Ambrose Evans-Pritchard
London Telegraph
August 28, 2008

Fears are mounting that Russia may restrict oil deliveries to Western Europe over coming days, in response to the threat of EU sanctions and Nato naval actions in the Black Sea.

Any such move would be a dramatic escalation of the Georgia crisis and play havoc with the oil markets.

Reports have begun to circulate in Moscow that Russian oil companies are under orders from the Kremlin to prepare for a supply cut to Germany and Poland through the Druzhba (Friendship) pipeline. It is believed that executives from lead-producer LUKoil have been put on weekend alert.

“They have been told to be ready to cut off supplies as soon as Monday,” claimed a high-level business source, speaking to The Daily Telegraph. Any move would be timed to coincide with an emergency EU summit in Brussels, where possible sanctions against Russia are on the agenda.

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Russia Today
August 28, 2008

A U.S. passport was found in a building in South Ossetia occupied by Georgian troops, a Russian military spokesperson revealed on Thursday. After Russian peacekeepers cleared the heavily defended building, a passport belonging to a Texan named Michael Lee White was discovered inside.

This Is London
August 28, 2008

Moscow has issued an extraordinary warning to the West that military assistance to Georgia for use against South Ossetia or Abkhazia would be viewed as a “declaration of war” by Russia.

The extreme rhetoric from the Kremlin’s envoy to NATO came as President Dmitry Medvedev stressed he will make a military response to US missile defence installations in eastern Europe, sending new shudders across countries whose people were once blighted by the Iron Curtain.

And Moscow also emphasised it was closely monitoring what it claims is a build-up of NATO firepower in the Black Sea.

The incendiary warning on Western military involvement in Georgia – where NATO nations have long played a role in training and equipping the small state – came in an interview with Dmitry Rogozin, a former nationalist politician who is now ambassador to the North Atlantic Alliance.

“If NATO suddenly takes military actions against Abkhazia and South Ossetia, acting solely in support of Tbilisi, this will mean a declaration of war on Russia,” he stated.

Yesterday likened the current world crisis to the fevered atmosphere before the start of the First World War.

Rogozin said he did not believe the crisis would descend to war between the West and Russia.

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Michael Evans
Times Online
August 28, 2008

A new Cold War between Russia and the West grew steadily closer yesterday after the Kremlin gave a warning about “direct confrontation” between American and Russian warships in the Black Sea.

Dmitri Peskov, a spokesman for Vladimir Putin, the Prime Minister, declared that Russia was taking “measures of precaution” against American and Nato naval ships. “Let’s hope we do not see any direct confrontation in that,” he said.

Any attempt by countries in the West to isolate Russia would “definitely harm the economic interests of those states”, he said.

A day after the Kremlin said that it was ready to fight a new Cold War, both sides gave the impression that they were preparing for a protracted stand-off. Foreign ministers of the G7 leading industrialised nations condemned Russia’s excessive use of force and the decision to recognise the breakaway regions of South Ossetia and Abkhazia, while the US and Russia shelved a key nuclear agreement that would have given the Americans access to Russian nuclear technologies and Russia help from the US in establishing an international nuclear fuel storage facility for spent fuel.

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South Ossetians have celebrated Russia’s recognition of independence

EU leaders are considering sanctions “and many other means” against Russia over the Georgia crisis, French Foreign Minister Bernard Kouchner has said.

But he said he hoped the matter would “be solved by negotiation”.

Moscow’s military action in Georgia and its recognition of independence for rebel regions has angered the West.

At a key summit, Moscow’s Asian allies have not followed suit in recognising independence but Russia’s president says he has their “understanding”.

Speaking at a summit of the Shanghai Cooperation Organisation (SCO), President Dmitry Medvedev said the group had a united position that would have “international resonance”.

“I hope it will serve as a serious signal to those who try to turn black into white and justify this aggression,” he said in the Tajik capital, Dushanbe.

However, the BBC’s Humphrey Hawksley in Moscow says the summit’s statement fell far short of unequivocal support for Russia.

The SCO, which includes China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan, did express backing for Russia’s “active role” in resolving the conflict in Georgia by “assisting in peace and co-operation in the region”.

But its statement added: “The SCO member states express their deep concern over the recent tensions surrounding the South Ossetia question and call for the sides to peacefully resolve existing problems through dialogue.”

Emergency summit

Earlier this month Georgia tried to retake the Russian-backed separatist region of South Ossetia by force after a series of clashes.

Russian forces subsequently launched a counter-attack and the conflict ended with the ejection of Georgian troops from both South Ossetia and Abkhazia and an EU-brokered ceasefire.

SOUTH OSSETIA & ABKHAZIA South Ossetia Population: About 70,000 (before recent conflict) Capital: Tskhinvali President: Eduard Kokoity Abkhazia Population: About 250,000 (2003) Capital: Sukhumi President: Sergei Bagapsh Profile: South Ossetia Profile: Abkhazia Q&A: Conflict in Georgia

France has called an emergency EU summit on Monday to reassess relations with Russia after Moscow’s refusal to pull back all its troops from Georgia in line with the truce agreement.

Mr Kouchner said: “Sanctions are being considered, and many other means.”

He added: “We are trying to elaborate a strong text that will show our determination not to accept [what is happening in Georgia].”

In a later statement, Mr Kouchner stressed France had made no proposals for sanctions itself but, as current president of the EU, would aim to get consensus among all 27 countries of the bloc if sanctions were envisaged.

Russia’s foreign minister described talk of sanctions, which correspondents say Mr Kouchner ruled out earlier this week, as an emotional response that demonstrated Western confusion over the situation.

Sergei Lavrov said such talk was the working of “a sick imagination”.

Mr Kouchner later responded by saying: “I’m not sick in the head. The Russians are a bit nervous, that’s all.”

New Cold War?

Meanwhile, Georgia’s foreign minister said the “ethnic cleansing” of Georgians from South Ossetia was nearly complete – but did not specify who was carrying it out.

Addressing the European security organisation, the OSCE, in Vienna, Eka Tkeshelashvili said Georgians had been removed from their homes across the disputed territory.

