Summary: In a week defined by unprecedented government bailouts and collapsing stock markets all financial logic flew out of the window as the US dollar strengthened and gold hardly budged leading many to speculate as to the extent of the rigging of the global gold market in the face of its purported safe haven status.

The announcement, Monday 13th October, that the British government is to take substantial stakes in 2 major UK banks, HBOS and Royal Bank of Scotland and the proposal in the US that the Fed is to take similar stakes in US banks while providing guarantees of bank's senior debt, caused the markets to rally. This despite the fact that it should be clear to anybody that the US is going way beyond bailing banks out and is in fact transferring the future wealth, in the form of future labour and taxation, of ordinary American's into the hands of a tiny financial elite.

Additionally, following the G7 meeting at the weekend it was announced that central banks around the world would provide unlimited US dollar funding to the markets in order to ensure sufficient liquidity is available at all times.

Amid this turmoil the auction of Lehman Brothers bonds at just 8.825 cents on the dollar, resulting in Credit Default Swap payout this coming week of 91.375 cents on the dollar by all sellers of Lehman CDS's, a devastating payout for the sellers, passed almost silently.


Gold closed at 859.00 dollars an ounce Friday, up 2.2% from $840.80 for the week. The dollar closed at 0.7458 euros Friday, up 2.8% from 0.7255 at the close of the previous week. That put the euro at 1.3408 dollars compared to 1.3783 at the end of the week before. Gold in euros would be 640.66 euros an ounce, up 5.0% from 610.03 at the close of the previous week. Oil closed at 77.70 dollars a barrel Friday, down 19.82% from $93.10 at the close of the week before. Oil in euros would be 57.95 euros a barrel, down 16.6% from 67.55 for the week. The gold/oil ratio closed at 11.06 Friday, up 22.5% from 9.03 at the close of the previous week. In U.S. stocks, the Dow Jones Industrial Average closed at 8,451.19 Friday, down 22.2% from 10,325.38 at the close of the previous Friday. The NASDAQ closed at 1,649.51 Friday, down 18.1% from 1,947.39 for the week. In U.S. interest rates, the yield on the ten-year U.S. Treasury note closed at 3.87%, up 17 basis points from 3.60 at the close of the week before.

Thus, the global crash we have been expecting seems to have finally started. At best, the resulting recession/depression will be severe.Previous recessions were 'staggered' - while some national economies fell into recession, others were healthy and could pull the weak ones back up with their demand. When all economies crash at once however, only governments can stimulate demand by massive deficit spending. But the United States, home to the world's reserve currency, has been engaging in massive deficit spending throughout the last expansion, leaving it in a very weak position to do more. But do more it must, as we have seen with bailout after bailout in recent weeks, all of which will be added to the deficit and the public debt. That will increase interest rates, thereby plunging the U.S. economy further into full-scale depression. The result should be a collapse in the value of the dollar and the end of the United States as a military hegemonic superpower, which would have catastrophic consequences for the entire planet. For when empires fall and entire political and financial systems cease to exist, there is always extreme turmoil and great suffering.

Last week, world stock markets finally reacted to the financial crisis that has been building for months for all to see:
Worst week for global markets since 1929

Barry Grey
11 October 2008

World stock markets plummeted Friday, ending a week that saw the biggest collapse in share values since 1929. The looming threat of a world depression provided the backdrop for a meeting of finance ministers from the G7 industrialized countries, who gathered in Washington for emergency talks with US Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke.

After a day of panic selling on markets from Asia to Europe and Latin America, and wild swings on the US stock market, the G7 issued a statement that pledged to place the resources of their respective countries at the disposal of the most powerful banks, but failed to outline any specific coordinated actions to stem the slide to economic disaster.

Paulson issued a statement and held a press conference following the meeting to announce that the US government would use the virtually unlimited authority granted it under the $700 billion Wall Street bailout passed one week before by the Democratic Congress to begin directly buying stock in banks and financial firms, an expansion of the government transfer of taxpayer funds to the most powerful sections of the financial aristocracy.[...]

