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Too Many Eurozone Summitsby Gary North Recently by Gary North: On Rebooting America
The New World Order is in big trouble. The European subdivision is visibly coming apart at the seams. You can always tell when an important NWO arrangement is in crisis mode. The representatives of the mainstream media keep asking high-level spokesmen, "Does this threaten your program?" They answer, "No, this is just a temporary aberration." They say this over and over. Meanwhile, the events that led to the question keep getting more threatening. The other sign of a true crisis is that the world's political leaders repeatedly meet at something called summits. A summit means "the top of the heap." The highest-level officials meet with each other. They meet in private, but the meeting is visible for the media. The journalists love a summit meeting, because summits are always held is swank hotels in hoity-toity locations. I mean, who would take seriously a summit held in, say, Hoboken, New Jersey? Nobody. So, the leaders meet in some Very Expensive Place. The reporters get to go there and lard up their expense accounts. And a good time is had by all. The trouble with this strategy is that protesters can show up without much trouble. They do not stay at the swank hotel. The media never report on exactly where they stay. Somehow, thousands of them have the money to pay for plane fares. They find shelter at some bargain-basement price. Then they parade in front of the hotel, carrying signs and yelling a lot. "No more this! No more that! No more this! No more that!" Maybe someone carries a "Free Mumia" sign. This goes on until the summit ends.
Sometimes, they turn violent. A few dozen are arrested. The members of the summit never say anything publicly about the protest. The media politely do not ask. The press release assures the world that there were frank discussions at the summit. There will be further frank discussions by members of the permanent committee that has been assigned the task of examining the issue in depth. The attendees meet for a group photo. Then the meeting breaks up. And Mumia remains in prison. REPEAT SUMMITS When the group meets again within two months to consider The Problem, we can be sure that the folks at the top of the heap – the real top, not their elected front men – are in trouble. The previous meeting of their spokesmen did not calm the situation. The crisis is getting worse. So, the word goes down to the Official Leaders that they had better call another summit meeting. The press release from the most recent one did not do the trick. So, the Official Leaders have their assistants schedule a reservation at another swank hotel. They pack their bags, assemble their entourages, fire up their Official Leader jets, and fly off to another prestige city for the next summit. They meet in secret, but this time allow the media photographers into a room for a photo op of a staged frank discussion between two highest Official Leaders – or, rarely, the top three. They sit in $2,500 chairs and look very concerned.
Then the group issues another press release that announces the creation of a permanent framework for future discussions of The Problem. The world's stock markets rise sharply for one day. Then the next day they fall back to where they were the day before the press release. Here is an unbreakable rule: if there is a third summit within a three-month period, the banking system is in really big trouble. If, in between summits two and three, there are a couple of failures of banks or brokerage firms that the public has never heard of, but which turn out to have had assets of tens of billions of dollars, the folks at the top of the heap are in panic mode. They ask themselves, "Who's next?" Each of them thinks "maybe my bank," but of course they mention to each other only some large bank that has been trying for years to get into the inner circle, but has not yet made it. Multiple summits that discuss the same problem are a sign of a problem that is not going away. It is getting worse. WEEKEND SUMMITS A summit always starts on a Friday and ends on Sunday. The meeting begins after the stock market in the time zone of the swank hotel has closed for the day. This way, the regional market will not plummet, thereby sending a signal to the markets that remain open in earlier time zones. The Saturday meeting is where the leaders decide what issues will be covered by the Sunday press release. The main areas of discussion are these:
The discussions are very frank. "Don't try to stick this on me! How many times do you people think I can go back to the voters? My coalition is about to break up." "How can we convince the voters that we are not throwing their money down a rat hole?" "Which country's largest three banks will need an infusion of funds?" "Which country's banks might come up with the necessary loans if we offer loan guarantees?" And so on. Then comes Sunday. Nobody at the summit goes to church. They don't worship back home, so any indication that they are in need of divine intervention might send the wrong message to capital markets on Monday morning. On Sunday afternoon, they issue the press release. If they wait until Sunday evening, the markets will open down by 1% on Monday. If they announce no decision, the markets will open down 3%. The press release must appear to say something new. There will be a new framework for discussion. The group has pledged a total of [X] billion euros, to be payable to the government of [Y]. This means that the banks that loaned 4X worth of euros to Y will not go bust. Yet. The summit's problem should be obvious. Because the biggest banks made stupid loans, based on the cooked books of the previous coalition government, no one is sure which banks have the credit rating and sufficient liquid capital to make the promised loans to the inter-European bailout agency. The whole banking structure is at the edge of the abyss. If two or three big banks announce that they are busted, MF Global style or Dexia-style, there will be a rush of hedge fund lenders to reallocate their remaining funds to what they hope will be one solvent large banks. Which banks might these be? Nobody knows. "Place your bets. The window is about to close."
THE ANNUAL G-20 MEETINGS The G-20 is an organization that specializes in annual press releases regarding the world's financial condition, which is always improving, compared to the mess that prevailed immediately prior to the previous meeting. The last scheduled meeting was held in France, October 14-15. There has been an emergency summit this week. It never hurts to review the official website on any high-level New World Order organization. This always requires a translation out of official jargon.
