Asian Money Magic

9/11/2008

Elaine Meinel Supkis

Just like in the Great Depression, government-sponsored fiancial instruments at low interest rates sell like hot cakes. This is called 'flight to security'. But can, in three years, change into total panic if a government goes bankrupt. Asian bond buyers bought far less US securities than normal in the latest sale. Japan confirms, they have been having serious inflation for 10 months. And the wives of gnomes are fleeing their embrace as the money dries up. Typical, isn't it? And we look at Chinese money magic and Hong Kong trees.

Fannie Raises $7 Billion in Largest Single Debt Sale

(Bloomberg) -- Fannie Mae raised $7 billion in its largest individual sale of senior debt, after a government takeover of the company led to a record drop in yields relative to benchmarks.

The two-year benchmark notes, which mature Oct. 12, 2010, were priced to yield 2.896 percent, or 70 basis points more than U.S. Treasuries of similar maturity, the Washington-based company said in a statement sent by e-mail. That was the lowest spread in a two-year sale by Fannie since June. Earlier today, the company sold $2 billion of short-term bills at lower yield spreads in a weekly auction.
*snip*
The large size of the two-year debt sale was ``a great way to test ultimate demand for a moderately cheap security,'' Jim Vogel, the head of agency debt research at FTN Financial Group in Memphis, Tennessee, said in a telephone interview.

Throughout this entire banking collapse and indeed, long before it, government officials, regular pundits in the media and many economic professors have called bad developments, 'good'. This is so continuous, I am thinking it is simply a side effect of the 'reverse image' mirror world of economics. This is due to wealth coming from places humans don't want to understand. To look at developments that are ultimately dire, as good, is a human trait. We always want to think we are doing great things when we are really doing stupid things.

People who tell the truth are called grumpy and boring. This is why, universally, when there is an obvious bubble, few people will understand it is a bubble and thus, will do what all bubbles do: pop. By pretending there is no bubble, this allows all parties to continue with the obvious bubble. Indeed, at the height of any bubble, the people pretending there is no bubble will talk enthusiastically about how history has changed. The bubble will grow forever! This is a NEW PARADIGM. This refusal to accept any lessons of history is typical. Just like the US empire wanted desperately to imagine, it was different from all other previous empires---lessons of history are for others.

The sign that money is frantically flowing into 'safe harbors' is a bad sign. No one wants to take risks anymore. A healthy economy sees people taking risks. Risks are reflected in returns. To attract money, one has to offer higher and higher returns. The reason why we had a housing bubble is because the ultimate value of loans to risky customers in expensive markets like California was set much higher than 'standard' loans. The riskier the mortgage seeker, the higher the rates. So all the bankers wanted to lend to these very risky homebuyers.

Few were as risky as illegal aliens. So undocumented loans to undocumented workers were much, much higher than to the standard homebuyer. This excited the buyers of the tranches with these loans. Higher and higher went the rates...in the future. For high-cost loans didn't work. They had to make up 'teaser' rate loans to encourage the buying of houses with higher loan rates. In turn, 'flippers' took advantage of this to buy houses on the cheap and then sell them before the harsher, more realistic rates kicked in.

When this created a classic 'hockey stick' graph as prices shot up, the inevitable bubble burst happened when the Fed raised interest rates to reflect obvious inflation. This cut the value of the SPREAD between Treasuries and mortgages and thus, no one wanted to buy the useless risky loans so the market for resale of bonds based on mortgages collapsed totally and suddenly and for the foreseeable future.

Money that used to pour into that is now looking for some place to be parked since the value of stock markets around the world are also falling. Commodities were the previous parking garage for this money but that has dried up after causing vast global inflation.

Bloomberg:

Spreads over Treasuries on Fannie's outstanding two-year debt fell to 54 basis points on Sept. 8, the lowest since May 27, from 89 basis points, the steepest drop in history. The spread was 56 basis points at 5 p.m. in New York, compared with a five- year average of 30 basis points. Asian investors bought 12 percent of the latest two-year debt issue, as European investors purchased 8 percent, down from 39 percent and 17 percent in the July sale, according to company data. Central banks bought 27 percent, down from 57 percent. The company yesterday failed to say how much debt it planned to raise in announcing the sale, a break from its typical practice.

Despite a record drop in the spread, it is still nearly double its historic levels. It is also of great interest to us that Asian trade rivals bought less than one third their normal amount. And Europeans bought only half of their normal ratios. And Fannie Mae didn't dare say how much they wanted to raise. Another telling sign of instability and uncertainty. The US has to attract back home all those dollars we send overseas in return for all that oil and manufactured goods we purchase every day.

As always, I keep hammering at the concept of trade imbalances being at the bottom of all these instabilities. The various players in international trade have been playing impossible games that get worse and worse. The status quo of the US consuming global output while paying for it with unsupported dollars is rapidly coming to a close. As always, the best way for any system to change is for the instigators of the instabilities to change, so it is here: ONLY THE US CAN FIX THIS BY KILLING THE STATUS QUO.

This is the great fear of all our trade partners and they will go to great lengths to insure the US doesn't dare think of doing this. Of course, the easiest way for the US to fix this quickly would be to repudiate global 'free trade' and institute harsh tariffs. This will, of course, kill world trade which is 100% focused on flooding the US with their exports. Since this will happen, anyway, when we go bankrupt, it is far, far better to have this happen on our own time frame rather than waiting passively for it to be imposed on us from the outside!

This, and the termination of our extensive and expensive empire's military adventures and obligations is the ONLY solution to developing problems. If we try to continue on this path, we only face future bankruptcy at much worse rates. The pain of our collapse today is miniscule compared to if we wait another 20 years and accumulate quazillions more in bad debts.

