Comparing today’s recession/depression to the 1980 recession

Comparing today's recession/depression to the 1980 recession

"Much like today, Americans were concerned not only with high unemployment but increasing budget deficits in the early 1980s. A September 1983 Gallup poll found that three-fourths of the public agreed that the federal government's budget deficit was a great threat (42%) or some

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Why savers are getting screwed

Why savers are getting screwed

"Without the intervention of economic policymakers, interest rates would be naturally higher. That would increase the cost of borrowing for businesses and consumers, but there would be some offsetting economic benefits. Savers are getting screwed by the current monetary policy

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Geithner admits USA bankrupt to US Senate

Geithner admits USA bankrupt to US Senate

"Never in our history has Congress failed to increase the debt limit when necessary. Failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses

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Real reason for electricity blackouts hitting southern US

Real reason for electricity blackouts hitting southern US

“Large oil companies have for a decade artificially shorted the gasoline market to drive up prices,” said FTCR president Jamie Court. “Oil companies know they can make more money by making less gasoline.” The following article was written by Paul Joseph Watson. He is t

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World economies on verge of currency revaluations to deal with debt

World economies on verge of currency revaluations to deal with debt

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." -- Henry Ford Basically what the world central banks are doing is increasing their money by devaluin

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Is Obama the next Mugabe of Zimbabwe?

Is Obama the next Mugabe of Zimbabwe?

"America, Britain, Japan, Germany, France, Sweden, Holland, Norway, Canada and Australia make up the Fishmongers Group and their meeting on Tuesday will deliberate on the state of the inclusive government, debt relief, public finance administration and the controversial economi

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US raiding foreign countries with dollars, not soldiers

US raiding foreign countries with dollars, not soldiers

""The United States is going to China and saying: we want you to commit economic suicide, just like Japan did. We want you to follow the same thing: we want you to revalue your currency, we want you to squeeze your companies, we want you to go bankrupt,” says Michael Hudson,

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FDIC wants your retirement cash to save banks: Bloomberg

FDIC wants your retirement cash to save banks: Bloomberg

“The FDIC is constantly looking at structures where we can get the greatest opportunity to tap into capital that we have not had the success reaching through previous disposition methods,” FDIC spokeswoman Michele Heller said in an e-mailed statement. “We welcome and work

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Canadian government admits recovery never happened

Canadian government admits recovery never happened

“Not only did their stimulus fail to create the jobs of tomorrow, it also failed to protect the jobs of today,” Scott Brison, the opposition Liberal Party’s spokesman for finance issues, said by telephone. "Most of us were shaking our heads in disbelief early last year w

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How Western society is brainwashed and crumbling

How Western society is brainwashed and crumbling

"The cultural embrace of illusion, and the celebrity culture that has risen up around it, have accompanied a growing system of casino capitalism, with its complicated and unregulated deals of turning debt into magical assets, to create fictional wealth for us, and vast wealth f

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Will we see double digit interest rates from the 1980s?

Will we see double digit interest rates from the 1980s?

"And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." -- Thomas Jefferson Spending is

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Greenspan: credit crunch “by far the greatest financial crisis”

Greenspan: credit crunch by far the greatest financial crisis

Greenspan said that while the economy was in worse shape in the Great Depression, the recent financial crisis was potentially more harmful than that in the 1930s because “never had short-term credit literally withdrawn.” Greenspan just said that the current credit crunch

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SANTA BARBARA (MarketWatch) — As global economies emerge from recession, policymakers must watch for unsustainable global imbalances driven by high levels of Asian exports and low U.S. savings rates, Federal Reserve Chairman Ben Bernanke said Monday. In a speech prepared for a conference here, Bernanke warned “global imbalances may reassert themselves.” The U.S. must save more, Bernanke said, and the most effective way is “by a clear commitment to substantially reduce federal deficits over time.” Bernanke warned Asian economies must avoid too great a reliance on external demand. Also, policymakers have to balance the risks of withdrawing policy support too early, and cutting off recovery, against waiting too long, “which could overheat the economy.”

There are some disturbing problems with Bernanke’s recommendations and apparently many of the mainstream media outlets have not picked up on it. First of all, China runs its economy as a mercantilist one, or one that is solely interested in its own policies and well being, and thus does not really care two pennies whether or not it is abiding by “trade obligations” that the World Trade organization has set. Indeed, they have been flaunting international calls to float their currency on the open forex market for many years, and import only about 5 per cent and export the rest.

This is a cause for concern because other countries are artificially attracted to the labor and cost savings of this country because of their artificially low financial system. Only until China abides by the rules of the WTO will there be a “trade re-balancing” of the world goods exchange system.

Secondly, Bernanke recommends that Americans start saving money so that the economy can heal itself with these savings. The question we must ask is: how are Americans supposed to save money when the central bank sets interest rates close to 0 per cent? It gives people no incentive to save and only to spend; and this is part and parcel of the plan to bankrupt America because central banks really have no business in setting interest rates.

These technicalities can be set automatically by market forces. For example, if everyone were to keep their money in the country, and kept, for example, 30% of their savings in banks, these savings could be invested by banks to people looking to open businesses. This would improve the economy. As it stands now, the banks are simply giving money away to banks and they are lending it out at exorbitant amounts to businesses; further worsening the credit crunch that the Federal Reserve is trying to fix but ultimately will not in the long run.

For the past ten years, the Chinese growth strategy has been mercantilism, the strategy of maximizing exports and minimizing imports. The key to modern mercantilism is a high savings rate by one’s own population. Those savings provide the needed funds for investment in new factories and are loaned to one’s trading partners so that their trading partners can buy imports. Unfortunately for China, mercantilism doesn’t keep working in the long run. It succeeds magnificently when the goal is to bring down one’s trading partners. Indeed France and England used mercantilism in the 16th and 17th centuries to bring down Spanish power (Trade n Taxes blog).

A number of factors have been combining to force Asian stocks to continue their downward trajectory. Starting with U.S. stocks that closed lower yesterday, which triggered a wave of profit taking as investors locked in profits given their recent high. Coupled with the dollar peak and risk appetite, decreased misfortunes appeared once more on the outlook for the global economy that pessimists focused on the growth of China’s lack of expectations and not the fact that the economy is indeed overheating.

Carl Delfeld, editor of ChartwellETF.com, says China’s economy may face big problems as overcapacity and overheated bank lending result in a sharp slowdown. The country has substantial overcapacity in manufacturing, real estate, and infrastructure, as well as deteriorating credit quality and weakening export markets. All of these factors will lead to a growth rate far below that expected by the markets and will, in turn, lead to a China crisis, circa 2010 (Delfeld, Moneyshow).

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