ASIA CRISIS

China needs to devise more policies to boost consumption among the nation's 1.3 billion people to counter the impact of falling exports on economic growth. Although the government has pledged to boost consumption to sustain growth, China still face difficulties in identifying which areas and which measures China should take to spur spending. Economic policies have failed to rebalance growth away from trade and investment, with the share of consumption in gross domestic product falling to less than 50 percent from 60 percent a decade ago.

The Government may unveil a second stimulus package as early as next month aimed at spurring consumer spending as the economy is set for its slowest growth in two decades. The government has already increased subsidies for farmers to buy household electronics, cut taxes on property and is preparing policies to revive slumping car sales in the world's second- biggest auto market.

China's household consumption rate is among the lowest in Asia as households still hold large precautionary saving balances Estimates household consumption growth slowed to 5 percent in 2008 after rising at double that pace the previous year.

The U.S. economy faces the opposite problem, with consumption too high and the savings rate too low. The policies now being pursued by US to revive growth by boosting consumption aren't the solution to the country's long-term structural economic problem. Consumer spending represents more than two-thirds of the U.S. economy while household consumption's share of China's gross domestic product slumped to slightly more than 35 percent last year from 45 percent a decade ago, according to Chinese government data. This shows there is huge potential to boost consumer credit and encourage people to buy homes and cars.

This shows there is huge potential to boost consumer credit and encourage people to buy homes and cars. Does anyone learn? Credit bubbles caused the great depression, and the great recession that we are in. One might think that someone in authority would learn something from this. But they never do. China wants to follow the US to ruin. Besides from a simple Austrian economic standpoint it it not possible to have too much savings. It is possible however to have too much debt and that is where the US is right now.

China's foreign-exchange reserves dropped for the first time in five years as a result of the global financial crisis, Market News International reported, citing Cai Qiusheng, head of the investment management bureau under the State Administration of Foreign Exchange. The current figure must be lower than the peak of about $1.9 trillion, Cai told a trade forum in Beijing over the weekend, the English-language wire service said. He didn't specify which period he was referring to or give a figure. China's foreign exchange reserves $1.9 trillion at the end of September, according to Bloomberg date.

The End of Dollar Hegemony

A hundred years ago it was called “dollar diplomacy.” After World War II, and especially after the fall of the Soviet Union in 1989, that policy evolved into “dollar hegemony.” But after all these many years of great success, US dollar dominance is coming to an end. It has been said, rightly, that he who holds the gold makes the rules. In earlier times it was readily accepted that fair and honest trade required an exchange for something of real value.

First it was simply barter of goods. Then it was discovered that gold held a universal attraction, and was a convenient substitute for more cumbersome barter transactions. Not only did gold facilitate exchange of goods and services, it served as a store of value for those who wanted to save for a rainy day.

Though money developed naturally in the marketplace, as US governments grew in power they assumed monopoly control over money. Sometimes US governments succeeded in guaranteeing the quality and purity of gold, but in time governments learned to outspend their revenues. New or higher taxes always incurred the disapproval of the people, so it wasn’t long before Kings and Caesars learned how to inflate their currencies by reducing the amount of gold in each coin-- always hoping their subjects wouldn’t discover the fraud. But the people always did, and they strenuously objected.

This helped pressure leaders to seek more gold by conquering other nations. The people became accustomed to living beyond their means, and enjoyed the circuses and bread. Financing extravagances by conquering foreign lands seemed a logical alternative to working harder and producing more. Besides, conquering nations not only brought home gold, they brought home slaves as well. Taxing the people in conquered territories also provided an incentive to build empires. This system of US government worked well for a while, but the moral decline of the people led to an unwillingness to produce for themselves. There was a limit to the number of countries that could be sacked for their wealth, and this always brought empires to an end. When gold no longer could be obtained, their military might crumbled. In those days those who held the gold truly wrote the rules and lived well.

That general rule has held fast throughout the ages. When gold was used, and the rules protected honest commerce, productive nations thrived. Whenever wealthy nations-- those with powerful armies and gold-- strived only for empire and easy fortunes to support welfare at home, those nations failed.

Today the principles are the same, but the process is quite different. Gold no longer is the currency of the realm; paper is. The truth now is: “He who prints the money makes the rules”-- at least for the time being. Although gold is not used, the goals are the same: compel foreign countries to produce and subsidize the country with military superiority and control over the monetary printing presses.

