Thread: The Global Rat Race

  1. #11
    Join Date
    Oct 2008

    Re: The Global Rat Race

    Here is an example of how the US Govt tries to help their cronies buy up their competitors on the cheap. Unfortunately, their attempt was trumped by Wells Fargo who has Warren Buffett standing behind them.

    Wells Fargo agrees to buy Wachovia, Citi objects

    NEW YORK, Oct 4 — A battle broke out yesterday for control of Wachovia, as Wells Fargo agreed to pay US$14.8 billion for the struggling bank, while Citigroup and federal regulators insisted that Citi's earlier and lower-priced takeover offer go forward.

    The surprise announcement that Wachovia Corp agreed to be acquired by San Francisco-based Wells Fargo & Co in the all-stock deal — without government assistance — upended what had appeared to be a carefully examined arrangement and caught regulators off guard.

    Wells' original offer totalled about US$15.1 billion, but since the value of its shares closed down 60 cents yesterday, the deal is now valued at about US$14.8 billion.

    Only four days earlier, Citigroup Inc agreed to pay US$2.1 billion for Wachovia's banking operations in a deal that would have the help of the Federal Deposit Insurance Corp.

  2. #12
    Join Date
    Oct 2008

    Re: The Global Rat Race

    It is difficult to imagine how the leaders of the most powerful nation in the world can be so stupid as to approve such a flawed bailout plan (Emergency Economic Stabilization Act), when we, laymen, from half a world away can see it will not work. The only explanation is that these lawmakers are compromised (bribed) by the Financial Class to do their bidding.

    Now the Treasury Secretary, Paulson, is soon going back to Congress for more money.

    What are the implications for us?

    AAA Sovereign rating for the US will drop.
    Interest rates will have to go up.
    The USD is going to crash and crash hard.
    Our RM will be similarly affected.
    We can expect hyperinflation if the situation is not managed properly.

    To protect ourselves, the safest vehicle is gold or silver.

    Read on.... Cost of U.S. Crisis Action Is Growing, Along With Debt, Deficit, By Matthew Benjamin

    Oct. 10 (Bloomberg) -- The global financial crisis is turning into a bigger drain on the U.S. federal budget than experts estimated two weeks ago, increasing the deficit and the national debt.

    Bailouts of American International Group, Fannie Mae and Freddie Mac likely will be more expensive than expected. States are turning to Washington for fiscal help. The Federal Reserve said this week it will begin buying commercial paper, the short- term loans companies used to conduct day-to-day business, further increasing costs. And analysts now say the $700 billion bank- rescue plan passed by Congress last week may have to be significantly larger.

    ``I always assumed they would be asking for more money along the way if it was necessary, and it looks like it's going to be necessary,'' said Stan Collender, a former analyst for the House and Senate budget committees, now at Qorvis Communications in Washington. ``At the moment, there's nothing happening here that's positive for the budget. Nothing.''

    The 2009 budget deficit could be close to $2 trillion, or 12.5 percent of gross domestic product, more than twice the record of 6 percent set in 1983, according to David Greenlaw, Morgan Stanley's chief economist. Two weeks ago, budget analysts said the measures might push deficit to as much as $1.5 trillion.

    Yields to Rise

    That means a lot more borrowing by Treasury, which will push up interest rates, said Greenlaw. ``The Treasury's going to be ramping up supply dramatically over the course of coming months to meet this enormous federal budget obligation,'' Greenlaw told Bloomberg this week. ``The supply will trigger some elevation in yields.''

    Payments the government allocated to keep vital companies solvent are beginning to look insufficient.

    AIG, the giant insurance company that was taken over by the government in mid-September, said this week it may access $37.8 billion from the Federal Reserve Bank of New York, in addition to the $85 billion the government already loaned it to stave off bankruptcy.

    ``You're in for a dime, you're in for a dollar on this one,'' said David Havens, a credit analyst at UBS AG.

    The financial health and earnings prospects of Fannie Mae and Freddie Mac -- seized by the government on Sept. 7 to prevent them from failing -- worsened in the second and third quarters, the companies' government regulator said this week.

    Price Declines

    The companies and regulators are recalculating the value of all of their assets to factor in price erosion. That may mean the government will have to spend more to keep the firms solvent.

    Earlier this week the Fed announced it will create a special fund to buy commercial paper, the credit that businesses use to finance payrolls and other ongoing expenses. The Treasury will deposit money into the Fed's New York district bank to help set up the new unit. A Fed official said Treasury funding for the program could be ``substantial.''