President Medvedev says he has the support of his Asian allies

Earlier, seven of the world’s leading industrialised nations – Canada, France, Germany, Italy, Japan, the US and UK – said Moscow’s recognition of South Ossetia and Abkhazia violated Georgia’s integrity and sovereignty.

The group also said it deplored Russia’s “excessive use of military force in Georgia and its continued occupation of parts of Georgia”.

UK Foreign Secretary David Miliband said Western countries should re-examine their relations with Russia and warned Russia not to start a new Cold War.

Russia said it was the last country that wanted a new Cold War.

President Medvedev said he was obliged to recognise the independence of the two regions after the “genocide” started by Georgian President Mikhail Saakashvili in South Ossetia in August.

However amid the rising tension, Russia has announced it has successfully tested its long-range Topol ballistic missile from a launch site in Kamchatka in the far east of the country.

Russia says the rocket is capable of penetrating the proposed US missile defence shield – another source of uneasiness between the two sides.

Infowars

August 27, 2008

Paul Craig Roberts, economist and former Assistant Secretary of the Treasury in the Reagan Administration, tells Jason Bermas on the Alex Jones Show that the Bush neocons are leading the United States into a nuclear confrontation with Russia over the situation in Georgia and South Ossetia. Roberts gives the conflict “almost total certainty if John McCain gets in office… this is not something that will happen in the next fifty years, it’s going to happen in the next two or three years.”

Related: Paul Craig Roberts

War With Russia Is On The Agenda
Are You Ready For Nuclear War?

Darryl R. Schoon
The Market Oracle
August 27, 2008

I have a bad feeling about what’s about to happen. The Great Depression is the closest that comes to mind. I, like most, was not alive during the 1930s when it happened. Nonetheless, what once was feared in private is now being discussed in public. It’s going to be bad. It’s going to make high school seem like fun.

THE UNITED STATES OF AMERICA THE NEXT ARGENTINA

This Time is Different: A Panoramic View of Eight Centuries of Financial Crises by University of Maryland‘s Carmen Reinhart and Harvard’s Kenneth Rogoff makes for perfect reading when flying between the US and Argentina.

There is perhaps no better analysis than Reinhart and Rogoff’s on the history of sovereign defaults; and, as such, Reinhart and Rogoff’s paper was ideal reading material when traveling between the US and Argentina , for the sovereign defaults that happened in the past to Argentina will soon be happening to the US .

But a US default will make Argentina ’s debt defaults pale both by comparison and consequence. The US , unlike Argentina , is the world’s largest economy, the issuer of the world’s reserve currency and the world’s largest debtor—and a default by the US on its debt will shake the very foundations of our increasingly fragile global economy.

SOVERIGN DEBT LIQUIDATING AMBITION

The power of ambition is extraordinary. The power of ambition transformed the US from the world’s only creditor after WWII into the world’s largest debtor in less than fifty years. Wanting to emulate England ’s 19 th century empire in the 20 th , the US instead has mirrored England decline in the 20 th century here in the 21 st .

Credit and borrowing fueled America ’s ambitions in the 20 th century as it had England ’s in the 18 th and 19 th . During the 1980s, to pay for President Reagan expansion of the military, the US quadrupled its national debt in less than a decade by borrowing three trillion dollars during a presidency pledged to balance the budget.

When Reagan took office, US debt totaled one trillion dollars. When Reagan left office, US debt totaled four trillion dollars. Reagan’s vaunted slogan of fiscal conservatism was just that—a slogan; and while talk is cheap, the debts now have to be repaid.

Just as the costs of WWI forced England to abandon the gold standard in the early 1900s, post WWII military spending forced the US to suspend the convertibility of the US dollar to gold in 1971; and the consequences, e.g. burgeoning trade deficits and global currency instability, are now putting unsustainable strains on a financial system already in extremis .

Ambition has its price and the bill is now due and owing. The question is: how will the US pay what it owes? In Hyman Minsky’s Financial Instability Model, the US is close to “Ponzi status” if not already there since the US is having to roll its debt forward and borrow from others to pay the interest as it can no longer pay down the principle.

In 2006, in an article published by the St Louis Federal Reserve Bank, Professor Laurence Kotlikoff stated the US was “technically bankrupt” as there was no way the US could pay the $65.9 trillion it owed.

Evidently, Professor Kotlikoff was conservative in his estimate or we’re going downhill faster than he knew. Just three months ago, on May 28, 2008 Richard W. Fisher, President and CEO of the Dallas Federal Reserve Bank estimated the obligations of the US to be actually $99.2 trillion, 50 % higher than Kotlikoff’s figures.

Fisher stated: In the distance, I see a frightful storm brewing in the form of untethered government debt . I choose the words—“frightful storm”—deliberately to avoid hyperbole. Unless we take steps to deal with it, the long-term fiscal situation of the federal government will be unimaginably more devastating to our economic prosperity than the subprime debacle and the recent debauching of credit markets that we are now working so hard to correct.

Fisher should know what the US owes and the danger that sum represents. As President and CEO of the Dallas Federal Reserve Bank, Fisher is a part of the Federal Reserve

System—the very system that has indebted America into perpetuity when its credit-based money forced out gold and silver based money in 1913.

But in his speech Fisher said nothing about the role the Federal Reserve has played in America ’s fatal dance with debt, warning instead about the increasing costs of entitlements such as Social Security and Medicare.

Fisher is part of a larger effort to now blame America ’s entitlements as the primary cause of our problems, assiduously avoiding the role his own Federal Reserve Bank has played in sinking our once wealthy nation into perpetual indebtedness.

In truth, the entitlement program that poses the greatest threat to America is—and always has been—the Federal Reserve System. Without the Federal Reserve’s credit-based money whose compounding interest (paid to the bankers) is obliged to be paid for by a possibly unconstitutional US income tax [note: the Federal Reserve Act and Federal Income Tax were both instituted the same year in 1913], the US would not be indebted and bankrupt as it is now.

If Ben Bernanke and Richard Fisher et. al. at the privately owned Federal Reserve Bank resigned and stopped plundering the US for their own benefit at the expense of the public in order to line the pockets of their banker friends with public funds, the US might have a chance of successfully getting out of this mess.

