Two years ago, economist Moritz Schularick and I coined the word "CHIMERICA" to describe what we saw as the key relationship in the then-booming global economy: CHINA PLUS AMERICA. Cheap Chinese labour was making US corporations highly profitable. Spendthrift American consumers, in turn, were keeping Chinese corporations busy with export orders. And the Chinese monetary authorities were converting export surpluses into dollar denominated reserves with the aim of preventing their own currency from appreciating.

The unintended consequence was a multi-billion dollar credit line to the United States, financing America's deficit at rock-bottom rates. It was those low long-term rates – combined with monetary policy errors by the Fed, excessive bank leverage and reckless financial engineering – that inflated the American property bubble, the bursting of which triggered this crisis.

In February, the People's Daily acknowledged the "global importance and influence" of Chimerica, but warned of an impending "period of chillness". COULD THIS BE ONE OF THOSE GREAT TURNING POINTS IN HISTORY, when the balance of power tilts decisively away from an established power and towards a rising challenger? It is possible. FINANCIAL CRISES OFTEN ACCELERATE THE GRADUAL SHIFTING OF THE GEOPOLITICAL TECTONIC PLATES; THEY ARE TO HISTORY WHAT EARTHQUAKES ARE TO GEOLOGY.

In a widely anticipated move, Dow Jones & Co said technology bellwether CISCO SYSTEMS INC (CSCO.O) WILL REPLACE GM, which filed for bankruptcy on Monday morning. Travelers Co (TRV.N), a large home, auto and commercial insurer, will take the place of Citigroup due to the bank's restructuring and the government's "large and ongoing stake."

The changes marked the latest fallout on the financial landscape from the collapse of the US housing market, when home prices plunged after years of running higher as credit markets froze. The turmoil helped drive Lehman Brothers into bankruptcy last September, shaking Wall Street to its core and prompting the US government to create a $700 billion financial rescue fund. The US Treasury plans to use about $30 billion of that bailout money to buy a stake in GM.

GM's bankruptcy is the third-largest Chapter 11 case in US history, ranking only behind Lehman Brothers and WorldCom in terms of size. One factor that helped seal GM's fate was the surge in US oil futures prices to record highs near $150 a barrel last July. THAT DROVE GASOLINE PRICES UP TO AROUND $4 A GALLON and helped kill demand for Detroit's gas-guzzling best sellers, the sport utility vehicles, or SUVs.

But that, in short, is the job description for Brian Deese, A NOT-QUITE GRADUATE OF YALE LAW SCHOOL WHO HAD NEVER SET FOOT IN AN AUTOMOTIVE ASSEMBLY PLANT until he took on his nearly unseen role in remaking the American automotive industry.

Nor, for that matter, had he given much thought to what ailed an industry that had been in decline ever since he was born. A bit laconic and looking every bit the just-out-of-graduate-school student adjusting to life in the West Wing — "he's got this beard that appears and disappears," says Steven Rattner, one of the leaders of President Obama's automotive task force — Mr Deese was thrown into the auto industry's maelstrom as soon the election-night parties ended.

MR. DEESE'S ROLE IS UNUSUAL FOR SOMEONE WHO IS NEITHER A FORMALLY TRAINED ECONOMIST NOR A BUSINESS SCHOOL GRADUATE, and who never spent much time flipping through the endless studies about the future of the American and Japanese auto industries.

FOR GM'S VOICELESS OWNERS - THE COMMON SHAREHOLDERS - IT IS A WIPEOUT. The proximate cause of the bankruptcy was supposed to be the inability of GM and the government's auto task force to reach an accommodation with GM's bondholders. But late last week, the bondholder problem was moving toward rapid resolution, and was clearly resolvable. Why then are GM and its multibillion government financier proceeding with bankruptcy?

The bankruptcy and the GM restructuring plan are THE PRODUCT OF A SECRETIVE, UNACCOUNTABLE, WALL STREET-MINDED GOVERNMENT TASK FORCE that assumed power because of a Congressional abdication of historic magnitude. By all rights, THE RESTRUCTURING PLAN SHOULD HAVE BEEN SUBMITTED TO CONGRESS for deliberative review and decision.

MANY, MANY JOBS WILL BE LOST THAT COULD BE PRESERVED. There is reason to question whether too many plants and brands are being closed - a matter that should have been taken up in Congress. Just the closing of hundreds of (GM and Chrysler) dealerships will cost more than 100,000 jobs. These sacrificed jobs will fray communities and impose enormous expenses on government entities that will have to provide unemployment and social relief, while suffering lost tax revenues.

