What Is Tipping the Boat?

the liquidity must always be under the strong row boat
it would be a bear
if it were inside astern

The Cult of the Next Thing: Quotes on Consumerism by Keropok Lekor

"I say that I am a “consumer” because that is what I am told, and consequently that is what I believe about myself. When did I start hearing that I was a consumer and why? Who tells me that I am a consumer and why? A noted philosopher told me once when I asked him what lust was, “Lust” he said, “is consuming”. I live in a rural area. Everywhere I go I find sheep, cows, and pigs. They are consumers, too. We eat them. Who is eating us? "—Wildfeather

Article by Keropok Lekor:

"I belong to the Cult of the Next Thing. It's dangerously easy to get enlisted. It happens by default—not by choosing the cult, but by failing to resist it. The Cult of the Next Thing is consumerism cast in religious terms. It has its own litany of sacred words: more, you deserve it, new, faster, cleaner, brighter. It has its own deep-rooted liturgy: charge it, instant credit, no down-payment, deferred payment, no interest for three months. It has its own preachers, evangelists, prophets, and apostles: ad men, pitchmen, celebrity sponsors. It has, of course, its own shrines, chapels, temples, meccas: malls, superstores, club warehouses. It has its own sacraments: credit and debit cards. It has its own ecstatic experiences: the spending spree. ...more

The Solution to the Global World Financial Crisis of the US Dollar by Wildfeather

Overview
Noted economists have adequately described the grave financial problem existing in the global markets today as being caused by fiat money and a marked shift away from the United States Dollar as the primary reserve currency. We are told that confidence in the United States on many levels has dropped signficantly. Some have begun to view us as a wounded predator insanely harming anything in its path in desperate fear for its own survival. The words of the ancient Roman historian Livy seem true when he wrote that through lack of discipline and morals the people had come to a place where they could no longer bear the vice nor the cure. To this end, economists are telling, we have arrived and are now in the throws of a deep financial crisis. Nothing could be farther from the truth.

Our Strength
The United States of America in the world because our non profit organizations continue to enrich the lives of millions of people globally and are for the most part untaxed in that process. Some like to say that we are glutting ourselves at the expense of the rest of the world. I disagree with this position because our greatest strength to this point has been in the interdependent stance we have taken with others to provide billions of dollars in grants to people and organizations who know how to give both domestically and internationally. The nations of the world need to be reminded of this because it would appear that this is something they know very little about. And that this is an underlying principle upon which our wealth is founded. It will even the most advanced nations many more years to achieve what we have for so long endured in order to obtain. We have our own poverty, crime and social diseases perhaps because we have given too much to the wrong people. The ancient of Aristotle will clarify this condition. Other nations quickly assume evil things about us because they envy the wealth we possess unaware that such wealth is founded upon spiritual principles which manifests itself in the physical. We are a humane, liberated and forthright people. Our social structure are open and accountable. We guarantee the rights of all from unborn children, through the sexes, classes, races, creeds and ages. Our freedoms represented through our churches, fellowships, associations, societies, and other philanthropic and charity based organizations are the heart and lifeblood of America. The corporate cardiovascular system of this nation is quite strong and vital.

The Solution
We always have before us the option to “freely give”, and there is no law, or regulations against that, either natural or economic. Only the unnatural demands of greed stands in the way of giving. Andrew Carnegie has already proven by overpowering those tendencies and setting an example as the worlds most honored and noted philanthropist. True, in many sectors of our economy our giving has been with the intention of deriving "earnings" and showing a profit. What is wrong with that? Why is that so unholy? What value is there in doing anything at a loss for anyone? But, at this juncture in our economic struggles, I propose that we must give even more. We must give wisely and we must give without the obsessive intentions of seeing immediate earnings or profit knowing through faith in the principles of giving that we will indeed reap a handsome reward, and sooner than we might expect if we are wise enough. We need to pump from the more deeply grounded resources of intrinsic wealth in our people.

