|October 14, 2004 | Modified January 27, 2005||The truth IS out there.|
A NEXIALIST N+E+W+S FEATURE: The BIG One VII: Coming Home to Roost?
from L. Reichard White
Do you like the "A-ha!" experience?
Here's the latest in NEXIALIST N+E+W+S's The BIG One series. First clips are a bit of a review.
For a complete review, start HERE: The BIG One! MASTER Menu
N+N:Reprise: "This is the biggest financial challenge facing the world in the last half-century." -Bill Clinton to CFR, 14 Sep 1998 346_clip1
N+N:Reprise: Mr. [Albert] Friedberg [famed Austrian economist, currency specialist and head of Canada's Friedberg Mercantile Group] points to the monetary policy of the Federal Reserve as the fundamental cause of the currency debacle. He notes that since the early 1990s, the Fed has backed a credit expansion policy that it has exported abroad. He also predicts that "the crisis will widen. It will travel from Asia to Russia, Greece, Brazil. Eventually it will come back to the United States." -TORONTO GLOBE AND MAIL (January 10, 1998) 346_clip2
N+N:Reprise: "It's certainly the worst international monetary crisis since the founding of the system, the Bretton Woods [paper money] system in 1944. ... And I know that the authorities in Washington are most concerned about this spread, and properly so -- because it seems to be happening." -Roger Altman, EVERCORE PARTNERS CHAIRMAN, former Deputy Secretary of Treasury, CNBC, 14 Aug 1998, ~7:37:21 AM EDT 346_clip3
N+N:Reprise: "We must [now] address not only a run on a bank or a firm, but also a run on nations." -American President William Jefferson Clinton to the World Bank and the IMF, October 6, 1998 346_clip4
JACKSON, Wyo. (AP) -Federal Reserve Chairman Alan Greenspan said Friday that the country will face "abrupt and painful" choices if Congress does not move quickly to trim the Social Security and Medicare benefits that have been promised to the baby boom generation.
Starting in the 1970s, the share of Federal revenue spent on interest expense began to grow. This burden is now approaching 30%, even though interest rates have been falling for several years.
An array of government and private analysts put the actual U.S. "fiscal gap," which means all future receipts minus all future obligations, at $40 trillion (Government Accountability Office) to $72 trillion (Social Security Board of Trustees).
BUENOS AIRES -The sinking of Argentina [the peso -lrw] is leading impoverished women and men to take desperate measures, selling their hair or blood, jumping on an overturned cattle truck to butcher the animals on the spot, or taking money to hold a place in a queue outside a bank all night long. ...In December, the same necessity led crowds to plunder supermarkets.
If we look at the fundamentals compared to third- world countries like Indonesia and Argentina, we're worse off than they are, but because of the status of the dollar in international trade, we seem to have some leeway. We have the twin deficits, the budget deficit and the trade deficit. This can't go on forever -- and things that can't go on forever don't go on forever. -Economist Paul Krugman, author of ^^w$"The Great Unraveling," Democracy Now!, December 21, 2004 346_clip9
Twenty years ago the total debt of U.S. households was equal to half the size of the economy. Today the figure is 85 percent. ... a "spectacular wave of bankruptcies" is possible. ... It is undeniable that America is living in a "debt bubble" of record proportions. ... Greenspan might instead deliberately allow the dollar to slump and inflation to rise, whittling away at the value of today's consumer debts in real terms. ... Higher interest rates, or higher inflation: Either way, ... You wouldn't want to hold 30-year Treasuries, which today yield just 4.83 percent. Economic `Armageddon' predicted, Brett Arends, On State Street, Tuesday, November 23, 2004 346_clip10
*F*orget Enron, WorldCom or mutual funds. The crisis enveloping the insurance industry is "the scandal of the decade, without a question" and "dwarfs anything we've seen thus far."
Stephen Roach, the chief economist at investment banking giant Morgan Stanley ... His prediction: America has no better than a 10 percent chance of avoiding economic "armageddon." ... In a nutshell, Roach's argument is that America's record trade deficit means the dollar will keep falling. To keep foreigners buying T-bills and prevent a resulting rise in inflation, Federal Reserve Chairman Alan Greenspan will be forced to raise interest rates ...The result: U.S. consumers, who are in debt up to their eyeballs, will get pounded. ...
PIMCO, which manages the world's largest private portfolio of U.S. government debt, ...argues that America's Asian creditors should forgive a portion of the debts owed to them by the U.S. government in exchange for the U.S. government imposing what amounts to a broad based austerity program, resulting in a substantial decline in American living standards. ...
Japan is warning the White House that there will be 'enormous capital flight' from the dollar if the Bush administration maintains its laissez-faire approach to the mounting currency crisis. Tokyo fears that Japan's strongest economic recovery in a decade could be derailed by the sudden appreciation in the yen against the greenback. The criticism of President Bush's inaction, by a senior member of the ruling Liberal Democratic Party, will be taken as a veiled threat that Japan could start to sell off its multi-billion-dollar holdings of US Treasuries. ...Like Japan, the eurozone fears that its tentative recovery could be choked off by the fall in the dollar, which European Central Bank president Jean-Claude Trichet has called 'brutal'. Japan threatens huge dollar sell-off*, Heather Stewart in Tokyo, Sunday December 5, 2004, The Observer http://www.observer.co.uk 346_clip14
a headline ... read ... "India to dip into forex reserves to build roads." Looks innocuous enough, but it was the signal long awaited that the US dollar would finally crack. For a long time now India, China, Japan and a number of other countries have been reinvesting the dollars they have been paid for exports in low yielding US Treasury bonds. India has around US$120 billion foreign exchange reserves ... which have been depreciating against the euro, pound and yen.
DAVOS, Switzerland (AP) -- China has lost faith in the stability of the U.S. dollar and its first priority is to broaden the exchange rate for its currency from the dollar to a more flexible basket of currencies, a top Chinese economist [Fan Gang] said Wednesday at the World Economic Forum. ... "The U.S. dollar is no longer -- in our opinion is no longer -- (seen) as a stable currency, and is devaluating all the time, ...Fan said, speaking in English.
Another salvation may be the economy. It's going to go very bad, folks. You know, if you have not sold your stocks and bought property in Italy, you better do it quick. ...Europe is not going to tolerate us much longer. The rage there is enormous. ...-- it's going to be an awful lot of dancing on our graves as the dollar goes bad and everybody stops buying our bonds, our credit -- we're spending $2 billion a day to float the debt, and one of these days, the Japanese and the Russians, everybody is going to start buying oil in Euros instead of dollars. ...the damage he's [Bush] going to do between then and now is enormous. We're going to have some very bad months ahead. -Pulitzer prize- winning investigative journalist Seymour Hersh: "We've Been Taken Over by a Cult," Stephen Wise Free Synagogue in New York, Democracy NOW!, Wednesday, January 26th, 2005 346_clip17
For a complete guide to The BIG One! series, start here: The BIG One! MASTER Menu
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