Robbing Recessioners ?

As standards of living across the eurozone continue to fall, a number of age-old problems are on the rise. In France, the faltering economy has led to a startling surge in armed robbery – with gold and high-value jewellery the main target.

The Quality of Washington’s Plan to Drag Iran Into a Third World War

Fraternity Boy gone wrong: where did Patrick Clawson harvest all of his neo-conservative ideas?

21st Century Wire

They’re like school kids playing war games.

Listen to this supposedly qualified academic talking head, Patrick Clawson of the influential neo-con think tank, the Washington Institute for Near East Studies – muse on about what underhanded stunts the US could hope for in kicking off WW3 in Iran.

Shameful, yet, someone is paying this guy good money to degraded American credibility abroad.

This is the quality of the garbage currently spewing out of most prestigious Washington think tanks. Clearly, they have lost touch with reality and should be treated as extensions of the international criminal class.

Q: How many other psychopaths are currently nibbling away at our liberties in these so-called ‘think tanks’?

….

Gold Counterfeiting Goes Viral: 10 Tungsten-Filled Gold Bars Are Discovered In Manhattan

Zero Hedge

A few days ago, our report on the discovery of a single 10 oz Tungsten-filled gold bar in Manhattan’s jewelry district promptly went viral, as it meant that a tungsten-based, gold-counterfeiting operation, previously isolated solely to the UK and Europe, had crossed the Atlantic. The good news was that the counterfeiting case was isolated to just one 10 oz bar. This morning, the NYPost reports that as had been expected, in the aftermath of the realization that the sanctity of the gold inventory on 47th Street just off Fifth Avenue has been polluted, and dealers promptly check the purity of their gold, at least ten more fake 10-ounce “gold bars” filled with Tungsten has been discovered.

The Post has learned as many as 10 fake gold bars — made up mostly of relatively worthless tungsten — were sold recently to unsuspecting dealers in Manhattan’s Midtown Diamond District.

The 10-oz. gold bars are hugely popular with Main Street investors, and it is not known how many of the fake gold bars were sold to dealers — or if any fake bars were purchased by the public.

As is to be expected, the Post story is weak on details: after all, any dealer who admits to having allowed Tungsten to enter his or her inventory can kiss their retail business goodbye, as customers will avoid said Tungsten outlet like the plague, for the simple reason that suddenly counterparty risk has migrated from Wall Street to the Diamond District. The one named dealer is the same one who already made an appearance in the previous story on Tungsten in gold’s clothing.

One gold dealer discovered that four of the 3-inch-by-1-inch gold bars he bought — worth about $72,000 retail — were counterfeit.

“It has the entire street on edge,” said Ibrahim Fadl, 62, who has been the owner of Express Metal Refining, a Midtown gold-refinery business, for the last 11 years. “I and the others on the street work off of trust; now that trust is strained.”

Fadl, a Columbia University graduate with a master’s degree in chemical engineering, and who has more than 40 years in the industry, purchased the four fake bars from a well-known Russian salesman with whom he has done business.

Ah yes, those pesky Russians: always happy to do the Fed’s bidding, because who really gains from the loss of confidence in physical gold?

Fadl became suspicious when he offered the salesman a deep discount for the investment-grade gold bars and he quickly accepted it, a source tells The Post.

Fadl said he did his due diligence “by X-raying the bars to ascertain the purity of the gold and weighing the bars, and the Swiss markings were perfect.”

Tungsten is an industrial metal that weighs nearly the same as gold but costs a little over $1 an ounce. Gold closed Friday at $1,774.80 an ounce.

We wish Fadl all the best in his liquidation sale. Others, for logical reasons, are far less willing to step forward:

A second 47th Street refiner, who wished to remain anonymous, said he was burned recently when he bought six gold bars that turned out to be mostly tungsten, with just a gold veneer. He would not comment, though, on who sold him the bogus bars.

The counterfeiting so far appears to have impacted solely PAMP (Produits Artistiques Métaux Précieux ) gold bars, madeby MTB, whose CEO can hardly be too happy that some “Russian” has made it a life mission to destroy the credibility of any gold stamped with the PAMP stamp.

Raymond Nassim, CEO of Manfra, Tordell & Brookes, the American arm of the Swiss firm that created the original gold bars — with their serial number and purity rating stamped clearly into them — said he reported the situation to the US Secret Service, whose jurisdiction covers the counterfeiting of gold bars.

He said his company “is supporting and cooperating with authorities any way we can.”

Nassim thought the culprit must be a professionally trained jeweler to have pulled off the caper.

“The forger had to slice the original bar along the side, hollow out the gold and insert the tungsten ingot, and then reseal and polish the bar, Nassim said.

The case of gold counterfeiting has already taken NYC by storm:

At an industry dinner Thursday night hosted by Comex, the New York-based metals exchange, the room was abuzz with talk about the bogus gold bars, according to Fadl.

Which was also to be expected. What is also to be expected is that as more and more stories of Tungsten making it into broader gold circulation, that retail sales of physical gold will certainly be impaired as end consumers become far more cautious about what they buy.

And while we await more information, especially from the Secret Service, who is “on top” of this case, which we assume implies that gold is after all money, we leave readers with our conclusion from Tuesday: “with false flags rampant these days, we would not be surprised if this is merely yet another attempt to discredit gold, this time physical, as an undilutable medium of warehousing wealth. So buyer beware: in a time when everyone is broke, triple check before exchanging one store of wealth for another.”

For those curious what a fake 10oz bar looks like, here it is again:

HUGO CHAVEZ SAYS TO ENGLAND: “HAND BACK MY GOLD”

By Andrew McKillop
21st Century Wire
August 18, 2011

Today, Venezuelan President Hugo Chavez has ordered his nation’s central bank to repatriate $11 billion of gold reserves held in developed nations’ institutions such as the Bank of England, as prices power through one record high after another, smashing through $1800 per ounce today.

This puts the shoe on the other foot for Britain, who is normally used to asking for their money back. A long-running saga of the 1980s and 1990s was the strident demand by England’s Margaret Thatcher for the European Commission to hand back what she considered was Britain’s over-large contribution to European Union spending on themes that Mrs Thatcher did not like – for example trying to cut youth unemployment and stop industries delocalizing out of Europe. As she said: this was a wanton infringement of free playing go-go markets, with a dedicated urge to impoverish Europe, marginalize million of persons, de-industrialize the economy and destroy social solidarity.

Her present day acolyte and admirer, PM David Cameron recently had a taste of what happens when too much Thatcher-type free market discipline comes home to roost.

