Money Matters

Gross DOMESTIC Product Is Up But This Is INFLATION

Elaine Meinel Supkis

More news about and from the Federal Reserve. Stocks are up today based on this 3.9 growth rate of our GDP. Like all the lies surrounding our finances, using the GDP rather than the GNP is typical. It counts the spending on inflation-ravaged items to be 'commerce'. Inflation, not our economy, is growing, of course. So time to talk about all this and what it means as the world slides into an obvious recession caused by high inflation of raw materials and energy.

A fawning story about Mishkin of the Federal Reserve, from Bloomberg:

His words carry weight inside the Fed as well. In a little more than a year as a Fed governor, Mishkin, 56, has established himself as what former Governor Lyle Gramley describes as an intellectual ``powerhouse,'' one of four on the policy-making FOMC.

In part, that comes from the Columbia University economist's three decades of central-banking scholarship, including three years as the New York Federal Reserve Bank's research chief. There are also his ties with Fed Chairman Ben S. Bernanke, which include graduate school and collaborating on research.

``Because he's a close ally of Bernanke, that makes him a powerful figure,'' said Gramley, senior economic adviser at Stanford Group Co. in Washington. He considers the other ``powerhouses'' to be Bernanke, Vice Chairman Donald Kohn and San Francisco Fed President Janet Yellen.

Instead of wild debate, a variety of voices, we see the Federal Reserve filled increasingly with people who are buddies and who are of one mind including the important aspect of religious affiliation. I was once married into a Jewish family in NYC that ran businesses, etc. They love to do business with each other and are so resisting to outsiders, I was very much on the outside even after giving birth to a son.

Just like Mormons or Catholics feel happier interfacing with only each other, so it is here. This unity of minds is, like with say, diamond traders in Brussels, a family affair and outsiders are ruthlessly eliminated or cold shouldered so they don't have any influence. The stellar minds running our national bank are in harmony with the many Jewish traders and financiers and this is a problem, not something to celebrate.

Allowing any system to fall into the hands of any religious group is most dangerous. For example, our airforce has been colonized by right wing fundamentalist End of Times preachers who cluster about the Airforce training centers and who want to literally have their fingers on the nuclear hairtrigger. This frightens me greatly. The US government, instead of eliminating this influence, has encouraged it.

Various religious sectors of dominantion are created with an eye towards world power. The US has fallen prey to this sort of activity. The Federal Reserve clearly shows who they are protecting when they make various moves. The recent move to drop interest rates in the teeth of total global inflation of all necessities is a fine example of the Fed wanting to save Jewish financiers rather than be honest about the reality of our financial woes. Always, when making moves that extend the power and protect these people, the Fed pretends they are doing this honorably in order to save jobs and protect the American economy.

This is a blatant lie. They lie to themselves, I imagine. They want America strong so we can fight Muslims on behalf of Israel. They believe that making America strong involves keeping our military/industrial complex rolling forwards. They don't care if an airforce filled with End of Time believers who think Jesus will come when all the Jews are herded into Jerusalem, controls our nuclear arms. They want this global empire to roar forwards no matter what.

I am of a different mind: our empire is killing us. If we don't drop a number of our pretensions to power and if we don't retract our empire, we will go down in flames and our homes will literally be destroyed in a fire that is a trillion times hotter than the ones in California this month.

Mishkin:

Minutes of their last meeting, released Oct. 9, said officials ``saw a risk that tightening credit conditions and an intensifying housing correction would lead to significant broader weakness in output and employment.''

That was foreshadowed in a Sept. 10 speech in which Mishkin said the financial turmoil posed an ``important downside risk to economic activity'' beyond housing. On Sept. 1, at the Kansas City Fed's annual symposium in Jackson Hole, Wyoming, he said in a research paper that the Fed can be more successful by lowering rates ``aggressively'' in response to a deep slump in home prices.

Since the Federal Reserve only cares about harboring and protecting financiers who use tax havens and who exploit Israel's laws that nearly always refuses to return not only economic criminals but outright murderers to the US for trial, we have this crazy system that is eroding our economic base relentlessly. China's bankers and rulers are not serving another nation. Indeed, this would earn a bullet to the back of the head. So they strive to make their empire stronger, not exploit it for other ends. They are united in this regard while the US is very much divided.

On top of the Jewish factor, the US also serves other former empires, the United Kingdom being a top feature of this other force. England has decided the only real industry they have left is to be host to tax havens and to be Switzerland only not neutral. The British banking system with all its many flaws are now deeply embedded within our own system.

Our founding fathers worried about this. They wanted to experiment with various systems to see what would work. The idea was to NOT have a banking system that would make financiers very powerful and very rich at the expense of the people. Quite the contrary. The system was supposed to support the small farmer, the small businessman, it was very much a bourgeosie entity. With the industrial revolution, all this changed.

The first of the very rich and very powerful were the creators and owners of various industrial systems: train lines, steel mills, cotton manufacturing, electricity production, etc. For example, there is the history of Mellon, the man who was considered, like Mishkin, to be a financial genius, but who presided over the long period before biggest economic disaster in US history, the Great Depression:

Andrew William Mellon (March 24, 1855 — August 27, 1937) was an American banker, industrialist, philanthropist, art collector and Secretary of the Treasury from March 4, 1921 until February 12, 1932. He is the only Secretary of the Treasury to have served under three presidents (Harding, Coolidge and Hoover).

Mellon was not Jewish, this was before Jews had full civil rights in America. America back then was very racist and very closed to many religious affiliations. But the interesting thing with Mellon is, all his efforts were focused on making the workers weaker and the financiers stronger. His family was very involved in making profits off of labor and therefore, he wanted labor to get as little gain as possible. The Democrats who held office during WWI were more worker-friendly, the party being an alliance between the South and northern industrial workers.

Mellon and the Republicans were able to take the US system which encouraged small farmers and small businesses and turned it into a means of making money, fast, for fast financiers. This meant ignoring escalating problems in the hinterlands, increasing poverty and indebtedness in the farming community which suffered greatly when Europe was unable to buy produce at high prices anymore. The US industrial workers saw wages fall after WWI production slowed and Europe ceased buying huge quantities of goods due to the huge debt overhang from that war. Instead of focusing on these escalating woes, Mellon looked only at his friends and collegues who were mainly interested in making money making money. And Mellon paid attention to England's central bank which was interested in regaining its financial control of the world and which needed a strong pound no matter what. The story of how the US and England worked on this matter post-WWI is still little discussed or understood.

Mishkin and Bernanke are the products of more recent immigration to the US, post-Civil war. They have made a big splash writing papers on the Great Depression. These papers have a strong thing in common: NO HISTORY. At least, what I call history. It focuses on the causes and effects of the financial mess on financiers and bankers, not on global working conditions. Nor do these papers try to understand the financing of empires and how they work hand in glove with global financiers to tap into funds they can't generate themselves. The result is, all empires can run in the red. It is this ability to ring up near-infinite debts that is so distressing and difficult to comprehend. The sky is the literal limit for financiers funding empires!

Our founding fathers didn't want this. Indeed, in England itself, writers like Gibbons were warning their own people about the hazards of empire. There was considerable discussion about avoiding the fate of the Roman Empire and the Spanish Empire when the Constitution was being written up. During the Industrial Revolution, politicans railed against the biggest banks and accused them of manipulating the currency. The fight over whether our banking system be based on gold or silver raged post-Civil War. The Euro-centric Eastern bankers in NY and Boston wanted gold and the Western mining/expansionist politicians wanted silver to be the basis for financing. But neither gold nor silver won this debate, PAPER won. Sort of like the Japanese game of junken, 'rock/paper/scissors' with gold being the rock, silver the scissors, paper wraps the rock in order to win so paper was attached to gold. I have old gold and silver certificates which were called 'dollars'. Gold certificates were supposed to be better than silver which is why old timers would look carefully at the paper before accepting it. To see if it was 'more' valuable.

In 1933, all this was ended. Basically, paper money's references to either gold or silver was eliminated and all paper after then used 'In God We Trust' rather than referring to something real. The new fiat God-dollars weren't created because the US ran out of either gold or silver, au contraire! We had more of both than any empire on earth! Which takes us back to England: after WWI, they had to turn over a lot of gold to us to secure trillions in war loans. Yet they wanted to pretend their worthless paper pounds were really quite valuable. So they had to manipulate world banking in order to do this and it made the pound stronger than the dollar and so the only way to stop the US from flooding industrial Britain with goods due to the strong pound, they began the process of putting large tariffs on non-imperial trade. So trade from India or Canada would be on a different track from US trade. This constricted US commerce. Not to mention, German.

My point here is, attempts at helping along the financiers who exploit various historic and trade messes to enrich themselves doesn't stop massive economic dislocations, it enables and makes inevitable, these dislocations. And these dislocations are not due to monetary value or schemes but rather, are buried deep inside of economies and can be seen clearly at the lowest levels, where the plow meets the soil and where the hammer falls on the anvil. In our present case, we have a bunch of financier-friendly guys who are interested in keeping the US financial mess rolling along because it benefits the wrong people and who ignore the cries of pain and suffering down below. They aren't interested in people going too deep into debt, they WANT them in debt!

They don't care if they maliciously miscalculate inflation! They WANT this inflation to rage, it makes the financiers richer! Industry and speculation thrives when there is both inflation and debts are shooting up. Servicing and exploiting this dynamic is how the Bilderberg-clones get rich and powerful. Focusing on keeping this power and enlarging it might endanger the lives of billions of people but none of these people get to speak to or influence the men and women setting up this speculative, destructive system. This is why Bernanke and Mishkin will talk to each other but not the host of smart, lucid writers and researchers which can be easily found on the web, for example.

From the Times Online, Gerard Baker: American View:

The downfall of Stan O’Neal as chief executive of Merrill Lynch is a useful corrective to the popular idea that the US Federal Reserve has been running monetary policy of late as a kind of lifeboat to preserve the jobs of wealthy bankers.

The swift and unforgiving humiliation for one of Wall Street’s highest flyers in the wake of the investment bank’s eyewatering $8 billion loss announced last week, is an encouraging indication in fact that markets still work.

O'Neal was hired to be a hitman. He played the crazy, wild speculative/inflationary games and was rewarded for this and like at the beginning of the Great Depression, is now being blamed for playing a Risky game. I talked about the yin/yang mirror creatures who inhabit the Outer Darkness in the past. Risky is a little tart of a demon who loves to gamble and take dangerous chances. She rolls the dice and lies about the outcome. She wants us to do obviously bad things because it gives her joy to see the results. Many writers and playwrights have had immense fun talking about Risky and her charming habits. She is extremely destructive and quite patient about it.

Then there is Safety. She is an angel who tries to warn of us dangers. She wants to see the land flourish, the children born, raised and healthy, not sick from leting Mattel import dangerous toys, for example. She wants us to save money for a rainy day and to be prudent. She is no maker of wealth but instead, increases the good things that make life possible. You can't get filthy rich from her. Which is why Risky is so wildly popular with people wanting needless or instant wealth! The more unstable or messed up a system, the greater the opportunities for getting undeserved wealth! So we have this bizarre system that rewards the very worst speculative things while it destroys industry, farming and the health and welfare of the people at large.

More about O'Neal:

Indeed if there is anything useful to come out of the US sub-prime debacle it is that men such as Mr O’Neal and Chuck Prince, his counterpart at Citigroup, who is yet to fall on the sword that has been carefully positioned under him, are starting to be held accountable for the mess they have got us all in.

They didn't get us into this mess. The CENTRAL BANKERS did this. The POLITICIANS did this. The rich speculators who bought our politicians did this! The tax cheats using distant little islands did this to us! O'Neal's job was to take money and turn it into money. If this meant firing all American workers and tranfering the factories to Mexico or China, he was applauded. If this meant driving everyone including our government deep into debt, he was applauded! But he couldn't do this alone. Only if the Federal Reserve officiers lied about inflation and enabled him to do this, could he do anything. The entire banking and economic system has been set up to make it possible to be increasingly Risky due to all the safe guards which exist only as props, not as stoppers. The minute, for example, the speculators needed to end the controls preventing gross, speedy trades on Wall Street via computers comes right on the anniversary of the Great Crash 88 years ago. They need to get rid of this rule in order to act irresponsibly. They wanted this rule only when it didn't matter much.

The people who fired O'Neal want Risky to give them MORE money, they hate Safety with a passion. They need to make more than the rate of return from banks because banks offer rates of return that have little to do with real inflation and everyone knows this. This is why good risks who want mortgages are considered pure poison by these guys while riskier loans were considered great buys due to the higher interest rates! Just this week, a bank sent me an offer for buying CDs at 5% interest. This, while Mishkin and Bernanke are openly lying about true inflation. This would be a great buy if inflation was really 2% a year. But it isn't. It must be around 7% if it were to make me money by parking my money in an account.

From the O'Neal story:

But it is now clear that the Fed is primarily focused not on the immediate financial stress but on the broader effect of a serious downturn in the US housing market.

As they weigh their decision-making, Fed officials are trying to gauge the appropriate stance of monetary policy in what promises to be a turbulent period for the world’s largest economy. Even after last month’s rate cut, at 4.75 per cent the Fed funds rate is still well above a neutral policymaking level.

Current economic models suggest the equilibrium real interest rate – the rate which is neither stimulating nor restraining the economy - is probably around 2 per cent. With inflation a little over 2 per cent that means the current Fed funds rate is still squeezing demand.

This analysis of what is going on clearly shows how selective belief systems enable all sorts of merry games. Today is Halloween. This is when we, in the North, shift from warm to cold. It is the Day of the Dead and is when Risky is firmly shoved out the door by Safety who announces that Winter is neigh and we better put in the food stores and firewood or we shall die. The fraud of fake inflation is a root cause of much of the evolving chaos. The hope that pretending inflation is gone and will thus, save the investment houses that handed out easy loans to all and sundry. The belief that if loans were made cheap enough, people would be able to again, sell at high prices while pretending there is no inflation even as these low loans cause huge inflationary rises in value...is a silly trick or treat game. Just ring the right doorbell and Bernanke and Mishkin will open it and pour candy into the bags of little pirates and three headed hell hounds!

From the O'Neal story at the Times:

But what about all those inflation pressures, you ask – a slumping dollar and oil edging closer to $100 a barrel? As long as rising petrol and home heating costs and higher prices for imports do not bury themselves in general consumer expectations for prices, the inflationary threat remains contained, in most Fed policymakers’ view.

In any case, given the alternative – an unpleasant recession – a little bit of inflation, like a little bit of help for irresponsible investors, is a necessary evil these days. Now if there was a way to punish inflation the way Merrill Lynch punished Stan O’Neal, we might really have achieved something.

You know, having a revolution and literally chopping off the heads of the speculators and financiers would also do the trick, right? If the point is to punish them, why not have the SEC arrest them and charge them with fraud and other crimes? Eh? Why is it, the writers working for the upper classes assume the only way to stop wild Risky lovers from destroying our economies is to make many workers unemployed and homelessa and starving millions of people to death? Eh? And if we want to 'punish' inflation, um, doesn't this mean taking the lash to the Fed and the Bank of England's top officiers? The LAST people on earth punished for all this are these same guys!

And note the stupid fiction that people EXPECTING inflation CAUSE inflation! This is pure 'magic' thinking and is part and parcel of the systems used by the wizards who manipulate things. The connection between magic and money is very strong, stronger than any other force which is why the words 'Gold certificate' or 'Silver certificate' were eliminated and replaced with the invocation to an invisible god. Not only that, the paper itself is covered with magic devices which try to connect it with the Outer Darkness.

From Bloomberg:

Banks shut out of the market for short-term loans are finding salvation in a government lending program set up to revive housing during the Great Depression.

Countrywide Financial Corp., Washington Mutual Inc., Hudson City Bancorp Inc. and hundreds of other lenders borrowed a record $163 billion from the 12 Federal Home Loan Banks in August and September as interest rates on asset-backed commercial paper rose as high as 5.6 percent. The government-sponsored companies were able to make loans at about 4.9 percent, saving the private banks about $1 billion in annual interest.

AARGH. So, bankers who don't have money because they make money by giving out irresponsible, inflationary loans, can't lend to each other, they have to go hat in hand to the Fed and the Fed wants to pretend there is no inflation so it is UNDERCUTTING banks with money (remember to speak Chinese here) in order to keep our system going? And this ia a billion in interest 'saved'? How inflationary is THAT? This is FAKE MONEY. This is MAGIC MONEY. This is the Fed handing out Halloween candy with a vengence! Why bother with these leeches, these go-between bankers? Why not have the Fed be the ONLY source of loans? After all, they pretty much are, already!

Here is an article that proposes to advise people to save their savings by buying silver (gold being too 'expensive') from Yahoo Finance:

As strange as it may seem to the average person, the problem is not a shortage of money -- it's too much money. The world is choking on too many U.S. dollars.

Normally, when a currency gets into trouble as the dollar is now, all the country has to do is raise the interest rates on their bonds and things are fine again. But because of the subprime meltdown, the Federal Reserve can't simply raise or lower interest rates.

In simplified terms, the Fed must keep rates low in order to save the domestic economy. This causes the international economy to dump the dollar by not buying our bonds, which is one reason why the price of gold keeps going up -- it's the true international money. And the rise in its price (and in the price of oil) signals the loss of the purchasing power of the dollar; the world simply doesn't want any more dollars. This is a ripple effect from 1971, when the dollar came off the gold standard.

Here is an ad Marketwatch sent me telling me how to get rich off of EFT trading (note: not HOLDING but trading!).

This article is correct in some ways. It touches on the terrible Horns of Dilemma. But the writer is trapped by the propaganda. The Fed ALWAYS 'simply' raises or lowers interest rates! This is their entire machinery! They decide when to do this based on their own desires and lusts. If they want to help their friends out and they have many friends within their own communities, they will do whatever it takes, to hell with anyone who is punished by their choices. Namely, they don't give a hoot about if inflation is destroying other people. They will deny inflation in order to give billions to bankers! Bankers who need to sell their stocks and bonds on the open market and need to boast that they are doing really well and have profits!

The Fed's low rates NEVER saves our economy! It CREATES INFLATION! Only if there is no inflation, does it not create inflation and since 1974, there has been insidious inflation that flares up hugely whenever there are wars or threats of wars in oil pumping regions. The US is banging the drums for more wars in Iran now and when there is wars in Iran, when foreign powers invade Iran (Iran has invaded no one) then the price of oil shoots up and we have recessions/inflations at the same time. And guess who is inflaming all this?

Click here to read a good article by Gary Dorsch about these Horns of Dilemma.

China rebuffs Israel on Iran nuclear sanctions

The USA itself. On behalf of Israel and Saudi Arabia.

BEIJING (AFP) - China said Tuesday it remained opposed to further sanctions against Iran over its nuclear programme, despite the visiting Israeli foreign minister's call for stronger action.

"We consider that the decision to impose sanctions should not be made lightly. At present, the Iranian side is seeking to solve the issue through talks," foreign ministry spokesman Liu Jianchao told reporters.

Click here for a You Tube video sent by a thoughtful reader, this video takes snapshots from TV showing how the drum beating works.

According to polls, 52% of America is suicidal and wants to kill Iran Kitty. This bare majority have been egged on by our media which is under very heavy influence of pro-Zionists who want us to go to war. Meanwhile, inflation rages due to all this war talk that is clearly irritating all our trade partners from Japan to China to Europe. Russia actually is enjoying this and getting very rich off of this but they also don't want us to start WWIII or invade Iran so they are part of the chorus ordering us to stop. But we won't stop any more than we will stop playing our fake inflation numbers games or increasing our debts in the teeth of our obviously declining economy and dropping wages for the lower levels of the working classes.

Back to the Yahoo Finance article above:

As the global economy continues to gyrate, you'll hear more and more people calling for the Federal Reserve to either lower or raise interest rates. The problem is that the Fed has less and less power to do much.

If it tries to save the domestic economy, the international economy will pound us. If the Fed tries to save the dollar internationally by raising interest rates, it'll kill the domestic economy.

Instead of looking to the Fed to save you, then, I recommend you save yourself by investing in real international money. One way to do so is by purchasing silver. Gold is expensive, but silver is still a bargain even for the little guy. When the recession comes, the ripple effect on your financial future will be immeasurable.

RUN AWAY! Yes, this is the solution. Leave America and go away! Only this is a fool's solution: just as the collapse of the banking system of England and Germany caused the entire globe to go into one of the most grinding and terrible depressions ever, so will this. Many web sites gain popularity by offering all sorts of goofy solutions which I cannot give here. For I am a responsible person. I know what will happen next.

If the US is begging for war in the teeth of rising world oil prices caused by American aggressions already then betting that the End of Time guys in the Airforce won't join with the Israel Firsters to create WWIII is an easy bet: they can and they will. And there is no protection from WWIII except to stop these mad razor wielding nut cases! Aside from this, a recession will not make gold or silver rise in value, since many people are using debts via the carry trade in Japan as well as super-low, fake interest rates, to buy gold and silver and oil, when this finally collapses, so will the value of these commodities. Like real estate, they are prone to bubbles and collapses. And for the same reasons and by the same systems and these are run by the Federal Reserve and their financial buddies.

From the Nikkei:

Housing Starts Tumble 44% In Sept, Biggest Fall On Record

TOKYO (Kyodo)--Japan's housing starts plunged 44.0 percent in September, the sharpest fall on record, to 63,018 units as confusion and procedural delays over stiffer building regulations weighed on the housing market, the government said Wednesday.
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BOJ Forecasts Zero Inflation In FY 2007, 0.4% In FY 2008

TOKYO (Kyodo)--Japan is likely to see zero inflation in fiscal 2007 and a 0.4% price rise in fiscal 2008 in terms of the consumer price index, the Bank of Japan said in a key outlook report released Wednesday.
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MUFG Cuts Full-Year Outlook On Credit Card Unit, Weak Lending

TOKYO (Dow Jones)--Mitsubishi UFJ Financial Group Inc. (8306) Wednesday slashed its group net profit outlook for the fiscal year ending March in anticipation of big restructuring costs at its credit card unit and weaker-than-expected profits at its domestic lending business.
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Forex: Dollar Dives To Record Low Vs. Euro On Expectations Of Fed Cut

TOKYO (Kyodo)--The U.S. dollar dived to a fresh record low against the euro for the fourth consecutive session Wednesday in Tokyo as investors anticipated a rate cut by the U.S. Federal Reserve to dampen the downward pressure on the U.S. economy.

