Signs of the Economic Apocalypse, 2-12-07

Gold closed at 671.70 dollars an ounce Friday, up 2.9% from $652.60 at the close of the previous Friday. The dollar closed at 0.7688 euros Friday, down 0.3% from 0.7713 euros at the end of the week before. The euro closed at 1.3008 dollars, compared to 1.2966 at the close of the previous week. Gold in euros would be 516.37 euros an ounce, up 2.6% from 503.32 for the week. Oil closed at 59.89 dollars a barrel Friday, up 1.4% from $59.09 at the close of the previous Friday. Oil in euros would be 46.04 euros a barrel, up 1.0% from 45.57 at the end of the week before. The gold/oil ratio closed at 11.22 Friday, up from 11.04 for the week. In U.S. stocks, the Dow Jones Industrial Average closed at 12,580.83 Friday, down 0.6% from 12,653.49 at the close of the previous week. The NASDAQ closed at 2,459.82 Friday, down 0.7% from 2,475.88 for the week. In U.S. interest rates, the yield on the ten-year U.S. Treasury note closed at 4.78% Friday, down four basis points from 4.82 for the week.

The U.S. markets were shaken a bit last week by more signs of mortgage defaults and rising foreclosure rates in the U.S. housing market. The dollar, stocks and interest rates went down, while gold and oil went up:

Stocks drop as more home loans go bad; Micron warns

Amanda Cooper

Fri Feb 9, 8:12 PM ET

U.S. stocks fell on Friday after Countrywide Financial Corp. became the latest mortgage lender to warn of rising defaults, while chip maker Micron Technology Inc.'s poor forecasts shook the tech sector.

Countrywide, the No. 1 U.S. mortgage lender, said foreclosures hit their highest since at least 2002, while delinquencies hovered near a five-year high, fanning concern over the erosion of the U.S. housing market after two of the top three U.S. subprime mortgage lenders warned on Thursday about the impact of bad loans on their bottom line.

Investors were jolted after Britain's HSBC Holdings Plc and New Century Financial Corp. issued their warnings, which punished shares of major U.S. banks like Citigroup and JPMorgan Chase & Co. for a second day in a row.

The much anticipated market debut of Fortress Investment Group LLC, the first hedge fund to go public, did little to dispel the worries about what further deterioration in the housing market could do to the economy.

"The market was looking for a reason to go down and I guess you could point to that. You could even point to oil trading above $60 a barrel," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets in Baltimore.

HSBC "obviously had an effect on the psychology of the market here," Mata said.

Micron said it believes prices for memory chips used in consumer electronics will fall 30 percent to 40 percent this quarter from the last one. That projection sent Micron's stock down more than 3 percent in their biggest one-day percentage slide in more than three months.

The Dow Jones industrial average slid 56.80 points, or 0.45 percent, to end at 12,580.83. The Standard & Poor's 500 Index dropped 10.25 points, or 0.71 percent, to finish at 1,438.06. The Nasdaq Composite Index tumbled 28.85 points, or 1.16 percent, to close at 2,459.82.

For the week, the Dow fell 0.57 percent, while the S&P 500 declined 0.71 percent and the Nasdaq slipped 0.65 percent.

Last week we pointed out the signs that the ruling groups in Germany are poised to follow the U.S. example of neoliberal privatisation, growing inequality of income and the dismantling of social insurance. The United States, neoliberal in social and economic policies and neoconservative in foreign policy, would seem to be a poor model to follow now that the disastrous effects of a generation of such policies are impossible to ignore. Yet the signs are there that even France will go in that direction, again, like Germany, against the wishes of her citizens, if Sarkozy manages to get installed as president.

France: Nicolas Sarkozy goes to London

By Antoine Lerougetel
5 February 2007

Nicolas Sarkozy’s first foreign excursion since his designation as official presidential candidate of France’s ruling Gaullist UMP (Union for a People’s Movement) was a trip to London. He spent January 30 visiting the Marylebone Jobcentre Plus, lunching with Prime Minister Tony Blair and addressing an election rally organised by the London branch of the UMP, which attracted 2,000 French expatriates.

