And Now For A World Government, by Gideon Rachman, Financial Times

Well, it had to happen sooner or later. The "respected" press could not go on forever pretending there are no plans to establish a One World Government. Rachman starts out assuring us he's not a conspiracy nut, and then moves right into describing the EU's supranational system of governance. He makes sure he mentions the EU's accumulated body of law twice in the second graph.

Of course he didn't feel it was important to NAME that body of law for his American readers. Nor did he feel it was relevant in this "fact based" story to describe how it is already underway across the globe (including the USA) via UN Local Agenda 21 Programmes and Community Economic Development. No mention of sustainable development or the role it plays in the balance between national law and international law. He gives just enough watered down information to lead Americans straight back into the dialectic. Heaven forbid Americans should have any other options for stopping Fabian plans besides fruitless armed rebellions. Peaceful non-compliance of unconstitutional laws, treaties, regulations and agreements doesn't play into the synthesis, so why bother explaining how that can be accomplished. It's much better for the globalists if American people think the only way to fight a War on Words is with guns. It's also a huge help if people never understand what communitarian law is. Leave them stuck in the capitalism versus communism divide and they'll never know what hit them.

"We cannot expect the Americans to jump from capitalism to Communism, but we can assist their elected leaders in giving Americans small doses of socialism until they suddenly awake to find they have Communism."
- Soviet Leader Nikita Khrushchev, 1959 (posted by Bob Lanzer in a comment to Rachman's article)

Krushchev, like all the Soviets, was an EXPERT liar. If the synthesis was planned at the same time the thesis (capitalism) and antithesis (communism) were, and the goal was always to create a solution called world government, then should we believe Krushchev's 50 year old promise or the REALITY of what we actually live with today?

Will this revelation change my public status from wacko to intelligent political analyst (or at least just a concerned citizen)? I doubt it. My focus on the synthesis (the actual EU laws) means I'm still too ahead of their propaganda game. Barack Obama will be the one who introduces the synthesis to the global "masses," not me. And he'll make it sound a lot better than I do.

And now for a world government, by Gideon Rachman, Financial Times:

"I have never believed that there is a secret United Nations plot to take over the US. I have never seen black helicopters hovering in the sky above Montana. But, for the first time in my life, I think the formation of some sort of world government is plausible.

"A "world government" would involve much more than co-operation between nations. It would be an entity with state-like characteristics, backed by a body of laws. The European Union has already set up a continental government for 27 countries, which could be a model. The EU has a supreme court, a currency, thousands of pages of law, a large civil service and the ability to deploy military force.

"So could the European model go global? There are three reasons for thinking that it might." {boldface mine} Read the rest of this article: http://www.ft.com/cms/s/0/7a03e5b6-c541-11dd-b516-000077b07658.html

Many thanks to Larry G. for sending me this link!

World Financial Summit planned for November 15

As one of the world's poor and "homeless," I'm getting pretty excited about all these big plans underway to bring my lifestyle up to an equal par with all my wealthier neighbors. The housing market has to be supplemented by governments, doesn't it? People can't live harmoniously unless they all have a secure roof over their heads, can they? As a top U.N. official said Wednesday, "Governments must address problems in the housing sector if they are to solve the global financial crisis."

And what a suprise. Now we're being told the world needs a common regulatory banking system. Is this part of the Global Marshall Plan?

The White House set the date for the economic crisis summit, it "will bring together leaders of the G20, which includes the Group of Seven major industrial economies plus key emerging-market countries like China, India and Brazil." http://www.reuters.com/article/topNews/idUSTRE49E2E720081022

Is the Club of Rome invited to the summit? They wrote the Global Marshall Plan. Maybe they'll send a copy of their plan to the meeting, just in case the summiters decide they need something legally binding that helps everyone on the planet, equally. Wouldn't it just be better for everyone if there was one global government system that owns everything? There are people who have the superior knowledge and capability of performing this necessary evolutionary redistribution of wealth task, and they'll do it only for the sake of all humanity, because they care.