Wealth
It has been said that "true wealth exists when we create energy and value for other human beings." It has been proven that in crisis one often comes to find the most liberating solutions. It was at a point of crisis that Samuel Adams made the unthinkable decision to stand firmly against the King and the armies of England. He made this decision alone and told his friends later. And you and I are free today because of it. They set in motion the engines of liberty for and entire nation and those engines have been revving ever since. Likewise, I believe the greatest wealth is at hand, if we thoughtfully, and dynamically believe in the wisdom of the ages that points to giving with confidence rather than hedging anxiously to secure our resources. But if we follow those who doubt and conspire nefarious and secret strategies for immediate solutions, we will plunge headlong into a desperate chasm of confusion and chaos just at the point of our greatest economic victory. That has always been the desire of the treacherous few. Therefore, it is my view, that we consider the greater means insuring our survival and that of the rest of the world by giving clean energy and power wholeheartedly to those whom we may have failed. At times of scarcity there is always going to be an abundance of "get" oriented thinkers with vain self serving solutions, but in our great land there is no dearth of "give" oriented thinkers who are fearless and most powerful in their ideas, guidance and disciplines to serve others. It is well within our reach and capacity at this time to solicit their views and to "give" new energy freely. I say again, it is well within our capacity.

History
Over one hundred and fifty years ago petroleum was sold as a cure for cancer, it stole people's live savings then just as it is robbing us of ours now. It was called snake oil back then. Little has changed. Before we drank it. Now we breath it. It is time for change before the snake devours us completely. Since then, certain families have profited by the global control of this snake oil promoting fossil fuels as the only available and economically feasible source of energy. They became our august benefactors. Oil was preferred because in truth it was a high demand resource which could easily be monopolized in mining and transportation. Oil became the establishment. However, there have always existed abundant alternate resources that would have insured and secured our democratic liberties and wealth because they would have fostered our individual independence and our social interdependence. Although delayed we as a free people must claim our rightful access to the available and virtually free resources of clean energy and we must begin to wean ourselves from oil which contaminates our precious atmosphere with toxic hydrocarbons. There is no one to blame ... no scapegoat but ourselves. We though we were benefiting and making progress. But, in the words of Robert Strange McNamarra, "We made mistakes." As Dante traveled with Virgil, the ambassador of reason, it is time for our nation to lead the way out of the sickening stenches of oil, and upward toward Paradise. We must struggle again to find new paths through the mire of this dead oil based energy we have become accustomed to. We must now employ the ancient and omnipresent living energy found in the same gases which were present at the foundation of the universe. These sacred life emitting elements began with the initial words, "Let there be light."

Practical Alternative Energy Now
The solution to the financial crisis caused by greed is to freely give these life supporting substances for the health of the world. Those life generating substances are Hydrogen and Oxygen. These precious gases have been wonderfully and miraculously stored in drinking water. We are told drinking water is good for longevity and good health. It is consistent with the nature of the Creator to provide life in the common substances we must use. Removing these substances and substituting improper ones leads to death. Petroleum distillates are harmful to biology. Certainly oil has proven a cruel master. But, through the simple mechanical dissociation of hydrogen and oxygen we can release the secret power of the universe and foundational elements of life in a perfect two to one ratio easily and safely on demand. The energy that many people are generating today from water was once thought to require massive electrical input in order to obtain. I wonder why? Who has profited from this lie? Every minute oil is used as the common source of energy we the people die. China is suffering severely under this unnecessary burden. Who profits from this? By releasing ourselves from this dependence on oil we will sustain our lives in a greater health and happiness. By offering other nations the methods and means of shifting from the use of fossil fuel toward accessible energy found in the hydrogen and oxygen stored in water, I believe that we will rapidly and safely avert a financial decline.

Since 2004 the US Government has established the Hydrogen, fuel Cells & Infrastructure Technologies Program and funded it with a billion and a half dollars. Interestingly, there is no apparent research for "on-demand" delivery that I have been able to find, only for storage. Obviously, this approach will remove hydrogen one step further from the people and prevent us from being able to produce hydrogen on demand economically. It would seem that on demand private personal manufacture and use may be prohibited.

