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G20 Whacks the US & ABC News did it!
I was hoping for some fireworks this weekend at the G20. I thought that
this would be a perfect opportunity to roast our boy, Ben Bernanke. At
this point in history the question, “Is US monetary policy contributing to global political instability?” has been asked and answered. The answer is “yes it is”.
The only question is to what degree. I was expecting that this issue
would be put on the table rather firmly by the economic leaders of the
world. That didn’t really happen. Or did it?
The wording of the final communiqué (they spent most of a night drafting
“acceptable” language) has some words that seem to be directed at Ben/
the USA: (Note: I edit out some the verbose language. Full text here)
We stressed the need to reduce excessive imbalances.
Interesting. This sounds like it is (as usual) directed at the Chinese.
The G20 agreed to come up with specific targets regarding those
“excessive imbalances”.
We agreed on a set of indicators that will allow us to focus on those persistently large imbalances which require policy actions.
Very interesting. What is suggested is that there will be names and
numbers established as to who actually has these “excessive imbalances”.
This information is supposed to be made available at the next G20 in
April. The G20 gives a hint on who will be on that list. The first
category is:
(i) Public debt and fiscal deficits; and private savings rate and private debt.
That category has little to do with China. This is directed squarely at the USA. The second category appears to be pointed at the Chinese:
(ii) and the external imbalance composed of the trade balance and net investment income flows and transfers.
What the grunts at the G20 argued about for 12 hours is which would come
first (i) or (ii). A shot at America, or a shot at China? America came first.
Both (i) and (ii) were mushed together with this:
Taking due consideration of exchange rate, fiscal, monetary and other policies.
To me this suggests that the G20 is equally upset with the US and China.
China’s exchange rate policy now ranks the same as the USA’s fiscal and
monetary policies as disruptive "excessive imbalances". As well it should.
No one really cares about the G20 meeting and their limply worded
communiqué. But it would be a mistake to ignore these signals. Over the
next few months we will see more of this. The leaders of the world will
be pointing their finger at the US for the problems that are exploding.
The “excess imbalances” of fiscal and monetary policy in the USA will
trump the exchange rate abuses of China.
Whether this is right or wrong is irrelevant. It's going to happen.
When it happens, this stink will force a change in US monetary policy.
(the fiscal side can’t be fixed short-term). In my view this means that QE3 is dead on arrival. If Bernanke tries to play this card the world will rise up against him. Obama will have no choice but to agree. If he wants to retain his role as a world leader.
Want some proof of this thinking? Down toward the bottom of the communiqué was this.
5. We discussed concerns about consequences of potential excessive commodity price volatility and asked our deputies to report back to us on the underlying drivers and consider possible actions.
There are many causes of the commodities price explosion that we are witnessing. At this point it is impossible to not include US monetary policies as a contributor.
There will be a report out to that effect before the next G20. That’s
in April. Not so long at all. Interesting to me is that this is exactly
the time frame that Bernanke MUST give us some information on his next policy step. His hands will be tied.
I have been blaming Ben B for a fair portion of the problems in the Arab world. He deserves some heat. But so does ABC news.
That Hosni Mubarak and his family looted the till in Egypt is a surprise to no one. The question is, “How bad was that rip off?”
In the early days of the crisis in Cairo information came to light that
the amounts involved could be between 40-70 billion dollars.
I was staggered by this information. It implies that Hosni is
worth more than Bill Gates (57b) and Warren Buffet (45b). This was not
some feathering of the family nest. The suggestion was that this was the
crime of the century. The prior record was Madoff, but that was only
$20b. No wonder the crowds went wild. This comes to nearly $1,000 per person. It is twice the entire external debt of the country.
So where did the estimate of 40-70b come from? ABC News. They did it on 2/2, very early on in the Egyptian crisis:
I have been waiting for some confirmation of this story. There has been none. The ABC News story is not correct.
On Friday the Swiss government released information regarding the
holdings of the Mubarak family holdings in Swiss banks. The report was
oddly worded (typical Swiss obfuscation): (WSJ 2/20/2011)
ZURICH
-- Switzerland has frozen tens of millions of Swiss francs in assets
belonging to members of the former Mubarak regime in Egypt.Bern said late Friday that it had blocked "several dozens of millions of francs" belonging to figures associated with former Egyptian President Hosni Mubarak
Two things on this. (1) When the Swiss say it is “several dozen million” they are talking about an amount that is less than $30mm. (2) While it is likely that additional money will be found in Swiss banks, it is not going to take the total up by a big amount.
