Juncker: EU could give
up right to nominate IMF chief
29.08.2007 - 09:28 CET
The EU's nominee to be the next head of the International
Monetary Fund may be the last European in the job, the
eurozone's chief Jean-Claude Juncker has suggested.
He also indicated that support for the EU candidate this
time round could see developing countries being the
source of future IMF leaders. "The next director
will certainly not be a European," Luxembourg's
prime minister and the president of the group of eurozone
finance ministers said in an interview with FT
Deutschland, published on Wednesday (29 August).He argued
that the bloc's finance ministers were aware that their
candidate - former French socialist finance Dominique
Strauss-Kahn - "will probably be the last European
to become director of the IMF in the foreseeable
Mr Juncker's words are in reaction to the increasingly
bitter debate between the West and developing countries
including rising economic giants China, Brazil and
India about who should head the international
Until now the nomination procedure has always followed
the unwritten rule that European IMF chief and an
American president of the World Bank.The rule came under
the spotlight once again when the EU chose its candidate
for the job in late July and then again last week when
Russia unexpectedly threw in its own nominee, the Czech
former central bank governor, Josef Tosovsky.
Moscow highlighted its candidate's recognised credit in
reforming the Czech economy, but Mr Juncker pointed out
that the French ex-finance minister is also a
"well-known reformer" who would bring along his
experience to improve the monetary fund.
"When Strauss-Kahn leaves the IMF one day, he will
have adjusted the IMF firmly to the expectations and
interests of developing countries," he said in the
interview.He went on to criticise the UK's position in
the debate, saying "They have criticised the
selection process and have said that we should have
talked to others as well. But we did talk to others as
well." "Anglo-Saxon accusations that, by
nominating Strauss-Kahn we were trying to cement the
unwritten rule that Europeans provide the IMF's head, are
missing the point," he added.
The Washington-based IMF provides loans and economic
advice to its member states. It has been also criticised
over the years for deepening economic crises in some
countries through its reform ideas.
© 2007 EUobserver, All rights reserved
'nuclear option' of dollar sales
By Ambrose Evans-Pritchard
Chinese government has begun a concerted campaign of
economic threats against the United States, hinting that
it may liquidate its vast holding of US treasuries if
Washington imposes trade sanctions to force a yuan
officials of leading Communist Party bodies have given
interviews in recent days warning - for the first time -
that Beijing may use its $1.33 trillion (£658bn) of
foreign reserves as a political weapon to counter
pressure from the US Congress.
Chinese policy are often announced through key think
tanks and academies.
as China's "nuclear option" in the state media,
such action could trigger a dollar crash at a time when
the US currency is already breaking down through historic
also cause a spike in US bond yields, hammering the US
housing market and perhaps tipping the economy into
recession. It is estimated that China holds over $900bn
in a mix of US bonds.
finance chief at the Development Research Centre (which
has cabinet rank), kicked off what now appears to be
government policy with a comment last week that Beijing's
foreign reserves should be used as a "bargaining
chip" in talks with the US.
course, China doesn't want any undesirable phenomenon in
the global financial order," he added.
an official at the Chinese Academy of Social Sciences,
went even further today, letting it be known that Beijing
had the power to set off a dollar collapse if it choose
to do so.
has accumulated a large sum of US dollars. Such a big
sum, of which a considerable portion is in US treasury
bonds, contributes a great deal to maintaining the
position of the dollar as a reserve currency. Russia,
Switzerland, and several other countries have reduced the
their dollar holdings.
is unlikely to follow suit as long as the yuan's exchange
rate is stable against the dollar. The Chinese central
bank will be forced to sell dollars once the yuan
appreciated dramatically, which might lead to a mass
depreciation of the dollar," he told China Daily.
threats play into the presidential electoral campaign of
Hillary Clinton, who has called for restrictive
legislation to prevent America being "held hostage
to economic decicions being made in Beijing, Shanghai, or
foreign control over 44pc of the US national debt had
left America acutely vulnerable.
