Obama, financial war and the elimination of DSK

A must read from Voltairenet, 28 MAY 2011
by Thierry Meyssan*

It is impossible to understand the downfall of Dominique Strauss-Khan without linking it to his project for the creation of a new international reserve currency, which was to be launched on 26 May 2011 at the Deauville G-8 summit. The project was paradoxically anticipated as much by the Emerging States as by stateless capital, but rejected by the U.S.-Israeli military-industrial complex. Thierry Meyssan exposes the chicanery of the Obama administration to dodge its commitments.






The French were dumb struck at the arrest in the United States of the most popular political leader of their country, Dominique Strauss Khan. Former Economy Minister, he had become the highest-paid public official in the world (base salary, excluding bonuses and expenses: 461,510 USD) and was, reportedly, about to enter the French presidential race. This affable VIP, reputed for his appetite at the table as well as in bed and often accused of being a political amateur because of the time he dedicated to satisfying his lust for life, has been charged with the precipitous sexual assault on a chamber maid in a Manhattan hotel.
For six days, the French remained glued to their television screens watching in a daze the judicial harassment against a man they considered to be a hopeful alternative to the catastrophic first five-year term of Nicolas Sarkozy. DSK’s fall marked the end of their illusions.
The spectacle of this shattered destiny is suggestive of ancient tragedy. The Roman saying: "Arx tarpeia Capitoli proxima" comes to mind: the Tarpeian Rock from which a convicted person was hurled to his death was close to the Capitol, the symbol of power and greatness.
Leaving aside any considerations of his innocence or guilt, the steamrolling of such a high-profile personality can only provoke anguish in the ordinary citizen. If someone like him is unable to defend himself, then how can we hope to succeed if we were to be accused like him?


The rise and the fall
Nevertheless, as a politicized people raised on Machiavellian lessons, without ever having read his works, it didn’t take the French long to start questioning the solidity of the charges brought against their compatriot DSK. According to the opinion polls, 57% didn’t buy the rutting-season story that the U.S. media have taken delight in dishing out. Some started imagining all kinds of manipulation scenarios, while others are asking "cui bono?" (who benefits?).
At that game, the first name that comes to mind is that of Nicolas Sarkozy. It is impossible not to think of him knowing that he became president by pressing charges against his chief rival, Dominique de Villepin, and entangling him in a forgery scandal just as convoluted as the current one. Therefore, why not another plot to move a new competitor out of the way?

Cartoon by Plantu published in Le Monde of 25 May 2011: "DSK and Villepin, two friends to which I am very attached."

Never mind if DSK and Sarkozy have needed each other to prepare the forthcoming international summits, or if they were both subservient to the United States. It is well known that the worst crimes are perpetrated against one’s own friends or even family.
As is happens, the French are unaware of DSK’s ties [1] or, for that matter, Sarkozy’s when they voted for him [2]. The media have never informed them that in the 1990’s, during his political wilderness, he was hired as professor at Stanford University by a certain... Condoleezza Rice. They also don’t know that he and his lieutenants Pierre Moscovici and Jean-Chrisophe Cambadélis were in charge of raising funds for the Socialist Party from the National Endowment for Democracy - a legal CIA front [3]. Nor did they follow his activities and various contracts with Atlanticist think-tanks, such as the German Marshall Fund of the United States [4] or the Bilderberg Group [5]. Finally, they are oblivious about his commitment to integrate France and Europe into a vast transatlantic market dominated by the United States.


Nor do the French know anything about DSK’s close links to Israel. Within the Socialist Party, he steers the Cercle Léon Blum, named after a former Jewish prime minister. The role of this discreet and powerful lobby is to eject from the political scene any individual who is likely to criticize the Zionist project. Thus, it can make heads roll, like that of political scientist Pascal Boniface who highlighted the electorally counter-productive implications of supporting Tel-Aviv in a country where 10% of the population is of Arabic culture. Yet, DSK is very open about it. Without beating around the bush, he asserted: "I deem that every diaspora Jew must support Israel. For that reason, it is important for Jews to take up political responsibilities. In short, in my functions and in my everyday life, in everything I do, I endeavor to make my modest contribution toward the construction of Israel." It’s rather disconcerting from someone who aspires to become president of France. But who cares? He’s so jovial!


