Tag Archives: debt

Pakistan is Examining its Illegitimate Debt Burden

Blog the Debt is a great blog in the spirit of “Jubilee USA’s notes on debt and economic justice. Cancel debt. Eliminate poverty.”

This news item is about Pakistan Probing for Illegitimate Debt.

This is hopefully the beginning of unravelling the heinous enslavement of the world by Public Debts for Vested Interest Payments as institutionalised by central banks since the Bank of England Act 1694 or Anglo-Saxon capitalists…


Evolution beyond Money: Money as Debt part III

Paul Grignon produced Part I and Part II of Money as Debt.

This Part III is the most lucid of all. It points to:

  1. the main cause of paying ‘interest’
  2. the ‘interest’ not being generated by anybody
  3. the man with the money has enslaved the man without it – just like the real world
  4. ‘flow’ is the real measure of economic activity
  5. what is ‘flowing’, is credit or ‘promises to pay’
  6. money = promises of future productive work
  7. interest= reduced future spending power.

Money is lent twice.

  1. first we borrow ‘money’
  2. then we borrow ‘money’ to pay ‘interest’.

Global Fraud / Global Hope: an Excellent Speech by an Excellent Canadian Politician

An excellent speech from an excellent Canadian politician:


Fort McDowell Resort, Scottsdale, Arizona
Saturday, February 26, 2011
Hon. Paul Hellyer, P.C.
Former Canadian Minister of National Defence

The world financial system is a total fraud. It is one gargantuan Ponzi scheme, no better than the one Bernie Madoff used to swindle his friends and neighbors, and thousands of times worse if you add up the total number of victims it has ripped off over countless generations.

The principal difference between the two schemes is that Madoff was acting outside the law while the international banking cartel has persuaded generation after generation of monarchs, presidents and prime ministers to provide legislative protection for their larceny.

The banks Ponzi scheme is alarmingly simple. They lend the same money to several people or institutions at the same time and collect interest on it from each. What the banks really lend, however, is their credit, and what they take back in compensation for that privilege is a debt that must be repaid with interest.

The number of times they lend the same money is called leverage. The practice is as old as the hills but for our purposes we can start with the goldsmiths of Lombard Street in London, England, who accepted deposits for which they issued certificates redeemable on demand. They paid their depositors a nominal interest rate on the understanding that they could lend the money to their customers at higher interest rates. They soon found that they could lend more than they had in their vaults because only a few depositors came in to redeem their gold or silver at any one time. It was a scam. It was illegal. Nevertheless they got away with it for a long while and the scam was legitimized when the Bank of England was chartered to help King William finance his war. Rich people subscribed £1,200,000 in gold and silver, as capital, to found the bank, which then was lent to the government at 8 percent. To show his appreciation the King allowed the bank to print £1,200,000 in banknotes and lend them at high interest rates. In effect, the bank was allowed to lend the same money twice – once to the government and once to the people.

If any skeptics think I am overstating the case don’t take my word for it. Go to www.victoryfortheworld.net and read some of the books that can be used as references. A hundred pages of The Web of Debt, for example, setting out the history of money, will probably be enough to make you sick at your stomach. I stopped reading it at night because if often made me so angry I couldn’t sleep.

Over the years, due to the avarice of the banks and the complicity of the politicians, that ratio has increased dramatically. In the early days of the 20th century, federal chartered U.S. banks were required to keep gold reserves of 25 percent. That means they were allowed to lend the same money four times. I remember when Canadian banks were required to maintain a cash reserve of 8 percent. That means they were allowed to lend the same money 12½ times.

Today, thanks to Milton Friedman’s irrational flip-flop from being a proponent of 100% cash reserves to the opposite extreme of zero reserves, and the adoption of his ideas by the major central banks of the world in 1974, multiples have increased dramatically – in some cases to as much as 20 to 1 or more. Banks only keep enough cash to meet day-to-day demands for those few customers who go in and request it, and consequently the fraud is virtually total.

The system works this way. Suppose that you want to borrow $35,000 to buy a new car. You visit your friendly banker and ask for a loan. He or she will ask you for collateral – some stocks, bonds, a second mortgage on your house or cottage or, if you are unable to supply any of these, the co-signature of a well-to-do friend or relative. When the collateral requirement is satisfied you will be asked to sign a note for the principal amount with an agreed rate of interest.

When the paperwork is complete, and the note signed, your banker will make an entry on the bank’s computer and, presto, a $35,000 credit will appear in your account which you can use to buy your car. The important point is that seconds earlier that money did not exist. It was created out of thin air – so to speak.

The banking equation is a species of double-entry bookkeeping where your note becomes an asset on the bank’s books, and the new money that was deposited to your account is a liability. The profit for the bank comes from the difference between the low rate of interest, if any, you would be paid on your deposit if you didn’t spend the borrowed money immediately, and the much higher rate you would be obliged to pay on your note – the technical term is “the spread.”

At some point, however, you have to pay off your note and any interest owing. And not only you but everyone else who has borrowed “money” from banks – including governments which, by the way, own the right to print money [creating money from nothing] but that have irresponsibly handed the right over to an elite group of private bankers. Anyone who defaults is in big trouble. Individuals who default will have the assets they pledged as collateral seized by the bank. A government that is in danger of defaulting, will be forced to borrow from the International Monetary Fund, which will then tell that government how to run its affairs including cutting back on services and selling off public assets to the international vulture capitalists.