When we decide to release the expanding pressures in the economic balloon caused by avarice, fear and usury in effect we will be taking the pinch out of its neck and allowing some of the precious gases to emerge freely. Global savings will occur immediately. Some agencies are afraid to give energy to the people for fear that their earnings will be reduced. But the highest agencies of the United States has never shared such fears because right decisions are made by wise and mature leaders who think in terms of benefits in the long run. This will insure the earnings of Big Five in the future but differently than they would like at present and that is why they are at a loss for solutions. Because the solution is instantly available, inexpensive, technically feasible, and may be manufactured and implemented by millions in a matter of weeks. There is simply no profit in it for the big five on this basis. Yet, only on this basis do I find the solution out of the crisis. It is a grave security issue for the People of the United States at this point in time that the governing powers adapt an emergency plan to install in the automobiles of no less that ten million vehicles in the commercial and private sectors which will generate HHO or Brown gas, othewise known as Hydroxy, into the air intake region of as many combustion engines as possible. These gases have proven to have significant beneficial effects on the engine and the atmosphere. They will virtually increase fuel efficiency by over 50% in some cases, and require little modification to the sophisticated engine systems except a simple Electric Fuel Injection sensing modification that will properly adjust for the additional gases. These items are all in practical use today. The Stanley Meyer patents provide the technology needed to minimize the electrical input and maximize the gaseous output. No storage of these gases is necessary or recommended except by those who would have us beholden to proprietary interests. Each unit could be manufactured and distributed to the end user for under thirty dollars. They are as easily self installed or can be installed by licensed professionals in just a few minutes.

The Argument
There is some fear that if there should be any quick and massive movement in the direction of free accessible energy that this would cause a wide scale breakdown in the economy and the taxation generated from the sale of fossil fuel, taxation necessary to offset the enormous debts this nation has to pay. I disagree with this thinking because fossil fuel will continue to be used as the main source of energy. I believe that the reverse of a breakdown will occur because by relieving the pressure from the straining economic balloon, gas consumption of other nations will be relieved permitting them to save. Save, by the way is an important word. People mock when they hear the phrase "Jesus Saves". I wonder why? The people of the United States will save. The Big Five will definitely save stores of oil which is invariably money in the bank. OPEC will save their energy by scaling down production and achieving an equilibrium price. The market will save by regaining confidence in the United States' proving once again that it manifests the power of ingenuity and brilliance in the face of imminent disaster. I love that about US. And, lastly and most importantly, the natural world in which we live will save by renewing the air supply which sustains us all. Just as the marinas cleared themselves of the toxic waters causing friendly wildlife to reappear, so too will the earth replenish itself in the proper balance and stability required to sustain itself a life generating phenomena.

Bob Dylan once sang these words, "Truth is an arrow, and the way is narrow, but it passes through." May those who read this message take courage believing in the simplicity and in the spirit of wisdom may we achieve abundant health and happiness for all who dwell upon the earth. — Joseph Leonard Segreto, sometimes called, Wildfeather

For more on Hydrogen from an average sort of fellow the likes of which is being multiplied millions of times over all over the globe ... click on image to view video.

The War To Save The U.S. Dollar by Gavin R. Putland

[Highly Prophetic Article MUST READ - Things are happening just as this author has stated in 2003 - Seems the handwriting was on the wall ]


(First released March 26, 2003; revised April 18, 2003.)
http://us.altnews.com.au/article.php?sid=4645

The URL for this article is:
www.trinicenter.com/oops/iraqeuro.html

The Americans could live with Saddam until he started selling oil for euros instead of U.S. dollars. Then the Europeans could live with him.

by Gavin R. Putland putland@bigpond.com

GOOD AS GOLD

At the end of World War II, the USA was the world's biggest national economy and the only great power whose industrial base was not damaged by the war. America's huge productive capacity made the U.S. dollar the easiest currency to spend in the global market and consequently the most acceptable foreign currency outside the USA. By the late 1950s, however, the recovery of Europe and Japan caused a suspicion that there were too many dollars in circulation. Central bankers began to exchange their dollars for gold under the terms of the 1944 Bretton Woods treaty, whereby the currencies of participating countries were backed by gold. In 1971, in response to the depletion of U.S. gold reserves, President Richard Nixon announced that the dollar would no longer be redeemable for gold. So the system of fixed exchange rates via gold-backing fell apart. It was thought that the dollar would decline in value as traders relied less on the dollar and more on the emerging European and Asian currencies. But support for the dollar came from an unlikely quarter.