Since printing paper money is nothing short of counterfeiting, the issuer of the international currency must always be the country with the military might to guarantee control over the system. This magnificent scheme seems the perfect system for obtaining perpetual wealth for the country that issues the de facto world currency. The one problem, however, is that such a system destroys the character of the counterfeiting nation’s people-- just as was the case when gold was the currency and it was obtained by conquering other nations. And this destroys the incentive to save and produce, while encouraging debt and runaway welfare.

The pressure at home to inflate the currency comes from the corporate welfare recipients, as well as those who demand handouts as compensation for their needs and perceived injuries by others. In both cases personal responsibility for one’s actions is rejected. When paper money is rejected, or when gold runs out, wealth and political stability are lost. The country then must go from living beyond its means to living beneath its means, until the economic and political systems adjust to the new rules-- rules no longer written by those who ran the now defunct printing press.

“Dollar Diplomacy,” a policy instituted by William Howard Taft and his Secretary of State Philander C. Knox, was designed to enhance U.S. commercial investments in Latin America and the Far East. McKinley concocted a war against Spain in 1898, and (Teddy) Roosevelt’s corollary to the Monroe Doctrine preceded Taft’s aggressive approach to using the U.S. dollar and diplomatic influence to secure U.S. investments abroad. This earned the popular title of “Dollar Diplomacy.” The significance of Roosevelt’s change was that our intervention now could be justified by the mere “appearance” that a country of interest to us was politically or fiscally vulnerable to European control. Not only did we claim a right, but even an official U.S. government “obligation” to protect our commercial interests from Europeans.

This new policy came on the heels of the “gunboat” diplomacy of the late 19th century, and it meant we could buy influence before resorting to the threat of force. By the time the “dollar diplomacy” of William Howard Taft was clearly articulated, the seeds of American empire were planted. And they were destined to grow in the fertile political soil of a country that lost its love and respect for the republic bequeathed to us by the authors of the Constitution. And indeed they did. It wasn’t too long before dollar “diplomacy” became dollar “hegemony” in the second half of the 20th century.
This transition only could have occurred with a dramatic change in monetary policy and the nature of the dollar itself.

Congress created the Federal Reserve System in 1913. Between then and 1971 the principle of sound money was systematically undermined. Between 1913 and 1971, the Federal Reserve found it much easier to expand the money supply at will for financing war or manipulating the economy with little resistance from Congress-- while benefiting the special interests that influence government.

Dollar dominance got a huge boost after World War II. We were spared the destruction that so many other nations suffered, and our coffers were filled with the world’s gold. But the world chose not to return to the discipline of the gold standard, and the politicians applauded. Printing money to pay the bills was a lot more popular than taxing or restraining unnecessary spending. In spite of the short-term benefits, imbalances were institutionalized for decades to come.

The 1944 Bretton Woods agreement solidified the dollar as the preeminent world reserve currency, replacing the British pound. Due to our political and military muscle, and because we had a huge amount of physical gold, the world readily accepted our dollar (defined as 1/35th of an ounce of gold) as the world’s reserve currency. The dollar was said to be “as good as gold,” and convertible to all foreign central banks at that rate. For American citizens, however, it remained illegal to own. This was a gold-exchange standard that from inception was doomed to fail.

The U.S. did exactly what many predicted she would do. She printed more dollars for which there was no gold backing. But the world was content to accept those dollars for more than 25 years with little question-- until the French and others in the late 1960s demanded we fulfill our promise to pay one ounce of gold for each $35 they delivered to the U.S. Treasury. This resulted in a huge gold drain that brought an end to a very poorly devised pseudo-gold standard.

It all ended on August 15, 1971, when Nixon closed the gold window and refused to pay out any of our remaining 280 million ounces of gold. In essence, we declared our insolvency and everyone recognized some other monetary system had to be devised in order to bring stability to the markets.

Amazingly, a new system was devised which allowed the U.S. to operate the printing presses for the world reserve currency with no restraints placed on it-- not even a pretense of gold convertibility, none whatsoever! Though the new policy was even more deeply flawed, it nevertheless opened the door for dollar hegemony to spread.

Realizing the world was embarking on something new and mind boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence “backed” the dollar with oil. In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite the radical Islamic movement among those who resented our influence in the region. The arrangement gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as dollar influence flourished.

