Cartoon from a year ago.
Elaine Meinel Supkis
The Chinese communists once more poked at the capitalist system and discovered the extent of China's economic powers. A panic attack ensued and lots of Americans lost money. Hmmmm...they say to themselves. Hahaha. Today, the stock market in China fully recovered but the rest of the world is still circling the toilet bowl flushed by the Chinese communist party. Sigh.
BEIJING, Feb. 28 (Xinhua) -- Chinese shares bounced back from the heaviest losses in 10 years Wednesday, as the major index gained 3.94 percent.The benchmark Shanghai Composite Index, which tracks both A- and B-shares, surged 3.94 percent, or 109 points to closed at 2,881.07 points.
The component index of the smaller Shenzhen Stock Exchange jumped 3.19 percent, or 248 points, to end at 8,039.70 points. Turnover on the two bourses totaled 136.08 billion yuan (17.01 billion U.S. dollars).
If you go to the BBC, they have lots of news about how the whole world is still screaming and running around like maniacs, everyone jumping metaphorically out of windows, shrieking. But the Chinese are back and buying and not freaking out at all! Years ago when I used to argue financial matters with economic professors and others online, everyone made fun of me for reading and citing 'Xinhua News'.
They called me stupid. They told me Xinhua News was full of lies and propaganda. I warned them that ALL news is propaganda and most of them lie reflexively. Refusal to read important information sources means closed minds. And why do people close their minds?
They are scared. They want to project upon the world their own dreams and desires so this can't be ruffled by contrary information. Today, I stand nearly alone in knowing what is going on. This is because I know that China now determines the world's economic fate. And the Communist Chinese running that huge place are now in total control of all levers of economic power and they intend, they very certainly----they TOLD ME---they will use this power to extend their own power and thus, triumph over 'the imperialist west.'
Anyone who thinks this isn't their bee-hive collective mind is nuts.
Xinhua News even thoughtfully explains fully what happened yesterday.
Securities analysts said the culprit behind the "Black Tuesday" panic was a rumor that China is to levy capital gains tax on retail equity investors.However, as the Ministry of Finance and the State Administration of Taxation blew out the rumor, Chinese shares regained their momentum with the recovery of investors' confidence.
HAHAHA. So, Chinese officials launched this crash and then they gently told the investors in China who read Chinese newspapers, 'Just kidding.' I must be the only person in blogland who noticed the Chinese communists are holding a big meeting this month to discuss our futures. A great time to see what control they have over our lives.
Namely, it is total. Arf.
It is interesting that a new fad is sweeping la-la land people in America.
By ALLEN SALKIN
Published: February 25, 2007
THERE are some surprising secrets behind “The Secret.”Peter DaSilva for The New York Times
INSPIRATIONAL Esther and Jerry Hicks, authors of “The Law of Attraction,” in their bus.
For one, most of the millions of people who have seen “The Secret,” a documentary that is the biggest thing to hit the New Age movement since the Harmonic Convergence, may not know that there are two versions of the film.In both, “The Secret” intersperses interviews with authors and inspirational speakers who specialize in personal transformation with short dramatized episodes to deliver a message about how positive thinking will improve one’s health, wealth and love life.
The secret that the movie purports to reveal after millenniums of obscurity is “the law of attraction.” This principle, said to be known by an elite few, including Beethoven and 19th-century robber barons, holds that the universe will make your wishes come true if only you really, truly believe in them.
This is a very popular notion that crops up a lot in human cultures. I wrote long ago about the Cargo Cult and how the USA has devolved into just that. We expect the Chinese to keep ship after ship coming over to the USA carrying tons of goodies and in return we give them increasingly worthless pieces of paper with a magic pyramid on it. Whoopee. I have often noted that people want Santa Claus and the Tooth Fairy and have collectively decided this is reality and the IOUs these two hand over to us every time they give us goodies, don't matter.
Hard reality always triumphs over magical thinking. This doesn't stop magical thinking from happening. Indeed, the people using this methodology end up committing crimes because the satanic rule is, 'Do as you will' which means, making one's dreams come true is good no matter how many people are destroyed making this happen. What interests me is how this childish feeling operates. Beethoven, for example, lived a terribly tormented life. Because of his deafness, he was rapidly losing the one thing he needed and loved. So he used vast reserves of titanic willpower to continue forwards.
And quite frankly, it drove him increasingly insane. He ended up unable to live with anyone but this simple lady and her young son who didn't mind his howls of rage as he pounded at his piano that had no legs and rested on the floor so he could feel the vibrations! So it is with all this sort of thinking: the harsh reality is, one has to work hard to make reality work to match our wishes.
