Elaine Meinel Supkis
Today we take a peek under the kimono of Miz Japan to see the Bank of Japan's interest rate history. Japan's ministers must read my blog because suddenly they realized the downside of a super-weak yen vis a vis a rising, stronger yuan. Heh. So they announce, by golly, there is inflation in Japan! US housing report just released says the obvious, the bubble that popped over a year ago is deflating at a faster and faster rate. No bottom here! And Forbes wonders why our government no longer stops interlocking cartels and monopolies. Well, duh. Who owns our government? Ask Goldman Sachs and the hedge hell hounds.
Equity Financing Tumbles As Firms Worry About Unsolicited TakeoversTOKYO (Nikkei)--The total amount of funds raised through public stock offerings and the sale of convertible bonds with equity warrants is likely to fall a steep 70% year on year in the six months through June to about 750 billion yen, the lowest level in four years.
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INSIDE VIEW: MOF No Longer Sees Weak Yen As 'Acceptable'TOKYO (Nikkei)--Growing concern over the weak yen has caused Japanese monetary authorities to quietly shift their stance on yen-dollar rates to being "watchful," after long deeming them as "acceptable."
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Corporate Service Prices Rise At Fastest Pace Since July '92TOKYO (Dow Jones)--Japanese corporate service prices rose at their fastest pace in nearly 15 years in May, driven by a strong gain in transportation prices.
The second or third biggest 'nation' to read this blog is 'unknown IPS'. My middle name, Meinel, is virtually unknown in the US but this is the CIA cloaking device at work. When I go overseas or interact with the UN or other foreign entities, my name is my calling card. Certainly, the entire Chinese leadership knows me personally. Very personally. The rise in sophistication of the Chinese leadership is astonishing. The recent scandal of the slaves forced to work in brick kilns is a throw-back to the older China and the officials who allowed this were old-fashioned. But let's not forget the people running Shanghai and Beijing are not these sorts!
Just as in the deep south we get all sorts of throw-back stuff involving proto-slavery, etc, one doesn't find this in New York City except in hidden immigrant enclaves overlooked or bribed to be overlooked by the authorities just like it is in China. The Chinese leadership is very, very astute and focused on their overall goal which is to disengage the US from Asia bit by bit, very quietly. They know that the brutal scheme of the Japanese has opened the door for China to overwhelm Japan in the monetary game they are playing. Namely, Japan, who no longer dominates the 'Go' tournament circuit--Go being the Asian game of black and white stones that you place on a board that has the same number of days as the year and the object of the game is to surround your opponent's stones and the winner is not who has the most territory or stones but who has the most EMPTY SPACES!
It is a very Zen concept. And if one is playing with number-denominated things, very appropriate for thinking about money and power. Namely, the Japanese, intent on dominating the US, neglected to keep track of the Chinese dragon's patient playing in the international game of monetary finance and even when the Dragon announced they had reaached their first main goal of over $1 trillion in FOREX reserves, Japan continued to focus on the US and not turn and confront the failure of their strategy to dominate the world via controlling the US currency value vis a vis the yen and underselling the US producers while forming an alliance with the hedge fund hell hounds in America.
The failure is obvious: Japan's weak currency means China can take these yen and manipulate THEM. To suit China. They just began to do this about...this month! It isn't in the stats yet but I can sense it like an itch and the news from Japan today confirms I am right for the Japanese can crunch numbers and they probably have some nameless individual in some corner of the Bank of Japan, reading this news service (yes, I also have readers in Tokyo!) passed on my analysis to the guys at the top, some of the older ones who know my dad personally.
The entire Chinese leadership knows both my dad and myself. So the fact that the Nikkei news is suddenly publishing, one right after the other, a series of headlines that in concert, give the Bank of Japan an excuse to begin raising rates is very funny, actually. Yesterday, there was a hint of what is to come with them pondering abandoning the American markets to concentrate on...selling Toyotas to China. This is a tactical move in this ongoing, invisible Go game: the Japanese must get the Chinese to buy Japanese so they can buy up yuan and thus, get a hold of the Dragon's tail at least. Because they see that dangerous head turning and looking at them with a cold, dark orb of an eye.