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Like the US is now doing, having a weak currency and high debts means more exports for Japan but the downside is now increasingly painfully obvious. Since they can't sell any of the bigger manufactured goods or housing to the increasingly poorer Japanese consumers, they can claim there is no inflation even as the budgets of all Japanese at the bottom are increasingly consumed in paying for sykrocketting world commodity prices. This leads to a collapse in buying manufactured goods not needed for survival and the system ratchets ever-downwards. But exports explode as all manufactured goods are sent outwards due to the weak economy/weak currency/LOW interest rates!

And this is EXACTLY what happened in the Great Depression and the guys running the Fed are supposed to be all so clever about all this, they did a lot of studies of this dislocation without putting their fingers on the core causes. So many people think the Great Depression was caused by 'overproduction'! Not the collapse of imperial finances.

So, Japanese housing is collapsing. Right on the heels of the US housing collapsing. And England is now following along and so it goes: one by one, all the debtor/no sovereign wealth nations will see this collapse while all the money flows like crazy into two places: the oil producing nations and the cheap labor nations. This is a huge imperial collapse since the empires have given up on capitalism and are now pure monetary manipulators hoping to hitch a ride on the planetary trade system.

From Bloomberg:

European retail sales declined for the first time in three months in October as rising prices and the deteriorating economic outlook damped consumer confidence, the Bloomberg purchasing managers index showed.

A gauge measuring retail sales fell to a seasonally adjusted 47.9 from 50.5 in September. The index is based on a survey of more than 1,000 executives compiled for Bloomberg LP by NTC Economics Ltd. A reading below 50 indicates contraction.

Even as the euro rises against the dollar, the distress at the bottom rises. Strikes are breaking out more and more as desperate workers seek to keep up with inflation. This isn't a matter of them being greedy, it is hard to go on strike, there are many risks to this, many costs! So it happens mostly when there is inflation and businesses fix inflation by depressing wages which cuts spending by consumers, a vicious circle that seems to never be fixable at all no matter how things are manipulated.

From the Times Online:

House prices fell for the first time in two years this month, sending a shudder through millions of homeowners already hit by rising mortgage repayments and more expensive borrowing.

The outlook for homeowners is likely to worsen with news that the wealthy are losing confidence in bricks and mortar as an investment. There has been a big drop in City bonuses being used to buy prime property in Central London and in the popular second-homes areas, triggering fears of price falls in the South West, East Anglia and the Cotswolds.

They are bidding up the price of gold and silver. They are listening to each other and this is the message we see all over the place. This is why gold has shot up in value suddenly in the last 5 years. This is also why currency games are much more volitile today. For playing the FX markets has shot up as everyone tries to get their money into other currencies and seek shelter from the dying dollar, for example, or the very dead yen.

From Bloomberg:

Target Corp.'s advantage may now be a disadvantage: Shoppers who are young and own homes.

That group, which had buoyed the retailer's results, may now be hardest hit by falling house values, and 41 percent of Target's sales come from home goods and clothing, more than double the rate at Wal-Mart Stores Inc. Target's short interest ratio, 5.73 percent, is at the highest rate in more than 10 years. The $62.49-a-share price is also expensive, based on earnings, compared with retailers including Wal-Mart.

Why, just 6 months ago, Target was supposed to supplant Walmart. For a while, Walmart lost shoppers due to its being more like a Soviet distribution point, dirty and poorly staffed, most of the goods being Chinese imports. But now there is a secondary flood of consumers dropping down the economic ladder due to inflation that is far over 2%. At 2%, we would be happy with such inflation! But it isn't, not even slightly. People took on huge debt loads during the super-cheap/fake inflation 7 years of plenty. Now the piper must be paid and we dance to the Grim Reaper's bagpipe wail.

From the Times Union of Albany, NY:

Owens Corning is planning to lay off as many as 160 workers from its building insulation plant in Bethlehem as it shuts down a production line.

The Owens Corning plant, which sits off Route 32 in the town, employs 360.

This is yet another sign of doom, I would hazard. A 50% layoff is not good news. Of course, Bernanke and Mishkin could drop rates back to the Greenspan/Japanese levels of the good old 'there is no recession/we are at war so we must spend like fiends' days of the early Bush tax cut years. Only this magic is finished. It can't be used twice in a row. This is why we have these stupid peaks and valleys over and over again even though Mellon and his ilk pretended the creation of the Federal Reserve would protect us from these very things the Fed itself now creates.

I also received two nice emails I want to share, I do appreciate the time people use to write to me:

Elaine: Been fascinated by your blog recently. You are right-on most days. Keep it up.

Consider:
My old dad, now deceased, who lived through the 29 crash, told me that US pays for wars with inflation. At the end of Vietnam, I came home, went in debt for a new house and a new car. Dad frowned. I almost lost the car and house because prices on everything doubled as inflation doubled prices and we middle class workers tried to catch up.

In relative terms, if massive inflation causes a huge expansion of the money supply, debt owed for war is proportionally less and eventually not significant.

This bunch of criminals and idiots, however, have destroyed the US middle class with outsourcing and globalization. Usually, the US middle class works harder and creates more wealth during inflationary times. Now, this stupid bunch expects to put our war debt on the backs of Chinese workers, create no real soverign wealth in the US except for the oil we steal for our global conglomerates to sell at high prices, and the rest of us be damned.

I suggest that the Chinese, Russians and others are going along with this mess (loaning us money) for their own benefit as they watch US corruption destroy our country. This gives them time to rebuild their infrastructure and military while the US is occupying itself with foolish wars and North American merger deals to steal natural resources. It is easier for them to buy up our worthless money with goods produced by their masses of (otherwise underemployed) workers than to engage us militarily or even in a head to head economic confrontation.

Unless we face our predicament(which I doubt), The US will have to default on it's FOREX debt. We are creating little or no new soverign wealth. In the end, we will be much poorer, militarily weaker( because we can't sustain continued military spending if we can't borrow) and we will have to struggle to hang onto what we have accumulated through theft and war.

After we default, we would be hard pressed to continue our ultra-expensive military adventures with debt backed by worthless paper (which no one in the entire world will want). (Perhaps, they think issuing a new Amero dollar backed by even more hot air will save us, but I doubt it).

Yes! I think The Empire is teetering on the brink of a sandy cliff, about to begin it's slide down to a crumbled mass at the bottom. It's time to save ourselves and what little we have left.

What are some things the US might do to begin getting us out of this mess? I don't think we can inflate ourselves out of this one.

Thanks for your efforts,

David

And here is yet another I think is quite interesting.

Hi Elaine, I have been reading Mike Shedlock's ( Mish) global economic trends analysis blog, among the many sites I visit. He claims that even though oil is denominated in dollars it makes no difference because it can be purchased in any currency, the denomination is just sort of a standard. I called him on it, claiming that to my knowledge oil MUST be purchased in dollars, hence the oil producing nations great reserves of dollars. Mish wrote me back, stating that although he's almost certain the oil producers take any currency it doesn't matter because any currency can be converted to dollars (or any other currency) in literally a second - I assume he's referring to electronic transactions - so for OPEC/whoever to price oil in euros or some basket of currencies is idiotic. Claims he's astonished no one understands these things.

So what I'm trying to understand is - I'd assumed to get dollars other nations needed to provide us goods, then instead of repatriating those dollars here by purchasing goods (that we don't even make anymore) or strengthening their own currency by exchanging them , those nations would hoard the dollars to buy oil.

But if dollars can be purchased in some sort of currency exchange market very easily as Mish believes - I would think massive buying of dollars by other nations would massively strengthen the dollar and I don't see this happening. I know Mish is smart and a white male and all, but I'm also thinking he's wrong here but I wanted to check what you think because I have mucho respect for you. Below is a link to his article:

Click here to read Basket of Insanity from Global Economic Analysis.

Alan

Mish is right in that the dollar is used to PRICE oil but there is no real exchanges of currencies since this is all now totally magical, namely, computers trade numbers. But if the dollar is too volitile and can't retain value but becomes a will'o'whisp currency, out of sheer frustration, the oil pumping nations might change gears and disregard the dollar totally. This is increasingly likely. When this happens, our own economy which depends on 60%+ of our energy as imports, will fall apart as we won't be able to exploit the differential between a dollar's value and all other currencies.

Culture of Life News Main Page

Federal Reserve Wants Infinite Debt And Low FOREX Reserves

October 30, 2007

Elaine Meinel Supkis

The Federal Reserve's overnight rates do funny things which disturbs Bernanke who wants a fake money regime that reflects little to no inflation, supposedly. Like, get real, dude! Anyway, time to view the news through my little prism where I keep in mind the new FOREX accumulation game run by first, Japan, and now, most anyone running a huge trade surplus with the US. The Federal Reserve has all sorts of models for things but they neglect to look at harsh reality and see that the old assumptions are cruelly out of whack with the New World Order which is run not by us but by CHINA. And Russia.

From the Denninger Market Ticker:

Last week some $75 million of "fed funds" (that is, interbank overnight credit) was transacted at a rate of 15%, and "a bunch" went through in the low to mid 7s.

No, I didn't mistype that. You can find the actual data at this link.

Originally I, and everyone else, assumed that the "high" was an error. A bad print. That there was no chance this was "real".

It was.

Yes, "EFF" (effective fedfunds) was right where "it should be" according to The Fed - across all transactions.

As usual, I went off to the Fed to see what was up. Here is a screenshot which I altered to show where the 15% deal was and also, in yellow, the times when the 'bids' were over the Fed's fake rate they set. Um, notice that this is nearly always, by the way, bid up beyond the Fed's line in the sand.

Here is a list of past Fed overnight rates, a section from 1974, when the government suddenly devalued the dollar at the Bretton Woods II meeting and of course, the Arab oil boycott which put us in an oil squeeze when the government put price controls on US oil wells and the oil pumpers capped their wells in retaliation.

Only 6 years later, it got much worse:

One of our readers sent this link. I was curious about it since it involves tidbits of data. Like a cat's paw marks on wet cement...ever pour cement? At night, all the animals come to walk on it. When I poured the cement floor to my basement, the dogs, cats, a deer and one horse hoof print appeared at night on it. I didn't fill them in, they amuse me. Anyway, in the banking system, things have to run 24/7 so the Federal Reserve is always open for special solicitations for funds. Generally speaking, banks prefer to make deals with each other and not share 'business' but when business involves working with stinky things like trashy tranches, the Fed is the bank of last resort.

The other time of mega-high rates was in 1980 due to the Iran oil boycott and hyperinflation at home. Unlike Greenspan, Volker raised rates to equal the real inflation rate. I genuinely believe that virtually no one remembers this time period. I remember because I had to do business via barter back then due to high rates. Certainly, I couldn't call a banker. And that was also when banks gave me trouble with money I deposited. They held onto it for as long as possible while I wanted it as fast as possible. Check clearing took forever.

Remembering all this, we look at that 15% deal in mid-October with a sens of foreboding. When there was this sudden hike in the overnight funds meaning that someone came slinking up to the Fed window with a bag of cow droppings, they couldn't get anyone to give them lending loot except at a very high rate indeed. Namely, someone thinks these guys who are probably attached to some pirate ship out at sea, are not long for this world. Too bad we can't tell who this person is. As I keep saying, despite the claims that we have an open system, it is very much 'insider trading' all the time. We get to know enough to think we know what is going on. But this is an illusion.

The Fed ought to NOT help in this. If the pirates don't want us to know about their skullduggery, this is OK with me so long as they don't come to the US to dugger the skulls. Our President and a host of others in our government, by the way, are literal skullduggers via the Skull and Bones at Yale.

I would like to urge Bernanke to reveal all the identities of all these guys who are bad risks. After all, there are a host of investors out there who should know this information. Assisting these guys means enabling them in projecting the appearance of being in good standing, solid citizens, etc. rather than as skulking denizens of the dark with daggers drawn, literal cut purses and gamblers.

From Market Watch:

Many economists believe the Federal Reserve will cut its policy interest-rate target by a quarter-percentage point to 4.5% on Wednesday to contain the risks that financial market turmoil could continue, possibly leading to a recession.

"The risk of a financial-market disruption spilling over into real economic activity is too serious for the Fed to ignore," said Kevin Logan, U.S. economist at Dresdner Kleinwort, in a note to clients. "Not easing at this juncture runs the risk of a financial market catastrophe and a possible recession."
*snip*
"I had been [thinking] for a long time that they should not ease, but the fed funds futures being priced in so aggressively for easing, I'm wondering if there is something out there I don't know," Seto said.
Seto said he got the "clear impression" from reading the Fed speeches that the central bankers won't have a firm opinion of what to do when they arrive for the meeting.
*snip*
There is a small possibility that the Fed could cut rates by a half-a-percentage point. But some analysts say a big rate cut could be perceived as the Fed knowing something bad that the markets do not know.

Here it is: we are in trouble due to wild lending at super-low rates leading to the bidding up of various assets and things of every imaginable sort from the futures markets to stock markets, housing markets, etc. The entire problem came about due entirely to the Federal Reserve dropping interest rates lower and lower back in 2001 starting from January 6th of that year. Previous to the election, they tightened the screws, claiming there was inflation even though we were obviously in a recession. Looking at all the data 7 years later, one notices immediately that all the nations of the world went into recession starting in late 1999 and through all of 2000, a time when the Fed raised rates over and over again.

The minute Bush was declared the 'winner' of an election he lost, Greenspan began to losen rates...right in the teeth of Bush and the GOP irresponibly granting many huge tax cuts to everyone! Then we had 9/11 and rates dropped from a super-low of 3% to a super-duper, mega-low rate of 1%. Right in the teeth of obvious energy inflation. Energy is always a driver of inflation. It doesn't matter what the interest rates are, if energy is rising, inflation rages. This is because energy is a powerful component of all economic systems. From manufacturing to transport, energy is consumed. And as it rises, either wages are cut or profits vanish or both which causes either inflation if both can be passed on or a depression if neither can be passed on and trade and manufacturing slow down.

So, to give Bush his good economic news so he could cement power, Greenspan gave us free money. And boy, did we celebrate this windfall! Note in the story above, the last sentence. I highlighted it because it reveals how all our financial systems depend on ignorance, darkness and occult practices. Why should the Fed know something but HIDE it from me?

As if they can! HAHAHA. They can't hide it from me. I could go there with my charts and graphs and notes and scare them all to death. Especially Bernanke who specializes in understanding the Great Depression. Being a 'gas pedal/brake interest rate' monetarist, he imagines that if only the Fed made more money available at super-duper low rates, the Great Depression would not have happened. This is plainly silly. The Fed couldn't do this because the cause of the Great Depression was the Great War and the fact that the 'winners' all went bankrupt except for the US which got really burned by lending trillions of dollars to the Allies. And this was the biggest loan crash in history at that time.

Worse, the overextended British Empire continued to expand and had to spend more and more money holding onto India, China, Africa and so on. China was devolving into total chaos and the communist revolutionaries were harrying the troops and fighting the European puppet state. War lords were roaming the land and Japan was busy invading Korea and beginning to attack Manchuria. Russian revolutionaries refused to honor debts of the Czar and the collapse of all these loans and schemes were reaching fever pitch when Germany threw in the towel. France and England were depending on German industries paying for their goofy empires which involved violently holding other people in bondage. We fought WWI to expand criminal empires, not for any freedoms as Gandhi thoughtfully pointed out as he demanded England vacate India, for example.

Like today, the financial messes are imperial messes. The US empire which is simply an extention of the European empires, can't hold onto its rule of the Seven Seas and many lands and as we continue to expand and continue to wage illegal and criminal wars, we are also doing this by going into debt just like England and France in 1929.

Unable to face reality, we play all sorts of occult and dark games hoping this will allow us to rule the earth without paying for anything, we hope the Chinese and Russians will fund our rule! The corporations which our government protects are nearly all now tax cheats for they want 0% taxes compared to the 35% they are charged with here. Since they are refusing to pay to the tune of nearly a trillion a year, this means our empire is running on lots of red ink instead. The conservative side of the blogsphere is running this futile campaign to present our rulers with a petition begging for them to be fiscally responsible. But this petition does not call for higher taxes, sending our navy to all those tax havens and taking them over and taxing all the corporations hiding there, no.

As always, the people wanting to fix things don't want to fix anything real just like the people who created the Great Depression refused to vacate China or India or Africa, etc. I think a petition calling on the Federal Reserve to restory the M3 numbers which are STILL PUBLISHED IN EUROPE is a start towards some small honesty. Then we must change the inflation figures to truly reflect inflation, not the fake numbers. And then change the unemployment stats, too. Hell, reform all the goofy systems set up to lie to us.

Speaking of the devil, here is the NY Federal Reserve's report on EFFs

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Unfortunately, this file is a PDF file so it is much harder for me to extract all the nuggets here. I have several sections I thought were interesting but the whole study is of interest. Anyone wanting to understand the mind of the Federal Reserve Beast should take the time to read this study. Let's examine this page:
This is an interesting Federal Reserve report about EFF rates published just last May, 2007:

******************************

OK: they set their rates and then try to get reality to conform with their happy ideal. They use various means to do this trick. I will note here that the Fed stupidly...VERY, FATALLY STUPIDLY...thinks the game here is to hold as little reserves as possible. NO OTHER MAJOR NATION DOES IT THIS WAY. None. They are all accumulating heroic reserves, far greater than the Federal Reserve. Many times greater! This is the new game.

The Fed, accustomed to setting the rules of international finance for 100 years hasn't figured out that this game ended in 1996 when Japan discovered the felicitous new tool for weakening the yen and thus, gaining trade advantage by hoarding dollars in their FOREX reserves. Then China joined them and one-upped them. Now Russia is doing this along with all the oil pumping nations including Venezuela and Peru, for example. Everyone is doing this! Now, India has joined. Meanwhile, the pointy pencils in the Fed haven't figured this out. Instead, they decided that huge FOREX reserves are not only useless but endanger the holders of these FOREX reserves!

They forget: these reserves have ONE FUCTION: to enable trade on better terms for the holders. Not to make profits via interest rates. Due to the games played by everyone, inflation is woefully understated. No, their only function is to gain profits via trade. Now, Canada must play this same game, they didn't hoard FOREX dollars and now the loonie is on par with the dollar and it is hurting Canada's trade with the US.

*****************************

Here is the classic game: let's make up formulas that are increasingly complex! This is lots of fun like any game but in this case, if all the presumptions plugged into the formula leave out important information, the formula fails. Big time. The Fed is evidently worried about easing things for bankers who can't even keep a measly 10% of their reserves in reserve! The minimum reserve is suggested by the Fed but bankers who are sober and sane keep MORE than this! In the olden times. Now, they can run off to the Fed rather than have a bank run! And so they keep nearly nothing in their vaults since they think the Fed will feed them forever no matter how reckless and careless they are!

******************************

Banks get into this fix when they give out way too many loans. And attract little savings. In the US, the savings rate is abysmal. It has dropped to nearly nothing, nay, is now negative as people rushed to get cheap loans courtesy of the Federal Reserve blowing the biggest bubble in our history. All our debts, national and personal, shot through the roof. The accumulation of debts was historic and heroic and utterly stupid. And the Fed didn't have a formula for this?

SFR (stupid Federal Reserve)/lir (low interest rates)+GBJ (the monkey in the White House)=FUBAR (obvious what that means!)

From Bloomberg:

PetroChina Co. and Alibaba.com Ltd. sold stock valued at more than $10 billion as investors increased bets on China, where shares have almost tripled this year.

PetroChina, the world's second-largest company by market value, raised 66.8 billion yuan ($8.9 billion) in the biggest stock sale this year. Alibaba, the operator of China's largest trading Web site for companies, sold $1.5 billion of shares in the second-biggest initial public offering of an Internet company after Google Inc., said two people with knowledge of the matter.

China's markets are continuing to rise. Of course, they too will fall in the end as a global recession caused by the US overspending and excessive debts and too-small reserves will grip everyone by the throat. Only we won't sail out of this with our empire intact and our power greater. China's retraction will be painful but ours will be fatal. This is due to the logic of all imperial collapses. Just as England, no matter how she twisted and turned, could not shake the depression she caused, so it is with us. Both Germany and the US grew stronger from 1933-1939 while England weakened. When WWII finally began, it really was a confrontation of the new Great Powers: Germany, Japan, the US and Russia. England struggled in vain to hold onto its rotting empire. If the US didn't fight Japan, the Japanese would have finished off the last of the imperial holdings of Australia and India, for example. But the US propped up Britain across the planet and in the end, did most of the manufacturing of war materials.

So now, in this collapse, China will be the world power when all this unwinds. It is quite simple: China isn't up to its eyeballs in debts. And if the US discharges its debts like Russia did twice in the 20th Century, this will destroy us just like it destroyed Russia. And unlike Russia, the comeback won't be easy. Russia has energy to spare. We are on the downslope of the Hubbert Oil Peak and are very vulnerable since our entire transportation and living systems are set to a model that assumes cheap, easy oil.

From Bloomberg:

The yuan rose the most in two years after China's central bank signaled it will allow the currency to appreciate faster to help narrow a record trade surplus and slow inflation.

The currency climbed 0.3 percent after the People's Bank of China set the highest daily reference rate since it ended a fixed link to the dollar in July 2005. Deputy Governor Liu Shiyu said on Oct. 26 that foreign exchange markets have ``a role to play in correcting'' trade imbalances, reacting to calls for more rapid gains by the Group of Seven nations.

Long, long ago, I said that China does not want to be exactly like Japan. China does not want to strangle its work force, lay off people, etc. In the Japanese news today is the story that there are now more layoffs and unemployment in Japan. The people at the bottom of the economic ladder are paying 100% for the Japanese 'depression' while the top of the pyramid enjoys huge trade benefits and rising wealth. This system will either kill off the Japanese people via suicide, starvation and cessation of child bearing or there will be some revolutionary changes. China overflows with energy and they have to suppress births due to overpopulation. But they want things to improve at the bottom, not just the top.

Japan's super-cheap yen is a problem for China. But don't worry. The Chinese let the Japanese exhaust themselves trying to kill the yen then the Chinese rush in and force the yen right back down. This yo-yo game will continue and perhaps, worsen, over the next year.

From the IMF:

IMF (International Monetary Fund) director, Rodrigo Rato, forecast that the dollar is due for a disorganized and pronounced fall.

