A Bigger, Bolder Role Is Imagined For the IMF

Changes Suggest Shift in How Global Economy Is Run

By Anthony Faiola
Washington Post Staff Writer
Monday, April 20, 2009 

Inside a cavernous assembly hall in downtown Washington, dignitaries gather twice a year for routine meetings of the International Monetary Fund. Before long, though, the room could take center stage in the IMF's transformation into a veritable United Nations for the global economy.

Surrounded by blond wood paneling and a digital screen the size of a cinema's, central bankers and finance ministers would meet to convene a financial security council of sorts. Serving almost as ambassadors to the IMF, they would debate ways to put out the world's economic fires and stifle reckless policies before they ignite new ones.

Bowing to a new economic world order, the IMF would grant fresh powers to the likes of China, India and Brazil. It would have vastly expanded authority to act as a global banker to governments rich and poor. And with more flexibility to effectively print its own money, it would have the ability to inject liquidity into global markets in a way once limited to major central banks, including the U.S. Federal Reserve.

That image of a radically transformed IMF -- whose role in the global economy had turned largely advisory in recent years -- is now coming together through internal IMF documents, interviews and think-tank reports. Finance ministers from major nations will begin grappling with the formidable details of the IMF's makeover this weekend when they converge in Washington for the fund's biannual assembly.

The changes, broadly outlined by President Obama and other leaders of the Group of 20 nations in London earlier this month, could take months, even years to take shape. But the IMF is all but certain to take a central role in managing the world economy. As a result, Washington is poised to become the power center for global financial policy, much as the United Nations has long made New York the world center for diplomacy.

The IMF's mission is expanding so broadly that its managing director, Dominique Strauss-Kahn, said in an interview that the organization -- which underwent deep cuts last year before the financial crisis swept the globe -- may boost staffing in coming months, potentially creating dozens of high-paying jobs in the District.

"The IMF is changing, and with it, there will be a sea change in the way the world economy is run," said C. Fred Bergsten, director of the Peterson Institute for International Economics. "Their role will dramatically shift. You're talking about monitoring fiscal stimulus, moving toward tighter regulations for financial institutions. You're talking about global economic management in a way we have never seen."

Already, the economic crisis is triggering a profound cultural shift, with the IMF moving away from its long-held mission to spread the gospel of capitalism around the globe.

Founded at the end of World War II to maintain stability in global currency markets, it later became known as the lender of last resort for nations in crisis, particularly as financial fires raced across Asia and Latin America in the 1990s. Its bailouts, however, were the bane of many poor countries; they often came with demands for fiscal austerity and free-market reform as the cures for developing nations -- even if that meant nations had to cut back on programs for health care and schools.

The IMF, Strauss-Kahn suggested, will become less ideological. Critics maintain the fund is still attaching too many restrictions to its longer-term bailouts for poor countries. But the IMF has signed off in recent weeks on no-strings-attached credit lines for countries with solid economic track records, offering $47 billion to Mexico and $20.5 billion to Poland.

"If the fund is considering a country and is technically convinced that privatization of any enterprise is needed to fix the country today, let's privatize. But if it's a general idea of privatization that has nothing to do with the problem, let's forget it," Strauss-Kahn said. "At the same time, if nationalization will help, let's do it."

Developing nations -- including some that were once down-and-out clients of the fund -- are now coming to the IMF's rescue as part of the pledge made by leaders in London to beef up the organization's war chest to $1 trillion. In exchange for better representation on the governing board, China, which has fewer voting rights than Belgium, is set to give more than $40 billion. Brazil, which received a massive IMF bailout in the late 1990s, is pledging $4.5 billion.

There is even talk that the next managing director -- traditionally a European, while an American ran its sister organization, the World Bank -- may come from the developing world. "Why not?" Strauss-Kahn said.

For an organization long demonized by the developing world, such changes were once unthinkable. "I spent 20 years of my life carrying posters that said 'IMF out,' " Brazilian President Luiz Inácio Lula da Silva, a former union leader, said last week in Rio de Janeiro. "Now the minister of finance says we are going to lend money to the IMF."

The IMF is also moving toward taking the lead role as the global economic watchdog. An intense debate, however, remains over the scope of the edicts it may issue as well as the power it will be granted to enforce them.

Along with the Switzerland-based Financial Stability Board, the IMF is set to develop benchmarks for financial governance, from guidelines on executive pay to methods to prevent the spread of toxic assets through global banks. But no one is talking seriously about allowing the IMF to impose sanctions to force compliance as the United Nations does. There is even a strong reluctance to grant the IMF powers such as those held by the World Trade Organization in Geneva, which issues binding rulings on violations of global trade law.

Instead, the IMF is likely to wield what Strauss-Kahn called "the strength of truth telling." Put another way, the organization's public pronouncements would carry the force of the nations seated at its table, including the world's most powerful industrialized and developing economies.

Some critics, however, say that may not be enough. A case in point: An internal IMF document recently called for Eastern European nations to adopt the euro as their currency to stabilize their economies, even without the approval of euro-zone nations. But stiff opposition from Western Europe has thus far prevented that document from being made public.

Additionally, some smaller European and low-income nations remain skeptical about the creation of a financial security council, arguing they would not be well represented. Even within the IMF, there is a debate over the council's purview and makeup. Some see the council turning into a venue to hash out major economic disputes, such as U.S. and European charges that China is keeping its currency artificially weak.

Others say it should steer away from country-specific rulings. Another camp argues the fund should not exist at all. Even Strauss-Kahn has sought to dispel the notion of too grand a role for the IMF, saying its primary mission should remain monitoring and surveillance rather than enforcement.

"The fund is supposed to take on a more regulatory role, holding accountable even wealthy countries," said Moshin Khan, the IMF's former Middle East and Central Asia director. "But I will have to see that happen to believe it. Whenever I've seen them going after the bigger countries, if the countries don't like what the fund has to say, the fund doesn't say it."

What will it take for you to believe?

The G20 moves the world a step closer to a global currency

The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity.

 

By Ambrose Evans-Pritchard
Last Updated: 3:45PM BST 07 Apr 2009

A single clause in Point 19 of the communiqué issued by the G20 leaders amounts to revolution in the global financial order.

"We have agreed to support a general SDR allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity," it said. SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that has lain dormant for half a century.

In effect, the G20 leaders have activated the IMF's power to create money and begin global "quantitative easing". In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body. Conspiracy theorists will love it.

It has been a good summit for the IMF. Its fighting fund for crises is to be tripled overnight to $750bn. This is real money.

Dominique Strauss-Kahn, the managing director, said in February that the world was "already in Depression" and risked a slide into social disorder and military conflict unless political leaders resorted to massive stimulus.

He has not won everything he wanted. The spending plan was fudged. While Gordon Brown talked of $5 trillion in global stimulus by 2010, this is mostly made up of packages already under way.

But Mr Strauss-Kahn at least has resources fit for his own task. He will need them. The IMF is already bailing out Pakistan, Iceland, Latvia, Hungary, Ukraine, Belarus, Serbia, Bosnia and Romania. This week Mexico became the first G20 state to ask for help. It has secured a precautionary credit line of $47bn.

Gordon Brown said it took 15 years for the world to grasp the nettle after Great Crash in 1929. "This time I think people will agree that it has been different," he said.

President Barack Obama was less dramatic. "I think we did OK," he said. Bretton Woods in 1944 was a simpler affair. "Just Roosevelt and Churchill sitting in a room with a brandy, that's an easy negotiation, but that's not the world we live in."

There will be $250bn in trade finance to kick-start shipping after lenders cut back on Letters of Credit after September's heart attack in the banking system. Global trade volumes fell at annual rate of 41pc from November to January, according to Holland's CPB institute – the steepest peacetime fall on record.

Euphoria swept emerging markets yesterday as the first reports of the IMF boost circulated. Investors now know that countries like Mexico can arrange a credit facility able to cope with major shocks – and do so on supportive terms, rather than the hair-shirt deflation policies of the old IMF. Fear is receding again.

The Russians had hoped their idea to develop SDRs as a full reserve currency to challenge the dollar would make its way on to the agenda, but at least they got a foot in the door.

There is now a world currency in waiting. In time, SDRs are likely evolve into a parking place for the foreign holdings of central banks, led by the People's Bank of China. Beijing's moves this week to offer $95bn in yuan currency swaps to developing economies show how fast China aims to break dollar dependence.

French President Nicolas Sarkozy said the summit had achieved more than he ever thought possible, and praised Gordon Brown for pursuing the collective interest as host rather than defending "Anglo-Saxon" interests. This has a double-edged ring, for it suggests that Mr Brown may have traded pockets of the British financial industry to satisfy Franco-German demands. The creation of a Financial Stability Board looks like the first step towards a global financial regulator. The devil is in the details.

Hedge funds deemed "systemically important" will come under draconian restraints. How this is enforced will determine whether Mayfair's hedge-fund industry – 80pc of all European funds are there – will continue to flourish.

It seems that hedge funds have been designated for ritual sacrifice, even though they played no more than a cameo role in the genesis of this crisis. It was not they who took on extreme debt leverage: it was the banks – up to 30 times in the US and nearer 60 times for some in Europe that used off-books "conduits" to increase their bets. The market process itself is sorting this out in any case – brutally – forcing banks to wind down their leverage. The problem right now is that this is happening too fast.

