MELTDOWN - DESIGN BEHIND THE TUMULT

by Jeremy Lee
When news broke in late September that legendary investor Warren Buffet was consigning US$6 billion into Goldman Sachs, he knew something that lesser mortals had not been told. After all, the latest drama was about to open on Capitol Hill, where Congressmen were to hear President Bush explain why the United States of America should swallow Henry Paulson 's proposal to create $700 billion as a bail out of Wall Street. Both presidential candidates were to attend.

Melodramas on Broadway are usually more popular than in Congress. But not this time. Not only was most of America but, in fact, most of the world riveted to radios and TV screens. Treasurers, Prime Ministers and Presidents in a number of countries had changed their tune in a remarkably short period of time, from 'Our economic fundamentals are sound to 'We are on the edge of meltdown '.

WHAT ARE 'FUNDAMENTALS '?
When tens of thousands are losing their homes and jobs, when poverty stalks ordinary families, when it takes a husband and wife to try and keep the mortgage at bay and the poorest live by soup-kitchens and welfare, things are, by and large, still O.K. But when huge banking firms round the world begin to collapse like dominoes, crisis threatens!

The picture in the U.S. is ugly. Federal debt, after Iraq and Afghanistan, and hurricanes like Ike and Katrina, stands at $10.6 trillion. State and Local Government debt is a further $2.2 trillion. Mortgage debt is $11 trillion and consumer debt $2.6 trillion. These four items alone total over $26 trillion well over $100,000 for every living soul in the United States, including the millions of illegal immigrants!

But that 's only a fraction of the debt. Sheer gambling, in the form of derivatives, makes government and home mortgage debt look trivial. Wall Street banks are staring bankruptcy in the face. They daren 't even lend to each other. What better solution than to make ordinary citizens bail them out?

THE PROPOSAL
So Henry Paulson, Secretary to the Treasury and former CEO of Goldman Sachs, proposed in three typed pages that the Federal Reserve Bank, under Fed Chairman Ben Bernanke, create a fund of $US700 billion, notch it up to ordinary taxpayers, and bail out the banks of Wall Street, and get debt money flowing again. George Bush was instructed to urge Congress to pass Paulson 's proposal as the only alternative to disaster! The sheer audacity of the proposal was breathtaking! Section 8 of Paulson 's proposal read:
' 'Decisions by the Secretary (of Treasury) pursuant to the authority of this Act are non reviewable by any Court of Law or any administrative agency ' Carte-blanche in other words!

INCH BY INCH
It was in 1913 that a major coup took place in a secret meeting on Jekyll Island in the United States when, at the instigation of Paul Warburg of the Warburg banking firm, the Federal Reserve was formed as the U.S. Central Bank.
Most Americans would automatically assume that the 'Fed ', like Australia 's Reserve Bank, is publicly owned. But, in fact, it is owned by a select group of the world 's biggest banking empires.

The current list of owners is:
Rothschilds of London and Berlin;
Lazard Bros of Paris;
Israel Moses Sief of Italy;
Kuhn Loeb & Co. Germany and New York;
Warburg & Co. Hamburg, Germany;
Lehman Bros of New York;
Goldman Sachs, New York;
Rockefeller Bros. New York.

WHO ARE THEY?
It was Nathanial Mayer Rothschild who coined the well-known phrase: 'Permit me to pass the money of a nation, and I care not who makes its laws.

Of the listed firms above, Lehman Bros has recently entered bankruptcy, being bought at a fire-sale price by Morgan Stanley. It is Goldman Sachs which has gained the pivotal posts for the 'new order '.
Henry Paulson himself is the initiator of the required 'carte blanche legislation. Joshua Bolton, White House Chief-of-Staff, is another former Goldman Sachs staffer. Robert Zoellick, former Secretary of Trade and one-time Goldman Sachs staffer, now runs the World Bank. The Central Banks of Canada and Italy are run by former Goldman Sachs men.