But, of course, they won’t and the now privately controlled US government will continue to indebt the American public so insiders can continue to profit immensely at the public trough. But the question still remains, how will the US pay its unpayable debt? The answer is as clear as it is obvious. It won’t because it can’t.

DEBT & DESTRUCTION SOUTH OF THE BORDER

In their well-researched paper, Serial Defaults and Its Remedies , Reinhart and Rogoff write “Cycles in capital flows to emerging markets have now been with us for two hundred years”. If we are to understand the dynamics of serial default, it would do us well to look at these cycles and their relevance to what is happening today.

Serial Defaults and Its Remedies, Section 2. Capital Flow Cycles and the Syndrome of “This Time Is Different” :

..a pattern of borrowing followed by crisis is evident in the string of defaults during 1826-28 in Latin America that come on the heels of the first wave of massive capital flows from Britain into Latin America in 1822-25…A second wave of capital flows from Britain came during the 1850s and 1860s. The cycle ended with the crisis of 1873. The next wave of capital flows into emerging markets coincided with the shift of the financial epicenter of the world from London to New York . Among Latin American countries, the borrowing binge of 1925-28 was [financed] with “cheap” money from New York . Capital flows peaked in 1928, the year before the U.S. Stock market crash ushered in financial and currency crises around the world and eventually an international debt crisis during 1929-33.

Argentina is at the very epicenter of Latin America borrowings and defaults and a cursory judgment may well lay the blame for such on Argentina . But understanding the past is akin to sedimentary sampling and a deeper reading of events reveals far more than the too familiar story of a spendthrift deadbeat nation borrowing more than prudence would otherwise dictate.

The capital flows from England and the US in the last two hundred years to Latin America were flows of credit, not money. The distinction is critical in understanding what has happened during the last two centuries. It explains the basis of the British Empire and current American power. It also explains the exploitation of Argentina .

The British Empire was founded on the central bank invention of credit-based money and the subsequent ability to substitute this new “money” for costly gold and silver; and the issuance of paper money allegedly backed by gold and silver is a critical component in the confidence game of central bankers to pass off their printed coupons as the real thing.

What the private bankers accomplished with the creation of the Bank of England was the government’s “legitimization” of the bankers’ new credit based coupons, sic paper money—coupons upon which the private bankers could now charge interest just as they had when loaning actual gold (what a wonderful scam). The new coupons were a lot easier to come by, especially when the king gave them a monopoly over its issuance.

The advantage to the king was that the king now had an unlimited supply of “money” that could be used to finance his wars—wars which led to the establishment of the British Empire; the cost of which was transferred directly as a burden to the people as the new counterfeit debt-based money was now an obligation of the state, not of the king.

This was the genesis (genius to the bankers and government) of the modern income tax where the people are forced to pay interest on the credit-based money issued by their own government. This was also the beginning of credit-based markets, deceptively called capitalism in order to closely identify the newly counterfeit credit based economy with the real money it had replaced.

CAPITALISM THE SPREAD OF DEBT IN DISGUISE

The flow of credit from England and then from its surrogate successor, the US, to developing nations such as Argentina was but the flow of printed coupons designed to harness and indebt the wealth and productivity of new lands.

The “capital” was really only credit, thinly disguised debt in the form of paper money originally issued by central banks, the Bank of England in Britain and the Federal Reserve Bank in the US , the twin towers of monetary Mordor.

The wonderfully sounding idea of unfettered capitalism is but a smokescreen for bankers to leverage their coupons in the form of credit and thereby indebt and control the productivity and wealth of others. As such, it has accomplished its goal admirably but its success will now cost the bankers dearly.

Three centuries of indebting nations, businesses, and the citizenry with constantly compounding debt is no longer sustainable. This is why central bankers in London , New York , Paris , and Tokyo are in such distress. Debtors can no longer pay their debts, defaults are on the rise and bankers may actually have to find real jobs if their confidence game continues to disintegrate.

BANKERS’ FEARS

Lawrence Summers’ credentials as a banker are impeccable. Educated at MIT and Harvard in economics, Summers has served as Chief Economist for the World Bank, US Secretary of the Treasury and President of Harvard University.

Recently, in March 2008, Summers stated:..we are facing the most serious combination of macroeconomic and financial stresses that the U.S. has faced in a generation–and possibly, much longer than that…It’s a grave mistake to believe in the self-equilibrating properties of economies in the face of large shocks. Markets balance fear and greed. And when fear takes over, the capacity for self-stabilization is not one that can be relied upon.

On June 29, 2008 the Financial Times quoted Summers:… we are in an economic environment where we have more to fear than fear itself …

Lawrence Summer’s fears are not to be taken lightly. They are the banker’s equivalent of Jim Cramer’s televised fit of fear when interviewed on CNBC last year, see http://www.youtube.com/watch?

While Summers is rightfully fearful of the current economic environment, the rest of us have far more to fear from bankers like Lawrence Summers and others like him. Summer’s role in the manipulation of the price of gold is found in his 1988 paper Gibson’s Paradox and the Gold Standard co-authored with Robert Barsky, published in the Journal of Political Economy (vol. 96, June 1988, pp. 528-550).

The hubris of bankers such as Summers is stunning. Fixing the price of gold hoping to control interest rates and prices is like fixing the temperature of thermometers hoping to control global warming. Such is the short reach of Summers’ considerable intellect.

EVIL BANKERS FACT OR FICTION?

But the real danger of bankers like Lawrence Summers lies not in their untethered intellect but in their cold ambition and selfish greed that sees nations and people as but living fodder to be milked, used and discarded as they and others profit.

In 1991, Summers issued the following memo while serving as Chief Economist at the World Bank:

…developed countries ought to export more pollution to developing countries because these countries would incur the lowest cost from the pollution in terms of lost wages of people made ill or killed by the pollution due to the fact that wages are so low in developing countries…the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.

As the World Bank’s Chief Economist, Summer’s memo is a chilling reflection of the heartlessness that lies at the core of bankers and banking establishments. The World Bank itself seems to be a favorite watering hole for those of questionable intent.

