US Struggles As Ports Are Hammered By Mother Nature

September 12, 2008

Elaine Meinel Supkis

As Hurricane Ike slams into Texas, it is time to remember how all natural forces do the same thing on a periodical scale. It was nearly exactly 100 years ago that Galveston was destroyed. It may be destroyed again, what a non-shock! The banking collapse of 2007-2011 will be the mirror image of the 1929-1937 banking collapse. I would suggest we have much better teaching of the history of economics and it should be tied into politics more. HAHAHA. First, we have to dynamite the School of Chicago after tying up the professors. And arrest the officers of the Federal Reserve as well as a host of politicians.

Fed Direct Loans Lose Stigma as Banks Push Borrowing to Record

(Bloomberg) -- Commercial banks that a year ago rebuffed a Federal Reserve program to provide cheaper cash may be increasingly dependent on it.

Borrowing from the Fed's discount window hit record levels in six of the past eight weeks, and reached $23.5 billion as of Sept. 10, Fed data show. By comparison, lending averaged just $779 million a week in the three months after New York Fed President Timothy Geithner urged banks to use the program.

The increasing use of the funds risks delaying banks' disposal of nonperforming assets and capital raising. It also may make it tough to restore the rate on the loans to the historical 1 percentage point premium over overnight funds, analysts said. The Fed has lowered the rate nine times since August 2007.

In the 1900-1907 time frame, the US literally lost several major cities to natural forces. Hurricanes, floods and earthquakes hammered significant ports and this interfered with all sorts trade. This came on the heels of a very bad invasion of the Philippines. Stuck in an endless jungle warfare, this cost the government considerable revenues as well as loss of face. It encouraged the Japanese to think, the US which basically gunned its way into Japanese markets, was a paper tiger. Plans for WWII were already being hatched in the corridors of the new military schools run mostly by Germans, in Tokyo.

The threads of various events are obvious for they shine like gold thread: the creation of the Federal Reserve was due to the hurricanes and earthquakes wrecking the US banking/government systems since these coincided with failed military imperialist adventures! And out of this stew came the Federal Reserve.

Now to today's news: the banks never, ever 'spurned' free funny money from the Federal Reserve. Lord forbid! No! They wanted this more than anything on earth. But they were frightened that smart investors, especially the Chinese and Japanese, would see clearly, the US banking system was bankrupt. They would, in turn, then decimate the banking system and buy up the ruins, cheap. Bears in the US knew this, too. I had to caution bears last year about this matter: I said the Fed would save these bankers! And so it is: the bankers made up this goofy and totally fake story that the Fed was blasting this hole in the side of the Cave of Wealth and Death only to demonstrate power! Not to take money out.

We knew this was a lie. They had this big story-telling time whereby they bent their wizardly gnomic skills towards convincing Asians that this was an EXPERIMENT, not a desperate move to circumvent the guardians of this dire cave. And this was because they were fearful that smart people would figure out, this demolition window-making work would waken the Goddess of Inflation.

Of course, it woke her up! She tore off her blindfold and the golden cord that bound her dark wings was released and off she took...flying higher and higher. She has landed, but only to wait for more money to be made so she can devour it. She is very much, awake and ready to fly again. Oil is dropping but this is no salve. For the funny money making via this new window in the Cave is still operational. INDEED, MORE MONEY THAN EVER IS COMING THROUGH THIS GROWING PORTAL!

A month ago, the Fed boasted that they would close this dire window that faces the hurricane because it was no longer needed. I snarfed at that obvious lie. Well, during the last month, the need to 'borrow' from this window of opportunity has hit record levels, as I predicted [ah! I enjoy a very high baseball score in this matter, eh, a virtual Babe Ruth!].

Fake interest rates in Japan and the US are unsustainable. They warp all trade, all commerce and all monetary relative values. They are the headstone to the grave of global Floating Currency Regimes. The horrid, stupid thing launched by Nixon in order to pay for the Cold War and bombing peasants in Vietnam continues to bomb our own banking system.

Bloomberg:

The low cost may ``delay necessary adjustments'' at banks, said Vincent Reinhart, a resident scholar at the American Enterprise Institute in Washington who was director of the Fed's monetary affairs division from 2001 to 2007. Lenders may ``have a hard time if the Federal Reserve tries to take it away,'' he said.

Geithner, along with Fed Vice Chairman Donald Kohn, told a group of banks including Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp. on an Aug. 17 conference call that tapping the so-called discount window was a ``sign of strength.''

The banks won't fix themselves or reform if they are getting infinite funny money created via a window blasted in the side of the Cave of Wealth and Death! They will continue to use this until someone shoots them dead! They will NEVER let anyone take this away from them except at gun point.

Note how the bankrupt Citigroup head as well as Geithner are calling this obvious raid on the Cave, a sign of strength! HAHAHA. Up is down, in is out and negative is positive. This is pure Outer Darkness/lightning territory. Whenever we see people stand reality on its head, we are looking at magic. Magicians believe that if you lie about the true condition of things, reality changes. This belief is stupid, of course. The gods control reality and the gods are really all goddesses: Mother Nature and the three evil sisters, History, Inflation and Depression. They love to use numbers and charts and unlike the liars who try to fool us, they keep very accurate accounts. Everything is carefully tracked and when the graphs show the 'hockey stick' sudden rise upwards, these demonic forces sharpen their fangs and claws and tear into whatever has dared to go off the charts. They hate things going off the charts. Balance is everything with them! They love to make everything equal zero.

All systems that double in size are anathema.

