But here’s the thing – this man apparently has a history of treating women horribly. From another maid in Mexico, to a reporter doing an interview, to prostitutes in New York City, he has a history of rape in the worst cases, and rough treatment in the cases of the prostitutes (provided by the same madam, Kristin Davis, who provided prostitutes to former NY Governor, Eliott Spitzer).n A recent book details the rape of the maid in Mexico (which went unreported), along with 14 other women who claim sexual assaults by this man.

Aforementioned madam, Ms. Davis, would not provide any more prostitutes to Strauss-Kahn due to his abusive behavior. The last time was when Strauss-Kahn was going to NYC for a conference with President Clinton:

[snip]Kristin Davis said she provided young women for the IMF chief in 2006, as he ran for the French Socialists’ presidential nomination, and that one complained about his “aggressive” behaviour.

“He was a client of my agency,” she told The Daily Telegraph. “When men abuse women I’m no longer going to protect their identities”.

[...]

Miss Davis, 35, who claims to have a long list of celebrity clients, said Mr Strauss-Kahn called her directly on her mobile phone and paid $1,200 cash for two-hour sessions in hotel rooms.

“He wanted an ‘All-American girl’, with a fresh face, from the mid-West,” she said. “A girl in January 2006 complained he was rough and angry, and said she didn’t want to see him again”.

In September 2006, Mr Strauss-Kahn travelled to New York for a conference hosted by Bill Clintonn September 2006, Mr Strauss-Kahn travelled to New York for a conference hosted by Bill Clinton. Miss Davis claims that month, she sent him a Brazilian-born prostitute who reported that “he was rough”, said Miss Davis, adding: “She told me not to send any new girls to him.” [snip]

Well, I would think not. Sheesh.

As to the other women, I do have a nagging question, which the author of this Telegraph article alluded to, as well:

A deluge of fresh allegations of sexual misbehaviour engulfed Dominique Strauss-Kahn yesterday.

The 62-year-old International Monetary Fund chief, who is accused of the attempted rape of a chambermaid, is said to have targeted young students, ‘behaved like a gorilla’ with an actress and had flings with the widow of an Italian academic.
As Strauss-Kahn languished on suicide watch in New York’s Rikers Island prison following the alleged sexual assault at a Manhattan hotel, the new claims sent further shockwaves reverberating through France and the financial world.

The revelations will trigger more questions about how the IMF’s managing director escaped censure during his rise to become one of the world’s most powerful money men and a potential president of France.[snip]

NO FREAKING KIDDING. That is what I would like to know. With all of these women, in a number of countries, being on the receiving end of, at best, inappropriate advances, and at worse, rape, how is it that NO ONE went after this man?? Go check out this article, and see the long list of women that we KNOW about who had dealings with Strauss-Kahn, just to give you an idea:

[snip]The mother of Tristane Banon, a Parisian novelist who claims to have been subjected to a frenzied sex attack by Strauss-Kahn nine years ago, used the Facebook website to deliver a scathing attack on her daughter’s alleged aggressor.

[...] French socialist politician Auriele Filippetti said the IMF chief had groped her in 2008 and from then on vowed to make sure she was never alone in a room with him.

Piroska Nagy, a Hungarian economist who had a brief affair with Strauss Kahn when both were married in 2008, told investigators that he had a problem and that she felt coerced into sleeping with him because of his senior position and aggressive advances. [snip]

Now that is a story we have heard all too often, isn’t it?

And what was the response to Strauss-Kahn’s arrest in France? Now, let me just say – I love France. I have had great interactions with the French when I have visited there, so this is disturbing to me:

[snip]President Sarkozy is said to have rolled his eyes and said ‘We did warn him’ after hearing of his arrest.

[...]

Most French people believe fallen Strauss-Kahn is the ‘victim of a plot’ over the charge that he tried to rape a hotel chambermaid.

A poll found that 57 per cent of French people think he was ‘framed’ in a bid to ruin him.

Among socialist voters, 70 per cent believe the Left-wing politician has been set up. (Click here to read the rest.)

I guess that answers my question as to why no one has censured this man, or brought charges against him before: because they will not be believed, and he will be held blameless, considered the “victim” of some nefarious plot, not as an (alleged) rapist/serial sexual abuser.

