<div><a href="http://www.nytimes.com/2008/12/06/business/economy/06jobs.html?hp">http://www.nytimes.com/2008/12/06/business/economy/06jobs.html?hp</a></div>
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<div>U.S. Loses 533,000 Jobs in Biggest Drop Since 1974 </div>
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<p>Not since December 1974, toward the end of a severe recession, have so many jobs disappeared in a single month — and the current recession, far from ending, appears to be just gathering steam. </p>
<p>"We are caught in a downward spiral in which employment, incomes and spending are collapsing together," said Nigel Gault, chief domestic economist for IHS Global Insight. "With private spending frozen, we have no choice but to rely on a stimulus package to revive the economy." </p>
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<p>Two economists I have been following for years, Andy Gause and Bob Chapman, predicted the current economic crisis years ago. I was skeptical of their claims, given they were not among leading academic economists, advocated "fringe" approaches to economic systems (eliminating the Federal Reserve Banking system, return to the gold standard) and entertained "conspiracy" theories about secret cabals (Illuminati or a small group of international ultra-wealthy controlling the US Federal Reserve) manipulating world economic/political systems. Besides, economics is a subject I find harder to comprehend than Super String Theory. But even if for the wrong reasons, they were correct. </p>
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<div>There are numerous other economists who years ago predicted the major US economic decline now under way. It seems that the evidence the US was headed for a major economic crisis was irresponsibly downplayed, as mortgages were handed out like candy in an artificially inflated housing market, Wall Street and banks played shell games with credit default swaps and complex derivatives, the US government borrowed hundreds of billions from China, Japan and the Middle East to finance its deficit and the Iraq War, and consumers ran up credit card debt like a drunken sailor on shore leave.</div>
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<div>Why were US citizens not given more warning about the negative economic trends? The following article discusses the failures of US government on both sides of the isle that contributed to the current crisis, and places some of the blame on the actions of the Federal Reserve banking system:</div>
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<div><a href="http://www.globalresearch.ca/index.php?context=va&aid=6750">http://www.globalresearch.ca/index.php?context=va&aid=6750</a></div>
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<div>A short excerpt:</div>
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<div>The government as a whole has failed to provide for equal protection of the laws as specified in the Fourteenth Amendment by allowing so much of the wealth of the nation to be transferred to the upper income brackets who manipulate the corporate and financial systems to their advantage. It could also be argued that the passivity of the government in standing by while millions of people have lost their homes, jobs, or pensions due to fraudulent financial practices or speculative bubbles violates the Fifth Amendment provision which specifies that "no person shall be…deprived of life, liberty, or property, without due process of law." </div>
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<div>Links to Andy Gause and Bob Chapman's web sites:</div>
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<div><a href="http://www.andygause.com/">http://www.andygause.com/</a></div>
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<div><a href="http://theinternationalforecaster.com/Bob_Chapman">http://theinternationalforecaster.com/Bob_Chapman</a></div>
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<div>Another economist who had it correct years ago, though I'm not sure the US will "officially" enter a "depression:"</div>
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<div><a href="http://www.informationclearinghouse.info/article21189.htm">http://www.informationclearinghouse.info/article21189.htm</a></div>
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<div><font face="Times New Roman"><strong><font size="6">Mikhail Khazin: U.S. will soon face second "Great Depression"<br></font></strong></font></div>
<div><font face="Times New Roman">Renowned economist Khazin predicted U.S. financial crisis in 2000 <br><br><b>By Yevgeniy Chernyx </b></font></div>
<p><font face="Times New Roman"><b>November 10, 2008 "</b><strong><a href="http://kp.ru/daily/column/1070/">KP.RU</a>" - -- </strong><b>F</b>ive years ago, I ran the cultural section at Komsomolskaya Pravda. Publishing houses used to send me their new releases now and again for review. One day, after digging through the latest shipment of such literature, I stumbled upon a book titled, "Sunset of the Dollar </font><a href="http://www.hypernews.ru/search/?from=72&id=43827" target="_blank"><font face="Times New Roman">Empire</font></a><font face="Times New Roman"> and the End of the </font><a href="http://www.hypernews.ru/search/?from=72&id=44858" target="_blank"><font face="Times New Roman">Pax</font></a><font face="Times New Roman"> Americana." </font></p>
