Bank

And So It Begins – The First Major European Bank Has Been Bailed Out And More Bailouts Are Coming

And so it begins.  The first major European bank bailout of 2011 has now happened.  French/Belgian banking giant Dexia has failed and both governments have pledged to participate in a rescue plan.  But Dexia will not be the last major European bank to fail.  Even now, governments all over Europe are feverishly developing plans to bail out major national banks in the event that the current financial crisis goes from bad to worse.  Instead of learning the lessons of 2008, most major European banks have continued to pile up huge mountains of debt, leverage and risk.  Now the bill for that stupidity is about to be passed on to the taxpayers of those nations.  But with most nations in Europe already drowning in debt, are bank bailouts really the right course of action?  What is it going to happen to Europe if dozens of major banks start failing and trillions of euros are needed to bail them all out?

Dexia is the first victim of the new credit crunch.  It got to the point where Dexia simply could not get access to the funding that it needed in the credit markets.

We are starting to see this all over Europe.  Nobody wants to loan much money to European banks right now because it is unclear what is going to happen next in Europe and it is uncertain which banks are stable and which are on the verge of collapse.

This is so similar to what happened back in 2008.

But Dexia is not going to be “the next Lehman Brothers” because the governments of France and Belgium are stepping in to save Dexia from collapse.

A recent article in the Financial Post described how the rescue of Dexia is likely to proceed….

Dexia will effectively be broken up, with the sale of healthier operations while toxic assets, including Greek and other peripheral euro zone government bonds, will be placed in a state-supported “bad bank.”

The details of the plan will be negotiated over the coming days, but authorities are making it clear that Dexia is not going to be allowed to collapse.  Bank of France Governor Christian Noyer is assuring everyone that Dexia is going to have access to plenty of liquidity….

“We will loan Dexia as much as it needs”

It appears that the “too big to fail” doctrine is alive and well in Europe.

Sadly, this is not the first time that Dexia has been bailed out.  France and Belgium also bailed out Dexia back in 2008.

But this was not supposed to happen.

Just three months ago, Dexia received “a clean bill of health” from regulators during European Union bank stress testing.

It just shows how credible those “stress tests” really are.

So are more European bank bailouts coming?

It certainly looks that way.

An article in the Financial Post on Tuesday stated the following….

European finance ministers agreed on Tuesday to prepare action to safeguard their banks as doubts grew about whether a planned second bailout package for debt-laden Greece would go ahead.

Of course when they talk about the need “to safeguard their banks” they are talking about those that are deemed “too big to fail”.  Just like in the United States, banks that are “too small” don’t get bailed out at all.

But western governments are very protective of the big banks.  The big banks are allowed to take gigantic risks, and if they succeed they make tons of money and if they fail then the taxpayers bail them out.

With big trouble on the horizon in Europe, authorities are already getting ready to bail out the major banks.  A Bloomberg article from last month acknowledged that the German government has been very busy getting ready to bail out their major banks in the event that a Greek default becomes a reality….

Chancellor Angela Merkel’s government is preparing plans to shore up German banks in the event that Greece fails to meet the terms of its aid package and defaults, three coalition officials said.

As you read this, there are already signs of trouble at major German banks.  For example, Deutsche Bank has just announced that it is eliminating 500 more jobs.

The fundamental problems that Europe is facing are not being solved and the financial crisis is getting progressively worse.  With each passing day, more bad financial news comes pouring in.

For example, Moody’s slashed Italy’s bond ratings by three levels on Tuesday.

A reduction of just one level is very serious business.  For Moody’s to hit Italy that hard is a really big deal.

Italian banks have also been targeted by the credit rating agencies.  The other day, S&P slashed the credit ratings of seven different Italian banks.

If Italy goes down, it is going to be an absolute nightmare.  The Italian economy absolutely dwarfs the Greek economy.  The EU has been really struggling to bail out Greece, and there is no way in the world that they would be able to bail out Italy.

So if nations such as Italy or Spain start collapsing, will the U.S. Federal Reserve step in to help bail them out?

You never know.

The sad truth is that the Federal Reserve can do pretty much whatever it wants and nobody can stop them.

As I wrote about the other day, the Federal Reserve has agreed to join with other major central banks to lend hundreds of billions of dollars to major European banks in October, November and December.

As the past few years have shown, wherever big, global banks are in trouble, the Federal Reserve is sure to step in and help.

And many big banks in Europe are definitely headed for trouble.  Right now, European banks are holding more than $4 trillion in European sovereign debt.

A lot of that debt is bad debt.  Today, troubled European nations Greece, Portugal, Ireland, Italy and Spain owe the rest of the world about 3 trillion euros combined.

That is a whole lot of debt out there, and many big banks are so leveraged that just a 5 percent reduction in the value of their holdings could wipe them out.

Hold on to your hats folks.

So what should we be watching next?

Well, Greece continues to be a huge problem.

The IMF, the European Central Bank and the European Union are very frustrated with Greece right now.

On Monday, it was revealed that Greece is not going to hit the deficit reduction targets set for it by the “troika” either this year or next year.

European officials have been particularly displeased that Greece has been getting all of this aid money and yet has not been strictly adhering to the austerity measures that they agreed to.

However, the reality is that the austerity measures that Greece has actually bothered to implement have hit the Greek economy really hard.  The more Greece reduces government spending the more the Greek economy seems to slow down.

Greek Finance Minister Evangelos Venizelos recently announced that the Greek economy is projected to shrink by 5.3% in 2011, and Greek debt continues to spiral out of control.

Meanwhile, severe economic pain continues to spark huge protests all over Greece.  Scenes of riot police firing tear gas and protesters throwing stones at police have become so common in Greece that most of us don’t even pay much attention anymore.