Though the President of France saying they “warned him” is telling – about just what DID they warn him? And was their concern for HIM, or for the WOMEN? I think we can guess the answer to that, can’t we?

Well, hopefully he will not get away with it this time, though. It is far past time, if these claims are accurate (and I have no reason to believe they aren’t, especially since they are coming from all different sectors from a number of different women in a number of different countries). I would not be at all surprised to see more women come forward to levy charges against Strauss-Kahn. Thank heavens for the courage of the maid in NYC, though had other women done so previously, perhaps she would have been spared this horrendous fate, at least at the hands of Strauss-Kahn (allegedly).

Perhaps now, he will get his comeuppance, not just a roll of the eyes and a “warning.” One can hope, anyway…

While the focus of the European bailout has been on the European Central Bank, the European Union, and the IMF, little attention is being given to swap lines which were reopened between the Federal Reserve and the European Central Bank.

The ECB has steadfastly fought the idea of breeching the principles which formed the European common currency (the Euro) in order to fashion a bailout for the EU. Did the ECB crater to political pressure by the EU? Or, did the risks of the bailout shift from the ECB to another large central bank? Such as? The Federal Reserve!

Adding fuel to this fire is the fact that the Fed reopened swap lines with the ECB and other central banks just yesterday. The Wall Street Journal reports, Fed’s Swap Decision Could Ratchet Up Political Pressure:

The U.S. Federal Reserve’s decision to reopen swap lines with the European Central Bank and central banks in Japan, Switzerland, England and Canada puts it in a delicate political position.

The U.S. Congress is in the midst of rewriting a financial regulatory overhaul that could rein in the Fed amid sharp criticism of its actions before and during the financial crisis. The overseas lending program it reopened Sunday in response to pleas from Europe has been among the programs lawmakers have criticized, with some suggesting it is bailing out foreign banks and other saying the Fed is too secretive about details.

Is the American taxpayer ultimately bailing out the EU? While the German populace is livid at the idea of providing bailout funds for the wastefulness and fiscal follies in other EU countries, has the wool just been pulled over the American public’s eyes?

Will the America public ever learn what is going on here?

Audit the Fed!!!

Hat tip to loyal Sense on Cents reader Matt for providing the following video from last summer:

LD

Well, it seems like it is finally happening. The world community to which Obama pandered during the campaign is starting to realize what many Americans now know (and some of us always did): He’s not all he’s cracked up to be.

In this article from Spiegel, “Obama’s Nice Guy Act Gets Him Nowhere on the World Stage,” they seem to finally be clueing in:

When he entered office, US President Barack Obama promised to inject US foreign policy with a new tone of respect and diplomacy. His recent trip to Asia, however, showed that it’s not working. A shift to Bush-style bluntness may be coming.

There were only a few hours left before Air Force One was scheduled to depart for the flight home. US President Barack Obama trip through Asia had already seen him travel 24,000 kilometers, sit through a dozen state banquets, climb the Great Wall of China and shake hands with Korean children. It was high time to take stock of the trip.

Barack Obama looked tired on Thursday, as he stood in the Blue House in Seoul, the official residence of the South Korean president. He also seemed irritable and even slightly forlorn. The CNN cameras had already been set up. But then Obama decided not to play along, and not to answer the question he had already been asked several times on his trip: what did he plan to take home with him? Instead, he simply said “thank you, guys,” and disappeared. David Axelrod, senior advisor to the president, fielded the journalists’ questions in the hallway of the Blue House instead, telling them that the public’s expectations had been “too high.”

The mood in Obama’s foreign policy team is tense following an extended Asia trip that produced no palpable results. The “first Pacific president,” as Obama called himself, came as a friend and returned as a stranger. The Asians smiled but made no concessions.

The “first Pacific president” – please. Could this man possibly have a more inflated sense of himself?? Not to interrupt myself or anything, but check out what Charles Krauthammer had to say about that false claim:

“First Pacific President,” indeed. Please.

Back to the “Emperor Has No Clothes” article:

Lost Some Stature

Upon taking office, Obama said that he wanted to listen to the world, promising respect instead of arrogance. But Obama’s currency isn’t as strong as he had believed. Everyone wants respect, but hardly anyone is willing to pay for it. Interests, not emotions, dominate the world of realpolitik. The Asia trip revealed the limits of Washington’s new foreign policy: Although Obama did not lose face in China and Japan, he did appear to have lost some of his initial stature.

