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The
suggestion that there is anything remotely approaching a recovery in the
United States, or the world economy, is pure cow pie, as evidenced by the
requirement for more borrowing, more easing, and more deterioration in employment
and housing. But as the title suggests, its
not just America. I’m referring to the heads of state around the world.
Apparently too busy jetting back and forth from Washington, New York, Vienna,
Athens, Berlin, London and Paris to have anything approaching a grip on reality, we’re delivered surreality
by world leaders immersed in United States of Denial. Now the banks in Europe
are carving up the assets of Greece as vig for
continued lending.
How much do you think the Parthenon could bring at
auction? Well okay, maybe not the Parthenon, but the fire sale, according to
a CNN report on June 20, would include “airports, highways and
state-owned companies, as well as banks, real estate and gaming licenses, to
meet international lenders’ demands that it raise funds.”
And so the ‘why’ of the glaring
inconsistency in this whole global debt mess, namely, throwing arguably good
money after bad, was revealed. Just as the top layer of the financial food
chain targets the assets of weaker former clients and partners in their quest
to be the boys with the most toys, so the Eurobanks
and their faceless shareholders target the assets of governments now that
anything worth owning in private hands has been forced into those of the
banks.
Do the banks holding US$114 billion of Greek debt
want the money back, or would they prefer to exercise the option to have
first choice over the plum producing assets driving the deteriorating Greek
GDP? Since money is worth nothing, and the whole default dance is just a case
of bullying the junior members of the Trillionaires
Club if they want to keep their seat at the table, I think the answer is
somewhat obvious. The top 8 economies in the world are essentially So Big
that they Won’t Fail, not because they will ultimately and miraculously
get their financial houses in order, but just becasue
there’s nobody to force them to sell their assets in exchange for a
bailout. They’re the top of the heap, the Big 8, the G8, and with each
member approaching or exceeding debt loads in excess of 100% of GDP
(Japan’s at 225%!), it is mathematically impossible for a balanced
check book to materialize anywhere in that mix. Unless of course GDP for each
of the countries were to miraculousy double, or in
Japan’s case, triple. But they’re the main conspirators in this
wealth agglomeration exercise, and they’ve divied
up the booty already in exchange for a nudge-nudge, wink-wink understanding
when it comes to voting on certain matters in key organizations such as the
IMF, the World Bank, and of course, in their own Treasury departments.
Of course, the banks holding the bag on Greece are
highly motivated to keep the flow of payments in a condition that is
optically acceptable to their shareholders. If they forced Greece into
default, they’d have to write down large chunks of their own books,
which would in turn affect their valuations and credit ratings negatively. In
many cases, a Greek default would, in the case of France and Switzerland
anyways, precipitate a restatement of loans in the amount of US$79 billion
each. No wonder the French banks announced today an initiative to voluntarily
re-invest maturing Greek bonds. According to the Bloomberg report,
“Fifty percent of the redemptions would go into 30-year Greek
securities, with the remaining 20 percent invested in a fund made of
“very-high quality” securities that would back the 30-year
bonds”.
Apart from the high-priced asset sweep and obvious
continental fees that are pocketed from the Global Debt Farce, what
motivation based on logic could possibly justify the ‘rolling
over’ over a debt load that constitutes 145% of that nation’s
GDP? It’s a giant fraud in progress that only exists to keep the
emasculated banks propped up, and their shareholders from having to sell off
works of art, cars and European chateâus.
If I was Greek and not a member of the elite class,
I too, would protest. As mentioned repeatedly around the blogoshpere,
this is the stuff that revolutions are made of.
United States of Delusion
Surprise, surprise. As predicted, the United States Federal Reserve is not
going to launch another round of Quantitative Easing. Instead, the Fed will
“continue to buy Treasuries with proceeds from the maturing debt it
currently owns. That could mean purchases of as much as $300 billion of
government debt over the next 12 months without adding money to the financial
system”, according to Bloomberg News.
It’s not QE3, then, its ‘re-investment’.
Okay.
So lets
just tally up the state of financial affairs in the United States of
Delusion. Since the Lehman Brothers collapse, the Fed has fabricated $2.3
trillion in counterfeit dollars and handed it over to the banks. In that same
time frame the ‘economic recovery’, which officially started in
June 2009, saw the United States economy grow by 4.9%, according to Sebastian
Mallaby, Director of the Maurice R. Greenberg
Center for Geoeconomic Studies and Paul A. Volcker
Senior Fellow for International Economics . But since total U.S. GDP was
US$14.26 trillion in 2009, and according to estimates, the 2011 total U.S.