The Swiss government has this number to the penny, there will be no
significant surprises. If the Mubarak money in Switzerland is less than
$50mm there is no way the total could add up to $70b.
The most significant clarification comes from non other than ABC News. Their top investigative reporter, Brian Ross had this to say on 2/11:
I can tell you from personal involvement that Ross is an SOB, he also gets his numbers right. The initial reports by ABC on 2/2 were way out of line.
Would it have mattered if at the beginning of the crisis in Egypt that
information on his wealth outside the country were accurately reported? Maybe. I think so.
You hear a lot of criticism about the financial blogs. That there is
information that has not been properly vetted. The funny thing is that
this criticism always comes from the mainstream media. Nothing could be farther from the truth. In the case of Egypt, ABC’s faulty reporting contributed to a change in government.
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Tasty...
Al jeezra got a report Gaddafi just bailed Libya, China RRR rate, waiting for shanghai market to open.
risk aversion is lightning...
all we need is hedges hit the shortsell.
It's on.
Whatever the numbers they all dwarf the real crime of the century. Nobody can top the housing heist with all the related "financial engineering" rip off cover ups and bailouts. 70 billion is chump change compared the multi-trillion dollar Bankster bonanza that has occured here at home the last few years.
keep an eye on bolivia.....protests are spreading....
http://nakedempire.wordpress.com/
Hi Bruce ;
Your estimate of Mubareks wealth within the range of only few billion dollars and the source of 40-70Billion wealth is not accurate.
There was a story from an Algerian Newspaper before the ABC article showed up:
http://www.jpnews-sy.com/en/news.php?id=709
They claim the family total well over 40billions.
There was another article, will post if i can find.
Mubaraks Billions
from a blog source:
.....I traced this 70 billion dollar smear back to February 2nd, 2011 from ABC online. This story flew around the internet once it was jigged into the system with the original context just becoming Mubarak is worth 70 billion dollars as was intended as Tavistock Institute protocols know that all information in humans compresses to simple figures and smears.
The Molotov gal in this was Susanna Kim. Who if source is correct has been quite the successful little 2010 graduate in landing a job at the New York Times money desk and apparently has a night job at ABC to write about things like Tucson spinning that Obama event and being a part of the Obama coup against Hosni Mubarak.........
Next up is Ms. Kim's source, the notable child, Christopher Davidson.
.....Davidson said the family's net worth, however -- $17 billion for Mubarak, $10 billion for his second son, Gamal, and $40 billion for the family -- are really just estimates.
Oh my Professor Davidson floated a lie which Reporter Kim dutifully posted on a most willing ABC in Charlie Gibson soap dropping position for Obama with political rapist Cynthia McFadden.
See Egyptian law demands that any business doing commerce in Egypt, must have an Egyptian partner, so that sort of explains how people can have NET WORTH and not cash worth, even if only in estimates.
One more quote so Davidson and Kim can end up in prison:
"Of course, by definition, bank accounts in Switzerland are a secret so we cannot get a full picture," said Davidson.
Oh the criminality in this, how did Christopher Davidson know in the first place that President Hosni Mubarak had a British Pound in Switzerland, unless he had been privy to confidential information which should not have been spoken of in the first place.......
http://lamecherry.blogspot.com/search?updated-max=2011-02-13T05%3A55%3A00-08%3A00&max-results=7
Warning only the brave should venture to the website. I picked out the highlights
Update. Dr Christopher Davidson-Durham University, who just happens to have a book out in a few months being printed by Columbia University Press, is a contributor for: OpenDemocracy.net, yet another 501c, supported by: Ford Foundation, Rockefeller Foundation, and taadaa Soros' bagmen TIDES!!!
http://www.opendemocracy.net/about/our_supporters
it would be interseting to see how many cases of advanced book sales Davidson has.
"The main obstacle to a stable and just world order is the United States." George Soros
Well now, there's the news behind the news. Thanks for the post.
Gotta go look into that. Will report later....
I wondered about criticism against Bernanke stopping QE III, but he has given trillions to the G-20 central banks the last two years under the table to keep them propped up so they should be under control.
