Europe Tries To Kick The Can Down The Road But It Will Only Lead To Financial Disaster

Have you heard the good news? Financial armageddon has been averted. The economic collapse in Europe has been cancelled. Everything is going to be okay. Well, actually none of those statements is true, but news of the "debt deal" in Europe has set off a frenzy of irrational exuberance throughout the financial world anyway. Newspapers all over the globe are declaring that the financial crisis in Europe is over. Stock markets all over the world are soaring. The Dow was up nearly 3 percent today, and this recent surge is helping the S&P 500 to have its best month since 1974. Global financial markets are experiencing an explosion of optimism right now. Yes, European leaders have been able to kick the can down the road for a few months and a total Greek default is not going to happen right now. However, as you will see below, the core elements of this "debt deal" actually make a financial disaster in Europe even more likely in the future.

The two most important parts of the plan are a 50% "haircut" on Greek debt held by private investors and highly leveraging the European Financial Stability Facility (EFSF) to give it much more "firepower".

Both of these elements are likely to cause significant problems down the road. But most investors do not seem to have figured this out yet. In fact, most investors seem to be buying into the hype that Europe's problems have been solved.

There is a tremendous lack of critical thinking in the financial community today. Just because politicians in Europe say that the crisis has been solved does not mean that the crisis has been solved. But all over the world there are bold declarations that a great "breakthrough" has been achieved. An article posted on USA Today is an example of this irrational exuberance....

Investors — at least for now — don't have to worry about a financial collapse like the one in 2008, after Wall Street investment bank Lehman Bros. filed for bankruptcy, sparking a global financial crisis.

"Financial Armageddon seems to have been taken off the table," says Mark Luschini, chief investment strategist at Janney Montgomery Scott.

Wow, doesn't that sound great?

But now let's look at the facts.

You can't solve a debt problem with even more debt. But that is what this debt deal is trying to do.

The politicians in Europe did not want to raise more money for the EFSF the "hard way". Voters in Germany (and other European nations) are overwhelmingly against contributing even more cash to a fund that many see as a financial black hole.

So what do you do when more money is needed but nobody wants to contribute?

You borrow it.

Essentially, this debt deal calls for the EFSF to become four or five times larger by "leveraging" the existing funds in the EFSF.

But isn't that risky?

Of course it is.

There are some leaders in Europe that recognize this. For example, an article in The Telegraph notes the reservations that the president of the Bundesbank has about this plan....

Jens Weidmann, the president of the Bundesbank and a member of the European Central Bank, sounded the alarm over the plan to “leverage” the fund by a factor of four to five times without putting any new money into the pot.

He warned that the scheme could be hit by market turbulence with taxpayers left holding the bill for risky investments in Italian and Spanish bonds.

So who is going to fund all of this new debt?

Well, it turns out that the Europeans are counting on the same folks that the U.S. government is constantly borrowing money from.

The Chinese.

French President Nicolas Sarkozy has already spoken directly with Chinese President Hu Jintao about funding this new bailout effort.

So is borrowing money from the Chinese to fund bailouts for Greece and other weak sisters in Europe sound policy?

Of course not.

And the sad thing is that this expanded EFSF is still not going to be enough to solve the financial problems in Europe.

According to an article in The Telegraph, a recent survey of economists found that most of them do not believe that this new plan is going to raise enough money....

The plan to increase the European Financial and Stability Facility to €1  trillion on paper was attacked by economists as not enough to “stave off” worsening debt problems in Italy and Spain.

In a survey of economists, 26 of 48 thought the firepower was not enough.

But the worst part of this new plan is the 50 percent "haircut" that private investors are being forced to take.

This is essentially a partial default by the Greek government. A lot of folks are going to get hit really hard by losses from this. Instead of making financial institutions in Europe stronger, these losses are going to make a lot of them even weaker.

Normally, in the event of a default, credit default swap contracts would be triggered. But apparently because this was considered to be a "voluntary" haircut, that is not going to happen in this instance.

A Bloomberg article explained this in greater detail. The following is a brief excerpt....

The EU agreement with investors for a voluntary 50 percent writedown on their Greek bond holdings means $3.7 billion of debt-insurance contracts won’t be triggered, according to the International Swaps & Derivatives Association’s rules.

That means that investors and financial institutions all over the world are just going to have to eat these losses.

Greek Prime Minister George Papandreou is already acknowledging that a number of Greek banks will have to be nationalized because of the severity of this "haircut". A recent CNBC article detailed this....

The haircut is expected to impose big losses on the country's banks and state-run pension funds, which are up their necks in toxic Greek government bonds of about 100 billion euros.

The government will replenish pension funds' capital, but banks may face temporary nationalisation, Papandreou said.

"It is very likely that a large part of the banks' shares will pass into state ownership," Papandreou said. He pledged, however, that these stakes will be sold back to private investors after the banks' restructuring.

So where will the Greek government get the funds to "replenish" the capital of those banks?

That is a very good question.

But we haven't even discussed the worst part of this "debt deal" yet.

If you don't remember any other part of this article, please remember this.

The debt deal in Europe sends a very frightening message to the market.

The truth is that Europe could have totally bailed out Greece without any sort of a "haircut" taking place.

But they didn't.

So now investors all over the globe have got to be thinking that if they are holding Portuguese bonds, Italian bonds or Spanish bonds there is a really good chance that they will be forced to take a massive "haircut" at some point as well.

At this time last year, the yield on two year Italian bonds was about 2.5 percent. Now it is about 4.5 percent. As investors begin to price in the probability of having to take a future "haircut" on Italian debt, those bond yields are going to go much, much higher.

That means that it is going to become much more expensive for the Italian government to borrow money and that also means that it is going to become much more difficult for the Italians to get their financial house in order.

In essence, the haircut on Greek debt is a signal to investors that they should require a much higher rate of return on the debt of all of the PIIGS. This is going to make the financial collapse of all of the PIIGS much more likely.

Remember, about this time last year the yield on two year Greek bonds was about 10 percent. Today, it is over 70 percent.

As I wrote about in a previous article, the western world is in debt up to its eyeballs right now and trying to kick the can down the road is not going to solve anything.

Our leaders may succeed in delaying the pain for a while, but it most definitely is coming.

Greece, Portugal, Ireland and Italy all have debt to GDP ratios that are well over 100% right now. Spain is in a huge amount of trouble as well.

When you add up all the debt, Greece, Portugal, Ireland, Italy and Spain owe the rest of the world about 3 trillion euros combined.

If Italy or Spain goes down, the rest of Europe is going to be helpless to stop it. There simply is not going to be enough money to bail either one of them out.

That is why this "debt deal" is so alarming. All investors in Italian or Spanish debt will now have to factor in the probability that they will be required to accept a 50 percent haircut at some point in the future.

If the markets behave rationally (and if the ECB does not manipulate them too much), it appears inevitable that bond yields over in Europe are going to rise substantially, and that will put tremendous additional financial strain on governments all over Europe.

Basically, we have got a huge mess on our hands, and this debt deal just made it a lot worse.

Yes, a financial collapse has been averted in Greece for the moment, but the truth is that there is no real reason to be celebrating this deal.

A massive financial storm is coming to Europe, and this "debt deal" has made that all the more certain.

Once again, politicians in Europe have tried to kick the can down the road, but in the end their efforts are only going to lead to complete and total financial disaster.

Euro Zone to Quadruple Bailout Fund...ONE TRILLION EURO's

Euro zone leaders intend to scale up their emergency fund, the European Financial Stability Facility, to around 1.0 trillion euros, EU sources said on Wednesday.

The sources said the 440 billion euros ($611.4 billion) fund, set up last year, would have about 250-275 billion euros available after amounts are set aside for aid to Greece, Ireland and Portugal and for the recapitalizing the region's banks.

That amount would be scaled up around four times, arriving at a headline figure of around 1.0 trillion.

"The ratio of the leverage will be of at least 4 times," one source said, while another said the spare capacity available to be leveraged was 250 billion to 275 billion.

The exact amount of capital available will only be known once negotiations over a second bailout package for Greece are agreed. Part of the problem is agreeing on credit enhancements for the private sector. More credit enhancement will reduce the amount of funds in the EFSF for leveraging.

