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Crimson Ghost

Stop the Fed before it is too late!



Elaine, I strongly agree we need to raise interest rates, as Volcker did. But however necessary his raising rates was, it was a disaster to the 3rd world countries with loans we essentially forced upon them. Volcker had to know this and was likely indifferent. A program of debt forgiveness, forgiveness of odious (sp?)debt is essential to avoid another disaster.

Elaine Meinel Supkis

I certainly agree, Al. You can't get blood from stones. Nor should you even try.


Elaine:I understand that the fed has about 800 billion in "reserves" that it can lend out to whomever. Their lending is approaching 450B. What happens when they are bumping up against the 800B limit? Game over?



The reason the Fed wants to open its Swap-a-Thon (exchange Treasuries for private assets) to banks all over the world has nothing to do with the "value" of the assets (debts) it would receive. They will eventually define "very safe" to mean "any useless piece of s**t", or just quietly drop "very safe" "safe" "sort of safe" from their vocabulary later on. They know NO ONE is going to give them GOLD in exchange for Treasuries (would you?). Just the opposite. They're ready to vacuum up all the bad debt of the world, just like they've been doing in the U.S.


It's very simple: If the Fed could get the banks of all the G7 (and hopefully one far-off day China, too) drawn into their web of debt swaps to keep those banks afloat when they make bad gambles with other people's money, then THERE IS NO LONGER A DANGER THAT THE BANKS OF THOSE COUNTRIES WILL DUMP TREASURIES (which is the Neutron Bomb of international finance waiting to destroy America). And, because Treasuries are always dollar-denominated, THE MORE DEBT OF THE WORLD ACCEPTED AND HELD BY THE FED IN EXCHANGE FOR TREASURIES, THE MORE THE WORLD IS PERMANENTLY TIED TO THE FED AND THE DOLLAR.

That way, the Fed can printing cheap dollars, keep interest rates negative, devalue the dollar, and in various ways continue underwriting casino capitalism, and the (virtually worthless) dollar will ALWAYS remain the reserve currency of the world.

Stupid? Yes. Fits right in with the track record of the Fed for the last 25 years? Yes.


Regarding the many discussions about "returning to the gold standard," using gold as the "reserve currency," etc:

You can't successfully use the gold standard (have your paper money redeemable for gold) unless you have a positive balance of trade (trade surplus). Otherwise, your creditors (the people, businesses, and nations who sell more to you than you buy from them) can - AND WILL - quickly move all your gold from your vaults to theirs by demanding payment of your balance of payment debt in gold.

That's why England had to take the Pound off the gold standard after WWI, and why the U.S. had to take the Dollar off the gold standard in the 70's - in both cases a former trade surplus nation had become a trade deficit nation and was losing its gold at a rapid rate that soon would have left them with NONE AT ALL.

There are nations who could be on the gold standard right now, but the U.S. isn't one of them.

Elaine Meinel Supkis

You are correct, Michael. And guess what? The US had a trade balance back when we dropped gold. Since then, it has gone very deep into a deficit up to nearly a trillion dollars!

Also, the Chinese plan to put the dollar out of its pain in the end. They told me this back when they arrested Madame Mao and set up their first 50 year plan. 'I be bank' was what they told me.

My parents were very heavily involved with the Chinese leadership from Nixon's visit to China till recently. And I was very involved since 1982,

Buffalo Ken

But here is the thing - all of these global plans will amount to nothing unless you WORK with the local folks.

So China, Russia, and the oh-so-young and pathetic (bite me if you want to) US of stinking A can shove it up its collective butt.

Buffalo Ken

Have we learned nothing from these small-scale wars. Local advantage is insurmountable if the local folks know how.

My plan is to help the local folks. I hope others feel likewise.

Especially you "money" folks who think money matters.

Elaine Meinel Supkis

One's influence starts locally and weakens outwards. I encourage local involvement. This is a good way to get a grip on things.

Buffalo Ken

Hey, I've been trying to get a grip for awhile....I'm not sure I ever will, but I will try....

Peace Elaine. I think we have the same objectives.

Just now I am going to try to sell some solar panels to help a factory in the US of A to make a product that we all need.

Local - all the way....

Buffalo Ken

Now I will admit, the solar panels are constructed in China, but they will provide energy locallly.

This way it is a one time purchase. Then it lasts for 25 years (or maybe even longer).

Eventually, as the price of energy goes up the value of the panels will increase, and all the smart business will have the panels beforehand -- an investment in the future.

