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The Pentagon’s Alarming Project: Avian Flu Biowar Vaccine!

  • I am no expert on diseases. But the recent mixing of live H5N1 avian flu virus and H3N2 seasonal flu virus in a vaccine is truly alarming. This is an article published last year by F. William Engdahl :
    There is alarming evidence accumulated by serious scientific sources that the US Government is about to or already has ‘weaponized’ Avian Flu. If the reports are accurate, this could unleash a new pandemic on the planet that could be more devastating than the 1918 Spanish Flu epidemic which killed an estimated 30 million people worldwide before it eventually died out. Pentagon and NIH experiments with remains in frozen state of the 1918 virus are the height of scientific folly. Is the United States about to unleash a new racially selective pandemic through the process of mandatory vaccination with an alleged vaccine “against” Avian Flu?
    There is reason to believe that sections of the international pharmaceutical industry cartel are acting in concert with the US Government to develop a genetically modified H5N1 virus substance that could unleash a man-made pandemic, perhaps more deadly than the 1918 ‘Spanish Influenza’ pandemic claiming up to 30 million lives.1
    Rima E. Laibow, MD, head of the Natural Solutions Foundation, a citizen watchdog group monitoring the pharmaceutical industry states, “Our best intelligence estimate is that pandemic Avian Flu has already been created through genetic engineering in the United States, fusing the deadly genome of the 1918 Pandemic, misnamed the ‘Spanish Flu’, with the DNA of the innocuous H5N1 virus in a growth medium of human kidney cells, according to the National Institutes of Health and the vaccine’s manufacturer. Some virologists believe that this would insure that the man-made mutant virus recognizes human cells and knows how to invade them.” 2
    If true, as Laibow points out, “A basic virological fact that the public has not been told is that it is impossible to make a vaccine against a virus that does not yet exist. Public relations efforts to the contrary, IF a vaccine is being made against the Avian Flu virus in its pandemic form, that means that the pandemic virus must already exist, period, end of discussion.”3
    The genome of the 1918 pandemic, the so-called “Spanish Flu”, was recently intentionally resurrected by the United States government from a frozen corpse that died of the flu in 1918 in Alaska. Because of that resurrection, both the Avian Flu, and its “vaccine” are now a significant threat to public health.
    The Spanish Flu, which was not Spanish at all, was created in the US through an early bioweapons program and injected into healthy young men (i.e., ’soldiers’) as the first mandatory vaccination in the military during World War I. The “Spanish Flu”, which originated in Kansas on US Military bases, was one of the deadliest pandemics in modern history. It was also one of the most successful biological weapons ever created, until now.
    Aspartame and Tyson Foods doubts
    To date, there have only been around 385 human cases of Avian Flu identified worldwide (assuming those identifications are trustworthy, of course), with 243 deaths. To put the absurdity of this effort into perspective, Laibow points out, Sudden Cardiac Death (SCD), which researchers believe is heavily associated with aspartame consumption, is a leading cause of death which, according to the CDC, for example, killed 460,000 Americans in 1999 and the numbers keep rising (
    But, aspartame is not under criticism. Interesting as a footnote on Aspartame, G.D. Searle, the Chicago drugs company that held the patent on Aspartame was in danger of losing its license from the US Government Food & Drug Administration in the 1980’s until Donald Rumsfeld, out of Government, was named President of Searle. Rumsfeld used his contacts in Washington to get the FDA to approve Aspartame despite known tests showing serious health effects on rats.
    As I document in detail in my book, Seeds of Destruction: The Hidden Agenda of Genetic Manipulation, the same Don Rumsfeld went on to become chairman and principal stockholder of a California pharmaceutical company, Gilead Sciences Inc., which developed and patented Tamiflu in 1996, first as a drug for AIDS, later as a vaccine for H5N1 Avian Flu. In 1997 Donald H. Rumsfeld was named Chairman of the Board of Gilead Sciences, where he remained until early 2001 when he became Defense Secretary. As Secretary he refused to sell his stock at the time he came under conflict of interest allegations when he ordered $1 billion worth of Tamiflu be bought to injected into the US military personnel as a “precaution.” It was later proven that Tamiflu was in no antidote for H5N1 and its side effects were sometimes very severe.
