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<a style="display: inline;" href="http://elainemeinelsupkis.typepad.com/.a/6a00d83451c0bf69e2010535da7acd970c-popup" onclick="window.open( this.href, '_blank', 'width=640,height=480,scrollbars=no,resizable=no,toolbar=no,directories=no,location=no,menubar=no,status=no,left=0,top=0' ); return false"><img class="at-xid-6a00d83451c0bf69e2010535da7acd970c" style="width: 475px; " alt="Word press culture of life news " src="https://elainemeinelsupkis.typepad.com/.a/6a00d83451c0bf69e2010535da7acd970c-500wi" /></a></p><p><big>Dear Readers, </p><br><div> </p><p> I finally got around to launching the new web site. I paid over $150 a year for Typepad service. And like typical modern business people, they decided to irritate me to death for this. I had to periodically remind them that I was one of their elite customers who pays, not gets a free ride. But they didn’t seem to get the message. So off I go, yet again. </p><br><div><a href="http://emsnews.wordpress.com/2008/11/05/welcome-to-new-web-site/"><big><b><u>CLICK HERE TO GO TO EMSNEWS.WORDPRESS.COM:</b></span></big></a></p><p> </p><p> I left Blogspot because they lost or jumbled my archives as well as letting anyone come along and censor me. Censorship is a big issue with me because I step on many toes while doing analysis. </p><p> Analysis without toe-stomping is false analysis. We have to put up with people saying things we don't want to hear if we want to hear things that irritate us. Our entire schooling and media system is set up so it can operate as a barrier to seeing the world clearly. We live in a universe which doesn't give two hoots, what sort of limitations we wish to impose on it. </p><p> I will continue to cross-post stories to my old blog for a while until everyone catches up and comes over to the new site. I will be doing things differently here because of the features they have on this site. I hope to make a series of improvements and welcome feedback from readers. </p><p> I hope everyone is patient with me as we make this move. One thing I must do is an archive crossing scheme. My in-house staff [the kids] should help out with this scheme. I probably won't do that this week because of lack of time. But as the winter snows fall, my outside work slows down and I have more time to fiddle with things here. </p><p> Comments on the opening page will be enabled so feel free to comment! Thanks for the patience and all the previous donations that makes this work so rewarding. </p><p> OBAMA WINS IN MASSIVE BLOW OUT!</p><p> I have to go to bed but I want everyone here to know that one of Obama's people reads this blog. I hope that he provides us with great leadership and the most important thing a leader must do is LISTEN and CHOOSE CAREFULLY. </p><p> Bush loved to say, 'I'm the leader who leads' and other noxious things. Then he set off with great determination to do whatever he wanted, damn the Constitution, damn the entire planet and above all, damn the American people.</p><p> Some Americans were happy with this sort of mindless leadership. It took us off the same cliff that all dictators who ignore everyone fall off of: like Saddam, Bush seemed to only have a talent for making enemies or making a fool of himself.</p><p> He was a spoiled brat, son of a very connected family that should have raised him properly. Instead, Mama Bush let her son torture small animals, skip out on doing his school work and then he grew up to drink, take drugs and evade the draft with a powerful Daddy's help. Papa Bush was worse than Mama Bush. He spoiled his son totally, gave him every advantage which his son tossed off the cliff. Bankrupting companies handed over as birthday presents, crashing things all over the place, getting arrested and then having Papa clean up the police records, etc. </p><p> Good riddance! I hope I never see another Bush walk the public stage ever again!</p><p> Now it is Obama's turn. We don't know what he will do. He certainly has patience and a good grip on his temper. These are great qualities for leaders. Hitler couldn't control his temper at all and at the end, was screaming at everyone in his tiny bunker.</p><p> One of the top qualities for any leader who has to negotiate with foreign leaders like the very formidable Hu of China, just for example, must be able to control his face, his attitude and his demeanor. I supported Obama for the simple reason, he knows how to eat in public and not puke on people like Bush Sr. Or spray food over everyone, talking with his mouth full like Jr. Bush. Also, Obama knows how to shake hands, say hello without smirking or contorting his face in odd ways like Cheney or McCain.</p><p> Obama speaks English. It has been very tiresome, listening to Bush. I was an early compiler of 'Bushisms' many years ago. The author of the book of Bushisms even credited me for my tireless work back in 1999-2001. After that, I gave up in disgust. How on earth could anyone stand this creepy man? Foreign powers had a field day, of course.</p><p> ALL DIPLOMACY IS CONDUCTED ON THE BASIS IF LANGUAGES! The exact wording of things matter a great deal! And we had this maniac who could barely construct a sentence, doing diplomacy. This dimwitted dopey diplomacy has been a total disaster! </p><p> Obama knows how to talk like a sentient being. Our fading empire needs this desperately. We should all hope and pray that he can make the right choices. And to do this, we must assist him by being noisy and letting him and the new Democratic Congress know what we want. </p><p> We want the Bush wars to end. Now.</p><p> We want to go back to a balanced budget and balanced trade. That can't be done now. But a first step should be to cut down our imperial obligations to a more reasonable size. We are going bankrupt, trying to rule the planet. </p><p> We need a new banking system with laws that have teeth and regulators who regulate, not goof offs. This must be done quickly. And all the authors of the banking collapse should be examined and PUNISHED.</p><p> And last but not least: restore our ancient Constitutional rights and close that gulag in Cuba. And stop the Cuban and Palestinian embargoes. One can only hope.</p><p></big>

Ending Free Trade Vital For US Survival As Nation

A cartoon I drew over two years ago.

November 4, 2008

Elaine Meinel Supkis

Since I am 100% against letting the Republicans run things any more, I am happy that Obama is probably going to win this election. It is time the US got beyond our own dark roots which is all about slavery and racism. A harmonious nation is one that has opportunities to all people of all races and all religions. I despise ethnic/religious dictatorships like the ones that litter the entire Middle East. The US nation is a nation, not a religious enclave. This is why I totally oppose Palin. She is a religious nut who wants the Apocalypse. And McCain is a lost soul. Wealth destroyed him.

And there is no one running at the top two parties who understands what is going on here. If Obama does understand, he is forced to play with his own cards so close to his chest, even he can't appear to see them. This is due to our media as well as our business class. The terror of our system is from these forces: they are united in trying to keep the US on track to go down into deindustrialized hell.

Great wealth is being concentrated at the top via the modern system which is all about luring the American people deeper and deeper into debt. Collectively as well as individually, we owe more and more and save less and less. We are encouraged to do this as our entire banking and trade systems are reset so they encourage debt and destroy savings. The virtues which we call 'old fashioned' are being reforged into a new, destructive moral code.

During the previous dozen elections, I have actually heard responsible adults say to me, 'Who cares about the next generation. I want tax cuts.' People who worry about their own grandchildren would vote for tax cuts which would burden their grandchildren's entire lives. When this is pointed out, a number of people would say, 'MY grandchildren won't have to worry!'

There was and still is this pet belief that the grandparents would leave a great boon to the heirs and thus, make up for dumping a mountain of public debts on them. Alas, this belief is collapsing as the grandparents who voted for tax cuts are now piling debts on top of their own homes as they struggle to keep up with inflation.So an entire generation will probably inherit not only vast tax obligations but also will inherit virtually nothing. As I look along the great curve of history, it is not hard to see over the horizon. All we have to do is mentally take wing and fly into the dim future. We can see clearly if we see the past. People who live in the 'here and now' cannot foresee the future since they are often ignorant of the past.

This collective ignorance of the past isn't the fault of the ordinary American voter. It is a fault of all the people at the very top. They are quite aware of the past. But instead of trying to understand it, they use it to justify the present.

When 'The Decline and Fall of Rome' was written by Gibbon, this was done as a warning to the newly-born British Empire. Gibbon got bogged down in all the details of the Byzantine Empire and lost sight of the general sense of decline that afflicts all empires. But he needed to write a plain history for others, first. The historians and radical thinkers of the 19th century explored the fascinating topic of the decline and fall of all empires. Even with this, many thinkers were filled with hubris: they thought their own empires were somehow different!

But none were. Even if an empire was built on the foundation of a democracy, they failed. We know this from history! The Athenian/Spartan imperial complex first killed off democracy and then fell to the sword of Macedonia. Then the new ruler, Alexander the Great, marched off to destroy other, older empires. Empires that were failing internally even though they were at their own military zenith!

For this is the most startling feature of most imperial collapses: they happen when an empire is spending its greatest sums on self-defense. The British empire bled to death when it was its strongest, not weakest. WWI killed the British Empire. It continued to expand but was fatally wounded and it didn't take much a push to collapse it entirely in WWII.

In WWI, the British and French fought the Germans to a stand-still pretty quickly. In WWII, Germany swept in nearly effortlessly. Japan, in the East, rolled right over both French and English colonies with barely a pause. The lessons our 'Greatest Generation' has not learned from all this is obvious: the WWII propaganda is all about how great the West was and how our greatness defeated the Nazis and Japanese.

