Dark Skinny

In a defining article in the Washington Post, a clear reversal in Bush’s socially and internationally untenable torture policies will be implemented. CIA Director Leon Panetta, interviewed today, said that the agency will no longer use “contractors” to conduct interrogations or to provide security for remaining detention sites abroad. These foreign prisons  - in the Bush era - were all blatantly used as illegal torture sites for terrorist and Al Quaeda detainees where  illegal interrogation practices such as “waterboarding” were used. All these illicit prison sites using “outside contractors” have now been thankfully terminated.

Here is the source article:

From the Washington Post
By Karen De Young

The CIA no longer operates any secret overseas prisons, Director Leon Panetta said yesterday, and has not detained anyone since he became chief in February.

Panetta’s statement, contained in a message to the CIA workforce, also said the agency will no longer use contractors to conduct interrogations or to provide security for remaining detention sites.

Referring to “black sites,” as the secret prisons were known, Panetta said the agency has a plan “to decommission the remaining sites,” an apparent reference to facilities still in existence but no longer operational. He said that “Agency personnel” will take charge of that process and that any outside contracts still involved in site security will be “promptly terminated.”

The CIA has never revealed the locations where it secretly held and interrogated as many as 100 high-level al-Qaeda and other terrorism suspects captured overseas after the Sept. 11, 2001, attacks. News reports have said the sites were in Thailand, Romania and Poland, among other places.

Panetta’s statement was the first public acknowledgement that some of the sites still exist.

Under executive orders issued Jan. 22, President Obama ordered the closure of the secret CIA sites, along with the U.S. military prison at Guantanamo Bay, Cuba, and banned interrogation techniques not authorized by the U.S. Army Field Manual.

Obama did not prohibit the process known as “extraordinary rendition,” under which prisoners are secretly transferred from their place of capture to another country outside the United States. Panetta said that the CIA “retains the authority to detain individuals on a short-term transitory basis” but that no such detentions “have occurred since I have become director.”

“We anticipate that we would quickly turn over any person in our custody to U.S. military authorities or to their country of jurisdiction, depending on the situation,” he said.

The Senate Select Committee on Intelligence last month launched a review of the CIA’s detention and interrogation program that it said will “run parallel to a White House review to be conducted as part of President Obama’s Executive Orders on detention and interrogation.”

Panetta said the CIA will cooperate with the reviews of “past interrogation practices” and reiterated his insistence that agency officials who acted on Justice Department guidance “should not be investigated, let alone punished.”

He said he had sent a letter to Congress outlining current CIA policies on interrogations, including the use of contractors.

Senate Intelligence Committee Chairman Dianne Feinstein (D-Calif.) responded with a statement saying she supports Panetta’s decision prohibiting the use of contractors during interrogations or to provide security “at the remaining CIA sites.”

Professor Kotlikoff, head of Economics at Boston University, has worked in the former Bush government where he completed several economic fiscal-based studies with the then Treasury Secretary Paul O’Neil(in 2003). And what they discovered or rather what they uncovered was horrific. When this work was presented to the Bush government - they wanted to hide it and prevented the release of these findings. As a result of Bush’s actions, O’Neil was fired and Professor Kotlikoff resigned outright. To hear what all these fiscal and economic problems are, I’ve included below, an interesting interview with Professor Kotlikoff from the US Tax Foundation website in 2006 with other detailed evidence.

At the time of the interview(2006), Professor Kotlikoff admitted that the US government was probably bankrupt already, and said that in 36 months the impacts of US government spending, credit and debt would impact America in an unstoppable economic disaster. The podcast below fully explains the American Fiscal Deficit status, and further expounds - quite simply and logically - what will happen to the US economy if the US government’s economic and fiscal policies do not radically change. He also proposes a solution to these fiscal problems - which does not include the US government “spending” its way out, where supply-side economics and tax-cuts stimuli have no honest position within his recovery plan.

You can read more of Professor Kotlikoff’s economic essays on the Boston University website and below is the link to his unspun economic podcast.