However, Dominique Strauss-Khan and his loved ones were spared no humiliation: while kept incommunicado under protective police custody, the New York prosecutor’s office was distributing to the media copies of the detailed indictment.
It contains a clinical description of the alleged crimes: "The defendant engaged in oral sexual conduct and anal sexual conduct with another person by forcible compulsion; the defendant attempted to engage in sexual intercourse with another person by sexual compulsion; the defendant subjected another person to sexual contact by forcible compulsion; the defendant restrained another person; the defendant subjected another person to sexual contact without the latter’s consent; and in that the defendant intentionally, and for no legitimate purpose, forcibly touched the sexual and other intimate parts of another person for the purpose of degrading and abusing such person, and for the purpose of gratifying the defendant’s sexual desire.
The offenses were committed under the following circumstances:
Deponent states and deponent is informed by an individual known to the District Attorney’s office that defendant 1) shut the door to the above location and prevented informant from leaving the above location; 2) grabbed informant’s breasts without consent; 3) attempted to pull down defendant’s pantyhose and forcibly grabbed informant’s vaginal area; 4) forcibly made contact with his penis and informant’s mouth twice; and 5) was able to accomplish the above acts by using actual physical force."
All these juicy details were splashed all over the evening news for days on end before wide-eyed parents just back from work, and before horrified children who buried their noses in their bowl of soup.
The cultural shock
It is difficult to know who was more traumatized: the brilliant economist who was going to save humanity from the financial crisis and has been abruptly relegated to the ranks of an infamous criminal, or the French people who were looking forward to a respite by choosing him as their leader, and have been compelled once again meet head-on the violence of the United States.
In this regard, the French are trying to find excuses for the nature of the Anglo-Saxon judicial system to which they are just beginning to awaken. They had already seen such a parody of justice in their favorite television series, but they never imagined it could actually exist in reality. As for the extra-judicial system, Guantánamo and the secret prisons, they have always preferred not to know. Some commentators have speculated that the harsh treatment at the hands of the police and the first judge denotes a will to treat the powerful and the weak on an equal footing. Yet, surely, they must all be familiar with the works of illustrious sociologists explaining that in this unjust system money is king and that justice may be blindfolded, but is not class blind.
Furthermore, the French unflinchingly went along with the criticisms relayed by the Anglo-American press, laying all the blame on its French counterparts for having failed to investigate Mr. Strauss-Khan’s life of sexual depravity in the name of his right to privacy. And yet - the puritans comment further - a man who ostensibly seduces a women, squeezes or even jostles her is obviously a potential raper. "He that will steal a penny will steal a pound." On its cover,Time Magazine depicts DSK and his peers in the guise of a pig. However, no one has pointed out that the defendant was IMF Managing Director and a Washington D.C. resident for the past 3 years, but whose hidden vices the moralizing Anglo-American press has also failed to dig into.
The accusation against DSK having opened up suspicions, now everyone remembers - albeit somewhat late - that in 2002 DSK had tried to force himself on a beautiful French journalist, Tristane Banon. When she asked him for an interview, he gave her an appointment in a private apartment located in the Marais, a historic district of Paris. He received her in a huge loft, completely unfurnished except for a big bed. Since the beauty refused to submit to the libertine, he bashed her.
Could it be that, in New York, the gentleman was overwhelmed by his own violence and transformed into a criminal?
Nothing seems to point in that direction, all the more since DSK is not a frustrated bachelor. He is married to television star Anne Sinclair, a French top-notch journalist, who abandoned her profession to accompany her husband in his career. The French saw her again during Dominique Strauss-Khan’s court hearings, as beautiful and determined as ever despite the extra years. The grand-daughter of a major art merchant, she sits on a cushy family fortune. Without hesitation, she flew to Paris to pay the one-million dollar bail and provide the court with an additional 5 million in collateral. At that moment, this wealthy woman was prepared to sacrifice everything to rescue her husband from the crushing jaws of United States justice. She was all the more admirable for it; a wife who didn’t hold his escapades against him and who even liked to go with him to the Chandelle, a Paris swingers club.

DSK, the fall guy.

Any nation worthy of that name would not have endured to see a political figure, who was slated to become president and represent their country, walking handcuffed between two FBI officers, shoved in the back of a car like a thug, and paraded in court shaggy and unshaven. In any other country, people would probably have staged a rally in front of the U.S. Embassy chanting patriotic songs. But not in France. The "Americans" are far too admired. The French look up to them like a rabbit hypnotized by a cobra. And they have a hard time accepting that they are not the navel of the world, that if indeed there was a plot, it was not necessarily hatched on the banks of the Seine but on those of the Potomac.


