Grant Montgomery - The Path of Weakness

The US economy explained in 135 seconds

2011-06-16T18:22:00.001-03:00

Former Labor Secretary Robert Reich said he could explain the problems with the economy in less than 2 minutes, 15 seconds—and he did it (with illustrations to boot). Check it out.

The Day the Dollar Dies

2010-12-16T10:41:00.000-04:00

What will happen the day the US Dollar dies?

Click here to see the news before the news happens:

Bankruptcy of U.S. is Mathematical Certainty

2010-11-06T08:22:00.001-03:00

John Allison, who for two decades served as chairman and CEO of the nation's 10th largest bank, told CNSNews.com it is a “mathematical certainty” that the United States government will go bankrupt unless it dramatically changes its fiscal direction. “I think the first thing we have to realize is where we’re going and to face it objectively,” Allison responded when asked about the trillion-dollar-plus deficits the federal government has run for three straight years, the more than $13 trillion in federal debt, and the $61.9 trillion long-term shortfall the government faces if the government is to pay all the benefits it has promised through entitlement programs.

“If you run the numbers … the United States goes bankrupt,” said Allison. “It’s a mathematical certainty. … Now, countries don’t go bankrupt the way companies do. They don’t file bankruptcy. They usually hyper-inflate. They print a bunch of paper money, or they become Third World economies like Argentina.”

Dollar at risk of becoming “toxic waste”

2010-10-29T03:14:00.000-03:00

The dollar's slump could get far worse if the dollar index takes out last year's low, Robin Griffiths, technical strategist at Cazenove Capital, told CNBC. "If the (dollar index) takes out the low that was made roughly a year ago I really think that will not only encourage more sales, it will cause a little bit of minor panic," Griffiths said. "A year ago it was deemed too cheap, if it goes any lower than that it's actually become toxic waste."

The dollar resumed its recent downtrend in the wake of a meeting of finance ministers from the Group of 20 nations at the weekend. The meeting failed to yield a definitive agreement on currencies, putting selling pressure on the greenback.

"The dollar is being trashed, we've actually had effectively devaluation of about 14 percent in the last two months," Griffiths said.

Mass mortgage document processing, dubbed “robo-signing”

2010-10-22T15:34:00.001-03:00

According to RealtyTrac, in September banks repossessed a home roughly every 30 seconds. Every 30 seconds, banks—many that received funds from the Bush administration’s TARP, and that may be using fraudulent practices—foreclose on an American family’s dream of home ownership.

Bank of America, JPMorgan Chase, GMAC and other big mortgage lenders recently suspended most foreclosure proceedings, following revelations that thousands of their foreclosures were being conducted like “foreclosure mills,” with tens of thousands of legal documents signed by low-level staffers with little or no knowledge of what they were signing.

[One example of “robo-signing, whereby a lower level overseer] received 10,000 mortgage foreclosure documents to process in one month. Based on an eight-hour workday, he would have had to read, verify and sign, in the presence of a notary, about one document per minute. He admitted to signing documents without reading them or checking the facts about homeowners said to be in default. And [he] was just one of many “robo-signers.”

Why so many U.S. jobless and underemployed?

2010-10-06T10:21:00.001-03:00

Why are so many jobless and underemployed in America? One clue is that US corporations are now hoarding all their cash instead of investing it. How much cash? More than $1.6 trillion. Read more

And US companies continue to move manufacturing operations to a low-wage country, manufacture the product there using ultra cheap labor, with no regulations or environmental concerns, and then ship the product to the US for consumption, paying no tariff or tax on that shipment into our country. Up to 60% of our imports come from this kind of operation. This is what has cost our country so many jobs.

And from a purely business and profits point of view, why on earth would America's biggest banks and corporations make any of their money available for loans to new and small businesses in the USA when they can "earn' so much more with that money by either building new factories in China, or using it to gamble on derivatives and stocks in the great Wall Street casino?

$12.8 trillion to rescue the U.S. economy

2010-09-06T17:32:00.003-03:00

We all know about TARP, the Troubled Asset Relief Program, which spent $700 billion in taxpayers’ money to bail out banks after the financial crisis. That amount was scrutinized by Congress and the media. (What it actually accomplished is another story!)

But the focus of this post is that that $700 billion is just a small part of a much larger pool of money that has gone into propping up our nation’s financial system.

And most of that taxpayer money hasn’t had much public scrutiny at all.