In reality, then, the banks have turned the world into one humongous pawn shop. You hock your stocks, bonds, house, business, rich mother-in-law or country and the bank(s) will give you a loan based on the value of the collateral. [by creating money from nothing, a.k.a. counterfeiting, since the banksters don’t own the assets against which they issue the money]

A world system where all the money is created as debt is a perpetual disaster in the making. It is like a giant balloon that the banks pump full of debt. The balloon gets larger and larger until the debt load becomes too heavy to carry, and then it is like a balloon with a pin stuck in it. The system crashes and thousands or sometimes millions of innocent people lose their jobs, homes, farms and businesses.

Almost any high school student should be able to see that any monetary system based on debt creation is totally insane.

The total world debt, mathematically, is always tending toward infinity – and there is no possible way of paying it off. The real money (legal tender) to do so doesn’t exist. And the real economy that depends on cash to grow shifts into low gear whenever the supply of credit money dries up.

Not surprisingly, there have been 25 recessions and depressions in the United States since 1890. In several cases, including the Great Depression of the 1930s and the current Great Recession, the evidence indicates that the meltdown was anticipated by a few insiders who helped trigger the catastrophe.

In the wake of the Great Depression, the U.S. Senate Banking and Currency Committee Report that became widely known as the Pecora Report on the Practices of Stock Exchanges, indicated that there were insiders who benefitted from the crash. “Legal chicanery and pitch darkness were the banker’s stoutest allies,” Pecora wrote in his memoir. Similar allegations were evident in Charles Ferguson damning documentary “Inside Job,” relating to the 2007-2008 meltdown. These reports, and other historical evidence prove beyond any doubt that much of Wall Street is rotten to the core. It has become one gigantic millstone around the neck of both the American and world economies.

The collateral damage from the recent meltdown has been staggering. The U.S. Bureau of Labor estimated that 8.4 million jobs were lost in the U.S. alone. Most countries experienced similar dramatic losses. The reduction in asset values worldwide has been estimated at $20 trillion U.S. dollars, yet not a single one of the culprits is in jail. You would think that someone would have had the decency to launch a class action for at least $10 trillion against every individual and every organization that contributed to the catastrophe in any way.

It boggles the mind that a system so vulnerable to manipulation would ever have come into existence in the first place. The evolution did not happen by accident. It was not guided by the mythical invisible hand of Adam Smith. On the contrary, for more than a century-and-a-half, it was engineered by the barely visible hand of the Rothschild family and its allies, and since World War II by the Rockefeller family. The two dynasties combined forces to exercise influence on many fronts sheltered by the cloak of secrecy established by the Bilderberg Group.

The long term influence of the banking cartel is incalculable. Their biggest coup was the establishment of the Federal Reserve System in the United States. The big New York banks really didn’t like the idea of genuine competition, so a small group held a secret meeting at the private resort of J.P. Morgan on Jekyll Island, off the coast of Georgia. Their scheme, devised by Paul M. Warburg, and subsequently adopted by Congress, is a legal private monopoly of the U.S. money supply operated for the benefit of the few under the guise of protecting and promoting the public interest.

It is a tribute to the skill of the international bankers that they were able to draft a bill, revise it, change its name and make the few window dressing compromises necessary to get it adopted by Congress just before Christmas when quite a few Representatives must have been dreaming of sugar plum fairies instead of exercising due diligence. Only Charles Lindberg Sr. seemed to grasp the essence of what was going on.

To put it bluntly, the Congress transferred its sovereign constitutional right to create money to the sole custody of a group of private bankers. The magnitude of the hoist is unprecedented in the history of the world – the numbers now are in the high trillions.

Soon after the bill was passed the magnitude of the tragedy began to be recognized. William Jennings Bryan, who acted as Democrat whip, later said: “In my long political career, the one thing I genuinely regret is my part in getting the banking and currency legislation (Federal Reserve Act of 1913) enacted into law.” President Woodrow Wilson, just three years after passage of the Act, wrote: “A great industrial nation is controlled by its system of credit. Our system of credit is concentrated (in the Federal Reserve System). The growth of the nation, therefore, and all our activities are in the hands of a few men…. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world.” But the bill was not repealed; almost 100 years later the sell-out is still the law. This makes you wonder what the people’s representatives have been doing to earn their salaries.

The people in charge of the original deception were very far-seeing. They realized that when future governments had to borrow from them they would need a constant income stream to pay the interest on the bonds. So they persuaded the government to introduce income taxes, first as a temporary measure, but later permanently, so it would be able to meet its obligations to the bondholders. In fiscal year 2005 total individual income taxes in the U.S. totalled $927 billion. Of that amount $352 billion, or 38%, was required just to pay interest on the federal debt. The figure would be higher now.

The banksters, as they were often called, then decided that an independent press might catch on to the chicanery. Oscar Callaway is reported in the Congressional Record of February 9, 1917 as follows.

“In March, 1915, the J.P. Morgan interests, the steel, shipbuilding, and powder interests, and their subsidiary organizations, got together 12 men high up in the newspaper world, and employed them to select the most influential newspapers in the United States and sufficient number of them to control generally the policy of the daily press of the United States… They found it was only necessary to purchase the control of 25 of the greatest papers. The 25 papers were agreed upon; emissaries were sent to purchase the policy, national and international, of these papers; … an editor was furnished for each paper to properly supervise and edit information regarding the questions of preparedness, militarism, financial policies, and other things of national and international nature considered vital to the interests of the purchasers [and to suppress] everything in opposition to the wishes of the interests served.”

It has been suggested that the Bilderberg Group may have taken a leaf from the Morgan precedent to protect their interests in the late 20th and early 21st centuries. That is impossible to prove, because its members are sworn to secrecy, and the press won’t report on its meetings.

