North-American Monetary Integration: Option of last resort?

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North-American Monetary Integration: Here Comes the Amero

by Andrew G. Marshall

Global Research, January 20, 2008

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Many have now heard rumblings of the “amero”, a proposed North American currency to replace the Canadian loonie, US dollar and Mexican peso. However, most of the mentions of this concept, when discussed in the mainstream media tend to focus on suggesting that talk of an “amero”, and in effect, the accompanying North American Union, is nothing but a conspiracy theory created by deluded xenophobes afraid of immigration and globalization. The Boston Globe recently wrote such a story, titled, “The Amero Conspiracy”, which stated, “The SPP [Security and Prosperity Partnership] does exist, and its tri-national task forces continue to meet, but its members consider it a way for the United States, Canada, and Mexico to collaborate on issues such as customs, environmental and safety regulations, narcotics smuggling, and terrorism. The amero, on the other hand, appears to be purely theoretical.”¹

However, despite being conveyed as “purely theoretical”, a recent article in the national Canadian newspaper, the Financial Post, referred to the amero, not as a theoretical idea or conspiracy theory, but as a potential reality. The article entitled, Fix the Loonie, lays out the process to be undertaken before the adoption of a continental currency known as the Amero.

The article was written as a response to a previous article written in defense of Canada’s flexible exchange rate system, to which it states, “David Laidler's recent defence of Canada's flexible exchange rate system misses completely the point made by Nobel Prize winning economist Robert Mundell in his famous article on optimum currency areas. Mundell's article has been widely credited with providing the intellectual base for the European Monetary Union and merits attention.”² The article continued elaborating on the previous point made by Mundell, stating, “If flexible exchange rates are best for Canada on the grounds presented by Laidler, why would flexible rates not be best also for Alberta, Ontario or New Brunswick?” It continued, “Milton Friedman's response to Mundell was that he would not advocate flexible rates for every possible region.”

The article contends that Canada is currently suffering from what the author refers to as the ‘Dutch Disease’, “which is named after the problems that developed in the 1960s when the Netherlands sold natural gas that had been discovered on its coast. The increases in Dutch exports of resources, like those of Canada in recent years, resulted in a strong appreciation of exchange rates, which was reinforced by interest rate policies of central banks and currency speculators.” It further states that, “The disease manifests itself through the loss of domestic manufacturers' ability to compete abroad and with imports.” The author then contends that, “The disease manifests itself through the loss of domestic manufacturers' ability to compete abroad and with imports,” and that, “The Bank of Canada can keep interest rates low to discourage capital inflows and thus exchange rate increases, but at the cost of fuelling inflationary pressures.”

The author then states that there is only one true cure for Canada’s ‘Dutch Disease’, “inoculation of the system by fixing the exchange rate at a level that allows manufacturers to be competitive, perhaps at the rate the Bank of Canada research identifies as the long-run equilibrium, around US90¢.” The author goes on to explain the reasoning behind this by giving the example that, “The Netherlands and Austria in the years before the introduction of the euro successfully operated such a system and enjoyed near perfectly stable exchange rates against the German currency. The essential ingredient in this success was the official commitment of the central banks of these two countries to maintain the same interest rate as that of the German central bank.”

So if Canada were to do the same in relation to the US dollar, then Canadian interest rates would be subject to the rates set by the US Federal Reserve, with our Bank of Canada lock in step. The author goes on to say, “An analogous commitment by the Bank of Canada with respect to U.S. interest rates may not be credible, tested by speculators and therefore ultimately doomed to failure.” Then the article continues, and makes a startling announcement:
“However, there is a solution to this lack of credibility. In Europe, it came through the creation of the euro and formal end of the ability of national central banks to set interest rates. The analogous creation of the amero is not possible without the unlikely co-operation of the United States.

This leaves the credibility issue to be solved by the unilateral adoption of a currency board, which would ensure that international payments imbalances automatically lead to changes in Canada's money supply and interest rates until the imbalances are ended, all without any actions by the Bank of Canada or influence by politicians.

It would be desirable to create simultaneously the currency board and a New Canadian Dollar valued at par with the U.S. dollar. With longer-run competitiveness assured at US90¢ to the U.S. dollar. [Emphasis added].”

In summation, what the author is proposing is to fix the Canadian loonie to the US dollar at US$0.90, create a currency board, which would be an unelected, unaccountable, group of people to handle our monetary policy, creating a route around using the publicly owned Bank of Canada, to ensure the creation of a ‘New Canadian Dollar’, which would be a prelude to the Amero. The author then explains that, “Fluctuations in global demand for natural resources will always result in competition for labour and capital among Canadian manufacturers and producers of resources. But, at least, the firms in these sectors would no longer have to concern themselves with exchange-rate fluctuations and policies of the Bank of Canada.” The article finishes by stating, “There will also always be changes in the U.S. (and Canadian) dollar exchange rate against the euro and other major currencies. But these changes would have minor effects on the Canadian economy because 80% of the country's trade is with the United States.”

The author of this article is Herbert Grubel, a professor of economics emeritus at Simon Fraser University, who also happens to be a Senior Fellow at the Fraser Institute, one of Canada’s largest and most prominent pro-big business think tanks.³ Other senior fellows at the Fraser Institute include Eugene Beaulieu, who sits on the Academic Advisory Council to the Deputy Minister of International Trade in the Department of Foreign Affairs and International Trade for the Government of Canada, Martin Collacott, former Canadian Ambassador, Tom Flanagan, who is known as the “man behind Stephen Harper”, and is a member of what is known as the ‘Calgary School’, which is an unofficial group of like minded thinkers who espouse neo-conservative views, and hold significant influence in the current Conservative government, even referring to Flanagan as the “Godfather of Canada’s conservative movement.”⁴