Recent turmoil at mortgage giants Fannie Mae and Freddie Mac...

sparked major concerns among Chinese bankers before the U.S. guaranteed payment on the firms’ debt, a former Treasury Department official told a congressional panel Wednesday.

Experts said the state of the government-sponsored entities posed considerable financial and political stakes for countries that held sovereign wealth funds, such as China. The comments were made in testimony before before the House Financial Services Subcommittee on Domestic and International Monetary Policy, Trade and Technology.

Brad Setser, former acting director of the Treasury Department’s Office of International Monetary and Financial Policy, told the panel that after the recent Fannie and Freddie developments “it was quite clear that there was a very high level of concern” among Chinese bankers.
*snip*
Daniel W. Drezner, a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University, compared the growing role of sovereign wealth funds and foreign investment in the U.S. to the idea of “mutually-assured destruction” between the U.S. and the Soviet Union during the Cold War.

“Mutually-assured destruction can mean a more peaceful co-existence, but it’s a relatively nervous co-existence,” Drezner said.

Drezner added that while interdependence caused by greater foreign investment in U.S. firms “will constrain U.S. foreign policy,” he said foreign holders of U.S. debt would be unlikely to take drastic actions to hurt the U.S.

I used to debate Brad Setser in the past until he told me to go away. He is a very smart man with a very limited vision. He is a 'China expert' who frankly, didn't believe me when I told him about the Chinese 50 year plan. He interacts with the present leaders of the Chinese banking and diplomatic world. He didn't interact with them when Madame Mao still ruled the roost...like I did. The Chinese officials were quite delighted to learn about the magic of the Floating Currency and how it operates in the Waking World.

The Chinese are huge believers in magic. Here is a classic example:

Smugglers Target Hong Kong `Good Luck' Trees for Feng Shui Fans

Buddhist Pine trees are considered harbingers of fortune in feng shui, an ancient Chinese practice exploring the relationship between nature and people. The rare trees are uprooted from plazas, gardens and public parks in Hong Kong and sold across the border in southern China for up to HK$600,000 each, police say.

At least 1,000 mature pines -- or about a quarter of the territory's total -- were stolen in the past five years, Marine Police Superintendent Wong Chun-chin says.

The crime spree is spurred by China's rising wealth. The number of U.S.-dollar millionaires increased 20 percent to 415,000 last year from 2006, said a June 24 report by Merrill Lynch & Co. and Paris-based Cap Gemini SA. China's economy has grown by at least 10 percent annually since 2002.

You see, the wind blows through Hong Kong. Hong Kong is a place that is directly connected to the Cave of Wealth and Death. So the wind blowing there carries the karma of this mysterious wealth and it is captured by the tree's branches. So if the trees are moved to places that want this wealth and the wind blows there, it will blow the magic money power from the pine needles to the house which is now next to the tree. In the house, the human will be magically connected with the mysterious powers of money creation out of thin air and the owner of the tree will then become rich! See?

HAHAHA. I love this because it confirms my major thesis: money IS magic. And money is connected to the gods in various ways that are obvious to me, mysterious to most humans. The ancient Chinese did sacrifices to the gods just like so many other civilizations. When paper money was created, they instantly understood that it has magical properties. They learned very swiftly that if one makes money out of thin air, the Goddess of Inflation is activated and she destroys all the paper money's value. They also figured out that if money is destroyed and not replaced, the remaining money is more valuable. They also had this very clever idea that they could use paper money as burned offerings to the Gods and if they use counterfeit money, they could bribe the Guardians at the Gates of Death and not lose any value here on earth!

This latest concept the Chinese came up with about 1,000 years ago is very interesting to me. Many great empires have 'ancestor worship.' The idea that the gods who run the Cave of Wealth and Death are easily fooled is about the stupidest human idea ever.

If I were to take a hike over to this place and sit down for an interview about all this....well....let's talk to these guys:

Elaine: Hi. I'm back.

Goddess of Inflation: Long time, no see. Of course, if I were to look at you, you would be turned to stone. [Cackles with delight at the thought]

Elaine: My readers want to know if the Chinese belief that they can bribe you with counterfeit dollars, works.

Goddess of Inflation: I love it. It is do delightfully upside down and inside out, it just tickles me to death.

Goddess of Death, Doom and Destruction, aka, Cerberus: I want more bones. Lots of bones. Give me more dead.

Elaine: Goddess of Inflation, what do you plan to do about this attempt at cheating you?

Goddess of Inflation: I keep Cerberus on a short leash, normally. But when people try to cheat us gods and goddesses who live in the Cave of Wealth and Death, I let go of this leash and Cerberus gets to run free. Humans seem to forget this for some reason. Ah well, more fun for me, I say!

Elaine: I think I shall go now. I don't want to see this happen. I will warn everyone on earth.

Japan's Bonds Fall as Wholesale Inflation Reaches 27-Year High

(Bloomberg) -- Japanese bonds fell, ending four days of gains, after a central bank report showed wholesale inflation accelerated to the fastest pace in 27 years.

Ten-year yields also rose from a 3 1/2-month low as a technical chart traders use to predict yield changes suggested recent gains in the securities were too rapid. Producer prices climbed 7.1 percent from a year earlier in July, after advancing a revised 5.7 percent the previous month, the Bank of Japan reported today.

``The higher inflation was driven by commodity prices and now it has been passed onto final product prices,'' said Susumu Kato, chief economist in Tokyo at Calyon Securities, one of the 26 primary dealers required to bid at government debt sales. ``This eventually can have an impact on consumer prices,'' which may weigh on bonds, he said.

Back to the real world, we see how statistics, government lies, the lending of too much money with too few strings attached have woken the Goddess of Inflation and her hound dog, Cerberus. The dire divine lady and her dog have been roaming around Japan, destroying stuff quite insidiously. Instead of looking at her, the Japanese government has pretended she is invisible.