This post-Bretton Woods system was much more fragile than the system that existed between 1945 and 1971. Though the dollar/oil arrangement was helpful, it was not nearly as stable as the pseudo gold standard under Bretton Woods. It certainly was less stable than the gold standard of the late 19th century.

During the 1970s the dollar nearly collapsed, as oil prices surged and gold skyrocketed to $800 an ounce. By 1979 interest rates of 21% were required to rescue the system. The pressure on the dollar in the 1970s, in spite of the benefits accrued to it, reflected reckless budget deficits and monetary inflation during the 1960s. The markets were not fooled by LBJ’s claim that we could afford both “guns and butter.”. Once again the dollar was rescued, and this ushered in the age of true dollar hegemony lasting from the early 1980s to the present. With tremendous cooperation coming from the central banks and international commercial banks, the dollar was accepted as if it were gold.

Fed Chair Alan Greenspan, on several occasions before the House Banking Committee, answered my challenges to him about his previously held favorable views on gold by claiming that he and other central bankers had gotten paper money-- i.e. the dollar system-- to respond as if it were gold. Each time I strongly disagreed, and pointed out that if they had achieved such a feat they would have defied centuries of economic history regarding the need for money to be something of real value. He smugly and confidently concurred with this.

In recent years central banks and various financial institutions, all with vested interests in maintaining a workable fiat dollar standard, were not secretive about selling and loaning large amounts of gold to the market even while decreasing gold prices raised serious questions about the wisdom of such a policy. They never admitted to gold price fixing, but the evidence is abundant that they believed if the gold price fell it would convey a sense of confidence to the market, confidence that they indeed had achieved amazing success in turning paper into gold.

Increasing gold prices historically are viewed as an indicator of distrust in paper currency. This recent effort was not a whole lot different than the U.S. Treasury selling gold at $35 an ounce in the 1960s, in an attempt to convince the world the dollar was sound and as good as gold. Even during the Depression, one of Roosevelt’s first acts was to remove free market gold pricing as an indication of a flawed monetary system by making it illegal for American citizens to own gold. Economic law eventually limited that effort, as it did in the early 1970s when our Treasury and the IMF tried to fix the price of gold by dumping tons into the market to dampen the enthusiasm of those seeking a safe haven for a falling dollar after gold ownership was re-legalized.

Once again the effort between 1980 and 2000 to fool the market as to the true value of the dollar proved unsuccessful. In the past 5 years the dollar has been devalued in terms of gold by more than 50%. You just can’t fool all the people all the time, even with the power of the mighty printing press and money creating system of the Federal Reserve.

Even with all the shortcomings of the fiat monetary system, dollar influence thrived. The results seemed beneficial, but gross distortions built into the system remained. And true to form, Washington politicians are only too anxious to solve the problems cropping up with window dressing, while failing to understand and deal with the underlying flawed policy. Protectionism, fixing exchange rates, punitive tariffs, politically motivated sanctions, corporate subsidies, international trade management, price controls, interest rate and wage controls, super-nationalist sentiments, threats of force, and even war are resorted to—all to solve the problems artificially created by deeply flawed monetary and economic systems.

In the short run, the issuer of a fiat reserve currency can accrue great economic benefits. In the long run, it poses a threat to the country issuing the world currency. In this case that’s the United States. As long as foreign countries take our dollars in return for real goods, we come out ahead. This is a benefit many in Congress fail to recognize, as they bash China for maintaining a positive trade balance with us. But this leads to a loss of manufacturing jobs to overseas markets, as we become more dependent on others and less self-sufficient. Foreign countries accumulate our dollars due to their high savings rates, and graciously loan them back to us at low interest rates to finance our excessive consumption.

It sounds like a great deal for everyone, except the time will come when our dollars-- due to their depreciation-- will be received less enthusiastically or even be rejected by foreign countries. That could create a whole new ballgame and force us to pay a price for living beyond our means and our production. The shift in sentiment regarding the dollar has already started, but the worst is yet to come.

The agreement with OPEC in the 1970s to price oil in dollars has provided tremendous artificial strength to the dollar as the preeminent reserve currency. This has created a universal demand for the dollar, and soaks up the huge number of new dollars generated each year. Last year alone M3 increased over $700 billion.

The artificial demand for our dollar, along with our military might, places us in the unique position to “rule” the world without productive work or savings, and without limits on consumer spending or deficits. The problem is, it can’t last.