But to the extent that this G20 accord makes it impossible for the "shadow banking" to resurrect itself in the next inevitable cycle of risk appetite, it may prevent another disaster of this kind.

The key phrase is "new rules aimed at avoiding excessive leverage and forcing banks to put more money aside during good times." This is more or less what the authorities agreed after the Depression. Complacency chipped away at the rules as the decades passed. It is the human condition, and we can't change that.

G20 leaders seal $1tn global deal

Leaders of the world's largest economies have reached an agreement to tackle the global financial crisis with measures worth $1.1 trillion (£681bn).

To help countries with troubled economies, the resources available to the International Monetary Fund (IMF) will be tripled to $750bn.

There will also be sanctions against secretive tax havens and tougher global financial regulation.

And the G20 has committed about $250bn to boost global trade.

US President Barack Obama said the summit could mark a "turning point" in the pursuit of economic recovery and made progress in reforming a "failed regulatory system".

NEW FUNDING PLEDGES
$500bn for the IMF to lend to struggling economies
$250bn to boost world trade
$250bn for a new IMF "overdraft facility" countries can draw on
$100bn that international development banks can lend to poorest countries
IMF will raise $6bn from selling gold reserves to increase lending for the poorest countries Source: BBC
"By any measure the London summit was historic.

"It was historic because of the size and the scope of the challenges that we face and because of the timeliness and the magnitude of our response," he said.

Prime Minister Gordon Brown said there was "no quick fix" for the world economy but there was a commitment to do whatever was necessary.

"This is the day that the world came together to fight back against the global recession, not with words, but with a plan for global recovery and for reform and with a clear timetable for its delivery," Mr Brown said.

Another G20 meeting will be held in New York in September to check on progress, the BBC has learned.

The deal was announced shortly before the European stock markets closed and gave leading indexes a significant boost.

London's FTSE 100 index of leading shares ended 4.3% higher. In Paris, the Cac 40 jumped 5.4% and in Frankfurt, the Dax rose 6%.

The deal

On behalf of the G20, Mr Brown announced the following steps:

Bankers' pay and bonuses will be subject to stricter controls
A new Financial Stability Board will be set up to work with the IMF to ensure co-operation across borders and provide an early warning mechanism for the financial system
There will be greater regulation of hedge funds and credit ratings agencies
A common approach to cleaning up banks' toxic assets has been agreed
The world's poorest countries will receive $100bn extra aid
G20 countries are already implementing the biggest economic stimulus "the world has ever seen" - an injection of $5tn by the end of next year.
IMF boost

The IMF has been one of the biggest beneficiaries of the G20 summit.

The resources it has to help troubled economies will be increased to $500bn.

An overdraft facility will also be increased to $250bn (in the IMF's currency, so-called Special Drawing Rights) that all members can call upon.

Mr Brown said that there would be a crackdown on tax havens to prevent the loss of sorely needed tax revenue.

Shortly after the summit finished the Organisation of Economic Co-operation and Development published a blacklist of countries deemed uncooperative.

It said Costa Rica, Malaysia, Philippines and Uruguay had not made any commitment to respecting international standards.

"We have agreed tough standards and sanctions for use against those who don't come into line in the future," Mr Brown said.

President Obama was said to have played a key role in brokering the agreement on tax havens, resolving differences between France and China.

Hopes met?

French President Nicolas Sarkozy said that the conclusions of the G20 summit were "more than we could have hoped for". HAVE YOUR SAY 1.1 trillion...how can that ever be accounted for? Success for them. Failure for everyone else Nathan McConnell, Grantsburg, US

Earlier, there had been suggestions of rifts between France and Germany and the US and the UK.

The US and UK emphasised the need for public spending to ease the crisis while France and Germany were keen for tougher financial regulation.

Mr Sarkozy had threatened to walk out of the meeting if it did not yield concrete results.

German Chancellor Angela Merkel also praised the outcome.

She said the new measures would give the world a "clearer financial market architecture" and the agreement was "a very, very good, almost historic compromise".

Her finance minister, Peer Steinbrueck, said he was pleased that the G20 statement did not oblige states to launch further economic stimulus packages.

Protests

Protesters gathered outside the summit, but in smaller numbers than during Wednesday's demonstrations in London's financial district.

Several hundred staged "noisy but calm" protests near the Excel centre, representing groups including the Stop the War Coalition and CND.

And about 400 more demonstrators were boxed in by police outside the Bank of England in London's financial district, during angry but peaceful protests.

More than 100 people were arrested over the two days of protests - 86 of them on Wednesday, police said.

A small group of protesters gathered earlier at the London Stock Exchange, but later dispersed.

Poor benefit

The G20 countries have pledged $100bn in aid for developing countries, more than expected.

The money will be dispensed through multilateral lenders such as the Asian Development Bank.

The measure that could make the most difference in the short term for the poorest countries is the availability of $250bn of trade credit, says BBC international development correspondent David Loyn.

It will enable goods currently rotting on the quayside in Africa to move again, he says.

BBC business editor Robert Peston said the tougher financial regulation announced by the G20 was a significant step.

He said it sounded the death knell for the freewheeling Anglo-American way of banking and conducting financial markets.

However, he said the measures would not get the world out of recession overnight.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7979483.stm

'Nationalize' the Banks

Dr. Doom says a takeover and resale is the market-friendly solution.
By TUNKU VARADARAJAN

New York

Nouriel Roubini is always dressed in black-and-white.

I have known him for nearly two years, and have seen him in a variety of situations -- en route to class at New York University's Stern Business School, where he's a professor; over a glass of wine in his boyish loft in Manhattan's Tribeca; at an academic conference, seated sagely on the dais; at a bohemian party in Greenwich Village, at . . . oh . . . 3 a.m. -- and he always, always wears a black suit with a white linen shirt.

And so, in black-and-white he was, earlier this week, when he rushed into the office of Roubini Global Economics, his consulting firm in downtown Manhattan, and offered a breathless apology to this correspondent, who'd been waiting for half an hour. "Really sorry I'm late! Charlie Rose taped for way longer than he said he would."

Mr. Roubini -- a month short of 50 -- is in huge media demand, the nearest thing to a rock-star among the economists who hold our fate in their hands these days. The peculiar thing, of course, is that he's in demand because he specializes in predictions of gloom. (He has earned himself the sobriquet of "Doctor Doom.") In person, though, he's anything but a downer.

The man has instant impact on public debate. An idea he floated only last week -- that our "zombie banks" be temporarily nationalized -- aired first on Forbes.com, where he writes a weekly column. It has evolved, in the space of just a few days, from radical solution to almost received wisdom.

Last Sunday on ABC, George Stephanopoulos asked Lindsey Graham, the conservative Republican senator, what he thought about all this talk of bank nationalization. Mr. Graham said that he wouldn't take the idea off the table. And on Wednesday, Alan Greenspan told the Financial Times that "it may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring."

Mr. Roubini tells me that bank nationalization "is something the partisans would have regarded as anathema a few weeks ago. But when I and others put it in the context of the Swedish approach [of the 1990s] -- i.e. you take banks over, you clean them up, and you sell them in rapid order to the private sector -- it's clear that it's temporary. No one's in favor of a permanent government takeover of the financial system."

There's another reason why the concept should appeal to (fiscal) conservatives, he explains. "The idea that government will fork out trillions of dollars to try to rescue financial institutions, and throw more money after bad dollars, is not appealing because then the fiscal cost is much larger. So rather than being seen as something Bolshevik, nationalization is seen as pragmatic. Paradoxically, the proposal is more market-friendly than the alternative of zombie banks."

In any case, Republicans must now temper their reactions, he says. "The kind of government interference in the economy that we saw in the last year of Bush was unprecedented. The central bank -- supposed to be the lender of the last resort -- became the lender of first and only resort! With our recapitalizing of financial institutions, and massive government intervention in the markets, we've already crossed a significant bridge."

So, will the highest level of government be receptive to the bank-nationalization idea? "I think it will," Mr. Roubini says, unhesitatingly. "People like Graham and Greenspan have already given their explicit blessing. This gives Obama cover." And how long will it be before the administration goes in formally for nationalization? "I think that we're going to see the policy adopted in the next few months . . . in six months or so."

That long? I ask. "Six months from now," he replies, "even firms that today look solvent are going to look insolvent. Most of the major banks -- almost all of them -- are going to look insolvent. In which case, if you take them all over all at once, you cause less damage than if you would if you took over a couple now, and created so much confusion and panic and nervousness.

"Between guarantees, liquidity support, and capitalization, the government has provided between $7 trillion to $9 trillion of help to the financial system. De facto, the government is already controlling a good chunk of the banking system. The question is: Do you want to move to the de jure step."

Yet another reason why bank nationalization is a good idea, Mr. Roubini continues, is that "we started with banks that were too big to fail, but what has happened, in the process, is that these banks have become even-bigger-to-fail. J.P. Morgan took over Bear Stearns and WaMu. BofA took over Countrywide and then Merrill. Wells Fargo took over Wachovia. It doesn't work! You can't take two zombie banks, put them together, and make a strong bank. It's like having two drunks trying to keep each other standing.