    California, Alabama and Massachusetts are urging the Fed and Treasury to include their securities in rescue plans designed for banks and businesses. The $2.66 trillion U.S. market for state and city bonds has been all but frozen since Lehman Brothers Holdings Inc., weighed down by losses in mortgage-backed bonds, declared history's largest bankruptcy on Sept. 15.

    California has said it needs to sell as much as $7 billion in notes to maintain its schools, health system and other public services. The Bush administration said it is reviewing the states' financial positions.

    Plan for Banks

    Meanwhile, Treasury Secretary Henry Paulson indicated two days ago that he is considering buying stakes in a wide range of banks in coming weeks to help recapitalize them.

    Such a move is allowed under the $700 billion bailout package Congress passed last week. Edmund Phelps, winner of the 2006 Nobel Prize for economics and a professor at Columbia University, said such action is necessary -- and will likely turn out to increase the measure's cost. Spending beyond the amount set in last week's bill would require further Congressional approval.

    ``We have to recapitalize the banks,'' Phelps told Bloomberg Television this week. ``I don't imagine that there's enough money in the first Paulson plan to be able to do all that needs to be done in that direction.''

    The additional borrowing could push the national debt well past 70 percent of GDP, the highest since the immediate aftermath of World War II, when the U.S. was still paying off war debt.

    Debt Limit

    Gross U.S. debt, which includes debt held by the public and by government agencies, this year reached about $9.6 trillion, or about 68 percent of gross domestic product. The rescue legislation increased the government's debt limit to more than $11.3 trillion from $10.6 trillion.

    On top of all that, budget watchdogs say the sheer size of the interventions is making Washington more profligate than usual. To attract votes in Congress, leaders added several costly items to the $700 billion rescue, including extensions of some tax credits and tax breaks for makers of wooden arrows and stock-car racetrack owners.

    Under normal circumstances, there would have been more resistance to such expenses, said Robert Bixby, executive director of the Concord Coalition, a non-partisan budget watchdog.

    The rescue legislation ``creates a mask for all sorts of fiscal irresponsibility,'' said Bixby. ``It covers up a multitude of sins.''

    To contact the reporters on this story: Matthew Benjamin at

  3. #13
    Join Date
    Oct 2008

    Re: The Global Rat Race

    Throughout the Rat Race series, we have stated that humans are driven by greed and fear. At this present moment, the predominant emotion is fear. But when the Rats are in a panic, they don't think. That is when the Ruling Class and the Financial Class quietly takeover the Rats' assets.

    We are witnessing right in front of our eyes, without realizing it, the transfer of tremendous wealth from the US taxpayers to the US Financial Class, all in the name of saving the financial markets. These are all planned by the Conspirators a long time back.

    When people are in fear, they can be stampeded into giving up their rights and freedom, just so that they can feel secure in the knowledge that Big Brother is taking care of them.

    Read on.... Fear Trumps Greed as Market Woes Paralyze Economies (Update1)

    By Matthew Benjamin and Michael McKee

    Oct. 9 (Bloomberg) -- Greed and fear are the emotions that rule markets. Fear is winning.

    U.S. and European stock markets fell yesterday, even after the Federal Reserve lowered its benchmark interest rate in concert with central banks in Europe, Canada and China.

    Investors are in the grip of a panic that psychologists and historians say isn't necessarily rational and may intensify. They aren't buying stocks, and more importantly, suddenly afraid they won't be repaid, they aren't making loans by buying bonds. Banks have also tightened credit.

  4. #14
    Join Date
    Oct 2008

    Re: The Global Rat Race

    If you have read Part IV of the Rat Race, you will come across a lot of familiar names and terms in this article.

    Why? Because the Conspirators are still the same group.

    Europe and US are facing off to fight for survival and global dominance. The Asian banks are insulated from the fight.

    Read on...
    Behind the panic:
    Financial Warfare over future of global bank power

    By F. William Engdahl* 10 October 2008

    What’s clear from the behavior of European financial markets over the past two weeks is that the dramatic stories of financial meltdown and panic are deliberately being used by certain influential factions in and outside the EU to shape the future face of global banking in the wake of the US sub-prime and Asset-Backed Security (ABS) debacle. The most interesting development in recent days has been the unified and strong position of the German Chancellor, Finance Minister, Bundesbank and coalition Government, all opposing an American-style EU Superfund bank bailout. Meanwhile Treasury Secretary Henry Paulson pursues his Crony Capitalism to the detriment of the nation and benefit of his cronies in the financial world. It’s an explosive cocktail that need not have been.

