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Begin­ning with a fright­en­ing arti­cle about an elec­tronic draw-down of money mar­ket accounts in the United States, the pro­gram notes that the Fed­eral Reserve and Trea­sury Depart­ment pumped money in to avert an unprece­dented eco­nomic and polit­i­cal cat­a­stro­phe. Sup­ple­ment­ing the “fear fac­tor,” the pro­gram relates some astound­ing num­bers about the size of the res­cue pack­ages assem­bled in order to attempt to stanch the eco­nomic bleeding.

Much of the broad­cast focuses on the Bernard Mad­off scan­dal, cov­ered at length in the first install­ment of “Update on the Melt­down.” (In that pro­gram, Mad­off is dubbed “Lee Har­vey Mad­off” for his insis­tence that he acted alone–a pre­pos­ter­ous claim that belies the cer­tainty that pow­er­ful forces were behind this scam.) The fact that the Secu­ri­ties and Exchange Com­mis­sion won’t be able to com­pel tes­ti­mony from key wit­nesses in the scan­dal. In that con­text, the pro­gram turns to the sub­ject of one of the oth­ers with which “lone nut” Mad­off was involved–Frank DiPas­cali. Note that this “blue col­lar guy” was rep­re­sented by the son of for­mer (George W. Bush) Attor­ney Gen­eral Michael Mukasey. Mark Mukasey works for Rudolph Giulani’s law firm.

Di Pas­cali was Madoff’s “Num­ber Two” and will be “Num­ber One” for inves­ti­ga­tors seek­ing to unravel the tan­gled web of the Mad­off Ponzi scheme. Not all of the investors in Madoff’s oper­a­tion got burned. JP Mor­gan largely escaped the fall­out. DiPascali’s wife worked for JPMor­gan Chase–a coin­ci­dence, no doubt!

Turn­ing to the sub­ject of offshore-entities that exempt them­selves from inter­na­tional finan­cial scrutiny and reg­u­la­tion and which thus serve as finan­cial safehavens-the prin­ci­pal­ity of Liecht­en­stein has served as a tax haven for years. Ger­many is ask­ing that country’s prince to pay taxes.

Attempt­ing to atten­u­ate the eco­nomic dev­as­ta­tion wrought by off­shore, Barack Obama’s Jus­tice Depart­ment is try­ing to appro­pri­ate new pow­ers to pros­e­cute off­shore tax evaders, includ­ing fraud­sters who have con­ducted their mis­deeds in the mort­gage indus­try. In a related devel­op­ment, the U.S. is seek­ing the iden­ti­ties of thou­sand of U.S. cit­i­zens who have used the Union Bank of Switzer­land and Swiss bank­ing laws to evade Amer­i­can tax laws.

It appears that things are not mov­ing in a direc­tion that would favor UBS or any other banks seek­ing to pre­serve data about tax cheats. Many of the finan­cial safe­havens for “off­shore” funds are mov­ing in the direc­tion of reg­u­la­tory trans­parency.

As ter­ri­fy­ing and dev­as­tat­ing as the melt­down has been in Amer­ica, the prospects for other some other coun­tries appear even worse. Switzer­land, Ire­land and the United King­dom may expe­ri­ence Ice­landic style finan­cial collapse.

It is against this apoc­a­lyp­tic back­ground that the pro­gram con­cludes with fears long expressed on For The Record. The British edu­ca­tion min­is­ter has warned of his belief that the severe eco­nomic cri­sis might spark a return to fas­cism, much as the social dis­lo­ca­tion expe­ri­enced by peo­ple suf­fer­ing in the Great Depres­sion drove many to the ranks of fas­cist organizations.

Pro­gram High­lights Include: An Aus­trian woman’s role as a Mad­off investor for (among oth­ers) Russ­ian oli­garchs; the exis­tence of a dozen Euro­pean feeder funds for Madoff’s oper­a­tion; review of con­nec­tions between the house of Liecht­en­stein and the al-Taqwa milieu.

1. Begin­ning with a fright­en­ing arti­cle about an elec­tronic draw-down of money mar­ket accounts in the United States, the pro­gram notes that the Fed­eral Reserve and Trea­sury Depart­ment pumped money in to avert an unprece­dented eco­nomic and polit­i­cal cat­a­stro­phe. One won­ders if this might have been an Under­ground Reich oper­a­tion, sim­i­lar to its delib­er­ate sab­o­tage of the New York Stock Exchange on 11/22/1963?

