Senior analysts and traders warned of impending bank failures as a summit intended to solve the European crisis failed to deliver a solution that eased concerns over bank funding.
The European Central Bank admitted it had held meetings about providing emergency funding to the region’s struggling banks, however City figures said a “collateral crunch” was looming.
“If anyone thinks things are getting better then they simply don’t understand how severe the problems are. I think a major bank could fail within weeks,” said one London-based executive at a major global bank.
Many banks, including some French, Italian and Spanish lenders, have already run out of many of the acceptable forms of collateral such as US Treasuries and other liquid securities used to finance short-term loans and have been forced to resort to lending out their gold reserves to maintain access to dollar funding.
So, what precisely does this mean? It means that the banks one ability that they have used since 1659 to control people and governments, the ability to create money and control the quantity of it in our system, is nearly gone. How is this, you ask?
While it is popular vernacular to refer to what has been practiced by Ben Bernanke’s Federal Reserve and Central Banks across the world as ‘printing money,’ that is a misnomer. What they truly do, is issue DEBT. Our worldwide monetary system is based upon nothing but the issuance of DEBT. This means there has to be a BUYER of debt somewhere, some place, in order for money to either be printed (physically) or put into someone’s bank account electronically.
‘Printing’ or more accurately termed ‘raw printing’ is what happened in Weimar Germany and in Argentina. This is when governments just run a printing press with NO promise to pay ANYTHING at any time, merely for the sake of fooling people into continuing with commerce as usual. That doesn’t last very long, and we get the much feared monetary phenomenon of hyperinflation.
Today, someone sent me a link to a recent Pajama’s Media article, which I believe embodies the erroneous perception of many on the right and perpetuates the outright lie that banks are innocent victims in our current economic situation.
Almost everyone who believes in the Constitution and free markets properly considers October 3, 2008, one of the darkest days in U.S. history. It was on that day that the “Emergency Economic Stabilization Act” creating the Troubled Asset Relief Program (TARP) became law. A day later, I wrote that law’s passage, accompanied by tactics and threats which amounted to orchestrated blackmail, over the strident objections of over 150 economists from across the political spectrum, only days after its initial voter-driven failure, proved that Washington’s politicians and elites “don’t care what we think.”
Abhorrent as it was, the sickening saga of TARP’s enactment was nothing compared to what transpired less than two weeks later.
I agree that October 3, 2008 was a horrible day for this country. It was essentially when the very last bit of capitalism that remained in this country was destroyed. It was not, however, because of the extortion of the BANKS by Henry Paulson, it was his extortion of CONGRESS.
Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group, said another financial crisis is inevitable because the causes of the previous one haven’t been resolved.
“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” Mobius said at the Foreign Correspondents’ Club of Japan in Tokyo today in response to a question about price swings. “Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.”
The total value of derivatives in the world exceeds total global gross domestic product by a factor of 10, said Mobius, who oversees more than $50 billion. With that volume of bets in different directions, volatility and equity market crises will occur, he said.
Let that sink in. TEN TIMES GLOBAL GROSS DOMESTIC PRODUCT. In other words, banks have created enough ‘financial weapons of mass destruction’ to wipe out every human being’s production….ten times over.
Military.com posted an article discussing the various proposals for ‘balancing’ the ever-ballooning budget.
There has been some recent buzz about the House of Representatives proposing more cuts to veterans’ benefits. This time, the focus has fallen on VA Healthcare and excluding some veterans over others. Here is what you need to know about the debate.
The House Budget Committee recently announced plans to cut $6 billion from VA Healthcare for 1.3 million veterans who are in Priority Group 7 and 8. Roughly 10 percent of these, some 130,000 veterans, will be forced out of the VA system with no available alternatives. Veterans from Group 7 & 8 have either a 0 percent service-connection or no service-connected rating. While this does not mean the veteran is fit as a fiddle, it does imply they do not need the amount of care needed for other vets. These veterans pay co-pay and have incomes over $32,000 and net-worths under $80,000, depending on geography. In other words, they aren’t dirt poor but certainly not wealthy, either.
The Congressional Budget Office believes the U.S. can save $62 billion over the next 10 years by removing services for these veterans altogether. According to the agency, 90 percent of the veterans in question have access to some form other healthcare other than VA funded. However, the CBO does not comment on whether the alternative healthcare is affordable.
I’m going to say right up front that this is reprehensible. Not only is it disgusting, it’s pointless to pretend that ANY of these proposed cuts to VA benefits will be anything but a microscopic drop of water in an ocean. Let’s talk about some reality here.
So, let’s see….our overall spending on defense is only about 1/6th of our total budget outlay, or as indicated here, $744 billion. Of that, only a tiny fraction goes towards healthcare to our current and retired military. Keeping in mind that these brave men and women were willing to sacrifice their very LIVES to do their jobs, let’s compare that to banker welfare expenditures over the past 4 years.
It’s amazing what conclusions people will draw from unrelated events. This article in the Washington Times for instance. Of course, the Times isn’t the only place where people are attempting to establish a cause and effect through unrelated events and failing to reach an accurate conclusion from circumstantial evidence. This is probably why our court system disallows circumstantial evidence, but that’s just an educated guess on my part.
Glenn Beck* is also doing this with regards to the financial portion of his programs. He too, has failed to deduce that the cause of our financial meltdown has absolutely no correlation whatsoever to those who are currently exploiting it.
None of what is written in the Times article would have even been remotely possible (assuming there are any bits of truth to this being ‘planned’) unless all the referenced Wall Street firms had already been insolvent – AND THEY WERE! Anyone who can read a financial earnings report can conclude this merely by examining the data. Further, anyone can currently see the former balance sheet of Bear Stearns, now happily festering on the Federal Reserve’s books, just awaiting its further taxpayer bailout.
The Democratic (remember: no references to “liberals” until after the November landslide.) version of the “Good Ship Lolli-Fop” has again loaded its fuel tanks with the patented helium that the Democrats continually pollute the political atmosphere with. According to the Washington Post, (“Obama assails GOP, promotes new jobs program”) Obama was off promoting a “new jobs program.” I find that to be as humorous as Howard Dean promotion “mental health” or Michael Moore promoting “weight loss.” Obama is to jobs what Kevorkian is to the elderly.
By LARRY WILKE
