Posted on 09/20/2007 4:55:46 PM PDT by NYer
"According to some US experts, some US$ 20 trillion in worthless securities exist, putting US and European banks are at risk. Asia should avoid the worse. A new North American currency, the Amero, is making news.">
According to US financial analyst Mike Whitney[1], a mountain of unfunded, unregulated paper worth more than US$ 20 trillion might be out there [2]. Apparently, no one, neither the general public nor professionals on Wall Street, has yet to realise the extent of the hole, a hole of 20 trillion dollars with no market, nor value.
Even if the Federal Reserve were to ease bank reserve and capital requirements, the existing financial system would still be moving towards its worst crisis in 80 years because the problem is not liquidity, but solvency. The situation is such that banks are even scared to lend to one another uncertain about each other’s solvency. Even the London interbank market is not going beyond day to day lending.
Greenspan and speculative financing
The problem arose in the United States where, starting in 1987, the bank lobby—by means of US$ 300 million in contributions—got Congress to do away with the Glass-Steagall Act (officially the Banking Act of 1933) that had been adopted in the wake of the 1929 Wall Street Crisis. President Bill Clinton signed into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act.
The original law had been introduced to avoid conflicts of interests between banks and companies that sell stocks and bonds.
Former Federal Reserve Chairman Alan Greenspan was the main proponent of financial liberalisation. Before his appointment to the post, he had served as a corporate director for J.P. Morgan, the first bank to take advantage of liberalisation.
Under his 18-year chairmanship he oversaw the greatest expansion of speculative financing in world history. But now the chicken are coming home to roost like a would-be train wreck that no one can stop, not even the Fed.
If Mike Whitney’s numbers are right, we are on the verge of a meltdown like that of 1929-1930, perhaps worse because of the world’s greater economic interconnectedness.
Lately, the big US financial and banking groups have tried to protect themselves by selling their junk bonds in Europe and Asia.
In Asia equity in most banking and financial institutions is in US securities and US dollar denominations. Most banks are ranked AA or even AAA by so-called independent agencies like Standard & Poors, Moody’s and Fitch. Securities with such ratings are, or perhaps we should say, were considered virtually risk-free.
Theoretically, US pension funds, insurance companies and big foundations are exposed to the uncontrolled offer of atypical securities of the past decades; so should the US financial and banking institutions which created them.
Yet we should not be surprised if those who hold the keys to the corporate are not, nor will ever be, held accountable for their wrongdoing.
Central banks, especially the Federal Reserve, are at the root of the problem because they have known about the overall situation for quite some time. But whomever is in charge of the Fed knows that a solution cannot be had from within.
Amero, North America’s new currency
With a bank crisis looming on the horizon, an odd piece of information is becoming news. As unlikely as it may seem, the United States along with Canada and Mexico, appears to be getting ready to launch a new single currency: the Amero.
With the monetary bubble on the verge of bursting, one solution would be getting rid of the dollar, replaced by a currency, the Amero, to serve a would-be North American Union.
In addition to the United States, Mexico should join such a union and in principle might be even in favour of it. Canada, too, might join, setting aside its aversion to losing its monetary sovereignty, out of concern that its equity in US dollars might simply lose its value.
When US President George W. Bush met then Mexican President Vicente Fox and then Canadian Prime Minister Paul Martin in Waco, Texas, in March 2005, they discussed a North American union.
The idea resurfaced the same year in a report released by the powerful US Council on Foreign Relations, a group that has influenced most US presidents, both Democrat and Republican, and a tri-national task force involving ministerial-level officials.
Wikipedia already sports a page dedicated to the Amero with the photos of prototypes.
A news report on the Amero broadcast on CNBC is also available on Youtube [3].
Similarly, 20 Amero coins can be seen on the Hal Turner Show webpage, with a small D visible, D as in ‘minted in Denver.’ Curiously, the Denver Mint is currently closed to the public, ostensibly for restoration work, till September 28 [4].
Whilst AsiaNews is unable to determine whether there is any basis to such claims, it does seem certain that a plan for a North American union is being developed [5].
Such an entity would have a population almost the size of the European Union, and could adequately respond to the current bank crisis that is bound to end up in a monetary crisis.
However, far from being a simple monetary union, the operation is likely to mean a de facto US annexation of the rest of North America.