The Dow fell 696 points in the first 15 minutes, falling below the 8,000 mark. Later in the day it was up by more than 320 points, but closed with a loss of 128 points, or 1.5 percent, ending at 8,451.

That marked the eighth straight losing session for the index, which gave up more than 1,870 points, or 18.2 percent, in the course of the week. The weekly loss outstripped the week that ended July 22, 1933, in the depths of the Great Depression, which registered a 17 percent drop - at a time when there were six trading days in a week.

Since its record high a year ago, the Dow has lost 40.3 percent, wiping out $8.4 trillion in stock values.[...]

The seize-up of credit markets showed no signs of lifting. Banks are hoarding their cash and refusing to lend to other banks, or charging usurious interest rates, because they have no confidence in the other banks' solvency.

The three-month Libor rate, a key lending benchmark for inter-bank loans of US dollars, climbed to 4.82 percent, the highest in nearly ten months. The flight of capital to what is deemed the safe haven of US government debt deepened, resulting in a decline in the yields on one-month and three-month Treasury bills to nearly zero.[...]

GM's announcement underscores the new stage that has been reached in the economic crisis, which has moved far beyond the situation that existed even three weeks ago, when the Bush administration announced its bailout plan for the banks and insisted it was the only way to avert a market meltdown and severe recession. That supposed panacea - designed to cover the losses of the biggest banks and facilitate a further consolidation of financial power in their hands - has done nothing to stem the crisis. Nor could it, since it did not address the underlying rot in the industrial base of American capitalism.

Now, the crisis is rapidly engulfing the broader economy, heralding a wave of plant closures and cutbacks in every branch of economic life.

Summing up the prevailing attitude toward Bush and other political leaders, Howard Silverblatt, senior index analyst at Standard & Poor's, said, "People are scared. Nobody believes what is coming out of the mouths of politicians or chief executives."

All of the proposals to deal with the worst economic crisis since the Great Depression, whether from the Bush administration and the Democrats and Republicans in the US, or the governments of Europe and Asia, have one thing in common: They all proceed from the need to maintain and defend the interests of the financial aristocracy.

None of the measures address the social tsunami that is about to engulf the working class.

As for the multi-millionaires and billionaires who monopolize the economy and dominate the US government, they will remain as ruthlessly preoccupied with their personal enrichment as ever. As the New York Times reported on Friday, a sticking point in the government plan to purchase stock from the banks with taxpayer money is the existence of token provisions in the bailout bill imposing certain limitations on the pay of top executives. The Times wrote: "It is not clear, administration officials said, that the largest American banks would agree to this, particularly given the restrictions on executive pay."
Again, past budget excesses of the United States government make any response to the financial and economic crisis that much harder:
Cost of U.S. Crisis Action Grows, Along With Debt

Matthew Benjamin
Oct. 10, 2008

The global financial crisis is turning into a bigger drain on the U.S. federal budget than experts estimated two weeks ago, ballooning the deficit toward $2 trillion.

Bailouts of American International Group, Fannie Mae and Freddie Mac likely will be more expensive than expected. States are turning to Washington for fiscal help. The Federal Reserve said this week it will begin buying commercial paper, the short- term loans companies used to conduct day-to-day business, further increasing costs. And analysts now say the $700 billion bank- rescue plan passed by Congress last week may have to be significantly larger. [...]

The 2009 budget deficit could be close to $2 trillion, or 12.5 percent of gross domestic product, more than twice the record of 6 percent set in 1983, according to David Greenlaw, Morgan Stanley's chief economist. Two weeks ago, budget analysts said the measures might push deficit to as much as $1.5 trillion.

Yields to Rise

That means a lot more borrowing by Treasury, which will push up interest rates, said Greenlaw. "The Treasury's going to be ramping up supply dramatically over the course of coming months to meet this enormous federal budget obligation," Greenlaw told Bloomberg this week. "The supply will trigger some elevation in yields."
Talking of covering up a multitude of sins, the dirty details of the Lehman bankruptcy were submerged in the tumult of the week.
Traders' worst fears realised at Lehmans auction

Hundreds of billions set to change hands as credit default swaps are reconciled

Stephen Foley
Saturday, 11 October 2008

[...] The auction set a price for Lehman bonds of 8.625 cents on the dollar. Financial firms that sold credit default swaps, therefore, owe 91.375 cents on the dollar - more than Wall Street had been factoring in. That figure increased nerves about whether everyone in the chain will actually be able to pay the amount that they owe, something that will become clear over the coming days. Participants said the auction went smoothly and efficiently.

