Socio-Economics History Blog

Socio-Economics & History Commentary

June 8, 1967: USS Liberty Attacked By Israel In International Waters

  • Global Research reports :
    A deadly Israeli attack on a US ship — an incident largely kept in the dark by Washington — receives new attention with survivors reliving the painful memory.
    USS Liberty survivors gathered in Washington on Monday to commemorate the 42nd anniversary of the incident and expound on how they were sprayed with bullets by America’s “closest ally and beneficiary”.
    On June 8, 1967, the unarmed spy ship USS Liberty was on duty in international waters off the Sinai Peninsula when it was bombarded by Israeli fighter jets and torpedo boats.
    The two-hour-long attacks killed at least 34 sailors, wounded 173 others and nearly sunk the ship. The attack on the Liberty came at a time when Israel had engaged in a brief but intense war with Egypt and its Arab allies, which coincided with the US war on Vietnam.
    Although the ship was clearly marked as an American vessel, Israelis declared the attack on Liberty as a simple case of “friendly fire” and “mistaken identity”. Despite overwhelming evidence to the contrary, former US president Lyndon Johnson accepted the Israeli claim and cancelled all investigations into the incident.
    “It was a case of mistaken identity …I do not care if every man drowned and the ship sank, we will not embarrass an ally,” Johnson had told his opponents who demanded an open congressional hearing to address the Israeli claim.
    USS Liberty survivor Rick Almett, however, begged to differ. “There was a conspiracy between our government and Israel. So that’s the reason why they didn’t pursue it and why the investigations were covered up because of the alliance of Israel and the United States,” Almetti told Press TV.
    In a separate interview with Press TV, Jim Smith — another surviving member of the USS Liberty crew — said the incident was “an intentional act by Israel to sink the ship with all hands and no survivors”.
    While there are many conspiracy theories as to why Israel attacked a ship of its top ally, Earnie Gallo — who heads the USS Liberty Veterans Associations — told Press TV that the attack was in fact designed to pave the way for an Israeli military incursion into the Golan Heights.
    In 2003, an independent committee comprised of retired high-ranking military officers and a former US ambassador to the Middle East joined forces to investigate the Liberty attack and the subsequent cover-up.
    Their pleas for an investigation, however, have fallen on deaf ears in the Congress as it continues to ignore the facts presented on the Liberty attack.
    Former US military and political officials said they had been ordered to put the lid on the controversy surrounding the USS Liberty attack. “We were never to speak of it and we were to caution everyone else involved that they could never speak of it again,” said former court Adm. Isaac C. Kidd.

  • See also :
    Dead In The Water – The Sinking of the USS Liberty


June 10, 2009 Posted by | GeoPolitics, History | , | 11 Comments

Treasury Nightmare Begins! Bond Traders White With Terror !

