The Dollar’s Inevitable Decline
The Telegraph wrote on November 6:
“The Fed’s ‘QE2’ risks accelerating the demise of the dollar-based currency system, perhaps leading to an unstable tripod with the euro and yuan, or a hybrid gold standard, or a multi-metal ‘bancor’ along lines proposed by John Maynard Keynes in the 1940s.
“China’s commerce ministry fired an irate broadside against Washington on Monday. ‘The continued and drastic US dollar depreciation recently has led countries including Japan, South Korea, and Thailand to intervene in the currency market, intensifying a “currency war”. In the mid-term, the US dollar will continue to weaken and gaming between major currencies will escalate,’ it said…
“As this anti-dollar revolt gathers momentum worldwide, the US risks losing its ‘exorbitant privilege’ of currency hegemony – to use the term of Charles de Gaulle.”
The US is also risking to lose whatever influence in the world it may still have.
Dollar in Danger of Losing 20 Percent of Its Value
Reuters reported on November 1:
“The dollar is in danger of losing 20 percent of its value over the next few years if the Federal Reserve continues unconventional monetary easing, Bill Gross, the manager of the world’s largest mutual fund, said on Monday…
“‘QEII not only produces more dollars but it also lowers the yield that investors earn on them and makes foreigners, which is the key link to the currencies… less willing to hold dollars in current form or at current prices,’ Gross added… ‘The fundamental problem here is that our labor… relative to developing economy labor is so mismatched—China can do it so much more cheaply,’ he said.”
As this article and the next ones show, the attempt to cure the fragile US economy with poisonous medications is doomed to failure.
Poison as a Cure?
Bloomberg wrote on November 5:
“Michael Burry, the former hedge-fund manager who predicted the housing market’s plunge, said Federal Reserve Chairman Ben S. Bernanke is trying to use ‘poison as the cure’ by pumping more cash into the economy to spur growth. Bernanke’s Fed pledged this week to use $600 billion in additional Treasury purchases to help lower a 9.6 percent unemployment rate, close to a 26-year high, and to avert deflation.
“The attempt to bolster growth is reminiscent of Alan Greenspan’s actions to revive the economy after 2001, Burry said in a telephone interview from Cupertino, California. The former Fed chairman helped create an unsustainable boom in U.S. property prices with his policies, leading to the worst global financial crisis since the Great Depression, he said.”
The US policy will not prevail or bring success, since God is not in it . As we, as a nation, have been turning our backs on the true God, He will not bless our efforts.
Inflation Due to Wrong US Policy?
CNBC wrote on November 4:
“Investors should brace for a much weaker dollar… said Merk, chairman and chief investment officer of Merk Investments, of Portland, Maine. Merk spoke the day after the Fed said it will be embarking on a program to buy $600 billion in Treasuries in an effort to pump up the economy by increasing liquidity. Critics say the program, also known as quantitative easing, will further devalue the dollar and ultimately create inflation. ‘It’s with the best of intentions but I think it’s a very, very wrong policy,’ Merk said in an interview.
“Consumers should prepare for another turn of events like the spring of 2008, when oil prices soared to $147 a barrel and gas at the pump was more than $4 a gallon… ‘There’s no such thing anymore as a safe asset. Cash is no longer safe,’ he said.”
“Recession Shadows America’s Middle Class”
On November 10, Der Spiegel Online reported the following:
“American society is breaking apart. Millions of people have lost their jobs and fallen into poverty. Among them, for the first time, are many middle-class families…
“Pam Brown is one of millions of Americans who, during the recession, tumbled from their idyllic middle-class existence to near-poverty — or beyond. For many, like Brown, the downfall is a Kafkaesque odyssey, a humiliation hard to comprehend. Help is not in sight: their government and their society have abandoned them.
“Wall Street is preoccupied with chasing new profits again. Yet for large sections of the nation, that old myth of working your way up, of bootstrap success and its ultimate prize, homeownership, has evaporated. The middle class, the America’s backbone, is crumbling. The American Dream has turned into a nightmare.
