Deadly Japanese Carry Trade Resumes Piling On Debt

WPA Post Office painting of secretive gnomes who make magic money, bowling and thus, creating thunder storms.

May 2, 2008

Elaine Meinel Supkis

All the pirates, all our G7 allies, the army of people playing with Funny Money™ are ecstatic today. The stupid, useless and destructive game of buy-ups, buy-outs and wild lending with no consequences has returned. Both the US and Japan have created conditions whereby lending is far, far cheaper than the real rate of inflation. And this means lots of easy money will resume flooding the planet but not in commodities any more. It returns to hiding deep inside people's pockets. All these deals do is create unemployment since all these deals pay for the interest rates from these useless loans by firing people. This is why we see expanding stock markets running right alongside collapsing incomes and rising unemployment. All the dire economic problems I rage about will get worse, not better.

Stocks Rise in Europe, Asia, Led by Banks; U.S. Futures Advance

Stocks rose in Europe and Asia, pushing the MSCI World Index to a three-month high, as investors speculated the turmoil in financial markets is subsiding. U.S. index futures advanced.

UBS AG, Europe's largest bank, climbed in Zurich, while Mizuho Financial Group Inc. rose in Tokyo. Royal Bank of Scotland Group Plc jumped after the Daily Telegraph said TPG Inc. is getting ready to bid for the U.K. bank's insurance unit. Air France-KLM Group reached the highest since January as oil traded near the lowest in almost three weeks. Toyota Motor Corp. and Bayerische Motoren Werke AG climbed on rising U.S. car sales.

The MSCI World added 0.7 percent to 1,526.70 at 12:28 p.m. in London, the highest since Jan. 14. The index has gained 0.8 percent this week. Futures on the Standard & Poor's 500 Index rose 0.2 percent before the U.S. government's monthly jobs report.

``Confidence is returning,'' said Mike Lenhoff, chief strategist at Brewin Dolphin Securities Ltd. in London, which has about $36 billion. ``There is definitely a big change in the underlying tone of these markets. The view is that central banks have done quite a bit to help remove the destabilizing feature of the credit crisis.''

This news illustrates why I constantly warn all bears that the keepers of the destructive status quo still have a great deal of power to manipulate the system to keep it going. Just as Americans are childishly happy that Santa Claus this week is raining almost $200 billion into our bank accounts, the bankers are happy because this is foolishly being called 'savings' or at least it is flowing into our bank accounts before being spent. This Super Funny Money™ is not a generous, solvent government hand out. It comes from one of the most indebted governments on earth!

It is irresponsible and totally fake. This is so very far away from being real money representing the real accumulation of wealth. It doesn't represent a profit from labor being returned to workers. It is utterly inflationary. It also puts our government in jeopardy. The guys making many billions gaming the markets are pleased, of course. They can continue to strip us of our collective wealth and transfer government debts into offshore tax havens where it ceases to support the system.

All the huge deals we will see in the next six months as these pirates continue to loot us will be heralded by the media as good news. $40 billion dollar deal to buy this corporation! $100 billion dollar to buy that bank consortium! Wow!

All this is DEBT and since debts are again much cheaper than inflation, credit will rapidly expand as everyone rushes to the bank window to get these super-easy term loans. All our major corporations and banks are very deep in debt. And a certain creature is happy as can be: the Derivatives Beast will resume growing rapidly again! Infinity, here we come! There is a fly in this ointment: the workers. They must be eliminated somehow.

Canon Plans U.S. Toner Cartridge Plant With Automated Assembly

TOKYO (Nikkei)--Canon Inc. (7751) is to invest 60 billion yen to build in the U.S. a factory featuring fully automated assembly of replacement toner cartridges for printers and copiers, The Nikkei learned Thursday.

Sony's FY07 Op Profit Seen Skyrocketing 430% On Electronics

TOKYO (Nikkei)--Sony Corp. (6758), which is undergoing a rapid earnings recovery, is seen posting a group operating profit of around 380 billion yen for the year ended March 31, up a whopping 430% on the back of brisk demand for digital cameras and other electronics.

