September 27, 2008
Elaine Meinel Supkis
Dear readers, you all sent me the money needed to take the train to Washington, DC. There, I not only got great photos and met lots of people some of whom knew me in NYC as 'the Housewife From Hell' as the Daily News dubbed me long, long ago. I got very lucky and got to sit within arm's reach of Bernanke and Paulson. I used this occasion to 'touch' them both in the singular way I operate. A sign that this succeeded was the fact that a sudden, rather violent storm came roaring ashore and not only hit DC, but followed me home like a dog. So today, I am very happy to learn that Bernanke's sleep has been as disturbed as Paulson's sleep. Now, he is LEAVING THE FRAY and going into hiding! HAHAHA.
Bernanke Jumps Out of Political Fray After Warning of Collapse
(Bloomberg) -- Ben S. Bernanke jumped into the political fray this week when he urged quick action from Congress to deal with ``grave threats'' to the financial system. Now he's trying to jump back out.The Federal Reserve chairman hasn't returned to Capitol Hill after two days of congressional testimony earlier this week. He has made it clear to Treasury officials and lawmakers that he isn't taking part in negotiating details of a $700 billion proposal to rescue the financial system even as the plan runs into a political buzzsaw.
By letting Treasury Secretary Henry Paulson be the point man with Congress, Bernanke may be trying to restore the Fed's position as a neutral party in Washington and preserve the central bank's independence. That's after he put both on the line by endorsing Paulson's plan and using the Fed's balance sheet to rescue creditors of Bear Stearns Cos. and American International Group Inc.
There is some great utility in getting physically close to someone one wishes to 'reach'. Since Bernanke won't talk to me or even want to know if I exist, I had to kind of impose on him. The first step is to draw him into the realm of mythological magical beings. When he confidently strode into the Chambers, he sat down right in front of me and then laced his fingers in front of his chest and impassively. He stared straight ahead without flinching, itching or moving a muscle.
I was not allowed to take a photo of him at this point in time so I took out my pad and began to scribble rapidly. As this was going on, I said out loud, 'Sphinx.' He flinched. This was the only movement he made. He heard me quite clearly, incidentally. For everyone around me heard this, too. Those of us who were in the back of the Chambers were forbidden to say anything. It seems one of the fine, young people in the back row were sufficiently riled and forwards that one of them held up a small sign which has now made the rounds of the internet.
Good for them! I think that Bernanke has finally figured out that he is NOT a very popular figure. He also is aware that some of us are eyeing him very closely in the Other Realm. This is the place where the Magic Flying Piggy Bank lives. Instead of people bowing and scraping for him, he is now somewhat aware that many of us look at him with some fury.
The United States has a Vice President who is always in an undisclosed place and who never, ever has press conferences or answers questions or appears in the Senate for questioning. We have a President who can't go out in the public for the last 6 years. Who holds press conferences about once a decade and who never answers questions at all. But rules unilaterally and even overrides Congressional bills he signs! Then there is the Jewish dual-citizen traitor these two shy rulers hired to be in charge of US security. Chertoff nearly never appears in the news or answers questions or even talks to us from his undisclosed bomb shelter.
McCain dearly wanted to run for President in this fashion. Palin, after flashing her glasses at us and scaring everyone, has now gone into hiding and wants to run with no debates, no press conferences.
I bet that poor Gollum, the creature who can't sleep at night and is tormented as he scratches for the Ring of Power and then, when slapped down, whimpers and whines. I read that the negotiations to save Gollum Sachs and JP Pirate has gone until 3am at night. Night is the hours when the Watchers are the most powerful. Awake or asleep, they can come flitting into minds. They carry a bag full of disturbing visions. They can transform reality with a snap of their clawed fingers.
It appears that no one who is supposed to be leading us is even putting up the facade of leadership. They are all going off to play golf. This sad business has leeched into the election. The United States is a very big nation with millions of people. Yet no one dares lead us for they will be removed for various tiny flaws. Yet the leaders who are at the top have grave flaws! This is a serious problem which is due to our media that is the gatekeeper to power. They pick and choose which things to focus on and inevitably, refuse to focus on anything meaningful. Then they gleefully accuse the public of being frivolous.