According to a team at Bloomberg News, at one point last year the U.S. had lent, spent or guaranteed as much as $12.8 trillion to rescue the economy.

Just to refresh your memories on what one "trillion" dollars is:
That's one million times $1 million.
Or one thousand times $1 billion.

Read more

Moody’s warns of full-blown sovereign debt crisis

2010-08-23T19:00:00.001-03:00

The Great Recession has dramatically shrunk the time left to prevent a full-blown sovereign debt crisis as the demographic time-bomb threatens, US rating agency Moody's has warned.

Moody's fears that the US will crash through its safety buffer by 2013 if growth falters with interest payments topping 14pc of tax revenues. The debt-to-revenue ratio has already doubled in three years to 430pc.

The US, UK, Germany, France, and Spain are all at risk of an "interest rate shock", either because they must roll over a cluster of short-term debt (US, France, Spain) or because deficits are so large.

The Telegraph

The Measure of American Poverty

2010-07-13T04:12:00.002-03:00

New poverty figures to be published in September: More than 15 million Americans are unemployed, homelessness has increased by 50 percent in some cities, and 38 million people are receiving food stamps, more than at any time in the program’s almost 50-year history.

But a number of states have become convinced that the federal figures actually understate poverty, and have begun using different criteria in operating state-based social programs.

According to Richard Bavier, a former analyst for the federal Office of Management and Budget, already available data about employment rates, wages and food stamp enrollment suggest that an additional 5.7 million people were officially poor in 2009. That would bring the total number of people with incomes below the federal poverty threshold to more than 45 million.

The poverty rate, Bavier expects, will hit 15 percent — up from 13.2 percent in 2008, when the Great Recession first started to take its toll.

[McClatchy News Service]

Those who don’t remember history are doomed to repeat it

2010-07-06T11:24:00.000-03:00

The Dow Jones Industrial Average is repeating a pattern that appeared just before markets fell during the Great Depression.

And says Robert Reich, former US labor secretary, "The economy is still in the gravitational pull of the Great Recession. All the booster rockets for getting us beyond it are failing."

The US is still trapped in depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP.

The longest and deepest Recession since the Great Depression

2010-07-03T16:51:00.002-03:00

The recession has directly hit more than half of American working adults, pushing them into unemployment, pay cuts, reduced hours at work or part-time jobs, according to a new Pew Research Center survey.

The biggest problem for the recovery remains the number of people who are unemployed. Adding to that is the growing number of people who stand to lose government support while they search for work. More than a million people have lost benefits and more could be cut off now that Congress has failed to extend federal jobless aid.

The economic shock, which destroyed 20 percent of Americans' wealth, has jolted many Americans into a new, more austere reality, which is likely to have lasting consequences for an economy fueled mostly by consumer spending.

A Depression only in hindsight?

2010-06-11T01:49:00.001-03:00

The rally that recently ended in April 2010 came after a crash that was actually slightly more severe than the 1929 crash (53% versus 48%). It took the market up nearly 80% from the low! The recent rally also lasted longer than the 1930 rally did--a year, as opposed to 6 months.

It may be the start of a great new bull market, one that will shake off the current "correction" and roar back to the market's old highs. On the other hand, it may yet also be another version of what happened in 1930--the start of another bear market that will take the market down for years.

Importantly, we won't know for sure what today's market is until we look at it with the genius of 20/20 hindsight. Even as late as 1931, they didn't know they were in a "Great Depression" yet.

What things looked like in the Spring of 1929

Yahoo Finance

US faces one of the biggest budget crunches in world

2010-05-24T21:33:00.001-03:00

Under the Obama administration's current fiscal plans, the national debt in the US (on a gross basis) will climb to above 100 percent of GDP by 2015 - a far steeper increase than almost any other country in the world.

France and Germany the largest holder of Greek debt

2010-05-07T03:43:00.000-03:00

France's banking sector has the second-largest exposure to Portugal and Spain debt loads, after Germany, according to the BIS.

And European banks have more at-risk assets in Portugal and Spain than in Greece.

Eurozone PIIGS sovereign debt the new subprime?

2010-05-01T02:36:00.000-03:00

The eurozone "lurched towards the endgame" as Standard & Poor's relegated Greece's sovereign credit rating to "junk" status, downgraded Portugal by two steps to A-, and the yields on Greek debt climbed beyond 15 per cent, a signal that the market regards a default as virtually certain.