Could it be mere coincidence that the monetary system, the downside of globalization, 9/11 and the decades-long cover-up of the extraterrestrial presence and technology (especially the clean energy sources that would impact the value of oil stocks), the four subjects of most direct beneficial interests of the banksters, are the four subjects that are avoided like the plague by the mainline press?

I myself am not willing to go so far as to say that the men behind the international banking system are evil men because their thoughts are private. But Sir Josiah, later Baron Stamp, a former director of the Bank of England, has given us a rare snapshot of the truth:

“Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create money, and with a flick of the pen they will create enough money to buy it back again. However, take that power away from them and all the great fortunes like mine will disappear, and they ought to disappear, for this would be a happier and better world to live in. But if you wish to remain the slaves of Bankers, and pay the cost of your own slavery, let them continue to create money.”

In the latest meltdown of 2007-2008, the Fed acted quickly to prevent the Ponzi pyramid from collapsing completely. It printed trillions of dollars to bail out the banks and a few industries that were highly indebted to banks.

But what did the Fed do for the taxpayers whose money was so wildly diluted to save the banks? Nothing! They were left to fend for themselves. Millions of people lost their jobs, their farms, their houses, their hopes, and their dignity as a result of circumstances beyond their control. The taxpayers bailed out the banks, but got nothing in return.

The same is true of governments who came so quickly to the rescue. As a result of the meltdown their revenues were decreased so they were forced to incur or increase their deficits, as well as to start cutting back on essential services.

The Fed pretended to be helping stimulate the economy by reducing interest rates to near zero. It would be an interesting exercise to find out what happened to all of this low-cost money. It would be a good subject for Congressional attention. How much did the banks use to buy up domestic and foreign assets at fire-sale prices? Was any of it used by financial institutions to try to corner world food markets and raise prices at a time when millions are starving?

No doubt some taxpayers did take advantage of the low interest rates available but were they warned about the old bait and switch game? Anyone who acquires assets with cheap money runs the risk of losing their property when the Fed ultimately raises rates. It’s all part of the boom-bust cycle inherent in our infinitely silly monetary system.

The Economics Profession

What does all this have to say about the economics profession? What it really says isn’t fit to print. Someone once said that if you put 20 economists in a room you will get 21 opinions.

That is not my experience. If you get 20 economists together they are likely to give you one stock answer, or at most two. And if there is one dissenter he or she is likely to be drowned out by the 19, squawking like a flock of parrots the words memorized from what their professors taught them.

I have witnessed this herd-like mentality firsthand. When I was first elected to the House of Commons in 1949 there were only a handful of Keynesians in Ottawa. Twenty years later nearly everyone was a Keynesian including, I am told, Richard Nixon.

At that time there were only a few monetarists around. But they spread like mushrooms and soon dominated the economic landscape. It reached the stage when Keynes was anathema, and it was almost impossible to get a tenured position in a school of economics unless you were part of Milton Friedman’s monetarist revolution.

Apparently little if any thought was given to the possibility that neither Keynes nor Friedman had got it right. The former was a bit closer to reality than the latter, but both theories foundered on the rocks of one inescapable truth. Both assumed that the economic system is self-correcting, yet more than two centuries of experience has demonstrated clearly that it is not! Someone has to be at the tiller charged with steering clear of the shoals and rocks of economic disaster and that person has to be someone who is responsible to the people and not the self-serving boom-busters.

Better People

The third essential change is for us as individuals. A just and peaceful world is not possible when it is riddled with graft, fraud and corruption of all kinds. Greed is king and mammon rules the world.

Institutions have to change too. For centuries major religions have been selling their alleged superiority or exclusiveness at the point of a sword, leading to the deaths of thousands of innocents. The three Abrahamic religions, for example, all claim the inside route to paradise. Mathematically that is impossible. It is far more probable, mathematically, that they are all wrong and that the truth is larger and more inclusive.

Ancient and modern history both suggest that there is no hope of a just and peaceful world unless all religions, and those with no religion, forget their differences and start working together to build the Kingdom of God on Earth. I define this as a world where every child can expect food to eat, clean water to drink, adequate clothing to wear, a roof overhead, access to medical support and enough education to be able to determine how best he or she can serve humankind positively, with dignity and self-fulfillment.

What a wonderful world that would be! But it would require a 180-degree change in policies and priorities and a serious effort to apply the Golden Rule that all religions claim as a common thread.

The application of the Golden Rule would mean an end to empire building, and the pursuit of military power and advantage. The U.S., for example, would have to stop being its own worst enemy. The declaration of the war on terror was the biggest strategic blunder I have seen.

On the 11th day of September 2001, following the attacks on the World Trade Center, the United States enjoyed the sympathy of the world, including Arab states and populations. The threat from al-Qaeda was limited and quite within the potential of police and intelligence operations to cope with.

The situation changed dramatically with the launch of a war on Iraq. The goodwill began to evaporate overnight. Soon, instead of a few dozens insurgents the numbers of young Muslims willing to die for their cause multiplied to thousands and a great chasm of hate and mistrust enveloped much of the world.

The U.S. has consistently refused to be even-handed in the Israeli-Palestinian dispute, and the Israelis deceive themselves, and the world, when they claim to be the victims. For a long while peace has been within their grasp if they could have agreed to a just settlement, and establishment of a vibrant Palestinian state. But a handful of fundamentalists have always succeeded in disrupting the peace process because they are not willing to accept the great Rabbi Hillel’s admonition. “So always treat others the way you would like them to treat you; that is the message of the Law and the Prophets.” Meanwhile the peace and stability of the world remains in jeopardy.

