it and haven't had the opportunity to post it or really respond to it other than to say it's an " I TOLD YOU SO " story.

Many here are fully aware that there is more to this than what shows on the surface and Paulson and GS are ( IMHO ) at the core of this entire mess. I've always said Paulson is protecting someone or some interest not yet known, not yet has it stepped into the light. I do feel that in time it will be known to all just exactly WTF really went on here. I'm leaning toward AIG and their associates as being candidate no.1

I further suspect that " CREDIT CARD DEBT " is being placed on the back burner by consumers in favor of mortgage payments, gas and food, and will soon be the next big shoe to drop. I've also heard of pissed of home owners considering letting their mortgages go so as to RE-WORK the loan for a better rate. That's a bad and IGNORANT thought unless you can't afford the home to begin with, or didn't understand the loan when you signed the damn thing. So consider legal action before not paying.

In a recent conversation about all of this, I mentioned to someone who's not completely understanding the " TOXIC DEBT/ASSETS " issues that: Bankers haven't a clue what any of these are worth when they are " BUYING " them but are damn sure what they are worth when they are " SELLING " This tells me two things: Either Paulson hasn't a clue as to how much money/debt/value WTF ever they need to fix this crisis, or he never intended to buy any to begin with. We used to call that lying, now it's often referred to as " I WAS MISTAKEN " and WE LET THEM get away with it by sitting on our ass, especially if it doesn't directly affect/effect us.

Well by the looks of things this will touch us all before it's over. Even My wife who never says much had an interesting comment the other day. She thinks that not disclosing who the recipients of the 2 Trillion dollars are might not be legal and may be a part of the bigger picture, to which I said: Welcome aboard, long over due!

I'm further inclined to agree with Fintan and his take on this whole thing but as I have said am holding out for further confirmation before taking the plunge. I must however, admit that Paulson has moved me more toward believing given this latest development.

Again thanks for posting and allowing my rant. Do Keep in mind that it's entirely possible that these toxic assets just might not be so toxic after all.

Hombre'
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InsightQuest



Joined: 28 Jul 2006
Posts: 75

PostPosted: Wed Nov 12, 2008 2:19 pm    Post subject: Reply with quote

I'll stop with the one, because AP and Reuters stories change constantly through the day, usually scrubbing the stories for final consumption by the viewers.

Anyway, this is the most recent, and currently unchanged version, of the story (with a new title too):

Quote:
Paulson: Government won't buy troubled bank assets
By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger, Ap Economics Writer
25 mins ago (11:49am CT)

WASHINGTON – The government has abandoned the original centerpiece of its $700 billion rescue effort for the financial system and will not use the money to purchase troubled bank assets.

Treasury Secretary Henry Paulson said Wednesday that the administration will continue to use $250 billion of the program to purchase stock in banks as a way to bolster their balance sheets and encourage them to resume more normal lending. He also announced that the administration was looking at a major expansion of the program into the markets that provide support for credit card debt, auto loans and student loans.

Paulson said 40 percent of U.S. consumer credit is provided through selling securities that are backed by pools of auto loans and other such debt. He said these markets need support.

"This market, which is vital for lending and growth, has for all practical purposes ground to a halt," Paulson said.

On the issue of using the $700 billion bailout package to provide help to ailing auto companies, Paulson said the administration preferred an approach that would accelerate support to that industry from other legislation Congress passed this fall.

Paulson said the administration is exploring other options, including expanding the program beyond banks to nonbank financial institutions which provide essential credit to both businesses and consumers. He suggested that capital could be provided to institutions on a matching basis in which the government would supply money to those able to raise money on their own.

Providing an update on the largest government bailout in U.S. history, Paulson said that the effort was showing results but that more efforts were needed given the most severe downturn being faced in housing.

"Our financial system remains fragile in the face of an economic downturn here and abroad," Paulson said. "Market turmoil will not abate until the biggest part of the housing correction is behind us. Our primary focus must be recovery and repair."

The administration decided that using billions of dollars to buy troubled assets of financial institutions at the current time was "not the most effective way" to use the $700 billion bailout package, he said.

The announcement marked a major shift for the administration which had talked only about purchasing troubled assets as it lobbied Congress to pass the massive bailout bill.

The bailout money also should be used to support efforts to keep mortgage borrowers from losing their homes because of soaring default levels, he said.

A proposal to have part of the bailout funds used to guarantee mortgages that have been reworked to reduce monthly payments for borrowers is an approach the administration continues to discuss, Paulson said, although he indicated it would not be a part of the rescue program. He said it went beyond the intent of the legislation Congress passed on Oct. 3.