    Laibow adds, “Given the shockingly obvious lack of any threat from an un-weaponized H5N1 virus, how can we explain the Bush Administration spending billions of dollars preparing each of the 50 States, for what it calls the ‘inevitable Bird Flu pandemic,’ which they say could kill half or more of all Americans and similar numbers of people around the globe?”4
    Ominously, on June 3, Associated Press reported, “Tyson Foods Inc. has begun killing and burying the carcasses of 15,000 hens from a flock that tested positive for exposure to a strain of the bird flu in northwest Arkansas, state officials said Tuesday.”
    Tyson Foods is the largest industrialized producer of chickens in the world and has been repeatedly under attack for its unsanitary conditions of breeding and slaughtering. In January 2005, a US Government Accountability Office (GAO) report to the US Senate, “Safety in the Meat and Poultry Industry,” concluded that US meat and poultry processing plants had “one of the highest rates of injury and illness of any industry.” They cited exposure to “dangerous chemicals, blood, faecal matter, exacerbated by poor ventilation and often extreme temperatures. Workers typically faced hazardous conditions, loud noise, must work in narrow confines with sharp tools and dangerous machinery.”
    The industrialization of chicken-raising and slaughtering in the USA has progressed to the point that by 2003 when the first cases of H5N1 Avian Flu virus were reported from Asia, five giant multinational agribusiness companies dominated the production and processing of chicken meat in the United States. The five companies were Tyson Foods, the largest in the world; Gold Kist Inc; Pilgrim’s Pride; ConAgra Poultry; and Perdue Farms.5 Most outbreaks of Avian Flu in Asia have been traced back to such mass chicken industrial factory centers.6
    In May this year, The Canadian Press reported from Toronto, “An experiment mating H5N1 avian flu viruses and a strain of human flu in a laboratory produced a surprising number of hybrid viruses that were biologically fit, a new study reveals. And while none of the offspring viruses was as virulent as the original H5N1, about one in five were lethal to mice at low doses, showing they retained at least a portion of the power of their dangerous parent.” 7
    The Toronto article went on, “The work suggests that under the right circumstances – and no one is clear what all of those are – the two types of flu viruses could swap genes in a way that might allow the H5N1 virus to acquire the capacity to trigger a pandemic. That process is called reassortment. ‘This study is just showing exactly that: There is a risk this virus can successfully reassort with a human virus,’ said Richard Webby, director of the World Health Organization’s collaborating centre for influenza research at St. Jude Hospital in Memphis, Tennessee.” 8
    Pentagon Bioweapon research
    Prof. Mathew Meselson, a professor of molecular biology at Harvard, and well-respected scientist in the area of chemical and biological warfare, confirms that the United States government has extensively researched and developed biological weapons in the past. Meselson described an American facility, north of Terre Haute, Indiana, built in 1944 that would have produced 500,000 four pound anthrax bombs monthly once in full operation.
    Meselson was part of a team that proved the accidental release of anthrax at a Soviet facility in 1979, disproved charges of biological warfare in Laos and Cambodia in the late 1970s, and was a driving force behind popularizing the Chemical Weapons Convention in 1994.
    Since coming in office, the Bush-Cheney Administration has done much to weaken that Chemical Weapons Convention as well as ones on biological weapons. One of George W. Bush’s first acts as President in early 2001 was to oppose a proposed international Biological and Toxic Weapons Protocol, without explanation, leading to the death of the talks.
    In a 2004 study, the British Medical Association warned that the world was perhaps only a few years away from “terrifying biological weapons capable of killing only people of specific ethnic groups,” citing advances in genetic weapons technology. 9
    The US Department of Homeland Security has ominously enough announced it is ordering production and stockpiling of a pandemic influenza vaccine: “The U.S. Government is taking steps to minimize the need to make vaccine allocation decisions by supporting efforts to increase domestic influenza vaccine production capacity. Significant funding is being provided to develop new vaccine technologies that allow production of enough pandemic influenza vaccine for any person in the United States who wants to be vaccinated within six months of a pandemic declaration.” 10
    The curious role of Sanofi Pasteur