In Tokyo, the new center-left government even pulled out of its participation in a mission which saw the Japanese navy refueling US warships in the Indian Ocean as part of the Afghanistan campaign. In Beijing, Obama failed to achieve any important concessions whatsoever. There will be no binding commitments from China to reduce greenhouse gas emissions. A revaluation of the Chinese currency, which is kept artificially weak, has been postponed. Sanctions against Iran? Not a chance. Nuclear disarmament? Not an issue for the Chinese.

The White House did not even stand up for itself when it came to the question of human rights in China. The president, who had said only a few days earlier that freedom of expression is a universal right, was coerced into attending a joint press conference with Chinese President Hu Jintao, at which questions were forbidden. Former US President George W. Bush had always managed to avoid such press conferences.

Understand this: when the author writes that the “White House did not even stand up for itself…” it means that the White House is not standing up for US, the American people. And Obama doing a press conference when Bush had managed to get out of them – for eight years – shows again how woefully inept and ill-prepared Obama is, even in comparison to Bush.

So, just what did Obama accomplish? Not a whole lot:

Relatively Unsuccessful

A look back in time reveals the differences. When former President Bill Clinton went to China in June 1998, Beijing wanted to impress the Americans. A press conference in the Great Hall of the People, broadcast on television as a 70-minute live discussion, became a sensation the world over. Clinton mentioned the 1989 Tiananmen Square massacre, when the government used tanks against protestors. But then President Jiang Zemin defended the tough approach taken by the Chinese Communists. At the end of the exchange, the Chinese president praised the debate and said: “I believe this is democracy!”

Obama visited a new China, an economic power that is now making its own demands. America should clean up its government finances, and the weak dollar is unacceptable, the head of the Chinese banking authority said, just as Obama’s plane was about to land.

Obama’s new foreign policy has also been relatively unsuccessful elsewhere, with even friends like Israel leaving him high and dry. For the government of Israel Prime Minister Benjamin Netanyahu, peace is only conceivable under its terms. Netanyahu has rejected Obama’s call for a complete moratorium on the construction of settlements. As a result, Obama has nothing to offer the Palestinians and the Syrians. “We thought we had some leverage,” says Martin Indyk, a former ambassador to Israel under the Clinton administration and now an advisor to Obama. “But that proved to be an illusion.”

Even the president seems to have lost his faith in a genial foreign policy. The approach that was being used in Afghanistan this spring, with its strong emphasis on civilian reconstruction, is already being changed. “We’re searching for an exit strategy,” said a staff member with the National Security Council on the sidelines of the Asia trip.

Gee, you mean that whole experience thing about which Hillary Clinton, then John McCain, spoke actually MEANT something?? Good grief. Show of hands of how many of us tried to tell them: Yep, that’s what I thought.

There is probably one person on the face of the earth who is going to think this is a good comparison, and you’ll know who right now:

‘A Lot Like Jimmy Carter‘

An end to diplomacy is also taking shape in Washington’s policy toward Tehran. It is now up to Iran, Obama said, to convince the world that its nuclear power is peaceful. While in Asia, Obama mentioned “consequences” unless it followed his advice. This puts the president, in his tenth month in office, where Bush began — with threats. “Time is running out,” Obama said in Korea. It was the same phrase Bush used against former Iraqi dictator Saddam Hussein, shortly before he sent in the bombers.

There are many indications that the man in charge at the White House will take a tougher stance in the future. Obama’s advisors fear a comparison with former Democratic President Jimmy Carter, even more than with Bush. Prominent Republicans have already tried to liken Obama to the humanitarian from Georgia, who lost in his bid to win a second term, because voters felt that he was too soft. “Carter tried weakness and the world got tougher and tougher because the predators, the aggressors, the anti-Americans, the dictators, when they sense weakness, they all start pushing ahead,” Newt Gingrich, the former Republican speaker in the House of Representatives, recently said. And then he added: “This does look a lot like Jimmy Carter.” (Translated from the German by Christopher Sultan)

Given how much water Jimmy Carter has carried for Oama, even disparaging the BEST Democratic candidate to do so, I just wonder how he will feel when he discovers Obama fears being compared to him more than George W. Bush??? You know I used to love Jimmy Carter until he started to trash Hillary Clinton, and called a bunch of us a bunch of racists. But I bet he didn’t see that coming for all the backstabbing he did. Welcome to the “Under The Bus” club, President Carter. It was only a matter of time.

