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ECONOMICS AND ESOTERICA FOR A NEW PARADIGM

Posts Tagged ‘Goldman Sachs

As the world crumbles: The ECB spins, the Fed smirks, and US banks pillage

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by Nomi Prins
Posted November 21, 2011

OFTEN, WHEN I TROLL AROUND WEBSITES OF ENTITIES LIKE THE ECB AND IMF, I UNCOVER LITTLE OF STARTLING NOTE. They design it that way. Plus, the pace at which the global financial system can leverage bets, eviscerate capital, and cry for bank bailouts financed through austerity measures far exceeds the reporting timeliness of these bodies.

That’s why, on the center of the ECB’s homepage, there’s a series of last week’s rates – and this relic – an interactive Inflation Game (I kid you not)  where in 22 different languages you can play the game of what happens when inflation goes up and down. If you’re feeling more adventurous, there’s also a game called Economia, where you can make up unemployment rates, growth rates and interest rates and see what happens.

What you can’t do is see what happens if you bet trillions of dollars against various countries to see how much you can break them, before the ECB, IMF, or Fed (yes, it’ll happen) swoops in to provide “emergency” loans in return for cuts to pension funds, social programs, and national ownership of public assets. You also can’t input real world scenarios, where monetary policy doesn’t mean a thing in the face of  tidal waves of derivatives’ flow. You can’t gauge say, what happens if Goldman Sachs bets $20 billion in leveraged credit default swaps against Greece, and offsets them (partially) with JPM Chase which bets $20 billion, and offsets that with Bank of America, and then MF Global (oops) and then…..you see where I’m going with this.

We’re doomed if even their board games don’t come close to mimicking the real situation in Europe, or in the US, yet they supply funds to banks torpedoing local populations with impunity. These central entities also don’t bother to examine (or notice) the intermingled effect of leveraged derivatives and debt transactions per country; which is why no amount of funding from the ECB, or any other body, will be able to stay ahead of the hot money racing in and out of various countries.  It’s not about inflation – it’s about the speed, leverage, and daring of capital flow, that has its own power to select winners and losers. It’s not the ‘inherent’ weakness of national economies that a few years ago were doing fine, that’s hurting the euro. It’s the external bets on their success, failure, or economic capitulation running the show. Similarly, the US economy was doing much better before banks starting leveraging the hell out of our subprime market through a series of toxic, fraudulent, assets.

Elsewhere in my trolling, I came across a gem of a working paper on the IMF website, written by Ashoka Mody and Damiano Sandri,  entitled ‘The Eurozone Crisis; How Banks and Sovereigns Came to be Joined at the Hip” (The paper does not ‘necessarily represent the views of the IMF or IMF policy’. )

The paper is full of mathematical formulas and statistical jargon, which may be why the media didn’t pick up on it, but hey, I got a couple of degrees in Mathematics and Statistics, so I went all out.  And it’s fascinating stuff.

Basically, it shows that between the advent of the euro in 1999, and 2007, spreads between the bonds of peripheral countries and core ones in Europe were pretty stable. In other words, the risk of any country defaulting on its debt was fairly equal, and small. But after the 2007 US subprime asset crisis, and more specifically, the advent of  Federal Reserve / Treasury Department construed bailout-economics, all hell broke loose – international capital went AWOL daring default scenarios, targeting them for future bailouts, and when money leaves a country faster than it entered, the country tends to falter economically. The cycle is set.

The US subprime crisis wasn’t so much about people defaulting on loans, but the mega-magnified effects of those defaults on a $14 trillion asset pyramid created by the banks. (Those assets were subsequently sold, and used as collateral for other borrowing and esoteric derivatives combinations, to create a global $140 trillion debt binge.) As I detail in It Takes Pillage, the biggest US banks manufactured more than 75% of those $14 trillion of assets. A significant portion was sold in Europe – to local banks, municipalities, and pension funds – as lovely AAA morsels against which more debt, or leverage, could be incurred. And even thought the assets died, the debts remained.

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The coming derivatives crisis that could destroy the entire global financial system

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Courtesy of Michael Snyder
Economic Collapse blog
Posted 21 October, 2011

MOST PEOPLE  HAVE NO IDEA THAT WALL STREET HAS BECOME A GIGANTIC FINANCIAL CASINO. The big Wall Street banks are making tens of billions of dollars a year in the derivatives market, and nobody in the financial community wants the party to end.