GDP will be $14.62 trillion, that figure is more realistically 2.52%. But the
amount of cash fabricated and dispersed into the economy so far is, as
stated, $2.3 trillion, or 16.1% of 2009 GDP. So there’s a discrepancy,
on a macro scale, of $1.94 trillion missing from the national balance sheet.
I don’t know about you, but if I’m going to borrow money to put
into my business, its becasue I’m convinced
that my rate of business growth and therefore profit will increase at an
exponentially greater rate than the cost of servicing and maintaining the
loan. Otherwise, the bank comes and takes away my business, and boots me out
of my house, and sells my car. If the bank lends me money at 10 points per
annum, then I better come up with a personal GDP increase of at least 11
points, but preferably more like 20 points, after the cost of servicing the
debt is factored in. Otherwise, what’s the point?
So if the Fed borrows, fabricates, conjures, prints,
or however you want to refer to their unequivocally fraudulent creation of
money to the tune of $2.3 trillion to obtain a growth in gross output of only
$0.36 trillion, what does that say about the real state of American finance.
What does that say about the United States of Delusion?
What that says, dear people, is that there is no
‘economic recovery’ underway, and there has been worse than 0
economic growth, and that what is underway is the biggest fraud in the
history of the human race. As this reality filters downward, and the economic
circumstances of the average American householder continue deteriorating,
look for increasing protests, attacks on government property, and a broad
increase in civil disobedience. More than a deepening of the divide between
‘haves’ and ‘have nots’,
this is the manifestation of an attempt by the elites to isolate and destroy
the middle class.
China, China, China.
More evidence that the Chinese balloon has started the long slow pop that the
monstrously corrupt and totalitarian beast of a nation has been heading for.
You want to talk about a revolution, well you know, China’s the perfect
candidate.
The big big big, out-of-left-field revelation this weekend, as stated
in the Wall Street Journal:
“China’s local governments had amassed
10.7 trillion yuan ($1.65 trillion) of debt by the
end of last year, Liu Jiayi, auditor general of the
country’s National Audit Office, said Monday. That’s equal to
more than a quarter of China’s 2010 gross domestic product of 39.7983
trillion yuan.
Debts assumed by local governments have become a key
risk factor for China’s financial system following the country’s
post-financial crisis stimulus package, which was fueled by bank lending and
infrastructure spending.
According to Credit Suisse, “China could
suffer a “perfect storm” of crises when falling property prices
are matched by a slowing Chinese economy and rising debt defaults among local
governments, cause sour property loans to climb as high as 921 billion yuan (US$142.5 billion)”.
That groaning sound is toppling of the world’s
financial system. Soon it will sound more like a ‘whoosh!’ before
the final sound of the big thump as it hits the ground hard. Let if fall, I
say. If I have to go back to raising corn and chickens while the bankers
resurrect the system, that’s fine with me. Watching the Davos Men
pompously pat little debtor nations on the head while they go about as if the
mantle of civilization is their exclusive domain is frankly quite nauseating.
Oh! Canada!
And here I thought we were the model of financial restraint. I was surprised
to understand just how close Canada is to becoming another basket-case G8
member, with our future gross government debt load currently running at 84%
of GDP. That number is projected to drop to 72%, assuming no reduction in GDP
and economic growth of 2% per annum. But what if the extremely high real
estate values start to plummet when the market goes soft as a result of
global downward GDP pressures, and all $200 billion in mortgages start
heading into non-performance mode? If the prices of key commodities like
copper and oil drop in value to, oh lets say 2005 levels, then Canadian GDP will be horribly
afflicted. That might seem unrealistic right now in this commodity price
environment that, remember, is largely inflated by the aforementioned $2.3
trillion in monopoly money that has been pumped into the system by the kings
of pump and dump on Wall Street and Capitol Hill. But I suppose when all your
neighbours are taking on debt in complete denial of
the consequences, to not emulate them becomes a competitive disadvantage for
the nation. Hmmmmmm.
Certain truths are increasingly held to be
self-evident by we the people. First of all,
everybody can see that the economist class that owns banks and governments
are a despicable breed of human being who feel that
by virtue of their privileged birth and education they can steal from the
public at will. The second is that this whole sovereign debt charade is just
a continuation of that mentality in the pockets of every last citizen for the
remaining drachmas pesos dollars and pounds that are slowly but surely
accruing at the top of that putrid food chain. And the third emerging reality
is that the game will continue until governments are toppled by the people
from whom they are stealing.
James West
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