Russian Professor Predicts Disintegration of US!

A Russian professor, Igor Panarin, who has been predicting the collapse of the United States for a decade has said that the country will break-up into 6 parts by 2010. He names the newly found republics as Atlnatic America, The Texas Republic, The Central-North American Republic, The Californian Republic, Alaska and Hawaii. He termed the current financial crisis as the main reason for the disintegration and said that US debt is a pyramid that is bound to collapse. Full story can be read in the Wall Street Journal at:

http://online.wsj.com/article/SB123051100709638419.html?mod=googlenews_wsj

Disintegration of a superpwer. Well, doesn't it sound familiar? Didn't it happen to another superpower called USSR, where Mr. Igor himself belongs to? And didn't he work for the KGB? Well, if he saying all this, he must be speaking out of experience and yes, the world must listen. I personally feel that such a disintegration, if it does happen, might not take place so soon. If I were to predict a time frame for such an event, I would suggest somewhere between 2015 and 2020, unless some drastic measures are taken not only in financial sphere but also in the realm of political arena. There is an urgent need to review the country's policies not only towards its own people, but also towards the rest of the world.

United States was able to to become a great country, that it was until recently, not by chance but because of the constant struggle of its leaders like Abraham Lincoln, George Washington and J. F. Kennedy. This country rose to the top of the world stage because its leaders believed in hard work, self rightousness, self confidence, belief in God, respect for others and freedom for all. Is the current United States the country those leaders dreamed it to be? With power comes responsibility, and with responsibility comes accountability. There is need to go back to the basic principles that turned the United States into a great power. The sooner it is realized, the better it will be for US and for the rest of the world.

US National Debt - A Time Bomb Ready to Explode?

National debt is the amount owed by a government to its creditors, both national and foreign. The total US federal debt today stands at around $10.6 trillion. The burden of this debt on each American citizen is close to $35,000. The debt has been increasing at a staggering avaerage of around $3.5 billion per day since September 2007. In October 2008, the National Debt Clock in New York that unofficially tracks federal deficit ran out of digits as the debt exceeded $10 trillion mark. The dollar sign was replaced by a digit as a temporary measure while the new clock is being prepared. The recent bailout package has increased the ceiling of federal debt to $11.3 trillion. Total US debt is currently around 73% of GDP. This does not include the guarantees backing up AIG policies or liabilities of healthcare and pensions. Nor does it include US private debt. National debt that exceeds 60% of GDP is not generally considered healthy. In 2007, around 61% of US public debt was held by non-resident foreign investors while that figure is now at 109%. According to an IMF study, countries that have more than 60% of their public debt held by non-resident investors run a high risk of debt default. More over, Barack Obama is expected to inherit a US budget deficit of $500 billion that might even climb to $1 trillion. This along with national debt and ongoing bailouts would make it very difficult for him to provide tax relief and public spending, as promised during the election campaign. This raises the question if the Obama dream for change will materialize?

Coming back to the the public debt issue, China and Japan are the number one and two ranked countries respectively that own most of the US debt. Both countries own more than $500 billion each. Next-in-line include United Kingdom, OPEC countries, Brazil, Luxemburg, Russia, Hong Kong, Norway, Switzerland, Germany, Taiwan, Korea and others. However, the biggest stakes remain with China, Japan and OPEC countries. Alhtough US can print as much currency as it wants and some experts believe the risk of insolvency might not be as great as it would have been in the case of any other country, as the situation deteriorates, there is high risk of hyperinflation and a drastic drop in US dollar. This in turn, would decrease the value of debt owned by foreign countries and in anticipation of such a fall, some of them might attempt to convert their foreign reserves into other currencies like Euro, which would again have negative effect on dollar. This in turn might lead to social crisis and chaos. China currently has interest in keeping a strong dollar but the future of dollar is quite uncertain. There are rumours that in the future United States might abandon dollar and adopt the currently theroretical "Amero", a joint currency of US, Canada and Mexico. However, it needs to be investigated how would it impact each of the participating countries, major current holders of US foreign exchange and the rest of the world. In short, the US national debt seems like a time bomb, ready to explode.