U.S. Treasury moves to calm Japanese investors

(MarketWatch) -- Seeking to head off any unloading of Fannie Mae and Freddie Mac bonds by Japanese investors, the U.S. Treasury Department is taking the unusual step of directly contacting Japanese financial institutions about the plan to rescue the mortgage giants, according to a published report.

Because a massive unloading of Fannie Mae and Freddie Mac holdings could hamper the U.S. government's efforts to shore up the mortgage firms' finances, the Treasury Department is effectively asking investors to refrain from doing so, Japanese business daily Nikkei said on its Website in a report dated Friday.

The US should put on beggar's robes, carry a tin cup and go about Asia, quavering, 'Alms for the poor! Alms for the poor!' HAHAHA. We know all about how important 'face' is in Asia. Well, we blasted our face to the moon and the man in the moon laughs at us at night. How stupid is this? If we need to beg Asia for holding our debts, we should throw in the towel. This means mothballing most of our navy. And ceasing to pretend to be a first class power. We can save our nation and concentrate on saving our ports that are being menaced by hurricanes, floods, tornadoes and earthquakes. Or we can passively wait for Mother Nature to teach us the meaning of reality.

China may cut its dollar holdings - CICC

China, which holds a fifth of its currency reserves in Fannie Mae and Freddie Mac debt, may cut the portion held in US dollars, according to China International Capital Corp (CICC), one of the nation's biggest investment banks.
*snip*
China holds up to $400 billion in the two firms' debt, CICC Chief Economist Ha Jiming said in a report Thursday.

"The crisis has made Chinese officials realize it's a bad idea to put all their eggs in one basket," wrote Hong Kong-based Ha. "This will likely lead to greater diversification of foreign exchange reserve investments."

This is an open threat. It is an experiment. 'Is it time for us to force the US to kow-tow to the Dragon Throne?' the Chinese debate. China just got hammered by epic storms and earthquakes. China can't sustain the US desire for endless loans. China has to think about saving China. Mother Nature has been very active this year. They know better than to ignore HER! She is not to be ignored. She forces her way into the situation.

So I am predicting that the Chinese will begin to seriously twist our arms here. When Katrina hit at the peak of the US housing bubble, the US government actually enthused about getting $250 billion---yes, billion---in new loans from Asia to rebuilt the entire Gulf. This did NOT happen. And it was the first warning shot that endless lending, infinite credit was now being clipped. The US could no longer spend freely.

So we continued to run budget deficits, anyway. To pay for our fruitless wars. Iran and Iraq are binding each other together insidiously and relentlessly. The no-big oil contracts the US foisted on Iraq have been repudiated this week. Venezuela has thrown out our ambassador as Russia sails merrily into port. This is the Cold War tit for tat. And tattered Cuba, still under embargo which has been tightened, is now going to Russia for help. And the US is losing diplomatic battles while we crawl on our stomachs in Asia, pleading for more credit so we can run the magic window in the Fed forever and ever.

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Comments

[rockpaperscizzors]

Will Comrade Hank Paulson bailout Lehman Bros and save is brother Comrade Richard Paulson?

From Forbes: Paulson Brothers On Either Side Of Lehman Divide
"....But Paulson's best friend at Lehman Bros. (nyse: LEH - news - people ) is probably his brother Richard Paulson, who has worked at the now-beleaguered investment bank as a fixed-income salesman for more than a decade."

[Hemlock]

Is it true that when a high profile investment bank fails the larger shareholders are bailed out but the smaller shareholders lose much of their investment? If this is the case, how can you be sure that this is inflationary? I assume that bailing out the large shareholders is inflationary, and letting the small shareholders lose most of their investment is deflationary. How do you know what the net effect of these actions is for a particular investment bank?

[Ed-M]

Elaine, it is my contention that this storm is the reincarnetion of the late President Dwight D. Eisenhower, pissed off at our (collective) embrace of the Military-Industrial that he so sternly WARNED us about.

[Ed-M]

correction: Military-Industrial Complex.

[OC]

Elaine,

All this talk of balancing; sounds very much like Chinese Yin-Yang principles...

[OC]

Another thing, all this diggin up and relearning history lessons...and the idea that the ancestors are smarter than us...is rather Oriental in mindset....

[ralph]

Secret Meeting tonight at the cave of death in downtown manhatten. These conspirators should be arrested. New York Fed Holds Emergency Meeting On Lehman's Future
By DAMIAN PALETTA and SUSANNE CRAIG
September 12, 2008 9:01 p.m. Game is up.

[randy]

If the US were to declare bankruptcy, exactly who declares it? The president? congress? The fed reserve? some other entity?

[Elaine Meinel Supkis]

Some other entity....when they say 'No' to more loans.

[Buffalo Ken]

I hope everyone made it throught the evening intact and my heart goes out to the folks along the Texas coast. They have a monstrously large mess on their hands, but something tells me they will figure out a way to work together - its the only way.

Hopefully this time around there won't be any chaotic friedman bullshit that only enriches a few at the expense of the community.

Isn't time to let go of the ugly ego and come to our senses. I think so. What about you - what do you think.

I also think this storm is a huge embarressment to the US scientific community who were too tempered in their assessments. It is a huge wake-up call for emergency planners who did not properly warn citizens. It could be an opportunity to implement some better ideas - but this will only be possible after the huge mess is cleaned up and given all of the chemical tanks and other industry-related equipment in the area being hit this mess may be unlike any other encountered in recent history.

Peace is what we need. We need peace. Wake up.

[Buffalo Ken]

Gracious - this is almost too much, but not really. We the People are tough, aren't we? I think so.

OK - Really. I've got to focus on local things.

Peace everyone who is trying to end sad and unnecessary and inhumane suffering of innocence. It is not hard.

Peace,
Ken