“The Cap­i­tal Mar­kets Sub­com­mit­tee Chair, Rep. Paul Kan­jorski of Penn­syl­va­nia, tells C-Span how the world econ­omy almost col­lapsed in a mat­ter of hours.

At 2 min­utes, 20 sec­onds into this C-Span video clip, Kan­jorski reports on a ‘tremen­dous draw-down of money mar­ket accounts in the United States, to the tune of $550 bil­lion dol­lars.’ Accord­ing to Kan­jorski, this elec­tronic trans­fer occured over the period of an hour or two.

Kan­jorski: ‘The Trea­sury opened its win­dow to help. They pumped a hun­dred and five bil­lion dol­lars into the sys­tem and quickly real­ized that they could not stem the tide. We were hav­ing an elec­tronic run on the banks. They decided to close the oper­a­tion, close down the money accounts, and announce a guar­an­tee of $250,000 per account so there wouldn’t be fur­ther panic and there. And that’s what actu­ally hap­pened. If they had not done that their esti­ma­tion was that by two o’clock that after­noon, five-and-a-half tril­lion dol­lars would have been drawn out of the money mar­ket sys­tem of the United States, would have col­lapsed the entire econ­omy of the United States, and within 24 hours the world econ­omy would have col­lapsed.’ It would have been the end of our polit­i­cal sys­tem and our eco­nomic sys­tems as we know it.’”

“Rep. Kan­jorski: $550 Bil­lion Dis­ap­peared in ‘Elec­tronic Run on the Banks” Posted by Mark Frauen­felder; boingboing.net; 2/9/2009.

2. Next, the pro­gram relates some astound­ing num­bers about the size of the res­cue pack­ages assem­bled in order to attempt to stanch the eco­nomic bleeding.

“The stim­u­lus pack­age the U.S. Con­gress is com­plet­ing would raise the government’s com­mit­ment to solv­ing the finan­cial cri­sis to $9.7 tril­lion, enough to pay off more than 90 per­cent of the nation’s home mortgages.

The Fed­eral Reserve, Trea­sury Depart­ment and Fed­eral Deposit Insur­ance Cor­po­ra­tion have lent or spent almost $3 tril­lion over the past two years and pledged up to $5.7 tril­lion more. The Sen­ate is to vote this week on an economic-stimulus mea­sure of at least $780 bil­lion. It would need to be rec­on­ciled with an $819 bil­lion plan the House approved last month.

Only the stim­u­lus bill to be approved this week, the $700 bil­lion Trou­bled Asset Relief Pro­gram passed four months ago and $168 bil­lion in tax cuts and rebates enacted in 2008 have been voted on by law­mak­ers. The remain­ing $8 tril­lion is in lend­ing pro­grams and guar­an­tees, almost all under the Fed and FDIC. Recip­i­ents’ names have not been disclosed. . . .”

“U.S. Tax­pay­ers Risk $9.7 Tril­lion on bailout Pro­grams (Update1)” by Mark Pittman and Bob Ivry; bloomberg.com; 2/9/2009.

3. Much of the broad­cast focuses on the Bernard Mad­off scan­dal, cov­ered at length in the first install­ment of “Update on the Melt­down.” (In that pro­gram, Mad­off is dubbed “Lee Har­vey Mad­off” for his insis­tence that he acted alone–a pre­pos­ter­ous claim that belies the cer­tainty that pow­er­ful forces were behind this scam.) The fact that the Secu­ri­ties and Exchange Com­mis­sion won’t be able to com­pel tes­ti­mony from key wit­nesses in the scandal.

“Yes­ter­day we noted that, based on his tes­ti­mony before Con­gress, SEC Inspec­tor Gen­eral David Kotz appears to be con­duct­ing an aggres­sive inves­ti­ga­tion of the agency’s fail­ures in con­nec­tion with the Bernard Mad­off case.

But on one cru­cial point, Kotz’s teti­mony was much less heartening.

Ques­tioned by law­mak­ers about his author­ity to gain access to doc­u­ments and wit­ness tes­ti­mony, Kotz admit­ted that he didn’t have the power to sub­poena for­mer SEC employ­ees for their tes­ti­mony. (We’ll post the video or the rel­e­vant por­tion of the tran­script when it becomes available.)