This banking collapse is not frivolous! It is very serious. There are many people who would like to insist, there is no crisis so why save the banks? Then there are the army of the rich who want the banks saved, who want their money to earn value and to gain that value and who are terrified that they will not gain great wealth. So they want a bail out that is essentially turning the US government into a mega-bank that gets to hold all debts generated for fees by the rest of the banking system!
We need to fix the banking system, of course. It needs desperately to return to its ancient virtues. The greed-is-good gang have used the powers of the banking system to grind out infinite loans so they could collect their 6% bonuses. They would happily do this forever. But the upper limit of debt has been reached. In trying to surpass this natural limit, they created many new lending schemes which had even better returns. And on and on this system grew as out of control bankers cooked up a stunning number of strange, warped 'instruments' which would allow them to ignore natural limits.
In Congress, our corrupt politicians have decided to plow everything possible into the latest spending bill which is a veritable Santa Claus sack of goodies.
Senate sends big spending bill to Bush to sign
(AP) — Automakers gained $25 billion in taxpayer-subsidized loans and oil companies won elimination of a long-standing ban on drilling off the Atlantic and Pacific coasts as the Senate passed a sprawling spending bill Saturday.The 78-12 vote sent the $634 billion measure to President Bush, who was expected to sign it even though it spends more money and contains more pet projects than he would have liked.
The measure is needed to keep the government operating beyond the current budget year, which ends Tuesday. As a result, the legislation is one of the few bills this election year that simply must pass. Bush's signature would mean Congress could avoid a lame-duck session after the Nov. 4 election.
The Pentagon is in line for a record budget. In addition to $70 billion approved this summer for operations in Iraq and Afghanistan, the Defense Department would receive $488 billion, a 6 percent increase. The spending bill also offers aid to victims of flooding in the Midwest and recent hurricanes across the Gulf Coast.
Such a huge bill usually would dominate the end-of-session agenda on Capitol Hill. But it went below the radar screen because attention focused on the congressional bailout of Wall Street.
Absolutely everything was handed out, wasn't it? Is the US income growing by 6% a year? Is our GNP growing by 6% a year? Is tax revenues growing at all? NO! Instead of balancing the books, Congress increased spending significantly. If something grows 6% a year, it rapidly begins to double and redouble, faster and faster. This is an unacceptable level of inflation! And the interest rate is at 2%. And Bernanke will be asked to drop it to 1%. This is painfully obvious. Everyone hopes to have spending grow by 6% based on 1% interest loans. Even if this is done, since both the loans and the spending are in the red, this means US national obligations for the future will double every 7 years. It went from $5 trillion to over $10 trillion in this fashion already. This means, by 2014, it will be over $20 trillion. This is an impossible debt level.
Of course, the US budget is NOT growing by a mere 6% a year now. This time around, it is growing at 10%+ a year! If we do this for only 5 years, it will be over $20 trillion by 2013. Homeland Security, run by the Invisible Dual Israeli Citizen, was raised to $40 billion. The wars were raised to $70 billion. and the other parts are now at $488 billion and we haven't the slightest idea what the spooks at the CIA and other Black Ops are getting. I would suggest, at least $75 billion. This ads up to almost $700 billion. Which is a MAGIC NUMBER!!!! HAHAHA.
It is the bank rescue amount. I suspect this was chosen because it was a number haunting these criminal minds. They all know they are very naughty to run this level of debt to pay for their funky military/industrial complex. Americans who are angry about the $700 billion TARP bank bail bill are NOT angry about this untidy mess. Indeed, anyone suggesting we cut back on our paramilitary spending is viewed as some sort of traitor so no one dares cut a penny!
By the way, the imposition of a US standing army in the US itself for 'crowd control' is all part of the Sovietization of the US. This is all very sad and stupid but the US has accepted a high level of East German-style limitations on travel and public places, the push to completely control our nation via privatized military is rushing forwards.
US Corporate SPECULATIVE Debt Default Rate Could Top 23% by 2010
If realized, this estimate suggests that 353 speculative-grade rated nonfinancial firms could default between 2008 and 2010, with potentially more than 200 of these defaults materializing in the second half of 2009 and in 2010.Consumer-sensitive sectors — such as consumer products, media and entertainment, and retail and restaurants — will be among the worst hit, in line with what happened in 1990-1992.