The unionized workforce will see the wage and benefit structure slashed - even though auto manufacturer wages make up less than 10 percent of the cost of a car - so that new jobs at GM will no longer be a ticket to the middle class. THIS WILL DRAG DOWN THE WAGE STRUCTURE OF THE ENTIRE AUTO INDUSTRY - exactly the wrong direction for the country.

AMERICA'S MANUFACTURING BASE WILL BE FURTHER ERODED, as GM pursues its Grand China Strategy - increasing manufacturing outside of the United States, and increasingly from China, for import back into the United States. Unanswered questions persist about how GM's valuable operations in China, and unrepatriated profits, will be treated in bankruptcy, or excluded from bankruptcy.

Bank of America Corp, Wells Fargo & Co and seven other firms judged to need extra capital by the Fed's "stress tests" plan to raise the required $69.1 billion through a combination of share offerings, asset sales, private securities exchanges and earnings. THEY WILL DO ANYTHING TO ESCAPE THE GOVERNMENT MEDDLING THAT PROBABLY AWAITS CITIGROUP, said Philip Orlando, who helps manage $410 billion as the New York-based chief equity strategist of Federated Investors Inc.

"YOU NEVER WANT TO HAVE THE GOVERNMENT INVOLVED IN YOUR BUSINESS," said Orlando, whose firm owns 7.3 million JPMorgan Chase & Co shares and 1,483 shares of Citigroup. "THEY'RE NOT BUSINESSMEN; THEY'RE BUREAUCRATS. They don't understand capitalism, they don't understand the profit motive and they don't understand the financial industry."

"The investing community doesn't welcome long-term involvement by the US government in the private economy," said Kevin Starke, an analyst at CRT Capital Group LLC in Stamford, Connecticut. "Every time I try to pitch an idea to investors that has some government involvement, the automatic reaction is, 'I don't want to get involved.'" Citigroup was found by the Fed to need $93 billion more in common equity as of the end of 2008, the biggest gap among the 19 US banks that underwent the stress tests.

On Iran, he said he hoped to see progress by the end of the year, through "tough, direct diplomacy". But he said rather than imposing its values on other countries the US should act as a role model. Speaking to BBC North America Editor Justin Webb, Mr Obama said he believed the US was "GOING TO BE ABLE TO GET SERIOUS NEGOTIATIONS BACK ON TRACK" between Israel and the Palestinians.

"Not only is it in the interest of the Palestinian people to have a state, it's in the interest of the Israeli people to stabilise the situation there," he said. "And it's in the interest of the United States that we've got two states living side by side in peace and security."

Asked about Israel's rejection of his call for a halt to Jewish settlements in the West Bank, the president urged patience, saying it was early in the conversation. "DIPLOMACY IS ALWAYS A MATTER OF A LONG HARD SLOG. IT'S NEVER A MATTER OF QUICK RESULTS," he said. However, Mr Obama said he had not needed convincing by Israel of the need to address Iran's programme of nuclear development.

Mr Obama is due to arrive in Saudi Arabia on Wednesday in the first stage of his tour of the Middle East and Europe. He will travel to Egypt on 4 June, where he is set to give a key speech on US ties with the region, before carrying on to Europe to attend D-Day commemoration events.

The Israeli rabbi says Arabs should find another place to build their homes. "This territory is Jewish territory," AFP quoted Savir as saying, making a sweeping gesture towards the nearby hilltops to show that he means the entire West Bank which Israel occupied in 1967. He stressed that Israel's right-wing government led by Prime Minister Benjamin Netanyahu should not even consider bulldozing Jewish settlements in the occupied lands under international pressure.

"JEWISH PEOPLE LIVE HERE BY BIBLICAL RIGHT," the Israeli rabbi said. "Arabs," he adds "should find another place to live."

Some 280,000 Jews live in 120 West Bank settlements which Israel considers legal and also wildcat outposts, which unlike full-scale settlements, are not authorized by the Israeli government. "WE MUST SETTLE HERE, GOD HAS ORDERED US TO LIVE ON THIS LAND," says Daniel Landesberg, 20, as he and a group of teenagers spread out cement being poured out of a large concrete mixer truck to form the base of a new house.