    Stock market falls of 7 to 10% a day make for dramatic news headlines and serve to foster a broad sense of unease bordering on panic among ordinary citizens. The events of the last two weeks among EU banks since the dramatic state rescues of Hypo Real Estate, Dexia and Fortis banks, and the announcement by UK Chancellor of the Exchequer, Alistair Darling of a radical shift in policy in dealing with troubled UK banks, have begun to reveal the outline of a distinctly different European response to what in effect is a crisis ‘Made in USA.’

    There is serious ground to believe that US Goldman Sachs ex CEO Henry Paulson, as Treasury Secretary, is not stupid. There is also serious ground to believe that he is actually moving according to a well-thought-out long-term strategy. Events as they are now unfolding in the EU tend to confirm that. As one senior European banker put it to me in private discussion, ‘There is an all-out war going on between the United States and the EU to define the future face of European banking.’

    In this banker’s view, the ongoing attempt of Italian Prime Minister Silvio Berlusconi and France’s Nicholas Sarkosy to get an EU common ‘fund’, with perhaps upwards of $300 billion to rescue troubled banks, would de facto play directly into Paulson and the US establishment’s long-term strategy, by in effect weakening the banks and repaying US-originated Asset Backed Securities held by EU banks.

    Using panic to centralize power

    As I document in my forthcoming book, Power of Money: The Rise and Decline of the American Century, in every major US financial panic since at least the Panic of 1835, the titans of Wall Street—most especially until 1929, the House of JP Morgan—have deliberately triggered bank panics behind the scenes in order to consolidate their grip on US banking. The private banks used the panics to control Washington policy including the exact definition of the private ownership of the new Federal Reserve in 1913, and to consolidate their control over industry such as US Steel, Caterpillar, Westinghouse and the like. They are, in short, old hands at such financial warfare to increase their power.

    Now they must do something similar on a global scale to be able to continue to dominate global finance, the heart of the power of the American Century.

    That process of using panics to centralize their private power created an extremely powerful, concentration of financial and economic power in a few private hands, the same hands which created the influential US foreign policy think-tank, the New York Council on Foreign Relations in 1919 to guide the ascent of the American Century, as Time founder Henry Luce called it in a pivotal 1941 essay.

    It’s becoming increasingly obvious that people like Henry Paulson, who by the way was one of the most aggressive practitioners of the ABS revolution on Wall Street before becoming Treasury Secretary, are operating on motives beyond their over-proportional sense of greed. Paulson’s own background is interesting in that context. Back in the early 1970’s Paulson started his career working for a rather notorious man named John Erlichman, Nixon’s ruthless adviser who created the Plumbers’ Unit during the Watergate era to silence opponents of the President, and was left by Nixon to ‘twist in the wind’ for it in prison.

    Paulson seems to have learned from his White House mentor. As co-chairman of Goldman Sachs according to a New York Times account, in 1998 he forced out his co-chairman, Jon Corzine ‘in what amounted to a coup’ according to the Times.

    Paulson, and his friends at Citigroup and JP Morgan Chase, had a strategy it is becoming clear, as did the Godfather of Asset Backed Securitization and deregulated banking, former Fed Chairman Alan Greenspan, as I have detailed in my earlier series here, Financial Tsunami, Parts I-V.

    Knowing that at a certain juncture the pyramid of trillions of dollars of dubious sub-prime and other high risk home mortgage-based securities would come falling down, they apparently determined to spread the so-called ‘toxic waste’ ABS securities as globally as possible, in order to seduce the big global banks of the world, most especially of the EU, into their honey trap.

    They had help. In recent testimony under oath by Eric Dinallo, the Superintendent of the New York Insurance Department at the AIG Bailout Oversight Hearing, into the AIG rescue by Paulson, Dinallo testified that funding cutbacks in recent years directed by the Bush-Cheney Administration had reduced the responsible department that should regulate or watch over the $80 trillions in Asset Backed Securities (ABS), which included the toxic sub-prime and Alt-A mortgage securities and much more. The Bush Administration took the staff from more than one hundred people down to one---yes that was not a typo. One as in ‘uno.’

    Was that just ideological budget cutting fervor, or was it deliberate? Was former Goldman Sachs man, the man who convinced the President to hire Paulson, Bush’s former Director of the Office of Management and Budget (OMB), Joshua Bolten, now the President’s Chief of Staff, responsible for insuring there was no effective government oversight on the exploding securitization of mortgage assets?