I am one of the few Americans who tracks the Japanese economic news closely. Note that Japan continues to evade American notice by the simple act of colonizing our industrial base. Bit by bit, they are taking over. They do discuss the American worker, back in Japan. They have dripping contempt for our workforce. Unlike the Chinese, ours is seen as slothful and disrespectful. But Japan is smart. They know that if they simply import, they will be attacked. They have to have this stealth system. So this new plant kills two birds with one cyborg stone: robots will do the manufacturing but they will be plonked down inside of the US empire! HAHAHA. Profits will flow to Japan and there won't be any pesky workers to intercept this money flow.

Note also the PROFITS of Sony: they are huge. The bigger the Japanese Carry Trade, the bigger the profits for Sony and Toyota. Since Japan, like Germany, has very high gasoline taxes, they sell lots of high-fuel milage cars and the rising cost of energy in the US due to US inflation and US menacing of Iran as well as the failed wars in the Middle East, US drivers are besieging Japanese automakers seeking to upgrade to better, more efficient cars. The Japanese really wish they could have total robot factories here to churn these things out.

Public Support For Fukuda Cabinet Plunges To Record Low 21%

TOKYO (Nikkei)--The approval rating for the cabinet of Prime Minister Yasuo Fukuda has sunk to a dismal 21%, the lowest figure since the cabinet's inception, as the public chafes at the revival of a gasoline surcharge and other tax measures, the latest Nikkei survey showed.

Do look at how the Japanese government dealt with high energy prices! They RAISED THE GAS TAX. In the US, we see the #1 and #2 warmongers for President, both of whom want to menace Iran even more, both are suggesting the super-low US gas taxes be ELIMINATED. This is because the status quo here is to spend more money than we can afford and expand imports including energy imports. So I can safely say that our budget deficits will balloon, our trade deficits will balloon and the US consumer will think that inflation is gone. It will relax its grip on commodities but will transfer its dark actions back to inflating asset pools or the Derivatives Beast. And US workers will see continuing wage reductions and the elimination of our industrial base except for factories with robots.

A dark, ugly thought comes to mind here: super-cheap loans that need servicing of the interest rates and rewarding the pirates who get these loans will cost a huge amount off the top of any profits. This flood of easy money will be invested in ROBOTS because they don't go on strike or get ill tempered if their wages drop non-stop. So I predict the cyborg production systems will also balloon.

Layoffs Rise 68 Percent in April

U.S. companies' planned layoffs jumped 68 percent in April from the prior month to the highest since September 2006, pointing to further deterioration in the labor market, a report showed on Thursday.

Planned job cuts in U.S. companies totaled 90,015 last month, up from 53,579 in March and up 27 percent from a year earlier, employment consulting firm Challenger, Gray & Christmas Inc. reported.

The April layoffs were the steepest since the 100,315 cuts announced in September 2006.

The useless raising money via loans to buy up or out various Wall Street listings will run alongside this news. The US housing market will not revive for the simple reason, no one can afford to bid up the prices. The existing housing stock will probably sell but only if rates are dropped to 'teaser' rates. People can't afford present costs since it sops up most of their income. Only if incomes rise, can housing resume its climb. I know that my own family has members who make really good incomes in NYC but have little surplus income thanks to the very high housing costs there. So all they do is shift their earnings to pay for small apartments! There is no advantage. The only people who benefit from high housing prices are people who bought houses in the past when they were cheap. There is one thing that the American people DO want: the Home ATM machine to return spitting wealth into our bank accounts via rising values being turned rapidly into debts. This is why we are at negative national savings.

Why China's Exporters Are Complaining Loudly

Meanwhile it seems the fight over the currency is intensifying. Chinese Academy of Social Sciences economist Li Yang, formerly a member of the PBoC monetary policy committee and currently an advisor to the powerful NDRC, was reported by Market News International to have said in a lecture today that the government should stop allowing the RMB to appreciate because of the pain it is bringing to export companies. He said that the RMB is currently at a “balanced level,” and elaborated: “One important factor to decide whether we're at a balanced level is that our companies are making losses on this appreciation. So we shouldn't move it any more.”