It was also only a matter of time before the shine started to tarnish. But even more than that, this man is supposed to be working on behalf of our nation. The work he is doing is what many of us knew was going to happen from someone so wet behind the ears, so concerned what people thought of HIM rather than being concerned about what he could do for the people. Not only do we know it, but now the world knows it. Even more than that, they know they can do pretty much as they wish since Obama doesn’t have the chops to stand up to them. Well, that’s just jake, isn’t it?

Is it 2012 yet?

Join me from 8:00 to 9:00 p.m. ET on NoQuarter Radio for Sense on Cents with Larry Doyle. These are truly historic times in the global economy. Let’s “navigate the economic landscape” without the pandering or nonsense found elsewhere!

Tonight I have a very special guest: Dr. Paulo Vieira da Cunha, renowned emerging market economist of Tandem Global Partners.

Former Deputy Governor of the Central Bank of Brazil and one of three Monetary Policy Committee Members, Dr. Vieira da Cunha was Brazil’s representative at the G-20 meeting of Central Bank Governors and Finance Ministers until January 2008. Dr. Vieira da Cunha is a visiting scholar at Columbia University and a consultant to the International Monetary Fund (IMF).

For nearly a decade, he produced and managed research on Latin America for the global securities industry, first at Lehman Brothers and later at HSBC where he managed research teams in Buenos Aires, Mexico City, New York, and Sao Paulo.

Dr. Vieira da Cunha had a distinguished career at the World Bank where he was Senior Adviser to the Chief Economist, Nobel Laureate Joe Stiglitz from 1993 to 1996. From 1996 to 1998 he was the Lead Economist for Mexico and also had operational assignments on Russia, Turkey, and Uganda.

Prior to joining the World Bank, he was the CFO of a large state enterprise in the state of Sao Paolo (Prodesp) as well as advisor to the Secretary of Budget and Finances on the issues of renegotiation of domestic and foreign debt. Earlier in his career he held senior positions in the government of the State of Sao Paolo.

With the emerging markets leading the world at this juncture, there is much to navigate in this sector of our economic landscape. Dr. Vieira is uniquely qualified to provide perspectives and insights not commonly found.

Call in to share your thoughts or ask questions at (377) 647-0792. I look forward to having you join me for NoQuarter Radio’s Sense on Cents with Larry Doyle.

LD

John Batchelor: From my blog. Don’t miss Larry Johnson on my show Sunday nights. Watch for NoQuarter’s promo on Sundays.

UPDATE: It’s remarkable that the following comes from the very liberal, Soros-funded Think Progress, in its “Under The Radar” section:

ECONOMY — TARP OVERSIGHT PANEL: TREASURY MAY NOT BE ACKNOWLEDGING THE DOWNTURN’S ‘DEPTH’:

According to new forecasts set to be released by the International Monetary Fund (IMF), “toxic debts racked up by banks and insurers could spiral to $4 trillion.” With that harrowing number hanging overhead, the Troubled Asset Relief Program’s Congressional Oversight Panel released its six-month report today. The panel, chaired by Harvard Law School professor Elizabeth Warren, questioned Treasury Secretary Timothy Geithner’s assumption that the toxic assets clogging the banks are merely economically depressed, noting that Treasury’s response “fails to acknowledge the depth of the current downturn.”

“If the economic crisis is deeper than anticipated, it is possible that Treasury will need to take very different actions in order to restore financial stability,” wrote the panel. The Warren panel also noted that
Treasury “has not explained its assumption that the proper values for these assets are their book values.” As estimates regarding the number of toxic assets climb higher and higher — with Nouriel Roubini claiming there are $3.6 trillion worth — it is becoming clearer just how much depends on Treasury finding a workable plan for cleaning up the banks. As IMF managing director Dominique Strauss-Kahn said, “[Y]ou never recover before the cleaning up of the banking sector has been done.” And right now, Geithner’s clean up is premised on an assumption with which more and more people are taking issue.

