Needed–A Plan to Rescue Us from the New Bailout Plan
The Associated Press announced on September 25:
“Warned of a possible financial panic, key Republicans and Democrats reported agreement in principle Thursday on a $700 billion bailout of the financial industry and said they would present it to the Bush administration in hopes of a vote within days… ‘I now expect that we will indeed have a plan that can pass the House, pass the Senate (and) be signed by the president,’ said Sen. Bob Bennett, R-Utah. The bipartisan consensus on the general direction of the legislation was reported just hours before President Bush was to host presidential contenders Barack Obama and John McCain and congressional leaders at the White House for discussions on how to clear obstacles to the unpopular rescue plan.”
WHY is that plan so “unpopular”?
On September 19, The Financial Times wrote in more detail about the proposed plan of the federal government to rescue or bail out troubled banks. This “magnificent” plan proposes that the government borrows money to buy bad loans from troubled banks for the purpose of wiping out most of them, thereby freeing those troubled banks from their problems and allowing them to borrow more money. Of course, ultimately the tax payer will have to bleed for these grandiose concepts. In addition, note what the Financial Times writes:
“A copy of the draft legislation, obtained by Reuters, also calls for raising US borrowing authority to $11.315 trillion [the U.S. national debt is right now about $9.6 trillion]… The political negotiations on the rescue plan, which followed a week of unprecedented stress in global financial markets, envisage the most extensive peacetime expansion of the role of government in the financial system since the Great Depression and appeared to many to mark the end of an era of Reaganite deregulation.”
The Financial Times added on September 24:
“The cost of the Treasury plan to save the US financial system from collapse cannot be estimated because it is too vague, Peter Orszag, head of the Congressional Budget Office, told legislators on Wednesday. At a hearing before the House budget committee, Mr Orszag said: ‘The secretary would have the authority to purchase virtually any asset, at any price, and sell it at any future date; the lack of specificity regarding how that authority would be implemented makes it impossible at this point to provide a quantitative analysis of the net cost to the federal government.’
“But Mr Orszag added that the CBO, which analyses the cost of legislation on a non-partisan basis, expected the Treasury to ‘fully use’ the $700bn authority in the fiscal year of 2009 it is demanding. Over time, he said, the government would recover some of that money, but the extent to which this would happen could not be estimated…
“Meanwhile, new data showed that existing home sales dropped by 2.2 per cent in August, which was much worse than expected and highlighted the continuing downturn in the US housing market.”
President Bush: USA in Serious Financial Crisis
Reuters reported on September 24:
“President George W. Bush on Wednesday said the United States was in a serious financial crisis as he tried to convince Americans to support a $700 billion financial rescue plan… He warned that ‘the market is not functioning properly,’ there is widespread loss of confidence, major sectors are at risk, and more banks could fail and threaten sending the U.S. economy into recession. ‘We must not let this happen,’ Bush said.”
“Almost Armageddon” –Until Next Time…
The New York Post wrote on September 21:
“The market was 500 trades away from Armageddon on Thursday… Had the Treasury and Fed not quickly stepped into the fray that morning with a quick $105 billion injection of liquidity, the Dow could have collapsed… money market funds were inundated with $500 billion in sell orders prior to the opening…
“The panicked selling was directly linked to the seizing up of the credit markets… and the rumors of additional money market funds ‘breaking the buck,’ or dropping below $1 net asset value. The Fed’s dramatic $105 billion liquidity injection on Thursday (pre-market) was just enough to keep key institutional accounts from following through on the sell orders and starting a stampede of cash that could have brought large tracts of the US economy to a halt.”
“An Economic Pearl Harbor”–And “No Plan B”!!!
Bloomberg wrote on September 24:
“Billionaire investor Warren Buffett, calling the market turmoil ‘an economic Pearl Harbor,’ said Treasury Secretary Henry Paulson’s $700 billion proposal to prop up the U.S. financial system is ‘absolutely necessary.’
