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The working assumption of the "Great Boom" is – or was – that we live in abenign era where most societies are converging towards some form ofmarket liberalism; where trade and capital flows are unrestricted; wheregovernments have enough legitimacy to keep order by light touch; where amajor war is unthinkable. This illusion is now being tested. We should notto read too much into the carnage in Mumbai. It may or may not be significant that the Deccan Mujahideen – whoever they are – picked India'sfinancial hub to launch their spectacular. Even so, the love affair withBombay's bourse was cooling anyway. The Sensex index is down almost60pc from its peak. The exodus of foreign capital may now quicken, layingbare the horrors of Indian public finance. The combined federal and statedeficit is 8pc of GDP. Plainly, spending will have to be slashed. If theatrocity now propels the Hindu nationalist leader Narendra Modi into officeat the head of a revived Bharatiya Janata Party (BJP), south Asia will onceagain face a nuclear showdown between India and Pakistan . . . Events aremoving briskly in China too. Wudu was torched by rioters this month in abattle with police. Violence has spread to the export hub of Guangdong asworkers protest at the mass closure of toy, textile, and furniture factories.When Benjamin Franklin returned to America in 1762, after almost fiveyears in London, he was shocked at the housing prices. "The expence of living is greatly advanc’d in my absence,” he commented. "Rent of oldhouses, and value of lands ... are trebled in the past six years." Franklin, itseems, had come home to a real estate bubble. It eventually popped —bringing on a credit crunch and deep recession that was the economic backdrop to the American Revolution. Sound familiar? The parallelsbetween the current economy and the one Franklin saw highlight a debateamong historians: how big a role did economics, as opposed to ideas, playin fomenting revolution? "I think there’s reason to doubt the Revolutionwould have happened as it did if it weren’t for these economic conditions,”said Ronald W. Michener, an economics professor at the University ofVirginia, in a radical departure from today’s popular notion that theRevolution was a product primarily of grand ideas about self-government. Wayne Madsen Report has learned from knowledgeable FEMA sources thatthe Bush administration is putting the final touches on a plan that wouldsee martial law declared in the U.S. with various scenarios anticipated astriggers. The triggers include economic collapse with massive social unrest,bank closures resulting in violence against financial institutions, and anotherfraudulent presidential election that would result in rioting in major citiesand campuses around the country. On April 3, 2008, WMR reported that,according to knowledgable sources, an alarming confidential and limiteddistribution document is circulating among senior members of Congressthat is warning of a bleak future for the United States if it does not quicklyget its financial house in order. The document is being called the "C & R"document as it reportedly states that if the U.S defaults on loans and debtunderwriting from China, Japan, and Russia, all of which are propping upthe U.S. government financially, and the U.S. unilaterally cancels the debts,America can expect a war that will have disastrous results for the U.S. andthe world. The other scenario is that the federal government will be forcedto drastically raise taxes in order to pay off debts to foreign countries tothe point that the American people will react with a popular revolution . . .In a remarkable evocation of the strategic environment of 2025, theNational Intelligence Council (NIC), a government intelligence service, portrays a world in which the United States wields considerably less powerthan it does today but faces far greater challenges. The assessment, contained in Global Trends 2025: A Transformed World, was released onNovember 20 and is intended to be read by President-elect Obama'stransition team as well as the general public. "Although the United States islikely to remain the single most powerful actor," the council notes, "theUnited States' relative strength -- even in the military realm -- will declineand US leverage will become more constrained." The report is devotedlargely to an examination of the major trends - political, economic, militaryand environmental - that will shape the world of 2025: the rise of China andIndia as major actors; Russia's signifigance as a power broker in Europe;the increasing role of corporations, crime networks; the growing impact of climate change. But two key developments stand out above all others: thedecline of America's primacy and the international competition for energy.Without any debate or authorization from Congress, the Federal Reservehas embarked on the most expensive and radical financial intervention inhistory. Fed chairman Ben Bernanke is trying to avert another GreatDepression by flooding the financial system with liquidity in an attempt tomitigate the effects of tightening credit and a sharp decline in consumerspending. So far, the Fed has committed over $7 trillion, which is beingused to backstop every part of the financial system, including moneymarkets, bank deposits, commercial paper investment banks, insurancecompanies, and hundreds of billions in structured deb. America’s freemarket system is now entirely dependent on state resources. With interestrates at or below 1%, Bernanke is "zero bound," which means that he willbe unable to stimulate the economy through traditional monetary policy . .The Federal Reserve extended the term of three emergency-loan programsto April 30 from January 30, aligning their expiration dates with othercentral bank efforts to mitigate the credit crisis. The Primary Dealer CreditFacility and Term Securities Lending