In declarations to the press, Rato said that the greenback may continue to fall rapidly, which, he added, would complicate the credit crisis in the United States.

Rato said there was a possibility of a worldwide recession in 2008 but this would not be his most important forecast.

What is his important forecast? Eh? HEH. And a 'disorganized' fall is fancy talk for 'falling off a cliff, screaming.' And what are the 'complications'? Ah, the joys of our dear little Sphinxes in world finance! They love to talk in various mysterious ways! 'Which currency walks on four feet in the morning, two feet during WWII and three feet since the Vietnam War?' hisses the Sphinx. Don't scratch your head too hard over this one. It wasn't the DM, yen or Vietnam's won.

From MSNBC:

The perceived creditworthiness of two of the largest financial guarantors in the US on Thursday plunged to lows not seen since the worst of the credit squeeze in August.

MBIA and AMBAC are specialist companies that guarantee the repayment of bond principal and interest in the event of an issuer default - including bonds backed by subprime assets.After both companies this week reported third-quarter losses, investors have begun to speculate that the monolines, as they are known, might themselves in default on their outstanding debt.

We saw a huge banking collapse last August. It is continuing. Anyone reading the timeline of the Great Depression knows that the collapse of the banking system took over 4 years to complete and the recovery took 15 years before things began to seriously improve. All the gurantors of the system are now in danger because the entire system is in danger and NOT in nations with huge FOREX reserves. I like to put in a lot of seemingly disparate stories to see what comes into focus and today, it is obviously the hidden hand of the FOREX reserves we must look at to see what will happen next.

My prediction: the US will still refuse to understand how FOREX reseserves operate in the New World Order they, themselves, foolishly created. So, unlike China, the biggest reserves holder, we will continue with our super-low reserves regime and thus, will collapse into infamy and destruction. And killing the dollar won't make us richer if the Chinese have all the export manufacturing bases anyway. It just means we get raging inflation at home. Which the Fed will deal with by lowering our reserves even more! We will continue to follow the wrong magic formula while the Chinese follow a totally different formula and the Japanese will lie to us about their magic formula (the carry trade machine).

From the BBC:

Saudi Arabia's King Abdullah is due to arrive in the UK on Monday for the first state visit by a Saudi monarch for 20 years.

He will be the guest of Queen Elizabeth II at Buckingham Palace and is due to meet British political leaders on Wednesday, culminating in a glittering state banquet.

The visit is the product of years of patient diplomacy and is an indication of how Saudi Arabia has become one of the UK's closest allies in the Middle East.

Um, Saudi Arabia is not an ally of England. They are now an OWNER of England. The Queen has her pretty collection of diamond studded tax havens and the King of Saudi Arabia owns much of the Footsie Stock Exchange and the people of England get to pay rent to the Saudis who lend them money. Sounds like the USA. Here, the King comes in secret and makes secret deals with Bush and others and we have no idea what they say since it is all secret! Democracy at work. Maybe we could start an online petition to demand Bush tell us what all his secret meetings with Putin and the Saudis really are about..HAHAHA.

Culture of Life News Main Page

Will 1987 Collapse Repeat Itself?

October 28, 2007

Elaine Meinel Supkis

The US and Europe seem bent on destroying not only themselves but the world's economy. The actions aimed at punishing Iran are punishing ourselves much more. All signs increasingly are pointing at a fall in finances, trade and sovereign wealth in the G7 nations. Oil exporting nations and China will flourish. Also, after computer trades were halted 17 times in less than 5 months, Wall Street just threw away this brake and now we can have full-blown panics. 1987, here we come! Exactly 20 years later! What next, another Great Asian Currency Crisis?

From the Times of London:

Iranian banks will be given the cold shoulder in the City after America’s imposition of new economic sanctions on Iran, a leading Anglo-Iranian business group predicted yesterday.

Lord Lamont of Lerwick, the former Conservative Chancellor and the chairman of the British-Iranian Chamber of Commerce, said: “I think the Iranian banks will find it very difficult to clear their US dollars in the City. This is quite a tricky issue.”

His comments came after Washington imposed harsh sanctions on the Iranian Defence Ministry and three state-run banks in a move that is expected effectively to paralyse the country’s banking system.

Lord Lamont also accused Henry Paulson, the US Treasury Secretary, of “jawboning” European banks. “What I think is a little unfortunate is threatening people who are acting within the law . . . European banks with branches in America shouldn’t have their business interfered with in Europe by America.”

Anxious to murder the Iranian Kitty, Miz Liberty is violently twisting arms of the New Warsaw Pact countries run by the Soviet Empire, Part II: The Madmen With Razors. The US isn't being reluctantly driven to these insane and inane acts, we are the drivers who are driven by certain small countries that have nuclear bombs and who bomb their neighbors over the slightest provocation or even with no provocation: Israel. I have to harp on this because the root cause of WWIII will be right there: in the Holy Land. The contradictions and clashes which we see growing are focused on that fatal place.

Europe's trade with the US is declining due to the euro rising. The euro is rising because all the oil pumping nations are changing to the euro. This is not being announced, it is just plainly obvious. The US managed to twist the arms and legs of the other G7 Dwarves and they finally agreed the blame China again while ignoring the yen and the dying dollar. But as the US twists the beards and tweaks the ears of the European dwarves, they are yelping now. They want to do business with Russia, with China, with Iran. They are gaining little playing with Miz Liberty if she is swinging a razor like the Grim Reaper in a downsizing mood.

The US doesn't buy Iranian oil so we can play this game. But India buys this oil as well as gas. Ditto, Pakistan. And China, of course. As well as Japan. So, Japan gets to buy much more expensive oil with their US dollars, HAHAHA. Oh, that is going to be a hard pill for Japan to swallow! China, meanwhile, gets to find new and novel ways to play footsie with Iran while pretending to be on our side as they prepare to take over center stage.

London Times:

Michael Thomas, director-general of the Middle East Association, which arranges trade visits to the region, said: “For British firms in Iran, at the minute it’s like pushing water uphill. It’s very hard to find a bank that will take a letter of credit, and companies are having to do barter deals with Chinese firms to get paid.

The Chinese know how to play this game. The US needs to boycott Cuba, Venezuela, the Sudan, etc., etc. But not Burma! We buy oil from them. The US boycotting game is flying in the face of free trade. Our foreign policies are full of contradictions and paradoxes. Tripletdoxes, for that matter. Pandoradoxes.

And out of these boxes, as if we are turning the crank of a Jack-in-the-Box, out pops $100 a barrel oil and a nasty recession. We are very vulnerable and if a boycott of Iran causes our entire economy to collapse, I would suggest we put Bush in a mental institution and take his razors and shoelaces away.

From Cryptogram:

The New York Stock Exchange said it will no longer impose curbs on computer-program trading that were put in place after the crash of 1987, claiming they’re no longer as effective in damping swings in prices.

The exchange will stop prohibiting brokerages from entering some program trades when the NYSE Composite Index rises or falls more than 2 percent, according to a notice sent to member firms today. The so-called collars had been in effect since 1988 and were triggered 17 times this year, according to a filing with the Securities and Exchange Commission.

One of my readers sent me this tidbit. I get so many leads every day, it is hard to keep up. This one is very revealing! Now they tell us the shut-down valve was activated 17 times? I bet that 90% of these times were in the last 3 months! This would mean it happened at least 5 times a month which would be more than once a week???? Oh. My. Opps! Time to irritate the Cat and make world oil prices bubble upwards! We are obviously in an crisis situation. The money pumping that hs kept things going is not preventing a collapse, it is getting worse, not better. Now, for example, the talk of a 'soft landing' and that the housing mess won't affect anything else is fading like the leaves, ripped from the trees during this week's huge storms here in Northeastern America. The winter is coming, ready or not!

So now they are releasing one of the Four Horsemen of the Great Apocalypic Collapse. The mindless, unemotional machines will take over and ruthlessly sell, sell, sell. Note how the rulers keep changing the damn rules. Whenever they need to do whatever, they just remake the rules and do whatever they want. If they want a quick exit from the markets, they don't want some stupid rules stopping them from creating a huge panic. They are SCARED. And they see the price of oil shoot up and also, Iran hoarding money since they can't bank it with anyone so the money will sit there an form this horrid thing I call 'Sovereign Wealth' and in two years, Iran's FOREX reserves will rival Russia and China! And they will win this war with us! Unless we bomb them to hell and invade and then dissect their country. A very real possiblity which I don't think Russia or China will allow.

From Bloomberg:

Treasury two-year note yields dropped below those of benchmark 10-year notes to the widest margin in a month on speculation the housing slump will encourage the Federal Reserve to cut borrowing costs.

The yield curve steepened this week as losses at financial companies including Merrill Lynch & Co. led traders to bet that the Fed will reduce its benchmark lending rate at least a half- percentage point on Oct. 31. A government report next week is forecast by economists to show U.S. employers added the fewest jobs since June, adding to evidence of a slowing U.S. economy.

The old 'gas pedal/brake' monetarism at work. This is so stupid in the face of huge rises in world oil and energy prices! When oil goes up, so does natural gas, firewood, pellets, coal, etc. All energy systems rise at the same rate relative to each other. So we have this beast we call 'inflation'. And the US also owes everyone oodles of money and the best way to deal with this is to inflate the currency and devalue the coin and to gain trade advantage: ditto. So the Fed must do two things: lie about inflation and create inflation at the same time.

I was visiting the Bank of Europe's home page and they have lots of talk about the M3 funds which are tracked and are running at an astonishing 11.5% which is almost Chinese! But Europe isn't growing at that rate at all! This is inflation! Only China is seeing its GNP grow by 11.5% this year! But the US doesn't track M3 funds anymore. Like with inflation calculations, they simply threw it out. 'No one is interested in this anymore,' said the Federal Reserve's Goldman Sachs clones.

The US drops rates below 5% which is the floor for inflation, we will see hyper-inflation and the dollar collapse! They can't do this! They need to encourage savings and protect the value of the dollar or a bunch of Europeans will be in a panic since they can't sell to us and they aren't allowed to sell to the Iranian Cat who will now be building this huge FOREX reserve of euros which wil force the euro higher and higher!

Sigh, this is actually rather funny. Talk about a trap. The US is a debtor nation and all dead beats love to pay loans with debased currencies. This is why kings and princes debased the coins of the realm in the past: so they could pay for their palaces and wars.

From Bloomberg:

Fed funds futures on the Chicago Board of Trade imply a 92 percent chance policy makers will reduce borrowing costs by a quarter-percentage point to 4.5 percent at its meeting and 8 percent odds of a cut to 4.25 percent.

``The Fed will do what it takes to get the economy, housing and the banking system going,'' said Andrew Brenner, co-head of structured products in New York at MF Global Ltd.

Does the US need more housing? I would suggest we have a housing glut. I see empty houses all over the place. In my village, there are a dozen such empty houses. All over America, there are empty places hoping to sell. And what is wrong with this?

It doesn't fix our problems! We are not in a recession because of housing, housing is merely a symptom! We are in a recession because we import too much oil and manufactured goods and our trade deficit is now nearly a trillion a year! And we are too deep in debt and can't take on more debt and this last 2 years, even with super-low, sub-inflation level interest rate loans, Americans can't even afford to pay the interest due on these loans at this point?

We are saturated with debts! Lowering the interest rates won't put us out of debt! It will INCREASE our debts because it will make more sense to go even deeper into debt if this makes more money than saving money! Rewarding people spending beyond their means in order to keep our economy going even if this means punishing savers and hard workers: this is FATAL. The government must face reality. We can't continue this way. Certainly now while raising the price of world energy due to our demented razor rabble rousing manics running amok!

From Futurecasts, the Great Depression;

By the end of March, 1932, Britain had paid back $550 million of the $650 million emergency loan borrowed from N.Y. and Paris. Since WW I, French currency devaluations had cut the value of debts payable in francs by 80%, German inflation had practically wiped out debts payable in marks, and now debts payable in pounds sterling had been cut by between 25% and 35% by the devaluation of the pound.

This was a "discharge in bankruptcy" - a payment of debts by means of a "capital levy" - a "monetization of debts." However it is described, the resulting decline of capital and loss of purchasing power is a powerful automatic austerity measure imposed by markets suffering from a loss of confidence in currency.

It always succeeds in restoring equilibrium at some lower level of economic activity. However, in the 1920s, when the Weimar government resorted to monetary expansion to make up for the loss of purchasing power - to "maintain liquidity balances" and prevent economic decline - the result was skyrocketing inflation and economic depression at the same time, and the destruction of its middle class.

As always, inflation didn't prevent depression. After a short period of pleasant results, it caused depression. A much milder form - termed "stagflation" - would afflict the U.S. in the 1970s.

Of course, reparations and war debts were payable in gold or hard currencies like the dollar, and so were made much more burdensome by debtor nation currency devaluations.

Grim reading. A young person writing a paper asked me for information about the 1932 banking and investment collapses following the stock market collapse so I gave this URL, a decent site that is a good timeline. I don't agree with all the analysis there but it is a fine timeline, very fine. As I leafed through it last night, I saw this section and read it carefully: a perfect mirror. We have war debts. Out of our $9+trillion Federal Debt, a good $5 trillion is war/Pentagon related. No other nation is spending like this. Even with a debased dollar, we are still outspending nearly the entire planet, together.

This week, both Japan and China have sent rockets to circle the moon and they are spending money on high-speed trains and other things we can't buy. We are buying war. Our remaining old Shuttle jalopies dutifully try to take off an go to a low orbit but we are losing the space race yet again!

Great Depression:

93% of war debts - principle and interest - was owed by four nations. England owed $3,645,605.000. France owed $2,230,000,000. Italy owed $430,956,875. Belgium owed $183,883,000.

In January of 1932, Germany had stated flatly that it could accept nothing less than full cancellation of all reparations.

And here is what happened in 1932: ENGLAND, the world's most powerful empire finally went bankrupt. This caused the economic downturn to become a quagmire. The winners of WWI owed $10 trillion and couldn't pay this off any more than defeated Germany could pay this off. During WWI, all sides refused to use any diplomacy or tact or surrender or stop or anything. They fought until they were all ruined. Utterly ruined. Yet they didn't accept this defeat. To this day, Britain imagines they won WWI. At least the Germans figured out, they lost.

So it is today. Britian, Europe and the US all imagine they are winning the wars that are ripping up the last remains of the Ottoman Empire. But this is bankrupting them all. We are going to crawl out of this mess, deep in debt and desperate to fix things via cheating everyone by debasing the currency. And this will cause a depression.

From Newsday:

he former head of the Long Island company that provided most of the body armor for U.S. soldiers in Iraq and Afghanistan was arrested at dawn Thursday in his Manhattan apartment by FBI and IRS agents on charges of fraudulently looting the company and investors to pay for a lavish lifestyle.

That lifestyle included supporting a stable of trotting horses; a face-lift for his wife; a diamond, ruby and sapphire-encrusted belt buckle in the shape of an U.S. flag; and an $8 million bat mitzvah for his daughter, which featured music stars including 50 Cent and Kenny G, according to Benton Campbell, the U.S. attorney for the eastern district.

David Brooks, 53, the founder and former head of DHB Industries, which had been located in Westbury, was the highest-paid head of a public company on Long Island in 2004, making $2.7 million in salary and bonuses, plus tens of millions of dollars in stock options.

The wild spending on war just doesn't stop. Bush asks for money, Congress gives it to him and then both charge this to the Chinese who we then attack and demand they make the yuan stronger so we can repay them with even cheaper and cheaper dollars! This rip off scheme doesn't fool anyone. It is tolerated only so long as we industrialize and empower China.

From London Times:

THE powerful American financial services group GMAC, half-owned by the car giant General Motors, is to spearhead a rescue bid for Britain’s stricken mortgage bank Northern Rock.

GMAC is to play a pivotal role in the bid being put together by Cerberus, the secretive New York private-equity house.

GMAC was for selling cars made by GM. Then they used it for selling credit cards and then for running up all sorts of debts. Then GM sold it to hell hounds beause GM is dying here in the US. Now, the auto workers will lose health insurance and die. But Cerberus is going to milk this cow no matter what! Britain no longer is the world's banker, it is the world's bankrupt. The happy sunny days of the powerful pound are growing cloudy and dim. As the sun sets on this once-mighty empire, they are now the world's most indebted former Great Power. To a degree approaching the debts of Germany post-WWI.

The irony that a dark pool, occult organization headquartered at one of Elizabeth's tax haven pirate coves is going to save a British bank is truly pathetic.

From the Independent:

British retailers are facing a tough Christmas as shoppers feel the pinch of rising living expenses. But experts warn that the real crunch will come in 2008.

The British Retail Consortium says that there is "clearly nervousness" among its members in the run-up to Christmas, with consumer spending under pressure from higher mortgage costs and utility and tax bills.

All the evidence shows that retailers have been discounting goods and offering promotions over the past few weeks to counter weaknesses in high-street spending.

In the US, everyone is chewing their fingernails over the bizarre Xmas sales season. I dislike this system totally. Most retail sales are focused on this time of year and this stupid ritual. And it has utterly deformed not only our economic landscape making it very uneven and unbalanced, it also destroys our need to grow up and learn to save and conserve. It is directly responsible for the irresponsible 'give me presents, Santa' attitude of the West. We want goodies and we want it for free!

And now, most of these goodies are from China. The trade deficit Europe, England and America have with China is growing. The growth may slow down somewhat but we are not sending Xmas presents to China! That is the problem.

Culture of Life News Main Page

A Mighty Oak Dies

October 27, 2007

Elaine Meinel Supkis

I didn't post this story yesterday due to being too tired after taking apart a collapsed oak tree that fell on our driveway. But today, it is raining hard and I have time inside to talk about the similarities to the death of one of the oldest and greatest oak trees on my property and how this mirrors our economy and our future.

From Bloomberg:

Connecticut Attorney General Richard Blumenthal is probing Standard & Poor's, Moody's Investors Service and Fitch Ratings for strong-arming debt issuers into giving them business.

Blumenthal's office is investigating complaints that the credit-ratings companies rank debt against issuers' wishes, then demand payment, he said today. The state also is probing whether the companies threaten to downgrade debt unless they're awarded business to rate all of an issuer's securities, and the practice of offering ratings discounts in return for exclusive contracts.

The entire financial system has been corrupted and corroded. This is a classic situation. Every time a financial system is saved from its own tendency towards deceit and deception, the rules forbidding fraud and follies are dropped or terminated one by one, step by step. Then the bubble/collapse happens again. Starting with the Tulip Mania, everyone assures each other, this will be prevented. The downside of a bubble economy are painfully obvious and everyone wants to avoid this pain as much as possible. Yet they do it over and over again.

On top of this, the desire to make money in a system that is out of whack with economic health and well-being is very strong so the people who have political and economic power will re-engineer economic rules so they can get rich quickly even if this means outright fraud, theft and the destruction of the core of an economy. Like my oak tree which dropped off one third of its limbs yesterday, stopping all traffic on my mountain, so it is here with our United States.

My oak tree is huge. It used to be twice as big but over the last 20 years, even as it continues to grow and have lots of leaves, it has really been dying. This is due to two things: when this field was first cleared 250 years ago by the Slatterlys, a colonial family in Berlin, they needed one spot in the field to rest out of the hot sun, a place for the oxen and the people haying that would be cool and also have a nice view of the entire valley. These hard-scrabble famers recently fleeing Europe lived in great poverty but they still appreciated the beauties of nature and so this tree grew greater and greater alongside America's growth into the world's greatest empire.

My huge oak tree attracted us when we came here in 1990 to build a house. Already, in the October Blizzard of '89, it lost one of its bigger limbs. Because it grew in the open and not in a forest, the limbs didn't reach to the sky but rather, grew outwards at a 90º angle to the ground. By 1990, this meant the branches were over 100' long in places. And this was the physical limit for this tree. No system in Nature is allowed to grow infinitely. There is always a breaking point.

The single branch that fell this week is at least 4' in diameter. The split in the trunk is over 7' tall. The fallen branch stretched across not only part of the hay field but the entire two lane road I built years ago. Now the tree, weakened by industrial pollution, namely acid rain, will die rapidly. Already, the crown shows many dead branches. Insects will enter the core of the tree and eat it inside-out. No longer can one rest at peace in its shade: the tree is no longer shelter but deadly, a hazard. For this great limb fell on a windless day. Silently, it suddenly fell with a tremendous boom.

So it is with our empire. Even if nothing is happening, it can suddenly fall with a boom. The fall itself will be violent but the trigger doesn't have to be any storm or earthquake: like the fall of the British Empire or the Soviet Union, previous storms will shake it and weaken it but the actual fall will take all by surprise. Economies are like this, too: there doesn't need to be any great event for it to collapse, all it needs is to be sick, overextended, overweighted and weakened by previous storms. Then it falls. We are watching exactly such a fall.

WASHINGTON (Reuters) - A senior Securities and Exchange Commission official said on Thursday insider trading appeared to be "rampant" among Wall Street professionals and the agency has formed a working group to focus on it.

"I believe we're going to see more insider trading cases," Linda Chatman Thomsen, the SEC's enforcement director, told reporters on the sidelines of a securities fraud conference.

"I am disappointed in the number of cases we are seeing by people who make an abundant livelihood in the market that they are sort of abusing by insider trading," Thomsen said, referring to cases already brought against professionals this year.

A wise farmer prunes their trees. When I bought this field, I climbed up into this tree to try to save it by pruning it but the damage from the first limb ripping off was too great. It was a fatal wound to a very lovely tree. My husband cut up the fallen limb to make firewood and we burned it. This latest, even bigger limb, is also going into the fire. In America, we are now taking the fallen limbs and chopping them up and literally burning them. Ever since 1974, when the US hit its personal Hubbert's Oil Peak, we have been 'growing' just like my tree, but dying at the same time, just like my tree. If one stood far off, the tree looks magnificent. But as a seasoned forester approaches the tree, the obvious signs of death are easily read.

One of my father-in-laws once joked that all stock trading is really insider trading. With his own company, he knew long before anyone, even anyone inside the company itself, what was going on. He could see trouble from very far off, he was a well-known publishing executive! By definition, he always knew better than anyone, what his stocks were really worth. Being a painfully honest man, a totally honest businessman, a humane boss and a man with a very powerful conscience, Joe never exploited this information. Nor did he use it to destroy the lives of his employees. He never sold stock to pirates, hell hounds or raiders. He fought them off, he was willing to take a personal loss rather than gain by destroying his own employees who considered to be his 'family.'