But all of us should pay attention to what is happening in Greece.

Eventually these kinds of economic riots will spread throughout the rest of the western world as well.

And every day Greece just seems to get closer and closer to default.

At this point, global financial markets seem to consider a Greek default to be inevitable.  The yield on 2 year Greek bonds is now over 65 percent.  The yield on 1 year Greek bonds is now over 135 percent.

Greece is toast without more bailout money.

But now major politicians all over Germany are declaring that Germany is done contributing money to the European bailout fund.

And without Germany, the rest of the eurozone is not going to be able to continue the bailouts.

So the clock is ticking.

Once the current bailout fund has dried up, the bailout game will be over.

What will happen then?

Will that be what sets off a massive financial collapse in Europe?

Could we actually see the end of the euro?

For a long time there was speculation that it would be weak nations such as Greece that would leave the euro.

But now it appears increasingly likely that if someone is going to leave the euro it might be Germany.

Most German citizens would be in favor of such a move.  One recent poll conducted for Stern magazine actually found that 54 percent of all Germans would favor leaving the euro.

But if Germany left the euro it would absolutely implode.  German economic strength is the primary thing holding the euro up at this point.

In any event, it is going to be very interesting to watch what will happen to Europe over the coming months.

Greece, Italy, Portugal and Spain are all steadily marching toward collapse.

Germany says that it is done bailing out other members of the eurozone.

Dozens of major European banks are teetering on the brink of disaster.

People get ready – a storm is coming.

Time is running out for Europe and there is no help in sight.

The Federal Reserve Plans To Identify “Key Bloggers” And Monitor Billions Of Conversations About The Fed On Facebook, Twitter, Forums And Blogs

The Federal Reserve wants to know what you are saying about it.  In fact, the Federal Reserve has announced plans to identify “key bloggers” and to monitor “billions of conversations” about the Fed on Facebook, Twitter, forums and blogs.  This is yet another sign that the alternative media is having a dramatic impact.  As first reported on Zero Hedge, the Federal Reserve Bank of New York has issued a “Request for Proposal” to suppliers who may be interested in participating in the development of a “Sentiment Analysis And Social Media Monitoring Solution”.  In other words, the Federal Reserve wants to develop a highly sophisticated system that will gather everything that you and I say about the Federal Reserve on the Internet and that will analyze what our feelings about the Fed are.  Obviously, any “positive” feelings about the Fed would not be a problem.  What they really want to do is to gather information on everyone that views the Federal Reserve negatively.  It is unclear how they plan to use this information once they have it, but considering how many alternative media sources have been shut down lately, this is obviously a very troubling sign.

You can read this “Request for Proposal” right here.  Posted below are some of the key quotes from the document (in bold) with some of my own commentary in between the quotes….

“The intent is to establish a fair and equitable partnership with a market leader who will who gather data from various social media outlets and news sources and provide applicable reporting to FRBNY. This Request for Proposal (“RFP”) was created in an effort to support FRBNY’s Social Media Listening Platforms initiative.”

A system like this is not cheap.  Apparently the Federal Reserve Bank of New York believes that gathering all of this information is very important.  In recent years, criticism of the Federal Reserve has become very intense, and most of this criticism has been coming from the Internet.  It has gotten to the point where the Federal Reserve Bank of New York has decided that it had better listen to what is being said and find out who is saying it.

“Social media listening platforms are solutions that gather data from various social media outlets and news sources.  They monitor billions of conversations and generate text analytics based on predefined criteria.  They can also determine the sentiment of a speaker or writer with respect to some topic or document.”

The Federal Reserve Bank of New York intends to listen in on “billions of conversations” and to actually determine the “sentiment” of those that are participating in those conversations.

Of course it will be those conversations that are “negative” about the Federal Reserve that will be setting off the alarm bells.

“Identify and reach out to key bloggers and influencers”

Uh oh.  So they plan to “identify” key bloggers and influencers?

What exactly do they plan to do once they “identify” them?

“The solution must be able to gather data from the primary social media platforms –Facebook, Twitter, Blogs, Forums and YouTube.”

Hopefully you understand this already, but nothing posted on the Internet is ever anonymous.  Everything on the Internet is gathered by a vast host of organizations and is used for a wide variety of purposes.  Data mining has become a billion dollar industry, and it is only going to keep growing.

You may think that you are “anonymous” when you criticize organizations like the Fed, but the truth is that if you are loud enough they will see it and they will make a record of it.

“The solution must provide real-time monitoring of relevant conversations.  It should provide sentiment analysis (positive, negative or neutral) around key conversational topics.”

Why do they need to perform “sentiment analysis”?

If someone is identified as being overly “negative” about the Fed, what will they do about it?

“The solution should provide an alerting mechanism that automatically sends out reports or notifications based a predefined trigger.”

This sounds very much like the kind of “keyword” intelligence gathering systems that are currently in use by major governments around the globe.

Very, very creepy stuff.

Are you disturbed yet?

For those of us that write about the Federal Reserve a lot, this is very sobering news.

I wonder what the Fed will think about the following articles that I have posted on this site….

*Unelected, Unaccountable, Unrepentant: The Federal Reserve Is Using Your Money To Bail Out European Commercial Banks Once Again

*Celebrating Independence Yet Enslaved To Debt

*19 Reasons Why The Federal Reserve Is At The Heart Of Our Economic Problems

*Is Ben Bernanke A Liar, A Lunatic Or Is He Just Completely And Totally Incompetent?

