Greenspan See's the Error of his Ways...(a bit)

This is an excerpt from the NY TIMES about former Fed chief Alan Greenspan’s grilling by lawmakers in Washingon:
Mr. Greenspan conceded a serious flaw in his own philosophy that unfettered free markets sit at the root of a superior economy.
“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Mr. Greenspan said.
Referring to his free-market ideology, Mr. Greenspan added: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”
Mr. Waxman pressed the former Fed chair to clarify his words. “In other words, you found that your view of the world, your ideology, was not right, it was not working,” Mr. Waxman said.
“Absolutely, precisely,” Mr. Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”
Am I alone in deriving a little grim satisfaction from hearing Greenspan recanting his monetarist neo-liberal weltanschaung? However it is certainly the case that capitalism will now begin to absorb the facts and adapt to the situation, bringing a neo-Keynesian perspective back into vogue, a little reminiscent of those tag wrestling bouts when the wrestler losing could somehow stretch out from a prone and utterly defeated position to bring onto the mat his partner, thus relieving himself from his impending defeat, well capitalism has a ready line of tag partners, fascism has stepped in on more than one occasion, I suppose that neo-keynesian ideas will be employed to justify the state and its resources( the taxes we all pay), now being employed to ensure capitalist property relations are preserved, whereas the current crisis should really be tackled from asking the really fundamental question, namely how can something as important as global economic development and prosperity be left in the hands of such a patently illogical system.

The main question here is how finance capital, yes dust off your Lenin, the controllers ultimately of both the banks and industry have been able to shift the political balance of forces in their favour over the past 30 years, destroying the restrictions on capitalism's power globally which had been wrested from the worlds ruling class over the previous 50 years.

Communist Party of the USA Chairman Sam Webb traces the crisis back to the political offensive of the Reagan administration against American organised Labour, and the USSR and the role that it played in supporting anti-imperialism across the globe, especially in the Middle East, Africa, and Latin America.
"While financialisation was an outgrowth of the systematic weakness of US capitalism, it was also the leading edge of a neo-liberal model of capital accumulation designed to restore US capitalism's momentum, profitability, and dominant position in domestic and world affairs"

But Webb goes on to argue,financialization is a two-edged sword, not all peaches and cream. Indeed, its very successes opened up new fault lines in the U.S. and global economy, making it, as we so graphically see, unsustainable.

