Frantic Feds Inject More Funds Into Collapsing Banking System

November 16, 2007

Elaine Meinel Supkis

Yesterday was a busy day for us Doom Meisters. Today, the landscape is littered with the various CDO corpses that crawled out of various Dark Lagoons. Now the attention of the money magicians turns back to that pesky business of the FOREX situation. The destabilization of international commerce and finance caused by the dying dollar is causing many cascading events which look unconnected at first but actually are all part of the same system. If we look at all this as if it is Götterdämmerung and the Bifrost Bridge is collapsing and Valhalla is being repossessed by the Frost Giant/dragon, Fafner, we can guess what will happen next: the Fat Lady Will Sing.

Fed makes biggest temporary injection since '01

The Federal Reserve on Thursday pumped its biggest temporary daily infusion into the U.S. banking system since just after the September 11, 2001 attacks as short-term lending rates rose on both sides of the Atlantic.

Even though some news about bank write-downs from riskier investments was not as dismal as some investors had feared, underlying strains pushed overnight lending rates up in both the United States and Europe.

"There was a bit more focus on the Fed operations today in context of the rise in Libor (London Interbank Offered Rates)," said Tony Crescenzi, chief bond market strategist at Miller, Tabak & Co. in New York.

The banking system collapse that began in 1974 and accelerated in 1987 continues. The seeming health of the international banking system was an illusion. For the last 35 years, the world's financial systems have accumulated vast amounts of debts that can only be discharged one way: by going bankrupt. Periodically, various major sectors do just that. The International Monetary Fund was set up to allow the accumulation of debt in every country simultaneously without crashig by imposing harsh rules if the indebtedness gets out of hand like it is wont to do in many places. But all this depended upon the top industrialized economic powers staying out of trouble, themselves.

As we can clearly see, these entities which used to watch other, lesser, more unimportant nation's debt finances like a hawk go suddenly blind when looking in that good old mirror I spoke about the other day. Humans are, by nature, unable to see themselves in the mirror. The roots of the Indo-european word, 'mirror', is 'shining light.' And it is a very magical word. 'Miracle' and 'mirage' come from the same word. So does 'smile'.

Due to the impossibility of seeing the reality of our own selves in the Mirror of Time and Truth, the US, Japan and Europe have chosen to walk down the path of destruction. Evenn as we hear the song of the Fates and Furies, collectively everyone refuses to heed this but instead, continue forwards. The status quo must be protected! No matter how impossible, dangerous and horrible this might be! Understanding the need to change direction doesn't happen unless people understand the need to change is life and DEATH.

Bayreuth, Brünnhilda's immolation scene.

This European ending has some hope. But the darker ending in this other production is closer to the truth.

Metropolitan Opera's Immolation Scene.

The opera cycle begins with a dwarf seeking vast powers stealing the Rhinemaiden's gold. At the same time, Wotan hires giants to build him a great palace, Valhalla. But he tries to cheat them when it comes to closing the deal. He has to pay them or else they evict him and take the property back and sell it to the dwarf who stole the gold [hahaha]. So to fix this, Wotan goes and steals the gold from the dwarf by tricking him with the sale of ABX index funds. When the dwarf finds out he was cheated, he curses the gold. Wotan then gets entangled in this ideological war which causes many deaths.

It all ends badly. The only ones happy in the end are the Norns who rule fate and the future and the Rhinemaidens who get their gold back after WWIII destroys everything. I grew up, memorizing this entire Ring cycle in the 1960's. As time passes, the horrible connections between this frightful operatic meditation on the destruction of both men and gods echoes ever greater. Hitler, for example, tried his best to make this opera real. Indeed, the very last thing the Berliner Philarmonic played in Berlin as the Russians shot rockets at the city, was Siegfried's Funeral March.

Back to the futile attempts at the Federal Reserve to turn the tide and prop up Valhalla: it is doomed to failure. The actual collapse of our physical Valhalla, the destruction of the World Trade Center, the frontal attack on the entire edifice of World Trade and the New World Order, required huge infusions of funds. Simultaneously, the Führer who leads told us to go shopping, to redecorate our houses and in general, do the worst possible things. The sale of gas guzzling vehicles was encouraged as well as wild expansion of the housing stock in distant exurbs that require tremendous commutes using only gas powered vehicles. All the stupidest choices were made. And then made worse, for every penny of this expansion from day one, was entirely funded by going to Asia for loans and worse, going to the Bank of Japan for their eternal carry trade scheme based on near or at that time, totally 0% interest loans!