Let’s review the objectives and commitments, each followed by questions and/or comments that I have:

1. Address countries providing tax havens.
My question: who will police?

2. Develop a Financial Accounting Stability Board to regulate currently unregulated financial entities, primarily hedge funds.
My questions: how will it be staffed, operated, and judgments adjudicated? (I don’t like FASB as the acronym to be confused with Federal Accounting Standards Board)

3. Develop global policies and outline to address compensation
My questions: who and how will this be implemented? how will it be regulated? will there be punishments for those not participating?

4. Develop a global systemic risk oversight body.
My Question: who and how?

5. Develop a common global approach to address toxic assets within the banks.
My Questions: will this approach be akin to the FASB relaxation of the mark-to-market? How will it be implemented? Will it employ free market principles or manipulate those principles?

6. Utlilize a global growth and recovery stimulus plan of $5 trillion via global central banks.
My Question: will every country and region go along with this?

7. Global central banks will maintain a fiscal expansionary posture.
My Question: what if inflation increases?

8. The IMF and other international agencies will receive $1 trillion. $750 billion directed to the IMF, $250 billion of which will be in the form of Special Drawing Rights. The G-20 will look for these international institutions to strengthen their independence. The G-20 looks for emerging economies and developing countries to get a greater voice in these international institutions.
My Comment: China just won BIG RIGHT HERE!!

9. The G-20 countries will look to kickstart international trade.
My Question/Comment: Congratulations!! How do they plan on doing this in the face of the global protectionist measures and financial protectionism being enacted everywhere?

10. The G-20 will meet in New York City again in September.
My Comment: is this really a very good idea? Can you imagine the rioting that may ensue there? I wonder if body piercing is optional to get involved in the fun?

In summary, the global equity markets are responding positively to these commitments along with the relaxation of the mark-to- market. I am concerned that free market principles have taken a back seat to potentially excessive political and accounting manipulation. That said, the global economy and global banking system will receive significant hard dollars along with significant accounting cover to help itself heal. My personal opinion is world leaders are trying to buy time but will risk real inflation to heal the global recession.

I will say, though, there will certainly not be a dearth of material for Sense on Cents to address as we navigate the economic landscape!!

LD

There’s been a lot of finger wagging at the unruly class recently. It seems we, the Main Street Taxpayers, have it all wrong. Our outrage over the AIG bonuses is class warfare. Our ignorance over the workings of government and finance is self evident. Our anger over our lost jobs, homes and 401k’s is understandable, but misplaced. Our bus tours are inappropriate. Our pitchforks and tea parties are political theater. Our whining over unfairness is unbecoming.

So, basically we’ve been told to sit down, shut up, and be patient. Because this was all our fault. We the underfunded, overspent, and irresponsible taxpayers are to blame for this financial crisis. Or so the story goes according to the Wall Street pork masters, politicians and pundits (a.k.a. the cowardly, corrupt and clueless.).

But strangely enough, some other voices are starting to be heard above the din. And equally strange they are telling a far different story. One that points the fingers of blame not so much at the Main Street Taxpayers (although none of us remain completely blameless), as at the Wall Street Oligarchs.

And in case you don’t remember from your long ago civics classes… An Oligarchy, according to Merriam-Webster, is a government in which a small group exercises control especially for corrupt and selfish purposes.

In The Nation, Christopher Hayes warns us of what happens when Experts of the World Unite and weigh down one side of the balance sheet.

The outrage over the AIG bonuses occasioned a great deal of commentary about a resurgent populism, often in cluck-clucking tones of disapproval. But the rage, frustration and visceral sense of injustice associated with the bailouts are only part of the story. There’s also the sense that an implicit social contract–by which we assign complicated technical matters to a class of talented experts and in return they figure things out–has been torn to bits.

Remarkably, the small class of (mostly) men running these failed financial institutions seem just as aggrieved. Instead of reacting to their failure with shame or apologies, many exude distrust of and contempt for the great unwashed who don’t understand their brilliance.

-snip-

… the financial elites are ideologically bankrupt, intellectually discredited and morally debased. They have no reputational capital and inspire no confidence. And yet, just as the deftly named “legacy assets” continue to pollute the balance sheets of the major financial institutions, so too do these legacy elites continue to lurk on one side of the balance sheet of democracy. In other words, even if they aren’t worth listening to, they still wield power. They can still bring the whole thing down.