Slightly off post - but Europe is looking very sick , if Libya falls thats a lot of oil.....................
I think the tension is North Africa is due to relatively primitive autocratic regimes that work optimally at lower revenues - the high oil price seems to have created a huge imbalance between the haves and the have nots or the insiders and the outsiders - however to satisfy everyone the oil price needs to remain static or indeed increase.
Given the increasing amount of oil in the American sphere of the world a revamped dollar with some gold backing is looking more and more a possibility.
I think globalism is dying for sure - the best that can be done is to re localise trade on the different continents.
But who gets the spice of Arabia ?
Bernanke will do whatever he wants, the Fed will go for QE3, its purpose is to prop up the banksters, as everyone knows it isn't helping anyone else whatsoever.
The G20 can whine and moan, it won't matter a jot.
And Obama will still be a 'world leader' as the US has the military muscle. The US will bankrupt the Chinese before the Chinese bankrupt the US. A nice little default, the temporary end of China's export market, I'm sure the US will withstand the stresses better than the poor Chinese (i.e. the population).
An interesting few years ahead.
Well ABC is part of the alphabet soup of State sponsored media. Spoonfed, they print all they are fed to print.
Of course, you're assuming, Bruce, that the average Egyptian can actually tell the difference between Seven Million of their money and Seventy Billion of their money.
Either way, that kind of cash is unfathomable to most families striving to eke out a living in the desert.
The "amount" would not have mattered one iota.
:D
When it happens, this stink will force a change in US monetary policy. (the fiscal side can’t be fixed short-term). In my view this means that QE3 is dead on arrival. If Bernanke tries to play this card the world will rise up against him. Obama will have no choice but to agree. If he wants to retain his role as a world leader.
What is the rest of the world going to do to suddenly "force" Obama/Bernanke's hand??? Last time I checked, the US is still the biggest customer of China, Japan AND Europe - if they suddenly stop selling to the US, their respective export industries will suffer, which will create additional domestic problems on top of the Euro & Japan's own debt crisis.
What I expect will happen is that the US will continue to short-sightedly use its declining leverage (rather than address the underlying causes of the problem, i.e., its deficits & debt) to kick the can down the road again, while the other countries continue to bitch & complain about US hegemony and seek out alternatives to ultimately replace the $US as the world's reserve currency. I don't think that will happen for a while yet, but when the tipping point is reached (hyperinflation created when COMEX stops delivering physical silver or a large silver short goes bust (like JPM?) , the fall of the $US will be swift, final & crushing.
Unfortunately, when that happens, it won't be a bed of roses for China, Japan or Europe either, but they'll be much better off than the US.
If you are a dictator, entitled to screwing your population, and you do this for 30 years, let's just run the calculator.
Population: 85 mil.
Years: 30
Yearly per capita theft: $100 estimate
make a 25% adjustment. And I get lots of billions in potential.
What's so hard about the several billion dollar figure?
Several billion is easy to get to. 70b is not so easy. I'm just shooting bullets at ABC. I have an axe to grind with them.
Just to add to the complexity. Let's make the assumption that Mubarak and entourage put their screwage out at interest (albeit of the Islam faith), and the amounts just mushroom.
curious, that no mention of the son or son in law was involved in the Bank of Islam?
The rate of negative/positive return of complexity : Is QE3 going to help more short term than it will hurt long term. Who knows the answer to that apart from Ben the great?
Consult Tainter... The Collapse of Complex Societies...
@Problem is : don't say that you'll upset 'topcllingtroll'. That's too hard to take for any true blooded american. You must be antimerican.
Oh yeah, here is one of my favorite Anti-Amerikan readings:
Unnown Anti-Amerikan Anarchists...
The biggest issue on this site as all over the world are the consequences of american financial folly. As it affects everybody.
The biggest issue for the Bernank is prop up our financial oligarchy and export the turmoil so their oligarchy goes down in flames before our oligarchy does...
I'm a fool and I knew 70 Bil was a joke, a set-up by an interested party.
Because Troll : Am I the only one who knows how to look at the facts, according to you? Or is that a privilege reserved to your own type of trollers. I'll take it further : is it a right reserved only to citizens of the good old US of A? Say it out, and let me have a good laugh!
Thank you for the post Mr. Krasting.
That 'slip' by ABC is unlikely to have been an actual, legit error.
I believe you are wrong about QE3 however.
