Subject: Re: The Great International Depression of 2008 & Beyond / Fri Jan 23, 2009 8:23 pm
BBC snippet, 1min 56sec
UK in Recession (officially). Figures show it shrank by 1.5% in the last Quarter of 2008 - the biggest fall in the past 28 years. Economists were expecting a 1.2% drop according to Bloomberg but no, it was started on the long slippery slope into hell, really.
Unemployment rising sharply - nearly two million now on the UK dole (which isn't as good as ours ) - one woman on the snippet below who runs a children's centre is smiling and happy and no wonder - what else do people do when the shit hits the fan but try to create little versions of themselves who they believe will support them when they are really old and it has caved in so much that people will be lucky to be living in caves by then. And little do they know that as they get older it will get soo bad that they will actually be canabalised by their own little ones. It'll be awful. Also if you look closely at the snippet you see a lot of people in the background begging ... (you need special software though)
And the politicians are keeping a stiff upper lip but behind the scenes I'd say they are all worried they'll be dragged kicking and screaming to the Tower of London again like in the ye olde dayes.
Best live version of a song I've heard so far recorded by an amateur - World Turned Upside Down - Billy Bragg - Live at Tolpuddle Festival
You poor take courage You rich take care This earth was made a common treasury for everyone to share All things in common, all people one We come in peace, the orders came to cut them down
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Subject: Re: The Great International Depression of 2008 & Beyond / Fri Jan 23, 2009 11:32 pm
Front of the Guardian aujourd hui...... Cameron is DELIBERATELY raising the spectre of the IMF, who were also called in across the way during the 70s. Interesting that he has the courage, given that Osborne was blown out of the H2O for suggesting a run on the pound in the autumn. I am actually relieved by this, I don't like finding salvation in the words of a Tory leader, but someone needs to stop Gordon Brown from SPENDING MONEY HE DOESN'T HAVE. Given our close links, if we're not careful they'll bring us down with them.
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Subject: Re: The Great International Depression of 2008 & Beyond / Fri Jan 23, 2009 11:39 pm
expat girl wrote:
Front of the Guardian aujourd hui...... Cameron is DELIBERATELY raising the spectre of the IMF, who were also called in across the way during the 70s. Interesting that he has the courage, given that Osborne was blown out of the H2O for suggesting a run on the pound in the autumn. I am actually relieved by this, I don't like finding salvation in the words of a Tory leader, but someone needs to stop Gordon Brown from SPENDING MONEY HE DOESN'T HAVE. Given our close links, if we're not careful they'll bring us down with them.
Iceland does have the IMF in, and I've posted on that a bit on the Iceland thread. This is an interesting take on what is going on: Can the UK government stop the UK banking system going down the snyrting without risking a sovereign debt crisis?
January 20, 2009 From Reykjavik
Quote :
Late last night I returned from a four-day visit to Iceland with Professor Anne Sibert, co-author of a report anticipating the collapse of the Icelandic banking system and joint carer for our cats and children.
Iceland’s largest three banks with border-crossing activities collapsed last fall, as did its currency. The three banks are in administration and new state-owned banks with a purely domestic focus have been set up. Strict capital controls make external borrowing all but impossible and discourage foreign investment. The country now has an IMF program. Strangely enough, the programme does not impose any fiscal pain until 2010. This year the fiscal automatic stabilisers are allowed to work freely, although no further discretionary expansionary fiscal measures are being proposed. Starting in 2010, under the programme, discretionary fiscal tightening of more than 8 per cent of GDP is envisaged between now and 2013. That number could be higher if the external indebtedness of the state turns out to be higher than the 110 per cent of annual GDP estimate of the IMF.
The true state of the gross and net external indebtedness, including contingent off-balance sheet exposure, of the Icelandic state is a mystery even now. In addition to sovereign debt and sovereign-guaranteed debt, there are credit lines and possibly other contingent external liabilities whose take-up has to be estimated/guessed to get an accurate view of the state’s external obligations. It is possible that the IMF figures include an offset against the sovereign’s external liabilities in the form of an estimate of the recovery value of some of the external assets of the sovereign (e.g. its share in the assets of the UK subsidiaries of Kaupthing and Landsbanki). Assigning any positive value to these assets is an act of faith. In any case, it would be helpful to have the hard external liabilities and the soft external assets reported separately.