Meanwhile, reports also surfaced Wednesday night that French President Nicolas Sarkozy will speak with Chinese President Hu Jintao on Thursday about boosting the EFSF. Reuters and the Wall Street Journal both cited unnamed European Union sources.

The EFSF is one of the key areas of focus for a euro summit ongoing in Brussels, Belgium that hopes to devise a concrete plan for attacking Europe's debt problems, especially in member state Greece.

According to a draft statement to be issued on Wednesday, the euro zone aims to boost its bailout fund "several fold," but finance ministers will only agree to the details of how that will be done in November.

The statement, obtained by Reuters, says two options are being considered to boosting the fund, one involving it issuing risk insurance and the other built around it taking part in a special purpose investment vehicle. Both models could be deployed simultaneously, the draft statement said.

The Eurogroup of finance ministers will be asked to finalize the terms and conditions for how the EFSF will operate under the leverage schemes in November, the statement said.

In addition, it said the EFSF's resources could be further enhanced, possibly via cooperation with the International Monetary Fund.

The draft statement also called on Spain to do more to bring its budget into line, while praising it for the steps taken so far. A paragraph on Italy, which is under pressure to do more on pension and other reforms, was left blank but is expected to be added later.

U.S. stocks added to gain on the report, with the S&P 500 climbing to session highs, though some analysts were skeptical about the effect a stronger EFSF would have on the market.

"It's moving in the right direction but it is going to disappoint the market, particularly given the emphasis policy makers put on this meeting," said Jessica Hoverson, foreign exchange analyst at MF Global.

Letter to Members of Parliament From Glenn Beck

Members of the Conservative Party,

Yesterday, Parliament experienced the largest rebellion from Tory Members since Prime Minister Cameron took office. Despite the potential of facing critical consequences for opposing the party line and pressure through the most stringent instructions from your party on how to vote, you stood your ground and insisted on voting in a way that represented your true beliefs on Britain’s decision to remain a part of the EU. I would like to congratulate you on an honest course of action and a truthful recognition of your obligation to stand by the people who elected you.

Many of the British people have suggested that Britain ought to hold a referendum on whether or not to remain a part of the European Union. In fact, a poll held by YouGov cited that over half of the British public wanted their Members of Parliament to vote in favor of this referendum on Europe—something that was promised, during the last parliament, by all three parties, and for Britain to ultimately leave the EU. (http://today.yougov.co.uk/politics/eu-referendum)

To ignore the will of the people for political interests and party politics would defy the purposes of democracy and betray the desires of millions of British citizens. Yesterday, the majority of Parliament did abandon their citizens, thanks to the other members of Cameron’s government and their support from the Labour Party and the Liberal Democrats.

The media is branding the eighty-one Conservatives who defied the three-line whip as ‘rebels,’ their insubordination, a ‘mutiny.’ Liberal Democrat Nick Clegg described the members’ actions as “launching a smash and grab dawn raid on Brussels.” The real rebels, however, are those who are trying to make failed institutions even bigger without any accountability to common sense, fiscal reason, or holding those who are worsening the problems responsible.

The response from those at Tahrir Square, the Wall Street occupiers, and the protestors at St. Paul’s cathedral in London will be that they want true democracy and the voice of people to be heard. And yet those who actually stand for the people and empower them are the ones being called rebels. But history has seen these scenes and the tyrants they give birth to time and time again. Know this: you’re on the right side of history.

John Locke believed in a limited state and a powerful society. He believed that too powerful a state was “inconsistent with civil society, and so can be no form a civil government at all.” founders on this side of the Atlantic recognized this truth as well, which is why our two nations remain brothers. The actions of Cameron and the other Members of Parliament exemplify the opposite of John Locke’s vision for equality and democracy. You, on the other hand, the eighty- one ‘rebels,’, are risking grave consequences to return political power to the people and away from remote and bureaucratic powers in the U.N.

Those who wish to consolidate their power even further have united globally. It is time for freedom lovers to understand that tyranny and the ‘spontaneous’ movements around the globe are uniting.

As your ally in America, I am extending myself. We must unite. There are eighty-one of you who stood your ground. There are millions in America, the Tea Party, and all over the globe, that feel the same way and will not sit down when they know what is right.

When we begin to unite, we can work together to defeat those trying to destroy our institutions and proudly begin advancing the causes of liberty and freedom.

Let us know what we can do to help.

-Glenn Beck and the GBTV Team

Florida Appeals Court Rejects Call to Block Judge From Citing Islamic Law in Ruling! WHAT?

A Florida appeals court has rejected a request to block a Hillsborough judge from upholding Islamic law in a case involving the former trustees of a local Tampa mosque that has garnered the national spotlight.
The state's 2nd District Court of Appeal on Friday denied without comment a petition filed by the mosque, known as the Islamic Education Center of Tampa, which is challenging Hillsborough Circuit Judge Richard Nielsen’s ruling in March that he intended to cite “ecclesiastical Islamic law” in the case, the St. Petersburg Times reported.
The former trustees have been suing the mosque because they claim they were unfairly removed as trustees. Nielsen said in March that based on testimony, “under ecclesiastical law” and pursuant to the Koran, “Islamic brothers should attempt to resolve a dispute among themselves.”
The two parties reportedly agreed ahead of time to use an imam and Islamic Law to resolve any potential differences through arbitration. So Nielsen only referenced Islamic law in deciding whether the two parties could resolve their differences through arbitration. He ruled they could.
The arbitrator ruled in favor of the former trustees, an outcome that would give them control of $2.2 million in mosque funds if the decision is upheld, the newspaper reported.
But mosque officials say the arbitration never happened, and they dispute the meaning of the appeals court ruling. Mosque attorney Paul Thanasides told the newspaper that an appeals court decision without a written opinion means the court wasn’t addressing the merits of the case.
But Lee Segal, a lawyer representing the trustees, told the newspaper that the ruling was a “big time” win for his clients and vindication for Nielsen.


Click here to read the full story from St. Petersburg Times.

Read more: http://www.foxnews.com/politics/2011/10/25/florida-appeals-court-rejects-petition-to-block-judge-from-imposing-islamic-law/#ixzz1btbhZcr1

GREEK BANK RUN BEGINS

Athens - It's depressing scenes from a country close to bankruptcy!

Monday morning, 7.40 clock in the district of Athens, "Agia Paraskevi". We, the BILD reporters are witnesses, such as in front of a branch of the "National Bank of Greece" is a snake, the Greeks want right after the opening at 8:00 on the clock switch. Pensioners Evagelos Dimitros (73): "I come here to immediately pick up my pension € 300. Who knows what else happened today. My money is safe only when it is at home. "

The EU plan for an average debt of up to 60 percent for many Greeks is nothing other than a bankruptcy. The Greek banks already reacted violently broke up yesterday, the intended "solution" in the stock market, a time by up to 25 percent. Background: When the average debt is resolved, Greece receives from the rating agencies in all likelihood a bankruptcy evaluation. And the Greeks therefore act now! Only in the last week it was revealed that 200 billion stash rich Greeks in Switzerland .

The head of an Athens bank branch Tanja Papadopoulos (38, name changed) told BILD: "More and more Greeks who still have some money to get it from the bank. In my office there are a total of 5,000 customers, 2,500 of which either have their money transferred abroad or hoard it at home. There are cases where people leave with € 300 000 in the bank bag. If it continues, will soon be no more money. "

Papadopoulos knows crazy hiding money from customers who have picked up their savings: "One exception is a fish there money put into it and freeze the fish again. Others support in walls, hide it in closets or buried their money in the garden. "You get on some days, until late evening calls from Greeks, who would prefer to collect their money immediately. She says: "It is terrible that so few trust the country. As Greece is supposed to work when people pick up their money from banks? "

Ron Paul on Meet The Press - 10/23

Nigel Farage: Ably Challenging the Notion of Solving the EU Problem with More EU (ignore subtitles)

VATICAN CALLS FOR 'CENTRAL WORLD BANK'

Mon Oct 24, 2011 12:23pm BST

VATICAN CITY, Oct 24 (Reuters) - - The Vatican called on Monday for the establishment of a "global public authority" and a "central world bank" to rule over financial institutions that have become outdated and often ineffective in dealing fairly with crises.

The document from the Vatican's Justice and Peace department should please the "Occupy Wall Street" demonstrators and similar movements around the world who have protested against the economic downturn.