He is no longer with us, alas. Nor is his company flourishing, alas. Joe didn't stand alone: many of his contemporaries had this sense of responsiblity: they were building America! Joe's family fled Russia right before the Revolution due to the anti-Jewish progroms. They came here with nothing and lived on the Lower East side and worked harsh hours to survive. Joe won a scholarship and went to college but graduated right at the very start of the Great Depression.

His sense of honor and humanity was forged by his family being refugees, then the Depression and WWII. He told me, 'I want America to be strong because we have to protect everyone from people like Hitler.'

Today, I see an army of anti-Joes: people who want to WEAKEN America. They want to be richer and more powerful and think, they will be very powerful even if this means killing this nation, destroying the world's economy and starting many wars! Joe was a stunning example of goodness and these people are horrible examples of badness. I remember once, an executive decided he wanted more money for himself and his fellow top officers for Christmas so he frivolously announced a huge layoff of his workers.

The horror, despair and frantic attempts at getting a new job, the suicides, bankruptcies and divorces his careless action caused didn't bother him in the slightest. The stocks soared, he and his gang sold shares and made out like bandits. And they were bandits! Far from 'growing' their company in a HEALTHY way, they were destroying it. This ethos is now nearly universal in our empire: schemes to enrich the guys 'in the know' are being pursued ruthlessly even if this means utterly destroying everything.

From Bloomberg:

Moody's Investors Service cut the ratings of collateralized debt obligations tied to $33 billion of subprime mortgage securities that were downgraded this month, a decision that may force owners to mark down the value of their holdings.

Securities with ratings as high as AAA from at least 45 CDOs were either cut or put on review for a downgrade, according to individual statements distributed today by the New York-based ratings company. Moody's didn't release a summary.

The collapse of this huge branch blocked all traffic. I couldn't go out to do business and this meant cancelling appointments. Two neighbors came over to help us clear the road and with several chainsaws, we did this in 5 hours. The collapse of whole sectors of the US economy are causing traffic to flow elsewhere just as we had to walk around the backside of this tree in order to get up and down our mountain. And it will all be burned just as the insiders are burning our economy in order to heat their mansions.

Joe didn't live in a mansion. Taxes in the 1950's and 1960's were very high on the rich. So there was no point in him grabbing a huge share of profits for himself. Instead, he supervised the spreading of these profits so they flowed mostly to the workers. He was one fo the people who helped devise this system of taxes. When he graduated from college with a degree in mathematics, he was hired by the government for this purpose. So he lived a modest life and was the HEART of his community! Many people looked up to him and sought him out for advice. He was beloved by not only his loving family but the entire community. Since he lived only slightly better than his own employees, they all felt he was one of them and loved him in return.

His funeral was packed and spilled into the streets of Brooklyn. Everyone genuinely cried. The present crop of crooks are not like this. They live far from their own employees who they don't associate with. They live like gods and like gods, are quite cruel and cultivate cruelty. When Enron's executives were lying, cheating and stealing, they encouraged their employees to toy with California and to shut down power plants frivolously and then make the resulting energy deficits worse and worse. Some employees were on tape, chortling like so many little demons working for Satan, laughing as they yelled, 'Die, you old bitches!' as they shut down systems, causing economic chaos and deaths in auto accidents or fires in homes when desperate people tried to light up the night with candles!

This attempt at exhorting money from California rate payers was one of the triggers of the Dot Com collapse. California is a huge part of the US economy. By deliberately sawing off a branch of our economy in order to make more profits for Enron, Lay and his Bush Pioneer gang unwittingly wrecked internal US trade and caused even more companies to flee this nation to better climes.

Joe used to say, 'Jesus saves but Moses invests.' And Joe invested in his community. This is why he was a pillar of the community, not a stalker seeking victims to rip off. Joe wouldn't shirk his taxes and use tax havens so he could then live above everyone while weakening America. Right now, many of our rich, despite record tax cuts that give them huge wealth advantages, are treasonously fleeing our taxes entirely to 0% tax havens. Europe is in the same boat. For a long time, the Japanese resisted this. They ran Japan like Joe ran his company. But the lure of easy riches, living like gods while everyone else starves to death, was too great.

This is the Zeitgeist of our civilizaton! No longer the beacon of democracy, the shining light in the dark, the generous harbor in the world's rough seas, the US is leading the entire world down the path of destruction as we encourage irresponsiblity, cruel labor practices, despotic rule and outright theft! Our ethos is now cruelty and inhumanity, torture and outrageous invasions on specious charges. We are living the lives of outlaws even as we yell about law and order.

We yell at the Chinese for manipulating their currency while the G7 manipulates currencies and gold markets. We pretend to be outraged by insider trading while secretly knowing that all trade by the top guys in business are insider trading from the get-go. All the blame for overspending is placed on the sick, the lame, the weak, on the elderly and children. Instead of dealing with the economic challenges of today's world, the people at the top work day and night to shove all blame onto the most helpless in the world. The people running this system put all the onus of dealing with this system's weaknesses on the poor, not the rich. On the powerless rather than the movers and shakers themselves.

Many people who support draconian cuts or the annihilation of the poor, the heatless economic system that is being imposed on us, the people who want even fewer taxes, less control over the thieves and frauds running things, they don't understand that they are digging their own graves. Far from some fabulous future whereby these right wingers who are at the lower levels of the system will end up in mansion is growing less and less possible. The chances they will be servants of another empire that views them as so many cattle, is growing, not shrinking.

If we kill off all grannies, children, poor people, etc, this won't make America stronger. It will be like signing our own death warrants. One never knows when one will be poor or weak. It can, like the falling of the limbs of my mighty oak, happen without warning, on a fine day. Fires can sweep in! Hurricanes or tornadoes can lay all to waste! Earthquakes, meteorite strikes, whatever, can happen with no warning at all!

This is why we need a community and not a devil-take-the-hindmost nation. All the people destroying America keep telling us, 'There is nothing wrong with this economy. Our nation is the strongest on earth. All is well,' even as they frantically move to protect themselves from our economic collapse. Stocks are up this last quarter only because the stock market no longer mirrors the economy. It really reflects the fraud economy. There are many non-taxpaying, offshore, international entities in the stock markets that make their profits by destroying the US work force, driving our government into debt and running all our systems in the red. Far from being a bellweather for us to gage how healthy our economy is, it is the opposite.

This is why we saw for the last 30 years, 'good news' for Wall Street nearly invariably was BAD NEWS for all of us. For example, when Bernanke decided to utterly destroy savers and kill grannies with inflation, he did this without hesitation in order to make Wall Street boom. And it boomed. But the process killed more jobs, killed more of our mighty economic oak tree. He fed the termites, not the workers. When job layoffs occur, stocks shoot up. When our nation goes to war but doesn't pay for this, stocks soar. Our own military can't protect America anymore, look at the absence of the National Guard from California or New Orleans! They aren't here! And on 9/11, a series of attacks on the heart of our empire wasn't even slightly impeded.

The wars this launched were treated as looting expeditions and the loot was here in America: the wild spending has cost more than the Vietnam war in today's dollars. And the government is now looking for the Jewish guy who sold defective vests and who had a multi-million dollar bat Mitzvah for his spoiled child. He is being accused of fraud and insider trading. But he isn't the criminal, it is our own government that treated this war as a great opportunity to make a handful of Halliburton stock owners like Cheney, richer. This is all about them, not us. They wanted this war so they could line their own pockets. And this is killing our economy. The 'growth' we saw was actually people profitting on things that were destructive. And this caused more and more red ink and the red ink is still flowing like crazy.

There is a lot of growing anti-semitism due to people like the above example. Instead of using their influence and power to make America stronger, AIPAC and the others are using this as a golden opportunity to line their own pockets and make out like bandits. They are focused on destroying America for their own benefits. But Christians are doing this too! Atheists are doing this! People of ALL ethnic identities are doing this!

This is because our empire is dying. It is not healthy. It isn't growing, it is dropping huge branches. Right now, we are seeing our automotive branches falling. GM is still growing but NOT HERE. Ford is still growing but NOT HERE. Apple is growing but NOT HERE. The list of companies that are growing but NOT HERE is very long! The military/industrial complex is also guilty of this. They are 'outsourcing' stuff not just mere privatization, they are outsourcing it to other nations! This is because the executives can make more money this way.

From Markit:

Based on a desk-by-desk survey of traded notional at LCDX market makers, slightly over $55 billion of estimated notional was traded for the month of September for LCDX8.

This, as with previous surveys, includes a conservative discounting of the notionals supplied by dealers to ensure inter-dealer trades are not double-counted.

The total volume traded on the index since inception is approximately $405 billion.

Nearly half a trillion is traded doing nearly nothing useful. It is all about making money any way possible and these systems were set up recently and have no real, honest function. None of these money-creation systems are strengthening America, they are WEAKENING America. This means they are bad, bad. Like, very bad. Yet they are being protected and even extended. Our Federal Reserve is focused on enabling them, not protecting us. This is why we have fake inflation caclulations: it is a cold-blooded attempt at shifting the burden of making wealth away from honest labor and towards ripping off people.

This is a screenshot of how these funds are collapsing.

I wrote about this fund when it was launched. I groaned and said, 'This is so destructive! It is pure gambling!' And it seems to have collapsed. Many of the branches we see falling this year are deadwood. But they infected this mighty oak and let in the termites which ate at the heart of this dying oaken economy. The frantic efforts as saving these deadly limbs is not only wasted, it is criminal. I want the SEC and others to investigate all these financial games and systems because they are bad. I want Congress to fix the huge tax loopholes that helps traitors to evade their obligations to this nation. I want Halliburton delisted from the Stock Exchanges here since they are now based in a tax haven in Dubai! And arrest Cheney, of course.

Congress, instead of doing the right thing, is soliciting bribes for the next election. Many of our politicians are courting the termites that are destroying our mighty economic oak tree. They are moving heaven and earth to continue the destruction. Instead of changing course, we sail into more ice fields as our Titanic sinks.

Mr. Howe, the inventor and tinkerer I interviewed yesterday isn't running off to tax havens nor is he destroying the economy. Even while retired, he is launching new industries, new businesses that hire people here to make things and bring him profits. He is doing this because he loves doing this and he cares passionately about America. He is one of the 'good guys' who reminds me of Joe and his fellow capitalists in the old days. There is hope for us as long as there are people like Joe, like Mr. Howe. People who understand we are all in this together. And we all have to make sacrifices in order to be free and safe. We can't be free or safe if we allow people to loot this nation, to evade taxes while ringing up huge deficits in trade and finance.

From Reuters:

The United States has entered a recession, according to highly-regarded investor Jim Rogers, who told Britain's Daily Telegraph newspaper on Wednesday he was switching out of the dollar and into yen, the yuan and the Swiss franc.
*snip*
"The US economy is undoubtedly in recession," Rogers told the Telegraph in Hong Kong in an article published on its Website.

"Many parts of industry are actually in a state worse than recession. If it were not for (Federal Reserve Chairman Ben) Bernanke putting huge amounts of money into the market, the stock market would probably be down much more than it is."

Here is someone who is making money in Britain pointing out the obvious. He works for Soros and they make money playing money games. Making money by shifting funds from one currency to another is the most USELESS business imaginable. It is directly responsible for the collapse of our economic base, the collapse of the world's old systems. Clever countries with powerful leaders are cynically exploiting this desire to get rich by trading money for money, they are taking over the economic systems entirely just by manipulating the people who are trying to 'game' the monetary systems of all nations. The biggest players in this game are China, Japan and Russia. Since China and Russia are two-teaming Japan, we see the present market instabilities due to Japan desperately trying to keep the carry trade going while Russia and China are focused on strengthening their internal bases as Japan hollows out Japan by destroying the buying power of the working classes! So Japan is yet another sick oak tree. With nearly a trillion in FOREX reserves.

People who understand this new financial game are getting very, very rich. Soros is interested in the news so he understands this new, utterly rigged game. But our own termites here in America refuse to understand the implications of this new game. For it is making China the world's top industrial power and is destroying the grand US/EU/UK empire! And this is the Chinese plan: to help the termites eat out our economic oak tree and then we fall, boom, one fine day, on a calm, sunny day.

From the Scotsman:

The Bank of England today warned that the credit crunch is set to continue as Chancellor Alistair Darling was quizzed by MPs over the Northern Rock crisis.

In a report, it said the short-term outlook for financial stability had been left uncertain by recent turmoil.

There is no economic stability! England is dying. The US is dying. The system is extremely unstable because our economies are dying! So assuming there is some small problem to be tinkered with is pure insanity. This week, the US/EU/UK empire decided for very stupid reasons, to attack Iran Kitty yet again. World oil prices surged to well above $92 a barrel. This is killing our economic oak tree every bit as much as a hurricane or blizzard. Every day that oil is expensive and rising, so rises inflation, so falls our economy that imports vast seas of oil. For we passed the Hubbert Oil Peak here, long ago. Our entire system depends on cheap oil all the time. The cheaper, the better.

And this is pure madness. Inflation will now rage out of control due to easy-term money below the rate of inflation as Bernake tries to save all the termites eating our oak tree economy.

From Bloomberg:

Mexico's central bank unexpectedly raised interest rates and said inflation will take longer to retreat than policy makers previously estimated.

The five-member board, led by Governor Guillermo Ortiz, 59, lifted the benchmark rate a quarter percentage point to 7.50 percent, surprising 22 of 29 economists surveyed by Bloomberg. The peso climbed to a three-month high, making the biggest one- day jump since September.

As Russia, China and Japan play currency games, as Bernanke kills the dollar, everyone else is seeing inflation. Mexico is beginning its own downslope, falling down the same Hubbert Peak we fell from long ago. More limbs falling from our oak. For we need Mexico's oil. We import tremendous amounts of this oil and all Mexico got from this is a society with a top that is very, very rich and a bottom that is very, very poor and a country that limps along with virtually nothing to show for all this.

This is why we must become aware of what is going on. We can't blissfully live under this huge oak if it is going fall on all our heads.

Culture of Life News Main Page

The Plunge Protection Team Circles The Toilet

Elaine Meinel Supkis

The Plunge Protection Team holds more meetings. They are desperate to find some Hail Mary play to save their financial houses from destruction as the SIVs now go off the cliff. Meanwhile, China is strengthening their Asian trade complex and are working towards creating an Asia-centric economic system.

From Bloomberg:

The collapse of confidence in Merrill Lynch & Co. after the world's biggest brokerage lost six times more than it forecast earlier this month helps explain why Treasury Secretary Henry Paulson's attempt to rescue SIVs is troubled.
*snip*
Paulson's plan, announced last week, may do little to address the lack of transparency that has roiled global fixed- income markets since July 31, when two hedge funds managed by Bear Stearns Cos. went bankrupt following losses on securities tied to subprime mortgages. Investors aren't willing to rely on estimates by Wall Street traders to value these bonds and there's no central trading system or exchange. Fitch Ratings says the value of SIVs, which own more than $320 billion of bonds, fell to 73 percent as of Sept. 28 from 100 percent in July.

``Continuing to mask transparency by means of rearranging risk without actually offloading or recognizing the true value of that risk is not going to help anyone,'' said Joseph Mason, an associate professor of business at Drexel University in Philadelphia and a former financial economist at the Office of the Comptroller of the Currency.

There are supposedly around $400 billion SIVs swimming about the planet, most of which are drowning. $400 billion, to put things in perspective, is what we spent on killing Iraqis and stealing oil in Iraq for about 3 years. I remember when Bush fired the Treasury Secretary when he warned this war would cost us $200 billion. This sum is big, by the way. Just as the Iraq war is bankrupting the US government, so will this global SIV fund mess. As each one sinks beneath the waves, the others take on more water.

It certainly was a cool trick for all the financial houses to create these funds. We forget why. When the stock market suddenly collapsed in 1987 and a number of banks went down along with a host of savings & loans, the US had to bail out a huge number of rich financial houses and some of the more outrageous financiers went to prison (fraud, of course) and to fix this, the Federal Reserve decided to allow a new form of financing that involved creating out-of-the-bank entities which we now call 'hedge funds'. They were supposed to go bankrupt in bad times but NOT pull down the huge houses because they would be seperate entities.

This solution has a huge flaw: because they can go bankrupt with no effect on the big entities spawning these hedge funds, they became very reckless and spawned a host of these creatures, every week, more and more were created. A lot of thought went into creating as many variations on various fund types as possible. On top of this, since they believed their risks were hardly visible, they could float BBB funds that carried high risks but even higher interest rates. Soon, everyone rushed out and poured a lot of money into these BBB funds hoping to get super-rich, super-fast.

From Bloomberg:

Standard & Poor's, calling the loss ``startling,'' cut its rating on Merrill's senior unsecured debt to A+ from AA-. Fitch and Moody's Investors Service also lowered their ratings on the company.

The cost to protect against a default in Merrill's bonds doubled the past two weeks. Credit-default swaps used to speculate on the company's creditworthiness or hedge against losses, have climbed 46 basis points since Oct. 10 to 88 basis points, according to CMA Datavision in London. A basis point is 0.01 percentage point.

What went wrong with this fix created 15 years ago is easy to see: no one is fooled by the big financial houses distancing themselves from the creatures they have spawned. Enraged investors are demanding they get their investments back, more or less intact, from these hedge funds that were sold on false pretences, false promises. Early on in this collapse, around February, the big houses made all sorts of promises that they would protect the basic funds even if they were unable to pay any profits at all. But the rapid collapse of these funds and the huge sums required to pay back investors who gained nothing but now stand to lose everything, has put the biggest financial houses in Europe and America into a tail spin.

Every week, we read about write offs of billions of dollars by these giants. But they still are barely scratching the surface. If the total sum to be written off is around $400 billion, this means the end of the financial houses just as surely as the collapse in loans to Europe and then the stok market drew shutters down on many big finanical houses and we had the Great Depression.

Click here to see who is talking about ABX HE funds! Heh.

Click here to see an article I wrote in August 22, 2007, talking about Bernanke and the push to get him to drop interest rates for these financial giants. And here is the cartoon from back then:

**********************************************
Click here to see the actual ABX-HE carnage this week. One ABX-HE BBB 06-2 dropped from 100.94 to a horrible low of 24.64 this year. The difference in price bid has shrunk this week to .64 difference. This isn't 0.00 yet but it is near some sort of basement where I doubt it will rise again.

Click here to see the latest very long list of funds that have to make interest shortfall payments.

The devil-may-care attitude is being replaced with a devil-take-the-hindmost panic. Bernanke is anxious to keep everyone going in a herd in the right direction but of course, this army of white-eyed fearful bulls are now running riot over savers, the dollar and world monetary values. As my cartoon from two months ago shows, they just wanted to have Santa give them endless goodies or else. And Santa know that they can do terrible things if they are not saved. So we go from being told, these guys are geniuses and should be admired to looking at them as poor babies who need the Nanny State to save them.

Always, the laissize faire system turns out to be anything but laissize and more, a matter of who has a liasson with whom. Namely, the rich control the levers of power and use this to bail themselves out of messes they created. At everyone else's expense. This is why government controls are necessary. The government sponsors these people.

From Market Watch:

Treasury Secretary Hank Paulson -- yes, the same gentleman who assured us in the spring that subprime issues were contained -- led the charge. He's gathered the biggest players on the street, from Citigroup Inc. to J.P. Morgan Chase & Co. to Bank of America Corp. as part of his posse to curtail contagion.

We're all in this together, he argued, so now is the time to stand together in unity.
For better. Or for worse.

This is an interesting article by the guys at Minyanville up on Market Watch. It amuses me because these obviously very smart and talented young people there suddenly figured out the obvious: there really is a 'plunge protection team'. This is code for 'politically connected powerful people who have huge financial stakes in keeping bubbles going no matter what.' They often fail in their mission but they try, oh, do they ever try. Always, the goal is to keep bubbles inflated, not preventing bubbles in the first place.

If we look at the news stories about who is meeting with Paulson, the head honcho of this gang, the biggest financial octopus house in America being Goldman Sachs, it is obvious who the members of this PPT are. Many of these people have been around a long, long time. We even know from history, they ran around the collapsing stock market in October, 1929, trying to prop it up. We know that after the 1913 panic, they ran off to Jekyll Island to start the Federal Reserve which is a private banking consortium.

Minyanville:

We used to huddle in hushed tones and talk about "the invisible hand" or the "plunge protection team." We did so for fear of being called conspiracy theorists or, worse, unpatriotic. The thought that there was a hidden force seemed bizarre. I was taught that nobody was bigger than the market. Most certainly, if there were games being played, it would eventually come out.
Still, some of my most trusted and widely respected sources confided in me that they saw it as well. They did so in confidence, as Wall Street is a small place where credibility is the gateway of continuity. I, too, held my tongue for fear of retribution or consequence. Even still, to this day, there are folks that will view this column as financial sacrilege.

In school, many are taught that there is no such thing as a PPT. The fiction is, the markets are King. Of course, the teachers point out that the PPT fails regularly to stop plunges but this doesn't mean they dont' exist. It merely means, they can't stop full-scale panics. We are in the middle of one such panic right now. And the PPT is working day and night including making money appear like magic in order to bail themselves out of quite a few fixes. But now it is obvious, they must bite some bullets or this will get much worse.

So...each time they are finally forced to admit to losses, they have Plan B: a most cunning plan, as Baldrick often assures Blackadder. This plan involves the PPT telling everyone, these loses are FINAL. There are no more losses. This obvious lie is then disseminated throughout the media just as they did this same trick in November, 1929. The second and even more important lie is to tell investors to hang on and not panic or sell. This is not only 'fraud' but also part of Plan C: dumping lousy investments so the PPT participants can sail off, intact, while less connected people drown.

Always, after the stock market begins a big decline leading to a 30%-75% loss, we see a second hump, a second, brief peak. This is where the PPT tells everyone, 'Stocks are a bargain! Now is the time to buy!' But then, when it becomes obvious that a recession/depression is now here, everyone gives up and begins selling starting with the marginal investors who use loans to bet on stocks.

Insulated from this mess, the biggest houses will hunker down and wait out the clock, hoping their connections and reserves will carry them through the storm.

Minyanville:

So what now gives this topic license for discussion? Paulson, who recently said, matter-of-factly, that there is indeed a Working Group on Financial Markets in force and at play. Further, he has openly held discussions with Wall Street firms and hedge fund managers in an attempt to gain leverage in the financial equation.