Here in America, they used magical thinking to try to explain the drop in the stock market.
The Dow opened down about 130 points and then fell close to 200 by mid-day. But shortly before 3 p.m., stocks took a sharp decline, falling at one point 546 points, more than 4 percent. The index righted itself briefly, regaining more than 200 points but then began falling again.Officials later said the precipitous fall was caused by a technical problem that caused a backlog of sales orders to come through suddenly.
Houston, we have a problem. Heh. In all panic attacks throughout history, keeping the data flowing as fast as the fear is impossible. So it always 'jumps' at us suddenly. Way back during the last 10 years, the guys running the show on Wall Street boasted their new computers will NEVER EVER fall behind! Oh no.
This reminds me of the many put options that were set against United Airlines and American Airlines three days before 9/11 and how this was being investigated and has now disappeared off the radar screens...
The loss wiped out all the Dow's gains since the beginning of the year. It was the biggest single-day decline for the Dow since Sept. 17, 2001, the first trading day after the Sept. 11 attacks, when the index closed down nearly 700 points, the Associated Press reported.
To me, this is very interesting news because yesterday was a hyper-harmonic number day and I noted that the numbers 2+2+7=11 and 2+0+0+7=9 which made that day, 2/27/2007 an interesting number. Visually, it is very pretty for 2 also looks like an inverted 7. Since we now know that this happened because someone in the Chinese communist party said something, this means it was done by humans and it looks deliberate to me. I may be wrong but what a strange coincidence (hmmm).
Alan Greenspan, now that he is retired, can tell the truth.
- Alan Greenspan and the Wall Street nosedive aside, economists think the probability of a U.S. recession this year is fairly low and the likelihood of one in China is even slimmer.Greenspan, the former chairman of the Federal Reserve, warned this week that the world's largest economy — the United States — could slip into recession this year. That would be bad news for the global economy, too.
However, many economists put the probability of a recession at about one in five.
The biggest risk to the five-year-old U.S. economic expansion is that the housing slump might take an unexpected turn for the worse, analysts say. In one dire scenario, not only would consumers and businesses clamp down on spending and investing, but troubles could spread to lenders dealing in risky mortgages, triggering a financial crisis.
Gads, talk about wishful thinking. They must all be reading that stupid magic book and not my blog. The housing slump has barely begun! NO housing slump EVER lasts less than six months. More like 5 years from peak to peak. Except for the Great Depression. It took the GI bill and the new Federal housing loans to restart the building process. Back in the Great Depression one could buy a house but only if you paid cash or at least 40% down! Even in my own youth, the bankers asked for at least 20% down!
Today, it is nearly 0%. If you pay 20% of the price, the interest rate you pay on the mortgage drops. To rig this housing bubble, sellers and real estate agents all conspired with buyers by giving the buyers the 20% downpayment as a separate loan and thus, fooling the banks. In the end, even the banks screwed around by not investigating people's financial histories, etc. All bubbles do this sort of risky behavior and they all pop the same way.
Worse, we can get the sort of madness we saw in the infamous Dutch Tulip Frenzy. Once the price of these bulbs collapsed, tulips went from priceless to worthless. This caused a global depression and this was back when banks were quite primitive. The problem was, the few bankers there were in the world, most of them were in Holland!
The nationwide median price of an existing home sold in January sank to $210,600, a drop of 3.1 percent from last year and the third-largest annual decline on record. The median price is where half sell for more and half for less.So far, consumers — the lifeblood of the economy — have been spending sufficiently to keep the economy moving ahead. The worry, though, is that people who had treated their homes like ATMs — when values were soaring through the five-year housing boom that ended in 2005 — will cut back on their spending as home prices in some markets drop or go up only a little.
Most housing booms last less than five years. This one was kept inflated by inflating the American currency. Namely, the dollars we passed to China lost their value every day the Chinese used our dollars or saved our dollars so the Chinese sent this currency back to our country to INCREASE ITS VALUE and thus it did in the form of loans for all sorts of schemes. Once the re-valuation of our currency can't keep up with the inflation we are causing, the whole thing collapses.
I made a cartoon over a year ago showing how Americans use their homes as ATM devices and how this was very bad because instead of paying off their debts as they age, baby boomers were driving UP their debts in order to buy garbage that is useless in a downturn. The whole movement to pretty up our homes was because this increased its value as an ATM machine and bingo: we get rich!