"Towards Reforming the International Financial and Monetary Systems in the Context of a Global Public Authority," was at times very specific, calling, for example, for taxation measures on financial transactions.

"The economic and financial crisis which the world is going through calls everyone, individuals and peoples, to examine in depth the principles and the cultural and moral values at the basis of social coexistence," it said.

It condemned what it called "the idolatry of the market" as well as a "neo-liberal thinking" that it said looked exclusively at technical solutions to economic problems.

"In fact, the crisis has revealed behaviours like selfishness, collective greed and hoarding of goods on a great scale," it said, adding that world economics needed an "ethic of solidarity" among rich and poor nations.

"If no solutions are found to the various forms of injustice, the negative effects that will follow on the social, political and economic level will be destined to create a climate of growing hostility and even violence, and ultimately undermine the very foundations of democratic institutions, even the ones considered most solid," it said.

It called for the establishment of "a supranational authority" with worldwide scope and "universal jurisdiction" to guide economic policies and decisions.

Such an authority should start with the United Nations as its reference point but later become independent and be endowed with the power to see to it that developed countries were not allowed to wield "excessive power over the weaker countries".

Asked at a news conference if the document could become a manifesto for the movement of the "indignant ones", who have criticised global economic policies, Cardinal Peter Turkson, head of the Vatican's Justice and Peace department, said:

"The people on Wall Street need to sit down and go through a process of discernment and see whether their role managing the finances of the world is actually serving the interests of humanity and the common good.

"We are calling for all these bodies and organisations to sit down and do a little bit of re-thinking."

EFFECTIVE STRUCTURES

In a section explaining why the Vatican felt the reform of the global economy was necessary, the document said:

"In economic and financial matters, the most significant difficulties come from the lack of an effective set of structures that can guarantee, in addition to a system of governance, a system of government for the economy and international finance."

It said the International Monetary Fund (IMF) no longer had the power or ability to stabilise world finance by regulating overall money supply and it was no longer able to watch "over the amount of credit risk taken on by the system".

The world needed a "minimum shared body of rules to manage the global financial market" and "some form of global monetary management".

"In fact, one can see an emerging requirement for a body that will carry out the functions of a kind of 'central world bank' that regulates the flow and system of monetary exchanges similar to the national central banks," it said.

The document acknowledged that such change would take years to put into place and was bound to encounter resistance.

"Of course, this transformation will be made at the cost of a gradual, balanced transfer of a part of each nation's powers to a world authority and to regional authorities, but this is necessary at a time when the dynamism of human society and the economy and the progress of technology are transcending borders, which are in fact already very eroded in a globalised world." (Reporting By Philip Pullella; editing by Elizabeth Piper)

OBAMA ADMIN GAVE HALF-BILLION-DOLLAR LOAN TO GORE-CONNECTED ELECTRIC CAR COMPANY TO BUILD CARS IN… FINLAND?

An electric car company that received more than a half-billion-dollar Obama administration-approved loan is reportedly now assembling its first line of cars in rural Finland, rather than in the United States. What’s more, the car company, Fisker Automotive, is funded by a venture capital firm whose partners include former Vice President Al Gore.

To make matters worse, Fisker is more than a year behind in rolling out its $97,000 luxury “Karma” car, funded in part with Department of Energy funds. A mere 40 Karmas have thus far been produced, with only two delivered to customers — one of whom is famed actor Leonardo DiCaprio.

ABC reports:

With the approval of the Obama administration, an electric car company that received a $529 million federal government loan guarantee is assembling its first line of cars in Finland, saying it could not find a facility in the United States capable of doing the work.
Vice President Joseph Biden heralded the Energy Department’s $529 million loan to the start-up electric car company called Fisker as a bright new path to thousands of American manufacturing jobs. But two years after the loan was announced, the job of assembling the flashy electric Fisker Karma sports car has been outsourced to Finland.
“There was no contract manufacturer in the U.S. that could actually produce our vehicle,” the company’s founder and namesake told ABC News. “They don’t exist here.”

Henrik Fisker said the U.S. loan has been spent on engineering and design work that stayed in the U.S., not on the 500 manufacturing jobs that were exported to a rural Finnish firm, Valmet Automotive.

“We’re not in the business of failing; we’re in the business of winning. So we make the right decision for the business,” Fisker said. “That’s why we went to Finland.”

But shipping 500 jobs abroad is only part of the odd equation. According to ABC:

Fisker is part of a $1 billion bet the Energy Department has made in two politically connected California-based electric carmakers producing sporty — and pricey — cutting-edge autos. Fisker Automotive, backed by a powerhouse venture capital firm whose partners include former Vice President Al Gore, predicts it will eventually be churning out tens of thousands of electric sports sedans at the shuttered GM factory it bought in Delaware. And Tesla Motors, whose prime backers include PayPal mogul Elon Musk and Google co-founders Larry Page and Sergey Brin, says it will do the same in a massive facility tooling up in Silicon Valley.
Meanwhile, Tesla’s SEC filings reveal the start-up has lost money every quarter, and while its federal funding is intended to help the company mass-produce a $57,400 Model S sedan, ABC reports that the carmaker has never tackled a project so vast — raising doubts about the company’s ability to produce.

An investigation by ABC News and the Center for Public Integrity’s iWatch News slated to air on “Good Morning America,” purportedly found that the DOE’s bet carries risks for taxpayers, has raised concern among industry observers and government auditors, and raised additional questions about the way in which billions of dollars in loans for smart cars and green energy companies are appropriated.

Ironically, the Fisker’s $100,000 price-tag eliminates the “other 99%” of the potential customer base. That may be just as well, since it offers worse fuel efficiency than many gas-guzzling SUV’s.

Forbes reports:

The Fisker Karma electric car, developed mainly with your tax money so that a bunch of rich VC’s wouldn’t have to risk any real money, has rolled out with an nominal EPA MPGe of 52.
Not bad? Unfortunately, it’s a sham. This figure is calculated using the grossly flawed EPA process that substantially underestimates the amount of fossil fuels required to power the electric car…
As I calculated in my earlier Forbes article, one needs to multiply the EPA MPGe by .365 to get a number that truly compares fossil fuel use of an electric car with a traditional gasoline engine car on an apples to apples basis. In the case of the Fisker Karma, we get a true MPGe of 19. This makes it worse than even the city rating of a Ford Explorer SUV.
The entire ABC report can be read here.

KUHNER: The Washington Times: The United States of Mexico?

American students now pledge allegiance to Mexico. They sing its na- tional an- them. And it is sanctioned by the state of Texas. Sound absurd? It is. Last month in a Spanish class at Achieve Early College High School in McAllen, Texas, students recited the Mexican pledge of allegiance and were instructed to memorize the Mexican anthem. Moreover, they had to wear red, white and green - the colors of the Mexican flag - as they fulfilled their class assignment. Public high schools no longer promote American patriotism, but they are doing a superb job of cultivating loyalty to Mexico.

Sophomore Brenda Brinsdon refused to participate. “I just thought it was out of hand; I didn’t think it was right,” she told the Blaze, which first reported the story. “Reciting pledges to Mexico and being loyal to it has nothing to do with learning Spanish.”

She’s right. When she complained, however, to the school’s principal, Yvette Cavazo, Miss Brinsdon was told it was part of the curriculum. According to Texas’ state education standards, students must acquire “knowledge” of foreign cultures and use language to enhance their “understanding.”

“The students came away with a better understanding of the culture, heritage and customs of a neighboring country where Spanish is the primary language,” school district spokesman Mark May said.

This is treasonous; American students are being indoctrinated to revere and pledge their loyalty to a foreign government. Such is the logical consequence of multiculturalism and modern liberalism.

For decades, spending on public education has soared. America spends more per capita than almost any other country in the West. The results: On international test scores, U.S. students continually lag behind their European and Asian counterparts, especially on math and science. Many students who graduate from high school are barely literate. They know next to nothing about the Constitution, American history or basic civics. U.S. public schools are not properly teaching writing and reading in English. Why do schools promote the learning of Spanish and a foreign culture when many U.S. students are deficient in understanding their own language and civilization? Santa Anna trumps George Washington.

