Ron Paul Says Federal Reserve 'Robbed' Americans of their Wealth"

Jeff Poor
Business & Media Institute
Friday November 9, 2007

Federal Reserve Chairman Ben Bernanke appeared before the Congressional Joint Economic Committee on November 8, but had to face criticism from Republican presidential candidate and Texas congressman Ron Paul.

Paul made accusations the Federal Reserve was stealing people’s money.

“There is a dollar crisis out and people’s money being stolen,” Paul said. “People who have saved, they’re being robbed. I mean, if you have a devaluation of the dollar at 10 percent, people have been robbed of 10 percent.”

Federal Reserve Chairman Ben Bernanke attempted to dispel the notion people were being “robbed” of their money by explaining the relativity of the dollar in a local economy.

“If somebody has their wealth in dollars and they’re going to buy consumer goods in dollars, then as a typical American … then the decline in the dollar – the only effect it has on their buying power is that it makes imported goods more expensive,” Bernanke replied.

Soros Says U.S. Slowdown Bigger Than What Bernanke Sees

Investing and Trading Journal
Friday November 9, 2007

Billionaire investor George Soros, speaking at New York University on Tuesday, said that the coming U.S. slowdown will be far worse than the Federal Reserve Chairman Ben Bernanke expects.

“We have borrowed an awful lot of money and now the bill is coming to us”, Soros said, according to Reuters.

“I think we are definitely in for a slowdown that I think will be a bigger slowdown than Bernanke is seeing”, he added.

The Fed just cut rates by 25 basis points, hard on the heels of a surprisingly large mid-September cut of 50 basis points.

The moves are seen as an effort to stave off the effects of hundreds of billions in bank write-downs tied to subprime mortgages. The current estimate of the cost of those write-downs, including international banks, is $1 trillion, according to Pimco’s Bill Gross.

Soros joins a chorus of influential voices who predict that the economic contraction ahead will be worse than widely believed, among them investor Jim Rogers - with whom he ran the Quantum Fund in the 1970s, Warren Buffett and former Fed chief Alan Greenspan.

The U.S. economy is “on the verge of a very serious economic correction”, Soros said.

Soros also intimated that China is clearly the “winner” in terms of its financial relationship to the world’s largest economy, a point recently echoed by Rogers. But, Soros said, a correction in China would be due within a decade.

Separately, Greenspan said on Tuesday that home inventories have to come down drastically to assure stability in the United States.

“The critical issue on the whole subprime and by extension, the international financial system rests very narrowly on getting rid of probably 200,000 to 300,000 excess units in inventory”, Greenspan said in a videoconference to a Tokyo audience, from Washington, D.C.

Metals - Gold close to record as dollar plunges to new depths

Thomson Financial
Friday November 9, 2007

Gold remained close to a 28-year high as the dollar plunged to unprecedented depths against major currencies and after Ben Bernanke, chairman of the Federal Reserve, yesterday warned of increasing inflationary pressures.

The precious metal moves in the opposite direction to the dollar as gold is seen as an alternative asset and rises when inflation jitters hit the markets because it is seen as a hedge.

Near-record oil prices, meanwhile, also seen as a key sign of inflation, also lent the metal support.

Some bouts of profit-taking, however, erased some of gold's recent sharp gains.

Standard Bank analyst said while the precious metal's rally towards the record price has stalled somewhat, gold is still 'riding high' on dollar weakness.

At 9.33 am, spot gold was trading at 835.80 usd an ounce, against 834.50 usd in late New York trade yesterday, having hit 845.58 usd on Wednesday, its peak value in almost 30 years.

Gold fetched its highest ever price in January 1980 of 850 usd per ounce.

Full article here.

Ex-Wall Street Journal Editor: Dollar Collapse Will Cripple European Economy

Former Assistant Secretary of the Treasury says world economy could return to barter system

Paul Joseph Watson
Prison Planet
Friday, November 9, 2007

The father of Reagonomics and former Wall Street Journal editor Paul Craig Roberts has warned that the collapsing dollar will eventually cripple the European economy and may even return the world economy to a barter system as financial chaos ensues.

Roberts served as an Assistant Secretary of the Treasury in the Reagan Administration and is a former editor and columnist for the Wall Street Journal, Business Week, and Scripps Howard News Service.

Speaking on the Alex Jones Show yesterday, Roberts cautioned that "The loss in value of the dollar is becoming so rapid it's alarming....we've got unmanageable trade deficits, budget deficits, the economy is set for recession, the wars show no end."

Asked how bad the dollar crisis can get, Roberts responded, "It can get awfully bad - the trouble is where can they go?"

"If China removes the peg and all the surplus dollars drive up the value of the Chinese currency then given our dependence on China....it's going to drive the prices up here a tremendous amount and Americans don't have any discretionary income left," said Roberts.