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<div><font face="Times New Roman">I remember reading the title over to myself several times in disbelief. Way back when, Soviet Americanologists loved to debate the collapse of the U.S. financial empire. But this book was published in 2003. </font></div>
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<div><font face="Times New Roman">I flipped through the pages, skimming over the text. The conclusions of the author — an economist named Mikhail Khazin — seemed convincing enough. So I gave the book to our economics columnist at KP Jenya Anisimov, who wrote a review and interviewed the author later at our editorial offices. </font></div>
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<div><font face="Times New Roman">All these years, I kept Khazin in the back of my mind, and followed his career as he spoke at various conferences throughout Russia. He seemed certain the U.S. was teetering on the verge of an economic collapse, while other analysts were quick to refute his theory. Now, as his once unfathomable prognosis begins to come true, KP contacted Khazin for an interview. </font></div>
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<div><font face="Times New Roman"><strong>Fired from the Kremlin!</strong></font></div>
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<div><font face="Times New Roman"><em>KP: Mikhail Leonidovich, how did you end up predicting the current financial crisis?</em> </font></div>
<div><font face="Times New Roman"><br>Khazin: In the spring of 1997, the Kremlin established the Presidential Economic Department. I was made the deputy head of the unit. Our first task was to prepare a report for [former <a href="http://www.hypernews.ru/search/?from=72&id=44973" target="_blank">President</a> Boris] Yeltsin about the economic situation. We realized an economic crisis was pending in Russia and would take place in the late summer or early fall of 1998 if the country''s economic policies weren't changed. </font></div>
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<div><font face="Times New Roman"><em>KP: What view did the higher echelons take of your report?</em></font></div>
<div><font face="Times New Roman"><br>Khazin: They didn't really take any view at all. No one read the text except for the deputy head of the administration and Yeltsin himself. In the summer of 1998, we were fired from the presidential administration for trying to stop a business project titled, "State Treasury Bills— Exchange Rate Corridor." This was the biggest financial scheme of the post-Soviet era. Just as we had predicted, an economic crisis gave way that <a href="http://www.hypernews.ru/search/?from=72&id=43220" target="_blank">August</a>. Together with my colleagues, I continued researching the reasons behind the crisis. </font></div>
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<div><font face="Times New Roman">After becoming seriously consumed in our studies of the U.S. financial system, we found an unprecedented parallel. Just as our T-bill market had sucked all the juices out of the Russian economy, the U.S. financial market was sucking the resources out of the entire planet. We realized a similar fate awaited the U.S. financial system. Our article was published in the summer of 2000 in the "Ekspert" magazine, titled, "Is the U.S. Digging for an Apocalypse." We concluded that it was just as impossible to avoid an economic crisis in the U.S. as the financial collapse in Russia. </font></div>
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<div><font face="Times New Roman"><strong>Playing the idiot</strong></font></div>
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<div><font face="Times New Roman"><em>KP: The U.S. obviously didn't listen to the song written by [the renowned Russian rock group] LUBE during perestroika, "Don't Play the Fool, America!" Seriously, though, what's the real reason for the economic collapse? Let's try to do this without any heavy duty financial terms...</em> </font></div>
<div><font face="Times New Roman"><br>Khazin: I'll try! The economic model that led to the collapse was the result of a crisis in the 1970s. This was a terrible financial crisis that was the result of surplus capital. Even the 19th-Century classics in economics literature concluded that capital grows faster than labor provides compensation. As a result, there is a lack of demand. In traditional capitalism, this problem is solved on account of crises in excess production. And in an imperialistic system, the problem is solved on account of capital outflow. But by the 1970s, these solutions had run their course. However, the international situation demanded the U.S. either make a great scientific and technological leap forward or lose the Cold War to the USSR. The administration of [<a href="http://www.hypernews.ru/search/?from=72&id=44973" target="_blank">President</a> Jimmy] Carter and the head of the Financial Reserve System Paul Walker developed a very tricky concept. For the first time in the history of capitalism, capitalists began helping others, issuing new currency in an effort to stimulate aggregate demand .</font></div>
