Bank of Japan Opens The Equity Taps

Elaine Meinel Supkis

Japan and the oil pumping Arabs are hosing the planet with liquidity. This liquid is red ink mostly from the USA. But the flood of money pouring into the coffers of these two entities far exceeds any trade so where does it come from? Time to talk about magic numbers and infinity! Also, Writers assure us that a weak dollar is a good dollar but doesn't explain how we can kill the dollar faster than Japan can kill the yen. And reporters continue to try to understand hedge funds. They are getting more and more suspicious as hedge fund hell hounds foam at the mouth, bite investors and then die suddenly. And Moody's raises Japan's credit rating.

From Market Watch:

Commentary: "The money tap tightens"
By Ian Campbell

The weather is fine, it seems, for investors. Sunny, and yet with the garden green and well watered. Global equities are at record levels. The MSCI global equity index rose to an all-time high on Wednesday. U.S. interest rates have risen and seem on hold. House prices have fallen, yet U.S. growth is sprouting encouragingly. All is well.

But it is nowadays the global climate that matters, not just the U.S. one. And whether markets are going to be watered depends not just on the Fed and a certain Ben but on the global flow of money -- and therefore on Mervyn, Jean-Claude and Toshihiko.

Around the globe the central bankers are tightening their money taps. Before long all markets will be drier. Some are going to go brown and wilt.

Mervyn is Mervyn King, Governor of the Bank of England. Thursday he and his committee are expected to raise UK interest rates again, for the fifth time in less than a year, taking them to a six-year high of 5.75%. Rates may have to go higher still. Broad money growth in the UK is far too high, at an annual rate of 13.8% in May. The Bank of England is playing catch up. Too much water is sloshing around.

Europe and the US and even China are turning off the taps. This is fancy talk for raising interest rates. But a miracle happens that is equal to Jesus and the bread and fish or as I like to say, his catering lox and bagels when he gave the Sermon on the Mount. Namely, out of six fish, six bagels and some cream cheese, he conjoured up, being a wizard, enough food to feed an army of people. So it is with money. How is this stuff created?

Well, it is 'fiat' chits set up to tell us the relative value of various objects and services and then everyone trades this IOUs and since this system automatically creates inflation, the government tracks who is promising whom and then adjusts intrest charged for holding money OUT OF THE SYSTEM. This is called 'interest' and the money kept out of the system is called 'savings'.

So, when there are too many IOUs on paper floating about, prices rise because people bid up the value of assets and purchases and the IOUs lent out by the savers begin to cause their savings to shrink in value so they cease saving and inflation shoots higher as no one is saving.

So, the entire fundamental basis of an economy rests upon the idea that enough people will be tempted to save money rather than send it out in to the economy. But the US is in a negative savings rate right now and on top of this, the US is the global empire and so, it can and does create global inflation when the government drops interest rates so low, no one bothers saving any money.

Well, the fiction for the last 7 years, ever since the US decided fiat money was free and gave out fist fulls of it at 1% interest, the story line cooked up by the crooks doing this was, Japan and China like to save. Well, this was a lie. And like all lies, takes time and patience to expose and undo. Now the whole planet knows that NO ONE ON EARTH is saving much of anything. Everyone is spending which is why the global economy is 'booming'. File this under 'DUH'.

So, where is this phantom money coming from? Economists wonder if the hedge funds and equity pirates are holding or being responsible for $400-600 TRILLION (yes, trillion) in deals, funding schemes, take overs and other mysterious stuff. This is over 7X the GNP of the entire planet including starving African nations. How can a handful of financiers hold more than the entire worth of the planet, more than 7 years of the worth of the planet?

Seven is an interesting number. It was seven years ago when the US, the world's #1 economy, joined Japan, the world's #2 economy in making free money and then handing it out like candy to all and sundry.

When the two top financial giants/industrial rivals both play the same bizarre game at the same time, we got a tsunami of 'money' appearing like magic. Japan, after the Plaza Accords in the late 1980's, was forced to have a stronger currency. They were told, their government and economy was strong while the US empire was weak thanks to the need to import much of our energy due to the Hubbert Oil Peak which hit us in the early 1970's.

The Japanese are fairly new to the concept of money and trade, having done it for only a century before this, so they asked the US negotiators, what would be acceptable for a currency to be weak again. They were told, you must run big government budget deficits and wages for workers should be dropping and the real estate market must go bust.

So, rubbing their hands, they went off and did all this. Then, with innocent eyes, they reapproached the US and said, 'Look at us! We are poor! We can't protect the yen, it will drop in value rapidly! And because the workers have no money, so we are sorry, the yen must die and we are in a depression!'