Price inflation is raising its ugly head, and the NASDAQ bubble-- generated by easy money-- has burst. The housing bubble likewise created is deflating. Gold prices have doubled, and federal spending is out of sight with zero political will to rein it in. The trade deficit last year was over $728 billion. A $2 trillion war is raging, and plans are being laid to expand the war into Iran and possibly Syria. The only restraining force will be the world’s rejection of the dollar. It’s bound to come and create conditions worse than 1979-1980, which required 21% interest rates to correct. But everything possible will be done to protect the dollar in the meantime. We have a shared interest with those who hold our dollars to keep the whole charade going.

Greenspan, in his first speech after leaving the Fed, said that gold prices were up because of concern about terrorism, and not because of monetary concerns or because he created too many dollars during his tenure. Gold has to be discredited and the dollar propped up. Even when the dollar comes under serious attack by market forces, the central banks and the IMF surely will do everything conceivable to soak up the dollars in hope of restoring stability. Eventually they will fail.

Most importantly, the dollar/oil relationship has to be maintained to keep the dollar as a preeminent currency. Any attack on this relationship will be forcefully challenged—as it already has been.

In November 2000 Saddam Hussein demanded Euros for his oil. His arrogance was a threat to the dollar; his lack of any military might was never a threat. At the first cabinet meeting with the new administration in 2001, as reported by Treasury Secretary Paul O’Neill, the major topic was how we would get rid of Saddam Hussein-- though there was no evidence whatsoever he posed a threat to us. This deep concern for Saddam Hussein surprised and shocked O’Neill.

It now is common knowledge that the immediate reaction of the administration after 9/11 revolved around how they could connect Saddam Hussein to the attacks, to justify an invasion and overthrow of his government. Even with no evidence of any connection to 9/11, or evidence of weapons of mass destruction, public and congressional support was generated through distortions and flat out misrepresentation of the facts to justify overthrowing Saddam Hussein.

There was no public talk of removing Saddam Hussein because of his attack on the integrity of the dollar as a reserve currency by selling oil in Euros. Many believe this was the real reason for our obsession with Iraq. I doubt it was the only reason, but it may well have played a significant role in our motivation to wage war. Within a very short period after the military victory, all Iraqi oil sales were carried out in dollars. The Euro was abandoned.

In 2001, Venezuela’s ambassador to Russia spoke of Venezuela switching to the Euro for all their oil sales. Within a year there was a coup attempt against Chavez, reportedly with assistance from our CIA.

After these attempts to nudge the Euro toward replacing the dollar as the world’s reserve currency were met with resistance, the sharp fall of the dollar against the Euro was reversed. These events may well have played a significant role in maintaining dollar dominance.

It’s become clear the U.S. administration was sympathetic to those who plotted the overthrow of Chavez, and was embarrassed by its failure. The fact that Chavez was democratically elected had little influence on which side we supported.

Now, a new attempt is being made against the petrodollar system. Iran, another member of the “axis of evil,” has announced her plans to initiate an oil bourse in March of this year. Guess what, the oil sales will be priced Euros, not dollars.

Most Americans forget how our policies have systematically and needlessly antagonized the Iranians over the years. In 1953 the CIA helped overthrow a democratically elected president, Mohammed Mossadeqh, and install the authoritarian Shah, who was friendly to the U.S. The Iranians were still fuming over this when the hostages were seized in 1979. Our alliance with Saddam Hussein in his invasion of Iran in the early 1980s did not help matters, and obviously did not do much for our relationship with Saddam Hussein. The administration announcement in 2001 that Iran was part of the axis of evil didn’t do much to improve the diplomatic relationship between our two countries. Recent threats over nuclear power, while ignoring the fact that they are surrounded by countries with nuclear weapons, doesn’t seem to register with those who continue to provoke Iran. With what most Muslims perceive as our war against Islam, and this recent history, there’s little wonder why Iran might choose to harm America by undermining the dollar. Iran, like Iraq, has zero capability to attack us. But that didn’t stop us from turning Saddam Hussein into a modern day Hitler ready to take over the world. Now Iran, especially since she’s made plans for pricing oil in Euros, has been on the receiving end of a propaganda war not unlike that waged against Iraq before our invasion.