"So if you took over a big bank, and you split the assets in three or four pieces, maybe you create three or four regional or national banks, and they're stronger! Nationalization -- or 'temporary receivership,' if you like, if the N-word is a political liability -- is an occasion to undo the sort of consolidation that has created an even bigger systemic problem. And the only way to do it is by essentially taking them over and breaking them up."

Here, I ask Mr. Roubini whether he has been more right -- more prescient -- in his reading of the economic downturn than all the other famous bears in America. After all, judging by the attention paid to him in the press, it is hard not to conclude that he is the leading guru of the current recession, or "near-depression," as he often calls it. My question, remarkably, induces in him some diffidence. "I don't want to personalize the analysis, you know . . . because, first of all, there were many people who got many of the elements right.

"People like [Robert] Shiller were very worried about the housing bubble. People like Steve Roach were worried about an economy based on asset bubbles leading to consumption bubbles that were unsustainable. People like Ken Rogoff talked about global imbalances in the current account deficit not being sustainable. Nassim Taleb has been worrying for a while about 'fat tail' events . . . . So lots of people signaled concern about things. I was one of those who put the dots together and thus gave a more fleshed-out picture."

To Mr. Roubini, the most interesting question isn't the one of who got it right. Instead, he asks why we "over and over again, get into these periods of irrational exuberance, when not only is there an asset bubble and a credit bubble, but people believe these are sustainable over a long time -- Wall Street, policy makers, rating agencies, academics, journalists . . . ."

What exactly is Nouriel Roubini's economic philosophy? "I believe in market economics," he says, with some emphasis. "But to paraphrase Churchill -- who said this about democracy and political regimes -- a market economy might be the worst economic regime available, apart from the alternatives.

"I believe that people react to incentives, that incentives matter, and that prices reflect the way things should be allocated. But I also believe that market economies sometimes have market failures, and when these occur, there's a role for prudential -- not excessive -- regulation of the financial system. The two things that Greenspan got totally wrong were his beliefs that, one, markets self-regulate, and two, that there's no market failure."

How could Mr. Greenspan have been so naïve, I ask, hoping to get a rise. "Well," says Mr. Roubini, "at some level it's good to have a framework to think about the world, in which you emphasize the role of incentives and market economics . . . fair enough! But I think it led to an excessive ideological belief that there are no market failures, and no issues of distortions on incentives. Also, central banks were created to provide financial stability. Greenspan forgot this, and that was a mistake. I think there were ideological blinders, taking Ayn Rand's view of the world to an extreme.

"Again, I don't want to personalize things, but the last decade was one of self-regulation. But in the financial markets, without proper institutional rules, there's the law of the jungle -- because there's greed! There's nothing wrong with greed, per se. It's not that people are more greedy now than they were 20 years ago. But greed has to be tempered, first, by fear of losses. So if you bail people out, there's less fear. And second, by prudential regulation and supervision to avoid certain excesses."

How does Mr. Roubini think the media has covered the financial crisis? "The problem," he says -- after first stating to me that he intends "no offense!" -- "is that in the bubble years, everyone becomes a cheerleader, including the media. This is the time when journalists should be asking tough questions, and I think there was a failure there. The Masters of the Universe were always on the cover, or the front page -- the hedge-fund guys, the imperial CEO, private equity. I wish there had been more financial and business journalists, in the good years, who'd said, 'Wait a moment, if this man, or this firm, is making a 100% return a year, how do they do it? Is it because they're smarter than everybody else . . . or because they're taking so much risk they'll be bankrupt two years down the line?'

"And I think, in the bubble years, no one asked the hard questions. A good journalist has to be one who, in good times, challenges the conventional wisdom. If you don't do that, you fail in one of your duties."

US Federal Reserve becoming de facto world central bank

On Sunday, I warned about indications that there may be a move afoot to establish a global central bank, I also said that "the US benefits from the current arrangement [with the US dollar as the world reserve currency] and will resist any adjustment away from it, but when it becomes clear that it cannot last, it will jockey for the highest position in the system that follows."

I imagined it might happen along the lines laid out by Hans-Hermann Hoppe in 2003:

Even this system is unsatisfactory, however. In a world of many countries, and even if the U.S. is a superpower with troops stationed in well over 100 countries around the globe, this system of coordinated inflation is bound to crack again and again... [A] U.S.-dominated country might suffer more inflation than the U.S., its currency would depreciate against the dollar, and in order to save government-connected investors in those countries, the U.S. might be compelled to engage in expensive bailout operations, i.e., buying up the falling currency in order to stabilize it.

...As the final solution in the drive toward monetary imperialism and as a decisive intermediate step in the drive toward world government, the U.S. has been working long and hard to establish a U.S.-controlled world central bank issuing a single, world-wide accepted paper currency. Only then are all obstacles to government counterfeiting eliminated because then the currency can no longer rise or fall against any other as no other currencies are left. The monetary integration currently under way in Europe, the establishment of a Europe-wide EURO, is an important step in this direction. (emphasis mine)

The US has not begun buying failing foreign currencies (among which I am tempted to count the pound sterling), but on Monday when the US Federal Reserve announced an agreement to extend an unlimited amount of loans to the Bank of England, the European Central Bank, and the Swiss National Bank, it amounted to, as Michael Rozeff points out, the Federal Reserve directly delegating itself the role of a de facto world central bank, a lender of last resort for foreign central banks.

Wars And Economic Failure Have Been Marching Us Towards One World Government

International Forecaster

January 31 2009

Summary: Enemies one of the benefits of war, do they think we will beg for one world government? Wars and the daisy chain of fraud, free trade, globalization, off shoring, outsourcing, and financial turned into weapons and toxic wast, intentional regulatory failures, they were never errors but plans all along

The US and Israel are on parallel paths. Each is now a base of operations for the Illuminati, and each will be discarded as a nation-state entity once their usefulness to the cause of the New World Disorder has been served, or at least that is the plan. Our nations have become a den of vipers. The corruption lies not with the common folk, but with their bought-and-paid-for or compromised leadership, while the common folk are kept in the dark by a corrupt media that is owned and controlled exclusively by the Illuminati.

Both the US and Israel have created the best enemies that money can buy, because the objective is to cause as much bloodshed and destruction as possible, for as long as possible, in order to provide fun and profits for the benefit of their respective military-industrial complexes. After all, you need a scapegoat on which to blame the destruction and loss of life that is necessary to rake in trillions of dollars in war profits, to implement genocides and population control agendas, to exert your political will, to rob other nations of their resources and to satisfy the limitless bloodlust of the satanic, megalomaniacal, trillionaire sociopaths who run the shadow governments in both the US and Israel.

The Illuminati, however, have conspired to achieve their objectives while simultaneously preventing the US and Israel from becoming too powerful, prosperous and independent to want to surrender their sovereignty in favor of world government. After all, why would the people of any free and prosperous nation with superior military and economic prowess on a global basis ever succumb to a one-world, Marxist-fascistic, Orwellian police state of feudality? That is why our respective militaries have been forced to suffer nothing but losses, stalemates and incomplete victories since the end of WWII. This process of implementing wars for profit without achieving too much military power and economic independence has been achieved by hamstringing US and Israeli military operations with incomplete or scaled-back objectives, moronic rules of engagement, insufficient manpower and equipment and implementation of defective military strategies which ensure that operations will devolve into a complete cluster-f--k, thus always snatching defeat from the jaws of victory.

Why did Roosevelt provoke the Japanese, and allow them to destroy our battleships in Pearl Harbor, while the carriers were conveniently on maneuvers off shore? Was is because he was worried the Japanese might find out we had broken their code, or was it to hamstring our navy to make sure the war would drag on in the Pacific for years to ensure that the Illuminist military-industrial complex made mega-profits and took us out of the Depression which the Illuminists themselves had caused? Couldn't we have prevented the attack, saved several thousand lives and used the old ships until the new ones were built, and still have beaten the snots out of the Japanese? Did Admiral Kimmel have to be disgraced? Why did we ship defective weapons to nationalist forces in China, thus allowing the communist forces to take over after WWII? Why was General Patton assassinated by our own military when he sought to push the soviets back to their own borders, and why did we then set communist Russia up with a new kingdom in the Yalta sellout of Eastern Europe? Why did we abandon the Hungarian freedom fighters at the last second in 1956 and allow the communists in Soviet Russia to slaughter them? Why did we not bomb the Chinese troops in North Korea for a sure victory as desired by General MacArthur, who was later disgraced by the evil Illuminist puppet, Harry Truman, instead settling for a division of Korea into North and South sectors by a demilitarized zone which we still occupy to this day? Why did we cut short the TET Offensive in Vietnam, which would have brought us to a complete victory according to the leading North Vietnamese General who admitted he and his troops would have been done for, thus settling for a later loss instead after a long, bloody and expensive war? Why did we stop short of taking Baghdad in the First Gulf War? Was it because we were winning too speedily with too few casualties for the Illuminists to make their usual gargantuan war profits? Was there not enough bloodshed to quench their thirst the Illuminati's thirst for blood?
Why did we use depleted uranium in both Gulf Wars so as to sicken and kill our own troops? Was it to make the medical and pharmaceutical industries flush with cash and to cut pensions short, thus saving hundreds of billions of dollars? Was it to reduce the number of patriotic veterans who might violently object to the implementation of world government? Why did it take more time to beat a bunch of rag-head terrorists in Iraq and Afghanistan numbering in the mere tens of thousands than it took to win WWII? Why did we use a small fraction of the number of troops recommended by our senior military commanders for the so-called War on Terror? Why were our troops continually ill-equipped and running excessively long tours of duty? Was it because we wanted to extend the war and wear out our military in order to reduce the number of US troops, and the potential for objection to world government by our patriotic veterans, by replacing them with mercenary killers who could care less? Why did we cause a civil war on top of the war to remove Saddam, due to the supposed errors in judgment that were made in our strategies for conquest? Was it to extend the war while channeling hundreds of billions to Illuminist contractors and mercenaries via no-bid contracts? Why did Clinton give our nuclear secrets to the Chinese? Are you beginning to get the picture?