The confinement
Is DSK guilty of rape or is he victim of a machination? One only has to think in order to answer the question.
The defendant allegedly spent the night with a call-girl, then raped the chambermaid at brunch time before calmly going to have lunch with his daughter, a student at Columbia University. Finally, he is supposed to have boarded his flight, booked several days in advance, bound for Berlin where he was to meet Chancellor Angela Merkel. Comfortably settled in his Air France business class seat, he was arrested ten minutes before takeoff.
According to the cabin crew, the officers of the Special Victims Unit (the same as in the NBC "Law and Order SVU" serial) didn’t delegate the questioning procedure to their airport counterparts, insisting on doing it themselves despite the risk of arriving too late. However, to prevent any warning from reaching DSK, they ordered the cell phone jamming of the zone until their arrival [6]. Now, this kind of jamming operation exceeds the scope of a vice squad. It could only have been ordered by national security services.
As soon as the suspect was placed under police custody, he was cut off from any external contact, with the exception of his lawyers, as prescribed by U.S. law. But when Judge Melissa Jackson moved him into protective custody, he was again cut off from the outside world. With no reason. It was explained that DSK’s detention was warranted for fear he might flee to France, with which Washington did not sign an extradition agreement and which has protected another sexual offender accused of rape, film director Roman Polanski. The decision to isolate him was therefore not taken with the aim of preventing him from influencing the witnesses. Nonetheless, the judge decided to lock him up at Rikers Island, one of the largest prisons in the world which houses 14 000 detainees, and one of the bleakest. A hell on earth. "For his protection", he was assigned to a single cell and kept incommunicado.
The IMF Managing Director was held in confinement for 10 days. During this period the functioning of the international institution was blocked in want of a signature. For 10 days the problems related to the euro and the dollar, Greece’s default, and many others crucial issues were put on standby at the mercy of the police, judges and prison guards.
According to U.S. jurisprudence, considering that he had no criminal record and is domiciled in Washington, DSK should not have been placed in protective custody but should, instead, have been released on bail. He obviously quickly assessed the situation and, through one of his lawyers, sent a letter of resignation to the IMF. On the very next day, against all expectation, a new judge acceded to his request and released him on bail, under house arrest and tight surveillance, pending trial. Indeed, it was no longer necessary to keep him locked up now that the IMF had recovered its freedom to act.

Christine Lagarde salutes all those who believed in Washington’s promises to Mr. Zhou.

French Economy Minister Christine Lagarde, who made a career in the United States defending the interests of the military-industrial complex [7], is sounded out to succeed the defendant at the helm of the IMF, despite Russia’s and China’s cries of outrage.
Incidentally, DSK’s second lawyer Benjamin Brafman didn’t visit him in prison and was not present at the second court hearing. The star of the New York Bar Association departed precipitously for Israel. Officially, it was to celebrate a religious feast with his family [8]. To claim his fees, Mr. Branfman didn’t simply limit himself to lighting candles on Lag BaOmer, he also must have negotiated to obtain assistance for his client.


The Zhou project
Why were Hollywood-like means deployed to block the IMF during 10 days? There are two possible answers, and they may be linked.
In the first place, on 29 March 2009, the governor of the People’s Bank of China, Zhou Xiaochuan, challenged the predominance of the dollar as reserve currency. Deploring that the objective of economist John Maynard Keynes to create an supranational currency (the Bancor) was not achieved at the end of World War 2, he suggested that the IMF Special Drawing Rights could be used to fulfill this function [9]

Mr. Zhaou Xiaochuan has not said his last word.

At the London G20 summit on 2 April 2009, yielding to pressure, the United States agreed to the tripling of IMF resources and to the issuance by that institution of Special Drawing Rights (SDR) for a value of 250 billion dollars. They also acquiesced to the principle of a Financial Stability Council associating the major emerging countries.
This idea was debated at the G8 summit at L’Aquila (Italy) on 8 July 2009. Pushing the pin further, Russia submitted that the new world currency should be minted rather than being virtual. Dmitry Medvedev, who had a few sample of coins minted, slapped them on the table. One side displays the faces of the eight Heads of State, whereas the flip side bears the motto "Unity in Diversity" [10].
The project was submitted to experts from the United Nations Department of Economic and Social Affairs. Their report, in which Professor Popov of the New Economic School of Moscow took part, was examined on 25 April 2010 by a joint IMF and World Bank meeting [11].
This project should have seen the light of day on 26 May 2011 at the G8 summit in Deauville (France). The dollar would thus have met its demise as the reserve currency against the backdrop of an imminent cessation of payments on the part of the U.S. Federal Government. As for Washington, it would have had to give up financing its super-powerful military apparatus through debt and to start concentrating on its domestic restructuring.

The Libyan dinar is the first (and last?) currency backed by gold and by IMF Special Drawing Rights. In 2000, Colonel Gaddafi had thought of creating a pan-African currency based on gold, but was unable to pursue his idea. Also, in 2009, he had spontaneously availed himself of the Zhou project and adopted it unilaterally for his country.