Home values in 20 U.S. metropolitan areas fell the most in at least six years, weakened by a record supply of properties for sale.Home values declined 2.1 percent in April from the same month a year earlier, according to a report today by S&P/Case- Shiller. It was the fourth straight drop in the group's index, which started in 2001.
The housing market continues to restrain the economy even as other areas, such as business spending and manufacturing, accelerate. Elevated inventories of unsold homes, reduced demand and stricter loan requirements will probably keep prices low the rest of this year, economists said.
Last month, the housing bust was supposed to be ending. This infantile analysis was pushed hard by both the Treasury and the Federal Reserve officers. Anyone with any brains knew this was impossible. Well, today they admit it is not only going down but will do so for a long, long time. Since they are infants and not adults, they still think it is only for a short while. This is silly. The ARM resets have barely begun! There are well over a million houses set to reset to the moon as global interest rates rise relentlessly! There is no way these will reset at a lower rate or be saleable in a declining market which leaves only one option: bankrutpcy.
If the Bank of Japan decides they better not commit hari kari and let the yen die even further and to save their asses, reset the insane low rates higher, we will see a collapse of the carry trade because the differential will be doomed.
Here is the official Bank of Japan's site:
Interest rate histroy from the Bank of Japan:
I have this obsession with the history of interest rates and other banking data and was overjoyed to discover the history of the Bank of Japan and it is obvious what is going on, just look at the numbers! To understand lines of numbers, I color them. In this case, the Bank of Japan playfully changes the data being sorted so I colored the important list I want to track. Note how the data gets thinner and thinner every ten years or so. In the beginning, this coincidentally being when the dollar cut off itself from the gold reserves in Fort Knox, they tracked the rates for export industries, etc. In the last 3 years of data, it is only the Bank of Japan's official rates!
And what a picture this paints! The US went on this roller coaster ride thanks to the Vietnam war and the Cold War military adventures and spending. The Bank of Japan's rates were 'normal', that is, within the range of normality that Bernanke spoke about this week when he mumbled stuff about how we should set our inflation rate. But then, in a key year, starting in 1993, when the yen was at its strongest vis a vis the dollar, suddenly interest rates collapse and continue to fall to laughable levels never ever seen in the entire history of monetarism, going to as close as absolute zero as possible. Now, many a 'reformer' has tried to kill off 'usury' by making the rate zero by fiat! The Catholic Church and Mohammed both took this path with disastrous results. The survival of the Jewish people depended on their ability to charge rational interest rates and the rulers of both religious persuasions had to let the Jewish community survive just so they had some source of loans!
But the Bank of Japan is the first modern bank to play Pope. And this has many destructive consequences for all of us as is obvious to readers of this news service. As usual, I like to compare apples and oranges to see if there are any tomatoes lurking about. So I compared American certificates of deposit with the history of the Bank of Japan's interest rates. During this whole cycle from 1970 to today, except for a very brief period when the yen was very strong and the US went into a Bush recession, the numbers are way out of whack which shows clearly how the US created global inflation in order to deal with the US currency being the world's currency for buying oil in particular.