    The US Government has been financing the development of a vaccine against H5N1 on a “fast track” basis since 2004. Sanofi Pasteur in Swiftwater, Pennsylvania, a subsidiary of the giant French pharmaceutical firm, the third largest in the world, manufactured an inactivated vaccine made from an H5N1 virus isolated in Southeast Asia in 2004. Sanofi Pasteur, part of the French-based Sanofi Aventis Group, was awarded a contract by the US Government’s National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health (NIH), NIAID to manufacture the H5N1 vaccine in May 2004.11
    In April 2007 the FDA approved the Sanofi Pasteur vaccine for H5N1 even though one year before the FDA cited Sanofi Pasteur for producing contaminated Fluzone vaccines.12 The FDA approved H5N1 vaccine is itself apparently not really effective in event of a human-to-human outbreak of Avian Flu. On announcing its approval, the FDA stated, “two injections given 28 days apart may provide ‘limited’ protection if a pandemic occurs. About 45% of people who got the vaccine in a study developed an immune response to the virus.”13
    Until now H5N1 has not mutated into a form that can easily spread from person to person. Is that what the researchers at Sanofi Pasteur and various labs under contract to the US Government are engaged in? If so it would be classified Top Secret, clearly. The respected British magazine, New Scientist, commented, “If H5N1 does mutate, it is unclear if vaccines developed now would still work against a pandemic strain. Manufacturers could tailor a new vaccine to that strain, but current production methods take months.”14
    The magazine noted that research on the Sanofi vaccine was conducted by the National Institutes of Health as part of the US Government’s efforts to prepare for a flu pandemic. The salient question is whether they prepare “for a flu pandemic” or whether they prepare a flu pandemic. Why is the US Government spending hundreds of millions of taxpayer dollars to stockpile this H5N1 vaccine which likely would not work against such a pandemic outbreak?
    On July 2, 2008, the London Daily Telegraph newspaper reported, “Three Polish doctors and six nurses are facing criminal prosecution after a number of homeless people died following medical trials for a vaccine to the H5N1 bird-flu virus.” 15
    The report added that the medical staff, from the northern town of Grudziadz, were being investigated over medical trials on as many as 350 homeless and poor people last year, which prosecutors say involved an untried vaccine to the highly-contagious virus. Authorities claim that the alleged victims received €3 to be tested with what they thought was a conventional flu vaccine but, according to investigators, was actually an anti bird-flu drug. The director of a Grudziadz homeless centre, Mieczyslaw Waclawski, told a Polish newspaper that last year, 21 people from his centre died, a figure well above the average of about eight.
    The Polish report did not specify if it was the vaccine being developed under contract to the US Government Department of Homeland Security by Sanofi-Pasteur. However, it is known that Sanofi-Pasteur has been producing large quantities of such a vaccine at a factory they have in China.
    Dr. Laibow reports that the “Pandemic Avian Flu Vaccine” was scheduled to be delivered to the United States this month by the French vaccine maker, Sanofi Pasteur, from a facility they own in China, where it is being produced. The US Government issued its “Vaccine” allocation plan in July. Laibow fears that a most sinister scenario of a deliberate release of Avian Flu pathogens on the population that could activate martial law and forced vaccination with resulting deaths in the millions could be imminent.
    Spanish Flu virus revived by Pentagon
    In 2003 US Army scientists created ‘Spanish Flu’ virus in the laboratory. According to a report at the time by the watchdog group, The Sunshine Project, which monitors biological and chemical weapons research of the United States Government issued a statement that “The ‘Spanish Flu’ influenza virus that killed 20-40 million people in 1918 is currently under reconstruction. Several genes of the extraordinarily lethal 1918 flu virus have been isolated and introduced into contemporary flu strains. These proved to be lethal for mice, while virus constructs with genes from a current flu virus types had hardly any effect. These experiments may easily be abused for military purposes, but provide little benefit from a medical or public health point of view.”
    They continued, “The 1918 Spanish Flu was highly infectious and – in comparison to contemporary flu viruses – killed a very high percentage of those infected, including many younger people. The Spanish Flu alone caused the medium life expectancy in the US in 1918 to drop by 10 years. Hence, flu viruses are perceived today as a serious biological warfare threat. Just two weeks ago, a 15 million dollar research grant was awarded in the US to develop protective measures especially against a bioterrorist attack with flu viruses.”