Which begs the question – if the financial elites are bankrupt, discredited and debased, why do they still wield so much power?

Well, it seems the key to their power is in the very nature of an Oligarchy. Oligarchs need enablers. Particularly, government and media enablers. The enablers are built into the foundation of the Oligarchy and then become embedded in the building blocks of all that transpires. So in the end, the enablers’ own survival requires that they endless serve and protect the Oligarchs.

And in the US, the Wall Street Oligarchs took over during The Quiet Coup explains Simon Johnson, former chief economist of the International Monetary Fund, in The Atlantic.

Of course, the U.S. is unique. And just as we have the world’s most advanced economy, military, and technology, we also have its most advanced oligarchy.

In a primitive political system, power is transmitted through violence, or the threat of violence: military coups, private militias, and so on. In a less primitive system more typical of emerging markets, power is transmitted via money: bribes, kickbacks, and offshore bank accounts. Although lobbying and campaign contributions certainly play major roles in the American political system, old-fashioned corruption—envelopes stuffed with $100 bills—is probably a sideshow today, Jack Abramoff notwithstanding.

Instead, the American financial industry gained political power by amassing a kind of cultural capital—a belief system. …Over the past decade, the attitude took hold that what was good for Wall Street was good for the country. The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world.

One channel of influence was, of course, the flow of individuals between Wall Street and Washington. Robert Rubin, … Henry Paulson, … John Snow, …Dan Quayle … Alan Greenspan.

These personal connections were multiplied many times over at the lower levels of the past three presidential administrations, strengthening the ties between Washington and Wall Street. …

…Throughout my time at the IMF, I was struck by the easy access of leading financiers to the highest U.S. government officials, and the interweaving of the two career tracks. …

A whole generation of policy makers has been mesmerized by Wall Street, always and utterly convinced that whatever the banks said was true. …

Of course, this was mostly an illusion. Regulators, legislators, and academics almost all assumed that the managers of these banks knew what they were doing. In retrospect, they didn’t. …To date, the U.S. government, in an effort to rescue the company, has committed about $180 billion in investments and loans to cover losses that AIG’s sophisticated risk modeling had said were virtually impossible.

Wall Street’s seductive power extended even (or especially) to finance and economics professors, historically confined to the cramped offices of universities and the pursuit of Nobel Prizes. As mathematical finance became more and more essential to practical finance, professors increasingly took positions as consultants or partners at financial institutions. … This migration gave the stamp of academic legitimacy (and the intimidating aura of intellectual rigor) to the burgeoning world of high finance.

And so the experts were all in place and the Wall Street Oligarchs took hold. Embedding themselves in the culture at large. Spinning a mystique of Wall Street that became celebrated and enshrined in books, movies and songs.

…In a society that celebrates the idea of making money, it was easy to infer that the interests of the financial sector were the same as the interests of the country—and that the winners in the financial sector knew better what was good for America than did the career civil servants in Washington. Faith in free financial markets grew into conventional wisdom—trumpeted on the editorial pages of The Wall Street Journal and on the floor of Congress.

From this confluence of campaign finance, personal connections, and ideology there flowed, in just the past decade, a river of deregulatory policies that is, in hindsight, astonishing:

• insistence on free movement of capital across borders;
• the repeal of Depression-era regulations separating commercial and investment banking;
• a congressional ban on the regulation of credit-default swaps;
• major increases in the amount of leverage allowed to investment banks;
• a light (dare I say invisible?) hand at the Securities and Exchange Commission in its regulatory enforcement;
• an international agreement to allow banks to measure their own riskiness;
• and an intentional failure to update regulations so as to keep up with the tremendous pace of financial innovation.

The mood that accompanied these measures in Washington seemed to swing between nonchalance and outright celebration: finance unleashed, it was thought, would continue to propel the economy to greater heights.

A party mood settled in and the congo line was formed, sweeping everyone along in its wake. Occasionally someone stubbed a toe or stumbled briefly, but the rest of the revelers hardly noticed. The congo line grew bigger and bolder. The music player faster. The step became quicker. And then the inevitable happened. The line of thrill-seeking revelers became too large to manage and too unweildly to maintain. It began to swing wildly in every direction. The revelers could not keep up and congo line bust open spewing revelers in every direction.