Prof. Kotlikoff’s Fiscal Podcast(MP3)

For those of you who don’t know Gerald Celente - he is an American who runs the Trends Research Institute and who, with his team, have made some surprisingly accurate, consistent and successful geopolitical predictions over the years. If you don’t believe me - check out his website. Mr Celente is fairly apolitical - he seems to be a man who has a particular low tolerance for economic stupidity or ignorance regardless of whatever partisan US government is in play. A man after my own heart and with his kind of track record - how can you doubt his well-researched predictions ?

What follows is an extract from Mr Celente’s Trends Journal for 2009 :

“In 2007, our summer edition of The Trends Journal, we warned that between July and November 2007, we would see a major financial crisis. That was the so-called ‘sub-prime’ crisis. What people needed to understand  was that it wasn’t only the little people who caused those problems by taking out mortgages they could not pay off. That was only a small part of it. The big part of it was that all of these leverage buyout firms, all of the commercial real estate people, all of the developers that were building on speculation.You had companies in New York, for example, like The New York Times reported of one that had about $60 million that they leveraged into $60 billion worth of real estate. Look at all the buyout firms such as The Blackstone Group, Carlisle Real Estate, Carlyle Group, Cerberus that bought Chrysler and Hilton. It’s not like these guys put up a billion dollars each and twenty of them bought a company. They bought these companies with no money down based on leverage.

Then there are all the financial manipulations: auction-raised securities, Compulsory Purchase Orders (CPOs), Structured Investment Vehicles (SIVs). I mean they make up this stuff and it’s really a Ponzi scheme.

It was all collapsing in front of us, but people did not want to believe it. We saw it coming. The top story in our Top 10 Trends of 2008 was the Panic of 2008 and Economic 9/11. We were precisely one week off in calling this the Economic 9/11 (September 11, 2008 was the seventh anniversary of the World Trade Center attacks). And it’s happened! This is the Economic 9/11. The Federal Reserve, the federal government, cannot save the day.

A Great 2008-2009 Depression

“The Feds cannot print enough money to save the day. We’re going into the worst depression that any living person has ever seen. It’s going to be worse than the Great Depression of 1929.”

Do you realize that Barack Obama recently said that he would not rescind the Bush tax cuts. He said this on ABC, September 7, 2008, IF the economy were in a recession. IF the economy is in RECESSION?! This is worse than a recession! We’re going into the greatest depression and people better beware.

I’ll tell you what I know other people are doing. They are taking their money out of the banks. People with a lot of money are moving it overseas into what they think are safer banks. There’s going to be a day here in the United States that the authorities are going to call a Bank Holiday. AIG is calling for more than $40 billion today. The Feds just bailed out Freddie Mac and Fannie Mac to the tune that could cost taxpayers up to $300 billion or more. Our national debt has been increased to at least $12 TRILLION! The Feds cannot print enough money to save the day.

So, we believe what the government is going to do is call a ‘bank holiday.’ You’re going to hear all those fat mouths out there that were saying that everything was OK, the FDIC was going to insure your money. But no one is going to be able to get it out all at once. Just like they did in Argentina and they did it in Brazil when their economies collapsed and their currencies collapsed and their economies were sinking. You’re not going to be able to get all your money out at one time. Our government is going to say, ‘It’s insured. Don’t worry about it, but we need to pause. Take a deep breath.’ Oh, boy, do they love that phrase! ‘Take a deep breath.’

Take a look at this last Saturday’s (September 13, 2008) New York Times. The headlines story on the business page is to just pause and reflect. Don’t panic. Everything is OK. The ship is sinking and the best they can say is, ‘Doesn’t the band sound great!

Implications for Future

WITH EVERYONE RUNNING TO TREASURIES AND INTERNATIONAL MARKETS ON SEPTEMBER 15, 2008, WHAT IS THE BOTTOM LINE TO THE IMPLICATION OF WHAT IS HAPPENING NOW?

We’re going into the worst depression that any living person has ever seen. It’s going to be worse than the Great Depression of 1929 and I’ll give you a some reasons why.

1) In the 1929 Depression, not many people owned homes, so they weren’t carrying that heavy mortgage load. The people who did have homes did not have something called ‘home equity loans,’ which is more money owed on top of the other money. They used to have something else back then called a ‘second mortgage.’ If you had one, you were a loser.

