October 21, 2008
Elaine Meinel Supkis
Last year exactly, the G7 nations were all fighting with the US to get the dollar stronger. This was their first reaction to the banking crisis that began on 7/17/7. Today, they are grimly settling in with a very fragile return to the status quo which was lost back then. So stocks go up, of course. AIG is now running in circles trying to avoid being arrested for fraud, grand larceny and treason. Send them to China to be punished! And dear readers, those of you who hate socialism, read today's posting very carefully. The Rich LOVE socialism for themselves and intend to make you all pay for all this AIG-style socialism while you get nothing in return except a lifetime of debt. This is called 'peonage' or 'serfdom', not freedom.
More information is now spilling out of the cave where the G7 dwarves met. Seems, as I predicted, the dwarves are not so united after all. Indeed, they are swinging hammers and axes at each other. The bank melt down is to be blamed on the Chinese Dragon who sent some observers to this confederation meeting. Hu needs to be entertained as he whacks rivals in the shins at home. HAHAHA. Turns out, the US vetoed condemnation of the weak US dollar. HAHAHA. Everyone wants BIGGER trade surpluses with the US. And reality be damned.
The dollar fell to an all-time low against its major trading partners after the Group of Seven failed to address the record decline following a meeting of finance officials.
The policy makers, representing the U.S., U.K., Japan, Germany, Italy, France and Canada, stuck to language in prior statements by saying ``excess volatility'' in currencies is ``undesirable'' and that currencies should trade in line with fundamentals. They also intensified calls for China to let its currency strengthen, during the Oct. 19 gathering in Washington.
``The statement gives the market a green light to sell the dollar,'' said Brian Dolan, chief currency strategist at FOREX.com, a unit of the online currency trading firm Gain Capital in Bedminster, New Jersey, which has about $250 million of funds under management. ``With no comment from the G-7 about its weakness, the dollar could decline to $1.45 per euro in a month.''
OK: no one believes me, it seems. The problem isn't the yuan. It is the yen. I can't understand why this is so hard to understand. We don't talk about the yuan 'carry trade' because there is none. China's interest rates are in line with the rest of the world. China, like the rest of the world, has inflation. China can see the value of the yuan rise if the US and Europe wish to hold Chinese yuan but we don't hold hardly ANY yuan in our own FOREX reserves.
The game is, if one wants a weak currency, they must buy the currency of their trade rivals and then hold them. Ergo: if Europe and the US want the yuan to be strong, they must ask for lots and lots of yuan and then HOLD THEM. This poker game is laughably easy to understand. But they don't want any yuan or yen. Europe and the US want the world to do the way we made Germany and Japan do it with first, the Bretton Woods II Accords and the Plaza Accords. In these cases, the US, as the world's reigning empire, ordered everyone to weaken the dollar vis a vis their currencies and so they did. the Plaza Accords caused Japan to go into this huge balloon which pretty much destroyed their domestic economy.
There is this titanic battle going on: the US Titanic is sinking. It is plainly obvious to everyone except in the US, we have to all shout in unison, 'We are NUMBER ONE', not, 'Man the lifeboats!' And the average American should wonder about all those lifeboats that are rowing off to socialist Europe. The very rich need houses in America but want houses in Paris, London or Rome. Just to give a few examples.
Last year, note how all the G7 also wanted China to make the yuan more valuable. Note that there isn't so much as a peep about that, today. The stark contrast is painfully obvious. China wants global trade to resume based on the 2000-2007 status quo. Naturally! But so does Japan. China's gambit of forcing the yen up while demanding the G7 condemn Japan has worked! All discussion about the yuan has been dropped. Not only that, China is the creditor nation, not the US. So they sit in the cat-bird seat and can call all the shots.
All the non-G7 nations are mocking the IMF and the entire G7 business. Led by Russia and China, they are trying to get the US and Europe to do something about their financial problems that are threatening the world's banking and trade systems. And it is time to visit Japan yet again, this always bothers me, how the US ignores the challenges of Japan and how the West focuses only on China but can't see how this interacts with Japan and how Japan is not on our side at all. Time to visit the IMF and the CIA web sites to talk about all the numbers and facts pertaining to this matter of US/Japan trade.