“Last year the US poverty rate reached 14.3 percent, 1.1 percent higher than in 2008. Almost five million Americans skidded below the poverty line ($22,050 annual income for a family of four), many from hitherto sheltered circles, where poverty was a foreign word. The number of long-term unemployed keeps rising. Worst off are families with children. Every fifth child in the US lives in poverty today…
“‘Nothing’s going to happen,’ Curtis Skinner, head of Family Economic Security at the National Center for Children in Poverty (NCCP), told SPIEGEL ONLINE. The political swing to the right, Skinner fears, is ‘extremely hurtful’ and ‘absolutely disastrous’ to the interest of the weakest…
“Bill Clinton’s ‘Welfare Reform’ of 1996 privatized welfare in the US, turning it into a for-profit business. Nowadays, welfare seekers have to adhere to such strict criteria that ‘a large number of applicants will have their applications denied, mainly because of purported non-compliance with certain requirements,’ the FPWA recently found in a study. Many others would just give up…
“Economists claim things are looking up. Brown doesn’t feel much of that. To this day she spends up to eight hours a day, several days a week, in the waiting room of a ‘Job Center,’ her neatly printed resume in her bag, only to be sent to dead-end training programs and interviews leading to nothing… In the meantime, she feels treated like cattle. ‘They don’t know what to do with educated people like me,’ she says of her overwhelmed social workers… She would be homeless if it weren’t for her lenient landlady. But the house is up for sale, and she isn’t sure how the next owner will handle it. Brown is terrified of homeless shelters. Just the other day she went to visit a girlfriend in a shelter: ‘It was like jail, with steel bars and a curfew.’ Her friend had lost her home in spite of her MBA…”
“Bank Holidays” Not Without Precedence
The Tonka Report wrote on November 5:
“With the world on the verge of a currency war as the Federal Reserve follows through on its dollar-killing quantitative easing program, rumors are once again swirling of a ‘bank holiday,’ during which US citizens will be prevented from withdrawing money or at least limited in the amount of the withdrawal they can make…
“Bank holidays are not without precedent in the United States. On March 5 1933, newly elected Franklin Roosevelt declared a ‘bank holiday’ that lasted four days, during which he rammed through the Emergency Banking Act which granted FDR near dictatorial control over the dealings of banks. The Act also forced every citizen and business in the country to relinquish their gold in exchange for paper currency. The 1933 bank holiday served as a face-saving mechanism for many financial institutions – thousands of them never reopened after the closure period had ended.
“… the debate is no longer about whether the US financial system and the dollar will come crashing down or not, but if that inevitable process will be characterized as a sudden collapse or death by a thousand cuts. The latter seems to be more likely, with a few lurches and leaps along the way…
“The blame for this turmoil can be laid firmly at the feet of Bernanke, acting at the behest of the Fed’s owners, who having promised in June last year that they would not monetize the debt of the U.S. government, have now embarked upon a ‘mad experiment’ that will precipitate ‘the collapse of the US dollar paper standard’…
“So while the happy clappers on Wall Street are drunkenly celebrating the fact that their artificially inflated stock market is surging solely as a result of the value of the dollar being eviscerated, Main Street is hunkering down for a long winter, beset by worries about hyperinflation, rising food prices and gas price hikes, as oil follows gold’s meteoric rise, again solely as a result of the Fed’s decision to debase the greenback.”
The present situation in the USA is filled with so much doubt, concern and uncertainty that even “bank holidays” are not dismissed any more as unrealistic nightmare scenarios.
Germany Angry With USA
As the following articles show, Germany is angry with the USA, and it expresses her anger with America’s politics in no uncertain terms, accusing the USA of duplicity, arrogance and hypocrisy–let alone the charge that it will not only hurt itself, but that it may also jeopardize the entire global economy. The relationship between the USA and continental Europe–especially Germany–is predestined to deteriorate, as we explain in our free booklets, “Europe in Prophecy” and “The Great Tribulation and the Day of the Lord.”
