(Reuters) - A new United Nations report released on Tuesday(June,29,2010) calls for abandoning the U.S. dollar as the main global reserve currency, saying it has been unable to safeguard value. read more...
Our old friends George Soros and Joseph Stiglitz seem to be trying to nudge the world closer and closer toward global governance. We learn from the World Commission on the Social Dimension of Globalization that SDR's(Special Drawing Rights) "were created by the IMF in 1969 as an international reserve asset to supplement members' existing reserve assets. They are valued on the basis of a basket of key national currencies and serve as the unit of account of the IMF. SDRs are issued to member states by the IMF according to a quota and can be converted into hard currency." And, that, the "primary motive for creating SDRs was to promote international financial stability by providing a permanent increase in the world stock of reserves and hence preventing shortages of international liquidity from occurring. However, the collapse of the Bretton Woods system and the shift to floating exchange rates lessened the need for SDRs. The current interest in SDRs result from proposals by George Soros and Joseph Stiglitz to use SDR allocations for financing for development." read more...
As of Monday the Chief of IMF(International Monetary Fund) said "he would like to consider putting the Chinese yuan into the basket of currencies that make up the Fund's Special Drawing Rights "the sooner the better", but its value first needed to be freely determined by the market." read more...
We discover that China's central bank revalued the Yuan ahead of the recent G20 meeting to an all new high. read more...
And, our globalist friend Soros attacked the fiscal policies of Germany: ""German policy is a danger for Europe, it could destroy the European project," he told German weekly Die Zeit." read more... In his speech he outlines how we got into this crisis, how the bad practices of the current economic policies generated it, and how his economic diagnosis begins to apprehend it. read more...
At the heart of his diagnosis is his theory of reflexivity which utilizes an understanding of both negative and positive feedback loops: "Reflexivity sets up a feedback loop between market valuations and the so-called fundamentals which are being valued. The feedback can be either positive or negative. Negative feedback brings market prices and the underlying reality closer together. In other words, negative feedback is self-correcting. It can go on forever and if the underlying reality remains unchanged it may eventually lead to an equilibrium in which market prices accurately reflect the fundamentals. By contrast, a positive feedback is self-reinforcing. It cannot go on forever because eventually market prices would become so far removed from reality that market participants would have to recognize them as unrealistic. When that tipping point is reached, the process becomes self-reinforcing in the opposite direction. That is how financial markets produce boom-bust phenomena or bubbles. Bubbles are not the only manifestations of reflexivity but they are the most spectacular."
In a recent speech at Humboldt University in Germany he expands on the bust/boom super-bubble. He offers a two-phase analysis of our current situation. The first phase consisted in pumping "a lot of credit, to replace the credit that had disappeared, and thereby reinforce the excess credit and leverage that had caused the crisis in the first place. Only in the longer term, when the crisis had subsided, could they drain the credit and reestablish macro-economic balance. He tells us this first phase has been accomplished, yet "the underlying causes have not been removed and they have surfaced again when the financial markets started questioning the credibility of sovereign debt. That is when the euro took center stage because of a structural weakness in its constitution." read more...
For him this second phase of the crisis is faced with finding a solution to the euro - the "common currency". As he states it: "the euro was an incomplete currency to start with. The Maastricht Treaty established a monetary union without a political union. The euro boasted a common central bank but it lacked a common treasury. It is exactly that sovereign backing that financial markets started questioning that was missing from the design. That is why the euro has become the focal point of the current crisis."
He tells us that the European Union itself was a partial solution to Europe's political and economic problems: "The European Union was built by a process of piecemeal social engineering, indeed it is probably the most successful feat of social engineering in history. The architects recognized that perfection is unattainable. They set limited objectives and firm deadlines. They mobilized the political will for a small step forward, knowing full well that when it was accomplished its inadequacy would become apparent and require further steps."
In his examination of the "structural defects of the euro" he lists several deficiencies:
1. absence of a common fiscal policy
2. a false belief in the stability of financial markets
3. it guards only against the danger of inflation and it ignores the possibility of inflation
4. and the greatest flaw in its design: it does not allow for error
The last point is further explicated in his statement: "It expects member states to abide by the Maastricht criteria without establishing an adequate enforcement mechanism. And now that several countries are far away from the Maastricht criteria, there is neither an adjustment mechanism nor an exit mechanism. Now these countries are expected to return to the Maastricht criteria even if such a move sets in motion a deflationary spiral. This is in direct conflict with the lessons learnt from the Great Depression of the 1930s and is liable to push Europe into a period of prolonged stagnation or worse."
He explains to the German Nation that as the leader of the European Union monetary practices it needs a set of guiding principles, which if followed will not only benefit Germany but the European Union as well:
1. First, the current crisis is more a banking crisis than a fiscal one
2. Second, a tightening of fiscal policy must be offset by a loosening of monetary policy
3. Third, this is the time to put idle resources to work by investing in education and infrastructure
In concluding he states: "What is needed is a delicate, two-phase maneuver, similar to the one the authorities undertook after the failure of Lehman Brothers. First help Europe to grow its way out of its difficulties and then revise and strengthen the structure of the euro. This cannot be done without German leadership."