Analysts say the amount of money that has to change hands could be more than $200bn. Some estimates put the value of outstanding credit default swaps on Lehman Brothers debt at $400bn, although some of these trades have already been netted out because some investors both sold and bought CDS contracts. Exact figures are not available because a CDS is a private contract and is not traded on an exchange, but the payout will certainly be the biggest in the 10-year history of the market.
With the above in mind it perhaps becomes clear why we read in Bloomberg Monday, the first day of settlement of those billions of dollars of obligations:
The U.S. Federal Reserve led an unprecedented push by central banks to flood financial markets with dollars, backing up government efforts to restore confidence in the banking system.
Not only are there the Credit Default Swaps written on Lehman's name but there are also the $639 billion (as at the date of its bankruptcy filing on 15th September 2008) of swaps and other derivatives that Lehman wrote in its own name that need to be settled or sold. These two vast sums hang over the market like the sword of Damocles - one slip by just one major counter-party to these financial transactions could cause the system to implode. No wonder central bankers look nervous these days.

So how did we get here? There are various answers to that question, depending on how far back and how deep you want to go.

Going far back, lending money at interest, usury, or fractional reserve lending, would seem to lead inexorably to where we're at now. Ran Prieur explains:
You might have heard the thought experiment where we're all on an island using a fixed number of coconuts for money, and if we start lending coconuts at interest, we create imaginary coconuts so it's impossible for all the debts to be repaid. To make the simplest possible example, if there's only one coconut, and I lend it to you on the condition that you pay me back two, we now have two imaginary coconuts and only one real coconut. You can't pay me back two, so instead you pay me back one and become my slave. Now, I could give you the coconut as wages and you could give it back to me, but it's much better for me if I loan it to you again and create more debt, and that's what happens in the real world.

Multiply that by billions, and it's still not as bad as the real situation, because once we have a system where someone can make money merely by lending, we get predatory institutions that don't just lend the money they have, but money they don't have. The really big fake money is not created as interest, but as fake principal to enable the creation of more debt/slavery. Inevitably, the lending institutions grow like cancers to consume the whole economy, and the supply of real stuff cannot match the exponential growth of money/debt, and the system collapses. And the foundation of the whole nightmare is the rule that if you loan someone money, they have to pay you back more...

I came up with another island-coconut story that makes the point better: Imagine an island with three people, Morgan, Chase, and you. Each of you has ten coconuts. Morgan and Chase agree to hold each other's coconuts and pay interest to each other, and you think that's silly and just keep your coconuts under your bed. Eventually, through compound interest, they have accounts worth hundreds of coconuts, while you still have only ten. Of course, if they try to withdraw their coconuts, the system collapses, so to make it more stable, they use pieces of paper that represent coconuts, and later they don't even use paper, but just keep a ledger of how many coconuts everyone supposedly owns. They agree to rules where they can lend each other even more coconuts than they have in paper money, so they can grow their money faster, until there are tens of thousands of symbolic coconuts. Meanwhile you still have only ten, and now if you want to buy stuff, it's going to cost more than it did before. Probably you will have to sell your actual coconuts to Morgan and Chase to afford to eat.
The origins of this collapse of the global system, for collapse it is, has it's origins in the very nature of the fiat money and fractional reserve banking system combined with Reaganomics and Thatcherite deregulation of the 1980's; an inevitable consequence of the "free market". Here is the blogger "Badtux" on the Reagan "revolution":
The toxic legacy of Ronald Reagan

Twenty-eight years. That is how long ago it was when Ronald Reagan burst upon the scene and changed American politics forever. Twenty-eight years. Reagan, like FDR, was a giant who changed politics for long after he departed from the political scene. His influence over the nation for these past twenty-eight years has been almost incalculable. Whether you are Democrat or Republican, liberal or conservative, you must admit that the shadow of Ronald Reagan has loomed over every man who has held office from the smallest town to the Presidency ever since then.