GOLD TURNS BLACK

In 1973, the Organization of Petroleum Exporting Countries (OPEC) quadrupled the price of oil but continued to accept only U.S. dollars in payment, so that demand for dollars soared. From then on, the dollar was effectively backed by oil instead of gold -- and the U.S. government didn't even have to own the oil!

Because dollars can buy oil, exporters in countries that need to import oil -- i.e. most developed countries -- will accept dollars for their exports. Hence everyone who needs to buy from those exporters will accept dollars as payment for other things, and so on. To pay their bills, importers must have reserves of dollars. To prop up their currencies against speculative attacks, the central banks of all countries must have reserves of dollars. To get capital, poor countries must borrow dollars, and to service these debts they must export goods to obtain more dollars. About 2/3 of all currency reserves, more than 4/5 of all currency transactions, more than half of the world's exports, and all loans from the International Monetary Fund (IMF) are denominated in dollars. As these things create demand for the dollar and shore up its value, oil exporters are the more willing to accept payment in dollars. So the process is self-reinforcing; it's called "dollar hegemony". ... read the rest.

Demising US dollar gives way to euro cash in Russia

Pravda 17.02.2005

The American currency has lost its function – the dollar does not save people's savings anymore


The dollar's behavior against the ruble makes a lot of Russian people turn to the euro. The Central Bank has recently published the statistics of last-year currency operations. As one can see from the information, authorized banks sold the euro cash in the sum of $1 billion 105.54 million to Russian natural persons in December of 2004. It became the all-time high record of euro sales since the introduction of the euro cash in 2002. On the one hand, December is a month that precedes the long period of New Year holidays. Wealthy Russians prefer to spend them somewhere in Europe having quite an amount of the euro cash in their pockets. On the other hand, there are not many such people in Russia, who can afford spending their holidays abroad. They could not spend such a huge amount of money on holiday tours. For the time being it is not clear if the increased demand on euros was only a seasonal factor, or one could already view it as a change of Russian people's traditional fondness to the US dollar.

An analyst of Gazprombank, Sergei Suverov, believes that Russians are disappointed in the declining dynamics of the dollar. “Everybody is used to the idea that the US dollar is a good way to avoid inflation. Now the American currency has lost its function – the dollar does not save people's savings anymore. The dollar rate has been sliding against the ruble. Furthermore, people look at the politics of the government and the Central Bank, which decided to place a part of its gold and forex reserves in both dollars and euros. To crown it all, Russian people travel to Europe much more often than they do to the USA. One may also recollect analytical forecasts, in which it was supposed that the dollar would continue its demise on account of the deficit of the US balance of payment and budget. To crown it all, Asian banks can also sell dollars and buy euros to diversify their reserves,” the specialist said.

Sergei Suverov does not think that the ongoing demise of the dollar will eventually lead to any extremities. “The American economy is still very strong, technological and efficient. I am talking about corporate data here, not the macroeconomic indexes of the USA. The corporate America is still an example for Europe to follow from the point of view of its effective and technological capacity. It would be naive to say that the dollar will vanish from the international arena. Furthermore, the situation in Europe is far from being perfect. Europe is not the most dynamic region of the world as far as its economic structure is concerned. The European Union is facing three problems at the moment: unemployment, the ageing of the population and the ageing of productive capacities. Asia is the most dynamic market in the world today. A lot of European enterprises do not meet competition with cheap Asian goods, especially when it comes to mass consumption goods. Therefore, the current correlation of the two major currencies has been most likely caused with the decline of the dollar, which in its turn appeared because of financial problems in the USA. As far as the ruble is concerned, the Russian currency depends on oil prices most. The current situation testifies to the high level of oil prices and the favorable development of the macroeconomic situation in Russia. The ruble has not obtained a long-term stability yet – the diversification of the Russian economy is just getting started,” Sergei Suverov said.