The word “derivatives” sounds complicated and technical, but understanding them is really not that hard.  A derivative is essentially a fancy way of saying that a bet has been made. Originally, these bets were designed to hedge risk, but today the derivatives market has mushroomed into a mountain of speculation unlike anything the world has ever seen before. Estimates of the notional value of the worldwide derivatives market go from $600 trillion all the way up to $1.5 quadrillion.

Keep in mind that the GDP of the entire world is only somewhere in the neighborhood of $65 trillion. The danger to the global financial system posed by derivatives is so great that Warren Buffet once called them “financial weapons of mass destruction”. For now, the financial powers that be are trying to keep the casino rolling, but it is inevitable that at some point this entire mess is going to come crashing down. When it does, we are going to be facing a derivatives crisis that really could destroy the entire global financial system.

Most people don’t talk much about derivatives because they simply do not understand them. Perhaps a couple of definitions would be helpful. The following is how a recent Bloomberg article defined derivatives….

Derivatives are financial instruments used to hedge risks or for speculation. They’re derived from stocks, bonds, loans, currencies and commodities, or linked to specific events such as changes in the weather or interest rates.

The key word there is “speculation”. Today the folks down on Wall Street are speculating on just about anything that you can imagine. The following is how Investopedia defines derivatives….

A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.

A derivative has no underlying value of its own. A derivative is essentially a side bet. Usually these side bets are highly leveraged.

At this point, making side bets has totally gotten out of control in the financial world. Side bets are being made on just about anything you can possibly imagine, and the major Wall Street banks are making a ton of money from it.  This system is almost entirely unregulated and it is totally dominated by the big international banks.

Over the past couple of decades, the derivatives market has multiplied in size. Everything is going to be fine as long as the system stays in balance.  But once it gets out of balance we could witness a string of financial crashes that no government on earth will be able to fix. The amount of money that we are talking about is absolutely staggering. Graham Summers of Phoenix Capital Research estimates that the notional value of the global derivatives market is $1.4 quadrillion, and in an article for Seeking Alpha he tried to put that number into perspective….

If you add up the value of every stock on the planet, the entire market capitalization would be about $36 trillion. If you do the same process for bonds, you’d get a market capitalization of roughly $72 trillion. The notional value of the derivative market is roughly $1.4 QUADRILLION.

I realize that number sounds like something out of Looney tunes, so I’ll try to put it into perspective. $1.4 Quadrillion is roughly:

• 40 times the WORLD’S STOCK MARKET.

• 10 times the value of EVERY STOCK & EVERY BOND ON THE PLANET.

• 23 times WORLD GDP.

It is hard to fathom how much money a quadrillion is. If you started counting right now at one dollar per second, it would take 32 million years to count to one quadrillion dollars. Yes, the boys and girls down on Wall Street have gotten completely and totally out of control. In an excellent article that he did on derivatives, Webster Tarpley described the pivotal role that derivatives now play in the global financial system….

Far from being some arcane or marginal activity, financial derivatives have come to represent the principal business of the financier oligarchy in Wall Street, the City of London, Frankfurt, and other money centers. A concerted effort has been made by politicians and the news media to hide and camouflage the central role played by derivative speculation in the economic disasters of recent years. Journalists and public relations types have done everything possible to avoid even mentioning derivatives, coining phrases like “toxic assets,” “exotic instruments,” and – most notably – “troubled assets,” as in Troubled Assets Relief Program or TARP, aka the monstrous $800 billion bailout of Wall Street speculators which was enacted in October 2008 with the support of Bush, Henry Paulson, John McCain, Sarah Palin, and the Obama Democrats.

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America “makes the cut” – So what happens next?

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by Brandon Smith
Posted on Alt-Market, August 7, 2011

AROUND THE WORLD, STARTING MONDAY, ALL EYES ARE ON THE MARKETS. The tension is palpable. The uncertainty is ample. And anger is heavy in the air. As predicted, the debt ceiling deal was not only NOT enough to assuage economic fears, it actually exacerbated them, triggering a flight from the Dow, and creating a decisive opportunity for ratings agency S&P to cut the once perfect U.S. credit rating from AAA to AA+.

At Alt-Market, we often talk about points of balance, and how certain moments in history become highly visible indicators of balance lost. If we pay close attention, and know what we are looking for, these moments can be recognized, allowing us time to shield ourselves from the explosion and the resulting financial shrapnel. The past two weeks have culminated into one of these defining events that tell us the tide has fully turned, and something new and dangerous is just over the horizon. The question now is; what should we expect?