Derrick, a currency strategist at the Bank of New York
Mellon, said the comments were a message to the US Senate
as Capitol Hill prepares legislation for the Autumn
words are alarming and unambiguous. This carries a clear
political threat and could have very serious consequences
at a time when the credit markets are already afraid of
contagion from the subprime troubles," he said.
drafted by a group of US senators, and backed by the
Senate Finance Committee, calls for trade tariffs against
Chinese goods as retaliation for alleged currency
has appreciated 9pc against the dollar over the last two
years under a crawling peg but it has failed to halt the
rise of China's trade surplus, which reached $26.9bn in
Paulson, the US Tresury Secretary, said any such
sanctions would undermine American authority and
"could trigger a global cycle of protectionist
Paulson is a China expert from his days as head of
Goldman Sachs. He has opted for a softer form of
diplomacy, but appeared to win few concession from
Beijing on a unscheduled trip to China last week aimed at
calming the waters.
FOR MONTHS WE'VE ALL HEARD STORIES
ABOUT THE POSSIBILITY THAT THE UNITED STATES, CANADA AND
MEXICO WOULD BE "MERGED" INTO A NEW SOVEREIGN
ENTITY CALLED THE "NORTH AMERICAN UNION" . . .
. .GOVERNMENTS DENIED IT PUBLICLY AND OTHERS CALLED US
"CONSPIRACY NUTS." WE FINALLY HAVE PROOF: THEY
ARE COINING MONEY IN THE NAME OF THIS NEW ENTITY!!!!
"The Hal Turner Show" has received images of
the new unit of currency they are planning. It is called
"the Amero" which will replace the
"Dollar" and the "peso" in all three
countries once they are merged out of existence!
They are even coining "Ameros" in Collectable
precious metals like Silver as the "Proof" coin
More details are pending. One
thing is absolutely clear: The governments of the USA,
Canada & Mexico are engaged in a conspiracy to merge
the three countries without the knowledge or consent of
In furtherance of this conspiracy, the government of the
United States is intentionally spending the nation into
absolute, unrecoverable Bankruptcy with the intention
that the monetary system collapses.
When the U.S. currency collapses, it will take with it,
both the Canadian dollar and Mexican Peso because both
countries are so heavily invested in the U.S. dollar
through trade with the US.
During such a collapse, when hundreds of millions of
average citizens face absolute destitution because their
currencies have been wiped out, these Conspirators will
turn to 'The People" of each nation and say
"your only hope is to merge all three countries and
make a new start."
The thinking is that the populations will rush to embrace
the merger and forget all about our individual history,
rights and systems. In one fell swoop, the Conspirators
will clobber us into absolute despotism and we will be
helpless to do anything because our money will have
While you're gasping for air at this, did you happen to
notice the DATES on these coins? 2007
Gee whiz, this plan seems awfully far along. I guess this
means the collapse will be this year? Maybe that's why
the housing market was allowed to "tank?" Maybe
that's why the Stock Markets are dropping hundreds of
points per day lately? Maybe this is why oil has
increased in price. . . . because the oil nations already
know they're going to take a bath on the currency change
when they have to exchange "Dollars" they're
already holding which will be worth only
"pennies" on the "Amero?"
Are you starting to grasp why so many things are going
wrong lately? Does a lot of it start to make sense when
put in the context of wiping out currencies in the name
of globalization? It's the jew bankers, folks. Another
jew banking scam designed to enrich the few at the utter
devastation of the rest!
Top Swiss banker attacks US
lending standards as 'unbelievable'
By Ambrose Evans-Pritchard and Yvette Essen
Last Updated: 12:15am BST 21/08/2007
banker has warned of massive losses from the unfolding
credit crisis, describing the collapse in US lending
standards as "unbelievable".
president of the Swiss National Bank, said market turmoil
was far from over as tremors from the sub-prime debacle
continued to rock the world.
certainly not at the end of the story. There are question
marks surrounding the development of the American
economy," he said. "Something unbelievable
happened. People who had neither income nor capital got
credit with very attractive conditions. Now reality is
striking back," he said.