2) Back in the 1929 Depression days, people didn’t have things called ‘credit cards.’

3) The United States didn’t have $14 trillion worth of debt.

4) We still had a manufacturing base in the United States so that when WWII broke out and the economy improved afterwards, we were still able to produce more so than any other country in the world. But now, the U. S. off-shores so much manufacturing now.

5) Back in the Great Depression of 1929, the U. S. government was not $14 trillion in debt and they had a trade surplus, not a trade deficit.

6) We weren’t fighting two wars that have sapped already $2 trillion from our American treasury and it’s getting worse.

“Dragflation”

So, we’re going into a downturn as America is sinking. This is ‘dragflation,’ a term that we at The Trends Journal have coined. When you had stagflation you had a declining and stagnate economy; you had rising inflation. But you also had rising wages. People remember back in the 1970s, they got a 10% cost-of-living increase in our wages.

Now wages are declining, you’re lucky to have a job, the median American household income is below 1999 levels. So we’re in for a devastating crash and people are not prepared for it.

2008’s Weak American Dollar

THE TOTAL AMOUNT OF GOLD BULLION IN THE UNITED STATES IN THE FEDERAL RESERVE AND AT FORT KNOX IS ONLY A FEW BILLION DOLLARS IF TRANSLATED INTO CURRENT MARKET VALUE. WITH A $14 TRILLION DEBT IN THE UNITED STATES, IT MEANS THAT THE DOLLAR IS NOT BACKED UP BY MUCH.

You’ve got it and it’s not only the dollar we are going to see problems with. We’re going to see all the paper currencies experience the same kind of problems. You’re looking at a global market unraveling. The Russian stock market is down almost 45% from the beginning of 2008. The Chinese and Indian are all down 40% to 50% from their highs. We’re going through a global crisis. We’ve been talking about this for a long time. I was just the keynote speaker at the International Diamond Conference in New York at the Waldorf Astoria on September 8. This is what we at The Trends Journal warned: the United States is going to go into a depression and the rest of the world into different levels of deep recession and depression.

If you look at the markets today, what’s going up and what’s going down? The softer commodities are retreating and the only thing going up in the markets today is gold. It’s coming off its lows where it’s been battered down, but it’s up some $17. We’re still firm believers that gold and diamonds and other precious gems and metals are going to be the things to invest in as the paper currencies collapse. There are no fiscal or monetary tools that can turn this around.

What people I know are doing is taking their money and putting it into other currencies, particularly the Swiss franc, and putting it into more secure international banks, and betting against America on every level. And we know it is only going to get worse. There is nothing to turn this around. What is the Federal Reserve going to do? Print more money?

On September 16, the Federal Reserve is going to decide whether or not to raise or lower interest rates. If they lower interest rates, you’re going to see the dollar plummet. If they keep interest rates the same, then we have the same situation we’re in now. They can’t raise interest rates. If they do, they will put the brakes on an already credit-squeezed economy and that will really push us into a really steep depression quicker than what we have seen. Looking across Europe, you can see the markets collapsing, along with the Russian market down 45%. There is no safety net. Ships do sink!

We like the Swiss franc because Switzerland always seems to survive at the worst of times, including back to World War II. But the Swiss banks are having problems, too. So, you have to be careful about which banks you put your money into. But what we’re saying is that people we know are hedging their bets by keeping some money in dollars and some money in Swiss francs, some money in Euros, so that if one goes down, others are up. So, you are preserving wealth. That’s the game right now. It’s not about making more money. It’s about preserving what you have.

Global Economic Depression?

In China, factory orders are plummeting. They have 1.2 billion people and millions of problems. So, they are not going to escape this global economic collapse either. There is no way out.

Remember the old fable about the grasshopper and the ant. The grasshopper played during the summer thinking it didn’t have to do anything to survive the cold winter coming. People are still acting like grasshoppers. What people are saying is, ‘I’m going to wait until after the elections to see what happens.’ To see what happens for what? The people running for office don’t have the economic skills.

AND WHOEVER IS ELECTED IN NOVEMBER 2008 IS INHERITING THE $14 TRILLION IN DEBT.