*10 Things That Would Be Different If The Federal Reserve Had Never Been Created

What is their “Social Media Monitoring Solution” going to think about those articles?

Unfortunately, this is all part of a very disturbing trend.

Recently, a very creepy website known as “Attack Watch” was launched to gather information on those saying “negative” things about Barack Obama.

Suddenly, everyone seems obsessed with what you and I are saying.

This just shows how the power of the alternative media is growing.

Not only that, but it seems as though the government also wants to gather as much information on all of us as possible.

For example, a new rule is being proposed by the Department of Health and Human Services that would force health insurance companies to submit detailed health care information about all of their customers to the federal government.

Every single day our privacy is being stripped away a little bit more.

But now it is often not just enough for them to know what we are doing and saying.  Instead, the “authorities” are increasingly stepping in to silence important voices.

One of the most recent examples of this was when Activistpost was taken down by Google.  We are still awaiting word on why this was done.

Sadly, the silencing of Activistpost is far from an isolated incident.

Hordes of YouTube accounts have been shut down for their political viewpoints.

Quite a few very prominent alternative media websites have been censored or attacked because of what they stand for.

So why is this happening?  Well, it turns out that the power of the alternative media is growing.  According to a new survey by the Pew Research Center for The People & The Press, 43 percent of Americans say that they get their news on national and international issues from the Internet.  Back in 1999, that figure was sitting at just 6 percent.

The American people are sick and tired of getting “canned news”, and they are increasingly turning to the Internet in a search for the truth.

As I have written about previously, the mainstream media in this country is overwhelmingly dominated by just 6 very powerful corporations….

Today, ownership of the news media has been concentrated in the hands of just six incredibly powerful media corporations.  These corporate behemoths control most of what we watch, hear and read every single day.  They own television networks, cable channels, movie studios, newspapers, magazines, publishing houses, music labels and even many of our favorite websites. Sadly, most Americans don’t even stop to think about who is feeding them the endless hours of news and entertainment that they constantly ingest.  Most Americans don’t really seem to care about who owns the media.  But they should.  The truth is that each of us is deeply influenced by the messages that are constantly being pounded into our heads by the mainstream media.  The average American watches 153 hours of television a month.  In fact, most Americans begin to feel physically uncomfortable if they go too long without watching or listening to something.  Sadly, most Americans have become absolutely addicted to news and entertainment and the ownership of all that news and entertainment that we crave is being concentrated in fewer and fewer hands each year.

The “news” that we get from various mainstream sources seems to always be so similar.  It is as if nearly all mainstream news organizations are reading from the same script.  The American people know that they are not getting the whole truth and they have been increasingly looking to alternative sources.

The monopoly over the news that the mainstream media once possessed has been broken.  The alternative media is now creating some huge problems for organizations that were once very closely protected by the mainstream media.

The American people are starting to wake up and they are starting to get very upset about a lot of the corruption that has been going on in our society.

But it turns out that the “authorities” don’t like it too much when Americans try to actually exercise free speech in America today.  For example, you can see recent video of female protesters in New York City being penned in by police and then brutally maced right here.

Are you sickened by that?

You should be.

What the “authorities” want is for us to shut up, sit in our homes and act as if nothing wrong is happening.

Meanwhile, they seem determined to watch us more closely than ever.

So are you going to be afraid to talk negatively about the Federal Reserve now that you know that they are going to be watching what you say on the Internet?

Please feel free to leave a comment with your thoughts below….

3, 2, 1: Global Debt Meltdown

We are steamrolling toward a massive global debt meltdown, and at this point world leaders seem to be all out of solutions.  Over the last 30 years or so, the greatest debt bubble in the history of the planet has produced unprecedented prosperity in the western world.  But now that debt bubble is starting to burst and the bills are coming due.  Many believe that “ground zero” for the coming global debt meltdown will be in Europe.  Unlike the U.S. and Japan, the nations of the EU can’t just print more money to cover their debts.  Nations such as Greece, Portugal and Italy must repay their debts in euros, and those nations are rapidly getting to the point where their debts are going to overwhelm them.  Unfortunately, major banks all over Europe are very highly leveraged and are also very heavily invested in the sovereign debt of nations such as Greece, Portugal and Italy.  If even one EU nation defaults it will start tipping over financial dominoes.  If more than one EU nation defaults it could cause a cataclysmic wave of bank failures all over Europe.

But Germany and the other more financially stable countries of the EU cannot bail out nations like Greece, Portugal and Italy indefinitely.  Pouring money into Greece is like pouring money into a black hole.  When you take money from financially stable countries and pour it into hopeless messes, you may stabilize things for a little while, but you also cause the financial condition of the financially stable nations to start deteriorating.

Right now, the yield on 2 year Greek bonds is up to 44%.  Basically, the market is screaming that these are horrible investments and that they will almost certainly default.

Greece cannot fire up the printing presses and print more money, so they are now totally dependent on others to bail them out.

Just how desperate have things become in Greece?  Just consider the following excerpt from a recent article by Puru Saxena….

In Greece, government debt now represents almost 160% of GDP and the average yield on Greek debt is around 15%. Thus, if Greece’s debt is rolled over without restructuring, its interest costs alone will amount to approximately 24% of GDP. In other words, if debt pardoning does not occur, nearly a quarter of Greece’s economic output will be gobbled up by interest repayments!

Can you imagine?

No nation on earth can afford to pay out nearly a quarter of GDP just on interest on government debt.

So just how did Greece get into this position?  Well, it turns out that big U.S. banks such as Goldman Sachs and JPMorgan Chase played a big role.  The following is an excerpt from a recent article by Andrew Gavin Marshall….