While it stimulated the domestic and global economy, it also left the USA with an astronomical pileup of household, government and corporate debt which can’t be unwound overnight.While it gave an impulse to economic growth, it also introduced enormous instability into the arteries of the U.S. and world economy, evidenced by the frequent financial contagions at home and globally over the past two decades.
While it prolonged the upward cyclical movements of capitalism, it has also set the stage for a hard economic landing and a much deeper crisis eventually, which is what we are experiencing now.While it created wealth on a substantial scale, it also successfully engineered the biggest transfer of wealth in US and European history from wealth creators — the world’s working people — to wealth appropriators, the upper crust of U.S. and European finance capital.
While attracting mobile capital the worlds financial markets, it also has made the economies of the western world dependent on the willingness of foreign investors to absorb massive amounts of debt, something that they are increasingly less inclined to do, as the dollar fell in value on international currency markets and markets collapse.While the debt-driven purchasing power of western consumers bolstered global demand, it also tied the world’s economy to the apron strings of a very heavily financialized, indebted, and unstable US economy.
As this year's financial woes spread beyond Wall Street to engulf much of the world's economy, the contours of debate over the crisis have also broadened. First narrowly defined around loans and bailouts, the debate has morphed into a wholesale reconsideration of the capitalist model and free-market economic orthodoxy. ""Laissez-faire is finished,"" said French President Nicolas Sarkozy in a recent speech. ""The all-powerful market that always knows best is finished."
The spectacle of a crisis of confidence in capitalism, largely unthinkable just a few years ago, has prompted a rethink of some of the most established aspects of modern economic theory. It has renewed the prominence of John Maynard Keynes, a Depression-era British economist who argued that free markets would not ""self-correct"" and that government involvement would always be needed to guarantee that market gains translated to improved living standards across society. Keynes wasn't an anti-capitalist--rather, he hoped government intervention would buttress the capitalist system against excesses and thereby preserve the positive aspects of the system. Keynesian theory stands in contrast to that of Friedrich Hayek, whose argument for a more hands-off approach to free markets won significant support in recent decades. An analysis from the FT says Keynes' renewed influence is now visible ""everywhere"": in Sen. Barack Obama's economic plans, for example, but also in recent comments from President Bush that U.S. bank takeovers were "not intended to take over the free market, but to preserve it.""
The policy implications of this ideological shift remain unclear, but could go on display in mid-November when world leaders will meet to discuss the future of international market regulation. Some analysts say the summit, convened jointly by Bush and Sarkozy, could produce a framework for managing the future order of financial and commercial relations akin to the 1944 Bretton Woods Agreements, which many economists now criticize as obsolete.
Some economists are also ringing a note of caution about systemic changes. In a new editorial, the Economist ""hopes profoundly"" that a move toward regulation takes into consideration the beneficial aspects of capitalism and the fact that no other system has proven better at creating wealth and preventing poverty--points made by Keynes himself. Regulators should work to manage the system better, the piece says, but not to scuttle it altogether. Doing this won't be easy. Martin Wolf, the FT's chief economics commentator, says that the effort to preserve liberalized capital markets faces a major intellectual challenge, given the severity of the crisis. ""We're going to have to do a very credible job of explaining that we're going to do better in the future, managing the global adjustment on macroeconomics,"" Wolf says. ""It's going to be very hard."... I know...I know....sadly the forces of progress and socialism had their most powerful wrestler in their tag team taken out of existence by the other side, so despite all the arguments in favour of its demise, capitalism is likely to survive even this crisis, and the best we can hope for is that the forces of democracy will be able to wrest a 'new deal' style approach to this slump, and it looks like its going to be one humdinger of a slump.

Barclays ...Amongst Others to End Up in the Dock??

Barclays is being sued in a New York court over claims it moved loss-making investments from its own accounts to those held by outside investors.

The losses to investors are alleged to total hundreds of millions of dollars.

The case is being brought by a French company which claims it was told these investments - known as "SIV-lites" - were super-safe and offered a AAA or AA rating.

But Barclays denies the allegations and told BBC File On 4, that the action has "no merit."

The case against Barclays centres on two complex investments - one called Golden Key and the other called Mainsail - which the bank created to sell to outside investors.

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The company alleges that in the summer of 2007, at a time when the sub-prime crisis was growing, Barclays arranged for hundreds of millions of dollars worth of mortgage-based securities to be transferred from its own accounts to the two SIV-lites.

The French company's US lawyer Geoffrey C Jarvis said that Barclays should have known in June 2007 that such mortgage-based investments were "substantially impaired."

He added: "I can't say what Barclays knew because they haven't told me but if they didn't know they were certainly reckless in not knowing."

Barclays refused to discuss the case with the BBC but in a short statement said: "This action has no merit and we will contest it vigorously."

listen to the fascinating programme here

Ten Reasons Why the Fed's Bailout Won't Work

It has been heralded as the answer to the world financial crisis, I have my doubts, when you consider these ten reasons why the US bailout won't work, it becomes very clear why the majority of serious economic commentators share my scepticism....

1.Buying toxic assets will do nothing to restore the balance sheets of troubled firms, says John Hussman, the portfolio manager of the Hussman Strategic Growth Fund and the Hussman Strategic Total Return Fund, and chairman of Hussman Econometrics Advisors . Such action would improve the balance sheet, he said, but it doesn't add capital to stressed firms, which is what they need.

2.Edmund Phelps, the winner of the 2006 Nobel Prize in economics and director of the Center on Capitalism and Society at Columbia University in New York, made parallel arguments in an opinion piece in a recent Wall Street Journal. Mr. Phelps said the main prong of a rescue plan must include “cash transfusions in return for warrants,” as with the Federal Deposit Insurance Corp.’s rescue of Wachovia Corp. of Charlotte, North Carolina.