So far, China hasn't bothered with chiding the IMF. This is because the IMF is impotent due to lack of banking power. The Brazilian and Agentinian ministers are doing the slapping for China. Both go to China for funding now, not the IMF. So they are emboldened to the point of open sassy back talk. The G7 dwarves just had their meeting and ended it in the traditional way: yelling at China while Japan stands to one side, sniggering. While I was visiting the Deep Water Ports in New Jersey, I noted that the Japanese ships were cloaked in anonymity while the Chinese ships had huge names painted on their sides. I constantly harp about Japan because of this cloaking device they use.
See? Last year, it was obvious to me that China, not the US, was now calling all the shots. And Europe understood that. This story was the very last time Europe tried to get China to raise the value of the yuan against the dollar. Instead, both they and Japan switched gears. Japan, later that month of October, 2007, ran off to China and had very, very secret negotiations over the business about the relative value of the dollar and basically, China agreed to call off their campaign to raise the value of the yen vis a vis the dollar and both focused only on strengthening the dollar.
My sole interest in the relative value of all currencies in the goofy, dangerous, unstable Floating Currency Regime launched unilaterally by President Nixon is philosophical. I do not seek to make money, gambling in this very rigged game where players who are not the inside players [Goldman Sachs, for example] try to make a fortune trying to guess what manipulative games governments intend to play. It is a fool's casino, in the end. I want to bust up this game, not enable it. This game is destroying world trade, the United States and might even cause WWIII. Therefore, it is bad and I want it ended.
Evidently, Europe agrees. They lived through WWI and WWII. They caused WWI and WWII. So they have some hesitation about starting WWIII. But they still want unbalanced trade with their supposed ally, the US. And this will cause WWIII just as unbalanced lending and trade caused WWI and WWII. Most Americans are not aware that England was no longer the premier manufacturing nation in 1914. Germany reached equality with England and better for them, DESPITE BEING THE ONLY SOCIALIST NATION IN EUROPE, they had a budget surplus and became the world's creditor power back then! This stunned England and frightened France.
Let me say this as clearly as possible: nations that opt for German-style socialism [NOT Russian or Chinese communism!] always become great powers. They do NOT go bankrupt. This means strengthening the industrial base while protecting, not ravaging, the work force. National health is a key component here. The US got rich by winning WWI and WWII but did this while increasingly imitating Germany. After Reagan won, we chose to become Mexico, not Germany. So workers were wrecked, cheap foreign labor was allowed to ooze across our borders, a flood of imports from cheaper labor pools were allowed and encouraged to pour in and union strikes were basically outlawed.
So the US workforce lost power over their workplaces, their incomes began to decline, and debts rose. Joe the Plumber is this foolish young man who thinks black men are at fault for his frustrations, he thinks socialism will kill him. Yet he is drowning in debt. He keeps piling more and more debt on his home rather than pay it off like his father probably did. He has precarious or even no health insurance. He can't pay his taxes and is in arrears. I feel sorry for the poor sap.
For his power has not been sapped by socialists, it has been sapped by the ruling elites who want to drive this fool into slavery! Within the 'Civil War Recreationists' groups, the vast majority of the game players who love to recreate the past are white males dreaming of the good old South and slavery. I know them, personally, and their dreams. We have argued quite loudly in the past about this. I come from the old Norman upperclass that turned all the once-free people of Europe into our slaves. We called them 'serfs' but we OWNED them. None of them could marry without our permission. Their children couldn't leave unless we got paid. We would go tromping about on horseback, restlessly seeking other estates for extra sons. Each son in the Steele family, for example, the eldest was always named 'Henry' and the second son, 'Richard.'
The 'Richards' are more famous than the 'Henrys' because they had to do more to earn a new estate. But Henry Steele, in the US, was one of the founding members of the Skull and Bones, for example.