"At some point the foreigners will stop financing our budget and trade deficits - then we're going to have a massive crisis the likes of which we've not experienced....if you're totally dependent on imports of manufactured goods and you can't pay for them, what do you do?" asked Roberts, explaining that the only recourse would be to print more money, pushing the dollar down even further.

Citing the fact that the dollar had lost more than 60 per cent of its value against the Euro since 2001, Roberts said that the flight from the dollar could eventually wreck the European economy because it would cripple their exports.

Asked how low the dollar could go, Roberts said that there was a limit because "There's simply so many dollars, there's not enough room in other currencies to absorb them - at some point the flight of investors from the dollar to the Euro will cause amazing troubles in Europe - they won't be able to export anything because the prices are driven up so high."

Roberts said investors will eventually desert the Euro as a safe haven from the dollar and the same process will cause a crisis in Britain as the pound is devalued due to exports being hit.

"Wages are being frozen, profit margins are shrinking, exports are down - so it's starting to impact on Europe," said Roberts.

Roberts warned that the potential destruction of the dollar as the world's reserve currency could eventually return us to a system of barter, completely altering the landscape of the economic structure as we know it.

A Market Without Parachutes

MIKE WHITNEY
Counterpunch
Friday November 9, 2007

America is finished, washed up, kaput. Foreign investors and central banks around the world have lost confidence in US markets and are headed for the exits. The dollar is sinking, the country is insolvent, and its leaders are barking mad. That's bad for business. Investors are voting with their feet. They've had enough. Capital is flowing to China and the Far East in a torrent. It's "sayonara" downtown Manhattan and"Hello" Tiananmen Square.

The dollar fell another 2 per cent last night, gold soared to $840 per ounce, oil topped $98 per barrel, General Motors reported a $39 billion loss after the market closed on Tuesday, the real estate market continued its downward slide, and the major investment banks are marching in lock-step towards bankruptcy.

The news is all bad. The nation's economic foundation is in shambles. US credibility is shot. Bush and Greenspan have put us on the road to ruin. Now their work is done. We're flat broke.

The catalogue of fiscal ailments now facing the country is too long to list. We'd need a ledger the size of a small encyclopedia. There's been a stampede away from the dollar even though it's already lost over 60 per cent of its value since Bush took office and even though central banks around the world will lose their shirts if it collapses. They don't care. They're getting out while they can.

Cheng Siwei, the vice chairman of China's National People's Congress, announced yesterday that China would continue to diversify its $1.4 trillion reserves away from the dollar to "stronger currencies" like the euro. "Strong currencies"; isn't that Paulson's line? Siwei's comments ignited a firestorm in the currency markets triggering a big blow-off of the greenback. The poor dollar has no place to go now but down, and it's on a greased pole to the bottom. With consumer spending paralyzed by the decline in home equity and frozen wages, and the banks "stuffed to the gills" with over a trillion dollars of mortgage-backed sludge; the prognosis for the hobbled dollar is looking grimmer by the day. The bulging trade deficits and dwindling foreign inflows haven't helped either. The greenback has suddenly become the global pariah; all it needs is a leper's rattle and a tin cup.

The news is no better in the real estate industry either, where the nation's biggest builders are reporting record losses and inventory is backed-up 11 months. Sales are off 22per cent in one year alone. Foreclosures are skyrocketing, jumbo loans (over $417,000) are impossible to get regardless of one's credit history, 40 per cent of all mortgages (subprime, Alt-A, piggyback, reverse amortization, interest-only) have been eliminated, and entire projects in Florida, Arizona, Las Vegas, and California's Central Valley have stopped building altogether. Tens of thousands of unoccupied homes across the Southwest have been reduced to ghost towns. Nothing is selling. The building boom, that began when Alan Greenspan ginned-up the Fed's printing presses in 2002, has turned into the biggest housing bust in American history.

On top of that, the banks are tightening lending standards and shunning potential buyers just when the economy needs a boost in demand. Loan originations are down and bankers are spooked by the gathering storm in the credit markets. That means that home sales will continue to be sluggish, prices will correct more quickly, and the anticipated "soft landing" will turn into a full-blown crash.

New home construction has accounted for 2 out of every 5 new jobs created in the last 5 years. Most of those workers are either delivering pizzas, cleaning bed pans or are lining up at the soup kitchen. The BLS's numbers on employment are bogus. It's just more government bunkum. They're predicated on a "birth-death" model that creates millions of fictitious jobs out of whole cloth. In truth, unemployment is soaring and the most vulnerable and impoverished among us are taking a beating from housing debacle.