Even as she devours future children and babies vanish into thin air, the Japanese look the other way. Despite a very rich cultural belief in magic and the ability of the Shinto nature spirits to turn into demonic forces, the rulers of Japan practice black magic while not sincerely believing in it. Just as in the West, the wizards who do real-time 'magic spells' refuse to understand the true nature and the true operations of the Outer Darkness and how it uses the Cave of Wealth to kill humans.

The Cave of Wealth is very dangerous. It is a dead end. It is a snare, a trap. Readers of my blog must accept this reality: we can prosper if we work and do 'good' things. Or we can do stupid things that destroy real wealth but gives us the illusion of wealth. Just like movie stars and sports icons always, always except for a very few, end up broke, the system that turns labor into wealth is a very tricky one. And respecting the LIMITS of one's powers and financial abilities leads to a sober assessment of true values as well as future prospects.

Just as a farmer must take into account Mother Nature, anyone playing with money must watch the Goddesses of Wealth Creation very closely. When they sleep, all is well. When they waken, all hell breaks loose. There is no system that can fetter them once they waken! They are as powerful as the greatest earthquakes or storms! And just as destructive.

Here is a great email I got yesterday from a reader in Japan:

Japan may sometimes have earthquakes every day and a typhoon every week (I kid you not), but it fortunately does NOT have significant fossil fuels and so always had to be energy efficient. After the first set of oil crises in the 70s, Japan went on a crash course of energy conservation, just like President Carter said everyone should. (The Japanese do have something much more important than oil: abundant water.) Oil is a curse of the worst kind. Handsome and charming like Satan... wait, they both smell like sulfur! The free money from oil concentrates power in the hands of a few, completely distorting society... oh, wait, maybe that is the carry trade. Ha ha.

The new Yamanote Line trains have greatly reduced weight and use regenerative braking to turn braking energy back into electricity. The new trains use HALF the electricity of previous models. Japan Railways is converting all their trains to this type. When a train is full, it probably takes 1/40th the energy to move a person than a car would.

Now, riding on a crowded train is no fun, but it is MUCH safer than driving. Number of fatalities per year in Tokyo of passengers riding in a train is about zero. To me, the fact that, over the last 20 years, there are say 200,000 people walking around who would otherwise be dead had they been driving trumps all other considerations. (With double the population, US fatalities are more than 40,000 per year, whereas in Japan it is about 7,000... although these numbers are difficult to compare due to different criteria... in Japan, you have to die within one day of the accident, I think.)

Since the public transport is so good, most people can go to work even if gas goes to 10 dollars a gallon. And telecommuting has just been encouraged to go from 10 percent to 20 percent by generous tax incentives. And do you know that all jobs in Japan reimburse you for travel to and from work by public transport? I buy a pass to go to my office downtown, and the company gives me back the price of the pass. All jobs are like this, because no one should be deprived of the right to work because they cannot afford the commute. The cap is usually around 800 dollars a month for commuting expenses.

Japan has done some extremely dangerous and stupid things. Yet also does very smart and safe things. The concentration on public transportation is a top item here: I wish to god the US did these things! Instead of pretending oil is eternal and oil imports don't matter, Japan is the exact opposite of the US. This is the fundamental reason why Japan is a CREDITOR nation and not a debtor nation. But they are debtors! This is the paradox: they are debtors to THEMSELVES. The US is debtor to Japan, Asia and all the planet earth.

Also, Japan's governments keep falling due to the rising paradoxes of hiding inflation via killing worker's wages. This is destabilizing Japan and destroying Japan's future by killing fetuses who are not living due to feminine attempts at preventing even more domestic monetary losses. No more mouths to feed!

Japan will have a most excellent infrastructure for whoever conquers Japan. Will it be the Indonesians? Or the Filipinos? Whoever it will be, it will be some population with lots of babies. Maybe the Palestinians will take over? History has seen this in the past, more than once. Lots of times, actually.

CPI rises sharply, but relief in sight

Consumer prices in July marked their sharpest year-on-year growth in 16 years, except for 1997, when the consumption tax was raised, the internal affairs ministry said Friday.

The consumer price index (CPI), which excludes sharply fluctuating prices of fresh food, was up 2.4 percent from July last year to 102.4 against the base of 100 for 2005, the ministry said in a preliminary report.

The growth rate was the largest since June 1992, when it jumped 2.5 percent. It was also the first time since December 1992 for the increase to reach 2.0 percent or greater, the Ministry of Internal Affairs and Communications said.

The July figure was also the 10th straight year-on-year monthly rise, it said.

The G7 nations should have an emergency meeting. Along with the BIS and the IMF and all the other goofy organizations that were foolishly set up to guard the Cave of Wealth and Death. They goofed. They let the Japanese run a totally insane and utterly irresponsible system of near-0% interest rate systems in the teeth of even obvious domestic inflation, forget global inflation! And this makes their system the beating heart of the mess we are in.

The US would not get all this cheap credit if credit were properly priced in Japan. The fact that not one soul in Japan can save money or protect their savings unless they ship their money out of Japan is a huge mirror image of the US which seeks to suck into itself, all global savings.

The savings glut that Greenspan and his goofy friends talked about was no savings glut. It was a huge sector of global savings being denied a refuge at home. Now, homeless refugees, all the savings of Japan were unleashed upon the entire earth. Restlessly, these poor yen wandered about the planet, desperate to protect themselves from inflation IN JAPAN, have destabilized the entire planet's financial systems. THIS HAS TO STOP. NOW.

Credit crisis blamed for rising number of adulterous wives

A lonely hearts website for married people claims twice as many wives are signing up as they were a year ago, many of them well-off and living in the Home Counties.
It claims they are turning to adultery because the credit crisis had made their husbands "no fun", causing them to work longer hours, worry about losing their jobs and shun social activities.
This comes just days after an academic study found that couples are more likely to get divorced or separate if one of them gets the sack.

