As bad as the Greek financial crisis seems, the land of Pericles is only the second-most-indebted nation in the world. The government of Japan holds top honors: Its debt equals 234% of its GDP. The reason Japan hasn’t been in financial-crisis mode is that it owes most of that money to itself. By contrast, the U.S., seventh on our list, owes $4.4 trillion to foreigners. To China alone Uncle Sam owes a cool $1.1 trillion. Of course, when measured by total debt, the U.S. has the biggest IOU: $14.3 trillion.
Excerpt: “The hour is late. At stake is the survival of the U.S. and world economy as we know it. Failure to act now would lead to a disaster comparable only to the collapse of the Roman Empire in the fifth century A.D. that was accompanied with a total breakdown of law and order, accompanied, significantly, by gold going into hiding.
By Antal E. Fekete
The financial instability that first surfaced with full force in 2008 is the result of a deteriorating condition in world finance going back 40 years. Worse still, that deterioration is continuing and threatens with an historically unprecedented world-wide credit collapse.
The watershed year was 1971. What made that year outstanding was not just the introduction of the so-called floating exchange rate system; but also the disappearance of the most potent and most reliable financial instrument of world finance. It was little noticed at the time and, if it is ever mentioned, it is being treated as a non-event. Yet the world can only dismiss its significance at its own peril. Academia that is supposed to study problems created by monetary experimentation, rather than alerting the public to the serious possible consequences of the omission, has been guilty of ignoring it. The most potent financial instrument, the disappearance of which we are referring to, is the gold bond.
This pronouncement is immediately objected to by detractors of gold in the monetary system. Their objection is that the gold bond had disappeared from world finance much earlier: in the years 1931-35, and was no occasion for any major catastrophe in its wake. Rather, the word economy has gone on from one triumph to another without gold bonds ever since ¾ proving the inconsequential nature of their disappearance.
However, this objection is not valid.
The truth of the matter is that the gold bond has survived the collapse of the gold standard and has played a most important albeit largely unrecognized role in world finance. Consider the fact that since January, 1934, the dollar has had a fixed value in terms of gold, based on the Treasury price of $35 per ounce of fine gold, and the U.S. government has continued to honor its international obligations at that rate. Moreover, this obligation was solemnly enshrined in several international treaties and confirmed by four sitting presidents. As a result, there is no gainsaying of the fact that U.S. Treasury paper in the hands of foreign governments and central banks directly, and in the hands of banks, financial institutions, and even ordinary citizens not under the jurisdiction of the U.S. indirectly, have continued to exist as gold bonds (or gold bills, as the case may be) after 1934. The most important role the gold bond has played up until 1971 was this: it was the standard of credit whereby all other debt instruments were gaged. Through disintermediation substandard debt was eliminated, and the rise of the Debt Behemoth prevented.
A spectre is haunting Europe: the illusion that Latvia’s financial and fiscal austerity is a model for other countries to emulate. Bankers and the financial press are asking governments from Greece to Ireland and now Spain as well: “Why can’t you be like Latvia and sacrifice your economy to pay the debts that you ran up during the financial bubble?” The answer is, they can’t – without an economic, demographic and political collapse that will only make matters worse.
Only a year ago it was recognized that decades of neoliberalism had crashed the U.S. and several European economies. Years of deregulation, speculation and lack of investment in the real economy had left them with rising inequality and little consumer demand, except for what was financed by running up debt. But the financial press and neoliberal policymakers counterattacked, using the “Baltic Tigers” as an exemplary battering ram to counter Keynesian spending policies and the Social Europe model envisioned by Jacques Delors.
Analysts have viewed Latvia’s October election results as vindication of the efficacy of austerity for solving the economic crisis. The standard narrative is that Latvia’s Prime Minister won re-election even after imposing the harshest tax and austerity policies ever imposed during peacetime, because voters realized that this was necessary. On politics, the standard narrative (as recently rolled out in The Economist) is that Latvia’s taciturn and honest prime minister, Valdis Dombrovskis, won re-election in October even after imposing the harshest tax and austerity policies ever adopted during peacetime, because the “mature” electorate realized this was necessary, “defying conventional wisdom” by voting in an austerity government.
This was actually something I had been wanting to broach…but more specifically how over priced colleges are, and how under taught students are…Professors get tenure in most major schools and the students are being taught by aides or TAs while paying outrageous prices for schooling…In Wy. they now have what they call the Hathaway scholarship which will give one either a partial or full ride to The University of Wyoming depending on the student’s High School GPA~Proud to live in Wyoming~jude
By Marc Brown
Student debt in the U.S has skyrocketed in the recent years. More and more students are willing to borrow money these days to fund their studies. This can have serious consequences on the future of college students. We are on our way to produce an entire generation of college graduates who will soon be knee deep in debt. Are you aware that borrowing of federal student loans has increased by 25% in 2010 compared to the previous year? Almost 2/3 of the college goers borrow money in order to finance their college fees and related expenses. This emphasizes the dependence of students on loans and the increasing cost of higher education.
It is true that studentdebt is often termed as “good debt”. This is because it is usually tax deductible and it is possible to defer payments in case you face some emergency situation. Moreover, student debt will come in lieu of a lifetime earning potential through a college degree.
Establishing a joint subcommittee to study whether the Commonwealth should adopt a currency to serve as an alternative to the currency distributed by the Federal Reserve System in the event of a major breakdown of the Federal Reserve System. Report.