    These are perhaps some questions which the good Congressmen ought to be asking people like Henry Paulson and Josh Bolten, and not such red herring questions as how large Richard Fuld’s bonus pay at Lehman was. Are Mr Bolten’s fingerprints on the corpse here? And why is no one questioning the role of Paulson as CEO of Goldman Sachs, then the most aggressive promoter of exotic and other Asset Backed Securitization products on Wall Street?

    It now would appear that the Paulson strategy was to use a crisis—a crisis that was pre-programmed and predictable as far back as 2003 when Josh Bolten became head of OMB—when it exploded, to panic the more conservative European Union governments into rushing to the rescue of US toxic waste assets.

    Were that to have happened, it would in the process destroy what was left of sound EU banking and financial institutions, bringing the world one step closer to a global money market controlled by Paulson’s cronies—US-style Crony Capitalism. Crony Capitalism is certainly appropriate here. Paulson’s predecessor at both Goldman Sachs and at Treasury, Robert Rubin, liked to accuse the Asian bankers of Thailand, Indonesia and other lands hit with the speculative attacks of US-financed hedge funds in 1997 of ‘crony capitalism,’ leaving the impression the crisis was home grown in Asia and not the result of a deliberate executed attack by US-financed financial institutions to eliminate the Asia Tiger model among other goals, and turn Asia into the funder of US debt.

    Interesting to note is that Rubin is now a Director of Citigroup, obviously one of Paulson’s crony bank ‘survivors,’ and the bank which to date has had to write off the largest sum in toxic waste securitized assets.

    If the allegation of pre-planned panic, a la the Panic of 1907 is accurate, and it is a big if, then the plan worked…up to a point. That point came over the weekend of October 3, coincidentally the national unification holiday of Germany.

    Germany breaks with US model

    In closed door talks well into the evening of Sunday October 5, Alex Weber the hard-nosed head of the Bundesbank, BaFin head Jochen Sanio and representatives of the Berlin coalition Government of Chancellor Merkel came up with a rescue package for Hypo Real Estate of a nominal €50 billion. However, behind the dramatic headline number, as Weber pointed out in a September 29 letter to Finance Minister Peer Steinbrück that has been made public, not only did the private German banks have to come up with 60% of that figure, the state with 40%. But also, given the careful manner in which the Government in cooperation with the Bundesbank and BaFin, structured the rescue credit agreement, the maximum possible loss, in a worst case scenario, to the state would be limited to €5.7 billion, not €30 billion as many believed. It’s still real money but not the blank check for $700 billion that a US Congress under duress and a few days of falling stock market prices agreed to give Paulson.

    The swift action by Finance Minister Steinbrück to fire the head of HRE, in stark contrast to Wall Street where the same criminal fraudsters remain at their desks reaping huge bonuses, indicates as well a different approach. But that does not cut to the heart of the issue. The situation of HRE arose as noted previously, from excesses in a wholly-owned daughter bank of HRE subsidiary DEPFA in Ireland, an EU country known for its liberal loose regulation and low tax regime.

    A British policy shift

    In the UK, after the costly and foolish bailout of Northern Rock earlier in the year, the Government of Prime Minister Gordon Brown has just announced a dramatic change in policy in the direction of Germany’s position. Britain's banks will get an unprecedented 50 billion-pound (€64 billion) government lifeline and emergency loans from the Bank of England.

    The government will buy preference shares from Royal Bank of Scotland Group Plc, Barclays Plc and at least six other banks, and provide about 250 billion pounds of loan guarantees to refinance debt, the Treasury said. The Bank of England will make at least 200 billion pounds available. The plan doesn't specify how much each bank will get.

    That means the UK Government will at least partially nationalize its most important international banks, rather than buy their bad loans as under the unworkable Paulson plan. Under such an approach, costs to UK taxpayers once the crisis abates and business returns to more normal conditions, the Government can sell the state shares back to a healthy bank at perhaps a nice profit to the Treasury. The Brown Government has apparently realized that the blanket guarantees it gave to Northern Rock and Bradford & Bingley merely opened the floodgates of government costs without changing the problem.

    The new nationalization policy is a dramatic contrast to the Paulson ideological ‘free market’ approach of buying the worthless bonds held by the select banks Paulson chooses to save, rather than recapitalize those banks to allow them to continue to function.