"Argentina's bonds fell 7 percent and stocks lost 10 percent after President Cristina Fernandez sent a bill to Congress on Tuesday to nationalize the country's private pension system, sending markets into freefall."
http://www.reuters.com/article/topNews/idUSTRE49E2E720081022?pageNumber=2&virtualBrandChannel=0

"Ultimately, the piper must be paid," by Henry Lamb

Henry Lamb continues to include the word communitarian in his articles. Now he calls sustainable development a "socialist, communitarian concept" that nobody noticed in the 1990s. We're in the middle of a blizzard up here, I'm working on the manifesto (it goes to print next week!) and my arctic entryway is only half-finished, so I can't comment about how I feel now that the ACL is being included in Lamb's articles. I can say that I'm happy to see the word getting out there, because it's 2008 and still so few have noticed it. The ACL is getting a lot more EU nation hits searching for "communitarian law." I wish we'd start getting those from America too.

Ultimately, the piper must be paid
By Henry Lamb, web posted September 29, 2008
http://www.enterstageright.com/archive/articles/1008/1008piperpay.htm
{take the direct link to Lamb's article for all his embedded links~ed.}

"The meltdown in the financial markets has caused the finger of blame to spin like a weathervane in a hurricane. The underlying cause of the debacle, however, has been largely ignored. Driven by "progressive" Democrats and Republicans, the cause is the relentless shift from a free market economy to a socialist economy.

"Until the Roosevelt era, the responsibility and privilege of having a home was left solely to the individual. Few people realize that Fannie Mae (Federal National Mortgage Association) was created in 1938 by FDR, to provide a federal guarantee for home loans extended by local banks.

"Freddie Mac (Federal Home Loan Mortgage Corporation) was created in 1970, during Nixon's reign. Both were designed to buy mortgages from local lenders as a way to insure an adequate supply of money for local lenders. These "secondary" mortgages were packaged into "bundles" of securities that were traded among an array of financial institutions.

"During the 1960s, the United Nations produced the International Convention on the Elimination of All Forms of Racial Discrimination. Article V(e)(iii) proclaimed that all people had a "right" to housing. Both the Kennedy and Johnson administrations supported the treaty, but it was not ratified until the Clinton administration, November 20, 1994. No one noticed, or connected the dots to the emerging socialist, communitarian concept called "sustainable development. Grassroots organizations across the nation were deeply involved in preventing ratification of another U.N. treaty, the Convention on Biological Diversity which was also under consideration at the time.

"To meet its obligations under the U.N.'s Racial Discrimination Treaty, the Clinton administration instructed Fannie Mae to expand loans to low-income borrowers, according to Franklin D. Raines, Fannie Mae's Chairman. Thus, the "sub-prime" market was born, and government guaranteed loans were extended to millions of families who could not qualify for a mortgage in a free market economy, but easily qualified under the new socialist scheme.

"In 2005, Republican Senators saw the danger and tried to reform these institutions with the Federal Housing Enterprise Regulator Reform Act (S-190), but Democrats blocked the bill.

"Both Fannie Mae and Freddie Mac were institutions that were neither purely socialist, nor purely free market – a blend that is best described as communitarian, in that they allowed private investors to buy and hold shares in the corporations, but were also guaranteed by the federal government. That is, until recently, when the federal government took over both institutions. Now, the federal government essentially owns all those properties – a result that is as socialist as had the government nationalized those properties by force.

"AIG, the international insurance giant, and other Wall Street and international financial institutions bought the bundles of mortgage securities that Fannie Mae and Freddie Mac offered. Everybody involved made a ton of money, and housing for low income families expanded exponentially – just as the Treaty on Racial Discrimination and the proponents of sustainable development had predicted. With all the new loans being made, the home building industry flourished, the real estate industry flourished, all industries related to housing flourished – until the market became saturated.