In the same way that homeowners take out a second mortgage to pay off their credit card debt, Goldman Sachs and JP Morgan Chase and other U.S. banks helped push government debt far into the future through the derivatives market. This was done in Greece, Italy, and likely several other euro-zone countries as well. In several dozen deals in Europe, “banks provided cash upfront in return for government payments in the future, with those liabilities then left off the books.” Because the deals are not listed as loans, they are not listed as debt (liabilities), and so the true debt of Greece and other euro-zone countries was and likely to a large degree remains hidden. Greece effectively mortgaged its airports and highways to the major banks in order to get cash up-front and keep the loans off the books, classifying them as transactions.

All over the world, politicians love to “kick the can down the road”, and big Wall Street banks love to find creative ways to help them do that.

But now Greece is about to collapse, and the people that helped them get into this mess will probably never be held accountable.

If Greece does default, it is going to have dramatic consequences all over Europe.  For a chilling look at what could potentially happen when Greece defaults, just check out this article by John Mauldin.

Sadly, Greece is far from the only problem in Europe.  Portugal, Ireland and Italy also have debt to GDP ratios that are above 100%.

The biggest potential problem, at least in the near-term, is Italy.

Italy is the fourth largest economy in the EU, and lately the financial problems of the Italian government and Italian banks have been making headlines all over the globe.

Italy is a far, far larger potential problem than Greece is.

The EU can handle bailing out Greece, at least for now.

If Italy gets to the point where it needs large bailouts, that is going to bring down the whole system.  The EU simply does not have enough money to perform an extensive financial rescue of Italy.

As you can see from this chart, the exposure that European banks have to Italian debt is absolutely massive.  If Italian debt goes bad, it is going to take down a whole bunch of banks.

Not only that, but many believe that the European Central Bank itself is now in some very dangerous territory.

It is estimated that the European Central Bank is now holding somewhere in the neighborhood of 444 billion euros worth of debt from the governments of Greece, Italy, Portugal, Ireland and Spain.

The financial consequences of a default by one or more of those nations could potentially be catastrophic.

According to London-based think tank Open Europe, the European Central Bank is massively overleveraged….

“Should the ECB see its assets fall by just 4.23pc in value . . . its entire capital base would be wiped out.”

That doesn’t sound good.

Surely the European Central Bank would be recapitalized somehow, but this is just another example that shows just how dangerous huge amounts of leverage can be.

As I wrote about in a recent article about the sovereign debt crisis, if the dominoes begin to tumble in Europe it is going to take everybody down.

The big banks in Europe are leveraged to the hilt, and they are massively exposed to government debt.

If you don’t think that this is a problem, just remember what happened back in 2008.

Back then, Lehman Brothers was leveraged 31 to 1.  When things turned bad, Lehman was wiped out very rapidly.

Today, major German banks are leveraged 32 to 1, and those banks are currently holding a massive amount of European sovereign debt.

Yes, things could become really nightmarish if the dominoes start to fall.

Already we are seeing huge signs of trouble at major banks all over Europe.

Major European banks UBS, Barclays, Credit Suisse, RBS, and HSBC have all announced layoffs recently.  In fact, when you add them all up, the total number of layoffs announced by these banks just this month is over 40,000.  Overall, the grand total of layoffs by European banks so far this year is now up to 67,000.

The mood in the financial sector over in Europe is very dark right now.  Just consider the following excerpt from a recent Bloomberg article….

“It’s a bloodbath, and I expect things to get worse before they get better,” said Jonathan Evans, chairman of executive- search firm Sammons Associates in London. “I cannot see a lot of those who have lost their jobs getting re-employed. Regardless of how good someone is, no one wants to talk about hiring. Life will be very difficult for two or three years.”

Just like back in 2008 with U.S. banks, we are seeing European banks getting absolutely pummeled right now.  A recent article in The Sydney Morning Herald documented some of the carnage….

The 46-member Bloomberg Europe Banks and Financial Services Index has fallen 31 per cent this year. RBS tumbled 49 per cent, Barclays 44 per cent and France’s Societe Generale 48 per cent.

Credit Suisse and UBS both reported a 71 per cent drop in investment-banking earnings in the second quarter. Revenue at Edinburgh-based RBS’s securities unit dropped 35 per cent in the period, while London-based Barclays Capital posted a 27 per cent decline in pretax profit.

Things in Europe continue to get worse and worse and worse.

Do not take your eyes off of Europe.  This crisis is just getting started.

Not that there aren’t huge debt problems around the rest of the globe as well.

Japan has a national debt that is now over 200 percent of GDP, and they are really struggling to recover from the recent disasters that devastated that nation.

Moody’s has just downgraded Japanese government debt one notch to Aa3, and more downgrades could be coming.  For now Japan is still able to borrow huge piles of money very, very cheaply but if that changes Japan could be wiped out very quickly.

Of course the nation with the biggest debt of all is the United States.

At the moment, the U.S. national debt is sitting at a grand total of $14,649,289,670,347.85.

Fortunately, the U.S. is also able to borrow massive amounts of money very, very cheaply right now.  But when that changes it is going to be absolutely cataclysmic for our economy.

Sadly, our politicians continue to act as if this debt binge can go on forever.

According to the Congressional Budget Office, the budget deficit for the federal government will be about 1.28 trillion dollars this year.  This will be the third year in a row that we have had a budget deficit of over a trillion dollars.

To put that in perspective, from George Washington to Ronald Reagan the U.S. government racked up a grand total of about one trillion dollars of debt.  But this year alone we will go 1.28 trillion dollars more into debt.

At the moment, the U.S. national debt is expanding by about 2 and a half million dollars every single minute.  It is hard to put into words how absolutely foolish that is.