The nature of the credit downgrade situation is not necessarily “unprecedented” in history, but it is surely unprecedented on the scale we see currently in the U.S. It is difficult to predict how exactly the investment world will react. Some consequences, though, are probable, if not inevitable. Let’s examine the events we are likely to see in the coming weeks as well as the coming months, as nations attempt to adjust to America’s final plunge…

1) Ratings Agencies under attack

This has already begun. Italian authorities have raided the offices of S&P and Moody’s, apparently perturbed that their credit rating is not under their control. The U.S. is accusing S&P of making “accounting mistakes” and jumping the gun on the American downgrade. The battle between insolvent governments and the ratings agencies from here on will escalate quickly. More offices will be investigated and raided. The mainstream media will try to assert that the downgrades are “not that important”, and that the U.S. will recover quite nicely without a perfect score. Eventually, as the collapse becomes more evident, ratings agencies will fill the role as the go to scapegoat / economic hitman at which all governments will point accusing fingers.

“S&P is gonna’ cut you man! S&P’s a blade-man, man!”

In my view, it’s all theater. First, let’s set aside the recent ratings cuts altogether and look at the facts. The U.S. should have been downgraded years ago, especially after the Federal Reserve decided to begin purchasing U.S. Treasury Bonds in place of dwindling foreign interest and turned to monetizing our debt to the point of rampant inflation. Italy and numerous other EU members should have been downgraded to junk status a long time ago as well. If anything, the ratings agencies over the past few years have been PROTECTING the credit reputations of many countries which in no way deserve it. The recent downgrades are long overdue…

Second, suddenly governments and MSM pundits feel it necessary to point out the large part ratings agencies played in the derivatives bubble and subsequent credit crisis? Please! They were perfectly content with S&P or Moody’s giving fraudulent top ratings for toxic garbage securities, and even defended agency actions after the bubble burst! Now, after they finally start doing their jobs by downgrading bad debt, governments want an investigation?

Third, ratings agencies were not alone in the creation of the derivatives bubble. The private Federal Reserve artificially lowered interest rates and flooded the markets with cheap fiat. International banks used this fast money to create the easy mortgage groundswell and the derivatives poison that was fed it into the system. Ratings agencies went along with the scam and graded the worthless securities as AAA. The federal government and the SEC allowed all of this to take place by purposely ignoring the crime and refusing to apply existing regulations in investigating the fraud.

The Bottom line? You CANNOT create an economic crisis like the one we face today without collusion between big business, government, regulatory bodies, and ratings agencies. The Obama Administration is well aware of this, and the attacks on S&P are nothing more than a show. S&P is not to blame for the downgrade this past weekend. They are ALL to blame.

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Too big to fail? Ten banks own 77% of all U.S. banking assets

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from The Economic Collapse
Posted July 18, 2011 

BACK DURING THE FINANCIAL CRISIS OF 2008, the American people were told that the largest banks in the United States were “too big to fail” and that was why it was necessary for the federal government to step in and bail them out. The idea was that if several of our biggest banks collapsed at the same time the financial system would not be strong enough to keep things going and economic activity all across America would simply come to a standstill. Congress was told that if the “too big to fail” banks did not receive bailouts that there would be chaos in the streets and this country would plunge into another Great Depression.  Since that time, however, essentially no efforts have been made to decentralize the U.S. banking system.

Instead, the “too big to fail” banks just keep getting larger and larger and larger. Back in 2002, the top 10 banks controlled 55 percent of all U.S. banking assets.  Today, the top 10 banks control 77 percent of all U.S. banking assets.  Unfortunately, these giant banks are also colossal mountains of risk, debt and leverage. They are incredibly unstable and they could start coming apart again at any time. None of the major problems that caused the crash of 2008 have been fixed. In fact, the U.S. banking system is more centralized and more vulnerable today than it ever has been before.

It really is difficult for ordinary Americans to get a handle on just how large these financial institutions are.  For example, the “big six” U.S. banks (Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo) now possess assets equivalent to approximately 60 percent of America’s gross national product.

These huge banks are giant financial vacuum cleaners. Over the past couple of decades we have witnessed a financial consolidation in this country that is absolutely unprecedented. This trend accelerated during the recent financial crisis. While the big boys were receiving massive bailouts, the hundreds of small banks that were failing were either allowed to collapse or they were told that they should find a big bank that was willing to buy them.