The spanner in the works
Unfortunately, in the final months of this process, military and political initiatives disrupted the plan. Countries such as Russia and China were double crossed. DSK’s arrest exposes Washington’s bad faith, and shows that its concessions were a only ploy to gain time.
Although the exact details of Dominique Strauss-Khan’s device for the creation of the new currency sustained by IMF Special Drawing Rights remain secret, it would appear that Libya had a key role to play. On an experimental level, the Libyan Central Bank was the first to base its currency, the dinar, on gold and later on SDRs. This aspect is especially important considering that Libya possesses one of the largest sovereign wealth funds in the world, exceeding even that of Russia.
By waging war against Libya, France and the United Kingdom generated a theoretical asset freeze targeting not only the Gaddafi family but also the Libyan state. Worse, Paris and London dispatched HSBC bank executives to Benghazi to set up a rebel Libyan central bank and attempt to grab the national assets [12]. Without knowing whether Nicolas Sarkozy and David Cameron got carried away by their own hubris or acted on instructions from their bosses in Washington, the fact remains that the fragile edifice developed by Dominique Strauss-Khan has collapsed.
According to our contacts in Tripoli, at the time of his arrest, DSK was headed for Berlin in order to work out a solution with Chancellor Angela Merkel. Afterwards, he and a German envoy were supposed leave to negotiate with Colonel Gaddafi’s representatives, and very possibly with Gaddafi himself considering that his signature was indispensable for unblocking the situation.
We are now witnessing a financial war on an unprecedented scale. While the economic situation of the United States is on the brink and the dollar could rapidly turn into monkey currency, the agreement concluded at the G8 and endorsed by the G20, implemented by the IMF in conjunction with the World Bank and the international banking circles, of which DSK was the architect, has been suspended. The hegemony of the dollar remains intact albeit more artificially than ever. The dollar which the emerging states wanted to resize but on which the U.S.-Israeli industrial-military complex rests its power.
In that context, what is one man’s honor worth?

Thierry Meyssan French intellectual, founder and chairman of Voltaire Network and the Axis for Peace Conference. His columns specializing in international relations feature in daily newspapers and weekly magazines in Arabic, Spanish and Russian. His last two books published in English : 9/11 the Big Lie and Pentagate. This author's articles  To send a message

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[1] "Dominique Strauss-Kahn, l’homme de « Condi » au FMI", by Thierry Meyssan, Réseau Voltaire, 5 October 2007.
[2] "Operation Sarkozy : how the CIA placed one of its agents at the presidency of the French Republic", by Thierry Meyssan, Voltaire Network, 26 July 2008.
[3] "La NED, vitrine légale de la CIA", by Thierry Meyssan, Réseau Voltaire, 6 October 2010.
[4] "The German Marshall Fund, a Fund for Secret Action Specialists?", by Thierry Meyssan, Voltaire Network, 5 October 2004.
[5] What you don’t know about the Bilderberg-Group, by Thierry Meyssan, Voltaire Network, 9 May 2011.
[6] "Les derniers mots de DSK avant son arrestation", by Michel Colomès, Le Point, 19 May 2011.
[7] "With Christine Lagarde, US Corporations Enter the French Government", Voltaire Network, 29 June 2005.
[8] Strauss-Kahn’s lawyer to Haaretz: Former IMF chief will be acquitted, by Chaim Levinson, Haaretz, 22 May 2011.
[9] "La Chine commence à s’écarter du dollar", Réseau Voltaire, 22 May 2009.
[10] "Medvedev Shows Off Sample Coin of New ‘World Currency’ at G-8", Voltaire Network, 11 July 2009.
[11] Reforming the international financial system (Excerpt from "The World Economic and Social Survey, 2010: Retooling Global Development", drawn up by Christina Bodouroglou, Nazrul Islam, Alex Julca, Manuel Montes, Mariangela Parra Lancourt, Vladimir Popov, Shari Spiegel and Rob Vos), Voltaire Network, 8 July 2010.
[12] "The heist of the century: the assault of the ‘willing’ on Libyan SWFs", by Manlio Dinucci, Voltaire Network, 28 April 2011.