    The statement added, “Despite the very dangerous nature of the 1918 virus, efforts to reconstruct it started in the mid 1990s, when Dr Jeffrey Taubenberger from the US Armed Forces Institute of Pathology in Washington DC succeeded in recovering and sequencing fragments of the viral RNA from preserved tissues of 1918 victims. In the current issue of the scientific journal Emerging Infectious Diseases new genetic details of the 1918 flu virus will be published.”
    Most ominously, they report, “But after (partially) unravelling the genetic sequence of the virus, the scientists went a step further and began bringing the Spanish flu back to life. Unnoticed by the public, they succeeded in creating a live virus containing two 1918 genes that proved to be very lethal in animal experiments. This experiment is only one genetic step away from taking the 1918 demon entirely out of the bottle.” 16
    They conclude, “A resuscitation of the Spanish flu is neither necessary nor warranted from a public health point of view. Allegedly, the recent experiments sought to test the efficacy of existing antiviral drugs on the 1918 construct. But there is little need for antiviral drugs against the 1918 strain if the 1918 strain had not been recreated in the first place. ‘It simply does not make any scientific sense to create a new threat just to develop new countermeasures against it.’ says Jan van Aken, biologist with the Sunshine Project, ‘Genetic characterization of influenza strains has important biomedical applications. But it is not justifiable to recreate this particularly dangerous eradicated strain that could wreak havoc if released, deliberately or accidentally.’”17
    Let us sincerely hope not, but as Prof. Stephen Block, Stanford University biophysicist with years of experience in classified Pentagon and US Government biological research remarked in another context, “We’re tempted to say that nobody in their right mind would ever use these things.” Block added, “But not everybody is in their right mind…” 18
    Sanofi Pasteur delivers H5N1 vaccine
    On April 28 of this year in an official Press Release from Sanofi Pasteur US headquarters in Swiftwater, Pennsylvania and Lyon, France, the company stated, “Sanofi Pasteur, the vaccines division of Sanofi-Aventis Group, announced today that the US Department of Health and Human Services (HHS) has accepted H5N1 bulk vaccine antigen to produce approximately 38.5 million doses of vaccine to protect against a new strain of avian influenza. Sanofi Pasteur has a multi-year contract with HHS as part of its pandemic program, and will receive a payment of $192.5 million booked in the second quarter of 2008 for acceptance of the bulk vaccine lot.”19
    Then, on June 16 of this year, Sanofi Pasteur issued the following release announcing that it will, “donate 60 million doses of H5N1 vaccine to the World Health Organization (WHO) over 3 years for the establishment of an H5N1 vaccine global stockpile.”
    The President and CEO of Sanofi Pasteur, Wayne Pisano, said in the release, “The H5N1 virus is currently circulating in some of the poorest regions of the world and an outbreak of pandemic influenza would most likely hit populations living in areas with limited access to vaccines. This donation of H5N1 vaccine aims to address the needs of those most vulnerable populations. In addition to supporting the efforts of governments,” Pisano added, “it is essential that industry collaborates with international organizations such as WHO, the Bill and Melinda Gates Foundation and other global health players. This is the best way to build a stockpile of vaccines for developing nations, ready to be deployed on the ground in the event of a pandemic flu outbreak.”20
    The Bill and Melinda Gates Foundation, in addition to being a financial supporter of the so-called Doomsday Seed Vault in the Arctic, has dedicated its foundation billions to support population control especially in Africa. Among other projects they, as well as the Rockefeller Foundation, are financing The Alliance for a Green Revolution in Africa, whose head is former UN Secretary General Kofi Annan. 21
    As the world’s leading influenza vaccine manufacturer, Sanofi Pasteur produces approximately half of the influenza vaccine distributed worldwide. In the US it produced more than 40 percent of the influenza vaccine distributed for the 2007-2008 influenza season. The fact that the US Government has revived the 1918 Spanish Flu virus to make “tests” indicates that anything is possible. There are in this world some people not in their “right mind.” God forbid if it is so in this instance.


