JAMES PICKETT WESBERRY Jr >>>> PERSONAL WEBSITE

WEEK OF OCTOBER 12 2009

Introduction to Jim Wesberry
GIVING THANKS
E-Magazines by Jim Wesberry
THE FALTERING EAGLE: Speech made in 1970
MIAMI KEYNOTE: Public Financial Management, 2016
CONFERENCIA: CONTROL INTERNO Y ÉTICA: ESTARÍAN PERTINENTES EN 2025?
CONFERENCIA 6a Conferencia de Auditores Ecuador: El Auditor Interno Frente sus Tres Mayores Desafios
CONFERENCIA CReCER 2015: Empresas Estales en Busca de Etica---State Enterprises in Search of Ethics
CONFERENCIA QUITO HONESTO: Ambiente Etico = Municipio Eficiente: Principios de Conducta Etica, 2014
DOCTORADO HONORIS CAUSA - UNIVERSIDAD INCA GARCILASO DE LA VEGA, LIMA, PERU - 2013
DECORATION BY THE PERUVIAN GOVERNMENT 1972
CONFERENCIA EN HUANUCO, PERU - El Auditor enfrenta la Erupcion de Corrup$ion del Siglo XXI -2013
CONFERENCIAS EN CHILE - 3 Mayores Desafios al Auditor Interno - 2012 - VIDEO y TEXTO
DOLLARCRACY ->>>>>>>>>>>>>>>>>>>>>>>>>>> $$$ COUNT.........PEOPLE DON'T
THE CONTINUING FINANCIAL CRISIS
GEORGIA CORRUPTION ON MY MIND
Personal Information
My Resume (in English)
Mi Curriculum Vitae (en español)
Technology Use in Fighting Corruption
ACTIVITIES & EVENTS INITIATED
The Top Quartile of Life
AMERICA IN DECLINE? The Life Cycle of a Great Power
ACCOUNTANCY & AUDITING: MY CHOSEN PROFESSION
SERVICE AS PAGE IN US HOUSE OF REPRESENTATIVES 1949-51
SPECIAL INVESTIGATOR OF CORRUPTION IN STATE GOVERNMENT 1959-60
LEGENDS: Georgians Who Lived Impossible Dreams
Wesberry v. Sanders, 376 US 1 Landmark US House Reapportionment Case
POLITICS - MY FIRST CAMPAIGN 1961
POLITICS - ELECTION TO GEORGIA STATE SENATE 1962
The Best Speech I Ever Made
Why I Quit the Georgia Senate
Activities in the Junior Chamber of Commerce
Contador Benemerito de las Americas (Most Meritorious Accountant of the Americas)
Articles from The Journal of Accountancy
My Credo
Media
Interview about Leadership
ACCOUNTABILITY - RESPONDABILIDAD
THE EVER GROWING, EVER STIFLING BUREACRACY
PONZIS and PIRAMIDES
THE NATIONAL DEBT
GRAPHIC DISPLAY OF US DEBT
CALCULATE YOUR DEBT LIABILITY
Fraud-Corruption-Bribery
Collusion Breaks Internal Controls
FORENSIC AUDITING --- AUDITORIA FORENSE
ETHICS
FRIENDSHIP - AMISTAD
Creencia - Belief
Think -------- Pensar
WOMAN -------------- MUJER
Dawn
Message to Garcia - Mensaje a García
THE GREATEST SPEECHES OF ALL TIME
Education
Interesting!
POEMS
ATLANTA, GEORGIA USA - MY HOME TOWN
WASHINGTON DC - MY OTHER HOME TOWN
PERU
ECUADOR
MEXICO
PHILIPPINES
COLOMBIA VS KLEPTOKAKISTOCRACIA: Presentación para el Día Internacional Anti-Corrupción 2011
LECTURE AT MANILA'S UNIVERSITY OF THE EAST: Integrity & Honor, Corruption & Dishonor VIDEO
MANILA LECTURES AT FAR EASTERN & SANTO TOMAS UNIVERSITIES: Good Governance and Social Responsibility
EFFECT OF 2008 GLOBAL CRISIS (JW presentation in English)
SEGUNDA GRAN DEPRESION 2010 (JW presentaciónes en español)
Speeches - English
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Conferencias / Discursos - Espanol
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ANTI-CORRUPTION EVENTS & REPORTS
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Items on this page are from Oct. 12 through 19.  Some links may no longer be active.

Foreclosures: 'Worst three months of all time'

Despite signs of broader economic recovery, number of foreclosure filings hit a record high in the third quarter - a sign the plague is still spreading.


Despite concerted government-led and lender-supported efforts to prevent foreclosures, the number of filings hit a record high in the third quarter, according to a report issued Thursday.

"They were the worst three months of all time," said Rick Sharga, spokesman for RealtyTrac, an online marketer of foreclosed homes.

During that time, 937,840 homes received a foreclosure letter -- whether a default notice, auction notice or bank repossession, the RealtyTrac report said. That means one in every 136 U.S. homes were in foreclosure, which is a 5% increase from the second quarter and a 23% jump over the third quarter of 2008.

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Britain ‘facing currency crisis’ amid rising debt

A leading City economist today warned that the UK faces a currency crisis after the Bank of England allowed the pound to become “seriously undermined”.

Stephen King, chief economist at HSBC, said: “There's always a risk of a sterling crisis. It clearly is already a currency that's been seriously undermined.”

The pound was trading against the US dollar at above $2 and at 1.50 before the financial crisis struck.

But ballooning levels of government debt and a bearish stance on Threadneedle Street — where Bank Governor Mervyn King said a weak pound was “helpful” in rebalancing the economy — has pushed sterling sharply lower...