From Bloomberg:

Japan's local currency debt rating may be raised, Moody's Investors Service said, citing progress in government efforts to reduce the world's largest public debt.

The long-term, local-currency debt rating of A2, the sixth highest of 10 investment grades, is being reviewed, Moody's said in a statement today. Japan has 834.4 trillion yen ($6.82 trillion) in public debt, the equivalent of the economic output of Asia-Pacific's next largest 13 economies combined.

This scheme has worked royally. Japan's government debt is huge! One would imagine, if their currency was dying, their government budget was trillons of dollars, nearly the size of our own, that the government would be taxing the billionaire Japanese industrialists, right?

Wrong! The tax the government is discussing this year is raising the sales tax! This will kill local businesses and drive the already poor workers into deeper suffering. It will stop them from buying imports, too. The weak yen is also strangling imports. This import stuff is very important to the Japanese, heh. They must prevent trade at all costs!

This makes their billionaires richer. And each change of rule in the government there is the same party and all are chosen by the exporter billionaires and all these governments are very unpopular. Like here. For the same reasons.

From Market Watch:

When exactly? It's not easy to be sure because the tap tightening has not yet alleviated the money flood. Becker finds in a "G5" composed of the US, Japan, the UK, Euroland and Canada that growth in narrow money, M1, has begun to ease but that broad money growth (which reflects growth in credit) has not yet come down to tolerable levels -- except in the United States. U.S. broad money growth was an annual 6.6% in May. Bernanke is ahead of Trichet and, even more so, of King, which is why U.S. house prices have fallen and Spanish and Irish ones are beginning to fall, while UK house prices are still rising at a double digit annual rate.

Market Watch is a mainstream media outlet that funnels fantasies to the masses in order to enslave them. It loves to give bad advice and pretend they are letting people know what is going on. They frame things in such a way that up is down and hot is cold. Basically, they lie about stuff or leave out dreadfully important information one needs to know in order to avoid making mistakes like giving money to hedge funds.

Here is a typical example from today's publication:

From Market Watch:

"Why a Weak Dollar Is Good"

A strong dollar makes foreign goods cheaper, which helps to keep inflation and interest rates down. It also gives tourists from this country more buying power when they travel overseas.

However, like many things in economics and finance, a strong dollar has its downside.

Cheaper foreign imports usually lead to a bigger trade deficit, thus subtracting from economic growth. This also reduces jobs, many of which are relatively high paying, while cutting into profits that U.S. firms make from their operations abroad.

But we're talking about a lower dollar, today, and, as you might have guessed, a weaker dollar produces results that are quite the opposite of those conferred by a strong currency.

For example, a lower-valued dollar will slow the inflow of goods made overseas, since they will be more expensive. At the same time, this will boost sales of products made here in the U.S.A., since they will be cheaper to foreigners.

A lower dollar will give earnings a lift -- not just for exporters, but for any U.S. company with operations based overseas. This is because stronger currencies overseas translate into more dollars stateside.

The yen is strong at home, weak overseas. The Japanese love this. The differential between their interest rates and the rates in the rest of the world are now widening rapidly. And the flood of liquidity is flowing harder and faster no matter how hard the other bankers raise rates in order to stem the tide. Why is this?

Well, look at Japan: the more the rates go up around Japan, the stronger Japan is in international trade and the more money flows into their coffers and they, by far, run the world's largest trade PROFIT surplus! Next in line are the oil pumping Arab tiny kingdoms!

From the BBC:

India has the most billionaires in Asia with a total wealth of $191bn between them, according to the Forbes magazine annual list of richest people.

With 36 billionaires, India has overtaken Japan's 24 billionaires, after two decades of Japan topping the Asian rich list.

As the differential between Japan's interest rates and all other countries rises, the more money is 'created' out of thin air. This is the magic of numbers. Unlike shamanism which is a nature religion, the money magic nexus is what wizards use. They can take numbers and make a mirror and model of nature and its dynamic forces. We call this 'Science'. And it can make a automaton reproduction of reality and then the wizards say, 'Accept this as an accurate portrayal of reality and you will get rich' and so it is: since the reality of money is all about numbers and statistics, juggling these creates reality!

So, if one party decides to create 0% interest in order to run up huge debts in order to lure everyone into releasing all their savings, this will happen. In Japan, savings are evaporating just as they did here when Greenspan did this magic trick by simply dictating a number, namely, 1%!

Since all money is really numbers and are no longer constrained by being physically expressed in the form of paper bills with artwork, etc, this new freedom from even the slightest concrete reality has set the finances into a fantasy realm where wealth is literally conjoured out of thin air simply by setting some numbers up and then declaring them to represent 'wealth'. This leads, thanks to human greed, to 'infinity.' Namely, we are entering the world of hyper-inflation and super-numbers while they are still hidden from view! Via hedge funds.