On top of that, government, corporate and private debt is over 200 times the gross domestic product, much worse than the Great Depression of 1929.

And Greenspan was saying as recently as May 2008 that the worst was behind us. So, too, was Hank Paulson, the U. S. Treasury Secretary. So, too, was the head of Lehman Brothers, Merrill Lynch and J. P. Morgan. They were all saying that the credit crisis was not as bad as it was because of the great bailouts of Countrywide and Bear Stearns. So, they were singing a different tune than now.

Never before have current events been so clear in front of us that spelled disaster. What is stopping people from admitting that the worst is yet to come and there are no plans to save it? This is a classic Titanic situation in the sense that what we saw with the Fannie and Freddie bailouts and the Bear Stearns bailouts and now the AIG request for $40 more billion from the federal government – it’s just like the Titanic where the rich and affluent were given the lifeboats and the rest of the people went under from steerage. The rich and powerful are too big to fail; the rest of us are too small to save. When we need to be saved, the government saves us with Katrina-quality rescue plans, which means that we drown.

United States Conditions in 2009?

IF THIS IS WORSE THAN THE GREAT DEPRESSION OF 1929, COULD YOU LAY OUT WHAT YOU EXPECT TO SEE HAPPEN OVER THE REST OF 2008 AND TO FALL 2009?

Let’s take retail sales, for example. This Christmas 2008, you’re going to see major chains go bankrupt. If you can see Lehman Brothers go under – guess what? Macy’s, J. C. Penny, GAP and the rest of them could go down, too.

All these companies, like the leverage buyout firms, have been built on an economic model of growth and expansion. That means opening new stores in new locations, but not necessarily increasing in store sales. You’re going to see major bankruptcies. We forecast this before. It’s going to happen.

You’re also going to see violence go to levels we’ve never seen before. You’re going to start to see gangland mentality that is running through Mexico start seeping up north into the United States. The Mexican government cannot control the level of violence. And we’re going to start to see it happening here: more gangs, more kidnappings, more violence and crime. The knee jerk reaction, of course, will be more police on the streets and that is not going to solve the problem.

We’re also going to see more movements for the break up of the American government – not necessarily in 2008, but we can certainly see the secessionist movements that have been gaining more strength because the federal government cannot fix this problem. It’s too big.

Alan Greenspan - Is Former Fed Chief Cause of Financial Dominoes Falling?

Greenspan is the guy that’s behind this whole collapse. By lowering interest rates during the dotcom bubble of 2000. They lowered the interest rates to 46-year-lows and created the situation that exists now for all this cheap money and all the financial games. Greenspan is the Prince of Destruction. The Federal Reserve is what is behind the destruction of this country and now Greenspan is warning us! He’s the one who caused all this!

Ron Paul (former candidate in 2008 presidential primary) has informed the people that the Federal Reserve is basically a rogue organization. It’s a private bank, it’s not a federal agency. They have taken the power of the money printing press out of the hands of Congress (Article 1, Section 8, Clause 5) that gives Congress the sole authority to print and regulate the money supply. And Alan Greenspan is the one that caused this Great Depression. He started it by bailing out the big guys following the 1987 Stock Market Crash, following the 1997 Asian currency crisis, following the 1998 long-term capital management bailout. I had an Op Ed piece in The New York Times in 1998 that I called ‘Capitalism for Cowards.’ This is what keeps happening – bailing out the big guys by printing cheap money because their friends are too big to fail.

WHAT HAPPENS THIS TIME IF THE UNITED STATES DOES NOT BAIL OUT AIG AND GIVE THEM THE $40 BILLION THEY ARE ASKING FOR?

It’s not going to make any difference whether they bail them out or not.

BUT IT’S IN MORE THAN 130 COUNTRIES WITH A TRILLION DOLLAR BALANCE SHEET.

Yes, but there are other huge ones that are going to be collapsing right along with it. What is going to happen when Blackstone goes under? Or Ceberus goes under? Or the Carlyle Group goes under? We’ve already eliminated the big names of Lehman Brothers and Merrill Lynch. Merrill Lynch was the nation’s largest brokerage firm and they were just gobbled up by Bank of America that was just gobbled up by the failing Countrywide. Who is going to bail out them? There is not enough money to bail them out. Where is the money going to come from? Americans are working two or three jobs already. Do you think they could do four jobs to bail these big people out? Impossible! We’re looking at the collapse of Empire America.