HAHAHA. And as always, the minor domestic goddesses who service the army of gnomes also go wandering about the planet, seeking or selling their sex. They cannot bear it when they bed poor gnomes. A rich gnome is petted. A poor one is kicked and has his hair torn out and his face scratched. It is all so rather pathetic.

Sorry, guys. This reminds me of my misspent youth. People would come to San Francisco to see the hippie chicks in the Haight. There, they would see me in my 'Whore of Babylon' t-shirt. 'Want to have sex?' the straight guys would ask, drooling over my rather large tits.

'Love is free. Sex is very expensive', I would sing back, grinning with the sort of amusement teen sex queens have been bestowed by Mother Nature. Pouting, the guys would go away. Either that, or they pestered me further and I introduced them to the other concept of mine: the Violent Hippie Chick From Hell.

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Comments

[ralph]

Dear Elaine, Something very,very weird is going on in physical gold markets. You say Hong Kong is the cave of wealth and death. Why are they gulping down as much physical gold as possible? "Physical dealers reported a shortage in gold bars in Singapore and Hong Kong as jewellers stepped up purchases ahead of religious festivals in India, the Middle East and Southeast Asia."

[carli]

Ralph, it's pretty simple. The Asians who worked very hard for the money they have today, without 0% loans and "democratically elected" governments, who lived and died in sweatshops for generations have grown up. They are voracious learners and internet denizens who have learned quite early on that "white man speak with forked tongue". The gwailoh and gaijin were unmerciful in the past century and even into the 21st Century. They see and know more than the denizens of the US and Europe who have been lulled to sleep by their until now comfortable lifestyles (relative to the last Great Depression).

Having said that, they have their thumb pretty much on the pulse of the economic downturn and are and have been quietly and now with more urgency converting their hard earned cash into gold and other commodities before the western paper is finally declared toilet paper. I think that is the simplest uncomplicated way of explaining it.

And let's not forget the ruling elite who know more than everyone else the urgency and timing of this debacle they created. They too are buying gold, and silver and platinum and diamonds. They are not buying their own bullshit, I can assure you.

The graphs, and numbers well, thats part and parcel of the liars game. Call it confusion economics, just like confusion marketing and confusion politics. They have convoluted it so much that David the Rock and Evelyn the Roth probably have to have it explained to them ten times before they get it!

[ralph]

Carli,
I appreciate your comment. You seem 100% correct. We shall see how this all plays out. Im trying to get physical silver down here, and you cant get any!!! The dealer I spoke to wants 14$ per oz. for silver, and he only has 112 oz.....LOL. I guess its too late to get in gold/silver. The physical stuff is gone

[Buffalo Ken]

if the "physical" stuff is gone then why does the spot price sink so low?

Something seems amiss to me, but what do i know....

Peace to all who have suffered from the horror of 9/11 past....

Peace,
Ken

[Tell]

"The concentration on public transportation is a top item here: I wish to god the US did these things! Instead of pretending oil is eternal and oil imports don't matter"...

http://tinyurl.com/cczvj

Same thing happened in the UK back in the 1920s...

Back in the 1920s the railway system of the UK was all ready to take on the mantel of distribution of goods to all parts of the UK and it would have worked very well.But the road haulage industry that was just beginning to come into being (it was a very small concern then)didn`t think this was a good idea,the motor manufacturers didn`t think it was a good idea.So to cut a long story short and a lot of very thick brown paper envelopes later MPs didn`t think it was a good idea.We have suffered to this day and how.Every time you see a lorry on the motorway think of this post.

[Buffalo Ken]

Tell - you are "telling" it for sure. I so concur with your post above.

I am sick and tired of so many cars on the road. It is so wasteful.

Peace,
Ken

[Buffalo Ken]

The factories could easily be "retooled" to manufacture more buses and trains - plus alll the associated equipment which is considerable.

There is plenty of labor to do this and everyone should recieve a fair wage - don't you think?

[RobG]

More info on Gross and Pimco: (Financial Times)

The Bill Gross-managed Pimco Total Return fund reaped a $1.7bn payday following the US government takeover of home loan giants Fannie Mae and Freddie Mac.

While shareholders in Fannie and Freddie suffered deep losses, the world’s biggest bond fund saw its highest ever one-day rise against its benchmark index on Monday, benefiting from the bet made by Mr Gross on mortgage bonds issued by the agencies.

Mr Gross had made a big shift out of US Treasuries and corporate bonds over the past year and into agency bonds, betting that the government would support Fannie and Freddie Mac. By May this year, more than 60 per cent of his $132bn fund was in mortgage debt.

[carli]

Yes, I almost forgot, A RESTFUL PEACE to all who have suffered through 9/11, and all such events caused by evil men.

May the perpetrators suffer untold misery in the bowels of Hell for Eternity.

[Buffalo Ken]

I once did considerable work in a train-related factory. That place was one "well run ship". It was awesome. The planning. The workers. The R&D.

And the best part was this facility was located in the US of A (North Carolina).

Sadly there are not many places like this anymore around here. I think that should change.

Peace,
Ken

[carli]

Ken, if and when the American people take back their country from the parasites who run it, or they leave the country willingly before they get lynched, only then will there be a fair and level playing field. Until then, I pray it comes to pass.

The U.S. is an extremely rich country in people and resources, it can pull itself out of this hole. I believe that.