And in the aftermath, we are facing signs that say Welcome to America, the World’s Scariest Emerging Market explains former deputy director of the International Monetary Fund’s Policy and Review Department, Desmond Lachman in The Washington Post. (The term Emerging Markets is used to describe a nation’s social or business activity in the process of rapid growth and industrialization. Political scientist Ian Bremmer defines an emerging market as “a country where politics matters at least as much as economics to the markets.”)

… despite their supreme arrogance, the country’s leaders never had a coherent economic strategy and that major decisions were always made on the run. I never thought that was how policy was made in the United States — until, that is, I saw how totally at sea Treasury Secretaries Henry Paulson and Timothy F. Geithner and Federal Reserve Chairman Ben S. Bernanke have appeared so many times during our country’s ongoing economic and financial storm.

The parallels between U.S. policymaking and what we see in emerging markets are clearest in how we’ve mishandled the banking crisis. We delude ourselves that our banks face liquidity problems, rather than deeper solvency problems, and we try to fix it all on the cheap just like any run-of-the-mill emerging market economy would try to do. And after years of lecturing Asian and Latin American leaders about the importance of consistency and transparency in sorting out financial crises, we fail on both counts…

…I thought then, that the United States was not similarly plagued by crony capitalism! However, watching Goldman Sachs’s seeming lock on high-level U.S. Treasury jobs as well as the way that Republicans and Democrats alike tiptoed around reforming Freddie Mac and Fannie Mae — among the largest campaign contributors to Congress — made me wonder if the differences between the United States and the Asian economies were only a matter of degree.

Yet how often do U.S. leaders respond to growing signs of economic dysfunctionality by spouting nationalistic rhetoric … instead of facing our problems we extol the resilience of the U.S. economy, praise the most productive workers in the world, and go on and on about America’s inherent ability to extricate itself from any crisis. And we ignore our proclivity as a nation to spend, year in year out, more than we produce, to put off dealing with long-term problems, and to engage in grandiose long-term programs that as a nation we can ill afford.

A singular characteristic of an emerging market heading for deep trouble is a seemingly suicidal tendency to become overly indebted to foreign creditors.

In part two, Facing Down the Wall Street Oligarchs, I’ll recap where the US now stands in this financial crisis and explore what needs to happen next with both the Main Street Taxpayers and the Wall Street Oligarchs.

Major H/T to LisaB and Mountainaires for bringing to my attention many of the articles used both directly and indirectly in part one & part two. All of these articles are well worth a full reading and I respectfully urge readers to find the time if at all possible.

1) At BriefingRoom.TheHill.com, Judd Gregg says the U.S. couldn’t even join the E.U. because of the U.S.’s debt levels.

“We won’t even be able to get into the E.U. if we wanted to,” Gregg said this morning on MSNBC, “because our government is so large and so huge.”

The European Union’s Stability and Growth Pact (SGP) adopted in 1997 requires a budget deficit to be less than three percent, and requires a national debt beneath 60 percent of Gross Domestic Product (GDP).

“We’ve been lectured by France on the fact that we’re not fiscally responsible right now,” Gregg, the would-be commerce secretary, noted with incredulity.

That hurts.

2) The Weeklystandard.com notes that Obama’s been indulging in “just words.”

Some of what Obama says is just pablum and isn’t supposed to be taken as serious economic thought. At least I hope not. Rather, it might be called economic morale-boosting. Nothing wrong with that, unless he actually believes what he’s saying.
———-
Nor is Obama up to speed on tax incentives. He dismissed the fear of charities that a proposed reduction in the tax deductibility of donations by upper middle class and wealthy Americans would curb giving. “If it’s really a charitable contribution, I’m assuming that that shouldn’t be a determining factor as to whether you’re giving that $100 to the homeless shelter down the street.”

That’s easy for him to say. Every charity from museums and arts groups to hospitals is terrified by the proposed tax change. And it’s a fair assumption that they know a tax disincentive when they see one. The question is whether Obama does. Perhaps not.