Asked about what he had in mind to expand the rescue effort to support credit card and other types of consumer debt that is backed by selling securities, Paulson said it would probably take weeks to design the new program and then more time to get it implemented, a possible sign that any such proposal would have to be implemented by the incoming administration of President-elect Barack Obama.

Speaking of the first-ever summit of leaders of the Group of 20 major industrial and developing countries, Paulson said this weekend's meeting needs to focus first on how to repair the financial system as a way to bolster the global economy.

Elsewhere, Paulson praised a new set of guidelines issued Wednesday by the Federal Reserve and other bank regulators, saying that they addressed a crucial issue of making sure that banks continue to lend at adequate levels.

The guidelines urge institutions to continue lending to credit worthy borrowers and to work with mortgage borrowers to avoid defaults. In addition, the guidelines encourage the banks to set dividend payments for shareholders and compensation for executives with the current crisis in mind.

The guidelines address criticism that banks obtaining funds from the $700 billion rescue plan could simply use the money for their own purposes rather than helping struggling homeowners and the overall economy.

Critics are concerned that banks, which are getting $250 billion through government purchases of their stock, are not using the money to boost lending to customers, one of the main reasons why the economy is in a crisis.

"If underwriting standards tighten excessively or banking organizations retreat from making sound credit decisions, the current market conditions may be exacerbated, leading to slower growth and potential damage to the economy," according to the regulators' guidance.

The Fed, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, and Office of Thrift Supervision said all financial institutions were expected to follow the new guidelines, even those not receiving federal assistance.

The Bush administration already has committed $250 billion of the $700 billion rescue fund for the purchase of bank stock, giving financial institutions an infusion of cash the government hopes they will use to resume more normal lending operations and address the most severe credit crisis in decades. On Monday, the administration announced that it was allocating another $40 billion as an investment in troubled insurance giant American International Group.

Those decisions leave only $60 billion of the initial $350 billion left to allocate. To access the second $350 billion, this administration or the next will have to make a request to Congress for the money.
©2008 The Associated Press
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maverick



Joined: 09 Aug 2006
Posts: 271

PostPosted: Wed Nov 12, 2008 6:33 pm    Post subject: Reply with quote

I often wondered if the only purpose this whole time was to bail out the entire banking system............. Neutral

I mean if all the banks are in major trouble.........and this was announced then there would be a MAJOR run on the banks and then what Confused

Maybe the consequences of really telling the truth would do major harm that could not be fixed...............

Just a thought.............

Still trying to figure out why it was pushed through after failing the first time............
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Hombre



Joined: 07 Jan 2008
Posts: 967

PostPosted: Wed Nov 12, 2008 8:02 pm    Post subject: Reply with quote

maverick: great thought and better question. Many banks do not need assistance, some who robbed Peter to pay Paul do, and will eventually going forward need much more capital as the pyramid collapses.

IB's and cash rich hedge funds, run by crooks and people tied to big business, Insurance, and Government, are mostly responsible for all of this shit. Sub-Prime is just an excuse they hid behind.

The runs that brought down Bear Stearns and Lehman Bros were crafted by Wall Street via some Hedge Funds, and you can bet your ass that the hedges funds were used as pawns, probably by JPM. JPM will always have a say in the financial business of the US. Have you seen any Presser's from JPM in regard to this shit lately? Laughing Laughing Laughing Don't ask don't tell.

In my lifetime this is as bold a broad daylight robbery as I have ever seen. Put 700 billion of the public's cash in the ante and then switch horses in mid stream right in front of a few billion people, knowing full well that nobody will lift a finger, or ask a question. Disgusting! Before this all plays out I predict some unsuspecting person gets capped. Keep an eye out for that!

JMHO~

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maverick



Joined: 09 Aug 2006
Posts: 271

PostPosted: Thu Nov 13, 2008 3:13 am    Post subject: Reply with quote

Quote:
IB's and cash rich hedge funds, run by crooks and people tied to big business, Insurance, and Government, are mostly responsible for all of this shit. Sub-Prime is just an excuse they hid behind.

The runs that brought down Bear Stearns and Lehman Bros were crafted by Wall Street via some Hedge Funds, and you can bet your ass that the hedges funds were used as pawns, probably by JPM. JPM will always have a say in the financial business of the US. Have you seen any Presser's from JPM in regard to this shit lately? Don't ask don't tell.