Not, how very weak the previous imperial rule of Europe had become. And why it was weakened. Our Presidential candidates cannot run on a platform that discusses the loss of US military and diplomatic power. But it is a very necessary conversation for the US people! We can't evade this anymore.

England's industrial base was destroyed after WWI. Today, Britain has virtually no industries at all. They make believe that this is no tragedy. Why, Britain is just this small island complex! BUT SO IS JAPAN. Is Japan deindustrializing itself? Obviously, not! There are now no British auto makers. There are still very big German and Japanese auto makers. No British subject runs any automobile systems. German and Japanese auto manufacturing plants are being built and run all over the planet!

The US native auto industry is collapsing here at home. General Motors and Ford build more than half of their cars overseas. So they continue onwards. But they are deindustrializing the US relentlessly. It is only a matter of time before only foreign owners will be building any cars here. And they will do this only because it keeps political heat off of them. If they just export cars to the US, they get exposed to political calls for tariffs and barriers.

One major feature of all imperial collapses is the problem of taxes and the increasing burden of past spending. All empires basically go bankrupt. And a key component of this is military spending coupled with corruption at the core. To fund the military, it ceases to be a joint effort of the people and becomes a privatized military system which protects only the wealthy and leaves the population as foreign interlopers who must be prevented from interfering with the ruling class.

We see this, again, in Britain: I read in the news this week that the government wants to bring in Gurkas from former colonies in Asia to patrol Britain! These mercenaries are exactly like the ones Romans used to keep their own people at bay. Bringing in foreigners who are of a different ethnic/religious group who will swear fealty ONLY to the ruling elites who pay them: this is a certain sign that the British people are finished as a political power. They are now merely tax sheep to be sheered when necessary.

It is a slow process: first, you let the population spend on bread and circuses. Then, you enslave them with the burden of the debts caused by this largesse.

The United States already recruits our troops in foreign lands. Then, our imperial overlords send these troops to other countries to occupy them and exploit the natives there. This is tremendously expensive so the overlords merrily charge all of these expenses to the bills owed by the public at home. That is, our grandchildren. They will be enslaved by these military and trade bills we are charging to the future!

No one wants to stop this because it is right now, painless. We imagine that if there were another Pearl Harbor, we would just up the output of our factories and....Britain could barely crawl along during WWII and certainly has no industrial base to activate today if they needed it again. And the US is rapidly approaching this same, dire situation. Now, on to the news today:

Vote for ( ) By THOMAS L. FRIEDMAN

Unfortunately, you’d barely know that from the presidential debates. Watching them in the context of the meltdown of the financial system was like watching a game show where the two contestants were kept off-stage in a soundproof booth and brought out to address the audience without knowing the context. Since the last debate, John McCain and Barack Obama have unveiled broad ideas about how to restore the nation’s financial health. But they continue to suggest that this will be largely pain-free. McCain says giving everyone a tax cut will save the day; Obama tells us only the rich will have to pay to help us out of this hole. Neither is true.

We are all going to have to pay, because this meltdown comes in the context of what has been “perhaps the greatest wealth transfer since the Bolshevik Revolution in Russia in 1917,” says Michael Mandelbaum, author of “Democracy’s Good Name.” “It is not a wealth transfer from rich to poor that the Bush administration will be remembered for. It is a wealth transfer from the future to the present.”

This is one of my earliest Friedman cartoons. I was just learning to draw using the Wacom pad system. This system is very difficult to master at first so I drew stick figures. It was hellishly hard. Instead of direct transmission of mind to paper, I had to draw in my lap while looking at the computer screen. Very difficult to do at first!

Friedman is a top pundit. He is also directly responsible for the destruction of the entire US industrial base. He is the front man for destroying our nation. Just this week, an African man was sentenced to prison for committing international crimes when he supported illegal war efforts by his own rulers. We punished Saddam's press staff. We punished Hitler's press staff, too.

They are all held responsible for the actions of the people they service! So it is here: Friedman is serving the traitors who are rapidly destroying our nation. He should certainly be arrested for crimes against the entire American people! Not to mention, his many war crimes. For he is a war monger as well as a de-industrializer sympathizer and running dog for the international bankers seeking to drive us all into debt.

My 2005 cartoon is pretty clear: Friedman is happily pushing US workers off the New World Order Flat Earth he and his buddies created for us. Here is one of my oldest articles:

June 14, 2005: FRIEDMAN CELEBRATES JOB LOSSES

My, having a secure job that won't be outsourced certainly is fun. One can happily poke a hot poker into the ribs of fellow Americans while utterly protected. The cold blooded antipatriotism of writers like Friedman astonishes me. Do the owners of the NYT view our country this way? One wonders and one suspects. Seems many in Congress think this way, too. Certainly, most of our business owners are like this. They hate America. JUNE 24, 2005

*snip*

I will spare you all the horror of reading anymore of this tripe. This wealthy, pampered pet of the ruling class, sub group, pro-fascist Israel, thinks a 35 hr week and welfare benefits are silly Frenchie things, non? I would love to park this guy in a mud hut somewhere like in the middle of Gaza and let him fend for himself but this will not happen. So this lapdog doth yap at us mere chattel for wanting simple protections so we won't all end up in mud huts, too.

This was my reaction to a classic Friedman editorial demanding Congress not even slightly restrict imports! He is one of the many-headed Beast of Babylon that has destroyed our nation. He is probably one of the top enablers for globalization. He is focused on one thing: destroying all our protections so we cannot stop a flood of imports. Japan and China control imports! Europe does, too, via domestic consumption taxes.

But the low-tax ideology of the US has doomed us to having absolutely no barriers to consumption. And we consume like crazy. There is an obvious connection between easy credit and the US public buying too much imported goods. The cheaper credit is, the higher our trade deficit. In turn, the Flat Earth empires exporting to us lend us more cheap money so we can continue this.

We saw this week, our own rulers cooperating with the entire planet to drive interest rates here down to sub-1% levels so we can continue to collapse into deeper debt! And Friedman applauds all of this!

Here, again, is Culture of Life News addressing these problems long ago:

2005: Friedman Wants US Economy Magically Fixed

So many people trust this con artist. Why are we 'a country in debt and in decline' in the first place? Before 'free trade' took over, we had no trade deficit. As I showed clearly in this week's articles detailing past Federal Reserve speeches, the US decided to cope with suppressing inflation by the neat trick of devaluing the currency abroad while simultaneously opening up the US to 'foreign competition' that was designed to force prices downwards via dropping union wages. To clinch the deal, the US media had to herd the voters into backing anti-unionist Ronald Reagan who cheerfully destroyed the right to strike. Now, strike breakers can replace striking workers permanently so no one dares to really strike anymore. Unions have had severely declining membership since Ronald Reagan's rule and now are utterly vanishing as the Old Guard are bought out with bribes and replaced with non-unionized, weaker workers who have far less pricing power and much, much lower wages and virtually no benefits.

Namely, the workers ate inflation. Free trade benefited Asia and Europe. Both saw huge trade surpluses with the US. Both saw their important industries grow massively. Both saw their sovereign wealth increase. Meanwhile, the US had little inflation but rising debts, loss of good industrial jobs, and the de-industrialization of this nation. If WWII were looming, we would have to surrender to Japan since we can't manufacture much of anything to keep ourselves going. We can make weapons but what if we have virtually no steel mills? Most of our ball bearings, fasteners and other vital things are made in Japan, China and Germany! The materials that make the wings of our fancy jets so fancy are made in Japan, not the US.

Friedman encouraged and enabled all this. For years and years, this Zionist who dreams of making Israel super-strong made America super-weak. We have to talk about this business because when we see treason, we have to answer the question, 'Which nation does this guy really work for, anyway?' Suspicions have to be aired. Of course, if anyone does this, they get censored or shoved aside in the US. We are not supposed to ask this vital question. When writers consistently push for things that destroy America, we must explore the question, 'Why?'

Some time ago, I showed that Israel, Friedman's home away from home, has enjoyed an international trade surplus. This is due nearly entirely because the US has a huge trade deficit with Israel. On top of paying for Israel's military, all peace initiatives and other hand outs. Israel is by far and away, the #1 recipient of US public largess. Friedman never complains about all this. He is very jolly well overjoyed about this. This is for him, good news, not bad news.

Here is another old story I wrote:

MARCH 06, 2006 Flat World Free Trade Traitors Screaming At Americans While Selling Our Security To Enemies

Back to Friedman's NYT editorial today:

A major money market fund — Reserve Primary — failed in September because the extra interest it offered customers derived, in part, from the $785 million in high-yielding Lehman Brothers commercial paper and notes it was holding. Depositors who told their congressmen to just let that greedy Lehman Brothers fail were shocked to discover this meant that their own money market would be frozen. No, we don’t need a president defending greed on Wall Street, but we do need one who can explain that we are all in the same boat, that a leak at one end can sink everyone and that while we must regulate, we don’t want to kill risk-taking and the rewards that go with that — which are essential to growing our economy.