The 9/11 attack happened and it was the greatest military strike in history, much greater than the Trojan Horse. It brought down the financial pillars of the United States figuratively and literally.

The United States has not recuperated from the great strike of 9/11 and the debacle of the dotcom crash. It was temporarily ameliorated by Greenspan by putting interest rates at 46-year-lows and creating the credit bubble. So, it’s over now.

The United States looks like to me what you see when a third world country starts going into chaos like any other failing empire. It’s going to be a very ugly scene. As I said, we’re going to see more crime. We’re going to see more federal intrusion into our lives. We are going to see more geopolitical turmoil. We’re going to start seeing our minds diverted from the financial crisis into more geopolitical affairs. We can also see by Election Day 2008 that the United States is involved in a major geopolitical confrontation, whether it is Iran or Russia.

DOES THE U. S. HAVE ANY LEVERAGE WITH ANYONE NOW?

The U. S. has no leverage with anybody now. We’re leveraged out. We used to be able to play the financial card. We can’t play that anymore. We used to play the military card. We can’t play that anymore. The United States is losing third world street fights in Afghanistan and Iraq. I don’t care about people telling me the surge is working. That is fairy tale language. As soon as there is a little rest, they are going to attack again. There were major bombings again this last week and they are not going to stop until the United States is thrown out. So, now you have all these countries that have weapons of mass destruction. They are not going to bow to America. It’s not like the old days of Venezuela or Chile or Argentina or Bolivia getting out of hand and the United States sends down gunboat diplomacy.

They are going to fight back and not with bows and arrows and little weaponry. They are armed to the teeth. So, the U. S. has lost its military supremacy and its economic supremacy. Yes, the United States could obliterate any country and bomb them into the Stone Age. But that country, what’s left of it, will retaliate again.

There is still a hole in the ground after the 9/11 attacks. That’s a metaphor. If anybody thinks the American government has the wherewithal, the intelligence or the integrity to get anything done, there is still a hole in the ground seven years later, there are still levees that have not been properly re-built after Katrina and people still can’t vote in the United States and have their vote properly counted because the voting machines don’t work. That’s America now.

IS IT IRONIC THAT BECAUSE OF WHAT HAS HAPPENED IN AMERICA, THE ENTIRE GLOBAL ECONOMY IS BEING DRAGGED DOWN AT THE SAME TIME?

It’s ironic in the fact that the international community bought into the same myths as everyone else. It’s greed that ruined this country and it’s greed that is ruining others. They all played the quick money game.

Another irony is that people could thrive in these times because as the old is dying, something new is being born. If there is intelligence, integrity and dignity behind the next movement, we could move into a new Renaissance, a brighter time and not a dark one.

HOW LONG DO YOU THINK IT WOULD TAKE TO GET OUT OF A DEPRESSION?

As long as it took 1929 and that was a war. And unfortunately, that’s the way authorities will start thinking. The only thing more I can say for this country is that the American people need to regain their dignity and look at their own moral base and what they are accepting as truth and lies. The only thing that will save us is enlightened leadership. I think it has to come from the individual and move up.

And unless people change the way they are living their lives, nothing is going to change. These people, Obama, McCain, Biden and Palin aren’t my leaders. They couldn’t lead me across the street! When are the American people find their own strength and become their own leaders? Until individual people find their own greatness within, nothing is going to change.

To everybody out there, make provisions now like the ant did for a cold, brutal winter wherever you live. Things are going to get very tough. Don’t waste a dime you don’t need to waste. Buy local and support your local community. Start by doing everything locally to preserve and save.”