The Meinel side of my family came from Germany. 'If you have enough socialism, the peasants will not revolt,' is the motto. So, within the ruling class there is a split: some want all those pathetic Joe Plumbers to be serfs again. The others fear that Joe might bonk everyone on the head and go mad and start a revolution. Even riots are scary! So they support keeping these guys happy. So far, all that was needed was cheap lending below the rate of inflation. But years and years of lending cheap has depleted our entire banking system due to too few people saving money.
So it is now collapsing in a deep, dark pool of red ink. Keeping this system going is the problem for the rich. Who can't resist looting all the rescue operations despite obvious dangers.
London’s News of the World sent undercover reporters to hunt down the feckless financiers on their $86,000 partridge hunt as they tromped through the countryside in tweed knickers, and then later as they “slurped fine wine” and feasted on pigeon breast and halibut.
The paper reported that the A.I.G. revelers stayed at Plumber Manor — not the ancestral home of Joe the Plumber, a 17th-century country house in Dorset — and spent $17,500 for food and rooms. The private jet to get there cost another $17,500, and the limos added up to $8,000 more.
In an astonishing let-them-eat-cake moment, the A.I.G. big shot Sebastian Preil held court at the bar and told an undercover reporter, “The recession will go on until about 2011, but the shooting was great today and we are relaxing fine.”
There were at least three New Yorkers bagging birds — Jeffrey Malkovsky, a senior director at A.I.G.’s Manhattan office, Hilary James, the general manager of the Bristol Plaza Hotel, and her friend, John Roberts, an A.I.G. adviser.
Oh, how the AIG executives laughed as they gave themselves this 10% bonus for landing the Big Kahoona. This giant $700 billion fish allowed them to party like there is no tomorrow. They feared they would be arrested, not showered with gold!
The news of their wild parties are now circling the earth. Maybe poor Joe the Plumber might wake up and realize his cans of cheap beer are little compensation for him taking on the entire debt load of this bail out. But then, he is blinded to this reality. He wants more funny money, he wants to join the party. He wants to win the lottery.
Many years ago, when NY was going bankrupt, the politicians were told that if we encourage gambling, this would be a HAPPY TAX. People would voluntarily join the games if they had a very slim chance of winning something. The state then takes a huge cut of the funds raised. I voted and lobbied against this. My speeches back then were pretty simple: 'This will kill the work ethic and in addition, kill any desire to pay any taxes. This will undermine democracy and by setting up a very few winners while the rest of us have to keep playing the game, this will destroy the whole basis of democracy which doesn't survive if there is a huge split between rich and poor.'
Well, since 1974, the split between the rich and poor have grown greatly. This is killing our democracy. In elections, discontent with the poor is encouraged alongside luring voters by promising tax cuts and increases in government spending. Today, we pay for our entire, huge deficits by selling our souls to foreign powers who are seeking to turn us into peons. And this is getting worse, not better. The US cannot support ANY tax cuts for the next 100 years! This is hopelessly irresponsible. But if anyone suggests we pay taxes, they are kicked out by the US voters. Who fear socialism but don't fear bankruptcy to Saudi Arabia and China.
American International Group Inc. said it will stop lobbying lawmakers and regulators, after coming under congressional pressure and questioning over how it is using more than $120 billion loaned by the government to keep the company afloat.
The financial-services giant has also cancelled about 160 events scheduled for coming months, that were to cost a total of $80 million, AIG spokesman Nick Ashooh said on Monday. Congressional overseers have raised questions over a series of lavish events thrown by AIG in the days after its government rescue last month, including a $440,000 weekend at a California spa for top business producers.
"We're reviewing all of our expenses and activities. As part of that we have suspended lobbying activities," Mr. Ashooh said.
Democratic Sen. Dianne Feinstein of California and Florida Republican Sen. Mel Martinez wrote to AIG Chief Executive Edward Liddy on Friday, telling him not to use its government loan to try and roll back tougher mortgage-industry licensing requirements and other controls.
Gah. Arrest everyone including everyone in Congress who has accepted a penny from AIG. Mr. Ashooh should be paraded down the Central Mall in chains. At the Lincoln Memorial, he can then offer an apology to all Americans. Then we seize everything he owns and I mean, everything. When one of my ancestors went bankrupt, he left his child with NOTHING. She was crying so the sheriff let her keep her dolly, shoes and a small suitcase. Thank you. This creepy gnome still has his many palaces, art and other goodies. This is unconscionable.