Robert McNamara, the architect of the Vietnam War was President of the World Bank as was Paul Wolfowitz, the architect of the Iraq War. The current President of the World Bank, Robert Zoellick, is also an ardent supporter of the Iraq War (also on Zoellick’s considerable list of “credits” is his service as advisor to Enron, his membership on the Council on Foreign Relations and Trilateral Commission and his attendance at the secretive Bilderberg meetings from 1991 to the present and his role as Senior International Advisor to investment bank Goldman Sachs).

It is no coincidence that those heading the World Bank are closely associated with America ’s vast war machine. Bankers have profited from fueling the military ambitions of both England and the US for the past two centuries and continue to do so today.

But perhaps the most damning indictment yet of the World Bank and today’s bankers is John Perkins’s Confessions of an Economic Hitman (Barrett Koehler, 2004) in which Perkins reveals the hidden intent of the World Bank and US bankers to cold-bloodedly indebt third world countries such as Argentina and profit by their misery.

In their review of Confessions of an Economic Hitman, Russell Mokhiber and Robert Weissman write:

Remember Smedley Butler?

He was perhaps the most decorated Major General in Marine Corps history. In the early part of this century, he fought and killed for the United States around the world. Butler was awarded two Congressional Medals of Honor.

Then, when he returned to the United States he wrote a book titled “War Is A Racket” which opens with the memorable lines: “War is a racket. It always has been.”

“I was a high class muscleman for Big Business, for Wall Street and for the Bankers,” Butler said. “In short, I was a racketeer, a gangster for capitalism.”

In a speech in 1933, Butler said the following:

“I helped make Mexico , especially Tampico , safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. The record of racketeering is long. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912. I brought light to the Dominican Republic for American sugar interests in 1916. In China I helped to see to it that Standard Oil went its way unmolested.”

Smedley Butler, meet John Perkins.

Perkins has just written a book, “Confessions of an Economic Hit Man” (Barrett Koehler, 2004). It is the War is A Racket for our times. Some of it is hard to believe. You be the judge.

In 1968, after graduating from Boston University , Perkins joined the Peace Corps and was sent to Ecuador . There, he was recruited by the National Security Agency (NSA) and hired by an international consulting firm, Chas. T. Main in Boston.

Soon after beginning his job in Boston , “I was contacted by a woman named Claudine who became my trainer as an economic hit man.” Perkins assumed the woman worked for the NSA.

“She said she was sent to help me and to train me,” Perkins said. “She is extremely beautiful, sensual, seductive, intelligent. Her job was to convince me to become an economic hit man, holding out these three drugs –- sex, drugs and money. And then she wanted to let me know that I was getting into a dirty business. And I shouldn’t go off on my first assignment, which was going to be Indonesia, and start doing this unless I knew that I was going to continue doing it, and once I was in I was in for life.”

Perkins worked for Main from 1970 to 1980. His job was to convince the governments of the third world countries and the banks to make deals where huge loans were given to these countries to develop infrastructure projects. And a condition of the loan was that a large share of the money went back to the big construction companies in the USA – the Bechtels and Halliburtons.

The loans would plunge the countries into debts that would be impossible to pay off.

“The system is set up such that the countries are so deep in debt that they can’t repay their debt,” Perkins said. “When the U.S. government wants favors from them, like votes in the United Nations or troops in Iraq, or in many, many cases, their resources – their oil, their canal, in the case of Panama, we go to them and say – look, you can’t pay off your debts, therefore sell your oil at a very low price to our oil companies. Today, tremendous pressure is being put on Ecuador , for example, to sell off its Amazonian rainforest -– very precious, very fragile places, inhabited by indigenous people whose cultures are being destroyed by the oil companies.”

When a leader of a country refuses to cooperate with economic hit men like Perkins, the jackals from the CIA are called in. Perkins said that both Omar Torrijos of Panama and Jaime Boldos of Ecuador -– both men he worked with – refused to play the game with the U.S. and both were cut down by the CIA -– Torrijos when his airplane blew up, and Roldos when his helicopter exploded, within three months of each other in 1981.

If the CIA jackals don’t do the job, then the U.S. Marines are sent in –- Butler ’s “racketeers for capitalism.”

Perkins also gives lurid details of how he pimped for a Saudi prince in the 1970s, in an effort to get the Saudi royal family to enter an elaborate deal in which the U.S. would protect the House of Saud. In exchange, the Saudis agreed to stabilize oil prices and use their oil money to purchase Treasury bonds, the interest on which would be used to pay U.S. construction firms like Bechtel to build Saudi cities.

For years, Perkins wanted to stop being an economic hit man and write a tell-all book. He quit Main in 1980, only to be lured back with megabucks as a consultant. He testified in favor of the Seabrook Nuclear power plant (“my most infamous assignment”) in the 1980s, but the experience pushed him out of the business, and he started an alternative energy firm.

When word got out in the 1990s that he was starting to write a tell-all book, he was approached by the president of Stone & Webster, a big engineering firm.

Over seven years, Stone & Webster paid Perkins $500,000 to do nothing.

“At that first meeting, the president of the company mentioned some of the books that I had written about indigenous people and said –- that’s nice, that’s fine, keep doing your non-profit work,” Perkins told us. “We approve of that, but you certainly would never write about this industry, would you? And I assured him that I wouldn’t.”

Perkins assumes the money was a bribe to get him not to write the book.

But he has written the book.

You be the judge.

Evil bankers? Fact or Fiction? You be the judge.

DEFAULT OR JUST DEADBEATS

While Reinhart’s and Rogoff’s work on sovereign default is worthwhile and important, their glaring avoidance of the geopolitical aspect of credit flows from England and the US to Latin America and other developing regions is indicative of the blind eye scholars turn to the activities of those who pay them.

Lawrence Summers was President of Harvard University where Kenneth Rogoff is now employed. It is not likely those who hired the likes of Summers would look kindly upon Rogoff should he begin asking questions whose answers would lead to truths Harvard’s trustees would rather not see the light of day.

So instead of dealing with the critical issues raised by John Perkins, Reinhart and Rogoff consider the phenomena of sovereign defaults as an innocent rite of passage much like high school through which developing economies must pass. Perhaps it is so, perhaps not.

