20 November 2009. The Federal Reserve is a private bank. While this is not new - it has been this way since 1913 - it is certainly news to most people. The Fed is owned 100% by shareholders, who are all private banks. It controls the creation of money, and then uses that to buy US Treasuries. In other words, it lends the money it has just created to the US Government, and secures a revenue stream in the form of interest payments from that. It pays a guaranteed 6% return to bank shareholders, who also get to borrow money more cheaply than anyone else, and create their own money through leverage. The express purpose of the Federal Reserve Act was and is to protect private banks, not the government. That is why great figures such as Jefferson and Lincoln bitterly opposed the bankers and their financing systems, fearing them more than standing armies.

18 November 2009. There is an elephant in the room, and it is hard to write about anything else while that is the case. The financial system in the US and Europe needs to be reformed. Not in the way that the regulation currently going through the House and Senate calls for. That is not real reform - it entrenches Too Big to Fail and still allows hundreds of trillions of dollars - more than the entire GDP of the world - to be traded in secret. Lets just say that with the banks financing politicians campaigns, they are getting their money's worth, and driving the US into ever deeper debt. Real reform is based on transparency, increased capital requirements, transaction taxes and the break up of Too Big to Fail firms.

17 November 2009. When Osama and Al-Qaeda launched the 9/11 attacks, they aimed to shake the foundations of western capitalism. Although the official line is that they failed to do that - and, indeed, that he is now somewhat irrelevant since we have 'won' the War on Terror - the measures used to contain the negative effects of the attacks involved pumping the system with cheap money. That liquidity helped to build up the asset price bubbles, bank leverage levels and global trade imbalances that imploded so successfully (from Osama's point of view) in the Financial Crisis. Now, we not only have to ask ourselves whether he planned this or got lucky; our more pressing question is what happens next, since the problems in the system have not been fixed.

13 November 2009. Despite its economic successes, India leads the world in hunger. The monsoon failure, followed by torrential rains at the end of the season that destroyed more crops, has led to growth in the numbers of food insecure to an estimated 220 million. While the government has done will to increase access to funds, the key is technology. A second Green Revolution is needed to take advantage of less thirsty crop varieties, sprinklers to reduce water usage, and even lasers to level fields.



12 November 2009. Sweeping economic reforms have been announced in Russia, that could see the major state-supported companies restructured. Western media have trumpeted this as President Medvedev going after former President Putin and his allies, but they are wrong. It is a factional clan fight happening beneath them, between the FSB (KGB) linked siloviki who control those companies, and the rising technocrats of the civiliki. The outcome of this fight will shape Russian politics and economics for years to come.

11 November 2009. What will are expected the worst economic crashes that happen in 2010? The list is dominated by European countries, so much so that we must stop talking about the sick man of Europe. Now we need to talk about Europe as the sick continent of the world. Indeed, out of the top 12 countries on the disaster list, only one - Equatorial Guinea, scene of corruption, embezzled oil money and attempted coups - is not European. Leading the pack are Ireland, a microcosm of the US - but without their own reserve currency to fall back on, and Lithuania, once a proud Baltic Tiger but now struggling with debt and a lack of export orders.

5 November 2009. Forget what the Happy Clappy Fed is saying, and ignore the frothing talking heads on TV. The US stimulus has had a positive impact, but it is not enough. Paul Krugman does the math - if you don't want to see high unemployment for the next decade, and that is the real generational theft going on here, then the US needs a second stimulus.