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Don’t give up on quantitative easing: We can have our cake and eat it too

ccording to a widely-held consensus view, the world is slowly emerging from the Great Recession of 2008. Growth in China is projected to top 8 per cent in 2009. Australia raised the interest rate on the Australian dollar last week and the US and UK economies are showing signs that unemployment growth has slowed even though the unemployment rates in both countries are very high. Sometime soon, perhaps in the spring of 2010, perhaps earlier, the Fed, the European Central Bank, and the Bank of England are likely to respond to the perceived global recovery by reducing the sizes of their balance sheets and raising interest rates on overnight loans.

John Taylor, of the eponymous Taylor Rule of central banking, foresees a welcome return to business as usual. In his view, once the Fed starts to tighten, it would raise interest rates in response to inflation and lower them when actual output falls below potential output. That would be a mistake. We can do better.

The liability side of the Fed balance sheet is a narrow measure of the money supply. Backing this up on the asset side, the Fed holds gold, foreign currencies and loans to the US government. After the demise of the gold-exchange standard in 1973, the assets of the Fed consisted mostly of three-month Treasury bills. This was true for 35 years until the Great Recession of 2008 led to an unprecedented change in monetary policy.

Central banks throughout the world began to purchase an exotic variety of new assets. In the US, the Fed bought long-term government bonds and relatively risky (by historical standards) private securities. Historically, monetary policy meant variations in the size of central bank balance sheets. In the US this was accomplished by the purchase and sale of T-bills. During the Great Recession, the Fed and other central banks learnt to vary not just the size of its balance sheet, but also its composition.

Soon, central banks throughout the world will follow Australia’s lead and begin to raise overnight interest rates. When this happens, world central banks should embrace quantitative easing as a second pillar of monetary policy, not abandon it and revert to business as usual.

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The rumours of the dollar’s death are much exaggerated


It is the season of dollar panic. These panic-mongers are varied: gold bugs, fiscal hawks and many others agree that the dollar, the dominant currency since the first world war, is on its death bed. Hyperinflationary collapse is in store. Does this make sense? No. All the same, the dollar-based global monetary system is defective. It would be good to start building alternative arrangements.

We should start with what is not happening. In the recent panic, the children ran to their mother even though her mistakes did so much to cause the crisis. The dollar’s value rose. As confidence has returned, this has reversed. The dollar jumped 20 per cent between July 2008 and March of this year. Since then it has lost much of its gains. Thus, the dollar’s fall is a symptom of success, not of failure.

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The big banks trade their way to profits

Although the economy is still struggling to recover from the financial crisis, some major banks eked out profits from trading.

Instead, they're doing what Wall Street does best -- betting big on stocks, bonds, commodities and other assets.

Citigroup, the shakiest of the major banks during the financial crisis, reported Thursday it eked out a quarterly profit from trading, despite suffering more losses on consumer loans. Trading also drove big profits at Goldman Sachs and JPMorgan Chase.

That some banks are making money now is a sign of remarkable recovery from the crisis a year ago. But the lopsided business model raises questions about what happens if trading profits fall off and banks are left to rely on more traditional operations.

After all, the economy is still struggling to recover, unemployment is approaching 10 percent and Americans are saving money and trying to pay down debt, not taking on more.

``The good news is that banks are in better shape. The bad news is that they're not making loans to consumers and businesses,'' said market analyst Edward Yardeni. ``That could come back to bite them because these trading gains will only last so long.''

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Soros says U.S. economy will be drag on world growth

Billionaire investor and philanthropist George Soros said on Thursday that the world's current "currency arrangements" are fraught with danger and that the world needs global regulation.

Soros, who runs hedge fund firm Soros Fund Management and has made his reputation with bold currency bets, said the U.S. dollar ought to be falling in value against the Chinese currency to allow the United States to contain its current account deficit.

However, Soros said because the renminbi is tied to the greenback, the Chinese currency is constantly undervalued leaving the dollar to sink against the world's other major currencies.

The dollar has lost about 7 percent this year against a basket of the world's major currencies.

Meanwhile, an undervalued yuan makes Chinese consumer goods cheaper in foreign markets. Beijing has powered the country's growth by targeting U.S. and other consumer markets with its exports, putting many producers in those markets out of business because they cannot compete.

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ENTREVISTA: NIALL FERGUSON Historiador económico

"Es la primera gran recesión sin una gran guerra"


 


Ferguson ocupa dos cátedras en Harvard -en laFacultad de Historia y en la Escuela de Nego-cios-, ha escrito más de una decena de libros de referencia y publica una columna semanal en
Financial Times. El libro señala los fallos, pero entona una defensa de las denostadas finanzas. "Lejos de ser obra de meras sanguijuelas deseosas de chupar la sangre a las familias endeudadas o de jugar con los ahorros de las viudas y los huérfanos, la innovación financiera ha representado un factor indispensable en el desarrollo del hombre", escribe. "La evolución del crédito y la deuda ha sido tan importante como cualquier innovación tecnológica en el auge de la civilización".
El dinero es ansiado y odiado a partes iguales. Y dicen que no da la felicidad. Reflexiones filosóficas aparte, hay que reconocer que es un motor fundamental en la historia. Esto es lo que el historiador escocés Niall Ferguson se ha propuesto exponer y analizar en su nuevo libro 
El triunfo del dinero. Cómo las finanzas mueven el mundo (Debate), un estudio que arrancó antes de que estallara Wall Street, pero en el que aparece deletreado el germen del desastre.

LEER TODO

VE SIGNOS DE ESTABILIZACIÓN EN LA EUROZONA

Trichet considera "prematuro" hablar del fin de la crisis

foto
Foto: Reuters


   El presidente del Banco Central Europeo (BCE), Jean Claude Trichet, considera que un año después del agravamiento de la crisis financiera tras la quiebra de Lehman Brothers se observan "más y más signos de estabilización económica en la zona euro", aunque advirtió de que es "prematuro" afirmar que se ha superado la crisis financiera.