CHAVEZ GOLD: Hugo is looking to get all his gold bullion back to the Central Bank of Venezuela.

Exactly like in the good old Soviet Union, you need one policeman every 200 metres along all main thoroughfares to suppress mob rage – and paying cops costs money. Hence, government spending rises.

Mrs Thatcher’s favourite finance minister Nigel Lawson was not in favour of it, but the late 1990s New Labour chancellor Gordon ‘Goldfinger’ Brown played the IMF game of breaking the back of gold bullion dealers attempts at driving gold prices to wantonly dangerously highs – say $ 350 per Troy ounce – in those dangerous days at the start of the millennium.

Gordon Brown sold around one-half of the Bank of England’s entire stock of gold in the 1999-2002 period at prices as low as $ 240 per Troy ounce. What a clever boy.

Venezuela is estimated to hold more than 210 tons of its 365 tons of gold reserves in European, Swiss, US and other banks, but will now progressively repatriate its bullion, Chavez announced on Wednesday August 16.

Outside the central banks, like the UK Bank of England, Venezuelan gold is held by several of the highly discreet, even secretive authorized bullion banks – JPMorgan Chase, Barclays Plc, Standard Chartered Plc and HSBC plc. When the Venezuelan gold is handed back, they will likely have to move fast to replace it – through buying on the open market.

FREE MARKET LIBERALS CAN ONLY GO SO FAR

Chavez has a well-rehearsed rent-a-crowd revolutionary image, but when it concerns stashing his country’s gold, Chavez clung to the decisions of his predecessors steeped in admiration of Mrs Thatcher’s free market ranting and blethering. Nearly one-half of all Venezuelan gold “parked” in the capitalist world’s central banks was held in Thatcher’s England, from very early on. As Chavez said, August 16: “We’ve held 99 tons of gold at the Bank of England since 1980. I agree with bringing that home. It’s a healthy decision.” 

The Venezuelan decision was simultaneously announced by central bank president Nelson Merentes, noting that for the world’s 15th-largest holder of gold reserves, repatriating the yellow metal is not unassociated with its 28 percent price leap, to date, in 2011. His colleague, Venezuelan finance minister Jorge Giordani hinted the real reasons for why Chavez is pulling his gold back home at this moment. He referred to the weakening U.S. dollar, the near-default by the U.S. government on its sovereign debt, and the pan-European sovereign debt crisis which all signal danger for Venezuela’s savings in the shape of yellow metal. This could opportunistically disappear or get sucked into IMF “virtual gold” operations, swapping real gold against SDRs but pretending the liquidated gold is still there, safe and comfy in a vault somewhere, and not replaced by titanium alloy bars with a thin covering of real gold.

Chavez could or may also have taken stock of what is happening to oil – which supplies around 95 percent of Venezuela’s national revenues, exactly like Saudi Arabia. In a nosedive of the global economy, oil prices will seriously tank but gold prices could go on growing. Simply to buy food, it will be handy to have those 210 tons of yellow metal on site and in place.

REVENGE IS NIGH

Chavez may only be an expense account revolutionary, but his gold repatriation decision will have quick and strong anti-Chavez results. Apart from the UK gold stash, Venezuela parked even more tons in Switzerland, and a large amount in the USA, too. The key term to describe the revenge action against Chavez is “attachment risk”, in arbitration case rulings able to freeze Venezuela’s international assets, very surely cut its credit rating, and raise interest rates on Venezuelan debt.

Even prior to the Chavez decision, Venezuelan bond pricing already incorporated a sizeable premium on its lack of transparency (at rates as high as 14 percent) but his gold repatriation decision is a geopolitical signal for Venezuelan bond prices to fall further and interest rates to go on rising.

More succinctly, the arrival of gold at Caracas airport could be simply an attempt by Chavez to spend his way back into another presidential mandate, using the gold for politically motivated spending ahead of next year’s presidential elections, and pre-emptive effort by US oil corporations to punish Chavez for booting them out of the huge potential, Orinoco oil sands. While Venezuelan paper dollar assets can easily be frozen, this does not apply to metallic gold.

 After Venezuela, the logical question is:  what country is next?

Apart from other oil exporters who are well worth analyzing relative to their gold holdings, we will surely find that Europe and the USA have the biggest potential gold scandals lurking under the “keep the party going” rhetoric.

–

GOLD BREAKS $1,800 AS STOCKS TANK, VENEZUELA’S CHAVEZ CALLING BACK GOLD RESERVES

Dip buying of anything except gold, that is.

Bloomberg
August 18, 2011

Gold surged to records in New York and London as mounting concern about debt crises and slower economic growth spurred investors to sell equities and seek the perceived safety of bullion and Treasuries.

Stock indexes fell 2 percent or more across most major European markets and futures on the Standard & Poor’s 500 Index suggested the gauge would open down by about the same amount after Federal Reserve officials said the central bank should refrain from protecting equity investors. Morgan Stanley cut its forecast for global growth this year. Gold holdings in exchange- traded products backed by the metal gained the most in a week.

“The whole world is having huge problems,” said Afshin Nabavi, a senior vice president at MKS Finance SA, a bullion refiner in Geneva. “Until we have assurances from Europe and the U.S. that things are ‘back in order’ then this rally will continue.”

Gold is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify their holdings away from equities. Yields on 10- and two-year notes fell to record lows on Aug. 9, when the Fed took the unprecedented step of saying it will keep its target rate for overnight lending between banks at almost zero at least through mid-2013 to support the economy.

$1,824.20

Gold for December delivery rose as much as $30.40, or 1.7 percent, to $1,824.20 an ounce and traded at $1,820.50 by 9:21 a.m. on the Comex in New York. Immediate-delivery gold was 1.5 percent higher at $1,818 in London after reaching a record $1,821.40.

The metal is up 28 percent this year. The MSCI All-Country World Index fell 8.1 percent this year, the Standard & Poor’s GSCI Index of 24 commodities rose 2.3 percent, while Treasuries returned 7.2 percent in 2011, a Bank of America Merrill Lynch index showed. Bullion today climbed to the highest level since 1980 priced in yen.

Fed Chairman Ben S. Bernanke’s pledge last week to keep interest rates near zero was “inappropriate policy at an inappropriate time,” Charles Plosser, president of the Fed Bank of Philadelphia, said yesterday in a Bloomberg Radio interview. The cost of living in the U.S. climbed in July by the most in four months and more than economists had forecast, a report today showed.

