Inflation Flying, World Stocks Frying In Hell

Elaine Meinel Supkis

Usually when the stock markets decide to tank, I am on a roof all day. So it was today. I climb down the ladders and hear the news on the radio. Well, with all the cheerleading in the media, of course, this all comes as a shock rather than, in my case, expected. After all up until this summer, everyone expected oil prices to drop like a rock and the $60+ a barrel would be history. Well, it is history: we may never see so cheap a price again. Now energy inflation is flailing the cheap labor engine of constant low prices coupled with high profits. And Japan, ahem, may have to start charging interest, too. THIS is going to slay all the financial funny money men! EIIIEEE!

From Bloomberg:

The yen headed for the first winning week in seven versus the dollar as a slump in global stock markets caused investors to sell higher-yielding assets they bought with money borrowed in Japan.

The currency yesterday gained the most in 10 weeks versus the euro after the Dow Jones Industrial Average had the biggest drop since April 13, prompting traders to cut so-called carry trades. Asian stock markets followed on concern rising global interest rates will sap consumer spending and corporate profits.

``The carry is going to come in for a bit of a pasting as Asian markets will be rattled,'' said Paul Milton, chief dealer at Societe Generale SA in Sydney. ``There will be yen strength.''

I figured five months ago that the yen would drop nearly dead and Miz Japan would hammer her yen in various ways to keep him in bed as the world's sickest, weakest currency. Despite pounding him with hammers and sawing him in two, the yen just keeps on getting stronger and stronger deep inside. And when the much weaker yuan beat up the yen, Miz Japan laughed and gloated that SHE would outsell China in the USA!

Well, she did for a few weeks. And then noticed what the Dragon of China was waiting for: to buy up Japan's yen super-cheap! HAHAHA. The downside of having a fake weak currency means anyone with a $1.2 trillion FOREX reserves can play super-gangsta money games with all other currencies that are weaker! So now, snarling, Miz Japan has stopped beating up her own yen and is now moving to protect it before she wakes up some fine morning with a rather irritable Dragon in her bed, one wanting to talk about Comfort Women. Euuuuo.

From the Bank of Japan:

``The size of any carry trades that would unwind is relatively small compared to the entire foreign-exchange market,'' Watanabe, vice finance minister for international affairs, said in a speech at the Euromoney Japan Forex Forum in Tokyo today. ``I don't think carry trades pose a risk of a sudden unwinding, but we still need to monitor these trades.''

HAHAHA. Everyone running these banks loves to lie! I suspect they all take lie detector tests and anyone caught telling the truth about anything except perhaps their own names, are eliminated. The biggest liars get to be the ones who tell us what is going on.

The entire world economic financial funny money system that feeds all the three-headed hell hounds of the finance world, all those dark named, dark dealing dudes, this system's mainspring is the damn Bank of Japan and its insane lending policies that are designed deliberately to make the yen weak and sickly. Well, now they must raise rates...FAST. Or all those stupid, sick yen will be eaten by a certain rapacious Dragon next door. And on top of this, Baby Dragon shot more missiles into the seas next to Japan. Japan won't apologize for WWII but they are sweating bullets about WWIII.

This is why Japan's leader is meeting with Putin at the German Gee, I Ate The Dog Meetings this week. The diplomatic photos show Japan's Abe sneering and looking away while an obviously disgusted Putin barely holds out his own hand. This is in stark contrast with Putin's visit with Hu: red carpet, lots of martial arts and pretty women, flowers and toasts. Cheers! The Chinese Dragon is watching all this with utter joy. It is winning every round, relentlessly.

From Market Watch:

Reflecting the third straight day of significant losses on Wall Street, Asian stocks dropped in early trading Friday. Japan's Nikkei 225 fell 1.2%, Australia's S&P/ASX 200 dropped 1.49%, South Korea's Kospi lost 0.81% and New Zealand's NZSX-50 was down 1.09%.

OH MY GOD! Stop the presses! There is INFLATION! IN JAPAN, even, wot?

Of course, just like the last round of this game in February when the Bank of Japan was forced to raise interest rates from .25% to .50%, China decided to spook its own stock markets. Blah! All the markets tanked around the world so Japan put out lots of notices that there was no inflation in Japan! And killed a couple dozen more jobs and reduced wages on workers and crushed everyone in Japan flat as a pancake and on the game rolled and the yen got 10% weaker!

Banzai! Kill that darn yen!

Well that didn't last. Despite this stupidity, of course, the Chinese raised the value of the yuan. And we come in this circle: if Japan focuses only on rival ecnomic industrial powers in Europe and the USA and undercuts anyone exporting the Japan by making every import into Japan super-expensive while the weak yen makes exports to these same nations super-cheap, this is a nifty game if it is only Japan versus the European Union and USA.