I couldnt agree more...........I dont buy that all this mortgage, sub-prime B.S. is all the cause of this Very Happy
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atm



Joined: 16 Apr 2006
Posts: 3861

PostPosted: Thu Nov 13, 2008 5:58 pm    Post subject: Reply with quote

Quote:



On the Periphery of the New World Order


by Vessela Tcherneva
13 November 2008

Vessela Tcherneva is a senior policy fellow at the European Council on Foreign Relations. This essay originally appeared on the council’s website.

http://www.tol.cz/look/TOL/article.tpl?IdLanguage=1&IdPublication=4&NrIssue=295&NrSection=4&NrArticle=20197

The new U.S. administration will likely look to Europe to be a more active guiding force for the Balkans.

The problems of the Balkans are no longer a preoccupation for the rest of the world and have not been so for years.

At the morning briefing given to the president of the United States, it is rare for the Balkans to be mentioned. Since Kosovo announced its independence in February 2008, a moment that spelled out the last word on the long negotiations that followed the bombing in the former Serbian province, the United States has seen its task in the region as accomplished. And rightfully so.

In the past 12 years, the United States has invested more political, financial, and military resources in the Balkans than the European Union has – and it is the EU that actually has the Balkans on its periphery. Further, and fortunately, the region has stopped producing conflicts and instability.

When, on 20 January 2009, Barack Obama enters the White House as president, what will change for the Balkans?

As expected, leaders of the countries in the region officially welcomed the election of the new U.S. president. The most enthusiastic welcome came from Kosovo president Fatmir Sejdiu, who called Obama "the most important person in the world," adding that "Albanians and the whole world had a sleepless night while waiting for the outcome of the election." Probably this was true: the Albanians (in Kosovo, in Albania, and in Macedonia) continue to be the most pro-American minded population in the Balkans – as well as among Muslims worldwide. They hope that the policy of U.S. leadership that ensured not only the independence of Kosovo, but also an invitation to NATO membership for Albania, will continue.

In Serbia, which found no allies in the Bush administration on the Kosovo issue, politicians hope that the new president will contribute to improving relations between Belgrade and Washington. But expecting dramatic changes in relations is hardly feasible. Among Balkan experts in the U.S. (regardless of their party affiliation) there is a consensus that the Kosovo case is closed and the way of Serbia to the EU goes through cooperation with the Hague tribunal. Vice president-elect Joe Biden is among the most experienced – and the most consistent voices in this group.

In Skopje, Macedonians, who suspect pro-Greek influence in Obama's headquarters, his victory is not what they would have preferred. In August 2007, Obama, a member of the U.S. Senate Committee on Foreign Relations, signed a nonbinding resolution calling on Macedonia to take a more constructive approach in its negotiations with Athens on the name dispute. The resolution gives clear priority to Greece in the dispute, which led to Obama being seen as "hostile" by the Macedonian public. But it can hardly be imagined that the U.S. president-elect has gone deep into the details of the Greek-Macedonian saga.

For fragile Bosnia, which increasingly is becoming a country consisting of three homogeneous ethnicities independent from one another, the choice of John McCain, someone more steeped in the Balkans, may have seemed more acceptable. McCain, initially a firm opponent of war in Bosnia, became in 1996 a key co-sponsor of a resolution in support of the U.S. peacekeeping mission. Today, however, Bosnia can sincerely welcome Obama because he has the chance to make Europe give more serious priority to the survival of the Bosnian Federation.

LOOKING ELSEWHERE

The Balkans and Europe will soon realize that, unlike John McCain, the new occupant of the White House will not be a "European" president. He does not relate to the Cold War, in which Europe played a key role; he has not been active in foreign policy making in the 1990s, when Eastern Europe was at the center of the debate on the new world order. Indeed, the 1990s to a large extent molded Obama's foreign policy advisers – when the Clinton administration sought solutions to ethnic conflicts in former Yugoslavia. But both Obama and his team understand that the world has changed radically.

The American president-elect (in whose election platform the Balkans were not mentioned at all) will not go for ‘great powers diplomacy.' Instead, he will want to manage global processes that transcend the boundaries of nation states. He indicated that he would be interested in problems that start at grass-roots level: in the villages in Indonesia where people have no choice but to sell at the market their avian flu-infected chickens, in the religious schools in Pakistan that plant hatred in the heads of their pupils, in drug-trafficking in Latin America. Unlike his predecessor, Obama has no ambition to spread democracy in the world but does want to achieve specific goals. He will not attempt to turn Afghanistan into a model for democratic government but will want to stop terrorists who come from there.