They will have these and will have to spend much less than those who wait to see what will happen.

Seems that way to me. Buffalo Ken - I'm nothing but a brain-splitting fool who thinks about tools....

Hey, I tried to rhyme and you have to give me that. Plus, I spoke of humor and its true value. So get on me if you want to, but I won't listen to U.......


Buffalo Ken -

There's nothing harmful about importing capital equipment (such as solar panels) from abroad to use in generating energy, setting up production systems, and creating employment. The U.S. did that for its first 100 years and built the most powerful agricultural and industrial economy on earth.

The problem for the last 45 years is we have been increasingly replacing our internal productive process with the (cheaper and more profitable for capitalists) productive process of foreigners. We don't import capital equipment any more, we import consumer goods - autos, clothing, electronics, toys. We borrow the money to pay for them, and these debts-for-more-crap keep diminishing our productive capacity.

The best is to produce it yourself; the next best is to pay cash out of saved money to import capital equipment you can use to produce it; the worst is to borrow to pay someone else to produce it for you. We are living in the worst of all possible worlds.

Be at peace, imported solar panels paid for with cash are not the problem.

Buffalo Ken


All I can say is your saying "be at peace" means so much to me. Thank you. Thank you.


Elaine Meinel Supkis

China has been intent on solar energy since 1976.


Hmmm...is it possible that Goldman Sachs orchestrated the downfall of Bear Stearns...crazy talk?

As of that date, the firm had more than $17 billion in cash and unencumbered liquid assets, the SEC said.

“Beginning on that day, however, and increasingly throughout the week, lenders and customers of Bear Stearns began to remove funds from the firm, despite its stable capital position. As a result, Bear Stearns’s excess liquidity rapidly eroded, the statement says.

Please note in the following Moody’s table that Bear Stearns’ “Total Illiquid Risk Assets” at 31% are far less than other ‘bulge-bracket brokers.’ Lehman is 197%; GS is 135%, Morgan is 109%, MER is 45%...

During the JP Morgan conference call on Bear, Bill Winters, Co-CEO of JP Morgan, said the following about Bear Stearns’ condition: “In fact what we've -- we were very pleasantly surprised to see that it was a very well run, tight operation with good risk controls and a risk discipline that was very similar to our own.”

If we were the SEC, we’d be issuing subpoenas like crazy to ascertain if Bears’ ‘run’ was a conspiracy. We’d check to see who shorted Bear stock, bought puts, CDS and other derivatives and cross check them against any party whose actions might have facilitated the run on Bear…Perhaps Bear Stearns stock rallied to 4.81 on the possibility of legal recourse. Yesterday’s WSJ: Bear Stearns Cos. plans to turn over documents to securities regulators showing that several financial giants, including Goldman Sachs Group Inc., Citadel Investment Group and Paulson & Co., slashed their exposure to the securities firm in the weeks before its collapse…


Elaine Meinel Supkis

Thanks, K. It looked like a back alley mugging to me at the time.



Posted by: Michael | May 31, 2008 at 04:26 PM

I don't think so. If you look global transaction and reserve, dollar is going down (tho very slowly) but more importantly the attitude toward holding dollar is over in private business.

Asia, Middle east are preparing ofr unified economy (and currency) while euro is certainly no slouch by now.

A change in currency can happen overnight. It's a china question.


Driving that train, high on cocaine,
Casey Kohn is ready, watch your speed.
Trouble ahead, trouble behind,
And you know that notion just crossed my mind.

Trouble ahead, lady in red,
Take my advice youd be better off dead.
Switchmans sleeping, train hundred and two is on the wrong track and headed for you.

Driving that train, high on cocaine,
Casey Bernake is ready, watch your speed.
Trouble ahead, trouble behind,
And you know that notion just crossed my mind.

Trouble with you is the trouble with me,
Got two good eyes but you still dont see.
Come round the bend, you know its the end,
The fireman screams and the engine just gleams...

Elaine Meinel Supkis

Rest in peace, Grateful Dead.


Jerry's spirit lives on in Gary.

Elaine Meinel Supkis

Miss them a lot.


Amid economic slowdown, signs of new world order

By Mark Trumbull Mon Jun 2, 5:00 AM ET

The world economy is cooling this year thanks to a slowdown in the United States, but something new is playing out: This slowdown is serving to amplify a shift in financial power toward Asia and developing nations.

Countries such as China and India are now big enough to help guide the global economy. In the past, a sharp downshift in the US and Europe would decisively slow the rate of global growth.