It’s not likely that maintaining dollar supremacy was the only motivating factor for the war against Iraq, nor for agitating against Iran. Though the real reasons for going to war are complex, we now know the reasons given before the war started, like the presence of weapons of mass destruction and Saddam Hussein’s connection to 9/11, were false. The dollar’s importance is obvious, but this does not diminish the influence of the distinct plans laid out years ago by the neo-conservatives to remake the Middle East. Israel’s influence, as well as that of the Christian Zionists, likewise played a role in prosecuting this war. Protecting “our” oil supplies has influenced our Middle East policy for decades.
But the truth is that paying the bills for this aggressive intervention is impossible the old fashioned way, with more taxes, more savings, and more production by the American people. Much of the expense of the Persian Gulf War in 1991 was shouldered by many of our willing allies. That’s not so today. Now, more than ever, the dollar hegemony-- it’s dominance as the world reserve currency-- is required to finance our huge war expenditures. This $2 trillion never-ending war must be paid for, one way or another. Dollar hegemony provides the vehicle to do just that.

For the most part the true victims aren’t aware of how they pay the bills. The license to create money out of thin air allows the bills to be paid through price inflation. American citizens, as well as average citizens of Japan, China, and other countries suffer from price inflation, which represents the “tax” that pays the bills for our military adventures. That is until the fraud is discovered, and the foreign producers decide not to take dollars nor hold them very long in payment for their goods. Everything possible is done to prevent the fraud of the monetary system from being exposed to the masses who suffer from it. If oil markets replace dollars with Euros, it would in time curtail our ability to continue to print, without restraint, the world’s reserve currency.

It is an unbelievable benefit to us to import valuable goods and export depreciating dollars. The exporting countries have become addicted to our purchases for their economic growth. This dependency makes them allies in continuing the fraud, and their participation keeps the dollar’s value artificially high. If this system were workable long term, American citizens would never have to work again. We too could enjoy “bread and circuses” just as the Romans did, but their gold finally ran out and the inability of Rome to continue to plunder conquered nations brought an end to her empire.
The same thing will happen to us if we don’t change our ways. Though we don’t occupy foreign countries to directly plunder, we nevertheless have spread our troops across 130 nations of the world. Our intense effort to spread our power in the oil-rich Middle East is not a coincidence. But unlike the old days, we don’t declare direct ownership of the natural resources-- we just insist that we can buy what we want and pay for it with our paper money. Any country that challenges our authority does so at great risk.

Once again Congress has bought into the war propaganda against Iran, just as it did against Iraq. Arguments are now made for attacking Iran economically, and militarily if necessary. These arguments are all based on the same false reasons given for the ill-fated and costly occupation of Iraq.

Our whole economic system depends on continuing the current monetary arrangement, which means recycling the dollar is crucial. Currently, we borrow over $700 billion every year from our gracious benefactors, who work hard and take our paper for their goods. Then we borrow all the money we need to secure the empire (DOD budget $450 billion) plus more. The military might we enjoy becomes the “backing” of our currency. There are no other countries that can challenge our military superiority, and therefore they have little choice but to accept the dollars we declare are today’s “gold.” This is why countries that challenge the system-- like Iraq, Iran and Venezuela-- become targets of our plans for regime change.

Ironically, dollar superiority depends on our strong military, and our strong military depends on the dollar. As long as foreign recipients take our dollars for real goods and are willing to finance our extravagant consumption and militarism, the status quo will continue regardless of how huge our foreign debt and current account deficit become.

But real threats come from our political adversaries who are incapable of confronting us militarily, yet are not bashful about confronting us economically. That’s why we see the new challenge from Iran being taken so seriously. The urgent arguments about Iran posing a military threat to the security of the United States are no more plausible than the false charges levied against Iraq. Yet there is no effort to resist this march to confrontation by those who grandstand for political reasons against the Iraq war.It seems that the people and Congress are easily persuaded by the jingoism of the preemptive war promoters. It’s only after the cost in human life and dollars are tallied up that the people object to unwise militarism. The strange thing is that the failure in Iraq is now apparent to a large majority of American people, yet they and Congress are acquiescing to the call for a needless and dangerous confrontation with Iran. But then again, our failure to find Osama bin Laden and destroy his network did not dissuade us from taking on the Iraqis in a war totally unrelated to 9/11.

Concern for pricing oil only in dollars helps explain our willingness to drop everything and teach Saddam Hussein a lesson for his defiance in demanding Euros for oil.
And once again there’s this urgent call for sanctions and threats of force against Iran at the precise time Iran is opening a new oil exchange with all transactions in Euros.
Using force to compel people to accept money without real value can only work in the short run. It ultimately leads to economic dislocation, both domestic and international, and always ends with a price to be paid.

