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China and Japan have been playing this game separately long before this current spate of events. For them to meet in "secret" (in full view of the US) is a calibrated move to get the desired response and open to the end game. The enemy of my enemy is my friend. Starting from different points on the board they have now completely surrounded their rivals.

Their elite have made their people sacrifice dearly to reach this point; tightening their belts almost to the point of starving them to death (in the case of Japan).

They have a completely different mindset, playing the long game, they shun short term pirate schemes, though they dance and play to the pirates tunes just long enough to control the board. Pirates are easily blinded by gold being low EQ creatures. It's simple enough, you tighten your belt and use your savings to buy your opponent until you own them.

I suspect Pax Asiana will be an infinitely kinder more peaceful era to live in, that is, if we can reach it without triggering WWIII.

Blunt Force Trauma

Ooooo. The cartoon; when the link from the main page is opened, is not too friendly; "Use your own server to host images". Waaa.


Oil & gold are up sharply today. The Saudis are threatening to uncouple from the dollar. The Chinese are making threats about using the "nuclear option" (dumping dollars). The dollar has broken through a key support level and is in free fall.

Things are starting to happen. I wonder if we'll look back on the Fed rate cut as we look back on the October 1929 crash -- i.e. the day that marked the beginning of the end?


I need a little help here, if possible. Could you spell out the following further?
-"The kingdoms in the Gulf States region are taking over the banking systems of the US and England at a really fast rate and they operate the same way as Her Majesty."
Exactly who is taking over what banking and exactly how are they doing it?
-[hedge funds] are dying and this junk is being shifted onto government agencies as fast as possible." How? Like the way Fannie and Freddie will now be allowed to buy up larger loans?
-"our ability to pay our debts is continuing to collapse." meaning the solvency of the US?
"the deal Miz Japan just made with China is super-secrecy will show up in the news as this crisis suddenly fades and the MONEY FLOW RETURNS!" By this, you mean China and/or Japan will return to buying up Treasuries?
I'm confused. How can anything be "back to normal" if "Things are starting to happen." And, "the dollar is in free fall".

How can anything be "back to normal" if "Things are starting to happen." And, "the dollar is in free fall".

I think Elaine is saying that the Chinese & Japanese will return to buying dollars to prop up the status quo. I'm not so sure.

Since the Fed lowered interest rates, the dollar is a very bad investment. The dollar is setting record lows. Anyone with a lot of FOREX reserves can prop it up for a while, but only by increasing their exposure when the bottom finally drops out (and it will drop out eventually; the status quo -- the US current account deficit, national debt, consumer debt, etc -- is unsustainable).

It would make more sense if the Chinese & Japanese would demand that the US raise interest rates before they agreed to buy dollars. If they don't, they're just throwing good money after bad.

Actually, I'm not sure the status quo can be propped up, given the drop in interest rates. Lower interest rates here will not only depress the dollar, it will cause the carry trade to unwind. As that happens, all that borrowed Japanese money will flow from the US to Japan, strengthening the Yen and further depressing the dollar.

Elaine Meinel Supkis

As I have said since May, Japan cannot support the status quo ALONE. I also said, in July, China was ending the status quo. This caused the banking crisis. Now, it is going again, I am assuming.

Until Japan screws up. The Chinese don't trust the Japanese as far as they can kick them. So the next crisis will be when Japan joins the West to attack the yuan yet again.


Arrggghh. Sorry to be so dense. China caused the banking crisis. OK, check. "Now, it is going again." It - meaning China? - is creating another crisis? China is rgoing to return to buying Treasuries?

I have witnessed deep hatred between China and Japan. It would take something mighty compelling for them to work together. With China clearly on everybody's potential threat list, it's hard to imagine Japan would do anything that would undermine its own security.

Elaine Meinel Supkis

Japan needs the US for security. The US is going bankrupt. So Japan has to TRIANGULATE. Few Americans understand this art. Triangulation is also called 'hedging your bets.'

All nations do this except for empires. Empires are exposed to singular positions. They can't trianguate by definition. Older readers of this news service understand this. Go read earlier stories and you can see quickly that the business of diplomacy is part and parcel of economics.

And the diplomacy between Japan and China goes back about 4,000 years. They have played this queer game of imitation/destruction. They are still playing this game. And it is a very dangerous game for us since Japan is using us as a tool for defying China right now.

We can't afford this. We are going bankrupt. And China holds as many financial cards as Japan now so Japan has been TRUMPED. Hence, the secret negotiations.


Your comment on bankers projecting "a facade of sober care" prompted me to re-read "Young Goodman Brown" (1835).
Thank you.
This year China remembers things that happened seventy years ago. In July 1937, the conflict with Japan escalated dramatically, and the Nanjing Massacre occurred in December.