The course of events has parallels with the banking crises of the autumn of 2008, when successive institutions came under attack and their interrelationships and size devastated confidence in the financial system. For many observers, it was a matter of "for Lehman's, read Greece", as sovereign debt became the new sub-prime. Again there was classic domino effect: bond yields also rose in the other so-called PIIGS group of highly indebted nations – Ireland, Spain and even Italy, as investors demanded higher risk premia to take on these governments' debts.

It raises fears of a sovereign debt crisis on a pan-eurozone scale, and beyond even the resources of Germany and France to resolve, and could leave the very future of the euro in doubt. Should that happen, or appear remotely likely, then it could plunge the world economy into a further crisis of confidence.

The Independent

Goldman Sachs in line for a small slap on the wrist?

2010-04-20T15:23:00.008-03:00

It is evident that the economic crash wasn’t a crash for the people who caused it. While the 99% have suffered from the economic crash, the elite 1 per centers that caused it have benefited disgustingly disproportionately.

Goldman Sachs executives are enduring a well-deserved barrage of questions from the investment community and reporters for its role in creating a complex mortgage security which prompted federal fraud charges against the company. Last week, the SEC filed a civil suit against Goldman, alleging that the New York City-based company allowed hedge fund Paulson & Co., who made billions of dollars betting against the U.S. mortgage market, to help select securities in a so-called collateralized debt obligation, or CDO. The SEC also charged Goldman with failing to tell investors that Paulson was betting that the value of the investment would decline. According to the SEC, investors in the security ultimately lost $1 billion. Conspicuously absent from the two conference calls was Goldman Sachs CEO Lloyd Blankfein, who has been under intense scrutiny in recent months on a number of issues -- including the firm's employee bonus program.

Oh and did I mention, that courtesy of the tax payer bailout, Goldman Sachs just had their most profitable quarter in their 140-year history? ---And last year, in recognition, Goldman Sachs paid only 1% in taxes!

Prediction: Goldman Sachs will get away with a slap on the wrist (just like Ken Lewis from Bank of America, and John Thain of Merrill got away with their investor fraud case). Crossing the line without breaking the letter of the law is an art perfected by these firms and their armies of lawyers.

Bernanke warns on higher taxes and/or Medicare and Social Security entitlement

2010-04-09T01:23:00.008-03:00

Federal Reserve Chairman Ben S. Bernanke has warned that Americans may have to accept higher taxes or changes in cherished entitlements such as Medicare and Social Security if the nation is to avoid staggering budget deficits that threaten to choke off economic growth.

"To avoid large and ultimately unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above," he said.

His remarks highlighted the difficulties posed by funding these entitlement programs over the long term. With the population aging and medical costs rising faster than inflation, Medicare is set to become a major drain on the federal budget in the coming decades, though the recently passed health-care bill has delayed the date when the program will begin to require big infusions of cash.

Former IMF chief warns of Great Depression II

2010-03-10T01:31:00.004-04:00

Former IMF chief economist Simon Johnson warns: "We're running out of time ... to prevent a true depression."

Johnson says unless we break Wall Street's "stranglehold" we will be unable prevent the Great Depression 2.

Meanwhile, 43% of U.S. workers say they have less than $10,000 in savings, according to the Employee Benefit Research Institute's annual Retirement Confidence Survey.

Joseph Stiglitz calls Federal Reserve corrupt

2010-03-07T00:08:00.009-04:00

One of the world's leading economists said that the very structure of the Federal Reserve system is so fraught with conflicts that it's "corrupt."

Nobel laureate Joseph Stiglitz, a former chief economist at the World Bank, said that if a country had applied for World Bank aid during his tenure, with a financial regulatory system similar to the Federal Reserve's -- in which regional Feds are partly governed by the very banks they're supposed to police -- it would have raised alarms.

To Stiglitz, the core issue is that regional Fed banks, such as the New York Fed, have clear conflicts of interest -- a result of the banks being partly governed by a board of directors that includes officers of the very banks they're supposed to be overseeing.

The New York Fed, which was led by current Treasury Secretary Timothy Geithner during the time leading Wall Street firms like Citigroup, JPMorgan Chase, AIG, and Goldman Sachs were given hundreds of billions of dollars in taxpayer bailouts, presently has on its board of directors Jamie Dimon, the head of JPMorgan Chase. He replaced former Citigroup chairman Sanford "Sandy" Weill.

"So, these are the guys who appointed the guy who bailed them out," Stiglitz said. "Is that a conflict of interest?" he asked rhetorically.