At that time, few dared to say, 'This is sheer madness!' Except for a few of us---this is probably why I laugh as I grind my teeth with rage. I gave plenty of warnings. From day one. Never, never should anyone ever go to war and simultaneously increase consumer credit. We tried this foolish experiment during the Vietnam War. This lead to a huge train wreck which, incidentally, continues. Far from recovering from that and learning lessons, we learned the opposite. Namely, that spending wickedly and freely means happy times even as we kill. This bizarre notion now has pushed the nation off the cliff. And the free fall won't be fixed by doing more of the same.

In addition, U.S. commercial paper outstanding shrank for the second consecutive week, indicating dislocations from the summer's credit market turmoil continue to dog that sector.

The Fed injected $47.25 billion in temporary reserves, its biggest combined daily infusion since September 19, 2001, to calm a rise in overnight interbank lending rates.

For the Fed want to KEEP THIS GOING. They want to have us run more war costs, spend more on the military AND spend like crazy on consumer goods and real estate! This can't go on for the simple reason, wars always cause inflation since they are run by governments and there are only two ways a government can run a war: looting or taxes! We are trying the looting and it doesn't even begin to cover the costs! And we cut taxes at the beginning of these wars. So the entire model is set to failure. While trying to steal the Ring of Power from the Saddam dwarf, all we ended up doing was create this Dragon, Fafner of China. Now the dragon wants to fry us.

The news that our Fed is pouring money into the system to keep interest rates low means they are creating more and more inflation. And their conflicting goals and means are driving us into a financial war with China. For the US wants the yuan stronger and instead of holding a huge FOREX reserve in yuan and thus, fixing the problem the way the Chinese did, we want to do this for free. Our FOREX reserves are pathetic. And all our major trade partners have bigger ones than us and this is why the dollar is weak. Our only tool to fix this without FOREX reserves is to raise interest rates yet the Fed is LOWERING them and doing this by debasing the damn dollar. So this means we will destroy our entire economic system in order to have FAKE LOW RATES that are below the real rate of inflation and already, this is hammering the lower half of the US population!

U.S. could face $2 trillion lending shock: Goldman

The impact of the U.S. mortgage market crisis on the underlying economy could be "dramatic" as leveraged investors may need to scale back lending by up to $2 trillion, according to investment bank Goldman Sachs (GS.N: Quote, Profile, Research).

In a report dated November 15, Goldman's chief U.S. economist Jan Hatzius said a "back-of-the-envelope" estimate of credit losses on outstanding mortgages, based on past default experience, was around $400 billion.

But unlike stock market losses, which are typically absorbed by "long-only" investors, this mortgage-related hit is mostly borne by leveraged investors such as banks, broker-dealers, hedge funds and government-sponsored enterprises.

A $2 trillion drop off the cliff! The entire concept of 'leveraged investors' should be outlawed. This was done, long ago, in the dark days of the Great Depression when even fools figured out that people playing gambling games betting of the future should do this only with their own savings, not with money made out of thin air and than promises to pay back when things pan out. This cycle of trying to get rich via going into debt is a CLASSIC. Far from being unusual or amazing, it is OLD. As old as the concept of 'bonds' and 'fiat money.' Many a king or emperor promised to pay off bonds sold to pay for wars. Then, if the loot didn't come in, the emperor or king would go bankrupt. Then, they turn on the Jews and loot them and burn the ghettos! Even the English did this with great brutality. For example, Edward I spent all his wealth on trying to subdue the ever-rebellious Scots. He won. He also went bankrupt because there was no gold in Scotland. All he got was this big stone which he put under the British Throne. But to pay, he turned on his bankers, the Jews, and divested them of everything and ejected them from Britain. All of them, rich or poor.

E. J. Dionne Jr.

Republican critics of the JEC report, " War at Any Price?," argued that some of its numbers are tendentious. Yes, this study has its moments of tendentiousness. But that doesn't undercut the importance of its questions. Consider only this number: Interest costs on Iraq-related debt will be more than $23 billion for fiscal 2008. That sum is almost exactly the amount separating Bush and Congress on spending levels for the entire budget now being debated.