Flanagan also used to work for Preston Manning, who is also a senior fellow at the Fraser Institute, a former Member of Parliament, and former leader of the opposition, and other senior fellows include Gordon Gibson, a former Assistant to the Minister of Northern Affairs and later Special Assistant to the Prime Minister, Wilf Gobert, former Director and Vice Chairman of Peters & Co. Limited, “an independent, fully integrated investment firm which has specialized for 35 years in investments in the Canadian oil, natural gas, and oilfield services industries,” Michael Harris, former Conservative Premier of Ontario, Jerry Jordan, former President and CEO of the Federal Reserve Bank of Cleveland, Ralph Klein, former Premier of Alberta, Rainer Knopff, a professor and also a member of the ‘Calgary School’, and Brian Tobin, a former Industry Minister.⁵

The author of the Financial Post article which mentioned the amero, Herbert Grubel, wrote a paper for the Fraser Institute in 1999, entitled, “The Case for the Amero: The Economic and Politics of a North American Monetary Union”, in which he laid out the case for the creation of a regional currency for North America.⁶ In this paper, Grubel wrote that, “The plan for a North American Monetary Union presented in this study is designed to include Canada, the United States, and Mexcio,” and that, “The North American Central Bank, like the European Central Bank, will have a constitution making it responsible only for the maintenance of price stability and not for full employment.”⁷

In discussing the issue of sovereignty related to a monetary union, Grubel stated that he thinks that, “sovereignty is not infinitely valuable. The merit of giving up some aspects of sovereignty should be determined by the gains brought by such a sacrifice.”⁸ He continued in saying, “It is important to note that in practice Canada has given up its economic sovereignty in many areas, the most important of which involve the World Trade Organization (formerly the GATT), the North American Free Trade Agreement,” as well as the International Monetary Fund and World Bank.⁹ Despite admitting to several agreements and organizations of which strip Canadian sovereignty, Grubel suggests that losing sovereignty in these areas is still worth the benefits.

The introduction of the Amero is an integral aspect of the process of creating a North American Union, much like the European Union. This process is being undertaken through the implementation of the Security and Prosperity Partnership of North America (SPP), which was signed by the leaders of the three North American governments in March of 2005. This agreement is orchestrating the bureaucratic “harmonization” among the three North American nations to pave the way for a North American Community, akin to the previous European Community, and ultimately, a North American Union.

The push for this agenda is being driven by the US-based Council on Foreign Relations (CFR), the preeminent American think tank, and the Canadian Council of Chief Executives, as well as the Mexican equivalent, Consejo Mexicano de Asuntos Internacionales. In May of 2005, the three groups, as a result of their joining forces in a Task Force, released a report entitled, “Building a North American Community,” in which they state that, “The Task Force offers a detailed and ambitious set of proposals that build on the recommendations adopted by the three governments at the Texas summit of March 2005. The Task Force’s central recommendation is establishment by 2010 of a North American economic and security community, the boundaries of which would be defined by a common external tariff, and an outer security perimeter.”¹⁰
Thomas P. D’Aquino was the Canadian Co-Chair of the Task Force report and is also the President and CEO of the Canadian Council of Chief Executives, other Canadian members of the Task Force report include Allan Gotleib, former Canadian Ambassador to the United States, Pierre Marc Johnson, former Premier of Quebec, John Manley, former Deputy Prime Minister of Canada, and after 9/11, negotiated the Smart Border Agreement with the US Secretary for Homeland Security Tom Ridge, and Wendy Dobson, former President of the C.D. Howe Institute, another one of Canada’s most prominent think tanks, and former Associate Deputy Minister of Finance in the Government of Canada.¹¹

The C.D. Howe Institute has on its board of directors, individuals from Imperial Oil Canada, a subsidiary of Exxon Mobil, General Electric Canada, BMO Financial Group, TD Bank Financial Group, Nortel Networks, Manulife Financial, Bank of Nova Scotia, Enbridge Gas Distribution, EnCana Corporation, Ford Motor Company of Canada, HSBC Bank of Canada, Astral Media, Merrill Lynch Canada, CIBC World Markets, and N M Rothschild and Sons Canada.¹²

In 1999, the C.D. Howe Institute published a report entitled, From Fixing to Monetary Union: Options for North American Currency Integration.¹³ In the paper, it is argued that, “The easiest way to broach the notion of a NAMU [North American Monetary Union] is to view it as the North American equivalent of the European Monetary Union (EMU) and, by extension, the euro.”¹⁴ It continued in discussing the issue of sovereignty, stating, “That a NAMU would mean the end of sovereignty in Canadian monetary policy is clear. Most obviously, it would mean abandoning a made-in-Canada inflation rate for a US or NAMU inflation rate.”¹⁵

The concept of a North American currency has not only been the object of discussion within powerful big-business think tanks, but has, in fact, been discussed in government positions. In May of 2007, Canada’s then-Governor of the Bank of Canada, David Dodge, said that, “North America could one day embrace a euro-style single currency,” the Globe and Mail reported. Further, the article stated that, “Some proponents have dubbed the single North American currency the ‘amero’,” and further, “Answering questions from the audience after a speech in Chicago, Mr. Dodge said a single currency was ‘possible’.”¹⁶

In November of 2007, the Globe and Mail reported that, “Canada should replace its dollar with a North American currency, or peg it to the U.S. greenback, to avoid the exchange rate shifts the loonie has experienced, renowned money manager Stephen Jarislowsky told a parliamentary committee yesterday,” and quoted Jarislowsky as saying, “I think we have to really seriously start thinking of the model of a continental currency just like Europe.”¹⁷ The article continued, “Mr. Jarislowsky, a former Canfor Corp. director, said the loonie's rise to above par with the U.S. dollar is destroying manufacturing and could devastate the forest sector,” and that, “Mr. Jarislowsky said Canada could either aim for a common North American currency or peg the loonie to the U.S. greenback at about 80 cents (U.S.), allowing it to float within a small band.” Jarislowsky, a billionaire often considered to be Canada’s Warren Buffet, is a member of several corporate boards, and is also a member of the board of directors of the C.D. Howe Institute.¹⁸

