Tokyo Injects Fiat Money while Beijing Talks about Bond Attack on Japan

By LUIS MIRANDA | THE REAL AGENDA | SEPTEMBER 19, 2012

The territorial conflict for the Senkaku/Diaoyu islands on the East China Sea have revealed two things in the last few days. First, China’s thirst to defeat its rivals in the region, despite American interventionism. Two, China will not necessarily use military weapons. Instead, it will use its economic might.

While the Japanese Central Bank announced it will follow on the steps of the American Federal Reserve and European Central Bank in flooding the market with money to keep its economy afloat, in Beijing the Communist Party led government is now considering attacking Japan by imposing sanctions on its main funding source: the sale of government bonds.

China is Japan’s main creditor today with holdings of over $230 billion in Japanese government issued bonds. This is China’s strongest weapon at the moment, or at least the one that the Chinese may use to obligate Japan to withdraw from the territorial dispute that has now called for the intervention of United States Defense Secretary Leon Panetta.

The most recent asset purchase program in Japan was extended by about 10 billion yen (€ 97,200 Mn), to 80 trillion yen (778 000 € Mn). In turn, the types of interest are maintained between 0 and 0.1%, a level at which they are since October 2010. The same policies are now being used by the United States Federal Reserve and the European Central Bank, which continue to facilitate funds to large financial institutions while denying loans to small and mid-size entrepreneurs.

The Bank of Japan opted, just like the Fed, to inflate its currency, by printing fiat money into the banking system in an attempt to revive the economy. As seen for the past 4 years, the insane policy of creating fiat money out of nothing does not work. In fact, it only prolongs the crisis because governments are not doing anything to kick start their economies.

The decision has favored the Nikkei, Japan’s stock market. Transactions closed with a rise of 1.19%. Stock markets are another tool in the rigged game that governments use to paint a colorful picture about otherwise dying economies, because they do not represent the actual state of those economies, but that of specific sectors. Stock prices, as in the case of Facebook, can be manipulated to show whatever the manipulators want to show.

The fake snowballing effect of the fiat money printing mechanism reached Europe, where the local markets received the news about the Japanese Bank injecting the worthless money into the economy as a good sign, which helped lift the markets.

In the meantime, in China, Jin Baisong, a member of the Chinese Academy of International Trade wrote on the China Daily newspaper that his government should “impose sanctions on Japan in the most effective manner” to bring Japan to its knees. He said China should consider invoke the security exception to punish Japan.

Other Chinese media such as the Hong Kong Economic Journal published an article about China’s plans to to cut off Japan’s supplies of rare earth metals which Japan needs to produce high tech consumer goods for local and international electronic giants. The considerations to punish Japan through credit lending, imposing cuts of raw materials and calling on international trade organizations to sanction Japan are three of the first steps China is considering to tame down the country’s intent to claim the Senkaku/Diaoyu islands as its property.

In the last two days, multiple protests exploded all over China against the Japanese which prompted many Japanese companies to close their doors for fear of retaliation.

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All Power to Brussels and the European Central Bank

By LUIS MIRANDA | THE REAL AGENDA | SEPTEMBER 12, 2012

A great complement to the decision to enable the European Stability Mechanism could materialize if the government in Brussels gets its way. The European government is now proposing that the European Central Bank should control all banking institutions in the EU. The European Commission wants the ECB to have the power to close or punish banks that do not abide by the rules issued in Brussels by the technocrats who now control the European banking system.

The European Commission proposed on Wednesday to empower the European Central Bank (ECB), that will oversee all eurozone banks beginning in 2014, to remove bank cards and punish non-compliant entities.

Brussels ignores Germany resistance to such power, which wants to limit the power of a single supervisor of larger systemic institutions. The initiative also collides with the reservations in the UK and the countries of Eastern Europe, which fear that the ECB will accumulate too much power while the nations are excluded in the decision making process.

In an attempt to allay these doubts, Brussels makes clear that the rules for the sector will be developed by the European Banking Authority, which lists the 27 member nations. In the first phase, starting in January 2013, the Central Bank will take over banks that have received state aid, thus opening the door for direct recapitalization, the EU plan says.

Then, the ECB will also monitor systemic institutions. By January 1, 2014 it will also be in charge of 6,000 entities that operate in the eurozone. The objective of this initiative, which was presented by the President of the Commission, José Manuel Barroso, in his State of the Union address in the Parliament, is to break the “vicious circle” between sovereign and financial debt and move towards a union bank. This has been the plan all along. The technocrats in Europe have always sought to erode national sovereignty — as explained in our report about the future of nation-states — so that the bankers can later consolidate power and resources, which is their ultimate goal.