   En un discurso pronunciado en Francfort, el máximo responsable de política monetaria de la eurozona reiteró que "se ha detenido la caída libre de la actividad económica" y mostró su confianza en que en el futuro se registre una recuperación "gradual", aunque existe un elevado grado de incertidumbre.

LEER TODO

QUARTERLY US REAL GROSS DOMESTIC PRODUCT
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WEEKLY US MONETARY SUPPLY 
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Chairman Ben S. Bernanke

At the Federal Reserve Board Conference on Key Developments in Monetary Policy, Washington, D.C.

October 8, 2009

The Federal Reserve's Balance Sheet: An Update

To fight a recession, the standard prescription for a central bank is to lower its target short-term interest rate, thereby easing financial conditions and supporting economic growth. In the current downturn, however, the Federal Reserve has faced two historically unusual constraints on policy. First, the financial crisis, by increasing credit risk spreads and inhibiting normal flows of financing and credit extension, has likely reduced the degree of monetary accommodation associated with any given level of the federal funds rate target, perhaps significantly. Second, since December, the targeted funds rate has been effectively at its zero lower bound (more precisely, in a range between 0 and 25 basis points), eliminating the possibility of further stimulating the economy through cuts in the target rate. To provide additional support to the economy despite these limits on traditional monetary policy, the Federal Open Market Committee (FOMC) and the Board of Governors have taken a number of actions and initiated a series of new programs that have increased the size and changed the composition of the Federal Reserve's balance sheet. 





FRED Graph


READ TEXT OF BERNANKE'S SPEECH

frankenstein.jpg

DERIVATIVES
The Frankensteins of Finance
...the unregulated and untracked shadow banking world of financial engineering, profiteering, and looting.

Estimates run as high as $1.4 Quadrillion (!) for the notional value of the world’s derivatives. Prior to 1990 there was basically no market whatsoever. The only agency to track a portion of the U.S.’s derivatives is the OCC (Office of the Comptroller of Currencies). They only track a PORTION of the derivatives and only those held by commercial banks.

Office of the Comptroller of Currencies' Quarterly Report on Bank Trading and Derivatives Activities, 2nd Quarter 2009

Executive Summary
• The notional value of derivatives held by U.S. commercial banks increased $1.5 trillion in the second quarter, or 0.7%, to $203.5 trillion.
• U.S. commercial banks reported revenues of $5.2 billion trading cash and derivative instruments in the second quarter of 2009, compared to a record $9.8 billion in the first quarter.
• Net current credit exposure decreased 20% to $555 billion.
• Derivative contracts remain concentrated in interest rate products, which comprise 85% of total derivative notional values. The notional value of credit derivative contracts decreased by 8% during the quarter to $13.4 trillion.

READ FULL REPORT

DOING THE WRONG THINGS WITH DERIVATIVES
From Nathan's Economic Edge

The total notional value of derivates that they track appears to have continued going up, but in fact have been going down recently. The reason they report total derivatives still going up is that several key big companies, formerly Investment Banks, filed to become Commercial Banks so that they can receive government handouts like the rest of the Commercial Banks. The largest of these is Goldman Sachs.

Though OCC says the notional value increased by $1.5 trillion… in Q4 of ’08 they increased by $24.5 Trillion mainly due to the previously mentioned IB’s becoming CB’s, but take that effect away and you would have net negative derivative growth as you are seeing in the remainder of the bullets with revenues cut nearly in half, net current credit exposure decreased 20%, and credit derivatives decreased 8%.

Do you see those decreases in the monetary aggregates reported by the Fed? No? That’s because their monetary aggregates do not capture the entirety of the shadow banking system, they only capture a portion of it indirectly when credit dollars are deposited in institutions. Leverage is dramatically increased as derivative contracts (most with no real backing – as in no real ability to pay) as companies pretend that their positions are backed or hedged – in most cases a catastrophic loss could not be paid, that is exactly what happened with the collapse of AIG and why the Government stepped in to bail out the central banks.

And the central banks, the Primary Dealers (WFC is not a P.D.), DOMINATE the world of derivatives. Remember, these are the banks WHO ARE THE FED. They are the ones who influence the Treasury and politicians to get their rules made into law (using phony money they created from thin air)...

..Here’s a paragraph taken from the OCC’s latest report:
Credit derivatives grew rapidly over the past several years as dealers increasingly used them to structure securities to help meet investor demand for higher yields. From year-end 2003 to 2008, credit derivative contracts grew at a 100% compounded annual growth rate. However, notional credit derivatives volume has fallen $2.5 trillion, or 15.5%, since peaking at $15.9 trillion in the fourth quarter of 2008.
One hundred percent compounding rate of interest? Ha, ha, that’s a double every single year. Think that’s sustainable? It’s not. Again, note that derivative VOLUME peaked in ’08 and is now down 15.5% in less than a year.

The clues are there, and they are telling me that net derivatives have peaked and are, in fact, falling backwards executing a classic parabolic collapse...

..The truth, however, is that there are very few legitimate purposes for these derivatives other than to find new ways to charge fees and to increase “credit,” that, of course, being someone else’s debt.

And speaking of fees, they have found a new game to send fees and commissions into the stratosphere, it’s called “Cap & Trade.” Goldman, in particular, has placed themselves at the head of a new market, one that will be larger than even the currency markets and they will skim transaction fees every step of the way (shhhh, Cap & Trade is really just another derivative market, shhhh!). Of course this is sold as being good for the environment! LOL, what bunk! It’ll be good for Goldman and more expensive for everybody else. This same lie is told about derivatives in general, some even claim that derivatives makes things less expensive! What baloney, they DRASTICALLY increase overall costs and ADD RISK to the system, they certainly do not lessen it.