“‘The market could not have taken another week’ like last week, Buffett told CNBC today… ‘I think it was the last thing Hank Paulson wanted to do, but there’s no Plan B for this’… The economy is ‘everybody’s problem,’ he said…”
Germany Blames USA and Britain for Present Financial Crisis
Deutsche Welle reported on September 20:
“German Chancellor Angela Merkel… said her government had tried in vain to win G8 support last year for tighter regulation of hedge funds and financial oversight of capital markets, hinting that she felt vindicated in her stance as a financial disaster unfolded on Wall Street in recent days… In a separate interview with a Munich newspaper, Muenchner Merkur… Merkel criticized the US and British governments for obstructing Germany’s efforts in the first half of 2007 to bring greater transparency to the markets… the United States and Britain ‘did not back this to the degree required,’ she said.”
Germany and Great Britain Won’t Participate in Bailout
Der Spiegel wrote on September 22:
“On Sunday US Treasury Secretary Henry Paulson then called on foreign governments to launch… bailouts for their own banks… But the governments of Germany and Great Britain have shaken their heads…
“Michael Meister, the deputy head floor whip of Merkel’s Christian Democrats (CDU)… said the US could be laying a foundation for the next crisis with its multibillion dollar bailout… Joachim Poss, deputy parliamentary whip for the center-left Social Democrats, also rejected calls from Washington to participate in the bailout. ‘The Americans can’t make Germany liable for their own failure and arrogance. A similar action is neither planned nor necessary in Germany,’ he said…
“In Britain, Prime Minister Gordon Brown told the BBC: ‘People were taking risks that were excessive — and that was mainly in my view in America and we are paying a price for what has come out of America.'”
“The US System Is Collapsing…”
The Los Angeles Times wrote on September 20:
“… the economic meltdown that wrought its wrath from Rome to Madrid to Berlin this week brought Europeans together in a harsh chorus of condemnation of the excess and disarray on Wall Street.
“The finance minister of Italy’s conservative and pro-U.S. government warned of nothing less than a systemic breakdown. Giulio Tremonti excoriated the ‘voracious selfishness’ of speculators and ‘stupid sluggishness’ of regulators. And he singled out Alan Greenspan, the former chairman of the U.S. Federal Reserve, with startling scorn. ‘Greenspan was considered a master,’ Tremonti declared. ‘Now we must ask ourselves whether he is not, after [Osama] bin Laden, the man who hurt America the most. . . . It is clear that what is happening is a disease. It is not the failure of a bank, but the failure of a system. Until a few days ago, very few were willing to realize the intensity and the dramatic nature of the crisis… The system is collapsing, exactly like the Albanian pyramids collapsed,’ Tremonti said…
“The crisis threatens to worsen woes — inflation, unemployment, weak growth — of regional powerhouses including Britain, Spain and Italy… Among the European economies, it is Britain’s that most resembles America’s in its vulnerability… ‘The financial tsunami that has engulfed Wall Street since the weekend hit these shores yesterday,’ the Daily Telegraph declared in an editorial Thursday… ‘The spectacle across the ocean has left a lasting [negative] impression on many Europeans…”
New US-German Tensions Over Relations with Russia
Der Spiegel Online wrote on September 22:
“A US diplomat has denounced the controversial Baltic natural gas pipeline… [and has] ruffled feathers in Berlin and highlighted growing US-German tensions over relations with Russia.
“Michael Wood… has been the US ambassador to Sweden for the past two years… He wrote that the pipeline represents ‘a special arrangement between Germany and Russia’ that ‘bypasses the Baltic States and Poland,’ which are ‘potential customers.’ Wood calls for the EU to speak ‘with a single voice to counteract the power of Russia’s energy weapon.’
“… Rüdiger von Fritsch, head of economic affairs at the German Foreign Ministry, promptly called up the American embassy in Berlin and demanded an explanation. Von Fritsch said the German government was ‘annoyed’ by this highly ‘unusual’ approach.
“On the other end of the line, Deputy Chief of Mission John Koenig said that he was surprised by the ambassador’s statements. He underscored that the US position remains unchanged: Washington will issue no comment on the private pipeline deal… Nevertheless, the incident has created an air of suspicion…
“German Foreign Minister Frank-Walter Steinmeier and his team are afraid that the American slip-up has let the cat out of the bag on how the US actually views the issue. Sources inside the German Foreign Ministry say that for months US diplomats have been working behind the scenes to undermine the proposed 1,200-kilometer (745-mile) underwater pipeline between the Russian port of Vyborg and Greifswald, Germany. They say that the Americans fear the pipeline will increase Western Europe’s dependency on Russian gas and make it more vulnerable to blackmail.