And what has happened in those twenty-eight years?

Well, a lot of things. Okay. Manufacturing employment: Down from 24% of the population to under 14% of the population. Ship construction: Down by 83% since 1980. There are now only six shipyards in the entire United States capable of building large vessels and all of them are naval shipyards. Personal debt: The size of the total consumer debt grew from $355 billion in 1980 to $2.6 trillion in 2008. Gross federal debt: In 1980, the federal debt was 33.3% of GDP. In 2007, the federal debt was 65.5% of GDP, or twice as much debt. Trade deficit: In 1980, the trade deficit was $19,407 and in 2007 $700,258. Debtor/creditor nation status: In 1980, the United States was a net creditor nation, owning 7% of the world GDP abroad. In 2007 the United States was a net debtor nation, with more than 21% of US GDP in hock to overseas.

Note that none of this has to do with how much cheap Chinese cr*p you can buy, the size of your television screen, or anything like that. I am talking about the fundamental underpinnings of a modern economy. These past 28 years have ripped the guts out of our economy until we're a nation of real estate salesmen selling each other the same overpriced homes over and over again. Well, at least that was the case until this year. BOOM. The whole house is falling down. Well, that's what happens when you rip the guts out of an economy. A hollow economy simply can't continue standing forever, it's like when they go back into a mine and pull out the pillars to get the last of the gold or silver or etc. out of it, pretty soon the whole mountain comes crunching down kaboom!

The problem is that the whole point of Reaganism was something for nothing. Reagan told us that we could have tax cuts *AND* a bigger military. The result was gigantic deficits -- bigger as a percentage of GDP than the Bush deficits (until this year). But Reagan had no problem with spending money he didn't have on fancy toys for the military. He just ran up the government's credit card bill! And no matter what Reagan might have said, that was the role model he set for the entire country. Reagan said, via his actions, "hey, don't worry about tomorrow, borrow, borrow, borrow, and live it up today!". And we did. Until now we're the world's biggest debtor nation. And the bill is coming due...

In 1980, we didn't know any of this. After the dismal Carter years, Reaganism seemed like a good idea. And maybe it was a good idea if Reagan himself had lived by the conservative values that he espoused. He didn't. He was like a middle class couple who run up a gigantic debt buying a house and junk to put in it that they don't need. He proved to America that "hey, you don't need to live within your means, you can always just borrow, borrow, borrow!" to the point where Dick Cheney said about the Bush deficits, "Ronald Reagan proved that deficits don't matter." But here's a secret Reagan did not tell you: there is no free lunch. He lied to you. He told you that we could have the greatest nation on the planet, and not have to pay for it.
Wishful thinking will get you every time! As will willful ignoring of reality. "Badtux" again:
The crown princess of the Ignorati

Ah yes, the ignorati. The great unwashed of American politics. Dim-witted, proudly ignorant, suspicious of anything they view as being dismissive or disdainful of their dim selves, eager to accept any politician who, in their view, is just as stupid as they are. Commonly associated with the term "I want a President that I can have a beer with."

In recent years the ignorati have been quite influential, having elected the President for six of the last seven elections. And I will say this: Ignore the polls saying that Obama is ahead. Because 50% of Americans are below average. And "average" ain't so smart, given the dumbing down of education over the past thirty years. Any rational, reasoning man could see that Barack Obama is clearly the superior candidate compared to Cranky McDepends and his sidekick Caribou "Dinosaurs walked the earth with Man 6,000 years ago" Barbie. But if we had a rational, reasoning electorate... (shrug).

Jesus Dinosaurs

The fact that the world is billions of years old and that the dinosaurs died roughly 60 million years before the first human being walked the world are matters of science, verifiable via experiments and observation. Palin may have faith that the world is only 6,000 years old and that dinosaurs co-existed with man. But the only way she can maintain that faith is by rejecting science and all of its benefits, such as this computer that you and I are communicating with. Frankly, that is a scary thought to me, because we have already experimented with having a President who believes in faith rather than observable objective reality as the mechanism for organizing government, and it hasn't worked out very well...