I am not sure I understand his reasoning. I have seen very little in the academic literature that suggests that a currency has reached an equilibrium level when some of its exporters are losing money. I would have thought that any definition of equilibrium would have focused instead of the level of the trade surplus, the amount of central bank intervention, the growth rate of exports, or on any of a number of other factors that suggest that RMB is still not near an equilibrium level, but I suspect that Li’s argument actually has more to do with the terms of the debate within China than with economic reasoning.

Chinese exporters are angry that the central government is raising the value of the yuan. But they had to when the Funny Money™ in the West exploded into all commodity markets. Now that the Japanese Carry Trade has resumed, they will probably return to flooding the US with their exports. The Japanese and Chinese leaders have made some secret deals which the US has ignored, of course. They have a plan, I fear.

Note the above news story from Japan: the government there is as unpopular as ours. Japan's ruling elites have tossed the Japanese workers under the wheels of the bus, haven't they? Raising gas taxes did cut fuel imports. It made commodity inflation shrink even as the yen grew even weaker. But it is hammering the ordinary Japanese something fierce. This causes rising discontent which might turn into violent political action. In Europe, the people there vacillate between supporting socialists to violent reactionary support of open fascists. This isn't viewed with alarm by the US press anymore since the fascist right wingers took over Israel. To justify Israeli aggressions, Jewish media has had to shift gears and now supports fascism. As I predicted long ago, this shift to justifying and supporting fascism in Israel means the philosophy of fascism will spread across the planet. Bad economic times for workers will cause them to seek leaders and if any leftist leaders are divided or hammered by the press, the workers will move towards any nationalist leaders who support nativist ethnic-cleansing socialism! This is why Jews in Israel get great social support systems and the 'others' who are Palestinians in this case, get severe poverty and loss of jobs, etc.

I see not liberalism but fascism rising. In China, the communist party is slowly evolving into that direction, for example. The recent attempt at destroying China itself has backfired and now fuels nationalist social policies. So far, the communist leaders resist the ethnic cleansing side of this equation. The Japanese have absolutely no ethnic groups to persecute so they are cannibalizing their own workforce. This is bad and will cause a collapse in the status quo. There is barely no left in Japan but a very, very active far right wing nationalist minority. If the left is kept locked out while the fascists are protected, we know what will happen when the US goes bankrupt and Japan has to shift gears!

China politburo holds group study on economic transformation

The Political Bureau of the Central Committee of the Communist Party of China (CPC) held a group study on the transformation of the country's economic development on Monday.
*snip*
Hu said: "We should keep to the new path of industrialization with Chinese characteristics and promote economic growth to shift from relying mainly on investment and exports to relying on a well-coordinated combination of consumption, investment and exports; from secondary industry serving as the major driving force to primary, secondary and tertiary industries jointly driving economic growth, and from relying heavily on increased consumption of material resources to relying mainly on advances in science and technology, improvement in the quality of the workforce and innovation in management."

Hu said macro-economic controls should be strengthened and improved. He added that the trend of slower global economic growth, and its impact on China, should be accurately observed.

"We should improve the nature of scientific, foresighted and effective macro-economic controls, adjust and optimize the investment structure and vigorously support modern agriculture, energy conservation and pollution discharge reduction to ensure the realization of macro-economic control goals," he said.

Since I know what the macro-economic control goals are, we may safely say that the Chinese are definitely shifting gears, a process that began LAST YEAR to internalizing their economy. They will be upgrading the systems and building like mad. The effort to 'grow' which characterized their economic objectives for 25 years will now shift to consolidation and interlocking themselves with all of Asia, not the US. They are quite anxious to disengage from the US markets because they see clearly, it is doomed. The Japanese elites are very status quo oriented. They will cling to any system for a long as possible. This is why they revived the Japanese Carry Trade. They make money off of it. They don't care that this is killing Japan, literally, or will kill the US. It makes them money! Just as American pirates don't care that they are bankrupting America.