As I wrote about yesterday, someone needs to wake up America.  Our debt is exploding and our economy is dying.

We haven’t even solved the problems caused by the last financial crisis.  The real estate market is still a gigantic mess.  Purchases of both new and previously existing homes in the United States continue to fall.

But there will never be a housing recovery until there is a jobs recovery, and our politicians continue to stand by and watch as millions of our jobs are shipped overseas.

Unemployment is rampant, and even many of those that do have jobs are barely able to survive.

Back in 1980, less than 30% of all jobs in the United States were low income jobs.  Today, more than 40% of all jobs in the United States are low income jobs.

That is not a good trend.

Sadly, it looks like things are not going to get much better any time soon.

Right now, the Congressional Budget Office is projecting that unemployment in the U.S. will remain above 8% until 2014.

That should really scare you, because government numbers are almost always way too optimistic.  The folks in the federal government hardly ever project that unemployment will actually go up.

So if they are saying that unemployment will remain above 8 percent until 2014, the truth is that things will probably be worse than that.

We have entered very frightening times.  We are on the verge of a massive global debt meltdown, and nobody is sure what is going to happen next.

Let us hope for the best, but let us also prepare for the worst.

Wow That Was Fast! Libyan Rebels Have Already Established A New Central Bank Of Libya

The rebels in Libya are in the middle of a life or death civil war and Moammar Gadhafi is still in power and yet somehow the Libyan rebels have had enough time to establish a new Central Bank of Libya and form a new national oil company.  Perhaps when this conflict is over those rebels can become time management consultants.  They sure do get a lot done.  What a skilled bunch of rebels – they can fight a war during the day and draw up a new central bank and a new national oil company at night without any outside help whatsoever.  If only the rest of us were so versatile!  But isn’t forming a central bank something that could be done after the civil war is over?  According to Bloomberg, the Transitional National Council has “designated the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and the appointment of a governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.”  Apparently someone felt that it was very important to get pesky matters such as control of the banks and control of the money supply out of the way even before a new government is formed.

Of course it is probably safe to assume that the new Central Bank of Libya will be 100% owned and 100% controlled by the newly liberated people of Libya, isn’t it?

Most people don’t realize that the previous Central Bank of Libya was 100% state owned. The following is an excerpt from Wikipedia’s article on the former Central Bank of Libya….

The Central Bank of Libya (CBL) is 100% state owned and represents the monetary authority in The Great Socialist People’s Libyan Arab Jamahiriya and enjoys the status of autonomous corporate body. The law establishing the CBL stipulates that the objectives of the central bank shall be to maintain monetary stability in Libya , and to promote the sustained growth of the economy in accordance with the general economic policy of the state.

Since the old Central Bank of Libya was state owned, it was essentially under the control of Moammar Gadhafi.

But now that Libya is going to be “free”, the new Central Bank of Libya will be run by Libyans and solely for the benefit of Libyans, right?

Of course it is probably safe to assume that will be the case with the new national oil company as well, isn’t it?

Over the past couple of years, Moammar Gadhafi had threatened to nationalize the oil industry in Libya and kick western oil companies out of the country, but now that Libya will be “free” the people of Libya will be able to work hand in hand with “big oil” and this will create a better Libya for everyone.

Right?

Of course oil had absolutely nothing to do with why the U.S. “inva—” (scratch that) “initiated a kinetic humanitarian liberty action” in Libya.

When Barack Obama looked straight into the camera and told the American people that the war in Libya is in the “strategic interest” of the United States, surely he was not referring to oil.

After all, war for oil was a “Bush thing”, right?  The Democrats voted for Obama to end wars like this, right?  Surely no prominent Democrats will publicly support this war in Libya, right?

Surely Barack Obama will end the bombing of Libya if the international community begins to object, right?

Obama won a Nobel Peace Prize.  He wouldn’t deeply upset the other major powers on the globe and bring us closer to World War III, would he?

Russian Foreign Minister Sergei Lavrov has loudly denounced “coalition strikes on columns of Gaddafi’s forces” and he believes that the U.S. has badly violated the terms of the UN Security Council resolution….

“We consider that intervention by the coalition in what is essentially an internal civil war is not sanctioned by the U.N. Security Council resolution.”

So to cool off rising tensions with the rest of the world, Obama is going to call off the air strikes, right?

Well, considering the fact that Obama has such vast foreign policy experience we should all be able to rest easy knowing that Obama will understand exactly what to do.

Meanwhile, the rebels seem to be getting the hang of international trade already.

They have even signed an oil deal with Qatar!

Rebel “spokesman” Ali Tarhouni has announced that oil exports to Qatar will begin in “less than a week“.

Who knew that the rag tag group of rebels in Libya were also masters of banking and international trade?

We sure do live in a strange world.

Tonight, Barack Obama told the American people the following….

“Some nations may be able to turn a blind eye to atrocities in other countries. The United States of America is different.”

So now we are going to police all of the atrocities in all of the other countries around the globe?

The last time I checked, the government was gunning down protesters in Syria.

Is it time to start warming up the Tomahawks?

Or do we reserve “humanitarian interventions” only for those nations that have a lot of oil?

In fact, atrocities are currently being committed all over Africa and in about a dozen different nations in the Middle East.

Should we institute a draft so that we will have enough young men and women to police the world with?

We all have to be ready to serve our country, right?

The world is becoming a smaller place every day, and you never know where U.S. “strategic interests” are going to be threatened next.

The rest of the world understands that we know best, right?

Of course the rest of the world can surely see our good intentions in Libya, can’t they?

