Looming Global Debt Crisis
by Bob Chapman

What do you do after you have zero interest rates and you have flooded the world with money and credit?
The answer is you attempt to fight off higher interest rates and see if you can dodge the inflation bubble that follows. The commitment for this current fiasco to save the world’s Illuminist banks has already caused an official debt responsibility for the US of more than $23 trillion or about 40% of world GDP. That is staggering and it is official. We wonder what the real figure is? It is also wise to remember that the Federal Reserve, and other reserve banks worldwide, all international, are responsible for the carnage we are witnessing.

The public is now paying for their gambling and corruption as central banks, who started this scam, transfer the debt to the taxpayers by buying up toxic garbage, guaranteeing losses and making sure none of the key Illuminist banks don’t go under. The Fed, privately owned, won’t let us look at their books, so we can tell what they are paying for these almost worthless assets. We are told it is a state secret.

There have been some salutary affects, but they are only transitory. As we can see the pace of job losses has slowed and will slow over the next year in anticipation of elections. About 80% of the stimulus package hits before the next election. There will be a slight increase in production and some inventory building. The real question is what will the Fed, government, Wall Street and banking due for an encore? They will most likely demand another stimulus package of some $2 trillion; keep zero interest rates and perhaps go to negative rates and continue to increase M3, money and credit, by 14%. That will neutralize the undertow of deflation and cause higher inflation. This game could last for a few more years, but one thing is for sure, many more are discovering what the game is and they are flocking to gold and silver in a flight to quality to preserve their wealth. If you have any doubts our Treasury Secretary, Mr. Geithner, has recently told us the same plan of easing is in effect. The manipulation and losses in fixed assets will continue. The underlying deflation will not go away. The remedy more money and credit and low interest rates will prevail. The manipulation of markets will continue; world monetization is going on full bore not only in the US but in the UK, China, Japan and many other countries as well. They are all working together to bring down the world financial system when it pleases them to institute world government.

A good part of money and credit injections have been into world stock markets to give a semblance of normality and to make people think all is well. At the same time we hear of eliminating this orgy of money and credit, but it gets pushed off further and further into the future, as it forms another speculative inflationary bubble. There is no doubt that a groundswell is forming as inflation begins to appear again, an event that really started in May, five-months ago. As you can see jobs are not being created and that this financial largess is again flowing mostly into financial markets. The inflationary bubble is on the way again worldwide. ( learn more at )

Ghost Fleets and Protectionism

The Mail Online has some stunning images of The ghost fleet of the recession.The biggest and most secretive gathering of ships in maritime history lies at anchor east of Singapore. Never before photographed, it is bigger than the U.S. and British navies combined but has no crew, no cargo and no destination - and is why your Christmas stocking may be on the light side this year.

Above: The 'ghost fleet' near Singapore. The world's ship owners and government economists would prefer you not to see this symbol of the depths of the plague still crippling the world's economies
Just 12 months ago these financiers and brokers were enjoying fat bonuses as they traded cargo space. But nobody wants the space any more, and those that still need to ship goods across the world are demanding vast reductions in price.
Do not tell these men and women about green shoots of recovery. As Briton Tim Huxley, one of Asia's leading ship brokers, says, if the world is really pulling itself out of recession, then all these idle ships should be back on the move.This is the time of year when everyone is doing all the Christmas stuff,' he points out.
'A couple of years ago those ships would have been steaming back and forth, going at full speed. But now you've got something like 12 per cent of the world's container ships doing nothing.'
As the shipping industry teeters on the brink of collapse, the activity at boatyards like Mokpo and Ulsan in South Korea all looks like a sick joke. But the workers in these bustling shipyards, who teem around giant tankers and mega-vessels the length of several football pitches and capable of carrying 10,000 or more containers each, have no choice; they are trapped in a cruel time warp.
There have hardly been any new orders. In 2011 the shipyards will simply run out of ships to build