Iceland’s government had to let the country’s three main banks go into administration because it did not have the fiscal capacity to bail out financial institutions with balance sheets amounting to 600-700 per cent of annual GDP. Any attempt to commit further government resources to the rescue of the banking system would have precipitated a sovereign default.
With each day that passes, estimates of the recovery value of the assets of the three ‘bad banks’ melts away like snow in April. The decision not to guarantee the liabilities or the assets of the banks (other than retail deposits, including retail deposits with foreign branches for amounts up to €20,000) was the only wise thing the Icelandic authorities have done in this whole sorry mess. It isn’t even clear that the Icelandic authorities came up with this sensible idea themselves. More likely the IMF opened their eyes. The creditors of the banks, which include Commerzbank and Bayerische Landesbank will have to explain to their own shareholders and taxpayers why they now in effect own large chunks of three defunct Icelandic banks.
…to London
Returning to London from Reykjavik last night was like coming home from home. Allowing for the differences in the scale of the Icelandic economy and the British economy (the UK population is more than 200 times larger than Iceland’s Coventry-sized population), there are disturbing economic parallels. The excesses in Iceland during the past decade were greater than in the UK, but not qualitatively different.
Continue reading "Can the UK government stop the UK banking system going down the snyrting without risking a sovereign debt crisis?" http://blogs.ft.com/maverecon/
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Subject: Re: The Great International Depression of 2008 & Beyond / Sat Jan 24, 2009 12:03 am
Lord Almighty Cactus, that's from the FT
Brian Squared better have a what happens when their next door neighbour goes splat plan.
what happens to northern Ireland in the event of a UK meltdown??? Especially since they are civil service top heavy.
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Subject: Re: The Great International Depression of 2008 & Beyond / Sat Jan 24, 2009 12:11 am
expat girl wrote:
what happens to northern Ireland in the event of a UK meltdown???
And what do you think the consequence would be for Ireland?
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Subject: Re: The Great International Depression of 2008 & Beyond / Sat Jan 24, 2009 12:44 am
Auugghhh, don't go there. There are a number of possibilities, if they hyperinflate, then Newry would go mad, then gradually become more and more expensive as they have to pay more to restock. There is this myth that the UK relies less on imports than we do... nahhh. i would have said from the average supermerket shop that we produce a similar or larger proportion of our own food than they do. Anything mechanical they do produce relies on some foreign components/raw materials anyway. Theyve been living off services (especially financial) for a long time. We might then be called in to somehow bail out/help with the North....there's a huge civil service wage bill up there. The Unionists wouldn't be happy, which would lead to law and disorder problems that we probably would have difficulty coping with. That is, if we could cope with an exodus of money to the UK while things were still ridiculously cheap. And the export issue would hit us hard. If on the other hand, they had the sense to bail out early and adopt the Euro, we might all be better off... things would definitely stailise and trade between these two islands reach a sensible equilibrium
If the IMF are called in because, like Iceland, the banks all go under at once, we are in even bigger doggy doo doo because I suspect that there are massive interlinkages between our banks and theirs. I would not be sure how much of these liabilities would be covered by credit default swaps; more importantly, the market in these would probably collapse completely under the weight of too many payouts. Insurance doesn't work if everyone claims at once. Anyway, our banks would be faced with massive writeoffs which would probably collapse the lot.
Exports, obviously, would be very, very badly hit, not to mention crunching almost everyone else's economy because London has some much world money passing through it.
Crime would go snake in the UK, much rioting and looting if they thought they could get away with it. The Army over there have, according to those in the UK with connections to it, been practicing "whole population riot" scenarios for some time. Why, I don't know.