Now that the systemic risk has become wider known, Congress...is pretending to do something about them for the benefit of the show...the big banks are not going to let any real changes get passed. They don’t want limits or regulations, and they don’t want exchanges because they have the world’s largest market for debt cornered and they want to keep it that way.

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Stiglitz Says Banks Should Be Banned From CDS Trading

Large banks should be banned from trading derivatives including credit default swaps, said Joseph Stiglitz, the Nobel prize-winning economist.

The CDS positions held by the five largest banks posed “significant risk” to the financial system, Stiglitz said at a press conference in Brussels. Big banks should have extra restrictions placed on them, including a ban on derivative trading, because of the risk that they would need government money if they fail, he said in a speech today.

“We will have another armed robbery unless we prevent the banks, the banks that are too big to fail,” Stiglitz said. “We should say that if you’re too big to fail then you are too big to be. They need more restrictions, such as no derivative trading.”

Derivative trading and excessive risk-taking are blamed for helping to spark the worst financial crisis since World War II. American International Group Inc., once the world’s largest insurer, needed about $180 billion of government money after its derivative trades faltered and pushed the company toward bankruptcy.

Financial markets should be subject to taxes that will discourage “dysfunctional” trading and help pay for the effects that the global crisis had on poorer nations, Stiglitz said last week. 

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CUBA

Faced with a deep recession, Cuba tries socialism lite

Facing a severe and protracted economic downturn, Cuba's government is scaling back socialism in an attempt to save it.

Cuba's workplace cafeterias are closing, President Raúl Castro keeps saying the well-off shouldn't get the same subsidies as the poor, and now there are rumblings that one of the stalwart vestiges of the revolution -- the ration booklet -- has outlived its usefulness.

As the Cuban government struggles through a deep recession, its leaders have begun picking away at socialism in order to save it. But experts say the latest buzz by the Cuban government is simply another desperate fix to stem the slide of a failed economy that buckled long ago.

Even one of Havana's leading economists recently said Cuba's economy needed to be turned upside down -- ``feet up.'' So taxi drivers got private licenses, farmers now have their own plots of land and government workers have to pack their own lunches.

``I think what they are trying to do is prepare the people for a hard landing,'' said Cuba expert Jonathan Benjamin-Alvarado of the University of Nebraska. ``The government is really saying in so many words: We've got limited resources and can only do so much. I think they are stuck.''

Since he took office early last year, Raúl Castro has been saying that the country's severely battered economy needs fixing. In a widely quoted August speech, Castro said Cuba was spending more than it made.

``Nobody, no individual nor country, can indefinitely spend more than she or he earns. Two plus two always adds up to four, never five,'' he said. ``Within the conditions of our imperfect socialism, due to our own shortcomings, two plus two often adds up to three.'' 

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Could Cuba be ready to get rid of ration book?

Cuba may soon be saying adios to ration books.
The system that allows islanders to buy food at deeply subsidized prices each month has long been one of the central building blocks of the country's socialist system, providing everyone from surgeons to street-sweepers the same allotment of basic foods like rice, beans and a bit of chicken.
Now, state-run media are suggesting the "libreta" that Cubans have depended on since 1962 to put meager helpings of food on their tables has outlived its usefulness and is hamstringing the government as it tries to reform the ever-struggling economy.
"The ration booklet was a necessity at one time, but it has become an impediment to the collective decisions the nation must take," Lazaro Barredo Medina, editor of the Communist Party's Granma newspaper, wrote Friday in a full-page signed opinion.
He said the government ought not do away with rations by decree, but suggested readers should start preparing for life without a system that people on this island both covet as a birthright and complain is woefully insufficient to meet even the most modest needs.
Barredo's words carry no immediate policy weight, but such a lengthy and frankly worded editorial penned by the editor of Granma could very well presage major governmental changes down the road — though it is impossible to know exactly when. 

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Dollar to Hit 50 Yen, Cease as Reserve, Sumitomo Says

The dollar may drop to 50 yen next year and eventually lose its role as the global reserve currency, Sumitomo Mitsui Banking Corp.’s chief strategist said, citing trading patterns and a likely double dip in the U.S. economy.

“The U.S. economy will deteriorate into 2011 as the effects of excess consumption and the financial bubble linger,” said Daisuke Uno at Sumitomo Mitsui, a unit of Japan’s third- biggest bank. “The dollar’s fall won’t stop until there’s a change to the global currency system.” 

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Reflexiones sobre la Reserva Federal


Por Ricardo Valenzuela

La Reserva Federal

La Reserva Federal

La única economía cerrada hoy día, es la economía mundial. Son las palabras de mi maestro Arthur Laffer. Pero al amanecer del siglo XXI estamos siendo testigos de las rudas zancadillas sembradas en la ruta hacía la globalización de la economía, y una feroz lucha por su control ante unos Estados Unidos sangrantes y debilitados.

En los siguientes años de este nuevo milenio, cortesía de su nuevo presidente socialista, Barack Obama, el deterioro de los Estados Unidos y su pérdida de control de la economía mundial será más evidente y, por razones naturales, México deberá tener un papel muy diferente al jugado durante el último siglo, si es que los mexicanos entendemos lo que está sucediendo en el nuevo paradigma mundial. Los Estados Unidos seguirán luchando por dictar la pauta de los acontecimientos económicos del mundo, básicamente a través de su política monetaria de su banco central, la Reserva Federal (el FED), cuando menos temporalmente.

Sin embargo, en estos momentos un nuevo cartel de países encabezados por Rusia y China, seriamente contemplan la posibilidad de abandonar el dólar como la moneda mundial para utilizar una nueva, y no es precisamente el euro.