USA in Breach of International Agreement?
Deutsche Welle wrote on November 5:
“The US central bank’s decision to buy additional government bonds in an effort to stimulate the economy is a breach of international agreements, German Finance Minister Schaeuble said on Thursday evening… [It] contradicts an agreement made by G20 leaders, Schaeuble said… Schaeuble said he would not let Germany’s opposition to the Fed’s action get pushed to the back burner and that the issue would be addressed during the G20 summit in South Korea next week…
“Schaeuble’s harsh assessment was supported by leading economists. The Fed runs the risk of causing long-term damage, said Michael Huether, director of the Cologne-based Institute for Economic Research (IW). The acquisition of government bonds by the Fed is a fundamental regulative sin, he said, and it would do nothing to solve the structural problems in the US economy…
“Internationally, the German politicians were joined by Brazilian and Chinese officials in their criticism of the US plan to buy government bonds. ‘Everybody wants the US economy to recover, but it does no good at all to just throw dollars from a helicopter,’ said Brazilian Finance Minister Guido Mantega.”
“USA At A Loss”
The Local added on November 5:
“Finance Minister Wolfgang Schäuble removed his diplomatic gloves on Friday, blasting the United States’ decision to go ahead with a massive economic stimulus measure that could harm Germany. Using unusually strong language, Schäuble said that the Federal Reserve Bank’s attempt to stimulate the US economy with a €600 billion cash injection did not make sense.
“’With all due respect, my impression is that the United States are at a loss,’ he said… Schäuble began his assault on Thursday night, when he told broadcaster ZDF that the Fed had already pumped ‘an endless amount of money’ into the US economy with ‘horrendous’ results.”
USA Hypocritical?
The Financial Times wrote on November 7:
“Germany has put itself on a collision course with the US over the global economy, after its finance minister launched an extraordinary attack on policies being pursued in Washington. Wolfgang Schäuble accused the US of undermining its policymaking credibility, increasing global economic uncertainty and of hypocrisy over exchange rates. The US economic growth model was in a ‘deep crisis,’ he also warned over the weekend.”
“Many Reasons for America’s Problems”
On November 8, Der Spiegel Online published an interview with Wolfgang Schäuble. We are bringing you the following excerpts from his comments:
“‘The United States lived on borrowed money for too long, inflating its financial sector unnecessarily and neglecting its small and mid-sized industrial companies. There are many reasons for America’s problems… I seriously doubt that it makes sense to pump unlimited amounts of money into the markets. There is no lack of liquidity in the US economy, which is why I don’t recognize the economic argument behind this measure…
“‘The Fed’s decisions bring more uncertainty to the global economy. They make it more difficult to achieve a reasonable balance between industrialized and emerging economies, and they undermine the US’s credibility when it comes to fiscal policy. It’s inconsistent for the Americans to accuse the Chinese of manipulating exchange rates and then to artificially depress the dollar exchange rate by printing money.'”
There are indeed MANY reasons for America’s problems–not only in the economic sector–and we discuss these reasons in our free booklet, “The Fall and Rise of Britain and America.”
“The Atlantic Rift Grew Wider”
Reuters reported on November 10:
“Germany’s undiplomatic outbursts against U.S. policy, calling it ‘clueless’… show growing estrangement on economics as America’s focus shifts away from transatlantic ties to domestic challenges and Asia.
“‘The Atlantic is getting wider,’ said Anton Boerner, head of Germany’s Foreign Trade Association, who spoke of a ‘creeping alienation’ between America and Europe, which has been exacerbated by the global financial crisis.
“Germany and the United States often criticize each other’s approaches to aiding economic recovery, with U.S. calls for more expansive policy falling on deaf ears in fiscally disciplined Germany. But Berlin has taken the rhetoric to a new level… One regional German paper, the Hannoversche Allgemeine, came to the conclusion that ‘never before has the Merkel government had such a direct confrontation with the United States.’