Tensions with Russia, China and the rest of the Arab world are certainly going to subside after they all see how selfless our “humanitarian intervention” has been in Libya, don’t you think?

In all seriousness, we now live in a world where nothing is stable anymore.  Wars and revolutions are breaking out all over the globe, unprecedented natural disasters are happening with alarming frequency and the global economy is on the verge of total collapse.

By interfering in Libya, we are just making things worse.  Gadhafi is certainly a horrible dictator, but this was a fight for the Libyan people to sort out.

We promised the rest of the world that we were only going to be setting up a “no fly zone”.  By violating the terms of the UN Security Council resolution, we have shown other nations that we cannot be trusted and by our actions we have increased tensions all over the globe.

So what do all of you think about what is going on in Libya?  Please feel free to leave a comment with your opinion below….

How Is The Central Economic Planning That The Federal Reserve Does Different From The Central Economic Planning That Communist China Does?

Most Americans believe that we still live in a capitalist system and that free markets primarily determine the growth and development of our economy.  But is that really the case?  No, sadly it is not.  The truth is that the U.S. Federal Reserve does a tremendous amount of central economic planning.  So what makes the central economic planning that the Federal Reserve does different from the central economic planning that communist China does?  Yes, in China it is the government that does the central planning and in the United States it is a private central bank that does the central planning, but other than that are there any huge differences?  And if our economy is centrally planned, then how can we continue to claim that we still have a free market capitalist system?

Certainly China goes into greater detail in their economic planning, but that does not mean that the economic planning that the Federal Reserve and the U.S. government do is not similar.

After all, free markets do not set interest rates in this country – the Federal Reserve does.

The Federal Reserve also determines what the money supply will be.

The Federal Reserve is the one that decides if inflation is too high or too low.

The Federal Reserve is the one that decides if unemployment is too high or too low.

In addition, the Federal Reserve has a tremendous amount of regulatory power over U.S. banks and the entire financial system.  Most Americans simply do not realize how much power the Federal Reserve has over our banks.  Just last year Federal Reserve officials walked into one bank in Oklahoma and demanded that they take down all the Bible verses and the Christmas buttons that the bank had been displaying.

Like the communist Chinese, the Federal Reserve is not elected and it is essentially accountable to nobody.

Like the communist Chinese, the Federal Reserve also picks winners and losers.  You see, not all financial institutions are treated equally by the Fed.  For example, some have access to the Fed’s discount window and others do not.

How is that fair?

Certainly the Federal Reserve does not do all of the central economic planning in this country.  The U.S. government loves to get involved in economic planning as well.  For example, the U.S. government has decided that there are certain types of light bulbs that we are allowed to buy and certain types of light bulbs that we are no longer going to be allowed to buy.  It doesn’t matter that the new light bulbs are far more dangerous to children or that most of us would still like to have the choice to buy the old light bulbs.

But getting back to the Federal Reserve, how “democratic” or how “capitalist” is it to have 12 unelected people sitting around a table deciding the economic direction of this country?

The truth is that we live in a system that simply does not trust free markets and that believes that our economy needs to be “managed”.

I have to admit that my thinking on these issues was stimulated when I recently read an excellent article by Vitaliy Katsenelson in which he asked the following question….

It is a fundamental tenant of American capitalism that central planning of economies doesn’t work in the long term, whether in Soviet Union historically or in China today. But I often wonder: How is the Fed’s Board of Governors – the proverbial 12 guys in a room – any different than the 24 guys in a room who make up the Chinese politburo?

Is Katsenelson not right about this?

How in the world is the Fed’s Board of Governors all that much different from the Chinese Politburo?

In both cases, a group of unelected elitists makes the major economic decisions for all the rest of us.

That certainly does not sound like “capitalism” to me.

Would the free markets really produce worse results for our economy than the Federal Reserve does?

Would America ever have gone through the Great Depression if the Federal Reserve had not been created in 1913?

Would we have experienced the financial crash of 2008 if the policies of Greenspan and Bernanke had not created tremendous bubbles in the financial system?

Would the U.S. dollar have lost over 95 percent of its value since 1913 if the Federal Reserve was not around to constantly inflate our currency?

Would the U.S. government have the largest debt in the history of the world if we were not using the debt-based monetary system imposed upon us by the elite international bankers?

Now that the total debt of the U.S. government is $14,228,193,126,138.72, it is getting really hard to deny that the federal government is drowning in debt.

Dallas Federal Reserve Bank President Richard Fisher unknowingly indicted the very system he serves when he recently made the following statement….

“If we continue down on the path on which the fiscal authorities put us, we will become insolvent, the question is when.”

If the Federal Reserve had never been created, and the U.S. government had been issuing debt-free currency all this time, it is entirely conceivable that we would have absolutely no federal government debt at this point.

But defenders of the Federal Reserve tell us that if not for the brilliant people over at the Fed, America would be an economic basket case by now.

Oh really?

In case anyone has not noticed, Federal Reserve Chairman Ben Bernanke has a very long track record of incompetence.  Nearly every major judgment that he has made since taking over that position has been wrong.  If one of us could go down the street and appoint the manager of our local Dairy Queen as the Chairman of the Federal Reserve, it is very doubtful that person could do a worse job than Bernanke has done.

Unfortunately, most Americans do not understand this.  Most Americans are still convinced that “the greatest economy on earth” will just keep roaring along forever.  Most Americans are spending and partying as if everything is going to be just fine.

Sadly, as Richard Daughty recently pointed out, most Americans will not wake up and realize just how bad our economic problems really are until it is too late….

