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Posts tagged ‘Council on Foreign Relations’

Summary of Prof. Carroll Quigley’s Last Public Lecture

Here is an excellent summary (by my friend and colleague Christopher M Quigley)  of Prof. Carroll Quigley’s Last Public Lecture Given Months Before He Died:”The 3rd. Oscar Iden Lecture 1978″ This is well worth a read and also hopefully it will  encourage you to start to help bring about the re-vitalization of you individual communities. The time has come to “Create  your  own  communities”. Current government policies are in fact destroying communities. The old, the sick, the poor and the less educated are been marginalized and are been forced to pay for the criminal actions of the elite.  The Irish state is now  under the total control of the financial gangsters in Europe and the local politicians are only the mouthpieces and enforcers of “ policy” as dictated by these  new absentee landlords  of modern times .The needs of our people are been ignored and each and every one of you can see that your local communities are falling apart as essential services are cut and people struggle to keep themselves afloat.  Fear of one’s own future is now a daily experience we all go through! The politicians are living in a twilit zone where they are pampered beyond belief as the various gravy trains with their “entitlements”’  leave from the Dail station!

machholz

By Christopher M. Quigley B.Sc., M.M.I.I., M.A.

 

 

 

Prof. Carroll Quigley Quote:

“This shift from customary conformity to decision making by some other power, in its final stages, results in the dualism of almost totalitarian imperialism and an amorphous mass culture of atomized individuals. The fundamental all pervasive cause of World instability today is the destruction of communities by the commercialization of all human relationships and the resulting neurosis and psychosis. Another reason for the instability of the Western system is that two of the main areas of sovereignty are not included in the state structure: control of credit/banking and corporations. These two elements are therefore free of political controls and responsibility. They have largely monopolized power in Western Civilization and in American society. They are ruthlessly going forward to eliminate land, labor, entrepreneur-management skills and everything else the economists once told us were the chief elements of production. The only element of production they are concerned with is the one they control: capital. Thus capital intensification has destroyed food, manufacturing, farming and communities. All these processes create frustrations on every level of modern human experience and result in the instability and disorder we see around everyday”.

 

In 1978 Professor Carroll Quigley, a few months before he died, gave three lectures at Georgetown University, Washington. The lecture series was sponsored by a grant from the Oscar Idem endowment. The genius of Carroll Quigley shone through his three presentations because, as always, he forced his audience to think. His essays covered the thousand years of the growth of the State in the Western tradition from 976 – 1976. His approach went against the grain of most academics who only taught history in short sound bites. Quigley believed that you could not understand anything unless you saw the whole and the essence of his philosophy was that history was logical i.e. things happen for a reason. For him the core of all that occurs throughout the ages is the underlying force of fundamental human values. Leaders, rulers and executives who miss this point are prone to make erroneous decisions because their actions will be based on flawed analysis and understanding. The professor saw that American society and Western Civilization were in serious trouble in the late 70’s. In hindsight his final essay “The Sate of Individuals” was particularly prophetic and events during the subsequent 32 years have exonerated his controversial conclusions. In summary this essay stated the following: Society is an organization of persons and artifacts to satisfy human needs.

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Currently our desires are remote from our true  needs. Societies are built on needs and they are ultimately destroyed through desires. Power between the state and the society rests on the ability of the state to satisfy human needs. The state is a good state if it is sovereign and responsible. There are seven level of culture or aspects of society: military, political, economic, social, emotional religious and intellectual. Military: men cannot live outside of groups. They can satisfy their needs only by co-operating within community. This group needs to be defended. Political: If men operate within groups you must have a method to settle disputes. Economic: The group must have organizational patterns for satisfying material needs. Social: Man and women are social beings. They have a need for other people. They have a need to love and be loved. Emotional: Men and women must have emotional experiences. Moment to moment with other people and moment to moment with nature. Religious: Human beings have a need for a feeling of certitude in their minds about things they cannot control and do not fully understand. Intellectual: Men and women have a need to comprehend and discuss. Power is the ability in society to med these eight fore-mentioned human needs. Community is group of people with close inter-personal relationships. Without community no infant will be sufficiently socialized. Most of our internal controls which make society function have historically been learnt in community. Prior to 976 most controls in society were internal. In the West after 976 due to specialization and commercial expansion controls began to be externalized. Sovereignty has eight aspects: defense, judicial, administrative, taxation, legislation, executive, monetary and incorporating power. Expansion in society brings growing commercialization with the result that all values, in time, become monetized. As expansion continues it slows with the result that society becomes politicized and eventually militarized. This shift from customary conformity to decision making by some other power in its final stages results in the dualism of almost totalitarian imperialism and an amorphous mass culture of atomized individuals. The main theme in our society today is competition and no truly stable society can possibly be built on such a premise. In the long term society must be based on association and co-operation. From 1855 Western Civilization has shown signs of becoming increasingly unstable due to: technology and the displacement of labor: increased use of propaganda to brainwash people into thinking society was good and true; an increased emphasis on material desires; the increased emphasis on individualism over conformity; growing focus on quantity rather than quality; increased demand for vicarious satisfactions.