Russian people will probably favor their national currency in two or three years. The default of 1998 still has a big impression on the majority of Russians. A lot of them realize that it is oil, which makes for the strength of the ruble. The popularity of ruble tools, ruble bank deposits, first and foremost, will definitely be growing. The dollar and euro rate will most likely be stabilized, because Europe is not interested in the expensive euro: it decreases the competitive ability of the European economy. Russia will probably become a three-currency space (dollar, euro and ruble), and people will be psychologically oriented at the strongest one of them.

Three Billion New Capitalists —Review by Gaetan Lion

Wanna read a fascinating review ... a little dated but somewhat profound.

He was wrong about Japan. He will be wrong about China too., June 11, 2005

By	Gaetan Lion - See all my reviews

Back in 1988, Prestowitz wrote "Trading Places" which was about Japan taking over the world. It sure looked that way at the time, Japan had the highest savings and investment rate, it was catching up and leapfrogging past us in many technologies. It had a huge current account surplus. However, shortly after Prestowitz published his book Japan experienced a chronic recession for the next 20 years. It's stock market level has not recovered from the peak of the late 80s.

Now, Prestowits is crying wolf about China and India for a different set of well known reasons. They have an abundant, cheap, and increasingly educated labor force that will accelerate the gutting out of both our manufacturing and research-service sectors.

Everything Prestowitz states is true, well researched, and insightful. Thus, why was he so wrong nearly 20 years ago about the prognostic of Japan vs the U.S.? And, is he likely to be wrong about China and India?

There is a simple reason why Prestowitz is likely to be wrong again. He focuses only on the most positive sides of our international competitors, and the worst ones of ours. Thus, his arguments are highly unbalanced. China and India are formidable competitors, and to some degree they should take over the world. This is just so that the living standards of their citizen reaches something beyond a poor third world level. However, both China and India face extremely challenging hurdles. China is absolutely clueless about efficient allocation of capital. Credit allocation through their banking system is one of the poorest and most corrupt in the world. The percentage of bad loans within these same banks is causing the entire banking sector to be essentially insolvent. India on the other hand suffers from an incredibly high illiteracy rate which exceeds 50% of the population. It has also one of the most byzantine and inefficient government regulatory apparatus. Ordering a new residential phone line in India is more cumbersome and time consuming then starting a whole new business in the U.S. These weak spots of China and India are complete blind spots in Prestowitz arguments. Thus, he reaches dramatic and likely wrong conclusions. Just like he did when he wrote about Japan back in 1988.

The truth of the matter is that a "catastrophic" type framework sells a lot more books than a more nuanced, and balanced one. But, reality is typically much more complex than such unidirectional lopsided arguments. This is especially true when one attempts to predict complex international competitiveness outcome over the next half a century.

For more on Ptestowitz

SOME HISTORY ON THE DOLLAR by Economicrot

Good Recent Essay on the Buck ... Best I've seen in a while ... concise and fairly brief.

Economicrot 1-2008

Throughout the history of the world, there have always been strong currencies, usually held by the economic powerhouses of the day. Theses currencies were primarily called Reserve Currencies. The Pound Sterling was the primary reserve currency for much of the world in the 18th and 19th centuries. But perpetual account and fiscal deficits, financed by cheap credit and unsustainable monetary and fiscal policies used to finance wars and colonial ambitions eventually led to the pound sinking (sound familiar?).

Post World-War II, the US dollar took over the sterling’s dominant position and became the world’s newest reserve currency. The Bretton Woods Accord, the first major economic transformation toward the end of World War II, established the International Monetary Fund (IMF) and a way to value the various currencies of the world relative to each other. All foreign currencies would trade in relationship to the US Dollar and only the US dollar (as the reserve currency) would be tied to a gold standard (meaning the value of dollars circulating must be backed by gold reserves).

The gold standard caused major problems in the 1960’s when France (under the London Gold Pool) called America’s bluff and demanded gold for payment of debt, rather than US dollars (they understood that we were printing more money, to finance the Vietnam conflict and fund new social programs, than we had available in gold reserves).

