Rothschild Insider Niall Ferguson: "There Will Be Blood"

[TBQ]

3 March, 2009

For those who don't know who Niall Ferguson is. He is not your ordinary hair-brained journalist. He is very well informed and one of the highest level City of London Corporation's key banking "insider" writers and commentators, and as such, does know what he's talking about.

A Scotsman, born in Glasgow in 1964, he has worked closely with the highest level of the City's banking fraternity for years, including the British Rothschild's, having worked as their authorized (hmmm...? -ed) historian, and was commissioned to write the giant, 1309-page classic book, THE WORLD'S BANKER - The History of the House of Rothschild published in 1998 for them. Like a sort of "John the Baptist," Ferguson has obviously been commissioned by the City now to prepare Americans and "Uncle Sam" particularly for what is soon coming - and it´s no cheap nostalgia.


'There will be blood!' Top financial analyst warns of civil violence, government overthrow

Noted Harvard economist and best-selling author Niall Ferguson sent tremors through world financial markets last week when he announced in a speech given in Ottawa, Canada, his studied conclusion that the global economic crisis has only just begun.

Before the economic crisis is over, Ferguson warned there will be civil violence and governments will be toppled.

Disagreeing with Federal Reserve Board Chairman Bernanke's testimony to Congress last week that the economic recovery could begin yet in 2009, Ferguson told the Canadians, "There will be blood."

"This is a crisis of globalization," Ferguson warned, according to a report of the speech published in the GlobalInvestor.com.

"A crisis of this magnitude is bound to increase political as well as economic [conflict]. It is bound to destabilize some countries," he warned. "It will cause civil wars to break out that have been dormant. It will topple governments that were moderate and bring in governments that are extreme."

Ferguson explained his view that the current crisis is a crisis of debt leveraging.

"It's a crisis of excessive debt," he explained, "and the deleveraging process has barely begun. U.S. consumers are not going to suddenly bounce back and hit the shopping malls just because they get a tax cut."

Ferguson is well known for creating the phrase "Chimerica," a combination of China and America that he concocted to criticize the phenomenon of the U.S. selling massive quantities of U.S. Treasury debt to China, as a means of financing massive U.S. budget deficits.

"If you think of it as one economy called Chimerica, that relationship accounts for around 13 percent of the world's land surface, a quarter of its population, about a third of its gross domestic product, and somewhere over half of the global economic growth of the past six years," Ferguson wrote last November, as reported by the Vancouver Sun.

Ferguson has cautioned that depending upon the Chinese to save so that the U.S. may spend is an unreliable formula.

On her first foreign trip, Secretary of State Hillary Clinton made a stop in China to politely ask the Chinese to keep buying U.S. Treasuries.

Yet, as much as the Obama administration would like to think the Chinese have no other choice, its government has been issuing none-too-subtle clues that the appetite for U.S. Treasuries is diminishing.

Niall Ferguson's current best-selling book, "The Ascent of Money: A Financial History of the World" was published in November 2008.

[TBQ]

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[TBQ]

And today in an interview with Bloomberg TV's Erik Shatzker, Niall Ferguson picks up where Reinhart and Rogoff leave off. The historian discusses the bond vigilantes, "Bond vigilantes are a bit like the people short selling investment banks a couple of years ago. You start with Bear Stearns and Lehman Brothers, you don't get to Goldman Sachs until quite late in the game. In a way the sovereign debtors of the western world are pretty much in that position today.

And we are working down the list, starting with Greece, moving on to Spain and Portugal, the UK dodged the bullet by implementing some preemptive measures. Sooner or later the bond vigilantes will get to the US, I don't think it will be this year, but in the absence of any political will to address this problem, this is simply an inevitability."

As to why it is inevitable, Ferguson observes the case of the UK which was the only one to manage to grow its way out of massive debt load: "Britain after 1815 had two big advantages, it had the only the industrial revolution at that point that was going on in the word and had the world's biggest empire. I don't see anyone in that happy position today."

The outlook: "Is it going to be inflation or is it going to be default. Right now there is no sign of inflation. We have monetary contraction at an alarming rate, and zero inflation in terms of core CPI, so the option of inflating this debt away doesn't seem to be there right now. What you are left with is therefore default. And I think it is a fair debt that US will default at least on the unfunded liabilities of Social Security and Medicare at some point in the foreseeable future.

What the Greeks discovered you are fine until you are not fine with the bond market and if you have a non-credible fiscal strategy of borrowing a $1 tillion a year for the rest of time, never ever again running a balanced budget, at some point the markets are going to get spooked, and I think that point is nearer than Paul Krugman believes. Nothing would spook the markets more than for Paul Krugman's advice to be accepted by the Obama administration. That might well be the trigger."

Video interview link: http://clipsyndicate.com/video/playlist/8178/1554278?wpid=7804

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