  • See also :
    Live Avian Flu Virus Placed in Baxter Vaccine Materials Sent to 18 Countries
    Alex Jones – Weaponized Avian Flu ?
    US Air Force Study Suggests 2009 Influenza Pandemic in 1996
    Is the World Heading Towards Pandemic Avian Flu ?
    Bayer Exposed (HIV Contaminated Vaccine)!


March 18, 2009 Posted by | EndTimes, Medicine & Health, Social Trends | , | 30 Comments

Bank of England Warns: Tensions in Banking System at Fever Pitch!

  • The market has rallied dramatically over the past week. Are economic conditions improving? NO ! Is the financial crisis getting resolved? NO ! Is the banking system solvent? NO ! And the DJIA  rallies over a thousand points. 
  • Is this the beginning of a Bull market?  A study of the DJIA for the past 100 years shows that bear market rallies are even more spectacular than bull market rallies. All these sharp and abrupt moves upwards are signs that the patient is in his final death throes!
  • The Telegraph reports on the British banking system:
    Tensions in the financial system are approaching the fever pitch they reached before the collapse of Lehman Brothers last October, the Bank of England has warned. 
    Investors have restrained the amount they are willing to lend, banks have grown reluctant to entrust their cash to each other and levels of stress in the system have hit new peaks, according to the Bank’s Quarterly Bulletin.
    The Bank’s chief economist, Spencer Dale, warns in the report, published today, that: “Against the background of a significant and synchronised weakening in international economic activity, market conditions generally remained strained. In particular, bank funding markets became more difficult again reflecting renewed concerns about the scale of potential credit losses and write-downs facing banks.” 
    The report lays bare the fears investors currently have about the creditworthiness of Britain’s biggest banks. It reveals that a key measure of interbank health – the spread between the London Interbank Offered Rate (Libor) and expected interest rate levels had “started to widen again” while “contacts reported some increased reluctance to lend to banks beyond very short maturities.”
    The main worry haunting investors is the threat that banks could be nationalised and that financial institutions are harbouring “ongoing balance sheet constraints”.
    However, most worryingly, it warns that the credit default swap spread rates on large banks – a key measure of concerns about their possibly insolvency – picked up to their highest level since just before the collapse of Lehman.
    The Bulletin says: “With a number of banks reporting large credit losses and write-downs for 2008 Q4, perceptions about bank counterparty risk appeared to pick up again. Consistent with that, premia on UK banks’ credit default swaps rose, and approached levels reached in October 2008 when fears about system-wide failure were intense.”

  • The world is not out of the woods yet. Will we see a banking system collapse? Don’t bet against it!


March 18, 2009 Posted by | Economics | , , , , | 1 Comment

Peter Schiff – Bernanke Completely Clueless!


March 18, 2009 Posted by | Economics | , , , , , , , , | 4 Comments

Stampede by Foreign Investors to Exit Their US Dollar Investments!

  • Is this the start of the end for USD and treasury bonds? It is a matter of when and not whether USD and Treasuries will collapse. US is bankrupt. If US is not bankrupt, why all the talk about Quantitative Easing – printing money out of thin air? Monetizing Debts? Bloomberg reports :
    March 16 (Bloomberg) — International demand for long-term U.S. financial assets fell in January, reflecting sales of corporate and government agency debt and China’s smallest net purchase since May.
    sales of long-term equities, notes and bonds totaled $43 billion, compared with buying of $34.7 billion in December, the Treasury said today in Washington. Including short-term securities such as stock swaps, foreigners sold a net $148.9 billion, after net buying of $86.2 billion the prior month.
    China, the U.S. government’s largest creditor, is “worried” about its holdings of Treasuries and wants assurances that the investment is safe, Premier
    Wen Jiabao said last week. President Barack Obama is relying on China to sustain buying of Treasuries amid record amounts of debt sales to fund a $787 billion stimulus package.
    “There was a stampede by foreign investors to exit their U.S. dollar investments,” said
    Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Everyone wants to bring their money home. It’s not about return on capital. It’s whether you can get your capital back.”
    Economists predicted international investors would buy a net $45 billion of long-term securities in January, based on the median of five estimates in a Bloomberg News survey.
    International investors sold a net $8.4 billion in U.S. corporate debt in January, the report showed. Net foreign purchases of Treasury notes and bonds were a net $10.7 billion in January after buying of $15 billion a month earlier.
    Agency Debt
    Foreign demand for U.S. agency debt from companies such as Fannie Mae and Freddie Mac continued to slide, with net sales of $22.5 billion, the fourth straight month of selling.
    Net foreign purchases of U.S. equities were $1.4 billion in January, after net purchases of $3.9 billion the previous month.
    China remained the biggest foreign holder of U.S. Treasuries, after its holdings rose by $12.2 billion to $739.6 billion. That’s the smallest since a $4.8 billion increase in May. Japan, the second-largest holder, reported holdings rose $8.8 billion to $634.8 billion.
    Some economists say the difference between the trade deficit and securities purchased by foreigners is an indicator of how easily the U.S. can finance its external obligations.
    The U.S. trade deficit narrowed in January to $36 billion, the lowest level in six years, on tumbling American demand for everything from OPEC oil to Japanese automobiles, Commerce Department figures showed March 13 in Washington.
    Caribbean banking centers, where many hedge funds are based, reduced their holdings of Treasury debt by $20.9 billion to $176.6 billion.
    The Treasury’s reporting on long-term securities captures international purchases of government notes and bonds, stocks, corporate debt and securities issued by U.S. agencies such as Fannie Mae and Freddie Mac, which buy mortgages. 