And I hope Minyanville figures out what they are plotting: to save their own skins at the expense of EVERYONE ELSE. And I do mean 'everyone' here. If the dollar dies, if the US government goes bankrupt, if millions are homeless or lose medical care or jobs or starve to death or if this causes WWIII, they don't care. So long as they are protected. They hated Roosevelt as he, a member of the uppermost echalons of the ruling class, struggled to keep the lower classes from rioting, revolution and terrorism, they hated him sharing any wealth with the laboring classes. They felt, he should heed only their delicate needs and dainty tastes.

Many of these people openly admired Hitler. Bush's grandpa was one of Hitler's bankers well into WWII. Some of the PPT wanted to get rid of Roosevelt entirely via military coup. But the Republican move to drive out WWI vets camping in DC, demanding their bonus pay so they could survive due to loss of jobs, made this impossible. The military didn't consider the GOP to be their best buddy or rather, the lower ranks were very sour on the idea of keeping the GOP in power via military fiat.

Right now, the biggest financial houses are now banking on Hillary Clinton and are hoping she will talk like a Democrat but rule like a Republican like her husband before her. If there is any candidate they dislike the most, it is Ron Paul. He is a libertarian who knows of their existence and talks about them, to their tremendous irritation.

Minyanville:

The Chinese are increasingly irritated with all the financial machines run by the EU/US/UK empire. The Institute for International Finance is just one part of this machine. Like the International Monetary Fund, the World Bank, the Bilderberger Group or the UN Security Council, it is designed to keep the powerful empires of yore in power. Namely, the guys who lost WWI and WWII plus the winners who run to the USA for salvation. All these guys who were chopping up the Chinese, Indian and Ottoman empires as well as all of the New World and Africa, now want stability. Meaning, they stay on top and everyone else on the bottom stays put. That is, China, India, the various parts of the Ottoman Empire and Africa as well as South and Central America. Deutsche Bank enabled these SIVs and CDOs and ABX-HE funds, etc, to flourish. Now they want fiscal responsiblity...a euro too little and a day too late.

Many people can play the financial games set up by the PPT people because this is fun and for about 5 years out of 10, it works. Knowing when to run away is important. This is why we need people who have seen more than 30 years of market gaming to understand what is going on. Better still, an understanding of history is much better.

I hope everyone reading this understands, my goal here is to write history as it happens. This is why I go global all the time and refer back to the past a lot. I wish to save the United States, not sink it. I have no interest in saving myself, I want to save this nation and all other nations. I want China to get its due and it is owed a lot, an awful lot. I want Europe safe, the fact that they have been overwhelmed by not one by two world wars that were hideously destructive is reason enough for me to want peace there! Russia, I want strong, not weak. A weak Russia is even more dangerous than a weak Ottoman Empire or a weak China 200 years ago: destabilizing everything.

I subscribe to the notion that we can all become stronger, together. This means the PPT can't bail itself out at the expense of retirees, workers, children, other countries, other investors. They have a responsiblity which they always drop in favor of lining their own nests. Thus, I call them 'traitors.'

From CNN Money:

Thus far, the SIV crisis has been almost exclusively contained among big institutional investors; the impact of SIVs on money market funds could be a development that brings the SIV problems into the lives of retail investors. As of Oct. 12, Bank of America's Columbia Cash Reserve fund appeared to hold securities issued by at least five other SIVs, according to a list of holdings published on the fund's website. Asscher Finance, Axon Financial Funding, Cullinan Finance, Five Finance, Sedna Finance and Whistlejacket Capital all appear on the fund's list of holdings, and all appear on lists of SIVs published by rating agencies.

Because the public sees money market funds as very conservative investments, banks will almost always step in to support them and ensure that investors in them don't take a loss on their original investment in the fund. Bank of America's Goldstein says that investors in the Columbia Cash Reserves fund have not suffered such a loss. He adds that the vast majority of the SIV securities held in Bank of America money market funds have high credit ratings.

These are all 'conservative' investments only in fiction. At no point since the Dot Com collapse, have these been anything but Risky, the wench that runs amok and does dangerous things. While pretending to be sober and sane, our mighty PPT guys were really flirting with the Dark Bitch, Risky. They knew the real rate of inflation and knew the only way to make a profit was to beat the real rate of inflation. In 2004, the nominal rate was set by the Fed at slightly more than 1%. But in reality, it was roaring along at 5%. The excuse was the WTC collapse: the Fed had to keep the ball rolling no matter how inflationary and they could do this only if they lied about inflation.

The oil and gold markets shot upwards and are still rising, proof that inflation is raging. They always do this in inflationary cycles. The high credit ratings given to Risky's SIVs set up by the biggest financial houses was fictional from day one. This is because the real rate of return is totally fictional due to lying about both the interest rates and inflation. This is why the PPT guys working in Europe and America came up with this madcap scheme to depress the value of gold via propaganda, lying about gold having any value at all, and via selling huge amounts of gold to keep the market flooded. Only they also flooded the market with easy term money! So a lot of this flowed into the oil and gold markets. Talk about funny! HAHAHA.

As I keep saying, the PPT is more like the Mayberry Cops of yore. They are clowns who refuse to understand how their games play in the end. They just want more money for themselves.

From CNN:

JP Morgan Chase also manages large money market funds. Just under 5% of the assets held by its $103 billion Prime Money Market fund are securities issued by SIVs. JP Morgan Chase (Charts, Fortune 500) declined to comment.

As of Sept. 30, Fidelity's $305 billion of money market funds had 2.3% of their holdings - or about $7 billion - in SIV debt securities, according to company spokesman Alexi Maravel. The SIVs in question are Asscher Finance, Beta Finance, Centauri Corp., Dorada Finance, Cullinan Finance, K2 Finance, Links Finance and Nightingale Finance. Fidelity's Maravel says: "We can state unequivocally that Fidelity's money market funds continue to provide safety and security for our clients' cash investments. We continue to invest in money market securities of the highest quality, and our clients continue to have full access to their holdings to invest as they wish."

Fidelity got mad at me for talking about their dates with Risky. They want everyone to think they don't go to Risky's bar and grill and get totally drunk there so she can pick their pockets. There are no more 'higher quality' securities: all are now insecure and unstable due to the gigantic mountain of Risky schemes that are now on fire like the overpriced, badly designed houses in California. Even that fake castle in Malibu burned to the ground.

From Yahoo Finance, sponsored by Fidelity:

'Retire RICH!'----In turbulent times, resist the urge to mess with your retirement plan and you'll come out ahead.

With dreary news coming out of the banking and real estate scenes almost daily, and the dreaded "r" word (as in recession) getting tossed around, roller-coaster madness is the new normal in the stock market.

It's a scary situation. But it doesn't have to wreck your retirement.

The single most important thing you can do in a turbulent market is stick to your 401(k) game plan - that means contributing regularly and definitely not panicking and selling.

In fact, if you had stayed the course when the stock market was tanking in July and August, you actually would have made a far better return on your money than if the stock market had stayed flat - or even increased modestly.

This message was brought to you by one of the members of the PPT! They want you to hold! DON'T SELL. They do the selling, not the little people hoping to become RICH when they RETIRE! Hang on, the roller coaster will carry you through, the PPT wants us to know. As usual. This is how they operate. They need everyone else to stay aboard the Titanic while they frantically row off in their life rafts.

From Xinhua:

The fourth China-ASEAN Expo (CAEXPO), slated for Oct. 28-31, will focus on port development, official sources said here.

This annual event will be held in Nanning, capital of Guangxi Zhuang Autonomous Region, featuring topics ranging from port development and cooperation between China and ASEAN, social development and poverty eradication, cooperation over power for homes and businesses, to cooperation and sustainable development in forestry, said Zheng Junjian, deputy secretary-general of the Secretariat for China-ASEAN Expo.

Meanwhile, China continues to develop its alternative markets. It is preparing to take center stage and history is 100% on China's side: we are exhausted, the EU/US/UK empire is deep in debt. The numbers are totally against us: no longer can we export energy, we are now trying to make Canada and Mexico a part of this system whereby their oil is ours and we can use it to keep power. But China is racing ahead of us here. Their overhang is much smaller, much smaller than ours. Japan's overhang is the worst of all the former empires and England is a close mirror.

Xinhua:

China and the 10 ASEAN members are speeding up tariff reduction to facilitate the establishment of the China-ASEAN free trade zone.

China's average tariff on ASEAN goods has been slashed from 9.9 percent to 5.8 percent and will further drop to 2.4 percent by 2009. By the time the free trade zone is established, 93 percent of products from ASEAN countries will be tariff-free.

China aims to establish free trade zone with Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand by 2010. Free trade zones with Vietnam, Laos, Cambodia and Myanmar are expected to be in place by 2015.

Zhang Xiaoqin, secretary general of China-ASEAN Expo Secretariat, said China and ASEAN have seen fast growth in bilateral trade in recent years.

According to Zhang, China-ASEAN trade volume was 160.8 billion U.S. dollars last year, while in the first eight months this year, bilateral trade amounted to 127.95 billion U.S. dollars. The bilateral trade volume between China and ASEAN is expected to reach 190 billion U.S. dollars this year.

Rate of growth matters. If the US, Europe and Japan all grow at less than 2% a year and China grows at 10% a year, in 20 years, China will be on top. The US and Japan worry a lot about this. But becoming mired in a morass of debt, depression and job losses as well as crushing the populace at large, is a totally stupid way of going about saving ourselves from destruction. China is not heaven but it is also not hell. It is a classic 'up and coming' capitalist state. It looks no different than Germany in 1900 or Britain in 1850 or the US after WWI-the Vietnam War. Pollution and too-fast growth are endemic to capitalist growth.

This new trade sphere being built by China is part of their political sphere. They keep trying to bring Japan into this sphere but Japan keeps running back to the other, older empire. This has the potential to turn into a big military clash as the EU/US/UK empire tries to keep Japan on their side despite Japan acting much more like China than any ally.

From the Nikkei:

ANALYSIS: Embattled Consumer Credit Industry Keeps Its Eye On Credia

TOKYO (Nikkei)--The consumer finance industry, which once enjoyed high profitability, is beset by troubles -- requests from their borrowers for refunds of overpaid interest, growing difficulty in fundraising and tighter restrictions due to a change in the moneylending law. The harsh environment has even forced one publicly traded firm to file for bankruptcy.
***************************************
Foreign Stock/Currency Investment Trusts Grow Apace In April-Sept

TOKYO (Nikkei)--There is a growing tendency for investors to prefer investment trusts focusing on foreign stocks and currencies rather than those dealing in domestic stocks and bonds.

Japan's SIVs are growing, not shrinking. Indeed, the entire economic mess here is totally different from the one in Asia. We would like to think that our situation is global. It is most certainly not. This is why the recent banking collapse didn't so much as turn a hair in Asia. Japan has no credit for people at the consumer level because they don't want consumption in the first place. The need to enforce this depression in order to keep the Bank of Japan's carry trade with the West going is all-important. When talking about any financial games here in the West, we must remember the carry trade and how the Japanese are moving heaven and earth to keep it intact.

From Associated Press:

Orders for big-ticket manufactured goods unexpectedly fell again in September, raising new worries about how much harm a severe housing slump and credit crunch are causing the overall economy.

The Commerce Department reported Thursday that orders for durable goods dropped 1.7 percent last month following an even bigger 5.3 percent plunge in August. It marked the first back-to-back declines in more than a year and took economists by surprise. They had forecast new orders would rebound by 1.5 percent in September.

There is no doubt we are in a recession. All the important indicators have been trending in this direction for some time now. This post-9/11 boom was fake and frankly, quite weak considering the 1% interest rates handed out by Greenspan. This is actually the Dot Com Bubble Pop, part II. They hope to have a part III. But I doubt this will be possible.

Culture of Life News Main Page

Japan Really Has Inflation Just Like The US

October 24, 2007

Elaine Meinel Supkis

The world financial systems may be slipping but the effects in Asia are quite different from the effects in the US and England. Time to discuss this. Once again, we have to discuss the stupid, outrageous inflation statistcs created by our rulers. These are designed to cheat savers, retirees and anyone worried about relative value of their finaces. On top of the new FX trade system and monetarist philosphy, this system is rotten to the core and the destruction it is causing will become increasingly clear as things deteriorate.

From the BBC:

The world's wealthiest private investors are planning to put more money into alternative investments over the next three years, a report says.
*snip*
It found that only 48% of respondents planned to buy further investments in stocks over the next three years, down from 64% over the past 36 months.
*snip*
By contrast, 15% of respondents said they planned to invest in private equity funds, up from 11% over the past three years; while 21% said they expected to invest in hedge funds, up from 20%.

This article also noted that many of these 'rich' investors don't have the foggiest notion, what they are doing. They are simply looking to find the easiest place to park their money and then sit passively by while it grows. The hedge funds are not growing at the rate they grew just one quarter ago, they are off by about 30%. But they are still growing. There is always this business in money flows: the people in the know are the ones selling to lower level people and for the last six months, the top hell hounds have been trying very hard to convince people who can't read charts or understand the elements of world trade and money manipulations, to buy.

Just as the top bulls on Wall Street will talk up stocks when they know perfectly well, it is a bear market. They need to shift their funds and to do this, they need other people to be fooled into buying. They knew every bit as I knew, that the Bernanke helicopter drop didn't fix anything. But they also knew that if they sold this as a solution, many people would flood into the market and buy which means they get customers.

So it is here: stocks shot up before the announced rate cuts. Then, the market has gone on to higher highs. But note that there are intersperced huge falls. Up 200 pts, down 350 pts, up 100 pts, down 50 pts, etc. This is a classic see/saw movement we often see at peaks. The smart guys can see we are about to take a classic tumble. They are clearing out their own stocks while staking out some territory elsewhere. This has caused the price of bonds to fall since this is one Safety place people park funds whenever Risky crashes into a brick wall.

Via one of our readers, Thomas, from the Financial Times:

Economists argue that there is more than intuition at play. Toshihiro Nagahama, economist at Daiichi Life, estimates the average household will spend about Y6,800 ($59, €42, £29) more on food a month once an nounced price rises take effect. He calculates that, since rising prices of everyday items affect poorer people disproportionately, families with annual in­comes of less than Y2m a year have been experiencing consumer price inflation since April.

There are also, however, good reasons Japan’s headline consumer price index has continued to show prices in steady fall, albeit by a tiny 0.1 per cent.

Masaaki Kanno, chief economist at JPMorgan in Tokyo, says part of the explanation is that big falls in prices of infrequently purchased items such as tele vision sets, computers and mobile phone contracts do not figure prominently in people’s calculations. People notice that flat-screen TVs are cheaper only when they buy one, whereas increases in rice or vegetable prices are instantly noted, he says.

Under the so-called hedonic method of calculating prices, statisticians take quality into account. Thus a more powerful computer that retails for the same amount counts as a price reduction. “Statistically, the prices of those items are coming down, but people don’t consider that to be deflation,” he says.

Everyone has been using this goofy system whereby they calculate inflation by considering technological advances as deflationary elements. So if computers can compute more but cost the same, then this tiny element is counted as a deflator so they happily announce, inflation is down! If a car has more extras, this is counted as deflation in price! So they can have negative inflation while prices of everything is either static or worse, rising rapidly. To finalize this stupid system, they also exclude many inflationary items like fuel, food, taxes and nearly everything humans use daily!

This infuriating statistical game is cynical and cruel. It is designed to make savers and retirees poorer. It is designed to torture workers demanding wage hikes. It is a FRAUD. The criminals who have devised this demonic system should be arrested. The governments that have imposed this upon us are doing this in the teeth of public demand that real inflation be calculated.

In the US, we have many people wanting tax cuts for years and years but they are being ripped off much worse by false government inflation statistics than by taxes! And now, the taxes are rising, too! Understanding what is going on is vital and near impossible since the media tends to support government schemes like this fake inflation calculation scheme. Yesterday, I was very enraged to read the Economist article about how the central banks kept down inflation.

This was due to ignoring the tool they used: cheating on statistics. The need for good statistical understanding is constantly defeated by political desires for certain outcomes. Since the G7 dwarves all have social systems requiring raises in income due to inflation, they all conspired to create this idiotic and evil system. Instead of demanding tax cuts, I would suggest we demand a change in this system.

From the Nikkei:

Winter Bonuses At Major Firms Up For 5th Year In Row: Keidanren

TOKYO (Nikkei)--Bonuses are set to increase for the fifth year running at major companies this winter, the Japan Business Federation, the influential business lobby that is better known as Nippon Keidanren, reported Wednesday.

The peculiar depression in Japan rolls onwards. As we see a mirror image of the US system: fake interest calculations used to keep interest rates well below the rate of real inflation and huge bonuses for the upper tiers of the industrial/financial systems. For 5 years, the Japanese who keep the LDP in power have rewarded themselve increasingly while the workers get less and less and less. This corkscrew system also keeps Japan's imports down so they can run this surplus. I will note that the other G7 nations won't talk about this in public. We used to hear about it all the time since 1974!

From Bloomberg:

Merrill Lynch & Co. reported the biggest quarterly loss in its 93-year history after $8.4 billion of writedowns, the most by any securities firm.

The third-quarter loss of $2.24 billion, or $2.82 a share, was about six times higher than the New York-based firm estimated on Oct. 5. Merrill wrote down the value of subprime mortgages, asset-backed bonds and loans to finance leveraged buyouts, and Chief Executive Officer Stanley O'Neal said in a statement today that he is ``working to resolve the remaining impact from our positions.''

No wonder rich people want hedge fund hell hounds to save them! Their money is vanishing! The old war horses are stumbling and falling. Note this loss: bigger than the Great Depression. This isn't good news. One of the mysteries of magic money is how they can create lots of fun when this stuff is conjured but when it vanishes, all sorts of things come to a screeching halt. There is no way we can have a booming economy if a trillion dollars goes up in smoke.

The fires in California are going to hammer our economy for a while: insurance rates for everyone will go up. Many of these houses had fire insurance since banks insist on this if there is a mortgage and since these houses are hugely expensive, this means many more millions in losses compared to New Orleans which saw mostly cheaper housing destroyed and of them, few had any insurance. This loss also will goose California's economy briefly as everyone rebuilds where these fires raged but it will depress other parts of the country. Just as the hurricanes didn't make us richer, so it is here: the last thing the US needs to spend money on is building suburban houses in death traps.

From Bloomberg:

Ambac Financial Group Inc., the world's second-largest bond insurer, reported its first quarterly loss after reducing the value of subprime mortgage-linked securities the company guarantees by $743 million.

The third-quarter net loss of $360.6 million, or $3.51 a share, compared with net income of $213 million, or $1.98, a year earlier, New York-based Ambac said today in a statement.

California was already seeing a huge rise in very expensive homes in the above $500,000 level going into receivership. How many of the burned or damaged homes this week will do likewise? The bank gets the insurance payment and the house is gone and can't be resold or rebuilt? All the systems set up to hedge the pain of downshifts are now in trouble due to the risky loans handed out like Halloween candy this last 4 years.

From Bloomberg:

Sales of previously owned U.S. homes fell more than forecast in September, signaling no letup in the real-estate slump that threatens to hobble economic growth.

Purchases declined 8 percent to an annual rate of 5.04 million, the fewest since record keeping began in 1999, from a 5.48 million August pace, the National Association of Realtors said in Washington. Sales were down 19 percent from September 2006 and the median home price dropped.

This is obviously a problem for magic money making: this machine needs debts to grow. It is a negative machine. The more people go into debt, the better it is for making money out of thin air. This is the entire process. We are obviously no longer making money this way in the quantity we did in the past.

From Finance Week, UK:

[In England] As consumers’ housing costs start to bite, they’re running down other forms of debt, according to new Alliance & Leicester research. Unsecured debt taken out by mortgage holders was down 3% year-on-year in Q2, as people spent less on credit and store cards to make way for bigger monthly home loan payments. In contrast, those without mortgages were still running up new personal debt, by 3% y-o-y.

At the time of this survey (of 2,245 people) many mortgagees were still enjoying fixed-rate offers, and some will since then have had to refinance at higher rates. The survey found those with mortgages 50% more likely to than consumers generally to cut their credit card and other personal borrowing over the next six months.
*snip*
While households are generally saving more as a result of the past year’s interest rates rises – as the Bank of England hoped – those with mortgages are now running down savings elsewhere. The A&L survey shows that mortgage holders’ rate of saving was two-thirds that of those without mortgages at the start of the year, but by mid-year it had dropped to less than half the rate the rate. This was despite a drop in some of the other bills that go with home ownership, especially the price of gas. For many, paying off a mortgage is now a substitute for conventional forms of saving, including pension contributions.

Higher interest rates means fewer loans and more savings. This brings money into banks but it is a lot less than the money that flows when the banks give out mortages. One might save $10,000 but get a loan for $500,000. See which one the bankers want! They would far rather hand out loans which is why governments have to force them to hold reserves which means, attract savers or else. The higher the reserves, the more the banks hate this.

England, accustomed to living in the shadow of the US empire, wants to pretend they are an empire. They have spent more recklessly than most anyone on earth, their debts dwarf their ability to pay and the entire nation is double deep in the same debt pit we are in. In the old days, one paid off the mortgage and also saved. Now we see the reverse. People are eating their retirement funds to pay the mortgage. This is yet another indication that our system will be much slower in the next few years just like in the 1970's. A lot of world trade has flowed to England just as it has flowed to the US. England had a brief period of wealth due to the North Sea oil fields. But not only are they depleting, they are going much faster than geologists and oil companies figured.

England, accustomed to the bounty from all this, has refused to change gears and prepare for harder times. Their only way out is to learn to do value-added manufacturing. Ha. Right. They invented this and now have utterly lost it.

From Bloomberg:

The dollar fell versus the yen after an industry report showed sales of existing homes dropped in September, increasing speculation the Federal Reserve will cut interest rates this month.

As I said, the yen was going to rise because the Japanese openly boasted they could make the yuan rise in value while the Chinese couldn't make the yen rise in value. In the news, they will pull all sorts of reasons for the yen's rise out of their hats but of course, up until now, all these things were obvious and the yen went down. We keep forgetting, China and Japan are trade rivals and they aren't just fighting over US market shares but also Asia and Europe. For a while, China raised the value of the yuan to please us but has been rather ill tempered about this as they saw the yen drop. So they have been moving since July, to raise the value of the yen. Back then, the Japanese boasted the yen would be 130 to the dollar. Hahaha.