“This new system, with the ECB in the center and involving national supervisors, restore confidence in the supervision of all banks in the euro zone,” said Barroso, who has called for a speedy adoption of the proposal so that it can be operational in early 2013. “In the future, the losses of bankers and debt will not become that of citizens, questioning the financial stability of entire countries,” he noted. That is difficult to believe, since the banks who are now posing as saviors were the ones who created most of the debt through fraudulent financial mechanisms.

The creation of a single banking supervisor in the EU is the condition imposed by Germany to allow the bank bailout of 100,000 million euros that the EU granted Spain. This bailout bypassed the state and was not computed as debt. Although n public Germany seems to not support more banker power grabs, in private Angela Merkel is indeed promoting the creation of a new European centralized entity.

The German finance minister, Wolfgang Schäuble, said in recent days that he wants the ECB to be limited to systemic institutions and intends to maintain control of its regional banks. However, the Commission contends that “as we have seen in recent years, even small banks can be systemic and cause financial turmoil,” as Northern Rock, Anglo Irish and Bankia.

The EU executive said his proposal is the “right balance” between the tasks of the ECB and the national supervisors. The ECB will have the final say in “key” decisions, while the daily work of supervision will remain with national authorities. This aspect is what the German minister of finance had opposed from the beginning. As proposed by Brussels, the ECB is responsible for granting new bank cards or withdrawing them if banks do not comply. Also, Brussels will evaluate major acquisitions and sales, and will require banks to increase their capital if it detects risks.

According to the proposal the EU will share power with the national authorities up until the moment when the EU’s authority for settlement is created. Then, it will be all up to the bankers. In order to perform the functions described above, Brussels will give new powers to the ECB, which may request information from entities and perform field inspections. In addition, it will be entitled to impose fines of up to 10% of its turnover. This last imposition is seen by skeptics as the mechanism for the ECB to fund its operations.

Do we or do we not work for the banks?

European Leaders Negotiate How to Collapse Europe

Herman van Rompuy Calls for less sovereignty for remaining nation-states.

By LUIS MIRANDA | THE REAL AGENDA | SEPTEMBER 9, 2012

Flashback: Herman van Rompuy, President of the European Union: “Homogenous Nation States are Dead”.

The collapse of the Euro and the European Union is not a result of the financial crisis created by the bankers. In fact, the crisis was created as a way to justify the banker acquisition of independent nation states in Europe, America, Africa and Asia, among others.

After reading what van Rompuy’s intention is in multiple occasions — to end nation-states as we know them — it is clear that countries will not be strengthened as a result of any measure adopted by the EU, the European Central Bank, or the IMF. As we speak there is a fight inside the banking hierarchy, whose members are discussing what is the best way to collapse the world’s financial system, beginning with the Euro zone to later spread the collapse to the Americas.

The EU president has not shied away from his goal to destroy nations and to submit them to unelected governing bodies. “The time of the homogenous nation state is over,” Mr he Rompuy said, adding that “in every European member state, there are people who believe their country can survive alone in the globalised world. It is more than an illusion — it is a lie.” The firmness of this statement can only come from a man who behind the scenes knows all the details of the planned implosion of the world’s financial system.

Since last week and over the weekend, European leaders have met to determine what is the best way to bring down the Euro zone while consolidating power over the independent nation-states as they’ve done with Greece. After the European Central Bank admitted it will buy sovereign bonds from indebted nations, the International Monetary Fund (IMF) launched itself like the financial vulture it is to discuss what it believes must be its role in the mechanism to destroy the European economy. Meanwhile, Spanish Prime Minister, Mariano Rajoy, who has not officially accepted the conditions given by the ECB, entered a race to beg for softer conditions before he hands his country over to the ECB and IMF.

“The decision of the ECB to provide funds to Spain, pretty much obligates the country to request a second bailout,” said ECB head, Mario Draghi. The ECB has already expressed its intention to buy unlimited amounts of debt from Spain and other nations who may need it, so it is expected that Rajoy will not let the opportunity pass by without requesting a complete bailout of the country. Spanish diplomats have gone to Brussels, Frankfurt, Washington and Madrid to try to negotiate better conditions should the country request the bailout this Fall.