The big chessboard on which the Balkans gained political importance during the past 20 years has disappeared. America will expect Europe to deal with problems on its periphery, integrating this periphery, and playing a mature role in the new world. Obama's priorities will be combating the spread of nuclear weapons and terrorism, climate change, and oil dependency. In election '08, the U.S. demonstrated its understanding that there is a new environment in which American hegemony will not be possible. And that Washington cannot be held responsible for everything. It is now time for the Balkans to realize the same.

Further, for those Balkan nations united by their hatred of politicians and distrust in politics, there is one more conclusion from the U.S. elections. Americans have shown that even in times of deep financial crisis, democracy can produce radical change – if citizens would only wish for it. The result of this change will depend, of course, on the quality of the leadership.

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Fintan
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Joined: 18 Jan 2006
Posts: 8605

PostPosted: Thu Nov 13, 2008 10:03 pm    Post subject: Reply with quote

What a Bullshit Rally!

They can't have Paulson looking like the asshole he is.
Musn't allow a collapse after he bailed out of his own Bailout....

Quote:
Stocks end sharply up,
erasing three days of losses


Dow sees 911-point swing to close on third-biggest point gain on record

By Kate Gibson, MarketWatch - Nov. 13, 2008

NEW YORK (MarketWatch) -- U.S. stocks raced higher Thursday as
a downtrodden market in one crazed session nearly recouped three
days of stiff losses, with the Dow Jones Industrial Average tallying
its third-biggest point gain after wild swings in both directions
.

The rally capped a day that featured largely bleak news on the economy
and on the earnings front, with investors at times reeling in the face of
rising unemployment claims and reduced outlooks from Intel Corp. and
Wal-Mart Stores Inc.


Quote:
Well, we've now had the 3rd biggest point "gain" in history. I put "gain" in
quotes because this "rally," like the two previous "historic rallies" before
it, were purely manufactured. I put "rally" in quotes because it's a joke.

I think we need to add a new term to the Book of Stock Market Terms.
Along with all the other technical terms, we now have the "Payday Rally."
This will be used to denote miraculous "rallies" that occur right before
millions of US workers receive their paychecks, and have money
deducted for investment in their 401K plans.

The "rallies" force American's to invest at prices 6% and higher than they
actually should be. The first two "rallies" cost American's 10% each in
possible returns, with this last "rally" costing them 6%. Do the math, and
you'll see just how much wealth has been redistributed in just one month
alone.

The market had two weeks to "rally," but just by coincidence, it drifted
down for two weeks before miraculously "rallying" today, the day before
millions of workers receive paychecks. And of course, it just didn't "rally"
a couple hundred points. No, it "rallied" away two weeks of losses in a
single day, on the heels of some of the worst data we've seen to date.
The only smoke available to cover this laughable "rally" was Walmart's
earnings.

This was the third biggest "gain" in history, and just by coincidence, the
#1 and #2 manufactured "historic rallies" just happened to occur
before payday as well.

What we have here is more redistribution of wealth, and the legalized,
criminal theft of money from hard working American's. Aren't we going
through enough already? We've now had 3 "historic rallies," so where's
the historic day of losses?

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Hombre



Joined: 07 Jan 2008
Posts: 967

PostPosted: Fri Nov 14, 2008 7:11 am    Post subject: Reply with quote

Here, in a nut shell, is one of the first articles touching on a sort of, changing of the guard, if you will, that I've read. It's interesting that in reading it one can get the feeling that what we've suspected as happening in the global economic realm, is indeed already SOP.

The inclusion of one " David Gergen " the political hack, so called expert, and his opinion of the changing environment should clue everyone in on the real change. Real change that has evidently been in the works for years now.

Here's his spew:
Quote:
David Gergen, the political expert and director of the CPL at Harvard, agrees. "The CEO of the future is going to have to be someone who deals well with government," he says. The truth is, these days a CEO cannot fully control his destiny in a world of competing entities, ranging from regulatory agencies to angry shareholders, from consumers to foreign powers.


another from a writer:Jim Collins


Quote:
"A crisis is a terrible thing to waste," says Jim Collins, author of Good to Great.


Interesting thought here:

Quote:
But in the void left by the visionaries, a new model is emerging. Collins thinks that legislative, not executive, skills are now ascendant - that top CEOs will be those who are able to create the conditions for things to get done rather than hand down orders (as Hank Paulson learned, what worked at Goldman Sachs didn't fly in Congress).