The economic law that honest exchange demands only things of real value as currency cannot be repealed. The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or Euros. The sooner the better. @

Communism VS Capitalism ...

Arnaud de Borchgrave, like so many others, seems not to understand the intentionality involved, but he does point out one key element in the worldwide Marxofascist plan, in his new commentary, "Emerging Theats: Karl Marx Redux." His piece could have been entitled, "How the Soviet KGB has Undermined Freedom Worldwide, by 'Capitalizing' upon Greed." Here is an excerpt.

“For 40 years the capitalist world faced the challenge of communism and socialism — the equal sharing of miseries — which kept democratic capitalism — the unequal sharing of blessings — on the straight and narrow. With the collapse of the Soviet Empire and its satellites and client states, capitalism tossed off its code of conduct. Insider trading among close friends in New York, London, Paris, Zurich, Hong Kong and Tokyo became commonplace.”

Russian organized crime, which succeeded communism, engulfed the entire planet (even in Guam). Choice real estate in London, Paris, Rome, Marbella in Spain, the French Riviera's priciest Cap d'Antibes, Italy's Amalfi Drive, Cyprus, Rhodes and other Dodecanese Greek Islands disappeared into the hands of Russia's newly minted billionaires — all paid for in cash. One real estate operator in Antibes told us about suitcases filled with $100 bills for the purchase of one $70 million property. In the 1990s some $230 billion was plundered from Russia and moved to secret numbered accounts abroad. Those who knew the Western system were usually KGB agents who had worked in Western European capitals.

The subprime mortgage cancer, which first was detected but ignored in 2006, had spread to the whole world by summer 2007. It was criminal predatory lending whose worthless mortgages were repackaged to look like secure investments and peddled all over the world.

Now Americans have seen retirement savings halved. U.S. households' net worth tumbled a mind-blowing $11 trillion — in a single year. This is the same figure as the combined annual output of Germany, Japan and the United Kingdom. Gone are the second homes, rising retirement nest eggs, rising expectations generally.

TV news now brings us tent cities from Seattle to Athens, Ga., for newly destitute Americans; homeless shelters are filled to overflowing (e.g., 2,000 beds in Sacramento, Calif., spoken for). Santa Barbara, Calif., has designated a parking area for people who sleep in their cars. And the World Bank predicts another 53 million falling below the level of "extreme poverty" this year. What began with criminal subprime mortgage predators is now hurting those who can least afford it — both at home and abroad.

Europe's hot new love affair with Obama already has cooled into the usual trans-Atlantic spats. The Europeans are resisting calls for more global fiscal stimulus, pointing out that the real problem is a systemic crisis that requires, above all else, a Herculean cleaning of capitalism's Augean stables. The unacceptable face of capitalism must be replaced with the kind of financial and economic regulation that will avert catastrophe in the future.

Who can read that and not at least start to wonder about what has really been happening in this world, since the quizzical "failure" of the Soviet Communists?Do we have trouble tracing the above to the suspicious coincidences having to do with the orchestration of the "mortgage meltdown," just before the (fictitious) election of Obama, the Marxist Messiah — with his operative comrades already in place, in congressional leadership, awaiting his arrival?

Is it too difficult to track the preparation and promotion of Barack Obama, as well as the communist plans to develop the armies of the proletariat through ACORN and the like, through Obama's "Organizing for America," through the patronage plan, and through the entire schema for taking advantage of manufactured crisis?

How many more clues do we need? @

Clearstream offers

Hong Kong dollar, Japanese yen and Australian dollar follow Singapore dollar/ Service helps customers to reduce funding costs

Clearstream, the International Central Securities Depositary (ICSD) part of Deutsche Bцrse Group, is the first ICSD to offer same day currency deadlines for leading Asian Pacific currencies: the Singapore dollar (SGD), the Hong Kong dollar (HKD), the Japanese Yen (JPY) and the Australian dollar (AUD). This means customers managing balances in these currencies will benefit from deadlines close to their local market deadlines.

Clearstream has offered a same day currency deadlines in the Singapore Dollar since December 2008. The same day service has been extended to the Hong Kong Dollar on 2 March and will be extended to the Australian Dollar and the Japanese Yen on 23 March 2009.