The world community must adopt principles and practices that override fundamentalists of any stripe whether they be Christian, Muslim, Jewish or Economic. In addition, religious people should pay more attention to their holy books. There is nothing in the Bible that would legitimize a preventive war, with its carpet bombing, or the launch of a drone or missile intended to kill one person when there is risk that innocent bystanders will also die. Similarly, there is nothing in the Qur’an that would justify suicide bombing that results in the random death of innocents.

Global Hope

If you get the impression that the world is going to hell in a hand basket you have heard me correctly. But it doesn’t need to be so. There are remedies but they involve massive change in the areas discussed – none of which are even on the political radar at present. There is light at the end of the tunnel but, as Sir John Quinton, a former chairman of Barclay’s Bank said, “Bankers sometimes look on politicians as people who, when they see light at the end of the tunnel, order more tunnel.”

What we are really talking about is restoring democracy to countries that not only claim they have it, but also take pride in trying to export it, even though they don’t really qualify as democratic as defined in the dictionary. In Webster’s it is: “government in which supreme power is vested in the people and exercised by them or their elected representatives.” To begin, Wall Street has been the dominant power in the U.S. for decades, and still is. Add to that the fact that the Commander-in-Chief of the Armed Forces, the President of the United States, does not have the security clearance for a number of projects controlled by troops under his command, and you have to conclude that the U.S. is not really a democracy.

The same can be said about Canada, the United Kingdom, Germany and myriad countries that are really puppets of the International Financial System. In each case the real interests of citizen voters is subjugated to the demands of international finance.

There is a sad irony in reading U.S. history of the pre-revolutionary and revolutionary days. Historians often attribute the revolution to the tax on tea. On the other hand, “[Benjamin] Franklin cited restrictions upon paper money as one of the main reasons for the alienation of the American provinces from the mother country.” The U.S. won the revolutionary war but then lost the next critical one when it adopted the British banking system instead of pursuing the better model their provinces had been experimenting with.

For the U.S. now to inflict the British practice on countries around the world, using the International Monetary Fund and World Bank as enforcers, is comparable to the King’s edict that gave birth to the United States. So the financial chains of oppression have to be broken and freedom restored to citizens everywhere.

It’s time to forget the tea party and address the critically important issues facing the U.S. and the world. All of these issues are non-partisan by definition and deserve the attention and support of all genuine patriots without distinction of race, color, religion or political affiliation – both in the U.S. and worldwide. We must unite to preserve and enhance the beautiful satellite that is our birthright.

An Agenda for Action

The first and most urgent project is to clip the wings of the bankers and democratize the money-creation function. In the U.S. the Federal Reserve System must be abolished and its alleged function of regulating the money supply be assumed by the federal government or an agency under its direct control. The most powerful and valuable tool in the economic arsenal must be available to the representatives of the people who can be held responsible for their success or failure.

Some monetary reformers recommend that governments create 100% of new money in a debt free form, greenbacks or equivalent. In the interests of a fast and smooth transition I am suggesting that a ratio of 34% government-created money to 66% bank-created money would work satisfactorily. Banks would be required to maintain 34% cash reserves against their deposits.

The important thing is that governments must immediately create the large sums necessary to balance their budgets and get their economies running at maximum output again. I am talking about an infusion of perhaps $10 trillion U.S. dollar equivalent to start and more if needed to get economies up to speed and to reduce unemployment worldwide by at least half, with the creation of millions of new jobs.
Is this likely to cause massive inflation, as the financial cartel will immediately allege, because it is one of its longest running and most successful bugbears?

The answer to their phony phonetics is a resounding “no.” As any economist should know, it is the amount of money that is created that influences prices, and not who prints it. So as long as governments limit what economists call “the multiplier effect” there will be no problem.

Certainly the present system has been inflationary. A 1950 U.S. dollar is only worth 7.5 cents today. A common sense monetary system should produce better results than that. So there is no reason why the banking system should not be fundamentally reformed – at once!

There are four other actions that I think we, the people of the world should demand of our politicians.

1. A law must be passed at once to prohibit all politicians, candidates for political office and political parties from accepting money from any financial institution as well as make it a criminal offense for any such institution either directly or indirectly to offer it.
2. World leaders must adopt a 10-year time frame to reduce greenhouse emissions by 90 percent.
3. That will only be possible if the U.S. discloses its knowledge of the ET presence and technology, and what has been accomplished in 60 years of back-engineering.
4. The U.N. should declare 2012 the year of forgiveness and reconciliation – a new era of cooperation and (agape) love between races, tribes, religions, nations, and regions both mondial and intergalactic. We have so much to learn from our star visitors in many areas including medicine and food production.

So the U.S. must relinquish its privileged position as the center of “the loop” as part of a new kind of leadership in creating the better world we all dream of.

International Finance vs. The People of the World

None of this vision of a just and peaceful world will be possible unless the all-pervasive power of the international banks has been broken. In 1999 I wrote a book in which I said the next world war would be between the banks and the people of the world. There have been skirmishes for centuries and, so far, the banks have always come out on top. They are now taking advantage of the recent meltdown, and the resulting sovereign debt crisis to line up their heavy artillery including the International Monetary Fund, the World Bank, the Federal Reserve System and the Bank for International Settlements for a final conclusive battle.

As always the aim of the game is to rob the people of the world of their sovereign right to govern their own affairs, and to entrench the power of the international banks, their elite industrial allies and a small cabal of military insiders who run the world as their private fiefdom. The word “unjust” is too small a word by far to describe what they are up to.