But their “trained” eye wanders a bit, even to an untrained eye such as mine. According to Reinhart and Rogoff, the US is a “default virgin”, sic the US has never missed a debt repayment or rescheduled on at least one occasion. While this is strictly so, the US is nonetheless at the center of the largest default in monetary history.

In the 1970s, the US defaulted on its gold obligations under the Bretton-Woods Agreement. After overspending the greatest hoard of gold in history, 21,775 tons, between 1949 and 1971, the US had 7,000-8,000 tons of gold left and still owed perhaps over 31,000 tons to others.

In 1973, when the US officially refused to convert US dollars held by other countries to gold, it was the biggest monetary default ever. In that one act, as a consequence the entire global monetary system shifted from a gold-based system to a fiat-paper system.

Of the US default on its gold obligations, Professor Antal Fekete wrote in June 2008:

http://www.professorfekete.com/articles%5CAEFItsNotADollarCrisisItsAGoldCrisis.pdf

Thirty-five years ago gold, symbol of permanence, was chased out from the Monetary Garden of Eden , replaced by the floating irredeemable dollar as the pillar of the international monetary system. That’s right: a floating pillar. The gold demonetization exercise was a farce. It was designed as a fig leaf to cover up the ugly default of the U.S. government on its gold-redeemable sight obligations to foreigners. The word ‘default’ itself was put under taboo even though it punctured big holes in the balance sheet of every central bank of the world, as its dollar-denominated assets sank in value in terms of anything but the dollar itself. These banks were not even allowed to say ‘ouch’ as they were looking at the damage to their balance sheets caused by the default. They just had to swallow the loss, obediently and dutifully join the singing of the Hallelujah Chorus of sycophants in Washington praising the irredeemable dollar and the Nirvana of synthetic credit.

Debt virgin? Hardly, and whether the US defaulted or not is not just a question of semantics, it is a matter of truth—which, like credit, is now surprisingly hard to come by.

THIS TIME IT’S DIFFERENT

Carmen Reinhart and Kenneth Rogoff’s paper, This Time It’s Different , refers to the idea that sovereign defaults are a thing of the past. That we have somehow fixed what was wrong and it won’t happen again. Reinhart and Rogoff think otherwise.

But this time, in a different way it really is different. This time default will come to both banker and debtor alike. The bankers’ system itself is now collapsing under the weight of debt that the bankers’ debt-based money has produced.

Banks are finding themselves increasingly bankrupt as are the governments the bankers used to debase the world’s currencies. This time, not only will Argentina possibly suffer another sovereign default, so too will its creditor, the US , as will many of the US banks that issued that debt.

The default of the US will remain, however, outside the limited definition of default used by Reinhart and Rogoff. The US will not miss a payment or reschedule its debt. Unlike Argentina , the US prints the currency in which the Argentine and US debt is denominated. The US will print its way out of its debts. Argentina cannot.

Because of the enormity of the US debt, the amount of dollars necessary to print to pay down the debt will lead to the hyperinflation in the US and the destruction of the US dollar. Those who live by the sword sometimes die by the sword—though not often.

In that same article where Professor Kotlikoff estimated US liabilities to be $65.9 trillion, Kotlikoff also wrote:

The United States ..appears to be running the same type of fiscal policies that engendered hyperinflations in 20 countries over the past century.

Maybe this time it isn’t different..

DON’T CRY FOR ME ARGENTINA

SAVE YOUR TEARS FOR YOURSELF

In 1976, the Argentine military overthrew the democratically elected Argentine government. The first to recognize the dictatorship was the US . The second was the International Monetary Fund, and within 24 hours of recognizing the soon-to-be most brutal regime in recent history, the IMF arranged a loan to the military junta.

At the time, Argentina ’s external debt totaled $7 billion. When the bloody dictatorship ended with the return of democracy six years later, Argentina ’s debt totaled $43 billion, a debt owed mainly to US banks.

The common law concept of caveat emptor has particular relevance here, caveat emptor —Latin, “let the buyer beware”, is a legal precept that buyers must take responsibility for the conditions under which the sale was made.

If you loan to a dictatorship, don’t expect to be repaid if a democracy emerges.

Richard Perle, former US Assistant Secretary of Defense and neoconservative lobbyist

Richard Perle who supported the Iraq War said those words shortly after the US invaded Iraq . While it is doubtful Perle believes the same applies for debts incurred by the US supported dictatorship in Argentina , the truth of Perle’s words extend beyond Perle’s situational principles or a lack thereof. In a court of law, an illegal contract cannot be enforced—unless, of course, the court has been bought off.

A critical distinction between the debt “owed” by Argentina and the debts owed by the US is that Argentina’s debt was illegally imposed upon Argentina by the IMF, the US and international bankers without the consent of the Argentine citizenry, The US debt, however, was incurred with the consent of the American people—or was it?

That, my fellow Americans, is a $99.2 trillion question.

BANKRUPT BE THE BONDS THAT BIND

Americans with their outstanding obligations now measured in trillions of dollars of outstanding US bonds have much in common with the Argentine people. We have both been enslaved and bankrupted by the same financial system.

While it is impossible for the debt burdened Argentines to do something about US banks, it is not impossible for Americans to do so. The US Federal Reserve Bank—the largest emitter of debt-based money in the world—while not an official US government agency is nonetheless still subject to the rules and laws of our land.

STIRRINGS IN THE ELECTORATE

Dissatisfaction, the beginning of change, is now occurring. The two political polarities are finally awakening to the fact that both have been callously used by those in power. The US has lurched right then left then right again, but it continues to go in the same disturbing direction, a direction now equally distasteful to those on the left and on the right.

In modern democracies, successful politicians must possess two qualities: They must say what the people want to hear and they must do what those in power want done.

It has been easy to manipulate those on the right as well as those on the left. The Republicans and Democrats have done so for years. But where’s the beef? The nation’s finances have been even more badly managed by the Republicans than the Democrats—and Iraq ? Sure, vote for the Democrats and stay mired in a conflict they promised they would end.