So we will see this battle continue. The Chinese don't mind the yuan rising against the dollar so long as the yen rises against the dollar even more.

From Market Watch:

Japan's trade surplus climbed a higher-than-expected 62.7% in September from a year earlier, as continuing strong export growth to Asia and Europe offset weaker U.S. demand.

Exports rose 6.5% in September from a year earlier, easing from 14.5% growth in August, the Ministry of Finance said Wednesday in Tokyo. Imports declined 3.2%, marking the first contraction since February 2004.

September's trade surplus hit a record 1.638 trillion yen ($14.28 billion), the ministry said. Shipments to the U.S. declined while those to Europe and China expanded at a slower pace.

As I said before, the international trade game is now all about monetary manipulations allowing one way trade. Right now, the target nations are the EU. The Asian traders know that England and the US are nearly tapped out or over-developed now and they are fighting over Europe's markets. Both China and Japan are now holding EUROS more than dollars. Because the dollar overhang is so gigantic, it was the vast majority of the money they are holding, the percentage is still relatively small. But we can sense the shifting of the gears here. Even as the yen and yuan rise against the dollar, they have fallen greatly against the euro. And Europe is feeling this quite strongly. This is why their inflation rate is much lower than Japan, China and the US. If we use real statistics like the price of oil.

From Xinhua;

China's Renminbi (RMB) broke the 7.5 mark to reach a new central parity rate of 7.4938 yuan to one U.S. dollar on Wednesday, according to the Chinese Foreign Exchange Trading System.

The yuan, climbing 72 basis points to one dollar from Tuesday, rose a total 3,149 basis points from 7.8087 yuan on the last trading day of 2006.

Tan Yaling, an expert with the Bank Of China, said a weakening dollar and calls from the United States and the Europe that China should allow the currency to appreciate more quickly were "short-term reasons" contributing to the recent rise in value.
*snip*
The accumulative appreciation since July 21, 2005, when China abolished yuan's peg to the dollar, has exceeded eight percent.

China published this today in response to the G7 attacks. They are quite angry about this but will continue to smile at us as we poke them in the eye.

From Xinhua:

The European Union leads the United States as a destination for Chinese students, a senior EU official said Tuesday in Beijing.

Last year 120,000 Chinese students studied in EU countries, a record number; and more Chinese students study in Europe than any other destination in the world, said Jan Figel, the European Commissioner for Education, Training and Youth.

And this is interesting since Europe is more expensive than the US. Obviously, China has begun to focus on Europe while they let us slide a bit. We should fear this. For we are still buying like mad from them. They can let go before we do and we won't notice it at first, a classic slippery slope. A stronger yuan means they lose interest slowly as they refocus elsewhere.

Culture of Life News Main Page

Central Bank Wizards Wave Wands Like Mad Today

October 23, 2007

Elaine Meinel Supkis

More signs that money production, debt increases and money flowing into the offshore pirate coves is diminishing. It is obvious that we are sliding into a recession just like we can see the California housing boom going up in flames. The Economist magazine has a very strange editorial about how our wizards running the national banks created stability (HAHAHA) and killed inflation. I counter this by explaining who killed inflation and how this works. Also, right after the G7 meetings, all our trade partners went home and tried to kill their own currencies. By talking them down. HAHAHA, again.

From Bloomberg:

Hedge funds raised $45.2 billion globally from investors during the third quarter, a decline from record fundraising earlier in the year as losses from subprime- mortgage loans hurt returns.

The new money attracted from hedge-fund clients compared with $60 billion and $58.7 billion during the first and second quarters, respectively, according to a statement today from Chicago-based Hedge Fund Research Inc. Fundraising in the third quarter brought industry assets to $1.81 trillion.

At $60 billion a quarter, the hedge hounds grew from near $0 to nearly $2 trillion in just seven years. Now they are growing somewhat slower. All the systems are slowing down. The stock market rises and falls on alternating fear and hysterical happiness, a classic sign of a bear market. Wild swings are a sign of bad times approaching. A $20 billion drop in the funds pouring into the Dark Pool system run by pirates on offshore islands is a sign they are not able to get the loot they usually want via hook or crook. The uneven trade due to high energy prices and hard working Chinese labor is still on track, producing wealth. But the consuming end of this is beginning to slow down: the USA.

The USA can't consume masses of stuff, merrily, if our wages and assets are declining. The US represents over 15% of world consumption. We are about 3% of the world's population so this means our consuming of resources and goods is grossly greater than anyone else. In particular, we consume more energy than any other group. Our energy consumption is double that of Europe or Asia. If we add onto this, the energy put into making and transporting goods sent to America, we actually consume another 5% of the world's energy via this trade.

Americans are so accustomed to being on top of the world, we can't imagine living any other way. In the past, some scientist had figured, if all of the world wanted to consume like we do, it would require 4 more 'earths'. In other words, this is utterly impossible.

Right now, half a million people in California are fleeing fierce, fast moving fires. The houses were built to not respond to fires because we think of our homes as disposable as tissue. But this is false. Japan is even more geologically unstable than California and in the old days, they built light, paper-thin houses which would be quickly reassembled or built from scratch due to all the earthquakes. But the Great Tokyo Earthquake in the 1920's showed the hazards of this when millions gathered in one place: the city nearly burned to the ground and many people died.

The world's economy is an ecosystem just like anything else in nature. All things must balance out one way or another. It is not an open-ended system. Just as we can't go into infinite debt, we can't have zero interest forever. Various actions designed to make money appear magically leads to debasement of currencies and inflation. Too much debt coupled with overbidding the value of real estate leads to depressions. Piling on debts on businesses leads to bankruptcies. Just as banks must attract not just borrowers, they must also attract savers, so it is with everything: paper houses are fine in earthquakes but a disaster in fires. Adobe houses are great in fires, a disaster in earthquakes.

So we try to devise systems which work in these yin/yang situations and none will be perfect. All are compromises. But lately, we have seen, thanks to the evolution of business schools and computers, attempts at creating systems that produce only wealth and never go downwards, instead of stabilizing our systems, this is destabilizing them much worse than pure laissez faire anarchy.

From Investor's Insight:

By Stephen S. Roach

After nearly five fat years, the global economy is headed for trouble. This will come as a surprise to policy makers and investors, alike-most of who were counting on boom times to continue.

At work is yet another post-bubble adjustment in the world's largest economy - this time, the bursting of America's massive property bubble. The subprime fiasco is the tip of a much larger iceberg - an asset-dependent American consumer who has gone on the biggest spending binge in the modern history of the global economy. Seven years ago, the bursting of the dot-com bubble triggered a collapse in business capital spending that took the US and global economy into a mild recession. This time, post-bubble adjustments seem likely to hit US consumption, which at 72% of GDP, is more than five times the share the capital spending sector was seven years ago. This is a much bigger problem - one that could have grave consequences for the US and the rest of the world.

This is yet another good analysis of what is going on here. The US is so accustomed to rising house values, we don't understand that this can, like anything else, vanish in a flash. It is a mirror of our economic health but a rear view mirror. It doesn't show the future, it reflects the past. The latest bidding up of housing was based on sub-inflationary interest rates. As housing values shot up, savings collapsed. Like any yin/yang system, this one was headed towards a crisis where the model must 'flip' to a new system. Namely, savings had to increase one way or another. The longer this takes, the more destruction the flip. And the flip is to go from inflation to depression.

While poking about the web, I saw this news show on You Tube. The couple in this story wanted to sell their home. They bought it a year earlier and were 'flipping' it. In a down market. They paid slightly more than $400,000 for this pathetic suburban 'dream' home. I once rebuilt and sold a mansion in New Jersey which was photographed by the NY Times and which was sold at an open house auction which saw the price bid up to $350,000. In 1986. It was a very beautiful, 8 bedroom, Victorian mansion, a historic structure, too.

This house in this video is a suburban box with thin walls and no really good details and a galley kitchen. Ack. And it went for $100,000 more than my mansion did 20 years earlier. This is pure inflation. Not a rise in value due to it being nicer.

The greedy couple lied to buyers and pretended to have a bidding war. One thing about bidding, if you set a bottom line and anyone rises above it, you must sell, You can't have a fake bottom line. In the sale of my own mansion, it was $270,000 so I did well in this sale. I owed the bank only $38,000 for the mansion so this was pure profit for me. In the case of this goofy couple, they were 'flipping' a property that was 100% in debt! Wow! Talk about stupid.

You can't do this! People did this but got caught in the gears when things went down and they go down regularly. Flipping, like investing in stocks, should only be in excess funds, not debts. Indeed, all collapsing markets are very much about 'margin calls' when people in debt play gambling games and then lose. The couple in this video rushed out and bought a second house without selling the first one. They just wanted a nicer house and hoped to have enough profit to pay for the move. This wishful thinking put them into danger and as I see all over the place, they wanted Risky and not Safety and will now pay the price as they go bankrupt. And you can bet, they will whine that this isn't their own fault just like the investors running all these games across the planet, playing with money, whine about being caught in the inevitable down markets.

This is why Bernanke decided to destroy savers by reducing already ridiculously low interest rates vis a vis real inflation to even lower levels.

From Associated Press:

WASHINGTON - President Bush asked Congress for $46 billion more to bankroll wars in Iraq and Afghanistan and said he wants the money approved by Christmas. The fighting in Iraq, in its fifth year, already has cost more than $455 billion.

Democrats who gained control of Congress with an antiwar message said Bush should not expect lawmakers to rubber-stamp the request.

"The colossal cost of this war grows every day — in lives lost, dollars spent, and to our reputation around the world," House Speaker Nancy Pelosi said. "The American people long ago rejected the president's planned 10-year occupation of Iraq and want the administration to provide a concrete plan to bring our troops home.

Pelosi always makes antiwar speeches before voting for more wars. I saw ABC news last night---I usually avoid TV this last 10 years due to the silliness of the propaganda. They had a long thing about war 'heroes' and then about how safe and wonderful Fallujah was. Not a peep about the cost of this war. Not a word. Each time Bush and the free booters running the Pentagon ask for money, they get it and then some. I recently heard from readers who told me about this petition to ask for fiscal responsiblity. But then I looked into the web site of the writer of the petition and he is a supporter of the Republican Party! Gah!

Talk about deluded. People who put the free-spending GOP in power should be ashamed of themselves. And this guy didn't support Ron Paul who at least is serious about cutting spending! The US still imagines we have Sovereign Wealth and can fund any wars we want in perpetuity. This week, Bush is vetoing a slight rise in the fuel heating bill because we supposedly can't afford it. Then turns around and asks for 4 times that amount for extra war funds! Will millions of Americans wish to freeze to death so we can secure oil we can't afford?

From Times of London:

BRITAIN’s biggest brewer, Scottish & Newcastle, is planning to thwart a £7.5 billion hostile takeover by Dutch and Danish rivals by selling off Hartwall, the Finnish holding company behind its most valuable asset.

Heineken and Carlsberg last week stunned S&N, which makes Foster’s, John Smith’s and Kronenbourg, by revealing they are plotting a bid to split the British brewer between them.

S&N’s board, however, is studying a radical plan to defeat the move. It is investigating a sale of Hartwall, the Finnish company that holds S&N’s 50% interest in BBH, its Russian beer business. The stake is worth £2.5 billion.

The buy up/buy out madness as resumed thanks to the central banks in Europe and the US pouring in over half a trillion dollars into the system. Note also, Russia is in the game now. They have sovereign wealth and no wars eating away at their finances. They went bankrupt, fighting wars.

From an editorial in the Economist:

If only life were so simple. In reality, the credit crisis has presented central banks with their greatest challenge since they won the battle against inflation a generation ago. It has cast doubt on how well they have discharged their twin duties as the guardians of financial stability and as the defenders of price stability. It poses questions about whether the almost mystical status that they have acquired over the past two decades can endure—and whether it would be a good thing if it did.

A great deal rests on those questions. A brilliantly inventive generation has harnessed computing power and financial theory to transform the world of finance. Trillion-dollar global markets have sprung up on the back of techniques for converting loans, interest payments, default risk and who knows what else into new securities that could be chopped up and repackaged in mind-boggling combinations, sold and resold. Much good has come of that—and not only fat bonuses on Wall Street and in the City. The most valuable result of the new finance is that more people and businesses have gained access to credit on better terms.

This grossly misunderstands what is going on. If all the central banks must do is provide cheap money for investors and speculators, they did a fine job of that. But how did they do this? Simple: they created oceans of inflation. And why is inflation only 2% a year right now?

BECAUSE THESE CRIMINALS ARE LYING ABOUT INFLATION!

It is easy to have low inflation if you ignore real inflation. This is quite magical. If they pretend inflation is 2% when it is really 6%, this means the investors and speculators can make an easy 4% profit simply by shifting things around, juggling them from one thing to another. So long as they do this WHILE ACCULATING DEBTS! The money here is anywhere from $200 trillion to $500 trillion, we haven't the slightest idea since these guys are all using Dark Pool money that flows through Japan and then to a host of offshore, 0% tax havens where there are no controlling autorities. This tremendous sea of 'wealth' is mostly red ink. And all over the place, there has to be someone who keeps paying interest on these sub-inflation rate loans. Since Japan has managed to totally evade inflation by chopping off huge hunks of its domestic economy, this is the ground support of sub-inflationary loans. This is echoed by the US which revised inflation calculations under Reagan and then finessed this under Bush Sr so that all the real inflation is wiped out. On top of this, the Chinese joined the world's markets and reduced labor costs so the cost of production, in classic Marxist theory, fell. This caused a global drop in wages which is still ongoing and we are seeing the utter destruction of unions in the US/EU/UK empire. But this 'kills' inflation by killing the worker's ability to gain value from labor.

On top of this, during the last 20 years, Russia entered world energy markets, first by selling to Germany and now the world. This had a tremendous impact on world oil prices for 15 years. This is now over since we are at the Hubbert Oil Peak and Saudi Arabia's production has been dropping despite lies about increasing production. Here is a chart by the Economist showing inflation and how it was 'fixed':

The sudden fall in inflation comes right where this triple whammy begins: the fake inflation figures, the drop in world oil prices and China entering the industrial export markets. This wasn't due to any wand waving by financial wizards. Far from it. It is as if they were waving wands and then the sea went out at low tide. 'We moved the very oceans!' they crowed. Now, the tide has turned. The waves are rushing in, sweeping away all the pretty sand castles built on the shore. The wizards are frantically waving wands and the waves are bigger and bigger.

This is why the insanity of demanding China raise the value of the yuan is so striking: they do this and the last leg of deflationary costs will collapse! Not that our wizards will understand. Using fake inflation numbers will allow them to pretend all is well even as Americans freeze or starve to death due to declining incomes at the bottom. The elderly will be treated like the people of Gaza: put on short rations and then told to go off and die. This is why the right yells about spending on the elderly and then asks for trillions for wars.

The Economist:

As for financiers, so for the economy as a whole. As chart 1 shows, the Great Inflation of the late 1970s gave way to an age of low, steady inflation thanks in large part to the skill with which central banks learnt to steer policy. The anchoring of inflationary expectations at moderate levels in turn combined with technological change and globalisation to support strong, steady economic growth. And in both America and Europe unemployment fell below the rates at which economists used to think inflation would start to rise.

This is simply astonishes me. Of course, inflation didn't kick in when employment went up! This is because the people being hired to manufacture things were in CHINA. Not Europe or America. Over here, the employment rise was in SERVICES. This is where Japan has been most ruthless, cutting the wages and the employment opportunities in services. The US has only 20% employment in manufacturing and about 70% of that is involved in the military/industrial complex. For example, we no longer build ships for trade. We do build military ships that cost a fortune and have huge cost overruns. This is a net loss to our economy, not a gain. These ships bring no profits from abroad. For we are not selling them to anyone unless we want to sell them to China, heh.

No, inflation was low due to loss of power in the working classes in the West. And this will unscroll most dangerously as they no longer can even get low wage jobs in services when the flood of wealth shifts and starts flowing to, not from, China. Already, it is flowing strongly to all the oil pumping nations that sell surplus energy.

From China Daily:

The Chinese government Monday said it objected to an overhaul of International Monetary Fund (IMF) guidelines for foreign exchange surveillance adopted earlier this year.

Li Yong, China's vice finance minister and the government's representative at the IMF and World Bank's annual meetings, told fellow ministers the IMF should strictly adhere to its tradition of consensus-based decision-making.

"We regret the IMF adopted in June its policy on foreign exchange surveillance, in the absence of consensus among its members," Li said in a speech. "We believe the IMF should focus on whether a member's exchange rate regime is compatible with medium-term macroeconomic policies, not the level of its exchange rate."

The IMF also needs to strengthen its oversight of policies of countries responsible for major reserve currencies, the dollar, the euro and the Japanese yen, Li said.

As I expected, the Chinese are now pushing back. They know the game is ending soon. Unlike the US, they also know that if they go into economic decline, they intend us to go into economic COLLAPSE. The US consumes far more than we make. Far more than our share. If this ends, China won't see its economy grow so fast but we will see our civilization go up in flames just like all those multi-million dollar homes with no sprinkler systems in California.

China doesn't have to let the IMF see into their affairs any more than all the offshore pirate islands. As the wacky financial systems set in motion by lying wizards in the US and Europe fall apart, more and more money making/money moving systems will shift to Dark Pools until the system collapses. The only cure for this that I can see is for real honesty: they have to set up a new way of calculating inflation that very definitely includes medicine, taxes, energy and food! If they can't figure this out, I know of ways of assembling a bunch of smart economists who can do this task!

From Reuters:

Traders sold off holdings of the Canadian dollar Monday in what some currency watchers suggest could signal the beginnings of a "long overdue" correction in the currency. Meanwhile, at least one Canadian bank sees the dollar dropping to 90 U.S. cents by the end of 2009, based on a rebound in the U.S. currency and overall softening of commodity prices.

This news tidbit shows how whacky the system is today: just as Japan is grinding the gears, desperately trying to make the yen super-weak, Canada exports to the US so they want the Loonie to be a lame duck. So they take this 2x4 and give it a good whack. Bingo. Over and over again, I read central bankers boasting about how they will make the dollar strong and their own currency, weaker. Only China is supposed to do the exact opposite. Which they have! The yuan has risen against the dollar.

Then everyone of the G7 dwarves sneaks off and plays these stupid games. Right on the heels of the othe dwarves begging the US to raise the value of the dollar so they can export to us, they rush home and strengthen the dollar using the same tools used by the Chinese Dragon! Right now, Canada's FOREX reserves is a measly $40 billion. This is even smaller than the US funds. Now if they do as Russia and increase this to $400 billion, then they can write their own currency checks! Then, no one but they can control the value of the Loonie!

Right now, they are 'talking down' their currency. This is fancy talk for 'waving wands frantically while chanting spells.' Despite the Harry Potter books where they simply wave wands and chant stupid things, this doesn't work when the tide turns. Real magic is when we understand how nature is our mirror and our actions must balance out in the end or She does it in Her brutal fashion which is quite destructive.

Culture of Life News Main Page

Bush Cuts Home Heating Help As Prices Rise

October 22, 2007

Elaine Meinel Supkis

Trichert, head of Bank of Europe, tells hell hounds and pirates as well as bankers, they can write their own rules. He hopes they let us see what they are doing, right! Due to high inflation, Japan's bosses are closing factories and laying off workers. Their fake depression will become more real, soon. Bush cuts heating assistance to the elderly and poor just as he also pretends inflation is only 2%. People will die this winter. And Rangel of NY wants to tax hell hounds and pirates. They are howling with fear!

From Bloomberg:

Stocks in Europe and Asia fell after the Group of Seven finance ministers and central bankers said the rising cost of credit, record oil prices and the U.S. housing slump will sap economic growth. Standard & Poor's 500 Index futures sank.

BHP Billiton Ltd. retreated after copper prices slipped. Daimler AG, the world's largest truckmaker, and Royal Philips Electronics NV led a decline by companies most sensitive to shifts in the economy. Electrolux AB dropped after saying lower demand in the U.S. may hurt earnings. Toyota Motor Corp., Japan's biggest automaker, slumped to a 14-month low.

The lynchpin of world trade is the US: we are the terminus. All things flow here and we struggle to make the flow go outwards again but a good percentage stays here and what flows outward is economic power. Namely, we lose economic power daily as our imports overwhelm our exports. The only tool we have in our box of tricks is to have our home base economy collapse. Then we can't buy imports! What a nifty deal.

This is how the Great Depression worked. It wasn't tariffs and barriers but rather, everyone desperate to export, desperate to prevent imports. So they did this by depressing prices to undersell while at the same time, making their currencies so weak, no one could sell to them. The champions at this game have to be the Japanese: they don't even need to bother with trade barriers if they weaken the yen so badly, no one can sell in Japan, their prices will be too high. The recent G7 Dwarf Tossing Convention saw various dwarves trying to throw each other's currency around and finally, frustrated that the US Dwarf won, they banded together to attack the Chinese Dragon's currency, instead.

But this does them no good at all. They must make the US dollar bigger but the US is busy shrinking the dollar. From dwarf size to midget size. This is causing the European dwarves lots of trouble for they are now giant-sized. They hate this because it is killing their trade with the US. This stupid currency game will trigger a depression because everyone wants a weak currency so they can flood the US with labor-value-added goods. The US needs energy so we flood world markets with weak dollars which is why energy in particular has risen fast this last 5 years.

Energy costs have not risen in Europe but their industries can't exploit this in world trade since the strong euro makes it harder for them to export. Instead, they are becoming the ultimate destination of all imports which is why they are asking the US, in desperation, to make the dollar stronger.

From the Nikkei:

Govt Cuts View On Housing Construction; 1st Since April

TOKYO (Dow Jones)--The Japanese government downgraded its assessment of housing for the first time since April in its October report, stirring concerns weak domestic demand could weigh on the economy across the board.
***************************************
Asia Stocks Erase Last Of October Gains; Yen Rises

SINGAPORE (Dow Jones)--Erasing what was left of October's gains for several of Asia's major indexes, investors moved out of stocks and into less risky assets Monday, amid renewed worries about the health of the U.S. economy.
***************************************
Nippon Paper To Shutter 3 Plants To Offset Surging Fuel Costs

TOKYO (Nikkei)--Nippon Paper Group Inc. (3893) will close three factories by next fall to revamp its production system in response to sharply rising fuel costs, company sources said Monday.
**************************************

Of all nations on earth, Japan's is the most tied to the US. The Japanese have many political problems in Asia directly tied to their WWII adventures. To this day, any apologies or payments for damage they caused are very grudging and very small. So they concentrated on selling to the US which is an easy target for them. Due to the Cold War, we view them as good allies and the bulwark of US power in Asia, not trade rivals.