If any skeptics think I am overstating the case don’t take my word for it. Go to http://www.victoryfortheworld.net and read some of the books that can be used as references. A hundred pages of The Web of Debt, for example, setting out the history of money, will probably be enough to make you sick at your stomach. I stopped reading it at night because if often made me so angry I couldn’t sleep.

I entered politics more than 60 years ago because I thought recessions were quite unnecessary. They were monetary phenomena with a relatively easy fix. I have made hundreds of speeches on the subject and convinced a few thousand people. But never the movers and shakers. And the mainline press were less than helpful. They were so jaundiced that they were not interested in a maverick speaking truth to power. So it was always a case of David vs. Goliath, to use a Biblical analogy.

Now, for the first time, the power exists to turn the tables and go for the jugular. The internet is providing power to the people that they have never enjoyed before. The young people of the world, in concert with the thousands of their parents and others who care about the state of the world can use the power of social networking to effect a miracle on their own behalf and that of succeeding generations.

The valiant people of Tunisia and Egypt have shown the way by achieving what was believed to be impossible. We share their euphoria. At the same time they, and we, must acknowledge that it is only the beginning. Real freedom will only be possible when they have escaped from the tyranny of international banks, and Wall Street is no longer able to manipulate the price of their daily bread.

A good start might be to distribute a million copies of this speech and translate it into a number of languages. Then the rising generation can bombard the barricades through their social networks. Regime change is not necessary except for leaders who refuse to see the light. But concerned citizens of the world should band together and rattle the cages of all federal politicians. Tell them bluntly that they must vigorously support the above agenda or face inevitable defeat at the next election. It is a simple message, but the only one they understand.

At a press conference on March 29, 2001 announcing the U.S. was backing out of the Kyoto Protocol, President George W. Bush said, “A friend is someone who tells you the truth.” That is what I have been doing today. It is a message of global hope for every race, color, religion and nationality in the world and of peaceful relations with visitors from other realms.
Paul Hellyer
20 Bay St., 12th Floor
Toronto, Ontario M5J 2N8 Canada
Tel: 416/850-1375

Money as Debt also known as Credit

Following a telephone conversation with a lady who wanted to offer her support, I created this new blog as a way of focussing on our core issues in the UK.

Credit comes from the Latin credere which means believing!

Why Paulson’s Plan is a Fraud

Why Paulson’s Plan is a Fraud

By Paul Craig Roberts

Is the Paulson bailout itself as big a fraud as the leveraged subprime mortgages?

Yesterday, here on CounterPunch, I discussed the bailout as proposed and noted that the proposal cannot succeed if it impairs the US Treasury’s credit standing and/or the combination of mark-to-market and short-selling permits short-sellers to prosper by driving more financial institutions into bankruptcy.

A reader’s comment and an article by Yale professors Jonathan Kopell and William Goetzmann raise precisely this question of the fraudulence of the Paulson package.

As one reader put it,”We have debt at three different levels: personal household debt, financial sector debt and public debt. The first has swamped the second and now the second is being made to swamp the third. The attitude of our leaders is to do nothing about the first level of debt and to pretend that the third level of debt doesn’t matter at all.”

The argument for the bailout is that the banks will be free of the troubled instruments and can resume lending and that the US Treasury will recover most of the bailout costs, because only a small percentage of the underlying mortgages are bad. Let’s examine this argument.

In actual fact, the Paulson bailout does not address the core problem. It only addresses the problem for the financial institutions that hold the troubled assets. Under the bailout plan, the troubled assets move from the banks’ books to the Treasury’s. But the underlying problem–the continuing diminishment of mortgage and home values–remains and continues to worsen.

The origin of the crisis is at the homeowner level. Homeowners are defaulting on mortgages. Moving the financial instruments onto the Treasury’s books does not stop the rising default rate.

The bailout is focused on the wrong end of the problem. The bailout should be focused on the origin of the problem, the defaulting homeowners. The bailout should indemnify defaulting homeowners and pay off the delinquent mortgages. As Koppell and Goetzmann point out, the financial instruments are troubled because of mortgage defaults. Stopping the problem at its origin would restore the value of the mortgage-based derivatives and put an end to the crisis.

This approach has the further advantage of stopping the slide in housing prices and ending the erosion of local tax bases that result from foreclosures and houses being dumped on the market. What about the moral hazard of bailing out homeowners who over-leveraged themselves? Ask yourself: How does it differ from the moral hazard of bailing out the financial institutions that securitized questionable loans, insured them, and sold them as investment grade securities? Congress should focus the bailout on refinancing the troubled mortgages as the Home Owners’ Loan Corp. did in the 1930s, not on the troubled institutions holding the troubled instruments linked to the mortgages. Congress needs to back off, hold hearings, and talk with Koppell and Goetzmann.Congress must know the facts prior to taking action. The last thing Congress needs to do is to be panicked again into agreeing to a disastrous course.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review. He is coauthor of The Tyranny of Good Intentions. He can be reached at: PaulCraigRoberts@yahoo.com

Farmers in debt, food prices and droughts…

Thanks to Nadia McLaren, global information provider par excellence. If you haven’t signed our Public Credit Petition yet, maybe reading this will want you to join the dots between money, climate and food…

Eaten Up


Raj Patel’s book Stuffed and Starved predicted the current global food crisis – spiralling food prices, starvation and obesity. Ed Pilkington meets the soothsayer ofagro-economics and talks about what will happen when all the food finally runs out

By Ed Pilkington

29/07/08 “The Guardian” — – -There is a passage towards the end of Raj Patel’s book, Stuffed and Starved, which elevates its author to the rank of soothsayer. He wrote it at the beginning of 2007, well before the roar of anger about rising food prices that resounded across the planet and that he so uncannily and accurately predicted.