"The reason you talk about governance is because in a democracy you want people to have confidence," Stiglitz said. "This is a structure that will undermine confidence in a democracy."

[Excerpt of a Huffington Post article]

Bernanke delivers blunt warning on U.S. debt

2010-02-27T01:59:00.000-04:00

With uncharacteristic bluntness, Federal Reserve Chairman Ben S. Bernanke warned Congress that the United States could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money to pay for the ballooning federal debt.

"It's not something that is 10 years away. It affects the markets currently," he told the House Financial Services Committee.

Mr. Bernanke for the first time addressed concerns that the impasse in Congress over tough spending cuts and tax increases needed to bring down deficits will eventually force the Fed to accommodate deficits by printing money and buying Treasury bonds — effectively financing the deficit on behalf of Congress and spurring inflation in the process.

Some economists at the International Monetary Fund and elsewhere have advocated this approach, suggesting running moderate inflation rates of 4 percent to 6 percent as a partial solution to the U.S. debt problem. But the move runs the risk of damaging the dollar's reputation and spawning much higher inflation that would be debilitating to the U.S. economy and living standards.

[The Washington Times]

National Debt to increase over 6 Trillion Dollars in next 10 years

2010-02-01T01:11:00.009-04:00

In its report released last week, the Congressional Budget Office (CBO) projected there will be $6.074 trillion in new national debt over the next 10 years if current laws governing taxing and spending are maintained.

In other words, the U.S. Treasury will need to borrow an additional $6 trillion between 2011 and 2020 to cover expected federal spending.

The CBO report adds: “With such a large increase in debt, plus an expected increase in interest rates as the economic recovery strengthens, interest payments on the debt are poised to skyrocket.”

“The government’s annual spending on net interest will more than triple between 2010 and 2020 in nominal terms, from $207 billion to $723 billion, and will more than double as a share of GDP, from 1.4 percent to 3.2 percent.”

For a refresher on how much a Trillion dollars is:

A trillion is a thousand billion dollars!

If you spent $1,000 per second, it would take almost 30 years to spend 1 trillion dollars!

Or if you spent a million dollars every day since Jesus was born, you still wouldn't have spent a Trillion!

One trillion $1 bills stacked one on top of the other would reach nearly 68,000 miles (about 109,400 kilometers) into the sky, or about a third of the way from the Earth to the moon.

U.S. to make cuts in Social Security, Medicare, and Education in 2010?

2010-01-10T14:04:00.002-04:00

Several European countries --first Iceland, then Ireland, now Greece,etc. -- are mired in inescapable debt and bankrupt nations, the result of crashing banks, bank bailouts, and soaring unemployment. The U.S. and U.K. watch from a distance, knowing their turn is next.

Recently, Moody’s released their notorious “misery index” — the nations that are most sunken in debt and least able to pay it back, requiring that “special measures” be taken to prove to investors that these governments are able to repay their loans.

The biggest losers of the misery index were not surprises and included Iceland, Ireland, and Greece But ranking right behind bankrupt Iceland was the United States: the once-proud super-power.

The U.S. and the U.K. need not make immediate cuts like Greece, Ireland, Spain, but they must make immediate plans to make major cuts, explains Moody’s chief of rating nations’ credit, Pierre Cailleteau: “…this will be the year [2010] where both the U.S. government and the U.K. government will have to articulate a credible plan to address their problems of large debt.”

John Chambers of Standard & Poor’s was more blunt: "The U.S. government, like the U.K. government, … is going to need to draw down fiscal stimulus, pare expenditures [make cuts], raise revenues [taxes] and probably take a look at [cuts] in their entitlement programs" [Social Security, Medicare, and Education]

[From a commentary by Shamus Cooke]

Countries pulling the strings on a stronger or weaker Dollar

2010-01-01T03:23:00.001-04:00

If China, Russia and OPEC sold their U.S. Dollar surpluses, they would inflict losses in these holdings on themselves in the process of undermining not just the U.S. but the global economy. Each could react in different ways:

1. O.P.E.C. oil producers are dependent on the States for the security of their sovereignty. The House of Saud dare not reject the Dollar oil price or they will lose the physical protection of the U.S. …However, this may be changing as we now hear the news of a new Gulf currency that may be used to price oil in. If this does happen, then a major nail will have been driven into the coffin of the $ as the global reserve currency.