"Home values stopped rising. Housing inventories began to rise. Home values began to decline. Foreclosures began to rise. Homebuilding slowed, housing related industries began to lay off workers. Energy prices began to rise. Paychecks fell short of family needs. Foreclosures skyrocketed. Suddenly, there was little or no value in the bundles of security that Fannie Mae and Freddie Mac had packaged. Financial institutions found themselves in possession of massive "assets" that had no value. Creak, crumble crash! The financial markets came tumbling down.

"The piper must be paid. The question is whether to do it now – and let the chips fall where they may, or, to kick the can down the road, and pay the piper later. The answer, of course, is to kick the can into the next generation, with another leap toward socialism. The bailout plan – whatever the particulars – is nothing short of a government takeover of the financial industry. The next president will have to sort it out and build the road toward future recovery or final disaster.

"Barack Obama's incessant drumbeat about the failure of the economic policies of the last eight years is either gross ignorance or, more likely, political blame-shifting. The cause of the current meltdown is clearly the Democrat's insistence upon giving federally-guaranteed mortgages to people who could not afford them. Even now, Democrats insist, not on the minimum government involvement possible, but on adding all sorts of give-away ornaments on the bailout Christmas tree. Obama is also promising to take over the energy industry, the health industry, and to give tax credits and even refunds to some people with money he shamelessly takes from others. This is redistribution of wealth - pure socialism.

"McCain may be only marginally better, but any deterrent to the Democrat's determined transformation of America to unabashed socialism should be welcomed. Despite the U.N.'s declaration to the contrary, no person has a "right" to housing. If Democrats prevail and continue their pursuit of the U.N'.s goal of universal socialism, America can expect to experience the same total collapse experienced by the Soviet Union.

"Ultimately, the piper must be paid."

Henry Lamb is the executive vice president of the Environmental Conservation Organization (ECO), and chairman of Sovereignty International.

© 1996 - 2008, Enter Stage Right and/or its creators. All rights reserved.

Rep. James Traficant on the Bankruptsy of the United States

Forwarded from our good friend Pete in Washington:

This story of Rep. Traficant makes sense, now that we see his prediction and story come true:

As you read what Congressman Traficant read into the Congressional record, please remember that he risked his life, his reputation and his career to warn us. He was set up, found guilty and sentenced to prison. He is STILL in prison.

Also know that Congressman Traficant was the first to go public with the treasonous "deal" the Reagan Campaign made with Iran. A "deal" that has come to be know as "The October Surprise."

The Bankruptcy of The United States
United States Congressional Record, March 17, 1993
Vol. 33, page H-1303

Speaker-Rep. James Traficant, Jr. (Ohio) addressing the House:

"Mr. Speaker, we are here now in chapter 11.. Members of Congress are official trustees presiding over the greatest reorganization of any Bankrupt entity in world history, the U.S. Government. We are setting forth hopefully, a blueprint for our future. There are some who say it is a coroner’s report that will lead to our demise.

It is an established fact that the United States Federal Government has been dissolved by the Emergency Banking Act, March 9, 1933, 48 Stat. 1, Public Law 89-719; declared by President Roosevelt, being bankrupt and insolvent. H.J.R. 192, 73rd Congress m session June 5, 1933 - Joint Resolution To Suspend The Gold Standard and Abrogate The Gold Clause dissolved the Sovereign Authority of the United States and the official capacities of all United States Governmental Offices, Officers, and Departments and is further evidence that the United States Federal Government exists today in name only.

The receivers of the United States Bankruptcy are the International Bankers, via the United Nations, the World Bank and the International Monetary Fund. All United States Offices, Officials, and Departments are now operating within a de facto status in name only under Emergency War Powers. With the Constitutional Republican form of Government now dissolved, the receivers of the Bankruptcy have adopted a new form of government for the United States. This new form of government is known as a Democracy, being an established Socialist/Communist order under a new governor for America. This act was instituted and established by transferring and/or placing the Office of the Secretary of Treasury to that of the Governor of the International Monetary Fund. Public Law 94-564, page 8, Section H.R. 13955 reads in part: "The U.S. Secretary of Treasury receives no compensation for representing the United States?’