The passage begins with Patel’s summary of earlier sections of the book in which he depicts the wasteland, as he calls it, of the modern food system. It is a system that destroys rural communities, poisons poor city dwellers, is inhumane to animals,demands unsustainable levels of use of fossil fuels and water, contributes to global warming, spreads disease and limits our sensuousness and compassion. As if that litany wasn’t enough, he then adds this: “Perhaps most ironic, although it is controlled by some of the most powerful people on the planet, the food system is inherently weak. It has systemic and structural vulnerabilities that lie close to the surface of our daily lives. All it takes to expose them is a gentle jolt.”

When he wrote that passage, Patel had in mind his native Britain and its occasional history of food crises. There was the oil crisis of 1973 that prompted panic-buying in the shops. Or 2000, when protesting truckers blockaded the oil refineries and the shelves again came close to emptying. Those events inspired Patel to contemplate a startling question: “What would have happened,” he wrote, “had all the food on the shelves run out?”

He left that question dangling in the book. But he got thinking about it again as he was on a tour of Australia last August promoting the book. As he travelled from Perth to Melbourne and then Sydney he kept being asked the same question: how did the drought that by then was already biting hard on Australian farmers as well as on consumers who were suffering rising prices, fit into his critique of modern food production? As he faced his audiences, it began to look to Patel, in a tentative, creeping way, that the gentle jolt he had written about was really happening.

“What was weird was that the stories I was hearing about drought and farmers in desperation were very similar to the stories that had been told to me in India a couple of years before. They were all about small independent farmers up to their eyeballs in debt. They had borrowed hugely to make a go of it, and then there’d been a shock – in Australia it was drought, in India it might be harvest failure, in Britain foot-and-mouth. It only takes one small shock.”

And then the agricultural slurry really hit the fan. The first intimations of something truly out of the ordinary came in Mexico in early 2007, before he had finished writing Stuffed and Starved. There were reports of unrest in some of the larger cities about rising food prices, partly related to the decision of the US government to divert huge quantities of corn to ethanol production, in an attempt to reduce dependence on foreign oil. Then early this year some eight months after Patel had finished writing about the risk of gentle jolts – the so-called “silent tsunami” began. Food prices appeared to be out of control, spiralling up by 68% in the case of rice in the first four months of this year alone.

Wheat and corn almost doubled in a year. Such hikes on the costs of the basics of life hit the urban poor in the cities of the developing world hardest, and the misery was soon made manifest in the form of unrest. Impromptu protests grew into angry marches and then erupted into food riots. In Haiti six people died and the prime minister was ousted from power. Two days of rioting ensued in Egypt and 24 people died in Cameroon. The pattern repeated itself right across the developing world, from Guyana and Bolivia to Ivory Coast, Surinam and Senegal, Yemen, Uzbekistan, Bangladesh and South Korea. Wild events in turn prompted wild official responses. Vietnam introduced a night curfew on harvesting machines to stop illegal raiding of the fields; any Filipino caught hoarding rice was threatened with life in jail, Malaysia cancelled all public building works and switched instead to stockpiling food. Even the rich western world was hit. Food prices in the UK have risen almost 7% year on year, shaking the government’s economic confidence. And if any doubts remained about the severity of this crisis, Wal-Mart, the supermarket goliath that stands at the pinnacle of the modern food system, announced it was imposing a four-bag limit for rice on its cash-and-carry customers to stop a run on supplies.

For millions of people around the world the soaring prices have spelt disaster – the World Bank has put the number of people who have been pushed into hunger at 100 million. But for one person, the impact has been strangely and paradoxically counter-factual. When Stuffed and Starved – Patel’s first book – came out last August, he and his publishers imagined it would at best enjoy a specialist readership among globalisation activists attuned to issues of corporate greed and exploitation. But the food crisis has turned it from being a niche read into the literary equivalent of a crystal ball. As a result, the demand has in Patel’s words “gone bonkers”. Reprints have been ordered in Britain, the US and Spain, deals done for editions in Italy, China and South Korea and half a dozen translations are under discussion. “If I had been this popular at school I’d be a different man today,” he quips. His analysis of the crisis, as the author of the book that predicted it all, is now hotly sought after. Or as Patel, who has the savvy Londoner’s gift for self-deprecation, puts it: “Spank me, and call me Cassandra!”

We meet for lunch in a restaurant within a Big Mac’s throw from Capitol Hill in Washington. It’s trivial I know, but it’s impossible not to be curious – a little intimidated even – about what Patel will order from the menu. He points out in his book that the livestock industry is responsible for 18% of greenhouse gas emissions, more than cars. So will he go for the hanger steak?

He asks for a pizza with goat’s cheese and mushrooms, but when I ask whether his choice was politically or ethically motivated, he laughs. “I haven’t had a steak in my life.Growing up in a Hindu household, I clamoured for hamburgers like any other kid and my parents said: ‘Oh, if you must.’ But they drew the line at steak.”

Patel sees in himself, and his eating habits, a tale in microcosm of the globalisation he writes about. His family on his mother’s side were civil servants in Kenya, and tin miners in Fiji on his father’s side. They both were drawn to the mother country, arriving in London in the 60s, where they met. It later became a cliche, but they were among the first to open up “Mr Patel’s corner shop”, working 18-hour days in an era before 24-hour supermarkets. The earliest memories of their son, who was born in 1972, are of playing among the fags, mags and sweets in the shop in Golders Green. It would be too neat, I hazard, to suggest that his parents were forced to close down the shop because of competition with the supermarkets? “My dad did very well for himself,” he replies, speaking with a high-velocity stammer. “But they were certainly driven out. You can’t compete any more, the corner shop is a dying industry.”