But the game is greater with China who is the biggest importer of value-added goods to Japan! And a super-weak yen means anything Japan buys that is made in China--has to be paid by yens. And each yen is parked in the Chinese Dragon's cave called its FOREX reserves! And each day, the communist Chinese leaders read the numbers and rub their clawed hands together and gloat, dreaming about when they can dominate Japan like they now dominate the USA!

From the BBC:

Witnesses said the unrest, in the city of Zhengzhou in Henan province, was sparked on Wednesday after a student was beaten by police.

She had been selling items on the street, apparently without a licence. There was an argument and reports say officials broke her front teeth.
*snip*
Six police officers have now been arrested for their part in the disturbances and their superiors have also been reprimanded

I keep saying, rioting students are a good sign. It means they are feeling life and hope and love and desire and..revolution! They want change and are willing to fight, even die, for it! China's rebirth is dated from the great Tiananmen Square uprising! They were brutally crushed yet their spirit is what infuses all Chinese who feel strong and energetic. In stark contrast to Americans who are hang-dog and helpless while they are pushed around by the elites. They can't even stop a stupid war they hate! Helpless. We should look to the Chinese for lessons in resistance and fighting back.

From the USA Treasury Department:

There has been a great deal of discussion at this conference and elsewhere about how to improve international tax rules. Today I would like to focus on the U.S. tax system, and the impact of the U.S. tax system on the competitiveness of U.S. businesses in global markets.

Competitiveness is a word that is used a lot. It is something Secretary Paulson, since coming to the Treasury Department last year, has focused on. Competitiveness has many possible definitions, depending on the context, and means different things to different people. Today, I'd like to outline my thoughts on how the U.S. tax system plays a role in our ability to compete in the global marketplace.

A key objective of any country's international tax rules is to ensure that its tax system interacts with other countries' tax systems efficiently, preventing, to the greatest extent possible, double taxation of business income and capital, while encouraging investment.

They are meeting this week to devise more ways to coddle the guys who are shipping all our jobs overseas. These negotiations always have one final effect: they cause our manufacturing here to collapse, they cause millions of Americans to lose the better-paying jobs both blue and white collar and they make our rulers much, much richer. So they obviously are going to improve things for themselves and make things harder for us and they want more and more and more RED INK!

Note that China's leaders are raising taxes and cutting out excess foreign commerce. They want to start forcing everything to be more oriented to the domestic markets. They are happy to announce, car sales to Chinese rose to 2.5 milliion this last five months. They will shove us out of the world's oil markets and this is why we are seeing both inflation and a looming nasty recession: world oil prices won't drop below $60+ a barrel at this rate.

From Hearld Sun, AU:

WORLD oil prices rose overnight as traders digested news that US refinery production fell last week as the peak-demand season for petrol kicks off.

As I showed in earlier postings here, the USA is buying GASOLINE overseas and this is making our trade deficit much, much worse as well as all the oil buying. And this is the ultimate reason why most of the world is now seeing inflation. The USA's over-consumption of oil and gasoline is sucking up everything and we are willing to pay more and more rather than cut back. People are still buying SUVs, I see them all over the place and they are being still churned out by our demented automotive industrialists. Since China is using more and more cars and we are guzzling more and more gas, this is the definition of the Hubbert Oil Peak: production can't keep up with consumption. And the whole sheebang then sees greater and greater inflation.

From Forbes:

If that 5% yield on 10-year bonds is sustained, Shin said, the impacts would be felt down the road. "You would see more distress in housing and some pullback for the consumer if debt is more difficult to pay off," he contended. The 10-year Treasury yield is used as base for setting other interest rates, including those on adjustable-rate mortgages and credit-card borrowings.

It is unusual that the overnight rate is higher than the 10-year yield. With U.S. economic growth modest but expected to accelerate and global inflationary pressures growing, it seems more likely that the long-term yield will rise to return the relationship to normal, rather than the Fed cutting short-term rates.

Humpty Bonds sat on the wall. Humpty Bonds had a great fall and broke Humphrey Stock Market's head. All the Banks of Japan and Federal Reserves couldn't prop up either Humpty Bonds or fix Humphrey Stock Market's head.

From the Nikkei, Japan:

Firms Rushing To Issue Loads Of Bonds Before Rates Go Up

TOKYO (Nikkei)--Japanese firms such as Nippon Yusen KK (9101) and Asahi Breweries Ltd. (2502) will soon engage in bond issues as they look to tap funding before interest rates increase.