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<div><font face="Times New Roman"><em>KP: They decided to switch on the printing press?</em></font></div>
<div><font face="Times New Roman"><br>Khazin: Exactly. In the early 1980s, they started to stimulate demand through state support. For example, they launched the "Star Wars" program. As of 1983, they placed an emphasis on the household economies.</font></div>
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<div><font face="Times New Roman"><em>KP: You mean, they relied on the average citizens?</em></font></div>
<div><font face="Times New Roman"><br>Khazin: <a href="http://www.hypernews.ru/search/?from=72&id=45768" target="_blank">Yes</a>. For an entire quarter century, households received funds as a result of issuing new currency in larger and larger quantities. </font></div>
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<div><font face="Times New Roman"><em>KP: In other words, credit?</em></font></div>
<div><font face="Times New Roman"><br>Khazin: <a href="http://www.hypernews.ru/search/?from=72&id=45768" target="_blank">Yes</a>. The U.S. was able to make the next step in technological progress as a result of this excess demand. They accomplished the collapse of the USSR and numerous other significant fears. But... The boom took place thanks to resources that were supposed to provide for future growth. The country ate its own resources two generations ahead of time. The U.S. built up tremendous debt. This is clearly seen if we compare the growth of debt in U.S. households with the entire U.S. debt and GDP. The economy is growing at an annual rate of 2-3, or at a maximum 4 percent. But debt is increasing at a rate of 8-10 percent.</font>
<div><font face="Times New Roman"><em>KP: Well, let the debt keep growing... The U.S. lived fine up until now without a problem... Better than we did!</em></font></div>
<div><font face="Times New Roman"><br>Khazin: Yes, the U.S. did create a very high standard of living by stimulating consumer demand. Generations lived without having to experience poverty. But it's impossible to live forever in debt. Household debt has now surpassed the national economy — more than $14 trillion. Now it's time to pay up. Of course, Wall Street tried to postpone this collapse. I won't go into detail about derivatives and other such financial assets, but this was just a gasp for air before an inevitable death. </font></div>
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<div><font face="Times New Roman">Another problem in the U.S. is that powerful industries were built around this growing demand. Whatever decision Wall Street takes right now, the demand is going to fall. What will happen to these industries? In 2000, we estimated that 25 percent of the U.S. economy would disappear. Today, we think the number is closest to one-third — if not more. </font></div>
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<div><font face="Times New Roman"><em>KP: That's a lot!</em></font></div>
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<div><font face="Times New Roman">Khazin: That's an incredible amount! But what exactly does this mean — the destruction of one-fourth of the U.S. economy? It means an uncontrollable increase in unemployment, a horrible depression, a sharp increase in the effect of social services on the budget... Now, the U.S. is jumping all over the place doing everything its can to rescue this fraction of the economy. The government is stimulating banks and manufacturing... But regardless, in 2-3 years, the U.S. will face a crisis similar to the Great Depression. </font></div>
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<div><font face="Times New Roman"><strong>Who is Who</strong> </font></div>
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<div><font face="Times New Roman"><i>Mikhail Leonidovich Khazin was born in 1962. He studied mathematics at the Yaroslavl University and Moscow State University. In 1984-1991, he worked at the Soviet Academy of Sciences. In 1993-1994, he worked at the State Working Center of Economic Reforms. In 1995-1997, he was the head of the Credit Policy Department at the Economics Ministry. In 1997-1998, he was the deputy head of the Presidential Economics Department. In June 1998, he left state service. At the moment, he is president of the consulting firm, Neokon. </i></font></div>
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<div><em><font face="Times New Roman">Vision2020 Post: Ted Moffett</font></em></div></div>
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