This man is not only nuts, he is heartless. I don't recall the public demanding that Lehman Brothers fail! The US public would prefer that NO businesses fail! Indeed, the #1 job of the Federal Reserve is to protect us from all of this. And the means for this is to not allow bubbles to form OR TO LET TOO MUCH CREDIT BE CREATED!!!!

The Fed failed, of course. Since the guys running it listen to creatures like the heartless Friedman guy, we get bad advice as well as the devotion of the Fed's officers are not aimed at protecting us but enabling people like Lehman Brothers to do stupid things.

What stupid thing did Lehman Brothers do, anyway? HAHAHAHA. They helped create and feed the Derivatives Beast! Paulson wanted to save them the same way he saved Bears Stearns: by taking in the losses and handing over the goodies to JP Morgan or Goldman Sachs.

But when he tried this for Lehman Brothers, he discovered that NO ONE WANTED TO DO THIS. It was because of the huge overhang of Derivatives Beast messes! Anyone who sucked down this baby would go instantly bankrupt no matter how big. And this definitely includes our Federal Reserve!

So they decided to see what would happen if they let it all just die. It instantly set AIG off the cliff! They were forced to save AIG because this would bankrupt the entire planetary system! Right now, we are seeing the DTCC attempt to make the Derivatives Beast a less frightful creature only even they dare not publish, in public, the actual deals and numbers. Indeed, Mark It was launched for this purpose: to give us a mark-to-market view of the actual real value of all the SIVs and CDOs and other goofy instruments sold by Lehman Brothers and others.

I watched in amazement last year as the Mark It graphs plunged to basically $0. They were obviously worthless. The Treasury and Fed Reserve are still struggling to save AIG. The bill is now nearly $200 billion and rising. And the AIG executives are using a huge hunk of this to party and pay themselves bonuses! All the gnomes being saved are doing this. They are treating this as a looting expedition, not a way to save America.

Friedman's sneering at the poor savers who are losing over 90% of their savings is pure Friedman fun: he is a terrorist.

About risk taking: the Lehman investors were forced into increasingly risky ventures due to the central bankers dropping interest rates far below the rate of real inflation. This isn't investor greed. This is investors being denied a safe return that is realistic. If they want more, they deserve to lose money if their bets don't pan out.

On the other hand, Friedman and his buddies all lied about risk! They told investors that the Derivatives Beast would eliminate all risk. So anyone who wrote positive stories about how credit default swaps ended risk should be arrested for fraud or enabling a con job.

JUNE 17, 2005 SNOW BLINDNESS

Is our economy expanding? Friedman, this last week, said he wanted Toyota to take over our entire auto industry. Because it is collapsing. I suppose next week, he will call for China to take over everything else...oops, they are. If we are "expanding," I see no sign of this. For the last thirty years, hiring in the manufacturing sector has collapsed. At first, they pretended this was due to automation. But we don't see lots of robot run factories being built, are we?

Another very early Friedman cartoon. Note the corporate jet flying away! Friedman isn't the only traitor who is la-de-dah about Japan destroying our auto industries. In England, Honda is forcing the government to subsidize their plant there since there is NO English auto industries anymore. The ones that were English are now parts of German or Japanese auto corporations! How far they have fallen!

More Friedman Fun:

So who are the brilliant minds that will be called to talk about all this? Friedman? Kristof? A Bush person? I can't wait to see which liars or fools are called forth here.

Back to Friedman's whining about world trade:

Third, we need a president who can rally the world to our side. We cannot get out of this crisis unless China starts consuming more and unless Europe keeps lowering interest rates. Everyone is interconnected, and everyone is still looking to America to lead.

If China 'consumes more' this means someone has to consume less. Or pay more in competition with the Chinese. For example, oil. If the Chinese buy more cars, they will use more oil and this means we either use less or pay more, ourselves. And if we imagine the Chinese, who let foreign automakers build factories there, won't take over these systems one by one, we are foolish.

For this is their 50 year plan! They told me this years ago! They plan to have all the best factories transfered to China and then relentlessly drive out all the foreign devils who run the main offices. This is a sly take-over that the entire government is focused on! Trust me on this one.

Which is the exact opposite of America's ruling elites. They want to enable foreign domination, not the opposite.

Culture of Life News, May, 2005: WHERE ARE THE EXECUTIVES? asks Friedman

Friedman: 'After six weeks of being a foreign correspondent traveling around America, the biggest question I have come home with is not "What's the matter with Kansas?" but rather, "What's the matter with big business?"'

Earth to Friedman: nothing is the matter with big business. They are doing hunky dory.

No more taxes, no more regulation, no one stopping them from becoming agents for China. As this blog has written about in the past, the magazine, Fortune 500 had jet loads of these MIA execs flying into China to wine and dine and cut deals. They are very much in evidence...overseas. They are busy selling off factories here and shipping them off to communist China. Duh.

*snip*

Friedman at the NYT yet again:'"America faces a huge set of challenges if it is going to retain its competitive edge. As a nation, we have a mounting education deficit, energy deficit, budget deficit, health care deficit and ambition deficit. The administration is in denial on this, and Congress is off on Mars. And yet, when I look around for the group that has both the power and interest in seeing America remain globally focused and competitive - America's business leaders - they seem to be missing in action. I am not worried about the rise of the cultural conservatives. I am worried about the disappearance of an internationalist, pro-American business elite."'

Why can't Friedman find these people? I track them daily, easily. He can too, if he can't, he can read this free blog! Friedman wants to know why General Motors isn't for universal health insurance.

Taxes. This means they pay Federal taxes and they and their buddies want to kill Federal taxes. They want to kill the unions. Using the health insurance issue as a club to smash in the heads of the unions is well worth it. They have zero interest in a good health policy for all Americans. They hate this concept. They think all other industrial nations are nuts to have this, they want communism like the Chinese have. Ahem.

Poor flat earther Friedman wonders why these corporate monsters don't want a sane energy policy. Well, they won't make money on this, to build a new infrastructure will require investing in America and take away money building factories in China. So it is dead in the water. When the Chinese sell us energy systems, and they will, they are very interested in this stuff, we will buy from them. Why invest at home?

Nothing has really changed since I wrote these old articles. Except our entire banking system has collapsed. And since 2004, our trade deficit was nearly a trillion dollars in the red every year. And these facts still don't faze our pundit class clowns. They continue onwards, deliberately refusing to see reality. Their reality is pure fun.

I make very little money commenting here. Thanks to wonderful readers who take the time and have the generosity to donate funds to my small news service, I get to enjoy posting, using good equipment. But Friedman makes millions of dollars thanks to his New York Times platform. He was put mercifully behind a 'pay to view' wall which is why I ceased mentioning him after 2005. But that wall is down and now I can throw rotten tomatoes at this idiot again. Thank you, New York Times.

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Living Inside The Economic Volcano With Angry Gods

November 3, 2008

Elaine Meinel Supkis

One of my favorite song birds, Yma Sumac, has flown from this earth and is now gone forever. Time to memorialize her. Also, we talk about the Japanese carry trade yet again. It is being restarted with great effort by the central bankers who want to continue flooding us with debts. And Rubins and Bernstein, two of Obama's economic advisors, talk at the NYT. I rip things apart. And we discuss the Volcano Gods who happen to be in the news today.

Yma Sumac, a favorite singer I used to love, has just died, age 86.

The fine lady with the most amazing voice, Yma Sumac, has left us a fine legacy of a lot of popular, entertaining music. When I was a child, I wished I had her wide ranged voice. But alas, I was not allowed to sing well. My throat was operated on when I was still a child and I bear the big gash across the neck to this day. When I was young and the scar was very striking, I used to tell children that someone tried to slit my throat but I fought him off. Heh.

So much for lying about things! It was amusing, though. As for Yma, she sang her heart out and I am glad she concentrated on South American themes, composers and culture. During WWII, the government was worried about losing the allegiance of South American and Central American nations so they began this big, big push to popularize the cultures that are south of the US borders.

Thank goodness for that! I happen to love many different cultures. Japanese, Chinese, European, African, South American, etc.= all have something wonderful to give us! This export of cultures I highly recommend. This is quite different from destroying our own industrial base type of export/import markets. I am an enthusiastic supporter of cultural exchanges.

Back to the 1940's: the US government encouraged artists and performers from this hemisphere to produce things in Hollywood or tour the nation. So the wide variety of peoples and cultures of the South came to our nation and opened many doors here. And I remember this flood coming in the 1950's. It influenced our sense of color and space as well as the rhythms of our music, our dance. A tremendous influence. And Yma was one facet of this diamond studded gold rush. Thank you, my dear, for giving us your gifts so generously.