These bailout terms suggest that what Wall Street wants is pretty much what colonialist Britain achieved for so many years in India and Africa: puppet leaders with an imperial political advisor, in America’s case a Secretary of the Treasury and a vice-regent as head of the Federal Reserve System. But what the rest of the economy needs is a genuinely free leader able to impose better and more equitable laws to write down debt, not build it up and bail out more bad loans. Within the present administration itself, Sheila Bair, head of the Federal Deposit Insurance Corporation, complained in a Wall Street Journal interview that she didn’t understand “Why there’s been such a political focus on making sure we’re not unduly helping borrowers but then we’re providing all this massive assistance at the institutional level.” She “described painstaking efforts made by lawmakers in crafting the federal Hope for Homeowners program to make sure it limited resale profits for borrowers who received affordable home loans,” by giving the government a share of the rising sales price.
A very good analysis at Counterpunch. The US government's help for home owners is to take 50% of all profits on future sales of houses. But not 50% of all profits from AIG or Citibank or any of the pirate organizations looting America.
(Bloomberg) -- The U.S. government and New York Attorney General Andrew Cuomo opened a joint investigation into the $34.8 trillion credit-default swap market, the top federal prosecutor in New York said.
The probe seeks to ``determine whether any federal laws have been violated'' in the market for the swaps, which function as a kind of insurance contract for bond losses, and will complement an earlier inquiry by Cuomo's office, U.S. Attorney Michael Garcia in Manhattan said today in a statement.
Cuomo has been probing credit-default swap manipulation by short sellers allegedly spreading false rumors about financial firms. Prosecutors are looking at whether they attempted to drive down stocks, including bankrupt Lehman Brothers Holdings Inc., according to a person in Cuomo's office who declined to be identified. The U.S. is also probing Lehman's failure.
Cuomo figures he will be President some day if he gets some scalps. But then, the media will find some flaw in him and he won't win the golden crown in the end. For of course, no one will donate huge sums to him if he imprisons any of the scam artists who are looting America. On the other hand, unless he choses to be a true revolutionary and not just slightly annoy the gnomes, we won't see any change of direction. I know that people are very fearful of 'change' even though that is Obama's motto. McCain's motto is, 'More houses for me and my friends'. Which isn't changing anything at all.
(Bloomberg) -- Just when deposits became the big prize in banking, Citigroup Inc. missed the brass ring.
The bank's proposal two weeks ago to buy Wachovia Corp. would have created the biggest pool of deposits in the U.S. -- ``unassailable'' as a source of stable, cheap funding and ``well in excess of the next-largest competitor,'' Chief Financial Officer Gary Crittenden said at the time.
Instead, having lost a takeover battle with Wells Fargo & Co., New York-based Citigroup slipped to No. 4 in deposits and has to hustle for them alongside banking newcomers Goldman Sachs Group Inc. and Morgan Stanley. With debt markets in flux and terms of the government's bailout plan changing by the week, Citigroup needs more deposits to temper a surge in the cost of financing its $2.05 trillion balance sheet.
Citibank was on a pirate looting mission when along came Wells Fargo who shot them down and robbed the Brink's trucks. Now that they have the combination to the bank's safe, they can grab the money there and recapitalize themselves while the US taxpayers get stuck, paying for all the losses.
Now, Bush, our Debt Junkie-in-Chief, needs another fix. The US Treasury, Citibank, Merrill-Lynch and other financial desperados need another hand-out from Abdullah's stash. Abdullah, in turn, gets this financial juice by pumping it out of our pockets at nearly $100 a barrel for his crude.
Bush needs the Saudis to charge us big bucks for oil. The Saudis can't lend the US Treasury and Citibank hundreds of billions of US dollars unless they first get these US dollars from the US. The high price of oil is, in effect, a tax levied by Bush but collected by the oil industry and the Gulf kingdoms to fund our multi-trillion dollar governmental and private debt-load.