Facility, created in March, and theAsset-Backed Commercial Paper Money Market Mutual Fund LiquidityFacility, begun in September, were lengthened “in light of continuing strainsin financial markets,” the Fed said today in a statement in Washington. Thethree loan facilities, part of the central bank’s efforts to cushion financialmarkets from the worst crisis in seven decades, had about $304 billion inloans outstanding as of last week. The Fed already authorized otherprograms through April for supporting the commercial paper market andmoney-market funds and for swapping dollars with fourteen central banks. U.S. Treasury Secretary Henry Paulson is debating whether to ask Congressfor the second installment of the $700 billion bailout package, concernedabout competing demands for the funds and a potentially hostile reactionfrom lawmakers. Besides lawmakers threatening to deny a request for theadditional money, Mr. Paulson is also grappling with confusion stemmingfrom the transition to a new administration. If Mr. Paulson decides torequest the next $350 billion, he is expected to do so next week. His handmay ultimately be forced if market conditions continue to deteriorate.California Governor Arnold Schwarzenegger, saying his state is going broke,declared a fiscal emergency and ordered the incoming class of lawmakersinto a special session to fix a widening $11 billion deficit. Schwarzeneggerwants lawmakers to raise taxes and cut spending to narrow the gap that isprojected to swell to $28 billion over the next 18 months. He invoked thepowers granted him in 2004 to declare a fiscal emergency, which gives theLegislature 45 days to plug the shortfall. If they fail to find a solution inthat time, they are barred from doing any other legislative work until theydo. Nationally, more than half of U.S. states are suffering from decliningrevenue in the fiscal year that began five months ago. California accountsfor nearly half of the $24 billion gap faced by a total of 31 states this year.When President-elect Barack Obama arrives at Philadelphia's IndependenceHall today to meet with the nation's governors, the main question will benot whether he will deliver fast fiscal relief to the states, but how much? Obama and congressional Democrats have promised that after he will sign an economic stimulus bill that could exceed $500 billion. The governorsintend to request about $176 billion of that -- $136 billion for infrastructureprojects and $40 billion to bolster Medicaid health programs."The slowingeconomy is resulting in growing unemployment, increased demand forstate services and significant declines in state revenues," said GovernorJim Douglas (R-Vt.) . . . "It's critical this happen as soon as possible." Turning to Washington for a lifeline, General Motors has asked lawmakersfor up to $18 billion to stave off collapse, promising in return to slashexecutive pay and jettison its poorly performing brands. GM, along withFord Motor Co. and Chrysler, submitted its restructuring plan to Congresson Tuesday, the same day domestic and foreign automakers reported awithering 37% U.S. sales decline. The depths of GM's troubles were broughtfully to light in its proposal, released late Tuesday. In November, GM said itcould run out of operating cash sometime in the first six months of 2009.Now it appears GM could fail in a matter of weeks without immediate aid.General Motors Corp.and Chrysler LLC told Congress they need $11 billion in government loans just to survive the year. Democrats pledged to keepthem out of bankruptcy without saying how. The aid requests deliveredyesterday to U.S. lawmakers total $34 billion, more than a third larger thanthe plans they set aside last month, and heighten the pressure for actionas a deepening auto slump quickens GM’s rush toward a default. WhilePresident-elect Barack Obama has said he favors an industry rescue, GMand Chrysler said yesterday they won’t be operating through his January nauguration without the money stalled by a deadlock in Congress. GM is "inan emergency position," Erich Merkle, an analyst at Crowe Horwath LLP inGrand Rapids, Michigan, said yesterday in a Bloomberg Television interview.General Motors, increasingly desperate for a federal bailout to stave offfinancial collapse, told Congress on Tuesday that it was willing to drasticallyshrink every aspect of its operations to ensure its long-term survival. Onthe same day that the industry reported its worst sales month in 26 years,the three Detroit automakers delivered new business plans to lawmakers inthe hope of winning support for $34 billion in federal loans. While the timingwas coincidental, the dismal November sales report underscored theperilous financial condition of G.M., the Ford Motor Company and Chrysler. U.S. auto sales plunged 37 percent in November to the lowest annual ratein 26 years as the recession and Detroit automakers’ aid pleas kept buyersout of showrooms. General Motors tumbled 41 percent, the second drop ofthat size in as many months. Toyota Motor Corp. fell 34 percent, the mostsince at least 1980, while Chrysler LLC’s 47 percent slide was the worstsince at least 1981, according to research firm Autodata Corp. Deliveriesfell for all major automakers. The results showed the strain of thedeepening economic slowdown and GM’s announcement last month that itmay run out of operating cash in 2008. GM, Ford Motor Co. and Chryslergave Congress requests today for $34 billion in loans to survive. "When youthink of the psyche of the American consumer right now, it’s bad," saidRebecca Lindland, an analyst with IHS Global Insight in Massachusetts . . .___________________________________________________________________