This is very much like 1929 headlines. All the speculators will be ruthlessly ground down by natural forces. Nothing can run in the red forever. Nor can money be made forever speculating without risk. The very speculations that seemed risk-free accumulate risk over time due to simple growth itself. Nothing grows forever. NOTHING. Except the Universe itself. And maybe, not even that.
Financial crisis: Bradford & Bingley to become latest victim
B&B, the eighth largest mortgage lender, is the latest banking institution to become a victim of the financial crisis and the deteriorating state of the housing market.Its shares fell six per cent to an all-time low of 20p as it became clear that no rival bank was prepared to mount a rescue bid. Since the start of the year, B&B shares have fallen 90 per cent.
However, the British Banking Association reassured the 2.5 million customers who have £22 billion deposited with B&B. "Customers have no need to worry about any deposits in any British bank.
In the Great Depression, even Bernanke probably knows that the banks didn't all go belly up on October 17th. They all didn't die by October 17, 1930. They crashed down, one by one, day after day, week after week, month after month. Until Roosevelt became President and shut the entire thing down to save the survivors from the inevitable. To master this mess, he arbitrarily doubled the value of gold versus paper gold certificates and then confiscated all the private gold holdings. Via fiat. The US government was fiscally sound when he did this. Not going into bankruptcy like today.
Gretchen Morgenstern, the best economics reporter for the NYT:
Two weeks ago, the nation’s most powerful regulators and bankers huddled in the Lower Manhattan fortress that is the Federal Reserve Bank of New York, desperately trying to stave off disaster. As the group, led by Treasury Secretary Henry M. Paulson Jr., pondered the collapse of one of America’s oldest investment banks, Lehman Brothers, a more dangerous threat emerged: American International Group, the world’s largest insurer, was teetering. A.I.G. needed billions of dollars to right itself and had suddenly begged for help.The only Wall Street chief executive participating in the meeting was Lloyd C. Blankfein of Goldman Sachs, Mr. Paulson’s former firm. Mr. Blankfein had particular reason for concern. Although it was not widely known, Goldman, a Wall Street stalwart that had seemed immune to its rivals’ woes, was A.I.G.’s largest trading partner, according to six people close to the insurer who requested anonymity because of confidentiality agreements. A collapse of the insurer threatened to leave a hole of as much as $20 billion in Goldman’s side, several of these people said.
*snip*
In the case of A.I.G., the virus exploded from a freewheeling little 377-person unit in London, and flourished in a climate of opulent pay, lax oversight and blind faith in financial risk models. It nearly decimated one of the world’s most admired companies, a seemingly sturdy insurer with a trillion-dollar balance sheet, 116,000 employees and operations in 130 countries. “It is beyond shocking that this small operation could blow up the holding company,” said Robert Arvanitis, chief executive of Risk Finance Advisors in Westport, Conn. “They found a quick way to make a fast buck on derivatives based on A.I.G.’s solid credit rating and strong balance sheet. But it all got out of control.”
I figured it was less than three traders would show up. It was only the Goldman Sachs and one forlorn chap from AIG. Goldman Sachs should be thoroughly investigated by Congress. Before doing this, all Congressmen who have gotten bribes from Goldman Sachs should be recused from this investigation. Then Kucinich and Ron Paul can tear into this business. Make them co-chairs. I will take notes in the audience. Heh. As I stated in the past here, Goldman Sach's lies about having virtually no losses due to their very clever trading rang hollow to my ears. Instead, they were very exposed which is why Paulson had quite a fire in his pants.
I noted at the hearings this week, Paulson's suit was rumpled. His blood vessels stood out on his hands making them look like the hands of a 100 year old Duchess. His little finger was crooked with tension. He had lost weight, too. A picture of a man in torment. I expect him to finish this all very badly. Very badly.