Gold and silver were such a powerful money during the founding of the united states of America, that the founding fathers declared that only gold or silver coins can be "money" in America. Since gold and silver coinage were heavy and inconvenient for a lot of transactions, they were stored in banks and a claim check was issued as a money substitute. People traded their coupons as money, or "currency." Currency is not money, but a money substitute. Redeemable currency must promise to pay a dollar equivalent in gold or silver money. Federal Reserve Notes (FRNs) make no such promises, and are not "money." A Federal Reserve Note is a debt obligation of the federal United States government, not "money?’ The federal United States government and the U.S. Congress were not and have never been authorized by the Constitution for the united states of America to issue currency of any kind, but only lawful money, -gold and silver coin.

It is essential that we comprehend the distinction between real money and paper money substitute. One cannot get rich by accumulating money substitutes, one can only get deeper into debt. We the People no longer have any "money." Most Americans have not been paid any "money" for a very long time, perhaps not in their entire life. Now do you comprehend why you feel broke? Now, do you understand why you are "bankrupt," along with the rest of the country?

Federal Reserve Notes (FRNs) are unsigned checks written on a closed account. FRNs are an inflatable paper system designed to create debt through inflation (devaluation of currency). when ever there is an increase of the supply of a money substitute in the economy without a corresponding increase in the gold and silver backing, inflation occurs.

Inflation is an invisible form of taxation that irresponsible governments inflict on their citizens. The Federal Reserve Bank who controls the supply and movement of FRNs has everybody fooled. They have access to an unlimited supply of FRNs, paying only for the printing costs of what they need. FRNs are nothing more than promissory notes for U.S. Treasury securities (T-Bills) - a promise to pay the debt to the Federal Reserve Bank.

There is a fundamental difference between "paying" and "discharging" a debt. To pay a debt, you must pay with value or substance (i.e. gold, silver, barter or a commodity). With FRNs, you can only discharge a debt. You cannot pay a debt with a debt currency system. You cannot service a debt with a currency that has no backing in value or substance. No contract in Common law is valid unless it involves an exchange of "good & valuable consideration." Unpayable debt transfers power and control to the sovereign power structure that has no interest in money, law, equity or justice because they have so much wealth already.

Their lust is for power and control. Since the inception of central banking, they have controlled the fates of nations.

The Federal Reserve System is based on the Canon law and the principles of sovereignty protected in the Constitution and the Bill of Rights. In fact, the international bankers used a "Canon Law Trust" as their model, adding stock and naming it a "Joint Stock Trust." The U.S. Congress had passed a law making it illegal for any legal "person" to duplicate a "Joint Stock Trust" in 1873. The Federal Reserve Act was legislated post-facto (to 1870), although post-facto laws are strictly forbidden by the Constitution. [1:9:3]

The Federal Reserve System is a sovereign power structure separate and distinct from the federal United States government. The Federal Reserve is a maritime lender, and/or maritime insurance underwriter to the federal United States operating exclusively under Admiralty/Maritime law. The lender or underwriter bears the risks, and the Maritime law compelling specific performance in paying the interest, or premiums are the same.

Assets of the debtor can also be hypothecated (to pledge something as a security without taking possession of it.) as security by the lender or underwriter. The Federal Reserve Act stipulated that the interest on the debt was to be paid in gold. There was no stipulation in the Federal Reserve Act for ever paying the principle.

Prior to 1913, most Americans owned clear, allodial title to property, free and clear of any liens or mortgages until the Federal Reserve Act (1913)

"Hypothecated" all property within the federal United States to the Board of Governors of the Federal Reserve, -in which the Trustees (stockholders) held legal title. The U.S. citizen (tenant, franchisee) was registered as a "beneficiary" of the trust via his/her birth certificate. In 1933, the federal United States hypothecated all of the present and future properties, assets and labor of their "subjects," the 14th Amendment U.S. citizen, to the Federal Reserve System.