But according to Brussels’ insiders, not even a financial bailout will be a strong safety net for Spain, because it is clear that the country will not be able to meet its goals to cut the deficit due to the depression now taking place in Europe and the failure of the Spanish government to increase its revenues. So the so-called rescue or bailout is nothing else than a smoke screen to facilitate the handover of Spain to its creditor, the European bankers.

Meanwhile, the IMF chief, Christine Lagarde, has said the organization is interested in playing a relevant role in the design and monitoring of the European Central Bank plan to buy bonds issued by euro zone governments. Lagarde stressed that the measures recently announced by the ECB President Mario Draghi, “pave the way forward”, but pointed out that “the priority is to be implemented in a coordinated manner.” “We are prepared to help and assist in the design and implementation of any programs that should be part of the solution,” said Lagarde, who has said that her institution is willing to participate “actively” in the design and development of the program debt purchase of euro zone countries.

Both Herman van Rompuy and Italian Prime Minister Mario Monti have called a meeting with other European leaders to find common ground to “defeat the populist ideas that have sought to destroy the Euro,” they said. “The integration of the EU is an ongoing problem,” said Herman van Rompuy, “again dealing with the financial and social problems (…) so I welcomed the idea of ​​President Monti to hold a special summit on the future of European unity,” said Van Rompuy.

The president explained that the European Commission is aware of the criticisms and oppositions that exist right now, but emphasized “the tremendous efforts of all European countries and institutions made ​​with unprecedented solidarity”. Mr. van Rompuy probably means solidarity towards the bankers, not in favor of the European population, which despite suffering the largest rates of unemployment in recent history, has had no direct help from the EU leaders. In fact, the first initiatives adopted by EU governments were to cut spending on social programs, salaries, pensions and other programs that generally alleviate the burden on the largest portion of the average european citizen.

It is expected the Spain will expand its campaign to obtain better conditions previous to its request of a bailout during the meeting of finance ministers of the EU. It is expected that both Spain and Greece will clear the timing of the petition as the appetite of European partners to facilitate (or not) things mild conditions (or not). “That’s a conversation that should occur not between Spain and the ECB, but between Spain and the other members of the euro zone,” said Benoit Coeuré, French director of the ECB, in an interview on France Inter.

Herman van Rompuy did not shy away last week about what the final outcome of all of these negotiations must be. Van Rompuy said that by December the project for a new European architecture will have been submitted. This project will be undertaken by the ECB and the European Commission and will include four pillars connected to each other: a banking union, a fiscal union, an economic union and a deeper political union.

Draghi brings in the ‘goodies’ to capture Spain and Italy

By LUIS MIRANDA | THE REAL AGENDA | SEPTEMBER 7, 2012

Mario ‘Super Mario‘ Draghi has unloaded his bag of goodies after the European Central Bank agreed to acquire the European continent. The line of states begging for a ‘rescue’ is headed by Spain and Italy, with Portugal and France waiting on the wings.

The European Central Bank announced the already expected purchase of sovereign debt to keep the financial collapse under control so that the bankers have enough time to absorb all free nations that are unable to pay their obligations.

As previously reported on this publication, the details of the program are murky, sketchy and as vague as possible to let the bankers make decisions as they please based on conditions on the ground. One detail was made clear, however. The ECB will have the power to buy unlimited amounts of sovereign bonds, the instruments issued by governments to cash their debts.

But before the ECB sends any money to Spain, Italy or any other nation in distress due to the unpaid liabilities, countries will have to review and accept a list of conditions that the bankers themselves have written, and under which the nation-states will have no flexibility. For example, countries in need of a bailout must officially request it to the ECB. Should the country decide to abandon the ‘rescue’ mechanism, the ECB is already threatening with stopping the purchases of bonds and sell the bonds that have been already acquired.

The positive answer from the ECB has already encouraged the artificially run financial markets, even though none of the nations that would eventually accept the conditions has actually requested the bailout. The risk premium of Spain has fallen sharply from highs of 638 points in the second half of July. The downgrade of the returns required of Spanish debt has been more pronounced in shorter maturities up to three years, as these are the titles that will focus on the operations of the issuing bank. Today, the Ibex 35 gained 4.91% and the risk premium has fallen below 450 basis points.

Once the countries request the ‘rescues’ — either for a full or partial bailout — the ECB will only accept the request if the country complies with all of the conditions imposed by the European bankers which will be provided through memoranda to each individual nation. The ECB  said that the bond purchases of bonds with maturities of between 1-3 years will be made with no quantity limits. “The amount will be adequate to achieve our goals,” said Draghi in a statement a month ago.