Why are the costs of the Iraq war not considered part of our larger budget debate? On Tuesday, Bush vetoed Congress's $606 billion labor, health and education bill because of a $10 billion difference on spending for domestic concerns. But he is asking for a supplemental appropriation of $196 billion for the wars in Iraq and Afghanistan -- an increase of $46 billion over what he sought in October.

The US will probably follow this ugly course in the end which is why I, as Mrs. Levy, yell about this mess. I don't want it to happen because this endangers my own family as well as millions of Americans. History has many an ugly story to tell. For example, when the 4th Crusaders needed funds to pay Venice for transport and passage of war materials, they were told to go loot Byzantia to pay for this. So they cheerfully did this. This killed the remaining power of Christian domination of the Middle East for 800 long years. The effects of this idiotic solution to financial difficulties still troubles the earth and may cause WWIII and the destruction of all civilization.

Most economic news blogs like to focus on the near future and many don't like to talk about the darker aspects. Or if they do, they won't tie it all in with history sufficiently. My sole reason for writing online is due to my intense interest in WWIII. Bush talked about WWIII yet again this week, you know. Since he controls more nuclear bombs than anyone, his need to talk about it is tremendously alarming. Especially since no one in Congress is demanding his arrest for doing this horrible thing. Or any horrible thing.

Instead, the US system struggles along, trying to make things work even as every indication points towards stopping and changing direction. One of the top actions we can take today is to cease importing vast seas of oil. We must stop this, now. It is destroying our economic base, it is blasting our financial systems to hell. Housing is a symptom, not a cause. It simply reveals that we cannot even afford to live in our own homes and can't afford to pay an honest interest rate on money we want to use for purchases. Instead, we see a world wherein we must jigger everything so we can keep on truckin'.

Only one ABX AAA is over $90 a share which is still running at a loss. 3 ABX BBB indexes have fallen from $100 to $18 and are on the way to vanishing entirely. 13 out of 20 funds have lost over 50% of their value and one third of them lost more than 2/3rds their value. After a brief pause upwards when the central banks and the government pumped money into this dark pool of lost dreams, the declines now resume today I believe.

Click here to see the graphs. It is quite clear to see where hope sprang ever eternal as all the financial giants coughed up their huge hair balls. They all think that this mess is over. But we can clearly see, it has just begun.

What the 'Subprime' Mess Is Really About

by John M. Regan, Jr.

It’s about the international fiat monetary regime’s denouement, and of course the Ron Paul presidential campaign.

Even the popular name of this "crisis" – implying that the whole problem is "subprime" borrowers with sketchy credit histories – is really just more disinformation. Shaky American borrowers defaulting on their home loans are indeed a great danger, but in the same way that a free press is a danger to despotic government. It is the danger of exposure. It is the end of plausible deniability. If the "markets" of the world perceive – finally – that the emperor has no clothes, the nearly century old game may be over.

An excellent summary of the sub-prime mess. Of course, nearly everyone imagines the money for this simply appeared out of nowhere. But it didn't. The US still requires bank reserves. The ultimate underpinning of this stunning growth in global debt remains outside of US control. It is NOT China. China uses most of its savings on building China. It is, of course, Japan. The a-historical rates set by Japan still annoys me to death. I can't believe this is accepted by bankers and pundits nearly universally. And my suspicion is, this is due to them profiting from this cheap source of funding. This is why Bush was permitted to cut taxes while the Fed cut interest rates to slightly above the Japanese rates. The US has no call to do this. They even admitted the rates were far below the rate of inflation. Their own charts made this clear. And we are talking fake inflation rates!

For nearly 2 years, the rate of official, fake inflation ran much higher than the Fed rates. Then the Fed, seeing huge inflation building, began to frantically raise the rates higher and higher only this crashed the system. This was due to the fact that Japan kept their own rates stubbornly at near zero! So as the Fed raised rates, the money pouring out of Japan increased and increased and increased...across the entire planet! And this fueled planetary inflation that continues. If the Fed drops rates to 0%, the Japanese will cease doing this. But this will mean the US will be doing this and this will lead to a total collapse of ALL banking systems worse than in 1933!

The only way out of this trap is to cut the US trade deficit by cutting our energy imports and to force the Bank of Japan to raise interest rates to at least 2.5%. And neither is happening since no one is talking about doing either. Instead, we want China to fix this.

Paulson: Dollar Will Be Strong Again

Treasury Secretary Henry Paulson expects more of the losses in the U.S. mortgage industry that have already damaged the dollar, but predicted a long-term recovery for the battered currency.