In Germany, the
state bank SachsenLB admitted that it had received a
17.3bn bail-out after its investment arm Ormond
Quai racked up huge losses on US sub-prime debt. It had
previously denied holding direct exposure to sub-prime.
came as traders braced themselves for another turbulent
week, with mounting expectations that central banks may
soon cut rates to prevent market mayhem leading to an
While the surprise
half-point cut in the US discount rate to 5.75pc last
Friday helped settle markets and launch a relief rally on
Wall Street and European bourses, investors remain wary
until it becomes clearer who is holding the main losses
on US mortgage debt.
historian David Schwartz warned investors not be fooled
by signs of recovery. "The truth is no-one knows how
serious the financial problem in the US is, nor how it
will unfold. We do know central banks are scared out of
their minds," he said.
The scale of last
week's sell-off sent shock waves through almost every
asset class. Hedge funds liquidated yen "carry
trade" positions to meet margin calls, toppling
dominoes across Asia, Latin America, and Eastern Europe.
Both Goldman Sachs
and Lehman Brothers predict two cuts in the US federal
funds rate to 4.75pc by the end of the year as falling
house prices dampen spending. Michigan's consumer
confidence index slumped to 83.3 in August, down from
90.4 in July.
pricing in a 34pc chance that the European Central Bank
will have to start cutting rates before the end of the
year after growth faltered in the second quarter. The
French and Spanish property booms have both stalled.
Claude-Trichet, the ECB's president, last week reaffirmed
a likely quarter point rate rise to 4.25pc in September,
despite the bank's emergency actions in previous days.
The Great Financial Crisis or Whos Got a Turd in
All the major financial analysts claim the ongoing and
deepening financial crisis is in large part the result of
investor uncertainty. This is because the investment
banks, derivatives and hedge funds placed high risk,
sub-prime mortgages and junk bonds, along with other more
reliable debt paper into packages and sold them to
institutional and private bankers who in turn
retailed them around the world.
The rating agencies, who are paid by the sellers, all
gave top billing (AA, AAA) to these hybrid securities,
mortgages and junk bonds, encouraging investment advisers
to push them on to risk-averse client looking for higher
returns than Treasury notes. Most of the investors do not
know whose and what paper they are holding, nor how much
their hedge funds are losing or have lost. Those who can,
have pulled out. The banks are reticent to loan to any
applicant. Leverage funds are a dirty word among lenders.
Hedge funds are either selling assets to pay loans or not
telling what they own or owe. Derivatives have been
deflowered. Central Banks in the US, Japan and the
European Union have poured (and keep pouring) over $250
billion to the private banks hoping to create liquidity
but the banks wont lend because, as one
prominent banker in Palm Springs told me Nobody
knows whos got a turd (worthless investments) in
his brief case.
Meanwhile, Goldman Sach, Bear Stearns and Lehman Brothers
are all closing down bankrupt investment funds or trying
to prop them up. The Fed props up all the worst
speculators in the name of saving the financial
system - in a way that it would never prop up the
failing American health system. The financial system has
the runs and infusions of Fed funds have
failed to block the run for cover.
Everybody for himself
and dont look
back, is the watchword of leading equity bankers.
The Democrats are calling for the usual inconsequential
Congressional hearings about what went wrong. Congressmen
Levin and Barney Frank will ask the wrong questions to
the wrong people going after the weakest fall guys
the rating agencies for overrating the
fraudulent deals, not the dealmakers themselves. The
turds in the briefcases are big and smelly
but no one knows how big: $250 billion or $500 billion.
There are a lot of bankers and hedge fund billionaires
walking around with invisible clothespins on their noses.
Where is Greenspan, since he started the whole scam with
his low interest, deregulated financial markets? The
homely hero of all hedge-derivatives-innovative financial
scamsters sanctioned, approved and promoted the pyramid
swindles. Hes off advising Deutsch Bank and
suckering the international bankers for $100,000 fees for
his failed financial recipes. But for those speculators
who made a bundle and left, Greenspan is not part of the
emerging turd culture. For them he is still the financial
genius who made their fortunes.