[Tell]

ATS Bullion...Silver...

http://www.atsbullion.co.uk/

Royal Mint...Silver...

http://tinyurl.com/5zcx2s

[Timothy]

I have an Asian neighbor who burns money to ancestors. But in recent years he has stopped burning banknotes. They have been replaced by burning ATMs. Every year the ATM has more buttons. I expect models with logarithmic functions this year

[Buffalo Ken]

Yeah - everybody is wasting so much effort making things way too complicated and then it just muddies the waters.

For example. Now they have a zillion hurricane models and because of the uncertainty amongst the models they "create" additional uncertainty that wouldn't be there elsewise.

Something tells me the Good-Ole "Mariners' 1-2-3 Rule to define the "Danger area" is your "best bet". It was created I suspect by individuals who were actually in some storms! Plus, it is very simple.

A study could be done to compare the models and I think this would be worthwhile. Pick out the best from each model if you think you can, but I still think the simple "Mariners' 1-2-3" is most imformative.

Peace,
Ken

[Buffalo Ken]

The study would obviously involve a past-looking assessment of how each model performed....then the ones that consistently perform poorly should more than likely be eliminated especially if they are ridiculously complicated.

This is simple and I suspect it also speaks to the "Derivatives Beast" which isn't anything but an imaginary concept in the minds of a few.

Peace,
Ken

[Buffalo Ken]

but I don't really know that much about the "Derivatives Beast" so I suppose that statement above is nothing more than me trying to verbalize (type) my intuition....

I am a pretty fast typer.

Elaine - I hope the headline in one of your articles on one of your other blogs is true. It was from a few years ago and deals with a one-day event. It would be great if the event was also "imaginary" and then afterward we could all just "get to work".

Peace,
Ken

[Tell]

"The Robber Baron and the Black Knight"...

http://tinyurl.com/5ezr9o

[Buffalo Ken]

you know figuring out how to use "less" energy to do most of what we need to do from one day to the next. Kind of like the trains discussed in the e-mail reference you had in your article...there are so many ways this sort of thinking can be implemented and we can all work together to optimize ---- 100% optimization though is never reached, and in a way, that is the beauty of it. There is always more to learn.

Anyhow, enough of my "blabbering.....bla...bla...bla.....and such"

[Jojo]

'Love is free. Sex is very expensive'
Today as we see confusion, deflation and desperation chasing cash in the present, in the not so distant future, with the help of the CBanksters, cash will again pour forth to lubricate libidos causing the cost of essential oil to rise, thus leading to a more expensive sex trade.
Elaine, you brilliant hippie chick with an attitude and aptitude - you are right again.

[Buffalo Ken]

Furthermore, let me go out on a limb here and suggest that part of the reason the hurricane models are sometimes "all over the place" is because the "weather conditions" are very fluid and subtle -- they have been "perturbed" and the consequence of this are often not easily understood because....well, it has never happened since humanity has been around. You know. Atmospheric chemistry and such.

Things are changing so quickly that to a degree the "models can't keep up". This is when I think it is often best to go back to something simpler but blessed with the knowledge that has been acquired - does that make any sense?

[Buffalo Ken]

OK - sorry for all of this semi-off-topic mathamatical pondering...

Peace,
Ken

Plus - Jojo - I agree!

[Buffalo Ken]

screw it - i'll "risk" on more post...

Here is some data I'd like to see regarding Hurricane Ike. I'd like to see the pressure-gradient within a certain radius of the "eye" (which isn't really an eye unless you are looking at it from far away...).

Anyhow, I think the gradient in Ike is most unusual. It have a very low central pressure but top speed winds are lower than would be expected - thus, they have been referred to as "atypical".

We need more planes to get data from within the storm, but so many planes are off "gallavanting" around were are not getting the data we need.

I also think a whole bunch planes should be "grounded" for safety sake, but what do I know. Hell, I think the Air Force should be subsumed by the Navy, but I'm sure others would argue adamantly otherwise....Oh well...

[Buffalo Ken]

sorry for all the "typos" in that...hopefully what i meant to say is evident.

[don]

Elaine: so true, Sex is very expensive..
Look how much Spitzer paid for his sugar.
I was catching up on my reading and came
across an interesting article about Richard
Cayne Perry, (Fortune-August). Of course one
of the graduates from the hooked on phonics
course at GS. What struck me was the
correlation of the timing of his Hedge Funds and how he was making money, Betting
against Subprime Mortages and failures in
2005!!! So If this gentleman was making money, someone had to know about this mess,
Who do we send to jail first? The article
ends with Perry's future investments:
"We are looking forward to taking advantage
of a "long-lasting" distressed cycle" !!!
Yikes !!!!!!!

[roger]

Haaaaaaa yeaaaa Sex the great preoccupation of MEN.Did it ever occur To Don Juan that
mother nature is in charge here!she could have done a better job do, like sharing
pregnancies ,population growth wouldn't
be an issue.

[rockpaperscizzors]

Nouriel Roubini isn't a happy camper with Comrades Bush, Paulson, and Bernanke:..The ideologue “regulators” who literally held a chain saw at a public event to smash “unnecessary regulations” are now communists nationalizing private firms and socializing their losses......
Like scores of evangelists and hypocrites and moralists who spew and praise family values and pretend to be holier than thou and are then regularly caught cheating or cross dressing or found to be perverts these Bush hypocrites who spewed for years the glory of unfettered wild west laissez faire jungle capitalism (and never believed in any sensible and appropriate regulation and supervision of financial markets) allowed the biggest debt bubble ever to fester without any control.........
http://www.rgemonitor.com/roubini-monitor/253529/comrades_bush_paulson_and_bernanke_welcome_you_to_the_ussra_united_socialist_state_republic_of_america

[DrKrbyLuv]

The financial illusions have become surrealistic, like a colonoscopy. The meds put you in a twilight; between a comfortable sleep and semi-consciousness state. Things seem quite peaceful and ok - then you notice that something odd is occurring but you are powerless to stop it.