"We have very much a strong dollar policy; that's in our nation's interests," he said in a South African radio interview. "Our economy, like any other, has its ups and downs and its long-term strength will be reflected in our currency markets."

Over and over again, this flea-bitten, drunk of a wizard waves his wand and says, 'Watch me pull a rabbit out of my hat' and out comes a dragon's head. Note also, how this sot blames those naughty home buyers for all this. As if they had ANYTHING to do with it! The Federal Reserve ignores inflation, the Treasury lies about inflation and this is the fault of homeowners? These pathetic clowns who designed this system and supervise it are quite content to plop the blame on anyone who had no power over anything. This dishonest accounting is rampant.

This is why so many power players can pretend they are victims and not the criminals who created this mess! Every book I read about past economic collapses, one feature is common: the people responsible always pretend that no one can figure out what really caused it. Then they all, ALL of the major players, will tell historians, 'The CONSUMER took on too much debt! It is the fault of them, they are the ones who dragged all this down the drain!'

*cough*HAHAHA*cough*. Right. The little mouse made the elephants stampede.

China Stand on Imports Upsets U.S.

The directive, issued in June, called for burdensome new safety inspections for foreign-made medical devices — but not for those made in China. The Bush administration is crying foul.

Even more worrisome to the administration is that the directive seems part of a recent pattern in which Chinese officials issue new regulations aimed at favoring Chinese industries over foreign competitors, despite efforts by Treasury Secretary Henry M. Paulson Jr. to ease economic tensions.

China is imitating Japan's strategy. This is classic and we should cease browbeating Asia and simply do the same thing. This is so pathetically simple. Our model of 'free trade' is pure garbage in the first place, anyway. Just like we are destroying ourselves trying to pretend there is no inflation, so it is here. We can't spend our precious diplomatic resources on pretending there is free trade. This creature is as real as unicorns. We may as well act like capitalists and this means imitating moves of others. This is basic games theory. You bite me, I bite you. You groom me, I groom you. And so on. But we want to do this 'I make up rules and you follow them' which is a dictatorial model that is failing. Note that no one in Asia takes us seriously anymore.

China's scorching factory investment a 'worry'

China's investment in factories, land and other assets in urban areas surged 27% in the first 10 months of the year, adding to concerns of a looming bubble in industrial spending and raising pressure on the government to rein in investment.

Investment in fixed urban assets totaled 8.9 trillion yuan ($1.2 trillion) in the January to October period, the statistics bureau reported on Friday.

More proof I am right. Japan is NOT building things in Japan. China, on the other hand, is building in China like crazy. The flow of money to China is due to China building. The US built suburban houses and city sky scrapers but China is building everything including, most ominously for us, building factories and infrastructure like train systems, for example. This dynamic system can crash, of course. But the crash won't be due to China growing but to the US going bankrupt while Japan shuts down its own retail trade and construction. We can't have the world's #1 and the world's #2 economies going flat simultaneously. Of course, both countries doing this will blame China just like the US leaders destroying our currency love to blame home owners in California.

Europe January-August Trade Gap With China Soars 25%

Europe's trade deficit with China surged 25 percent in the eight months through August, giving European officials more reason to pressure China to let its currency trade freely when they visit Beijing this month.

The euro-area trade gap with China widened to 70 billion euros ($102 billion) from 55.9 billion euros in the year-earlier period, the European Union's statistics office in Luxembourg said today. China's yuan has dropped 7 percent against the euro in the last year, fueling tension over the growing imbalance.

Europe is like the US: accustomed to barking orders to those dark skinned or slanty-eyed colonial servants, they think all they have to do is make demands. Well, either they pool their half a trillion in FOREX reserves and then start buying and holding yuan or they can force the US and Japan to raise the value of their own currencies! And since barking at the US is like barking at the moon, they should buy and hold dollars like China is doing. It is laughably simple only they aren't a nation. They aren't an empire. They don't even like each other. Inside of each other's own countries, they hate each other. So there is no real unity here and the unified currency should either be abandoned or the Europeans must continue to follow Germany into forming the 4th Reich.

Back to Wagner! HAHAHA. Anyway, ordering the Chinese to make their currency more valuable than the yen is pure insanity. Either these dwarves must twist Japan's arms hard or shut up. Besides, strengthening the yuan won't save the dollar. It will make the dollar weaker. And so we will soon wave goodbye to both global free trade and monetarism. These defunct and stupid philosophical economic systems were a fool's game from the very start. The mess in the US starting in the LBJ-Nixon years wasn't fixed by this system. It only made things much worse.