    The battle lines drawn

    What has emerged are the outlines of two opposite approaches to the unfolding crisis. The Paulson plan is now clearly part of a project to create three colossal global financial giants—Citigroup, JP MorganChase and, of course, Paulson’s own Goldman Sachs, now conveniently enough a bank. Having successfully used fear and panic to wrestle a $700 billion bailout from the US taxpayers, now the big three will try to use their unprecedented muscle to ravage European banks in the years ahead. So long as the world’s largest financial credit rating agencies—Moody’s and Standard & Poors—are untouched by the scandals and Congressional hearings, the reorganized US financial power of Goldman Sachs, Citigroup and JP Morgan Chase could potentially regroup and advance their global agenda over the coming several years, walking over the ashes of a bankrupt American economy made bankrupt by their follies.

    By agreeing on a strategy of nationalizing what EU finance ministers deem are ‘EU banks too systemically strategic to fail,’ while guaranteeing bank deposits, the largest EU governments, Germany and the UK, in contrast to the US, have opted for what will in the longer run allow European banking giants to withstand the anticipated financial attacks from the likes of Goldman or Citigroup.

    The dramatic selloff of stocks across European bourses and across Asia is in reality a secondary and far less critical issue. According to market reports, the selloff is being driven mainly by US hedge funds desperate to raise cash as they realize the US economy is going into economic depression, that they are exposed and that the Paulson Plan does nothing to address that.

    A functioning solvent banking and interbank system is far the more strategic issue. The ABS debacle was ‘Made in New York.’ Nonetheless, its effects have to be isolated and viable EU banks defended in the public interest, not just the interest of Paulson’s banking cronies as in the US. Unregulated offshore vehicles such as hedge funds, unregulated banking, unregulated insurance all went into building the $80 trillion ABS Tsunami as I have called it. Certain more conservative EU hands are not about to buy the remedy being offered by Washington.

    The coordinated interest rate cut by the ECB and other European central banks while grabbing headlines, in effect do little to address the real problem: banks fear to lend to each other until their solvency is assured.

    By initiating state partial nationalizations across the EU, and rejecting the Berlusconi/Sarkozy bailout scheme, the governments of the EU, interestingly enough this time led by the German, are laying a more sound foundation to emerge from the crisis.

    Stay tuned, it’s far from over. This is a fight for the survival of the American Century which has been built since 1939 on the twin pillars of American financial dominance and American military dominance—Full Spectrum, Dominance.

    Asian banks, badly burned by Wall Street’s manipulated 1997-98 Asia Crisis, are apparently very little exposed to the US problem. European banks are exposed in different ways, but none so serious as in the US banking world.

  5. #15
    Join Date
    Oct 2008

    Re: The Global Rat Race

    The Rat Race Series is an attempt to explain a complex world and present it in a simple model. Even then, it is still quite complex as events are constantly evolving and making sense of them is a real challenge. With the mental model, it is much easier.

    In the current crisis, the hidden hands behind the Rat Race are starting to be flushed out into the open.

    This article below is an analysis from a Latin American point of view. Those people have experienced American imperialism first-hand for more than a century and will have interesting ideas to share. There is a hint of who are the operators of the Rat Race System and their abettors.

    Read on...The End?

    La Jornada, Mexico, By Gustavo Esteva, Original Article (Spanish), Translated By Anthony Enriquez 6 October 2008

    The current crisis does not mean, in and of itself, the end of the long agony of the capitalist regime, which we have been under for decades. Yet the indefinite delay of its collapse seems impossible.

    All around it feels like a funeral, but attempts to identify the deceased have only generated confusion and controversy. No one knows for sure what passed away during the worst economic crisis since 1929. The following list includes only the likely casualties.

    Neoconservative Republicans: The small mafia-like group, dogmatic and cynical, which controlled and defined the Bush administration is, like the president, passing into history. Its death certificate already registers it as one of the worst administrations in United States history. Those who accompanied it are also leaving through the back door. Yet both the ideology and interests that acquired such extravagant prominence with this group are still there and under certain circumstances could be resurrected.

    Market fundamentalism: George Soros named thusly a series of attitudes and policies that have, over the last decade, dominated the United States' economic outlook and contaminated the entire world. An economic philosophy centered on financial speculation and an unprecedented concentration of wealth was proclaimed fueled by ignorance, irresponsibility, and abuse of trust. The false debate between government and the free market, attempting to claim the supreme worth of the “invisible hand,” has concluded. Once again the government’s hand in the creation of markets and their necessary regulation will be recognized. Even McCain, who has defended deregulation throughout his entire political career, has realized the need to adopt a populist stance, denouncing Wall Street corruption and demanding greater government supervision of the market. This corpse is not likely to rise again.