Emerging-Market Inflation

“A developed world with slower growth, a large fiscal deficit and near zero rates over the next few years, inflationary pressures in emerging economies, and larger political and economic uncertainty bodes well for history’s oldest form of wealth,” Roxana Mohammadian-Molina, an analyst at Barclays Capital, said in a report.

Holdings of the metal in exchange-traded products rose 10.8 tons yesterday, the most since Aug. 8, to 2,198.7 tons, data compiled by Bloomberg show. Assets reached a record 2,216.8 tons last week as Standard & Poor’s cut its U.S. credit rating and concern about Europe’s debt crisis spurred demand for gold.

The rally has lifted the 14-day relative strength index for bullion futures to near 80. That’s above the level of 70 that some analysts who study technical charts view as a signal of a potential impending drop.

“We’re looking a little overbought,” said Andrew Gardner, an analyst at MF Global Australia Ltd. in Sydney, referring to the pace of recent gains. “But until the world’s problems –the big issues of the day being U.S. growth and European sovereign debt — are resolved, it’s unlikely to drop much.”

CHAVEZ: 365 Tons

Venezuelan President Hugo Chavez ordered the country’s central bank to repatriate $11 billion of gold reserves held in developed nations’ institutions. The country, which holds 211 tons of its 365 tons of gold reserves in U.S., European, Canadian and Swiss institutions, will progressively return the bars to the bank’s vault, Chavez said yesterday. He also said he’s preparing a decree to nationalize the gold industry to dedicate local production to building up reserves.

MAKING MOVES: Chavez foresees a demand for gold and is now shoring up his position.

Venezuela’s move “suggests a lack of comfort with holding gold abroad,” London-based UBS AG analyst Edel Tully said in an e-mailed report today. “This is another central bank that wants gold to play a greater role in its international reserves.”

Central banks are adding to their reserves of the metal for the first time in a generation. They bought 198 tons of gold so far this year, Marcus Grubb, managing director of investment at the World Gold Council, said on Bloomberg Television today.

Silver for December delivery in New York rose 0.8 percent to $40.705 an ounce. Palladium for September delivery fell 1.4 percent to $765 an ounce. Platinum for October delivery was little changed at $1,841 an ounce after yesterday reaching $1,848.80, the highest price since June 10.

To contact the reporter for this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editors responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

FALLING FALSE FLAGS: THE NORWAY MASSACRE

By Andrew McKillop
21st Century Wire
July 24, 2011

A gunman allegedly dressed as a policeman opened fire on a crowd of young Labour supporters at a summer camp on the island of Utoya in Norway yesterday. The death toll from both attacks stands at 92 and counting.

Authorities have conveniently unearthed a typically mad 1,500 page manifesto (here is link to the whole thing) credited to the alleged gunman accused of this killing spree, written under the name of Andrew Berwick (this is where the story gets extremely bizarre) – which lays out a buffet of extreme Islamophobia, far-right Zionism, as well as attacks on Marxism and multiculturalism, for good measure.

He has since been charged with “terrorism” by the Norwegian authorities. No talk yet of actual murder charges. Amazingly, this rogue paramilitary domestic terrorist has not topped himself and will have a chance to take the world stage, no doubt invigorating a lively new debate on topics like free market economics, the need for more state surveillance, security measures, multiculturalism and applied Marxism in the 21st century.

COBRA STRIKE: Anders Breivik AKA Andrew Berwick

He has quickly been credited with a car bomb hitting a Norwegian government building before the shooting spree and agricultural supplier Felleskjopet now finally claims he bought six tonnes of fertiliser in the weeks before the attack, material that can be used for ‘home-made’ bombs. As per the m.o. of similar ops we have seen in the past, expect coming reports in the news by victims of  ‘multiple shooters’ and a military or intelligence agency background linked to Anders himself.

NEWS CORP WEIGHS IN

One of Rupert Murdoch’s remaining money-grubbing, gutter filling recyclable fish and chip wrappers, the UK “Sun”, was predictably lightning fast with the scoop today, its headline screaming: “Al Qaeda’s Massacre, Norway’s 9/11”. Oops, sorry about that, chum.

Norway with a GNP-per-capita score not so far from that of Qatar and no unemployment, had brewed its own post-liberal neo-fascist poster child, Anders Breivik- AKA Andrew Berwick, a latter day Knight Templar defending the Holy City of Jerusalem, free market economics and the wars in Iraq, Libya, Afghanistan and Pakistan… had struck – real hard.

NEWS CORP KNEE JERK PSY-OP: Norway: "It's Al Qaeda..!"

MOVING ON WITH OUR WAR ECONOMY

This raises a timely question, and certainly the kind which our mainstream media will not be discussing ad nauseum for the next week or two: How are we going with the post-liberal or even post-modern and post-historical War Economy these days?

Obama’s most impressive acheivement to date, the 14,297 billion dollar debt ceiling, underlines a simple fact: printing more new money is now so urgent that going to war is far too slow. Besides, ever since the supershow of 9/11 and a public demolition event at a major New York tourist-and-finance venue, designer wars ‘over the horizon’, AKA the Middle East have been on a downturn, despite the collateral civilian dead.

Obama’s new debt ceiling party, called a Stimulus 2.0 bill by some, and unreal by almost anybody else is far larger than the total combined cost of World War 1 and World War 2 to the USA. It is around 5 times bigger than the combined costs of the USA’s post-2001 designer wars estimated at a total cost of around 2,100 to 2,800 billion dollars.

Getting the debt ceiling sealed and delivered could therefore take several more 24-hour chat shows inside the White House and on prime time, but nice editorialists say the event is likely only a 10-day wonder. Like the Norway massacre, this boggles the mind.

Before we get around to US Treasuries selling for pennies on the dollar, things need to move. The problem is “it never happened before”, just like the Greek-PIIGS and Japanese meltdowns.

All we have on display in the fire sale shop window is the Asian Locomotive growth economy to keep us happy. Hailed as saving us all, by CNN Business and Bloomberg experts, and likely by the UK “Sun” this miracle loco is easy to understand because it is a literal carbon copy – a high carbon copy – of the post war economic growth miracle which happened in the Old Rich/New Poor societies until they were hit by the 1970’s oil shocks.

China and India are shovelling coal into their locomotive right now: a combined total of around 2.7 billion tons of coal a year. Their coal burning grows every year. This is guaranteed but when or if it doesnt, the Asian growth miracle terminates, and then mutates in ways we will find out quite soon.