Looks to me that the business as usual cycle has been busted and will evolve into something completely different than today's model, and as usual some are way ahead of the curve. Wink

http://money.cnn.com/2008/11/13/news/companies/reingold_newleader.fortune/index.htm?source=yahoo_quote

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atm



Joined: 16 Apr 2006
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PostPosted: Fri Nov 14, 2008 10:40 pm    Post subject: Reply with quote

Quote:


G-20: Shaping a new world order

U.S. economic mettle is tested as emboldened leaders from throughout the world gather in Washington.

By Steve Hargreaves, CNNMoney.com staff writer
Last Updated: November 14, 2008: 11:48 AM ET

http://money.cnn.com/2008/11/14/news/economy/g20_powerplay/?postversion=2008111409

NEW YORK (CNNMoney.com) -- The role of the United States as the world's economic leader will be tested this weekend when 20 significant world leaders meet in Washington to address the global financial crisis.

Some European leaders are hailing the summit as the next Bretton Woods - a reference to the historic talks in the latter days of WWII that, in effect, made the dollar the world's dominant currency and laid the foundation for the economic order of the past 60 years.

The United States basically ran those meetings. Close to prevailing in the war, it was the world's undisputed military and economic leader.

But today, with the current credit crisis partly rooted in America, and with the rising economic might of China and a unified Europe, that dominance is being challenged.

"The Europeans see themselves as taking a position equal to the U.S.," said Irene Finel-Honigman, an international affairs professor at Columbia University specializing in international banking. "We're looking at a different composition of players and a different powerplay. It's going to be fascinating to watch."

Europe's heavy hand

To bolster their position, the Europeans come to the meeting emboldened by their belief that the credit crisis didn't originate on their soil.

They say that means the more tightly regulated European banking model has triumphed over the more lax laws favored in America.

"The initial response was accusing the U.S. of cowboy capitalism," said Finel-Honigman. "But as the weeks passed, it's become clear we're all in this together."

Together or not, deep divisions still exist between the United States and the Europeans, who initially called for this meeting and will be pushing an agenda heavy on new rules.

Their proposals include: Greater oversight of hedge funds and investment banks; increasing how much money banks need to keep in reserve; more transparent and universal accounting standards; and limits on executive pay.

All that would be accompanied by a new global network of regulators -regulators that would presumably have power over U.S. banks, a potential non-starter with the Bush administration.

"Self-regulation to solve all problems, it's finished," French President Nicholas Sarkozy was quoted saying in the Guardian newspaper last month. "Laissez-faire, it's finished. The all-powerful market that is always right, it's finished."

Moreover, the Europeans are expected to come to the talks presenting a more united front than ever. And they are likely to use one voice to gain international support to counter U.S. policies which many blame for this crisis.

The United States

For the United States, the main goal of the summit will be to derail many of these new regulations, said Robert Brusca, chief economist at Fact and Opinion Economics, a Manhattan consultancy.

It's a goal Brusca seems to fully support.

"The last thing we need is another powerless, toothless, cumbersome global agency," he said. "You need to let [banks] run their business, the government isn't going to run it any better."

The Bush Administration is of the same mindset.

While Bush has agreed some more regulation is needed, particularly when it comes to unifying accounting standards and increasing transparency, he is wary of too much government involvement.

"We must recognize that government intervention is not a cure-all," Bush said in statement just before the summit Thursday, which seemed almost designed to temper European expectations. "History has shown that the greater threat to economic prosperity is not too little government involvement in the market - but too much."

Brusca said the United States should instead focus on what he views as more fundamental causes of this economic crisis - mainly China's unwillingness to let its currency, the yuan, rise in value.

The low yuan, Brusca argues, makes Chinese goods unfairly competitive, and prods U.S. consumers to buy too much. This gives China its huge trade surplus, which it has used to buy U.S. Treasurys, mortgage-backed securities and other products that allowed all these banks to lend so freely in the first place.

"They have abused the rules of the game, and politically, this is very dangerous," he said.

The Bush administration may raise this issue at the talks. Getting China to raise the yuan was, after all, one of the administration's highest priorities just a few years ago.


China, Russia, and everyone else

When a consensus is achieved by the G-20 it carries a lot of weight. With its 19 nations plus the European Union, it represents 90% of the world's economy and 75% of its population. But reaching a consensus is the toughest part for such a big and powerful group.

And at this summit, China, Russia, and most developing countries will be pushing for more power, not just within the G-20, but in other, more exclusive clubs like the G-7, the World Trade Organization, and the International Monetary Fund.