It is built in. Without #3, the ponzi collapses. Free money is a requirement at this point, and obama isn't a leader, he is a politician. #3 will happen to extend the pretend in hopes of getting politician obama a second term.
I accept your position on QE. Many disagree with me on this. Including Tyler D.
I ask all of you what would happen if Ben would say:
"We need more QE. After 6/30 (end QE2) the Fed will buy $100b every month until further notice".
The price of wheat, corn, soy and rice would double in six months if that were to happen. Bernanke knows this. His position in history will have gone down in flames. The Fed would be permanantly damaged. The worst possible outcome.
Ben will not gamble his career on this. After all. The economy is growing at 3.5%. There is absolutely no justifiction for QE3. Bernanke knows that as well.
"The price of wheat, corn, soy and rice would double in six months if that were to happen. Bernanke knows this"
Well shit, then the Fed needs to put some control on the speculative financial commodities market. Haven't we learned by now that bubbles are bad? Regulation is the main issue here -not QE.
I agree with others who suggest that Bernanke's legacy is already toast, but he doesn't realize it just yet, and like any political animal, he will try to have it both ways (QE3 & tightening), while finding someone else to pin the blame on when things go south.
I hope I'm wrong, but I fear that when the SHTF finally, things will get so bad, few will care who or what is to blame - the masses will exact their pound of flesh wherever they can (perhaps including Bernanke), but when things finally settle down, I'm not sure that what is left will be recognizable.
I suggest that your perceptions are off. YOU would be concerned about legacy and responsibility. Bernanke is not. You are likely a moral creature. Bernanke is not. You imagine a moral system.
This is not one.
Ben's position in history has already gone down in flames. His career is toast. The Fed is already permanently damaged. Ben knows all this. What Ben is looking for is someone else to blame it all on. That's why I agree with you about QE3. If he goes all in, he will take the fall.
Hi Bruce ;
If Shalomish Bernankestein doesnt launch QE3 then the US markets will crash.
So pick your poison. Market crash or QE3 ?
Why would the Mubarak clan keep any significant portion of its wealth in Switzerland when they have an announced policy on freezing the funds of fleeing dictators? The amount reported is probably just walking around money, the bulk is probably in gold in another Arab country.
An excellent question. You know he owns gold. Lots of it. Where is it? In a vault in Zurich/London or NY? I doubt that.
As you suggest he would "stash' it better than that. But each billion dollars is 22 tons of gold. How to describe that? Think fifteen Honda Accords in weight. So hard to move around. By volume it comes to a pile 10'X10'X6'. But it is not stacked in tight piles. Not so easy to hide this. That is just one billion.
Its in the basement of a bank in Guernsey
Hope and Change. I worry about starving millionaire govt union "workers" in Wisconsin they may have to pay a few extra dollars for gold plated health care and gold plated pensions.
I have no glee at people suffering, except maybe those who are born sadists.
Your posts about america's possible collapse speak otherwise.
1.(a) QE3 is not dead. The rising stocks is the only "positive" development that Ben has to show for the trillions of dolalrs he has spent so far. I am not a psychologist, but it looks to me like every up-tick of the S&P additionaly reinforces Bernanke's self-belief that he's doing the right thing. His interviews and testimony in Congress seem to show that his resolve is stronger than ever. This beligirent fool (although perhaps one of the smartest academics, but whatever) totally confuses cause and effect, i.e. in a "normal" economy, stronger economic prospects lead to stock market gains. In Bernanke's Ponziconomy he thinks that higher stock prices forecast stronger economy ahead. But I bet that the top 1% loves it - especially when coupled with tax cuts, union-busting, investigating "friends of Angelo" (an investigation that will cost millions, and the return will be that Chris Dodd benefitted by a few thousand dollars - what's the cost/benefit here?) rather that an investigation of the half-trillion dollar criminal syndicate Countrywide, as well as BofA, JPM and GS.
1.(b) Bernanke doesn't give a flying fornication what G20 thinks. He only has to remind them how he bailed out Europe in the fall of 2008 with half-trillion (or more - who knows, we can't audit the Fed) of swap lines open to the ECB, Bank of England, and the Swiss. If G20 start making too much stink about the falling USD, he'll shut off this safety valve, and the EuroZone wil be Kaput during the next crisis. They better treat Uncle Ben with maximum respect... And by the way, it's the Bush and Obama administratiosns that for over a decade have been trying to devalue the USD. Obama wants to grow exports? Well, the ONLY way to do it is by lowering domestic wages. By actual cuts or by devaluing of the USD. Here Bernanke is the primary tool (and in general, a tool) of both Administrations. He will not get fired, instead he'll probably be secretly praised if USD sheds 30-40% over next 2-3 years.