John Corzene, former CEO of Goldman Sachs and now Governor of New Jersey, was spokesman for the international financiers who confronted Australian Prime Minister John Howard in June 1996, shortly after he gained office, in Sydney. Yet another former Goldman Sachs man is now leader of Australia 's Opposition.

IN THE BEGINNING
Both in Australia and the U.S. their founding Constitutions confer the power to create, print and borrow money on elected Federal Governments. The Labor Government, now led by Kevin Rudd, once founded the Commonwealth Bank as a bulwark against overseas borrowing. The same Labor Party under Paul Keating sold it into private hands.

Both Australia and the U.S. have weakly abandoned their duty to their people, conferring the power to create money on their own terms to a network of privately owned banks. The resulting system of usury has destroyed families and communities, and is now enslaving nations. So overloaded has the global debt system become that it threatens to engulf us all.

DOCUMENTED
In 1963 America 's most widely known and best regarded historian, professor Carroll Quigley, published his famous 'Tragedy and Hope A History of the World in Our Time '. In this epic, Carroll Quigley said that he had been allowed access to the private papers of an association of bankers bent on using their monopoly to eliminate national governments, establishing global government under their own control. The power of finance was their chief instrument.

When Prime Minister Kevin Rudd and Treasurer Wayne Swan and, incidentally, former Goldman Sachs representative Malcolm Turnbull - urge the United States Congress to give total control to Henry Paulson they are, consciously or unconsciously, endorsing this reach for global government and A New World Order.

A CAUSE FOR HOPE
At this very late stage, there is some cause for hope. A number of media reports say that Senators and Representatives in Congress, assembled to consider George Bush 's plea that they endorse Henry Paulson 's proposal for a bailout, were bombarded by a deluge of letters, calls and e-mails from every State, urging them to reject the suggestion.
People instinctively know that this is wrong and evil, even if they don 't know of an alternative. Congressional dissenters are having their arms twisted and their heads kicked to surrender to the 'banksters '. It is likely that the money power will prevail. But miracles have happened before.

AN ALTERNATIVE
When the Great Depression broke in 1929 there was a great deal of discussion among economists, church leaders and the public about a theorem propounded by a Scottish engineer called Clifford Douglas.
It was known as the A+B theorem, and showed that, if all money was created in the form of debt, it must result in a price structure that rose faster than available purchasing power. The result would be prolonged periods of alternating boom and bust, interspersed with trade and military wars, and finally complete dislocation and breakdown.

Enormous efforts were made by the financial establishment to discredit the proposition, and finally to silence it. Orthodox economics has been elevated to religious status, even though it is now resulting in breakdown.

In 1989, two professional men, J.D. Malan, an engineer, and A.A. Chresby, one-time Liberal Member of Parliament, made a submission to a Government Inquiry into the Financial System, the Campbell Inquiry.
It presented an alternative for Australia that would have lifted the debt and poverty burden off many Australians and eliminated the ever-widening divide between rich and poor. Not surprisingly, it disappeared in the cesspool of orthodoxy.

Whatever way Congress votes,* we now face a prolonged period of financial difficulty. WE must do two things. Firstly, we must resist at all costs any idea of a world money system that would constrain Australia 's sovereignty over our own affairs. We must return to our Constitution. And we must seek an alternative that releases us from the world of compounding debt. ( *Members of Congress passed the legislation.)

Two essential booklets for those who have had enough of the banksters and politicians scams. These books open up the money issue from an entirely different perspective:

(1) 'The A+B Theorem Its Validity and Implications by J.D. Malan.
(2) 'Finance and the Natural Law - A submission to the Campbell Inquiry, 1989, by J.D. Malan and A. A. Chresby.
Both books for $10.00 posted while stocks last.

'The Money Trick, $13.00 posted

"Tragedy and Hope" by Carroll Quigley $85.00 posted.

THE RESERVE POWERS

from David Flint 's Opinion Column:
The Governor-General 's surprise support for the codification of the Crown 's reserve powers has stirred up a controversy. These powers relate to the granting of elections, and the appointment and dismissal of ministers. These may be exercised without or contrary to ministerial advice. At the present time they are governed by convention, that is unwritten custom.