The US Treasury is not alone in its frightening dependency on Arabian loot. America's private financial institutions are also begging for foreign treasure. Yesterday, King Abdullah's nephew, Prince Alwaleed bin Talal, already the top individual owner of Citibank, joined the Kuwait government's Investment Authority and others to mainline a $12.5 billion injection of capital into the New York bank. Also this week, the Abu Dhabi government and the Saudi Olayan Group are taking a $6.6 billion chunk of Merrill-Lynch. It's no mere coincidence that Bush is in Abdullah's tent when the money-changers made the deal just outside it.
Bush is there to assure Abdullah that, unlike Dubai's ports purchase debacle, there will be no political impediment to the Saudi's buying up Citibank nor the isle of Manhattan.
This is why Citibank lost. And this is why the Saudis have to learn more harsh lessons. They will be ripped off, one way or another. The Chinese are very aware of this tendency. They have hedged things sufficiently that if we do rip them off, they can destroy us. This is why the US is very careful to not let the Chinese get too pissed off. The guys pulling these strings figure, the Saudis will still have to play with us since we protect them. We don't protect China. And Saudi Arabia has only one way out: to go to China for protection. This, they are increasingly considering.
(Bloomberg) -- The U.S. Mortgage Bankers Association plans to ask the Federal Housing Finance Agency to increase the limit for Fannie Mae and Freddie Mac purchases or guarantees of single-family mortgages to $625,500 to bolster the housing market.
The mortgage bankers' residential board of governors is scheduled to vote today on the recommendation, which would call for an increase of 50 percent above the current limit of $417,000, at the trade group's annual conference in San Francisco.
Why are they doing this? Housing prices are falling, not going up. Well, the answer is obvious: the bankers love making huge loans. But hate HOLDING them. So they need to increase the size, volume and speed of growth for Fannie Mae. So it will end up being a totally SOCIALIST program that holds ALL mortgages. 100% of all US housing loans! And then the banks can make infinite money while having $0 in capitalization. This is all part of the future 0%-0%-0% system I keep warning everyone about. This sort of socialism is EVIL. It is statism of the worst sort. Instead of providing health, safety and schooling, the government privatizes all this but nationalizes all housing debts! What a DUMB DEAL.
Note that already, the government is demanding 50% profits on any increase in value of homes being 'rescued' in this latest plan. This is forever. This kills the housing market if people figure, they will get little benefit from selling. And if they try buying a new house and all houses now cost more, they fall further behind and need more debt to do this. It is a debt trap!
Going bankrupt springs one from this trap only Congress voted to close off that option. So we go into this grinding hell where more and more people will end up in this prison where they get virtually no benefit from selling their homes anymore. Why improve it if you can't gain the profits from that? This, in turn, kills my own market: improving houses! Huge parts of the US will turn into slums.
Resorting to credit has long been the American solution for dealing with expensive crises — as long as the solution has wide public support. Fighting World War II certainly had that support. Even now many Americans tolerate running up the deficit to pay for the wars in Iraq and Afghanistan, which cost $11 billion a month combined. And so far there is wide support for an initial outlay of at least $250 billion for a rescue of the financial system, if that will stabilize banks and prevent a calamitous recession.
“There are extreme circumstances when a larger national debt is accepted as the lesser of two evils,” said Robert J. Barbera, chief economist at the Investment Technology Group, a research and trading firm.
There are also assumptions that help to make America’s deficits tolerable, even logical.
One is that people all over the world are willing, even eager, to lend to the United States, confident that the world’s most powerful nation will always repay on time, whatever its current difficulties.
“So far the market is showing that it is quite willing to finance our needs,” said Stephen S. McMillin, deputy director of the White House Office of Management and Budget.
Here it is, yet again: smug idiots like McMillin. He is obviously the idiot in charge of figuring out the Bush budgets which were the most unbalanced in American history. So what, if we are selling 90% of these debts to the Chinese and Japanese? He doesn't bother wondering why they are buying our souls. He has no soul.