Despite those difficulties, the Patels did proud by their son, sending him to a north London grammar school, then to Oxford where he studied PPE, and finally to Berkeley in California. Along the way, he became interested in, and engaged with, the anti-globalisation movement. He was among the thousands who protested in Seattle against the World Trade Organisation (WTO) in 1999, and it was there that he came face to face with what he calls the “march of the farmers’ movement” in the form of arguably the world’s largest network of independent organisations, La Via Campesina, which represents around 150 million farm workers and smallholders across the globe.”I was struck by their sophisticated and detailed critique of the WTO. Seven years before Seattle they had already translated the draft text of the Dunkel report [on trade] into Kannada and were distributing it in the fields.”

He began delving more deeply into the subject of trade, food policy and agricultural resistance as an analyst at Food First, a radical thinktank in Oakland, where an idea for a book emerged. It began life as a meditation on choice, or the lack of it – Coke v Pepsi, McDonald’s v Wendy’s. Its working title was Choice Cuts. Over the next three years he travelled to research the book from South Africa, Europe and South Korea to Brazil, Mexico and the US. In the process the thesis grew bigger in scope and more refined. Its focus was no longer just a lack of consumer choice, it embraced an entire world food system that can consign 800 million – more than one in 10 people on earth – to hunger while simultaneously inflicting obesity on an even greater number, 1 billion people. Hence the book’s new, and in his opinion better, title.

His analysis shows how communities around the planet have been disempowered by a system that appears to offer an abundance of cheap food, but in reality dictates unhealthy and limited choices to an overworked and underpaid workforce that cannot afford any better. “The figure that often stuns people outside the US when I tour with the book is that 20% of American fast-food meals are eaten in cars. People are incredulous and ask: is that because Americans so love their cars? But living here you see how hard people work, for a pittance, with no healthcare, no decent education, not even a hint of a pension – so it’s not surprising that the one hot meal you eat a day you eat off your lap. That’s where the food system becomes a lifestyle.”

Much of the broad argument in Stuffed and Starved will be familiar to those who have followed the debate on globalisation – how the liberalisation of trade has created a vast global market for heavily subsidised American and European agricultural products at the expense of local growers in the developing world; how relentless pressure to drive down food prices over 30 years has seen rich ecosystems replaced by monocultures that rely on oil-powered machines, chemical fertilisers and pesticides to drive up yields; and how international corporations and supermarkets that control the flow of technologies and of food itself have been the beneficiaries. It is a portrait of the agro-economics of the madhouse. “While we think our food is made for us, we are in fact being made for our food,” he says.

Take India, which he describes as a storm of contradictions. “India has the most people in the Forbes top 10 billionaires list, but in the past decade the average calorie intake of the poorest has fallen. There are levels of hunger we haven’t seen since the British left, combined with the world’s highest levels of type 2 diabetes from the pressure of eating too much of the wrong kinds of food.”

Or take the UK, where food producers are now less than one per cent of the workforce. The government may be committed to reducing global warming emissions, but meanwhile a quarter of all trucks on UK roads are carrying food and the average British family is driving 136 miles a year to buy it.

Or America. This is the country whose farmers, food giants and supermarkets benefit most from the global system. Such is the might of US food corporations that the double arches of McDonald’s are more widely recognised as a symbol than the cross.

Wal-Mart is the largest private employer not only in the US, but also in Mexico where Walmex takes in three out of every 10 pesos Mexicans spend on food. Yet amid such largesse 35 million Americans don’t know where their next meal is coming from. “You are hearing these amazing stories of working American families adopting coping strategies that I learned about in development sociology – skipping meals, growing their own fruit and vegetables, giving up on meat. That’s happening right here right now.”

Which brings us back to the current food crisis. What surprised him, he says, is not that the food system felt a gentle jolt – after all, he predicted it – but that it has been pummelled all at once by a perfect storm of troubles. “We could have seen it coming because of the biofuels policy, which has always struck me as absurd, or the rising price of oil, or increased consumption of meat, or weird things happening with climate.

But all these things happened at once, and that sent food prices through the roof.” And this time, there were none of the safeguards of grain stores, strategic food reserves, or import barriers that used to protect vulnerable economies from the vagaries of world markets. They had all been removed in the liberalisation craze of the past few decades.

His prognosis is that in the short term at least the crisis will carry on biting. Major institutions such as the World Bank persist, he says, in responding to events with the same failed policies of liberalisation of markets. “There’s no reason why food prices should come down significantly. And if they don’t, and there’s no real impetus for governments to redistribute spending power, people will continue to take to the streets.”

In the medium term, he’s confident that change is in the air. He detects a growing seriousness and willingness to embrace new ideas in some unexpected quarters. The reason we are chatting in a DC restaurant is that Patel has just that morning been giving testimony before a Congressional committee investigating the World Bank’s approach to food and development. With representatives from the World Bank, UN, Monsanto and other monoliths listening in, he told the committee that industrial agriculture could no longer be relied upon to feed the world and that we need a shift towards less fossil-fuel dependent farming and a return to rich ecosystems based on natural crop rotations and organic fertilisers. “Those are the kinds of things that are anathema to the World Bank and development analysts at the moment, and Congress normally doesn’t want to hear them. That they called on someone like me is very weird, but very heartening.”