3.LIBOR, the rate at which banks lend to each other, since the bailout was passed is in fact higher. The 3-month Treasury yield has dropped again. And the DOW dropped 300+ points.So the Bailout news hasn't done it (and if the market thought the bailout would work, the markets would have reflected that.) This suggests that the US government will have to do even more. Which it has already started to do. Fed and 9 other central banks responded by announcing another MASSIVE liquidity injection. The market rallied modestly on this news, but not much.

4.Part of the problem is that the crisis has now spread to Europe (Fortis, etc.). The economies of UK, Germany, etc., were already following the same path as the USA. More bank failures won't help.

5.Paul Krugman Professor of Economics and International affairs at Princeton University,says “For the fact is that the plan on offer is a stinker — and inexcusably so. The financial system has been under severe stress for more than a year, and there should have been carefully thought-out contingency plans ready to roll out in case the markets melted down. Obviously, there weren’t: the Paulson plan was clearly drawn up in haste and confusion. And Treasury officials have yet to offer any clear explanation of how the plan is supposed to work, probably because they themselves have no idea what they’re doing."

6.The much vaunted bailout does not address the prices/valuation of US property, stocks and risky bonds; all of which will continue plummeting; further compromising the asset side of the US balance sheet while the liability side remains – and drives hundreds of billions more in net loan losses. The asset side will be further undermined by the collapse of commodity prices in the face of plunging global demand.

7.It stratospherically increases US government liability at a time of plunging tax revenue from all sources, destruction of loanable capital, and growing liability to fund unemployment claims and the like. This liability can only be met by borrowing, taxing or fiat money creation – each of which has major negative consequences.

8.Kenneth Rogoff Professor of Economics and Public Policy at Harvard University believes that “The plan’s central conceit is that government ingenuity can disentangle the trillion-dollar “subprime” mortgage loan market, even though Wall Street’s own rocket scientists...(who shared more than $36bn dollars in bonuses last year, thanks to the huge profits these institutions “earned” on their risky and aggressive business strategies)….have utterly failed to do so. Let’s ponder this. Investment bankers have been losing their cushy jobs because they could not figure out any convincing way to price distressed mortgage debt. Otherwise, their firms would have been able to tap the trillions of dollars now sitting on the sidelines, held by sovereign wealth funds, private equity groups, hedge funds, and others. Now, working for the taxpayer, these same investment bankers will suddenly come up with the magic pricing formula that has eluded them until now.”

9.It costs $700 billion dollars, which is as much money as the combined annual budgets of the Departments of Defense, Education and Health and Human Services. It amounts to $2,300 for every man, woman, and child in America. This $700 billion will all be borrowed money. The plan raises the national debt ceiling to $11.3 trillion. That is $11,300,000,000,000.

10.It gives Sec. Henry Paulson, formerly the head of Goldman Sachs, the power to buy assets from his former firm with no court or administrative oversight. Goldman Sachs, like many Wall Street firms, gave its CEO a $67.9 million bonus last year. That is more than 1,400 times what the average American earns. Yet the plan has no provision to cap salaries or reduce bonuses at Wall Street banks that take taxpayer money.

'Tales from Europe' and Das Singende Klingende Baumchen

I was chatting the other day with one of my old school mates from my early years in London, and as people in their forties are wont to do, we started remembering the old TV programmes that were broadcast on childrens TV back in our childhood ....amongst mention of the inevitable Blue Peter vs Magpie divide, we both almost simultaneously remembered that there was something really very weird that British children were served up before their tea's sometime in the early 1970's. That was of course the strangest of times when the BBC seemed to be importing some pretty well made fairy-tale dramatisations mainly from Eastern Europe. We both remembered that the series was called 'Tales from Europe', and we both remembered one of the the Soviet contributions, 'The Snow Queen' below which I recall was pretty scary,



But best of all was when we both exploded in a laughter born of mutual recognition as our memories located the weirdest of them all...'The Singing Ringing Tree' (or to afficionados TSRT) ...or in its original German title Das Singende Klingende Baumchen. This surreal fairy tale came out of the Babelsberg studio in Potsdam and was produced by DEFA films and featured a nasty haughty princess, a handsome prince who is later turned into a bear, an evil dwarf, a magical singing ringing tree, some comic soldiery, and a talking fish (full story here) .