As Oil Hits High,
Mideast Buyers
Go on a Spree
Dubai, Qatar Battle
For Stakes in Bourses;
Political Savvy Grows
By HENNY SENDER in New York, CHIP CUMMINS in Dubai, GREG HITT in Washington and JASON SINGER in London

Wall Street Journal, September 21, 2007

As oil prices soar, Middle Eastern governments are demonstrating their clout in global financial markets -- but doing so with a new political savvy.

Yesterday saw a burst of deal activity involving Mideast governments, including a battle among two Persian Gulf emirates over the London Stock Exchange and a bid by one of them for a stake in Nasdaq Stock Market Inc. A third emirate announced an investment in Carlyle Group, a Washington-based private-equity firm known for ties to political heavy hitters such as former President Bush.

The governments of the Persian Gulf -- along with regional powerhouse Saudi Arabia -- have seen their coffers swell to unprecedented size with rising energy prices and a regional economic boom. Yesterday crude oil topped $83 a barrel.

Four of the eight largest government-controlled investment authorities are from the Gulf, and the Abu Dhabi Investment Authority tops the list with assets estimated at $875 billion, according to Morgan Stanley. That's more than triple the size of Calpers, the California pension fund.

Middle Eastern firms and funds shopping around the globe have spent $64 billion so far this year, compared with $30.8 billion in all of last year and $4.5 billion in 2004, according to Dealogic. Acquisitions in the U.S. and Britain account for slightly more than half of the total this year.

"The deep pools of capital in the Middle East are increasingly affecting all aspects of global financial markets, both private and public," says Monte Brem, chief executive officer of StepStone Group LLC, La Jolla, Calif., which advises Middle Eastern institutions on their international investments.

That frenetic pace could continue as oil revenues climb along with oil prices. Crude-oil futures ended at their fourth record high in a row Thursday, in nominal terms, as fears renewed of an approaching storm in the Gulf of Mexico. The front-month contract has surged 20% over the past 20 days.

Some of the Middle Eastern investment funds have long histories, such as those of Abu Dhabi, Kuwait and Saudi Arabia. But newer investment authorities set up by Qatar and Dubai have made most of the waves in global markets recently by making aggressive bids for stakes in well-known targets such as Nasdaq.

Despite the attention-grabbing deals, Middle Eastern countries are becoming more sophisticated at heading off political backlashes, especially in the U.S. They have learned from the firestorm last year that forced a Dubai-controlled company to sell the U.S. port operations of a British company it had acquired. China, which also combines deep pockets of foreign reserves with a shaky standing in Washington, left another lesson when one of its government firms tried unsuccessfully to purchase the U.S. oil company Unocal.

Dubai, which is seeking a minority stake in Nasdaq, asked the Bush administration to vet the deal upfront for potential national-security issues. It hired a team of Washington lobbyists and strategists to reach out to officials in the administration and Capitol Hill a day before the proposed deal became public, according to people familiar with the situation.

While President Bush promised a careful review of the deal, a key legislator, Democrat Barney Frank, said it "doesn't raise any alarm bells to me." Rep. Frank, who is chairman of the House Financial Services Committee, noted Nasdaq is a highly regulated entity and "there's no physical transfer of property" in the proposed deal.

The fight over Nasdaq is part of a larger battle for control over parts of world stock exchanges between Dubai and Qatar. Dubai, part of the United Arab Emirates, is the flashier of the two. Nearby Qatar is a tiny country that controls the world's third-largest gas reserves.

Apart from Nasdaq, the other two stock exchanges involved in the maneuvering are London Stock Exchange Group PLC and a company called OMX AB that operates stock exchanges in Sweden, Denmark, Finland and Iceland.

Dubai's stock exchange agreed to a deal yesterday under which it will take a 19.9% stake in Nasdaq and buy a 28% stake in the London exchange from Nasdaq. The deal would also result in Nasdaq owning OMX.

But just as it seemed Dubai had locked up an alliance with leading exchanges in the world's top two financial capitals, Qatar moved in with an apparent bid to upset it. Qatar spent $1.36 billion in a matter of hours before the market opened to buy 20% of the London exchange. It also spent $470 million during trading hours to buy 10% of OMX.

Officials representing Qatar said the country is looking for long-term investments in a variety of industries that can produce high rates of return. Three Delta, a fund backed by the Qatar Investment Authority, says it is principally focused on acquiring companies in the United Kingdom, and it aims to support existing management at the companies it buys.