With all these nations pushing for such disparate things, it's unlikely much will get done, at least this time around.

The Europeans are unlikely to push China to reform its currency because of what China will likely ask in return, said Sebastian Mallaby, a senior fellow for international economics at the Council on Foreign Relations.

"China isn't going to give up its export-led growth strategy for the sake of the international system unless it gets a bigger stake in that system - meaning a much bigger voice within the International Monetary Fund and a corresponding reduction in Europe's exaggerated influence," Mallaby wrote in a recent op-ed in the Wall Street Journal. "Naturally, the Europeans aren't proposing it."

And despite America coming to the table with a black eye from selling these rotten mortgage backed securities around the globe, nearly everyone says the country, with its massive economy and long history of solid stewardship, is still in the driver's seat when it comes to setting worldwide economic policy.

"There is no other country that could offer the leadership that would cause the G-20 to come up with anything even worth thinking about," said George Magnus, a senior economic advisor at the Swiss bank UBS.

That means the Europeans are unlikely to get the type of oversight they're proposing.

Combine the wide range of interests, the complexity of the problem, and the fact that the U.S. is being represented by a lame duck president - Barack Obama is not expected to attend - and it's unlikely anything will get accomplished besides, maybe, a commitment to meet again.

"I have quite low expectations of what's likely to be achieved," said Magnus. "This is just the beginning of a long and crucial dialogue."

First Published: November 14, 2008: 4:31 AM ET


Quote:


Obama, world crisis and the new world order


by Maurizio d’Orlando

http://www.asianews.it/index.php?l=en&art=13759&size=A

The depth of the current economic crisis is leading many people to favour a form of governance that would place economic and political life under the trusteeship of international organisations. Barack Obama’s new cabinet, which is made up of those responsible for the crisis, will ensure the ascendancy of financial interests. In the meantime no one is calling for the people to have power in the monetary sphere. The result is that democracy is being killed by financial power.
Milan (AsiaNews) – A new world order has been in the making for quite some time and is now becoming “inevitable”. Many a politician and economist are quick to say that great sacrifices are called for, and that any “reasonable” person will see that suffering and hardship are “necessary.”
The crisis that is currently affecting our lives is behind this global shift. The slow fire has moved from real estate, to banking and finances, and is now reaching industry, agriculture and the whole economy. From the heartland in the United States it is reverberating outward touching the entire world.

The fear of a domino effect and its potential for economic, political and social upheavals and the fear of widespread anarchy will provide the necessary tools to install this new order, which for most people will appear as the only possible outcome. The act of governing will change as a world body will be in charge the financial, economic and tax systems. Police, prisons and private relations inside and outside the family will come under its purview, so will national sovereignty of the peoples and the right to express opinions that are different from those of the single thought of relativism, which will be seen as the only solution that is available and desirable.

The G20 and the New World Order

Until a few decades ago such a new world order would have been anathema, a nightmare, a first step towards a worldwide dictatorship. Now world leaders will be praised when they show concern for the well-being of the earth’s peoples and social groups at a time of difficulties. Of course, this is what we will hear, and very soon too, in terms more unambiguous that we might think now. This said, new rules, a new Bretton Woods, are not anything new; discussions have been going on for some time. Perhaps the next G20 summit on 15 November will be a time when the “miracle” cure is found, one that will entail a world central bank that regulates a single currency of account and its relationship to local currencies.

After a short lesson and a quick diagnosis of the current problems, during which G20 participants will hear that “it was all the fault of Bush’s brainless laissez-faire advocates,” the same people responsible for the current crisis will supply the treatment for putting things right.

All we have to do is see who funded the most expensive presidential campaign in the former US superpower (more than a billion dollars at a time of great recession). As always some have bet on both horses just to be on the safe side. As we know Barack Obama pulled it off, money-wise too, almost twice as much as the Republican candidate. In addition to traditional sectors like show business, media, academe, education, information technology and the Internet, hedge funds, law firms (closely linked to the world of creative financial mediation) and private equity funds have bankrolled the new president’s campaign.”1

In order to change nothing, the appearance of everything has to change. In fact, only the surface had to change a bit; the new president’s darker skin. For everything else, it was business as usual. Indeed the cabinet of the new president is made up of the same, reckless people. Let’s see! We have Larry Summers, Tim Geithner and Robert Rubin who have been short-listed for the Treasury Department; all of whom are extreme laissez-faire advocates who believe in an unfettered financial system, enemies of the Glass-Steagall Act.2 They are same people who swapped jobs at the International Monetary Fund, World Bank, Clinton Administration; played sidekicks for Alan Greenspan and Ben Shalom Bernanke, or at the headquarters of Federal Reserve Bank of New York (Geithner); that is the same people who masterminded events before and after the current crisis.