  • AFP comments :
    Foreign investors sold a net 43 billion dollars in long-term US securities in January as the flow of capital turned negative, US Treasury data showed Monday. The decline in foreign holdings was the steepest since August 2007.
    The decline came after a revised capital surplus of 34.7 billion dollars December. If the decline persists, it could spell trouble for the United States, which is issuing massive amounts of debt to finance its economic recovery efforts.
    The Treasury data showed a decline in both private purchase and official government or central bank purchases of US securities, including US Treasury and agency bonds, and to a smaller degree, equities. When short-term securities are added to the figures, it shows a capital deficit of 148.9 billion dollars.
    For all of 2008, the US had a capital surplus of 609.9 billion dollars including 514.8 billion in long-term debt held by foreigners. Last week, US officials scrambled to assure China that its hundreds of billions of dollars in US bonds were safe, after Premier Wen Jiabao expressed concerns about “the safety” of its investments.
    Analysts say a loss of confidence in US Treasury securities could cause a dramatic drop in the dollar and force Washington to pay higher interest rates.
  • Last week China’s premier Wen Jia Bao commented :
    China, the U.S. government’s largest creditor, is “worried” about its holdings of Treasuries and wants assurances that the investment is safe, Premier
    Wen Jiabao said.
    “We have lent a huge amount of money to the United States,” Wen said at a press briefing in Beijing today. “I request the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.”
    White House National Economic Council Director
    Lawrence Summers, asked about Wen’s remarks, said overseas “confidence” in Treasuries would be hurt without the administration’s steps to end the economy’s decline. President Barack Obama is relying on China to sustain buying of Treasuries amid record amounts of debt sales to fund a $787 billion stimulus package.
    “China’s purchases of American debt have been one of the few bolts keeping the wheels on the global economy,” said
    Phil Deans, a professor of international affairs at Temple University in Tokyo. “If China stops buying, where does Obama’s borrowing to fund his stimulus come from?”
  • How long can the USD and treasuries’ confidence trick be maintained? Is this the beginning of the end? We shall know pretty soon.


March 18, 2009 Posted by | Economics | , , , , , | 1 Comment

GEAB – Wall Street’s and the City’s Attempt to Destabilize the EU Banking System and the Euro

  • Global Europe Anticipation Bulletin (GEAB) N°33  report on the Eastern Europe ‘Crisis’ (it is not as bad as the MSM says) :
    Growing Transatlantic tensions on the eve of the G20 summit
    According to LEAP/E2020, there are only two options left for the G20 leaders who gather next April 2nd in London: either they rebuild a new international monetary system, creating the conditions for a new global system that involves all the main global players, and reducing the crisis to a maximum of 3 to 5 years; or they strive to prolong the current system, thrusting the world into a decade long tragic crisis starting at the end of 2009.
    In this 33rd edition of the GEAB, we wish to describe the two ways forward that remain open until summer 2009. Beyond that, our team estimates that the “short-term crisis” option will be obsolete and that the world will be on the path towards global geopolitical dislocation (1), and a deep and decade-long crisis.
    For this reason, due to the urgency, LEAP/E2020 has decided to publish next March 24th on a global scale an open letter to all the leaders of the G20. This will be our team’s attempt to divert the system from the long and tragic crisis option.
    The situation appears all the more worrying in that tensions are growing on the eve of the April 2nd summit. Indeed a number of thinly disguised threats on the part of some G20 leaders, as well as various attempts to manipulate public opinion on the part of others are to be observed.
    We shall come back in detail on these aspects in this GEAB N°33 where the LEAP/E2020 team has also decided to engage in an exercise intended for all those (including the US where 20 percent of LEAP/E2020’s readers come from) who are exasperated by the illusion fed by Western media about the state of the US as a cornerstone of our current system: anticipating the social and economic state of the United States in one year from now, in Spring 2010. Strong trends are already visible enough to enable this kind of forecast. Of course, a similar exercise will be conducted about the European Union, Russia and China in the following editions of the GEAB.