El Fondo de la Reserva Federal es la más poderosa institución en Washington y la menos cuestionada de todas. Puede decidir elecciones, rescatar gobiernos de la bancarrota, impulsar el mercado de valores o inmobiliario a la estratosfera, o, simplemente destruir dichas actividades. Sin embargo, opera sin vigilancia o supervisión alguna. Este organismo del país más rico y poderoso sobre la faz de la tierra, es también conocido como la criatura de Jekyll Island, lugar que lo vio nacer producto de una reunión en el año de 1913 entre los representantes de los grandes capitales de la época: JP Morgan, Los Rockefeller,  Los Warburg, Los Rothschild: ¿el objetivo? eliminar la odiosa  competencia para tomar control total de los mercados financieros.

La composición de la reunión de Jekyll Island fue un ejemplo clásico de la formación de un cartel. Un cartel es un grupo de hombres de negocios o países  independientes que se unen para coordinar la producción, calidad, el precio, y la comercialización de los productos de sus miembros. El propósito de los carteles es reducir la competencia y así incrementar sus ganancias. Estos objetivos los logran estableciendo monopolios compartidos en sus actividades que obliga al público a pagar precios mucho más altos por sus productos y servicios, de los que normalmente tendrían que pagar en un sistema de libre mercado.

Unos cuantos años después de la formación del cartel de Jekyll Island, mediante ciertas maniobras de los bancos más importantes de los Estados Unidos, se provoca la gran depresión que curiosamente elimina más del 50% de la competencia de esos grandes bancos.

A partir de la formación del banco central de los Estados Unidos, el FED ha manipulado le economía del país de la forma más misteriosa y secreta que alguien pudiera imaginar. La oficina de contabilidad del gobierno federal publicó un reporte recientemente que entre otras cosas revela el hecho de que el FED mantiene un fondo secreto de contingencia por un total de $30.7 billones de dólares. Este dinero proviene de guardaditos que el Fondo ha “desnatado” de las ganancias que le dejan las operaciones de mercado abierto. Supuestamente esos dineros deberían de estar en la Tesorería.

Cuando alguien afirma que el FED está tirando el dinero de los contribuyentes, su Presidente en turno protesta vigorosamente asegurando que el FED no tiene presupuesto para apropiación de fondos de parte del gobierno federal. La verdad es que el FED necesita los recursos de los contribuyentes tanto como un falsificador de dinero necesita asaltar una gasolinera. El banco central puede imprimir todo el dinero que necesite. Como banco de emergencia para el sistema financiero nacional, el FED controla la circulación de dólares, la definición del su valor, controla los intereses, controla la economía.

El concepto de banca central es relativamente nuevo y solamente los socialistas monetarios afirman que tiene un buen récord. En su interminable campaña para expandir el dinero y el crédito, una verdadera contracción del mismo nunca ocurre. El FED pude bajar los intereses que le carga a los bancos miembros por los prestamos que les otorga, puede manipular los requerimientos de reservas, más impactante, puede comprar valores de la Tesorería en el mercado abierto. Es decir, sacar dinero de una bolsa para echárselo en la otra.

Las compras en el mercado abierto es lo que ha probado ser más rentable. El FED compra valores de la Tesorería directamente o a través de sus Casas de Bolsa favoritas y mantiene esos valores como activos. Operando a través de sus sucursales y bancos miembros, piramida préstamos con esos valores. La calidad del crédito del gobierno de los Estados Unidos, cuyo balance sugeriría declararlo en bancarrota, es sólo sostenido por el poder del Fondo de la Reserva Federal.

El  FED puede ser un importante o insignificante jugador en el mercado, o puede simplemente jugar el papel para persuadir gobiernos extranjeros de comprar y acumular deuda del gobierno de los EU para financiar el déficit.  En cualquier caso, este poder le da vida a la relación simbiótica entre el sistema bancario y el gobierno que hace una burla de la alegada independencia de FED.

La verdadera ridiculez—y aquí es donde el poder de falsificar aparece—es la forma en que el FED consigue el dinero para comprar esos valores de la deuda. Los fabrica echando a funcionar su maquinita, se los saca de la manga, tarea que se simplificó cuando el papel dinero reemplazó al restrictivo sistema del patrón oro.

Si alguien en el sector privado trata de hacer lo mismo, atraería toda la ira del supremo gobierno para ir a aterrizar en las tétricas prisiones federales. El gobierno de los Estados Unidos ha considerado invadir países que se rumorea están falsificando dólares. Hace esfuerzos extraordinarios para aniquilar y castigar severamente a los falsificadores de billetes. Yo le llamo a ese esfuerzo eliminación de la competencia.

El argumento original para la creación del FED fue que eliminaría las crisis que causa a los bancos ir a la quiebra y que los depositantes pierdan su dinero. Después de la creación del FED en 1913, las recesiones han sido más frecuentes, el gobierno se ha hecho exageradamente grande, el dólar ha perdido casi el 100% de su valor. Los depositantes han sido afectados como nunca.

Las huellas digitales de FED están por todos lados en esos eventos. Cada nuevo dólar creado por las operaciones de FED diluye el valor de los dólares existentes en la economía. Un dólar aun más barato redistribuye dinero de ahorradores a deudores, y de la clase media que paga impuestos a los bancos y contratistas del gobierno que pueden gastar ese dinero fresco antes del aumento de precios.

Ricardo Valenzuela is a libertarian Mexican economist who graduated from Tech Monterrey and has an MBA from the UNAM. 

In Recession, China Solidifies Its Lead in Global Trade

With the global recession making consumers and businesses more price-conscious, China is grabbing market share from its export competitors, solidifying a dominance in world trade that many economists say could last long after any economic recovery.

China's exports have fallen less than other countries

China’s exports this year have already vaulted it past Germany to become the world’s biggest exporter. Now, those market share gains are threatening to increase trade frictions with the United States and Europe. The European Commission proposed on Tuesday to extend antidumping duties on Chinese, as well as Vietnamese, shoe imports.

