Happy New Year

 

 F. William Engdahl, Global Research 15 Dec. 2008: “The world faces the greatest financial and economic challenges in history in coming months. The incoming Obama Administration faces a choice of literally nationalizing the credit system to insure a flow of credit to the real economy over the next 5 to 10 years, or face an economic Armageddon that will make the 1930's appear a mild recession by comparison.”

As Gerald Celente has predicted the danger of the developing real economic recession is that it turns into a hyperinflation with a break-down of the dollar and world-wide unemployment.
Engdahl is a very well-informed man and describes how exactly this scenario is developing now due to calculation or incompetence of the criminal Federal Reserve and here.


FED_dees

The Federal Reserve has bluntly refused a request by a major US financial news service to disclose the recipients of more than $2 trillion of emergency loans from US taxpayers and to reveal the assets the central bank is accepting as collateral.

                      Pictures in this post by David Dees

How much is at stake?
The total of such emergency Fed lending exceeded $2 trillion on Nov. 6. It had risen by an astonishing 138 percent, or $1.23 trillion, in the 12 weeks since Sept. 14, when central bank governors relaxed collateral standards to accept securities that weren't rated AAA. They did so knowing that on the following day a dramatic shock to the financial system would occur because they, in concert with the Bush Administration, had decided to let it occur.

The present economic collapse across the United States is driven by the collapse of the $3 trillion market for high-risk sub-prime and Alt-A home mortgages. Alone in 2008 US home owners lost 2 trillion dollars - and no bottom is in sight

Obama-change? Hardly
On September 15 Bernanke, New York Federal Reserve President, Tim Geithner, the new Obama Treasury Secretary-designate, along with the Bush Administration, agreed to let the fourth largest investment bank, Lehman Brothers, go bankrupt, defaulting on untold billions worth of derivatives and other obligations held by investors around the world. That event, as is now widely accepted, triggered a global systemic financial panic.

Note printers working hard
Since the Lehman Bros. default, the Fed´s money expansion rose so dramatically by end October -  without precedent in the 95 year history of the Federal Reserve since its creation in 1913.
That expansion of the monetary base had jumped to a staggering 76% rate in just 3 months. It has gone from $836 billion in December 2007 when the crisis appeared contained, to $1,479 billion in December 2008.

No confidence
Crash_deesDespite this, banks do not lend further, not even to each other meaning the US economy is in a depression free-fall of a scale not seen since the 1930's.

Hence the banks exchange $2 trillion of presumed toxic waste securities consisting of Asset-Backed Securities  in exchange for Federal Reserve cash and US Treasury bonds or other Government securities, i.e. risk-free.

The result is that the Federal Reserve is holding some $2 trillion in largely junk paper.  Borrowers include Lehman Brothers, Citigroup and JPMorgan Chase, the US's largest bank by assets.

Financial catastrophe just around the corner
Further adding to the troubles in the world's former financial Mecca, the US Congress refused to give even a meager $14 billion emergency loan to the Big Three automakers-General Motors, Chrysler and Ford.

What is being left out of the debate is that those three companies account for a combined 25% of all US corporate bonds outstanding. They are held by private pension funds, mutual funds, banks and others. If the auto parts suppliers of the Big Three are included, an estimated $1 trillion of corporate bonds are now at risk of chain-reaction default. Such a bankruptcy failure could trigger a financial catastrophe which would make what has happened since Lehman Bros. appear as a mere hiccup in a hurricane.

As well, the Federal Reserve's panic actions since September, by their explosive expansion of the monetary base, has set the stage for a Zimbabwe-style hyperinflation.

The dollar is set to collapse – and European export to be paralyzed
The new money is not being 'sterilized' by offsetting actions by the Fed, a highly unusual move indicating their desperation.

That means once banks begin finally to lend again, perhaps in a year or so, that will flood the US economy with liquidity in the midst of a deflationary depression. At that point or perhaps well before, the dollar will collapse as foreign holders of US Treasury bonds and other assets run. That will not be pleasant as the result would be a sharp appreciation in the Euro and a crippling effect on exports in Germany and elsewhere.

For the week ended December 6 initial jobless claims rose to the highest level since November 1982.
Some 1,900,000 US jobs have vanished so far in 2008.

CFR-member Paul Volcker, a Chase Manhattan appendage of the Rockefeller family, in the 1980´s sent economy  into severe recession, and his high interest rate policy detonated what came to be called the Third World Debt Crisis. The same Paul Volcker has just been named by Barack Obama as chairman-designate of the newly formed President's Economic Recovery Advisory Board, hardly grounds for cheer.

Foreclosure_dess

The widely-used S&P Schiller-Case US National Home Price Index showed a 17% year-year drop in the third Quarter, trend rising. By some estimates it will take another five to seven years to see US home prices reach bottom.

In 2009,…. the rate of home abandonments and foreclosures will explode. Little in any of the so-called mortgage amelioration programs offered to date reach the vast majority affected. That process in turn will accelerate as millions of Americans lose their jobs in the coming months.

In the process it might be time for Congress to consider retaking the Federal Reserve into the Federal Government as the Constitution originally specified, and make the entire process easier for all.

Reuters Dec. 16: A poll released by Marist College Institute for Public Opinion on Monday showed 24 percent of Americans thought it likely they would be laid off or see their working hours cut in 2009.

"Obama has not shown signs of being the right person for this. He has not shown the right boldness of vision."

Canada and the US have just agreed to send each others´armies to their mutual assistance in the case of internal riots due to e.g. economic collapse - and the police in Arizona is also bracing for that event - just as the US Northern Command is making intensive propaganda to obtain the accept of the Americans of the presence of regular combat troops on their streets.

Comment
AmeroThe question is: Is this disaster meticulously premeditated by the bankers of the New World Order – or is this due to incompetence of Henry Paulson and Bernanke? Many have a feeling that the dollar will be replaced by an Amero (video) at an unfavourable exchange rate - this causing severe social unrest. Or riots will be brought about through intolerable taxes on a proletarianized middle class - as suggested by Gerald Celente and the British Defence Department.

I think it is premeditated in order to enforce an intermediary towards a world currency like the Euro, which is planned by the New World Order – in the same way as the climate lie and the “war against terror”, which are two reasons for the economic collapse, are premeditated in order to implement  world government. And Joe Biden and Colin Powell are predicting even greater disasters in the near future  - to make us all scream for their corporate New World Order World Republic
(see videos on the right margin of this blog).

Will this crisis have consequences for Europe and the Euro?
The Telegraph 15 Dec. 2008 . One notes that Germany has acquired the taste for bullying small nations. Mr Steinbrück threatened to "take a whip" to Switzerland. Germany now has a current account surplus of 7pc of GDP. It is hollowing the industrial core of Latin Europe.
Comment: Didn't the English treat the Icelanders like terrorists this very year?

Russia Today News, 14 Dec.
Membership of the EU and its single currency has led to soaring living costs in Greece, and many in the younger generation fear their future is among the poor.

Greece´s spirit and soul is closer to Eastern Europe, so it’s not surprising the first cracks in the European Union are appearing here.

Meanwhile, demonstrators are threatening to continue their street protests until officials in Brussels understand that the economy is more than numbers; it’s geography, history, tradition and soul.
Comment: And these protests are spreading to France, Spain and Italy as well. This crisis may bring about a very deep political crisis in the entire world - and hopefully make the EU burst.