Appearing on Larry King Live recently, former Mexican President and initial signatory to the Security and Prosperity Partnership, Vicente Fox, when asked a question about whether or not it was possible to see a common currency for Latin America, responded by stating, “Long term, very long term. What we propose together, President Bush and myself, it's ALCA, which is a trade union for all of the Americas. And everything was running fluently until Hugo Chavez came. He decided to isolate himself. He decided to combat the idea and destroy the idea,” to which Larry King interjected, “It's going to be like the euro dollar, you mean?” and Fox responded, “Well, that would be long, long term. I think the processes to go, first step into is trading agreement. And then further on, a new vision, like we are trying to do with NAFTA.”¹⁹

So clearly, there is a move on toward a regional currency for North America, in conjunction with the formation of a North American Union. Monetary sovereignty, and especially the power to create and issue money, is perhaps more central to the idea of a free, democratic and sovereign nation than the right to vote. If we do not have the power over the issuance of money, it does not matter whom we vote for. It’s the Golden Rule: he who has the gold, makes the rules. We, as Canadians, and other peoples of their respective nations should never relinquish this sovereignty over to regional boards, private banks, or other unaccountable individuals. It is our right, not a privilege, and giving up such a right is akin to giving up the right to vote; it is anathema to democracy and a free society.

¹ Drake Bennett, The Amero Conspiracy. The Boston Globe: November 25, 2007:

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Financial Architecture:
The EU wants to construct a new world order for the global economy.
by Irwin M. Stelzer
10/17/2008 12:00:00 AM

Politics may make strange bedfellows, but economic crises make even stranger ones. Gordon Brown, free trader, now finds that Nicolas Sarkozy, arch-protectionist, has virtues he had not previously noticed. It seems that they are united by three things. First, they believe, or at least are pretending that they believe, that the current ills originated in the United States. You might remember: This is the same United States whose entrepreneurship it was Chancellor Brown's habit to laud to all who would listen, before becoming prime minister and slipping easily into the anti-American mode that began with his first visit to President Bush and now dominates his public and private discourse.

Second, Brown and Sarkozy, along with their EU partners, believe that now is the time to put the former hegemon in its place. America, they believe, is paralyzed by the lame-duck status of its president. It will, they reason, be forced to go along with any European proposals for what is variously called a "new financial architecture" and a "new world order". The joy on the faces of EU leaders as they gather for their several conferences can be seen in news photos. Never mind that the banking systems of their countries are on the verge of collapse, or that they are headed for a recession deeper and longer than the one the United States will suffer. Now is their chance to do things that the Americans might not like, but can't stop.

Third, Brown, Sarkozy & Co. have always done what Ronald Reagan accused his own bureaucracy of doing, "If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it." Brown, long famous for profligate spending and mindless regulations, now proposes to subsidize home buying by first-time buyers so that they can catch the falling knife that is the UK house-price market. And his new-found friends in the EU, the very same countries whose currency he wisely snubbed, have never hesitated to increase their tax-funded budgets, and draft regulations at such a rate that very often the lobbying firms in Brussels cannot follow all the action.

But that's no business of the United States, at least not directly. Now, however, the EU 27 plan to make it America's business. The enthusiastic response to Gordon Brown's memorandum suggests that his partners have signed on to a regulatory scheme that they plan to put to the United States on a take-it-or-leave it basis. There will be more regulations, more regulators, more international gathering of those regulators, perhaps a new Bretton Woods agreement--more on that in a moment--with a timetable "for agreeing these proposals over the next few weeks and months," says the Prime Minister.

Regulators would study the world's economies for signs of trouble; they would supervise the impact of the financial sector on the real economy; hedge funds would be closely regulated; executive pay and bonuses would be limited; offshore centers will be regulated (important to the French, who find foreign competition with their institutions unpleasant); "Market participants," Brown insists, "should develop a robust clearing facility for OTC credit derivatives and fulfill other commitments to achieve greater certainty in OTC derivative markets". Whatever that means, it does show that no detail is to be spared the regulator's review. There is, alas, no mention of a commission to stimulate innovation in financial services.

But give Brown his due. He did lead the way in developing a plan to do the most important thing that could be done to bring the crisis off the boil: recapitalize the banks. That, while Hank Paulson and George W. Bush were talking about spending $700 billion to buy duff IOUs from the banks--which would do nothing to add to their capital unless the U.S. Treasury overpaid, which it said it would not do. Dutch Finance Minister Wouter Boss had reason to say, "The crisis showed an absence of US leadership."

Now, there is nothing wrong with greater coordination of economic policy among nations. That's why it was good news that the central bankers of leading countries coordinated their recent reduction in interest rates, and why it is a good thing that there are talking shops such as the International Monetary Fund to provide a forum for an exchange of ideas.

But informal cooperation is not the same thing as erecting a new world order. As the British delegation to the original Bretton Woods, New Hampshire conference in 1944 repeatedly argued, individual nations must be free to adjust to special circumstances by having what we have come to call "opt outs"--the ability to flout the rules when circumstances required.

Consider the question of purchasing stock in banks. In Britain, the Prime Minister and his colleagues initially decided to attach punitive conditions to the assistance the government was offering. Preferred shares were to have a 12 percent coupon; no dividends could be paid on common shares until the banks' retired the government's shares; no bonuses to executives.

America has something Britain does not: a large non-bank financial sector. Favor the banks, and GE and other financial firms would find themselves hard put to compete for funds. Also, with no hard-left pressure to be punitive, the U.S. administration could set earnings on its preferred shares at 5 percent, allow dividends on common shares, and limit only those executive salaries that might threaten the financial integrity of their institutions. One size just does not fit all, as Gordon Brown was fond of arguing that many EU directives and policies should not apply to the UK. Doubt that, and think euro, the currency he almost alone rejected.

The EU 27's hopes for forcing the United States to dance to their tune rest on the elegantly tailored figure of Barack Obama. That's why Brown wants to hold his big international conference after the November elections, and invite the president-elect. For Brown, such a Bretton Woods II would put him in the role played by John Maynard Keynes in 1944, when his biographer Robert Skidelsky reports Keynes "was the Churchill of this [financial] world, and no one could have taken his place." That wouldn't be the first time, and won't be the last time, the prime minister has likened his role in coping with the financial crisis to Churchill's role in coping with Hitler.