In rebuttal, Amity Shales, in the Bloomberg Businessweek, in reply to Soros's accusation that Germany "does not know what it is doing", says: "It is time to turn the question around, and make a grave accusation against Soros. It is Soros who is endangering the euro by advocating these spending and loosening policies. They are policies that may give Europe budget problems that render its currency vulnerable to attack by Soros-like traders. Perhaps, like Merkel, Soros is doing his endangering for understandable reasons. Nonetheless, the danger is there, and worth laying out." read more...
In her article she reiterates that the only one to benefit from the advice of Soros is Soros himself, not Germany and certainly not the EU:
"The Obama administration for its part is being disingenuous when it makes spending recommendations. As my colleague Sebastian Mallaby at the Council on Foreign Relations notes, the dollar’s status as the currency of reserve amounts to a sort of Kevlar vest against the bullets of currency raiders. The euro possesses no vest.
Soros wants to help the Obama administration and the Keynesian spending that Democrats favor. If Europe spends, that makes the U.S. look less isolated. A big spending Europe also makes the euro less of a threat to the dollar. In any case, it is hard to imagine that what Soros alleges about Germany is true for Soros: that he just doesn’t understand what he is doing."
William Tarpley argues that Soros is creating the very crisis on the euro that he seems to be trying to offset. That the crisis in Greece was archistrated by the hedge fund predators for financial gain: "Now comes concrete proof of this conspiracy in the form of a Feb. 8 “idea dinner,” held at the Manhattan townhouse of Monness, Crespi, Hardt & Co, a boutique investment bank. Among those present were SAC Capital Advisors, David Einhorn of Greenlight Capital (a veteran of the fatal assault on Lehman Brothers in the late summer of 2008), Donald Morgan of Brigade Capital, and, most tellingly, Soros Fund Management. The consensus that emerged that night over the filet mignon was that Greek government bonds were the weak flank of the euro, and that once a Greek debt crisis had been detonated, all outcomes would be bad for the euro. The assembled predators agreed that Greece was the first domino in Europe. Donald Morgan was adamant that the Greek contagion could soon infect all sovereign debt in the world, including national, state, municipal and all other forms of government debt. This would mean California, the UK, and the US itself, among many others. The details of this at dinner were revealed in the headline story of the Wall Street Journal on Friday, February 26, 2010."
I tried to find this article which was mentioned by many reputable new organizations, but has been mysteriously removed from the Wall Street Journal. Yet, the New York Daily News also disclosed the same information: read more...
The interesting thing is letters were sent to the U.S. Justice Department by CNBC and Bloomberg. The parties involved have all denied any wrongdoing and we suspect that nothing much will come of the Justice Departments probes if any. The DailyNews mentions Soros's involvement in the equity debacle during England's 1992 where he made $1 Billion dollars betting against the British pound. Of course Soros's standard reply agains any wrongdoing was to state: "A spokesman for Soros said that is has become commonplace to direct attention toward George Soros whenever currency markets are in the news. "Any suggestion of wrongdoing by Soros Fund Management LLC implied in those articles is without merit," the spokesman said, adding that the firm intends to cooperate fully with any governmental requests."
As Tarpley continues: "It amounted to a deliberate attempt to create a large-scale world monetary crisis which would certainly bring with it the dreaded second wave of the current world economic depression. The creation of monetary chaos in Europe through the convulsive destruction of the euro under speculative attack would cripple commodity production in western Europe, severely undermining one of the dwindling areas of the world economy which are still functioning. The genocidal implications for humanity ought to be obvious, but the assembled hedge fund hyenas were not concerned with these consequences."
Who will be the winners and losers in this global crisis? Obviously the losers are most of the world's poor, as always. And the winners will be the predatory capitalists who have orchestrated our demise through greed and monopolies. As the rich begin again to move us toward global governance systems through the manipulation of the markets we will have to forge new tools to not only expose their corruption but to begin awakening citizens everywhere to form a new type of radical program towards real change. Otherwise we will become entrapped in this strange new world of economic dominance with no recourse of justice or escape.
Tarpley tells us we have two alternatives: "The world now faces a stark choice between two alternatives, with Wall Street forcing the issue. The first is that the zombie banks and hedge funds, having been saved and bailed out by national states and their taxpayers, will repay the favor by driving the national states and all forms of state, provincial, and local government into bankruptcy. This will be synonymous with the destruction of modern civilization itself. The second and preferred alternative is that the national states summon the political will to use the inherent powers of government to place the zombie banks, hedge funds, and related purveyors of derivatives into bankruptcy receivership and shut them down once and for all, relying in the future on nationalized central banks for the provision of credit. The second alternative would allow the preservation of modern civilization as we have known it."