    In line with their concern for reliable information, the LEAP/E2020 team (which warned about housing risks in Central and eastern Europe as early as December 2007 in GEAB N°20 decided to study carefully in the present public announcement the reality of this so-called “Eastern European banking bomb” which has invaded the media in the last month.
    If we found this a relevant theme, it is because it represents in our opinion a deliberate attempt on the part of Wall Street and the City (2) to make the world believe in some rupture within the EU and to instil the idea that some « deadly » risk is weighing on the Eurozone, by endlessly conveying phony news on a “banking risk coming from Eastern Europe” and by stigmatizing a “cold-feeted” Eurozone as opposed to the “voluntarist” actions initiated by the Americans and the Bristish. One aim is also to divert the attention from the increasing financial problems encountered in New York and London, and to weaken the Europe position on the eve of the G20 summit.
    The idea is brilliant: pick up a current and “in the news” theme to ensure interest, add one or two striking analogies to guarantee that the media and internet are eager to circulate the information; then call on a few devoted men and organisations, always available to tell one more lie. With this kind of a cocktail, you can even make people believe for a while that the war in Iraq is a great success, that the subprime crisis will not affect the financial sector, that the financial crisis will not affect real economy, that the crisis is not really severe, and that, if it is, everything is under control!
    In the present case, the theme is a classic; it is about the separation between the « Old Europe » and the « New Europe », between a rich and selfish Europe and a poor and hopeful Europe. From Rumsfeld on Iraq to the United Kingdom on EU enlargement, this is a common theme repeated endlessly over the past ten years by the Anglo-Saxon and related media, and on which some British media in particular have become specialists (3).
    As to the analogies, there are two: Eastern Europe is the “subprime crisis” of the EU (understand: of course, everyone has its own subprime crisis (4)); and, a crisis in Eastern Europe will have the same terrible effect as the 1997 Asia crisis (probably because both are Eastward (5)).
    Suspects are not missing. In the first place, a rating agency – in this case Moodys (6), which, like the rest of them, first of all, is completely devoted to Wall Street, and then is incapable of seeing “an elephant in a corridor” (they missed the subprimes, the CDS, Bear Stearn, Lehman Brothers, AIG, ….). But, for some mysterious reason, the financial media keeps on repeating their opinions, probably generously applying the principle that they could be right some day purely out of statistical chance. In this case, Moody’s prediction has been largely echoed: they saw a major « bomb » in the backyard of the Eurozone (as of course, it is the Euro we are talking about here)… about to devastate the European financial system.
    Then, to make the idea more credible, you select some virulently anti-Euro media (such as the UK’s Telegraph, for instance, which, despite the fact that they also produce some very accurate analyses of the crisis, are currently blinded as regards the Eurozone by the collapse of the British economy and Pound Sterling) and you circulate a news item that you soon retract (because it is inaccurate) so that it gains credibility by virtue of its retraction, of the secret (7) revealing some unfolding “financial tsunami” due to Old European banks’ liabilities within the New European financial sector (8). Continue the story each day in the main US and UK financial media, knowing the others will follow out of habit (it is so easy as regards the EU, slow as it is to understand and even slower to react, with the inevitable dissent that makes it possible for the manipulation to gain momentum).
    This time, Hungarian Prime Minister,
    Ferenc Gyurcsany, is the one playing the role of the « poor little new European martyr ». For the record, the Hungarians have vainly been trying to get rid of him ever since he involuntarily admitted two years ago that he lied to his citizens in order to be reelected, and confirmed in the same breath that he indebted his country beyond any reasonable limit. Now, he is the one announcing crazy figures for a bailout plan of the Eastern European financial system, giving the Old Europeans the role of the « bad » or « cold » guys. The latter’s refusal is pinpointed by the entire US and UK press, coming to the natural conclusion that European solidarity has failed,… and understating (or completely forgetting) the fact that the Polish and the Czechs were the most virulent against the absurd claims of Hungarian Prime Minister (9). The attempt to weaken the EU and Eurozone from the East could have gone on further until the Eurozone leaders decided to make a number of strong statements and announced a substantial financial support plan (compared to the real risk), and political leaders and central bankers of the regions resorted to publishing tough press releases so that finally the manipulation began to lose momentum. But it has not disappeared yet, and the analogy between the subprime crisis and the housing crisis in Eastern Europe remains vivid in the mind of the media; as if Hungary was equivalent to California, or Latvia to Florida.