The premier also ruled out the possibility of lifting the crippling blockade on the Gaza Strip, saying there are other issues that should be dealt with in the coastal sliver. "We are being asked to ease the living conditions of the population and allow goods and equipment in, but we have other priorities in the Gaza Strip," he added.

"We do not want to strengthen Hamas, not by allowing them to rebuild their defenses," Netanyahu said. He made the remarks on the same day that the Israeli military launched a large-scale manoeuvre which hints that another war in the region is imminent.

The Israeli premier added that "we need to find a balance between easing the conditions of the (Gaza) population and easing on Hamas' ability to acquire more weapons."

Both Hamas men and the homeowner died in the shootout, along with three policemen. Dozens of bullet holes in walls and furniture in the home attested to the ferocity of the fighting. It was the bloodiest internal Palestinian clash in the occupied West Bank since the Western-backed Abbas launched a security drive and revived peace talks with Israel in 2007 after breaking with Hamas over its takeover of the Gaza Strip.

Samman and Yasin had ignored calls to surrender, witnesses said. Palestinian security forces spokesman Adnan Damiri said police had tried to negotiate a peaceful end to the standoff. "Thousands of shots were fired at the security forces," Damiri said, adding that large quantities of explosives were discovered in the Hamas hideout.

After the raid, Hamas threatened to call off Egyptian-sponsored reconciliation talks with Fatah that had been scheduled to resume in Cairo in July. Fawzhi Barhoum, a Hamas spokesman in the Gaza Strip said: "We in Hamas have come closer than ever to taking a decision to suspend our participation in the dialogue."

Reports say a majority of bondholders have now agreed to a deal giving them at least a 10% stake in what is likely to emerge as a much smaller company. President Barack Obama is due to give full details at a news conference. The BBC's Jonathan Beale, in Detroit, says Mr Obama is expected to announce $30bn (£18.5bn) in new funding for GM.

GM's sales have been hit hard by the financial crisis and the firm has received $20bn in state aid. In return for more cash the federal government is reported to be receiving a stake of 60% in a new, leaner company due to be re-launched within 90 days. Senior executives at General Motors have been making final preparations for completely restructuring what was once the world's largest car company, under judicial supervision.

A Chapter 11 bankruptcy filing by GM would rank as the third largest bankruptcy in US history following Lehman Brothers' collapse and the failure of telecoms giant WorldCom.

True, the situation has been well prepared on and off for the past century, especially the past twenty years. The initial testing grounds was conducted upon our Holy Russia and a bloody test it was. But we Russians would not just roll over and give up our freedoms and our souls, no matter how much money Wall Street poured into the fists of the Marxists. Those lessons were taken and used to properly prepare the American populace for the surrender of their freedoms and souls, to the whims of their elites and betters.

FIRST, THE POPULATION WAS DUMBED DOWN through a politicized and substandard education system based on pop culture, rather then the classics. Americans know more about their favorite TV dramas then the drama in DC that directly affects their lives. They care more for their "right" to choke down a McDonalds burger or a BurgerKing burger than for their constitutional rights. Then they turn around and lecture us about our rights and about our "democracy". Pride blind the foolish.

THEN THEIR FAITH IN GOD WAS DESTROYED, until their churches, all tens of thousands of different "branches and denominations" were for the most part little more then Sunday circuses and their televangelists and top protestant mega preachers were more than happy to sell out their souls and flocks to be on the "winning" side of one pseudo Marxist politician or another. Their flocks may complain, but when explained that they would be on the "winning" side, their flocks were ever so quick to reject Christ in hopes for earthly power. Even our Holy Orthodox churches are scandalously liberalized in America.

THE FINAL COLLAPSE HAS COME WITH THE ELECTION OF BARACK OBAMA. His speed in the past three months has been truly impressive. His spending and money printing has been record setting, not just in America's short history but in the world. If this keeps up for more than another year, and there is no sign that it will not, AMERICA AT BEST WILL RESEMBLE THE WIEMAR REPUBLIC AND AT WORST ZIMBABWE.

These past two weeks have been the most breath taking of all. First came the announcement of a planned redesign of the American Byzantine tax system, by the very thieves who used it to bankroll their thefts, loses and swindles of hundreds of billions of dollars. These make our Russian oligarchs look little more then ordinary street thugs, in comparison. Yes, the Americans have beat our own thieves in the sheer volumes. Should we congratulate them?

