Nobel Laureate Says Globe Headed for Financial “Breakdown” and “Radicalism”

By Dominique de Kevelioc de Bailleul

The world is in the midst of a complete global economic “breakdown,” according to Nobel Laureate economist Paul Krugman, with the implications of political “radicalism” quickly brewing in Europe and the United States.

“We are living through a time where we face an enormous economic challenge,” Krugman told Russia Today (RT). “We are facing — obviously — the worst challenge in 80 years and we are totally mucking up the response.”

Traders of German Bunds and U.S. Treasuries agree and have sold PIIGS paper for other paper higher up on the food chain.

As a result, rates on Bunds and Treasuries have reached record-low levels Wednesday of 1.59 and 1.23 percent, respectively—levels that Dan Norcini of Jim Sinclair’s said signals a Lehman-times-10 event around the corner.  With Spain’s 10-year note spread higher by 520 basis points more than the yield on 10-year Bunds, a near-record level as well as depositors decidedly motioning into a trotting bank run on Spanish banks, Europe is again on the slippery slope to doom.

Krugman blames policymakers for the impending crash, fearing a replay of Nazi Germany as a result of a radical drop in standards of living on both sides of the Atlantic due to Germany’s refusal to inflate the euro.

“We’re doing a terrible job. We’re failing to deal with it,” Krugman added.  “All of the people, the respectable people, the serious people, have made a total hash of this. That is a recipe for radicalism. It is a recipe for breakdown.”

Forcing nations to swallow austerity contributed greatly to the rise of the Third Reich following severe reparations exacted upon Germany post-WWI—a mistake Krugman doesn’t forthrightly say in the RT interview, but may be inferred by his Jewishness, gleaned through numerous posts on his NYTimes Web blog and attributed to his notorious allegiance to a failed monetary system under intense fire from people of all nations affected by the crisis.

For the first time since the creation of the Fed, for example, the majority of Americans now understand that the Fed is not a public institution, but an independent one.  “End the Fed” is almost as common a slogan today as “End the War in Vietnam” was during the presidency of Richard Nixon (1969-1975).

In Europe, at the tip of the spear between the Brussels globalists (by the American proxy, the Fed) and the people of Europe is Germany, where the political heat of rising nationalism and scapegoating of Arab and Turk immigrants, in particular, has emerged and reported by international press.

“No other religion in Europe makes so many demands. No immigrant group other than Muslims is so strongly connected with claims on the welfare state and crime,” best-selling author, former German politician and Bundesbank board member, Thilo Sarrazin, stated in German cultural quarterly Lettre Internationat of Sept. 2009.  “No group emphasizes their differences so strongly in public, especially through women’s clothing. In no other religion is the transition to violence, dictatorship and terrorism so fluid.”

And, May 21, 2012, Israel Business published a Reuters article about Sarrazin’s newly released book, Europe Doesn’t Need the Euro, within which, he argued that Germany is being blackmailed by the EU to bailout the PIIGS to make further reparations for WWII.

Germany’s globalists “are driven by that very German reflex, that we can only finally atone for the Holocaust and World War II when we have put all our interests and money into European hands,” he stated in his book.

Germany’s initial bailout of Greece shows Germany’s “susceptibility to blackmail”, Sarrazin wrote, suggesting that crimes committed by the Nazi Party will be asked to be repeatedly atoned.

“This politics is turning Germany into a hostage of all those in the euro zone who may in the future, for whatever reason, need help,” he stated.

Krugman believes the West may have reached a tipping point, not only in the sovereign debt crisis, but in the social order, as well.

“There are a lot of ugly forces being unleashed in our societies on both sides of the Atlantic because our economic policy has been such a dismal failure, because we are refusing to listen to the lessons of history,” he told RT.  “We may look back at this thirty years from now and say, ‘That is when it all fell apart.’ And by all, I don’t just mean the economy.”

Did German Gold Bailout Europe?

Question surrounding the disposition of German gold held by the NY Fed is gaining traction with the media, both in Germany and the U.S.  Considering the secrecy of central bank operations, German gold could have served as partial collateral (or levered source) for the latest $714 billion bailout of the euro by the ECB on Feb. 29.  Sign-up for my 100% FREE Alerts

The unaudited gold may have made its way into the cash market to suppress the gold price following the announcement by the ECB to extend ‘credit’ to approximately 800 banks in the euorzone.  And the credit extended to these banks by the ECB appear to have come from the Fed’s swaps window, according to Trim Tabs.

“ . . . the Fed’s currency swaps accompany a massive expansion of the ECB’s balance sheet.  In 2011, the ECB’s balance sheet soared $947 billion, or 36%, to a record $3.5 trillion, which includes the $638 billion in low-interest loans doled out to Eurozone banks in December.”