Like many others, I’ve read much on the issue of the current US financial crisis, and what has come out of all this effort is that I am amazed at all the tilted versions of the economic truth as well as to its cause and remedy which arise from both the media as well as from the America’s well-practiced government spinmeisters. There is the conservative view, the liberal side, the libertarian voice and the much feared socialist view. All stupid labels because good, well-practiced economics is - if you think about it - never political in its purpose or execution. All these “labels” only serve to trigger and play on the fears of the ordinary US citizen, to habitually force US citizens into “believing” the government or media spin as honest and true, but whose only real and exacting purpose has been to perpetuate popular self-image and therefore to steer and fool public opinion onside, whose end-purpose serves only to prompt yet another slithering and detestable shadow agenda. Bush Jnr is an overt master of this type of plebescitary and so-called “patriotic” government service or behaviour. But I wont waste time anymore talking about about an economic lame duck in this piece.

In its own perpetuation and disregarding which political “side” you are on, perhaps economic theory is the criminal here. In a quote by Ludwig von Mises of the Austrian School of Economics, here is what he had to say about politics and all those -isms:

“We can quantify the deaths caused by both communism and fascism, but we will never know how many deaths have been the result of capitalism; of nothing more noble than a rich man wanting to be even richer, and sacrificing the health and lives of millions of workers to achieve this. Don’t even try to count how many people capitalism has killed, because not only will you not know where to begin, but also it will never end.”

Notice that this quote is completely apolitical and self-evident - since every political stance - left wing, right wing, democracy and even financial capitalism - is accommodated within its single, critical sweep.  You cannot brand this statement  as  socialist, conservative, liberal etc. because it is so annoyingly all inclusive. Instead, it highlights the pernicious fact that not only politics but economics can easily be governed and ruled by power and greed (in whatever political overcoat) which are not economic or political entities - but human traits. This is the his ultimate message.

I’ve just finished reading “Crashproof - How to Profit from the Coming Economic Collapse” by Peter Schiff, and I was fairly stunned with the accuracy of its predictive content (written in 2006) and particularly the simplicity with which he explains macroeconimics, world markets and the US economy. This book is well worth a read. Here is an extract and a parable which fairly accurately describes how both Consumerism and Debt are most definitely finite and, in the end, a bad economic habit:

A Tale of Two Farmers
Farmer Chang grows only oranges. Farmer Jones grows only apples. Each grows only the fruit he produces most efficiently, trading his surplus for the fruit grown by the other. Both farmers benefit from comparative advantage and free trade. The sole reason that Farmer Chang “exports” oranges is so that he can afford to “import” apples, and vice versa. Suppose that one year a flood wipes out Farmer Jones’ apple crop. Not having any fruit to trade, but hungry nevertheless, he proposes to trade apple IOUs for Farmer Chang’s oranges. Since Farmer Chang cannot eat all the oranges he grows anyway, and since Farmer Jones’ IOUs will pay 10 percent interest (in extra apples, of course), he accepts. Farmer Chang accepts Farmer Jones’ offer only because of the apples that Farmer Jones’ IOUs promise to pay. By themselves, the IOUs have no intrinsic value. Farmer Chang cannot eat them. It is the promise to pay additional apples that gives the IOUs their value. When Farmer Jones issues his apple IOUs in exchange for real oranges, he does not actually pay for the oranges. Payment will not really be made until the following year when Farmer Jones redeems his notes by giving Farmer Chang all the apples his IOUs obligate him to pay. Only then can the notes be retired and the transaction be completed. Now suppose that the following year Farmer Jones’ crop is again destroyed, this time by a hurricane. He and Farmer Chang once again make the same deal, with Farmer Jones getting more of Farmer Chang’s oranges, and Farmer Chang accepting more of Farmer Jones’ IOUs. Further suppose that similar natural disasters continue to besiege Farmer Jones for several more years, until it finally dawns on him that he is eating pretty well, without actually farming. He therefore decides to turn his apple orchard into a golf course and simply play golf all day while enjoying farmer Chang’s oranges. In other words, Farmer Jones now operates as a service economy. Farmer Chang, by contrast, is so busy growing all those oranges that he never gets a chance to play Farmer Jones’ course. In fact, he has been accepting Farmer Jones’ IOUs for so long that he no longer remembers his original reason for doing so. He now counts his wealth based solely on his accumulation of Farmer Jones’ IOUs. Farmer Jones actually enjoys such a good reputation within the farming community that Farmer Chang is able to trade some of Farmer Jones’ IOUs for goods and services provided by other farmers and merchants. However, as a result of Farmer Jones’ good reputation, no one notices that his apple orchard has been turned into a golf course. His IOUs are now worthless since Farmer Jones no longer possesses the ability to redeem them with actual apples. Some might argue that the entire community now depends on Farmer Jones and his worthless IOUs and that Farmer Chang and the others will simply accept them indefinitely to avoid acknowledging the reality of their folly. Of course, were these revelations to occur, any unfortunate holders of Farmer Jones’ IOUs would officially be forced to realize their losses. However, their true financial situations would improve, as any further accumulation of worthless IOUs would end. As for Farmer Chang, he would once again, literally, enjoy all the fruits of his labor. The real loser, of course, would be Farmer Jones, for without a viable apple orchard or the ability to buy oranges on credit, he would starve. It would take years to transform his golf course back into an orchard, regain his lost knowledge of farming, and replace his obsolete and dilapidated farming equipment (provided he hadn’t already traded it in for golf carts and titanium clubs). In the end, Farmer Jones’ only alternative might be to sell his golf course to Farmer Chang and take a job picking fruit in his orange grove.