Year*USA CD Rate*Bank of Japan's Rates
1970.....7-8%......5-6% (Note that they are high but close)
1971.....5-3%......5.25%
1972.....3-6%......4.25%
1973.....5-9%......5-7%
1974.....9-12%....7-9%
1975.....7-6%......8-6%
1976.....5-4%......6-4%
1977.....4-6%......6-4%
1978.....4-9%......3%
1979.....9-13 %...4%
1980.....13-19%..7-9%
1981.....17-13%..6-5%
1982.....13-8%....5%
1983.....8-9%......5%
1984.....9-11%....5%
1985.....8-7%......5%
1986.....7-5%......4-3%
1987.....3-7%......2%
1988.....6-9%......2%
1989.....9-8%......3-4%
1990.....8-7%......5-6%
1991.....7-4%......5-6%
1992.....3%.........5-4%
1993.....3%.........3%
1994.....3-6%......2%
1995.....5-6%......1%
1996.....5%.........0%
1997.....5%.........0% (Note: The Asian Banking Crisis began)
1998.....5%.........0%
1999.....4-6%......0% (Asian Banking Crisis Ends)
2000.....5-6%......0%
2001.....5-1%......0% (Note: 9/11)
2002.....1%.........0%
2003.....1%.........0%
2004.....1-2%......0%
2005.....2-4%......0%
2006.....4-5%......0%
2007.....5%.........0%
For the first 8 years, the US and Japanese rates were similar. Then the US decided to save our economy that was in trouble due to losing the Vietnam war by devaluing the dollar all the way while printing money like mad. This created hyperinflation in the world's premier currency. This destabilized the entire planet. To fix the inflation our government caused by foolish imperial ventures and wild domestic spending to keep everyone happy while losing wars, the Federal Reserve had to raise Certificate of Deposit rates very high to get people at home and across the planet to put money in our banks here in America.
These rates had to rise very high to attract savers and by 1986, inflation began to slow down and also the Federal Reserve and the government cooked the books, hiding real inflation. Over the years, this cooking scheme has been extended so that much of the inflation is now cleared off the books so they can pretend there isn't any even as they print up an extra $2 trillion a year. Yesterday, I showed how the Central Bank of Europe still publishes the M3 statistics which is how we track government-generated inflation. The most recent book cooking by the crooks running our government was to eliminate these numbers.
From 1992 until 9/11/1, the US CD rates were within 'normal' ranges of a low-inflationary monetary system although this was partially fabricated, the real rate was already near to or above the CD rate and the rate of savings in America began to plummet until it reached negative numbers last year. Despite this, the government and the banks have refused to face reality and raise rates. After 9/11, they went nuts and dropped rates to near 0%. But the Bank of Japan was way ahead of us, they did this, dropping it below 1%, way back at the end of 1996---right on the eve of the near total collapse of all those Asian banks!
I smell a rat here. Back then, I said, 'How on earth can ANYONE loan money at that rate? It is unheard of...since the Middle Ages!' And this is certainly true. How the world's monetarists take this development has been at first, puzzling to me but when I finally figured out what they were babbling about when they talked about the 'carry trade'. They and their buddies were making money off this anomaly! So of course, they didn't challenge Japan over this despite mounting evidence that this was harming not just the US economy but was destabilizing the entire world, driving up the euro as well as pouring too much 'liquidity' back into the system with too-low rates thus killing the ability to control inflation.
The U.S. trustbusters no longer appear to object to big mergers, as shown by their lack of concern over Alcoa's (nyse: AA - news - people ) $26.9 billion offer for Canada's Alcon (nyse: ACL - news - people ). The Bush Justice Department's challenges to mergers from 2002 to 2005 were the lowest in 20 years, and the prospects of tougher antitrust enforcement in the next administration is a big incentive to do deals now; so is the possibility of higher taxes on capital gains, dividends and income.the same time, some argue that the federal government has also spurred private equity takeovers by instituting onerous regulation of public companies, especially through the Sarbanes-Oxley Act. Note, however, that the average cost of compliance with that law in 2006, the third effective year, was $2.92 million per company, 35% lower than the first year.
It's also said that private firms can pursue long-term and ultimately more profitable goals once removed from the nasty glare of shareholders and their demand for consistent quarterly earnings growth, achievable with or without creative accounting.
The roaring stock market and easy credit makes shareholders amenable to the novel structures that largely strip them of regulatory protection. They will be allowed to own 30% of Clear Channel Communications (nyse: CCU - news - people ) after its $19.4 billion private equity takeover, but those shares will probably trade in the over-the-counter pink sheets normally inhabited by tiny Canadian gold mine shares and other rank speculations.
Funny, this article doesn't mention campaign finance reforms and cleaning Washington. Well, all this is going to end badly if these guys piling on debts carried over from Japan back to here, building global interlocking monopolies and cartels, if they think this will make them rich as they charge whatever they wish, they are stupid.