Above: 750ft-long merchant vessel is standing absurdly high in the water. The low waves don't even bother the lowest mark on its Plimsoll line. It's the same with all the ships parked here, and there are a lot of them. Close to 500. An armada of freighters with no cargo, no crew, and without a destination between them.
If ever you had an irrational desire to charter one, now would be the time. This time last year, an Aframax tanker capable of carrying 80,000 tons of cargo would cost £31,000 a day ($50,000). Now it is about £3,400 ($5,500).
This is why the chilliest financial winds anywhere in the City of London are to be found blowing through its 400-plus shipping brokers.
Between them, they manage about half of the world's chartering business. The bonuses are long gone. The last to feel the tail of the economic whiplash, they - and their insurers and lawyers - await a wave of redundancies and business failures in the next six months. Commerce is contracting, fleets rust away - yet new ship-builds ordered years ago are still coming on stream.There are many more images in the story as well as tales of the local fisherman, such as Ah Wat who says:
"'We don't understand why they are here. There are so many ships but no one seems to be on board. When we sail past them in our fishing boats we never see anyone. They are like real ghost ships and some people are scared of them. They believe they may bring a curse with them and that there may be bad spirits on the ships."
The ghost fleet is not exactly "secret" given the availability of satellite images. Nonetheless, there has not been widespread reporting of this phenomenon by mainstream media.
Baltic Dry Index Shows Collapse In Shipping Demand
Given the buildup of ships sitting empty on the ocean, the collapse in the Baltic Dry Index is readily explainable.

Please see Investment Tools for more charts and information on Baltic Exchange Dry Index (BDI) & Freight Rates.
Protectionism Will Make Matters Worse
Growing protectionism will exacerbate the problems facing the global economy.
In the 1930's Smoot Hawley completely ruined the agricultural sector in one fell swoop. Now, Obama Risks Global Trade War With Misguided Tariffs over steel and tires.
China has retaliated by "investigating" automotive and chicken exports from the US.
Note that rising protectionism is a symptom of global trade problems and issues. Unfortunately, rising protectionism does nothing but make matters worse.
Mike "Mish" Shedlockhttp://globaleconomicanalysis.blogspot.com/

"Greenspanism" the

Root Cause of this Depression

Bernanke, Geithner, and others have stated the biggest mistake in this depression was the failure to rescue Lehman. I have long disagreed, instead declaring the Bankruptcy of Lehman was one of the few things the Fed got right, even if by accident.
Ambrose Evans-Pritchard has similar thoughts in Lehman is a footnote in the great East-West globalisation crisis.As my colleague Jeremy Warner puts it, Lehman no more caused the economic convulsions of the last year than the assassination of an Austrian prince caused the First World War. There was the little matter of a rising Germany then, and a rising China now. Both scrambled the international system, albeit in different ways.
As of last week, the ABX index of sub-prime mortgage debt showed that AAA-rated securities from early 2007 were trading at 28 cents on the dollar – AA was at 4 cents, near all-time lows. No one can say that $2 trillion (£1.2 trillion) of sub-prime and Alt-A debt is still trading at panic levels, exaggerating losses. The dust has settled. What we can see is that creditors will never recoup their money.
Foreclosures reached 358,000 in August alone. More Americans are being evicted each month than during the entire Depression year of 1932.
We know why the bubble occurred. Call its Greenspanism. Central banks rescued assets each time there was a hiccup, but let booms run unchecked. They pulled "real" rates ever lower, creating addiction to monetary stimulus. Larger doses were required with each cycle, until we hit zero, and it is still not enough. Debt burdens rose to records across the OECD.
Couldn't they see that this was cheating: stealing from the future? No, they were seduced by "inflation targeting" – watch goods, ignore assets – just as cheap imports from China rendered the doctrine obsolete. It always takes ideology to consummate massive error.
China is trying to plug the gap, belatedly, by ramping up credit 70pc this year, but it will take a cultural revolution to induce the Chinese to spend. The liquidity is leaking into stocks, metals, and property.
The Great Game can continue only as long as deficit countries – currently, US (-$628bn), Spain (-$109bn), Italy (-$62bn), France (-$58bn), Britain (-$53bn), Greece (-$42bn), and east Europe – are willing to bankrupt themselves buying Asian goods. Obviously, this is absurd.Absurd is correct.
China, in spite of all those misguided souls who believe otherwise, is not close to decoupling. Proof is easy to find in China's need to ramp up credit and force banks to lend.
In the US, Great Britain, etc, the "Great Game" depends not on US consumers who long ago threw in the towel, but on stimulus packages that shift the demand curve forward. As soon as the stimulus runs out so will purchases.
An economic relapse is coming as sure as night follows day.
Mike "Mish" Shedlockhttp://globaleconomicanalysis.blogspot.com