“Merkel’s center-left predecessor Gerhard Schroeder came into conflict with President George W. Bush for criticizing the war in Iraq. The arrival of conservative Merkel raised great hopes in Washington and she got on well personally with Bush… But the chancellor and Bush’s successor Barack Obama have always had a difficult time communicating… Merkel has doggedly refused U.S. overtures to fire up domestic economic demand in Germany.
“‘On economic policy there is no dissonance with Europe as a whole, but rather with successful EU states like Germany,’ said Hans-Ulrich Klose, head of German cooperation with Washington and deputy head of parliament’s foreign affairs committee… ‘But the danger is that anti-American sentiment in Germany could grow,’ said Klose.”
Der Spiegel Online wrote on November 11:
“The days of close cooperation among the world’s big 20 economic powers may have ended. With the economic recovery, displays of envy and egotism have reared up at this year’s G-20 summit in Seoul. German Chancellor Angela Merkel is on a confrontation course with Washington over trade policy… Washington has accused governments with large trade surpluses of seeking growth in their own economies at the expense of other nations… The criticism has been directed largely at China and Germany… The harsh tone used by US Treasury Secretary Timothy Geithner recently in making the American case has led to resentment in Berlin and Beijing…
“Notably, Merkel left Germany with well-rehearsed words of praise for the Chinese… Of course, Berlin would rather stand shoulder-to-shoulder with Washington. But the unspoken message was clear: Drive us into a corner, and we’ll find other powerful allies.
“So in Seoul, the Americans appear to be on trial. They haven’t yet brought their economy into line and they still sit on a gigantic state deficit of $1.3 trillion (just under €1 trillion)…”
In a related article, Der Spiegel Online reported on November 11 that a meeting in Seoul before the summit between Merkel and Obama was “extremely frosty” and that the differences between Germany and the USA became “surprisingly” visible, and in the most obvious way. Further, the magazine stated that Obama suffered another set-back since he was unable to secure a trade agreement with South Korea.
“Washington Worries About New Power Couple”
The New York Times wrote on November 9:
“…rarely, in fact, have two men reached the pinnacle in Washington with so little in common. With Mr. Boehner about to become the speaker of the House, the nation’s two most powerful leaders [Obama and Boehner] open this new era with little connection other than a shared fondness for golf and a weakness for cigarettes… The gulf in background, temperament, personality and philosophy make for an uncertain two years as they try to figure out whether they can work together…
“So far, at least, Mr. Obama and Mr. Boehner have spent virtually no time together and have made little effort to forge a bond. Aides said they could not recall a single one-on-one meeting or substantive phone call… As a result, it may be hard for Mr. Obama to reach out to the emboldened House Republicans… Mr. Obama and Mr. Boehner seem to have been talking past each other since the election last week, with Mr. Boehner claiming a mandate to reverse administration policies and Mr. Obama claiming a mandate to work together.”
California’s Ticking Time Bomb
The Los Angeles Times wrote on November 9:
“With the mid-term elections behind us and pundits offering opinions on what it all means, there is a ticking time bomb that further threatens California’s precarious budget situation and economic recovery for business, large and small. The issue regarding the solvency of the unemployment insurance fund was largely ignored by both gubernatorial candidates and the legislature during the recent budget deliberations. Unfortunately for all Californians, and particularly California employers, the failure to act will have serious consequences for business and unemployed workers.
“On a daily basis, California is borrowing $40 million a day from the federal government for payment of unemployment insurance benefits. California already owes the federal government $8.6 billion and that figure will exceed $10 billion by the end of this year. The state’s California Employment Development Department estimates that the deficit will total $16 billion in 2012. By the end of September 2011, California will owe the federal government $362 million for accumulated interest on the loan.”