From the Washington Post:

The new financial system (hedge funds cutting up 'risk') seemed to be working.

Still, a growing number of market watchers wonder whether the system is encouraging hedge funds to take on too much risk.

"It's a weird dynamic that the market has now," said Dan Freed, a senior writer at Investment Dealer's Digest. "You used to have a small number of institutions taking a lot of risk. Now you take something that's toxic and you divide it into a thousand pieces and you say, okay, well, it's not toxic anymore. . . . But if it's toxic, isn't it [still] toxic?"

These magicians think they can levitate things and walk through walls. Predict the future (hahaha, the Norns laugh in scorn!) and make lead turn into gold. They think they can make things do the opposite of what they are. Hot becomes cold, dark becomes light. But in reality, this doesn't happen for long. Indeed, the longer one pretends hot is cold and dark is light, the darker and hotter hell becomes when the Grim Reaper shows up. So it pays to have open eyes and not agree with the wizards when they assure everyone they are real and their words are reality.

The 'weird dynamic' Dan Freed is puzzled by is called 'harsh reality'. As their fantasy world of magic begins to melt down, they pretend this is all very mysterious indeed. Who could tell? I love fairy tales, they are full of truths. For example, the poisoned apple that puts Sleeping Beauty to rest. The poison was only a tiny amount. Not much at all. But one bite, just one, and the poison works.

Indeed, this is the nature of poisons. If you put poison in everything, we call this 'pollution' and a small amount of lead, for example, left over from magicians trying to turn it into gold, kills everything it touches over time, slowly, bit by bit. Every day, all who injest the poisoned waters, gets sicker and weaker until they all die.

Gold miners create lots of arsenic pollution and everything downstream from the gold mine dies. Which takes me back to the stream of numbers-generated liquidity that is gushing all over the planet: this is polluted water. It is red with blood. It is red ink coupled with money creation via 0% interest rates by the world's #2 economy. There is no way Japan will tax its industries or rich to pay for its own debts nor will it give its people a break and allow the elderly and the soon to be elderly, high interest rates so they can save for the future, thus, they will never retires. Already, more than half of the retirees are forced to work full time there

From the WP:

In the case of the Bear Stearns funds, the managers appeared to struggle to value their assets accurately or find buyers for them. In May, they said the funds had lost 6.75 percent of their value in April. In June, they revised that loss to 18 percent. The revision spooked traders, and ultimately some of their assets had to be dumped in a fire sale. Bear Stearns also lent $3.2 billion to bail out one of the funds after Wall Street banks demanded their money back.

Bear Stearns hid the truth. They didn't want to know it so it was hidden from them until the Furies arrived at the front gates with the Grim Reaper and forced them to tell the truth. And all the hedge funds are filled with fantasists who believe they are creating reality when they juggle numbers and lie. The truth is, Bear Stearns today would be issuing happy reports except many of the investors were very suspicious seeing all the other smaller hedge fund hell hounds foaming at the mouth, biting their owners and then dying of rabies. So they didn't wait for the wizards at BS to wave wands and make magic money, they knew they were doomed so they demanded their money back.

This forced BS to make a real accounting or hand over the investor's money. So they told the investors, 'Oops! Our wand broke last week and we really lost money so please kiss your ass goodbye. Goodbye!' This was very, very unpopular and set off all the investors hoping to make money magically, to withdraw their funds. So BS pretended they could set things to rights if they got the numbers correct.

So hot ceased being cold and rose in temperature from 60 degrees to 200 degrees. Oops. And night fell instead of a sunny, happy, rich economy that was as the top article described, everyone getting rich! Nope, it is already night time. The moon is rising, not the sun.

To save all the financial houses, BS gave the investors their money back and this is costing them very dearly, their stock is collapsing now. But they hope to convince everyone that all is well. Wave those wands, guys! Then the investors will return, seeking wealth without work.

From the WP:

"Wall Street creates all these increasingly sophisticated financial products, and no one really seems to understand them but the people involved in creating them," Freed said. "They assure everybody that everything's going to be okay, and we are forced to believe them."

HAHAHA. The Washington Post knows me, sometimes, the writers and pundits there have debated with me in the past. My father was an advisor to 5 Presidents and is one of the first people in the CIA. So, why does 'nobody know' how these hedge funds work? Isn't it because the media deliberately keeps everyone under the spell that 'we are forced to believe them'? How can someone be forced to believe anything? Skeptics don't believe anything at all! And in this case, from day one, a healthy dose of that would have stopped the entire concept of all the hedge fund trust fund plans from ever happening in the first place. It was painfully obvious to me, that spreading the risk would increase the risk for everyone and psychologically would cause financiers to go wild and do anything they could, they would be tempted into playing dangerous games and so it was.