Most pundits and bureaucrats agree that the gnomes should structure more bail-outs; even if the costs transcend our generation. And, really, our children-grandchildren-great grandchildren will not mind footing much of our tab. After all, we are fighting the crazy terrorists for them.

[Elaine Meinel Supkis]

So many links! And suggestions....yes, we are all learning about this business together.

The communists are becoming superb capitalists while the capitalists are becoming either Maoists in Europe or Stalinists in America. This is classic 'flip/flop' sort of switching which is when things go upside down and inside out.

Pure lighting/outer darkness type of strange flips.

By the way, I had speech problems when young and my first therapist spent HOURS trying to get me to say 'flip.' Once I mastered this, saying anything became a piece of cake. Just occurred to me, by the way. Funny, how memory works.

I am so happy 'Spot' wasn't named 'Flip'. But then, when I was 13, 'Flipper' came along on TV. Gah! Can't escape destiny!

[PhD]

I am somewhat removed from US mainstream TV media as I am residing in Europe. However I regularly watch CNN's 'Situation Room' with Wolf Blitzer. It comes on every weekday at midnight here on CNN International, so it must run at 6PM EST I believe. This must be pretty much the only daily show that CNN sends out to the world that is transmitted live to the US audience at the same time.

They 'clipped' Lou Dobbs a long time ago for the international viewers :-(

Anyway, what I am trying to say is that just tonight for whatever reason the 'Situation' is that they decided to shift some attention from McCain and Obama to the banking collapse for a 'change': Mr. Blitzer was talking with some journalist, who somewhat explained the 'Lehman' 'situation' - Mr. Blitzer then commented that this whole 'situation' makes him feel 'dizzy'(!). He actually also looked confused and really genuinely concerned, like I have never seen him before.

Has anyone else seen this tonight?

How does the rest of the US news entertainment media cover the 'Lehman' breakdown?

[GK]

The reduction in the financial strength the physical infrastructure of the USA is simply a requisite to the plan to create global criminal monopolies of Food, Oil, Money, Commodities, Labor, Land and Pharmaceuticals.

If you can open free trade everywhere, weaken government regulation everywhere, the natural progression is to a total monopoly of everything.

Virtually infinite profits.

The financial genius Harry Schultz believes the solution is breaking down large, inefficient governments into lots of small nations.

“ON RE-MAKING THE WORLD: Cut Nations Down to Size”

http://www.hsletter.com/Harry_index.html

The US needs to immediately begin building distributed, reliable electrical power generation capabilities powering super-efficient rail transport before we fall into a Neo-Malthusian dark ages of windmills Neo-Feudal debt slavery.

Has anyone else heard of the Hyperion Micro-Nuke Power Module?

http://www.hyperionpowergeneration.com/

[Bear of Little Brain]

Bolivia has just booted the US ambassador, Philip Goldberg, out (72 hrs to pack and leave). He is persona non grata. The US is considering an 'appropriate 'response' (an assassination is usually the preferred option).
Mr. Goldberg has a number of interesting earlier assignments (e.g., Bosnia, Kosovo, Colombia, Chile):
http://www.state.gov/r/pa/ei/biog/73005.htm
Can't think why Bolivia would think he was bad news.

Russia has just landed a couple of long-range bombers in Venezuela for a 'friendship' visit (don't they have a naval fleet heading there for something sim'lar?).

Nuclear-armed Pakistan is looking very ragged and Little Boots has already authorised operations within Pakistan, with or without their permission (or notification, I believe). The problem isn't radical Muslims perceived wish to build bombs, it's the possibility that they just become the government of a country that already has them!

Looks like there are lot of restless natives out there.

Thought: how do you bring down a bankrupt empire? Force it to try to maintain its military dominance in too many places and to deploy an overwhelming military presence against too many possible threats. No need to do something similar to force unnecessary expenditure within the empire's homeland, because it's already doing that for you.

Hey, let's blame on Puti!

[Bear of Little Brain]

Oh, and hold loads of its debt and be prepared to dump it.

[roger]

there seems to be great confusion around the world on the definition of all the ism's.
and since all the Ism's are constantly morphing I like to think this way:
Knowledge+co-operation =sharing=trust=
harmony=peace/security=prosperity.
Knowledge+competition=domination=
exploitation=conflict=misery/death.

[CK]

So this past wednesday I trolled around the local antiques market.
One joiner( old cast iron job), one woodworkinglathe ( cast iron), one bench top drill press ( Taiwanese it makes holes adequately), one reciprocating saw ( Japanese ), one canvas and leather repair kit, two 1/4 hp motors, 5 rolls of dead naugha hides, B&D grinder/polisher with two boxes of various abrasives, several bunches of old stanley tools, bunch of other useful items. Total expenditure, One 6 pennyweight gold bracelet. Actually came home with more Federal work points than I left home with.
Bit of wind took down part of my persimmon tree, wonderful hard wood ( only member of the ebony family on this continent ) will be enough deadfall to keep me warm for part of a month.
Started some indoor pots for fresh veggies and herbs for the winter. Looking around for a used motor scooter for buzzing around use. No big hurry, have enough parts to build my own transport. Still working on getting that damn black forest cake to come out properly, third time might just be the charm, will use Italian rum soaked cherries and real German Cherry brandy ... Even it it doesn't come out looking like a proper cake, a few bites and who will care?
What you ask does any of this blather have to do with Lehman or FNMA? Wrong question, what do Lehman and FNMA have to do with a happy existence. They can sink, swim, or do nothing and tomorrow I will still have things to build, food to eat, sunrises to enjoy and strong waters to finish the day... So excuse me but it is time to enjoy a snifter of Laphroig and some world class reading. ( Popular Mechanics book from 1947 on how to build your own welding equipment and forge and trip hammer.)