Here’s why that mat­ters. Three SEC enforce­ment staffers — Assis­tant Regional Direc­tor Doria Bachen­heimer, Branch Chief Meaghan Che­ung, and Staff Attor­ney Simona Suh — were listed on the “clos­ing doc­u­ment” for the 2006-07 inquiry into Mad­off, which has emerged as exhibit A in the case against the agency. Accord­ing to an SEC enforce­ment source, only Suh, the most junior of the three, remains at the agency. (A recep­tion­ist at the agency’s New York office, where all three had been based, con­firmed to TPM­muck­raker that Bachen­heimer and Che­ung no longer worked at the SEC.)”

“SEC IG Can’t Com­pel Tes­ti­mony from Key Mad­off Wit­nesses” by Zachary Roth; TPM­Muck­raker; 1/6/2009.

4. Next, the pro­gram turns to the sub­ject of one of the oth­ers with which “lone nut” Mad­off was involved–Frank DiPas­cali. Pas­cali called him­self the Chief Finan­cial Offi­cer of Madoff’s firm. Note that this “blue col­lar guy” was rep­re­sented by the son of for­mer (George W. Bush) Attor­ney Gen­eral Michael Mukasey, who works for Rudolph Giulani’s law firm.

Frank DiPas­cali Jr. joined Bernard Mad­off’s firm a year after grad­u­at­ing from a Catholic high school in Queens, New York. Over a 33-year career, he rose through the ranks, even­tu­ally call­ing him­self chief finan­cial officer.

For investors like Tim Mur­ray of Min­nesota, DiPas­cali was a ‘street-smart New Yorker’ who fielded calls about the mil­lions of dol­lars he entrusted to the firm.

‘To a Mad­off cus­tomer with a dis­cre­tionary account, he is the guy,’ said Mur­ray, 57, a real-estate devel­oper. ‘There is nobody else.’. . . ‘Mr. DiPas­cali is a blue-collar guy, not a Wall Street mas­ter of the uni­verse,’ said his attor­ney Marc Mukasey, a for­mer fed­eral pros­e­cu­tor now at Bracewell & Giu­liani LLP in New York. ‘He is dev­as­tated by the losses to investors.’

“Madoff’s ‘Street-Smart’ Aide DiPas­cali was Investors’ Go To Guy” by David Vore­a­cos, David Glo­bin and Patri­cia Hur­tado; bloomberg.com; 1/16/2009.

5. Di Pas­cali was Madoff’s “Num­ber Two” and will be “Num­ber One” for inves­ti­ga­tors seek­ing to unravel the tan­gled web of the Mad­off Ponzi scheme.

“As a key lieu­tenant to money man­ager Bernard Mad­off for more than 30 years, Frank DiPas­cali Jr. said he headed stock-options trad­ing and was the point man for investment-advisory clients who were told he exe­cuted their trades.

Now, he is a poten­tial point man in the inves­ti­ga­tion of a Ponzi scheme that Mr. Mad­off has told pros­e­cu­tors he car­ried out over decades, accord­ing to a crim­i­nal com­plaint and peo­ple famil­iar with the mat­ter, poten­tially bilk­ing investors out of $50 billion.

Fed­eral inves­ti­ga­tors are inter­ested in infor­ma­tion Mr. DiPas­cali, 52 years old, can pro­vide about the inner work­ings of Mr. Madoff’s oper­a­tion, who — if any­one else — knew about the alleged fraud, and where the money went, accord­ing to peo­ple famil­iar with the matter.

Mr. Mad­off was charged with crim­i­nal secu­ri­ties fraud and has told pros­e­cu­tors he acted alone, accord­ing to peo­ple famil­iar with the matter.

Mr. DiPas­cali hasn’t been charged with wrong­do­ing. His lawyer, Marc Mukasey, declined to com­ment about Mr. DiPascali’s role with Mr. Mad­off except to say that he had fre­quent con­tact with investors. . . .”

“Mad­off Point Man Cast in Same Role for Pros­e­cu­tors” by Aaron Luc­chetti, Amir Efrati and Tom Lau­ri­cella; Wall Street Jour­nal; 1/21/2009.