    Neoliberalism: The label was carelessly affixed to many different philosophies, but only truly applies to the package of policies associated with the so-called Washington Consensus. They were neither new nor truly liberal policies, but extended from the United States and Latin America to the entire world. The Consensus fell apart well before this crisis. It was up to the World Bank, one of its principal advocates, to eulogize in its most recent report. The governments of Colombia and Mexico are perhaps the only left in the world who shamefully continue to follow it. The abandonment of this philosophy, now gasping its final breaths, cannot be contributed to the crisis, but some of its components, such as fiscal and monetary prudence, will gain favor because of it. Its predictable application in the United States has already provoked surprise and worry. When the International Monetary Fund and the European Union prescribed advice to the U.S., administered to all countries for decades, some legislators considered it an attack on U.S. sovereignty.

    The United States’ position in the world: This is the most difficult casualty to certify, and requires examination of each of its components.

    a) Clearly Wall Street has ceased to be the center of the financial world. It will not be replaced by another: the plurality of financial centers will be a sign of new multilateral geopolitics.

    b) The imperial capacity of the United States, which was never based on arms, although it did frequently employ them, has been seriously in question for years. The recent evolution of Latin America stands witness to the process. The crisis is a symbol of its passage into history. No empire can sustain itself upon loans.

    c) The proposed reform to the international financial system will soon create mechanisms in which the dollar will not have the position still attributed to it.

    d) If the new U.S. administration abandons the impossible attempt to sustain an imperial army that now lacks economic and political support, something uncertain with McCain/Palin, the United States could slowly recover from the crisis and occupy the place on the world stage that belongs to it.

    The current crisis does not mean, in and of itself, the end of the long agony of the capitalist regime, which we have been under for decades. Yet the indefinite delay of its collapse seems impossible. The current juncture is defined by a complex network of economic, social, ecological, and financial disasters created by the arrogance that characterized the victors of the Cold War and contaminated leaders around the world. The spirit of transformation runs deep and wide, everywhere nurturing hope. Yet the sheer magnitude of the changes that must be wrought, along with the strong influence of those interests and ideological fundamentalists who oppose them, means that it will be nearly impossible to attempt them. That is why we should prepare for even more severe disturbances than those marking the current instability, including the possibility of violence, bearing with it both the possibilities and immense dangers usually associated with the end of an era.

  6. #16
    Join Date
    Oct 2008

    Re: The Global Rat Race

    Why the U.S. Economy is Going to Get Much Worse

    The derivatives market is worth more than $516 trillion, roughly 10 times the value of the entire world's output: it's been called the "ticking time-bomb". Unsurprisingly, this news comes to us from Britain; the U.S. media is not going to mention it.

    The complex and opaque derivatives markets, land of hedge funds and complex financial instruments, has been dubbed the world's biggest black hole. It operates outside of the grasp of governments, tax inspectors and regulators, in a parallel, shadow world to the rest of the banking system. They are private contracts between two companies or institutions which can't be controlled or properly assessed. In themselves derivative contracts are not dangerous, but they can have an enormous domino effect on the rest of the financial world.

    Most markets have something backing them up. But derivatives don't have anything, because they are not real money, but paper money. It is also impossible to establish their worth; the $516 trillion number is actually only a notional one.

    Anything that carries a price can spawn a derivatives market. They are financial contracts sold to pass on risk to others. At the core of this market is the credit derivative swap, effectively an insurance policy against the default in the interest payment on a corporate bond -- although you don’t even need to own the bond itself. It’s like buying an insurance policy on someone else's house and pocketing the full value if it burns down.

    Many experts that I personally respect, and that have studied this issue for decades, believe that the U.S. financial crisis is an intentionally designed scenario of a Problem-Reaction-Solution. Create a problem covertly and blame someone or something else for what you have secretly done; tell the people through an unquestioning mainstream media the version of the problem you want the masses to believe; then openly offer, through changes in society, the 'solution' to the problem you have yourself created. This 'solution' is always the installation of more centralized control.

    Take these simple coordinates and apply them to the events of the last few days and weeks and everything morphs into focus.

    The banking 'crash' has been coldly designed to create the 'problem' that can lead to the 'solution' -- a massive centralization of power in the 'private' and 'government' banking systems, both of which are owned and controlled by the same network of families.

    The 'World Central Bank', plays a major roles in this area and wants to impose and control the entire global financial system. As a result of the economic turmoil, we are now seeing this being proposed to 'solve the problem' of the banking chaos and to 'make sure it never happens again'.