Years ago, Japan rose to economic prominence by taking apart American products like cars and television sets to learn how to make them better.

Ko Sasaki for The New York Times

Now, as Japan’s focus on manufacturing wanes, economic planners here are trying to reverse engineer another source of the United States’ economic strength: Wall Street.

Japan’s Financial Services Agency, which oversees the nation’s banking and securities industries, is working on a plan, to be presented before the end of the year, aimed at transforming Tokyo into a global financial capital more on par with New York and London. Top Japanese officials have toured Wall Street and the City, London’s financial district, in search of the secrets of their vitality.
*snip*
But for many years, the Japanese, rather than investing more at home, have been putting their money overseas because of the low returns from domestic stocks and bonds. Some of that flow of money abroad now appears to be slowing, a move reflected in a stronger Japanese yen. That gives resonance to the Japanese hopes of creating a financial district in Tokyo that can lure foreign investment and Western professionals.

First, Britain decided to cease being a manufacturing power and became a banking center only they allowed this to morph into a bunch of Queen Elizabeth's dominions at various tiny islands to declare themselves pirate coves and thus, sucked away most of the taxable wealth from this central banking. Then the US decided stupidly, we too, would be the world's banking center. With the same results. Now Japan, the place where all banking now passes through via the Bank of Japan creating the 'carry trade', has outsourced its own industry and is now wanting to be what London and NYC are: gambling houses using funny money to play games of chance.

So, the world's #1, #2 and #10 [Britain has fallen far, hasn't it?] economies are all going to be based on playing money games and making money and speculating on money and this is pure insanity. It can't work. Especially since hyper-growth China is also playing the banking/investment game with a vengeance!

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Comments

[Ignorant Old Lady]

Where are all these billions the Fed continues to "pump" into the "system" coming from? The printers?

[Katya]

Pretty good question. I don't think they are actually printing anything...that costs money. :) I would say that they are making loans from their reserve funds (funds deposited at the Fed by member banks), but I think it could be they just type some numbers into their magic box and whoosh, money shows up in the account of the borrower.

[Jeffrey Willsey]

Elaine is brilliant.

I am sending her some of my fiat cash and I hope you do too.

An unpaid non political announcement.

[Al]

Katya,
I believe you're right, the Feds do a Repo where a member bank makes up a security and the Fed purchases the security for a set period then the member bank pays back the Fed. To my understanding that's how the Fed pumps $ into the system. All an accounting fiction, nothing actually printed up.

[EEngineer]

The crux of the problem is that a "short time" in the grand scheme of things often exceeds the professional, if not outright, lifespan of an individual human. As a result systemic imbalances that can only last for a "short time" can seem like permanent good times, or the achievement of nirvana, to those in the right time and place in history.

It reminds me of an off hand observation that John Perkins makes in "Confessions of an Economic Hitman". He said that while he clearly understood what he was up to and how he was doing it, that the later generations did not. In only a decade or so; all the BS reports and theories that he and his generation had published to justify their work had become accepted as reasonable and proper academic work. Once they were accepted as truly good vs merely a useful deception, it was only a matter of time before the same techniques were but to use here at home to enhance the return on every business endeavor imaginable.

I see the same cycle of "drinking your own kool-aid" in all sorts of places. Business, politics, religion; none are immune. I guess it all comes down to who watches the watchers and who teaches the teachers?

[shargash]

If we look at all this as if it is Götterdämmerung and the Bifrost Bridge is collapsing and Valhalla is being repossessed by the Frost Giant/dragon, Fafner, we can guess what will happen next: the Fat Lady Will Sing.

ROFLMAO! That made my day, Elaine. :)

[Elaine Supkis]

I am publishing a little fairy tale called 'The Good Ship, the Even Keel.' It is quite amusing.

And of course, you are all right! The 'money' being created is fictional and NOT backed by anything except the say-so of the Federal Reserve. And this has crashed in the past and will, in the future. This is why playing with fire while the Santa Ana winds are blowing is insanity.

[Canuck]

Whhoop! Whhoop! **Discontinuity alert**

Elaine extols the USA to be unified, harmonious and nationalistic in service of strength in world and internal affairs, implying of course that fractured backbiting provincial, narrowly focused self-serving issues should be suppressed for the better good of all.