So now we have the clear chance of having a President within the next four years who rejects modern science, who rejects objective reality in favor of superstition. Forty years ago, scientists and engineers and people who dealt with observable reality were respected here in the United States. Today, they are reviled as "atheistic" and "elitist", made fun of as "nerds" and "geeks", and our young people flock to become mortgage bankers and real estate salesmen rather than scientists and engineers. This also corresponds with the decline of the United States as the leader of the free world and an economic superpower, to the point where the US can't even build ocean liners and cargo vessels any more. Coincidence? Nope. That's what happens to a nation that rejects observable objective reality and decides to base itself on faith instead. When our nation was led by practical pragmatic reality-oriented people, it thrived. Now, dominated by the ignorati who view those practical pragmatic reality-oriented people as heretics and "elitists", it declines. Coincidence? Nope.

Personally, I am not too eager to meet my new Chinese overlords, but meet them I shall. Did you know that China's president is an engineer? Maybe that explains why China is growing and thriving while the United States is declining. The U.S. elects people who reject science and objective reality. China selects people who do not. I don't think I'll like living under Chinese rule, it is a harsh and unforgiving rule, but that's what is going to happen if the U.S. keeps electing people who reject science and objective reality. I'll laugh and laugh and laugh, but it'll be more of a gallows laugh because it will be the end of a once-promising dream, the dream of a nation built upon freedom and liberty... but what can I say. Democracy is the theory that the common people know what they want and deserve to get it good and hard. This situation is, apparently, what the common people want. Getting it good and hard yet?
The above commentator puts his finger on two aspects of the ponerization of the United States: what Andrew Lobaczewski, in Political Ponerology calls hysteria, or the "hysteroidal cycle" and what he identifies as the downfall of the psychopaths who take control of a society with insufficient defenses: their lack of basic competence and view of objective reality.
During good times, people progressively lose sight of the need for profound reflection, introspection, knowledge of others, and an understanding of life's complicated laws...

Perception of the truth about the real environment, especially an understanding of the human personality and its values ceases to be a virtue during the so-called "happy" times; thoughtful doubters are decried as meddlers who cannot leave well enough alone. This, in turn, leads to an impoverishment of psychological knowledge, the capacity of differentiating the properties of human nature and personality, and the ability to mold minds creatively. The cult of power thus supplants those mental values so essential for maintaining law and order by peaceful means. A nation's enrichment or involution regarding its psychological world view could be considered an indicator or whether its future will be good or bad.

During "good" times, the search for truth becomes uncomfortable because it reveals inconvenient facts. It is better to think about easier and more pleasant things...

Catastrophe waits in the wings. In such times, the capacity for logical and disciplined thought, born of necessity during difficult times, begins to fade. When communities lose the capacity for psychological reason and moral criticism, the processes of the generation of evil are intensified at every social scale, whether individual or macrosocial, until everything reverts to "bad" times. (Political Ponerology, pp. 85-6)
Since the bad times are now here, Lobaczewski points the way to hope:
When bad times arrive and people are overwhelmed by an excess of evil, they must gather all their physical and mental strength to fight for existence and protect human reason. The search for some way out of the difficulties and dangers rekindles long-buried powers of discretion...

Slowly and laboriously... they discover the advantages conferred by mental effort; improved understanding of the psychological situation in particular, better differentiation of human characters and personalities, and, finally, comprehension of one's adversaries. During such times, virtues which former generations relegated to literary motifs regain their real and useful substance and become prized for their value. A wise person capable of furnishing sound advice is highly respected...

Difficult and laborious times give rise to values which finally conquer evil and produce better times. The succinct and accurate analysis of phenomena, made possible thanks to the conquest of the expendable emotions and egotism characterizing self-satisfied people, opens the door to causative behavior...(Ibid., p. 88)
If Lobaczewski is correct then it would seem that we are in for a hell of a ride before things get any better. F. William Engdahl posits that there is transatlantic battle taking place behind the scenes for European financial dominance:
There is serious ground to believe that US Goldman Sachs ex CEO Henry Paulson, as Treasury Secretary, is not stupid. There is also serious ground to believe that he is actually moving according to a well-thought-out long-term strategy. Events as they are now unfolding in the EU tend to confirm that. As one senior European banker put it to me in private discussion, 'There is an all-out war going on between the United States and the EU to define the future face of European banking.'