Irwin M. Stelzer is a contributing editor to THE WEEKLY STANDARD, director of economic policy studies at the Hudson Institute, and a columnist for the Sunday Times (London).

http://www.weeklystandard.com/Conten...5/705imijb.asp

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We Need a Bank Of the World

The financial crisis is global, and only an international central bank can deal with it.

Jeffrey E. Garten
NEWSWEEK
From the magazine issue dated Nov 3, 2008

If George W. Bush's upcoming global summit on how to fix the world's broken financial system—an event proposed by several European presidents and prime ministers—is to be a serious effort, the leaders should begin laying the groundwork for establishing a global central bank.

The idea of such an institution would have been a political nonstarter before the current debacle. The crises of the last several decades—the Latin American debt meltdown in the early 1980s, the stock-market crash in 1987, the savings and loan collapse of the early 1990s, the Asian financial blowup of the late 1990s, the Internet-stock collapse earlier in this decade—did not involve the extent of global linkages among financial institutions or the mind-boggling consequences of complex securities that we are seeing today. In none of these previous blowups did the global credit system shut down, as it did in recent weeks; in none did governments in both the industrialized and developing world intervene so massively, coming close to nationalizing the entire global banking system.

And in none was it so clear that there is no effective governing authority at the center of global finance. There was a time when the U.S. Federal Reserve played this role, as the prime financial institution of the world's most powerful economy, overseeing the one global currency. But with the growth of capital markets, the rise of currencies like the euro and the emergence of powerful players such as China, the shift of wealth to Asia and the Persian Gulf and, of course, the deep-seated problems in the American economy itself, the Fed no longer has the capability to lead singlehandedly.

After World War II, the IMF was designed to be a central financial institution, too. But over the decades it has had less and less influence on the rich industrialized nations. Its credibility with Asia and Latin America has also waned. It is still involved in bailouts for countries such as Iceland and Pakistan, but its once central role in protecting global stability is clearly over. And most important, its political legitimacy is deeply flawed, because its management structure reflects the 1950s, with Belgium having more voting power than China.

In the future, a global central bank is needed to oversee the rudderless global financial system. There are a number of critical functions it could perform.

It could be the lead regulator of big global financial institutions, such as Citigroup or Deutsche Bank, whose activities spill across borders. It could monitor risks that are building in the global market and create an early-warning system that alerts banks and national regulators that trouble is coming, and pushes them to modify their policies.

It could act as a bankruptcy court when big global banks that operate in multiple countries need to be restructured. It could oversee not just the big commercial banks, such as Mitsubishi UFJ, but also the "alternative" financial system that has developed in recent years, consisting of hedge funds, private-equity groups and sovereign wealth funds—all of which are now substantially unregulated.

A new institution could have influence over key exchange rates, and might lead a new monetary conference to realign the dollar and the yuan, for example, for one of its first missions would be to deal with the great financial imbalances that hang like a sword over the world economy.

A global central bank would not eliminate the need for the Federal Reserve or other national central banks, which will still have frontline responsibility for sound regulatory policies and monetary stability in their respective countries. But it would have heavy influence over them when it comes to following policies that are compatible with global growth and financial stability. For example, it would work with key countries to better coordinate national stimulus programs when the world enters a recession, as is happening now, so that the cumulative impact of the various national efforts do not so dramatically overshoot that they plant the seeds for a crisis of global inflation. This is a big threat as government spending everywhere goes into overdrive.

The IMF could continue to exist, but its board would have to be restructured, its bailout role for smaller nations carefully defined, and its directions—including the severity of the conditions it imposes on borrowers—would have to come from the new central bank.

To give it legitimacy, a global central bank would have to be governed in light of political realities. That means that its board would include not only the top financial officials of the United States, the U.K., the euro zone and Japan, but also China, Saudi Arabia, Brazil, South Africa and perhaps a few others.

If a global central bank had existed before today's financial crisis, it could have sounded a shrill warning about irresponsible financial transactions much earlier; and if it had been set up with the enforcement teeth it deserves, it would have had the clout to demand, perhaps as early as 2005, that banks and other financial institutions start building reserves when times were booming, rather than allow them to maintain lower reserves precisely because profits were soaring. It would have seen that financial institutions were accumulating debt that was 30 times their capital and imposed—or caused national central banks to impose—more sober leverage ratios.

A global central bank worth its salt would have reined in not just commercial banks but also loosely-regulated investment banks, because all such institutions would have been obligated to adhere to the global banks' regulatory standards or else be blacklisted in global markets. It would have intervened to deal with Lehman Brothers and AIG, both with truly global reach, and thereby put the burden not just on American taxpayers but also taxpayers of other countries who used these institutions' services.

Had it existed, a global central bank would have acted without the air of panic that has been exhibited by national central banks and finance ministries in this meltdown. Ideally, it would have gathered its governing board well in advance of a financial blowup to execute a coordinated rescue and global-stimulus plan, part of what should be its ongoing role of preparing for crises.

It would be hard to overestimate the political pushback that any official proposal for a global central bank would draw from various constituencies, most especially within the United States. Among their many charges, critics will protest the establishment of "world government." But we have a World Trade Organization with legally binding powers over trade disputes. We have a World Health Organization for communicable disease with the ability to quarantine entire countries. And a World Court functions today that has considerable legal and moral clout.

No one should want too much globally centralized oversight. But the world's gathering misery shows that too little leadership from the center can be equally dangerous. The November summit itself won't solve anything, but if it gave instructions to finance ministers and central bankers to explore what a new central bank could do, with a deadline to come back with concrete ideas shortly after a new U.S. president is inaugurated, it will have made real progress on one of the great problems of our times.