Economists peddling the post war growth economy, with its cute designer wars as a side dish could ask the average iPhone enabled postindustrial consumer living the Internet revolution if they knew their industrial iPhones and PCs were made from coal and run on coal, when they aren’t made from oil and run on electricity made from much more coal and gas – than nuclear power or homeopathic doses of Green Energy, to amuse and fool the crowd ? At times like today, there is only space for the growth mantra: so simple that even brain-dead TV advertising gets it word perfect. It says: Keep The Party Going, and the no surprise is that nobody wants to know.

The war economy, like its downsized civilian counterpart runs on coal and heavy industry. Al Gore and Rajendra Pachauri, Nobel prize winners for alerting consumers in the Old Rich/New Poor societies to the dangers of CO2 could try the question of what would happen to remaining strands of the growth economy, if China and India suddenly gave up coal burning, and replaced the coal with oil and gas “to save the planet”. Gasoline would be rationed in every single Old Rich/New Poor country, not just using high prices but those cute old-fashioned, postwar ration books the Baby Boomers parents used.

CANARY IN THE GOLD MINE

The new and giant middle class populations of China and India, by early 2011 were buying physical gold bullion in volume due to their concern about inflation and the declining value of their respective paper currencies. Gold demand by China was expected to rise about 20 percent to near 700 tons in 2011; Indian private gold buying was estimated at more than 200 tons in the first 3 months of 2011. Combined, this demand is running at far above one-half of likely world total gold production, of around 2500 to 2700 tons for the year.

So why shouldn’t China and India take one-half, or more than that, of world oil output ? Like anybody can tell you, this is physically impossible. Period and full stop. To be sure, this is the hidden basic agenda of the late-stage growth economy. Any postindustrial consumer-voter in the Old Rich/Hyper Debt countries knows why there are oil wars over the horizon. They know they need 10, 15 or 20 barrels of oil a year to be postindustrial, produce nothing, and consume every possible industrial gimmick, from fast food to Facebook. Just doing nothing takes oil.

But fighting heroic wars over the horizon, and War on Terror at home takes so much oil we don’t even want to guess although the manufacturers of land battle tanks or helicopters can tell us how many barrels-per-hour their not-so-postindustrial goodies consume.

Today, even a downsized and losing war over the horizon needs borrowing to buy the oil it burns, but the mix of dreamtime hope and real world debt is toxic. Not being able to win those cute little wars over the horizon is a downer for consumer morale, and like the post-Vietnam sequence for the USA, through 1975-79 we can be certain the former growth society, deprived of its raison d’etre, will shift into Black Swan domains where everything is possible and surprise is sure. Even designer wars can be admitted as unwinnable. That ‘barbarous relic’ of Keynes, gold instead of paper money, is a nice new idea. Buying food and gasoline now needs credit cards and debt: with creative financing this could be levered and structured – like we said, all is possible.

China and India will go on buying and importing oil until the bitter end. Today’s four leading global oil importers, by rank are: USA, China, Japan, India. Like gold, oil prices can and will show “surprising and alarming” strength right up to the meltdown wire. Only recession pushing say 20 percent of the USA’s population to the bread line soup kitchen, like in Spain already, and in other PIIGS economies very soon, will dent the high structural oil demand of the debt-wracked post-wealth post-growth economy.

THE NEOLIBERAL ALTERNATE

Like we know, this does not exist. Even its golden oldie of designer wars over the horizon has run out of collateral dead and the debt needed to pay for it. The new solution is emerging right now, with Norway in the lead. Our downsized neo-colonial wars over the horizon and being repatriated back home, downsized again, and can use low cost tech like fertilizer bombs and cheap plastic wrapped copies of 5.56 mil infantry rifles with a Chinese made scope for trimming.

The very founding Mother and Father of the doctrine, Britain’s Margaret Thatcher and US president Ronnie Reagan spelled it all out a long time ago – your neighbor is your enemy: profit from their downfall. The new war economy will feature iron rations and freeze-dried chow for bunker living, and those cute anti-radiation gas masks we are getting to see and admire every day. When the Knights of the Temple attack those dirty bomb nuclear reactor targets littered around the oil-saving squeaky-clean New Economy, their body count can become as impressive as Anders Breivik wanted – lets say a few million here and there. To be sure, the historical antecedents are cast in stone.

CONCLUSION

Mind you, both Mussolini and Hitler ran a war-time economy inside their corporate fascist states- all too familiar to the structures of leading ‘democratic’ western super states.

Nice people have a “No Alternative” route today: so it’s pedal to the metal !

COPYRIGHT ANDREW MCKILLOP 2011

FIAT vs METAL: DREAMTIME GOLD, THE EURO AND OTHER NEW MONEYS

The ECB is technically insolvent, but we won’t hear that on primetime

By Andrew McKillop
21st Century Wire
July 16, 2011

Once upon a time there was the Eurozone and its all-new hard money, the EURO…

It got off to a good start with a monstrously high forced surrender cash-in rate for the national moneys it replaced: depending on country, around 15 to 25 percent above the euro’s real worth. This yielded several years in the early 2000’s when it wasn’t even necessary to doctor the official inflation numbers, but through a penchant for old ways and traditions, national economic agencies, the European Commission, the ECB and other rightly named players kept on doing it. This made sure that all of its fundamental economic data was absolutely fake, an important aid to launching a now-floundering ‘cuckoo’ fiat money.

KEEPING THE MONEY STRONG

The 1956 Treaty of Rome and subsequent treaties like Maastricht and Nice lectured that governments must leave their central banks alone and not force them to liquidate gold assets. They could play around with SDRs and paper gold behind closed doors at the IMF, but in their home patch the central bank’s role is currency and money supply management, not government financing woes. Making this a lot less than sure by creative interpretation of the founding texts, the creation of the ECB and operation of the Eurozone, recently expanded to 17 countries, included the Protocol of the European System of Central Banks and European Bank, with “ESCB” being the correct name for the Euro zone. 

THE "EURO-FED" : The ECB will not be told what to do by the European Union.

This protocol says in one of its Articles that neither the ECB, nor any national central bank, nor any member of their decision-making bodies will be told what to do by any European Union institution, body or national government. 

Another article prohibits community institutions or governments having what the article calls ‘overdrafts’, or any other type of easy loan facility with the ECB, or with any national central bank. This rather ferocious, seeming limit on selling gold, of course in secret, was easily got around by interpreting it to mean that gold cannot be put up as collateral for loans received by a central bank and passed on to private banks or to its national government- but it can be swapped.