This move is part of a drive by Clearstream to provide customers with Asia Pacific market settlement solutions as efficient as those offered in US Dollars, Euros and other major currencies and to materially reduce their funding costs. Due to time zone differences, Asia Pacific customers have been historically disadvantaged by the need to pre-fund or finance their settlement operations in advance of their normal cash management activities in Asia Pacific currencies.

Clearstream will complement the enhancements to its currency deadlines with the roll out of a same day settlement service in the Asia Pacific securities markets within the coming year. With the enhancement, Clearstream aims to make available the full range of its ICSD services throughout the Asia Pacific business day. The scope of services benefiting from the new environment include not only settlement itself, but also instruction validation, matching, domestic market instruction handling and feedback, instruction sequencing, provisioning, collateral allocation and substitution and customer reporting. These changes will enable Clearstream to significantly strengthen its commitment to the Asia Pacific markets where the company has been present since 1992.

Philippe Metoudi, a Hong Kong-based Clearstream Board member who is responsible for Clearstream’s Asia, Pacific, Middle East and African business said; “Serving Asia and serving our Asian customers are key priorities for Clearstream and we are constantly evaluating ways to strengthen our commitment to the region. Since we opened in Asia in 1992, the region has generated significant growth for Clearstream. With these changes, our aim is to complement our presence in Singapore, Hong Kong and Tokyo with an offering that makes all our services available throughout the local business day”.

Details of the currency deadline changes:
The customer deadlines for pre-advices and withdrawal of funds in HKD, JPY and AUD have been considerably improved. For these currencies it was previously 15:00 central European time the day before the transaction. For HKD, it is now 07:00 central European time (CET) of the day of the transaction. The equivalent local Hong Kong time is 14:00 during European winter time and 13:00 during European summer time.
For JPY, it is now 4:30 (CET) of the day of the transaction. The equivalent local Japanese time is 12:30 during European winter time and 11:30 during European summer time. For AUD, it is now 5:00 central European time (CET) of the day of the transaction. The equivalent local Australian time is 15:00 during European winter time and 13:00 during European summer time.

Clearstream
Clearstream is an international central securities depositary (ICSD) headquartered in Luxembourg and is an integral part of Deutsche Bцrse Group, the world’s largest exchange organization when measured by sales revenues. Clearstream offers settlement and custody services for bonds, equities and investment funds to more than 2,500 banks and financial institutions worldwide. Clearstream currently holds Ђ 10 trillion in assets under custody. Clearstream Banking S.A. has long-term credit rating from Standard & Poor’s and Fitch of AA

stimulus package ?

Imagine this: A group of community organizers, aided by mesmerizing rhetoric and calls for equality, fraternity and hope, remove the privileged from power. But the government they inherit is heavily in debt to the tune of a third of the GDP. The debt comes due, the government can't pay, so the economy tanks.

What to do? Taxes are out - the taxpayers have fled (or are broke). The ingenious solution: Print more money as a stimulus package! What about interest on the printed stimulus? Piffle. Just print it also!

This is not the United States in 2009 - at least not yet. It is France, 1789, right after the French Revolution.

Why mention this history? For three reasons: First, because it is an obvious equivalent to what is happening today; second, because its ending could provide a clue to how today's events could end; and third, because a book I recently read about that period changed my thinking and made me into a semi-reluctant gold bug.

The book is Fiat Money, Inflation in France, written 50 years ago by Andrew Dickson White (a co-founder of Cornell University). I was handed the book last week when I went to visit a friend at a brokerage company, leafed through the book on the subway back, then got caught up in the narrative and finished it that day. It was delightful and terrible: Delightful, because it was written in the elegant plain style no longer in use today, and terrible, because it was so reminiscent of current events that, if the present unfolds as the past did, hard times lie ahead.

What evidence is there that today resembles that particular past so much that the ending is bound to be similar? First, in 1789, power shifted from those who had money to those who mostly didn't - similar to today. Second, the revolutionary French government tried to pay the debt racked up by the deposed regime with freshly printed money - again like today. Third, any dissenting voices in the National Assembly were shouted down with dire warnings of a "catastrophe" if the stimulus package were not approved - once more, like today.

But fourth and worst, as soon as the freshly printed money was used, the cry arose that it was not enough - and so more was printed. Then more, more and more. That last part is not yet in evidence today. However, once the recently approved U.S. stimulus is used up, more will be demanded of Congress, just as it was in 18th century France - you can bet on it.