Basically, some scenarios would be capitalism's Berlin Wall moment. And would bring us hurtling down with them. However, I suspect the ECB would step in before it got too bad. With knock-ons for the Eurozone, they'd probably have to print to get us all out of trouble
There may be huge humanitarian problems, I suspect. The Icelanders seem to have met their fate with dignity. I would not see the same happening across the way (I also don't know if we could manage that ourselves, in fairness).
This may sound like complete nonsense, hopefully they will listen to Dave C and bring Prudence BACK!!!! Here's hoping
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Subject: Re: The Great International Depression of 2008 & Beyond / Sat Jan 24, 2009 1:01 am
Quote :
The Icelanders seem to have met their fate with dignity.
Good post epg, but in the last video I posted on Iceland, the dignified Icelanders were throwing poo at the riot police.
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Subject: Re: The Great International Depression of 2008 & Beyond / Sat Jan 24, 2009 1:10 am
expat girl wrote:
Auugghhh, don't go there. There are a number of possibilities, if they hyperinflate, then Newry would go mad, then gradually become more and more expensive as they have to pay more to restock. There is this myth that the UK relies less on imports than we do... nahhh. i would have said from the average supermerket shop that we produce a similar or larger proportion of our own food than they do. Anything mechanical they do produce relies on some foreign components/raw materials anyway. Theyve been living off services (especially financial) for a long time. We might then be called in to somehow bail out/help with the North....there's a huge civil service wage bill up there. The Unionists wouldn't be happy, which would lead to law and disorder problems that we probably would have difficulty coping with. That is, if we could cope with an exodus of money to the UK while things were still ridiculously cheap. And the export issue would hit us hard. If on the other hand, they had the sense to bail out early and adopt the Euro, we might all be better off... things would definitely stailise and trade between these two islands reach a sensible equilibrium
If the IMF are called in because, like Iceland, the banks all go under at once, we are in even bigger doggy doo doo because I suspect that there are massive interlinkages between our banks and theirs. I would not be sure how much of these liabilities would be covered by credit default swaps; more importantly, the market in these would probably collapse completely under the weight of too many payouts. Insurance doesn't work if everyone claims at once. Anyway, our banks would be faced with massive writeoffs which would probably collapse the lot.
Exports, obviously, would be very, very badly hit, not to mention crunching almost everyone else's economy because London has some much world money passing through it.
Crime would go snake in the UK, much rioting and looting if they thought they could get away with it. The Army over there have, according to those in the UK with connections to it, been practicing "whole population riot" scenarios for some time. Why, I don't know.
Basically, some scenarios would be capitalism's Berlin Wall moment. And would bring us hurtling down with them. However, I suspect the ECB would step in before it got too bad. With knock-ons for the Eurozone, they'd probably have to print to get us all out of trouble
There may be huge humanitarian problems, I suspect. The Icelanders seem to have met their fate with dignity. I would not see the same happening across the way (I also don't know if we could manage that ourselves, in fairness).
This may sound like complete nonsense, hopefully they will listen to Dave C and bring Prudence BACK!!!! Here's hoping
Wo ho there's some great imagery there. I can't wait for the UK to go belly up now so - I'd like to see what happens in a Weimar Situation ! This has nothing to do with incorrigible bitterness on my part when I knew poverty when folks wouldn't buy my drawings on the street in Vienna, Virginia.
Here's a 7 minute piece from Bloomberg where an investor, Jim Rogers says the UK has too much debt and nothing to export now that Brent is disappearing.... the analyst brought in to counter him says Britain has loads to export ... Rolls Royce and Pop Music. https://www.youtube.com/watch?v=9liUyh8VonQ
I wonder what would be the consequences as STG weakened more and more though - joining the Euro ?
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Subject: Re: The Great International Depression of 2008 & Beyond / Sat Jan 24, 2009 1:17 am
Yeah, that won't kill the riot police. What they could get up to in the UK might well. Don't forget, they have WMD, as well. That stuff needs maintaining... as we know from the whole Iron Curtain thingy. That is actually a hilarious way of protesting though
I hope they are better organised than I give them credit for. I have faith in some institutions.. some of the UK press (Irish coverage often excepted) are very very good. One of the things that really depressed me was the lack of community coherence (much better here, and in Canada). But that may actually improve in a recession. I would still hold that their property price bubble (but not the levels of construction) were easily as bad as here, when you take lower salaries into account. They don't have the same extent of indebted developers though. Given huge restrictions on building, I'd expect their property market to recover sooner, but the extent of reliance on financial services is very scary at the moment. That needs real handling with kid gloves, to make sure it still works for them (and us, and everyone else who uses London as an investment platform).
