July 3, 2010
by Jesse
Jesse’s Café Américain

Things are changing. The world has lost confidence in the dollar reserve currency regime thanks to the serial abuses of Greenspan and Bernanke, and the abusive use of power by the current and previous Administrations. Things that have been in place on a global scale for fifty years change slowly. But that change is happening, and that is what you are seeing in the chart below.

As I noted last year, the SDR recalibration would be a focal point for the BRIC’s to attempt to dislodge the dollar hegemony. The US and UK are fighting it with their bag of financial tricks. This is why Obama refused to touch the gangs of NY in his so called reforms. The big banks and hedge funds are as much an instrument of US foreign policy as is its military. Europe is learning this lesson, and it is taking measures to protect itself. This is part of the long range forecast, and is known as the ‘currency wars.’….

The oligarchs have ruined the US and the UK. They will now seek to subtly starve the middle and lower classes to pay for their piles of wealth which are largely pieces of paper, useless wagers, and will resist every effort to repeal the absolutely irresponsible tax cuts enacted during the administration of their chosen candidate G. W. Bush, and the setup to divert reform through their stalking horse, Barrack Obama.

They will speak out of both sides of their mouths. Unemployment insurance, Social Security benefits, healthcare, relief for the poor, and pensions are bad, and their unfortunate recipients lazy, stupid and an expendable drag on society. But the maintaining of ill gotten gains of the oligarchs, the enormous fortunes obtained through financial fraud, and paying little or no effective taxes on them through various loopholes, is a somehow a requirement for economic recovery. And so we see how reform is floundering, and the smirks of the congressional chimps and pigmen are maintained even as the nation suffers the worst unemployment since the Great Depression.

The US cannot obtain a sustained recovery without serious and significant financial reform and restructuring of its economy, and the legal repatriation of the wealth stolen by the financiers through fraud. What complicates this is that the politicians have allowed themselves to be tainted by the same brush of corruption, so in the short term everything is illusion, deception, and cover up. Slowly but surely, the truth will out.

The bad debts will be liquidated. They cannot be repaid. Starving the people alone will not work, and selling the sovereign assets will not be enough. Taxes would have to be raised to post WW II levels, along the lines of 70+% for the wealthy. How likely is this? The wealthy elite will promote the confiscation of pensions and Social Security first. These will be dangerous times, full of deception. Greed and fear will reach high emotional states.

Therefore default, albeit selective, is the only rationale alternative, excepting the contrivance of yet another war. And that default will be accomplished through devaluation of the currency, the basis of the debt, which is the Fed’s note of zero duration. It will spread the pain throughout all holders of US debt. Bernanke and his economists know this.

They will not admit it, because they are playing a confidence endgame with the people and with the holders of US sovereign debt, many of whom are foreign. The last thing they wish to cause is a panic. But at some point, there will be one, and it will not be pretty. The Democrats will attempt to kick that can down the road, delivering it to the successor to Obama, who is like to be a one term wonder ‘unless something happens.’

Click here to read the complete article Gold Charts; Bond Crash; Currency Wars; Subornation of Perjury, and Financial Coup d’etat.