The first round of the French presidential elections will be held April 22.
The Guardian newspaper noted: “Mr Sarkozy’s choice of London for his first foreign trip since launching his presidential campaign is seen as deeply symbolic. He is keen to present himself as an international statesman, a friend of Mr. Blair and close to the US-British alliance.”

Sarkozy is reported to have met Blair for discussions on no less than eight occasions. Their personal friendship is underlined by unofficial meetings, “including while on holiday in Florence and during Sarkozy’s trip to London to celebrate his reconciliation with his wife Cecilia.”

When Blair’s wife goes to Paris, she has dinner at the ministry of the interior Sarkozy presides over.

The London visit, and particularly the rally at the end of day, provides a snapshot of Sarkozy’s social base. There are 60,000 registered voters among the big French expatriate community in Britain (some 300,000), mainly living in London and the prosperous southeast. Many of them are drawn by the low taxes and deregulated economy stripped of labour and social rights, where the business of accumulating wealth is untrammelled. The January 30 Guardian editorial comments, “The expatriate [French] community in Britain is one of the biggest outside France. Whizz-kid bankers and businessmen fleeing a homeland in a state of political (and entrepreneurial) torpor are natural voters for the man who has promised to break the mould of French politics.”

According to the Daily Telegraph, “Many of the new arrivals work in the Square Mile [the City, London’s banking and financial district], where bonuses mean that they can earn five times what they would for the same job at home.”

The Guardian gave this description of Sarkozy’s audience: “Hundreds of well-heeled city financiers, students from Paris’s posh suburbs, restaurant workers and teachers living in Britain filled a hall at Old Billingsgate market.”

The Telegraph reported, “Upwards of 2,000 chic, prosperous supporters chanted ‘Sarko president’ as he told them he wanted their support for his candidacy and his vision of a new France.”

Raphaël Leclerc, 21, studying politics at the London School of Economics, told the Guardian that he had grown up in a smart Paris suburb and came “from a privileged background and rightwing family” and had played football against Sarkozy’s sons. Alex Poitier, 29, a trader at a foreign bank, told the Daily Telegraph, “In terms of salary and the amount of responsibility I’m given there is no comparison with France, but I love the whole philosophy of the place.”

This philosophy, dominant in these social layers, is well expressed by a piece by the French, London-based think tank Cercle d’outre-Manche in the January 30 Financial Times January 30. It asserts that Britain has overtaken France as a place for money-making:

“The UK generates 76 billion euros more gross domestic product..... Twenty-five years ago the UK’s GDP was 75 percent that of France.”

The article then explains the secret of this success: “Margaret Thatcher broke down many rigidities and reintroduced market practices in the economy. With Tony Blair at the helm and Gordon Brown at the purse, market fluidity has been introduced in almost all aspects of the economy.”

Here we see the significance of Sarkozy’s visit to the job centre. The destruction of job protection is lauded with the euphemism “hiring people has been made easier.” Forcing people to accept any low-paid job offered by the job centre, on pain of withdrawal of benefits for those who do not, is approvingly described: “Welfare resources are targeted to make it easier for the long-term unemployed, older workers, young people and single mothers to get back to work with a carrot and a stick policy.”

These are the people for whom Sarkozy speaks and who want him to do in France what Thatcher first did in Britain. What they applaud in Thatcher and also Blair is that, as the Cercle d’outre-Manche puts it, “they have held firm in the face of opposition.”

Here we see clearly the anti-democratic nature of the neolib/neocon elite. The opposition in the face of which they have held firm is that of the vast majority of citizens.

The cynicism of Sarkozy’s claim, in recent statements, to have the interests of workers at heart and even to approve of better remuneration for work, is clearly revealed in a January 31 interview in the International Herald Tribune: “I want people to be recompensed and respected for their work. I want people to understand the value of work. I’m concerned with people who want to work hard, and I want to speak to them. When people work hard, they have to be recompensed for this. And that’s why I want to do away with inheritance laws, because if someone has worked hard throughout his or her life, then it must be possible to pass onto your children the fruits of your work.... I don’t accept that someone is poor if they worked really hard.”