Good luck, Dave C...... keep opposing spending, please!!!
Anyone who has close links with the Almighty, get in contact now, we really don't want this to happen
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Subject: Re: The Great International Depression of 2008 & Beyond / Sat Jan 24, 2009 1:21 am
uhoh, Barry O in de US of A has just been told by Congress that 800bn stimulus package is too expensive (Beeb news)
Has someone just put Prudence on testosterone?? More power to their elbows, IMHO.... I don't know quite how to deal with vast debts, but I suspect loading up yet more of it may not be the answer.
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Subject: Re: The Great International Depression of 2008 & Beyond / Sat Jan 24, 2009 1:37 am
expat girl wrote:
uhoh, Barry O in de US of A has just been told by Congress that 800bn stimulus package is too expensive (Beeb news)
Has someone just put Prudence on testosterone?? More power to their elbows, IMHO.... I don't know quite how to deal with vast debts, but I suspect loading up yet more of it may not be the answer.
This is true, but it may well send "confidence" or even "hope" into a bit of a tail spin.
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Subject: Re: The Great International Depression of 2008 & Beyond / Sat Jan 24, 2009 1:59 am
The UK will print money to buy their own bonds. So will the USA. Now the tricky question is which is greater the current deflationary pressure or the likely inflation caused by hitting the key boards down in Thread Needle Street?
If any major country defaults we will have extremely serious problems and gold will soar. As for the UK joining the Euro they would need to stabilise the value of Sterling within the criteria of the exchange rate mechanism for 2 years before that would happen, unless some drastic changes were made to the rules the UK will not be able to enter the Euro zone.
The UK property market will probably bottom out somewhere towards the end of this year early 2010. What you have now is not a proper market, it is dead. It has ceased up. There is no market, no movement and few properties are coming onto the market. Fear rules and no one wants to buy in case what they buy is worth less tomorrow and estate agents can't get new customers to mark down the value of their houses. Another 15% reduction this year.
To get a competitive mortgage you need at least 25% PLUS any money likely to be withheld for repairs. TO get a mortgage of £250,000 you would probably now need joint earnings of around £70,000 plus. Good tightening up, no bad thing. But the interest on that £250,000 would be at less than 3%
There is a serious housing shortage in many parts of the UK. I don't think there will be too many empty houses in 2011. (Set aside all the daft developments like apartments in Consett. They are just insane),
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Subject: Re: The Great International Depression of 2008 & Beyond / Sat Jan 24, 2009 2:29 am
Squire wrote:
The UK will print money to buy their own bonds. So will the USA. Now the tricky question is which is greater the current deflationary pressure or the likely inflation caused by hitting the key boards down in Thread Needle Street? If any major country defaults we will have extremely serious problems and gold will soar. As for the UK joining the Euro they would need to stabilise the value of Sterling within the criteria of the exchange rate mechanism for 2 years before that would happen, unless some drastic changes were made to the rules the UK will not be able to enter the Euro zone.
The UK property market will probably bottom out somewhere towards the end of this year early 2010. What you have now is not a proper market, it is dead. It has ceased up. There is no market, no movement and few properties are coming onto the market. Fear rules and no one wants to buy in case what they buy is worth less tomorrow and estate agents can't get new customers to mark down the value of their houses. Another 15% reduction this year.
To get a competitive mortgage you need at least 25% PLUS any money likely to be withheld for repairs. TO get a mortgage of £250,000 you would probably now need joint earnings of around £70,000 plus. Good tightening up, no bad thing. But the interest on that £250,000 would be at less than 3%
There is a serious housing shortage in many parts of the UK. I don't think there will be too many empty houses in 2011. (Set aside all the daft developments like apartments in Consett. They are just insane),
Bizarre stuff we're looking at in general - some fellas think we're watching the end of the Fiat Currency system in one or more major countries ... Others of course think we've been watching that since 1971 ..