“The dispute over the undersea pipeline threatens to divide the US and Europe, just as the Georgian crisis has done… When it comes to Russia, politicians in Washington generally view Germany with suspicion. They accuse the Germans of being so dependent on Russian gas that they don’t dare speak their mind to the Russian strongman, Prime Minister Vladimir Putin.
“But the Baltic States, Poland and the Scandinavians are also uneasy about the pipeline. They are afraid that Moscow and Berlin have made a special deal… Chancellor Merkel, who had already warned of the dependency on Russian gas before taking office, now supports the project without reservations.”
Needed–A New Currency Order?
Reuters wrote on September 17:
“Threatened by a ‘financial tsunami,’ the world must consider building a financial order no longer dependent on the United States, a leading Chinese state newspaper said on Wednesday… The People’s Daily is the official newspaper of China’s ruling Communist Party, and the overseas edition is a smaller circulation offshoot of the main paper. Its pronouncements do not necessarily directly reflect leadership views, but this commentary by a professor at Shanghai’s Tongji University suggested considerable official alarm at the strains buckling world financial markets…
“The commentary suggested China must brace for grave economic fallout and look to alternatives, saying the crisis brings to mind the Great Depression of the 1930s. ‘Lehman Brothers’ announced bankruptcy will not only have a domino effect on the global financial world, it will bring a shock to the world economy,’ the front-page comment stated.”
China Banks Told to Halt Lending to U.S. Banks
Reuters reported on September 25:
“Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported… [It] cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.”
On September 21, the British paper, The Daily Mail, published an article which dealt with the possible outcome of the present worldwide financial crisis. Although much of what is predicted in the article is pure nonsense–such as, that the current crisis will destroy the Euro–some of the opinions are worthwhile considering. Here are some excerpts:
“Almost exactly seven years ago Al Qaeda terrorists targeted their hijacked planes into the Twin Towers at the heart of New York’s financial centre — and the world was transformed. There were no deaths this week, but the effects of the carnage on the financial markets will be far more profound and destabilising than the 9/11 atrocity…
“The seismic events which have seen the near-destruction of the investment banking sector and the collapse of insurance giant AIG are on the scale of the Great Crash of 1929. That was such a disaster because it created conditions for the emergence of fascism in continental Europe and then World War II. Although it is hard to predict the consequences, we should expect ramifications of equal significance — including the re-emergence of violent Far Right parties across the globe.
“Some experts were talking this week as if the financial crisis was nearly over. They could not be more wrong. The downturn has only just begun — and for most citizens uninvolved with finance the consequences have not been felt at all. But they will be felt very soon and very brutally. The British economy is in the same position as the Texan coast earlier this month as Hurricane Ike approached — apparently calm, with life going on as normal, but an almighty storm is raging just over the horizon and heading our way with terrifying speed.
“We [in Britain] can expect a sharp increase in personal bankruptcies. Yet the numbers will not peak until this time next year at the earliest. Hundreds of thousands of people will lose their jobs, with many forced to sell their houses. Property prices will slump. There will be extreme human suffering, panic and despair. Many careers will be destroyed. This is considerably worse than the downturn of the early 1990s… Banks will foreclose on thousands of small businesses. Massive corporate failures are inevitable…
“But the biggest worry is what will happen in the U.S. Ever since the end of World War II, America has been the world’s policeman. It has been able to play this role, and see off perceived enemies, such as Soviet Russia and Saddam Hussein’s Iraq, because for the past 60 years it has been the greatest global economic power. The most important question facing the world today is whether the U.S. — already crippled by the estimated $2 trillion cost of financing the Iraq occupation — can afford to continue its global role. The historical precedent is far from encouraging… America’s global dominance — already threatened by the emergence of rival economic powers such as China — may soon be coming to its end…
“The world that will emerge from the Great Crash of 2008, therefore, will be dark and unpredictable.”