Perhaps charities better front load all they can get from donors now. Obama seems to think a tax deduction doesn’t matter AT ALL. Maybe not for him. Last I heard, his tax returns showed very little charitable giving.

3) The Atlantic has a stunning piece about the financial mess. Here’s the summary:

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

I’ve often wondered if oligarchy isn’t the right term for what and/or who is driving U.S. policy.

4) Realclearpolitics has an interesting piece about the current economy and the lessons learned from the 30s.

Anybody who wants to pontificate about the economy, or the budget, or the deficit right now should think about three questions:

1. What changed the Depression from an ordinary recession into a worldwide catastrophe? (And how bad was it, anyway?)

2. Is this crisis the same or different?

3. If there’s risk of another depression, how do we stop it?

Interesting stuff.

I truly relish the honest perspectives offered by a number of our Thought Leaders. A recent piece posted by Professor Ken Rogoff, a former chief economist for the International Monetary Fund, and currently a professor of Economics and Public Policy at Harvard, lays out a logical road map for global interest rates, economic growth, sovereign defaults, and inflation. Let me preface Rogoff’s piece by stating the road will be long and steep!

What does Rogoff think about the prospects here in the United States under the Obama administration? He writes, “US long-term growth could be particularly dismal, as the Obama administration steers the country toward more European levels of welfare assistance and income redistribution.”

I strongly recommend Rogoff’s What is the Deficit Endgame? Please access a wealth of other global perspectives at the Thought Leaders link (in the left sidebar of Sense on Cents), which provides access to leading global economists and over 400 periodicals from around the world.

LD

On January 31st, I wrote a lighthearted piece, Know Your Customer, about my personal experience with an Asian counterparty. The lesson I learned from that experience back in the late 1980′s was that business dealings in Asia are ultimately “a question of honor.” Are you honorable in your manner? Are you honorable in your engagement? Are you honorable on a going forward basis? Are you honorable in both word and deed? Obviously in a meaningful relationship, this code of honor must run both ways.

Our relationship with the People’s Republic of China hinges on American consumers’ purchase of Chinese exports and ongoing Chinese purchase of U.S. government debt. As I just highlighted in my most recent piece, Chinese exports fell 26% in February 2009. Numbers like that will make any government uneasy. During challenging economic periods, the tenuous nature of any economic relationship is captured in understanding the nuances of the Prisoner’s Dilemma.

Well, the Chinese occupant of the cell next door appears to be getting increasingly nervous. He just slipped us a note inquiring whether we will “honor” our promises in protecting his investments. The full note reads, China’s Premier Wen Worried on Safety of Treasuries.

Is this a mere sign of a nervous investor? Hardly. There is no doubt that the Chinese Premier is launching a shot across our bow prior to the highly anticipated G-20 Meeting in the U.K early next month. Please recall that the surplus nations in our global economy, primarily China, have very limited voting power in our global financial intermediaries, such as the IMF. This Chinese statement is an attempt to create increased leverage over the negotiations which will transform the global economic landscape.

How honorable!!

LD

Former Australian Prime Minister and Treasurer Paul Keating

Well, Mr. Keating has spoken again and I am listening to him very closely as I strongly believe I am more educated and informed as a result. Our domestic officials and media outlets should take heed.

In an article published in this past Saturday’s Sydney Morning Herald, Obama’s Economic Saviour Savaged as Keating Let’s Rip. Keating offers a piercing review of then Treasury Officer Geithner’s structuring of an IMF led rescue plan of the Southeast Asian crisis in 1997-98.

For those unaware, many countries in SE Asia had massive infusions of foreign capital in the form of debt to facilitate infrastructure development. Geithner and then IMF Chief Michael Camdessus structured a plan that injected $200 billion dollars in the form of IMF loans to refloat the economy. Keating maintains that Geithner and Camdessus totally misdiagnosed the problem and in turn the solution.

Keating further maintains that the manner in which that package was handled dramatically impacted the way Asian countries have managed their finances since. The massive surpluses emanating from that region have been a major factor in the massive capital inflows into the U.S. over the last ten years. We do not need to replay that disaster.

I sincerely appreciate the integrity displayed by Paul Keating in connecting the dots.

Those who do not learn from history are doomed to repeat it!!

LD

**Cross-posted from my blog, Sense on Cents. Come by and visit!