As a result more and more people began to comprehend that the state was not a society with community values. This realization brought increasing instability. Another element of the trend towards instability in Western Civilization was the growth in weapon systems that if actually used would ensure total destruction of the planet. This in effect meant that they were effectively redundant. In addition the expansion of the last 150 years has in essence been based on fossil fuels. The energy which gave us the industrial revolution, coal – oil – natural gas – represented the combined savings of four weeks of sunlight that managed to be accumulated on earth out of the previous three billion years of sunshine. This resource instead of being saved has been lost. Gone forever never to return. The fundamental all pervasive cause of World instability today is the destruction of communities by the commercialization of all human relationships and the resulting neurosis and psychosis. Medical science and all the population explosions have continued to produce more and more people while the food supply and the supply of jobs are becoming increasingly precarious, not only in the United States, but everywhere, because the whole purpose of using fossil fuels in the corporate structure is the elimination of jobs. Another  reason for the instability of the Western system is that two of the main areas of sovereignty are not included in the state structure: control of credit/banking and corporations.

These two elements are therefore free of political controls and responsibility. They have largely monopolized power in Western Civilization and in American society. They are ruthlessly going forward to eliminate land, labor, entrepreneur-management skills and everything else the economists once told us were the chief elements of production. The only element of production they are concerned with is the one they control: capital. Thus capital intensification has destroyed food, manufacturing, farming and communities. All these processes create frustrations on every level of modern human experience and result in the instability and disorder we see around every day. Today in America there is a developing constitutional crisis. The three branches of government set unpin 1789 do not contain the eight aspects of sovereignty. As a result each has tried to go outside the sphere in which it should be restrained. The constitution completely ignores, for example, the administrative power. As a result the courts, in particular the Supreme court, is making decisions it should not be making. In addition the President, who by the constitution should be easily impeached, has become all powerful to such an extent that the office is now as basically Imperial. However, to me the most obvious flaw in our constitutional set-up is the fact that the federal government does not have control over money and credit and does not have control over corporations. It is therefore not really sovereign and is not really responsible. The final result is that the American people will unfortunately prefer communities. They will cop or opt out of the system. Today everything is a bureaucratic structure, and brainwashed people who are not personalities are trained to fit into it and say it is a great life but I think otherwise. Do not be pessimistic. Life goes on; life is fun. And if a civilization crashed it deserves to. When Rome fell the Christian answer was. “Create your own communities”.

Source: The Oscar Iden Lecture Series Georgetown University Library Prof. Carroll Quigley

Wall St. Helped to Mask Debt Fuelling Europe’s Crisis

As worries over Greece rattle world markets, records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.

Even as the crisis was nearing the flashpoint, banks were searching for ways to help Greece forestall the day of reckoning. In early November — three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in the ancient city with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting.

The bankers, led by Goldman’s president, Gary D. Cohn, held out a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards.

It had worked before. In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.

Athens did not pursue the latest Goldman proposal, but with Greece groaning under the weight of its debts and with its richer neighbors vowing to come to its aid, the deals over the last decade are raising questions about Wall Street’s role in the world’s latest financial drama.

As in the American subprime crisis and the implosion of the American International Group, financial derivatives played a role in the run-up of Greek debt. Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere.

In dozens of deals across the Continent, banks provided cash upfront in return for government payments in the future, with those liabilities then left off the books. Greece, for example, traded away the rights to airport fees and lottery proceeds in years to come.

Critics say that such deals, because they are not recorded as loans, mislead investors and regulators about the depth of a country’s liabilities.

Some of the Greek deals were named after figures in Greek mythology. One of them, for instance, was called Aeolos, after the god of the winds.

The crisis in Greece poses the most significant challenge yet to Europe’s common currency, the euro, and the Continent’s goal of economic unity. The country is, in the argot of banking, too big to be allowed to fail. Greece owes the world $300 billion, and major banks are on the hook for much of that debt. A default would reverberate around the globe.

A spokeswoman for the Greek finance ministry said the government had met with many banks in recent months and had not committed to any bank’s offers. All debt financings “are conducted in an effort of transparency,” she said. Goldman and JPMorgan declined to comment.

While Wall Street’s handiwork in Europe has received little attention on this side of the Atlantic, it has been sharply criticized in Greece and in magazines like Der Spiegel in Germany.