As a group, Citigroup, JPMorgan Chase, Bank of America and Wells Fargo held approximately 22 percent of all banking deposits in FDIC-insured institutions back in 2000. By the middle of 2009 that figure was up to 39 percent.

That is not just a trend – that is a landslide. Sadly, smaller banks continue to fail in large numbers and the big banks just keep growing and getting more power. Today, there are more than 1,000 U.S. banks that are on the “unofficial list” of problem banking institutions. In the absence of fundamental changes, the consolidation of the banking industry is going to continue.

Meanwhile, the “too big to fail” banks are flush with cash and they are getting serious about expanding. The Federal Reserve has been extremely good to the big boys and they are eager to grow. For example, Citigroup is becoming extremely aggressive about expanding and has been hiring dozens of investment bankers, dialing up advertising and drawing up plans to add several hundred branches worldwide, including more than 200 in major cities across the United States.

Hopefully the big banks will start lending again. The whole idea behind the bailouts and all of the “quantitative easing” that the Federal Reserve did was to get money into the hands of the big banks so that they would lend it out to ordinary Americans and get the economy rolling again. Well, a funny thing happened.  The big banks just sat on a lot of that money. In particular, what they did was they deposited much of it at the Fed and drew interest on it. Since 2008, excess reserves parked at the Fed have grown by nearly 1.7 trillion dollars.  Just check out the chart posted below….

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Systemic risk is on red alert

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by Graham Summers
Phoenix Capital Research
Posted June 15, 2011

SINCE 2009, I’VE BEEN WARNING THAT SYSTEMIC RISK REMAINS HIGH. However, from that time until today, investors have been willing to bet on the US Federal Reserve (and the world’s central banks) keeping a lid on things. Until today.

Greece has erupted into full-scale, violent riots that could shut down the entire Government there. SHOULD this happen it’s the beginning of the END GAME for central bank intervention in the financial system. And the reason is: The only thing that has maintained investor confidence since the depths of 2009 is the belief that the central banks can continue to bailout/ intervene to control any financial problem.

Remember, we never actually “took the hit” we needed to take in 2008. The same junk debt remains in the system (it’s just been hidden by loosened accounting standards). The same enormous derivatives time bomb is still ticking (it’s over $600 TRILLION in size).

None of these problems were solved. None were even addressed. All the central banks did was lend more money to the insolvent big banks. Well, that and damage their sovereign balance sheets by taking on a ton of garbage debt (the Fed’s balance sheet is now over $2.8 TRILLION in size).

So in plain terms, the central banks took systemic risk that existed in the private sector and allowed it to spread to the public sector.

What does this mean? That the next Crisis won’t just involve banks like Goldman Sachs, it will involve entire countries (including the US) going belly-up. We’re already seeing it in Greece. That situation has made it very clear what happens when you combine public outrage with Government bankruptcy and systemic insolvency: SHUT-DOWN.

This IS coming to the US. And it won’t be long. Once the bailout wagon stops (first in Greece) the ensuing collapse will spread VERY quickly. The reason is quite simple: Greece is the Bear Stearns of the Sovereign Debt Collapse.

So buckle up, because it was only six months or so after Bear Stearns that the Lehman disaster unfolded. Given the amount of leverage in the system today, we could easily see the issues hitting Greece today arriving at the US’s shores before the year’s end.

“We are on the verge of a Great, Great Depression”

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by George Washington
Posted originally June 1, 2011

THE NEWS THAT FREQUENT CNBC GUEST Peter Yastrow of Yastrow Origer (and formerly with DT Trading) told CNBC that “We’re on the verge of a great, great depression. The [Federal Reserve] knows” is going viral today. But this is not news to anyone who has been paying attention. As I pointed out Tuesday, billion dollar fund managers agree: the government never fixed the underlying economic problems, so we’ll have another crash. I provided details last month: As noted in January, the housing slump is worse than during the Great Depression.

As CNN Money points out today: Wal-Mart’s core shoppers are running out of money much faster than a year ago due to rising gasoline prices, and the retail giant is worried, CEO Mike Duke said Wednesday. “We’re seeing core consumers under a lot of pressure,” Duke said at an event in New York. “There’s no doubt that rising fuel prices are having an impact.”

Wal-Mart shoppers, many of whom live paycheck to paycheck, typically shop in bulk at the beginning of the month when their paychecks come in. Lately, they’re “running out of money” at a faster clip, he said. “Purchases are really dropping off by the end of the month even more than last year,” Duke said. “This end-of-month [purchases] cycle is growing to be a concern.