While the IMF’s recent director Strauss-Kahn was surely interested in wife-swapping, his gold-swapping appetite was even stronger, with the IMF’s action in this domain on an extreme high since Strauss-Kahn moved in, during late 2007. Since then, the swapping bug has new and powerful adepts, or competitors, in Europe as the IMF, ECB, the US Federal Reserve and European central banks scramble to invent, shuffle, swap and sell paper gold, buy government debt, and bail out any private banks who belong to the club.

SELLING GOLD

The ECB under another French political nominee, J-C Trichet, lost no time with its Eurozone central banking partners in ignoring these strictures and ran official gold sales rising from around 35 tons a year, to their first high point in 2009 at 142 tons. In 2010 the brakes were slammed, and sales crashed to 6.2 tons. Official reasons given for this nicely underline the schizophrenic balancing act played out by all central banks and the governments they are officially independent from and unrelated to.

On the one hand central banks seek a low and preferably declining gold price, because a low gold price (by money magic) means that fiat paper moneys they also print and circulate will seem relatively stronger in comparison. To help that process, claimed to generate and maintain confidence and trust in their paper moneys, they have to sell gold.

On the other hand if the gold price is rising, they have to buy gold, and by 2010 (in fact long before), gold was showing ugly signs of going only one way: up. Central bankers mulled the dire fact that gold, by 2010, had its best 10-year streak for price growth – since the 1920s – a fateful decade for central bankers, and everybody else after 1929.

The Central Bank Gold Agreement (CBGA) set at the dawn of the 2000’s, sought limited and controlled European central bank gold sales because of concern that uncoordinated selling was destabilizing the gold market and driving down gold prices too far – despite this being what one side of the Jekyll-and-Hyde central banker psyche wants.  In February 2001 gold prices had fallen from their previous record high (in nominal dollars) of $850 an ounce, reached in 1980, to $253. By September 2010 the price had grown to $ 1300, and today is menacing to break out from current levels around $1550 to unknown and exotic new extremes – for central bankers.

By pure schizophrenia therefore, gold selling suddenly became dangerous and unacceptable in late 2010 but well before then, from 2008, national governments were in panic mode on sovereign debt, budget deficits and collapsing private banks across Europe, in the USA, and Japan. They needed huge new amounts of financing, and central banks had no choice but to pony-up liquid cash using the only real hard asset they have: their gold reserves. They were therefore thrust into the purest of all two-way splits: they had to buy (or in fact invent) gold, while they also had to sell both real and invented gold: needing a frenzy of gold swaps.

THE FRAGILE ECB

The ECB could be called the worst possible mix-and-mingle of classic central bank and semi-federal bureaucratic institution. Both secretive and incompetent, it has intensified Europe’s sovereign debt crises by waiting too long to act, then panicking in an unproductive way. The Bank’s hard asset gold and gold related financial resources (called gold-related receivables), are based on its declared gold reserves of 522 tons at end 2010, with a value of less than €20 bn at today’s gold price ($1550 per ounce). With other resources, whose value or present worth is market price-related, its total reserves are in nominal terms about €82bn but its current operations and exposure, notably the buying of Greek debt and loans to Greece, and loans to other PIIGS countries, stood at around 444 billion euro as of June 2011.

The Bank is therefore now leveraged around 23 to 24 times relative to its real capital base, meaning that should the ECB see the value of its assets fall by less than 5 percent, from booking losses on its loans, from purchases of bad government debt in the PIIGS, or from selling gold at one price but then having to buy it back again at a higher price, its entire capital base would be wiped out. To be sure, that is ‘unthinkable’ because the ECB, even more so than most other central banks is ultimately underwritten by taxpayers. In turn this means there is a hidden – and potentially huge – cost of the Eurozone crisis to taxpayers buried in the ECB’s books.

Hefty losses for the ECB are no longer a remote risk. Greece is effectively already in ‘rolling default’  because it does not have the capacity to pay double-digit interest rates on its ballooning debt, as shown by the supposedly disappointing results from each new bail-out package from the EU, ECB and IMF. To date. the ECB has probably taken on around €200bn in Greek assets, in other words well over twice the ECB’s capital base, and as much as 8 times the value of its 500-odd tons of gold at current gold prices. Since value compression from the penny-on-the-dollar forced sale of Greek national assets is predictably ferocious, and investor-speculators operate a classic raid on its assets, encouraged by all the institutional players including the European Commission and European governments, this will cause large losses to the ECB.

Some forecasts put the probable loss for the ECB, only on its Greek operations at around €45 to €65 billion, depending on how deep the write-downs and losses are and how long the crisis drags on.. 

A loss of this magnitude would make the ECB insolvent – meaning taxpayers in the Eurozone 17 countries will have to finance its recapitalisation. Alternatives exist: the Bank could ask Eurozone governments to send it more cash through a capital call on their national central banks, which could sell some of their gold to raise the cash. In theory and almost always in practice when a central bank is recapitalised it will print and issue more money. The ECB would therefore almost certainly print more euro notes and organize more euro coin minting, making it certain the results are inflationary, which is  specially unacceptable for Germany, the strongest economy in Europe, with the second-largest central bank stock of gold in the world. The risk of Germany quitting the euro, or in fact, keeping it for a selected and restricted club of ‘hard money capable’ countries would radically increase. 

THE NUMBERS DON’T ADD UP

Looking at the debt-and-deficit crises of the Europe-USA-Japan threesome it is hard to say which one might be less out of control than the others. Each has its special edge of unreality and uncontrollability, with the USA oppressed by the single biggest debt load, the Europeans having the fastest spreading and most dangerous loss of control, and the Japanese having the oldest and most untreatable hyper-debt.

If we took the total official gold stocks of the world’s 180-plus central banks, or the 15 – 19 European parties to different versions of the CBGA since 1999, and the current gold price which central bankers tell us is extreme high and dangerous, the present total net worth of these two official gold piles is not just tiny, but minuscule in relation to present-day sovereign debt and deficit crises.

If by magical means it was possible to sell the biggest of these two piles, world total central bank gold reserves as reported to the World Gold Council, around one-third of it held by CBGA parties, this would produce about $1500 billion. This is far short of the Obama administration’s annual deficit for 2011. Even the recent and current ECB and IMF bailout of Greece, costing above $250 billion, is one-sixth of that amount – to unsuccessfully bail out the sinking finances of one small country with 11 million inhabitants. Japanese sovereign debt is over $12 300 billion, and growing, most recently by a probable $150 billion hit from the Fukushima disaster, with the same again for tsunami damage.

Question: What can central bank gold stocks do against that ?

