On the day that a new American President was inaugurated, the Lords of the City of London decided to quietly announce in their newspaper of record, the Financial Times, that there are about to be major shifts in policies and practices.
On Monday the
government declared total war on the economic crisis, and not a moment too soon. A long phony war ended abruptly with the financial system’s near-meltdown in October. Now, in the next phase of the crisis, the government is thankfully using a full arsenal of ammunition. UK
The October intervention was designed in haste but succeeded in staving off a collapse of the banks. What it failed to do was to restart lending. The credit crunch has now worsened to the point where the real economy is harming the banks, not just the other way around. . . .
The government must immediately get to grips with the banks’ balance sheets and make sure that its remedies are indeed large enough. It must stand ready to recapitalise banks further, even to the point of full public ownership of banks that turn out to be insolvent.
Even a perfect bank rescue will not by itself end the crisis; the problems have spread too widely. It can, however, ease the credit crunch and help fiscal and monetary policy revive the real economy. Letting the Bank of England trade corporate securities gives it a tool later to engage in quantitative easing if further interests rate cuts are not enough. In total war, full mobilisation is the only way. (Emphasis mine)
This is the EDITORIAL of the Financial Times ?!?!? My God, the world has shifted on its axis. The fine "gentlemen" of the City of
The key to understanding this radical shift in the oligarchy’s thinking is to realize that this is not just about economics, or saving their financial power. This is about world domination and the continued existence of Anglo-American power.
The expectation was the trillions of dollars and pounds thrown at the crises since October would stabilize Wall Street and the City of
But these crises are much, much worse than 1929, because the shadow banking system had been allowed to create assets that were completely fictitious (as Michael Lewis described in his Portfolio article last month). We’re talking about assets – trillions of dollars of financial derivatives, especially the credit default swaps explained by Lewis - that were not just inflated, but completely fake. Derivatives had grown to some $160 trillion – how could that ever be bailed out? Oh, but they tried, and now are forced to admit that it can’t be done.
So, the equity markets did not bounce back. The banking situation has actually gotten worse, as the collateral damage done to the real economy has become so severe that it is actually curtailed demand for credit; i.e., "the real economy is harming the banks." Wall Street and the City of London are now in worse shape than they were in October. So now, in desperation, they are willing to jettison the very tenets of their economic theology. So, suddenly, there are calls from everywhere for nationalizing the banks.
Even worse, the same financial follies have also destroyed the
No, this is about much more than the financial collapse now. This has become a desperate struggle by the oligarchy to maintain basic control of the world economy and its resources. This has become a fight for existence itself.