As I remember it everyone of us in our class could not get over how wonderful it was, and as I recall it was repeated a good few times, because I remember watching it at least twice. What made these tales from Europe so watchable was the fact that it transported us to another land, in so many ways, a land of fairy tales and of course the unknown lands of Europe. The fact that they came from behind the Iron Curtain did not either register with us, or if it did it certainly did not matter. Curious I found that my old school mate and I were not alone in remembering with warm affection this whole series, and the Singing Ringing Tree in particular. I listened with some fascination the BBC Radio 4 documentary about the innovative and at times absolutely terrifying fairy tale from the DDR and the USSR . By clicking on the hypertext link you can still listen to that documentary about the cult DDR childrens film
I went on to some discussion boards and discovered that this programme was stuck in other peoples minds as much as mine, one poster described his feelings thus,

"I still have flashbacks in the form of a barely-remembered, glorious,visually sensual,surreal,sinister and to me,somehow erotic dream. The princess was the first woman I ever loved. I remember I may have been about eight or nine years of age at the time and I found this woman utterly bewitching. I would gawp in complete enrapture at her - to me she was the most beautiful, other worldly and exquisite thing I had ever seen! Seeing pictures of her now still makes me feel 'all funny'! Throughout my life I have always had an interest in the unusual,sinister,bizarre and erotic and I would say that TSRT most probably laid the foundations for this, along with other European children's programmes. A huge thankyou to all those individuals responsible for helping us to relive a small part of our innocent childhoods again "

There are literally dozens and dozens of other comments like this about TSRT on

guest book of ‘your Favourite TV memories’

If you want to be a complete anorak about this a full listing of what was on Tales from Europe and when is available here .

Seeing that there is obviously a lot of us who were mesmerised by the whole 'Tales from Europe' experience I have decided that 'Unrepentant Communist' will repeat the role of the socialist countries and provide a little bit of access to some clips from the best loved of these 'Tales from Europe', this is part of a series of 7 TSRT tracks available now on You Tube


but perhaps the visuals will bring back a few memories, apologies to those readers who did not see these in their childhood since you were in other countries, but I hope you will indulge this exercise in blatant nostalgia on this one teeny weeny occasion :) ....

Socialism For The Rich.OR How Roubini WAS Right...

Gore Vidal writing in the 1980's made the observation that Reagonomics was nothing more than the expression in policy terms of the fact that

"The US government prefers that public money go not to the people but to big business. The result is a unique society in which we have free enterprise for the poor and socialism for the rich."

This insight has been impossible not to recollect this week following the nationalisation of American International Group, the world's biggest insurer, immediately following the dramatic rescue of the Fannie Mae and Freddie Mac housing companies and of the Bear Stearns bank.Robert Reich's described the process as 'socialised capitalism' . It has reached an astonishing new height with the announcement by the Fed, hurriedly backed by a thoroughly spooked Congress, and White House, that it would in effect underwrite the entire creaking US financial system to a tune of $1 trillion, thats a $1000 billion to you and me, courtesy of an increase in the US national debt, which of course is ultimately serviced by the US taxpayer.
"Gains privatised and losses socialised" was the more pointed comment by Nouriel Roubini Professor of economics at the Stern School in New York University. Professor Roubini is known in the economics trade as a "permabear" because of his repeated claims over the last six years that a financial system based on self-regulation, non-deposits, highly leveraged subprime housing debts and globalised derivatives trading was unsustainable and would collapse.

Roubini argues that the AIG should have been bankrupted rather than nationalised, and the $85 billion of taxpayers' money loaned to the firm could have been used instead for debtor-in-possession financing. This would have allowed for a more fair process for allocating losses between shareholders and short-term and long-term creditors of the firm. Nationalisations like this are prejudiced in favour of those responsible for the trouble in the first place.He is scathing about the Bush administration's actions. In RGE (Roubini Global Economics) Monitor, he wrote: "Fanatic zealots of any religion are always pests that cause havoc and destruction with their inflexible fanaticism; but they usually don't run the biggest economy in the world. But these laissez-faire voodoo-economics zealots in charge of the USA have now caused the biggest financial crisis since the Great Depression and the nastiest economic crisis in decades.

