Mr. Tilford at the Financial Times makes light of the fact that the US and UK are deep in debt to foreign trade rivals. He makes the usual mistakes in his article about how trade deficits don’t matter at all. He is dead wrong from top to bottom. No surprise, of course. Seems the debtor culture in the US and UK has finally unhinged our brains. We think this is true wealth and not the chains of debt strangling us.
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A trade surplus is not always a sign of strength, article by Simon Tilford, 4 March 2009
Article by Simon Tilford, published in the Financial Times, 4 March 2009There has been a queue of commentators arguing that the strong economic performance of the US and the UK in the run-up to the financial crisis was an illusion, a product of excessive borrowing and an inflated financial sector. The fact that both countries are running large trade deficits is taken as evidence of economic malaise. They are compared unfavourably with countries such as Germany and Japan that still “make stuff”. These countries’ huge trade surpluses are said to be a sign of their competitiveness.
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There are many levels of competition here. One is trade in HIGH END manufactured goods like ships, trains and cars. Then there is manufacturing of materials for making high end goods like steel and glass production. Then there is lower end goods like TVs or computers.
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Germany can Japan make much of the high end goods. Even high end goods the US makes like planes are also made in Japan and Germany and then assembled here (INCREASINGLY this is true!!!!).
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Nations also make another thing: public debt. Germany’s public debt is much lower than Japan’s which is, per GDP, the highest of all the first world countries on earth. That isn’t good for Japan. But it isn’t all evil, either. Over 85% of that debt is owed to Japanese people, not foreign trade rivals. A very, very significant point that stupid people like Tilford deliberately ignore.
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The financial crisis, it is argued, has revealed the fallacy of the UK’s “excessive dependence” on services. Manufacturing has been allowed to decline too far and as a result the UK has nothing left to sell. The talk has been about the need for “reindustrialisation”. Leaving aside the fact that the UK remains the seventh largest exporter of manufactured goods in the world, this portrayal reveals some lazy thinking.
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Britain, like the US, cannot export its way out of this deficit. The more the UK exports, the worse things get. The question isn’t ‘Are there any exports?’ but ‘Are exports BALANCING imports and are exports maintaining the industrial base?’
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In the US and England, much of the manufacturing has been removed from English and US hands and is now run by hostile foreign trade rivals. The US and UK both count car manufacturing jobs of foreign trade rivals out to destroy the US and UK manufacturing profit base, as ‘good manufacturing jobs’ when these are really very,very destructive to the SOVEREIGNTY of the state!
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For the PROFITS of all this flow not to the US or UK but flow to Japan and Germany as well as increasingly, China. The infantile view of capitalism currently popular in the US and UK leads to an inability to track CAPITAL and considerable confusion of capital with debt. Many lazy thinkers think these are the same thing. THEY ARE MOST CERTAINLY NOT. They are opposites.
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It is hilarious that the author of this tripe thinks other writers are lazy.
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Britain’s economic prospects are not handicapped by the size of its service sector and in particular its specialisation in internationally traded services. Neither are the long-term economic prospects of Germany and Japan better because of their strengths in export-oriented manufacturing and their external surpluses. If growth in the US and UK has been illusory, it has been no less illusory in Germany and Japan. Had it not been for robust demand for their exports, these two economies would have continued to stagnate.
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HAHAHA. This lazy writer dares to suggest that the international banking gnomes were good for the US and UK??? HAHAHA. This isn’t mere lazy thinking, this is delusional insane thinking. As for ‘stagnating’ economies: the US and UK growth was a growth of debt, and if a debt growth is too great, it becomes a mountain of future obligations that literally crushes the life out of any system.
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The only reason this wasn’t glaringly apparent yet is due to our trade rivals who are destroying our native controls of all our industrial base as well as other systems want to keep us borrowing our way to hell. If they shut off the spigot of this flood of lending, we would crash into a brick wall nearly instantly.
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And worse: much of the stupid banking business run in London and NY was all about dumping oceans of red ink on top of every possible business and operation in the US and UK. This is now destroying all of the native businesses of any sort. The buy up and buy out games of the bankers replaced IPOs due to creating new businesses.
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This destructive debt creation business is the bleeding heart in the center of the crash. It is nothing to be proud of. But Germany and Japan put up as many barriers as possible to prevent the Japanese carry trade borrowing to end up as debts transferred by the London and NY banking gnomes onto businesses.