6. Not all of the investors in Madoff’s oper­a­tion got burned. JP Mor­gan largely escaped the fallout.

“Bernard Mad­off’s alleged mas­sive finan­cial fraud has sparked more out­rage as news cir­cu­lates a major U.S. bank may have cashed out early while other investors were left high and dry.

The New York Times reported on Thurs­day that JPMor­gan Chase & Co sud­denly began pulling its money out of two hedge funds that invested with Mad­off last fall before Mad­off was arrested, but did not tell investors.

Accord­ing to the news­pa­per, JP Mor­gan said its poten­tial losses related to Mad­off are “pretty close to zero.”

JP Mor­gan Chase spokes­woman Kristin Lemkau did not return sev­eral calls seek­ing comment.

As lawyers and investors digested the story, they began ques­tion­ing how big play­ers may have been able to pro­tect them­selves from Mad­off, while small investors were left exposed. . . .”

“New Talk of Who Escaped Mad­off Scheme Sparks Anger” by Svea Herbst-Bayliss; Reuters.com; 1/29/2009.

7. One pos­si­ble expla­na­tion for the fact that JP Mor­gan escaped the dam­age done to other Mad­off investors is the fact that the above-mentioned Frank DiPascali’s wife worked for JP Mor­gan­Chase National Association.

“With the public’s atten­tion hav­ing been exclu­sively focused on Bernie, his sons Marc and Andrew, and Bernie’s “three-man accoun­tant com­pany” lead by David Friehling, a ques­tion that is intrigu­ing more and more peo­ple is who/what/where are Frank DiPas­cali, the 51 year old CFO of Bernard L Mad­off, and Charles Wiener, Bernie’s 50 year old nephew, listed as Direc­tor of Admin­is­tra­tion, who were the only other ten­ants on floor 17 of 885 Third Avenue. . . . Frank is mar­ried to Joanne DiPas­cali of Howard Beach who is an employee of JP Mor­gan­Chase National Asso­ci­a­tion, the pri­vate bank­ing arm of JPM. As noted here, Joanne works out of JPM’s Iselin NJ office, which is where the firm’s mort­gage busi­ness is cen­tered. In this March 29, 2006 memo, the Iselin office pro­vided its 2 cents on just how smoothly the Non­tra­di­tional Mort­gage Prod­uct mar­ket is oper­at­ing. As seen in the fol­low­ing rep­re­sen­ta­tive prospec­tus from a 2007 mort­gage pool offer­ing by that office, of the $473 mil­lion mort­gage pool ped­dled prob­a­bly by Mrs. DiPas­cali among oth­ers, only $181 mil­lion of mort­gages had ver­i­fi­ca­tion checks, $440 mil­lion are IOs and aver­age out­stand­ing bal­ance is $476,000...So plot thick­ens — hus­band is chief finan­cial offi­cer to a ponzi as wife is poten­tially sell­ing worth­less mort­gage pools...”

“Break­ing Expose: So . . . Where Are Frank and Char­lie?” by Tyler Dur­den; Zero Hedge; 1/14/2009.

8. Among those who helped steer money to Madoff’s oper­a­tion was one Sonja Kohn. Among those for whom she allegedly invested were Russ­ian “oli­garchs.” To no one’s sur­prise, she appears to be in hiding.

“With an aggres­sive style that stood out in the staid world of Aus­trian bank­ing even more than her bouf­fant red wig, Sonja Kohn made few friends gath­er­ing bil­lions for Bernard L. Mad­off from wealthy investors in Rus­sia and across Europe.

Now, she has even fewer. Kohn has dropped out of sight, leav­ing the firm she founded, Bank Medici, in the hands of Aus­trian reg­u­la­tors, who took it over last week.Embar­rass­ment from invest­ing heav­ily with Mad­off could explain want­ing to dis­ap­pear from pub­lic view. But another the­ory widely repeated by those who know Kohn is that she may be afraid of some par­tic­u­larly dis­pleased investors: Russ­ian oli­garchs whose money made up a chunk of the $2.1 bil­lion that Bank Medici invested with Madoff.

“With Russ­ian oli­garchs as clients,” said a Vien­nese banker who knew Kohn and her hus­band socially, ‘she might have rea­son to be afraid.’ . . .”