Instant Bailouts

When US treasury secretary, Henry Paulson, came up with the plan to bail out financial insitutions by injecting hundreds of billions of dollars to purchase non-performing loans or "bad debt", he told Congress that there was not much time to ponder upon the issue. His view was that as more time is wasted, some of the biggest financial institutions might collapse, just like Lehman Brothers did. In a matter of a few days, the bill was passed. So why did everything happened so quickly? Did Paulson and his associates not want the Congress members to analyse the issue at hand, or were they scared that the US public might start questioning the rational of saving the ever profiteering banks with tax payer's money? Although so much money has been poured into these financial institutions, reports are that banks are still shy at lending money. Why? Where have all these funds gone? Recently, a US journalist asked around 21 financial institutions, that received atleast $1 billion or more in financial relief, about the whereabouts of these funds. Surprisingly, not even a single institution agreed to disclose the information. This raises a lot of questions.
Why was so much haste shown in approving the $700 billion bailout package for financial institutions? Why was tax payer's money used to make these fundings? Why were some quarters so eager to save the banks while they have not shown the same urgency in saving other industries like the Auto Sector which is directly or indirectly connected with 3 million jos? Who owns these financial institutions? Was it fair to use tax-payers' money when a man on the main street still cant get loans or stay in his house? Who is Henry Paulson? Why was he given unprecedented powers by the US government to overlook the bailout? Why was Leman Brothers allowed to fail while other institutions like Goldman Sachs survived? What is Paulson's connection and history with Goldman Sachs? Why was the bailout plan changed from the original purpose that it was supposed to serve? How much more bailout money would Paulson ask for in the future? Will spending all these treasury funds really help the economic recovery? Will the US public debt continue to rise from the current $10.6 trillion level? Will these efforts help ordinary people or just save the interests of those who are already playing in millions and billions?
The logic and effectiveness of this policy can only be judged with time. However, several loop-holes along with accusations of hidden intentions and corruption are only going to make things difficult for the government and for the economy as a whole.

Why did Madoff do it?

The big question to me is: Why did a man of Madoff's stature, reputation and background, literally robbed people and funds off billions and billions of dollars. This is a scandel in the making and one that has shattered the world of finance. No one knows the extent of damage and what domino effect would this have on other hedge funds and on the world economy on the whole. No more can rich and famous believe in their most entrusted financial advisors of long time.

Bernanrd Madoff, born in 1939 in the city of New York to a jewish family, started his firm in 1960 with a sum of $5,000. His firm made huge contribution to the formation of NASDAQ, to which he served as Chairman of Board of Directors. He brought several of his relatives into his firm and was known for philanthropic activities, contributing to a range of charitable organizations, educational institutions, cultural groups and jewish cause. Madoff made high level contacts in Jewih Circles and among the rich and famous, including members of elite country clubs and yatch clubs in New York and Florida, and the rich and royal in Europe, that helped him get funds.

Year after year, Madoff's fund paid high returns consistently to the investers, regardless of economic situation, which helped boost invester confidence. His fund was also attractive to others as it was not open for all but people could join in through invitation only. Alhtough, over the years, some people did raise doubts about the way Madoff conducted business and there were even complaints lodged to SEC, no proper investigation was undertaken. Madoff's firm also successfully avoided filings with SEC.

In December 2008, Madoff was arrested by authorities for running the biggest "ponzi scheme" ever that may have squandered as much as $50 billion of other people's and institutions' money. This fraud may have been going on since 1970s. Most of this money will never be recoved and the affected include banks, funds, charitable organizations, educational institutions and individuals.

Back to the million, rather billion dollar question: Why and how? Well, if he has been involved in fraud for decades, and held such high esteem and positions during all this time without getting noticed, then he was one smart person, or shall we call an evil genius? He was a fraud from day one and probably was totally focused on amassing huge sums of other people's money and be famous. Second, many people had put blind trust in him. This shows the vulnerability of not only the rich and famous but also jewish organizations that assumed that a fellow jew would not eat up their money like this. Third, SEC cannot be absolved from its very questionable role of ignoring red flags against Madoff's firm and its inability to act and scrutinize the company. Fourth and last, many experts believe that Madoff must not have acted alone. This is a story in the making and we may see more arrests in addition to more funds of funds being vanished.