In this banker's view, the ongoing attempt of Italian Prime Minister Silvio Berlusconi and France's Nicholas Sarkosy to get an EU common 'fund', with perhaps upwards of $300 billion to rescue troubled banks, would de facto play directly into Paulson and the US establishment's long-term strategy, by in effect weakening the banks and repaying US-originated Asset Backed Securities held by EU banks.


It now would appear that the Paulson strategy was to use a crisis; a crisis that was pre-programmed and predictable as far back as 2003 when Josh Bolten became head of OMB; when it exploded, to panic the more conservative European Union governments into rushing to the rescue of US toxic waste assets.

Were that to have happened, it would in the process destroy what was left of sound EU banking and financial institutions, bringing the world one step closer to a global money market controlled by Paulson's cronies-US-style Crony Capitalism.
This may indeed be correct, as demonstrated by the one-up-manship in bank and other sector rescues taking place either side of the Atlantic. During just one week Hypo Real Estate Bank, Dexia and Fortis banks all have to be rescued, while in the UK HBOS and RBS are effectively nationalised and others accept massive government funding. Events moving so fast, as pointed out on the financial website Seeking Alpha.
Robert Peston/BBC, Saturday afternoon:
"I would expect Royal Bank to raise the capital it needs over the weekend. On paper its balance sheet looks okay. But its board has concluded it needs a further cushion of capital, perhaps as much as £10bn."
Robert Peston/BBC, 5:30pm, Sunday afternoon:
"In the case of Royal Bank of Scotland, the sum of capital it's being forced to raise is mindboggling - at least £15bn (and rising)."
Financial Times, 6:30pm Sunday afternoon:
"Under the plans being discussed, RBS is likely to raise as much as £20bn in fresh capital."
The US then countering with an injection of about $125 billion into nine of the biggest U.S. banks, Citigroup Inc., Goldman Sachs Group Inc., Wells Fargo & Co., JPMorgan Chase & Co., Bank of America Corp., Merrill Lynch & Co., Morgan Stanley and State Street Corp.

However, we at have an idea that there may be more, much more, to this meltdown and so, given that rampant speculation has been a major factor on the road to this global systemic crisis, we thought a little speculation on our part (now we're here) wouldn't do any harm. So, let's have a look at how events in Europe and the US have played out these last couple of weeks:

1. US Treasury Secretary and Goldman Sacks banker (there's no such thing as being "ex"-Goldman, once Goldman always Goldman), Henry Paulson proposed a $700 billion bailout of US banks. The proposed Bill was just 4 pages long and can only be described as inflammatory given that there was no provision for Congressional oversight nor for limiting executive pay.

2. Inevitably, the Bill failed to win approval in Congress, although the Senate rolled over at the first opportunity. The Bill was "renegotiated" and expanded to a miraculous 500 plus pages which provided for a wide range of business and political interest groups to get their snouts into the taxpayer's cash trough. With highly disturbing echoes of the lack of legislative oversight applied to the passing of the Patriot Act, and the second Bill have being prepared before the first Bill was even rejected, the Bill was passed by Congress on the second attempt. Hidden within its pages, provisions for pork barrel spending deceived no one as to who was bought off and for how much. Even more concerning are the provisions, as disclosed by Naomi Wolf, that provide Bush with $100 billion to do with as he wishes with no oversight and no accountability. One Congressman had the courage to expose the scare tactics that were deployed to ram the revised Bill through Congress, including threats of Martial Law within days.

3. Ahead of a meeting of the four principle European leaders and finance ministers, it was leaked that Nicholas Sarkozy, President of France, was planning a €230 billion pan-European bank rescue package. However, the idea was roundly rejected and we were told that both Angela Merkel and Gordon Brown were lukewarm to the plan also.