Bank bail-outs to be kept secret

The Bank of England has imposed a permanent news blackout on its £50bn-plus plan to ease the credit crunch.

Ferocious and unprecedented secrecy means taxpayers will never know the names of the banks that have been supported through the special liquidity scheme, which was unveiled by Bank Governor Mervyn King last week.
Requests under the Freedom of Information Act are to be denied. Details will be kept secret even after 30 years - the period after which all but the most sensitive state documents are released.

Any Bank of England employee leaking the names of institutions involved will face court action for breach of contract.

Even a figure for the overall amount advanced will not be published until October. Meanwhile the Bank is expected to issue at least £50bn of Treasury bills to banks in exchange for their mortgages - entirely in secret.

Today, the media is trumpeting the news that the banking crisis in the West is over. This is total hogwash. It is now UNDERGROUND again and will cause all the bad parts to grow like crazy. As I said before, fixing a flood of debt by flooding in even more debt will fix nothing. It makes the inevitable worse. But they don't care any more than the Japanese rulers care if they kill off the last Japanese worker and replaces them with robots! Debt will provide the funds to create a robot world. And the remaining humans will be forced to pay the interest on these debts. And who needs industries anyway, if humans are mostly eliminated? This is the dark side of industrialization. The movie, '2001' touches on this. 'I'm sorry, Dave, you are redundant. You are fired,' sighs Hal.

How dare the Bank of England keep vital economic statistics secret...HAHAHA! HAHAHA. Good grief. The US has destroyed inflation statistics and then eliminated the M3 information even as they still assemble and analyze these numbers...in secret. As I keep saying, ALL wealth grows in dark caves. Wizards go in there to manufacture more wealth. And this is the Cave of Death. The British bank controllers can't do their magic in full daylight. People might figure out that Britain is bankrupt! So they hide it. Operating in the dark, the magicians hope no one figures out the obvious. Britain has stumbled into bankruptcy in 1917 and has never seen the light of day since. The trick is to pretend they are an empire and attach themselves to the US empire. Which is going bankrupt, too. So this is fixed by hiding this fact. This is why NO politician except for perhaps Ron Paul is screaming, 'We are going bankrupt!' Nor are any yelling, 'All this Funny Money™ the bankers are making will be used to turn industry into robots as all you workers will be fired!'

For Europe’s Middle-Class, Stagnant Wages Stunt Lifestyle

When their local bakery in this town south of Paris raised the price of a baguette for the third time in six months, Anne-Laure Renard and Guy Talpot bought a bread maker. When gasoline became their biggest single expense, they sold one of their two cars.

Anne-Laure Renard, a teacher, and Guy Talpot, a postal worker, sold one car and bought a bread maker to cut expenses. Prices have risen four times as fast as salaries in France in the last year.
Their combined annual income of 40,000 euros, about $62,500, lands Ms. Renard, a teacher, and Mr. Talpot, a postal worker, smack in the middle of France’s middle class. And over the last year, prices in France have risen four times as fast as their salaries.

At the end of every month, they blow past their bank account’s $900 overdraft limit, plunging themselves deeper into a spiral of greater resourcefulness and regret.
*snip*
“I have this feeling that there is a wall in front of us,” said Axel Marceau, a 41-year-old schoolteacher living outside of Frankfurt. “We’re just not going to get any further.”

His concerns are well-founded. A study by the German Institute for Economic Research in Berlin found that the broad middle of the German work force, defined as workers making from 70 to 150 percent of the median income, shrunk to 54 percent of the population last year, from 62 percent in 2000.

And note how Europeans are being sucked into the exact same system the American and Japanese workers are in: dying wages, reduced incomes due to inflation. Reduction in lifestyles as housing shot up in value, sucking in more and more percentage of net income! The Home ATM machine has extracted a huge price on the workers who are being squeezed brutally now. If inflation vanishes and interest rates drop to Japanese levels, this will not bring the workers a Golden Age. It will usher in the world of the Clone Wars.