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Ultimately, they owe their short-lived economic recovery in 2005-07 to economic growth in the US and other big deficit countries such as the UK. Even the growth in their exports to emerging markets such as China and Russia was to a large extent a by-product of growth in other developed economies. Chinese growth was heavily dependent on exports (especially to the US), and the Russian economy on high oil prices, themselves a function of the economic boom led by the developed world’s deficit economies…. .
There was no ‘economic boom’……there was a CREDIT boom! And the credit grew out of trade surpluses with the US and UK and other nations running in the red. All the debtors bought stuff including oil and gas from the creditor nations. The creditor nations built up immense FOREX holdings plus they also bought the lion’s share of world debt.
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For example, Japan’s government is very deep in debt vis a vis the GDP. But Japan has the world’s #1 or #2 amounts of FOREX holdings as well as holding US and other national debts, etc. A formidable holdings! True, they owe themselves lots of money.
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But this was money spent inside Japan and is owed to Japan! The US and UK owe money to Japan that was often spent on foreign military operations and on Japanese goods sold within the host nations! This lazy, stupid writer can’t understand this simple concept?
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JAPAN HAS CAPITAL. The US and UK has no capital…except for future taxes on the populace.
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…A trade surplus is not necessarily a sign of strength. HAHAHAHAHA In the case of Germany and Japan it reflects weak domestic demand, itself a product of very high savings rates. If savings rates were to fall in these countries, this would stimulate consumption and reduce their dependence on exports. To this extent, it could be argued that Germany and Japan are indeed better placed than the UK and US. However, all the evidence suggests that savings rates in these countries will not fall.
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Good lord! This stupid man is whining that Japan and Germany won’t spend lots of money! He wants them to stop saving and to start spending. The problem here is obvious to Libra: you can’t have everyone peddling debt simultaneous with no one saving! There has to be a capital base! Minus that, you see the collapse of manufacturing and trade.
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If Germany and Japan start spending, the US and UK have to stop spending. I hope the results of this become obvious in the mind. The US and UK standard of living will have to collapse.
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Indeed, the opposite is inevitable, as recession and subsequent stagnation depress employment and wages. The external price competitiveness of German and Japanese manufacturing industries will benefit, but they will find it difficult to boost their sales because of huge overcapacity in many industries and very weak global demand. At the same time, these big surplus economies will remain beset by chronically depressed consumption. With demand for their exports likely to remain weak for years, Germany and Japan arguably face a bleaker outlook than do the US and Britain.
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ΩΩGermany and Japan will have depressed profits. The US and UK will die. Whoopee. Isn’t that great? This guy is typical of US and UK mental gymnastics. The debtor sneers that his spending is keeping things going. And if he ceases spending, all the businesses feeding his debt-driven binge will suffer.
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ΩΩBut the debtor DIES. The difference between suffering a temporary set back versus dying totally and going into chaos, destruction and civil collapse….it is obvious that debtor nations have considerable suffering when things even slow down slightly whereas governments with credit and who owe little or nothing to other foreign powers sail through credit contractions intact.
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ΩΩFor example, it was like flipping a light switch to get the US to go from depression to roaring vitality after the Great Depression. Now, we have no light switch. All we can do is spend public money to keep buying foreign goods. For example, the lion’s share of the stupid clunker program went flying off to Japan.
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At Inquiries Start, Lawmakers’ Ties to Toyota Are Questioned – NYTimes.com
Federal disclosure records show that Toyota, with 31 lobbyists in Washington last year, has spent nearly $25 million on federal regulatory and legislative lobbying matters in the last five years, far more than any other foreign automaker. That amount is certain to grow this year, with Toyota in full damage-control mode in the face of myriad federal investigations.
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“Toyota has lobbied to a degree that no other foreign automaker has,” said Dave Levinthal, communications director for the Center for Responsive Politics, a research group that has analyzed Toyota’s record in Washington….
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…Toyota’s registered lobbyists include at least eight former officials from Congress and the executive branch. The company also employs former engineers and officials from the National Highway Traffic Safety Administration, the federal regulatory agency faulted by some critics for failing to spot a pattern of safety problems at Toyota.
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A number of lawmakers have personal financial ties to Toyota as well. More than a dozen members of Congress have owned stock in Toyota since 2008, valued, in some cases, at tens of thousands of dollars. Representative Jane Harman, a California Democrat, led the way, with Toyota stock valued at $116,000 to $315,000 in her most recent disclosure report.
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Ms. Harman serves on the House energy committee, which will begin a public examination of Toyota’s problems at a hearing on Tuesday.