Subsequently issues judgement on euro-unifed activities:

“They aren't an empire. They don't even like each other. Inside of each other's own countries, they hate each other. So there is no real unity here and the unified currency should either be abandoned or the Europeans must continue to follow Germany into forming the 4th Reich”.

Texas loves New York as Spain loves Denmark

The shinning path of uniform harmony for North America is purchased on the burden and destruction of the original inhabitants. Never in the history of the earth was such a wide expanse of collaborative opportunity made available for such little investment in blood of conquistadors and oppressors.

These conditions never existed on a continental scale without large major disruptions of established comparative societies. In a work “Unique”, a situation without equal.

So lets take a dump on Europeans unable to shake their feudal tendencies, the Africans for running scared to captured slavery instead of stoic evisceration and Latin America for being dazed and rocking from endless pummeling from world powers seeking advantage. Why can’t they just wipe away their history, borders and culture and start anew as Americans had. Truly unworthy of a foot let alone stage in world affairs.

So, collaborative effort of disparate groups (i.e. Euro Union) is an effort in futility? Should only successful efforts be acknowledged? (Oooh, those crafty Chinese, so industrious!)

Elaine you claim to rally against WWIII, but I think you know the key lies more within cooperative efforts like Euro Union and Chinese diplomacy than picking apart nascent efforts at getting people looking in the same direction. Particularly when they seem pointless and ineffective.

[steve]

Actually, the last two days of REPO activity
amounted to a net drain, not add. These loans from the Fed have to be paid back plus interest. Google Repo & go to Wikipedia to read more.

[Elaine Supkis]

YES, OUR DEBTS ARE GROWING!!!! And to 'pay' for this, the banks will take this cheaper loan money and lend it out and this increases the money supply which causes inflation, Steve.

Canuck: NO ONE can beat me when it comes to talking about history. And here it is: the US right now, RIGHT NOW, is 'united.' This was done VERY BLOODILY just like the unity of Scotland with England is drenched in blood! And this unity is very FRAGILE. Will fall apart in an instant!

All we need is for our currency to collapse.

NO NATION IS UNITED unless there is a solid currency and a good government. Then people forgive the past. But the only OTHER route out of disintegration is the one we are on right now: war. Wars unite people. But if you lose a war, the divisions grow much worse. During the Vietnam War, our cities rioted and burned.

Just for example.

[Canuck]

Wouldn’t dream of trying to beat/challenge you on historical precepts Elaine. Wouldn’t want to get scorched to a cinder.

I’m trying to point out that I agree with Jim Willie CB that the Euro/European Union is untested as of yet both as a financial instrument and as a social bonding construct for the Europeans. Bringing up societies who have faced and are facing major challenges in geographical terms such as Africa and South America illustrates how unique the voluntary adoption of the euro is.

As the Euro is strengthening against the dollar at the moment it seems disingenuous to encourage the European Union to disassociate because they “Hate” each other. Further it seems that the good old USA is much farther along toward a fascist 4th Reich than the Germans. How exactly is Germany dominating the European Union with fascistic military/industrial social controls? What evidences is there that the German government is organizing its political power structure along these lines? How exactly is Germany going to dominate the European Union in a fascist sense when the populations are alert and wary of European Union policies and fully cognizant Germany’s militaristic history?

As for the US Civil war bloodily keeping the fragile US together I’m unqualified to venture very far into this but my best understanding is that it was overall a states rights conflict and with the defeat of the Confederacy states rights relating to all states were ceded in majority to the Federal Government. Such a fundamental change would suggest that the US wasn’t the same country at all after the Civil War. How would an individual state divorce itself from the USA when the Civil War abrogated the power to effect such a process, fragile or not?

[Elaine Supkis]

Power grows out of the barrel of a gun and Europe disarmed and surrendered to us.

[DeVaul]

Cannuck raises a good point about state's rights. Basically, they have none. Yes, they can create different domestic laws and refuse to follow other states, but they are in all actuality provinces and not states as that terms is understood by most nonamericans.

Any state that tries to leave the union will be attacked, and I doubt the outcome would be any different if they followed all legal and social rules in doing so and had 100% approval from the citizens to leave the union.

The "state" is really the Federal Government. That's why I can exist despite being an outlaw with no home state.

[Elaine Supkis]

Note that when states pass pot laws, the Feds ignore them or attack them. Federal law has grown like a monster in the last 150 years.