Both parties are controlled by the same money, the same money that now controls global governments and institutions such as the World Bank and the IMF, the same money that buys politicians, scholars, the military, lawyers, TV anchors, radio talk show hosts and anyone else whose influence they can use for their own ends.

There is a reason why we are indebted as we are and there is a reason why we are mired in a war that one wants except the few that do, the few that now control our nation and many others. In the midst of this most unreasonable world, there are reasons—whether you want to know them or not.

Humanity now finds itself at the beginning of a profound shift, a shift that will force us—if we are to survive, if we are to triumph—to put aside our differences to accomplish together what we obviously cannot accomplish apart.

The two political polarities must find common ground or they will soon find there is no ground at all. What is happening is bigger than money and power although it involves both. It involves humanity, it involves all of us and unless we find each other we will soon find there will be nothing left to find at all.

We are closer to the end than to the beginning. Keep your own counsel. Buy gold and silver. Keep the faith.

In Argentina , I read in a recent issue of Scientific American that physicists now believe that in the beginning of time the Universe was only one centimeter across. That knowledge heartened me. We have come a long way.

Pravda
August 27, 2008

NATO has been increasing its naval presence in the Black Sea during the recent several days.

“The US Navy destroyer USS McFaul, which is currently docked in the Georgian port of Batumi, carries about 50 Tomahawk cruise missiles on board. They are outfitted with nuclear warheads and are meant to hit ground targets. The remaining NATO ships are currently concentrated in the northern part of the Black Sea,” a source in the military intelligence of the Russian Federation said.

He added that other NATO ships drifting in the Black Sea were armed with 64 anti-ship Harpoon missiles and about eight helicopters.

Washington insists that the ships, which appeared near Georgia’s shores, have been deployed there in accordance with George W. Bush’s decision, who ordered to deliver humanitarian aid to the Georgian military. Other NATO warships – Germany’s Luebeck, Spain’s Adm. Juan de Bourbon and Poland’s General K. Pulaski arrived to the shores of Bulgaria and Romania to participate in the military exercise that was scheduled along ago and has nothing to do with the conflict in Georgia.

“It is strange that such a large group of NATO warships has arrived for a joint exercise with Bulgaria or Romania. Usually, only one or two warships participate in such exercises, so the attempts to substantiate the presence of the naval group with a military exercise does not withstand any criticism,” the source said.

“It is clear that all statements made by the political and defense administration of NATO members are accompanied with outspoken militarist demarches. The use of nuclear weapons by NATO ships in the Black Sea is out of the question. The conventional weapons, which the NATO naval group has in the region, are more than enough to achieve any defense goals, which can be exemplified with Yugoslavia,” the source said.

The port of Batumi is the only port, which US warships can access on the Georgian territory. The port of Poti, which is larger and more convenient, remains under the control of Russia’s troops.

Russia’s President Dmitry Medvedev said in an interview with Al-Jazeera in Sochi that Russia’s recognition of Abkhazia and South Ossetia had only one goal – to help the people living in the two republics.

“There are no other motives in our actions,” Medvedev said answering the question about Russia’s possible intention to destabilize the government of Mikhail Saakashvili and change the political regime in the country, RIA Novosti reports.

R. F. Gay and F. William Engdahl
The Peoples Voice
August 22, 2008

A mathematical proof that there is no “climate crisis” has been published in debate on global warming in Physics and Society, a scientific publication of the 46,000-strong American Physical Society.

Christopher Monckton, who once advised Margaret Thatcher, demonstrates via 30 equations that computer models used by the UN’s climate panel (IPCC) were pre-programmed with overstated values for the three variables whose product is “climate sensitivity” (temperature increase in response to greenhouse-gas increase), resulting in a 500-2000% overstatement of CO2’s effect on temperature in the IPCC’s latest climate assessment report, published in 2007.

The article, entitled Climate Sensitivity Reconsidered demonstrates that later this century a doubling of the concentration of CO2 compared with pre-industrial levels will increase global mean surface temperature not by the 6 °F predicted by the IPCC but, harmlessly, by little more than 1 °F. Lord Monckton concludes –

“… Perhaps real-world climate sensitivity is very much below the IPCC’s estimates. Perhaps, therefore, there is no ‘climate crisis’ at all. … The correct policy approach to a non-problem is to have the courage to do nothing.”

Larry Gould, Professor of Physics at the University of Hartford and Chair (2004) of the New England Section of the American Physical Society (APS), has been studying climate-change science for four years. He said:

“I was impressed by an hour-long academic lecture which criticized claims about ‘global warming’ and explained the implications of the physics of radiative transfer for climate change. I was pleased that the audience responded to the informative presentation with a prolonged, standing ovation. That is what happened when, at the invitation of the President of our University, Christopher Monckton lectured here in Hartford this spring. I am delighted that Physics and Society, an APS journal, has published his detailed paper refining and reporting his important and revealing results.

“To me the value of this paper lies in its dispassionate but ruthlessly clear exposition – or, rather, exposé – of the IPCC’s method of evaluating climate sensitivity. The detailed arguments in this paper, and, indeed, in a large number of other scientific papers, point up extensive errors, including numerous projection errors of climate models, as well as misleading statements by the IPCC. Consequently, there are no rational grounds for believing either the IPCC or any other claims of dangerous anthropogenic ‘global warming’.”

Lord Monckton’s paper reveals that –

► The IPCC’s 2007 climate summary overstated CO2’s impact on temperature by 500-2000%;
► CO2 enrichment will add little more than 1 °F (0.6 °C) to global mean surface temperature by 2100;
► Not one of the three key variables whose product is climate sensitivity can be measured directly;
► The IPCC’s values for these key variables are taken from only four published papers, not 2,500;
► The IPCC’s values for each of the three variables, and hence for climate sensitivity, are overstated;
► “Global warming” halted ten years ago, and surface temperature has been falling for seven years;
► Not one of the computer models relied upon by the IPCC predicted so long and rapid a cooling;
► The IPCC inserted a table into the scientists’ draft, overstating the effect of ice-melt by 1000%;
► It was proved 50 years ago that predicting climate more than two weeks ahead is impossible;
► Mars, Jupiter, Neptune’s largest moon, and Pluto warmed at the same time as Earth warmed;
► In the past 70 years the Sun was more active than at almost any other time in the past 11,400 years.