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An obvious conflict of interest. She should hand over her chair to someone less corrupt. But alas, most of Congress is totally corrupt.
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On Wednesday, the House oversight committee will hold a hearing of its own on Toyota. The ranking Republican on the committee, Representative Darrell Issa of California, has pressed Toyota for a fuller accounting of the safety problems, but he too has a history of financial connections to automakers.
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ΩΩBoth political parties are totally corrupt. I wish to laud Ron Paul here for pulling off a great CPAC coup: his supporters who greatly outnumbered the people who showed up at the pathetic Tea Party meeting (there were many more than 600 Ron Paul supporters at the CPAC meeting!) and they voted to support him for President.
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ΩΩFlying planes into the IRS building in outright terrorist attacks is stupid. Organizing intelligently to run systems is smart. The Ron Paul people who attended this meeting and rocked the right by taking over from the Christian fanatics and the corporate gnomes such as Mitt the tax haven cheat Romney, this was significant.
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ΩΩBut no one will learn any lessons unless they call for Ronald Reagan to be charged, despite being dead, of TREASON. He was the very first public elected official to sell himself openly to the Japanese corporate powers. They were the ones who paid him the same month he retired, $2.5 million for a small addled speech in Tokyo.
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ΩΩAt that time this was and I think it still is, the most expensive useless speech ever given by anyone on earth. ‘Arigato for the bribe,’ was pretty much the entire base of this speech. I was enraged when he got away with this crime. The Chinese officials living with me laughed and said they knew they could also own any US president this same way.
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ΩΩI went to DC and demanded Congress go after Reagan for this crime and they instead polished their own ‘Arigato’ speeches and ran off to foreign powers to peddle their wares. Now, Toyota owns Congress. Great.
US super-rich get five times more income than in 1995
ΩΩSome of these families are in Congress. Many of the super rich make their money dumping debt on top of all our systems and selling us out to trade rivals. They are actively destroying this nation’s sovereignty. The way to fight them is to organize ourselves politically. To have any impact on systems, we must understand systems.
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ΩΩThe wrong analysis will lead to making obvious mistakes. We recognize our mistakes via various ways: red ink is a sign of a mistake. And losing ownership of not only industries and systems but losing the ownership of one’s taxes by selling future taxes to foreigners is a sign that things are very, very bad.
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ΩΩAny good political party has to recognize this. Also, they have to set aside all the ‘goodies’ such as worrying about women choosing abortions or supporting ethnic cleansing in the Holy Land, etc. These are side issues when we are facing economic slavery.
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‘Size Matters’ as EU Weighs Up Greek Rescue Bill: Chart of Day – Bloomberg.com
Europe may need to stump up as much as 320 billion euros ($441 billion) if it decides to bail out Greece because it would open the door to rescuing other countries in financial distress, according to BNP Paribas.
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“To come up with a bailout plan that would be reasonably certain of success, it would have to cover all the most likely candidates, and it would have to be big,” said Paul Mortimer- Lee, global head of market economics at BNP in London. “Size matters when you are trying to scare off speculators and to comfort nervy bondholders.”
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ΩΩUm, comparing all of this to Spain’s debt is funny. HAHAHA. Note that the NYT didn’t compare Spain’s debts owed to Japan and Germany with US debts owed to these nations! Instead, it shows the AIG bail out. NO ONE ON EARTH can bail out the US and UK! No one! The money owed is over $10 trillion. Greece is in trouble only because their GDP suddenly shrank so the share ratio shifted dramatically. Obviously, Spain owes much more than all the other PIIGS.
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ΩΩA Spanish default will trouble everyone a great deal. But conversely, a US default, even though it is a smaller GDP ratio than Spain, would devastate, nay, annihilate all banking. On the other hand, the countries with a strong industrial base will spring back totally powerful while the US will collapse and not rise again for another 100 years. This is something the Chinese are betting on in the future.
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Greek fuel supplies run dry as strike over harsh austerity measures bites – Scotsman.com News: This is a warning to the US. We will see, when we are crushed, our own fuel vanish this way. Unless the unions are totally dead. Then we will simply quietly see all our wealth drain out very fast.
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Tracy Residents Now Have To Pay For 911 Calls – cbs13.com
But there are a couple of options. Residents can pay a $48 voluntary fee for the year which allows them to call 9-1-1 as many times as necessary.
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Or, there’s the option of not signing up for the annual fee. Instead, they will be charged $300 if they make a call for help.
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“A $300 fee and you don’t even want to be thinking about that when somebody is in need of assistance,” said Tracy resident Greg Bidlack.