And – in case you still think that the 29% of Americans who think we’re in a depression are unduly pessimistic – take a look at what I wrote last December. The following experts have – at some point during the last two years – said that the economic crisis could be worse than the Great Depression:

States and Cities in Worst Shape since the Great Depression

States and cities are in dire financial straits, and many may default in 2011. California is issuing IOUs for only the second time since the Great Depression. Things haven’t been this bad for state and local governments since the 30s. Loan Loss Rate Higher than During the Great Depression

In October 2009, I reported: In May, analyst Mike Mayo predicted that the bank loan loss rate would be higher than during the Great Depression. In a new report, Moody’s has just confirmed (as summarized by Zero Hedge): The most recent rate of bank charge offs, which hit $45 billion in the past quarter, and have now reached a total of $116 billion, is at 3.4%, which is substantially higher than the 2.25% hit in 1932, before peaking at at 3.4% rate by 1934.

Here’s a chart summarizing the findings:

Indeed, top economists such as Anna Schwartz, James Galbraith, Nouriel Roubini and others have pointed out that while banks faced a liquidity crisis during the Great Depression, today they are wholly insolvent. See this, this, this and this. Insolvency is much more severe than a shortage of liquidity.

Unemployment at or near Depression Levels

USA Today reports today: So many Americans have been jobless for so long that the government is changing how it records long-term unemployment. Citing what it calls “an unprecedented rise” in long-term unemployment, the federal Bureau of Labor Statistics (BLS), beginning Saturday, will raise from two years to five years the upper limit on how long someone can be listed as having been jobless.

The change is a sign that bureau officials “are afraid that a cap of two years may be ‘understating the true average duration’ — but they won’t know by how much until they raise the upper limit,” says Linda Barrington, an economist who directs the Institute for Compensation Studies at Cornell University’s School of Industrial and Labor Relations.

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China demands American austerity

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from The Daily Bell
Originally posted June 09, 2011

China warns U.S. debt-default idea is “playing with fire … Republican lawmakers are “playing with fire” by contemplating even a brief debt default as a means to force deeper government spending cuts, an adviser to China’s central bank said on Wednesday. The idea of a technical default – essentially delaying interest payments for a few days – has gained backing from a growing number of mainstream Republicans who see it as a price worth paying if it forces the White House to slash spending, Reuters reported on Tuesday. But any form of default could destabilize the global economy and sour already tense relations with big U.S. creditors such as China, government officials and investors warn. – Reuters

Dominant Social Theme:
Don’t even try it. Don’t even go there. You owe us the interest and … you … will … pay!

Free-Market Analysis:
We tend to go back and forth regarding the world’s larger financial fix. We have arrived at the idea, eventually that the Anglo-American power elite responsible for the mess wants to push Western citizens as far as possible without setting up full-scale revolutions. The idea is simply to afflict Western Middle Classes with such misery that they will not notice when their countries’ sovereignty is removed in favor of a One World Order.

The best way to do this is to keep people distracted and miserable – hovering on the edge of foreclosure, food insecurity and professional oblivion. In Europe this has been accomplished by ensuring that many countries have borrowed far more than they can pay back, thus ensuring generations of “austerity” (assuming that Europe’s young people don’t revolt against the prospect). Hey, it’s a fine line.

America has been a tougher nut to crack. Americans come from hardy immigrant stock and have tended to be thrifty and hard working, certainly in the past. The Anglo-American power elite has been at work for decades to ensure these admirable qualities are subdued. Result? America’s finances are a mess.

The US deficit is scheduled to reach $1.4 trillion, and the U.S. Treasury Dept., responsible for funding it, needs to borrow more money than it is authorized to do. Republicans in the House and Senate have seized on the opportunity to demand that the Obama Administration agree to significant cuts in spending.

The Democrats, for their part, warn that using the debt-ceiling to enforce frugality is a most dangerous strategy, one that could virtually sink the United States’ credit. If the US cannot borrow, it will have to default on its debt payments, which would likely lead to some sort of devaluation of the dollar. Since the dollar is the reserve currency of the world, this would lead to significant tumult abroad.

China is willing to do its part in this all, apparently. According to a Reuters’ article that appeared yesterday (see excerpt above), China’s top officials have some strong opinions about a potential default in the US. Reuters quotes Li Daokui, an adviser to the People’s Bank of China, as saying that a default could undermine the U.S. dollar. “I think there is a risk that the U.S. debt default may happen,” Li told reporters (according to Reuters) on the sidelines of a forum in Beijing. “The result will be very serious and I really hope that they would stop playing with fire.”