In fact, to use an analogy, the economy is like a group of overpaid people, milking the government for every dollar and benefit they can get, on a chartered airplane that has been certified as “unsafe,” where one minute everybody is having fun, drunk as skunks, laughing and telling dirty jokes, and the next minute the plane is plunging out of the sky, out of fuel, one wing is in flames, the engines are dead, the entire electrical system is kaput, and, worst of all, the beverage cart is completely empty of cold beer and those little bottles of different kinds of tasty liquors. Uh-oh!

Most Americans have become so “dumbed down” that they still won’t even understand what is happening even after the economy has collapsed.  Newsweek recently found that 63 percent of Americans do not know how many justices are on the Supreme Court and 29 percent of Americans cannot even name the current Vice-President.

America today is rapidly degenerating in many of the same ways that the Roman Empire once did.  Tens of millions of Americans are lazy, slothful and absolutely addicted to entertainment.  It is frightening to see just how many Americans did not show any empathy during the recent crisis in Japan or when we started launching missiles on Libya.  The following mini-documentary that was recently posted on YouTube does a beautiful job of making this point….

So is there any hope for America?

Let us hope that people wake up, because there are going to be even more economic disasters coming our way.  Right now a large percentage of the American people don’t even know enough to realize what the real problems are, much less what the solutions may be.

When most Americans talk about economics, they instantly start blaming “Obama” or “Bush” and a lot of them never even bring up the Federal Reserve.

But it is the Federal Reserve that has the most power over our economy.

If Americans want to blame someone in Washington D.C. for the economic mess that we are in, the number one culprit is the Federal Reserve.

Yes, Obama, Bush and virtually every member of Congress has played a role in our economic nightmare as well.  But it is the Federal Reserve that is actually “managing” our economy.

We would have been much better off if we had allowed free markets to “manage” our economy all this time, but very few Americans actually seem to still believe in free markets anymore.

Shocking New IMF Report: The U.S. Dollar Needs To Be Replaced As The World Reserve Currency And SDRs “Could Constitute An Embryo Of Global Currency”

The IMF is trying to move the world away from the U.S. dollar and towards a global currency once again.  In a new report entitled “Enhancing International Monetary Stability—A Role for the SDR“, the IMF details the “problems” with having the U.S. dollar as the reserve currency of the globe and the IMF discusses the potential for a larger role for SDRs (Special Drawing Rights).  But the IMF certainly does not view SDRs as the “final solution” to global currency problems.  Rather, the IMF considers SDRs to be a transitional phase between what we have now and a new world currency.  In this newly published report, the IMF makes this point very clearly: “In the even longer run, if there were political willingness to do so, these securities could constitute an embryo of global currency.”  Yes, you read that correctly.  The SDR is supposed to be “an embryo” from which a global currency will one day develop.  So what about the U.S. dollar and other national currencies?  Well, they would just end up fading away.

CNN clearly understands what the IMF is trying to accomplish with this new report.  The following is how CNN’s recent story about the new IMF report begins….

“The International Monetary Fund issued a report Thursday on a possible replacement for the dollar as the world’s reserve currency.”

That is exactly what the IMF intends to do.

They intend to have SDRs replace the U.S. dollar as the world reserve currency.

So exactly what are SDRs?

Well, “SDR” is short for Special Drawing Rights.  It is a synthetic currency unit that is made up of a basket of currencies.  SDRs have actually been around for many years, but now they are being heavily promoted as an alternative to the dollar.

The following is how Wikipedia defines SDRs….

Special Drawing Rights (SDRs) are international foreign exchange reserve assets. Allocated to nations by the International Monetary Fund (IMF), a SDR represents a claim to foreign currencies for which it may be exchanged in times of need.

The SDR is a hybrid.  SDRs are part U.S. dollar, part euro, part yen and part British pound.  In particular, the following is how each SDR currently breaks down….

U.S. Dollar: 41.9%

Euro: 37.4%

Yen: 9.4%

British Pound: 11.3%

Now there are calls for other national currencies to be included in the basket.

Russian President Dmitry Medvedev has publicly called for the national currencies of Brazil, Russia, India and China to be included in the SDR.

In January, the Obama administration said that it fully supports the eventual inclusion of the yuan in the SDR.

So yes, it looks like we are definitely moving in the direction of the SDR becoming a true global currency.

But is this a good idea?

Globalist organizations such as the IMF say that having a true global currency would facilitate world trade, it would make currency wars less likely, it would stabilize the global economy and it would make the rest of the globe less reliant on what is going on in the United States.

In fact, there is a lot of discussion in international financial circles that oil should be traded in SDRs rather than in U.S. dollars.

In a recent interview, IMF Deputy Managing Director Naoyuki Shinohara even suggested that the IMF may actually consider issuing bonds that are denominated in SDRs.  Apparently the goal would be to promote the use of the new “currency”.

But once again, it is important to remember that the IMF does not see SDRs lasting forever either.  Rather, the IMF considers the SDR to be an “embryo” from which a true global currency could emerge.

An IMF paper entitled “Reserve Accumulation and International Monetary Stability” that was published last year even proposed that a future global currency be called the “Bancor” and that a future global central bank could be put in charge of issuing it….

“A global currency, bancor, issued by a global central bank (see Supplement 1, section V) would be designed as a stable store of value that is not tied exclusively to the conditions of any particular economy. As trade and finance continue to grow rapidly and global integration increases, the importance of this broader perspective is expected to continue growing.”

In fact, at one point the IMF report from last year specifically compares the proposed global central bank to the Federal Reserve….

“The global central bank could serve as a lender of last resort, providing needed systemic liquidity in the event of adverse shocks and more automatically than at present. Such liquidity was provided in the most recent crisis mainly by the U.S. Federal Reserve, which however may not always provide such liquidity.”