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ΩΩAnd this is a harbinger of the future! We will pay dearly for any social services. The US will be a ‘cash only’ economy and if you get in an accident, you will be asked to pay up or will be left there to die. Your choice. This is the anarchist result of being stupid when it comes to debt, money and trade.
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ΩΩWe know from many third world nations, the rich don’t care if you die. They will step over your body. The sudden death of all those poor Haitians made the news and there are many appeals to save them. But many Haitians were dying on the streets every day for years and no one bothered to do anything.
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ΩΩHaiti used to produce its own food. Today, it grows only 10% of the rice it consumes. The US exports rice to Haiti and this is paid for via the government there taking on more and more debt. Money is draining out of Haiti to US rice growers while Haiti pays interest on these losses. A spiral downwards that we are on, too.
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UK government posts first January borrowing on record | Business | guardian.co.uk
A sharp rise in government spending and a drop in tax receipts from businesses hit by the deepest recession in decades meant that Britain was unable to post the usual surplus enjoyed in a January, a month when income tax and corporation tax revenues typically pick up. In fact, by the government’s preferred measure of the public coffers, there was a deficit last month – the first January when the government was forced to borrow since records began in 1993.
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The Office for National Statistics (ONS) said public sector net borrowing – the gap between the exchequer’s tax-take and its spending – was £4.34bn compared with a repayment of £5.27bn a year earlier. The figure was also much worse than the £2.8bn repayment forecast in a Reuters poll by City analysts, who in previous months had largely underestimated the state of the public finances.
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ΩΩReading this news and then looking at the top article here about how great the US and UK are…HAHAHA. Good lord! To begin the tax year with running in the red already? Insane. And a sign that the UK is bleeding to death. The international bankers are not making London more powerful. They are poison.
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Former Mexican foreign minister calls for ‘North American union’, unified currency | Raw Story
In a new interview with Web site BigThink.com, Castañeda, Mexico’s foreign minister from 2000-2003 and a global distinguished professor of politics at New York University, said that with nearly 11 percent of Mexicans living in the United States, he has stopped seeing his nation as a Latin American country.
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“Well, my sense is that we’re moving closer and closer to forms of economic integration with the United States and Canada and conceivably Central America and Caribbean could become part of that in the coming years,” he said. “I don’t see Mexico as a Latin American country. Too much of trade, investment, tourism, immigration, remittances, absolutely everything is concentrated exclusively with the United States. So, Mexico has to be part of a North American community, a North American union, which at some point probably should include some type of monetary union along European lines with a free flow of labor, with energy being on the table, etc.”
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Often demonized as some type of “conspiracy theory” in mainstream American press, the so-called North American Union proposals have actually existed for some time. In May of 2005, the Council on Foreign Relations released a document entitled “Building a North American Community” in which it calls for an EU-like integration of Canada, the United States and Mexico.
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The ‘conspiracy’ people are totally correct here. There are stupid conspiracy theories and SMART theories. This is one of the smart ones. I take on a lot of flack when I try to point out the difference. Organizing to deal with this monetary union with nations running trade surpluses with us is stupid.
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Germany, for example, pushed for the euro because Germany ran trade surpluses with lots of people. We do it and it is suicidal.
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While the document does not specifically call for the ceding of sovereignty between the three nations — as some vocal opponents of the idea have suggested — it does recommend the formation of a North American Advisory Council and a multinational inter-parliamentary group to facilitate mutual cooperation. Though the group originally set out to achieve this goal by 2010, few in mainstream America are even aware of it today.
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ΩΩOne of the monopolists in Mexico, Slimy Slim, is pushing very hard for this. This is why he now owns the NYT! Murdoch, the owner of the right wing Zionist press also wants this. This is why Murdoch’s stable of ninnies won’t mention this. It is also why the lone voice against trade deficits was fired and removed from TV very unceremoniously.
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ΩΩThe US public doesn’t know much about this because there is no information about this. While the skanky Palin female traipses all over TV, anyone talking about this potential deal is removed from public view. Ron Paul talks about this which is why he doesn’t get to talk about this on TV. They will interview him a lot but they are seeking MISTAKES they can exploit. All he has to do is say something that triggers emotional hysteria and the media owners will gleefully broadcast this error over and over and over again.
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ΩΩThis deliberate dumbing down of the US public is malicious and deliberate. Then, the upper people can tell each other, ‘Oh, how stupid everyone is! HAHAHA. We fooled them.’ And people can be fooled! The online commentators who put forwards Mr. Confused Stacks, the wannabe church tax deductor, as some sort of hero delights the mainstream tax cheaters! They want us to hate the IRS which keeps our nation going.