Decades ago, students learning Spanish would recite the pledge of allegiance to America or sing “The Star-Spangled Banner” in that foreign language. No more. Our education establishment thinks displays of patriotism are signs of “nativism” and “xenophobia.” Textbooks regularly teach that America is a nation founded upon racism, sexism, imperialism and genocide. Therefore, students must be taught to appreciate - and respect - foreign peoples and Third World cultures. This is a form of national self-hatred and self-abnegation.

Moreover, this is part of the Hispanicization of America. Since 1990, nearly 20 million illegal aliens have crossed our porous southern border. If one adds legal immigration, the foreign-born population is nearly 40 million. America essentially has imported an entire subculture the size of a major European nation. This is the most dramatic cultural transformation in one generation in history. Our political class is engaged in a dangerous social experiment - one that threatens to destroy our country.

The cultural effects have been felt almost everywhere, especially in Texas, the Southwest and California. English is dying. Spanish is rampant. Hispanic communities are surging. Along with their unprecedented numbers, they are bringing their distinct culture, language, customs, heritage and powerful loyalties. In an America that no longer emphasizes assimilation, many remain unassimilated. Ethnic separatism and linguistic chauvinism are on the rise. For millions of illegal and legal immigrants, Mexico is - and always will be - their true homeland. America is slowly being Balkanized.

“Mexifornia” is a case in point. California once was the symbol of the American dream. Today, it is sinking into a Third World abyss. Among large parts of Los Angeles, English can no longer be heard. Some neighborhoods are no-go areas. They are occupied by Mexican gangs and drug cartels. In the Golden State’s public schools, from kindergarten through the third grade, almost 2 out of 5 students have English as their second language. In the Central Valley, the state’s agricultural region, one can go for hundreds of miles and hear only one language: Spanish.

Our political establishment - both liberal Democrats and pro-business Republicans - do not want to confront this unpleasant truth: Mexico is slowly reannexing the U.S. Southwest. This is occurring culturally and linguistically. Eventually, it will happen territorially.

In fact, the Mexican government has been open about its expansionist aims. Its consulates in America have a mandate to provide Mexican textbooks in communities with large Hispanic populations. The Mexican consulate in Los Angeles has distributed hundreds of thousands of such textbooks to more than 1,000 schools in the Los Angeles area alone. Those textbooks teach that the Southwest, California and Texas belong to Mexico; that they were stolen in the 1848 Mexican-American War; and that Hispanic children owe allegiance to the Mexican flag and the Mexican state. In Mexico City and among radical Hispanic activists in America, the strategy is called “La Reconquista” - the reconquest of ancient lands. In 2004, then-President Vicente Fox said in Chicago that Americans of Mexican descent are part of a “nation” that transcends frontiers. He was calling for the creation of a Greater Mexico.

Yet Americans remain strangely silent. We are witnessing the emergence of a multicultural, multiethnic and multilingual Tower of Babel. Unless it is demolished, it will tear America apart. Today, Texas students are being told to pledge allegiance to Mexico and sing its anthem. Tomorrow, they may be told that the U.S. flag and the Constitution of our Founding Fathers represent a foreign regime occupying foreign soil.

Welcome to the United States of Mexico.

Jeffrey T. Kuhner is a columnist at The Washington Times and president of the Edmund Burke Institute.

1912 Cartoon One Year Before The Creation Of The Federal Reserve

According to Shadow Government Statistics, the "real" rate of unemployment in the United States is creeping up toward 25 percent.

So what is going to happen if a worldwide depression hits?

Things could get very, very interesting over the next few years.

A significant percentage of Americans have already lost faith in the system. According to a new Gallup poll, 44 percent of all Americans say that our economic system is "unfair" to them on a personal level.

But sadly, most Americans don't really understand the mechanics of our financial system.

They don't understand what actually makes it unfair.

That is why we need to work so hard to educate the American people about the Federal Reserve. The Federal Reserve system is at the very heart of our financial system, and it was designed to get the U.S. government perpetually enslaved to debt.

At this point, the U.S. national debt is 4700 times larger than it was when the Federal Reserve was created back in 1913.

It looks like the creators of the Federal Reserve achieved their goal.

Posted above is a cartoon that was published one year before the creation of the Federal Reserve. The intent of this cartoon was to criticize the "Aldrich plan" which was a precursor to the plan to create the Federal Reserve.

As you can see below, the creator of this cartoon had a good idea of what would happen if the plan put forward by Rhode Island Senator Nelson Aldrich was adopted.

Today, the Federal Reserve totally dominates our financial system just like this cartoon once warned would happen if we allowed a central bank to control our money....

In Debt Up To Our Eyeballs

The entire financial system of the western world is designed to be a debt spiral. The total amount of money and and the total amount of debt are supposed to continually expand. Today, we are in debt up to our eyeballs and it seems like nearly everyone is talking about "deleveraging" and reducing government debt. But in a world where the entire financial system is based on debt, is there any way for massive deleveraging to take place without plunging us all into a horrific worldwide depression? The governments of the western world have had a lot of fun spending money as if there was no tomorrow, but now tomorrow has arrived and all of that debt is rapidly catching up with us. Politicians in Europe and in the United States are running around trying to come up with a "plan", but there is no "plan" that is going to fix the current debt-based system. Over the next few years we are going to reap what we have sown.

For fiscal year 2011, the U.S. federal government had a budget deficit of nearly 1.3 trillion dollars. That was the third year in a row that our budget deficit has topped a trillion dollars.

Sadly, most Americans simply have no idea how much money a trillion dollars is.

Perhaps an illustration or two would help.

If on the day when Jesus was born you began spending one million dollars every single day, you still would not have spent one trillion dollars by now.

That is how large a trillion dollars is.

If you went out today and started spending one dollar every single second, it would take you over 31,000 years to spend one trillion dollars.

Some people have suggested that we could solve our problems by taxing the rich.

Well, if Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for about 15 days.

No, the truth is that what we have is a spending problem.

The U.S. federal government is spending way, way too much money. Total U.S. government debt will soon cross the 15 trillion dollar mark.

Should we do something to celebrate such a monumental national achievement?

It really takes a special effort to borrow 15 trillion dollars.

We have accumulated the largest mountain of debt in the history of the world, and yet our government continues to add to our debt at a blistering pace.

If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.

Unfortunately, we are not paying it off right now. Instead, we are adding even more to it.

Back in the early 1980s, Ronald Reagan declared the national debt to be a national crisis.

Well, today our national debt is more than 14 times larger than it was when Reagan took office.

Something has gone horribly, horribly wrong.

Right now, spending by the federal government accounts for about 24 percent of GDP. Back in 2001, it accounted for just 18 percent.

Spending is going in the wrong direction.

And most government spending goes into the pockets of individual Americans.

59 percent of all Americans now receive money from the federal government in one form or another.

We have got tens of millions of Americans that are completely and totally addicted to getting money from the federal government.

But wasn't the Tea Party supposed to do something about all of this crazy government spending?

Unfortunately, the Tea Party has failed in this area. In the mainstream media there is talk of "austerity" by the federal government, but the truth is that spending by the federal government has increased by about 5 percent so far this year.

We are hurtling toward a "debt wall" and the brakes don't seem to work.

Europe is in a massive amount of debt trouble as well. In fact, a financial meltdown is probably going to happen in Europe before it happens in the United States.

Greece, Portugal, Ireland and Italy all have debt to GDP ratios that are well above 100%. Spain is in a massive amount of trouble as well.

Right now, Greece, Portugal, Ireland, Italy and Spain owe the rest of the world about 3 trillion euros combined.

Greece is on the verge of a default of one form or another, and Italy and Portugal look like they will not be far behind.

As the financial world braces for a Greek default, the yields on Greek bonds are going absolutely crazy. The yield on 2 year Greek bonds is now over 70 percent. The yield on 1 year Greek bonds is now over 170 percent.

Sadly, it looks like Portuguese bonds are starting to go down the same path. The yield on 2 year Portuguese bonds is now over 17 percent. A year ago the yield on those bonds was about 4 percent.

European banks are also drowning in an ocean of debt.

According to renowned financial journalist Ambrose Evans-Pritchard, banks in Europe need to reduce the amount of lending on their books by about 7 trillion dollars in order to get down to safe levels....

Europe’s banks face a $7 trillion lending contraction to bring their balance sheets in line with the US and Japan, threatening to trap the region in a credit crunch and chronic depression for a decade.

But can that be done safely?

Can that be done without plunging Europe into a financial nightmare?