Old faces in Obama’s new government

Obama picked Rahm Emanuel to be his chief of staff, a man whose career straddled politics and Wall Street’s great financial groups. But there is more to his case. Not only his father was a member of the Irgun3 but he holds Israeli citizenship, has fought for Israel and represents that country’s armed forces. He also endorsed Obama before the leadership of the AIPAC,4 a US Zionist organisation that is also funded by the State of Israel and which has recently been involved in espionage cases. In Israel many view Rahm as “our man in the White House.”

Based on this perhaps the choice between the two candidates was not really equal. See-sawing in the polls for quite a while after an apparent jump, buoyed by the war in Georgia, the Republican camp saw its fortunes nosedive after President Bush refused in late August to provide Israel’s air force refuelling aircrafts for a long range mission5, in effect vetoing an attack against Iran. Starting with oil, the prices of primary commodities began dropping a few days later, negatively affecting investment banks, which had bet on high prices to compensate for losses in the home mortgage market, thus throwing the world’s stock markets into a tailspin in early September.6

Democracy and money

From all of the above it is clear that an Obama presidency will not change how the financial crisis will be handled. On the contrary, it will strengthen the trend to protect large institutions and industries at the expense of small enterprises and the man and woman of the street who voted for him. It is quite obvious that the G20 summit in Washington will not affect the central issue of the present financial and economic crisis (and the many preceding crises of modernity and post-modernity), i.e. sovereignty and system legitimacy.

In today’s world the only political regime that is considered fully legitimate in political and economic terms is democracy. Many wars have been fought to spread democracy and in democracy, by definition, the people are sovereign. However, if a highly developed and complex democracy like that of the United States can be guided (in the sense that voters are left with the illusion that they can choose when in fact their choices like in a supermarket are shaped by marketing, political marketing that is) by those with deep pockets, the legitimacy of the system no longer lies in the consent of the people since the latter goes to the highest bidder. Hence money becomes the basis of consent and power in a democracy.

There is nothing new in all this but the crucial point is that printing money is a sovereign act and is governed by laws. A creditor cannot refuse payment in money that has legal tender and demand instead payment according to his or her wish (gold, silver or what not) if he or she has not negotiated it beforehand. Those who control the money supply through ad hoc rules can favour some over others.7

Thus the paradox of modern democracy is that a sovereign people (through its supposed representatives, parliaments, heads of state and government) have de facto no power or right over the US Federal reserve (or the European Central Bank) with regards to such an important sovereign act.

In order to protect the public and avoid political interference printing money has been privatised and placed beyond public control. Through its representatives the sovereign cannot be trusted and thus is not sovereign. Few know that the US Federal Reserve was established under private law; the same is true for the Bank of Italy and many other central banks. It has been so since the dawn of parliamentary government, right after the Glorious revolution if 1688.8



1. See for example “Hedge Funds: Long-Term Contribution Trends,” in OpenSecrets [vedi: http://www.opensecrets.org/industries/indus.php?ind=F2700], retrieved on 13 November 2008; “Lawyers / Law Firms: Long-Term Contribution Trends,” in OpenSecrets [http://www.opensecrets.org/industries/indus.php?ind=K01], retrieved on 13 November 2008; and RENICK Mayer, Lindsay, “Obama's Pick for Chief of Staff Tops Recipients of Wall Street Money,” 5 November 2008, in OpenSecrets, [http://www.opensecrets.org/news/2008/11/obamas-pick-for-chief-of-staff.html], retrieved on 13 November 2008.

2. The Glass-Steagall Act split deposit banking from investment banking. The law was adopted in 1933 to prevent a repeat of the stock market crash of 1929 which caused the Great depression of the Thirties. The law was repealed in 1999 by the Clinton Administration. Creative financing, which is the root cause of the current crisis, was thus the brainchild of a Democratic, not a Republican administration.

3. Zionist organisation that carried out a violent campaign against the British in order to end Britain’s mandate over Palestine and set up the State of Israel. The mandate iself was established by the League of Nations, the predecessor of the United Nations.

4. Jose, Katharine, “Obama's AIPAC Speech, Rahm's Endorsement,” in The New York Observer, 4 June 2008 [http://www.observer.com/2008/emanuel-endorses-obama-after-aipac-speech], retrieved on 13 November 2008.