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Related:

Two Distractions With One DSK

Save Us From The Tyranny Of Bankers

From The International Forecaster, May 29 2011
By Bob Chapman

We hope all of our appearances on Greek TV, radio and in the press have helped the educational process and to allow the Greeks to identify who the real culprits are, and what to do about it. It has just been over a year since this tragedy became reality, but we reported on Greece and Italy ten years ago. They both bent the rules to enter the euro zone. We knew then that Goldman Sachs and JPMorgan Chase were assisting them by creating credit default swaps. There were a few Europeon journalist who reported on the issue, but the elitists control the media and few noticed that Greece and Italy were beyond bogus. The events of the past year remind us of the onslaught of the credit crisis, which unfortunately is still with us. What finally brought about trouble for Greece and other euro zone countries was the zero interest rate policy of the Fed and slightly higher rates by the EC. These policies encouraged speculation and caused problems that would have never happened otherwise. In addition, the stimulus measures by both banks were embarked upon to save the financial sectors and in that process promote speculation by the people who caused thee problems in the first place. That began with QE1 and stimulus 1, which we now recognize as our inflation drivers. Wait until QE2 and stimulus 2 appear next year. It will be very shocking.

Just to show you what a loser lower rates are just look at economic progress. There has been no recovery under either QE1 or QE2. Even 4.60% 30-year fixed rate mortgages have not encouraged people to buy homes. They are either broke or they don’t know whether they will be employed five-months or even one year from now, so how can they buy a house? Consumer spending is falling along with wages. The small gains you see are for the most part the result of higher inflation.

Growth moved from the fourth quarter of 2010 of 3.1% to 1.8% in the first quarter of 2011. We had forecast 2% to 2-1/2% growth for 2011. That is little to show for a minimum of $1.8 trillion spent in QE2 and stimulus 2. Without that we probably would have been at a minus 2%. Just think about that. Trillions of dollars spent with little results. Obviously such programs do not work very well. You would have thought the Fed would have found a better way after two such failures. They know what the solution is, but they won‘t put it into motion and that is to purge the system and face deflationary depression. That will happen whether they like it or not, but in the meantime the flipside is 10% inflation headed to 14% by yearend and another greater wave next year, and another in 2013. Unimpressive results is not the word for it. It has been a disaster and the Fed keeps right on doing it. As a result of the discounting of QE3 we wonder what the stock market has in store for us? We would think that a correction would be in the future. If that is so could that negatively affect the economy? Of course it could. All the good news coming, further stimulus by the Fed, will have been discounted. What does the Fed do for an encore? Create more money and credit – probably? Does that mean hyperinflation, of course it does. If the Fed stops the game is over. We are also seeing fewer results from additional stimulus. It is called the law of diminishing returns. In the meantime the dollar goes ever lower versus other currencies, but more importantly versus gold and silver.

If you can believe it, even though the Fed has provided financial flows and assisting speculative flows so Wall Street, banking and hedge funds can glean mega-profits, it still has not provided enough liquidity for additional GDP growth. The small and medium sized businesses have been shut out. The latter participants do not play those games, it is the propriety trading desks, hedge funds and the remainder of the leveraged speculating community that takes advantage of the excess liquidity and the Bernanke put of keeping bonds and stocks up artificially. The Fed and the others are sustaining this process. There are negatives for the Fed and their friends, higher commodity and gold and silver prices. The Fed and banks temporarily took care of that and haven’t quite finished their latest short-term foray in that sector. There are still fears as well regarding Greek debt fears and their CDS, Credit Default Swaps, and those of other euro zone members. They could still blow up in everyone’s faces in a partial if not total default, which is very likely. Banks are on the wrong side of this trade as well as the bond trade, not only with Greece, but with five other nations as well.

In the final analysis papering over the problem never works. The problems also reemerge with new additional problems. The combination of excessive speculation and liquidity and too big to fail is going to end badly, as it always has. De-leveraging will eventually rear its ugly head.

As we said, Greece and others could cause extensive bond and CDS problems and that is not only being reflected in a lower euro, but in higher Greek bond yields of 16-3/8% in their 10-year notes and 24-3/4% in two-year yields, and Portugal, Ireland and Spain are not far behind. The socialists just lost the latest election in Spain in a big way showing the public is fed up with the lies of government and the bankers. The euro is attempting to break $1.40 to the downside as a result of those election results and the Greek impasse. It is obvious that Greece cannot service its debt and reduce its deficit and the other deficient nations are in the same boat. The CDS marketplace would be severely disrupted if there were a sovereign debt default. That fear, of contagion, could be seen in higher rates in Spain, some .30%, the highest upward move this year. Greece, Ireland and Portugal have problems that can never be resolved and Spain, Italy and Belgium are not far behind.

Spain is implementing austerity, but that means like in recent weeks millions have demonstrated in 72 Spanish cities. The 17 autonomous regions have doubled their debt in the last 2-1/2 years. The socialists just did not know when to stop, now they are out of office. Spain is going down. There is no way they can sustain. That should bring the CDS situation front and center. It will also increase unemployment for those 18 to 35 to 40% or more. It is not surprising that half of the protestors were in that age group.