"So let them be shamed in public for their hypocrisy and zealotry that has caused so much financial and economic damage."

Roubini appears to be underwhelmed by the Feds bail out however, writing on the 19/9/08 in RGE Monitor he said

""At this point a severe recession is unavoidable; the only question is how severe and protracted it will be. Debt reduction and public recapitalization of banks will not instantly resolve every problem and will not prevent a painful recession that – at this point – will last at least 18 month."

NB Roubini predicted this crisis as long ago as September 2006- See here-http://www.alternet.org/story/95375/meet_the_economist_who_thinks_we%27re_doomed/

AIG May Be Bailed Out- But the World Financial Crisis Will Remain Profound

As I write there has been a last minute deal to save huge American Insurance giant AIG..but whether or not this lifebelt is thrown will rely on whether the Fed considers AIG to be of such systemic significance that it can not be allowed to go to the wall, unlike the unfortunate Lehman Bros. Its interesting how what would probably be the home of the most wide eyed fanatical adherents of the all powerful 'invisible hand of the market' are now having their bacon saved by the intervention of the much derided US state. The same state that is viciously derided for its interference in free market forces by the right wing media pundits and talking heads representing the 'investing community' or the financial services sector when it regulates and controls the excesses of greed which capitalism seems inevitably drawn to. The same state is now cast in the role of hero as it spends tax payers money to save the hides of the formerly much vaunted 'masters of the universe'.
This impressive analysis by Ann Pettifor of Open democracy provides an insightful examination of what are the roots of this crisis and goes beyond the immediate hoo-hah surrounding Lehmans or AIG, it is well worth taking time to read...