2. Russia needs to maximize oil income to keep itself economically sound. So it will accept the Yuan from China but won’t reject the Dollar payments from other countries. It is diversifying reserves as far as it can without damaging the Dollar exchange rate and would love to jettison the Dollar, but for the sake of the value of its reserves and the stability of the world’s currency markets, including the Ruble market, it won’t. (As one Treasury Official said, the $ may be our currency, but it’s your problem.)

3. China is stuck with around $3 trillion in its reserves, firmly snared in the $ trap. It is unhappy with this and is diversifying as far as it can [including into gold]. Its unshakeable answer is to peg the Yuan to the Dollar and reap the benefits of sucking the manufacturing out of the States and selling it cheap goods. There will be no loosening of the ‘peg’ until the problem of China’s Dollar reserves are solved. It is therefore turning the disadvantage into an advantage that is bleeding the U.S. of its strength. By doing this, the advantage of a weakening Dollar to the States is neutralized.

[Excerpt from Gold Forecaster]

U.S. taxpayers' Christmas present: Congress raises debt ceiling to $12.4 trillion

2009-12-24T13:19:00.005-04:00

The Senate voted today to raise the ceiling on the government debt to $12.4 trillion, a massive increase over the current limit and a political problem that President Barack Obama has promised to address “next year”.

This one vote raised the ceiling on government debt by $290 Billion.

The current measure was deemed needed as a result of the out-of-control budget deficit, which registered $1.4 trillion for the budget year that ended in September.

The current debt ceiling is $12.1 trillion and is set to be reached by Dec. 31.

Is Sovereign Debt the New Subprime?

2009-12-18T15:52:00.003-04:00

Just as many subprime borrowers were unable to make their mortgage payments in 2007 and 2008, investors now fear certain nations will be unable to pay their debts in the year ahead. And sovereign debt defaults are potentially even more catastrophic as they can lead to geopolitical instability, societal unrest and even war. And there will also be economic ramifications for investors worldwide, putting America's (and the globe's) fragile recovery at great risk.

"Sovereign debt" refers to the debt of nations. Just as the U.S. issues Treasuries backed by the "full faith and credit" of the government, other nations sell bonds in order to raise money to pay for programs ranging from armies to public healthcare.

To varying degrees, Greece, Spain, Ukraine, Austria, Latvia, Mexico are just a handful of the nations viewed at risk of defaulting. Meanwhile, Dubai only just avoided a similar fate thanks to a $10 billion bailout from their oil-rich neighbor Abu Dhabi.

Excerpt of a Yahoo article by Aaron Task

The Geography of the U.S. Recession

2009-12-16T02:24:00.003-04:00

Watch unemployment spread across the country, the deteriorating transformation of the U.S. economy, beginning January 2007 -- approximately one year before the start of the recession -- to the most recent unemployment data available today.

Watch video

Pentagon War Budget to increase an extra $60 Billion

2009-12-07T14:16:00.001-04:00

For those of you who hoped — or worried — that the Obama administration would mean a big cut to defense spending, think again.

The Office of Management and Budget has approved a nearly $60 billion increase in the Pentagon’s base budget between fiscal years 2011 and 2015,” InsideDefense.com reports.

That includes an extra $15 billion for the next fiscal year — “a 2.7 percent increase after inflation.

Soon half of our U.S. National Debt will be interest!

2009-11-27T04:03:00.005-04:00

Here's a new way to think about the U.S. government's epic borrowing: More than half* of the $9 trillion in debt that Uncle Sam is expected to build up over the next decade will be interest. (*$4.8 trillion)

Why that's a problem:In 2015 alone, the estimated interest due - $533 billion - is equal to a third of the federal income taxes expected to be paid that year, said Charles Konigsberg, chief budget counsel of the Concord Coalition, a deficit watchdog group.

And then it's Vicious Circle 101 - well known to anyone who has gotten too into hock with Visa and MasterCard. The more debt the country racks up, the more likely it becomes that creditors could demand a higher interest rate for making new loans to the government. Higher rates in turn make it harder to pay off the underlying debt because more and more money is going to pay off interest - money, by the way, which is also borrowed.

CNN

U.S. National Debt projected to exceed GDP by 2019

2009-11-20T02:11:00.005-04:00

The U.S. National Debt presently amounts to just under $40,000 for every man, woman and child in the States.

It has increased about $1.6 trillion on Mr. Obama’s watch, after climbing $4.9 trillion during the presidency of George W. Bush.