Greek PM George Papandreou, who secretly promised Europe’s elitists bankers that he would sell-off and or pledge Greek state assets, wants to sell stakes in Hellenic Telecommunications, Public Power Corp., Postbank, the ports of Piraeus and Thessaloniki and their local water company. All supposedly worth $70 billion. The bankers, of course, say they are worth far less. They want to buy them for 10% to 20% of what they are worth – so what else is new. The Cabinet went along with the giveaway, as expected, and without a whimper. The EU is demanding all the assets be sold off immediately, so the bankers can buy them as cheaply as possible. The threat by the bankers is if you do not sell and sell fast for a pittance, then we won’t fund loans of $42 billion over the next 2-1/2 to 3 years. If not funded it would be “re-profiled” another new euphemism for default and debt restructuring, or perhaps debt extension.

Then there is the threat that the bankers, the ECB-European Central Bank for the Euro Zone, would refuse to supply the Greek banking system with any further liquidity. They would then admit their new word refilling would mean default. This would end with Greece leaving the euro zone and the euro and total default, the issuance of a new drachma at 50% of the value of the euro and perhaps even leaving the EU, the European Union. Jens Weidmann, the Bundesbank’s new president said no compromise on monetary stability and a correction back to normality and a full separation between monetary and fiscal policy. It is obvious to us that in spite of debt of $620 billion that Germany wants to cut Greece loose. The German voters said that in last month’s elections. The Germans should have accepted default for $0.50 on the dollar offered by the Greeks a year ago. Even if the Greeks sold $50 billion in assets it would be a drop in the bucket, when they cannot possibly pay off the remainder of the debt ever. This shows you how derelict the bankers and sovereign countries were in allowing this debt to be accumulated. In addition Goldman Sacks and JPMorgan Chase hid their problems, via credit default swaps and now these same banks and others want to loot the country.

Tuesday Jean-Claude Junker, chair of the euro zone finance ministers committee had to admit he lied about the secret meeting the bankers had concerning Greece. He is another who says Greece cannot pay its debt under its current debt burden. Both he, and Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, said that any partial or total default would put all of Europe and the euro in jeopardy. In fact, some of these apologists for banks, especially the Germans, have entertained having Germany control Greek budgets and collect taxes. That means you would have a financial SS running things not only in Greece, but also in Ireland and Portugal and eventually in Belgium, Spain and Italy.

It should be noted the ECB paid in capital $14 billion and they hold $183 billion in Greek debt. We would say the ECB is already insolvent. It could be the Ponzi scheme, much like that of the Fed’s will soon come to an end. Some believe that a 50% markdown is in store for Greek debt. That could have worked a year ago, but not low. It is 2/3’s or more of a write down. We can just imagine Greece, Portugal, Ireland, Belgium, Spain and Italy recapitalizing the ECB – forget it. This is why partial or full debt default are out of the question. Just to buy time the ECB will kick the can down the road as long as they can. Those six nations in trouble should all go back to their currencies, default by at least 2/3’s and leave the euro zone.

European bondholders with a 50% debt write off are offside $1.2 trillion for Greek, Portuguese and Irish debt. If we include Spain, Italy and Belgium the 50% write off is $846 billion. That should easily destroy the ECB and the euro zone. We predict that by October changes will have to be made not only in the EU and euro zone, but in the UK and US as well. The battle rages in the euro zone, EU, UK and in the US over overwhelming debt. The debts are all unpayable. This dance of debt could go on for 4 or 5 months. Even a temporary solution is not going to work. The debts are unpayable. Once the lending stops the bottom falls out. The same is true in the US. They cannot raise interest rates and neither can the UK and euro zone, and the issuance of money and credit can only lead to inflation and hyperinflation. The bankers and the politicians in the debtor countries have so enraged the public, and the public now knows what they are up too because of talk radio and the Internet, that we don’t believe there can be settlements. We’ll see by the end of October and perhaps much sooner. All one party or group has to say is forget it we are out of here, and the entire system blows up.

We have seen the extensive damage, as we predicted, that has been caused by one interest rate fits all, which led to a major misallocation of funds and malinvestment. Due to such low interest rates massive debt was accumulated. The EU’s answer is to usurp sovereignty and turn the entire mess over to technocrats, who will most certainly make matters worse.

Political currencies like the euro do not work. It is an unnatural cultural instrument designed to bring people of differing cultures together as one. The order envisioned by European elitists is total amalgamation of all nations at every level. What the professionals not included with the elitists don’t understand is that these Illuminists want world government, at any cost.

The insiders in Europe have realized their plan did not work and that the six countries involved have to be cut loose and the remainder has to stay with the euro. Whether this can be accomplished remains to be seen and we personally believe it is a lost cause. In this withdrawal process bankers and others are going to be exposed and the outcome will be jail time and forfeiture of ill-begotten gains.