Possibly this is known, but also possibly it is too extreme to be understandable – by central bankers and their ilk. Heavy attention in government-friendly and politically correct media has gone to the horse-trading process for shoehorning France’s own Christine Lagarde, a near world class swimming champion in her youth – into the IMF. Europe wants and needs the directing role, because Europeans must invent and swap an awful lot of gold, fast.

Under Strauss-Kahn the “loan portfolio” of the IMF was multiplied from $1 billion in 2006 to around $100 billion today, and the amount of paper  SDRs the IMF could print, allocate and shuffle between member countries were drastically raised, but the numbers remain derisively small compared with the size of the problem.

The next quantum leap in IMF financial resource creation, all of which have a ‘gold handle’ somewhere in their design, might only need to be 10-fold, or 20-fold, we are told by believers to expect ‘good luck’ and to muddle through, but how the IMF could do this trick is still relatively unknown. In the event of failure, we are forced back to the rather gob-smacking scenario of an ‘entirely new money’ being created.

Financial markets, as expected are doing their predictable best to drive the crisis. The US debt ceiling of $14 300 billion sets a nice playing field for political horsetrading and name-calling;  after Greece, market operators in Europe are quaking with music hall fear from their surprise discovery that Italy is a super Greece;  and Japan’s latest weak government is on its way out as national debt racks on and up by as much as $400 billion only since March. Ingredients have fallen into place for a Summer Panic on world stock markets – which is unusual in modern times, but no problem at all if we go back to classic Victorian-era panics.

NEW MONEY

To be sure, both political elites and their well-disciplined media and press supporters will hunker down and try to ignore the crisis, driving financial market operators to new extremes of saying out loud what they want: easy cash and low interest rates. They have the whip hand for exactly that reason. Easy cash and low interest rates has been the only tune in town since 2008 – but the results are unreal. Saying there is no cause for concern is nice or traditional, but the vastest amounts of extra money ever printed in human history has failed to do anything to, or with the real economy: this is more than just alarming.

Today’s crisis is totally unlike the 1979-1980 panic era. This is despite the “Crash of 79” being cited more and more as the likely model for what happens now, featuring the solid-looking precedents of high gold and oil prices, high unemployment, banking sector stress, rising government deficits and falling regimes in the Arab and Muslim world. Today’s crisis has major missing ingredients: high inflation and high interest rates. It also includes ingredients that weren’t present in 1979: the BRICS are big creditor nations today, both China and India are massively industrialising. They have both, like Russia and Brazil, on many times warned they are not happy with the dollar’s constant loss of value. In 1979, sovereign national debt in the OECD countries was often tiny and sometimes nonexistent – Japan for example was a huge net creditor country with the rest of the world.

One new money could in theory therefore come from over the horizon, BRICS Money, but even a moment’s look at the idea shows this neat fantasy is as unreal as the debt-and-deficit crisis of the OECD group. Gold-backed money, an idea that was tried in the 1920s, but resulted in gold prices only rising and the gold-backed moneys of the day folding one by one, is another popular quick solution, among many observers, but would have direct consequences. To work, it would need a cut in world liquidity by let us say 90 percent, to allow each new bill or note to command, equate to and freely exchange with a measurable speck of metallic gold.

Bancor-type money of the Keynesian genre, in fact never really detailed in the ramblings of Keynes but featuring a basket of real resources able to range across the commodities space, could or might be a candidate new single world reserve currency. Massive intervention across global commodity markets would be needed, with a huge risk of price spirals, and crashes in the value of the ‘fiduciary resources’, that is commodity values. Setting up this nice idea would take a lot more than a single day’s work for ex-swimming champ Lagarde at the IMF. 

Other genial-seeming solutions have already come and gone. In particular the Carbon Money trial balloon of 2009, heavily promoted by Strauss-Kahn at the IMF, which folded as fast as it had appeared.

We can unfortunately be sure that financial market operators have their own solution: another 1929. Lemming-like and driven by herd instinct, they are drawn to these kind of events because. In certain market contexts like the present there is one Total Solution: sell everything, except of course gold.

Leads and ideas from the finance sector can be counted on for their apocalyptic-type absence, forcing the question back into the public arena. This unfortunately is not prepared to deal with such a fundamental question. We could or might suggest that No Alternative economics, as some early neoliberals in their heyday right after the crash of 1979 called their first solution of the day – high street bank interest rates gouged to 20% or more in OECD countries – has generated a No Solution crisis in 2011.

The problem may be so special, and so big we can only anticipate and hope for unprecedented solutions. These would likely be forced to include debt moratoriums on some of the biggest economies of the world, starting with the USA, existing moneys would have to be protected from implosion, world prices of key basic commodities would have to controlled – but whatever the solutions, they will have to come fast.

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Gold and Silver Likely to Go Parabolic Due to ‘Global Shockwaves’ if U.S. Defaults

Before it’s News
July 16, 2011

Gold is some 0.5% lower against the U.S. dollar and most currencies today but higher in Australian dollars as the Aussie fell on Australian and global economic growth concerns. Asian equity indices were mixed as are European indices.

Bond markets have seen subdued trading but Greek bonds are again under pressure and the Greek 10-year yield has risen to 17.37% in increasingly illiquid trade.

The dawning reality that the U.S. will be downgraded due to its appalling fiscal position led to new record nominal gold and silver prices yesterday.

Denial regarding the possibility of a U.S. default continues with some analysts denying that such an event is “possible”. Such an event is possible and it grows more likely by the day. US Federal Reserve Chairman Ben Bernanke warned overnight that a default on America’s debt will spark a major crisis and send shockwaves through the global economy.

“The Treasury security is viewed as the safest and most liquid security in the world, and the notion it would become suddenly unreliable and illiquid would throw shockwaves through the entire global financial system,” he told a congressional committee.

US CDS has broken out to the upside and there is the potential for sharp moves up here as was seen in the aftermath of the Lehman and global financial crisis.

The fundamentals for gold and silver could not be better as the outlook for most paper currencies and government paper (sovereign debt) is not good. The precious metals are again being seen as safe haven assets to protect from government profligacy and currency debasement. The risks of a “depression” and currency crises in Europe and the U.S. are rising and this is contributing to significant safe haven demand.

The fact that gold and silver have no counter party risk and cannot default and cannot be debased or printed into oblivion makes them crucial diversifications. Gold, global equities and AAA rated, short dated bonds remain the best way for investors to protect themselves from today’s growing sovereign debt and monetary risk.

Gold, silver, good equities and good bonds will be better than depreciating cash or currencies in the coming years. Real diversification will help protect preserve and grow wealth…

FLASHBACK: 21st Century Wire Reports on Summer Gold Parabolic on May 24, 2011

MARKET FLASH: GOLD PARABOLIC COMING THIS SUMMER

By Andrew McKillop
21st Century Wire
Originally published May 24, 2011

Question: Why could gold go parabolic?