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ΩΩThey want us to blame our government for running in the red. While at the same time, not blaming a corrupt Congress owned by or actual multi millionaires and foreign powers. Mr. Stacks was throwing a temper tantrum. We no longer control our IRS because foreigners are increasingly owning it.
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ΩΩEventually, they will let our civil systems collapse and move in to occupy our nation and eke out harsh taxes on us and the money will pay off previous debts. We can fight back by starting WWIII but they are preparing for this, too. They expect us to ‘fly into the building’ solution and will coldly terminate most of our civilian population if we try this trick.
Culture of Life News 
Yes Harper would love for us to be American.
I should add, lest anyone think i’m a sucker for party politics, the other party would do the same.
@emsnews: “This deliberate dumbing down of the US public is malicious and deliberate. Then, the upper people can tell each other, ‘Oh, how stupid everyone is! HAHAHA. We fooled them.’”
Congress should be incensed that they are being dumbed down as well. If they attended the right parties in New York, they would hear Bankers making fun of politicians for being so stupid. That most politicians fail to understand: the endstate is the goal, not the puppet show in between.
Why don’t you run for office, Elaine.
@ziff house
I have no love for Harper either, but I’m beginning to wonder if Goldman Sachs makes a deposit in Ignatieff’s Swiss bank about every time he says “cap and trade.” He sounds like a broken record. Besides, the fact that he spent 30 years at Harvard defending US imperialism is enough to convince me that he would be Canada’s equivalent of Yuschenko or Saakashvili. Is he backed by NED?
Of course deficits don’t matter the ultra-wealthy. They have no allegiance to a country. Their ‘country’ is the entire globe and any colonies on the moon to be established once they figure out how to turn it into Palm Springs with taxpayer or funny money.
Citibank has come up with an innovative solution – turn demand deposits into 7-day deposits:
Seen on a recent Citibank statement: “Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change.”…
http://tinyurl.com/yl9v4jw
I’m not so sure that Canadians want to be Americans any more. We’ve got the oil, minerals, trees, water, uranium, and please and thank yous. Oh, and these cool red mitts with maple leaves on them.
I think Harper would rather do deals with China than the US, but doesn’t want to tick off the big brother down south.
LTO; whats NED? as for Ignatieff his main concern seems to be the philosophy of Isiah Berlin , so i doubt his chances as PM. Its been my guess that the US would get Canada as a consolation prize. I hope we are more nationalistic ,but they just snatched one of our citizens Marc Emory for selling pot seed in the US and only a few objecting to the intrusion. there may only be a dim notion of sovreignity left.
Hope you survive WIII Elaine ! No kidding here !
Both political parties are totally corrupt. I wish to laud Ron Paul here for pulling off a great CPAC coup
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it could happen… there isnt another leader in congress that is not ‘main stream’
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if we are rich, debt is dumb, or government holds the torch of earnest hope… possibly there are opportunity’s to embellish US freedom, education, social consciousness, and mobility in a modern society
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uber wealth does not require a never ending transfer of power to heavy handed power ‘dispatch’ clerks… the debt is not sustainable, and our investments are strange even in these times
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government IS big enough
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http://www.cahrecords.com
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vote republican vote Ron Paul
“A trade surplus is not necessarily a sign of strength. In the case of Germany and Japan it reflects weak domestic demand, itself a product of very high savings rates.”
Uhm… how far from reality is this guy? Having and being able to have big savings is bad he thinks? And he thinks that this leads to weak domestic demand? That people should spend with loans, is that it? Unbelievable. And I thought capitalism was meant to produce wealth!
I everybody in the disUnited States were given what Lord Blankfein, Jamie Dimon, and all the other alphabet soup programs gave and are giving away, wouldn’t be as well off as those Zionists Tribesmen?
“Uhm… how far from reality is this guy?”
Apparently, the concept of infinity applies to mental insanity as well. Insanity proceeds on an exponential upward curve until it almost touches the vertical line that limits it from progressing further.
If it touches this line, it loses all momentum and collapses to zero. In practical terms this usually results in a dead person, or a dead nation, or perhaps even a dead world.
In human affairs, sanity is not the norm. I personally cannot think of any way to change this on a large scale. History shows that it has never happened, unfortunately.
First they bought everything on credit, now they’re close to sovereign default, the housing bubble is still not fully deflated and they next earth quake might be a Euro collapse.