2. Are we counting Mubarak and his immediate family's wealth, or more broadly, the wealth he, his family, his ministers+families, top army officers+families, all the loot that his helpers and enablers have accumulated, plus the value of all no-bid contracts to the friends+family, the construction permits on the most lucrative locations, the business licenses for most profitable businesses and thigs such as elimination of competition, etc etc? The "broad" amount of the stolen/misappropriated money can easily be $70B. And remember that until recently Egypt was exporter of oil, although that couldn't be said looking at the standard of living there. So, the oil revenues had to go somewhere?
Exactly. $70 billion stolen/misappropriated over 30 years is a very realistic figure. That's not to say ABC wasn't probably wrong to report that as Mubarak personal wealth. But I have to take my man Bruce, who I love, to task here.
ABC didn't do this, Bruce. Check your head. 30 years of brutal dictatorship, secret prisons, secret police, torture, economic oppression, and widespread corruption did this. I mean, are you really saying that the Egyptian heroes who hit the streets and stayed there for weeks, despite the attacks and tear gas, are so stupid that "only" $5 billion in theft would have led them to stay home and forgive Mubarak for all the other crimes?
What do you think Americans would do after 30 years of dictatorship? Are Egyptians different from us, somehow genetically pre-disposed to put up with dictatorship, requiring reckless reporting by a foreign news agency to spur them into rebellion?
Hitting the streets when the police have free rein to kill you or throw you in jail and play games with your tolerance with pain before making you disappear is very difficult to justify to your children. That's one of the reasons brutal dictatorships, once they get a hold of power, and get the support of the most powerful nations in the world, tend to last. Franco lasted 45 years in Spain.
ABC news had nothing to do with what happened in Egypt, but if ABC news started telling the truth about what is happening in this country it has a chance to have something to do with what should happen here.
Thumbs up, like button, whatever that thing is that we don't have to agree with a comment.
No, QE3 is not dead. Absent significant opposition Ben might just push it through. I am sure that is what he would "like" to do. It will be public opinion that shuts him down. If he goes this route every financial leader outside the country (and a good man at home) will just rip him apart.
I wasn't kidding when I suggested that Obama will have to stop Bernanke. O's phone will ring off the hook from global leaders.
Bottom line. People are dying. They are also getting hungry. The monetary policy of the US is contributing to this. There can be no doubt about that.
I'm just a peon around here, but I can't thank you enough for breaking down this complicated stuff so well, I am understanding more and more each day...
deleting duplicate post
"If he goes this route every financial leader outside the country (and a good many at home) will just rip him apart."
~~~~~~~~~~~~~~
I just wonder who exactly these 'financial leaders' will turn out to be. You can't mean any of the following:
The Bank of England/British Govt.
The ECB/EU bloc.
Maybe Germany again? Fat lot of good their protest did in stopping QE2!
The Chinese will moan, and the developing nations.
But really, none of that matters to Ben, he's a 'sticks and stones' man don't you think?
Plus, I believe that we could very well see the same outcome either with or without QE3: the commodity bubble just bursts (again). All of these bubbles burst.
Ben does what he is told. The FED doesn't care about public opinion. Neither does Obama. He knows he's a one-termer.
Hey troll, you're boring me with your recurrent crap. You know that debate has two sides. Fine, I state my case. You state yours. I don't question your motives, nor the colour of your pubic hair. Just do the same. Start speaking with your mouth. It would help.
I dont question your motives. Any reading of your previous posts make it obvious you want to see us ugly americans.get our.comeuppance.
I'm against giving ABC news credit for anything, whether or not it's from a screw-up on their part. Their error didn't have a damn thing to do with the outcome of the Egyptian protests.
Seriously, which of the protesters would have just shrugged and gone home if they'd heard the correct number on 2/2/2011? Can you picture anyone saying "well heck, we were here protesting, trying to get him to resign, but since he's only stealing a few dozens of millions of dollars, I guess he's an OK leader after all."