While no one seems to know how much US debt China holds, Reuters claims confidently that it is $1 trillion. We’ve read US$800 million and US$ 2 trillion as well. But US$1 trillion sounds about right. That’s certainly a lot of money. Do Chinese officials really expect to get repaid? Here’s Li again: “I really worry about the risks of a U.S. debt default, which I think may lead to a decline in the dollar’s value.”

Ben Westmore, a commodities economist at National Australia Bank, is also upset that the Republicans are holding the debt-ceiling hostage. “It has dire implications for the economy at a time when the macro data is softening. It’s just a horrible idea.”

Financial markets remain steady, but that may not be the case if the stand-off continues. Republicans, Reuters informs us, have been working on the theory that bondholders would put up with a delay in payments in return for a bipartisan deal that would lower US spending and make the country stronger in the long term.

According to Reuters, central banking officials around the world are less sanguine about the ramifications than Republicans are. “This could then create huge panic globally,” Reuters quotes one Indian central banking official as saying. At the same time, India’s Treasury officials continue to buy and hold dollars. The government held US$39.8 billion in U.S. Treasuries as of March.

Of course, Reuters doesn’t mention that countries HAVE to buy dollars in order to purchase oil from Saudi Arabia, which will not accept anything else. This is how the dollar’s reserve currency status is enforced.

The article concludes by quoting Yuan Gangming, a researcher with the Chinese Academy of Social Sciences, as saying that default was indeed a real risk. “The possibility is quite high to see a default of the U.S. debt, which would harm many countries in the world, and China in particular.”

We’re not so sure as Gangming that the “possibility is high” that the US will default, or not seriously anyway. The House is led by Ohio Republican John A. Boehner (about as radical as a mushroom). Boehner is one of a handful of elite politicians, one of the most powerful men in the world thanks to his position as Speaker of the House. The idea that John Boehner will lead a radical restructuring of America’s finances does not seem especially feasible to us.

Of course, a good deal of pressure is being put on Boehner by the Republican-oriented Tea Party, and perhaps this will serve to shove the Republicans out of what would otherwise be their comfort zone. Hard to tell, really.

What is more significant from our point of view is the message the Chinese are sending. The Chinese central bankers, like central bankers around the world are not willing to entertain an iota’s reconfiguration of America’s debt. It’s a kind of dominant social theme – a fear based promotion. We’re not sure it will hold, but the rhetoric is stern. We have seen the same sort of implacable rigor in Europe, where the ECB has been at the forefront of the fight to ensure that Greece and the rest of the PIGS pay ever euro of their increasingly unpayable sovereign debt.

The mechanism of American austerity, then, is to be Chinese insistence on the immutability of American repayment terms. What the sovereign crisis is doing to Europe, the Chinese will do to America. In fact, American “austerity” is already here. The Chinese are providing the proximate cause, but increasingly we believe this was the plan all along.

Britain is in the same fix, Europe is rioting, the Middle East has gone up in smoke and Africa is trending the same way. Surely this couldn’t be coincidence could it? We think not. The world’s economic system is controlled out of the City of London via the Bank for International Settlements (based in Switzerland) and over 100 central banks around the world. The Anglosphere elite that constructed this system knew full well it would self-destruct over time.

They knew it in Europe, too. In fact, it has been admitted. The Eurocrats knew that the current system was unstable and would break down. They intended to take advantage of it to build a more centralized system and in fact they are currently doing so.

The wild card, as we have pointed out, is the Internet itself (and the truth-telling it provides), which we believe has destabilized Europe far beyond what the elites expected. They are said to be meeting somewhat unhappily in Switzerland today, as part of the annual Bilderberg affair. War is supposedly on the menu, along with selecting an IMF chief – and stabilizing Europe. There is to be austerity, yes, but not revolution.

In America, austerity is coming, too. The Chinese and perhaps the Japanese (and other creditors) will demand it. But the same realities hold for America as for Europe. There is perhaps a limit to what people will put up with, a limitation reinforced by the Internet Reformation.

Conclusion:
We have no doubt that a chaotic financial situation around the world was intended to increase pressure for a more centralized currency – and for more centralized bank regulations, etc. We are not so sure the current plan will hold. Will the elites get their chaos? They might wish to be careful what they wish for.