In an interview on the ABC 's 730 Report on 23 September, 2008, the Governor-General, Quentin Bryce, said:
"I like the idea of them being written down in the Constitution. I'm increasingly attracted to the need to codify as much as possible. It is another way of empowering people." (This sentence, incidentally, does not appear in the ABC transcript)

Another view...
In The Australian on 27 September, 2008, Christopher Pearson said that codifying the reserve powers is 'a herculean task, virtually impossible as well as pointless.
'First, it would involve a team of experts agreeing on the proper limits of emergency powers, which it has generally been thought prudent not to define too precisely because not all contingencies are foreseeable. 'Second, the whole process would need a large measure of bipartisan support.
'Finally, it would mean a referendum carrying by a majority of votes in a majority of states an amendment specifying in great detail every hypothetical circumstance in which a government's actions might warrant the exercise of the Crown's power to sack it.
He said that the consensus at the 1998 Constitutional Convention was that the existing checks and balances were 'the best available guarantee that the reserve powers wouldn't be abused.'"

Professor George Williams is for codification...
But constitutional lawyer, Professor George Williams, disagreed. He said that Christopher Pearson was wrong in saying that codification would be 'virtually impossible as well as pointless '.
Constitutional lawyers have for many years argued for exactly this reform, he said . The 'vague and uncertain nature of the reserve powers was 'a flaw. He said the reserve powers had been codified in the NSW Constitution and in the ACT.

An ACM view...
The Australian published my views on this on 2 October, 2008. These are identical with the view advanced by ACM in the referendum. But similar views were also held by the republican establishment.
'The fact that the reserve powers are not described in the constitution is hardly a flaw, as Professor (George) Williams suggests (letters 30/11), I wrote.
As former chief justice Sir Gerard Brennan says, this 'has been beneficial in allowing the evolution of an independent system of national government.
'Codifying the conventions would also allow an aggrieved politician to slow down the process by going to court, rather than the political mess being resolved quickly and democratically in an election, as in 1932 (NSW) and 1975.
'Christopher Pearson is accurate in saying the task would not be easy. When he gave up his attempt at codification, Gareth Evans said it was 'a labour of Hercules...frankly, I think the task is impossible.
So Prime Minister Paul Keating abandoned the project, deciding 'the conventions should remain as they are unwritten. '
'The 1998 Convention also decided codification was too difficult. So the referendum model tried to transfer the conventions to the president, allowing them to continue to develop and keeping them out of the courts. 'Incidentally they are not codified in New South Wales, as Professor Williams suggests.
'Established constitutional conventions are specifically preserved. And the ACT is a bad example. The financial excesses of the Carnell government in relation to the Bruce Stadium would not have occurred if the constitutional system forced on them had properly respected the essence of the Westminster system.
"A reasonably diligent administrator or governor would have sent that one back. And if the Carnell government had persisted it would have faced the fate of the Lang and Whitlam governments.
Paul Keating says codification impossible '... '

NATIONAL AND GOVERNMENT DEBT

In 'Test your knowledge ', On Target Bulletin 15th August 2008, the statistics are declared as follows ...
"Do you know that during the 50 years from 1946 to 1996, Australia's National Debt (Commonwealth and States) increased from $4.7 billion to $87.1 billion in 1994, before being reduced to $62.7 billion in 2004 through a fire-sale of Australian assets such as our ports and harbours, electricity companies, water resources, etc?"

Forgive my ignorance, asks a reader, but how is "Australia's National Debt - Commonwealth & States - related to Net Foreign Debt? A.N.D. = Australia's National Debt, N.F.D. = Net Foreign Debt:

YEAR - - - A.N.D. - - - N.F.D.
1994 - - - - - 87.1bn - - - - 171bn
2004 - - - - - 62.7bn - - - - 429bn

In answer to the query Jeremy Lee replied:
National Debt is the total of Government debt. Foreign Debt, on the other hand, is debt owed overseas by either public or private, or both, sectors. Our current foreign debt, about $650 billion, is almost all owed by the private sector.