    You can see the very clear directon in this area as the US government bought $250 billion in shares of the nine largest banks in the US this week.

  7. #17
    Join Date
    Oct 2008

    Re: The Global Rat Race

    Quote Originally Posted by pywong
    The Rat Race Part V Ch 1 & 2 - The Malaysian Rat Race:

    Embedded in Ch 2 is an article on the Social Contract. The Social Contract is not mentioned in the Constitution. So, there is no question of questioning the Social Contract.

    Rulers: Do not question social contract

    KUALA TERENGGANU, Oct 16 - The 215th meeting of the Conference of Rulers, held at the Istana Maziah here, today issued a special press statement on several matters enshrined in the Federal Constitution.

    Following is the press statement in full issued by the Keeper of the Rulers' Seal, Engku Tan Sri Ibrahim Engku Ngah. :

    "Press Statement issued by the Keeper of the Rulers' Seal on the role of the Yang di-Pertuan Agong and the Malay Rulers regarding the special privileges, position, eminence or greatness of the Malay Rulers, Islam, Malay as the national language, the special position of the Malays, and genuine interests of the other communities in accordance with the Federal Constitution.

    "The Malay Rulers who attended the meeting of the Conference of Rulers conferred on the issuing of this special joint press statement today.

    "The Malay Rulers hold the constitutional role to safeguard the special privileges, position, eminence and greatness of the Malay Rulers, safeguard Islam, Malay as the National Language, and the genuine interests of the other communities in Malaysia.

    "The actions of certain quarters in disputing and questioning these matters, which formed the primary basis for the formation of Malaysia and are enshrined in the Federal Constitution, had caused provocation and uneasiness among the people.

    In retaliation, several quarters particularly Malay leaders whether in the government or non-governmental organisations as well as individuals had expressed their dissatisfaction and anger against those who had made the statements and reports and organised the forums.

    "Among the reasons identified for these to have occurred is the cursory knowledge of those concerned regarding the historical background as to why these provisions were enshrined in the Federal Constitution and the influence of their attempts to implicate the principles of impartiality and justice without regard for the historical background and social condition of this country.

    Narrow political interests are also a cause.

    "Unless this phenomenon is arrested immediately, it can lead to disunity and racial strife that can undermine the peace and harmony which has all this while brought progress, development and success to the nation.

    "As such, it is necessary for the Conference of Rulers to emphasise and remind all quarters of these constitutional provisions besides giving emphasis to the assurance of safeguarding the genuine rights of other communities.

    It has to be emphasised that each provision in the Federal Constitution has undergone the process of discussion, consideration, consultancy, sacrifice and compromise of the highest degree for what has been championed, discussed, considered, benefited from as well as agreed to by all quarters concerned, until the realisation of the provisions in the Federal Constitution which are known as the Social Contract.

    It is not proper to dispute and question this Social Contract and more so to subject it to a review or change because it is the primary basis of the formation of Malaysia.

    Therefore, it is appropriate for the Malay Rulers to remind that there should never be any attempt ever to test and challenge issues related to the Social Contract.

    "Truly, the leaders of the pre-independence era were insightful - far-sighted. They brought along with them the Malay Rulers for the negotiations to claim independence.

    The Institution of the Rulers was retained and legally enshrined in the constitution of an independent Malaysia.

    The Institution of the Rulers was accorded eminence, was positioned at the apex of Government, as the head of the country and the states, as a protective umbrella, ensuring impartiality among the citizens.

    The Institution of Rulers takes on the role of being a check-and-balance factor to untangle complications, if any.

    "The Conference of Rulers also calls on the Malays to be united to safeguard the privileges, position, eminence and greatness of the Malay Rulers, safeguard Islam, Malay as the national language, and the genuine interests of the other communities in Malaysia as enshrined in the Federal Constitution.

    It has to be emphasised that this agenda is more important and foremost than political or factional interests.

    "Non-Malays should not harbour any apprehension or worry over their genuine rights because these rights are guaranteed under the Federal Constitution and provisions of the state constitutions of Malaysia contained in Article 153 of the Federal Constitution.

    "It is hoped that with this emphasis, all confusion among the people regarding these matters can be contained and an atmosphere of peace, harmony and mutual respect can continue to exist among the people for the maintenance of order in the country."

    The Yang di-Pertuan Agong, Sultan Mizan Zainal Abidin, attended the meeting today.

    His Majesty was accompanied by Prime Minister Datuk Seri Abdullah Ahmad Badawi.

    The two-day meeting, which ended today, was chaired by the Sultan of Kedah, Sultan Abdul Halim Mu'adzam Shah.