So we should watch out if a major country defaults ? I presume you mean a lot bigger than Ireland ? UK or Spain ?
Now - printing money: they can get away with it for a while I'm thinking because it might help in clearing out inventory that's on shelves but not moving, the trouble is, there's trouble when printed money starts eating into inventory that must be imported or that depends on imports. Does the UK produce enough to sustain itself through export trade ? Rolls Royces and Alexandra Burke just may not be enough to pay for some stuff.
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Subject: Re: The Great International Depression of 2008 & Beyond / Sat Jan 24, 2009 2:48 am
Audi
If anyone is wiling to accept the paper you are printing does it matter, and if they are not then there isn't a problem.
The gold standard will not be reintroduced for one very simple reason, the amount is relatively stable so as you produce more and the economy grows the value of gold increases. So those with gold get wealthier as the economy increases. Whoever owns disproportionate amounts of gold may be for it but no one else will.
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Subject: Re: The Great International Depression of 2008 & Beyond / Sat Jan 24, 2009 3:02 am
Are you saying the suppliers overseas could take quantitative easing ? At some point this becomes untenable though I don't know when - can't remember the history of Weimar.
It gets down to how much work a country is willing and able to do I think. Printing money is fine as long as it doesn't create hyperinflation = does every state which tries it think they can control it ? No one seems to have learned too well although it could be argued that that's been happening in the West since 1971 and only now America is exploding. House prices here were half hyperinflationary though too.
Maybe we're catching it before it tries to explode altogether. California was just given a stimulus package of 4.5bn and they intend to cease paying welfare and grants from Feb. 1st. They will be in effect the first big country-sized economy to default. They won't be pampered forever, they'll have to get their house in order.
Bailouts won't be provided indefinitely to squanderers.
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Subject: Re: The Great International Depression of 2008 & Beyond / Sat Jan 24, 2009 3:18 am
Audi
I am saying if they don't you don't import so imports are not sucked in! If they do then bigger fools are they.
I agree you cannot print forever and need to create some real goods and services that others are willing to buy.
If there are bailouts there will be austerity conditions imposed and in effect a partial loss of sovereignty.
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Subject: Re: The Great International Depression of 2008 & Beyond / Mon Jan 26, 2009 3:18 pm
Quote :
Bank and insurer ING today announced 7,000 job cuts and said the Dutch government will take over of most of the €27.7bn it holds in troubled US mortgage-backed securities.
Under the complex deal, the government will assume 80% of risk and payments from the portfolio, in exchange for an annual payment to ING of about €600m.
The securities derive from “Alt-A” mortgages, which are from prime borrowers, but do not conform to typical mortgage terms – for instance, some documentation may be missing, or the property might be a holiday home. http://www.breakingnews.ie/business/mhsngbmhojau/
The American banks have a new sub-prime crisis about to hit a tv/newspaper/radio/forum near you. These are the Alt-A and Option ARM mortgage packages where people were allowed to pay whatever interest or a very low rate for the first two years. ARMS- "adjustable rate mortgages" were racked up in big numbers as big as the subprime about two years ago. For the first two years you could pay 'optional' interest or 'adjustable' interest and then pay the full interest later after the mortgage would reset after its initial two year optional adjustable period was up. That was two years ago that those mortgages ended being racked up.
Even during the first TWO YEARS of those low-interest mortgages it is said that a worrying fraction were defaulting. It was believed that around 70% would default after the initial two year period was up, given the lack of interest payments on the low rate.
That was two years ago.