Sarkozy’s message is not for working people, but for the upwardly mobile and the financial elites who will have substantial wealth to leave to their children. His call for hard work to be rewarded is in fact a call for the rich to be allowed to get richer. He employs the same bogus claims of a commitment to a meritocracy as Blair, where a supposed equality of opportunity for social advancement and wealth accumulation is counterposed to calls for greater social equality—which is denounced for holding back the “hard working” and rewarding the lazy and shiftless.

Anyone who defends social equality is out of step with the times, Sarkozy declares: “My ideas are the ideas of today’s world: respect for work, social promotion, equal opportunities. Let me tell you, I don’t like egalitarianism. I don’t like people being unnecessarily helped. I don’t like lowering in the interests of equality. I want to bring everyone upwards.”

And when quizzed as to his commitment to deregulation and privatisation, Sarkozy reassures his interlocutor, “I’m not an enemy of the state. A great country needs the state, but let me put things very simply. I believe in capitalism. I believe in the market economy. I believe in competition.”

When asked why in a recent poll 51 percent of the people said they were afraid of his policies and actions, he vaunted his success in the opinion polls and attributed this to his readiness to confront social and political opposition:

Speaking of how he faced up to 27 days of rioting in Paris and major French cities, he replied, “Fortunately I’m worrying. If I were reassuring what would things be...you come along and you say, ‘Mr. Sarkozy, why are you frightening people? Why are people worried? What should be done not to frighten people?’ I’ve been number one, so presumably, there must be some reassurance; at least that’s the perception of some.

Notice that Sarkozy's answer makes absolutely no sense.

“I’m not frightened of ideologies, credos. I’m not going to bow down to the latest fad, and I’m not frightened of facing up to difficulties,” he boasted.

It is on this basis of his role as a strongman, an authoritarian figure, that Sarkozy is making his pitch for presidential office.

…Sarkozy’s bombastic displays of self-confidence are not due to any inherent strength or to the popularity of his elitist policies—he leads in the polls, but with only 38 percent of respondents. They are the product of the lack of any meaningful opposition from the official left parties: Socialist Party, Communist Party, Greens, the trade unions and their hangers-on in the so-called “far left” and radical movements (the LCR—Revolutionary Communist League, LO— Workers Struggle, the PT—the Workers Party, José Bové and the anti-globalisation associations).

A recent poll has found that more than 70 percent of French people do not believe in the free market as a condition for social well-being. This was also expressed in the rejection of the European constitution in the May 2005 referendum, the mass protest movements of 2003 against pension cuts, and in 2006 against the dismantling of labour and social rights and protections.

…What Sarkozy is seeking to learn from Blair is how to make a policy of the destruction of rights and living standards, imposed by an authoritarian state, palatable to the electorate by dressing it up in pseudo-progressive and liberal garb. He needs Blair’s advice on how to make enough voters believe that his credo “I believe in competition” can also encompass what he described to the IHT as “an ethical form of capitalism.”

He has promised, if elected, to curtail the right to strike and picket, to generalise the New Job Contract at present only enforceable in small businesses—a contract similar to the First Job Contract (CPE), which had to be withdrawn because of the mass movement of youth and workers against it in the spring of 2006. He proposes to withdraw benefits from unemployed workers who reject a second offer of a job from the state employment agency, lengthen working hours and make further drastic inroads into pension rights.

Blair is the most despised politician in Britain for his lying and complicity with US President George W. Bush in justifying the illegal invasion and colonial-style occupation of Iraq against massive national and world opposition. He is also hated for his social policies.

Sarkozy’s visit to such a discredited figure is another aspect of his alienation from the concerns of ordinary French citizens.