The G20 was established in 1999, in the wake of the 1997 Asian Financial Crisis, to bring together major advanced and emerging economies to stabilize the global financial market. Since its inception, the G20 has held annual Finance Ministers and Central Bank Governors' Meetings and discussed measures to promote the financial stability of the world and to achieve a sustainable economic growth and development. Meaning: The G-20 was created to deal with the first major threat to the New World Order's plan to launch the euro in 2000, as the first step in the establishment of a worldwide managed currency.
To tackle the financial and economic crisis that spread across the globe in 2008, the G20 members were called upon to further strengthen international cooperation. Accordingly, the G20 Summits have been held in Washington in 2008, in London and Pittsburgh in 2009, and in Toronto and Seoul in 2010. Meaning: The Asian bailout of 1998 held the system together, mainly because the Asians are experiencing economic growth. This got their banks out of the hole. But, in 2008, a variant strain of "Asian flu" hit the West. This has required an annual meeting to keep the signs of breakdown in check.
The concerted and decisive actions of the G20, with its balanced membership of developed and developing countries helped the world deal effectively with the financial and economic crisis, and the G20 has already delivered a number of significant and concrete outcomes:
Meaning: When a meeting of revolving heads of state – several a year in Japan – solves the world's crisis-driven financial problems at a weekend meeting held on schedule once a year, only to issue a press release, we can be sure that there are things going on behind the scene and in between annual press releases. These include:
First, the scope of financial regulation has been largely broadened and prudential regulation and supervision have been strengthened. There was also great progress in policy coordination thanks to the creation of the framework for a strong, sustainable and balanced growth designed to enhance macroeconomic cooperation among the G20 members and therefore to mitigate the impact of the crisis. Finally, global governance has dramatically improved to better take into consideration the role and the needs of emerging of developing countries, especially through the ambitious reforms of the governance of the IMF and the World Bank. Meaning: The Keynesian knee-jerk solution to every problem is more regulation. This is known in other circles as locking the barn door after the horse has escaped. The G-20 has a framework for balanced growth, which has been is short supply since 2008. Also, the IMF has borrowed lots of money to hand over to Third World dictators to fund their Swiss bank accounts.
Building on these important progresses, the G20 has now to adapt to a new economic environment. It must prove that it is able to coordinate the economic policies of major economies on an ongoing basis. Meaning: The new economic environment is this: the entire international fractional reserve banking system is coming apart, and it will take more than press releases to hold it together. Behind the scenes, each government is trying to pass on liability to the other governments. "Our banks are in worse shape than your banks!"
2011 will be the occasion to build on the recent successes of the G20 and ensure an active follow-up on processes already underway. It will also be the time to address other essential issues which are crucial to global stability such as the reform of the international monetary system and the volatility of commodity prices.
Meaning: "We are just barely holding this system together in the face of continuing bankruptcies. That's as much success as we are capable of at this time. Meanwhile, the markets are so volatile that they are calling attention to the fact that our tightrope walk between inflation and recession is becoming visibly disturbing. We don't want to wind up like the Great Wallendas."
We believe indeed that today's key economic challenges require a collective and ambitious action which the G20 is able to impulse. Meaning: I am not sure what "able to impulse" means. Sorry. VOLATILITY REVEALS INSTABILITY Stock markets
this year have reflected the presence of investment pessimism regarding
(1) the imminent departure of Greece from the eurozone, (2) the
increasing probability of a Greek default on its euro-based debt,
(3) the loss of hundreds of billions of euros by large northern
European banks, (4) the threat of bank failures in Italy after the
Greek government defaults, (5) the shaky condition of Portuguese
and Spanish banks, (6) the increasing likelihood of a worldwide
recession in 2012, and (7) the fear of a black swan event resulting
from a "Dexia moment." Stock markets have also reflected optimism regarding (1) the calming power of press releases from summit meetings, (2) the hope that the central bank of China will still keep inflating at home in order to buy euro-based IOUs in order to hold up the euro in order to promote Chinese exports, (3) the hope that the Federal Reserve will do something new that might possibly turn things around, (4) the hope that cash-flush companies will announce stock buy-back programs in order to make senior managers' stock options rise. The stock markets are more volatile today than at any time in recent memory. To the extent that 20% of Americans who hold about 80% of the individual stocks pay attention, they are getting this message: nobody knows what is happening. As far as the common man knows, things are not getting any better for him. The stock market's gyrations are just more noise. He is worried about his job's security – for good reason. CONCLUSION The Powers That Be are facing Problems That Won't Go Away. The heart of their control is fractional reserve banking and the market for government bonds (sovereign debt). Both are under siege. Both are showing signs of unprecedented vulnerability. The euro summit meetings are turning into reality shows. Which team will be The Survivors? Merkel-Sarkozy? Papandreou-Berlusconi?
Then there is Iceland.
Iceland, whose banks defaulted on $85 billion in 2008, completed a 33-month International Monetary Fund program in August. The Washington-based fund expects Iceland's economy to grow faster than the average for the euro area this year and next. It costs less to insure against an Icelandic sovereign default than it does, on average, to hedge against a credit event in Europe's single currency bloc, debt derivatives show. Iceland and Estonia never get invited to major European summit meetings. They are not in the G-20. There is a lesson here. November 5, 2011 Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 20-volume series, An Economic Commentary on the Bible. Copyright © 2011 Gary North
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Meanwhile,
Estonia is the only nation in the West that is not in fiscal trouble.