We Need a Special Prosecutor for

Blackwater and Other CIA "Contractors"
by Jeremy Scahill

Some parts of Blackwater’s clandestine work for the CIA have begun to leak out from behind the iron curtain of secrecy. The company’s role in the secret assassination program and its continued involvement in the CIA drone attacks that occur regularly in Afghanistan and Pakistan have become front page material in the Washington Post and New York Times. There is much more to this story than has been reported publicly and details will continue to emerge, particularly about Blackwater’s aviation division(s).
Now we learn (unsurprisingly) that Blackwater offered “foreign” operatives to work on the CIA assassination program. Blackwater told the CIA that it “could put people on the ground to provide the surveillance and support — all of the things you need to conduct an operation,” a former senior CIA official familiar with the secret program told The Associated Press. If that’s true, those foreign individuals would appear to have been privy to information that vice president Cheney and other US officials deemed not appropriate for Congressional ears, not to mention oversight.
In light of all of these developments, it is important to remember how Erik Prince essentially hired George W Bush’s top people from the CIA’s Directorate of Operations to create his own private CIA, Total Intelligence Solutions. He also offered Alvin “Buzzy” Krongard, the former number 3 man at the CIA, a paid position on Blackwater’s board. Buzzy was the guy who got Blackwater its first known CIA contract back in 2002 in Afghanistan. Buzzy is also the one whining about the CIA’s “morale” problem, in light of the recent scandals, in the Washington Post. “Morale at the agency is down to minus 50,” he told the paper.
When you hear reports that a “private” company was hired to do clandestine work, remember that this particular “private” company, Blackwater, is, in part, being run by Agency veterans, including several of the top people running the torture and assassination programs under Bush. At the end of the day, using Blackwater and/or other companies represents taking covert, lethal operations even further away from anything vaguely resembling oversight by the Congress. By using ex-Agency people instead of “current” Agency personnel, yet another barrier is thrown up and the case for “plausible deniability” becomes stronger. When you are dealing with a billionaire like Erik Prince who apparently viewed himself as a crusader tasked with eliminating muslims and Islam globally, as has been alleged by a former Blackwater official, it is not difficult to imagine how all of this could remain—at least in part— off the books. Would it be a great shock if we learn that Prince volunteered some of his men or his company’s time to lethal missions for the CIA free of charge? “I’m not a financially driven guy,” Prince told Congress in October 2007. Take that with a grain of salt, but it is probably not flat out false. He was a believer in the crusade. ( learn more at )

"Undoing the Imperial Presidency"

Reviewing David Swanson's "Daybreak"
by Stephen Lendman

David Swanson is co-founder of AfterDowningStreet.org and Washington Director of Democrats.com. He's also a board member of Progressive Democrats of America, the Backbone Campaign, and Voters for Peace as well as a member of the legislative working group of United for Peace and Justice.

Subtitled "Undoing the Imperial Presidency and Forming A More Perfect Union, Daybreak" is Swanson's first book, a timely and impressive account of presidential extremism, congressional complicity, the urgency for progressive change, and how to do it.

Swanson exposes what was wrong under George Bush and provides a compelling prescription for real change.

In his book "Cracks in the Constitution," Ferdinand Lundberg explained that the supreme law of the land, the Constitution, never deterred presidents or sitting governments from doing what they wished, then inventing justifications for their actions. During eight years in office, George Bush personified it and said so in his own words. In 2005, he told congressional Republican leaders:
"I'm the president and the commander-in chief. Do (things) my way. Stop throwing the Constitution in my face. It's just a goddamned piece of paper." Both parties acceded. The administration got away with murder. Separation of powers were abandoned. Checks and balances barely exist. Lawlessness became the new standard, and the republic took a giant step backward toward despotism and dystopia under a culture of violence, police state laws, and a Wall Street-run asset-stripping system - parasitically destroying America, wrecking the economy for profit, and forcing the public into permanent debt peonage.
Swanson's book is a call to arms for change, an alert about what's wrong with the nation, the urgency to restore the rule of law, save the republic, and necessity to get engaged enough to matter. After eight years under Bush - Cheney and Obama's early months, the government is more than ever corrupted, imperial, and extremist. Undoing the damage will take years of committed effort, and Swanson explains how: ( learn more at )