And that is why we saw so much finacial activity this last four months. As I explained before, everyone knows what is going to happen and so they wanted to the the last goodies before the Bank of Japan raises rates. New Zealand raised rates with no warning to the shock of anyone with their head buried in the ground. And the Bank of England passed on passing on rate hikes but already, all the money guys are in a panic, they know inflation has taken off so they will rush the bank there and take as much out as possible. All around the planet, we are seeing a rush on National Banks as everyone rushes to get last minute 'free money'.

From the Economist:

A QUICK break, then back on track. To many on Wall Street, America’s slowdown looks more like a pit-stop than a protracted stall. Yes, the economy ground to a halt in the first three months of the year, growing by a mere 0.6% at an annual rate. But judging by the most recent spate of statistics, it is revving up again nicely. Job growth is strong, manufacturing is on the mend and, by some measures at least, even the housing market is showing signs of life. Most forecasters expect output to grow by an annualised 2.5% or more in the second quarter.

Gads. I think this stupid magazine should be called the 'Idiotomist'. The world's markets are going to shift now! And this shift will be China leading everyone to the exits as everyone decides the up to their eyeballs in debt USA can't take on anymore credit! And our outrageous trade deficits will turn against us starting with the competition for oil and gas! And China is now working with Russia on this very matter. The biggest gas provider to Europe and Japan is very irritated with both and feeling friendly towards China and this spells our collective doom.

For not only are we competing with China using money to buy energy, we are in a diplomatic race to influence energy sellers so they make nice deals for us and look! We are KILLING THEM! Threatening them! Europe is mad at Russia's energy policies?

Well, parking a bunch of attack missiles on Russia's borders means Russia will turn off the spigots! I wonder if Europe figures this out in time. Then there is Iraq and Iran: both are very angry with us and hope we go to hell. And many of their people will push us into hell in an eyeblink. Threatening them and killing them only means they will try to take us down with them. And since high energy prices are killing us, why are we making this worse and worse?

Most of the Mainstream media who cover financial matters are right wingers. And they love rightwing stupid stuff like super-dumb diplomacy. And they love free money and beating up peasants. So they can't see the obvious when their own stupidity causes world events to blow up in our faces. And I see absolutely nothing good ahead!

How stupid can these people be? Well, history shows us, they can be utterly stupid.

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Comments

[Liberal AND Proud]

Gee, Mr. Smith has been unexpectedly quiet.

Has he gone to Washington?

[JSmith]

"Usually when the stock markets decide to tank,..."

I wouldn't call a 1.5% drop a "tank" - remember the Great Crash of Last February?

The market has been so high for so long that anything like this is a buying opportunity.

"It means they are feeling life and hope and love and desire and..revolution!"

'Tis the season when wild oats are sown. I can see a couple of kids meeting at a demo, all full of proletarian fervor, and going back to the apartment after to hump their randy little brains out. Did that myself, a couple of times, although by the time I got to college the big demos were over; we were protesting against Chilean grapes or California lettuce or somedamnthing, I forget what.

"In stark contrast to Americans who are hang-dog and helpless while they are pushed around by the elites."

Or as I said in the other thread, maybe we just have more entertainment options.

"the USA is buying GASOLINE overseas "

Because, thanks to the enviro types, we haven't built a new refinery in 30 years. Way to go, greeners.

Elaine, something I love about you is your utterly restrained writing style. You never overstate your case!

[JSmith]

There's an interesting photo here:

http://elainemeinelsupkis.typepad.com/
media_news/2007/06/ucla_drive_to_r.html

Where are the burning cars, the clouds of teargas, the riot squads, the troops? What an utterly peaceful yuppified "demonstration"! A gaggle of small children running around, a couple of people sitting down and taking a break, and is that woman in the left foreground making a freaking phone call? What the hell way is that to take it to the streets?

[DeVaul]

"The market has been so high for so long that anything like this is a buying opportunity."

Priceless!!! Straight out of the drooling mouthes of those hoping to strike it big right before the crash of 1929.

Smith, you do understand that all of the ultra rich insiders are SELLING off ALL of their stocks, bonds, pieces of paper and moving their money into other places that they know will be safe and that this has been going on for almost a year now.

I would advise you to do the same, unless your money is stuck in the market in some 401k plan.

Later, the lower level chumps will all say: "They told us to buy! Yet, they were selling behind our backs! How could they do that to us! We trusted them!"

They always do it. It is how they become super rich. Deceit does not produce anything good or useful, but it can make you rich while ruining everyone else.