Indonesians appease volcano gods with sacrifices

Today thousands of pilgrims flock to Mount Bromo on East Java each year to offer the spirits food, live animals and money and ask for prosperity and health. Bromo, a 7,641-foot volcano, is one of Java's most popular tourist attractions. The poor arrive days ahead of the ceremony, carrying fishing nets to catch money and anything edible. They camp under tarps in the crater atop the mountain's chilly slopes.

Time for the annual human sacrifices to the Volcano Gods! The Volcano Gods are like the Lightning Gods: very, very dangerous but also the source of life and wealth. The lightning storms brought us fire and water: the falling rain soaks the parched land and things grow. Volcanoes spew out the wealth of the inner core of this planet. The mineral wealth this brings is very good for growing things but like lightning, it is also destructive.

The hammer of lightning and the forge of volcanic fire created humans. We evolved rapidly due to these forces of nature! Several major volcanic events in the history of this planet shoved evolution forwards at a tremendous pace. The skies dim under the aerosol veil as the fine dust covers the entire biosphere. This dimming of the solar energy leads to a cooler climate. This, in turn, causes starvation and death.

Indonesia's volcanoes have caused huge havoc in the past. The eruptions there nearly wiped out all early humanoids, for example. So it is no surprise to see the people there worshipping these dangerous mountains as gods. But since the best farmlands tend to be in the range of volcanic events, humans are resigned to living with this planetary hazard.

This story today interests me because it is so true to the concept of human wealth and power as well as the dangers that the poor must take to gain even small boons. Note that the rulers of this region used to use human sacrifices to placate the gods living in these mysterious deep holes that go far into the earth. Secondly, to make these gods happy, humans not only throw humans but other things into these volcanoes.

Third: despite the belief that the offerings must go to the gods, the poorest humans scramble into a very dangerous place in the hopes of catching a few of these falling items as they are pitched into destruction. Fourth: the destruction of wealth is seen as a way of protecting FUTURE wealth! This is the top item here, in my mind.

If the people fail to sacrifice something valuable today, they believe they will be punished tomorrow. So these people who often had little to give up, would assign high values to things and then pitch these into a volcano or a deep, deep lake. Often, they would make things out of gold and then toss it. This was because gold was seen as eternal and connected to the Death Gods. It had little real use in the real world.

But as a currency for the true overlords, the Gods, yes, gold was quite valuable. We must remember that the Egyptian pharaohs or the Inca emperors didn't park gold deep in lakes or deep in caves or in pyramids, etc in order to keep it for themselves. They did this for the Afterworld. What I often call, the Outer Darkness. Our museums are filled with these things that were created for the Death Gods. We pay a lot of money to view them with wonder and envy.

So let's go to today's news again. The world is in a global grip of a mega-financial meltdown which is due to the Emperor of the US refusing to pay tribute to the gods or to keep an even balance between revenues and desires to spend.

Yen Falls on Speculation Stock Rally to Encourage Carry Trades

Bloomberg) -- The yen fell against the dollar and the euro as a rally in Asian and European stocks encouraged investors to step up purchases of higher-yielding assets financed with the Japanese currency.

The yen also weakened versus Australia's dollar on expectations the Reserve Bank of Australia will cut interest rates tomorrow to sustain economic growth. The Japanese currency slid against South Korea's won and India's rupee after Korea announced a $10.8 billion stimulus package and India's central bank cut borrowing costs for the second time in two weeks. The dollar declined against the euro before reports this week that may add to evidence U.S. economic is slowing.

``We're seeing a bit of risk appetite returning as things stabilize and I wouldn't be surprised to see the yen even lower,'' said Ian Stannard, a senior currency strategist in London at BNP Paribas SA, the most accurate forecaster in a 2007 Bloomberg survey. ``We should see lower-yielding currencies coming under some more pressure.''

*snip*

The yen has appreciated 8.8 percent versus the greenback since Sept. 12, the last trading day before Lehman Brothers Holdings Inc. filed for bankruptcy. The remainder of the world's 16 most-active currencies declined as frozen credit markets and a rout in stocks that wiped out more than $13 trillion of market value fueled risk aversion. The yen may drop to 103 against the dollar in the next week, Stannard said.

Japan sighs with relief. They are absolutely desperate to get the yen above that horror level of 100 or less to the dollar. They are happy that the US government is equally desperate to restart the mega-moneymaking-machine of the Japanese carry trade. This will pour more liquidity around the planet and we will continue with our false sense of well-being as we get shoved deeper and deeper into the volcano.

If the Japanese carry trade leads to huge sums of free funny money being tossed madly into this massive volcano, we can lurk below the rim and catch some of the loot as it plunges downwards. There is a lot of economic debate going on here on this planet as people struggle to understand the nature of magical money and how it intersects with reality.

One cannot do this unless one first accepts the concept that all of this is magical and all of this is very connected with fires and holes deep in the earth. And the heavens, of course. And above all, death. If our cultural ancestors across the planet knew that gold and wealth was very much connected to Death Gods, we must accept this as a fact of human nature and deal with it appropriately.

The US prayed to the Kami of Japan for wealth. These Kami are often found in volcanoes. And the ocean. The magic golden fish that grants wishes lives there, for example. We begged these Kami for wealth without work. They granted our wish. But of course, this will destroy us. But being Death Gods, they are overjoyed we made this request and are very happy to grant us this wish. Throughout the history of fairy telling stories of yore, there is this common thread: wishes are DANGEROUS. One doesn't get what one imagines when one wishes. Especially if the wishes are being granted by the gods and goddesses who control access to the Cave of Wealth and Death!

Bloomberg:

The yen also weakened as volatility implied by one-month euro options against Japan's currency fell to 42.40 percent, from 43.93 percent on Oct. 31, signaling a reduced risk of exchange-rate fluctuations that make so-called carry trades unprofitable. Volatility was 49.62 percent Oct. 27, the highest level since the common European currency's debut in 1999.

In carry trades, investors get funds from countries with low borrowing costs, such as Japan, where the benchmark interest rate is 0.3 percent, and invest the money in overseas markets where returns are higher. Japan's main interest rate compares with 3.75 percent in the 15 nations that share the euro and is the lowest among industrialized countries.

Japan doesn't mind it if the US drops interest rates to Japanese levels. Since Japan already has worked well at deconstructing the US industrial base and now has outpost factories here which send all their profits to Tokyo, they are happy when our government desperately lowers interest rates and makes credit easier to obtain.

Japan's carry trade was never mainly with the US in the first place. It is with other, much smaller nations. This way, they can happily inflate the number of dollars across the planet while virtually none of this except a small overflow, goes directly to the US. This is fine with our rulers. They don't want inflation due to this flood of US dollars coming home. The violent unwinding of the Japanese carry trade coincided with the biggest inflation bubbles in commodities, by the way. All of which mainly happened in the last 2 years.

The US and Japan like it this way. The US can overspend budgets and the Japanese buy our debts so they can continue both the carry trade as well as increasing the US trade deficit. Anyone even slightly interested in fixing the present mess has to address the politics of the Japanese carry trade. It is painfully obvious to me that everyone at the top want this to continue no matter what. Let's look even deeper:

5 trillion Yen shortfall in taxes expected

Overall tax revenue for fiscal 2008 will fall more than 5 trillion yen short of the government's 53.5-trillion-yen estimate, due mainly to poor corporate performances, the Finance Ministry said.

The shortage in the general account could force the government to issue deficit-covering bonds, which will likely push the total amount of national bonds issued this fiscal year past 30 trillion yen for the first time in three years.

The government intends to attain a primary balance surplus in fiscal 2011, at which the sum of new government bonds issued each year is kept under the total repayment of interest and principal for bonds issued in the past.

But the additional deficit-covering bonds for fiscal 2008 would make it extremely difficult to achieve that goal unless there is a sudden surge in tax revenue.

The government's tax revenue estimate for the current fiscal year was based on economic forecasts and corporate performances as of last December.

Corporate tax revenue, which accounts for about 30 percent of total tax revenue, was estimated at 16.7 trillion yen.

Japan has the cheapest credit on earth. And for a very long time, too. This was no emergency. Unless an emergency lasts forever. They have found this deep hole in the ground, one that is actually a volcano. They are happily using this to create massive global credit. This, in turn, has flooded all nations with debts. International debt levels are increasing.

Japan has the world's #2 FOREX reserves which are mainly dollars. And yet the government is running in the red! This, after strangling public services. The government could use their reserves to make the shortfall. But why do that? They are borrowing at virtually free values! What is there to stop them from borrowing even as they flood the planet with debt via their FOREX reserves? This is fundamentally very bad! But they don't care. Everyone is clamoring for them to do this.

The other matter here is the fact that Japanese corporations that make some of the highest profits via their export trade, pay 30% of the government's taxation! So let's go to the other side of this trade ledger: the US spending and taxation systems.

THE DECLINE OF CORPORATE INCOME TAX REVENUES By Joel Friedman

Deficits over the next decade are now projected to be enormous in size. A joint analysis by the Center on Budget and Policy Priorities, the Concord Coalition, and the Committee for Economic Development projects deficits totaling $5 trillion through 2013.