In 1947 to 1948, Israel was sold out by Britain as it gave up possession of Palestine, which left them with indefensible borders and a country less than ten miles wide in some sections, thereby ensuring continual conflict with the Arabs. This vicious redrawing of borders to foment conflict is something the British Black Nobility are experts at after centuries of practice. They thought that the Arabs would destroy Israel which was becoming a thorn in their side because they wanted a piece of the Middle East oil action, and Israel was putting a crimp in their plans. But then Israel won miraculously in the face of an overwhelming attack by several Arab nations simultaneously, and Truman saw his chance to use Israel to gain a foothold in the Middle East, a base of operations for Illuminists of the US faction. Incidentally, Britain lost virtually its entire empire after screwing Israel, a nice bit of poetic justice and divine retribution for their treachery. But Israel did not press its advantage, winning by simply surviving, in its first war with the surrounding Arab states. Many of the Palestinians left the Palestinian territories bordering on Israel during this conflict, thinking that Israel would be easily defeated and that they would get to take over all the Israeli lands, as well as get their own back. Their desire to get this abandoned land back is the basis for the so-called "right of return." Frankly, in attacking Israel, the Arabs forfeited their rights to their own lands by failing to respect Israel's borders, as did the Palestinians by cooperating in the war to destroy Israel. The surrounding Arab states could and should have taken all the displaced Palestinians in, but instead left a good portion of them along Israel's new occupied lands as a hemorrhoid for Israel to deal with, allowing their Arab brethren to live in poverty and squalor rather than take them in after telling them to leave and then losing the war. They use the Palestinian territories as a base from which they can terrorize Israel and eventually destroy them. They have no intention of giving Israel peace, but instead want to take them apart piece by piece via the corrupt Oslo process and the so-called Roadmap to Peace, which should be termed the Roadmap to Israel's Destruction.
In its 1967 Six Day War, which was a preemptive strike by Israel in an act of self-preservation against Arab states massing troops along its miniscule borders, Israel could have been more aggressive, but they pulled back and started negotiating with the Arabs after less than a week of fighting, when they could have extended their borders and made them more defensible. Why? Was it because the US insisted to protect its US oil interests with the Arabs? Was it because, in any case, the US Illuminists did not want Israel to become too powerful and extend their borders too far, because they wanted to destroy Israel when they had finished using it as a base of operations for Middle East conquest? Why did the US withhold aid from Israel in the 1973 Yom Kippur War until it was almost too late, thereby almost destroying Israel in the process? Was it because Kissinger, Nixon's Secretary of State, wanted to bloody Israel's nose to show them who was boss, and that they had better do as they were told, or else? Why, after Israel blew through Lebanon in the First Lebanon War and surrounded Arafat and his PLO, did they allow him to escape to Libya? Why did they tolerate the PLO for so many years when they could have easily eliminated them? Why did they allow Hamas to be eligible for elective office when they are sworn to the destruction of Israel? In the second Lebanon War, why did they use a tiny fraction of the forces used in the First Lebanon War against an enemy that was far more entrenched and dug in than in the first war? Was it because they were not supposed to win at the insistence of the US? Were they told to keep Hezbollah in place to keep fomenting terror and trouble, thus generating profits for the US and Israeli military-industrial complexes? Why does the US fund Saudi Arabia which then funds Hamas' operations? Is it not convenient for oil companies to have an excuse to gouge consumers every time the Middle East ignites in conflict? Is not the whole peace process just a way to dismantle Israel after US and Israeli Illuminists are finished with it? You better believe it!!! Are you starting to get the picture again?

The fact that the US is the top-ranked military power in the world, and that the Israeli military is the top-ranked military in the Middle East, is no coincidence. Israel, of course, derives much of its strength from money and aid provided by the US, and it is, in essence, a satellite base for the Illuminist operation to create a region of oil hegemony in the Middle East where oil is the cheapest, and therefore the most profitable, to extract. Additionally, the control of this crucial resource provides great political clout and the opportunity for economic extortion in the great play for power. Russia is currently doing something similar with natural gas. Once the Illuminati have control of the world's most prolific and profitable oil supply, they can use it to force other nations, as well as their own people, to accept one-world government by turning off the taps, by driving the price up to extortionate levels or by driving the price down to levels that are economically unsustainable for competing nations who would prefer to pass on a one-world system.
In addition to the manufactured wars for profit and the attempt to put a stranglehold on critical commodities and other resources, is the Illuminist economic destruction agenda which is being played out right before your eyes in the US and around the world. This destruction was brought about by the intentional creation of a conspiratorial daisy chain of fraud throughout the mortgage and consumer loan industries via derivatives traded in the unregulated OTC derivatives market, accompanied by intentional regulatory failures by the Fed and the elitist bootlickers in our government along with legislative machinations that opened the Pandora's Box previously closed and locked by Glass-Steagall, AND NOT BY UNINTENTIONAL MISCALCULATIONS OR ERRORS IN JUDGMENT --- THEY KNEW EXACTLY WHAT THEY WERE DOING!!!
The products spawned by that daisy chain of fraud were spread throughout the world like a deadly poison, only to be cut off unexpectedly and serendipitously by Meredith Whitney of Oppenheimer when she exposed Citigroup's subprime derivatives as being toxic waste weapons of mass financial destruction. In addition, here in the US, the Illuminati have used free trade, globalization, off-shoring and outsourcing, along with both legal and illegal immigration, to bust our unions, and to destroy our domestic manufacturing sector by shipping it overseas, along with the productive, good-paying jobs produced by that sector. In place of those jobs in the manufacturing sector, we now peddle toxic waste derivatives, flip hamburgers and greet people entering department stores. These are the new "wonderful" jobs driving our new economy. The idea here was to knock the snots out of everyone around the globe, and especially in the US, so they will beg for a one-world solution, which will of course be offered in true Hegelian Dialectic fashion.

Icelandic government becomes first to be brought down by the credit crunch

By Graham Smith
Last updated at 3:10 PM on 23rd January 2009

Quit: Iceland's Prime Minister Geir Haarde called a general election for May. He also revealed he has cancer and will not be standing for re-election
The government of Iceland today became the first to be effectively brought down by the credit crunch.

After several nights of rioting over the financial crisis, Prime Minister Geir Haarde, surrendered to increasing pressure and called a general election for May.

A poll would not normally be held until 2011.

Haarde also revealed that he had been diagnosed with a malignant tumour of the oesophagus and would not seek re-election.

'I have decided not to seek re-election as leader of the Independence Party at its upcoming national congress,' he told a news conference.

The global financial crisis hit Iceland, which has a population 320,000, in October, triggering a collapse in its currency and financial system under the weight of billions of dollars of foreign debts incurred by its banks

The economy is set to shrink 10 percent this year and unemployment is surging.

Critics wanted Haarde, the central bank governor and other senior officials to resign.
Some senior figures in his party have also said they favour an early election, but Haarde had up to now vowed to defy plunging popularity and stay on.

Protests had been held weekly since the crisis broke last year, but since Tuesday have been held every night.

On Thursday, police used teargas on demonstrators for the first time since protests against the North Atlantic island's entry into the NATO alliance in 1949.

Special forces had to rescue Haarde from his car after he was surrounded by an furious mob hurling eggs and cans outside the government offices, in Reykjavik.



Protesters clash with police in Reykjavik during a demonstration against the Icelandic government's handling of the country's financial crisis

Riot police huddle together as projectiles are thrown at the Parliament building behind them in downtown Reykjavik
The seething crowd spattered the building with paint and yoghurt, yelling and banging pans, hurling fireworks and flares at the windows and even lighting a fire in front of the main doors.

'There were a couple of hundred (protesters) when they had to use the gas,' police spokesman Gunnar Sigurdsson said. 'It went on for two hours or so. There were no arrests. Some injuries, but not serious.'

Latvia, Bulgaria and other European countries hit hard by the global economic meltdown have also seen unrest.


Protesters carry a placard of Iceland's Justice Minister Bjorn Bjarnason and a sign reading 'death power' during demonstrations

Zimbabwe Currency Facing Extinction

Despite government denials that economy has been “dollarised”, local currency virtually unacceptable as legal tender.

By Chipo Sithole in Harare (ZCR No. 174, 7-Jan-09)

Grocery purchases, public hospital bills, property sales, rent, legal fees, vegetables and even mobile phone recharge cards in Zimbabwe are now paid for in foreign currency as the worthless Zimbabwe dollar virtually ceases to be legal tender.