Currently, there is much worry over the US auto industry. There is, perhaps, a good pattern and a useful parallel here. The UK auto industry died over twenty years ago because of poor management strategy, unions that were too strong and expensive, which led to poor quality standards, lagging research and uncompetitiveness. Sound familiar ? So the British government let the industry change itself and allowed foreign takeovers and company deaths. After all, in an honest  free market - as supported by both the Keynesian and Austrian Schools - only the strong  and successful should be allowed to survive. The same should be allowed to happen to the failing US auto industry. If this industry is propped up - even with the Chinese and Indian  auto markets rising - the US taxpayer will pay through the nose for this mistake. It’s purely a case of do you save a non-competitive and incompetent industry that is trying its best to die - just for the sake of maintaining auto-workers jobs ? And if this industry is supported, what will be the long term effects on an already financially strained and cracked US economy ? Peter Schiff convincingly extends these reasons in his recent article The Truth About Bailouts.

In terms of the American economy or any other national world economy for that matter, I always try to take it down to the Home Economics level. Nice and simple. The US currently has a National Debt of over $10.5 trillion and its National Debt is about five times its reported GDP. So just compare this to  a parable. Say you have a spouse, a family of two kids and a house. Now suppose the parents of the family earn a certain salary we will call X dollars. But both parents have combined outstanding monthly debts worth 5 times their earnings. But they never payoff this debt until, eventually - because of the climbing interest - both parents aren’t even capable of paying the interest anymore and bankruptcy ensues. I also realize that perhaps this parallel is a little unfair. After all, the US government can always sell its debt. As well,  the Fed can just switch on its printing presses to create some more liquidity. Forgive my assumptions here, obviously Home Economics doesn’t include the ability to sell your debt on the never-never and certainly would never include creating your own counterfeit money at home either. In individual terms, this counterfeit practice would correctly be described as immoral and criminal, whereas in terms of the Fed - this same counterfeit  activity would quietly be described as a “good and useful  banking mechanism”.

There are also many whose stance is rigidly to maintain the economic status quo, trying desperately and hopefully to cling on to this current order, such that they are able to continue  their wonderful debt-based lifestyles. But a national economy doesn’t really care about lifestyles or wishes or even politics, this beast will simply ignore all of us and just react to the economy and markets, which will either move back towards equilibrium and stability or - much more likely - towards chaos. Wishing will not make it go away ….

…And many will have to stop hiding and become a little more honest and, perhaps, a little less greedy - forced, in the end, to come out from behind the hypocrisy of That Bush, and back into the harsh glaring reality of realized unsustainable economics.

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In my readings and judgement of the outcome of the G20 Summit in Washington, I have to say that that there was alot of talk, regulatory promises and reportage etc, but was anything achieved ? Was anything signed off ? Nope. I guess Bush Jnr firmly expects that the world financial crisis can just wait for its own solution. Clearly leaders such as ex-UK Prime Minister Tony Blair, current UK Prime Minister Gordon Brown and French President Nicholas Sarkozy were, perhaps, a little disappointed at this lack of urgency and response to the financial crisis. Which is why Mr Sarkozy has decided to hold his own European crisis meeting on January 8, 2009.