Ambrose Evans-Pritchard is skeptical....

The risk is "Japanisation" without the benefits of Japan: without a single government, or a trade super-surplus, or 1pc debt costs, or unique social cohesion.

Already the financial crisis in Europe has pushed unemployment to frightening levels. So what will happen if you add massive deleveraging to the equation? Ambrose Evans-Pritchard is very concerned about what might happen in some of the most troubled nations....

Even today, the jobless rate for youth is near 10pc in Japan. It is already 46pc in Spain, 43pc in Greece, 32pc in Ireland, and 27pc in Italy. We will discover over time what yet more debt deleveraging will do to these societies.

Major European banks not only have too many loans on their books - they have also borrowed way, way too much money themselves.

The truth is that most major European banks are leveraged to the hilt and are massively exposed to sovereign debt. Before it fell in 2008, Lehman Brothers was leveraged 31 to 1. Today, major German banks are leveraged 32 to 1, and those banks are currently holding a massive amount of European sovereign debt.

What all of this means is that we are on the verge of some really bad stuff.

The governments of the world are up to their eyeballs in debt. According to the Economist, the governments of the world combined are more than 40 trillion dollars in debt. But that total only counts government debt held by the public and it does not include any future obligations (such as Social Security, etc.) owed by national governments.

It would be hard to understate how much of a crisis this is.

But just like with the subprime mortgage meltdown of a few years ago, a number of very savvy investors and economists can see what is coming.

For example, Texas investor Kyle Bass made millions and millions of dollars betting against subprime mortgages, and now he is warning that we are facing a crisis much greater than that.

Bass believes that the European debt crisis is soon going to explode. In particular, he has been putting his money into investments that will pay off big if Greek debt collapses.

But that is not all Bass has been up to. He has been stockpiling gold, guns and nickels (20 million nickels to be exact).

Bass appears to be well prepared for the coming economic collapse. The following is how one writer described his visit to the 40,000 square foot "fort" owned by Bass....

"We hopped into his Hummer, decorated with bumper stickers (God Bless Our Troops, Especially Our Snipers) and customized to maximize the amount of fun its owner could have in it: for instance, he could press a button and, James Bond–like, coat the road behind him in giant tacks. We roared out into the Texas hill country, where, with the fortune he’d made off the subprime crisis, Kyle Bass had purchased what amounted to a fort: a forty-thousand-square-foot ranch house on thousands of acres in the middle of nowhere, with its own water supply, and an arsenal of automatic weapons and sniper rifles and small explosives to equip a battalion."

If only the rest of us were so well prepared, eh?

So if this is the kind of thing that the "financial experts" are doing, then what is the message for us?

A great storm is coming, and most Americans are going to be totally unprepared for it.

Not that things are not really, really bad already.

According to Shadow Government Statistics, the "real" rate of unemployment in the United States is creeping up toward 25 percent.

So what is going to happen if a worldwide depression hits?

Things could get very, very interesting over the next few years.

A significant percentage of Americans have already lost faith in the system. According to a new Gallup poll, 44 percent of all Americans say that our economic system is "unfair" to them on a personal level.

But sadly, most Americans don't really understand the mechanics of our financial system.

They don't understand what actually makes it unfair.

That is why we need to work so hard to educate the American people about the Federal Reserve. The Federal Reserve system is at the very heart of our financial system, and it was designed to get the U.S. government perpetually enslaved to debt.

At this point, the U.S. national debt is 4700 times larger than it was when the Federal Reserve was created back in 1913.

It looks like the creators of the Federal Reserve achieved their goal.

Posted below is a cartoon that was published one year before the creation of the Federal Reserve. The intent of this cartoon was to criticize the "Aldrich plan" which was a precursor to the plan to create the Federal Reserve.

As you can see below, the creator of this cartoon had a good idea of what would happen if the plan put forward by Rhode Island Senator Nelson Aldrich was adopted.

Today, the Federal Reserve totally dominates our financial system just like this cartoon once warned would happen if we allowed a central bank to control our money....

KUHNER THE WASHINGTON TIMES: The last conservative, Pat Buchanan.

Is America in its twilight years? Patrick J. Buchanan argues it is. Americans, especially conservatives, should heed his warnings. The very future of our republic is at stake. Mr. Buchanan has written the political book of the year - and maybe of our time.

In “Suicide of a Superpower” (Thomas Dunne Books, 2011), the nationally syndicated columnist and TV commentator delivers a damning indictment of the past two decades. His thesis: America is in decline. Unless it is reversed, the United States - like great republics before it - will be swept into the dustbin of history.

Mr. Buchanan argues that our leaders have embraced the “New World Order.” Unlimited immigration, free trade, open borders, strident multiculturalism, globalism, a cradle-to-grave welfare state, neo-pagan morality, massive deficit spending and democratic imperialism - together they have triggered the moral, economic and spiritual disintegration of America.

Mr. Buchanan was one of the few conservatives to directly challenge the Great Society Republicanism prevalent throughout the George W. Bush administration. He opposed No Child Left Behind, the Medicare prescription-drug benefit, runaway spending, amnesty for illegal aliens, economic globalization and the Troubled Asset Relief Program (TARP). He argues that the GOP establishment had lost its ideological way, abandoning principle in favor of power. Niccolo Machiavelli trumped Ronald Reagan.

The author insists that President Obama has accelerated - and deepened - the failed Bush policies. Mr. Obama is seeking to erect a European-style nanny state. Bailouts have propped up big business and big banks, as Middle America was forced to pay for it. Mr. Obama’s trillion-dollar deficits have brought us to the brink of bankruptcy. His economic stimulus failed to create jobs, while it expanded the reach of government - providing more beneficiaries and voters loyal to the Democrats. Obamacare is another massive entitlement program Americans cannot afford. Mr. Buchanan states that the exploding debt threatens our economic future. It will force America into default or to devalue our currency, leading to Weimar Germany-style inflation. Cherished programs - Social Security, Medicare, Medicaid, food stamps, defense spending - must be slashed, capped and reformed or America is doomed.

Yet there is a lack of will among our political class. Both parties, Republican and Democrat, lack the stomach to impose the necessary, difficult cuts. Mr. Buchanan understands that welfare liberalism is like a “narcotic,” slowly making entire classes addicted to government handouts and sapping the nation’s moral fiber. Like the ancient Romans, we know we are in decay but are unable to stop it. Our debt crisis ultimately is a crisis of democracy. Mr. Buchanan asks: With so many dependent upon social programs, can America avoid the fate of Greece?

Mr. Buchanan has been ostracized for years by some conservatives. In particular, they argue that he represents the worst traits of the 1930s old right - nativism, anti-Semitism, protectionism and isolationism - that make his politics beyond the pale. In fact, the very opposite is true: Mr. Buchanan is the last true conservative. He is the heir of postwar conservatism’s intellectual founder, Russell Kirk. Like Kirk, Mr. Buchanan is a Burkean traditionalist who champions the organic society and America’s distinct cultural identity.

For Mr. Buchanan, like most conservative traditionalists, nation-states, faith, family and community are not abstract concepts, as secular progressives claim. Rather, they are real, historic and eternal institutions necessary to a viable, just and free social order. This has been Mr. Buchanan’s central insight. It is why he is despised by many liberals and neoconservatives. His Christian nationalism stands in stark contrast to the rootless globalism and MTV morality of our age. He staunchly opposes abortion, pornography, homosexual marriage, drugs, euthanasia and the West’s hedonism. He understands that a nation is held together by a common culture, language, civilization, heroes, history and myths. Multiculturalism combined with open immigration is a recipe for national suicide. This is not racial chauvinism; it is common sense and proved by history. Austria-Hungary, the Soviet Union, Yugoslavia, Czechoslovakia (and most likely, the European Union) all were torn apart by resurgent ethno-nationalism and centrifugal forces. Multinational empires do not last; only cohesive nations endure.

In foreign affairs, Mr. Buchanan has been tarred as an America-hater, one who abandoned the Reaganite vision of U.S. global leadership. This is another lie. Like many conservatives before him - George Washington, Alexander Hamilton, Robert Taft - Mr. Buchanan is a continental realist. He champions a foreign policy based solely on protecting vital national interests. He supports maintaining the mightiest military in the world. He seeks to secure our porous southern border. He wants to end entangling alliances, such as NATO. He rightly believes it is time for wealthy Europeans and Asians to protect their own backyards - instead of piggybacking off Uncle Sam. In short, America has become overextended, squandering precious blood and treasure. It must retrench or it will collapse from imperial overstretch.