Global Warming gets the Cold Freeze
Global warming hoax exposed by record global cold
by F. William Engdahl

The media and governmental hype over a danger from global warming that already is allegedly causing the polar icecaps to melt and threaten a global climate catastrophe, looks more and more like the political hype it is. This year to date, snow cover over North America and much of Siberia, Mongolia and China is greater than at any time since 1966.

According to the US National Climatic Data Center (NCDC) many American cities and towns have suffered record cold temperatures in January and early February. According to the NCDC, the average temperature in January “was – 0.3 F cooler than the 1901-2000 average.”

China is surviving its most brutal winter in one hundred years. Temperatures in the normally mild south were low for so long that some middle-sized cities went weeks without electricity because once power lines had toppled it was too cold or too icy to repair them.

There have been so many snow and ice storms in Ontario and Quebec in the past two months that the real estate market has been hurt as home buyers have stayed home. In just the first two weeks of February, Toronto received 70 cm of snow, breaking the record of 66.6 cm for the entire month set back in 1950.

Arctic Ice Melt has Reversed

One of the most dramatic results of the record cold over much of the planet is the reversal of the much-reported melt of the icebergs in the Arctic Ocean. Last autumn the world was alarmed to hear from certain climatologists that the ice in the Arctic had melted to its “lowest levels on record.” What was carefully omitted from those scare stories was the fact that those records only date back as far as 1972, and that there is anthropological and geological evidence of much greater melts in the past.

Now, as a result of the recent record cold weather, the ice is back. According to Gilles Langis, a senior forecaster with the Canadian Ice Service in Ottawa, the Arctic winter has been so severe the ice has not only recovered, it is actually 10 to 20 cm thicker in many places than at this time last year.

What few people know and what the Global Warming lobby seems at pains to keep known is the fact that there is considerable seasonal variation in how much pack ice of the Arctic ice pack covers the Arctic Ocean. Much of the ocean is also covered in snow for about 10 months of the year. The maximum snow cover is in March or April — about 20 to 50 centimeters over the frozen ocean. The thickness is not one of the universal constants, never was.

Admit flawed Climate Model

There is also admission by several intellectually honest climatologists that their predictive models are flawed. Robert Toggweiler of the Geophysical Fluid Dynamics Laboratory at Princeton University and Joellen Russell, assistant professor of biogeochemical dynamics at the University of Arizona, two very prominent climate modellers, recently admitted that the computer models that show polar ice-melt cooling the oceans, stopping the circulation of warm equatorial water to northern latitudes and triggering another Ice Age (as in the fictional movie The Day After Tomorrow) are wrong. In a recent interview Russell said, “It’s not ice melt, but rather wind circulation that drives ocean currents northward from the tropics. Climate models until now have not properly accounted for the wind’s effects on ocean circulation, so researchers have compensated by over-emphasizing the role of man-made warming on polar ice melt.” Now that’s very interesting.

When professors Toggweiler and Russell reprogrammed their model to include the 40-year cycle of winds away from the equator, then back towards it again, the role of ocean currents bringing warm southern waters to the north was obvious in the recent Arctic warming.

Russian climatologists believe recent weather changes around the globe are results of solar activity and not man-made emissions. Oleg Sorokhtin, a fellow of the Russian Academy of Natural Sciences, calls the argument for man-made climate change “a drop in the bucket.” His research shows that now the recent very active solar activity has entered an inactive phase. He advised people to “stock up on fur coats.”

Kenneth Tapping of Canada’s National Research Council, who oversees a giant radio telescope focused on the sun, is convinced we are in for a long period of severely cold weather if sunspot activity does not pick up soon. The last time the sun was this inactive, Earth suffered the Little Ice Age that lasted about five centuries and ended in 1850. Crops failed through killer frosts and drought. Famine, plague and war were widespread. Harbours froze, so did rivers, and trade ceased.

The Global Warming Geopolitics

The recent Global Warming hysteria is in reality a geopolitical push by leading global elite circles to find a way to get the broader populations to willingly accept drastic cuts in their living standards, something that were it demanded without clear reason by politicians, would spark strikes and protest. The UN’s latest IPCC report on Global Warming calls for diverting a huge 12% of global GDP to “prevent the harmful effects of climate change.” The UN report, for example, estimated that its recommendations to reduce certain manmade emissions would cost about $2,750 per family per year in the price of energy.

Today there are two principal policy options of the Anglo-American power establishment to impose their further control over a world that is rapidly slipping out from under them. We might call them Plan A and Plan B for short.

The first, Plan A, was the option represented by Bush-Cheney and the big oil and military industrial complex behind them. Cheney and his close Houston friend, Matt Simmons, propagated the myth of Peak Oil to lull populations into accepting the inevitability of $100 a barrel or even higher oil prices. In the meantime, the relative strength of the Big Oil and the related US military establishment grew with higher oil prices.

Their global War on Terror provided a cover or pretext to justify military control over the major oil reserves and oil transit passages of the world. From Iraq to Afghanistan to Kosovo, the US and NATO agenda was aimed at future control of the extraordinary economic powers emerging from Russia to China to India to Brazil and Venezuela and beyond. Through China’s effective diplomacy in Africa, many African countries are on the brink of slipping out from under the US or British control into Chinese or more independent status.

If John McCain becomes the next choice of the US power elites to be President, that will signal that that military and oil agenda will escalate, especially as the USA sinks into a severe economic depression in coming months.

The second broad faction of maintaining their control over the greater part of the world economy, Plan B, sees Global Warming and “soft power” as embodied in the organs of the United Nations and IMF and World Bank as the more suitable vehicle to convince people to willingly accept drastic reduction in living standards.