Garten is the Juan Trippe Professor of international trade and finance at the Yale School of Management.

http://www.newsweek.com/id/165772

[American Patriot]

Ummm

No thanks

[Toad]

Globalization one step further. One step further to World Government.

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UK's Brown: Now is the time to build global society

07:03 PM EST

LONDON (Reuters) - The international financial crisis has given world leaders a unique opportunity to create a truly global society, Britain's Prime Minister Gordon Brown will say in a keynote foreign policy speech on Monday.

In his annual speech at the Lord Mayor's Banquet, Brown -- who has spearheaded calls for the reform of international financial institutions -- will say Britain, the United States and Europe are key to forging a new world order.

"The alliance between Britain and the U.S. -- and more broadly between Europe and the U.S. -- can and must provide leadership, not in order to make the rules ourselves, but to lead the global effort to build a stronger and more just international order," an excerpt from the speech says.

Brown and other leaders meet in Washington next weekend to discuss longer term solutions for dealing with economic issues following a series of coordinated moves on interest rates and to recapitalize banks in the wake of the financial crisis.

"Uniquely in this global age, it is now in our power to come together so that 2008 is remembered not just for the failure of a financial crash that engulfed the world but for the resilience and optimism with which we faced the storm, endured it and prevailed," Brown will say in his speech on Monday evening.

"...And if we learn from our experience of turning unity of purpose into unity of action, we can together seize this moment of change in our world to create a truly global society."

According to a summary of the speech released by his office, Brown will set out five great challenges the world faces.

These are: terrorism and extremism and the need to reassert faith in democracy; the global economy; climate change; conflict and mechanisms for rebuilding states after conflict; and meeting goals on tackling poverty and disease.

Brown will also identify five stages for tackling the economy, starting with recapitalizing banks so they can resume lending to families and businesses, and better international co-ordination of fiscal and monetary policy.

He also wants immediate action to stop the spread of the financial crisis to middle-income countries, with a new facility for the International Monetary Fund, and agreement on a global trade deal, as well as reform of the global financial system.

"My message is that we must be: internationalist not protectionist; interventionist not neutral; progressive not reactive; and forward looking not frozen by events. We can seize the moment and in doing so build a truly global society."

(Reporting by Jodie Ginsberg; Editing by Janet Lawrence)

http://mobile.reuters.com/mobile/m/F...10?src=RSS-BUS

[Aplomb]

I'm having a totally rotten moment of enlightenment. This thread should be merged...with the financial crisis, with the bail outs...with Sean's thread on the North American Union... and the presidential elections thread. I believe Bush, Obama, the financial crisis, this election, members of both houses, the supremes, etc. are all tied together. There is something very big going on here and it is more frightening than a horror flick...

[American Patriot]

I'm having a totally rotten moment of enlightenment. This thread should be merged...with the financial crisis, with the bail outs...with Sean's thread on the North American Union... and the presidential elections thread. I believe Bush, Obama, the financial crisis, this election, members of both houses, the supremes, etc. are all tied together. There is something very big going on here and it is more frightening than a horror flick...

They ARE tied together.

They are all idiots, they are all mismanaging things and they all ought to be fired.

Bush is on his way out, and someone far, far worse, is on his way in.

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I'm having a totally rotten moment of enlightenment. This thread should be merged...with the financial crisis, with the bail outs...with Sean's thread on the North American Union... and the presidential elections thread. I believe Bush, Obama, the financial crisis, this election, members of both houses, the supremes, etc. are all tied together. There is something very big going on here and it is more frightening than a horror flick...

You are reading my mind.

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...and maybe some of the posts in "Joe Biden calling on all Conspiracy Theorists"

Ron Paul Warns Of Great Shift Toward Global Government Under Obama Congressman says president elect was chosen long ago to take care of the corporate elite

Steve Watson ********.net Wednesday, Nov 5, 2008

[IMG]http://www.********.net/pictures/nov08/051108Obama2.jpg[/IMG]

Texas Congressman and 2008 presidential candidate Ron Paul has warned that the euphoria surrounding the election of Barack Obama combined with the overwhelming fear of major international crises could facilitate a cataclysmic shift toward a new world order.

Appearing live on the Alex Jones show earlier today, the Congressman spoke of a feeling of dread surrounding the change of guard both in the White House and on Capitol Hill:

"I do feel it but I don't think it's brand new, I didn't wake up with it, I've had it for a while, I don't think the election was a surprise, but the rhetoric is getting pretty strong and they are getting very bold." he commented.
Speaking on the stage management of the election, and calling it a "huge distraction" from real issues, the Congressman outlined how both candidates were pre-positioned by the elite interests with the knowledge that either would satisfactorily serve their agenda:

"I think McCain was obviously a back up candidate in case something happened where Obama didn't win, they'd have been satisfied with McCain, but they have been positioning Obama for a long long time."

"This started even before he announced he was running. Anybody who would have gotten that much favorable coverage for so long, you know that the plans are laid for him to be the individual that's going to be taking care of the corporate elite." the Congressman continued.

Paul also warned that Democrats gains within the House and the Senate make for a particularly worrying situation of absolute power, similar to that held by the Republican party eight years ago.

"Just as a Republican Congress wouldn't say boo to a Republican Congress, you know that the Democratic Congress is NEVER going to stand up."

"I think it is very dangerous and the first year is going to be the most dangerous year." Paul stated. "Just think of Bush's first year, he also had the 9/11 thing that he could use to scare everybody to death. And Obama will use the financial crisis, which will get worse, and there will be more military skirmishes around the world." Paul asserted.

The Congressman also warned that many Republican representatives may go along with Obama just to win favor with the electorate and be seen to follow popular opinion.

Commenting on the much touted "International crisis" that luminaries such as Colin Powell, Joe Biden and Zbigniew Brzezinski have all guaranteed will occur within weeks of Obama entering the White House, the Congressman stated that he believes it may be a catalyst for a shift toward world government:

"I think it's going to be an announcement of a new monetary order, and they'll probably make it sound very limited, they're not going to say this is world government, even though it is if you control the world's money and you control the military, which they do indirectly."

"A world central bank, worldwide regulation and world control of the whole system, of all the commodities and all the natural resources, what else can you call it other than world government?"

"Obama wouldn't be there if he didn't toe the line, and when the meeting starts on November 15th for the new monetary system, this could be the beginning of the end of what's left of our national sovereignty." Paul said, also warning that the global media are already hailing Obama as the world's leader.

With Obama having previously announced that he will shift military attention to Pakistan, the Congressman also warned that the president elect will, thanks to the previous administration, have the necessary precedent to escalate the war on terror:

"It's the philosophy of the Bush doctrine, which was that we have the right to preemptively strike anybody and then he even expanded that recently by saying we don't have to invade and conquer, but we have the right to go in and bomb anybody without their permission, and that's why we go into Pakistan and Syria, which are acts of war. So they have the tools to do it and the sentiment and most Americans are oblivious to what is happening."

Paul also suggested that any escalation could be facilitated by false flag events such as Gulf of Tonkin style incidents.

Urging listeners not to lose faith in the campaign for liberty and the quest to restore and the Republic, Ron Paul spoke of reason to look ahead:
"We have to look for sources of optimism... ultimately though all that happens to us is a result of philosophy and beliefs and convictions and that is where I think we have made some inroads. We have drawn attention to the importance of monetary policy, the importance of the central bank, the importance of how government causes so much problems, it's just that we're in the minority." Paul said.

"We have to continue to do what we are doing, you are in the business of passing on and spreading information, that, to me, is most crucial, getting more people engaged, more people understanding what the issues are, nothing else is more important than that. Then when you see an opportunity we have to turn this into political action." the Congressman concluded.

To listen to the full interview click here.

[vector7]

Japan to boost bilateral currency swap deal with China

Tokyo - Japan, China and South Korea agreed at the Group of 20 summit to enhance bilateral currency swap between Tokyo and Beijing to help Seoul stay afloat in the global financial crisis, Japanese media said Saturday.

A joint statement said the three nations agreed to "explore an increase in the size of bilateral currency swap arrangements" among them. The deal was mainly aimed at helping South Korea fend off the financial crisis since the won has faced selling pressure as foreign investors withdrew capital.

Japan can offer US dollar and yen funds worth up to 13 billion dollars, while China can provide up to 4 billion dollars in yuan funds to South Korea, officials said. Finance ministers from the three nations met on the sidelines of the G20 summit in Washington Friday, comprised of leaders from 20 industrialized nations and emerging economies.

The East Asian officials also agreed to work together to develop their version of the Workshop on Macroeconomic and Financial Stability, which advises the Group of Seven industrialized nations and other developed countries.

The joint statement suggested an early agreement to discuss capital increase of the Asian Development Bank, media reports said.

http://www.earthtimes.org/articles/s...ith-china.html

[vector7]

This stuff is everywhere...

Is world ready for a new financial system?

(Xinhua)
Updated: 2008-11-16 21:50

Ever since a credit crunch that started with the US subprime mortgage crisis spread to other parts of the world, there have been mounting calls for reforming the current international financial system from all over the world.

As Henry C.K. Liu, a Chinese American commentator on economics, put it in an open letter to the G20 summit in Washington last week: "The winter of 2008-2009 will prove to be the winter of global economic discontent..."

The letter, published by Asia Times on November 8, blasted neo-liberal economists who "fooled themselves into thinking that false prosperity built on debt could be sustainable with monetary indulgence."

It advocates a new international financial architecture based on an updated 21st century version of the Keynes Plan originally proposed at Bretton Woods in 1944.

"This new international financial architecture will aim to create (1) a new global monetary regime that operates without currency hegemony, (2) global trade relationships that support rather than retard domestic development, and (3) a global economic environment that promotes incentives for each nation to promote full employment and rising wages for its labor force," said the letter signed jointly by American macroeconomist Paul Davidson and dozens of other leading world economists.

The proposal presents a rosy blueprint, but on the ground, the world has not gathered enough dynamics to rebuild a new financial system.

US DEFENDS SELF INTERESTS

Though other nations blamed the financial storm on the failure of free-market capitalism in the United States, US President George W. Bush stood firm against calling into question the very fundamentals of "democratic capitalism," and against excessive regulation.

It is "essential we preserve the foundation of democratic capitalism," Bush said while meeting with French President Nicolas Sarkozy and European Commission President Jose Manuel Barroso last month.

Bush reiterated the US position at the G20 summit, saying one objective of the leaders' meeting was to reaffirm "our conviction that free market principles offer the surest path to lasting prosperity."

But he admitted that both the International Monetary Fund and the World Bank, the two main international financial institutions created in 1944 in Bretton Woods, should be modernized.

The joint statement of the summit did not mention the creation of a global financial market enforcer as demanded by some European and emerging countries but opposed by the United States.

As for calls to end the US dollar's hegemony as the sole world currency, US close ally Japan voiced support for the dollar-centered currency system at the summit.

"There is a voice questioning if it's stable for the US dollar of the world's largest debt country to continue to be a key currency... But our prime minister stressed (at the summit) that no currency but the dollar can be used as a key currency," a Japanese official told reporters.

EU PUSHES HARD FOR REFORMS

Earlier this month, European Union (EU) leaders gathered in Brussels and turned up the rhetoric with calls for an overhaul of the current global financial system in the wake of the financial crisis.

British Prime Minister Gordon Brown had called for a reshaping of the International Monetary Fund, a Washington-based institution born of the 1944 Bretton Woods agreement, as the keystone of global market regulation and an early warning system for the global economy.

He called on national authorities to set up 30 supervisory colleges that would cooperate in regulating major cross-border financial institutions.

In addition, the EU eyes tougher regulations on hedge funds, new rules for credit-rating companies and limits on executive pay.

French President Nicolas Sarkozy also raised the issue of world monetary system in the future, a move seen by some analysts as a challenge to the long-time dominance enjoyed by the US dollar.

European leaders proposed a 100-day deadline for drafting the overhaul of the financial system.

EMERGING ECONOMIES DEMAND MORE VOICE, REPRESENTATION

Last Sunday in Sao Paulo, Brazil, finance ministers and central bank presidents from 20 leading nations agreed to boost emerging economies' role in negotiations to overhaul the international financial system.

Brazil, Russia, India, China and other developing countries say the global financial system drawn up by rich nations in the 1940s has failed to prevent economic crisis, fueling their argument that they should be given a role in crafting a new solution.

"We'll have to change the tires of the car with the car moving. This means in 60 to 90 days we'll need the solutions for new financial regulation," said Brazilian Finance Minister Guido Mantega.

At the G20 summit in Washington, Chinese President Hu Jintao urged the international community to earnestly draw lessons from the ongoing financial crisis and undertake necessary reform of the international financial system through full consultations among all stakeholders.

"Reform of the international financial system should aim at establishing a new international financial order that is fair, just, inclusive and orderly and fostering an institutional environment conducive to sound global economic development," Hu said.

He said the reform should be conducted in a comprehensive, balanced, incremental and result-oriented manner.

For emerging economies, some took the summit as an opportunity to raise their voices.

Brazil's President Luiz Inacio Lula da Silva urged greater say and representation for developing countries in international economic organizations such as the International Monetary Fund and the World Bank.

Indian Prime Minister Manmohan Singh called for changes needed in the global financial architecture to prevent the current financial crisis from recurring.

With the financial storm close to drawing most industrialized powers into recession, analysts say emerging economies are gaining unprecedented clout on the global stage. Some even believe the Western countries' road to recovery runs through the emerging economies.

http://www.chinadaily.com.cn/world/2...nt_7208932.htm

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Phase IV of the Global Systemic crisis: Breakdown of the Global Monetary System by summer 2009
- Public announcement GEAB N°29 (November 17, 2008) -



The G20-meeting held in Washington on November 14/15, 2008, is in its essence a historical indicator that the Western - above all Anglo-Saxon - monopoly on global economic and financial governance, is coming to an end. Nevertheless, according to LEAP/E2020, this meeting also clearly demonstrated that this kind of summits is doomed to inefficiency because they concentrate on curing the symptoms (banks’ and hedge funds’ financial difficulties, derivative markets’ explosion, financial and currency markets’ dramatic volatility, ...) rather than the fundamental root of the current crisis, i.e. the collapse of the Bretton Woods system based on the US Dollar as sole pillar of the global monetary system. Without a complete overhaul of the system inherited from 1944 by summer 2009, the failing of the current system and that of the United States at the center, will lead the whole planet to an unprecedented economic, social, political and strategic instability, and more specifically to a breakdown of the global monetary system by summer 2009. In light of the technocratic jargon and calendar of the declaration released after this first G20-meeting (totally disconnected from the speed and scope of the unfolding crisis (1)), it is more than likely that the disaster will have to happen for the fundamental problems to be seriously addressed and for the beginning of a reply to be initiated.

Four key-factors are now pushing the Bretton Woods II (2) system to collapse in the course of the year 2009:

• Fast weakening of the central players: USA, UK

• Three visions of the future of global governance will be dividing world’s largest players (United-States, Eurozone, China, Japan, Russia, Brazil) by spring 2009
• Unbridled speeding-up of the last decade’s (de-)stabilizing processes
• Increasing number of more and more violent backlashes.

LEAP/E2020 already extensively described factors 1 and 4 in previous editions of the GEAB. Therefore we will concentrate on factors 2 and 3 in the present edition (GEAB N°29).

The agitation that has seized global leaders since the end of September 2008 indicates that panic has struck at the highest level. Worldwide political leaders have now understood that the house is on fire. But they have not yet perceived something obvious: that the very structure of the building is involved. Improving fire-regulations or reorganizing emergency services will not be sufficient. To use a strong symbolic image, the World Trade Center’s twin towers did not collapse because firemen were late or because water was missing in the automatic fire-system, they collapsed because their structure was not meant to support the shock of two airliners hitting them in just a few minutes.

Today’s global monetary system is in a similar situation: the twin-towers are the Bretton Woods system, and the airliners are called « subprime crisis », « banking failures », « economic recession », « Very Great US Depression », « US deficits », … a whole squadron.


First year of major correction (Dow, as percentage, since 1900) - Source ChartoftheDay

Today’s leaders, who all belong to the collapsing world (including Barak Obama (3)), cannot possibly imagine how to solve the problem, just like central bankers in 2006/2007 could not possibly imagine the scope the unfolding crisis could reach (4). It is their world which is disappearing under their eyes, their beliefs and their illusions (sometimes similar) (5). According to our team, a 20 percent renewal of worldwide leaders is required to begin to see sustainable solutions (6) appear. This is indeed, according to LEAP/E2020, the « critical mass » needed to permit any fundamental change of perspective in a complex not very hierarchical human group.

Today we are still far from reaching this critical mass: in order to contribute to finding solutions to the crisis, those new leaders must accede power in full awareness of the crisis’ specific nature.

According to LEAP/E2020, if global leaders fail to realize that in the next three months and to take actions in the next six months, as explained in GEAB N°28, the US debt will « implode » by summer 2009 under the shape of the country’s defaulting or the Dollar’s dramatic devaluation. This implosion will follow closely a number of similar episodes affecting less central countries (see GEAB N°28), including the United Kingdom whose already huge debt is ballooning at the same pace as Washington’s (7). In the same way as the US Federal Reserve saw, month after month, its « Primary Dealers » (8) being swept away by the crisis before it was itself confronted to a real problem of capitalization and therefore survival, the United States in the coming year will witness the implosion of all countries too-closely integrated to their economy and finance, and of their allies financially too-dependent on them (9).


Monetary authorities with the largest foreign reserves in 2008 - Sources FMI/BRI/Wikipedia , 10/2008

The role the Europeans can play in the matter is essential (10). The Eurozone in particular must send out a strong message towards Washington: « The United States will fall into an economic and financial pitfall in 2009 if they cling to their past « privileges ». Once the world has given up on the Dollar, it will be too late to negotiate ». With more than 550-billion USD, the Eurozone owns the third largest reserve (ex-aequo with Russia who is not very accurate on that aspect) after China and Japan, and before the Gulf oil-monarchies (see table above). It therefore has the diplomatic weight, the financial weight, the economic weight, the commercial weight and the monetary weight required to compel Washington to face realities (11). The EU altogether will follow because non-Euro EU countries are all on the verge of a severe crisis of their currency or economy or both (12). Without the Euroland, their outlook is very gloomy in the short and medium term. As a matter of fact, the Euro is the only currency a growing number of initially reluctant (Iceland, Denmark…) or skeptical (Poland, Czech Republic, Hungary…) countries now wish to join (13).

Sign of the times, the Financial Times has started to list the US federal state’s tangible assets: military bases, national parks, public buildings, museums, etc… everything has been evaluated for a total amount of approximately 1,500-billion USD, i.e. more or less the probable amount of the budget deficit in 2009 (see the detail of these assets in the chart below). No wonder why Taiwan, despite its dependence on the security provided by Washington, decided to stop buying one of the three great components of the US public deficit, the Fannie Mae and Freddy Mac securities (despite the fact that they were « rescued » by the government (14)); or why Japan is now a net-seller of US T-Bonds.

All those who, despite our advice in the past two years, invested in Fannie and Freddy securities or in stock markets or in large US private equity banks or in the banking sector in general, have no reason to worry: it will not happen because « they » will prevent it! A problem remains however: “they” are now panic stricken and “they” understand nothing to this situation “they” were never prepared to face. Like we explained in the GEAB N°28, 2008 was only the detonator of the global systemic crisis. Now comes Phase IV, phase of the aftermath!


US government balance sheet (09/2007) - Source US GOA / Financial Times

http://www.leap2020.eu/GEAB-N-29-is-available!-Phase-IV-of-the-Global-Systemic-crisis-Breakdown-of-the-Global-Monetary-System-by-summer-2009_a2435.html

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Talks about .gov buying worthless companies, One-World Currency and more.

Video

[vector7]

Amero to become USA’s new currency when dollar collapses

02.12.2008



Pictures of the new currency that will supposedly replace the US dollar have appeared on the Russian Internet. The United States is reportedly working on the new currency, the amero, which will be common for the USA, Mexico and Canada. The unstable financial situation in the world, the collapsing oil prices and the growing foreign debt of the United States may eventually crush the US dollar as the world’s major currency. Needless to say that the US authorities reject the rumors and promise to keep the dollar afloat.

Amero notes have no portraits of US presidents on them and resemble the Belarussian rubles. For example, there is an image of a deer depicted on a 50-amero note, whereas a picture of a pyramid of Mexican Indians can be seen on a 100-amero note.

The amero follows the model of the European Union and its euro. It brings up the idea that the new currency can be adopted by the USA, Canada and Mexico within the scope of the North American Union, which the Bush administration established in 2005 under the Security and Prosperity Partnership of North America (SPP).

On April 6, 2005, the US Treasury announced the formation of the Financial Services Working Group to assist in the SPP’s ‘prosperity’ plans. According to its own press release, the US Treasury’s Financial Services Working Group said it “will play a critical role in the SPP.”

Conspiracy theorists contend that the governments of the United States, Canada, and Mexico are already taking steps to implement such a currency, as part of a "North American Union (NAU)" No current members of any country's government have officially stated a desire to create such a body, nor introduce a common currency.

The idea for a North American currency union was first proposed in 1999 by Canadian economist Herbert G. Grubel. A senior fellow of the conservative Fraser Institute think-tank, he published a book titled The Case for the Amero in September 1999, the year that the euro became a virtual currency. Another Canadian think-tank, the C.D. Howe Institute, advocates the creation of a shared currency between Canada and the United States .

After the report came out, center-left nationalist groups in Canada expressed their opposition to any currency union because they view it as an attempt by American businesses to gain access to Canada 's extensive natural resources while dismantling the nation's social services. The 100,000 member strong Council of Canadians, a progressive advocacy group, has declared one of its central issues to be the threat of "deep integration".

Dr. Robert Pastor, in a 2001 book, suggested a common currency should be a foundation of "macro economic cooperation" among the three NAFTA countries. However, the 2005 Independent Task Force on North America, which he chaired, did not recommend a common currency, nor does Pastor in the section for additional and dissenting views suggest a common currency should be a goal.

http://english.pravda.ru/world/americas/106779-amero-0

[wallis]

I have read articles on the collapse of the American dollar that go way back into the 1990s. IMO, it has been a huge disappointment to these harbingers of doom that the dollar has remained strong.

Reading these articles above, I come away with the impression that the ariticles are not in support of any global currency, much less a North American Amero.

Calls for an Amero and/or a global currency, again IMO, are knee-jerk reactions that have been twitching for a decade or so. I believe we can all agree that there is a great deal of animosity and jealousy aimed at the U.S. for its ability to (thus far) absorb the monetary mistakes that have been made.

I am far from being a financial wizard. But the People's Republic of China reportedly has a huge holding of American dollars. I suppose I could joke that the PRC is helping keep the American dollar as strong as it is worldwide. For if the American dollar were to weaken and/or collapse, the PRC would soon be tumbling after.

Conversations and opinions on this side of the world indicate that the American dollar is not only the strongest currency in the world today but that it is keeping total global financial collapse from becoming a reality.

I also feel that it is unfair to label the current crisis on President Bush and his administration. While I believe that this forum and others have squarely and correctly laid the blame on the Democratic-controlled congress, I feel that it is also unfair to immediately lay innuendoes and predictions of how President-elect Obama will handle this problem. The gentleman is not in power yet; we should give him enough rope to hang himself before tightening the noose around his neck. Then again, we just might be surprised, and all this hand-wringing a needless exercise.