    All the Rulers and Yang Dipertuas Negeri attended the meeting except the Rulers of Pahang, Johor, Terengganu, Perlis and Negeri Sembilan.

    The Sultan of Pahang was represented by the Regent of Pahang, Tengku Mahkota Tengku Abdullah Sultan Ahmad Shah; the Sultan of Johor by the Tunku Mahkota of Johor, Tunku Ibrahim Ismail Sultan Iskandar; the Sultan of Terengganu by the President of the Regency Advisory Council Raja Tengku Sri Panglima Raja Tengku Baderulzaman Sultan Mahmud.

    The Yang Dipertuan Besar of Negeri Sembilan by the Regent of Negeri Sembilan, Tunku Naquiyuddin Ibni Tuanku Ja'afar; and the Raja of Perlis by the Raja Muda of Perlis, Tuanku Syed Faizuddin Putra Tuanku Syed Sirajuddin Jamalullail.

    Also present were the menteris besar and chief ministers except the Sarawak chief minister who was represented by State Planning and Resource Management Minister II Datuk Seri Awang Tengah Ali Hasan.

    The Keeper of the Rulers' Seal, Engku Tan Sri Ibrahim Engku Ngah, said matters related to defence, security, the national economy, the Yang di-Pertuan Agong scholarships, and proposals on the appointment of the Chief Justice, President of the Court of Appeal and Chief Judge of Malaya were discussed at the meeting. - Bernama

  8. #18
    Join Date
    Oct 2008

    Re: The Global Rat Race

    CPI discusses the Social Contract as embodied in the Constitution here:,135.0.html

  9. #19
    Join Date
    Oct 2008

    Re: The Global Rat Race

    We have a chance to see a massive transfer of wealth from the US people to the banks and their favoured cronies. Crony capitalism is hale and healthy in the US, despite the financial crisis.

    Watch out for a crash in the USD and hyperinflation. And if the Rats rebel, there is the Dept of Homeland Security ready to take care of them.

    The best way to protect ourselves is to hold gold.

    Read on..

    Oct 21, 2008

    Monetary despotism
    By Hossein Askari and Noureddine Krichene

    The combined recent liquidity injection by Western central banks could exceed US$4 trillion, yet that vast amount has created nothing real, not even one grain of corn.

    To summarize, continental Europeans a week ago, on October 13, following the British plan for UK bank recapitalization, unveiled a plan requiring $2.55 trillion to recapitalize their banks, at the same time promising unlimited dollar funding in coordinated action with the US Federal Reserve.

    The Fed, meanwhile, has injected $1.3 trillion in liquidity into the banking system and has decided to bypass banks and extend directly lending to borrowers. These sums certainly dwarf the

    $700 billion Troubled Assets Relief Plan (TARP) of US Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke. If recent bailouts and liquidity injection are added together, the price tag could easily amount to 70% of US gross domestic product in 2008.

  10. #20
    Join Date
    Oct 2008

    Re: The Global Rat Race

    This is how the Rat Race behaves among nations. Imagine nations as participants running in the Rat Race. At the top of the Pyramid is the US followed by the G7 countries who have access to USD funds through a swap line. Those outside the group are left scrambling for USD to fund their imports and make dollar loans to their businesses. This comes at a high cost to their local currencies. The long-term effect is a transfer of wealth from the developing countries to the G7 countries.

    Read on...

    Where is my swap line? And will the diffusion of financial power Balkanize the global response to a broadening crisis?

    Posted on Saturday, October 18th, 2008 by bsetser

    Some emerging market central banks have noticed that they – unlike the Bank of Japan, Bank of England, Swiss National Bank and the European Central Bank – don’t have access to unlimited dollar credit through reciprocal swap lines with the Federal Reserve.

    Peter Garnham of the FT, drawing on Derek Halpenny of Tokyo-Mitsubishi UFJ, observes:

    Analysts say the unlimited dollar currency swaps set up between the Federal Reserve and central banks have helped bring stability to currencies through alleviating institutions desire to purchase dollars in the spot market to satisfy overnight funding requirements. “In contrast, the lack of currency swaps put into place between the Federal Reserve and emerging market central banks has likely helped to exacerbate the pick up in emerging market currency volatility” says Derek Halpenny, at the Bank of Tokyo Mitsubishi UFJ.

    Think of Korea. There is “a shortage of dollars in the Korean banking system” – and Korean banks (and the Korean government) are scrambling to obtain them. That is likely adding to the pressure on the Won.

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