I was particularly amused to read of this meeting in the NY Times, that well known bastion of truth and unbiased reporting, which contained the headline, “Sarkozy’s Fiscal Meeting Raises Diplomatic Hackles“. Dotted about their parlez were declarations such as:

“President Nicolas Sarkozy of France left the summit meeting on the financial crisis here last weekend in a triumphal mood, declaring that it had tamed the animal spirits of American capitalism. Then he went home and announced that he would hold his own summit meeting in a few weeks in Paris — on the same topic.”

“That has raised hackles in diplomatic circles, not just because the [European] meeting appears to compete with a planned gathering of 20 world leaders next April. Mr. Sarkozy’s aggressive statements have put American officials on edge, with some saying that he seemed determined to turn the global crisis into a referendum on the ills of untrammeled capitalism.”

In reports of this meeting by such as Reuters and the Washington Times, the headlines and assessments were somewhat less biased and stirring. These newspapers suggest that the future summit planned for the G8 on April 2009 wasn’t exactly a rush to inspire confidence or respond adequately to the current economic crisis.

Therefore, as to the reasons why European leaders  want to further address this financial crisis, these reasons are many. ALL governments have their own economic and political Think Tanks and advisers who are not stupid. Their only function must be to develop policies which aid their own country. Here, as a best guess, is what they have probably been pondering concerning the US Bailout Plans and the latter’s performance so far:

• At the recent G20 financial conference, President Bush Jr made damn sure nothing was signed. Plenty of talking and blabbing, but no urgency, no direct effective response. Bush Jr, evidently, doesn’t want any of the blame - he just wants to hand it off to President Obama.

• The US government’s Bailout response to the financial crisis, via the voodoo-thinking of the US Treasury and the Fed, can only be described as very ad hoc, messy, ill-thought out and verging on the incompetent. With something approaching 73 Treasury advisers - all ex-Wall Street, Paulson has been inexplicably saving more and more Wall Street Institutions. Therefore, his credibility as a neutral political player is very suspect. Perhaps Paulson’s so-called tenet of “Recapitalizing the banks” should be re-read as “Recapitalizing Wall Street” with taxpayers money.

• Just days before the $700 billion Bailout went into effect, Paulson bought $630 billion in credit default swaps in foreign currencies. This has caused the recent surge in the value of the US Dollar. When these swaps expire in early January 2009 - all these dollars will flood the currency markets once again and drag the dollar - and other currencies - down. Perhaps both Sarkozy and Gordon Brown have spotted this ruse, and perhaps they are aware of the currency problems that will occur in early January because of this heavy-handed play by Paulson.

• With her current Dollar problems, Energy problems, relationship problems with both China and Russia and a heavy, crippling Fiscal Debt, can the US government lead and focus effectively on the financial crisis in Global friendly terms, rather than eventually promoting its own isolationist and protectionist policies that would economically hurt both Asian and European economies and trade ?

• When Obama takes rein as the next US President, then Bush Jr, Paulson and Bernanke might well all be out of a job. Why should they care what happens in April at the the next slow-moving G8 Financial Summit ?

• With all the shadow agendas that have been perpetuated by the Bush Jr administration over the years, why should the stated economic intentions of either Paulson or Bernanke - both Bush’s main fiscal henchmen - be believed or trusted ?

• With the recent projected downgrade of America’s influence in both the global economic and political spheres by 2025 - according to a recent  US NIC Report - European Leaders should help contribute to take the lead in sorting out the current economic and financial mess.

These will be the passing thoughts of those leaders and economists concerned with the European Conference in January 2009. It’s certainly a warming thought to realize that at least a few World Leaders are intent on taking this international financial crisis seriously…

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References :

• The Fed’s Exploits: Fiscal Bust and the Dollar Go Boom…

• A Frightening Indictment from the Bailout

• As China Slowly Dumps the Dollar

• China and Russia Playing

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