Over the past 1-1/2 years we have witnessed a degenerative process in Greece and in other nations as well. The Greek president and his party does not have the votes to give away Greece’s assets to European bankers even though they promised to do so.

Antonis Samaras, opposition leader, is not going to allow that to happen. The standoff could last 4 to 5 months. No Greek property collateralization and severe austerity are not acceptable. Opposition support will not be forthcoming. The formula proposed by the bankers is the same one used by the IMF to loot countries and keep them in perpetual servitude and poverty.

Probably on orders from the bankers the present government has made no effort to restart the economy. Mr. Samaras has called for renegotiation of the bailout deal before anything meaningful can get underway or proceed. He also knows 62% of the voting public is behind what he recommends, and that only 15% are against. That is why a referendum would solidify his position. If PM Papandreou promised the bankers he would sell off Greek assets he should not have done that, because he doesn’t have the power to do so. Worse yet, now Alexis Tsipras of the Left Coalition is calling for Mr. Papandreou’s resignation. Tsipras said what Mr. Papandreou is doing is a crime against the Greek people.

Professors and experts are pushing for a referendum because they say what the PM is trying to do is illegal. Polls already show that 62% of the electorate is against using Greek national assets as collateral. Fifteen percent are for, which means 23% is undecided. The PM does not have a majority in Congress and he cannot win a referendum for the terrorist bankers. These problems could last for months. In the final analysis they will be a partial bankruptcy that could last a year or two. Ultimately such an arrangement won’t work.

We are very proud of Mrs. Theodorakis and Samaras as they save Greece from the tyranny of the bankers.

As an addendum Italy has public debt of 120% of GDP and compromise 17% of the euros total GDP, Spain is 12% and Greece, Ireland and Portugal 6%. If Italy or Spain goes bankrupt the euro is dead. Italy has had a slow economy for ten years.

The top 91 European banks carry $144 billion in Italian debt, or quadruple their holdings of Spanish debt, and 22 times the holdings of Irish debt. This number will give you an idea of the enormity of European bank debt. If the euro fails there will be in a heap of trouble.

We haven’t commented too much regarding the Fed’s secret advance of $30 billion to Goldman Sachs, Credit Suisse and the Royal Bank of Scotland, which is controlled by the Queen of England. This just shows you the Fed is a tool of major banks and in particular European Illuminists banks. There is no transparency unless it is demanded by court order. The Fed is supposed to be an agency of government, when in fact they are agents of the banks who own them. The Fed handed out free cash to their owners. The horror story goes on and the one and the only solution is the termination of the Fed.

Another feature this Friday was that Fitch cut its outlook for Japan to negative from stable, which was not unexpected due to the earthquake.

According to Goldman Sachs 2011 growth is not going to be 4.8% but 4.3%. UBS has cut their estimates from 3.9% to 3.6%. They also believe the market will remain stagnant.

Central banks are raising interest rates, China, India, the Philippines, Chile, Poland, Peru and Malaysia. Others like us are looking for worldwide growth this year of 3.5%.

Small gold and silver coins of one-ounce or less are becoming scarce in Europe. That condition is also moving up to bars.

The IRS, moving aggressively to collect more taxes from small businesses, is telling companies being audited to turn over exact copies of the electronic records kept in their business-software programs, according to a letter from an agency official to the American Institute of CPAs.

The accounting group fears this will force small businesses to turn over customer lists, personnel data, confidential client information and other unrelated information often contained in the off-the-shelf software programs many businesses use to manage all aspects of their finances.

Small-business groups are beginning to push back, saying the agency shouldn't treat small firms like bigger businesses, which usually have elaborate accounting systems and are able to give the IRS only the data the agency seeks. Small businesses, defined by the IRS as those with assets of less than $10 million, often use one off-the-shelf software program such as QuickBooks or Peachtree. A spokesman for Intuit said the Mountain View, Calif., company "was aware that the IRS has purchased copies of small-business accounting software to use in its tax audits." The IRS declined to comment.

"Many accountants are worried this could lead to fishing expeditions" to find problems beyond the scope of the requested information, said Danny Snow, a certified public accountant in Memphis who is active in the American Institute of CPAs, or AICPA. "It's not like what the IRS asks of large companies."

Orders for U.S. durable goods dropped more than forecast in April, reflecting less demand for aircraft and disruptions in supplies of auto parts stemming from the earthquake in Japan.