Mr. Buchanan does not care for nation-building. He is loathed by some members of the conservative establishment for opposing the Iraq war. In a cover story for National Review, David Frum denounced Mr. Buchanan and also the late anti-war conservative Robert Novak as “unpatriotic.” They were read out of the movement. Both Mr. Buchanan and Novak, however, have been intellectual giants. Both have championed the Reagan revolution marked by tax cuts, small government and free-market capitalism. Both were leading Cold Warriors who advocated anti-communism during the West’s darkest hour. And both - especially Novak - appeared in the pages of National Review over several decades.

The article was shameful. It tried to make support for the Iraq war the litmus test for belonging to the movement. According to Mr. Frum, Mr. Buchanan and Novak were insufficiently conservative. Yet the former Bush speechwriter is really a right-wing liberal. He has urged Republicans to be more open to abortion, gay rights, environmentalism and public education spending. In other words, Mr. Frum has called for surrender in the culture war. His polemics eventually boomeranged against him - and to some extent, National Review. Its founder, the late William F. Buckley Jr., turned against the Iraq quagmire (as did conservative columnist George F. Will). By Mr. Frum’s perverse logic, Buckley and Mr. Will also should be tarred as “unpatriotic.”

On Iraq, Mr. Buchanan was right and Mr. Frum wrong. The war became a protracted guerrilla campaign. More than 4,000 U.S. troops were killed, while tens of thousands were wounded and maimed. Iraq has slowly drifted into Iran’s orbit. The country has been fractured along religious and ethnic lines. Iraqi Christians, who date back to the time of Christ, have been murdered or expelled. The campaign has depleted America. Meanwhile, radical Islam continues to expand relentlessly across the Middle East, Africa, Asia and Europe.

Conservatives once derided Wilsonian internationalism - the messianic impulse to spread democracy around the globe - as naive and arrogant. They understood that the warfare state reinforces the welfare state. Both are forms of social engineering. And both must be dismantled.

The same holds for free trade. Traditionally, it has been men of the left - Woodrow Wilson, Franklin D. Roosevelt, John F. Kennedy and Bill Clinton - who have been ideological free-traders. It has been the right - Hamilton, William McKinley, Calvin Coolidge, Taft - who have espoused economic nationalism. Mr. Buchanan has opposed the North American Free Trade Agreement, the World Trade Organization and communist China’s privileged access to the U.S. domestic market.

Trade liberalization was supposed to usher in an era of unprecedented prosperity. Instead, the results have been disastrous: huge annual trade deficits, the loss of millions of manufacturing jobs, eroding wages for working- and middle-class citizens and the deindustrialization of America. The big winner is China. It has emerged as the world’s premier exporting and manufacturing nation. It is a rising superpower, having enriched itself at our expense. Washington has become a vassal of Beijing. For years, Mr. Buchanan was a lone prophet in the wilderness, decrying America’s economic betrayal.

Few have contributed more to modern conservatism than Mr. Buchanan. And even on issues on which I strongly disagree with him - the Israeli-Palestinian conflict, World War II - a rigorous and respectful debate is called for. Liberals silence dissent; conservatives are supposed to uphold freedom of thought and rational civility.

Mr. Buchanan represents a dying breed. He is a nationalist, a free-marketer and an unabashed Catholic. His life’s work amounts to fighting for the preservation of Western civilization with America as its bastion. Despite his defunct critics, Mr. Buchanan’s legacy will stand the test of time.

Jeffrey T. Kuhner is a columnist at The Washington Times and president of the Edmund Burke Institute.

IS THE MUSLIM BROTHERHOOD INFILTRATING THE AMERICAN GOVERNMENT?

Lindsey Williams on Alex Jones Radio - World War III Starts in 2012

Lindsey Williams : Kissinger Plan, Collapse Dollar by Double-Crossing of Arabs in 2012

LOL – This Stock Market Rally Is For Suckers.

Hey, have you heard? The stock market is absolutely soaring right now. The Dow was up 330 points on Monday, and overall the Dow has risen by more than 10 percent since October 3rd. So should we all be throwing our money into the stock market in order to take advantage of this tremendous rally? Well, if you actually believe that the sovereign debt crisis has passed and that we are no longer on the verge of a massive worldwide financial crisis then I have a bridge that I would like to sell you. The stock market may be soaring, but absolutely nothing has been solved. The truth is that this stock market rally is for suckers. The primary reason why stocks rose today was because German Chancellor Angela Merkel and French President Nicolas Sarkozy promised that they would reveal a "comprehensive response" to the European debt crisis by the end of this month. When pressed for specifics, Sarkozy stated that "now is not the moment to go into the details." So do global financial markets really have a legitimate reason to be giddy about the super secret plan cooked up by Angela Merkel and Nicolas Sarkozy, or are Merkel and Sarkozy just blowing a bunch of smoke?

Merkel and Sarkozy have made bold promises in the past, but nothing ever got fixed.

So why should we believe them this time?

If they have real solutions, why don't they just reveal them now?

Why keep us in suspense?

By making these vague promises, Merkel and Sarkozy certainly did give a boost to global financial markets, but they also seriously raised expectations.

Now many in the financial world are expecting something truly significant from Merkel and Sarkozy. For example, CNN has quoted economist Scott Brown as saying the following about the announcement by Merkel and Sarkozy....

"The Europe debt crisis cloud has been hanging over the market for a year-and-a-half now," said Scott Brown, chief economist at Raymond James. "The risks and worries have been intensifying over the last couple of weeks, but after this weekend, the market is expecting something big and concrete that will put the crisis behind us."

So can Merkel and Sarkozy deliver something big?

Of course not.

Merkel has already gotten all of the bailout money that she is going to get out of the Germans. The political will for more bailouts is totally gone in Germany, and many of Germany's top leaders have expressed this in no uncertain terms.

For example, German Finance Minister Wolfgang Schaeuble is publicly admitting that Germany will not be able to contribute any more money to the European bailout fund.

Also, the leader of Bavaria's Social Christians, Horst Seehofer, said after the recent vote on the Greek bailout package that his party would go "this far, and no further".

Recent opinion polls in Germany make it abundantly clear that the German people are overwhelmingly opposed to more bailouts. Squeezing more money out of Germany simply is not going to happen, and that means that squeezing more money out of the rest of Europe is simply not going to happen.

In a recent editorial, Ambrose Evans-Pritchard described the current political situation in Europe in this manner....

Repeat after me:

THERE WILL BE NO FISCAL UNION.

THERE WILL BE NO EUROBONDS.

THERE WILL BE NO DEBT POOL.

THERE WILL BE NO EU TREASURY.

THERE WILL BE NO FISCAL TRANSFERS IN PERPETUITY.

THERE WILL BE A STABILITY UNION – OR NO MONETARY UNION.

Get used to it. This is the political reality of Europe, since nothing of importance can be done without Germany. All else is wishful thinking, clutching at straws, and evasion. If this means the euro will shed some members or blow apart – as it almost certainly does – then the rest of the world must prepare for the day.

So exactly what "big" solution do Merkel and Sarkozy have up their sleeves that does not involve more money?

Can they really produce the goods or are they just blowing smoke?

Perhaps global financial markets should be focusing on what we can see rather than on what we cannot see.

For example, the first major bank bailout in Europe has now happened. Dexia is being bailed out, and it is going to cost more than 100 billion dollars.

The funny thing is that Dexia actually passed the banking stress test that was conducted a few months ago.

What does that say about all of the major European banks that did not pass the stress test?

Also, perhaps global financial markets should focus on all of the credit ratings that are being downgraded all over Europe.

Lately, we have seen a cascade of credit rating downgrades.

For example, Moody’s slashed Italy’s credit rating by three levels last Tuesday, and the other day S&P slashed the credit ratings of seven different major Italian banks.

The problems in Europe continue to grow worse, and yet the stock market is soaring.

It doesn't make a lot of sense, does it?

If Greece defaults, it is going to be a major disaster.

If Italy or Spain defaults, it is going to be financial armageddon.