In return, the Federal Reserve System agreed to extend the federal United States corporation all the credit "money substitute" it needed. Like any other debtor, the federal United States government had to assign collateral and security to their creditors as a condition of the loan. Since the federal United States didn’t have any assets, they assigned the private property of their "economic slaves", the U.S. citizens as collateral against the unpayable federal debt. They also pledged the unincorporated federal territories, national parks forests, birth certificates, and nonprofit organizations, as collateral against the federal debt. All has already been transferred as payment to the international bankers.

Unwittingly, America has returned to its pre-American Revolution, feudal roots whereby all land is held by a sovereign and the common people had no rights to hold allodial title to property. Once again, We the People are the tenants and sharecroppers renting our own property from a Sovereign in the guise of the Federal Reserve Bank. We the people have exchanged one master for another.

This has been going on for over eighty years without the "informed knowledge" of the American people, without a voice protesting loud enough. Now it’s easy to grasp why America is fundamentally bankrupt.

Why don’t more people own their properties outright?

Why are 90% of Americans mortgaged to the hilt and have little or no assets after all debts and liabilities have been paid? Why does it feel like you are working harder and harder and getting less and less?

We are reaping what has been sown, and the results of our harvest is a painful bankruptcy, and a foreclosure on American property, precious liberties, and a way of life. Few of our elected representatives in Washington, D.C. have dared to tell the truth. The federal United States is bankrupt. Our children will inherit this unpayable debt, and the tyranny to enforce paying it.

America has become completely bankrupt in world leadership, financial credit and its reputation for courage, vision and human rights. This is an undeclared economic war, bankruptcy, and economic slavery of the most corrupt order! Wake up America! Take back your Country."

To silence Traficant, certain members of Congress found a means to put him in prison on trumped-up charges. The hearings were like a kangaroo court; whereby, he was not allowed to bring in certain witnesses, documents, and testimony. Judge Lesley Wells of the U.S. District Court in Cleveland, Ohio, was prejudiced toward Traficant and refused to set bail for Traficant, ordering that service of his term should begin immediately. Denial of bail also sets aside all pending appeals to Traficant's conviction. Traficant is now serving an eight year prison sentence in federal prison for his April 11, 2002 conviction on trumped-up felony charges of bribery, corruption and tax evasion.

By a vote of 420-1, Traficant was also expelled from the House of Representatives. House Resolution No. 495 read simply, "Resolved, That, pursuant to article I, section 5, clause 2 of the United States Constitution, Representative James A. Traficant, Jr., be, and he hereby is expelled, from the House of Representatives." Traficant is the second member of the House to be expelled since the Civil War and the fifth in congressional history. Traficant, addressing the House, said "I'll go to jail before I resign and admit to something I didn't do.""

Traficant, A former county sheriff, had been elected to Congress nine times by the people of his Mahoning Valley, Ohio district.

Remember, James Traficant is STILL in prison!

Thanks for reminding us about this Pete! Here's a sample of what more we can find at http://www.traficant.com/

EASIER TO FIND ELVIS THAN A GOOD FACTORY JOB HERE IN AMERICA November 12, 1997

Mr. Speaker, Kodak is laying off 10,000 workers. Now if that is not enough to overexpose your most recent negative, Fruit of the Loom is cutting 3,000 jobs and moving to Mexico. Unbelievable. It is getting easier to find Charlie Trie and Elvis than it is to find a good factory job here in America.

Beam me up. I think it is time for Congress to ask themselves a very simple little commonsense question: If our trade program is so great, why does Japan not do it? Think about that.

I yield back all the balance of jobs and say one last thing here. From snapshots to long johns, American workers just keep getting their assets kicked.