Once a regional economic model, Zimbabwe is in the throes of an economic crisis, with unemployment running at more than 80 per cent and many families unable to afford a square meal. Stratospheric inflation (officially estimated, in July, to have reached 231 million per cent) and an unstable exchange rate have caused the Zimbabwe dollar to lose both credibility and its value as a trading currency.

However, the government of long-time ruler President Robert Mugabe is too ashamed to admit that it has officially "dollarised" the economy, so the Zimbabwean dollar remains the de jure legal tender of the country, leading to a situation economists term "partial dollarisation".

Full or official dollarisation is the adoption by one country of another’s currency as legal tender. In the case of Zimbabwe, the US dollar and the South African rand are widely accepted. The adopted currencies have taken over all the functions of domestic currency.

In order to attract foreign currency into the official market, Zimbabwe’s central bank has, since September, licensed at least 1,000 shops to sell goods in foreign currency. The authorities have also recently licensed mobile phone service providers to accept foreign exchange for airtime and other services, and permits public hospitals to receive payment in other currencies.

Other shops and service providers have followed suit, despite warnings that those who flout the country’s foreign exchange regulations will be prosecuted.

Political analysts and economists say the main reason for the government’s failure to admit to dollarisation or partial dollarisation is that the situation is difficult to reconcile with Mugabe’s oft-repeated declaration of his country’s "sovereignty" and frequent “anti-imperialist” outbursts.

"Such a declaration [of dollarisation] would be an embarrassment to a government which professes hatred of the US government," Lance Mambondiani, an investment analyst, said.

"At a symbolic level, one of the most important national symbols is money, which serves to enhance a unique sense of national identity. The currency underscores the fact that everyone is part of the same social entity," he said. "These effects are lost when money of a foreign state is adopted. Dollarisation is therefore a greater threat to national sovereignty than any perceived threat of recolonisation by the British."

There is another problem. Full dollarisation would require the approval of the US Federal Reserve, which is unlikely to be forthcoming, given the animosity between Washington and Harare.

Mugabe accuses the US government and former colonial power Britain of attempting to bring down his government through sanctions imposed in 2001 in response to political repression and electoral theft in Zimbabwe. In turn, Washington accuses Mugabe of having run down a once thriving economy through insane economic policies.

Diplomatic sources say America has asked the Mugabe regime to come clean on whether it has officially dollarised. Sizani Weza, a spokesperson at the US embassy in Harare, maintains, however, that, although he is “aware of public interest in US government approval or disapproval of the use of the US dollar in Zimbabwe” the US government has not “expressed an opinion” on the issue.

"As far as we know Zimbabwe has not officially dollarised. The US dollar circulates in Zimbabwe, as it does in many countries,” he said.

Weza said the US has simply expressed an interest in knowing whether dollarisation is now official policy so it can establish what short-term and long-term returns are due to it.

A senior government official said Zimbabwe had approached South African finance minister Trevor Manuel and South African Reserve Bank governor Tito Mboweni with a proposal that they rescue the Zimbabwean economy by extending the common monetary area of rand into Zimbabwe. It currently encompasses South Africa, Namibia, Lesotho and Swaziland.

Similar proposals have been made by Steve Hanke, Cato Institute Senior Fellow and Professor of Applied Economics at Johns Hopkins University, who advocates the creation of a currency board to end Zimbabwe's spiralling inflation, and by Tomaz Salamao, executive secretary of the Southern African Development Community, SADC.

Tomaz has reportedly suggested that Zimbabwe's depleted foreign reserves be topped up with the South African currency and that Zimbabwe be allowed to join the rand monetary area.

The Zimbabwe government, invoking its sovereignty mantra, initially rejected the suggestion, but IWPR has learnt that it has backed down under the pressure of the imploding economy and proposes issuing Zimbabwean dollars that are fully backed by and convertible into rands at a fixed rate.

Under this plan, the currency board will initially be capitalised by South Africa and the rand will be allowed to circulate legally in Zimbabwe.

"The rand would effectively prop up the Zimbabwe dollar," which has become almost worthless, said a government official.

The ultimate aim would be to stabilise the exchange rate of the Zimbabwe dollar and curb hyperinflation, enabling the country to buy foreign exchange and continue to import essential goods.

According to diplomatic sources, the price of South Africa's help will be Mugabe's commitment to a genuine power-sharing arrangement with the opposition in terms of the agreement signed on September 15, 2008, and to far-reaching political and economic reforms.

The power-sharing deal, which, it was hoped, would halt Zimbabwe’s plunge to destruction, has stalled over the allocation of key cabinet ministries.

Chipo Sithole is the pseudonym of an IWPR journalist in Zimbabwe.

Sen. Biden, New World Order Speech

U.S. Sen. Joseph R. Biden Jr. (D-Del.), a member of the Senate
Foreign Relations Committee since 1972, said last Thursday he did not
understand the importance of collective security for the nations of
the world until he graduated from the University of Delaware in 1965.
In a speech celebrating United Nations Week, Biden said professor
emeritus Leroy Bennett and other political science professors who
taught him were wise to espouse the value of the United Nations as a
valuable peacekeeping tool.
Meeting with world leaders, Biden said he has "on more than one
occasion, been brought back in my mind to classes I took with Dr.
Bennett," a man Biden called "well ahead of his time."
In his speech in Clayton Hall, "On the Threshold of the New World
Order: A Rebirth for the United Nations," Biden said the world's
leaders must adopt a new understanding of security. "Collective
security today must encompass not only the security of nations," he
said, "but also mankind's security in a global environment that has
proven vulnerable to debilitating changes wrought by man's own
endeavors.
"Thus, in setting an American agenda for a new world order, we
must begin with a profound alteration in traditional thought," he
said.
Speaking to about 150 faculty and students, Biden said the United
States should "buttress stable democracy in the former Soviet empire"
and "champion the cause of democracy in China."
Biden criticized President George Bush's Soviet policies, saying
the "administration, if not absent, has been little more than an
onlooker."
The senator said the United States should deliver more
"educational and professional" assistance to the countries of the
former Soviet Union. The goal, he said, must be to "foster the
conditions and institutions necessary for a free economy and a free
body politic to thrive."
Very little money would be needed from the American government to
make great strides toward assisting in the privatization of the former
Soviet Union, Biden said.
Together with other nations, the United States could help
stabilize the currencies now used in the independent Soviet countries,
he said. Other efforts could be aimed at establishing legal codes for
business practice, taxation and property ownership, he said.
Biden said the collapse of communism and the end of the Cold War
also give the United States an opportunity to slash the number of
nuclear weapons now available. He said the START treaty ratified by
the Senate early in October limits Russia and the United States to
possessing no more than 9,000 nuclear warheads each, but said "more
dramatic progress" could be made to reduce the nuclear threat.
"We should seek a steady, mutual draw-down to a ceiling of no
more than 500 warheads (per side)," he said.
Representatives of the United Nations should be used to monitor
the dismantling of the weapons, he said. "We should cut the Gordian
knot of difficult dismantlement by acting immediately to sequester all
warheads to be eliminated," he suggested.
Biden also advocated a global ban on the production of
weapons-grade missile material and a comprehensive test ban treaty for
all countries with nuclear capabilities. He said the United States and
other countries should commit military forces to exclusive use by the
United Nations' Security Council, which would enforce nuclear
agreements.
Since the United States is a permanent member of the council,
with the power to veto multinational military action, Biden said there
is no risk of having Americans troops drawn into conflicts the
government does not wish to join.
Biden stressed that, if nuclear containment efforts fail, the
United States "must be able to use force to stop rogue nations like
North Korea" from collecting additional weapons of mass destruction.
The "new world order" also should include a new role for NATO, he
said.
"NATO should abandon its anachronistic posture-the defense of
allied territory against direct attack-to make a great leap forward
and adopt peace-keeping outside NATO territory as a formal alliance
mission," he said.
Biden also attacked Bush's handling of human rights' violations
in China, as well as his environmental record.
"The president has opposed every congressional effort to impose
serious sanctions or even link trade to more reasonable Chinese
policies on human rights and the sale of dangerously destabilizing
arms," he said.
"No one can expect that trade sanctions against Beijing would
yield a sudden transformation of that regime. But American foreign
policy should leave no doubt-and the Bush administration has left much
doubt- that the United States stands squarely on the side of China's
brave and aspiring democrats-to whom power will ultimately flow."
Of President Bush's refusal to sign treaties at the United
Nations' Earth Summit in Rio de Janeiro, Biden said, "Our blunder was
both tactical and strategic."
"For the United States, it should become a paramount priority to
promote American environmental technologies and services around the
world," he said. "We do not, despite what the president or anyone else
may say, have to choose between jobs and the environment."
In a question-and-answer period following the speech, one
audience member drew applause for suggesting that Biden would make a
good secretary of state if Bill Clinton wins the presidential
election. Biden said he was flattered but did not think he would
receive such an appointment.
-Stephen Steenkamer

Kissinger: Obama primed to create 'New World Order'

Policy guru says global upheaval presents 'great opportunity'
Posted: January 06, 2009
9:07 pm Eastern

By Drew Zahn
WorldNetDaily


Henry Kissinger
According to Henry Kissinger, the Nobel Peace Prize winner and former secretary of state under President Nixon, conflicts across the globe and an international respect for Barack Obama have created the perfect setting for establishment of "a New World Order."