In France, many assembly members had been bribed by debtors, and by others who benefited from the new spending - just as in U.S. Congress, where there are many who are alleged to sell their vote. And what of differences between then and now? Of course there are some. First, revolutionary France was violent, and those who refused to take the newly printed assignats - the currency of the day - or insisted on payment in gold, were arrested or guillotined.

Second, in revolutionary France, the massive printing caused inflation immediately. This is not yet the case, since the economy is so stagnant. Isn't this, then, a flaw in the argument? Not really. In 18th century France, that first money-printing caused a brief economic revival, before the inevitable slide began. Seven years later, the French economy was in ruins and Napoleon appeared, to sop up the unemployed and their anger in a continental war.

If the same scenario follows today, we are about to experience the first flush of false spring, as the first massive stimulus wends its way through the economy; but then the economy would falter, and there'd be demands for more stimulus, which would rekindle inflation and make gold rise - same as in France, more than two centuries ago.

Yes. I know I opined before that short-term gold may decline. It hasn't, though it still might. But longer term, it would likely benefit, as more and more paper money is printed. (I told you the book converted me.) Benefit until when? Until the inevitable squeeze is instituted to purge the economy of inflation - the kind of interest rate hike that Paul Volcker performed in 1982 that killed inflation, but also tanked gold.

But we are still a few years away from it, and a war to go through first, as U.S. President Barack Obama sends more divisions into Afghanistan, sopping up some unemployment, even as the Russians, Pakistanis and Iranians unite to block their supply routes and, together with China, work (out of pure national interest) to push the U.S. out of Central Asia.

So: Inflation, economic decline, an escalating war, a Volckerish purge at the end - what's a good investment in such a scenario? Treasury inflation-protected securities, gold and cash - plus a stack of good, first-edition volumes on economic history to keep you well informed.
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US says China ‘manipulating’ renminbi

Tim Geithner, President Barack Obama’s choice for Treasury secretary, on Thursday accused China of “manipulating” its currency and pledged “aggressive” diplomatic action to drive Beijing into action. The comment – a politically loaded term likely to raise tensions with Beijing – marked the Obama administration’s first public intervention in what will be one of its most critical international economic relationships.

The US has long felt that China has artificially depressed the value of its currency to boost exports – to the detriment of US business – but the Bush administration always stopped short of formally declaring China a currency manipulator.

In a written response to questions from senators, Mr Geithner, whose nomination was supported on Thursday by a clear majority of the Senate’s finance committee, said: “President Obama – backed by the conclusions of a broad range of economists – believes that China is manipulating its currency.” Mr Obama would “use aggressively all the diplomatic avenues open to him to seek change in China’s currency practices”, he said.

The price of long-term US Treasury bonds fell after Mr Geithner’s remarks, with some traders concerned that Beijing might ease up its purchase of US assets. China is the largest foreign holder of US Treasuries after Japan, and more than half of the $5,500bn Treasury market is held by foreign investors.

Mr Geithner stopped short of pledging that the US Treasury would formally name China as an exchange rate manipulator in its annual currency report, due in the spring. “The question is how and when to broach the subject in order to do more good than harm,” he said.

Hank Paulson, Mr Geithner’s predecessor, repeatedly criticised Beijing for holding down its currency but resisted pressure from Congress formally to name China as a manipulator. US legislation requires only that the administration starts negotiations with any country it so designates.China abandoned a fixed currency peg with the US dollar in 2005 for a managed float and since then the renminbi has appreciated by about 20 per cent against the dollar.

In November the Chinese authorities let the currency depreciate modestly, prompting speculation about a shift in policy. Since then, the renminbi has traded in a narrow band against the dollar, leading some economists to argue that a de facto peg has been restored. In spite of the gradual appreciation in the renminbi, China has continued to record large current account surpluses, which are likely to become politically controversial in a global recession.

Mr Geithner’s statement will spark controversy in China. In an article published in the Chinese media last week, Zhang Jianhua, head of the central bank’s research bureau, said that “wrong economic policies and improper market monitoring [in the US] are the primary reasons for the current financial crisis”. He added: “Any attempts to shift the responsibility to other countries reflect an inability to develop the right attitude for seeking solutions.”

Mr Geithner’s nomination hearing was dominated by concerns about his failure to pay some $34,000 in US taxes while employed by the International Monetary Fund several years ago.

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