The downside of change

Our work expanded to include the federal reserve banking system because it was a pivotal event in American history surrounded by controversy. The source of much of the funding for the Third Way was via the Rothschilds' Bank of England so I had to know who they were too. But I never studied economics in college and I eventually relied heavily on alternative writers who seemed to be the only sources willing to discuss the implications of building the U.S. on illusionary money and credit (or teach me about the fed, CFR, TC, et. al.). I still have only a rudimentary understanding of how international bankers manipulated our system and how their stock markets work. Because I know so little about it, I trusted the economists who warned us about the flaws in the banking system, mainly because their predictions seemed to correspond to the overall communitarian theory of controlling everything. I did spend some time reading about the housing market and the bubble surrounding it, because so much of my early ACL research was on the reinvented government's agenda for creating safe and afforable housing and granting neighborhood cops new authority to impose and enforce stricter land use regulations.

It's one thing to read and talk about the coming economic collapse, it's quite another to watch it go down. The unpleasantness of this subject is one of the main reasons people I know refused to consider our work. So many Americans don't want to think about the possibility of losing everything. Our citizens exist in some kind of weird "happy" zone where everything will be "fine," and everything they own is really theirs, even when they're making monthly payments on most of it.

In the early days I tried my best to get my friends and family to read some of the financial things I was finding, especially the ones who own property and businesses. They pooh poohed me with all kinds of reasons why they didn't need to know anything. As years went by and nothing "major" happened to the U.S. economy, my decision to not go into anymore debt, to not buy another "real" house or invest my time in a career and regular employment looked pretty stupid. Every now and then, I get a call or an email from an old friend who says they "heard" I'm living in a tent in rural Alaska and what the hell is up with that? I never explain anymore that the whole system is crashing and this is my hedge against homelessness, because that's not an acceptable topic of conversation with lower-middle class people. I own my gertees, no bank can close or repo them, and even if something happens and I do lose it in other ways, I know how to build more of them. I'll have a warm, comfortable round room for my family to call "home" until there's no land left to put it on.

The people who recommended investing in gold and silver are being proven right. I think the communitarian plan to rebuild the world is going into hyperdrive.

Rense.com has a lot of good links to articles in the current news about Morgan Stanley and how a Chinese investor could end up with 49% of their stock. That sure plays into Nordica's theory that hidden Chinese women playing ma jong are the ones pulling the NWO strings.

Anyway, I sure hope all our readers, supporters, friends, family and loved ones are prepared for a very rough winter. It's all about quality of life now, isn't it?

'The World As We Know It Is Going Down'

By Marc Pitzke in New York

"Panic is the word of the hour on Wall Street. Now even Morgan Stanley is fighting for survival. The commercial bank Wachovia and China's Bank Citic are being discussed as possible rescuers. The crisis has led President Bush to cancel a trip."
http://www.spiegel.de/international/business/0%2C1518%2C578944%2C00.html

Apocalypse Down Under: Aussie bank’s write-offs signal doom for Wall Street

For years we've read articles assuring us that a huge economic disaster was looming. While it was never a focus of our research, we've become convinced our system's crash is necessary to bring about massive communitarian change. The world's final transference into communitarian global governance is hastened during any kind of a panic. A big stock market crash could be very useful in subduing arrogant, selfish Americans who use up more than their share of the world's precious resources. What makes Americans think they have the right to own anything anyway?

What is The Stop Excessive Speculation Act, and why was it blocked? One of the sponsors, Senator Patty Murray (D-WA) was responsible for bringing the WTO Ministerial to Seattle in 1999. Main sponsor Harry Reid shares values with DLC-Third Way Senate leader Evan Bayh, and Reid introduced the “Pandemic Preparedness and Response Act” in 2005. He's a player.

From Peter Myer's elist:

(1) National Australia bank’s write-offs “signal doom for Wall Street”

From: Paul de Burgh-Day, Date: Mon, 4 Aug 2008

Apocalypse Down Under: Aussie bank’s write-offs signal doom for Wall Street
By Mike Whitney
Online Journal Contributing Writer
Aug 1, 2008, 00:31

http://onlinejournal.com/artman/publish/article_3571.shtml

Monday’s trading on the New York Stock Exchange (NYSE) was a real humdinger. It started off with the White House announcing that this year’s fiscal deficit would soar to a new record of nearly $500 billion. That was followed by news of rising oil prices, weak quarterly earnings and a slowdown in consumer spending. Plunk, plunk, plunk; one domino after another.