An analysis by Brookings economists reaches a very similar conclusion, while Goldman Sachs projects deficits totaling $5.5 trillion.[1]

Despite the deteriorating fiscal outlook and the historically low corporate revenue collections we already face, Congress nonetheless seems poised to shower more tax breaks on corporations that would cause deficits to grow substantially larger over time .

Treasury Department figures show that actual corporate income tax revenues fell to $132 billion in 2003, down 36 percent from $207 billion in 2000.

As a result of these low levels, corporate revenues in 2003 represented only 1.2 percent of the Gross Domestic Product (the basic measure of the size of the economy), the lowest level since 1983, the year in which corporate receipts plummeted to levels last seen in the 1930s.

Corporate revenues represented only 7.4 percent of all federal tax receipts in 2003.

With the exception of 1983, this represents the lowest level on record (these data go back to 1934).

I heavily amended these graphs to illustrate the forces at work here. Here is a most important fact we must never forget:

WHEN THE US RAN TRADE SURPLUSES, WE TAXED CORPORATIONS AT 30%!!!

This startling fact should be a hot topic. These graphs are very good at showing how the deterioration of corporate tax revenues corresponds quite directly with the deteriorating US trade situation. Namely, I simply made the years that we ran a trade deficit, red. And the previous period in green to reflect the profits from back then.

A general rule of thumb is very simple: if someone is doing something and it is quite successful, we should imitate them. The Chinese follow this rule very closely. This irritates the Japanese, of course. We are in competition with both China and Japan. Not to mention, the rest of the world. We can have and want global trade and I am all for this. But NOT global one-way trade.

Namely, the US cannot run deficits nonstop. There was exactly one year we ran a surplus. But this was due to Gulf War I when Bush Sr. sold our soldiers as mercenaries to the despotic rulers of Kuwait. Not because the US suddenly began to manufacture and sell overseas, more US goods.

More Yma great singing:

Here is a New York Times story about how this flood of Japanese carry trade funny money ravaged our entire corporate base even as the easy lending sent stock markets to the heavens:

Debt Linked to Buyouts Tightens the Economic Vise

Private equity firms embarked on one of the biggest spending sprees in corporate history for nearly three years, using borrowed money to gobble up huge swaths of industries and some of the biggest names — Neiman Marcus, Metro-Goldwyn-Mayer and Toys “R” Us.

When the economy was booming, the firms made huge profits by cutting costs at their new acquisitions, improving operations and then turning around and selling them. In 2007, at the height of the bubble, such deals totaled $796 billion, or more than 16 percent of the $4.83 trillion in all the deals made globally that year, according to data from Dealogic.

Firms like the Blackstone Group and Kohlberg Kravis Roberts & Company, faced an image problem at the height of the bubble for excessive compensation and beneficial tax treatment, but their returns were so high that even investors like pension funds were drawn in. Now these firms, built on enormous amounts of debt, are being forced to go back to the financial markets just as those markets have nearly frozen up.

If history is any guide, the worst may be yet to come. Steven N. Kaplan, a professor at University of Chicago Graduate School of Business, found that nearly 30 percent of all big public-to-private deals made from 1986 to 1989 defaulted.

Why did our nation allow this? The rulers knew that this sort of debt-piling on game would have AT LEAST a 30% default rate! This is totally unacceptable. A 10% default rate can cause an entire economy to go into a bad tailspin.

Recall, please, how this present collapse is being nearly totally blamed on the poor homebuyers who are at the very bottom of the money feeding scale, the people who live on the lip of the volcano and spread their aprons and nets to catch some of the loot. How sad this all is! Innocent people trapped inside the volcano are being blamed for it blowing up.

The US ruling elites and corporate overlords knew perfectly well, the game they were playing would, AT BEST, lead to a 30% loss if things didn't continue to expand. So they continued to expand things despite knowing this. The tool they used the most was the most insidious of creations: the Derivatives Beast!

Yes, it all boomerangs back to that thing. Millions of humans will die in the volcano because the Beast lives there and is one of the Death Gods! Workers who live inside the lip of this mighty volcano were told to give their money to the guys throwing it into the volcano and if they catch some of this falling loot which were their own savings, they would get RICH! Only, they won't get rich. For none of the savers in the volcano were told that the failure rate of these loans would be at least 30%.

Instead, they were told lies about the Derivatives Beast. They were told, this deadly creature would shelter them. And so the money is lost and people will die because of this. Now, the NYT has printed a major editorial from the staff working for Obama. There are many interesting levels of this editorial which I must explore as we think about volcanoes and Death Gods:

No More Economic False Choices By ROBERT E. RUBIN and JARED BERNSTEIN

We also jointly believe that fiscal stimulus must be married to a commitment to re-establishing sound fiscal conditions with a multi-year program that includes room for critical public investment, once the economy is back on a healthy track.

One of us (Mr. Rubin) views long-term fiscal deficits — in combination with a low national savings rate, large current account deficits and foreign portfolios that are heavily over-weighted in dollar-dominated assets — as a serious threat to long-term interest rates and our currency and, therefore, to our economic future. The other views these economic relationships as much weaker.

*snip*

One important policy question is what our fiscal objectives should be in terms of deficits and of the ratio of the national debt to the gross domestic product. In times like these, larger than normal budget deficits will add to the national debt. In more stable times, a budget deficit equivalent to roughly 2 percent of G.D.P. will keep the debt-to-G.D.P. ratio constant, a legitimate fiscal policy goal. In flush times, a smaller deficit would lower the debt ratio and that might be desirable.

We both agree that individual income tax rates and other taxes for those at the very top could be moved back to the rates of the Clinton era. It’s worth remembering that rates at this level helped finance deficit reduction and public investment that contributed to the longest economic expansion in our history.

So, they will up corporate taxes? HAHAHA. I would suggest that they read this story of mine and then explain the need for higher taxes. Namely, our deadly rivals in Japan have these higher rates. So we should, too. Period. No other excuses needed.

We also see in this editorial that the top economic advisors to Obama are split on many issues. Actually, this is a very good thing! Obama can listen to all sides and then MAKE CHOICES. The one-voice method used by Bush was a failure. We need debate. I hope I get invited to these debates over time. I would be happy if they merely read me. After all, knowledge is good. Especially if it is very old knowledge.

Free markets versus regulation and protection: We both feel strongly that there are important lessons to be learned from the disruptions in our financial system, and that significant reforms are needed. The objective ought to be to optimize the balance between increasing consumer protection and reducing systemic risk on the one hand, and preserving the benefits of a market-based system on the other.

We know, too, that Wall Street and Main Street are intimately connected. The consequences of the financial market crisis are profound for Americans in terms of lost jobs, lower incomes and reduced retirement savings. Measures to reform and strengthen the financial system should be evaluated by this measure: Do they ultimately translate into improving the jobs, incomes and assets of working Americans?

With respect to trade, the choice is not trade liberalization versus protectionism. Instead, as trade expands, we must recognize that protecting workers is not protectionism. We must better prepare our people to compete effectively and help those who are hurt by trade — not just dislocated workers, but those who find their incomes lowered through global competition. This means investing more of the benefits of trade in offsetting these losses, through more effective safety nets, including universal health care and pension coverage.

Neither advisor understands global trade. Nor does virtually anyone working for the major media. Indeed, the blind spots here are so massive, we could say that, when it comes to trade, our entire pundit class lives in the Outer Darkness. They are blind and stupefied by propaganda and hubristic imperial belief systems. Or worse, divided loyalties.

Note how these two guys who happen to be Jewish, fret about 'those who are hurt by [this idiotically unbalanced] trade! Oh dear!

Well, I have a stark message to both men: THE ENTIRE US ECONOMY AND SOCIETY IS BEING HARMED BY THIS UNBALANCED TRADE!!!

It will kill the entity we call, 'The United States'. We will become Yugoslavia: the maker of crummy cars who then fell apart with ethnic and religious infighting and is now a series of mini-states after killing lots and lots of people.

Let's look at one prime example of unbalanced trade which involves many financial experts turning a blind eye because they support other nations benefitting from US trade imbalances:

July 10, 2008: Top Israeli Imports & Exports

The United States of America consumes almost 40% of Israel’s total export shipments, far more than second-place Belgium at 6.5% and third-place Hong Kong at 5.9%.

Israel’s imports are less concentrated, with products from trade partners distributed more proportionately. Leading exporters into Israel include the U.S. (12.4%), Belgium (8.2%), Germany (6.7%), Switzerland (5.9%), the United Kingdom (5.1%) and China (also 5.1%).

In 2007, Israel exported an estimated US$50.2 billion worth of goods onto the international trade marketplace. Israeli imports totalled roughly $55.8 billion, resulting in Israel’s overall $5.6-billion trade deficit last year.