Kissinger has long been an integral figure in U.S. foreign policy, holding positions in the Nixon, Ford and Reagan administrations. Author of over a dozen books on foreign policy, Kissinger was also named by President Bush as the chairman of the Sept. 11 investigatory commission.

Kissinger made the remark in an interview with CNBC's "Squawk on the Street" hosts Mark Haines and Erin Burnett at the New York Stock Exchange, after Burnett asked him what international conflict would define the Obama administration's foreign policy.

Read "Hope of the Wicked," where author Ted Flynn reveals the greatest deception in modern history – corporations, foundations and governments converging to bring about a New World Order.

"The president-elect is coming into office at a moment when there is upheaval in many parts of the world simultaneously," Kissinger responded. "You have India, Pakistan; you have the jihadist movement. So he can't really say there is one problem, that it's the most important one. But he can give new impetus to American foreign policy partly because the reception of him is so extraordinary around the world. His task will be to develop an overall strategy for America in this period when, really, a new world order can be created. It's a great opportunity, it isn't just a crisis."


The phrase 'new world order' traces back at least as far as 1940, when author H.G. Wells used it as the title of a book about a socialist, unified, one-world government. The phrase has also been linked to American presidents, including Woodrow Wilson, whose work on establishing the League of Nations pioneered the concept of international government bodies, and to the first President Bush, who used it in a 1989 speech.

"A new partnership of nations has begun, and we stand today at a unique and extraordinary moment," said Bush before a joint session of Congress. "Out of these troubled times, our fifth objective – a new world order – can emerge: A new era … in which the nations of the world, east and west, north and south, can prosper and live in harmony."

The phrase "New World Order" causes alarm for many Americans, particularly those concerned about an international governing body trumping U.S. sovereignty or those that interpret biblical prophecy to foretell the establishment of a one-world government as key to the rise of the Antichrist. Conspiracy theorists, too, have latched on to the phrase, concerned that powerful financial or government figures are secretly plotting to rule the world.

Kissinger's ties to government and international powers – as well as his use of the phrase – have made him suspect in the eyes of many who are wary of what "new world order" might actually mean.

"There is a need for a new world order," Kissinger told PBS interviewer Charlie Rose last year, "I think that at the end of this administration, with all its turmoil, and at the beginning of the next, we might actually witness the creation of a new order – because people looking in the abyss, even in the Islamic world, have to conclude that at some point, ordered expectations must return under a different system."

As WND reported, Kissinger was also part of last year's super-secret Bilderberg Group, an organization of powerful international elites, including government, business, academic and journalistic representatives, that has convened annually since 1954.

According to sources that have penetrated the high-security meetings, the Bilderberg meetings emphasize a globalist agenda and promote the idea that the notion of national sovereignty is antiquated and regressive.

CNBC's Haines concluded the Kissinger interview by asking, "Are you confident about the people President-elect Obama has chosen to surround him?"

Kissinger replied, "He has appointed an extraordinarily able group of people in both the international and financial fields."

World faces "total" financial meltdown: Bank of Spain chief

Dec 21 11:40 AM US/Eastern

The governor of the Bank of Spain on Sunday issued a bleak assessment of the economic crisis, warning that the world faced a "total" financial meltdown unseen since the Great Depression.
"The lack of confidence is total," Miguel Angel Fernandez Ordonez said in an interview with Spain's El Pais daily.

"The inter-bank (lending) market is not functioning and this is generating vicious cycles: consumers are not consuming, businessmen are not taking on workers, investors are not investing and the banks are not lending.

"There is an almost total paralysis from which no-one is escaping," he said, adding that any recovery -- pencilled in by optimists for the end of 2009 and the start of 2010 -- could be delayed if confidence is not restored.

Ordonez recognised that falling oil prices and lower taxes could kick-start a faster-than-anticipated recovery, but warned that a deepening cycle of falling consumer demand, rising unemployment and an ongoing lending squeeze could not be ruled out.

"This is the worst financial crisis since the Great Depression" of 1929, he added.

Ordonez said the European Central Bank, of which he is a governing council member, would cut interest rates in January if inflation expectations went much below two percent.

"If, among other variables, we observe that inflation expectations go much below two percent, it's logical that we will lower rates."

Regarding the dire situation in the United States, Ordonez said he backed the decision by the US Federal Reserve to cut interest rates almost to zero in the face of profound deflation fears.

Central banks are seeking to jumpstart movements on crucial interbank money markets that froze after the US market for high-risk, or subprime mortgages collapsed in mid 2007, and locked tighter after the US investment bank Lehman Brothers declared bankruptcy in mid September.

Interbank markets are a key link in the chain which provides credit to businesses and households.

Kissinger Calls For New International System Out Of World Crises

Posted By aaron On December 19, 2008 @ 3:21 pm In Featured Stories

Says global necessities should foster an “age of compatible interests”

Steve Watson
Infowars.net
December 19, 2008

Bilderberg luminary Henry Kissinger has repeated his routine call for a new international political order, stating that global crises should be seen as an opportunity to move toward a borderless world where national interests are outweighed by global necessities.

Speaking with Charlie Rose earlier this week, Kissinger cited the chaos being wrought across the globe by the financial crisis and the spread of terrorism as an opportunity to bolster a new global order.

"I think that when the new administration assess the position in which it finds itself it will see a huge crisis and terrible problems, but I can see that it could see a glimmer in which it could construct an international system out of it." Kissinger said, referring to the transition between the Bush and Obama administrations.

The former National Security advisor and Secretary of State compared the current world climate to the period immediately following the second world war, which led to the creation and empowerment of global bodies such as the UN and NATO.

"If you look back to the end of the second world war, many people now think that the period between the end of 1945 and 1950 was in many ways the most creative period or one of the most creative periods of foreign policy, but it started with chaos and fear of Russian invasion of Europe and governments that were very weak." Kissinger stated.

"The new administration is really coming into office at a strange period in this sense," he continued. "It looks like a period of horrendous crisis all over the world. And we ourselves are in a severe crisis financially, but at the end of it our relative position in the world is actually stronger than it has been in the sense that Russia, China, India all have strong reasons to contribute to a quiet international environment because of the preoccupation they must have with their domestic affairs."

"They do not wish and have good reasons not to wish for an international atmosphere of crisis. So Paradoxically, this moment of crisis is also one of great opportunity." Kissinger commented.

Interviewer Charlie Rose, who has previously listened to Kissinger’s calls for a new world order, recognized the direction the conversation was taking and urged Kissinger to elaborate:

"When you talk about a new structure, I’m not sure, you’ve used the term new world order, what is it? Is it simply a world order that is defined by new interest and new mutuality of interest?" Rose asked.

"That’s certainly how you have to start. I know the view that you start by converting the whole world to our political philosophy. I don’t think that can be done in one or two terms of an administration. That is an historic process that has its own rhythm." Kissinger replied.

"There are so many elements in this world at the moment that can only be dealt with on a global basis, and that’s unique," Kissinger continued. "Proliferation, energy, environment, All of these issues necessitate a global approach, so you don’t have to invent an international order. So every country has to mitigate its pure national interests by the global necessities, or define it’s national interests by global necessities But it cannot push its own technically selfish interests only by throwing its own weight around." he stated.

Kissinger also related that he has been struck by how much the move toward a new global order has been enhanced by the recent crises.

"The jihadist crisis is bringing it home to everybody, that international affairs cannot be conducted entirely by drawing borders and defining international politics by who crosses what borders with organized military force." he said.

"This has now been reinforced by the financial crisis, which totally unexpectedly has spread around the world. It limits the resources that each country has for a foreign policy geared to an assertion of its own pure interests."

Kissinger claimed that the key players in international politics, India, China, Russia, America, Europe, should recognize they have parallel concerns and work together to forge what he termed an "age of compatible interests".

"I’m not saying that leaders will be up to all the opportunities that I may perceive but I think they can start moving in that direction and I’m actually fairly hopeful that we will be moving in that direction." Kissinger said.

Bush says sacrificed free-market principles to save economy

Dec 16 05:58 PM US/Eastern

US President George W. Bush said in an interview Tuesday he was forced to sacrifice free market principles to save the economy from "collapse."
"I've abandoned free-market principles to save the free-market system," Bush told CNN television, saying he had made the decision "to make sure the economy doesn't collapse."

Bush's comments reflect an extraordinary departure from his longtime advocacy for an unfettered free market, as his administration has orchestrated unprecedented government intervention in the face of a dire financial crisis.

"I am sorry we're having to do it," Bush said.

But Bush said government action was necessary to ease the effects of the crisis, offering perhaps his most dire assessment yet of the country's economy.

"I feel a sense of obligation to my successor to make sure there is not a, you know, a huge economic crisis. Look, we're in a crisis now. I mean, this is -- we're in a huge recession, but I don't want to make it even worse."

At a G20 summit last month in Washington, Bush resisted some proposals for global financial regulation and argued free market principles still held true despite the global economic downturn.

And administration officials have also referred to the primacy of the free market when discussing a possible government bailout for the troubled US auto industry.

In the interview, Bush said that a "disorganized bankruptcy" of the carmakers could create "enormous" economic difficulties.