The world truly is on the verge of a massive financial crisis. If you don't want to believe me, perhaps you might believe some of the top financial officials in the world....

*Bank of England Governor Sir Mervyn King: "This is the most serious financial crisis we've seen at least since the 1930s, if not ever"

*U.S. Treasury Secretary Timothy F. Geithner recently stated that if something is not done quickly, Europe faces "cascading default, bank runs and catastrophic risk."

*IMF advisor Robert Shapiro: "If they can not address [the financial crisis] in a credible way I believe within perhaps 2 to 3 weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system. We are not just talking about a relatively small Belgian bank, we are talking about the largest banks in the world, the largest banks in Germany, the largest banks in France, that will spread to the United Kingdom, it will spread everywhere because the global financial system is so interconnected."

For many more shocking quotes about how bad things have gotten in Europe, just check out this article.

Merkel and Sarkozy are holding really weak cards but they have chosen to raise the stakes anyway.

Their bluff may calm financial markets for a month or two, but in the end they will not be able to stop what is coming.

A great financial collapse is coming to Europe.

Try to get out of the way of the coming avalanche while you still can.

Beijing intervenes to help stabilize banks!

The Chinese government will boost its stakes in the country’s largest banks, as it attempts to shore up slumping financial stocks and to restore investor confidence. Central Huijin, the domestic arm of China’s sovereign wealth fund, will purchase shares in Agricultural Bank of China, Bank of China, China Construction Bank and Industrial and Commercial Bank of China, the official Xinhua news agency announced on Monday. Xinhua added that the purchases by Huijin – its first such public intervention since a similar decision at the onset of the financial crisis three years ago – would “support the healthy operations and development of key state-owned financial institutions and stabilise the share prices of state-owned commercial banks”.

The announcement came too late for the Chinese stock market, which had closed at a 30-month low, but had an immediate effect on late trading in Hong Kong. ICBC’s Hong Kong-listed shares, which had been down 3 per cent, rallied to close up 1 per cent. Analysts said the sharp rebound may have partly reflected short covering. Chinese bank shares have fallen 30 per cent during recent months.

“They [Huijin] are trying to signal to the market that they feel confident,” said Sanjay Jain, a Chinese bank analyst with Credit Suisse. “And of course valuations are depressed, so it’s not a bad idea to buy at these levels for a long-term strategic investor.” Although Chinese growth has so far held up well, the European debt crisis and fears of a double-dip recession in the US have cast a shadow over the country’s economic prospects. With inflation running near three-year highs and debt levels swollen by heavy spending, economists doubt that Beijing can launch another massive stimulus programme, as it did when the global financial crisis struck in 2008.

Beijing also allowed the renminbi to record its biggest one-day gain in years on Monday. It rose 0.6 per cent against the dollar, squeezing traders who have been betting that the currency will weaken in tandem with a slowing economy. The motivation for the sudden appreciation appeared to be diplomatic. The US Senate is poised to vote on Tuesday on legislation that would punish China for deliberately undervaluing the renminbi.

The government, by means of Huijin, is already the majority shareholder in all of the country’s important banks. The Xinhua announcement gave no details about how many more shares the fund intends to buy. Investors have turned against China, driving down commodity prices and dumping Chinese bank shares. Global investors worry that bad debt levels will soar because of a lending spree that began in 2008. To short Chinese bank shares in Hong Kong has become a popular play for investors betting that the world’s fastest-growing major economy will soon slow.

WHAT DO THEY REALLY THINK?

Moody’s Cuts Rating on 12 UK Financial Institutions!

Moody’s ratings agency lowered the rating of 12 U.K. financial institutions on Friday, saying it sees a decreased likelihood of government support for smaller institutions in particular but specifying the move does not reflect a deterioration in the financial strength of the banking system.

“Moody's believes that the government is likely to continue to provide some level of support to systemically important financial institutions, which continue to incorporate up to three notches of uplift.

However, it is more likely now to allow smaller institutions to fail if they become financially troubled,” Moody’s said in a statement.

In addition, Moody's downgraded nine Portuguese banks on Friday, citing the increased risk linked to their holdings of government debt.
“It’s a little bit of a catch-up for Moody’s,” said Louise Cooper at BGC Partners, adding the downgrades were overdue.

Royal Bank of Scotland [RBS-LN 23.62 -0.74 (-3.04%) ] shares opened down by some 5 percent, also pressured by an FT report that Britain’s financial regulator is examining the bank’s portfolio of commercial property loans.

RBS said on Friday it remains one of Europe's strongest capitalized banks.

“A 5 percent move on RBS isn’t a huge move," Cooper said. "Markets are so massively volatile.”

Moody’s cut Lloyds TSB Bank [LLOY-LN 34.66 -1.205 (-3.36%) ] and Santander UK by one notch to A1 from Aa3 and the Co-Operative Bank by one notch to A3 from A2.

RBS and Nationwide Building Society were downgraded by two notches and seven smaller building societies were cut by one to five notches.

KUHNER THE WASHINGTON TIMES: Obama’s October revolution!

President Obama’s shock troops are marching in the streets. Occupy Wall Street - a movement composed of communists, anarchists, socialists and anti-globalization student radicals - is spreading. Protests have swelled in cities including New York, Washington, Los Angeles, Chicago, Denver and Philadelphia. The protesters are gaining influence and numbers. A ragtag group of hippie students has turned into a potent political force.

Occupy Wall Street seeks to demonize big banks, large corporations and capitalism. Its goal is to overturn America’s economic structure. The protesters are calling for wealth redistribution, fees on bank profits and massive tax increases on the rich. Many are demanding a socialist revolution - the confiscation of private property and nationalization of the economy. They are the heirs of Karl Marx, Friedrich Engels and Vladimir Lenin. Their aim is to impose the hammer and sickle upon America.

Leftist radicals, such as Michael Moore and Noam Chomsky, have endorsed the anti-capitalist movement. Both men have glorified authoritarian communist regimes - Fidel Castro’s Cuba, Hugo Chavez’s Venezuela and the old Soviet Union. Their hatred for America has found expression in the rabble on the streets of New York and Washington. Actress Roseanne Barr even has called for the return of the “guillotine.” She wants bankers to be sent to “re-education camps,” and if they still refuse to hand over their profits, they should be beheaded, she says. This is the language of revolutionary terror and Marxist violence.

Mr. Obama has said he “sympathizes” with the protesters - especially their anger at Wall Street and “fat-cat” bankers. For years, he has demonized billionaires and millionaires, jet owners and corporate America. His divisive, irresponsible rhetoric has laid the groundwork for Occupy Wall Street.

The White House connection is even deeper. The protest’s main players all have ties to the Obama administration. Its primary organizer is former Obama “green-jobs czar” Van Jones. Mr. Jones is a self-avowed communist and follower of Saul Alinsky, the radical community organizer who also was Mr. Obama’s intellectual mentor. Mr. Jones said October is the month of the long-awaited “progressive offensive” - the watershed moment when students, labor unions, socialists and civil rights activists coalesce into an anti-Tea Party to blunt Middle America’s growing opposition to Mr. Obama.

Occupy Wall Street also is being supported by MoveOn.org. The group was one of the first to back Mr. Obama’s presidential candidacy when he was still an obscure senator from Illinois. The protests are being funded by socialist billionaire George Soros - a key Obama ally. And the protesters are being joined by big labor, the administration’s most powerful constituency.

Hence, Occupy Wall Street is not a spontaneous uprising of disenchanted citizens frustrated with corporate plutocracy and capitalist excess. Rather, it is a planned, manufactured attempt to prop up Mr. Obama’s failed presidency. It is a page taken straight from the Alinsky playbook: Demonize bankers and businessmen in order to divert attention from the real source of our economic woes, Mr. Obama’s policies.

The president inherited a recession, and he has deepened it. His out-of-control spending and trillion-dollar deficits have brought us to the brink of bankruptcy. America’s debt credit rating has been downgraded. Growth has slowed to less than 1 percent. Unemployment has risen above 9 percent. Inflation is rising as consumer confidence declines. Obamacare is strangling job creation and business investment. Mr. Obama has waged war upon the private sector. If those students are truly angry about joblessness and a bleak future, they should direct their fury at the president.