"The collapse of Lehman Brothers and the forced sale of Merrill Lynch which took shape over the weekend of 13-14 September 2008 have confirmed the scale and gravity of the global financial crisis. The difficulties at the insurance company AIG are a glimpse that there is more to come. But the extent of the wreckage makes it ever more important to analyse correctly what has gone wrong. For just as a faulty medical diagnosis can harm the patient, so a flawed economic diagnosis can lead to wrong conclusions and bad solutions.
Ann Pettifor is executive director of Advocacy International. In the 1990s she helped design and lead the international campaign Jubilee 2000. She is editor of The Real World Economic Outlook (Palgrave, 2003) and author of The Coming First World Debt Crisis (Palgrave, 2006)Also by Ann Pettifor on openDemocracy: "The coming first world debt crisis" (1 September 2003)"Ethiopia: the price of indifference" (19 February 2004)"Gleneagles, 7/7 and Africa" (4 July 2006)"Debtonation: how globalisation dies" (15 August 2007)"Globalisation: sleepwalking to disaster" (11 December 2007)"The G8 in a global mess: 1920s and 1980s lessons" (7 July 2008)In this respect, orthodox economists continue to be part of the problem that Lehman Brothers and Merrill Lynch (and, before them, Northern Rock, Bear Stearns, and Fannie Mae and Freddie Mac) represent. For so long they turned a blind eye to the finance sector, to privatised credit-creation and its role in fuelling asset-bubbles. In so doing they revealed their inability to predict, understand or offer solutions to a consuming crisis.
This article looks at how such failures took hold in the context of the deregulated global financial system of the 2000s, and why the predicted collapse of this system begins in the United States.
The deregulated economy
The former chairman of the Federal Reserve in the United States, Alan Greenspan, has himself said that what is happening to Lehman Brothers and Merrill Lynch is a "once-in-a-century" event. Yet the way many orthodox economists characterise Greenspan's own role in the global "debtonation" of the post-9 August 2007 era reveals how far they remain trapped in the rituals of evasion (see "Debtonation: how globalisation dies", 15 August 2007).
The key argument these economists make here is that the current crisis has been caused by the low interest-rate monetary policy Greenspan presided over after 2001. This case permits a twofold diversion - for it pins the blame for the crisis on interest rates (not deregulation of credit-creation) and on central bankers (not the private-finance sector). The policy implications of this focus neatly avoid proposals for what is clearly and urgently required: re-regulation of the finance sector.
But the argument that makes interest-rates a fundamental cause of the crisis is wrong even in its own terms - not least as it can lead to a recommendation that higher interest-rates are a way out of the mess. The crisis facing banks and individuals - indeed whole economies - buried under mountains of debt and threatened by an intractable deflation makes this a truly deranged proposal.
The phenomenon of "deleveraging" as a way of managing these mountains of debt helps explain why. Deleveraging means paying off (or more accurately writing off) the crazy amounts borrowed on the back of tiny amounts of real money - say the $1 million borrowed (or leveraged) on the back of $1,000 of sound collateral; deleveraging that debt would entail paying off / writing off $999,000. The inevitable result in many cases is bankruptcy, part of a wider deflationary momentum in the economy.
Debtors of all kinds - official, corporate, individual - are already struggling to repay at the current high real rates of interest. That is the core element of the debt crisis (or "credit-crunch"). To prescribe higher interest-rates would turn crisis for many individuals, companies and banks into catastrophe.
Also in openDemocracy on the global financial crisis of 2007-08:Saskia Sassen, "Globalisation, the state and the democratic deficit" (18 July 2007)Christopher Harvie, "Gordon Brown vs Scotland: the balance-sheet" (17 September 2007)Tony Curzon Price, "Gordon Brown: between rock and hard place" (18 September 2007)Robert Wade, "The financial crisis: burst bubble, frayed model" (1 October 2007)Avinash D Persaud, "The dollar standard: (only the) beginning of the end" (5 December 2007)Fred Halliday, "Sovereign Wealth Funds: power vs principle" (5 March 2008)Tony Curzon Price, "Lehman: technocrats' endgame" (15 September 2008)Here, the context of Alan Greenspan's post-2001 role is relevant in understanding the global economy then and now. For his policy of lowering interest-rates was a reaction to the bursting of the dot.com-bubble - which, like the property-bubble which burst in 2007, was fuelled and inflated by easy, unregulated and privatised credit-creation. Moreover, these low interest-rates in the early years of the 21st century were more a function of the new global capital markets than of the powers of central bankers to set low rates.
The result of deregulation (i.e. "globalisation") in the 2000s was and is that capital can flow free and untrammelled around the world. The accompanying collapse of the Bretton Woods system (which contained mechanisms for curtailing the growth of imbalances between nations) meant also the growth of large balance-sheet contrasts (massive deficits in the United States and Britain, huge surpluses in China and Japan, for example). The countries in surplus - China most of all - exported their excess capital to the US.
This flood of capital lowered rates of interest in the US - to the chagrin of Alan Greenspan, who by this time was trying to raise rates. Greenspan could have done this by erecting barriers to the movement of capital - capital controls - thereby preventing China's surplus capital from having an impact on US interest-rates. Instead, he preferred to pretend that he was impotent in the face of a mysterious "conundrum".
An Alan Greenspan or any other central banker armed with controls over the movement of capital would be able to switch a key lever of the economy: the rate of interest. That is, not just the "policy rate" or the "official rate" (often known as the "bank rate") but all rates - safe and risky, short and long. Where central bankers abandon such controls, and delegate powers over interest-rates to private bankers, they are impotent in the face of capital movements that affect the yields on bonds, and therefore of interest-rates within their domains.
The sharecropper society
The momentous news of the collapse of Lehman Brothers and the sale of Merrill Lynch - part of the larger process unfolding since "debtonation day", 9 August 2007 - brings all the failings of the seven years that preceded it into even sharper focus.
In 2003, as part of a team at the new economics foundation, I edited a book intended to "shadow" the International Monetary Fund's "world economic outlook", which we believed was based on the delusions of orthodox economics (see The Real World Economic Outlook, Palgrave, 2003). An article in openDemocracy at that time - five years ago almost to the day - heralded the "provocative new research ... which argues that the ‘first world' is approaching a major debt crisis... The reckless financial policies of leading western powers in the last two decades make it likely that the next seismic debt crisis will be in America, not Argentina" (see "The coming first world debt crisis", 1 September 2008).
The book and article explained that the current, post-Bretton Woods international financial architecture ("globalisation") was so structured as to enable the United States to "hoover up" money from the rest of the world, and use these resources to live beyond its means. I wrote then: "It is this financial system which makes US financiers so confident that the rest of the world will continue to finance their nation's extravagant spending binge. In the words of David Goldman, head of debt research at Bank of America Securities: ‘America is at little risk for the foreseeable future, simply because the world's capital has nowhere else to go' (Wall Street Journal, 13 August 2003)".
The fall of Lehman Brothers is final confirmation that the world's capital does now have somewhere else to go. This event thus marks the beginning of the collapse of today's international financial architecture, which has rested on very shaky foundations since Richard Nixon's administration unilaterally dismantled the Bretton Woods system in 1971 and began to shape the new.
The reason why the Lehman Brothers collapse is historic is that this institution expected until a very late stage to be saved by the state-run Korea Development Bank (KDP). But Seoul looked at the books and had other ideas: on 9 September 2008 - to the astonishment of Lehman's shareholders and investors - this ever-so-reliable ally of Washington refused to fund a bail-out.
The fact that such sovereign wealth funds as the KDP are no longer willing to finance reckless US institutions is of itself of the greatest significance. It implies a lack of confidence in the solvency of US financial institutions, and indeed of the United States as a whole. This will lead to a fall in the dollar, which will have profound economic implications for the global economy, and for globalisation as a whole.
The billionaire investor Warren Buffett wrote a letter to shareholders in March 2005, in which he predicted that by 2015 the net ownership of the US by outsiders would amount to $11 trillion. "Americans ... would chafe at the idea of perpetually paying tribute to their creditors and owners abroad. A country that is now aspiring to an ‘ownership society' will not find happiness in - and I'll use hyperbole here for emphasis - a 'sharecropper's society'."
Buffett was and is right. The collapse of banks and investment funds, and of the international financial system - a consequence of the unpardonable folly of the powerful - is serious and dangerous enough. But what is even more to be feared is the emergence of a sharecropper society, angry at its downfall. Thus will America's problem become the world's. "