5. “ZOA Critical Of Bush Administration Decision To Deny Refueling Aircraft To Israel,” 22 August 2008, in Zionist Organization of America, [http://www.zoa.org/sitedocuments/pressrelease_view.asp?pressreleaseID=1419], retrieved on 13 November 2008; KEINON, Herb and Hilary Leila KRIEGER, “Barak: US clearly opposes military action against Iran now,” 14 August 2008, in The Jerusalem Post, [http://www.jpost.com/servlet/Satellite?cid=1218446196991&pagename=JPost%2FJPArticle%2FShowFull], retrieved on 13 November 2008.

6. “Futures chart - Oil price chart,” Live Charts, [http://www.livecharts.co.uk/LongTerm/oil_price_chart.php], retrieved on 13 November, 2008.

7. For example, only firms listed in the Primary Dealers list (historically no more than 20, those that have recently topped the financial pages) can take part in the transactions and auctions by the Federal Reserve for billion dollar securities. See “Primary Dealer List,” in Federal Reserve Bank of New York, [http://www.newyorkfed.org/markets/pridealers_current.html], retrieved on 13 November 2008.

8. Ties between finances and politics exist in modern parliamentary systems. Recent “orange revolutions” in Eastern Europe, backed by financier George Soros, were inspired by the historical precedent of the Glorious Revolution. Parliamentary rule prevailed in England at the time of the Glorious Revolution when James II (a Catholic) was ousted from power. But we should not confuse parliamentary government with constitutionalism. James II was the legitimate and constitutional sovereign because he had acknowledged the legislative powers of parliament. William of Orange, backed by an army of Dutch and German mercenaries and financed by Amsterdam bankers, invaded England and removed James II. In order to pay off his debts William, also known as the bankers’ king, granted private interests a monopoly over printing money with legal tender. He chartered the Bank of England and the Bank of Scotland. With capital worth two million pound sterling the Bank of England began loaning an equal amount for interest as well as issuing Gold certificates (paper money) for the same amount, thus doubling its capital. The Orangist army did not have to fight because William of Orange was backed by influential people who, instead of fighting the invader on the field, came to terms with him betraying their legitimate sovereign. The main character in the story founded the Churchill line.

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PostPosted: Sat Nov 15, 2008 11:48 am    Post subject: Reply with quote

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Leaders temper G20 ambitions


By FT reporters

Published: November 14 2008 19:38 | Last updated: November 15 2008 00:14

http://www.ft.com/cms/s/0/90aeaf10-b27e-11dd-bbc9-0000779fd18c.html

World leaders played down expectations of dramatic breakthroughs at the start of this weekend’s Group of 20 summit on the economic crisis on Friday, conceding that the political transition in the US made big decisions unlikely.

However, European leaders kept up their drive for a timetable to reform global finance, as figures showed that the eurozone had fallen into recession for the first time since the birth of the single currency.

The Bush administration continued to resist a lurch towards regulation but conceded that there could be discussions on subjects such as hedge funds and derivative markets that it has blocked in the past.

“Everyone agrees we need to look at these things,” said Tony Fratto, a White House spokesman. But he added: “We don’t want to be chasing bogeymen.” The Barack Obama team kept its distance from the talks, even as its representatives met with visiting delegations.

The G20 was expected to pledge to support world growth, without promising any co-ordinated fiscal stimulus; agree to principles for financial regulation; lay out an action plan and commission working groups to report back on issues including regulation of securitised markets, accounting standards, credit ratings and pay schemes in the financial sector.

Support grew for a “college of supervisors” from different nations to monitor global banks. Leaders will review the International Monetary Fund and its resources, with Japan offering an extra $100bn, and recommit to free trade. They appeared set to reconvene in the spring.

While China and other emerging nations at the summit generally kept a low profile, their presence marked a historic recognition that industrialised nations could no longer dictate the rules of global finance.

“This summit is not going to be a second Bretton Woods,” a European diplomat said, invoking a phrased used by British prime minister Gordon Brown and Mr Sarkozy. “It is the beginning of a process.”

Hank Paulson, Treasury secretary, indicated that the US would accept some criticism. “We have in many ways humiliated ourselves as a nation with some of the problems that have taken place here.” But he said the US would not accept sole responsibility for the crisis.

Reporting by Krishna Guha, Daniel Dombey and George Parker in Washington; Ralph Atkins in Frankfurt, Ben Hall in Paris and Chris Bryant in Berlin
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