[GK]

CK, How true the importance of focusing on ruling one's own self and life and being responsible for the happiness of ones own family.

However, when your neighbors have gotten bored with this and demanded a king, then got rid of that because they wanted something more exciting, it behooves us to make our frog neighbors aware they and their wealth and freedom are about to be eaten before it is too late.

http://www.aesops-fables.org.uk/aesop-fable-the-frogs-desiring-a-king.htm

"The Frogs were living as happy as could be in a marshy swamp that just suited them; they went splashing about caring for nobody and nobody troubling with them.

But some of them thought that this was not right, that they should have a king and a proper constitution, so they determined to send up a petition to Jove to give them what they wanted.

"Mighty Jove," they cried, "send unto us a king that will rule over us and keep us in order." Jove laughed at their croaking, and threw down into the swamp a huge Log, which came down splashing into the swamp.

The Frogs were frightened out of their lives by the commotion made in their midst, and all rushed to the bank to look at the horrible monster; but after a time, seeing that it did not move, one or two of the boldest of them ventured out towards the Log, and even dared to touch it; still it did not move.

Then the greatest hero of the Frogs jumped upon the Log and commenced dancing up and down upon it, thereupon all the Frogs came and did the same; and for some time the Frogs went about their business every day without taking the slightest notice of their new King Log lying in their midst.

But this did not suit them, so they sent another petition to Jove, and said to him, "We want a real king; one that will really rule over us."

Now this made Jove angry, so he sent among them a big Stork that soon set to work gobbling them all up. Then the Frogs repented when too late."

Better no rule than cruel rule

[carli]

"Tens of thousands to be laid off every week' as UK falls into recession" To read: http://tinyurl.com/698mwk

The race to the bottom is on. Everyone is counting on US X'mas sales to pick things up but the truth is far from this. Everything has come down to wishful thinking.

At the end of the day it doesn't matter what type of economics or finance models you use, if the people with the big bucks don't follow the rules. A Ponzi scheme is a Ponzi scheme, is a Ponzi scheme. If it looks like a duck, and walks like a duck, then it must be a duck! We are all fucked.

[Elaine Meinel Supkis]

CK: if you talk about Black Forest Cake [lord! I used to live in the Black forest in Germany and they had delightful cakes!] I will SCREAM.

If you succeed, do email me a picture. I will post it for joint e-devouring.

[Jeremy]

My partner is an RF Engineer (who happens to be from China) and he also sales shoes online, just as a hobby that makes a little money. I run an upscale shop in a very wealthy area of town. Over the past 3.5 months, sales have been horrible! Its like as soon as June 1st came around, people stopped shopping and it has been shocking and indeed makes us worry. I know retailers are expecting Christmas sales to save them...and indeed, if retail shops have a bad Christmas Season it can and will RUIN a business, especially the mom-&-pop shops. I am not expecting this Christmas Season to be anything impressive, so that is something else to keep an eye on at the first of the year. People simply aren't shopping! I guess when gas and food become an issue, people are not going to spend on luxuries.

[Christian W]

The Democrats want to have a second tax rebate to ensure people have cash for Santa... How ingenious.

All while the F&F mess is about to be pushed into the US budget.

[PLovering]

Zi juus foreign central bankers are fleecing honest U.S. investors today just like they did in 1929.

They pump the dollar and sell/kill equities, housing, oil, gold and silver -- causing losses that stagger the imagination.

Heaven help the margin playerz.

Come the Depression, these same ZJCBers will be back buying the country for pennies on the dollar.

[carli]

The dollar is now in musical chairs game mode, when the music will stop only the top ruling bankers know. There will be only one or two chairs left standing. The game is rigged.

Elaine always reminds us, that no one remembers history. Except of course the bankers who clearly do because they keep running the same scams over and over again.

If there was a Nuremberg trail for war criminals, there should be one of the financial con men. The damage they inflict and the lives they take and ruin are even more than all the wars put together.

[AA]

Elaine - any thoughts on what would ensue if the following scenario occurs (which was posted by a usually knowledgeable commentator at Roubini's blog today):

" was briefed on the proposed US financial reforms which will be shoved through with minimal review. Short version is that the Fed wins an explicit "financial stability" role which gives it powers and secrecy to do pretty well whatever Tim Geithner chooses to do for his capitalist crony clientele. The role will include comprehensive, global data collection which will give the Fed visibility of all open positions. In the wrong hands, this insight could be used to selectively induce volatility and margin calls which would selectively hurt some and advantage others. That could help the Fed's friends over time.

The FDIC will be stripped of financial supervision and prudential intervention powers in favour of the Fed. That makes the Fed totally unreviewable and unchallenged by other authority in the USA.

Additionally, the SEC will be forcibly reformed to be more like the CFTC - a service entity for the interests of those who pay good money for bad regulators. Instead of fixed rules, SEC regulation will become "principles based" which will mean that no one is ever held accountable for breaking the law unless they have done something to break the code of omerta and anger their peers.

Federal law and regulation will pre-empt all state laws, and states attorney generals will be stripped of authority to investigate or sue. That means no more inconvenient Elliot Spitzers to get in the way of Wall Street excess.

This may not meet Professor Roubini's recommendations, but the deal is going through with little review so far because the cries for reform are only going to be met with this one pre-agreed proposal. After all, who in Washington or Wall Street would ever suggest that Geithner, Bernanke and Paulson didn't have the best interests of American and global investors at heart? "

[Shoshona]

Buffalo Ken - very entertaining. Where are you? Am I correct you're in Buffalo NY?
What field of work are you in?
Curious whether it is journalism or writing of some kind.

[OC]

Spot on CK and leave some for us....those jackasses can drop dead for all I care!!

Imagine the gall of these guys - they have the nerve to expect us to clean up their shit.