China is winning a larger piece of a shrinking pie. Although world trade declined this year because of the recession, consumers are demanding lower-priced goods and Beijing, determined to keep its export machine humming, is finding a way to deliver.

The country’s factories are aggressively reducing prices — allowing China to gain ground in old markets and make inroads in new ones.

The most striking gains have come in the United States, where China has displaced Canada this year as the largest supplier of imports.

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Dollar loses reserve status to yen & euro


Ben Bernanke's dollar crisis went into a wider mode yesterday as the greenback was shockingly upstaged by the euro and yen, both of which can lay claim to the world title as the currency favored by central banks as their reserve currency.

Over the last three months, banks put 63 percent of their new cash into euros and yen -- not the greenbacks -- a nearly complete reversal of the dollar's onetime dominance for reserves, according to Barclays Capital. The dollar's share of new cash in the central banks was down to 37 percent -- compared with two-thirds a decade ago.

Fed boss Ben Bernanke may be forced to raise rates in order to restore faith in the dollar — and help bring the euro and the yen back to earth.
GETTY IMAGES
Fed boss Ben Bernanke may be forced to raise rates in order to restore faith in the dollar — and help bring the euro and the yen back to earth.he could be the Fed chairman who brought down the whole thing."

Investors and central banks are snubbing dollars because the greenback is kept too weak by zero interest rates and a flood of greenbacks in the global economy.

They grumble that they've loaned the US record amounts to cover its mounting debt, but are getting paid back by a currency that's worth 10 percent less in the past three months alone. In a decade, it's down nearly one-third.

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Dollar Reaches Breaking Point as Banks Shift Reserves 
Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades. Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.

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Dollar Retreats Most Against Commodities in Wealth Shift 
President Barack Obama’s effort to lead the world economic recovery by spending the U.S. out of its recession is undermining the dollar, triggering record commodities rallies as investors scour the globe for hard assets.

As threats of a financial meltdown fade, the currency is falling victim to an unprecedented budget deficit, near-zerointerest rates and slow growth. The dollar is down 10 percent against six trading partners’ legal tender in Treasury Secretary Timothy Geithner’s first eight-and-a-half months, the sharpest drop for a new occupant of that office since the Reagan administration’s James Baker persuaded world leaders to boost the deutsche mark and yen by debasing the dollar in 1985. This year’s drop followed its best two quarters in 16 years.

“The dollar had been strong because the U.S. was a haven in the storm, and now that the storm is abating, who needs the dollar?” said Edmund Phelps, who won the 2006 Nobel Prize in economics and teaches at Columbia University in New York. “People got exasperated with the tiny returns on safe assets.”

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DOLLAR FACES LONG JOURNEY DOWNWARD

Even putting aside the spectacular but hard-to-measure risks of a financing crisis or the loss of its special status, the dollar faces really serious headwinds from boring old fundamentals.

The dollar has been weak for months and markets have been fretting over a host of big picture worries.

Perhaps the world’s oil exporters will stop using the dollar as the medium for petroleum trade. Or maybe the so-far patient and docile buyers of Treasuries will finally turn jittery. Either could be a disaster for the dollar, but you don’t need conspiracies or crises to be bearish on a currency from a country which on some measures has run the largest-ever deficit between what it imports and what it sells abroad.

One of the most interesting side effects of the first part of the financial crisis was that the dollar actually rose despite being the locus of the credit bubble and despite the U.S. consistently importing far more than it exports. That strength, which has now been reversed in part, was largely because the freezing up of markets set off a scramble for dollars.

The acute phase of the crisis is over and a return to something approaching normalcy is not treating the dollar kindly; from its peak this year the dollar has fallen more than 13 percent against a trade-weighted basket of currencies. The current account deficit — the balance of exports to imports — has also been reduced greatly, from a peak north of 6 percent of GDP to below 3 percent at the end of June, with further narrowing in the months since. That is because a weaker dollar makes U.S. products more competitive, but also because the price of oil, of which the U.S. is a net importer, has dropped, and consumption at home is flagging.

It is far too early, however, to say that the dollar adjustment has done its work and the deficit will now close.

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Decline Is a Choice 

...Of symbolic but also more concrete importance is the status of the dollar. The social democratic vision necessarily involves huge increases in domestic expenditures, most immediately for expanded health care. The plans currently under consideration will cost in the range of $1 trillion. And once the budget gimmicks are discounted (such as promises of $500 billion cuts in Medicare which will never eventuate), that means hundreds of billions of dollars added to the monstrous budgetary deficits that the Congressional Budget Office projects conservatively at $7 trillion over the next decade.

The effect on the dollar is already being felt and could ultimately lead to a catastrophic collapse and/or hyperinflation. Having control of the world's reserve currency is an irreplaceable national asset. Yet with every new and growing estimate of the explosion of the national debt, there are more voices calling for replacement of the dollar as the world currency--not just adversaries like Russia and China, Iran and Venezuela, which one would expect, but just last month the head of the World Bank...

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Summers Comes Out Swinging on Economic Policy

The White House's top economic adviser took aim at Republican criticism of President Obama's economic recovery policies on Monday, delivering a sharply worded letter to lawmakers that credited the administration with pulling the nation back from an "abyss" and faulted the record of recent GOP presidents on the economy.

In his five-page letter to House Minority Leader John A. Boehner (Ohio), National Economic Council Director Lawrence H. Summers attempted to rebuff what has become a centerpiece of the Republican attacks -- that despite the administration's $787 billion stimulus package, job losses are continuing. Summers argued that the Recovery Act has substantially reduced the pace of unemployment and that financial markets have stabilized. And while the economy is still contracting, it is doing so much more slowly, he said. He also noted that some of the worst job losses occurred before the administration took office.