Instead, they mouth leftist pieties. They are a spoiled, dependent and illiterate generation that believes it is entitled to government handouts, state coddling and permanent prosperity. They don’t wish to be self-reliant and make their own way; rather, they want others - successful, productive members of society - to transfer their hard-earned money to subsidize their indolence. They are the kind of deadbeats the welfare state eventually produces - lazy, whining and shameless.

Alinsky argued that an economic crisis inevitably fosters a political crisis. The key for the hard left was to take advantage of our misery to seize power and impose a socialist regime. By sowing street mayhem, Occupy Wall Street is hoping to demoralize and distract Middle America into believing big business is the evil culprit for the financial collapse. The very opposite, however, is true. Meddlesome government intervention caused the housing bubble, the subprime mortgage debacle and the reckless bank lending practices that triggered the Great Recession. The way out is not more statism; it is less. Only a vibrant free market can restore economic recovery and stimulate job growth.

The protesters are not interested in real solutions. They are political activists masquerading as concerned citizens. Progressives are desperate to keep Mr. Obama in office. This is why the president is deliberately encouraging Occupy Wall Street. He hopes to create enough bedlam and then target Republicans, the Tea Party and the rich. He is pursuing the Alinsky strategy of divide and conquer, pitting interest groups and different classes against each other.

Mr. Obama has unleashed class hatred and racial hostility in the pursuit of state socialism. It is clear that his 2008 campaign slogan of “hope and change” was really a thinly veiled rallying cry, not to save the nation, but to precipitate the downfall of American capitalism.

Jeffrey T. Kuhner is a columnist at The Washington Times and president of the Edmund Burke Institute.

World facing worst financial crisis in history, Bank of England Governor says...

"The world is facing the worst financial crisis since at least the 1930s “if not ever”, the Governor of the Bank of England said last night."

Sir Mervyn King was speaking after the decision by the Bank’s Monetary Policy Committee to put £75billion of newly created money into the economy in a desperate effort to stave off a new credit crisis and a UK recession.
Economists said the Bank’s decision to resume its quantitative easing [QE], or asset purchase programme, showed it was increasingly fearful for the economy, and predicted more such moves ahead.
Sir Mervyn said the Bank had been driven by growing signs of a global economic disaster.
“This is the most serious financial crisis we’ve seen, at least since the 1930s, if not ever. We’re having to deal with very unusual circumstances, but to act calmly to this and to do the right thing.”
Announcing its decision, the Bank said that the eurozone debt crisis was creating “severe strains in bank funding markets and financial markets”.
RELATED ARTICLES
Printing more money won’t work this time 06 Oct 2011
A desperate measure for desperate times 06 Oct 2011
Jeremy Warner: Bank of England hits the panic button 06 Oct 2011
Obama urges EU leaders to 'move fast' on debt crisis. 06 Oct 2011
FTSE: market report live 06 Oct 2011
BoE increases stimulus: full text of statement 06 Oct 2011
The Monetary Policy Committee [MPC] also said that the inflation-driven “squeeze on households’ real incomes” and the Government’s programme of spending cuts will “continue to weigh on domestic spending” for some time to come.
The “deterioration in the outlook” meant more QE was justified, the Bank said.
Financial experts said the committee’s actions would be a “Titanic” disaster for pensioners, savers and workers approaching retirement. Sir Mervyn suggested that was a price worth paying to save the economy from recession.
Under QE, the Bank electronically creates new money which it then uses to buy assets such as government bonds, or gilts, from banks. In theory, the banks then use the cash they gain to increase their lending to businesses and individuals.
By increasing the demand for gilts, QE pushes down the interest rate yields paid to holders of these and other bonds. Critics of the policy say it pushes up inflation and drives down sterling.
The National Association of Pension Funds yesterday called for urgent talks with ministers to address the negative impact of lower gilt yields on pension funds. Joanne Segars, its chief executive, said QE makes it more expensive for employers to provide pensions and will weaken the funding of schemes as their deficits increase. “All this will put additional pressure on employers at a time when they are facing a bleak economic situation,” she said.
Ros Altman, of Saga, said the latest round of QE was “a Titanic disaster” that would increase pensioner poverty. As well as fuelling inflation, she said, falling bond yields would make annuities more expensive, “giving new retirees much less pension income for their money and leaving them permanently poorer in retirement”.
The MPC also voted to keep the Bank Rate at its historic low of 0.5 per cent, another decision that hurts savers. Yesterday, protesters outside the Bank’s headquarters smashed a giant piggy bank to symbolise the situation of pensioners and others forced to raid savings to keep up with the rising cost of living.
Asked about the plight of savers, Sir Mervyn said it was more important to support the wider economy than to support them. He suggested that savers would not be helped by deliberately pushing the British economy into recession. Yesterday’s decision was the first move on QE since 2009, during the global credit crisis, when the Bank injected £200 billion into the economy.
Some analysts believe that this round of QE could be less effective than the previous one, forcing the Bank to create even more money this time.
Michael Saunders of Citigroup, forecast that there could be as much as £225 billion more QE by next year. “I think they will do lots more QE,” he said. “It’s both that the economy is weak but also that the MPC’s view is that QE is not a very powerful tool, or rather it takes a large amount of QE to have much effect on the economy.”
The Bank is supposed to keep inflation near a target of 2 per cent. Inflation now stands at 4.5 per cent, and the Bank admitted it is likely to hit 5 per cent as soon as this month. The Bank’s own research shows that as well as stimulating the economy, QE pushes up prices.
Sir Mervyn insisted that yesterday’s move was still consistent with the 2 per cent inflation target, saying that the slowing economy means inflation could actually fall below that mark “by the end of next year or in 2013”.
The Governor insisted that the MPC’s decisions had been the correct response to events. “The world economy has slowed, America has slowed, China has slowed, and of course particularly the European economy has slowed,” he said. “The world has changed and so has the right policy response.”
City traders took heart from the Bank’s move to boost growth, with the FTSE 100 rising 3.7 per cent to 5,29, its biggest two-day gain since 2008.
The Bank’s decision came after mounting political pressure from ministers worried that Sir Mervyn was not reacting urgently enough to the darkening global economic outlook.
George Osborne, the Chancellor, welcomed the Bank’s move, saying: “The evidence shows that it [QE] will help keep interest rates down and boost demand and that will be a help for British families.”

Dexia clients fret as Belgium, France plan rescue! HERE WE GO......

(Reuters) - Worried customers withdrew funds and overloaded the telephone helpline of struggling bank Dexia (DEXI.BR) on Wednesday as governments raced to put a rescue plan in place and stop its troubles from deepening the euro zone debt crisis.

One French politician also expressed concern that the problems facing Franco-Belgian Dexia, a key player in municipal funding, might contaminate other banks and hit already tight financing for local authorities.

Belgium and France hope to finalize by Thursday a rescue plan for the bank, now in need of a second bailout in three years because of its exposure to Greek debt and trouble accessing wholesale funds.

"We have had some customers taking money out, but it has been limited," a Dexia spokeswoman said. "We have faced many questions and we have been explaining the situation a lot."

Dexia's telephone helpline began with a warning that its system was 'overloaded'. Otherwise, there was no obvious sign of panic or queues at Dexia's branches in Brussels.

"It doesn't worry me, I know it will be okay," said Mora Ba, a 39-year-old plumber, coming out of a branch in Brussels.

Claude Bartolone, a lawmaker for the Seine Saint-Denis department north of Paris, said details were urgently needed.

"It would be unacceptable to contaminate the Banque Postale and especially the Caisse des Depots, given the trust that exists between it and local governments," he said.

READ THE REST OF THE STORY CLICK HERE.

Italy downgrade deepens contagion fears over euro debt crisis!

Ratings agency Moody's slashes Italy debt rating by three points, increasing pressure on European governments trying to contain financial crisis.
Italy's sovereign debt rating has been cut for the second time in as many weeks, with ratings agency Moody's citing "sustained and non-cyclical erosion of confidence" as it slashed its forecast for the country.

In a report released after US stock markets closed on Tuesday, Moody's downgraded Italy's government bond ratings from Aa2 to A2 with a "negative outlook", suggesting further cuts could be to come. The move threatens to increase Italy's cost of borrowing, and will add yet more pressure to European finance ministers now wrestling with a financial crisis that has spread across the continent.

CLICK HERE TO READ THE REST OF THE STORY.

Part1/4 Meltdown - The Secret History of the Global Financial Collapse 2010.