Despite its overall deficit, Israel enjoyed a US$7.8 billion trade surplus with its American trade partner in 2007. The most recent surplus statistic is 32.6% higher than the Israel-US surplus in 2003 but represents a 5% decrease from the $8.2 billion surplus in 2006.

With a population of 7.1 million, Israel exported US$20.8 billion worth of merchandise to the United States in 2007, an 8.6% increase from 2006 and up by 63% in 4 years.

US exports into Israel is 12.5% but the reverse direction is 40% of Israel's exports are to the US. Ergo: Israel imports more from others while the US gets a very much smaller slice. But Israel gets to ship things with pretty much Japanese-levels of impunity to the US! And this has been climbing steeply. True, it declined a slight amount this last year. But this happened with Japan and China and is only a side effect of the US going into a steep recession.

Anyone looking at trade statistics can clearly see that nearly all trade deficit reductions in the past 35 years have come ONLY during recessions. The minute spending picks up, the US is inundated with imports pouring in all our major ports.

In the last 4 years while the US ran epic trade deficits, Israel had one of the highest growth rates. True, it is not a towering mess like from China! But Israel is a very small country, so it is no surprise the amounts are smaller. But the growth rate is not smaller.

Since none of our leaders, all of whom swear fealty to Israel before running for office, are going to stop this one-way trade with Israel, they can't go off and do this to other nations. So, to let Israel do this, they have developed a philosophical matrix that says, 'It is OK for the US to continuously run trade deficits'. Closely connected is this concept of, 'The US can run trade and budget deficits forever.'

This is very clearly seen in DC. Whenever I talked about trade deficits and the need for the US to stop piling on debts, eyes would glaze over. THIS IS TREASON. Ignoring dire dangers to the US people due to this is treasonous. The people who live in DC and run our government are REQUIRED to protect us, protect our borders, protect our Constitution and to live within certain bounds. Selling us to foreign powers is not allowed. It is quite outside the directives of our government.

More Yma Amore

:

More news from today that illustrates all this:

Hard-Fought Battle in Hard-Hit Ohio Decisive State in '04 Is Economically Battered and Electorally Coveted

Both sides expect a close finish, something of a paradox in a struggling state in a year in which the poor economy is driving support for Obama and other Democrats. Ohio lost 300,000 manufacturing jobs this decade and its median income has dropped by 3 percent, yet polls show Obama with no more than a narrow lead in a state that Sen. John F. Kerry lost to Bush by two points.

That may be because the weak economy has driven away younger and college-educated residents who lean Democratic, because abortion remains a potent issue and because an African American candidate with an unusual name remains a tough sell in some corners. But voters also say the poor economy has not swung more voters to Obama precisely because the state has been down for so long -- many have come to see the woes as systemic, and not easily blamed on a particular party.

Ever since the US launched the floating currency, the collective boats of the working class have sunk deeper and deeper. Or maybe I should say, the workers have been pushed deeper and deeper into the volcano. They are now cynical and are feeling victimized. People who are victimized turn to racism or religious fanaticism for comfort.

This is very bad! We see it very clearly in past depressions! Over and over again, no matter what country it is, when the economy goes bad, minorities get hammered. Ohio has been let down by everyone. When Ross Perot talked about the 'Giant sucking sound' he got over 20% of the vote.

So the DNC and GOP conspired to kill the sponsorship of Presidential debates so they could exclude anyone who could talk about the Federal Reserve and Free Trade. Now, we get faux debates where the people must choose based on emotions, not economic principles.

This is why things get worse and worse. The US auto workers should be demanding tariffs and barriers. But when they vote for people endorsed by their unions, these same people end up supporting free trade. This is simple: the entire Congress and the Presidential candidates are owned by the banking gnomes and international dealers seeking to drive us deeper into debt!

So everyone comes to Ohio to be pious but then goes to DC to be corrupted.

So people left behind in these dying communities are bitter, as Obama noted. They cling to guns and religion. A very deadly combo that leads to Yugoslavian solutions.

Now, back to the Derivatives Beast who lives in this volcano:

DTCC to Provide CDS Data from Trade Information Warehouse

The Depository Trust & Clearing Corporation (DTCC) announced today that it will begin to publish aggregate market data from its Trade Information Warehouse (Warehouse), the worldwide central trade registry it maintains on credit derivatives. Starting Tuesday, November 4 and continuing weekly, DTCC will post on its website www.dtcc.com/derivserv the outstanding gross and net notional values ("stock" values) of credit default swap (CDS) contracts registered in the Warehouse for the top 1,000 underlying single-name reference entities and all indices, as well as certain aggregates of this data on a gross notional basis only. The data is intended to address market concerns about transparency.

The very secretive gnomes running the DTCC can't be trusted nor are they clear. These monsters are going to soothe markets by publishing hard information. So I said, 'Whoopee! I will haunt this website!' Only I can't!

Only certain people, namely, ONLY GNOMES can access this information! I hope some of my more connected readers can overcome this barrier for me and send me information published by the DTCC. I would love to see the actual numbers.

According to the DTCC, the actual physical losses due to Lehman Brothers was virtually nothing. Less than $10 billion. Well, this begs the question: what on earth is this stupid Derivatives Beast that is many trillions in size if it isn't big at all? And if so, why continue to keep this vital information behind a locked door that only gnomes can access? EH???

Gads. They are pulling yet another gnome trick here. Can't fool me.

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Every day is Trick or Treat Day for the gnomes.

This artwork is courtesy of Mr. Taylor.

Elaine Meinel Supkis

I hurt my fingers yesterday so I couldn't post anything. Now, with band aids all over the place, I can type again. Typepad continues to annoy me with bugs and a refusal to understand their coding is awful. But on to less serious matters [hahaha] the economy: time to pause and look at a bunch of graphs. They show a rapidly deteriorating situation which the US has never had before. Roubini's RGE Monitor publishes a ridiculous analysis about the Derivatives Beast. Evidently, this economist named 'Pickel' thinks there is no problem, all is well. The Beast is NOT eating our banking gnomes and spitting out bones! Right. And the Middle East is now sliding into a pre-revolt mode as the oil kings decide to cut welfare payments. Bin Laden is ecstatic.

From Roubini's web page comes this utter rot---Insight: The CDS sector is not the central villain PrintShare Robert Pickel

Last week saw an important milestone in the credit default swaps sector, when counterparties to CDS trades on Lehman Brothers cash-settled their transactions.

Based on a protocol and auction process developed by ISDA, protection sellers paid 91 cents on the dollar to protection buyers. An estimated $6bn to $8bn was paid out. Over the past 25 years, the privately negotiated derivatives industry has developed a robust framework – one that governs and guides participants through such an event, and which includes procedures and processes for valuing and unwinding trades. Recent defaults show the value of these efforts – the industry’s infrastructure clearly works.

Just as clearly, the Lehman default and settlement are not the financial catastrophe CDS critics claimed they might be. The widely cited industry estimate of $400bn in notional amount of Lehman CDS trades outstanding includes a significant number of offsetting transactions. Dealer firms generally have minimal net exposure via CDS; if they sell protection, they also generally buy protection to offset the risk. Net these positions out and net amount of risk transferred is a low single-digit percentage of the notional amount. Cash payments on Lehman were about 91 per cent of that net amount.

Two more points must be kept in mind. First, companiees are required to mark positions to market, and they have already calculated the impact of Lehman’s default on their financials. Second, companies require counterparties to post collateral to back their exposures, so most of the $6bn-$8bn paid out was already collateralised. The bottom line is that groups had little incremental exposure to the Lehman cash settlement.

It’s also worth noting that, in spite of the failure of Lehman, as well as several other large counterparties, the CDS business continues to function effectively. CDS have proven to be the main – and sometimes the only – way to shed risk or express a view on market behaviour. While cash, securities and money markets have seized up, the CDS business still operates.

Here is part of my reply to this utter tripe:

'This guy is NUTS!!!! We just saw not only a 91% loss in a derivatives swap meet, AIG is now gulping down well over $140 billion in just THREE WEEKS and not at the end of this swap of derivative failures for US taxpayer dollars!

This is UNPRECEDENTED.'

Back to today:

On the other hand, the entire collapse of the G7 banking system is not due to derivatives. The Derivatives Beast may be eating up all the major banks in the G7 stellar complex but the real reason 'liquidity' dried up was due to the sudden unwinding of the Japanese carry trade! Even Bloomberg news admitted that most of the world's monetary expansion of the last 10 years has been nearly entirely due to the Japanese carry trade!

Pickels can't see this, of course. The mantra hammered into the noggins of all the economists in America is very simplistic: China is undermining world trade by using cheap labor. Even though China is not the world's number on export profit center, economists focus only on sales, not profits.

This plagues a lot of commentary on capitalism. I wonder why? One would imagine that everyone in the US would be hyper-focused on capital creation! But we are not.

