On Friday November 21, the world came within a hair’s breadth of the most colossal financial collapse in history according to bankers on the inside of events with whom we have contact.
The trigger was Citigroup – the bank, which only two years ago, was America’s largest (and, a shining example (and barometer) of our financial prowess).
How many of you noticed – and then understood – the vital sense of urgency around the Fed’s response to Citigroup, and the frenzied efforts to stabilize that organization?
It can now be argued that the United States government (the people?) are the largest shareholder in Citigroup.
“The size (nay – the magnitude) of the United States Government’s de facto nationalization of the $2 trillion banking institution is an indication of shocks yet to come in other major United States and perhaps European banks thought to be ‘too big to fail.”
– Raymond St. James, British Financier
The way in which US Treasury Secretary Henry Paulson has handled the unfolding crisis has been worse than clumsy. It is incompetence laced with deceit. Paulson is not a banker; but a Wall Street ‘investment banker’, whose experience has been in the quite different world of buying and selling stocks or bonds (or underwriting and selling same). His croneyism and sleight-of-hand tactics has made a grave situation into a globally alarming one. Mostly (likely) in terms of shaking (or confirming) the global financials markets confidence.
The most alarming aspect of the crisis is the fact that we are in an inter-regnum period when the next President (that would be Barack Obama) has been elected, but cannot act on the situation until after January 20, 2009 when he is sworn in.
Interestingly, there is already talk around Capital Hill in terms of Presidential “preemptive” pardons.
Just think about that in terms of who is perceived as holding the bag, and accountability. The timing is exquisite for a crisis and all responsible parties can avoid liability.
In any event… Professor Igor Panarin, a leading Russian political analyst has said the economic turmoil in the United States has confirmed his long-held view that the country is heading for collapse, and will divide into separate parts.
I don’t think this is likely. But, the notion is provocative or evocative – depending on where you stand.
Professor Panarin said in an interview Monday the 24th with the respected (most of the time) daily Izvestia:
“The dollar is not secured by anything. /1 The country’s foreign debt has grown like an avalanche, even though in the early 1980s there was no debt. By 1998, when I first made my prediction, it had exceeded $2 trillion. Now it is more than 11 trillion. This is a pyramid that can only collapse.”
The paper said (and, I am paraphrasing – so, you have to trust me on this):
Panarin’s dire predictions for the U.S. economy, initially made at an international conference in Australia 10 years ago, at a time when the economy appeared strong, have now been given more credence by this year’s sequential events.
When asked when the United States economy would collapse, Panarin said:
“It is already collapsing. Due to the financial crisis, three of the largest and oldest five banks on Wall Street have already ceased to exist, and two are barely surviving. Their losses are the biggest in history. Now what we will see is a change in the regulatory system on a global financial scale: America will no longer be the world’s financial regulator.”
NOTE: China and Great Britain are already making this assumption (my perception based on actions [deeds] and words).
He predicted that the U.S. will break up into six parts – the Pacific coast, with its growing Chinese population; the South, with its Hispanics; Texas, where independence movements are on the rise; the Atlantic coast, with its distinct and separate mentality; five of the poorer central states with their large Native American populations; and, the northern states, where the influence from Canada is strong.
Fascinating and gripping stuff. I wonder which “province”, given socio-economic opportunities would be the egalitarian?
In closing, Panarin even suggested that:
“We could claim Alaska – it was only granted on lease, after all.” /2