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SEGÚN EEUU

Bin Laden, en crisis financiera

El subsecretario del Departamento del Tesoro norteamericano en financiamiento terrorista, David Cohen, ha explicado que en lo que va de año, Al Qaeda, que lidera Bin Laden, ya ha hecho varios llamamientos a sus seguidores para que les donen fondos."Hemos concluido que Al Qaeda está atravesando una de sus peores crisis financieras, y consecuentemente, está mermando su influencia en el exterior", asegura Cohen.

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"Habrá más crisis financieras, sería ingenuo creer que todo está arreglado"

Stephen Green, presidente desde hace tres años de HSBC, el mayor banco del mundo por capitalización, del que anteriormente fue director general, acaba de publicar un libro titulado Les bonnes valeurs, en el que intenta responder a la pregunta de si se puede ser banquero y hombre de fe a la vez.

Según él, "por supuesto, se pueden extraer numerosas lecciones de esta crisis, aunque una cosa está clara: no hay alternativa al capitalismo de mercado".

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TOO GOOD TO BE TRUE? 

THIS HEADLINE AND STORY FROM TELEGRAPH UK 

Energy crisis is postponed as new gas rescues the world

Engineers have performed their magic once again. The world is not going to run short of energy as soon as feared.

 


Oil shale is rock containing deposits of oil and is pictured here burning.
Oil shale is rock containing deposits of oil and is pictured here burning.


America is not going to bleed its wealth importing fuel. Russia's grip on Europe's gas will weaken. Improvident Britain may avoid paralysing blackouts by mid-decade after all.

The World Gas Conference in Buenos Aires last week was one of those events that shatter assumptions. Advances in technology for extracting gas from shale and methane beds have quickened dramatically, altering the global balance of energy faster than almost anybody expected.

Tony Hayward, BP's chief executive, said proven natural gas reserves around the world have risen to 1.2 trillion barrels of oil equivalent, enough for 60 years' supply – and rising fast.

"There has been a revolution in the gas fields of North America. Reserve estimates are rising sharply as technology unlocks unconventional resources," he said.

APRIL FOOLS DAY IN OCTOBER? READ THIS ENTIRE UNUSUAL ARTICLE IN TELEGRAPH.co.uk

The Fed's $2.2 trillion fire hose

Ben Bernanke and the Fed have lent and spent trillions, but as the recovery takes hold, they'll have to rein some of that back in.

The Federal Reserve threw a lot of money at the crisis to get the gears of the economy turning again -- but it may soon be time to collect on the bill.

Federal Reserve Chairman Ben Bernanke gave an update on the Fed's expensive economic rescue package Thursday evening, in a keynote address at a conference in Washington.

Bernanke and the central bank have been engaged in unprecedented actions over the past year. After the Fed used the last of its rate-cutting bullets, dropping interest rates to zero in December 2008, it had to get creative to keep the recession from tailspinning into a depression.

The Fed's solution was three-fold. It lent funds to companies and investors, bought up Treasury bonds, and purchased Wall Street's unwanted assets.

In all, the Fed more than doubled the size of its balance sheet, to $2.3 trillion.

As the recovery begins to take hold, many of those programs are phasing out, but the balance sheet still stands at $2.2 trillion.

Now the Fed will have to walk a tightrope: If it keeps its balance sheet super-sized for too long, that could lead to out-of-control inflation. But deflation and soaring unemployment are a concern if the Fed begins its exit too soon.

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Job Competition Toughest Since Recession Began

The number of job seekers competing for each opening has reached the highest point since the recession began, according to government data released Friday.

The employment crisis is expected to worsen as companies stay reluctant to hire. Many economists expect a jobless recovery, putting pressure on President Barack Obama and congressional Democrats to stimulate job creation. 

There are about 6.3 unemployed workers competing, on average, for each job opening, a Labor Department report shows. That's the most since the department began tracking job openings nine years ago, and up from only 1.7 workers when the recession began in December 2007.

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Steep Losses Pose Crisis for Pensions

The financial crisis has blown a hole in the rosy forecasts of pension funds that cover teachers, police officers and other government employees, casting into doubt as never before whether these public systems will be able to keep their promises to future generations of retirees.

The upheaval on Wall Street has deluged public pension systems with losses that government officials and consultants increasingly say are insurmountable unless pension managers fundamentally rethink how they pay out benefits or make money or both.

Within 15 years, public systems on average will have less half the money they need to pay pension benefits, according to an analysis by Pricewaterhouse Coopers. Other analysts say funding levels could hit that low within a decade. 

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THE NEXT BIG POLITICAL ISSUE:

THE STATE OF THE DOLLAR

The state of the dollar probably hasn’t been a first-tier political issue in the United States since, say, the presidential election of 1896. Back then, it manifested as whether or not America would stay on the gold standard or switch to a bimetallic one. (The William Jennings Bryan “cross of gold” speech and all that.)

The aftershocks of the global financial crisis may now be propelling the dollar back to the political forefront. The greenback’s continuing slide makes it a handy metric that neatly encapsulates America’s current economic troubles and possible long-term decline. House Republicans for instance, have been using the weaker dollar as a weapon in their attacks on the Bernanke-led Federal Reserve.

For more evidence of the dollar’s return to political salience, look no further than theFacebook page of Sarah Palin. The 2008 GOP vice presidential nominee — and possible 2012 presidential candidate — has shown a knack for identifying hot-button political issues, such as the purported “death panels” she claims to have found in Democratic healthcare reform plans. In a recent Facebook posting, Palin expressed deep concern over the dollar’s “continued viability as an international reserve currency” in light of huge U.S. budget deficits.