4. At the same meeting there was resounding criticism of Ireland, where the government moved to guarantee all deposits, in a move widely understood to be due to Irish bankers conjuring the idea that in the absence of such a guarantee all those deposits would take flight.

5. Merkel went home and promptly announced government backing for all personal deposits following the rescue of Hypo Real Estate Bank using funds provided 60% by private banks and 40% by the government. There was media uproar at her 'reversal' and she was forced to provide significant clarifications.

6. Gordon Brown and UK Finance Minister Alistair Darling met with senior British bankers over the weekend amid speculation and leaks from the BBC that the banks are asking for an unprecedented financial support package to be put together as swiftly as possible. Amid denials, an air of frenzied media spin and a collapsing stock market, Darling launched a plan involving the provision of ₤50 billion in fresh capital and ₤250 billion of loan guarantees for the leading British banks.

7. Silvio Berlusconi decided to stir the pot by an announcement that said leaders may close world's markets - a statement that he was later forced to retract, but the cat was out of the bag.

8. Pundits started speculating that the inability of the ECB to match the Fed's bailout on a Europe wide basis heralds the end of the Euro. The reason for this is that the ECB can dictate monetary policy but has no fiscal powers, unlike the Fed.

9. The IMF then warned that the global financial system is on the brink of meltdown.

10. Key banks, many previously considered to be in sound financial shape, perhaps the "chosen few" who will be allowed to survive, started receiving massive capital and cash injections on both sides of the Atlantic.

It is well documented, and thoroughly understood by those who have a complete grasp on the grand illusion that is global finance, that financial booms and the subsequent crashes are engineered by the financial elite via their control of both the banking system, including central banks, and the political elite whose careers they finance. Each crash is engineered through panic, triggered by the collapse of a major financial institution, whose flames are fanned by the press and through the careful placing of statements and information into the public sphere. In the US, the 1907 panic resulted in the formation of the Federal Reserve while the 1920/21 agricultural crisis resulted in the consolidation of vast land holdings, the 1929 Crash resulted in a massive consolidation in financial power for the likes of J.P. Morgan and provided the conditions for the rise of fascism in Europe.

With this in mind perhaps we would be better served to see what is happening around the world today as part of a plan. Already it is becoming apparent that there are those in Europe who see no other choice other than to provide the ECB with the same fiscal powers as the Fed. They are portrayed as being 'realists' and the financial meltdown as being the vindication of all those who supported the defunct European Constitution and the Treaty of Lisbon. Both the European Constitution and the Treaty of Lisbon having been voted down by the few Europeans whose governments allowed them to express their opinion.

The central purpose of the European Constitution and the Treaty of Lisbon was the creation of a pan-European Central Bank along the same lines as the US Federal Reserve with the inevitable, although unspoken, result of a federal Europe ruled by a tiny financial elite.

Ireland's 53% majority rejection of the Treaty of Lisbon was thought to have been the death knell, at least for some time, of the federalists plan but it would be unwise to assume that there was no plan C; Plan A being the European Constitution and Plan B being the Treaty of Lisbon. Naomi Klein's 'Shock Doctrine' should leave us in no doubt as to the wide range of manipulations that those who seek global and regional dominion will stoop to in the furtherance of the consolidation of power and wealth. That Europe is being forced into a massive depression, during which hyper-inflation and bank collapses will erode all vestiges of the middle classes leaving impoverished masses toiling under the total dominance of a small elite, should not seem so fanciful today as it might have just a few months ago. A federal Europe and fiscally powerful European Central Bank will then be presented, along with "strong" (ie. overtly fascist) government, as the only solutions and the masses will cry out for them. Hence facilitating through fear and confusion what could not be achieved otherwise.

Similarly, the US is being plundered in such a manner that the dollar will inevitably collapse under the debt deflation that will be essential for the Fed to survive. Many are suggesting that the new pan-American currency, the Amero will be introduced to save the day under the banner of needing a new system, a "new start" so to speak.

Whether the newly federated Euro and new Amero will be cash currencies will be interesting to see for, along with the current turmoil, there have been signs aplenty that we are steadily marching towards a cashless society. But that's a long story which we'll leave for another time.