Prime Minister Putin, less than two months ago, warned Obama and UK's Blair, not to follow the path to Marxism, it only leads to disaster. Apparently, even though we suffered 70 years of this Western sponsored horror show, we know nothing, as foolish, drunken Russians, so let our "wise" Anglo-Saxon fools find out the folly of their own pride. Again, the American public has taken this with barely a whimper... but a "freeman" whimper.

The Russian owners of American companies and industries should look thoughtfully at this and the option of closing their facilities down and fleeing the land of the Red as fast as possible. In other words, divest while there is still value left. The proud American will go down into his slavery without a fight, beating his chest and proclaiming to the world, how free he really is. The world will only snicker.

A top Chinese army official attending the meeting in Singapore called on Pyongyang to move to denuclearisation. Earlier, the US said activity in the North could indicate plans for a new long-range missile test. Vehicle movements resembled the build-up to a test last month, the US said.

Speaking in Singapore, Mr Gates made it clear the US would take an extremely dim view of more nuclear or missile testing by North Korea. "The truth of the matter is if they continue on the path they are on, I think the consequences for stability in the region are significant."

"We will not stand idly by as North Korea builds the capability to wreak destruction on any target in the region or on us," Mr Gates added. But he insisted the next step in negating Pyongyang's ambitions would be political, not military. The Pentagon chief also argued for bolstering diplomatic relations with China, and cited common challenges facing regional Asian powers: counterterrorism, piracy, energy security and disaster relief.

"It is essential for the United States and China to find opportunities to co-operate wherever possible," he said. The BBC's Asia correspondent, Jonathan Head, says Mr Gates' speech is probably intended to reassure countries in this region that the new administration in Washington is committed to supporting its allies.

Since The Daily Telegraph began exposing their claims, 12 MPs have said they will step down in response to public anger at their behaviour. Others are expected to follow in the weeks ahead. Despite effectively admitting their actions have been unacceptable to the public, none of the MPs is stepping down immediately. Instead, they intend to remain in their jobs until the next general election, which must be called by June next year at the latest. More than one million people could now miss out on proper representation because they live in seats held by MPs with no hope of re-election.

The prospect of generous rewards for so many lame-duck MPs will add to the pressure on Gordon Brown to call a general election this year instead of waiting until 2010. By staying in the Commons for another year, shamed MPs stand to make significant financial gains. In addition to their £64,766 salaries, they will still accrue pension rights and then, on stepping down, be able to claim thousands of pounds in new allowances.

MPs who leave the Commons at a general election can claim a "resettlement grant" worth as much as a whole year's salary. The first £30,000 of the grant is tax free. Significantly, the grant may not be claimed during a parliament, meaning that MPs who step down before a general election are not eligible for the payment.

"I am 100 percent sure that the US will go into hyperinflation," Faber said. "The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate."

Federal Reserve Bank of Philadelphia President Charles Plosser said on May 21 inflation may rise to 2.5 percent in 2011. That exceeds the central bank officials' long-run preferred range of 1.7 percent to 2 percent and contrasts with the concerns of some officials and economists that the economic slump may provoke a broad decline in prices.

"There are some concerns of a risk from inflation from all the liquidity injected into the banking system but it's not an immediate threat right now given all the excess capacity in the US economy," said David Cohen, head of Asian economic forecasting at Action Economics in Singapore.

Faber, who said he's adding to his gold investments, advised buying the precious metal at the start of its eight-year rally, when it traded for less than $300 an ounce. The metal topped $1,000 last year and traded at $949.85 an ounce at 12:50pm Hong Kong time. He also told investors to bail out of US stocks a week before the so-called Black Monday crash in 1987, according to his Web site.

"I still expect that economic growth in the US is going to be negative through Q4, and that we'll see positive growth in Q1," Roubini told Reuters in an interview on the sidelines of the Seoul Digital Forum.

Roubini stood by a recent article in which he mentioned the possibility of a "PERFECT STORM" IN 2010. "There is even a risk of a double dip, a W-shaped recession at the end of next year," he said, A COMBINATION OF RISING OIL PRICES, RISING PUBLIC DEBT AND INCREASES IN REAL INTEREST RATES, RISING CONCERNS ABOUT INFLATION AND THE EXPIRATION OF A NUMBER OF TAX CUTS IN THE UNITED STATES."