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Some self-employed professionals are not benefiting from federal moves toloosen the mortgage market.The volume of jumbo loans -- those thatexceed limits for government backing -- fell by more than 70% for the firstnine months of the year from 2007. "Underwriting criteria have swung fromfoolish ease to tighter than any in modern times," says Lou Barnes, amortgage banker in Boulder, Colo. The changes are increasingly frustratinga group of borrowers whom banks once coveted: affluent self-employedprofessionals such as doctors, lawyers, accountants and business owners.Almost 16 million square feet is currently listed as available in large blocksin 68 office buildings in Manhattan, according to Colliers ABR, a commercialbrokerage firm. That is nearly double the space available a year ago, bothin terms of the number of large office blocks — which in New York usuallymeans 100,000 square feet or more — and in terms of total square feet.Those figures are expected to go much higher, said Robert Sammons, themanaging director of research for Colliers ABR. He said it was difficult toget a handle on exactly how much space financial companies alone mightput back onto the Manhattan office market over the next year or so . . .Credit card and auto loan delinquencies are surging in the city. In fact, bythe end of next year, the number of New Yorkers expected to be at least90 days behind on their credit card bills is projected to jump 45%, execsfrom credit bureau TransUnion told the Daily News. That would mark thehighest percentage of significantly past due credit card bills in at least fiveyears. In addition, the number of New Yorkers more than 60 days late ontheir car bills is expected to soar 22% increase. "Consumers will still feelstress due to the state of the economy that will be reflected in their loanpayments," said TransUnion's Ezra Becker. "They have reached the limitsof their ability to pay." The picture will be even grimmer for mortgages. Everything is on sale. And that's not a good thing. Consumer prices inOctober fell at the fastest pace in more than 60 years, sucked down bythe rapidly deteriorating economy. The prices of oil, food, cars, clothingand electronics have all plunged. Home prices continue to swoon and so dostock prices. As the early reports from the holiday shopping seasonsuggest, the nationwide fire sale might seem like a boon for consumers.But it's increasing the risk that the economy could become mired in adangerous deflationary spiral - a widespread, sustained reduction in prices.That's something that hasn't happened here since the Great Depression. Kevin Norrish, the bank's commodities strategist, said the average fall inthe price of copper, lead, and zinc has been roughly 60pc since the peak inJuly this year. All three metals were traded on the London Metal Exchangein the inter-war years so it is possible to make a comparison. Prices forthe three metals fell 40pc from their highs in 1929 before touching bottomin 1933, with the bulk of the fall in 1930 as the slump spread worldwide . . .Not to be confused with the stay-at-home mother who selflessly devotesherself to the upbringing of her children, with all the housework and choresthat entails, the Toxic Wife is the woman who gives up work as soon as shemarries, ostensibly to create a stable home environment for any offspringthat might come along, but who then employs large numbers of staff to doall the domestic work she promised to undertake, leaving her with little todo all day except shop, lunch and luxuriate. Having married her wealthyhusband with his considerable salary uppermost in her mind, the Toxic Wifesimply does not do "for richer, for poorer". Indeed, lawyers and financialadvisers have reported a 50 per cent increase in the number of divorce inquiries since the financial markets collapsed last September . . .Goldman may post a huge loss of $5.14 a share for the quarter, whileMorgan Stanley is likely to report a loss of 46 cents a share, analyst Kenneth Worthington said. Worthington was the latest among Wall Streetanalysts to turn more downbeat on Goldman Sachs and Morgan Stanley.For the quarter, he expects gross write-downs of about $3.5 billion atGoldman Sachs and about $5.5 billion at Morgan Stanley. Goldman has beenwidely expected to post its first quarterly loss since going public in 1999.JPMorgan Chase said Monday that it would cut 9,200 jobs at WashingtonMutual Bank, which it acquired Sept. 25 after WaMu became the nation'slargest bank to fail amid the continuing credit crisis. The most cuts willcome at Washington Mutual's Seattle headquarters, where 3,400 pink slipsare going out, and at the bank's San Francisco center, where 1,600 jobsare being eliminated, JPMorgan spokesmen said. About 4,000 of the jobs willbe cut by the end of January, a spokesman said. The remaining 5,200employees will stay with JPMorgan through a transition period but will losetheir positions by the end of next year. Those 5,200 employees who stayon as transition workers will receive double their salary retroactive to Oct.1 until their last day on the job, and be entitled to severance packages.Industrial agriculture is dependent on chemical fertilizers. Chemicallyfertilized soils are low in organic matter. Organic matter helps conservethe soil and soil moisture, providing insurance against drought. Soils lackingorganic matter are more vulnerable to drought and to climate change. Industrial agriculture is also more dependent on intensive irrigation. Sinceclimate change is leading to the melting of glaciers that feed rivers, and inmany regions of the world to the decline in precipitation and increasedintensity of drought, the vulnerability of industrial agriculture will only increase. Finally, since the globalized food system is based on long-distancesupply chains, it is vulnerable to breakdown in the context of events offlooding, cyclones, and hurricanes. While aggravating climate change, fossilfuel-dependent industrialized agriculture is least able to adapt to change.Life After the Oil Crash
Deal With Reality or Reality Will Deal With You
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