    Ths is indeed the core of the problem: in economy and finance, size matters… and the tail never wags the dog, contrary to what some people would like us to believe.
    As early as December 2007, at a time when our « current experts of the Eastern European crisis » showed no awareness whatsoever of the problem, LEAP/E2020 highlighted the fact that a considerable housing risk weighed on these European countries (Latvia, Hungary, Romania,…) and on their creditors (Austria and Switzerland in particular). However they always found obvious that these problems were limited to the concerned countries. There are indeed problems ahead for these countries and those commercially and financially involved with them, but these problems are no more serious than the average problems encountered by the global financial system; and they certainly do not compare with the problems faced by the financial markets of New York, London or Switzerland. Let us remind ourselves that the bank most often cited as being the “detonator” of this “Eastern-European bomb”, i.e. the Austrian bank Raiffeisen, increased its profits 17 percent in 2008; a result beyond the wildest dreams of most US and UK banks today, as William Gamble noted, one of the rare analysts who studied what the story was really about (10). 
    For those who are not familiar with EU geography, a headline like « Hungary in bankruptcy » or « Latvia defaults on its debt » can compare to one like « California goes bankrupt ». For those who lose their jobs as a consequence, the problem is indeed similar. However, in terms of impact on a larger-scale, they have nothing in common. California, severely affected by the subprime crisis, is the most populated and richest state of the United States, while Latvia is a poor country with a population corresponding to 1 percent of the EU population (versus California’s 12 percent of the US population (11)). Hungary’s GDP represents less than 1.1 percent of the Eurozone’s GDP (in the case of Latvia, this figure is 0.2 percent) (12), that is to say the equivalent of Oklahoma (1% of US GDP (13)) rather than Florida. Eastern Europe is far from being able to bring problems of a similar magnitude to the subprime crisis. All the new Member-States put together comprise less than 10 percent of the EU GDP (among them, the biggest and richest ones, such as Poland and the Czech Republic, are hardly affected at all). As a worst-case scenario, the amounts at stake for the European financial system, are around EUR 100-billion (USD 130-billion) (14), that is to say a very modest sum on the scale of the EU financial system (15). In fact, the EU has taken the lead of a consortium which has already injected EUR 25-billion (i.e. 20 percent of the worst-case scenario) to stabilize the situation (16), and whose severity has already been diminished by the recent fall in value of the Swiss Franc. 
    Last but not least, the value of new houses in Eastern Europe will not fall dramatically (even if the value will be less than in 2007/08) because, after 50 years of communism, there is a shortage of modern buildings. In the US on the contrary, an excessive number of houses were built during the last housing bubble, of variable quality and already depreciating in value in the most affected states. There, there is a real destruction of wealth for landowners, creditors, banks and the economy altogether.
    The complexity of the ongoing crisis requires being extremely vigilant in identifying the trends and factors conveying real serious dangers, instead of being sidetracked by rumors and phony news.
    We hope that this detailed explanation will contribute to debunk the lie orchestrated around a so-called « Eastern European financial bomb » (17) ; and that it will provide an illustration enabling each and everyone to see through first appearances, seek true facts hiding “behind the mirror” presented by mainstream media, and make up their own mind.
    If the G20 Summit fails to prevent the world entering into the phase of geopolitical dislocation, similar operations of manipulation and destabilization will increase in number, each regional block trying to discredit their opponent, like any zero-sum game (18) : a player gains the other players lose.  


March 18, 2009 Posted by | Economics | , | 1 Comment