[Cato]

Mr.Smith,

Jesse Livermore knew the ability to sit pat was the best characteristic of a stock operator. "Feeding" shares to the public through insider sales, IPOs and just the transfer of paper from strong hands to weak takes a very long time. No need to upset the apple cart when the whole point of Wall Street's gig is distribution. Condition the folks to buy the dip, reward them with gains and they'll always come back for more. However, there always comes the time when the music stops and the technical operations finally take a backseat to the ugly fundamentals. A sell-off is a buying opportunity until it's not.

As to American strength and freedom to choose as exhibited by entertainment options; I suspect the only resistance and outrage, much less, evidence of a pulse will come when the cable or satellite gets shut off.

The oil industry is no fool. They see the handwriting on the wall. Why spend billions building new refineries when crude oil reserves are headed down the right slope? Would you want your bonus used that way?

[Elaine Meinel Supkis]

Who wants to live next to an oil refinery? Its all about NIMBY. I remember when Mayor Koch whined to me that everyone is crying NIMBY. I shot back, 'Our back yard isn't you garbage dump!'

And so it is: Americans want to guzzle gasoline but don't want the dirty stuff manufactured here. This goes for everything else. Ergo: hideous trade deficits.

[DeVaul]

"The oil industry is no fool. They see the handwriting on the wall. Why spend billions building new refineries when crude oil reserves are headed down the right slope? Would you want your bonus used that way?"

This is very true. It has always been my suspicion. When big business really wants something, they just roll right over the tree-huggers. Big Oil made no real fight to build any new refineries.

However, many of them have spent part of their bonuses on building personal fortified compounds that run on solar, wind, and possibly even geothermal energy.

Ignore what people say. Just watch what they do.

[Daliwood]

"...thanks to the enviro types, we haven't built a new refinery in 30 years. Way to go, greeners."

That's a nice cut and paste from the Republican playbook. It's one of their many bumper-sticker philosophies that plays extremely well to people who don't want to be bothered by facts or thinking.

The conservatives, especially oily Cheney, love to repeat this mantra about refinery construction because it's a single lie that can serve 2 purposes: It provides an excuse (a false one) for higher gas prices, and it slams anyone who cares about environmental issues.

But look at the facts. Refineries are proposed, constructed, operated, and wholly owned by the oil companies. It was their decision to limit refining capacity in the US that kept new ones from appearing, not opposition from environmental groups. Maintaining a totalitarian control on refining capacity is an essential part of big oil's manipulation of prices. More refineries would challenge that control.

Second, as noted above, the oil companies don't even propose construction of new refineries now because they know they'd be investing billions in a production facility that will soon be without feed material.

Third, I worked for over 20 years for the federal and state agencies that would grant permits for the construction and operation of large-scale, energy-related facilities such as oil refineries. Not once, not one single time did I ever even hear a rumor of a permit application for an oil refinery coming in. That's right--in my 20+ years in environmental regulatory agencies, the subject of refineries didn't come up once. Isn't it odd that the "enviro types" have been able to stop projects that weren't even proposed? Hmmm. They must be significantly more powerful than I suspected. In addition, for the past 7 years, the agencies that would grant such construction and operating permits have been in the hands of right-wing, unethical, anti-environmental zealots and oil company lobbyists like Gale Norton who would have signed off on bulldozing the Vatican and throwing the rubble on an endangered species. Do you really think the feds are going to say "no" to any oil company because Greenpeace said, "We don't want that permit to be granted."?

Hence, Smith, for your cavalier parroting of right-wing propaganda to be true, you'll have to name several refineries that were seriously proposed (with applications for permits submitted) and then provide evidence that the project was abandoned because of pressure from external forces in the environmental movement. (Ask Cheney for the list--I did.) I know you can't do it, because I know it didn't happen. But again, when have conservatives ever given a tinker's damn about the truth?

[Elaine Meinel Supkis]

And why did the Germans try to kill GREENPEACE protestors in boats and used helicopters to destroy GREENPEACE balloons?

Geeze. The GREENPEACE people aren't stopping anything. Note how France blew up their ship that was protesting French nuclear bomb tests!

If they want refineries, they get them. If they want to blow up huge nukes in the desert, they up and do it. If they want to fucking invade oil pumping nations, they invade. Nuff said,

[JSmith]

What. Ever.

[DeVaul]

You just got owned, Smith. As usual.

[John]

Game, set and match to Elaine.

[some fat guy]

Elaine - you haven't been listening. My buddy Hank Paulson supports a strong dollar and our boy Ronald Regan proved that deficits don't matter. Don't you watch Fox News? Get ready for the second wave of the bull market. The U.S. is now an ownership society. USA! USA! USA!

[Elaine Meinel Supkis]

Yeah. Owned by the Chinese.

[DeVaul]

My Chinese fortune cookie said yesterday:

"Congratulations! You are now an owner!"