The ECB also waives its preferred creditor status, something that frightened investors. Moreover, the liquidity created by these direct sterilized monetary transactions (the withdrawal of an amount of cash equal to the purchase of bonds), will be done as it was with the previous program. Purchases may be extended to other countries already bailed out, such as Ireland and Portugal, to the extent that they recover their market access.

The ECB had already bought debt of other countries since May 2010 and began buying Spanish and Italian debt in August 2011. However, these purchases stopped earlier this year, as the bank decided to rescue the banks instead. The decision by the bank to bailout the banks caused the vicious debt problem to get worse as the increase in debt and insolvency of financial institutions and nation-states demanded even more money. Now, the bank has decided to come back with more cash to keep on feeding the beast, instead of killing it.

It will just a matter of time before the bailout of nation-states becomes as insufficient as the one given to the banks back in 2011. What will the ECB do then to slow down the collapse? Free money or ‘rescues’ will have proven ineffective.

As for what will Spain and Italy do, what does a crack addict do when you offer him a pipe and the ‘springly’?

European Central Bank will decide to become — or not — The Bank of the Euro

By LUIS MIRANDA | THE REAL AGENDA | SEPTEMBER 3, 2012

September promises to be a decisive month for the Euro zone. It is expected that the European Central Bank will decide to become the Euro’s grand daddy and it also may be the time when Spain will be handed over to the bankers. At this point, the second outcome seems a sure thing, while the first has found significant opposition. Until now, the German Central Bank — The Bundesbank — rejects that monetary policy be put at the service of fiscal policy to reduce their financing costs. Germany doesn’t want to deal with everyone else’s debt.

This week alone will be decisive in trying to solve the disaster created with the poor management of the sovereign debt crisis in the euro zone. As most people know, the banks have made it clear that the way they’ll solve the problem will be by creating more debt in order to buy up the independent nations in perpetuity.

The ECB has reacted rather strongly, at least in public, regarding its intention to go all the way to save the Euro zone. The bank’s president, Mario Draghi, said back in July he would do “everything necessary to preserve the euro. And believe me, it will be enough.” By saving he meant saving it for the bankers who intend to become sole owners of the region.

Germany, it seems, still remembers the trauma the country experienced due to hyperinflation last century, so the president of the  Bundesbank, Jens Weidmann, has not hesitated to manipulate the main German taboo: buying government debt amounts to starting up the machine to print money and set a ceiling to the types of Spain and Italy in the secondary market. This would cause anyone’s stomach to ache.

This confrontation between Draghi and Weidmann sums up the complexity in the form and substance of what is at stake. The situation is much more complicated than, for example, the American crisis of 1987, where the U.S. Federal Reserve open the lending window and encouraged anyone in need to borrow.

The same scenario was seen after 2008 when the crisis got worse in the United States. In reality, the policy of lending cash fresh from the printing press has not stopped since the FED’s creation in 1913. The discount window for the big banks and large corporations remains open until today and as a consequence, the American currency has lost over 90% of its real value.

In the case of the Euro, the situation is completely different but also similar to the United States. How’s that? Well, the Federal Reserve Bank is a private institution, that does not belong to the US government, but that does determine what monetary policies are adopted and implemented. The FED, just as the ECB work for the international banking cartel now in power anywhere there is a Central Bank scheme, which utilizes the directives from the IMF and World Bank. The difference between the ECB and the FED, is that its members represent countries — 17 in total — while the FED is governed by Governors who are spread around the US territory.

Now who is staking its credibility is Mario Draghi. As part of the public was on vacation in August, three committees with senior officials from each of the seventeen members of the ECB central banks worked like ants preparing a document with all the options (and objections).

The French Prime Minister Jean-Marc Ayrault, said yesterday in support of Draghi “It is not fair that Spain or Italy, which make considerable efforts are paying such high interest rates on its debt” and therefore deemed it necessary to address deep reforms in the lending and payment system. How about the bankers renounced to all the payments that the countries have to make on a debt that is not theirs, but that was created illegally by the politicians in those countries and the bankers that dictate the policies they follow?

The question now is whether the ECB will use its first to last shot by reducing its rate from 0.75% to 0.50%, as it is expected to do in  October, according to European analysts. It is expected the more actions are taken by the ECB once the bailout account is approved by the German Constitutional Court on 12 September.