Whether the delay to liquidate German gold was part of the deal made by the Fed and the ECB cannot be known for sure.  Laws, and in some cases, immunity from prosecution, stand in the way of any semblance of transparency at the Bundesbank, which has now become a political matter in Germany.  The Bundesbank missed its gold audit of 2010, raising a red flag with the German people.

Not auditing the nation’s gold is “a clear breach of the law,” top Bilanzrechtler Prof. Jörg Baetge told German newspaper BILD on Mar. 6. “At least every three years to control counts the bars are made. [Google translation]”

Bundestag representative, Phillip Missfelder, has discovered that suddenly the Bundesbank has taken on the attitude of the U.S. Federal Reserve.  The 32-year-old chairman of the Junge Union inquired of the German central bank regarding the matter of the unaudited gold and was stonewalled.

“I was shocked,” Missfelder told BILD.  “First they said that there was no list.  Then there were lists that are secret.  Then I was told, demands endanger the trust between alliance bank and the Fed. [Google translation]”

But some analysts wonder how the gold market can be flooded from time to time when there’s no record of any activity at the COMEX or LBMA.   While lease rates at the LBMA don’t suggest individual banks slammed the market with privately-held gold during gold’s recent weakness, one analyst and 50-year veteran of the gold market, Jim Sinclair, suggested that the Fed may be behind the mysterious inventory sale.

“. . . we all ask ourselves the question, ‘Where does the gold come from on these attempts at intervention?’” Sinclair asked rhetorically in his latest interview with King World News on Mar. 15.  “Because it’s not simply paper gold, it’s also in the cash market.  There is a concern that the gold that’s being used to intervene might not be our (U.S.) gold.”

According to the Mar. 6 BILD article, approximately 2,050 tons of gold is held outside of Germany. Where is it? and why is it not stored in Frankfurt with the remainder of the nation’s gold stockpile?  The German people want to know.

“Basically they (Germany, Switzerland and other countries) are now asking the question, where is the gold coming from? . . . ,” Sinclair continued.  “Everybody knows what’s at the Fed, other people’s gold.  The trend that we discussed a long time ago which is really turning into a modest torrent, is to take back gold.  I mean the truth is what do the Germans need the Fed to store their gold for?  Are they afraid France will invade?  It doesn’t make any sense.”

The complexity of the Maastricht Treaty as it relates to the launching of the euro on Jan. 1, 1999 as well as the serious threat the treaty poses to democratic peoples was not widely understood by the majority of Europeans at the time.  The truth, according to founder of Peterson Institute C. Fred Bergsten, is that the 17 member states which make up the euro have had their sovereignty superseded by the ECB.

“The adoption of a common currency is by far the boldest chapter of European integration,” he stated in an Opt-Ed piece for the Washington Post two days after the launch of the euro.  “Money traditionally has been an integral element of national sovereignty …and the decision by Germany and France to give up their mark and franc …represents the most dramatic voluntary surrender of sovereignty in recorded history. The European Central Bank that will manage the euro is a truly supranational institution.”

To complicate matters further, the electorate in Europe and the U.S. is unaware that many central bank chairs are also board members of the Bank of International Settlements in Basel, Switzerland—a body formed in 1930 in response, partly, to German reparations for WWI.

According to the BIS, there are 18 board members, comprising Governors of central banks from Belgium, France, Germany, Italy, the United Kingdom and the United States.

Essentially, each board member serves two masters, one domestically and one internationally.  But the protection of a central bank Governor from ‘unlawful’ acts committed under domestic law is afforded him via the BIS.  In fact, central bankers are immune from prosecution from their country of citizenship while performing BIS business.  The BIS determines if a crime was committed by one of its board members, not an elected or regulatory body.

BIS Article 14, Privileges and immunities granted to all Officials:

The Officials of the Bank, whatever their nationality, shall  (a) enjoy immunity from jurisdiction for acts accomplished in the discharge of their duties, including words spoken and writings, even after such persons have ceased to be Officials of the Bank.

In essence, the Bundesbank represents the BIS, first, Germany second.  Actions taken by the central bank in accordance with BIS wishes fall under its own set of laws in matters of central bank operations.  The Bundesbank doesn’t need to account for its operations with the German people.

Germany’s gold may have been sold and possibly played a part in the latest downdraft in the gold price.  But it appears that there’s nothing the German people can do about it, if it turns out, indeed, that the Bundesbank sold its gold.  Could that be the reason for Bundesbank President Axel Weber’s departure on Apr. 30, 2011, a full year short of his appointed term?  Sign-up for my 100% FREE Alerts