It seems that Sarkozy, backed by neocons in Israel and the United States, has infiltrated the security services in France and is backed financially by the Israeli/Russian mafia, according to Wayne Madsen :

February 6, 2007 -- Right-wing French presidential candidate Nicolas Sarkozy received money from international American fugitive and Russian-Israeli Mafia kingpin Marc Rich, according to informed French sources. The money was transmitted through the Luxembourg-based Clearstream clearing division of Deutsche Borse. Sarkozy cleverly proclaimed his innocence in the French-Taiwan frigate bribery and money laundering affair, accusing French Prime Minister Dominique de Villepin of being behind a political dirty trick. However, in squawking loudly about his innocence in the Taiwan scandal, Sarkozy diverted attention away from his receipt of funds from the Russian-Israeli Mafia Clearstream accounts of Bank Menatep, the bank owned by jailed Russian tycoon Mikhail Khodorkovsky.

Sarkozy, a committed neo-con who favors a hard line towards Arabs domestically and internationally, is reported to have received funds from Switzerland-based Marc Rich, via Menatep's Clearstream accounts, prior to and after Menatep's collapse in 1998. Menatep has been linked to a number of Russian-Israeli mafiosi figures, including Semyon Mogilevich, considered to be the most dangerous Russian-Israeli Mafia leader in the world. Rich's former attorney, I. Lewis "Scooter" Libby, is on trial in Washington, DC for perjury and obstruction of justice in the outing of a covert CIA officer.

French tax police are homing in on off-shore accounts operated by former Yukos Oil and Menatep official Alexei Golubovich, who was under house arrest in Italy before he returned to Russia. Golubovich agreed to testify against Khodorkovsky in return for Russian prosecutors dropping charges against him. In what may be related to the money laundering scandal, Yuri Golubev, a Yukos co-founder, died in London last month under what Russian prosecutors believe are suspicious circumstances.

In December, WMR reported, "Sarkozy has been accused of receiving illegal funds through dubious bank accounts in Luxembourg and some of those funds have Russian-Israeli mafia fingerprints all over them."

Sarkozy is in a tight race with French Socialist Party candidate Segolene Royal. The taint of money and bribery scandals continue to cling to Sarkozy.

Last October, Madsen reported the following about Sarkozy’s infiltration of France’s security services, acting in the interests of Israel:

Neo-con agents of influence have infiltrated the DGSE and other intelligence services with a view to changing their Arabist viewpoints to more pro-Israel perspectives. This has been accomplished with the help of Sarkozy. The Interior Minister has managed to weaken some of the strict requirements stipulated in the past for service in the French security services -- allowing those with dubious foreign connections to become employed by the DGSE and Direction de la surveillance du territoire (DST).

French intelligence sources also report that Sarkozy is running a band of agents provocateurs who have been responsible for starting two recent riots in and around Paris that were similar to the riots that plagued France last year. Many of last year's riots were also provoked by Sarkozy agents.

…In August, French Socialist presidential candidate Segolene Royal, who lives in a Paris apartment with her male partner, Socialist Party Secretary General Francois Hollande, complained that Sarkozy's Interior Ministry leaked information to the press about the break-in and ransacking of their Boulogne-Billancourt apartment. The break-in occurred while Royal and Hollande were on their August vacation. Royal said that nothing was missing from their apartment but it had been ransacked in a manner that suggests someone was searching for something that they did not find. Royal said, "This was not a burglary, but an intrusion and a full-scale search of my home in which nothing was stolen."

According to French intelligence sources, Royal and Hollande are now under total communications and physical surveillance by Sarkozy's DST agents and unofficial agents from organizations, including foreign intelligence services, supporting Sarkozy's anti-Arab and neo-con agenda. DGSE agents opposed to Sarkozy appear content to allow Sarkozy and his friends to continue to carry out their subterfuge in the hope they will make a major mistake and be caught, thus dooming Sarkozy's presidential hopes.

The people of France should know that once you let these types of people in power, they will never leave. Just look at the United States and Great Britain.