SC86-6 / http://www.globalresearch.ca/index.php?context=va&aid=12414

Dispatches from the Front Lines of the Economic Crisis

.....................Great Depression II?
So it seems because of what Martin Weiss calls "The Great Credit Crunch and Real Estate Crash of 2009." Its fallout hits everywhere and in some places disastrously. On The Global Research News Hour (February 16) and in his latest Global Research.ca February 18 article, F. William Engdahl headlined an example:
"Next Wave of Banking Crisis to come from Eastern Europe (with) an entirely new wave of losses in coming months not yet calculated in any government bank rescue aid to date." They're from "massive" 2002 - 2007 Western European risky bank loans to Eastern European countries, now in big trouble "with unpayable loan debts."
"The dimension (of the problem) pales anything yet realized. It will force a radical new look (at nationalizing troubled banks) in coming weeks." According to Engdahl's "well-informed City of London sources, (these concerns) will define the next wave of the global financial crisis (with impact) more devastating than the US sub-prime securitization collapse which triggered the entire crisis of confidence."
The risk amounts are "staggering" for banks in Italy, Austria, Switzerland, Sweden, Greece," and likely Germany. Other troubled countries include Ireland, Spain and Portugal as pain heads everywhere across the continent and beyond. "Perhaps most alarming is that the EU institutions don't have any framework for dealing with this. The day they decide not to save (one country, it will) trigger....a massive crisis with contagion spreading into the EU."
According to UK-based Market Oracle editor Nadeem Walayat, add Britain to the troubled country list from his article headlined: "UK Recession Watch - Britain's Great Depression?" In a lengthy analysis, he cites why:
-- Q 4 GDP contracting 1.5% (or an annualized 6% loss) compared to 2009 forecasts of 2%;
-- like America, enough "money (being printed to) bankrupt" the country;
-- today's deflation will be tomorrow's inflation, and it's likely to be severe;
-- sterling falling over 30% in six months to a 23-year low against the dollar;
-- it still failed to boost manufacturing as the global slump hits everywhere;
-- a growing conviction that Britain is contracting fastest since the 1930s;
-- slumping oil prices exacerbated trouble as UK North Sea foreign exchange earnings have plunged;
-- British banks are in crisis with Northern Rock nationalized last February and Royal Bank of Scotland RBS) and Lloyds Banking Group PLC last October classified "public-sector entities," meaning their liabilities are included in public finances;
-- last September's "shot-gun wedding between HBOS and Lloyds TSB....is increasingly blowing up in Lloyds face;"
-- as in America, nationalizations loom as the only viable solution;
-- on February 22, after Walayat's article, the UK's Sunday Times reported that RBS will be "split into a 'good bank' and 'bad bank' in a dramatic restructuring in which assets worth several hundred billion pounds will be put up for sale." RBS will also "place at least 200 billion pounds of toxic assets into the government's asset-protection scheme, a controversial insurance scheme designed to protect banks against further losses." RBS' losses and job cuts were reported earlier. The "bad bank" idea is similar to the insurance plan for Citigroup and B of A, although both banks so far remain whole.
-- further UK evidence shows in sharply rising unemployment, slumping retail sales and housing, commercial real estate in trouble, and so is the entire financial sector in a crisis-ridden country like most others.
It's why economist Michael Hudson calls the "financial 'wealth creation' game....over....The economy has hit a debt wall and is falling into Negative Equity....A quarter to a third of US real estate (is) in Negative Equity." It will stay there "for as far as the eye can see until there is a debt write-down....debt deflation threatens to keep the economy in depression until a radical shift in policy occurs - a shift to save the 'real' economy, not just the financial sector and the wealthiest 10% of American families." Obama's "recovery" plan is ruinous by adding mountains of new debt and ignoring "the need for a write-down."
World markets may agree as a February 20 Wall Street Journal online headlines: "Wave of Selling Spans Globe....prolonging a market swoon that has dragged major averages down to levels not seen in years."
Bellweather General Electric is around 85% off its valuation high and year to date down around 43% in less than two months. At the same time, gold touched $1000 an ounce before pulling back intra-day. Spot gold reached $1030.80 last March with analysts predicting much higher prices going forward given strong physical demand and investors seeking the traditional safe haven in troubled times.
It's why financial expert and consumer advocate Catherine Austin Fitts recommends:
-- "Vote with your feet;"
-- take your money out of "big money-center, tapeworm banks and financial institutions and put it in local credit unions, thrift institutions, savings banks and state chartered banks;"
-- control your own retirement savings in troubled times, and above all:
-- "Bail out of Wall Street" and "nationalize" the Fed. In other words, drop the fiction that it's a government agency. Expose its status as a private for-profit cartel, abolish it, and obey the Constitution's Article I, Section 8 that gives Congress alone the right to coin (create) money and regulate its value.
A Final Comment
Today's crisis should bury the myth about "free-market" fundamentalism as the best of all possible worlds. History proves otherwise by clearly showing that it fails the many to advantage the few because it's arranged that way:
-- nearly everywhere earlier and now.
In 19th century America:
-- through indigenous slaughter, slavery, financial panics, child labor, sexism, racism, and worker exploitation;
In 20th century America:
-- much the same in most respects;
-- the 1930s depression;
-- repeated recessions, inflation, deflation, instability, unemployment, under-employment, and the erosion of job security, high wages, good benefits, and reliable pensions;
-- wealth and want extremes;
-- a plutocracy masquerading as democracy; according to Gore Vidal, most people never question "the inequality of a system (under which they) drudge along, pay heavy taxes (and) get nothing (back) in return;"
-- government of, by, and for the privileged;
-- elections reduced to theater in a de facto one-party state;
-- a corporate state placing profits over people;
-- essential needs left unmet; and
-- imperialism, militarism, foreign wars, homeland repression, government and business corruption, a broken media, a prison-industrial gulag, wage slavery, social decay, growing poverty, inequality, injustice, and racism under a system where the business of America is business; where never have so many lost out to the few; where capital is empowered to get more of it; where it's sucked from the public to the privileged; and where government is indifferent to human needs, rights and civil liberties.
Enough is enough. Bury the monster, its crimes, its inhumanity. End its poison and bandit ideology for egalitarian freedom and equal justice. Marshal collective defiance for real change. It's high time we got some.