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Subject: Re: The Great International Depression of 2008 & Beyond / Mon Jan 26, 2009 3:38 pm
Auditor #9 wrote:
The American banks have a new sub-prime crisis about to hit a tv/newspaper/radio/forum near you. These are the Alt-A and Option ARM mortgage packages where people were allowed to pay whatever interest or a very low rate for the first two years. ARMS- "adjustable rate mortgages" were racked up in big numbers as big as the subprime about two years ago. For the first two years you could pay 'optional' interest or 'adjustable' interest and then pay the full interest later after the mortgage would reset after its initial two year optional adjustable period was up. That was two years ago that those mortgages ended being racked up.
Even during the first TWO YEARS of those low-interest mortgages it is said that a worrying fraction were defaulting. It was believed that around 70% would default after the initial two year period was up, given the lack of interest payments on the low rate.
That was two years ago.
Right. Now, what we need to know is how many European banks are loaded down with these mortgage bonds. I know our own banks said they'd very little subprime---did anyone ask them about AltA?? You can bet that the UK banks are loaded with these things
Finally, anyone got any figures about PRIME mortgage bonds?? From anywhere, US included??
Was reading the Guardian on the w/end; Polly Toynbee quoted some figures about UK bank balance sheets being 440% of UK GDP or something
Someone PLEASE tell me that was a typo... and what is the equivalent figure for Ireland
Auuughhh.
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Subject: Re: The Great International Depression of 2008 & Beyond / Mon Jan 26, 2009 3:41 pm
expat girl wrote:
Auditor #9 wrote:
The American banks have a new sub-prime crisis about to hit a tv/newspaper/radio/forum near you. These are the Alt-A and Option ARM mortgage packages where people were allowed to pay whatever interest or a very low rate for the first two years. ARMS- "adjustable rate mortgages" were racked up in big numbers as big as the subprime about two years ago. For the first two years you could pay 'optional' interest or 'adjustable' interest and then pay the full interest later after the mortgage would reset after its initial two year optional adjustable period was up. That was two years ago that those mortgages ended being racked up.
Even during the first TWO YEARS of those low-interest mortgages it is said that a worrying fraction were defaulting. It was believed that around 70% would default after the initial two year period was up, given the lack of interest payments on the low rate.
That was two years ago.
Right. Now, what we need to know is how many European banks are loaded down with these mortgage bonds. I know our own banks said they'd very little subprime---did anyone ask them about AltA?? You can bet that the UK banks are loaded with these things
Finally, anyone got any figures about PRIME mortgage bonds?? From anywhere, US included??
Was reading the Guardian on the w/end; Polly Toynbee quoted some figures about UK bank balance sheets being 440% of UK GDP or something
Someone PLEASE tell me that was a typo... and what is the equivalent figure for Ireland
Auuughhh.
Didn't we hear 600 billion? What is our GDP again?
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Subject: Re: The Great International Depression of 2008 & Beyond / Mon Jan 26, 2009 4:03 pm
Don't forget with all mortgages the rate of interest is now much lower so the risk of widespread default is reduced for now. Many who have mortgages with fixed rates for say a 5 year term may now be better off when that term ends.
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Subject: Re: The Great International Depression of 2008 & Beyond / Mon Jan 26, 2009 6:21 pm
It is reduced so long as people can retain their employment. This is why wage cuts are far more desirable than widespread redundancy.
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Subject: Re: The Great International Depression of 2008 & Beyond / Wed Jan 28, 2009 12:04 am
The Ron Paul message: let private capital flow into ailing business, cut spending, get government out of everything ...
So how does he propose that public services be maintained - such as roads bridges, potholes? "Stop bombing bridges and roads in Iraq" he says.
Subject: Re: The Great International Depression of 2008 & Beyond / Wed Jan 28, 2009 12:36 am
Michael Hudson - the Bailout is a giveaway to billionaires - hyperinflation coming.
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Subject: Re: The Great International Depression of 2008 & Beyond / Wed Jan 28, 2009 1:25 am
One of the few times I saw George Dubya looking less guilty than those around him
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Subject: Re: The Great International Depression of 2008 & Beyond / Wed Jan 28, 2009 2:18 am
A slightly different approach to reading the news.... A classic viral rant from the Chinese Sh*t guy after only two or three days up on youtube. All of it true.
WARNING - Strong language, anger, loudness, smoking pot, the truth