What the Russians Left In Their Wake in Georgia
On September 24, The Wall Street Journal wrote the following:
“Having devastated vast areas of its own lands in the Caucasus, such as Chechnya and Ingushetia, in order to ‘protect’ them from instability, Moscow’s obliterating shadow has settled deep over Georgia — with the usual consequences. The full barbarism of Russian actions in Georgia may not emerge for years; much of the evidence lies behind the lines in terrain newly annexed by Russia. But some details are now beyond dispute.
“Alongside the various human atrocities, such as the bombing and purging of civilian areas, the invaders looted and destroyed numerous historical sites, some of which were profoundly revered by the Georgians as sacred building blocks in their national identity. This is especially true of the region around South Ossetia that served as a kind of cradle of early Georgian culture…”
Get Ready for Iran’s Nuclear Weapons
The Associated Press reported on September 24:
“Iran is nearing the ability to arm a nuclear warhead even if it insists its atomic activities are peaceful, the European Union warned Wednesday… the EU also asserted that Iran appeared to have had a past nuclear arms program despite its denials… Israel says the Islamic Republic could have enough nuclear material to make its first bomb within a year. The U.S. estimates Iran is at least two years away from that stage, and some experts say the country could reach that stage in as little as 6 months through uranium enrichment… To date, Iran has produced nearly 1,000 pounds of low-enriched uranium… close to… the 1,500-pound minimum needed to produce the 45-60 pounds needed for a simple nuclear bomb under optimal conditions…”
Russia Sabotages Sanctions on Iran
Reuters wrote on September 24:
“Iran is posing a crucial challenge to the U.N. nuclear watchdog, the International Atomic Energy Agency, the EU and the United States said during a debate at an IAEA board of governors meeting. But they threatened no action, reflecting differences among six world powers negotiating with Iran over what to do after Russia snubbed a U.S.-led campaign for tough sanctions on Iran…
“‘The (IAEA) report presents a decidedly bleak picture. We now seem at a particularly critical juncture, with Iran now asserting there is nothing for the agency to investigate as far as possible military dimensions to its nuclear program are concerned,’ Germany, France and Britain, among the six big powers, said in a joint statement to the governors’ meeting… Foreign ministers of the United States, Britain, France, Germany, Russia and China scrapped talks this week to discuss a fourth round of sanctions after Moscow pulled out, a few days after an abortive meeting on the matter in Washington.”
Tensions Between Moscow and Washington Could Worsen Other World Crises
Deutsche Welle reported on September 24:
“Germany’s foreign minister [Frank-Walter Steinmeier] warned Wednesday recent tensions between Moscow and Washington could worsen a number of world crises after high-level talks on Iran’s disputed nuclear program were scrapped… Steinmeier said the US decision to pull out of a planned meeting of foreign ministers from the Group of Eight industrialized nations had led Russia on Tuesday, in a tit-for-tat move, to drop out of talks of the so-called 3+3 on Iran bringing together the United States, Russia, China, France, Britain and Germany… ‘We’re going in the wrong direction, I am completely convinced of that,’ Steinmeier said…
“Relations between Washington and Moscow have been tense since the five-day Georgia war last month. The US has recently attempted to exclude Russia from several G8 conference calls and called for internationally isolating Moscow. In his final speech at the General Assembly, US President George W. Bush accused Russia of having violated the UN charter with what his administration has called a premeditated invasion of Georgia, a former Soviet territory. The Russian Foreign Ministry called on the US to declare how it intended to maintain relations with Russia…”
Iran “Blasts” USA
The Associated Press reported on September 23:
“Iran’s president addressed the U.N. General Assembly Tuesday declaring that ‘the American empire’ is nearing collapse and should end its military involvement in other countries… He accused the U.S. of starting wars in Iraq and Afghanistan to win votes in elections and blamed a ‘few bullying powers’ for trying to undermine [Iran’s] nuclear program…
“Ahmadinejad also lashed out at Israel on Tuesday, saying ‘the Zionist regime is on a definite slope to collapse, and there is no way for it to get out of the cesspool created by itself and its supporters.’ The Iranian president is feared and reviled in Israel because of his repeated calls to wipe the Jewish state off the map, and his aggressive pursuit of nuclear technology has only fueled Israel’s fears.