This, not China, lies at the heart of what is going wrong. Americans have become so accustomed to going into debt ever since Nixon cut the gold peg from our now-fiat dollars that we imagine, we can skip the business about profits and simply have a churning economy based on consumerism and debt.

This is why not one of the solutions to our economic collapse are doing even the slightest good. The anxiety of the G7 central bankers is all about restarting lending. It is all about seeing if they can get more people to borrow more money. To make this an alluring prospect, they are all grinding out loans at ridiculous interest rates.

Back to Pickles: like many of the RGE analysts, he cannot really understand the role the Japanese carry trade played in the creation of global debt and global inflationary bubbles. The Derivatives Beast was created by the banking gnomes over the last 20 years as a tool with which they could lend recklessly while being protected from losses. These losses are also called 'bankruptcies.' This, in turn, are massive wealth destroyers.

Recessions aren't simply reductions in consumption. They are wealth destruction cycles. The entire excuse for having central banks is so they can prevent these periodic cycles of wealth destruction. But even the briefest look at history clearly shows that the ONLY thing the consortium of central bankers have succeeded in doing is this: They have MEGA-BUBBLES AND MEGA-BUSTS!

This is a notable failure. Many people who are critics of this system restlessly seek someone responsible. They light on various names and people. A common mistake is to blame various ethnic groups such as the Japanese or Jews or the Chinese or the Arabs. Some people even blame one of the oldest groups who have controlled much of the earth for the last 500 years: the ruling elites of Europe, the Old Nobility.

Everyone has exploited the modern system of interlocking central banks. This is because it makes people fabulously wealthy....but only during the bubbles. During the collapses, all hell literally breaks loose. And even though people assume ruling elites in Arabian lands or Merry England want chaos, this is FALSE.

Or rather, the chaos is supposed to happen far, far away. In Afghanistan, for example. That is a favored site for chaos between empires. But no: the chaos from bubbles bursting always comes home. When kingdoms or countries go bankrupt, revolution is not far behind. And revolutionaries are, by definition, outsiders.

Mr. Pickles doesn't seem to do much history. The whole Derivatives Beast thing was an attempt by the central bankers to expand credit when the world was awash in credit. Already, one of the G7 central banks flooded the world with liquidity via 0% or slightly higher interest rates.

This unprecedented and very long duration of these interest rates in a world undergoing inflation was very deadly since Japan is the world's #2 economy. The fact that all the central banks are now plunging into the same abyss means that the Japanese carry trade will NOT resume. Instead, the whole of the top economic consuming nations on earth which are Europe and North America, will try to go on a huge consuming binge, directly lending to themselves money at infinitely cheap interest rates.

This, in turn, will fuel Asia's industrial development. This is why China supports this business. The battle between China's central bank and Japan's central bank ended several months ago. But I suspect, it will re-ignite due to some very shocking news out of Japan concerning a top Japanese general blaming China and the US for all of WWII. More about that later.

Asia has embarked upon a massive shifting of production from Europe and North America to Asia. This is simple: the physical facilities of manufacturing are not so easy to move if a government is determined to keep them. The US voluntarily gave up our industries because we wanted no inflation instead of facing the facts about inflation.

Namely, we wanted money growth with no downsides. This brings us back to the Derivatives Beast: it grew in direct proportion to the banking gnomes burying inflation in interesting places. IT INFLATED TREMENDOUSLY. When inflation finally poured into commodities, the shocking truth came out. Inflation was really running at over 12% a year. This wasn't isolated inflation. This was global inflation.

Proof: even the strongest currencies with interest rates above 6% saw inflation! More proof: even Japan, with severe suppression of wages of 80% of the population, still saw inflation over 3% a year! Now, inflation seems to be receding but it is not. It is continuing to grow in the darkness. The reason we don't see it temporarily is simple: all the investors are removing their money from hedge funds and investment funds and HIDING it! And they are hiding it from the Derivatives Beast.

Anyone stupid enough to keep their money in the system is seeing it lose value faster than gold or oil is dropping. So we have lots of cash sitting idle. And it will sit idle until the Beast is done eating. And it has barely begun. The fact that all the major investment banks on earth are rapidly going bankrupt or have ceased growing, isn't due to there not being enough money. THE MONEY IS BEING HIDDEN RIGHT NOW! People are waiting to see what item can be turned into an instant bubble.

Now, let's go into the past again:

Congressman McFadden on the Federal Reserve Corporation Remarks in Congress, 1934:

"If this United States is to redeem the Fed Notes, when the General Public finds it costs to deliver this paper to the Fed, and if the Government has made no provisions for redeeming them, the first element of unsoundness is not far to seek.

"Before the Banking and Currency Committee, when the bill was under discussion Mr. Crozier of Cincinnati said: 'The imperial power of elasticity of the public currency is wielded exclusively by the central corporations owned by the banks. This is a life and death power over all local banks and all business. It can be used to create or destroy prosperity, to ward off or cause stringencies and panics. By making money artificially scarce, interest rates throughout the Country can be arbitrarily raised and the bank tax on all business and cost of living increased for the profit of the banks owning these regional central banks, and without the slightest benefit to the people.

The 12 Corporations together cover y and monopolize and use for private gain- every dollar of the public currency and all public revenue of the United States. Not a dollar can be put into circulation among the people by their Government, without the consent of and on terms fixed by these 12 private money trusts.'

"In defiance of this and all other warnings, the proponents of the Fed created the 12 private credit corporations and gave them an absolute monopoly of the currency of these United States- not of the Fed Notes alone- but of all other currency! The Fed Act providing ways and means by which the gold and general currency in the hands of the American people could be obtained by the Fed in exchange for Fed Notes- which are not money- but mere promises to pay.

"Mr. Chairman, if a Scottish distiller wishes to send a cargo of Scotch whiskey to these United States, he can draw his bill against the purchasing bootlegger in dollars and after the bootlegger has accepted it by writing his name across the face of it, the Scotch distiller can send that bill to the nefarious open discount market in New York City where the Fed will buy it and use it as collateral for a new issue of Fed Notes. Thus the Government of these United States pay the Scotch distiller for the whiskey before it is shipped, and if it is lost on the way, or if the Coast Guard seizes it and destroys it, the Fed simply write off the loss and the government never recovers the money that was paid to the Scotch distiller.

"While we are attempting to enforce prohibition here, the Fed are in the distillery business in Europe and paying bootlegger bills with public credit of these United States. "Mr. Chairman, by the same process, they compel our Government to pay the German brewer for his beer. Why should the Fed be permitted to finance the brewing industry in Germany either in this way or as they do by compelling small and fearful United States Banks to take stock in the Isenbeck Brewery and in the German Bank for brewing industries?

"Mr. Chairman, if Dynamit Nobel of Germany, wishes to sell dynamite in Japan to use in Manchuria or elsewhere, it can drew its bill against the Japanese customers in dollars and send that bill to the nefarious open discount market in New York City where the Fed will buy it and use it as collateral for a new issue of Fed Notes- while at the same time the Fed will be helping Dynamit Nobel by stuffing its stock into the United States banking system.

"Why should we send our representatives to the disarmament conference at Geneva- while the Fed is making our Government pay Japanese debts to German Munitions makers?

All over the web, I read spurious analysis that often starts with, 'This GLOBAL banking mess has never happened before!' This false story irritates me to death. Since the birth of banking, it has been an international/trade operation. Nay, banking was launched ONLY for international/trading purposes! And funding wars, of course. The bankers were more than happy to lend to foreign lords so they could go to wars.

But the international character of banking is the basis of banking. Banks were NOT started so people could buy property! In the Middle Ages, there were several interesting ways of gaining property: war, marriage or fealty deals with kings. And the Church gained via death bequests. And kings seized this property from the Church in various ways like Henry VIII of England. People didn't buy land.

There was another way: trading one property for another. But the preferred way remained the most ancient: sex and war. And frankly, we are never far from this. The US did this recently to Iraq. We wanted the oil so we invaded.

No, banks were mainly for traders. I have seen short histories of banking where the authors would explain that people would want to protect their gold by giving it to a banker with a safe.

But why would they do that? If they were rich enough to have gold, they were rich enough to hire guards and to hide the gold, themselves. No, the people who parked money with someone else were the traders who had to move from place to place. And they didn't park it with anyone. They had to park it with a family they could trust, one that had members across Europe and Asia. So a simple letter would effect a transfer of value from one place to another.

All paper currencies are contracts. I wrote about this in the past. If you read the language on older paper currencies, they are obviously contracts. The very first paper money issued by the new US government were covered with fine print detailing how the notes were issued, how they could be used and who was responsible for REDEEMING them! An important issue that is now hidden totally from the unsuspecting public today.

The conservative Congressman from 1934 is basically complaining that the US dollar was now being used for global trade and bills were being created overseas that eventually turned into dollars and thus, the US lost control of its own currency!