By mid-morning the markets were in full retreat. That’s when investment giant Merrill Lynch announced that it would notch a $4.6 billion second-quarter loss and write-downs of $9.4 billion on collateralized debt obligations (CDOs) and other mortgage-related assets. That’s when the dookie really hit the fan. Stocks quickly went vertical and the rout was on. By the closing bell the Dow was down 240 points. Traders staggered from floor of the exchange slumped-over and bedraggled, looking like they just got a missive from the draft board. The optimism is being wrung from the markets faster than the credit at an over-levered hedge fund. Every day brings another dismal surprise.

And, yet, on Tuesday, the market staged a valiant comeback surging 260 points in a matter of hours. It was enough to give the fund managers a bit of a lift and hope that things are finally turning around. But the market’s woes are far from over. They’re deeply rooted and spreading like Kudzu throughout the system. The International Monetary Fund summed it up in warning they issued earlier in the week: “Global financial markets are ‘fragile’ and indicators of systemic risk remain ‘elevated’ . . . Credit quality ‘across many loan classes has begun to deteriorate with declining house prices and slowing economic growth.’ Bank balance sheets are under ‘renewed stress’ and the decline in bank share prices has made it more difficult to raise new capital. [There is an] ‘increased likelihood of a negative interaction between banking system adjustment and the real economy.’” (Financial Times)

The IMF also stuck by its earlier prediction that total losses to financial institutions from the credit crisis would reach $1 trillion ($945 billion) a sum that will have devastating consequences for industry, consumers and the global economy. Tuesday’s festivities on Wall Street are likely to be short lived. It’s just a one day lull in the storm.

Over at Nouriel Roubini’s blog, Dr. Doom made this observation about Merrill Lynch’s troubles, “Merrill Lynch’s decision to ‘sell’ a good chunk of its remaining CDOs at 22 cents to the dollar has been widely praised as the firm finally recognizing the full extent of its losses on these toxic instruments. This batch of $30.6 billion of CDOs was already marked down to $11.1 billion. Now with the ‘sale’ of it to Lone Star at a price of 6.7 billion Merrill Lynch is taking another $4.4 billion write-down and ‘selling’ it at 22% of the original face value. But is this a market-based ‘sale’? No way, calling this transaction a ‘sale’ is a joke.” (Nouriel Roubini’s Global EconoMonitor)

This isn’t a “sale”; it’s more like abandoning a sinking ship. The investment chieftains are getting scorched by their downgraded assets and have started dumping them at any cost. There’s no market for mortgage-backed anything now, and there won’t be until housing finds a bottom. By the time that happens, most of the CEOs and CFOs in the mega-brokerage houses will be squatting on street corners on the lower East Side with tin cup in hand. It’s that bad.

The Merrill Lynch deal illustrates just how crazy things have gotten. Merrill said it “will provide financing to the purchaser for approximately 75 percent of the purchase price.” Whoa. In other words, the banks are so anxious to offload their junk-paper, they’re almost paying people to take it off their hands. Now that’s desperation! No wonder the market is snorkeling its way to the bottom of the fishbowl. The problems haunting the financial markets have cross-pollinated with the real economy and are spreading misery everywhere. Unemployment is rising, growth is slowing, inflation is up, the dollar is down. We’ve heard it many times before, but it’s still jarring to see General Motors stock fall below Bed & Bath, or Starbucks shut down 600 stores, or million dollar McMansions sell for $425,000, or millions of middle-class families join the food stamp rolls. That’s tragic no matter how you slice it.

Now that the working stiff is maxed out on his mortgage, worried about losing his job, and trying to keep food on the table, the least congress can do is scatter the oil speculators. Right?