  • It had to happen sooner or later. Do we really believe the US government can borrow US$2-3T in 1 financial year without any consequences? The reality is sinking in with all the professional bond traders. Unfortunately, the sheeple will take time to wake up from their dream. You have to be asleep to be living your dream.
  • Will Bernanke go the whole hog and print out of thin air: US$2-3T for Quantitaive Easing?  This will kill the USD, hyper-inflation will set in and gold will rocket. If he refuses and just print US$300B for QE as he said he would the last time, the bond market will collapse and all hell will break loose. Either way you look at it, we are living in interesting times!
  • Stewart Thomson comments (emphasis mine):
    What’s happening in bond land? The latest US govt bond auction was for $110 billion. Two years ago the average monthly bond auction total was $5 billion, $10 billion, numbers like that. The US govt finances its debt with bonds. A $2 trillion deficit means $2 trillion in new bonds needs to be issued. Approx. $200 billion a month.
    I want to take you inside the mind of a primary dealer. These are the approx. 20 dealers that have contracts with the US govt to market their bonds. The way the deal works in the govt’s mind is: “You buy our bonds and sell them. You can short t-bonds going into the auction and bag a nice profit for yourself. But if you don’t sell the bonds to your clients, guess who owns them? You do! If you don’t like it, no more primary dealing for you, got it? And maybe we aren’t so keen to hand over anymore bailout money or allow fraud accounting of your OTC derivatives. So play ball, or we take you out.”
    I spent two hours yesterday meeting in person with a very good friend of mine who is retired as the largest govt bond trader in Canada for one of the primary dealers. He still manages $1.5 billion as a side gig. His minimum trade is $5 million. He looks like a pitbull and uses 4 letter words like Mr. Bernanke uses a greenback photocopier. He carefully detailed to me the horrors that began roaring thru the bond market, horrors that are growing, since the shocking $110 billion US govt bond auction was announced for this week.
    The bottom line is: There isn’t enough money to soak up all the govt paper screaming down the pipe. The $300 billion in total that Mr. Bernanke committed to buy the bonds over multiple auctions, is a drop in the bucket. It’s not enough.
    There is a daily competition for money in the world’s bond markets. The US govt bond is the King Daddy of those markets. The primary dealers will do WHATEVER IT TAKES to sell those bonds. The primary dealers also carry tremendous power against the govt. Let’s have a listen to their response to the Gman’s “it’s my way or the highway”. Listen carefully. “How would you like it, Mr. Gman, if we announced that ” sorry, we can’t find buyers for your triple A rated toilet paper, we’re going to announce to your public that you defaulted. Let’s see how you do when we cut your credit cards up. You tell us what to do? Wrong. Go ahead, take away our primary dealerships. We’re all standing together on this. We give the orders, not you. Got it?”
    What might those orders be? One order could be: “Your $300 billion commitment to buy T-bonds ain’t gonna cut it. Try $3 trillion. Now get to your greenback photocopier start button and start pushing it. We’ll tell you when to stop.”
    While that action may be in the pipeline, as of today the ACTIONS taken in the bond market by the players are what is important. And those actions, believe it or not, are to buy bonds. Money is starting to come out of general equities, aka the stock market, and into bonds. Money is not coming out of bonds, it’s going in. This is what the chartists don’t understand. Money isn’t just trickling in, it’s pouring in. But it’s not enough to meet the govt’s skyrocketing demand for money!
    The losses in the bond market have pounded bank capital ratios. Balanced funds must now sell stocks and buy bonds to meet their mandated percentages. Losses on corporate bonds bought over the past year are staggering. Many hedge funds leveraged their purchases and are now in dire trouble.
    The bond market auction was this week. Again, I want you to FEEL what the bond traders are feeling. They are white with terror. They aren’t looking at some chart in internet candyland, they know there isn’t enough money to buy all the govt bonds.
    If Ben Bernanke fails to drastically increase the Fed’s purchases of bonds, another vortex of asset destruction is a near certainty, as the primary dealers will exert mindblowing pressure on the managers of other assets to move those assets into bonds. Some of the movement is being triggered automatically thru asset allocation algorithms. Let me repeat: money IS not just moving into bonds now, it is POURING in. But… that money is not enough to soak up all the bonds the govt is issuing.
    Most money managers are only just this week starting to understand this reality. And what kind of horrific situation this is. If Mr. Bernanke steps forward and announces massive new bond purchases, that could disintegrate the USdollar and send gold to $1200 in weeks or even days. On the other hand, if he doesn’t, the primary dealers have no choice but to order a massive liquidation of equity and commodity assets to feed the Gman’s maniacal demand for money. Picture a black hole. Everything is being sucked into it. That is the US govt’s demand for money.
    This week’s announcement of the $110 billion auction is literally seen by the bond traders as announcing that a real black hole has opened up on a sandy beach. EVERYTHING is slowly being sucked in. Even the sand. And it is accelerating fast in a massive deflationary vortex. As the govt gets the money, it is BURNED. As the sand (and people) pour down the hole, even gold could get sucked in as everything is sold to feed the Gman.
    Remember the tools Mr. Bernanke has laid out. After the purchase of the t-bonds fails, (and it is badly failing right now) the next step is gold revaluation. If you think the United States govt is going to stand around like a wet noodle while their t-bonds are liquidated and watch all “their” money pour into gold without taking action to prevent that, please report to your new home on Fantasy Island. And don’t expect there to be any gold there for you when you arrive. Own gold stocks bought into weakness and take delivery of a portion of your certificates. Own gold jewellery. Secure your gold before the govt secures it for you. Jim “Mr. Big” Sinclair, the world’s largest trader of gold in the last bull market, feels gold could begin a skyrocket move to 1200, within 3 weeks! Jim “Mighty Man” Rogers feels gold could fall to 700! The bottom line right now is the bond market will decide the victor. The good news is Mighty Man will be a buyer at 700 if it happens.


June 10, 2009 Posted by | Economics | , , , , , , , , | Comments Off on Treasury Nightmare Begins! Bond Traders White With Terror !