“Politicians want to pass the ball forward, and if a banker can show them a way to pass a problem to the future, they will fall for it,” said Gikas A. Hardouvelis, an economist and former government official who helped write a recent report on Greece’s accounting policies.

Wall Street did not create Europe’s debt problem. But bankers enabled Greece and others to borrow beyond their means, in deals that were perfectly legal. Few rules govern how nations can borrow the money they need for expenses like the military and health care. The market for sovereign debt — the Wall Street term for loans to governments — is as unfettered as it is vast.

“If a government wants to cheat, it can cheat,” said Garry Schinasi, a veteran of the International Monetary Fund’s capital markets surveillance unit, which monitors vulnerability in global capital markets.

Banks eagerly exploited what was, for them, a highly lucrative symbiosis with free-spending governments. While Greece did not take advantage of Goldman’s proposal in November 2009, it had paid the bank about $300 million in fees for arranging the 2001 transaction, according to several bankers familiar with the deal.

Such derivatives, which are not openly documented or disclosed, add to the uncertainty over how deep the troubles go in Greece and which other governments might have used similar off-balance sheet accounting.

The tide of fear is now washing over other economically troubled countries on the periphery of Europe, making it more expensive for Italy, Spain and Portugal to borrow.

For all the benefits of uniting Europe with one currency, the birth of the euro came with an original sin: countries like Italy and Greece entered the monetary union with bigger deficits than the ones permitted under the treaty that created the currency. Rather than raise taxes or reduce spending, however, these governments artificially reduced their deficits with derivatives.

Derivatives do not have to be sinister. The 2001 transaction involved a type of derivative known as a swap. One such instrument, called an interest-rate swap, can help companies and countries cope with swings in their borrowing costs by exchanging fixed-rate payments for floating-rate ones, or vice versa. Another kind, a currency swap, can minimize the impact of volatile foreign exchange rates.

But with the help of JPMorgan, Italy was able to do more than that. Despite persistently high deficits, a 1996 derivative helped bring Italy’s budget into line by swapping currency with JPMorgan at a favorable exchange rate, effectively putting more money in the government’s hands. In return, Italy committed to future payments that were not booked as liabilities.

“Derivatives are a very useful instrument,” said Gustavo Piga, an economics professor who wrote a report for the Council on Foreign Relations on the Italian transaction. “They just become bad if they’re used to window-dress accounts.”

In Greece, the financial wizardry went even further. In what amounted to a garage sale on a national scale, Greek officials essentially mortgaged the country’s airports and highways to raise much-needed money.

Aeolos, a legal entity created in 2001, helped Greece reduce the debt on its balance sheet that year. As part of the deal, Greece got cash upfront in return for pledging future landing fees at the country’s airports. A similar deal in 2000 called Ariadne devoured the revenue that the government collected from its national lottery. Greece, however, classified those transactions as sales, not loans, despite doubts by many critics.

These kinds of deals have been controversial within government circles for years. As far back as 2000, European finance ministers fiercely debated whether derivative deals used for creative accounting should be disclosed.

The answer was no. But in 2002, accounting disclosure was required for many entities like Aeolos and Ariadne that did not appear on nations’ balance sheets, prompting governments to restate such deals as loans rather than sales.

Still, as recently as 2008, Eurostat, the European Union‘s statistics agency, reported that “in a number of instances, the observed securitization operations seem to have been purportedly designed to achieve a given accounting result, irrespective of the economic merit of the operation.”

While such accounting gimmicks may be beneficial in the short run, over time they can prove disastrous.

George Alogoskoufis, who became Greece’s finance minister in a political party shift after the Goldman deal, criticized the transaction in the Parliament in 2005. The deal, Mr. Alogoskoufis argued, would saddle the government with big payments to Goldman until 2019.

Mr. Alogoskoufis, who stepped down a year ago, said in an e-mail message last week that Goldman later agreed to reconfigure the deal “to restore its good will with the republic.” He said the new design was better for Greece than the old one.

In 2005, Goldman sold the interest rate swap to the National Bank of Greece, the country’s largest bank, according to two people briefed on the transaction.

In 2008, Goldman helped the bank put the swap into a legal entity called Titlos. But the bank retained the bonds that Titlos issued, according to Dealogic, a financial research firm, for use as collateral to borrow even more from the European Central Bank.

Edward Manchester, a senior vice president at the Moody’s credit rating agency, said the deal would ultimately be a money-loser for Greece because of its long-term payment obligations.

Referring to the Titlos swap with the government of Greece, he said: “This swap is always going to be unprofitable for the Greek government.”

source  http://www.nytimes.com/2010/02/14/business/global/14debt.html?pagewanted=2

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