“Mad­off Losses and Austria’s ‘Woman on Wall St.’” by Nel­son D. Schwartz and Julia Werdigier [New York Times]; Palm Beach Post; 1/11/2009.

9. Other Euro­pean investors include a dozen ‘feeder funds’ that directed cap­i­tal to the Mad­off oper­a­tion. Might this have been Bor­mann cap­i­tal net­work money?

” . . . [Harry] Markopo­los said he had dis­cov­ered a dozen addi­tional funds that fun­neled money to Mad­off ‘hid­ing in the weeds’ in Europe. Man­agers of invest­ment ‘feeder’ funds that relayed money to Mad­off will­fully turned a blind eye to his impro­pri­eties because they were paid gen­er­ous fees, Markopo­los said. . . .”

“Law­mak­ers Assail Mute SEC Wit­nesses -‘Abuse of Author­ity’” by Marcy Gor­don; San Fran­cisco Chron­i­cle; 2/5/2009; p. C2.

10. Turn­ing to the sub­ject of offshore-entities that exempt them­selves from inter­na­tional finan­cial scrutiny and reg­u­la­tion and which thus serve as finan­cial safehavens-the prin­ci­pal­ity of Licht­en­stein has served as a tax haven for years. Ger­many is ask­ing that country’s prince to pay taxes. Note that the royal family’s LGT bank was a repos­i­tory of Bank al-Taqwa funds and that Prince Max returned to Ger­many as a res­i­dent in Sep­tem­ber of 2001-the month of the 9/11 attacks.

“Ger­man tax author­i­ties want Prince Max von und zu Liecht­en­stein to pay taxes on invest­ment gains of a foun­da­tion set up by his fam­ily, LGT Group, the bank owned by Liechtenstein’s royal fam­ily, said in a statement.

Lawyers for Prince Max, who lived in Ger­many from Jan­u­ary 1999 until Jan­u­ary 1999 until Jan­u­ary 2000 and again since Sep­tem­ber 2001, dis­pute the tax author­i­ties’ view and are work­ing with them on a solu­tion, LGT said in the state­ment, which was e-mailed to news orga­ni­za­tions late Tuesday. . . .”

“Ger­many Asks Liechtenstein’s Prince Max to Pay Invest­ment Taxes” by Chris­t­ian Baum­gaer­tel; Bloomberg.com; 2/20/2009.

11. Barack Obama’s Jus­tice Depart­ment is try­ing to appro­pri­ate new pow­ers to pros­e­cute off­shore tax evaders, includ­ing fraud­sters who have con­ducted their mis­deeds in the mort­gage indus­try. In addi­tion, the pro­vi­sion would enable the Jus­tice Depart­ment to pur­sue abuse of gov­ern­ment bailout funds.

“The Jus­tice Depart­ment is seek­ing expanded pow­ers to pros­e­cute off­shore tax eva­sion and other finai­cial crimes, includ­ing those related to the mort­gage indus­try and poten­tial mis­uses of gov­ern­ment bailout money, The New York Times’s Lynn­ley Brown­ing reports. The efforts, which have gained trac­tion in recent weeks, could give the agency tougher pros­e­cu­to­r­ial tools to com­bat fraud amid the eco­nomic down­turn. As part of the effort, the agency has thrown its weight behind a Sen­ate antifraud bill that, if passed, would make it eas­ier for the agency to apply money-laundering statutes in cases of sus­pected tax eva­sion, par­tic­u­larly those involv­ing off­shore accounts.

A top Jus­tice Depart­ment offi­cial laid out the aims on Wednes­day in com­ments at a Sen­ate Judi­ciary Com­mit­tee hear­ing on the bill, known as the Fraud Enforce­ment and Recov­ery Act of 2009. . . .”

“New Pow­ers Sought to Fight Finan­cial Fraud” by Andrew Ross Sorkin [access­ing arti­cle by Lynn­ley Brown­ing of the New York Times]; Deal­book; 2/13/2009.

12. In a related devel­op­ment, the U.S. is seek­ing the iden­ti­ties of thou­sand of U.S. cit­i­zens who have used the Union Bank of Switzer­land and Swiss bank­ing laws to evade Amer­i­can taxlaws. UBS is coop­er­at­ing to a cer­tain extent, but not nearly enough to sat­isfy the Obama admin­is­tra­tion. In this con­text, one should not lose sight of the fact that UBS is closely con­nected to the Bor­mann cap­i­tal network.