Yes, unfortunately this is what the IMF really has in mind for all of us.  A one-world economic system with a one-world currency and a one-world central bank.

Is that what we really need?

A “global Federal Reserve” that dominates the currency and the economy of the entire planet?

At least with the U.S. Federal Reserve there is hope that someday the American people can convince Congress to shut it down.

A “global Federal Reserve” would not answer to anyone.  Individual nations could attempt to pull out, but then they would potentially be isolated from the rest of the globe and potentially cut off from world trade.

That may sound very far-fetched now, but that is the direction we are headed.

And shifting away from the U.S. dollar as the reserve currency of the world would be disastrous for the U.S. economy.

Right now the fact that the U.S. dollar is the primary reserve currency of the world is one of the only things holding it up.  If you took that support away the U.S. dollar could end up collapsing quite quickly.

Let us hope that the American people wake up and start insisting that we want no part in a global currency.  If we ever allow a world currency to start replacing the U.S. dollar to a large extent, we will lose a great deal of our economic sovereignty.  Not that we haven’t lost most of it already, but at least if we are still using our own national currency there is a greater chance that we can reclaim it.

What the IMF is proposing right now may seem very innocent, but the long-term consequences of going down the road they want to put us on could potentially be absolutely catastrophic.

The American people need to send a very clear message to their representatives in Washington D.C…..

#1 We do not want a one-world economy.

#2 We do not want a one-world currency.

#3 We do not want a one-world central bank.

The Federal Reserve Bans A Local Oklahoma Bank From Displaying Crosses, Bible Verses And Christmas Buttons

What in the world are they thinking over at the Federal Reserve?  The privately-owned central bank that runs the U.S. economy is now forcing local banks to remove every shred of Christian faith from their establishments.  When Federal Reserve examiners recently visited a local bank in Perkins, Oklahoma they demanded that the bank take down a “Bible verse of the day” and crosses that were displayed on the teller’s counter.  In addition, the agents from the Federal Reserve forced all bank personnel to remove buttons that said “Merry Christmas, God With Us”.  The bank was also ordered to remove a “Bible verse of the day” from the bank’s website.  According to Federal Reserve officials, all visible expressions of Christian faith by bank officials are now banned in all banks across the United States.

Now, before people start screaming “separation of church and state”, please keep in mind that the “state” is not involved here.  The local bank in Perkins is a privately-owned financial institution.  The owners of that bank should be able to express themselves however they want.

In addition, it is important to note that it was not an agency of the federal government or a federal court that ordered this private local bank to remove all traces of Christianity.

The truth is that the Federal Reserve is not part of the U.S. government.  In fact, the Federal Reserve is about as “federal” as Federal Express is.

You doubt this?

Well, perhaps you will believe what the Federal Reserve is publicly saying about itself.

In defending itself against a Bloomberg request for information under the Freedom of Information Act, the Federal Reserve objected by declaring that it was “not an agency” of the U.S. government and therefore it was not subject to the Freedom of Information Act.

In the video posted below, former Federal Reserve Chairman Alan Greenspan makes it very clear that the Federal Reserve is above the law and need not answer to anyone in the federal government….

So where in the world does the Federal Reserve get the idea that they have the authority to tell a private bank that they cannot display a Bible verse of the day and that their employees cannot wear Christmas buttons?

No matter what you think about the faith of the owners of the local bank in Perkins, the truth is that we should all be concerned about the kind of precedent that this sets for free speech.

According to Federal Reserve officials, any visible expression of Christianity by a private bank may cause someone from another religion to be offended and feel as though they may be discriminated against by that bank.  Therefore any expression of Christianity is “an appearance of discrimination” and thus must be banned.

Okay, so if any expression of Christianity is “an appearance of discrimination”, will federal officials soon use all of the federal “anti-discrimination laws” already on the books to ban all expressions of Christianity in all private businesses throughout the United States?

Once again, it is absolutely crucial to note that the local bank in Perkins is not a government building.  Federal Reserve agents are telling private business owners how they can express themselves as they run their privately-owned business on private property.

The following is a local news report about this very disturbing incident….

Does anyone still believe that we have “freedom of speech” in the United States?

It is almost as if all forms of Christian expression are now regarded as something horribly dirty by our public officials.

Even if you are an atheist, this should deeply concern you as well.  When freedom of speech is taken from some of us, it is only a matter of time until it is taken from the rest of us as well.

And since when does the Federal Reserve have any authority to tell any private citizen what they can or cannot say?

This is just another example of how the Federal Reserve has gotten completely and totally out of control.  The Fed has become an unaccountable monster that is just running around doing just about anything that it wants to do.

It is for some very good reasons that many members of Congress are starting to publicly speak out against the Federal Reserve.  Just recently it came out that the Federal Reserve has been handing out gigantic piles of nearly interest-free cash to their friends at the largest banks, financial institutions and corporations all over the globe.  The American people have completely lost control over the financial system, and as long as the Federal Reserve remains in control that is going to continue to be the case.

But now, not only is the Federal Reserve at the core of the rapidly developing financial nightmare that is enveloping this nation, they are also attempting to tell private bank owners what they can and cannot say inside their own private businesses.

No matter what your faith is or even if you have no faith, you should be objecting to this.  If the Federal Reserve is allowed to get away with this, it will be just a matter of time before U.S. government agencies come along and start ordering all private businesses to remove all traces of Christianity because they are “discriminatory” and they might offend someone.

The freedoms and liberties that previous generations fought and died to defend are being stripped away from us.  If you plan to say something about it before they are all gone, now would be a good time to start.

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