Barack Obama, the apparent choice of the same elites as a “breath of change” to allow them to regroup after the debacle of the Bush-Cheney years, would likely opt for the second faction of the global elite—the Global Warming option to lowering general living standards, ‘Plan B’ of the Anglo-American establishment. In a recent campaign speech in Wallingford Pennsylvania, Mr. Obama replied to a question about Al Gore, the hero of Global Warming. As President, Obama said he would consider putting Al Gore in a Cabinet-level position—or higher. He stated, “I will make a commitment that Al Gore will be at the table and play a central part in us figuring out how we solve this problem. He’s somebody I talk to on a regular basis. I’m already consulting with him in terms of these issues but climate change is real.”

The two major global factions

Today there are two major factions within the Western political power establishment internationally. They cooperate and share broad elitist goals, but differ fundamentally on how to reach these goals. Foremost is their goal of sharply controlling global economic growth and population growth. The first faction is best described as the Rockefeller Faction. It has a global power base and is today best represented by the Bush family faction which got their start, as I document in my book, as hired hands for the powerful Rockefeller machine. The Rockefeller faction has for more than a century based its power and influence on control of oil and on use of the military to secure that control. It is personified in the man who is since 2001 de facto President in terms of decision-making—Dick Cheney. Cheney was former CEO of Halliburton Corp., which is both the world’s largest oilfield services company (now based in Dubai for tax reasons), and the world’s largest military base constructor.

The second faction might be called the Soft Power Faction. Their philosophy might be summed up that they think its “possible to kill more flies with honey than with vinegar.” Their preferred path to global population control and lowering of the growth rates in China and elsewhere is through promoting the fraud of global warming and imminent climate catastrophe. Al Gore is linked to this faction. So is British Prime Minister Gordon Brown. They see globalist institutions, especially the United Nations, as the best vehicle to advance their agenda of global austerity.

The Intergovernmental Panel on Climate Change (IPCC) was created by the United Nations Environment Programme. Its reports have been demonstrated to be fundamentally flawed in scientific methodology, yet they are aggressively being promoted as revealed truth by the powerful media behind this faction. Others in the circle include billionaire speculator George Soros, parts of the British Royal family and representatives of European “old money.”

With the meteorological evidence of their claims for global warming dissolving as the ice forms anew, it is not surprising that news of the Arctic refreeze and other contrary evidence to their doomsday thesis are kept from mainline international media.

Kurt Nimmo
Infowars
August 23, 2008

Jim Kuhnhenn, writing for the Associated Press, tells us that the American Issues Project, described as a “conservative nonprofit group” linked to John McCain, “is spending $2.8 million on an ad questioning Democrat Barack Obama’s relationship to a founder of the 1960s radical group Weather Underground,” William Ayers.

The SDS and the Weatherman were rife with FBI informers and agents provocateurs tasked with discrediting the antiwar movement of the 1960s.

Apparently, the American Issues Project wants you to think Obama, who counts Goldman Sachs and the investment bankers as his staunchest supporters, is in bed with “a remorseless domestic terrorist,” an absurdity at best. In fact, Obama takes orders from terrorists higher up, for instance Zbigniew Brzezinski, the man responsible for creating the Afghan Mujahideen, an organization that would eventually metamorphize into the Taliban and al-Qaeda with the helping hand of the CIA, Pakistan’s ISI, and gobs of Saudi moolah.

At any rate, it should be recalled that Ayers’ Weather Underground was a pet project of the FBI back in the day. The FBI not only monitored the Weather Underground after it splintered off from the Students for a Democratic Society, they also infiltrated the group and stocked it up with violent lunatics of the sort the American Issues Project are complaining about.

“One of the most militant members of the Weather Underground, ‘widely known for his skill in making bombs and fuses,’ had often criticized his comrades for limiting their bombing to property. He berated them, stating that ‘true revolutionaries had to be ready and anxious to kill people.’ It turned out that he was a paid informer and agent provocateur for the FBI,” writes Michael Linfield (Freedom Under Fire: U.S. Civil Liberties in Times of War, South End Press, 1990).

“The FBI had informers in the Weatherman organization who acted as agent provocateurs,” writes M. Wesley Swearingen (FBI Secrets: An Agents Expose, South End Press, 1999, p. 70). “The informers helped incite the Weathermen to riot against the police and the establishment in Chicago. The ensuing demonstrations, from October 8-11, 1968, became known as the ‘Days of Rage,’ when top Weatherman leaders were arrested by the Chicago police, just as the FBI hoped.”

In fact, as David C. Rapoport documents in his book, Terrorism: Critical Concepts in Political Science, the SDS and the Weatherman were rife with FBI informers and agents provocateurs (see Gary T. Marx, The agent provocateur and the informant, American Journal of Sociology, 1974, published in Rapoport’s book, specifically pages 197-200). Examples abound of the FBI, CIA, and military intelligence infiltrating and creating radical organizations, particularly under the aegis of the FBI’s COINTELPRO, the CIA’s Operation CHAOS, Project MERRIMAC, and Project RESISTANCE.

At the same time, the Pentagon, through its Division of Military Services, “infiltrated thousands of legitimate civilian political organizations. Data banks with as many as 100,000 entries each were maintained at intelligence headquarters at Fort Holabird, Maryland, and at Fourth Army headquarters at Fort Sam Houston, Texas,” note Morton Halperin, Jerry Berman, Robert Borosage, Christine Marwick (The Lawless State: The crimes of the U.S. Intelligence Agencies, Penguin Books, 1976, p. 160). “With the exception of the FBI, the military intelligence services collected more information on American politics in the sixties than any other federal agency.”

It is not clear if Bill Ayers and his wife, Bernardine Dohrn, were part of this widespread government manipulation of the more radical fringes of the antiwar movement in the 1960s and early 1970s, although their relationship with insider Obama should cast a hefty pall of suspicion over the duo.

However, this is irrelevant, as the larger point is that much of the violence of the time was orchestrated directly by the government as a way to discredit and emasculate the opposition. Of course, these troublesome facts are rarely if ever mentioned by “conservatives” as they go after Barack Obama, who is a consummate insider with a CFR connected wife and connections via Zbigniew Brzezinski to the Trilateral Commission and David Rockefeller. Attempting to characterize Obama as some kind of wild-eyed post-60’s Marxist associated with bomb-throwing terrorists is, to say the least, the ultimate absurdity.

As usual, things are quite different than a handful of McCain flunkies would have us believe.