“A gov­ern­ment law­suit filed Thurs­day seeks the iden­ti­ties of tens of thou­sands of peo­ple who hid bil­lions of dol­lars in assets from the IRS at the Swiss-based bank UBS AG. A defi­ant Swiss pres­i­dent pledged to main­tain his country’s bank secrecy laws.

In the suit filed in Miami, the Obama admin­is­tra­tion wants UBS to turn over infor­ma­tion on as many as 52,000 U.S. cus­tomers who con­cealed their accounts from the Inter­nal Rev­enue Ser­vice in vio­la­tion of tax laws. . . .

A deal announced Wednes­day pro­vides access to about 250 to 300 UBS cus­tomers who used Swiss bank secrecy laws to hide assets.

To avoid pros­e­cu­tion, UBS agreed to pay $780 mil­lion, which Jus­tice Depart­ment offi­cials said was the largest ever in a crim­i­nal tax case. The bank’s chair­man, Peter Kurer, said UBS accepted ‘full respon­si­bil­ity’ for help­ing its U.S. clients con­ceal assets from the IRS,

But that does not mean the bank is about to fork over infor­ma­tion on thou­sands of accounts. . . .”

“U.S. Wants More Names in UBS Bank Secrecy Case” by Devlin Bar­rett [AP]; San Fran­cisco Chron­i­cle; 2/20/2009; p. C2.

13. It appears that things are not mov­ing in a direc­tion that would favor UBS or any other banks seek­ing to pre­serve data about tax cheats.

“Switzerland’s days as a safe haven for the world’s tax evaders are num­bered. Under pres­sure from the United States and other trou­bled economies, the Swiss gov­ern­ment said Fri­day that it will coop­er­ate in inter­na­tional tax inves­ti­ga­tions, break­ing with a long-standing tra­di­tion of pro­tect­ing wealthy for­eign­ers accused of hid­ing bil­lions of dol­lars. Aus­ria and Lux­em­bourg also said they would help.

‘Against the back­ground of the finan­cial cri­sis, inter­na­tional coop­er­a­tion has grown stronger par­tic­u­larly against tax crimes,’ Swiss Pres­i­dent Hans-Rudolf Merz said. But he insisted that the secrecy of Swiss banks would remain intact except when other coun­tries pro­vide com­pelling evi­dence of tax evasion. . . .”

“Swiss Bank Accounts Los­ing Power to Shield Tax Cheats” by Bradley S. Klap­per and Alexan­der G. Hig­gins [AP]; San Fran­cisco Chron­i­cle; 3/14/2009; p. A4.

14. Switzer­land may be bank­rupted by the global finan­cial crisis.

“Econ­o­mist Arthur Schmidt says Switzer­land could go broke because Swiss banks extended bil­lions in credit to East­ern Euro­pean coun­tries which now can’t pay back the money.

‘Switzer­land, like Ice­land, is threat­ened with a poten­tial national bank­ruptcy,’ Schmidt told the Swiss daily Tagen­sanzeige.

Loand made in Swiss francs stim­u­lated rapid eco­nomic growth in many East­ern Euro­pean coun­tries, Schmidt says, mak­ing Swiss cur­rency very impor­tant. . . .Now, East­ern Euro­pean cur­ren­cies are falling and more bor­row­ers are hav­ing prob­lems repay­ing their loans. ‘Because of the deval­u­a­tions of the national cur­ren­cies, the debt to Switzer­land has increased more than one third.” . . .”

“Econ­o­mist Warns Switzer­land Could Go Broke” by Julie Craw­shaw; Moneynews.com; 2/23/2009.

15. In addi­tion, the Emer­ald Isle may be inun­dated by a sea of red ink.

“Fears are mount­ing that Ire­land could default on its soar­ing national debt pile, amid con­tin­u­ing wor­ries about its trou­bled bank­ing sec­tor. The cost of buy­ing insur­ance against irish gov­ern­ment bonds rose to record highs on Fri­day, hav­ing almost tripled in a week. Debt-market investors dnow rank Ire­land as the most trou­bled econ­omy in Europe. . . .Pledges made by Ire­land to sup­port its bank­ing sec­tor amount to 220% of the country’s annual eco­nomic out­put. The total loans held in Irish banks are more than 11 times the size of the econ­omy. Fol­low­ing the scan­dal at Anglo Irish Bank over undis­closed loans, the mar­ket fears there are more hid­den prob­lems that could ulti­mately fall to the state to resolve. . . .”