AIG had a trillion dollar balance sheet. But was exposed to the Derivatives Beast to the tune of over $50 trillion? Who knows. With the fall of Lehman Brothers, all the swaps and OTC deals were finally triggered en mass. And there was no way of stopping this massive cascade of derivative triggering rescues that were never anticipated by the juvenile delinquents hired to monitor and control these deals. Cleaning up the Derivatives Beast's messes will consume all things of value if we try to save these blasted, stupid banks and their infantile geniuses who created this mess in the first place.
Confidence ebbs as money markets freeze
Key parts of the financial system broke down this week as doubts about counterparty risks of the world’s biggests banks saw lending seize up.Money markets froze as financial institutions refused to lend to each other because of fears of further bank failures.
*snip*
The heightened nervousness sparked bets that the Federal Reserve might opt for an emergency rate cut or slash key rates by half a percentage point from the current 2 per cent, while one of main measures of credit risk rose to fresh highs.The spread between three-month dollar London interbank rates and average overnight rates jumped for the fourth day in a row to 206 basis points.
The TED spread, which compares three-month Treasury yields and three month dollar Libor, also remained over 300bp, around all-time highs, underlining investors’ caution as they switched into the safety of short-term government paper.
*snip*
The repurchase markets, where banks lend cash in exchange for collateral such as government bonds, have also ground to a halt. This week, banks admitted they were only prepared to lend out cash for the highest quality collateral such as German bunds. Some traders said that UK gilts were even being refused by some counterparties because of the heightened state of alarm over the financial system.
So everyone wants German bunds and don't want UK gilts? The US/UK WWII team has been falling off the same cliff here. This is a significant part of the G7. Both the US and Britain have neglected to attend to their trade deficits. For some bizarre reason, these growing deficits, like the budget deficits, have simply been allowed to balloon to whatever size they wish. So they double and double every decade.
The simple tools of classic banking have been cast aside along with the simple tools of trade restrictions which prevents messes. The food scandals pouring out of China due to China's primitive food manufacturing rules shows clearly that there are good reasons to restrict trade. One is, protecting consumers from poor products. But merely to keep out excessive trade, this is another very good reason to use tariffs and barriers. They are tools and not evil in themselves. The religion of 'free trade' is foisted upon the US and other nations in order to EXPLOIT people and resources, NOT PROTECT THEM.
Bank steps in to offer £40bn loans
The worsening financial crisis forced the Bank of England into an unprecedented intervention today as it offered at least £40bn to cash-strapped banks.Lenders are hiking mortgage costs because of a sudden surge in the rate at which banks lend to each other for three months, as those hit by the credit crunch hoard funds.
The Bank usually offers three-month money on a monthly basis, but will hold auctions every week from Monday for the first time while the pressures in wholesale markets remain.
The central bank has not revealed the sums involved in future auctions but they are likely to be of a similar size to Monday's if desperate banks snap up the funds. The move comes as interbank three-month lending rates soared to 6.28 per cent yesterday - way above the Bank's official 5 per cent base rate.
Ever since exactly a year ago, the central banks of the G7 nations have had to intervene very heavily in order to keep the banking system going. Each time, in the past, they said this was all very temporary. And the Fed said, lending from the TLAF window was a test, a game, not serious. Everyone was doing it to enjoy the sensation of borrowing money and pretending to be bankrupt. Now that they are all going bankrupt despite these lies, we should toss out the business of 'this is temporary.'
Until significant sectors of the US and UK normalize and cease running in the red, our banking systems will be undercapitalized. Dropping interest rates simply decreases capital. Since savings are considered DEFICITS, no banks want this until this year. This is why governments can't allow investment bankers to have a 30-1 or an 80-1 lending/savings ratio like we saw last year. Banks want a 1,000-1 ratio. Or better still, infinity to 1 ratio. This would destroy any currency very fast. This is why the neglect of reserve ratios was most disturbing and isn't ending, it is continuing.
Now, here is an article I wrote a year ago, about Japan. The riddle of Japan's contribution to the collapse of the US manufacturing and banking systems must be solved if we wish to survive as a nation.