So unless the fund directors come clean, empty their
brief cases and open their balance sheets we wont
know who are carrying the turds: The great unknowns
include the unredeemable bonds, the worthless mortgages
and the illiquid hedge funds. Without knowledge of the
size and scope of the turds, the great uncertainty has
frozen most investments and loans it is paralyzing
the financial system. Even Fannie Mae and Freddie Mac
(the federally-funded mortgage companies) cant come
in and buy up the turds (otherwise known as
bad debts), no matter how many hundreds of
billions of US taxpayers money they are willing to
All the financial wizards, the super-smart scientific,
mathematical, guaranteed 30% per year investment advisers
have less credibility than a street corner con man. The
most arrogant, pretentious, scientific speculators have
been humbled; especially those oracles who practiced what
is call among the insiders as Quantitative
Quantitative investing (QI), the use of complex computer
models in making investment decisions, was used and
promoted by some of the reputedly smartest and highest
regarded gurus of Wall Street. For a decade
the complex mathematical modeling produced extraordinary
profits for Renaissance funds, Goldman Sachs and numerous
other asset managers and hedge funds. With the massive
sell-offs of assets to pay debts and the desperate drive
for liquidity, all the assumptions of the QI went out the
window. The Model cannot account for any
crisis which calls into question historical
trends. The best and the brightest are baffled. At
first, the QI geniuses said the crisis was a localized
problem for the sub-prime bottom-dwelling speculators.
But as their own funds dropped they blamed hysterical
investors who over-reacted. A problem of
perceptions, they psychologized. But their funds
continued to decline: the Market wasnt acting as
their model dictated. Hearsay flourished,
Whats the problem: The Market or the
Model?, one QI practitioner asked his colleagues.
The answer from the Market: Its the model
stupid: All the QI use historical models that
extrapolated past patterns into the future as if
capitalism is a crisis-free system which changed
incrementally and in which investors borrowed rationally
to leverage purchases in line with their capacity to pay
back any losses. Thats Main-Street folklore for
retail brokers and the daily fare of American Enterprise
Scientific mathematical modeling in the Great Casino
predictably turned out to be as fallible as numerology
spun by Shamans to explain the life cycle.
No ones going out of the window of the upper
stories of high rise offices yet. Whats
keeping the suicide rate down is precisely whats
keeping investors running: no one knows how many hundreds
of billions in worthless paper is being held. With the
demise of the mathematical modeling speculative science,
we are now in the period of the Mystical Black Hole. The
big investment houses and hedge funds are holding back on
revelations, hoping that investment confidence will
return if investors are kept in the dark about how much
they lost. This is a step below Voodoo Economics. How can
investor confidence return if they dont know if the
big turds are in the briefcase of the Renaissance Funds,
Goldman Sachs, First Quadrant or any one or all of a
thousand and one Ali Baba hedge funds?
Let them lose their pants, writes orthodox Market pundits
like Marty Wolf in the Financial Times. In order to
value risk, they should lose properly. To bail them
out, they argue, is a moral hazard.
Meaning of course, that if the hype and scam speculators
are covered by a Federal Bank bail out, they lose
nothing, and will repeat swindling in the future.
Bailouts are a formula for financial scam recidivism. So
much, alas, for the advice of orthodox market experts.
European Central Banks and the US Federal Reserve know
what class they represent: Real existing speculator
plungers, not textbook risk-calculating value-oriented
entrepreneurs, are their reference group. The risk of
letting the bad boys sink is that there are too many of
them, working in most of the most powerful investment
houses, managing too many funds, for the most powerful
There are no good financiers and bad
speculators, one philosophically inclined fund
manager (who is likely carrying a turd) put it, We
are all in this together, if we sink so does the whole
financial system. Is this a self-interested plea
for financial solidarity, a closet Marxist or a prophet
of doom? Nobody knows till we delve into the Black Hole
of the financial crisis. That wont happen till the
brief cases open.