Nation gripped by financial coup

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America entered the third world this year – very quietly.

Communicating undercover in a 2009 number of “The Atlantic,” risk management executives of the International Monetary Fund warned of a “financial coup” at work in Americans’ lives. 

The scam is at end-game, and it’s not that different than those foisted upon the peoples of third world nations such as Indonesia, Argentina, Russia, or South Korea.

The formula for recovery is very simple – increase exports, reduce imports – and live within the national means – but it’s also very, very expensive.

When conventional bankers begin to reject proposals for further borrowing, that leaves the more expensive, less desirable route offered by IMF.

According to experts quoted without attribution in the Simon Johnson article, “One thing you learn rather quickly when working at the International Monetary Fund is that no one is ever very happy to see you. Typically, your ‘clients’ have come in only after regional trading-bloc partners have been unable to throw a strong enough lifeline, after last-ditch attempts to borrow from powerful friends like China or the European Union have fallen through…”

It’s as simple as that.

Most Americans are only now waking up to the aroma of freshly brewed coffee.

According to Johnson’s article: “The challenges the United States faces are familiar territory to the people at the IMF. If you hid the name of the country and just showed them the numbers, there is no doubt what old IMF hands would say: nationalize troubled banks and break them up as necessary.

That’s the way out, according to conventional wisdom. Conventional wisdom beats no money, and those with conventional wisdom have it to lend.

Big banks gained political strength by being too big to fail, and that came only after the “crisis” – so-called – was well underway.

By 2007, financial industry profits as a share of U.S. Business profits had risen to 30 percent, up from slightly less than 10 percent in 1945, while pay per worker in the financial sector had risen from 120 percent of an average worker’s to double that over the same period.

As an emerging market economy, the U.S. is trapped, according to Philip Turner of the Bank for International Settlements. “The global long-term interest rate now matters much more for the monetary policy choices facing emerging market economies than a decade ago. The low or negative term premium in the yield curve in the advanced economies from mid-2010 has pushed international investors into EM local bond markets: by lowering local long rates, this has considerably eased monetary conditions in the emerging markets. It has also encouraged much increased foreign currency borrowing in international bond markets by emerging market corporations, much of it by affiliates offshore. These developments strengthen the feedback effects between bond and foreign exchange markets. They also have significant implications for local banking systems.

Keywords: Term premium, international corporate bonds, monetary policy triangle, currency mismatches…”

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