Prices for the Yellow Metal have recently suffered, along with silver, from sudden investor retreat using rationales like ‘inflation is beaten’, the global economy is recovering and the US dollar is getting stronger. Against the overvalued euro, maybe, but against gold the US dollar, euro, yen and almost all other paper moneys only have one way to go:  down.

Gold is a very special market and gold plays a key arbiter role in the unending attempt by the IMF and central banks to bolster and defend the value of “fiat moneys”. Their strategy is simple: push down the price of gold, anyway they can.

With the sudden and spectacular fall of the IMF’s Strauss-Kahn, 18 May, a large number of gold shuffling and swap operations between the IMF, central banks, the ultra-secret BIS and the world’s highly restricted number of authorized bullion banks could have been frozen in mid-air. When the balls hit the ground the collateral monetary damage could be a lot more interesting and much more powerful than what Strauss-Kahn did with his personal playthings in a Manhattan hotel room.

Strauss-Kahn’s sudden ouster comes at a key moment for its biggest debt bailout operations in favour of governments like that of Greece or Portugal, Ireland or Spain, the Baltic states, Iceland and others – who have to run a constant financing operation to save their national private banks, insurance companies and mortgage lenders. IMF austerity cures and forced firesale of government assets, under Strauss-Kahn or any body else, only makes the debt-load financing problem worse. To be sure, the IMF line is things have to get worse before they get better

Other so-called rich countries with similar crisis-level debt loads start with the USA, but at such fantastic rates of new financing need that, since late 2008, the USA is in permanent crisis territory…

SEE FULL MAY 24th REPORT HERE
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SEE ALSO:

The Strauss-Kahn Affair: It’s Now Make or Break Time for the IMF

Gold Doesn’t Care About The Stock Market

by JOHN RUBINO
Dollar Collapse
July 12, 2011

Once upon a time, gold and stocks were thought to be inversely correlated. That is, when the market went up, gold would go down, and when the market was down, gold would go up as investors abandoned risky assets for the safety of sound money. Put another way, stocks were for “normal” times and gold was something you owned as protection against abnormal events like long bear markets or sudden crashes.

See the 2008/2009 part of the first chart below (blue line is the Dow, green line is gold) for an example of inverse correlation in action.

But post-crash, with the government borrowing trillions and running the printing press flat-out, gold and stocks became positively correlated, as newly-created credit pushed up the price of pretty much everything.

And now the relationship seems to be breaking down altogether. In the past week, stocks went up and stocks went down — and gold just went up. As this is written on July 11, the Dow is down about 1.3% for the day, while gold is up a few bucks to near its all-time high.

What, if anything, does this mean? There’s no way to know for sure, but one possibility is the expected impact of the Pan Asia Gold Exchange, which will bring gold to a new, potentially huge, market. See this King World News interview for a more complete explanation.

Or it could mean that investors have finally figured out that all possible economic outcomes are good for gold. If Washington’s prodigious borrowing sends the economy into inflationary overdrive, capital will pour into precious metals. If QE2 was a bust and the economy starts to sink, that guarantees an even bigger stimulus plan in the near future. Either way, gold is the one clear winner.

Or maybe  the marketplace is finally catching up with years of price suppression and bringing gold into line with the amount of paper currency that exists in the world. Estimates of the gold price that’s necessary to bring about this balance vary, but they’re all far higher than the current price.

A NEW DAWN FOR THE IMF: SWITCHING DEBTS TO ASSETS

By Andrew McKillop
21st Century Wire
June 30, 2011

In the gallic joy and media hoopla of yet another French elite politician with almost no knowledge of economics getting the IMF top job, confirming the real role and mission of this fragile institution, its bizarre mutation to financial and economic charlatanism- goes almost unnoticed. The Greek debt crisis however shows this stark and clear.

The IMF and the European Central Bank, with an outgoing French director and an incoming Italian chief, are basically struggling for survival – due to the debt crisis of a country with 11 million inhabitants whose GDP comes in at about 5 percent of EU-27 GDP.

Whoever says IMF and ECB also says ‘US Federal Reserve’, although Ben Bernanke would likely nuance that and distance himself from failed “quantitative tightening” in south-east Europe, to concentrate on failed QE at home.

What the IMF and ECB have cooked up in Europe’s PIIGS, with the second I-for-Italy moving upstage in a dangerous way as the Berlusconi empire and media circus crumbles, is nothing short of ultra Keynesian deficit medicine mixed with ultra Neoliberal austerity cures of the IMF 1980s Third World type. The net result is simple: debt has to become assets. Never mind the ideology because if this gambit fails, the euro will fall and a string of European, US, Japanese and other banking houses will shudder and tremble, 2008-style.

OLD AND NEW

The doctrinal mix-and-mingle running through the veins of global central bankers and their bridges to the political deciding elite – the IMF playing master of ceremonies – has become so confused, so bizarre we could call it an ice cream cocktail with chopped gherkins put through a mixmaster. It was not even born to fail – it was simply not biologically possible, but like dinosaurs… it happened. Using Greece as an online, real time exhibit of leading edge financial engineering, the IMF and ECB, along with the European Union and a few Greek politicians, watched by the US Fed and some very engaged private bankers and finance sector players, are creating one of the most massive debt explosions the world has ever seen. All this with the small assets, and big debts of a small country edging along the Balkans.

But the Greek Ponzi-style debt pyramid grows every day; most media reporting gives rather fakely, exact numbers of the type: “As of 9am Wednesday morning, Greek sovereign debt is 365.2 billion euros”, and a slightly less fantasist number for how much Greece has to receive to cover the 31 days of July: 12 billion euro, roughly $ 1500 for every man, woman and child in the country. With borrowing like that, why work ? The second income has arrived, but of course with strings attached.

All eyes are turning towards French Finance Minister Christine Lagarde, the first woman to run the IMF or any large financial institution.

The latest 12-billion dollop is the last part of the first debt package masterminded by the IMF and the Europeans, with the ECB in the lead but also including the European Commission and major government players, led by Germany’s Angela Merkel who has publicly said she got on fine with Dominique Strauss-Kahn, and will get on fine with Christine Lagarde: it is official.