Due to the rapid loss of US gold reserves, President Nixon had no choice but to abolish the Bretton Woods accord in August of 1971 and he took the US dollar off the gold standard (it was $35 per ounce then; today it is > $900).

This Nixon shock of August 1971 caused a swift devaluation of the US dollar (gold doubled in price by 1972) and numerous efforts followed (by U.S. leadership) to develop a new system of international monetary management. They felt they must find another way, as currencies around the world were in turmoil and were now floating among one another…

The year 1974 provided the much needed answer. In June of 1974, Secretary of State Henry Kissinger established the US-Saudi Arabian Joint Commission on Economic Cooperation. One of the major components of this commission stated that OPEC would officially agree to sell its oil only for dollars—meaning any country purchasing oil from OPEC had to pay in U.S. dollars. This agreement enormously increased the demand for the floating dollar, as oil importing countries now had to earn or borrow dollars to pay for their oil. ...more

Uncertain future for US economy

I love reading dated stuff ... some insightful writers make marvelous predictions, and thus, one comes to learn by watching the truth of past predictions of wise and qualified by people who have a right to speak. I think that Alan Ahearne is one of these. Here is something he wrote in 2006 which may have some bearing on today's economic events"

The following is taken from the Post.IE

Sunday, November 12, 2006 - By Alan Ahearne
The recapture of the US House of Representatives and the Senate by the Democrats last Tuesday represents an enormous defeat for Republican President George W Bush and his policies in Iraq.

The now lame-duck Bush is a deeply unpopular figure in many parts of the world, including, it would seem, here in Ireland. Republican losses have been greeted in some quarters with a degree of jubilation not seen since the Munchkins celebrated the demise of the Wicked Witch of the East.

But before breaking into a chorus of ‘‘Ding Dong, the Republicans are gone’’, we ought to consider that the shift in power in the US could have major implications for the world’s biggest economy - and therefore for Ireland, which is very reliant on the US.

Voters punished the Bush administration for its failure to win in Iraq, and the Irish economy may end up a victim of collateral damage.

The Democrats’ victory comes at a time when the outlook for the US economy is highly uncertain. After several years of heady economic growth, the performance of the US economy deteriorated markedly this past summer amid a dramatic downturn in the over-stretched housing market.

Hit by a series of interest rate hikes by the Federal Reserve - America’s central bank - which saw interest rates go from 1 per cent in 2004 to 5.25 per cent today, construction of new houses tanked, inventories of unsold houses soared to 40-year highs and house prices stalled - and, in some states, began to fall.

The crucial question for the US economy’s short-term prospects is whether the worst of the housing slowdown has passed. The concern is that the recent softness in the housing market may deteriorate into an outright housing market crash, plunging the US into a severe recession.

The fortunes of the US economy in the near term will be largely unaffected by the changeover in the House and Senate. The Democrats are expected to move quickly to push through a rise in the minimum wage to $7.25 an hour from the current $5.15, a roll-back in tax breaks for oil companies and possibly an increase in income taxes on the very wealthy.

None of these policy changes will matter much for the direction of the overall economy over the next few years. Financial markets, tellingly, hardly reacted to the election results.

Where the economy goes from here will be determined mainly by what happens to interest rates, which are set by the Federal Reserve, not by the newly-elected politicians.

Importantly, the same cannot be said of US economic policies in the international arena, like trade and foreign investment policies, which are expected to change, perhaps radically. ...more