The Qatari investment fund has also offered to pay $21 billion for British supermarket chain J. Sainsbury PLC. The fund has hired Tony Campbell, the former deputy chief executive of Wal-Mart Stores Inc.'s British division, to become nonexecutive chairman of Sainsbury if its takeover is successful.

Other big sovereign funds from the Middle East and Asia have said they are looking for undervalued brand-name businesses. A Dubai investment firm bought a big stake in DaimlerChrysler AG when the big German auto maker was suffering from quality problems at its Mercedes-Benz division. It sold the stake after a year, doubling its money. The same firm, Dubai International Capital, bought Tussauds Group, the U.K. museum and entertainment company, but later sold most of it to private-equity firm Blackstone Group.

Gulf governments have also been active in the U.S., buying Manhattan real estate and other assets. Yesterday, an investment arm of the Abu Dhabi government known as Mubadala Development Co. announced it reached an agreement to pay $1.35 billion for a 7.5% stake in Carlyle Group.

The parties in that deal also showed awareness of political sensitivities. Before the deal was announced yesterday, Carlyle notified key players in Congress and the U.S. Treasury "as a courtesy," said Carlyle co-founder David Rubenstein.

The battle between Qatar and Dubai for a piece of Western stock exchanges is part of their jockeying to become the premier financial center in the Middle East. Ten years ago, when Dubai wasn't much more than a port with a single business thoroughfare in the desert, such ambitions would have been dismissed as laughable.

President Bush said yesterday that Dubai's proposed transaction for a Nasdaq stake will come under formal scrutiny by his administration. "We're going to take a good look at it, as to whether or not it has any national security implications," Mr. Bush told reporters. "I'm comfortable with the process to go forward."

Lawmakers on Capitol Hill said they would closely monitor the deal. Such reviews are carried out by the Committee on Foreign Investment in the U.S., or CFIUS, a government panel led by the Treasury Department.

Even before the president's statement, Nasdaq and Borse Dubai had signaled to policy makers that they wanted a U.S. review.

New York Democratic Sen. Charles Schumer, a leader of opposition to the Dubai ports deal, was among the first to receive a briefing when representatives of Dubai and Nasdaq went to Capitol Hill this week.

The senator voiced skepticism, warning in a letter to the Treasury Department that the deal "would result in a foreign government having a large influence on the decisions made by a critical part of the U.S. economic infrastructure."

Elaine Meinel Supkis

They hire lobbyists? They have been doing this for YEARS!!!!

Carlyle: guess where papa Bush was on 9/11? Meeting with the bin Ladens, talking about money in Carlyle! 'It's a small world, after all!'

Since 1945, the Saudis have been mixing it with us Westerners. My mom and dad took me all over the earth and let me meet all sorts of people EXCEPT the Saudi royals. I was not allowed to go there or meet them here until after I was married.

Heh. Nonetheless: they are now buying up the US power base in ernest. This is a dangerous game for it exposes them to revolutionaries. Maybe they will flee after selling off all the oil. This is what I expect. This is what bin Laden's revolution is all about. The surge of wealth is a two edged sword in the Middle East. Mix in millions of refugees from Iraq and the demolition of the Palestinian ghettoes and a tremendous amount of pent up anger and lots and lots of boys (due to them being 'valuable') we get an explosive package.

Neuro Artist

It appears to be a chicken-race, between these countries (Saudi Arabia, Japan and China). They all will see demand destruction for their products (oil, cars and consumer goods/toys), when the real plunge of the dollar occurs. At the same time the one who pulls the trigger last will see the destruction of their holdings.

I guess what they'll try to do is change their dollar holdings into physical assets. The meeting between China and Japan banks was to give them time to do that instead of buying each others currencies with USD. Wall Street will explode with this buying, until one of them squeezes the trigger (probably China), and the house of cards falls. Mid October maybe?


Check out Yahoo.news today.

A western businessman was forced to sit like a hostage next to a Chinese official and apologize to China and the Chinese people on national television about recalling too many toys and damaging the reputation of the Chinese people.

This is our future. If he were Chinese, he would be underground or in a little jar by now.

In a way, it is kind of ironic. These hot-shot businessmen thought they could exploit Chinese labor and then blame them for all their problems just like they do here in America.


The Chinese officials politely and quietly explained the concept of a "gun to the back of your head" to Debrowski and that may be why he was sitting "stoney-faced" during this televised event.

Elaine Meinel Supkis

Thanks for the news! Doesn't surprise me at all! Yes, the Chinese are very proud and very intent and duelling with them, dangerous. They will strong arm any opponent.

The leadership is very sensitive, they are still very pissed off at me. They hate this news service, too. I know too much.

They will force anyone doing things with them to kow tow. They also know how to flatter and roll out red carpets, this is how they reeled in Putin.

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