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Patron– Marshall, R.G.
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Referred to Committee on Rules
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WHEREAS, the Supreme Court of the United States has ruled in In re Rahrer, 140 U.S. 545, 554 (1891), that “the police power” of a State “is a power originally and always belonging to the States, not surrendered by them to the general government, nor directly restrained by the Constitution of the United States, and essentially exclusive”; and
WHEREAS, the Supreme Court of the United States has ruled in Beer Company v. Massachusetts, 97 U.S. 25, 33 (1877), that the police power of the States “extend[s] to the protection of the lives, health, and property of the[ir] citizens, and to the preservation of good order”; and
WHEREAS, the protection of the lives, health, and property of Virginia’s citizens, and the preservation of good order in the Commonwealth, depend upon the maintenance of both an adequate system of governmental finance and a sound and robust private economy; and
We’ve been told a lot of things since the global economic crisis first became apparent in 2007. In March of that year Federal Reserve Chairman Ben Bernanke said, “the impact on the broader economy and financial markets of the problems in the sub-prime markets seems likely to be contained.” Clearly, Mr. Bernanke’s assessment was incorrect and the sub-prime real estate issues were only part of a broader, systemic issue.
The fundamental problems within our economy became mainstream news in the latter part of 2008 when stock markets around the world were in free fall and most major financial institutions were on the cusp of insolvency. In response, our government, with the full support and confidence of Congress, took unprecedented steps to save the system by injecting, first billions, and then trillions of dollars to bailout failed companies, stabilize deflationary price collapses and stimulate the economy.
Treasury Secretary Henry Paulson eventually wrote a book about the crisis, aptly titled On the Brink. But how close to the brink were we? If Representative Brad Sherman is to be believed, we were close. So close, in fact, that according to Sherman, Congressional members were told that if the bailout was not authorized by Congress the collapse would be so severe that martial law may have to be declared – basically, tanks in the streets. The following short video is Brad Sherman discussing the situation on the House floor:
As we predicted in September, the US, which is issuing debt at a clip of about $125-150 billion per month (in line with the Fed’s monetization of every single newly printed dollar of debt), will likely hit its debt ceiling as soon as March. We finally get confirmation from none other than tax expert Tim Geithner, who in continuing his tirade of scaring the bejesus out of anyone dumb enough to listen to him , has just confirmed our concerns. Not only that, but he has also written a letter to Dear Mr. Leader Harry Reid in which he uses big and scary words to make it clear just how fucked this country is if it can not issue about $2 trillion in debt each and every year. Because the only way to avoid bankruptcy is, as Joe Biden once said, to issue way more debt.
From Reuters:
The United States could hit the legal limit on its ability to borrow as soon as March 31 and faces serious consequences unless Congress acts by then to raise it, Treasury Secretary Timothy Geithner said on Thursday.
“Even a short-term or limited default would have catastrophic economic consequences that would last for decades,” Geithner said in a letter to U.S. Senate Majority leader Harry Reid that was issued by Treasury.
Geithner said it was hard to pin down exactly when the current $14.3 trillion ceiling on the debt limit would be pierced but urged Congress to act before the end of the first quarter.
“The Treasury department now estimates that the debt limit will be reached as early as March 31, 2011, and most likely between that date and May 16, 2011,” he wrote.
He said Treasury could engage in extraordinary measures, such as suspending sales of state and local government securities, but preferred not to because it is disruptive.
He warned that failure by Congress to raise the debt limit, which would effectively put the United States into default on its obligations for the first time in its history, would have consequences “potentially much more harmful than the effects of the financial crisis of 2008 and 2009.”
Riot police face demonstrators in Athens earlier today. Photograph: Aris Messinis/AFP/Getty Images
Inside a freezing, derelict military barracks on the crest of a hill in the middle of Germany, Bernd Niesel single-handedly carries on with his labour of love.
The 67-year-old retired serviceman oversees a shrine to the Deutsche Mark, the symbol of postwar German success, running a small museum devoted to the remarkable birth and lamented death of the currency. The mark was born behind barbed wire in total secrecy in this barracks in 1948 in what became known as the “conclave of Rothwesten”. The currency met an early death at the age of 50 in 1998 (though notes and coins were in circulation until 2001). But as the German opinion polls show every week at the moment, 30%-40% are hoping for a resurrection.
“Certainly for the older generation,” said Niesel, “the feeling is very much one of nostalgia – ‘if only we had the D-mark again’.” The sentiment is hardly surprising given the turmoil besetting the D-mark’s successor, the euro.
The Federal Reserve releaseda stunning report showing the details of bailouts that occurred during the peak of the credit crisis. They won’t call it “bailouts” but giving money when others won’t is exactly that. What the report shows is that the Fed operated as a global pawnshop taking in practically anything the banks had for collateral. What is even more disturbing is that the Federal Reserve did not enact any punitive charges to these borrowers so you had banks like Goldman Sachs utilizing the crisis to siphon off cheap collateral. The Fed is quick to point out that “taxpayers were fully protected” but mention little of the destruction they have caused to the US dollar. This is a hidden cost to Americans and it also didn’t help that they were the fuel that set off the biggest global housing bubble ever witnessed by humanity. A total of $9 trillion in short-term loans were made to 18 financial institutions. Still think the banking bailout didn’t happen or cost us nothing? Let us first look at the explosion of assets on the Fed balance sheet.
The Fed is still carrying longer term debt on its books that shouldn’t be there:
