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http://tinyurl.com/34nufnaObama strategy for G-20 in Ottawa: push
Euro down, drive Renminbi up, attack Germany, and keep toxic
derivatives in charge of the world
economy<http://inthesenewtimes.com/2010/06/26/obama-strategy-for-g-20-in-otta
wa-push-euro-down-drive-renminbi-up-attack-germany-and-keep-toxic-derivatives
-in-charge-of-the-world-economy/>
Posted by inthesenewtimes on June 26, 2010
Webster Tarpley,
Tarpley.net<http://tarpley.net/2010/06/25/obama-strategy-for-g-20-in-ottawa-p
ush-euro-down/#more-1591>
25th June, 2010
With Obamas letter to the G-20 countries released at the end of
last week, the US strategy for the upcoming Ottawa summit is clear:
Obama will attempt to sabotage the meeting with a two-pronged attack
designed to knock China and Germany off balance, and to prevent any
urgent measures from being discussed which might roll back the
exorbitant proliferation of derivatives, impose a Tobin tax on
speculators, or regulate and restrain the hedge fund hyenas whose
activities are ravaging the globe.
Obama, as usual, operates under a veil of dissembling and deception.
His letter talks first of all in edifying terms about the priority
which must be given to economic recovery and growth. He says he
wants to encourage the growth of internal consumption, especially
in countries with large trade surpluses, meaning China and Germany,
or possibly Japan. He sheds crocodile tears about the drastic
austerity policies of the type being introduced by the Merkel
government in Berlin. He tells countries which have built their
strategy around exports that it is unwise to rely on exports.
Much of this represents an attempt to prevent the Germans from
bringing up the issues that are important to them and to the world,
such as the need to restrain over-the-counter derivatives, especially
the extremely toxic naked credit default swaps which Berlin has now
banned in regard to government bonds denominated in euros. Obama
does not want to hear about the German governments plans for a Tobin
tax on speculative turnover. He also wants to divert attention
away from the European Union efforts to regulate and restrain hedge
funds, which have played a prominent role in exacerbating the current
world economic depression.
The other prong of Obamas attack is his blather about the superiority
of market-based rates for currency exchange. Obama, in effect,
demands the perpetuation of the current chaos of the floating
exchange rate system, which has done so much to hinder world economic
development in the nearly 40 years since Nixon and Kissinger, acting
under British pressure, destroyed the Bretton Woods system on August
15, 1971. In particular, Obama wants the Chinese yuan or renminbi
to be driven sharply upwards. There is now a significant strike
wave breaking out in China, especially at factories owned by Japanese,
Taiwanese, and other foreign companies. The US knows that for every
penny which the renminbi gains on the US dollar, a measurable number
of Chinese export firms operating on narrow profit margins will be
forced out of business and into bankruptcy, increasing unemployment
and magnifying the social tensions which are already abroad in
China. There is also the chance that US pressure on this point
will inflame the contrasts between the elitist and populist factions
inside the Chinese Communist Party. The Chinese first instinct,
which was to refuse to discuss matters of sovereign economic policy
at a multilateral gathering, was undoubtedly the correct one. The
subsequent report that China is willing to be more flexible on its
exchange rates is fine if it is meant as a smokescreen, but opens
the door to great trouble if the Chinese begin to make significant
concessions on this point.
During the early months of this year, the United States systematically
provoked China on issues related to Google and the administration
of the Internet. After that phase, there has been a relatively
quiet interlude. One suspects that the US was attempting to apply
a kind of aversive conditioning to Beijing, most probably with the
goal of inducing the Chinese to dump large quantities of euros
during the month of May. The Chinese are estimated to have 2 =
trillion dollars worth of foreign exchange reserves, of which about
one quarter is held in euros. A recent story planted in the London
Financial Times by Anglo-American intelligence circles claimed that
China was indeed about to dump the euro. The Chinese government
agency which administers foreign exchange quickly denied this report,
stressing that China regards Europe is an important area of future
investment and economic cooperation.
The best guess possible at this time is that the US and the British
had intended to launch a very rapid Blitzkrieg against the euro in
May, with the intent of provoking a panic flight of hot money out
of the joint European currency within a matter of weeks, before the
end of last month. In this estimate, the German ban on naked credit
default swaps and on the naked shorting of German bank stocks was
partly a defensive measure against this looming Blitzkrieg, and
partly a signal that Berlin intended to fight the Anglo-American
predators with additional serious countermeasures. As a result,
the collapse of the euro has now been halted for the moment, and
this currency has exhibited greater stability over the past two
weeks.
The forces of economic depression in the world economy are colossal,
and they cannot be neutralized without the deleting or shredding
(as Germany has begun to do) of large portions of the cancerous
mass of $1.5 quadrillion of derivatives that is crushing the world
economy, and without a wave of debt moratoria and debt write-offs
among those nations who have destroyed their public finances by
socializing the private speculative and derivatives losses of zombie
banks and hedge fund hyenas. Since this is not being done by most
countries, the forces of depression emanating from the black hole
of world derivatives will necessarily do their destructive work in
one direction or another. During the second half of 2009, the
victim was the dollar. For the last several months, it has been
the euro. If the euro somehow gets off the hook, the British pound
sterling might be the next victim. Or, it could be the Japanese
yen. This will become clear shortly.
The notorious hedge fund predator George Soros is frenetically
churning out his own variations on the Anglo-American line in advance
of the G-20 with a series of attacks on Germany. He does not make
the ban on naked credit default swaps the issue, but bashes Berlin
using other pretexts. Soros pretends to be concerned about the
German austerity policies, which are admittedly ill-advised in the
extreme. Soros wants brutal austerity for Greece and the southern
tier, but demands deficit spending and consumerism in Germany. This
is the old Carter-Mondale locomotive theory of 1977, when Germany
and Japan were expected to launch vast stimulus programs to weaken
their currencies and reduce their exports so as to relieve the
pressure on the US dollar. In an interview with Die Zeit of Hamburg,
Soros absurdly blamed the entire hedge-fund induced European crisis
on the Germans, pontificating:
The German policy is a danger for Europe, it could destroy the
European project. Soros thinks that the collapse of the euro may
be at hand; in fact, his hedge funds have been a key part of the
speculative attack, for which he has also served as ideologue.
Soros thinks that the end of the euro may be followed by a new era
of European wars: That would be tragic, because then Europe would
be threatened by the sort of conflicts between states that have
shaped European
history.[1]<http://tarpley.net/2010/06/25/obama-strategy-for-g-20-in-ottawa-
push-euro-down/#_ftn1>
According to a recent speech by Soros in Berlin, current German
austerity policy is in direct conflict with the lessons learnt from
the Great Depression of the 1930s and is liable to push Europe into
a period of prolonged stagnation or worse. The wide range of
possibilities will weigh heavily on the financial markets. They
will have to discount the prospects of deflation and inflation,
default and disintegration. In a worst case scenario that could
undermine democracy and paralyze or even destroy the European Union.
If that were to happen, Germany would have to bear a major share
of the responsibility because as the strongest and most creditworthy
country it calls the shots. By insisting on pro-cyclical policies,
Germany is endangering the European
Union.[2]<http://tarpley.net/2010/06/25/obama-strategy-for-g-20-in-ottawa-pu
sh-euro-down/#_ftn2>Austerity is a bad thing, but it is absurd to
blame Germany for the current depression, the direct cause of which
was the 2008 panic in the $1.5 quadrillion derivatives bubble
centered in Wall Street and the City of London.
The G-20 should ban all credit default swaps, starting with the
naked ones already targeted by Germany. A bright line prohibition
of collateralized debt obligations is also long overdue, as even
Lloyd Blankfein of Goldman Sachs has conceded. Individual countries
should generate revenue and suppress speculation by instituting a
1% Tobin tax on financial transactions, to be collected and used
at the national level. Hedge funds need to be thoroughly regulated,
meaning that they will cease to be hedge funds in the current sense.
So far, only Germany has taken concrete steps on these issues.
Depressions like the current one do not end thanks to some mysterious
business cycle or other deus ex machina. They end when destructive
policies are abandoned, and effective recovery programs are set
into motion. If the G-20 fails to restrict speculation, the world
economic depression will continue to worsen.
________________________________
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