“Ahmadinejad accused ‘a small but deceitful number of people called Zionists … (of) dominating an important portion of the financial and monetary centers as well as the political decision-making centers of some European countries and the U.S.’…
“His speech came just hours after President Bush made his eighth and final appearance before the U.N. General Assembly, urging the international community to stand firm against the nuclear ambitions of Iran and North Korea. ‘A few nations, regimes like Syria and Iran, continue to sponsor terror,’ Bush said…”
Pakistani Troops Fire at U.S. Helicopters
Reuters reported on September 25:
“Pakistani troops fired on U.S. helicopters which had crossed into Pakistan from Afghanistan on Thursday, the Pakistani military said. In a conflicting version of the incident, the U.S. military denied the aircraft had flown into Pakistani territory. There were no casualties nor were the helicopters damaged, NATO said.
“The shooting took place amid rising tension between Pakistan and the United States — normally close allies in the U.S-led ‘war on terror’ — after U.S. troops launched missile attacks and a helicopter-borne ground assault into Pakistan this month. The Islamabad government condemned those raids and said it would not tolerate any infringement on its territory.”
And Now… North Korea Becomes Again a Nuclear Threat
Reuters reported on September 24:
“North Korea has expelled U.N. monitors from its plutonium-making nuclear plant and plans to start reactivating it next week, rowing back from a 2007 deal to scrap its atomic bomb program…
“North Korea… [is] angry at Washington for not taking it off its terrorism blacklist… Washington says it will de-list Pyongyang once it allows inspectors to verify claims it made about nuclear arms output… Before Yongbyon’s shutdown, U.S. officials estimated North Korea had produced about 50 kg (110 pounds) of plutonium, which experts said would be enough for six to eight nuclear weapons.”
U.S. Pastors Plan to Defy IRS Ban on Political Speech
The Los Angeles Times wrote on September 25:
“Setting the stage for a collision of religion and politics, Christian ministers from California and 21 other states will use their pulpits Sunday to deliver political sermons or endorse presidential candidates… The pastors’ advocacy could violate the Internal Revenue Service’s rules against political speech with the purpose of triggering IRS investigations. That would allow their patron, the conservative legal group Alliance Defense Fund, to challenge the IRS’ rules, a risky strategy that one defense fund attorney acknowledges could cost the churches their tax-exempt status. Congress made it illegal in 1954 for tax-exempt groups to publicly support or oppose political candidates…
“ pastors who have signed on to the ‘pulpit initiative’ have sparked loud condemnations by fellow clergy and advocates of the separation of church and state. These critics… argue that Sunday’s sermons at churches in Oregon, Texas, New Mexico, Pennsylvania and other states will violate federal tax law by politicizing the pulpit…
“‘The integrity of the religious community is at stake when religion and politics become entangled,’ said… Eric Williams of the North Congregational United Church of Christ in Columbus, Ohio. Williams was recruited for the defense fund but instead joined with 54 other Christian and Jewish clergy members to file a complaint against the initiative with the IRS… Representing the religious leaders are three Washington attorneys, all former IRS officials, who also filed a complaint accusing defense fund attorneys of violating IRS rules by helping the churches break federal law.
“Meanwhile, a separate group of 180 ministers, rabbis and imams also has sought to counter the ‘pulpit initiative.’ Members of the Interfaith Alliance — which includes the nation’s top Episcopal bishop — have signed a pledge to refrain from electioneering in their houses of worship. ‘Political activity and political expressions are very important, but partisan politics are . . . . a death knell to the prophetic freedom that any religious organization must protect,’ said… Ed Bacon, rector of All Saints Episcopal Church in Pasadena, who signed the pledge.
“All Saints survived a nearly two-year IRS investigation after former Rector George Regas spoke out against the Iraq war on the eve of the 2004 presidential election. Bacon repeatedly said the church did not engage in campaigning. The IRS dropped the case last year even though agency officials indicated that they still considered the sermon to be illegal.”