But their economy is going down faster than the US economy because they are in a panic, they know what will happen next. The US stops buying expensive Japanese goods and will focus on buying cheaper Asian goods! They are out on the limb, in the upper end of export manufactured goods. When the US goes 'cheap', they will be cut out of our markets. Note how, after pretending there is not only on inflation in Japan, there is deflation, they must cut out jobs and reduce their business to cope with RISING costs! The need to keep their depression going to keep the yen weak and interest rates below 1% has them trapped now in a real depression that will now pull them down, badly. They should have done business like China and let inflation in back in 2003. But, gleeful at the trick of pretending to be poor, they didn't do this. The carry trade they created must go on and all of Japan's trade partners are now so dependent on this for funding themselves, they also must keep it going which means Japan has to create a depression in the teeth of terrible, rising inflation. This is causing great distress there. Much of which is hidden from view just like our own government hides our own inflation from view.

From Reuters:

U.S. Energy Secretary Sam Bodman said on Friday that current oil prices were "far too high" and the White House said this week the Bush administration was concerned about the impact high energy prices have on low-income families.

Still, the administration did not back away from its threat to veto legislation to boost funding for LIHEAP to levels it has called too high.

LIHEAP has an interim annual budget of $2.16 billion, but the White House wants to cut the program to $1.78 billion for the 2008 spending year that began on October 1.

The House of Representatives has passed legislation to boost the program to $2.66 billion, while a Senate committee has cleared a bill keeping LIHEAP at its current $2.16 billion budget.

Fox pointed out that if funding for the program had increased to keep up with inflation each year since it began in 1981, LIHEAP would have a $4.2 billion budget.

As I predicted, the government in the US plans to freeze or starve the lower working classes and retirees to death. Bush is concerned about inflation of energy? HAHA. Right. So he deals with this by cutting funds to the elderly on top of the false inflation readings allowing him and his gang to drop SS rate hikes! People will die because of this just like children will die due to lack of health care. Since the financiers and speculators don't care, Bush doesn't care. Cramer won't run about on TV screaming, 'There is BLOOD in the streets!' if the bleeding is from non-speculators.

There are many Americans who imagine a world that is cruel and heartless and mean is a great place to live. Few of such thinkers never worry about being one of the elderly being frozen to death because of investments going bad when a bubble pops and they are too old to regain their wealth by working. The Social Safety Net is boring and often, annoying but it is better than Risky's lovely dark pit in hell where you die. The main reason most sane, civilized countries devise safety nets is very simple: it brings in political power and makes the population peaceful. Otherwise, a huge military force has to be created that, like in say, Burma, has to constantly battle the populace. Look at Pakistan: no stop warfare in the streets. Look at Iraq: the peace there under Saddam was militarily imposed but it was not too difficult for him to rule due to the social safety net he created and which we tried to destroy with the embargo.

From the Inquirer:

THE central bank, Bangko Sentral ng Pilipinas (BSP), had about $14 billion of its offshore investments in the custody of American banking giants JP Morgan Chase and Citibank as of end-June, according to a recent report to the Monetary Board.

The BSP asset portfolio handled by the two banks had expanded by about 31 percent from a year earlier, the report said.
*snip*
The BSP said Friday that the reserves had reached $30.7 billion as of end-September, up $200 million from end-August, due to a resurgence of foreign portfolio investment inflows.

This little tidbit story illustrates how money that is no longer flowing into the US/UK banking systems is now flowing, via pirate coves, to other destinations. The flood of money flowing madly about the planet seeking some place where they can grow without building much actual infrastructure is incredible. The money making machine created by the FX markets has been astonishingly prolific like cockroaches breeding in the dark, warm kitchen at night. I have noted in the past how the production of new money has shot up and very little of this is direct foreign trade surpluses but rather, are speculators using differentials in valuations of the script used in this trade to run betting schemes. They borrow money and then use it to bet on the value of the money they borrowed. This mess is at the heart of the carry trade and Japan's need to have super-low interest rates for trade purposes.

From Market Watch:

Top European regulators urged big banks to take voluntary steps to fix weaknesses uncovered in the recent global financial market turmoil and warned any move for quick new laws might cause more harm than good.

European Central Bank President Jean-Claude Trichet said he wanted to give "the right of first refusal to the private sector" to work out appropriate principles for restoring confidence and liquidity in financial markets.

In a dinner speech at the Institute for International Finance, Trichet said that banks should consider "voluntary" disclosure of their holdings of complex securities. This would include disclosure of the holdings of the vehicles banks arranged to stay off their balance sheet.

Maybe the government should give us all the 'right of first refusal' when it comes to laws! I don't like a law, I get to refuse to obey it. Nay, it can't even become a law if I don't want it. Why bother with bribing politicians, that is so very expensive, when the head of the Imperial European banking system will automatically let me write the laws governing my activities? HAHAHA. Right!

This is so stupid, so fake, so obviously wrong any way we look at it. The entire mess unfolding is due to how these banks, investment houses and pirates operate off shore and off the books. And they are off shore and off the books because they are crooks! Duh! So of course, they want NO laws, NO regulations and NO taxes. And since they are creating a tsunami of money that has caused global inflation everywhere but in Fortress Japan, they are very much responsible for the present banking collapse and therefore, should all be arrested, not told to write the rules!

As for the 'voluntary' disclosures of their dirty doings: this is like asking Al Capone for his bank robbing schedule! Why on earth will these liars and con artists want to show their cards? Why would they go off shore and off the books in the first place if they weren't doing something murky, risky and stupid? How can they con people if they show us their con game?

Expecting them to uncover the mess they created and to give a true accounting, a fair value for all this is like expecting China to raise the value of the yuan because we demand it. The feeble demands of the European central bank is in stark contrast to the Bank of China which is united with its government in running things. The US system is even more wretched: we are beggars who beg everyone to please do this or that but we no longer control our fates on any level. All we can do is put on the brakes via interest rate hikes or cut rates and make bubbles. We can't finesse anything, anymore.

From Bloomberg:

House Ways and Means Chairman Charles Rangel is preparing to unveil what he calls ``the mother'' of all tax proposals. When he does, he may set off the mother of all lobbying battles as Wall Street races to block higher taxes on hedge-fund managers, Blackstone Group LP and other buyout firms, and venture capitalists.

Rangel's proposals will be in two bills he plans to introduce this week: An $80 billion measure to temporarily protect 23 million U.S. households from the alternative minimum tax, and a broader, $1 trillion overhaul of the tax code that would eliminate the levy altogether. The tax, which was originally aimed at the wealthiest Americans, now affects more and more middle-income earners.

Like in the 1970's when inflation pushed people into higher and higher tax brackets while their life styles deteriorated, so it is here: there is a need for tax reforms but if it were set to the rate of inflation, we wouldn't need these 'tax cuts' in the first place. But then, the government must be honest about inflation and they lie about that nasty item. The Democrats will rake in huge bribes this election cycle as desperate dealers and wheelers pour money into DNC coffers. They would far rather corrupt the GOP but the GOP's alliance with the gullible people in the 'morals' movement has proven to be a total fraud and the GOP is now being eclipsed. And these same people bribing Democrats are very fearful of Ron Paul. They love fooling the Moral Majority but they can't fool him. So they want to bury him.

The Republican party, like the Democratic party, has lost its conservative bearings. This is why they have a multi-married cross dresser and a vapid, cheap TV star running for the highest office. The Democrats want to be populists but they hate their own population so they, like the GOP, waver between tossing out the entire concept fo democracy and just do as they please. And it pleases them to get lots and lots of money. To have easy times even as a storm of hard times approaches.

As we make heart-rending choices about killing people in the Middle East, as we make cruel choices about freezing or starving people to death, we have to remember, the costs of all this can rebound on ourselves. It is now exactly 88 years since the Great Depression began. 8, when turned on its side as ∞ becomes infinity. The #4 in China is a good number and when doubled, double good. This is also Oroboros, the snake with the tail in its mouth. And it is also the Möbius strip where one is stuck in a matrix, a configuration that, despite twists and turns, it also infinite even as it is very finite, sort of like our own time and space continuity.

The past is always there, we don't escape it. History is a matrix that is a mischievous Möbius strip. This is why, if we want to see the future, we must look at the past.

Culture of Life News Main Page

Greenspaniel and the G7 Dwarves Fight Over Dollar Stuff

October 21, 2007

Elaine Meinel Supkis

More information is now spilling out of the cave where the G7 dwarves met. Seems, as I predicted, the dwarves are not so united after all. Indeed, they are swinging hammers and axes at each other. The bank melt down is to be blamed on the Chinese Dragon who sent some observers to this confederation meeting. Hu needs to be entertained as he whacks rivals in the shins at home. HAHAHA. Turns out, the US vetoed condemnation of the weak US dollar. HAHAHA. Everyone wants BIGGER trade surpluses with the US. And reality be damned.

From Bloomberg:

The dollar fell to an all-time low against its major trading partners after the Group of Seven failed to address the record decline following a meeting of finance officials.

The policy makers, representing the U.S., U.K., Japan, Germany, Italy, France and Canada, stuck to language in prior statements by saying ``excess volatility'' in currencies is ``undesirable'' and that currencies should trade in line with fundamentals. They also intensified calls for China to let its currency strengthen, during the Oct. 19 gathering in Washington.

``The statement gives the market a green light to sell the dollar,'' said Brian Dolan, chief currency strategist at FOREX.com, a unit of the online currency trading firm Gain Capital in Bedminster, New Jersey, which has about $250 million of funds under management. ``With no comment from the G-7 about its weakness, the dollar could decline to $1.45 per euro in a month.''

OK: no one believes me, it seems. The problem isn't the yuan. It is the yen. I can't understand why this is so hard to understand. We don't talk about the yuan 'carry trade' because there is none. China's interest rates are in line with the rest of the world. China, like the rest of the world, has inflation. China can see the value of the yuan rise if the US and Europe wish to hold Chinese yuan but we don't hold hardly ANY yuan in our own FOREX reserves.

The game is, if one wants a weak currency, they must buy the currency of their trade rivals and then hold them. Ergo: if Europe and the US want the yuan to be strong, they must ask for lots and lots of yuan and then HOLD THEM. This poker game is laughably easy to understand. But they don't want any yuan or yen. Europe and the US want the world to do the way we made Germany and Japan do it with first, the Bretton Woods II Accords and the Plaza Accords. In these cases, the US, as the world's reigning empire, ordered everyone to weaken the dollar vis a vis their currencies and so they did. the Plaza Accords caused Japan to go into this huge balloon which pretty much destroyed their domestic economy.

Germany used its surplus wealth created by the sudden hike in the DM to reunite Germany after bribing Russia to remove their troops. So Germany didn't have a balloon like Japan.

The US, when the dollar became strong again after the curious and bizarre Asian Currency Crisis went off on a tear and had the Dot Com bubble. The following Wall Street/housing bubble was not due to a good currency situation, it was pure hokum, Greenspan's 1% interest rates driving the bids on stocks and assets.

So here ends the latest chapter in Snow White and the G7 Dwarves: everyone wants a strong dollar except the US and so the dollar is weak. But they can't say a thing about this so they attacked China, as per always.

From Bloomberg:

The yen rose against the 16 most-actively traded currencies this week as a decline in global stocks prompted investors to sell assets funded by loans in Japan. A report this week is forecast to show existing home sales in the U.S. fell to the lowest since 2001 in September.

Ah! This pleases me no end! I said, when the Japanese boasted that China's FOREX reserves couldn't stop them from raising the value of the yuan no matter what, the Chinese were helpless, I said, China would counter attack with tremendous speed. And here is the proof. All it takes to move currencies is to join a rush and then give a good push in the right direction. So if the playing field is tilting towards a stronger yen, all China has to do is pump a small surge into the mix and this gives the yen more momentum to move where the Chinese want it to go: UP AND UP. This is a war between China and Japan. China thought Japan would help them stop the barking in the West. But Japan joined so China upped the value of the yen in retaliation.

I expect the Japanese to take countermeasures on Monday though what they may be, I can't tell yet. Another threat to get nuclear arms? Or will they play footsie with the seperatists in Taiwan? Can't wait to see.

From the Telegraph:

European finance ministers this weekend failed in their bid to slap down the United States for allowing the dollar to plunge to record lows against the euro. US Treasury Secretary Hank Paulson vetoed French, Italian and German proposals to use the final statement from the Group of Seven (G7) finance ministers meeting to warn of the problems that are facing Europe due to the falling dollar.

Sooooo....seems the disgruntled dwarves in Europe are in a bad mood. They wanted Dopey, of Goldman Sacks, to do something, anything, to make the dollar stronger. IE: tell Bernake, there was no BLOOD IN THE STREETS but it was all a farce and he should raise interest rates. But of course, right on the heels of the G7 grumbling and growling at each other, the US stock market was fed a poisoned apple made by the Wicked Queen and it keeled over, dead. This sudden death alarmed everyone. But did it stop them from wishing for a strong dollar?

Nope. They all want to export to the US. They don't care the US has the world's biggest trade deficit, bar none. They don't care we are going bankrupt. They don't care that a currency cannot, just CANNOT be 'strong' of the trade deficit is over 6% a year, every year. Over 1%+ for every year for 35 years. Normally, when this happens, a currency is hammered mercilessly. But not in this case. Everyone is seeking trade advantage via weak currency vis a vis the dollar. A strong yen is useless since Japan won't let in any imports in any way, shape or fashion. If they have to tax their people at 60% and then raise the sales tax to 17%, they will do this.

But low-tax USA is a great destination! China finds this all very funny. We like to imagine, China wants us to be the destination of all they produce. China has a very LONG history of being the world's top manufacturing power and demanding gold for goods. They know what money really is. Note that since they loomed larger in the world's economy, they and India, another gold-loving civilization, the value of gold has shot to the heavens. Not the dollar.

From the Telegraph:

The ministers limited their currency comments to a warning to China to allow its currency to appreciate. They ordered the Asian giant to let the renminbi rise faster, amid concerns its peg against the dollar is one of the root causes of instability in global markets. Having sent only a skeleton team to the meetings, the Chinese government is not expected to respond.

ALL currency markets are manipulated. The problem for the dwarves manipulating currencies is that a DRAGON is not only doing this too but now a RUSSIAN BEAR has joined and between them, they control almost half of the world's FOREX reserves. Which they are using artfully and I suspect, in tandem. If the G7 imagine they, alone, can conspire, they are stupid. Others outside the Dwarf Mini Hut also can do this. Dragons are known for their craftiness, for example. And Bears may hibernate but when they are awake, they can pry open windows, doors, rip them off the walls and enter and eat. All we need now is some crazy Persian cats coming along, clawing everyone's noses.

From the Telegraph:

The G7 communiqué said: "Our response to recent financial turbulence must be based on full analysis of its causes."

Despite the rise in oil prices to a record high above $90 a barrel this week, the statement did not urge oil cartel Opec to raise its production levels.

HAHAHA. Analysis: we can't ask Saudi Arabia to pump more oil! They CAN'T!!!! Oh my god. And we can't ask Iran Kitty to pump more oil which is why it is laughing at us now. Ouch. And Russia? HAHAHA. Oh, no! They are...with the Dragon! So far, threatening this bear with missiles has been a miserable failure. I wouldn't put it past Putin to use his FOREX reserves and Sovereign Wealth Funds to hammer the dollar and raise the value of the euro. Kill two dwarves with one, big stone. Who needs finesse?

Will the dwarves learn any lessons? Is the moon green cheese? I can't wait to see what happens next.

From Bloomberg:

European Central Bank officials said food costs and record oil prices are fanning inflation pressures in the 13 euro nations, suggesting they may support further interest-rate increases.

``Inflation risks have increased recently'' and the ECB will ``have to counter these risks should they materialize,'' said Germany's Axel Weber in an interview today after a meeting of the Group of Seven nations in Washington. Austrian colleague Klaus Liebscher said the threat of faster inflation is ``significant.''

The ECB shelved a planned rate increase in September after the U.S. housing recession caused a jump in credit costs. While G-7 finance ministers and central bankers said Oct. 19 the market rout threatened to drag down growth, President Jean- Claude Trichet said they agreed on the need to ``remain vigilant'' on global inflation.

Paulson claims there is no inflation in the US! Japan has negative inflation. But Europe is inflating! Of course, the US and Japan are both lying bastards. If Europe wants no inflation, they should destroy the income of the working classes, starve people to death, let raging storms wash thousands of people out to sea while doing nothing, etc. Imitate the masters! Of course, labor unrest in Europe is growing ever sharper. The more they imitate Japan and the US, the more likely the Bastille will be stormed and the heads of the right wingers put in power due to fear of Muslims, will end up on pikes, not turnpikes.

From Bloomberg:

Group of Seven finance ministers and central bankers said the credit-market rout will slow economic growth and strengthened calls for China to let its currency appreciate.

``Recent financial market turbulence, high oil prices and weakness in the U.S. housing sector will likely moderate'' the global expansion, officials said in a statement after meeting in Washington yesterday. ``Our overall economic fundamentals continue to be strong and emerging markets are providing critical impetus.''

When I read this, it was obvious, the brave face plan is in place. You have nothing to fear but China! Yes, I can see that message. Of course, the Japanese are terrified of China. But their latest games made it worse for them, not better. If China forces the value of their precious, poor yen upwards vis a vis BOTH the dollar AND the euro, this kills their whole profit margin and thus, they will genuinely end up in a depression.

The 'strength' of many world markets is based on selling to the US while not buying from the US. To the tune of $700+ billion a year. Impossible.

Bloomberg again:

The G-7 set aside differences over the dollar's drop to a record low against the euro, sticking to past language in saying ``excess volatility'' in currencies is ``undesirable'' and that they should trade in line with fundamentals. Other than the yuan, no specific currency was mentioned.

I include this to show how this story has morphed over the last three days. Why would the creators of the world FX trade system hate 'volatility'? If they hate this, they should control their own currencies! This means ending thost stupid off shore pirate organizations that spend much of their misbegotten time, playing shuffleboard with coins. The insane and utterly useless shifting of funds from account to account accounts for much of this 'volatility'! The cure?

Every nation must hold about $1 trillion in FOREX reserves. Note how the yuan is NOT volatile! It is 'stable'! Yet it is the only currency criticized! I have said this before: make up your minds, guys! Do you want Safety or Risky? Risky makes wealth and breaks hearts as she destroys as swiftly as she creates. Poor Safety is slow, easy, quiet and no one gets rich but no one blows up and dies.

Click here to see past market crashes vis a vis the Wall Street Journal:

With investors marking the 20th anniversary of the 1987 crash this month, here's a look back at how that episode compares with other notable drops in the Dow Jones Industrial Average, from the crash of 1929 to the 2007 credit meltdown.

From Yahoo comes more Greenspaniel fun!

An unusually high degree of risk taking across asset classes made recent financial market turmoil all but inevitable, former Federal Reserve Chairman Alan Greenspan said on Sunday.

"The financial crisis that erupted on August 9 was an accident waiting to happen," Greenspan said in a speech on the sidelines of the International Monetary Fund and World Bank meetings. "Credit spreads across all global asset classes had become suppressed to clearly unsustainable levels."

"Something had to give."

The gift that keeps giving! Greenspaniel can't shut up, can he? Arf, arf! He happily points his cute little nose at allllll the messes HE made and then barks at us, wagging his little stubby tail, his rear haunches writhing with joy. 'Puppy made a BAD mess!' he says in dog body language.

Well. 'BAD DOG. GO TO YOUR BED!' I yell, but he ignores me.

Greenspan:

"If the pernicious drift toward fiscal instability is not arrested and is compounded by a protectionist reversal of globalization, the current account adjustment could be quite painful for the United States and our trading partners," he warned.

The current account gap swelled to more than 6 percent of U.S. gross domestic product last year, leaving the United States reliant on foreign capital to finance that deficit.

"At some point, foreign investors will balk at increasing their share of dollar denominated assets in the portfolios they hold," he said, adding the recent dollar decline is an indication that America may be nearing that point.

Thank you, naughty puppy. The US doesn't plan on going 'protectionist'. The plan is to go BANKRUPT. Thank you. Instead of reining in our appetites for imports, we will import until we can no longer import. And China decides when that happens. This is when they shut the door in our faces and tell us, they are no longer interested in selling for dollars. They are looking for gold or other goodies. And this day isn't in the far future, it is in the nearer future.

The fact that less than one week after Japan boasted, they will boost the value of the yuan while the Chinese couldn't do anything about the yen, and then the yen, not the yuan, shoots up in value means our own free ride is ending.

This should be painfully obvious now. Again, thank you, Greenspaniel, bad boy, bad, bad boy.

Culture of Life News Main Page

Non-G7 Nations Mock G7 Dwarves

Elaine Meinel Supkis

All the non-G7 nations are mocking the IMF and the entire G7 business. Led by Russia and China, they are trying to get the US and Europe to do something about their financial problems that are threatening the world's banking and trade systems. And it is time to visit Japan yet again, this always bothers me, how the US ignores the challenges of Japan and how the West focuses only on China but can't see how this interacts with Japan and how Japan is not on our side at all. Time to visit the IMF and the CIA web sites to talk about all the numbers and facts pertaining to this matter of US/Japan trade.

From Bloomberg:

Brazil and Argentina chastised the International Monetary Fund for its failure to foresee the collapse of the U.S. subprime mortgage market.

Ministers from the two nations, which have required rescues from the IMF in the past two decades, said the fund should scrutinize richer countries as much as emerging economies. The call for equal treatment was echoed by the Group of 24, a collection of officials from developing countries.

``Allow me to point out the irony,'' Brazilian Finance Minister Guido Mantega told the annual meeting of the IMF and World Bank in Washington. ``Countries that were references for good governance, of standards and codes for the financial systems, these are the very countries facing serious problems of financial fragility, putting at risk the prosperity of the world economy.''