Well, this is happening today, in spades! The world mostly uses dollars and so, they create dollars via debt creation. And no one created more 'debt for export' than Japan. The Bank of Japan, not the Federal Reserve, is the real agent who is 'printing dollars'. But this is not discussed at all by much of the media.

I saw in a New York Times editorial the other day, a long chat about the economic mess. Like most people, the unwinding of this mess is blamed on US home owners who are too deep in debt. As if they could magically make these debts appear! Now, the government must bankroll a reduction of these debts. And the banks which manufactured money in Japan and then parked it here, will demand the Treasury and the Federal Reserve turn these Japanese debts into AMERICAN CURRENCY. Which flows back overseas again!

Click here to see photos showing the course of hyper-hyper inflation in Zimbabwe:

If you think that the current economic crisis is something that has never happened in history before, you may be wrong! After the collapse of the agriculture sector in Zimbabwe in 2000, the inflation in that country skyrocketed to 231 million percent a year! Just think about it - 231 000 000%! Unemployment went up to 80% and a third of country’s population left it. Let`s now have a look at the photos that you may not be able to see anywhere else in the world. Here is a boy getting change in 200 000 dollar notes!

Not a soul on earth wants Zimbabwe's paper money. But everyone on earth wants dollars. If all the dollars floating about the planet suddenly come home, this is what it would look like: to buy a one pound loaf of bread, you would need 10 pounds of paper money. This, of course, makes no sense at all. But Zimbabwe shows that hyperinflation isn't just a Weimar nightmare. It can happen to anyone.

So it is now time to visit the Federal Reserve to see what is going on this week [click on images to enlarge]:

M1 money stock:

So, this last week, the Federal Reserve increased the basic money supply exactly the same amount as on 9/11. At 1% interest post-9/11, we saw a global equities inflation bubble. Then, when the climbing money supply leveled out, we saw a commodities inflation spurt! This was all the US dollars coming out of hiding when it could no longer be parked on top of global housing or stock markets.

Now we are at a LOWER interest rate and the same day, the Fed jumps the M1 money supply. And smart people will bet that we get a repeat of the previous 5 years. But this cannot happen unless first, enough debt disappears via bankruptcy.

In the previous downturn, that idiot, Donald Trump, went bankrupt. Then, he got even more money to waste on stupid real estate deals. When he goes bankrupt again, this will prepare the ground for him to get even more loans to do this again. Unless he gets arrested.

Right now, the central bankers are struggling to prevent the cleaning house via bankruptcies. They hope to increase lending and increase trade without first eliminating at least 50% if not 100% of the previous dollars created between 2002-2006.

Monetary Base [BASE]:

The monetary base ceased growing in Asia so it is now being artificially grown here in the US. Only we didn't allow for most of the previous, Asian-manufactured debt to be cleared out via bankruptcy. Nor has the Derivatives Beast been able to munch on much more than just $3 trillion of the $66 trillion in funny money deals created by the bankers seeking ways to lend like crazy despite risks.

Total Borrowings of Depository Institutions [TOTBORR]:

In all the previous years of our nation, we never, never, never saw this sort of insanity. The 9/11/1 borrowing binge was billed as a one-time thing due to a direct attack on Wall Street that killed many of the workers there as well as halting trade for a number of days.

But that has been utterly dwarfed by the present rescue. Was America attacked? Did Wall Street shut down? Has anything happened at all? As far I am concerned, the charts agree with me that the trigger event was in July, 2007: the day the carry trade with Japan suddenly began to unwind. This is a most singular event. It is being deliberately ignored not due to stupidity.

The actors on stage who did this to us still run things. They very definitely want the carry trade to resume. The G7 central bankers all yelled that they wanted this! It was in the news this week! They were all blatantly obvious about this. They hope to hide the mess again the old way: via lending this money to the West via Japan. Then, it doesn't show up in any charts!

Except it is very inflationary.

The 4 Horseman Have Arrived Debt, Derivatives, Deficits and the Dollar

By John Riley Chief Strategist

Grim graphs! The debt to GDP is now nearly double what it was in the Great Depression. And that was due to the GDP being very weak! Our GDP has barely begun to decline. But it is showing signs of decline.

On the other hand, when gasoline was selling above $5 a gallon, I saw nearly no one in the malls. This week, thanks to inflation temporarily receding, I see packed stores again. So we know that inflation is merely pulling back slightly before unleashing even worse effects: identical to the 1970's.

We know that foreign powers sold or refused to buy US Treasuries. It is not only irresponsible, it is treason for our government to be run in this fashion. Our loss of sovereignty is tremendous. Few people see this but it is obvious in trade statistics: the US sells Treasuries and debt in direct proportion to demands by our trade rivals to open our markets and allow them to destroy our own economy. Ergo: it is treason.

Now, after all this grim news, we go to the Middle East again:

Gulf Citizens Beg for Bailout Amid Stock Rout: Week Ahead

(Bloomberg) -- Abdullah Hajeri led a march on the Emir's palace in Kuwait last week, demanding the oil-rich nation's ruler stop stocks from plunging. Adnan Mohammed Saleh, down the Persian Gulf coast in Dubai, said he wants more government protection from the global financial crisis.

``Every day the market is crashing,'' said Saleh, a 42- year-old trader, staring dumbfounded last Tuesday as company names scrolled across the Dubai Stock Exchange's outdoor ticker in red. The region's rulers are under pressure from citizens to shore up investors, not just banks, as they try to fend off what may be the worst economic crisis since December 1998, when oil at $10.35 a barrel forced them to slash spending.

Crude prices have fallen 50 percent from a record $147.27 in July, and stock indexes in Dubai and Saudi Arabia are down by as much this year. Gulf economies are more susceptible to financial turmoil than in the past because of their greater dependency on international expertise, investment and tourists to diversify away from oil. While Dubai, home to the world's tallest building and the man-made Palm Island, is considered most at risk, no part of the Persian Gulf will go untouched.

Residents of the region are used to government intervention. All Gulf countries are run by unelected rulers who maintain political power through tribal allegiances and marriages. Generous state welfare programs have traditionally damped demands for more political participation.

How the region's rulers cope with the turmoil may define relations with their people in the future, as they try to wean their subjects off state handouts and encourage them to find jobs and embrace market capitalism.

``There's no question that it sets back the move from socialist, paternalistic societies toward more modern capitalist states,'' said Gabriel Stein, a director at London's Lombard Street Research, which provides economic analysis to investors and companies. ``It is a trend that we have seen all over the world. The immediate reaction is that you told us to do this, so now things are going wrong it's up to you to help us out.''

Unlike Asia, the Middle East generally consumes rather than builds industries. The only possible exception for this is in Turkey, Iraq, Iran and Palestine. That is, when Palestinians are allowed to build anything at all. This is due to historical cultural biases. But the proto-nomads of the desert view money as loot. To be spent having fun. Frankly, this is now our own ethos.

Profits are windfalls, not via labor-added manufacturing systems. Now on to the Jewish director in London: cutting back on 'socialism' in the oil pumping nations will lead directly to revolutions. For these are people who remember and know how to do something: fight.

Which takes me back to history: revolutions and wars are very intertwined with economic matters. And banking can launch a thousand ships or inspire a million revolutionaries. And there is one big revolutionary who just cannot wait for the kings and sheikhs to cut social services!

This is bin Laden's plans! To have the biggest rulers of Muslims fall before the sword as outraged people swarm the palaces and behead them! And the chances of this happening is around 50% right now. Give people no money, no hope and no way out and they will be willing to die, fighting. The Jewish freedom fighters in the Warsaw ghetto fought with all their hearts, contesting every inch the Nazis tried to gain. Ditto, Stalingrad.

There are many historic battles of this sort. This is why Chinese generals warn their fellow generals to always allow an 'out' so the opposing armies can retreat rather than stand and fight. The western pundits advising the king of Saudi Arabia, a despot who got the throne via murder, that he should encourage his people to become 'capitalists' is pure insanity. They will become DECAPITISTS. Namely, 'guillotine experts'. Or in their case, they use swords.

And guess how much oil these revolutionaries will sell Europe and the US afterwards? And if you want to see hyper-inflation, if the price of oil hits over $500 a barrel due to revolutions and civil wars sweeping all our pets from power, we will see tremendous inflation.

Bloomberg:

Of the Gulf states, Dubai may be hardest hit by a global economic slowdown because it has borrowed more to finance its transformation from a Persian Gulf trading post to a financial and tourist hub, and has only 4 billion barrels of oil reserves. Government-controlled companies owe at least $47 billion, more than Dubai's gross domestic product, and they will continue to accumulate debt faster than the economy grows, Moody's Investors Service estimated in an Oct. 13 report. It concluded that Dubai may need financing help from Abu Dhabi.

Many bankers and others are running off to the Middle East to beg for investments. Or running off to Asia. But the price we pay is very high! This is a boon that has many strings attached. And these strings will strangle us. And this is all due to the fact that we ceased being profitable. We are not a capitalist society.

We are in a debtor's prison.

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