WHERE 'S THE LOCAL GOOD WILL?

Where's the local goodwill when it comes to rates? asked journalist Chris Berg, in The Age 28th Sept. 2008. 'How do we know that our local councils have raised far more money than they need? It isn't the fact that local governments have enough money to send councillors on "diplomatic" missions to negotiate "friendship city" relationships. Moreland City Council proudly notes that it has relationships with councils in China, East Timor and on the beautiful island of Sicily.
Ararat City Council carefully points out on its website that it took "many visits" to forge its relationship with the city of Taishan in China. And thank goodness for Latrobe City apparently its fraternity with cities in Japan and China is responsible for all that peace, goodwill and friendship around these days. But that's not it. And it's not because local councils have enough extra money and surplus bureaucrats to organise those cringe-inducing "community" events the sort of events that assume people wouldn't say hello to their neighbours unless they were coaxed to do so by a public servant.
Every council has a half-dozen silly programs that help the bureaucrats feel like they are encouraging diversity, harmony and other nice things.
Boroondara has a spring planting festival, Frankston has a pet's day out, Brimbank has a leisure challenge, Stonnington has a thrilling-sounding follow your recyclables tour and, rather ambitiously, Monash sponsors the clean up the world weekend.

Petty local council bureaucrats morph into investment bankers:
"No, what makes it most obvious that local councils have jacked our rates up far higher than they need to is this: council workers appear to have woken up one day and decided that they were no longer petty bureaucrats deciding the orientation of road signs. Instead, they decided that they were investment bankers, with striped suits and a large bundle of equity-leveraged, investment-shared, portfolio-bearing, interest-asset options. Councils are harvesting such an enormous amount of money from home owners and businesses that they can afford to play the share market. So, obviously, the financial crisis has hit local governments hard.

Vital diplomatic missions to sunny Italy and essential dog beauty pageants:
"In NSW, where the law lets councils invest in pretty much anything they feel like, the subprime crisis has sucked so much money out of council investments that they are trying to sue their way out of the crisis.
The ratepayers of Manly City Council probably didn't expect that by paying their rates they were also speculating in low-doc mortgages in San Diego.
They no doubt thought their money was going towards vital diplomatic missions to sunny Italy and essential dog beauty pageants. Instead, their councillors were being seduced by stockbrokers eager to sell shiny new investment portfolios that may not have been technically blue chip, but were definitely a secure-looking aquamarine.

In Victoria, our councils' lesser subprime exposure is only due to the fact that they have been legally restrained from making the most stupid investments. Local governments have never been very competent at the best of times if you want to organise a hard-rubbish pick-up in April, you had better get on to the council now but it is particularly damning that the only reason Victorian councils haven't all gone under from shonky trading is because the State Government made doing so illegal.

"Of course, it's a bit ironic watching local governments fall foul of the financial crisis. To a certain extent, it was local governments around the world that caused the crisis to begin with. For many years, local governments have attentively listened to those prudish property owners who are eager to block their neighbours' development plans.

Council bureaucrats have had great fun heritage-listing otherwise useful buildings and blocking subdivisions. And council planners have helped state governments restrict development in the name of stopping evil "sprawl". These are the sorts of heavy-handed planning regulations that have artificially raised the price of housing and contributed to the housing bubble that spectacularly imploded earlier this year.

"Admittedly, local governments didn't invent the hoarding of tax. The Federal Government's Future Fund that accumulating mountain of cash has now morphed into a giant cheque account that tries to make a virtue of the fact that budget after budget, Canberra is taxing us more than even they can think of ways to spend.

"But instead of funding overseas trips, or playing the stockmarket, or hoarding for the future, perhaps governments should think about not taxing so much in the first place he concluded.

LOCAL GOVERNMENT SCANDAL

ICAC recommends criminal charges in Wollongong scandal. The Independent Commission Against Corruption (ICAC) has released its final report into corruption at Wollongong Council and is recommending that 11 people be charged with criminal offences.