Wrong PLovering, the Chinese are the ones buying all of us out this time round and are waiting for the Feds to make the FATAL mistake!!(with the Koreans and Japanese too!!)

[buffalo ken (computer 2)]

Shoshona - I was born in Buffalo, N.Y. I now live in Charlotte, N.C. and I'm basically unemployed. I have been for over a year now.

Luckily for me my lovely spouse teaches 1st grade and I managed to save a bit of funds before I quit my previous occupation which was running a one-man environmental consulting firm working primarily for "little plants" throughout NC within a day's ride. You know with what minor savings my wife and I have, we "sat on" cash for almost a year, but then back in May a choice was made and we invested in the following:

1. Silver (the "Peoples" metal in my opinion).
2. Gold (less than silver).
3. Swiss Franc currency (on a whim).
4. Canadian dollars (I'm very fond of Canada because I've been there many times especially when I was a kid).

But as often goes, it is damn near impossible to make an informed decision regarding investments these days because the juvenile "big boys" just can't keep their hands out of the cookie jars. I would really like to slap them around some and tell them to grow up before they destroy everything for everyone especially themselves. I'd like to discriminately take all of the "big boys" and turn them into little cry babies who are stuck in a cage for the rest of their pathetic little lives. They think it is all a game, but that only others lose. They have stopped learning and in my opinion, this is the beginning of the end for them. Time will tell.

I enjoy writing and "farting around" on the internet.

Thanks for your interest.

Peace,
Ken

P.S. The only reason I'm up now is that sometimes I wake up in the middle of the night and I figured I'd check out the National Hurricane website. Plus, I just can't stop myself from checking out Elaine's blog....

[hIGHcastle]

This is a bit disturbing and may start to become a trend. From Naked Capitalism:

Michigan (And Maybe Ohio): Lose Your Home, Lose Your Vote

The deterioration is accelerating rapidly.

[Bear of Little Brain]

Elaine, you'll like this. Our own dear Merv must be reading your blog. He used your Pigasus phrase. Quote:

"He [Mervyn King, Governor of the Bank of England] said central banks should not be regarded as a "magical piggy bank" for mortgage lenders, and that guaranteeing the mortgage market would have profound economic and fiscal consequences for decades."

"MAGICAL PIGGY BANK"!!

From the Daily Telegraph:
http://tinyurl.com/4ks7sa

Merv has been banging on about moral hazard for months. He recently was reappointed Governor for another term (so he's feeling quite secure). Our ill-fated PM, Gordon Brown, gave the Bank independence from the government many years ago, just after New Labour (i.e. New Tory) came to power. Gordon was Chancellor then, and when the dour sod wasn't telling us how he'd put an end to boom-and-bust due to his 'prudence', he was trumpeting his BoE liberation, along with its 'contained inflation' mandate. Now he's stuck with it and it looks like Merv is standing up to the government just when it wants to save its sorry ass with bailouts and handouts. You gotta love it.

[WG]

Usually I tend to ignore most of what Elaine says about magic(gotta see it to believe it), but claiming that the Chinese believes in magic is simply wrong. In fact, one of the key movements of the current administration was the abolishment of all beliefs in the supernatural, and they have succeeded quite well.

The Chinese has a study of feng-shui, but that's more of a wall-flower effect for 'looking pretty' rather than actually wanting it to work magic. Feng-shui has also been proven to not work again and again, dating back to the Qing dynasty, when the Qing emperor built his capital and grave to occupy the best feng-shui in the entire China, and wanted his empire to last for eternity(hence his name, Qing Shi Huang, the start of eternal rule). Too bad his empire fell apart after only 1 succession.

Also note the starting day of Olympics, 08/08/08 08:08, a number supposed to bring wealth and prosperity. Too bad stock markets crashed on that day, nobody believed wealth was coming, and the government didn't believe either, and didn't step in to help.

Too many examples to list. In short, most sane people in china does not belief in magic or feng-shui. They look at facts.

[WG]

And one more comment today, since I have time to kill, this time on the concept of magical days or dates. Frankly, there can be no magic about any particular date, since all dates are simply arbitrarily set numbers. It is now year 2008, but that is only according to ancient romans, who certainly didn't consider their creation to be magical. They picked January 1st to be in the middle of winter pretty much because they felt like it, and could simply have picked any other date as a start. Thus a date can't possibly be magical unless these Romans were some uber magicians.

I understand that Elaine refers to magical dates because some cults or groups believed in them and would love to act on such dates. But in that case a more appropriate name for such dates would be 'trouble date' or 'catastrophe date', or some other better name. The words magic and magical are too vague and badly misused.

[carli]

Ken, I am based in the Far East. Born and raised. Got my secondary and University education in Europe. Have lived in Spain, Switzerland, Germany and Hong Kong. Also spend many moons in Tokyo. So am familiar with the people, the politics, the way both Europeans and Asians do business and their idiotsyncrasies (pun intended) in general. But for all intents I am an Asian at heart.

Having read what you said about silver and Swiss franc, I would encourage you to do some homework on Sing $, Indian Rupee and Yuan. Mind you I am not talking about speculation but about wealth preservation. What you need to seriously consider in the ongoing economic scenario is, who has the financial ammunition to pay the bills and keep things running?

Between the US, the EU and Asia it comes down to a last man standing game, and it will be the money of the the last man standing that will rule. That is based on the assumption that no one blinks and presses the NUKE EM button. I am an optimist.

The fundamentals of these two countries are solid. China to a lesser degree but it is very much solid too. India is growing internally and is not dependent on exports like China. Singapore is the Switzerland of the rich Indians just as Hong Kong is to the rich mainland Chinese.

You can start doing your homework here: http://indiaeconomywatch.blogspot.com/

Good luck with that. Wish you and yours the best.