In the longer term, though, even the current food crisis may seem mild. The world population is set to rise from about six billion today to nine billion by 2050. Global warming is likely to disrupt growing patterns and extend drought across Africa and the American south-west. Water resources for irrigation will be depleted. If we are already in a perfect storm, then we lack the terminology to describe what lies ahead.

I put it to him that any attempt to change world food production is like a game of poker with extraordinarily high stakes: it not only has to meet the massive yield of industrial farming – and say what you like about the modern food system, the one thing it has done is churn out mountains of the stuff relatively cheaply – it also has to raise it to support three billion extra hungry mouths. Can his alternative model achieve that?

“We’ve got an energy problem, a fuel problem, a water problem and global warming all coming at us,” he replies. “Monoculture is heavily C02-emitting, water and fossil-fuel dependent. Clearly we can’t carry on as we are. We can and we must meet this challenge with something new. So the question is what?”

That’s not entirely an answer to my question. There is a slightly starry-eyed quality to Stuffed and Starved that is also striking about its author in the flesh. When he talks of alternative farming techniques that offer a way forward, the examples he chooses come from Cuba, Venezuela and a project in Oakland that follows in the footsteps of the Black Panthers. That’s hardly going to play well with sceptical American policy-makers.

The other element that is lacking from his prognosis is any role for science and technological innovation in the search for solutions. Where technology does appear it is in the role of villain – GM crops are a ruse by Monsanto and others to secure corporate profits at the expense of the rural poor.

But isn’t there a place for responsibly directed science in steering us through the coming maelstrom? Couldn’t GM, for instance, prove to be crucial in developing drought-resistant crops as global warming tightens its grip?

“I’m big on science, married to a neuroscientist, I love it,” he insists, protesting perhaps a little too much. “I like the way Cuban science approaches the problem. They say you can have GM crops if you can prove there’s no better way of doing things. So they don’t have GM crops, because there always is a better way.”

Not exactly a ringing endorsement for the value of science. But then that is not where Patel’s heart lies. For that you have to look to politics, and political resistance. The soothsayer’s next book, he says, will be a look at the individuals and communities who are refusing to bow down to the current global system. He will soon be starting another journey to meet them. On his list: the slum-dwellers of Durban and the homeless Americans who run the University of the Poor. He sees in them a lesson for us all. “We are victims,” he says as he polishes off his pizza and prepares to fly back to San Francisco where he now lives. “If we are choosing between Coke or Pepsi, Burger King or McDonald’s, that’s not choice. We should stop feeling guilty about that. We should start feeling angry”.

Ed Pilkington is the Guardian’s New York correspondent. He is a former national and foreign editor of the paper, and author of Beyond the Mother Country.

© Guardian News and Media Limited 2008


12 Myths About Hunger


Who Is Responsible for the World Food Shortage


Paul Collier: 4 ways to improve the lives of the “bottom billion” (Video, 20 mins)


Visual resources on overconsumption

1. Danish sculptor Jens Galschiøt

Website: AIDOH (Art In Defence Of Humanism) http://sculptures.aidoh.dk/

notably his 2002 exhibitions

Survival of the Fattest – a sculpture about the world´s imbalance

A huge fat woman from the West is sitting on the shoulders of starved African man. The 3.5 metres high sculpture epitomizes the imbalanced distribution of the world´s resources, preserved by means of a biased and unjust world trade http://www.aidoh.dk/?categoryID=71

The Hunger March / Hunger Boys


2. Photographer Chris Jordan

Website: http://www.chrisjordan.com/

Image series

Running the Numbers: An American Self-Portrait

Plastic Cups, 2008

Plastic Bottles, 2007

Cans Seurat, 2007


Intolerable Beauty: Portraits of American Mass Consumption

Chris Jordan’s TED presentation (20 minute video)




“President Bush has linked higher food prices to higher demand from India and China, but the leaked World Bank study disputes that:

“Rapid income growth in developing countries has not led to large increases in global grain consumption and was not a major factor responsible for the large price increases.”

Even successive droughts in Australia, calculates the report, have had a marginal impact. Instead, it argues that the EU and US drive for biofuels has had by far the biggest impact on food supply and prices.”




There is little doubt in my mind that these floods were caused by HAARP, as a means of accelerating the program of global genocide through starvation. rkm

Heavy Rains Drowning U.S. Crop Production Hopes


June 11, 2008 | From theTrumpet.com

Whether from drought or rain, American crops are being destroyed as the global food crisis escalates.

When the full scope of the developing global food crisis first became evident last winter, grumbling broke out in America and riots broke out in two dozen other countries. Now, at a time when the world vitally needs bumper crops to ease the threat of pervasive food shortages, America’s breadbasket has been hit with torrential flooding.

Many farms in Iowa, Illinois, Indiana and Nebraska have received as much as 12 inches of rain this month so far, according to the National Weather Service. That is over four times the normal amount.

Bridges have been wiped out by swollen rivers, homes have been evacuated due to rising water levels, and fields have been inundated.

This could be the worst flooding the Midwest has experienced in 15 years. Areas of Wisconsin, Minnesota and Missouri also experienced flooding last week.

Due to this flooding, at a time of year when the country’s corn crop should be flourishing one plant in ten has not even emerged from the ground, the Agriculture Department said on Monday.

The crop damage caused by this flooding has caused the Agriculture Department to slash its estimate of this year’s corn crop.

[Nadia] Haven’t heard of HAARP? Try this 10 minute video introduction from Benjamin Fulford http://www.youtube.com/watch?v=InV0cVH6KZc. Form your own views (and remember I’m no expert, just the messenger).


Be isolated, be ignored, be attacked, be in doubt, be frightened…but do not be silenced Bertrand Russell