The ICAC report into the Wollongong Council on the New South Wales south coast has been tabled in New South Wales Parliament in Sydney. The commission has recommended that advice be sought from the Director of Public Prosecutions (DPP) about charging 11 people named during the investigation with 139 criminal offences.

It wants the former Wollongong Council planning officer, Beth Morgan, charged with 27 offences. The commission found she abused her position to provide favours to developers with whom she was intimately involved.

The first ICAC report, released in March, questioned development consents granted by Ms Morgan to developers Frank Vellar, Glan Tabak and Michael Kollaris. It also investigated alleged corrupt conduct by four ALP councillors, including former deputy mayor Kiril Jonovski. It recommended the council be sacked.

The second report delivered a month later recommended suspension of a development application for Mr Veller's $100 million Quattro development.
The ICAC said Mr Vellar requested Ms Morgan be assigned to assess the application when she returned from maternity leave in March 2004. It said she began a sexual relationship with Mr Vellar two months later.
The watchdog said he gave the planner gifts and benefits worth thousands of dollars, including cash, holidays and home appliances.

THE SHODDY CHINA BRAND - NEWS FROM CANADA WE NEED TO KNOW

Chronicle Herald, 29 September 2008:
MADE in China? Buyer beware. The Chinese tainted-milk scandal which has killed four infants and sickened 53,000 more in that country should come as no great surprise to anyone familiar with the Asian giant 's well-deserved reputation for a shoddy, corrupt product-safety system.

The chemical implicated in the Chinese dairy product debacle is melamine, an industrial resin used in the production of plastics. But melamine did not enter the food chain accidentally. In China, melamine 's ability due to a high nitrogen content to be added to farm feed and, apparently, raw milk to give the false appearance of high protein levels has made it a favourite additive in the agricultural sector for many years.

Melamine is forbidden for use as a food additive in North America. In high enough concentrations, melamine can crystallize in the blood, leading to kidney stones and a risk of eventual kidney failure. Chinese feed industry members admit melamine use is still rampant in that country.
The reason is that the melamine scrap a by-product of chemical plants is a far cheaper way to artificially boost protein levels than using proper, healthy methods.

Last year 's pet food scandal, when thousands of North American dogs and cats died after eating product partly made with Chinese wheat gluten, was also traced to the melamine in the ingredient imported from China.
As a result, in April 2007, China "banned" melamine from its food products. Two months later, a spokesman for the Chinese commerce ministry guaranteed the safety of its food exports.

Those statements seem laughable today, as countries around the world move to ban imports of a range of Chinese food products from baby formula to chocolates, sweets and other goods that have been tested and found to contain melamine. Yet, last week, a Chinese government spokesman had the gall to insist the problem had been solved and no more bad news would affect the market. That 's wishful thinking.

Until China radically reforms its product-safety system ensuring manufacturers do not escape penalties for using unsafe materials to save money we 'll no doubt continue to see scandals erupt.

The list is already long:
Recalls of Chinese toothpaste containing a chemical used in antifreeze. Use of formaldehyde, industrial wax and illegal dyes in making pickles, crackers, seafood and other goods. Lead paint on toys.

Compounding the latest scandal is abundant evidence the main implicated dairy company and government officials suppressed information about problems with milk products despite illnesses in infants to avoid bad publicity before the Beijing Olympics.

Given what 's happened, many Canadians will no doubt want to avoid Chinese food products. The problem, however, is knowing. As of Jan. 1, new federal rules will require goods labelled "Product of Canada" to have 98 per cent Canadian content.
Meanwhile, "Made in Canada," requiring 51 per cent Canadian content, will add the words "from imported ingredients," but not name specific countries. That 's no longer good enough.

NATIONAL WEEKEND

At the Seminar, two excellent power point presentations were made by Louis Cook and Terence Holmes and Diane Teasdale presented the paper "Defending Malaysia's National Economic Sovereignty" by Malaysia 's Dr. Mahathir. More on the presentations when the DVDs become available.