California Leads Nation to Bond Default Abyss

  • What happens in California will be replicated throughout America. America is bankrupt at all levels it seems: federal, state, municipal, city… corporate, personal… etc. Uncle Sam is still behaving like it has tonnes of money to spend. Ben Bernanke can wave his magic Quantitative Easing wand right? Let us see how effective it is in bringing down the USD and the entire US economy. Bloomberg reports :
    ….. California budget crisis may well lead to a second financial calamity that would be far worse than anything experienced over the past 18 months.
    California is, of course, facing a debacle. Voters rejected a series of ballot initiatives designed to restore some sense of sanity to the state’s budget. As a result, California is more than $21 billion in the hole. Governor
    Arnold Schwarzenegger is struggling to find enough spending reductions to close the gap, but investors are skeptical. According to Fitch Ratings, which in March downgraded California’s general obligation bond rating, California has the worst rating of any state.
    Even amid economic calamity, the people of California are relatively wealthy, and the state’s economy is an impressive engine. If California were a country, it would have the eighth- largest economy on Earth. Given those advantages, the notion that California might default on its government debt might seem farfetched. After all, the reasoning goes, they can always raise taxes to pay off debt. Even a gridlocked legislature might act if California gets too close to the edge.
    The problem with that line of thinking is that California’s politicians might get little notice that desperate times are at hand. For some borrowers, the first sign of problem is their inability to make an interest payment. For others — and here lies the nightmare scenario — the problem first becomes visible when all the lenders disappear.
    Lenders’ Response
    Imagine, for example, that California returns to credit markets in the coming months simply to roll over some of its expiring debt. Maybe the state borrowed money from China for two years back in 2007 and now has to borrow again to give the Chinese their money back. What happens if, seeing the catastrophic budget situation, lenders decide to shun California altogether?
    If that happens, California would have to default on its obligation to give the Chinese their money back. It might do so by extending the terms of the existing debt, but that would be, nonetheless, a default, and a run on California debt surely could ensue.
    Once a panic occurs, similar assets tend to be swept up in the wave. Bad news spreads. Witness the run that occurred during the Asian financial crisis of the late 1990s. So if the unofficial eighth-largest economy fails on its debt, might the debt for the largest economy go with it?
    Deficit and GDP
    A look at President
    Barack Obama’s budget suggests that the U.S. government’s fiscal situation is in worse shape than California’s. The deficit relative to gross domestic product for the entire U.S. this year is 12.9 percent, according to White House estimates released last month. If California had the same deficit relative to its GDP, it would be short about $230 billion — 10 times the size of its current shortfall.
    What’s worse, the Obama administration’s attitude toward economic policy comes right out of the California playbook. Notwithstanding White House claims that the federal deficit will drop to 8.5 percent of GDP next year, there is little cause to believe that the U.S. faces a brighter future than California. That shouldn’t come as a surprise.
    Except for the sales tax, the Obama administration’s plan is to copy California’s policies. Obama has proposed a massive tax increase on U.S. corporations by curbing the deferral of taxes on corporate income earned abroad. He also has advocated higher marginal tax rates on the rich, by letting
    George W. Bush’s tax cuts expire.
    Even with those tax hikes, Obama projects that deficits are here to stay because, like California’s Democrats, Washington’s can’t resist increasing government spending. It is easy to see how investors might stop believing in California. If they do, it would be rational for the U.S. to be next.


June 10, 2009 Posted by | Economics | , , , , , | 1 Comment

German Retail Giant Goes Bust, 43,000 Jobs At Risk!

  • Yeah, more ‘green shoots’ sprouting. World economy is on the road to recovery. I’ll believe it when I see it. Unfortunately, dead roots are showing up every where. AFP reports :
    German retail and tourism giant Arcandor filed for bankruptcy on Tuesday, putting around 43,000 jobs at risk after Berlin dismissed the company’s request for emergency state aid.
    “Arcandor AG today filed with the Essen District Court to open insolvency proceedings,” the group said in a statement. “This will affect a total of around 43,000 employees of the Arcandor group in Germany. Employee salaries are secure for the months of June, July and August,” the statement said.
    The group, which employs 70,000 people in Europe, two-thirds of them in Germany, said its department store chain Karstadt, as well as mail-order company Quelle, would also be affected by the insolvency.
    Arcandor’s appointed bankruptcy manager, Horst Piepenburg, said it would be the “biggest insolvency currently underway in Germany.” Travel agency Thomas Cook, in which Arcandor holds a 52-percent stake, “will remain unaffected by the insolvency proceedings,” Arcandor’s statement added.
    The chairman of Arcandor’s board, Karl-Gerhard Eick, said: “Even as the insolvency proceedings are ongoing, we will continue to fight to save as many jobs and locations as possible.” “Every ending is also a beginning,” he told reporters, adding that the bankruptcy was inevitable given the company’s lack of funds and that he did not blame the political establishment for his firm’s plight.
    Chancellor Angela Merkel told reporters that Arcandor now had a chance to merge with another retail firm and named Metro, Germany’s largest retailer, as a possible partner.
    Metro, which employs 300,000 people in 32 countries across Europe, Asia and Africa quickly expressed an interest in taking over its stricken rival. “We remain, as before, committed to our proposal of taking over some 60 Karstadt sites and thereby saving the majority of jobs,” Metro said in a statement. “The door for talks and negotiations is open,” it added.


June 10, 2009 Posted by | Economics | , , , | Comments Off on German Retail Giant Goes Bust, 43,000 Jobs At Risk!