You can't sell squat diddley to people with no money. This is the ultimate end of the 'greed is good' philosophy of Ayn Randists like Greenspan and Bernanke. The New World Order will be a crushing affair that will, like the suppression of the people in all the oil pumping nations like Mexico or Nigeria or Iraq, will lead to insurrections, revolutions and riots. Just what Ossam Bin Laden wants.
World military expenditure reached an estimated $1.2 trillion in 2006, up by 3.5 percent over the comparable figure for 2005 and 37 percent over a decade, according to the SIPRI Yearbook 2007, compiled by the Stockholm International Peace Research Institute, an independent research organization.
All the ruling elites are arming each other as fast as possible for the looming confrontation which will be called World War III: the Beast of the Apocalypse. This stupid war will feature MIRV warheads destroying all the major cities. Talk about stupid. The liquidity caused by the US printing up trillions of extra dollars to pay for our overconsumption of Asian goods and world energy will trigger this and stopping this from continuing is life and death and since the rich are getting richer off of this, it won't stop. Nor will the military/industrial complex cease growing while all other important things shrink.
CHINA produced 34% of the world's steel in 2006, while consuming only 30.9% of it, according to the International Iron and Steel Institute, an industry group. This over-capacity is equivalent to some 38m tonnes—nearly as much as is produced in Ukraine, the eighth-biggest producing country. China has ramped up production significantly in recent years to meet demand for its booming economy: in 2006 it produced nearly 20% more than in 2005. Steel watchers have been nervous throughout, knowing that a fall in demand would result in production capacity being diverted to producing steel for export.
This story has a chart that shows how China is 'overproducing' steel. Only if you look at it, there lurks Japan who also is 'overproducing' steel! Of course, the cloaking device they wear hides everything. Instead of a good article examining how all of Asia is overproducing steel, it concentrates all its fire and ire at the Dragon who is under now nearly total sustained attack in Western media. This isn't accidental. Most media stories are first vetted by or set in stone by people who have a political agenda and for some stupid reason, they don't fear the Japanese or they are stupidly conspiring with the empire we fought a very vicious world war with, a nation famous for kami kaze attacks whereby they kill themselves if only they can destroy us too.
The US stupidly let its steel industry die. Once it is dead, we are a sitting industrial duck in the case of a war. We have no more weaving industries or manufacturers of fasteners who haven't relocated their plants to potential enemy nations! I warned the State Department years ago about outsourcing: once a factory falls into Chinese or Japanese hands, it stays there! This is all strategic stuff.
The pound advanced before a report this week that will probably show house prices gained for a 14th month in June. Markets now expect the BOE to follow the desires of Governor Mervyn King and get more aggressive on rate increases going forward. These higher interest rate expectations in the UK, coupled with a weak dollar story, will see the pound sustained above the $2 level. I expect the BOE to hike rates in July with another hike later this year. Aggressive rate hikes by the BOE could push the pound sterling up above $2.05 by year end.The International Monetary Fund will raise its forecast for world economic growth this year and said inflation may accelerate as a result. "Global growth is stronger than we had expected in April," Simon Johnson, the IMF's economic counsellor and director of research, to reporters in Frankfurt today. "Inflationary pressures are definitely building up." This supports our view that global growth will continue to push interest rates higher. These higher rates will eat into the interest rate differential which has been supporting the US$. The FOMC is not going to be able to move rates up to combat inflation due to the slowdown in housing. As rates move up in Europe and Asia, investors will be selling dollar assets and moving them back into Europe or Asia. More negative news for the US$!
Tick, tock, look at the Japanese watch as it swings back and forth, there is no inflation in Japan, there is no inflation in Japan, there is...oh my god! The Chinese are taking over the yen! There IS inflation in Japan, there IS inflation in Japan.
Now I can go off to read the CIA files released today. I bet 99% of the real black ops stuff that involved either the Bushes or the Meinels aren't there today. Nor any of the Cheney stuff and other fun stuff like the Clintons...rats.
alcAn not alcOn, it's not acheat.
Posted by: Eric Bloodaxe | June 26, 2007 at 05:23 PM