But the US president has yet to announce how his administration will proceed amid calls from Detroit automakers and Democrats for a bailout drawing on funds set aside for financial firms.

Sarkozy forever? EU uneasy on leadership bid

Wed Nov 26, 2008 6:42am EST
-- Paul Taylor is a Reuters columnist, the opinions expressed are his own --

By Paul Taylor

PARIS (Reuters) - Not content with a temporary role as first consul, Nicolas Sarkozy wants to be emperor of Europe. That, at least, is the way it looks to many of his EU partners.

The energetic French president has relished his term in the European Union's rotating presidency so much -- playing fireman during the Georgia war and the global financial crisis -- that he is loath to cast off the mantle at midnight on December 31.

His aides are working actively on ways to perpetuate his European leadership into 2009 and beyond, using the euro zone, NATO, the new Mediterranean Union, Middle East diplomacy and a continuing mediation role with Russia and Georgia as levers.

The fact that Paris hands over the six-month presidency to the Czech Republic, an EU newcomer with a divided government, a Eurosceptical president and no seat in the euro zone, may help Sarkozy's bid to extend his influence.

But apart from the implicit challenge to EU institutions, the problem is the economic policy direction in which he wants to lead Europe, taking advantage of the credit crisis and recession to push old-fashioned French "dirigisme" (state direction of the economy).

The main obstacle is the reluctance of Germany, the EU's biggest economy and France's traditional partner in leadership.

Chancellor Angela Merkel is deeply suspicious of Sarkozy's efforts to build greater euro zone economic governance and irked by his effort to position himself as the "go to" man in Europe for incoming U.S. President Barack Obama.

She sees his calls for an "economic government of Europe" as a challenge to the independence of the European Central Bank and a recipe for protectionism and government meddling in industry.

"Merkel is always polite and the Germans don't like to be troublemakers. But at some point soon, they are going to say: 'Enough!'," says Ulrike Guerot, head of the Berlin office of the European Council on Foreign Relations.

"SUPER SARKO"

"Super Sarko" has called a record number of summits during his hyper-active EU presidency, traveling twice to Moscow to broker a ceasefire and a Russian pullback in Georgia, and twice to Washington to press for a global financial summit and more international regulation in the credit crisis.

He has set ambitious economic agendas for the EU and the G20 grouping of industrialized and emerging powers, although the results have been far more modest.

"Sarkozy has shaken things up, not just out of personal ambition but out of a belief that Europe needs strong political leadership to overcome its complex routine and face up to the challenges of our times," says Jean-Dominique Giuliani, president of the Robert Schuman Foundation think-tank.

Giuliani described the French leader in a recent book as "a European in a big hurry," determined to put France back in the pilot's seat of EU integration and willing to use unorthodox methods to achieve his objective.

Sarkozy broke the straitjacket of EU institutions by holding meetings of the leaders of the four biggest European economies -- France, Germany, Britain and Italy -- and of the 15-nation Eurogroup of countries that share the euro single currency.

He formed a pragmatic alliance with British Prime Minister Gordon Brown, not an EU enthusiast, to promote bold steps to rescue banks, revive interbank lending and respond to recession.

And he has displayed a ruthless streak in undermining those he perceives as standing in the way of his leadership.

Blaming tax havens for part of the financial crisis, Sarkozy dared to snipe at Luxembourg Prime Minister Jean-Claude Juncker, Europe's longest serving leader and chairman of the Eurogroup of finance ministers, over his country's banking secrecy.

He also signaled that the financial crisis was likely to require more euro zone summits in 2009, which he wants to chair.

Juncker, a critic of French budget deficits, speaks on behalf of the Eurogroup and is a contender for the post of president of the European Council of EU leaders if and when the Lisbon Treaty reforming the bloc's institutions takes effect.

French Secretary of State for European Affairs Jean-Pierre Jouyet, Sarkozy's key fixer during the EU presidency, openly criticized Germany for resisting French proposals for a coordinated European economic recovery program.

"Why don't you think the Germans are making a profound mistake?" he asked a radio interviewer. "All we are saying is that it is better to have an economic union and economic coordination than to have disorderly national responses."

DIPLOMATIC CALENDAR

Next year's diplomatic calendar offers Sarkozy plenty of opportunities to flex his leadership muscles while Germany will be inwardly focused in an election year and Britain mired in a deeper and more painful recession than the rest of Europe.

One showcase will be an April 3-4 NATO summit, jointly hosted by France and Germany in Strasbourg and Kehl, which will be the centerpiece of Obama's first presidential visit to Europe and mark France's return to the alliance's military wing.

Expect Sarkozy to put on an impressive show to highlight Paris' role as Washington's new indispensable ally, perhaps offering more troops for Afghanistan and proposing a European peacekeeping role in any Israeli-Palestinian peace settlement.

The French have secured two years as co-president of the Mediterranean Union grouping the EU and its southern neighbors, giving Paris opportunities for high-profile initiatives with North Africa and in the Middle East.

Sarkozy's gambit of bringing Syria in from the cold in exchange for cooperation in Lebanon could bear fruit in 2009 as Obama looks for an exit from Iraq and breathes new life into Middle East peacemaking.

His good relations with Russian President Dmitry Medvedev and Prime Minister Vladimir Putin, which enabled him to broker the Georgia ceasefire, could pay off if Obama opts for detente rather than confrontation with Moscow.

But his coziness with the Kremlin worries EU governments in central and eastern Europe.

The risk is that Sarkozy, whose restless energy sometimes gets the better of diplomatic calculation, overplays his hand, offending European partners and irritating Washington.

Naomi Klein: Bailout is ‘multi-trillion-dollar crime scene’

David Edwards and Muriel Kane
Raw Story
Wednesday, Nov 19, 2008
The Bush administration has already handed out almost half of the $700 billion in bank bailout money authorized by Congress but has not even filled the mandated oversight positions to review how it is being used.
Naomi Klein, author of The Shock Doctrine: The Rise of Disaster Capitalism, has described the handling of the bailout as “borderline criminal” because of this and other problems. Klein spoke to Amy Goodman of Democracy Now! on Monday to explain her accusations.
“We were all reassured that there was going to be transparency, accountability, legality,” Klein stated. “But now we’re finding out that, in fact, Henry Paulson has achieved his original goal by stealth, because there is no accountability, and lawmakers are very hesitant to challenge this. … Essentially, what the Bush administration has done is said, ‘We dare you to challenge us and be responsible for the Great Depression.’”

Klein sees three areas of borderline illegality. The first is that rather than being used to get banks lending again, the bailout money “is instead going to bonuses, is instead going to dividends, going to salaries, going to mergers.”
The second is that, without Congressional authorization, “the Treasury Department pushed through a tax windfall for the banks, a piece of legislation that allows the banks to save a huge amount of money when they merge with each other. And the estimate is that this represents a loss of $140 billion worth of tax revenue for the US government.”
The third problem, which dwarfs the $700 billion bailout itself, is that “there’s another $2 trillion that’s been handed out by the Federal Reserve in emergency loans to financial institutions, to banks, that actually we don’t really know who they’re handing the money out to, because, apparently, it’s a secret.”
“If the Fed has accepted distressed assets as collateral in exchange for these loans,” stated Klein, “there’s a very good chance the taxpayers aren’t going to be getting this money back. … So that’s why we’re calling this the ‘trillion-dollar crime scene’ or the ‘multi-trillion-dollar crime scene.’”
Klein argued that Congress should be challenging violations of the bailout legislation, but instead “what they’re saying is, we can’t afford to enforce the law … that somehow, because there’s an economic crisis, legality is a luxury that Congress can’t afford.”
“I’m quite concerned,” Klein stated, “that what we’re seeing from Obama’s team is an accepting of this logic that they need to give the market what it wants, which is continuity, smooth transition, which is really just code for more of the same. … I think we should question all of it. Across the board, I think the assumptions are faulty.”
Klein is also concerned that rather than using the crisis as a mandate to fix the underlying problems, the world leaders at the recent G20 summit were talking about propping up the old system.
“Think about what these leaders could do if they really wanted to,” Klein suggested. “When you have a crisis like this, which so clearly shows the need for those types of regulations, when you have an election like there just was in the United States, where people have said clearly that this is a priority, the leaders have an opportunity to act. … But they blew that opportunity, and they actually called for less regulation.”
“This crisis isn’t over,” Klein warned, “and the same people who justified this bailout, who clamored for this bailout, are the very people who are going to turn around and say to Barack Obama, ‘We can’t afford for you to make good on your election promises. We can’t afford universal healthcare.’”
“The money has been given to the people who needed it least, and it’s going to be used to justify austerity measures imposed against those who need it most,” Klein concluded. “It’s going to be used to justify cuts to food stamps. It’s going to be used to justify cuts to Social Security, to health care, let alone being used to justify why more ambitious plans for a national health care program, for green energy are not affordable. So people have to be ready for this. You know, the next shock is yet to come.”
Democracy Now! has a full transcript of Naomi Klein’s interview.