Wrong. On Monday, the Financial Times reported, “A US Senate proposal designed to curb speculation and increase transparency in the energy markets was blocked by Republican legislators on Friday. The move frustrates Democratic efforts to show the party is taking action on record petrol prices. The Stop Excessive Speculation Act, sponsored by Harry Reid, the Senate majority leader, fell 10 votes short of clearing a procedural hurdle.”

Unbelievable. Four dollar gasoline and millions of consumers that are flat broke and congress still refuses lend a hand? What a scruffy band of sandbaggers.

The scariest news of the week comes from Down Under, where the National Australia Bank (NAB) announced it would “slash a £400m bond sale by two thirds. The retreat comes days after the Melbourne lender shocked the markets by announcing a 90pc write-down on its £550m holdings of US mortgage debt, an admission that it AAA-rated securities are virtually worthless. . . . The decision by National Australia Bank to make drastic provisions on its US mortgage debt could have ramifications in the US itself. It opted for a 100pc write-off on a clutch of ‘senior strips’ of collateralized debt obligations (CDO) worth £450m -- even though they were all rated AAA.” (Ambrose Evans Pritchard, “Australia faces worse crisis than America,” UK Telegraph)

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/30/cnoz130.xml

This is a huge story with grave implications for America’s struggling banking system. No wonder the establishment media is avoiding it like the plague. If AAA rated CDOs are worthless, then some of the biggest financial institutions in the country will be packed off to the boneyard feet first.

The original article appeared in the Business Spectator and was titled “NAB will shock Wall Street,” by Robert Gottliebsen. “Shock” is an understatement. This is more like a meat cleaver crashing down on a butcher block. Schwook! This is a must-read for anyone who is following the meltdown in the financial markets.

Here is an extended excerpt from Gottliebsen’s article:

http://www.businessspectator.com.au/bs.nsf/Article/NAB-will-shock-Wall-Street-GV4M7?OpenDocument&src=stf

“The National Australia Bank’s decision to write off 90 per cent of its US conduit loans will have dramatic repercussions around the world. Wall Street will be deeply shocked when they understand the repercussions of what NAB has done. It is clear global banks have nowhere near provided for their exposures to US housing loans which in the words of John Stewart are experiencing a ‘meltdown.’

“We are now way beyond subprime. NAB says that it is suffering a 55 per cent loss on American housing loans -- an event that has never happened in the history of a developed country in recent memory. This is an unprecedented event and means that the cost of bailing out the US financial system is now far beyond the highest estimates. A US recession is now locked in, but more alarmingly, 55 per cent loan losses point to the possibility of a depression.

“It means the cost of bailing out housing exposures to the two mortgage insurers will be so great that it will leave no room to bail out anything else and there are several US banks that are now in big trouble. NAB says that the dislocation in the residential market is separate from the corporate market, but the flow on is inevitable.” (The Business Spectator, ”NAB will shock Wall Street”)

The conduits are off-balance sheets operations run by the banks which contain hundreds of billions of dollars of bonds which are now essentially worthless. So far, many of the banks have not accurately reported the losses from these operations hoping that the housing market will stabilize and the value of the bonds will rebound. The action taken by the National Australia Bank is a “game-changer”; it’s like the Grim Reaper swooping down on Wall Street and lopping-off the top of every big investment bank in downtown Manhattan.

Gottliebsen again: “The global banks have been marking to market the assets they held on their balance sheet, but the vast amounts held in so called ‘conduit trust accounts’ have not been written down because they were not marketable. NAB wrote them down when they saw the bad mortgages. . . . US banks have written down $450 billion in bad housing loans. The revelation from NAB means that they will now certainly need to take provisions to $1,000 billion. But write-downs of $1,300 billion and perhaps even more are on the cards.” (Business Spectator)

Tuesday’s “sucker rally” in the stock market was just the convulsive writhing of a dying bull. It won’t last. Once the bad news sinks in, investors will pull up stakes, equities will fall, and banks will crumble. The big hand just inched a little closer to midnight.

Mike Whitney lives in Washington state. He can be reached at fergiewhitney@msn.com

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