According to the Mortgage Bankers Association of Washington, the total of mortgage loans outstanding in 2006 was $10.9 trillion; $6 trillion of which were transformed into securities. (CDOs, MBSs) About $1.5 trillion of those securities are subprime; another $1 trillion Alt-A (nearly as risky) and at least another $1.5 trillion in adjustable rate mortgages (ARMs) At least 20 per cent of these shaky liabilities/securities will default, and yet, no one really knows who is holding them on their books. All of the major financial institutions-the insurance companies, foreign banks, hedge funds, investment banks---have purchased these CDO "roadside bombs" and mixed them in with their other performing loans and hard assets. The projected explosions have already begun to take their toll on the financial giants---Citigroup and Merrill Lynch are just the latest victims; others will follow. The problem can't be fixed with Bernanke's low interest rates. The bad debts are everywhere and must accounted for and written down. That puts us on the threshold of a jarring market-downturn triggered by an unprecedented number of defaults that will rumble through the entire system. Bankruptcies will pop up everywhere at random. It is a blueprint for economic chaos. And it is unavoidable.

The global markets have never seen a financial typhoon of this magnitude before. Mortgage lenders, homeowners, banks, hedge funds, bond insurers, etc. will all either go under or feel the sting of a slumping market.

Many of the major investment banks are already broke; it's clear from their own reporting. Charles Hugh Smith sums it up like this in his recent article "Empire of Debt: The Great Unraveling":

"If their bad bets were marked to market, Citicorp and Merrill Lynch would be declared insolvent. Why? Because they are insolvent--right now. The meaning of insolvency is straightforward: their losses exceed their capital. Recall that these firms list assets of $100 billion (or whatever) but their actual net capital is on the order of 2.5 per cent to 5 per cent---a mere sliver of their stated assets. In other words: a 5 per cent loss of their stated assets wipes them out..The game is now over, and the players shuffling losses can only last a few more days or weeks."

Up to this point, the banks have been able to place a sizeable portion of their "hard-to-value" assets in a Level 3 grab bag, which allowed company accountants to assign a value to those assets according to their own judgment. No more. The new FASB 157 regulation will force the banks to use "market prices" to determine the true value of their holdings. Some analysts believe that these new disclosure rules may result in $200 billion write-downs on assets and require that the over-leveraged banks to increase their capital reserves. That will slow down lending and put a wrinkle in the banks' bottom line. In any event, once the law is enacted; we'll see who's "faking" the value of their assets or as Warren Buffet says, "Who's swimming with their clothes off.

Professor Nouriel Roubinisummed it up like this:

"The amount of losses that financial institutions have already recognized - $20 billion--is just the very tip of the iceberg of much larger losses that will end up in the hundreds of billions of dollars.Calling this crisis a sub-prime meltdown is ludicrous as by now the contagion has seriously spread to near prime and prime mortgagesAnd it is spreading to every corner of the securitized financial system that is either frozen or on the way to freeze.The reality is that most financial institutions have barely started to recognize the lower "fair value" of their impaired securities.The credit crunch is getting worse and its financial and real fallout will be severe." (Nouriel Roubini blog.)

The constant drumbeat of bad news is having a numbing affect on Wall Street. Traders' are tight-lipped and downcast. Spirits are sagging. No one likes loosing money, and yet, the credit storm shows no signs of letting up anytime soon. Yesterday, the Dow Jones Industrial's took another 360-point pounding before the bell rang.Another day, another bloodbath. The subprime virus has now infected the broader markets leaving the once-brawny financial giants bruised and reeling like Joe Frazier in the Thrilla in Manila. A few more down-days like yesterday and they'll be carrying out hedge funds feet first.

The stock market is looking more and more like a glass pitcher propped up on the edge of a bookshelf. One little bump, and down she goes.

Ratification of the Law of the Sea Treaty Would Give the UN Control Over Everything About the Oceans

Larry Greenley
JBS
Friday November 9, 2007

The Senate is poised to ratify the Law of the Sea Treaty (LOST), which would give total regulatory jurisdiction over the world’s oceans and seas to a United Nations body, the International Tribunal for the Law of the Sea.

Follow this link to the original source: "25th Anniversary of the United Nations Convention on the Law of the Sea"

On October 31 the authoritative Capitol Hill news publication, CQ Today, stated:

The Senate is likely to ratify a 1982 U.N. treaty governing the use of the world’s oceans despite grumbling from a few conservative GOP senators.

That’s right. After 25 years of stalemate, the Senate is poised to ratify the Law of the Sea Treaty (LOST), which would give total regulatory jurisdiction over the world’s oceans and seas to a United Nations body, the International Tribunal for the Law of the Sea.

This is the same UN famous for its corrupt oil-for-food scandal. This is the organization that consistently votes against American interests.