An Economic View of the United States

The US has the largest and most technologically powerful economy in the world, with a per capita GDP of $46,000. In this market-oriented economy, private individuals and business firms make most of the decisions, and the federal and state governments buy needed goods and services predominantly in the private marketplace. US business firms enjoy greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, to lay off surplus workers, and to develop new products. At the same time, they face higher barriers to enter their rivals' home markets than foreign firms face entering US markets. US firms are at or near the forefront in technological advances, especially in computers and in medical, aerospace, and military equipment; their advantage has narrowed since the end of World War II. The onrush of technology largely explains the gradual development of a "two-tier labor market" in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in household income have gone to the top 20% of households. The response to the terrorist attacks of 11 September 2001 showed the remarkable resilience of the economy. The war in March-April 2003 between a US-led coalition and Iraq, and the subsequent occupation of Iraq, required major shifts in national resources to the military. The rise in GDP in 2004-07 was undergirded by substantial gains in labor productivity. Hurricane Katrina caused extensive damage in the Gulf Coast region in August 2005, but had a small impact on overall GDP growth for the year. Soaring oil prices in 2005-2007 threatened inflation and unemployment, yet the economy continued to grow through year-end 2007. Imported oil accounts for about two-thirds of US consumption. Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade and budget deficits, and stagnation of family income in the lower economic groups. The merchandise trade deficit reached a record $847 billion in 2007. Together, these problems caused a marked reduction in the value and status of the dollar worldwide in 2007. ...more

Life is no Bell Curve

"The combination of relentless refusal to allow regulatory oversight of the explosive new financial instruments from Credit Default Swaps to Mortgage Backed Securities and the myriad of similar exotic "risk-diffusing" financial innovations and the 1999 final repeal of the Glass-Steagall Act strictly separating securities dealing banks from commercial lending banks opened the way for what in June 2007 began as the second Great Depression in less than a century. It began what future historians will describe as the final demise of the United States as the dominant global financial power."

and

"As hundreds of thousands of Americans over the coming months find their monthly mortgage payments dramatically reset according to their Adjustable Rate Mortgage terms, another $690 billion in home mortgage debt will become prime candidates for default. That in turn will lead to a snowball effect in terms of job losses, credit card defaults and another wave of securitization crisis in the huge market for securitized credit card debt. The remarkable thing about this crisis is that so much of the sinews of the entire American financial system were tied in to it. There has never been a crisis of this magnitude in American history.

At the end of February the Financial Times of London revealed that US banks had "quietly" borrowed $50 billion in funds from a special new Fed credit facility to ease their cash crisis. Losses at all the major banks from Citigroup to J.P.Morgan Chase to most other major US bank groups continued to mount as the economy sank deeper into a recession that clearly would turn in coming months into a genuine depression. No Presidential candidate had dared utter a serious word about their proposals to deal with what was becoming the greatest financial and economic meltdown in American history.

By the early days of 2008 it was becoming clear that Financial Securitization would be the Last Tango for the United States as the global financial superpower.

The question now was posed what new center or centers of financial power could conceivably replace New York as the global nexus. That we will examine in Part VI."

Read:

Speculative Onslaught. Crisis of the World Financial System: The Financial Predators had a Ball

Financial Tsunami, Part V

by F. William Engdahl

The Financial Tsunami: Sub-Prime Mortgage Debt is but the Tip of the Iceberg by F. William Engdahl

Part 1: Deutsche Bank’s painful lesson

Even experienced banker friends tell me that they think the worst of the US banking troubles are over and that things are slowly getting back to normal. What is lacking in their rosy optimism is the realization of the scale of the ongoing deterioration in credit markets globally, centered in the American asset-backed securities market, and especially in the market for CDO’s—Collateralized Debt Obligations and CMO’s—Collateralized Mortgage Obligations. By now every serious reader has heard the term “It’s a crisis in Sub-Prime US home mortgage debt.” What almost no one I know understands is that the Sub-Prime problem is but the tip of a colossal iceberg that is in a slow meltdown. I offer one recent example to illustrate my point that the “Financial Tsunami” is only beginning.

Deutsche Bank got a hard shock a few days ago when a judge in the state of Ohio in the USA made a ruling that the bank had no legal right to foreclose on 14 homes whose owners had failed to keep current in their monthly mortgage payments. Now this might sound like small beer for Deutsche Bank, one of the world’s largest banks with over €1.1 trillion (Billionen) in assets worldwide. As Hilmar Kopper used to say, “peanuts.” It’s not at all peanuts, however, for the Anglo-Saxon banking world and its European allies like Deutsche Bank, BNP Paribas, Barclays Bank, HSBC or others. Why? ...more