She might be onto something here, politically and economically. A recent Rasmussen poll, for instance, found that 88 percent of Americans say the dollar should remain the dominant global currency. Now, the average voter may not fully understand the subtleties of international finance nor appreciate exactly how a dominant dollar has benefited the U.S economy. But they sure think a weaker dollar is a sign of a weaker America.

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US recession over, unemployment seen

 at 10 % - poll

The worst U.S. recession since the Great Depression has ended, but weak household spending as the labor market struggles to create jobs will slow the pace of the economy's recovery, according to a survey.

The survey of 44 professional forecasters released by the National Association for Business Economics, also known as the NABE, found that 80 percent of the respondents believed the economy was growing again after four straight quarters of declines.

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Cae inesperadamente el déficit comercial de EEUU

EL déficit comercial de Estados Unidos se redujo de manera inesperada un 3,5 por ciento en agosto hasta los 30.700 millones de dólares, debido a la caída de las importaciones de crudo, según informó el Departamento de Comercio.

Los analistas habían anticipado que el déficit comercial crecería desde los 32.000 millones en 

julio hasta los millones de dólares en agosto, por el aumento de los precios de los combustibles.

Las cifras finales revelan que, aunque se produjo un encarecimiento del petróleo, el volumen de combustible importado se redujo con respecto al mes anterior en 1.280 millones de dólares.

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Temen que el desempleo ahogue el gasto del consumidor en EEUU

El rebote del gasto del consumidor de Estados Unidos, producto del programa gubernamental de estímulo económico, se disipará cuando el índice de desempleo supere un 10 por ciento, según un sondeo a un grupo de economistas.

Las compras de las familias aumentarán a una tasa anual de un 1 por ciento este trimestre después de haber subido a un 2.4 por ciento en los tres meses previos, de acuerdo con la mediana de los pronósticos de 57 economistas sondeados por Bloomberg News del 1 al 8 de octubre. Los analistas bajaron asimismo las previsiones de gastos del primer trimestre del 2010.

"Es imposible ver mucha fuerza en el lado del consumidor dado lo mucho que ha caído el ingreso con los despidos y el escaso aumento de los salarios por hora'', dijo David Greenlaw, economista principal de renta fija en Morgan Stanley & Co. en Nueva York. ‘‘Tenemos una recuperación gradual en la economía en conjunto, pero no es lo bastante vigorosa para reducir mucho el índice de desempleo''.

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Las vacantes al mínimo

 en nueve años

Las vacantes de empleos en Estados Unidos cayeron en agosto al mínimo nivel en al menos nueve años, lo que indica que la economía no ha mejorado lo suficiente para hacer que las compañías incorporen más personal.

La cantidad de cargos sin llenar cayó en 21,000 a 2.39 millones, el mínimo desde que comenzaron los registros en el año 2000, dijo el viernes el Departamento de Trabajo en Washington. Las vacantes habían caído unos 2.4 millones, o 50 por ciento, desde su apogeo en julio del 2007.

El informe mostró que tanto la contratación como los despidos se redujeron en agosto, indicio de que la aceleración del último mes en las pérdidas de plantilla puede haberse debido a la falta de empleo en vez de a un repunte de los despidos. Los datos del Departamento de Trabajo mostraron la semana pasada que las empresas redujeron el personal en una cantidad neta de 263,000 trabajadores en septiembre y que la tasa de desempleo subió al máximo nivel desde 1983.

``No vamos a decir que está todo bien en el mercado laboral hasta que veamos un repunte en la contratación'', dijo Zach Pandl, economista de Nomura Securities International Inc. en Nueva York. ``Los despidos han mermado, pero las empresas realmente no han acelerado la contratación''.

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La crisis obliga a las reformas profundas

La actual crisis evidenció la urgencia de reformas profundas en la arquitectura financiera internacional y a los sistemas regulatorios y de supervisión, con el fin de garantizar una mayor estabilidad global, sostiene Alicia Bárcena, secretaria ejecutiva de la Comisión Económica para América Latina y el Caribe (CEPAL).
La alta funcionaria de las Naciones Unidas dictó la Trigésima Octava Cátedra de las Américas en la sede de la Organización de los Estados Americanos (OEA).
Añade que la nueva arquitectura financiera global debe cumplir con dos requisitos. Tener un liderazgo representativo, con legitimidad política, que incluya una instancia de rendición de cuentas y contar con agencias especializadas globales y regionales.

LEER TODO

Former IMF Chief Economist


GREATER FINANCIAL CRISIS COMING

The Obama administration "refused" to take meaningful steps to reform the banking system in the wake of last year's financial crisis, and the opportunity to do so has now been missed, says a former chief economist for the International Monetary Fund.

Simon Johnson told PBS's Bill Moyers that he expects an even larger financial crisis to hit the United States in the coming years because the system was not fixed through reform, but rather through a massive injection of taxpayers' money into the failing banks.

"The short term opportunity was missed," Johnson said on Bill Moyers Journal Friday night. "There was an opportunity the Obama administration had. President Obama campaigned on a message of change. ... The time for change for the financial sector was absolutely upon us, this was abundantly apparent in January of this year."

Johnson continued: "Rahm Emanuel, the president's chief of staff, is known for saying 'Never let a good crisis go to waste.' The crisis for the big banks is substantially over. And it was completely wasted. The administration refused to break the power of the big banks when they had the opportunity earlier this year. And the regulatory reforms they are now pursuing ... will turn out to be essentially meaningless."

Johnson said that the bank bailout would not fix the long-term instability of the financial sector, and "when [the crisis] comes back, it will come back with a vengeance, and it will be I think even more devastating."

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Whenever you find you are on the side of the majority, it is time to pause and reflect

                     --- Mark Twain

We have never observed a great civilization with a population as old as the United States will have in the twenty-first century; we have never observed a great civilization that is as secular as we are apparently going to become; and we have had only half a century of experience with advanced welfare states...Charles Murray

Kella
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