In order to understand just how comprehensive and sweeping are the powers over the oceans that LOST would confer on the UN, read what was said at an official UN celebration of the 25th anniversary of LOST on Oct. 17:

The United Nations Convention on the Law of the Sea ... is perhaps one of the most significant but less recognized 20th century accomplishments in the arena of international law.... Its scope is vast: it covers all ocean space, with all its uses, including navigation and overflight; all uses of all its resources, living and non-living, on the high seas, on the ocean floor and beneath, on the continental shelf and in the territorial seas; the protection of the marine environment; and basic law and order.... The Convention is widely recognised by the international community as the legal framework within which all activities in the oceans and the seas must be carried out. ("25th Anniversary of the United Nations Convention on the Law of the Sea," Oct. 17, 2007; emphasis added.)

In short, the LOST treaty provides the legal framework within which all activities on, over and under the oceans and the seas must be carried out. In other words, the LOST treaty would give the UN jurisdiction over everything concerning the oceans and seas of the earth.

Everything would certainly include military and commercial uses of the oceans and seas. How do you think the anti-American UN would rule on U.S. Air Force planes and U.S. Navy ships using the oceans for military purposes? What would this mean for our national security? How about our commercial airliners flying over the oceans? How about the necessary transportation between our mainland states and Hawaii? And, on and on.

We would not have veto power protection in the UN’s International Tribunal for the Law of the Sea like we do in the Security Council. We’d have one vote among a membership of over 150 nations.

For confirmation of just how bad it would be for the Senate to ratify LOST, take a look at these two videos of recent Senate hearings, featuring one of LOST’s most articulate critics, Sen. Jim DeMint (R-S.C.): (1) DeMint on Law of the Sea Treaty: Part 1; (2) Round 2: DeMint on Law of the Sea Treaty.

This vote on LOST is arguably the most important vote the Senate will cast this year. The John Birch Society is urging its members and allies, especially the leaders and members of other organizations that also believe in preserving American sovereignty and security, to phone their senators within the next few days in opposition to the LOST treaty. Click here for a link to your senators’ phone numbers and talking points for the calls.

If enough Americans contact their senators, we can stop LOST just like we stopped amnesty back in June. However, fewer organizations are involved in this fight, so those of us who understand the long range threat posed by surrendering our sovereignty to the UN need to step up our activism and get the job done!

Our personal freedom and security depend on preserving American sovereignty and security by winning this fight against LOST!

'Apocalyptic' if Egypt, Saudi go nuclear: Israel minister

AFP

JERUSALEM, Nov 9 (AFP) Nov 09, 2007
Egyptian and Saudi nuclear ambitions, on top of Iran's atomic drive, will lead to an "apocalyptic scenario", a senior Israeli cabinet minister said in comments published on Friday.

"If Egypt and Saudi Arabia begin nuclear programmes, this can bring an apocalyptic scenario upon us," Strategic Affairs Minister Avigdor Lieberman told the English-language Jerusalem Post newspaper.

"Their intentions should be taken seriously and the declarations being made now are to prepare the world for when they decide to actually do it," said the minister, responsible for coordinating Israeli efforts against a nuclear Iran.

On October 29, Egyptian President Hosni Mubarak announced a programme to build several nuclear power stations -- the country having abandoned an atomic energy programme in 1986 after the Chernobyl disaster.

Jordan, one of only two Arab countries with Egypt to have signed peace deals with Israel, as well as Algeria, Libya, Yemen and all six pro-Western Gulf states including Saudi Arabia have also announced peaceful nuclear ambitions.

Lieberman, who heads the ultra-nationalist Yisrael Beitenu party, also told the Jerusalem Post that Pakistan could pose a major threat to Israel.

"If the Taliban or (Al-Qaeda leader Osama) bin Laden get control (of Pakistan), they will have nuclear weapons for terror use and they don't hide their opinions about Israel," he said.

Lieberman also joined the chorus of Israeli criticism against the head of the UN nuclear watchdog, Mohamed ElBaradei, over comments from the Egyptian that Iran's nuclear acitivites pose no immediate danger.

"He is part of the problem, not part of the solution," said Lieberman, who is also a deputy prime minister.

Israel, which belongs to the UN nuclear watchdog but is not a signatory to its key Non-Proliferation Treaty, is widely considered to have the Middle East's sole -- if undeclared -- nuclear arsenal.

It considers Iran its chief enemy after repeated statements by President Mahmoud Ahmadinejad that the Jewish state should be wiped off the map.

Lieberman is known for extreme nationalist views.

He advocates a land swap in which Israel would annex its largest Jewish settlements built on occupied Palestinian land and transfer Israeli territory with a large Arab population to a future Palestinian state.

He also once sparked outrage by advocating the execution of Arab Israeli MPs who had dealings with Palestinian Islamist movement Hamas, which Israel considers a terrorist organisation but which controls the Gaza Strip.