Lenin was 100...And Other Secrets of the Forest...

An intriguing story has come my way, concerning a visual relic of the Soviet era which can be seen by all now in 2008 courtesy of google earth.
Thirty eight years ago, in 1970 there was the hundreth anniversary of the birth of Vladimir Ilyich Lenin, the leader of the Bolsheviks and the founder of the USSR after the revolution in 1917. In Siberia foresters decided to celebrate this anniversary by cutting all the trees on a plain leaving only those that would form a really huge message “Lenin is 100 ”. This was before the era of Google Earth, and there were certainly no satellite photos in the media.
So what inspired this bizarre tribute to the memory of Lenin? The real reasons are no doubt lost in the smoky haze of some long forgotten Communist Party committee meeting in the region at the time, when people were devising ways to commemorate the anniversary,.
Some have speculated that it may have been a defiant two fingers to any passing American spy satellites, or perhaps it was an act of personal whimsy by a collective of bored managers and workers.
I wonder, whether, given the amount of trees involved that there were good deal of trees not cut, presumably an act approved for the purposes of this stunt, could this in itself have provided a conveniently grey accounting area in terms of other amounts of lumber that were not cut and may, instead of participating in this unique arborial tribute to Lenin, have ended up being sold for private gain on the black market?
I know that this is purely speculative on my part, but it does seem rather an elaborate wheeze for something that very few could possibly have ever seen. If this was true, could it be the real irony of this discovery 38 years later ? That it was in fact all part of an elaborate black market lumber scam?
On the other hand the lads might just have thought it would be a good way of not having to cut down those trees. Whatever way one looks at it, if it was the idea of some keen young Party apparatchik eager to make an impression, one can only guess what the workers who had to cut around the elaborate template required to make it visible from the lower stratosphere would have thought of their management, and possibly the whole Soviet leadership. You can examine the evidence of this piece of super topiary by following this link,