“Ire­land ‘Could Default on Debt’” by Iain Dey; The Sun­day Times [Lon­don]; 2/15/2009.

16. The United King­dom may default as well.

“The global finan­cial cri­sis could be enter­ing a ‘new and more treach­er­ous phase’, which could push inter­na­tional coun­tries to the brink of fail­ure and fur­ther hin­der the global eco­nomic recov­ery, accord­ing to Hen­nessee Group. Charles Gra­date, co-founder of the Hen­nessee Group, points out that Ice­land had one of the high­est stan­dards of liv­ing in the world just a few months ago, but after expe­ri­enc­ing the fastest eco­nomic col­lapse in his­tory, it is suf­fer­ing from soar­ing unem­ploy­ment as well as dou­ble digit inter­est rates. . . . Hen­nessee Group Research believes a pri­mary con­trib­u­tor to the rise nad fall of Iceland’s econ­omy was the vast size the country’s finan­cial sec­tor grew rel­a­tive to its GDP and fis­cal capacity.

Gra­date says ‘Iceland’s three main banks (Kaupthing, Lands­banki and Glit­nir) built total lia­bil­i­ties of approx­i­mately ten times the size of their GDP, up from about two times in 2003. In addi­tion, approx­i­mately 80 per cent of the lia­bil­i­ties were in for­eign cur­ren­cies leav­ing them at risk of a cur­rency col­lapse.’ . . . Cur­r­netly, the US debt to GDP is approx­i­mately 100 per­cent with the bulk of its exter­nal debt mostly in dollars.

The Nether­lands cur­rently has a ratio of approx­i­mately 328 per cent, while Ire­land has built a debt to GDP ratio of 900 per cent.

How­ever, the two coun­tries that appear most sus­cep­ti­ble to eco­nomic col­lapse are the UK and Switzer­land. The UK’s debt to GDP ratio is cur­rently 456 per cent, while Switzerland’s is 433 Per cent. . . .”

“UK ‘Could Expe­ri­ence a Crash Sim­i­lar to Ice­land’”; Hedge Week; 2/18/2009.

17. Echo­ing fears long expressed on For The Record, the British edu­ca­tion min­is­ter has warned of his belief that the severe eco­nomic cri­sis might spark a return to fas­cism, much as the social dis­lo­ca­tion expe­ri­enced by peo­ple suf­fer­ing in the Great Depres­sion drove many to the ranks of fas­cist organizations.

Ed Balls, the Children’s and Schools Sec­re­tary, said the down­turn was likely to be the most seri­ous for 100 years, and his com­ments appeared to raise the prospect of a return to the Far Right pol­i­tics of the 1930s and the rise of Facism.

His warn­ing, in a speech to activists at the week­end, came after a trade union baron warned that far right par­ties were try­ing to hijack the cam­paign for ‘British jobs for British workers’.

The row over for­eign work­ers has gath­ered momen­tum in recent weeks and Mr Balls seemed to sug­gest the reces­sion could trig­ger a return to the Far Right pol­i­tics that pros­pered in the Great Depres­sion of the 1930s.

He told Labour’s York­shire con­fer­ence: ‘The econ­omy is going to define our pol­i­tics in this region and in Britain in the next year, the next five years, the next 10 and even the next 15 years.

‘I think that this is a finan­cial cri­sis more extreme and more seri­ous than that of the 1930s and we all remem­ber how the pol­i­tics of that era were shaped by the economy.’

The remarks are sig­nif­i­cant because Mr Balls was a key adviser to Mr Brown dur­ing his decade at the Trea­sury as Chan­cel­lor of the Exchequer.

Mr Balls said that he believed this to be ‘the most seri­ous global reces­sion for over 100 years’. .

.”

“Ed Balls: Min­is­ter Fears Rise of Fas­cism Amid Eco­nomic Gloom” by Christo­pher Hope; Telegraph.co.uk; 2/10/2009.