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Comments

[Paul S]

Elaone: how do the Chinese and Japanese currently get along? I thought they had longstanding feuds that made them enemies? You know, things like the Japanese invasion of Manchuria before WW2. And I thought that there was some racial prejudice between the Chinese and Japanese? Do these issues still hold some sway or are they pretty much in the past?

[Elaine Meinel Supkis]

They have a common goal: to utterly dominate the US market and then destroy US power. Sounds crazy, doesn't it? Remember who nuked Japan TWICE.

[OC]

Hi Paul,

It's like oriental husband and wife relationship - u can't live with her and can't live without her. Love, hate and respect at the same time but if someone else step in between; all hell will break loose and both sides will clobber the intruder(US) at the same time!!

[Gavin Gaskins]

Dear Elaine,

I'm confused by something you wrote. You stated "And who needs industries anyway, if humans are mostly eliminated?" Isn't it the workers who buy the products that the robots produce? Without a vibrant middle class, there is essentially no market for the goods produced by the factories and, thereby, no return on investment. This is why in the longer term, I'm bearish on worldwide economic growth. Can the neo capitalist model kill the golden goose? Where is my thinking wrong.

Thank you for all your great work,

GMG

[Elaine Meinel Supkis]

If there are only a few humans left, they don't need mass manufacturing. Eventually, robots [the US has ALREADY BEGUN THIS] will be our military and they will be sent out by people hiding in caves to kill humans. We already do this. The operators of these robot killing machines sit in caves and murder people from the sky!

If that isn't opening a door to pure hell, I don't know what else is worse.

[GK]

If you believe the Georgia Guidestones quote that we should:

"Maintain humanity under 500,000,000 in perpetual balance with nature"

http://en.wikipedia.org/wiki/Georgia_Guidestones

Then it is clear that the only reason for rapid industrialization and control of world governments would be to master military technology to complete the logistical challenge of removing the other 5 1/2 billion people on the planet.

And perhaps storing some seeds to regenerate life if things go south, and maybe some genetic engineering and research on life extension so you can hang into there until the air clears.

Also, you are clouded by your life as a modern high tech iPeasant into thinking that our international elite are interested in money. They have plenty of that for 100 lifetimes; the real currency is power and control.

'Own nothing and control everything' would be the dream.

Once the technology to control everything on the planet with only about 6000 people, then it is time to 'pull it' in the inimitable words of Larry Silverstein.

Coming soon to the theater near you.

Now you should be getting back to building your own dossier on Facebook and logging all your intimate thoughts into email, search engines and text messages. Oh yah, and blogs too. ;-)

[Elaine Meinel Supkis]

You forgot the 'and the elites live forever' part. Ugly stuff there. This is why they need clones. They need body parts. SF has talked about all this in the past, you know. I used to lecture about these things. Then people wanted fantasy and Star Trek. So hard science people faded from view.

[kenneth s]

great article elaine
could you explain to me the comment you made concerning the yen carry trade killing off the us. how will this happen?
thx

[Elaine Meinel Supkis]

Drowning us in red ink. Piling on infinite debt. Allowing us to have super low interest rate loans below the rate of inflation.

This is very deadly. If the central banks of the US and Japan both do this, we get super-floods of debt and this kills our FUTURE financial prospects! Smart people pay down their debts over time. Stupid people pile on debts until they die. This is why 'mortgages' have the old French word for DEATH in it.

[kah]

The globalist elite plan to control, in a book no less:
http://www.roguegovernment.com/news.php?id=8791
coming soon across the world. Disgusting greedy pigs need to be strung up and gut shot.

[PLovering]

Kah, England had a special Traitors Gate for these scum. They'd row them down the Thames to the Tower and enter through the Traitors Gate, wherein rested all the tools of the trade to help they talk. Heads appeared on pikes days following adorning the Tower.