The World Hopes for Its First President

Stryker McGuire
NEWSWEEK
From the magazine issue dated Nov 10, 2008
The world has never watched any vote, in any nation, so closely. In country after country, polls show record-high fascination with the outcome of the U.S. elections this Tuesday. In Japan, according to one poll, there's more interest in the election than there is in the United States. The Voice of America, which broadcasts in 45 languages to a worldwide audience of 134 million, is seeing "unprecedented interest." In Pakistan there was so much interest in the first presidential debate, the VOA changed its initial plans and broadcast the next two as well. Indonesians and Kenyans, are of course fascinated and somewhat astonished by the fact that Barack Obama, a man with ties to both places, should be the front runner, and in Vietnam, there is much discussion over John McCain, a man who returned home from Hanoi in 1973 a wounded man and spent the rest of his life in dedicated service to the United States.

Europe is thrilled by the prospect that whatever happens this week it will mean the end of George W. Bush, and enraptured by the sheer spectacle of it all. James Dickmeyer, the director of the Foreign Press Centers, which helps international press cover U.S. political campaigns, says foreign journalists swarmed not only the Iowa caucuses but even the Iowa State Fair's Straw Poll, which they had never covered before. Bob Worcester, the American-born founder of the London-based polling and research firm Mori, has worked in more than 40 countries, and says he has "never ever seen any election in which so many people in so many places have been so interested."

It's very clear who they are interested in: Barack Obama. John McCain and Sarah Palin are by all accounts still in the race, but McCain has become a political cipher in a world that has of late tuned into Obama 24/7. (Obama's running mate, Joe Biden, is an afterthought to the international audience). Obama went into Election Day with a steady lead in U.S. polls, averaging about 50 percent to 44 percent for McCain, but he was headed for a landslide around the world, topping polls in virtually every nation often by strong margins: 70 percent in Germany, 75 percent in China and so on. Somewhere along the road to the White House, Obama became the world's candidate—a reminder that for all the talk of America's decline, for all the visceral hatred of Bush, the rest of the world still looks upon the United States as a land of hope and opportunity. "The Obama adventure is what makes America magical," French State Secretary for Foreign Affairs and Human Rights Rama Yade, a Senegalese immigrant who is the only black member of Nicolas Sarkozy's government, recently told Le Parisien.

By the final days, it was as if the world and America were talking about two different elections. In the United States, the pundits framed campaign '08 much as they framed the last election, and the one before. It was a small, almost local obsession with the horse race, with battleground states—not just Ohio but southern Ohio—voter-registration drives, fundraising, ad buys and, of course, that hardy American provincial staple, negative campaigning. Even the discussion of the "race card" echoed, despite the fact that Obama's race changes everything. Republican attempts to play the card against Obama drew comparisons with the Republicans' 1988 attempt to link Michael Dukakis to a black convict. To a large degree, Obama had become just another Democratic candidate, in the chain linking Dukakis to Clinton to Gore to Kerry.

Outside of the United States, the election played large and transformational: a 21st-century man with whom the whole world can identify versus an old cold-warrior out of synch with the complex political and economic crises of our age. The election, it seemed, had morphed into a meta-election. If at home, especially as the election neared its end, Obama seemed to be playing down his blackness, his intellect, his eliteness and his progressive ideas, these were the qualities that more and more drew the rest of the world to him. The world loved the idea that a man named Barack Hussein Obama could become America's 44th president after a 200-year string of white guys named Washington and Jefferson, Clinton and Bush. Asia was trying to claim Obama for his Indonesian childhood, Africa for his Kenyan father, and the Middle East for his middle name, says Ahmed Benchemsi, who edits both of Morocco's leading newsweeklies, one in French, one in Arabic.

Once upon a time, McCain, too, was seen as part of the post-Bush American reformation. He was the worldly wise maverick ex-POW with a reputation abroad for hurling bricks at the Republican Party establishment. He was a fixture at European foreign-policy talking shops, and all the more appealing for asserting in 2000, when he ran for president for the first time, that he wouldn't "pander" to the "agents of intolerance" of the religious right, whose grip on U.S. politics has long perplexed and worried outsiders. When in late August McCain chose Palin to be his running mate in a bid for support from conservative evangelicals, his global luster quickly faded.

Now, to the rest of the world America's election is about change but not just at home. Jonathan Freedland, a columnist for The Guardian in London, says the past seven years have been a long, painful public education for the world in the importance of decisions made by the United States. "Two wars and a global financial crisis—those events, at least to some extent, had their origins in decisions taken in Washington." What's more, the connection between the world and the occupant of the Oval Office has become deeply personal, says Constanze Stelzenmüller, director of the Berlin office of the German Marshall Fund. "In a globalized world," she says, "America's president can shape lives worldwide. He is our president, too."

That would be true, up to a point, of any occupant of the highest office in the United States at a time of American pre-eminence in the world. But with Obama, supported as he is by overwhelming majorities abroad, the connection is stronger than it would be with any other incoming president, the affection more deeply personal and the significance of his election much more intense. "The American president always claims to be the 'leader of the world,' and we always hate that arrogance," says Benchemsi. "Obama can say that, and we have no problem with it."

Around the globe, in a way that no one else has for half a century, says Oxford University professor of government Vernon Bogdanor, Obama has raised "hopes of a progressive leader who can restore America's moral leadership." U.K. Minister of State for Higher Education David Lammy, who has known Obama since 2005 when they met at a Harvard event for black alumni, says "Obama's movement for change is one that has the potential to go beyond America's borders, giving him a reach that could be unprecedented for a world leader."

Obama, whose life story allows him readily to be seen as the personification of change, racks up landslide-scale support in global surveys. Recent polling by the London-based firm YouGov had Obama garnering more than 70 percent support in Nordic countries and well more than 50 percent in Egypt, Saudi Arabia and the United Arab Emirates. They show him rising in the polls since May, ever so slightly in Germany, and by 13 points in Britain, to 62 percent in October. In France, friends-of-Obama committees have proliferated; the French Support Committee for Barack Obama sells "France for Obama" T shirts online. The Portuguese-language version of the social networking Web site Orkut, dominated by Brazilians, has 293 "communities" dedicated to Obamania, including Eu Amo Obama. In Brazil, flattery knows no bounds: at least eight candidates in recent elections simply borrowed Barack Obama's name and put it on the ballot instead of their own.

More than celebrity worship, the Obama phenomenon has already had a very real impact abroad, raising questions, for example, about the lack of progress by racial minorities in Europe. Europe's parliamentary democracies have done quite well by women in recent decades, but blacks and Asians have been left behind. "Searching for the French Barack Obama" was a headline in Le Monde last week. As part of that report, the Togolese-born former state secretary for social affairs and integration Kofi Yamgnane told the paper, "We have to admit that the American model works better than the French model." "We love Obama," wrote the columnist Claude Weill in Nouvel Observateur, because "we hate slavery, racial segregation, discrimination in all its forms—America's original sins." He concludes on a pessimistic note: "We are the country of human rights, no? But are we really listening to Obama?"

As the election neared, Obama looked very likely to win. If he does, judging from the tenor of the campaign's final days, America will have elected a new leader of the world for entirely local reasons. In no small part it will be because of McCain's apparent lack of focus on the economy in an era of financial distress. It will also be a reaction to Palin, a political newcomer and a seeming lightweight a heartbeat away from the presidency, as they say.

If Obama loses, the reaction in America will likely play out along the same old divides. Democrats will interpret the loss in the framework of recent election defeats: we could not elect Al Gore or John Kerry, and now Obama, even in the midst of crisis. Their talk will turn to a new third way. Republicans will look at their implausible victory as a reason to suspend or at least dial down the soul-searching they are undergoing now, over whether they drifted too far right—or not far enough. Conservatives will crow. Liberals will weep. African-Americans will gnash their teeth. (And the media, it must be said, will be shamed for its poll-driven reporting that showed virtually no path to a McCain victory.)

The rest of the world, for its part, will see something different. America, already said to be on the decline, will look all the smaller for having failed to redeem itself with the election of a young black man with African and South Asian roots and a Middle Eastern middle name. And it will look smaller still for having had the opportunity to do so, yet failing to see the opportunity, let alone capitalize on it and breaking a line that goes back more than 200 years in the United States. To the rest of the world, in electing another Republican America will have appeared not only to extend the agonies of the Bush years, but to have missed a historical chance for which it's hard to find a precedent or parallel in any country: the ultimate triumph of a long-oppressed minority.

The world has already cast its vote, in poll after poll, and what it wants, and may not get even if Obama is elected, is an American Gandhi, a Gandhi who not only speaks for the oppressed minority but was one of them. The world caught a glimpse of their man on a sunny afternoon last July in Berlin. He stood at the base of Berlin's Siegessäule, or Victory Column, in the Tiergarten. Some 200,000 people fanned out before him, a crowd much larger than any he had drawn at home during 18 months on the stump. He took the opportunity to address a much larger audience. "People of the world," Barack Obama said, "look at Berlin, where a wall came down, a continent came together, and history proved that there is no challenge too great for a world that stands as one." That may be too much for any president to deliver. Indeed the world may be setting itself up for a rather rude awakening when an elected Obama proves far more pragmatic, less progressive, than expected. But taking their cue from the title of his second book, the people of the world he addressed that day have invested in him the audacity of their hope.

With Tracy Mcnicoll in Paris, Mac Margolis in Rio De Janeiro, Akiko Kashiwagi in Tokyo, William Underhill in London, Barrett Sheridan in New York And Melinda Liu in Beijing