GREEK FINANCE: WITH STRINGS ATTACHED

The strings attached include the Dr Jekyll part of the two-headed IMF monster: Greece has to perform. It has to achieve 50 billion euro of asset sales, not so easy in a country of 11 million inhabitants operating in the oversupplied Mediterranean package tour business against bankrupt Tunisia and bankrupt Egypt, now selling 8-day holidays at modern hotels, with food and air flights, at around $ 400 per person. With the July monthly instalment from the IMF and the Europeans, the entire Greek nation could ship itself out to Egypt for the month and find something creative to do with the unused assets, back home.

Greece of course also has other assets, like lignite fuelled power plants, toll highways, ports, tanker shipping lines and even a few semi-bankrupt airlines.

The real potential of achieving 50-billion-euro of asset sales in Greece, anytime at all, let alone soon is however rather low – but that doesn’t matter. What is needed is a public attempt at doing it, and here the IMF and its European friends, with their uncertain and perhaps wavering US allies, have stepped back in time to the 1980s Third World debt pantomine, complete with funny noses: all that is needed is a remake of the Club of Paris, bringing worried banks and reassuring IMF officials together, for a debt and asset slaughter, where assets were turned into debts rather fast.

OLD ASSETS, NEW DEBTS

A country like Greece today, or 1980s-style debt strangled Third World countries, or Russia, Argentina and others in the 1990s has so much short-term debt and ever rising interest rates on that growing part of its debt balloon – a lead balloon – that any asset it puts on the block will be depreciated, quick time. The depreciation is rigorously ferocious, something like an aside in a Thorsten Veblen book on cigar puffing, cognac swilling Victorian capitalists. What you thought might bring in 5 billion euros will in fact return 50 million, penny-on-the-dollar style. Under that type of New Reality, austerity has to be Victorian-style, witness a hike in value added tax on Greek restaurant meals from 10 percent to 23 percent: if you have enough cash to eat out, you have enough to pay the IMF and ECB.

Asset sales and state revenue hikes in Greece will therefore, and can only disappoint.

Meanwhile, the debt clock ticks on and up, another bailout will be needed, so more assets have to be sold (even if they dont exist) and the austerity program has to be tightened, again. In the Russian case in the 1990s, national pride took a strange New Capitalist turn: roughly 40 percent of the entire population were de-monetized or moved out of the cash economy for several years. To be sure, this had a rather draconian impact on imports, let alone mortality rates, but even if oil was worth nothing in the 1990s, Russia kept on exporting it along with other Sunset Commodity resources – exactly like Argentina. So Russia pulled through, to a certain extent, leaving Putin with a permanent chip on his shoulder regarding Western capitalist partners and iron will to stay a creditor nation.

Greece isn’t likely to have a resource-led export revenue boom, like Russia, Argentina and almost all the Jekyll-finance 1980s victims of the IMF in low income Africa and other Third World countries. This is Europe, meaning new-style rigour in a new-style post-liberal economy – which as we already said is the most bizarre cocktail crock of loony economic tunes a Martian could imagine. Failure is certain.

Courage has no place at all in that me-too circus, but it could work in the Greek case:  a sudden and dramatic abandonment of the euro with no prior warning would almost certainly succeed, aided by its shock and horror. The reintroduced drachma would spiral to nothing – but then banks, including the global central bank-surrogate, the IMF, and the would-be federal European ECB would understand they had gone too far with their Veblen medicine and themselves were set to lose everything, too. This brings us straight to a fundamental notion embodied in Keynesianism: if you have a big debt and can’t pay, bankers will stay interested in you. If you have a small debt and can’t pay – go away and die or take a stay in prison.

Greece could shift to a street-friendly military regime of the type which (legend says) saved vodka swilling Boris Yeltsin, install a land army agriculture corps and national sea fisheries corps, develop close and friendly relations with other ruined new democracies of the Mediterranean region, and basically refuse to pay its debt.

Playing for time, the new popular regime of Greece would by necessity be populist, and start by ousting all foreign migrant workers from the country, stemming remittance outflows from the country. This again would signal the new popular regime means business. An aggressive financial strategy with all other EU27 nations would also be necessary, carefully using the twin arms of debt default menace, and joint venture asset development promise.

THE POST LIBERAL RECOVERY

The IMF’s present role models and dominant ideology cocktails range from the laughable to the absurd and back again. Even as a gold hoarder and semi-legal trader, operating with the Basle-based BIS, the IMF is a failure and like other new style central banks probably has a lot less physical gold than it claims. All it can offer debt-strapped countries is SDRs and new debt, drawing down and destroying, or depreciating to almost nothing any real assets that happen to fall into its hands.

Recovery is almost officially defined by the IMF as an Act of God, or Inch’allah for the Gulf state petro-monarchies brought onside by the IMF whenever possible.

We can be sure that previous feats of the IMF, especially its decades-long debt financing saga with low income resource exporter Third World countries, would have dragged on even longer – if there had not been a sudden, strong and sustained upsurge in commodity prices. This upsurge was totally expected by almost any analyst able to use a two-dollar calculator, and totally unexpected by the IMF and its ruling elite politician friends. The IMF therefore has a proven track record of being surprised, and will be surprised by what we can call post-liberal recovery.

In Greece, Portugal, Ireland, Spain and across the Med in Tunisia and Egypt this post-liberal recovery is emerging, sometimes quite fast. The restored state, the government, national institutions and national identity all have a post-global economy importance which of course is played down by average government friendly media in presently unaffected countries. This is a dangerous trend for fuddle-along debt financing and austerity miracles, which only fatten the regular gang of charlatans, who in any case will quickly lose their ill-gotten gains on the gaming tables of the global financial casino.

The process is also post-ideology in a major way. Carefully unexplained by dominant media and their business editors, the failed dictators of the Arab world, currently including ben Ali of Tunisia, Mubarak of Egypt, Gaddafi of Libya and al Assad of Syria all played squeaky clean copybook export platform economics, yipped on by IMF-friendly economists and commentators. Inside their countries the story was a lot different. Street resistance was not driven by ideology or by demonstrators waving pictures of Che Guevara – but by citizens sick of not being able to afford to eat and the victims of permanent mass unemployment, casually described by well paid IMF experts as “an adjustment phenomenon”.

Forcing the economy to ground zero, which again is official IMF medicine, drives society to a rapid search-and-select of what counts and what does not. The flimsy global economy and its tinsel promises weigh little, and outright resistance to austerity measures and cures will rise.

The fear of anarchy and revolution in the post-liberal world – and a total loss for global finance players – is now moving up the teleprompter, prompting European, US, Japanese and other remaining defenders of Orthodox ‘no alternative’ economics to throw money at emerging national governments in a string of countries. Played right, Greece might also benefit from this.  

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