From one year ago at Culture of Life News: Japan's Export Markets Boomed As World Banking Collapsed
Japan's trade surplus profits rose 400% this last year. US auto workers cease their strike and lose pay and benefits as the depression being imposed on the working class relentlessly forces them back down the economic ladder and back into poverty and servitude. The British banking system is very weak yet the Queen is still allowed to run tax haven pirate coves that weaken England. Hahaha. And Carlyle, even as it hides under Her skirts, lost a lot of money in July. I examine all this and tie the lose ends together yet again. Oh, and the bears are supposed to be routed due to a rising stock market. How 1929 of them to say this!
Japan and Germany both had the greatest trade profit surpluses last year. This means both nations are the top trade powers on earth. Yet, when I was in Congress, everyone there at the hearings talked about Japan as if it is weak and not tremendously powerful. No one mentioned Japan's massive FOREX reserves. Certainly, the Sphinx didn't mention this. Considering that the Federal Reserve has no reserves now and is swapping the gold reserves...an important topic for Kucinich and Ron Paul to discuss once they eliminate all the guys on the Finance and Banking committees who take bribes from Wall Street.
Stocks: Nikkei Slides On Skepticism Over U.S. Bailout PlanTOKYO (Kyodo)--Tokyo stocks fell Friday, with the key Nikkei index closing below the 12,000 level for the first time in a week, as investors grew skeptical about whether the U.S. government and Congress could soon reach an accord on the government's financial bailout plan.
*********************************Nomura Chief Sees Big Boost From Lehman Deal
TOKYO (Nikkei)--Kenichi Watanabe expects a big strategic benefit from the acquisition of Lehman Brothers' core businesses in Europe, the Middle East and Asia.
***********************************Core CPI Jumps 2.4% In Aug, Up For 11th Month
TOKYO (Nikkei)--The nationwide consumer price index rose 2.4% in August from a year earlier, matching the previous month's rise, which was the sharpest increase since October 1997.
************************************C's Create Files For Bankruptcy Protection, Debt Y11.4bn
TOKYO (Dow Jones)--C's Create Co. (8921) said Friday that it has filed for bankruptcy protection with the Tokyo District court with debt totaling Y11.4 billion.
**************************************Forex: Dollar Falls To Lower Y105 On Uncertainty Over U.S. Bailout Plan
TOKYO (Kyodo)--The U.S. dollar fell to the lower 105 yen level Friday in Tokyo amid growing doubts over whether the U.S. Congress will pass by the end of the week the government's financial bailout plan to stabilize the U.S. banking system.
**************************************WSJ: WaMu Fails, Is Sold Off to J.P. Morgan
Federal regulators seized Washington Mutual and struck a deal to sell the bulk of its operations to J.P. Morgan in what is by far the largest bank failure in U.S. history.
Japan hasn't had depression in years. It has had inflation. Now, the inflation is moving along smartly. No recognition from the Bank of Japan of this reality. Also, the news that the yen is getting strong instead of dropping to 120 to the dollar which the exporters want, this is constant news in Japan. The US dollar gets weak, the Nikkei drops like a rock. This is so blatantly obvious, smart traders play this game outrageously and are getting very rich since this dynamic is so obvious.
The Japanese are also buying up the dying sectors of the US banking system! Another sign that they are not in a depression. Or outsiders would be buying up Japanese banks, not the other way around. the stock market in Japan always flounders when the dollar gets weak and US lending slows. This entire country's economic base is based on exports to the US.
U.S. will lose financial superpower status: Germany
(Reuters) - Germany blamed the United States on Thursday for spawning the global financial crisis with a blind drive for higher profits and said it would now have to accept greater market regulation and a loss of its financial superpower status.In some of the toughest language since the crisis worsened earlier this month, German Finance Minister Peer Steinbrueck told parliament the financial turmoil would leave "deep marks" but was primarily an American problem.
"The world will never be as it was before the crisis," Steinbrueck, a deputy leader of the center-left Social Democrats, told the Bundestag lower house.
Who won WWII? Well, wars are being waged constantly. Trade wars, that is. The US banking system's failure is due to the entire US and UK trade and budget systems running too deep in the red, too long. Absolutely no one in power is even slightly interested in fixing this fundamental problem. Instead, with the bank rescue bill and the budget bill in the US, the deficit spending has greatly increased. Then, when we add onto this, the rescues: this is fatal.
Here is Denniger's video where he talks about all this:
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