We will have no recession tomorrow but we will face total economic annihilation in 2012. What a deal! The US public has been sold this bill of goods for 8 years: deficits don't matter. They are all OFF-SHORED. Hooray for that! All my life, even as Presidents ran in the red, we were told this was bad. But now, with Bush running us into the ground, it is suddenly good or at least, the lesser of two evils. So, evil #1 is paying our own way which means we can't spend like fiends. And evil #2 is that we sell our entire nation to the Chinese and Japanese and pray they don't come over here and demand we kiss their feet and become slaves?
Good grief. TREASON, I say! Treason!
(Bloomberg) -- China's central bank pledged to step up cooperation with global counterparts to help combat the financial crisis that's driving down stocks worldwide and threatening to tip economies into recession.
``Economies that are able to, such as China, Japan and the Middle East, should all participate in efforts to ease the financial crisis,'' said Xing Ziqiang, an economist at China International Capital Corp. in Beijing. ``Otherwise it will eventually be a lose-lose situation for all.''
Xing said buying Treasuries may be one way of helping the U.S. through the crisis.
China should take part in the bailout of the U.S. financial system to protect the value of dollar-denominated assets and sustain export demand, Chinese researchers wrote yesterday in the official Shanghai Securities News.
And China is going to save us. And they know what will happen next for this is part of their 50 year plan. One that I thought was thoroughly audacious back in 1986. Well, it is on track and will succeed.
(Bloomberg) -- China Shipping Container Lines Co. forecast traffic will decline for the first time in at least four years as the global economic slowdown and a stronger yuan curb demand for Chinese-made toys, electronics and clothing in North America and Europe.
``Traffic will drop at least 10 percent for the full year,'' Zhang Denghui, assistant president of China Shipping (Group) Co., parent of China Shipping Lines, the country's second-largest container line, said in an interview yesterday. ``An even much larger drop is possible, as the full impact of the global economic turmoil is yet to come.''
China wants to restart the status quo. So does Japan. Odd, this article doesn't mention Japanese nor South Korean or even Taiwan shipping. All of which are in the same boat. And all of which are working with China to restart the status trade quo.
(Bloomberg) -- European Central Bank council member Ewald Nowotny said a ``tri-polar'' global currency system is developing between Asia, Europe and the U.S. and that he's skeptical the U.S. dollar's centrality can be revived.
``What I see is a system where we have more centers of gravity'' Nowotny said today in an interview with Austrian state broadcaster ORF-TV. ``I see for the future a tri-polar development, and I don't think that there will be fixed exchange rates between these poles.''
The leaders of the U.S., France and the European Commission will ask other world leaders to join in a series of summits on the global financial crisis beginning in the U.S. soon after the Nov. 4 presidential election, President George W. Bush, French President Nicolas Sarkozy and European Commission President Jose Barroso said in a joint statement yesterday.
Nowotny said he was ``skeptical'' when asked whether the Bretton Woods System of monetary policy, set up after World War II and revised in 1971, could be revived to aid global currency stability. The U.S. meeting should aim to strengthen financial regulation, define bank capital ratios and review the role of debt-rating agencies.
HAHAHA. And who will chair this? China, the US or some Europeans? If it is Europeans, they will set up which currencies to be this tripod of power? And where is the yen in all this? And how on earth can they 'set bank capital ratios' when CHINA has the highest ratios and the US and Japan have virtually none? And then global interest rates: is it going to be the high Chinese/EU rates or the 0% rates of Japan and the US? And how to hash all this out?
This conference could be like the disarmament conference run by Britain from 1912-1914. Britain wanted to freeze Germany and Japan's naval build ups, not to mention, stopping the US ships. So they agreed to reduce their navy a tad if everyone stopped competing. Then WWI broke out. And the Brits needed the US to provide them with shipping and the US took over world shipping and the global naval power by 1945. Utterly. And then lost it all from 1974-2008 to the point that we have virtually no merchant marine and a very expensive navy that is forcing us to go to the true naval powers of Asia to fund our navy via loans which we must repay them with interest!
And this is treason. We lost our merchant marine while protecting the merchant marines of the world who are flooding us with imports which our rulers want because this way, they can enslave poor little old Joe the Plumber and others who dream about being owners, not slaves. Gads. What a circle we are in.