Bush’s Memoirs Cause Outcry in Europe
Deutsche Welle reported on November 10:
“The 43rd US president’s apparent mission to have his two terms in the White House reassessed and his reputation rehabilitated through his new book, ‘Decision Points,’ has many Europeans shaking their heads. And it’s not just the most inflammatory excerpts – such as Bush’s assertion that water-boarding of terror suspects saved lives – that are causing an outcry…
“If Bush’s single-minded and heavy-handed approach to Afghanistan and Iraq in the wake of the terror attacks of 9/11 were damaging to his relations with his European allies at the time, his newly released memoirs appear to be giving European readers the chance [to] get angry all over again…
“The Bush legacy is still powerfully felt in the United States: the armed forces are embroiled in the two wars he started; the financial system is struggling to pull out of an overwhelming crisis, and politicians are scrambling to rebuild their credibility on the world stage… But the ripples from his eight-year presidency continue to be felt in Europe as well. Under his leadership, decades of trust and cooperation between the US and European governments was damaged.
“According to Thomas Klau, a Transatlantic Relations expert at the European Council for Foreign Relations, the memoir provides new fodder for Europeans who are skeptical about the US political system. ‘Europeans, and Germans in particular, are still amazed that the US political system has the potential to elect such an incompetent leader who has no respect for Western values,’ Klau said. ‘While Obama gave some hope, the Germans are now saddened to see that a discredited party such as the Republicans can be re-elected as the majority in the House of Representatives.’ Germans see the Republican mid-term victory as proof that ‘the US system and electorate has a very short memory and very little wisdom’…
“So far, European reaction to the Bush memoirs has been heavily affected by comments in the book that seem to advocate torture… Moreover, Bush ‘made bold statements’ that the information gained from water-boarding stopped an attack on London – a claim the UK refutes… The response to his memoirs suggests that the damage Bush did to his country’s reputation in Europe remains severe… Bush may have come out with his book to try and put the record straight in his own words. But in doing so, at least in Europe, it appears that he has taken a big stick to a hornet’s nest of his own making.”
EU President Warns of War…
The EUObserver wrote on November 10:
“EU Council President Herman Van Rompuy has issued a stark warning against growing nationalism, populism and anti-democratic forces across the EU, suggesting that the threat to peace in Europe remains a key issue…
“The president was speaking in the German capital on the Schicksalstag, or ‘fateful day,’ the anniversary of five pivotal events in the nation’s history: the fall of the Berlin Wall in 1989 and the fall of the monarchy in 1918, but also the Beer Hall Putsch in 1923, Kristallnacht in 1938 and the execution of a leader of the 1848 revolutions in the German states.
“Quoting wartime US president Franklin Roosevelt, he said that the ‘biggest enemy of Europe today is fear,’ and that this ultimately could lead to war. ‘Fear leads to egoism, egoism leads to nationalism, and nationalism leads to war,’ he said.”
Germany To Use Military in Defense of Economic Interests
Der Spiegel Online wrote on November 10:
“Earlier this year, then German President Horst Köhler provoked a storm of controversy when he said that military deployments were necessary to protect German economic interests. His remarks, made during a trip to Afghanistan, triggered consternation and sharp criticism in the media. Ultimately, he resigned as a result. Now German Defense Minister Karl-Theodor zu Guttenberg has echoed those sentiments.
“Speaking at a security conference in Berlin on Tuesday, Guttenberg said that Germany should be prepared to use its military to secure trade routes, for example against piracy… Commenting on Köhler’s decision to step down in May, the minister said: ‘I ask myself to this day what was so audacious about his comments’…
“He also referred to the competing demands for raw materials of emerging nations and the industrialized world, which could raise questions of strategic importance for German security. ‘The securing of trade routes and sources of raw materials have without a doubt to be considered from military and global strategic viewpoints,’ he [said].”
Deutsche Welle added on November 10:
“The German government has decided to extend three military operations abroad, promising to supply up to 3,000 soldiers in three separate international missions.
“In the biggest such mission, German marines will continue their involvement in the European Union’s anti-piracy operation. The so-called ‘Atalanta Mission’ targets Somali pirates threatening ships in the Gulf of Aden and the Indian Ocean, one of the most important trade routes between Asia and Europe. There are currently 320 German marines participating in the operation off the Horn of Africa. Germany may now deploy a maximum of 1,400 troops in the mission.