By 2019, the National Debt is projected to reach $24.5 trillion — exceeding the Gross Domestic Product projected for 2019!

How much is a Trillion Dollar?

Broader Measure of U.S. Unemployment at 17.5%

2009-11-09T03:22:00.001-04:00

The New York Times indicates that unemployment is at its highest level since the Great Depression.

In all, more than one out of every six workers — 17.5 percent — were unemployed or underemployed in October. This includes the officially unemployed, who have looked for work in the last four weeks, and also discouraged workers who have looked in the past year, as well as millions of part-time workers who want to be working full time.

The broader rate is highest today, sometimes 20 percent, in states that had big housing bubbles, like California and Arizona, or that have large manufacturing sectors, like Michigan, Ohio, Oregon, Rhode Island and South Carolina.

It is a strange combination: workers who still have a job are doing better than in other deep recessions, while the the unemployment and underemployment figures have risen to their highest level since the Depression.

More bank failures

2009-11-01T13:47:00.006-04:00

Regulators on Friday closed 9 banks in California, Illinois, Texas and Arizona, boosting the number of failed U.S. banks this year to 115.

Nine is the most in one day that the FDIC has shut since the financial crisis began taking down banks last year. The 115 total failures are the most in a year since 1992 at the height of the savings-and-loan crisis.

The FDIC expects Friday's closings will cost $2.5 billion. To replenish their fund, the FDIC wants the roughly 8,100 insured banks and savings institutions to pay premiums in advance that would have been due over the next three years.

Hundreds more bank failures are expected to raise the cost to around $100 billion through 2013. Last July, FDIC Chairman Sheila Bair predicted that the bank failure rate will increase tenfold.

Gold at $2,000 or more an ounce

2009-10-19T15:40:00.001-03:00

Gold’s rally to record prices is still 53 percent below the 1980 inflation-adjusted peak, an indicator it will continue to climb in value.

While gold rose this year to $1,072 an ounce (on Oct. 14), consumer prices have almost tripled in the past three decades, eroding the metal’s value. Meaning bullion hasn’t kept pace with the cost of bread, fuel or medical care.

In 1980, gold hit a then-record $873 an ounce. In today’s dollars, that would be $2,287, according to the U.S. Labor Department’s inflation calculator.

The Richman, Poorman story continues

2009-10-18T12:25:00.003-03:00

Bloomberg reports that Treasury Secretary Timothy Geithner’s closest aides earned millions of dollars a year working for Goldman Sachs, Citigroup and other Wall Street firms. Yet, they are overseeing the handout of hundreds of billions of dollars of taxpayer funds to their former employers.

The gifts of billions of dollars of taxpayers’ money provided the banks with an abundance of low cost capital that has boosted the banks’ profits, while the taxpayers who provided the capital are increasingly unemployed and homeless.

Goldman Sachs has made so much money during this year of economic crisis that enormous bonuses are in the works. London Evening Standard reports that Goldman Sachs’ “5,500 London staff can look forward to record average payouts of around $800,000 each. The highest paid executives will get bonuses of $16 million.“

Meanwhile, New York City’s homeless shelters have reached the all time high of 39,000, 16,000 of whom are children. Long-term unemployment has become a serious problem across the country. Hundreds of thousands more Americans are beginning to run out of extended unemployment benefits. A record number of Americans, more than one in nine, are on food stamps. Mortgage delinquencies are rising as home prices fall.

Meanwhile, the political system is unresponsive to the American people. It is monopolized by a few powerful interest groups that control campaign contributions.

[Excerpts of an article by Paul Craig Roberts]

Arabs, China, Russia, Japan and France to end dollar dealings for oil

2009-10-07T01:05:00.002-03:00

Robert Fisk writing in The Independent asserts that Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs.

The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said.

UN calls for new reserve currency

2009-10-06T19:21:00.003-03:00

The United Nations called on Tuesday for a new global reserve currency to end dollar supremacy which has allowed the United States the "privilege" of building a huge trade deficit.

"Important progress in managing imbalances can be made by reducing the reserve currency country’s 'privilege' to run external deficits in order to provide international liquidity," UN undersecretary-general for economic and social affairs, Sha Zukang, said.

Speaking at the annual meetings of the International Monetary Fund and World Bank in Istanbul, he said: "It is timely to emphasize that such a system also creates a more equitable method of sharing the seigniorage derived from providing global liquidity.”

AFP