And this should have been made illegal. But then, the US has decided that giant trade deficits don't matter and that the world's premier currency which is the gage for all other currency values, can collapse in value or inflate like mad and this won't bring down the temple of finances upon our own silly heads! Sort of like Samson, blindly killing the Philstines and himself.

'They (the howling hounds of hedge fund hell) assure everyone that everything's going to be okay...' says the reporter with touching innocence. Drunk drivers always yell, 'I know what I'm doing,' as they drive on the wrong side of the road, heading straight towards a semi. I was once driving with one of the founders of the Children of God, a criminal religious organization, back in the sixties. He claimed that he didn't need to see where he was driving because God would guide him. He then shut his eyes while driving. I struck him with my elbow, slammed my foot on the brake while yanking the wheel to the curb. I then turned to the task of subduing him while screaming, 'You are under arrest!'

People do not have to listen to insane drunks or religious nuts. One doesn't have to accept the word of scam artists and con men. One doesn't have to believe what wizards say. One should grow up with the knowledge that money can do good but it can also do evil. And the lust for money can do great evil.

A one-notch upgrade by Moody's to A1 would put Japan's rating on a par with Greece and Chile. Moody's, which cut the rating two notches to A2 in May 2002, changed its long-term credit outlook for Japan to positive in June last year.

Moody's yesterday put South Korea's ratings on review for upgrade, citing a favorable economic outlook and progress in talks with North Korea on dismantling its nuclear weapons program.

Japan needs to maintain economic growth as the population declines and the debt hovers around 150 percent of gross domestic product. The cost of servicing the debt alone will amount to 21 trillion yen this fiscal year, or a quarter of total spending.

From Bloomberg:

Kohlberg Kravis Roberts & Co., the leader in leveraged buyouts this year, plans to raise as much as $1.25 billion in an initial public offering to help finance its appetite for the biggest takeovers.

The 31-year-old firm will use the money for investments and to ``expand into new related businesses,'' according to a filing yesterday with the U.S. Securities and Exchange Commission. Founders Henry Kravis and George Roberts won't sell any shares, unlike Blackstone Group LP founders Stephen Schwarzman and Peter G. Peterson, who raised $2.56 billion between them from their firm's IPO last month.

One billion is nothing in today's magic realm of fantastical numbers. What will happen is, this will represent the base and then they will lay on top of it a pile of global numbers that represent wealth only if anyone dares to cash it in and use it, it will vanish. The 'expansion' is simply them using 'leverage' from the 'carry trade' to load onto existing businesses and then they skim off a percentage for themselves. That's all it is: transfering numbers from the Bank of Japan and Dubai and then pretending it is worth something.

Note how the Japan has a budget deficit 30% smaller than our own, they use this as an excuse for not defending the yen. And yet they have the world's #2 FOREX reserves! Why aren't they paying down their debts? Heh. Where did this FOREX reserve come from? Eh? Magic?

From the BBC:

US private equity group Blackstone is buying the global Hilton Hotels chain for $26bn (£13bn) in an all-cash deal.
Under the deal, Blackstone is paying $47.50 for each Hilton Hotels Corporation share, a 32% premium over their closing price on Tuesday.

Blackstone said the deal had been approved by Hilton's board, and was due to be completed by the end of 2007.

The surprise announcement comes two weeks after Blackstone raised $4.13bn through floating a 13.2% stake.

All businesses are going 'private' while all private funds are going 'public'. Up is down and hot is cold and dark is light. See how all these things are going backwards? There are many things that are flowing in the wrong direction, the 'rules' are collapsing. Reality is being warped badly. The flood of money thanks to world oil prices shooting higher and higher because frankly, we just arrived at the global Hubbert Oil Peak and now Saudi Arabia is pumping less and less oil from more and more wells that have to pump in more and more seawater...this is causing global inflation.

And this inflation vanishes magically as all the consuming nations pretend there is no inflation! And the red ink is like our blood flowing from amputated limbs: one really doesn't feel pain when bleeding to death. This is why it surprizes people when the Grim Reaper appears. And all the wizards who performed these amputations will yell, 'No one expected the Grim Reaper!' They will claim, they are puzzled by all this, they never expected DEATH to appear! They never expected the system to reverse and then collapse! They never expected World War III to happen.

But they are the cause of all this. The traitors in the capitals of the world, all working for each other and the billionaires, they are the cause of all this. They wanted these things to happen. They didn't want us to save, to be careful, to take our time and see ahead and plan for the worst. They created this system, they created these magic numbers, they are the wizards who thought they could cheat Death and fool the Fates.

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