“At present there are no German troops actively participating in NATO’s ‘Active Endeavour’ operation in the Mediterranean. However, this week, the German frigate Bremen will be sent to the area to make its contribution to the anti-terror mission. The NATO operation, first devised after the September 11 attacks on the United States, is designed to prevent terrorists from crossing the Mediterranean into Europe. The German cabinet has agreed to maintain its pledge of 700 German troops for the mission.
“Meanwhile there are currently 115 German peacekeeping soldiers stationed in Bosnia. The cabinet agreed to maintain the maximum number of German troops taking part in the EU mission in the country at 900…”
French Democracy in Jeopardy?
Der Spiegel Online wrote on November 10:
“French President Nicolas Sarkozy allegedly ordered France’s domestic intelligence agency to spy on journalists who annoyed him. The opposition is now demanding an investigation. Is French democracy in jeopardy?…
“Sarkozy’s fellow conservatives like to point out that François Mitterrand, the former Socialist president, had a department at the Elysée dedicated solely to his own affairs, and that among its responsibilities was listening in on the telephone conversations of journalists. This so-called ‘cabinet noir’ was only exposed a few years later, when its members were put on trial. But Sarkozy is apparently going one step further and secretly exploiting the police and intelligence service for his own purposes, justifying his actions by arguing that the state is in jeopardy…
“Last week, the administration was also forced to admit that — in the interest of the state, of course — a public prosecutor who had been decorated by Sarkozy had ordered intelligence agents to examine telephone communications between two Le Monde editors and a judge… Such revelations make it increasingly difficult to believe the many official denials of wrongdoing. Likewise, Sarkozy’s adversaries point to a series of bizarre burglaries…
“Olivier Metzner, a Paris-based attorney… is worried about the threat posed to French democracy if the government decides to ‘send out agents to steal the computers of journalists who are looking into the affair’…
“Sarkozy has figured out how to gain control over the entire public broadcasting system. For example, when appointing directors of radio and television stations, Sarkozy has shown a clear preference for friends and trusted associates. And they repay the president with loyalty, as can be gathered from a recent incident at France Inter, a major public radio channel, when two comedians were shown the door after making fun of the government. Under these conditions, it’s hardly surprising that there aren’t many members of the media still willing to criticize the administration. Indeed, a major shift has now taken place in the French media landscape, and it is now online publications… who have alone assumed the mantle of uncovering scandals.”
Italy’s Immorality
Der Spiegel Online wrote on November 10:
“Pious Christians regard him as sick but many ordinary Italians are cheering him on. Prime Minister Silvio Berlusconi may grope his way from one scandal to the next, but issues of morality are not likely to cause his downfall.
“Should 74-year-olds be hosting group sex parties? Absolutely. And should they also be in charge of the government affairs of a core European Union country? Silvio Berlusconi would answer this question enthusiastically in the affirmative…
“Once again, Berlusconi finds himself at the center of a scandal that involves underage women, prostitution and the abuse of power…
“Rome has long been full of rumors about sex parties at the prime minister’s house, Villa Arcore near Milan, lavish affairs complete with half-naked young women and lap dancers, wine, drugs and seafood, Neapolitan songs performed by the master of the house, repeated hymn-like invocations (‘Thank God for Silvio’), and all of it surrounding a golden throne…
“Meanwhile, the opposition doesn’t exactly occupy a moral high ground. Berlusconi’s publications reported with relish on how former Prime Minister Romano Prodi’s spokesman was photographed conversing with a transvestite back in 2007. And the center-left coalition lost control of the Lazio region when its president was caught being driven in his official car to a rendezvous with a Brazilian transvestite…”
… And There is No Peace…
The New York Times wrote on November 9:
“President Obama’s criticism of new Israeli housing plans for East Jerusalem, and Prime Minister Benjamin Netanyahu’s even sharper retort, have thrown the Middle East peace talks into jeopardy, with the dispute over Jewish settlements looming as a seemingly insuperable hurdle…”