This time, emerging markets appear poised to grow collectively by 6.7 percent this year, according to recent forecasts by the International Monetary Fund . As a result, the IMF sees world gross domestic product (GDP) growing 3.7 percent, even though the US might experience a recession.

The US economy remains the world's mightiest. But even for Americans, this new economic order has immediate implications:

•Policymakers at the Federal Reserve must worry about upward price pressures for food and fuel – driven largely by rising demand in developing nations. That problem calls for tighter monetary policy, while the domestic consumer slump calls for the opposite policy.

•Demand for US exports from these new markets is providing a helpful cushion for growth, yet trade tensions could be an issue in the US presidential election.

•Money from emerging markets is playing an increasingly important role in the US financial system.

"We have a new pecking order in the world economy in terms of influence on global growth and economic power," says Michael Cosgrove, an economist in Dallas. "[Historically] we would see oil prices fall with a slowdown in the US and Europe…. That no longer holds."

The dynamism of the "BRIC " bloc – Brazil , Russia , India, and China – is not new, but their stunningly rapid rise in this past decade is now being tested in the laboratory of tough times.

For consumers and workers worldwide, what's playing out is a tug of war between two opposing problems.

First is the weakness in the US and some other advanced nations as a housing slump and related credit squeeze hits households. That's dragging GDP growth down on all continents.

Second is inflation, a symptom of the strength of emerging nations. Their demand for commodities explains much of the surge in fuel and food prices worldwide. It's this problem that is, at present, taking center stage as a global worry.

"The good news here is that the standard of living for a lot of people is improving," says Mr. Cosgrove, publisher of the EconoClast newsletter. But for now, "the bad news is that it pushes up prices."

What's changed in the world economy is not just the rate of growth of countries labeled developing or emerging. It's also the size of their economic output.

"What's different this time is that the emerging market economies have been growing so rapidly that they've emerged," says Ed Yardeni, an economic forecaster at Yardeni Research in Great Neck, N.Y. "They've become very large."

Now, these nations are accounting for more than half the world's economic growth in a given year. And, when measured in terms of the domestic purchasing power of their incomes, these countries are also approaching half of global economic output, according to IMF figures.

This makes it a different world from just seven years ago, the last time the US was in a recession. Then, America's nosedive brought global GDP growth down to 2.2 percent in 2001. Considering the expectation that GDP should keep pace with population growth, that was in effect a worldwide recession.

Oil prices were not a concern then. But growth in developing nations fell sharply to 3.8 percent from 5.9 percent in 2000.

This year, by contrast, the IMF forecasts a recession in the US but growth well above 6 percent in developing countries – down just a percentage point from last year.

Recession or not, how the American economy fares depends partly on trends in emerging markets .

One issue is cash supply. Historically, emerging economies are importers of capital. Now, "sovereign wealth funds," investment funds controlled by developing nation governments are helping US banks survive mortgage-related losses. More broadly, nearly half of US capital inflows over the past year and a quarter came from China , Brazil , Mexico , and Russia , according to Bank of America.

Emerging economies are also influencing monetary policy. The Federal Reserve has been lowering interest rates to stave off a banking crisis. But rising commodity prices mean the Fed has to be ready to fight inflation with higher interest rates.

Economists at Merrill Lynch predict that the current global economic cycle hinges on when monetary authorities in creditor nations – many in the developing world – clamp down on inflation.

Other economists caution against viewing emerging economies as being in the driver's seat. "The US is still the biggest by far," says Jay Bryson of Wachovia Corp in Charlotte, N.C.

He predicts that inflation pressures will abate as the world feels the cooling effect of the slowdown in US and Europe .

Developing nations are also trading more than ever, offsetting the US slowdown. But these trade ties are also controversial, especially with China.

A backlash against trade with developing nations is possible in the aftermath of the US election this fall.

It's a thorny political question – how to deal with policies that may not help every worker or that help some nations more than others. "Before, say, 1985, the United States got the majority of the gains from trade" with other nations, says Cosgrove. Since then, he reckons, "the US has a smaller share of the gains from trade."

Trade remains helpful for America and the world, but the danger is that voter psychology is shifting, he says.




Eustace Mullins, one of the few people on earth who realizes that the federal reserve is a criminal organization.



The problem for the last 45 years is we have been increasingly replacing our internal productive process with the (cheaper and more profitable for capitalists) productive process of foreigners...great lens find it very interesting will credit this.

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