Tulip mania indeed. This feedback system became the backbone of our economy: instead of investing funds in building factories that make goods we can trade, we used it for pretty stuff that can't be sold overseas, nay, we drove up the trade deficit hugely, doing this!
For the next two years, I'm cautioning people to watch their ratios between good debt and bad debt, and keep liquid reserves such as cash, gold, or silver.Good debt is debt that makes you rich. An example of good debt is the debt on the apartment houses I own. That debt is good only as long as there are tenants to pay my mortgages. If tenants stop paying their rent, my good debt turns into bad debt.
Heh. I used to work for a slumlord in NYC many years ago. He bought buildings where the owner went bankrupt. We would fix it up and then rent it out until the housing market caused the value to rise 50% and then he would sell it. He became quite rich doing this. He taught me a lot.
He NEVER went into debt doing this. He paid cash at auctions. I remember once racing to City Hall in Lower Manhattan to beat out another landlord who let his taxes on a Greene Street building in Soho fall $60,000 in arrears. We watched this building like hawks and the hour it became vulnerable for purchase---the city would hand the title over to ANYONE who paid the back taxes!---we intended to buy it.
Alas, someone who was also a lawyer became aware of this and he made a deal with the owner to save his property and they would be partners! He literally ran into the City offices ahead of me, yelling, 'I'm first!' He knew my mission. 'Rats,' I said.
The economic writer here admits his 'good loan' can swiftly become a 'bad loan'. I must warn people: if the rents drop until they can't cover the costs, the building swiftly becomes a distressed property. And smart people who buy buildings behind in their taxes, etc, won't rush in to buy until the time is ripe and it ceases losing value.
Which is why it takes several years to recover from a housing collapse. Anyone with money will play this waiting game and when it reverses, will rush in to close deals before they rise in value too fast. Most rentals owned by amatures like this fellow, are bought with personal writs. If the guy can't keep up payments, he or she has to declare bankruptcy. Donald Trump did this. He got rich again only by forming a consortium and boasting on TV about his powers of administration which were totally bloated out of proportion but then, he represents the magical thinking style anyway. This works only during bubbles. During collapses, it is horrible because it causes these collapses.
And this is a rat race that goes to the swiftest and the person who can see what is happening next. China now rules the economic roost. So we must watch the Chinese and reading the bland offerings of Xinhua News is highly recommended.
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"Houston, we have a problem."
Really? DJIA, Nasdaq, S&P all trending up today. I wouldn't exactly call a 3% drop in US markets "Black Friday" - but from your viewpoint, every day is Black __day. Black Monday, Black Tuesday, Black Wednesday... you name it, it's Black!
Housing will have to work out the bad debt taken on by the "subprime" lenders - the outfits that loaned to people that would have gotten laughed out of the lobbies of traditional lenders. And the stuff they marketed to these people: no-money-down loans, interest-only loans (no equity there!) etc., is just... breathtaking.
Posted by: JSmith | February 28, 2007 at 11:39 AM
I heard this am that it was a program trading glitch - - - same excuse they used in '87 - - but '87 was a real - um - correction - - - the beginning of Fed interference with the markets - so say the Canadians - - - I hope they continue to interfere a bit more, so I can sell some stock. I can't even read the press reports on this stuff - - - definitely you don't want mom and pop to panic - - - give the fat cats time to move more of their assets offshore.
Posted by: D. F. Facti | February 28, 2007 at 12:10 PM
The problem with these sub-prime loans is that most of them have been repackaged and sold as "mortgage backed securities" to hedge funds and others who did not know what they were really buying. The sub-prime loans are mixed together with prime loans in order to spread the risk far and wide.
How will defaults in the sub-prime market not spread to the main market? How will they be confined to just the criminals who started them?
Ordinary investors now own many of these sub-prime loans and have no idea they bought them. They are part of their 401k plan which is managed by a faceless hedge fund manager or perhaps even a computer.
Posted by: DeVaul | February 28, 2007 at 12:24 PM
Glitch only explains weird afternoon negative slope event:
Glitch Article
Posted by: rouser | February 28, 2007 at 04:41 PM
Yes, the famous hidden surge protection team is at work today. They run the Treasury. They have to keep this game going but my posting of past graphs and cartoons clearly show this whole business is totally unsustainable.
Posted by: Elaine Meinel Supkis | February 28, 2007 at 04:52 PM
"This reminds me of the many put options that were set against United Airlines and American Airlines three days before 9/11 and how this was being investigated and has now disappeared off the radar screens..."
What DID ever end up happening with that???
Posted by: Travel Guy | January 27, 2008 at 05:54 PM