So far, China hasn't bothered with chiding the IMF. This is because the IMF is impotent due to lack of banking power. The Brazilian and Agentinian ministers are doing the slapping for China. Both go to China for funding now, not the IMF. So they are emboldened to the point of open sassy back talk. The G7 dwarves just had their meeting and ended it in the traditional way: yelling at China while Japan stands to one side, sniggering. While I was visiting the Deep Water Ports in New Jersey, I noted that the Japanese ships were cloaked in anonymity while the Chinese ships had huge names painted on their sides. I constantly harp about Japan because of this cloaking device they use.

Here is a NYT article about clothing a Japanese woman can wear that makes her look like a Coke machine if she thinks someone might notice her.

But the devices’ creators also argue that Japan’s ideas about crime prevention are a product of deeper cultural differences. While Americans want to protect themselves from criminals, or even strike back, the creators say many Japanese favor camouflage and deception, reflecting a culture that abhors self-assertion, even in self-defense.

“It is just easier for Japanese to hide,” Ms. Tsukioka said. “Making a scene would be too embarrassing.” She said her vending machine disguise was inspired by a trick used by the ancient ninja, who cloaked themselves in black blankets at night.

Ninjas didn't cloak themselves because they were scared, they did this so they could secretly assassinate troublesome people and worked in the pay of various powerful lords who dueled with each other for political and economic power. The fact that the European and American negotiators will sit and talk openly about how to save their economies as Japan's Ninja negotiators sit there, smirking, is an amazing thing to me. Every time I try to warn people about this, they always say, 'Japan is in a depression, Elaine! Can't you see?' So I keep tearing at this issue like a frustrated terrier. Before I went to the port on Friday, I made a bet with myself, that the Japanese ships would be hard to identify. And as I suspected, this was correct.

The recent emergency meeting between China and Japan led me to believe the Japanese gave the Chinese various subtle signals which would lead me to suspect they would cease the currency wars. But if this was merely for Japan to stay silent, this was broken last week when a Japanese financier openly gloated that China's huge FOREX reserves would be defeated by clever, ninja Japanese financial FX moves that would force up the yuan.

Unfortunately for Japan, China reads the news and indeed, probably my own news service here (they know me, you see) so they now are making harsh moves to counteract the Japanese betrayal of their own possible secret accords. There are many ninja stars and blads thudding into walls here at night. The Dragon is every bit as proficient at this sort of Byzantine doings as the Japanese. Unlike the US which blunders about in the dark, falling into one net after another, blindly. Our technological edge which allowed the Europeans and Americans to pry open the Treasure Chests of China and Japan 150 years ago is now gone. We must use our wits again and this is lacking.

From Xinhua:

A senior Chinese official urged the international community here on Saturday to analyze the root causes of the recent financial turmoil and to make efforts to safeguard global financial stability.

"Activities in the major advanced economies slowed in the second quarter of 2007, posing significant downside risks to global growth," Wu Xiaoling, deputy governor of People's Bank of China said at the 16th meeting of the International Monetary and Financial Committee.

Credit market retrenchment in the United States may further dampen the housing market, suppressing consumption and investment, giving rise to potential risks of recession with a spillover effect on other countries, she warned.

"It is all the more urgent a priority to strengthen surveillance of the systematically important advanced economies in order to safeguard global financial stability and economic prosperity," said the Chinese official.

How droll. How funny. HAHAHA. Right on the heels this week of the G7 dwarves demanding China open its own bank vaults and let Japan root about there to find weaknesses to exploit, China slaps us smartly across our triple hell hound snouts. The Dragon loves fiscal stability. And it loves openess. So the US and Japan should join England in asserting control over all those pirate coves in the Caribbean! Of course, they won't and can't. Just this week, they began to whine that they NEED occult darkness in order to mine wealth out of the Outer Darkness where magicians operate! I drew a cartoon about that, showing a wizard explaining he would not bring light into the Hell Hound's cave.

China won't laugh to death. They can, with a straight face, lecture us back every time we attack them verbally. The whole world is watching and this is why Brazil and Argentina are now joining in. The G7 will be outnumbered and outgunned, verbally, by all other nations as one after another finally throws down the gauntlet and tells us off. This is a HUGE loss of face. We cannot ignore or underestimate this. Just as Russia and soon, China, are now openly embracing countries we are trying to desperately isolate. For example, North Korea isn't isolated anymore, it is slowly being engulfed by China and South Korea. For the last year, I have lauded China's massive diplomatic efforts which are now paying off. China knew that if China became strong, Europe, Japan and America would form an alliance to stop China's growth and power but the days were we could do this easily are long past. China has us by the throat.

I would suggest the US/EU/UK empire imagines Japan will perform some sort of ninja action on China's finances to defang the Dragon. I believe the Japanese think they can do this. But I would caution all of them, this is not possible. China has eyes and ears everywhere and they are not stupid. Not at all. The 'survival of the fittest' fights within the government of China which includes annihilation, insures the top dogs will be top dragons, not drooling idiots like in the West. China just had their latest 5 year purge and more 'young princes' whose daddies were top revolutionaries, in this case, Zeng, are being dethroned and thrown into the streets or worse. Unlike Japan where nepotism reigns supreme.

From the top article by Bloomberg:

Developing countries are now lecturing the IMF. The G-24 urged the organization to increase ``surveillance of advanced economies, putting as much focus in evaluating their vulnerabilities as it does in emerging-market economies.''

Members of the group include Syria, Ivory Coast, Egypt, Ethiopia, South Africa, India, Iran, Lebanon, Pakistan, the Philippines and Sri Lanka.

The list of these countries are important for they are ALL countries Hu or Wen have visited several times this last 2 years. The leaders of these nations talk regularly with the Chinese diplomats at their embassies or directly with Hu. We overlook this because we like to imagine everyone is banging on our door, hat in hand, begging for attention and money. Israel does this, only no hat in hand. They, like the Japanese, believe in the ninja method, cloaking their actions, hiding their intentions, manipulating from the dark.

From the Bloomberg article above:

``We recognize there are issues in the system that need to be addressed,'' Clay Lowery, an assistant secretary at the U.S. Treasury Department, told reporters on a conference call from Washington. ``The biggest danger we can have is complacency.''

Lowery attended a meeting yesterday between Treasury Secretary Henry Paulson and ministers from Mexico, Argentina, Chile, Colombia, Peru and Uruguay. He said they weren't critical of the U.S.

``I give a lot of credit to these Latin American countries,'' Lowery said. ``They have stabilized their finances.''

This is the level of diplomacy we have. With a straight face, Lowery says the South American and Central American nations have sabilized. They were at that meeting to see if the US was stabilizing! Not themselves! And of course, they weren't critical at that meeting, they attacked the US via the US power in the IMF! And for Lowery to warn us to not be complacent and then being complacent about his meeting which was a parody of a meeting, a poker face event where the participants ran outside and doubled up, laughing while Lowery trundled away, satisfied and utterly fooled...hahaha. Indeed, where do we get these people?

Don't tell me. I know where they come from. Time to visit the IMF headquarters to see what they think about all this.

From the IMF US economic counsellor and director of research there, Mr. Johnson:

In emerging market and developing countries, growth is expected to remain strong across all regions, albeit at a somewhat more moderate pace than the brisk growth we have seen over the past two years. This year we expect China and India will be the two largest contributors to global growth, measured in PPP terms. As noted in my foreword to the WEO, this is the first time based on the IMF's measurements that this will be the case. China is expected to grow by more than 11 percent in 2007, while India is expected to expand by 9 percent. Growth may moderate somewhat across emerging Asia in 2008, reflecting slower trade growth as well as some policy tightening in countries facing overheating pressures.
*snip*
Uncertainty about the impact of financial turmoil on real activity also reflects the unexpected ways in which the problems have spread. Like a forest that has not seen a fire in many years, a benign financial environment, including low volatility and unusually narrow risk spreads, had built up a sizable underbrush of risky loans, relaxed lending standards, and high leverage in certain areas. When problems ignited in the U.S. subprime mortgage market, the fire jumped in somewhat surprising ways to other areas. In other words, at least three important fire breaks that should have limited the impact of the crisis in U.S. subprime mortgages did not hold. One was obviously the impact on other parts of the U.S. credit markets, such as jumbo mortgages which traditionally involve less risky borrowers. The second jump was to banks. Revelation of the extent of bank exposures, including among European banks, to subprime mortgages in the U.S. through off-balance sheet vehicles have shaken confidence and squeezed liquidity in interbank markets. The third, and perhaps most surprising jump, was to commercial paper markets. Asset-backed commercial paper saw issuances curtailed and a sharp rise in spreads, and there were effects also on other kinds of commercial paper. These global funding strains, as you know, led to a run on a UK bank, a mortgage lender that was apparently not at all involved in U.S. subprime.

These secondary fires are still being addressed through liquidity operations by major central banks, and their actions continue to help stabilize market conditions, but the smoke has not yet cleared. Interbank and commercial paper spreads have begun to ease, but money market conditions have definitely not yet returned to where we were before the turmoil began.

Central banks in advanced economies face a challenge in terms of restoring stability to the payments system while responding to the evolving macroeconomic risks. Central banks have been appropriately careful to distinguish between actions to restore liquidity and setting their policy stance to control inflation and support growth.

The complacency and inability to see grave dangers created by the US/UK/EU methodology for financial health is continuous in this interview. It is most unnerving. The other nations yelling at us right now are quite correct to pin the blame of this devolving economic situation on the US donkey. The US adamantly refuses to understand, we can't spend like fiends while producing nothing for export. Our oil consumption is the root cause of oil rising in price, not China. China's share is still smaller than ours and per capita, far behind our consumption. But we assume we have the right to consume as much oil as we want for as long as we wish.

None of the root problems are being addressed. For this FOOL, the American IDIOT to claim the pathetic patches on the banking and financial systems we created are working, is just beyond aggravating. It doesn't address fundamental problems and the most fundamental of them all is the US trade deficit.

From Bloomberg:

U.S. Treasury Secretary Henry Paulson said a fund created by some of the biggest banks to help revive the asset-backed commercial paper market should be in place by the end of the year.

``It will be more valuable if it's up and running sooner,'' Paulson told reporters yesterday after a meeting of finance ministers and central bankers from the Group of Seven nations. ``It will take a while, but it should be done by the end of the year.''

Traders are becoming more pessimistic as losses on structured investment vehicles, which borrow in short-term markets to buy longer-dated assets, add to concern over the fallout from record U.S. mortgage foreclosures. Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. agreed to start a fund of as much as $80 billion to rescue the SIVs.

The number keeps dropping! Earlier, it was $100 billion. By the time it is set up, will it be $20 billion? This is one of the latest patches. Europe and the US poured in huge sums from August to today, trying desperately to get the banking system's gears going again. This huge, massive collapse is historic. The level of denial is historic. During all financial collapses, there is this period of denial. Everyone hopes the system runs of thinking postive, on not panicking, on waving wands and making wealth well out of the dark caves where it flowed earlier.

This latest, stupid scheme, is doomed to failure. The dark pools have emptied out and going there at night with bucket won't do any good at all. There is no water there to haul into our bank vaults. Facing the truth is life and death here. We can't patch it. We must face the truth about our trade deficits. And this, the world fears, above all, the Japanese fear this. Europe wants us to spend wildly. So does Japan. We sat with them in the G7 negotiations and all this was, all it did, was work towards keeping the US spending wildly on imports! The EXACT opposite of what we need.

The US should not be negotiating with Europe or Japan as if we are all in the same boat. We are rivals and they have a vested interest in keeping us in the position we are in now: going off the financial cliff. They are hoping we will come up with some elaborate and sneaky system to keep this status quo going. The magic of the Japanese .5% or less carry trade loans has exhausted itself and can no longer keep going due to the simple fact, everyone is now so deep in debt in the West, we and Japan, can no longer pile on more debt, we are at the point, we can't pay the interest rates anymore, even.

From Bloomberg:

Federal Reserve Governor Frederic Mishkin said inflation measures that exclude food and energy costs are a ``better guide'' to underlying changes in prices.

Changes in price indexes without food and energy ``provide a clearer picture of underlying inflation pressures,'' Mishkin said in the text of remarks to the HEC Montreal Macroeconomics and Monetary Policy Conference today. ``If the monetary authorities react to headline inflation numbers, they run the risk of responding to merely temporary fluctuations.''

Mishkin should be either arrested or put in cement boots and dropped into Bayonne Bay. He is a criminal mastermind. No sane person could say this in public. Social Security recipients just got the tinniest raise in payments this year, way below the rate of inflation. As sellers of goods drop prices due to the economic contraction, the inflation index magically falls. But since this drop off is due to consumers losing purchasing power due to a 5 year long hike in the price of commodities, energy and food, well! This isn't 'fluctuations', this is INFLATION. Big time. The Fed is supposed to keep the LIVING STANDARDS of the elderly from collapsing due to inflation. Yet they refuse to track the price of things the elderly must buy to stay alive. This will have political consequences, of course.

Let's go visit Japan to see what is going on there yet again, from the Asahi:

The Cabinet Office on Wednesday presented its estimates of long-term projections for social security programs and the revenues needed to pay for them to the Council on Economic and Fiscal Policy. We welcome this development if it kicks off long-awaited head-on debate on the issue. According to the Cabinet Office, additional tax revenues of between 14 trillion and 31 trillion yen would be needed in fiscal 2025 to maintain current levels of health and elderly care benefits. If those revenues are sourced from the consumption tax, the rate will reportedly need to be raised to between 11 and 17 percent from the current 5 percent.

OK: Japan is again, debating raising the sales tax. 17%???? Wow. Kiss any economic activity in Japan, sayonara. The goverment can't raise income taxes, they are much higher than in the West. On the other hand, they don't do Social Security taxes which hammer the US work force very hard. They pay for the elderly via the general government funds.

From The Age, Australia:

Japan's government debt, already the highest in the industrialised world, mushroomed to a record high of Y795.8 trillion ($A9.5 trillion) at the end of June, according to a report released by the Finance Ministry.

The latest figure marked an increase of Y14.3 trillion ($A170 billion) from the end of March, the ministry said. The amount is equivalent to about Y6.24 million ($A75,000) for every Japanese.

Japan has relied on government bond issues to make up for falling tax revenues, turning into one of the world's most indebted countries.

Japan's public debt burden is almost 160 per cent of its GDP and already the highest in the industrialised world.

I have done many stories about Japan and the US government spending and debt levels. I get all sorts of numbers. This one is astonishing, if true. So far, this is not the final word on that matter. I read the Japanese news a great deal, daily, in fact, and never, never, do they mention the total in the headlines or pretty much anywhere. This level of denial matches the US. In this case, the Australian dollar was worth less than the US dollar but going backwards in time to see by how much takes too much time. All I know is, Japan's debt is, like Britain, its mirror image, nearly the same size as the US debt. Per capita, Japan is far worse off than the US. And this, without funding much of any military.

The US still has the ability to deal with its problems, we are not so far up the creek as many other nations including most of the other G7. But we are foolishly thinking we don't have to deal with all this due to this fact. We can go deeper into debt! Whoppee!

Only we are in deep trouble due to deindustrialization. This is much harder to regain. We can't wave wands and factories, appear. This is why Europe and Japan are clinging desperately to their own industrial bases! From Taxes in Japan:

The upper rate is now about 50%, isn't it? Imagine what this would do in tax-cutting America. These taxes are not enough to pay for running Japan. And since Japan doesn't encourage pay raises, this means their income tax goes DOWN, not up! Pay is being cut! Not raised.

I decided to translate the numbers above into dollars:

¥1,950,000 =$17,017

¥3,300,000 =$28,789

¥6,950,000 =$60,651

¥9,000,000 =$78,540

¥18,000,000 =$157,081

The overall pay scale in Japan is lower than the US. So many are at the ¥3 million level. With taxes taking 10%, this leaves them with $25,911 dollars. In the US, this is poverty level wages. You live in a very small box apartment...um...like many Japanese. Only this is the average wage and this is where we are heading, ourselves! Only not via deflation but inflation.

From the Asahi:

Advisers to the government have also been mulling ways to raise taxes when the nation's economic recovery takes firmer root.

They are even more turtle-like than the US. The ability to do anything has caused paralysis. On the other hand, when it comes to export trade and finance, suddenly Japan moves faster than a jack rabbit on a hot Texas highway dodging trucks! Zoom! The thing no one in Japan or the US talks about is the other side of the Japanese coin: not only do they not have a trade deficit, they have the world's #2 FOREX reserves so there is a HUGE amount of loot sitting inside of Japan, just sitting there! Its sole function: to keep the trade deficit with the US going.

From the Nikkei:

Forex Margin Trading Firm Halts Ops On Subprime-Related Losses

SAPPORO (Nikkei)--FX Sapporo Co., a company that brokers foreign exchange margin trading for individual investors, has fallen into a negative net worth due to losses in proprietary trading and been forced to suspended operations, The Nikkei learned Saturday.
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G-7 Pledges Efforts To Stabilize World Markets Amid Subprime Woes

WASHINGTON (Kyodo)--Group of Seven financial leaders pledged a joint commitment Friday to do their utmost to quell world financial turmoil arising from the U.S. subprime mortgage market problem.
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Oops. The carry trade is collapsing, isn't it? The top Japanese financial news story is dire news indeed, the patches on the tires of the US/Japan carry trade system are now so full of holes, it looks like an army of rats chewed it to shreds! Right under it is the G7 story. Japan desperately wants this goofy, totally a-historical and financially impossible system to keep on running. Their entire economy is based on a unsustainable system built on lies and ninja deceptions!

Here are other headlines, illustrating my point, from the Nikkei again:

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So, Japan won't set up a Sovereign Wealth Fund? Why not? They have nearly a trillion to do this with! And of course, this would turn the spotlight on the Ninja himself! And he has to first put on his Coke costume so he can hide at the next G7 meetings. I would suggest a 'Dwarf' design. Time to look at the CIA's world facts figures:

A quarter of Japan's economy is industrial. Per capita income was $33,000 but it has been dropping off this last 5 years.

Here is the CIA figures for Japan's government debts:

And they still run the government in the red! Amazing. Why don't the G7 talk about this? Why isn't the IMF yelling about this? Ha! Japan has a huge, huge trade surplus! That's why!

Note the US numbers here: our workers earn $10,000 more than the Japanese...but not for much longer, I fear. Our industrial base is only 20% of our economy. This is 5% less than Japan. And a good hunk of our base is actually owned by Japan but the stats don't show this. We own none of the Japanese industrial base and this is a key element that doesn't get talked about by either our own officials or the ninja Japanese officials.

From the IMF.

Japan and the US have opposite systems. This must be discussed more by the media and by our negotiators, not papered over all the time. Assuming we are playing on the same page when the Japanese aren't even playing the same instruments, much less, music, is childish. We have a tin ear.

Here is the CIA itself, talking about us!

Economy - overview:

The US has the largest and most technologically powerful economy in the world, with a per capita GDP of $43,500. In this market-oriented economy, private individuals and business firms make most of the decisions, and the federal and state governments buy needed goods and services predominantly in the private marketplace. US business firms enjoy greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant,to lay off surplus workers, and to develop new products. At the same time, they face higher barriers to enter their rivals' home markets than foreign firms face entering US markets. US firms are at or near the forefront in technological advances, especially in computers and in medical, aerospace, and military equipment; their advantage has narrowed since the end of World War II. The onrush of technology largely explains the gradual development of a "two-tier labor market" in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in household income have gone to the top 20% of households. [Elaine: HAHAHA, how did that slip in???] The response to the terrorist attacks of 11 September 2001 showed the remarkable resilience of the economy. The war in March-April 2003 between a US-led coalition and Iraq, and the subsequent occupation of Iraq, required major shifts in national resources to the military. The rise in GDP in 2004-06 was undergirded by substantial gains in labor productivity. Hurricane Katrina caused extensive damage in the Gulf Coast region in August 2005, but had a small impact on overall GDP growth for the year. Soaring oil prices in 2005 and 2006 threatened inflation and unemployment, yet the economy continued to grow through year-end 2006. Imported oil accounts for about two-thirds of US consumption. Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade and budget deficits, and stagnation of family income in the lower economic groups. The merchandise trade deficit reached a record $750 billion in 2006.

Wow, talk about a schizoid summary! Seems more than one hand at work. I bet the staff writing this was yelled at for telling the truth so the compromise was one truth per every third sentence. The part about firing workers here are directly connected to the 'worker productivity going up' part. That is code for cutting wages, we all know. I picture this as a devil and an angel writing it. 'Productivity is UP!' yells the demon. The angel then writes, 'But worker's wages are going DOWN!' And so on.

From the Age, Australia:

Import prices fell by 0.8 per cent in the September quarter and were down by 5.5 per cent for the year to September, the Australian Bureau of Statistics (ABS) said.

Within the total, the price of consumer goods fell by 1.0 per cent in the quarter and 4.0 per cent for the year.

In fact, prices for imported consumer goods have been declining for the best part of five years.

This has been caused by the combined effect of a rising exchange rate (up by 34 per cent in the past half decade) and the flood of goods onto global markets that have steady or falling prices - even in the currencies of the developing countries that export them.

China figures prominently on both counts, as a voracious consumer of Australia's minerals, whose soaring prices have propelled the exchange rate higher and as a producer of low-cost consumer goods.

Like Europe, Australia has the joys of a rising currency and is being flooded with manufactured goods from Asia. And the same thing is happening in Australia: the people aren't unhappy with their currency rising, they are glad they can buy lots of stuff from Asia. But like in Europe and the US, both the consumers and the Australian businesses there are going deep into debt. The banking mess is hitting all such nations which is why it did NOT touch Asia but hammered all the US/EU/UK systems.

The Economist:

Norway's 2008 budget, which is being discussed in parliament this week, gives them a new deal closer to the EU's system of a flat tax based on tonnage. Shipping profits would become exempt from tax. But the massive one-off price exacted by the centre-left government is the payment of NKr21 billion ($3.9 billion) of deferred tax liabilities built up under the old system—a burden that could cripple many companies.

Now the air is thick with threats of Norwegian shipowners flocking to foreign flags, including the British “red duster”, when they want new ships (Britain's shipping-tax regime is one of the most benign in the EU).

This is the race to the bottom. England is very big on this. As poor Japan struggles to tax its own people, England merrily drops taxes in its many tax havens to 0%! Amazing. And Japan's money people, to escape high Japanese taxes, are flooding into these pirate coves, sailing ships with no flags, of course, no names painted on the sides. They want to do this in the dark so the Japanese tax payers stuck at home don't see the obvious.-

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