For Asia the real point of interest would be economic rather than political since the Americas have been the United States’ backyard for a long time.
Firstly, the Amero would be definitely weaker than the US dollar because it would include the Mexican pesos, which was insolvent not so long ago.
A weaker North American common currency would quickly push the value of the currencies of China and the whole of Asia, which have hitherto been reluctant to do so.
Secondly, converting dollars used outside the United States would raise problems since in Asia as well as in many countries around the world payments in dollars are more common than one might think. In this case the impact of a North American union would also be very significant.
The article I read yesterday indicated they had absolutely no plans to do so, and would remove themselves from the dollar peg.
From what I understood in the article, the Saudi intent is to prevent monies coming into America (as it becomes cheaper for foreigners to buy up real estate, etc., here)...as the dollar becomes weaker, foreign currency becomes stronger, and buying out America becomes a “real deal” for outsiders....and we get screwed, of course.
If the Saudi’s prevent the inflow of money into America, that also means America doesn’t have the capital to reinvest, or buy....this would likely cause companies to cut back on expenses (the most expensive expense is employees)...so, layoffs and firings, here we come.
As bigger companies lose money, pull back on orders from smaller companies, etc., I can only imagine that smaller companies (not directly reliant on the foreign investment monies) will also have to have layoffs/firings and maybe go belly up.
This will worsen the economy, of course.
Too much instability right now. Just keeping some tech stuff that I know is intrinsically solid because I know the individuals behind the technology.
I just love it when a “plan” comes together, even when it’s by accident.
Best laugh of the day. foflol!!!
“and would remove themselves from the dollar peg”
Thus causing foreign investors across the middle east to dump the dollar, no? That’s sort of how I see it. Dollar value drops, along with some of what you mentioned. But I’m sure someone will come along to tell us that it’s in our best interest (no pun intended)
whoops, off with my head, this is my 3rd or so post to each of you within 24 hours...!!
I was wondering if they’d ever dealt with him or not. Too much energy expired (lol) Worth the laugh though :)
“dear leader” - Omg, that is horrific!
I darn near read the article again and it was painful the first time.
The article said that Kuwait had already removed itself from the dollar peg a few months ago (I believe).
Yep...my reading on it is the same. Much of the market is speculations, so, they’d want to dump before they lose money values themselves......
All of this will further increase the lowering of the dollar value.....
OTOH, the article did state that it didn’t see how Saudi Arabia could realistically prevent investments into the U.S. (there’s always ways of funneling monies). But, I don’t see why very many would want to heavily invest, in the short term, in the U.S. in the near future.
I think they will hold off.....it would likely be an imprudent investment for awhile....given the fact that it’s likely the value of the dollar will continue to tank.
Yep
thirty lashes (at least that’s better than 30 pieces of silver : )
That may be because they're getting way too much help in believing the unbelievable. You may have noticed a couple of regulars here on this thread, taking shots at those that dare discuss the real problems.
Exposing fools to their own foolishness is entertaining.
Amnesty on steroids.
“But, I don’t see why very many would want to heavily invest, in the short term, in the U.S. in the near future.”
Let’s stop and think about this nicmarlo. We have self-professed conservatives and patriots pushing for cheap labor through CAFTA and china-trade. I ask the rhetorical question of ‘what the hell are they going to invest in’? At what rail-crossing did conservatism and patriotism get turned sideways? I kid you not, you’ve seen the posts as have I...people are pushing for cheaper labor in foreign countries so we get a cheaper product. Ok, so then tell me what SA is going to invest in...logistics companies?
Mini-rant off.
I agree, and yes I noticed. It woke me up from a nap :)
Yep, I checked it out thanks. Was wanting to see what the ‘feel’ was for efforts here at FR against it.
Good question. What is there to invest in within the U.S. any longer? Our companies are being sent overseas. There aren't major manufacturing companies growing in the U.S.
The U.S. has become, primarily now, a "service economy." How do you "invest" in a service company???? There's no inherent value in any such kind of company...there's no real estate, machinery, equipment, or copyright. Those kinds of company's "values" and "worth" come from "service". Service is people ability....not product-ability. It's "paper" not something "tangible."
So....what is there any longer to invest in the U.S. is a good question.
And why is AFRICOM not getting any press? lol
wth is Africom?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.