Bookings for goods meant to last at least three years fell 3.6 percent, the most since October, after a 4.4 percent jump in March, a Commerce Department report showed today in Washington. Economists projected a 2.5 percent drop in April, according to the median forecast in a Bloomberg News survey. A measure of demand for business equipment declined by the most this year.

Bookings for Boeing Co. aircraft slumped last month and vehicle makers slowed production due to a components shortage that may be short-lived as Japanese manufacturers recover. At the same time, rising overseas sales at Deere & Co. and General Electric Co. indicate factories will keep expanding.

There is “a slowing, but not a dramatic slowing in manufacturing,” Bricklin Dwyer, an economist at BNP Paribas in New York, said before the report. “The inventory rebuilding cycle has tapered off and now we have a normalization. Manufacturing will still be an important component of growth going forward.”

Orders excluding the volatile transportation equipment category decreased 1.5 percent in April after a 2.5 percent gain. The median projection in the Bloomberg survey was for a 0.5 percent rise.

Estimates of total durable goods orders in the Bloomberg survey of 81 economists ranged from a drop of 5.7 percent to a gain of 2 percent. Economists’ forecasts for orders excluding transportation ranged from a decline of 1.2 percent to an increase of 1.8 percent.

New orders for manufactured durable goods in April decreased $7.1 billion or 3.6% to $189.9 billion. Excluding transportation, new orders decreased 1.5%. Excluding defense, new orders decreased 3.6%. Transportation equipment, also down two of the last three months, had the largest decrease, $4.9 billion or 9.5% to $46.7 billion.

Inventories of manufactured durable goods in April, up sixteen consecutive months, increased $3.2 billion or 0.9% to $350.5 billion. This was at the highest level since the series was first published on a NAICS basis in 1992. Transportation equipment, also up sixteen consecutive months, had the largest increase, $1.0 billion or 1.0% to $106.1 billion. This was also at the highest level since the series was first published on a NAICS basis in 1992.

Slower economic activity drove rates on fixed-rate mortgages down for the sixth week in a row, Freddie Mac’s chief economist said on Thursday.

The 30-year fixed rate hasn’t been lower since early December. The loan averaged 4.6% for the week ending May 26, down from 4.61% last week and 4.84% a year ago.

Fifteen-year fixed-rate mortgages averaged 3.78% this week, down from 3.8% last week and 4.21% a year ago. That loan’s rate hasn’t been lower since late November.

Rates on adjustable-rate mortgages also fell this week, with the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaging 3.41% this week, down from 3.48% last week. The ARM averaged 3.97% a year ago.

And 1-year Treasury-indexed ARMs averaged 3.11% this week, down from 3.15% last week and 3.95% a year ago.

To obtain the rates, the fixed-rate mortgages required payment of an average 0.7 point, while the ARMs required payment of an average 0.5 point. A point is 1% of the mortgage amount, charged as prepaid interest.

“Fixed mortgage rates eased slightly for the sixth consecutive week amid reports of slower economic activity. The index of leading indicators fell 0.3% in April and represented the first monthly decline since June 2010,” said Frank Nothaft, vice president and chief economist of Freddie Mac, in a news release. “In addition, the Federal Reserve banks reported less business and manufacturing activity in Philadelphia, Chicago and Richmond.”

However, Nothaft said that house-price indexes may be nearing a bottom.

“On a national basis, prices fell 0.3% between February and March, which was the smallest decline since November 2009, according to the Federal Housing Finance Agency. In addition, four of the nine Census Regions exhibited positive growth, compared to none in February.

“Separately, the Mortgage Bankers Association reported a further reduction in the serious delinquency rate (90 or more days plus foreclosures) in the first quarter, which stood at the lowest reading since the second quarter of 2009.”

Sales of homes in some stage of foreclosure declined in the first three months of the year, but they still accounted for 28 percent of all home sales a share nearly six times higher than what it would be in a healthy housing market.

Foreclosure sales, which include homes purchased after they received a notice of default or were repossessed by lenders, hit the highest share of overall sales in a year during the first quarter, foreclosure listing firm RealtyTrac Inc. said Thursday.

"It's an astronomically high number," said Rick Sharga, a senior vice president at RealtyTrac. "In a normal market, you're looking at the percentage of homes sold in foreclosure to be below 5 percent."

In all, 158,434 homes in some stage of foreclosure were sold in the first quarter, down 16 percent from the last three months of 2010 and down 36 percent versus a year ago. Sales of all other types of homes also declined sharply, according to RealtyTrac's figures, which differ from other home-sales estimates.

While the number of bank-owned properties sold declined, they grew as a share of all home sales. Bank-owned homes accounted for nearly 19 percent of all sales, up from 17 percent in the fourth quarter and up from 18 percent a year ago, the firm said.

That's not good news for the housing market.