Elaine Meinel Supkis
Stock market is up! After Europe and America misspent a huge sum of money in a huge hurry, the markets are back to full bull-shit happy as pigs in slop. But who is buying? Hahaha. Time to talk more about 'sovereign wealth.' The US stock market has devolved into a machine that translates our trade deficit with the world into a fire sale of all US businesses and assets. And as prices drop as we can't buy our own stuff, alien powers pick up cheap!
The parent company of the New York Mercantile Exchange disclosed it has held talks over being purchased and said it could cut 150 jobs and sell its headquarters to trim costs. Nymex Holdings (NMX:128.16, +9.38, +7.9%) , in a statement released late Tuesday following an investor presentation, said it has "talked to certain parties regarding a potential business combination." It said it would expect a "significant premium" to its current share price
Who is this mysterious entity? Does this entity pray to Mecca or pray to Chairman Mao? Can't wait to find out. Up until this month, the Big Banks and the Big Hedge Fund Hell Hounds borrowed money from these people in order to buy each other in a mad debt-drenched frenzy. But today, the real buyers are now showing up with fistfuls of cash. The Sovereigns are here and they are going to be our future rulers. All hail the Sovereign Wealth Foundations! The true New World Order. Bush Sr, in 1991, on 9/11, to be exact, made his infamous 'New World Order' speech. He just made a deal whereby the US military would work as mercenaries for the Arab royals who were on the ropes thanks to Saddam.
This was a moment of tremendous embarrassment for the US, a former empire. Just as it was planning on launching the New American Century, it was forced into hock! Since then, things have gotten far, far worse. Our trade deficit created enough red ink to correct errors on an infinite number of monkeys typing randomly, trying to write Shakespeare's works. 'To be or not to be a bee' for example, would have to be x-ed out with red ink by the Celestial Editor, a graduate of Vassar with pretentions to being a goddess.
Like these monkeys madly typing away---I am assuming this work was outsourced to an infinite number of computers hacked by a young orangatang in Asia---the US imagined we could generate an infinite amount of red ink and over the years, many a commentator, politician and fools on TV have shouted that there is no harm in sucking down infinite amounts of red ink. Red ink is healthy and a sign of wealth and power, not irresponsible misspending! Well, this childish idea is still around but there is some nervousness.
Now we are told, it doesn't matter if our bosses are in China or Dubai! They won't interfere with us. They won't change our politics even if all our politicians are lining up to line their pockets. Nope. These people won't change our nation's priorities, for example. Look at today's news! Someone from one of these foreign powers is going to buy up our energy market's headquarters where prices are set. Ahem. ARGH.
On top of this, insult to injury, a bunch of Americans will also lose their jobs. And this is part of all of these stories. The better the job, the more likely it will vanish. If Dubai buys this, it will move to..hahaha. Guess. Anyway, our madcap rush to sell our souls is working...for other nations. And our refusal to raise gas taxes to match Europe and Japan meant we are now deep in hock to OPEC. And can't compete with China, Europe or Japan in exports since we need to import so much oil and can't pay for it except via cash on the barrel.
The European Central Bank said it will lend an extra 40 billion euros ($54 billion) to banks for three months to lower borrowing costs for commercial banks and indicated it may still raise the benchmark interest rate next month.The ECB's operation will supplement next week's regular 90- day auction of 50 billion euros, the central bank said today. The Frankfurt-based central bank also said ``the position of the governing council of the ECB on its monetary policy stance was expressed by its president'' on Aug. 2.
So, every 90 days, Europe has been infusing 50 billion euros, eh? This is 'magic money' at work with a vengence. And we wonder why so much money is pouring into Russia, China and the UAE pockets! The Bank of Europe now has to raise interest rates because they are DOUBLING the rate of money creation after dumping half a trillion in make-believe money just a week and a half ago! And they said they would do this to INFINITY. Back to the monkeys: if an infinite number of monkeys were printing an infinite number of euros, how long would it be before the entire universe is coated in euros? Hell, let's think smaller numbers here: how many days before the entire planet is covered with Weimar Republik deutsche Mark? A week? A month? Certainly, not a year. Why don't they cut to the chase and begin adding zeros to everything? Zero can rise rapidly to infinity without changing any other parts of the money!
U.S. stocks climbed for a fifth day on speculation the Federal Reserve's actions to stem a liquidity crisis will lead to a pickup in takeovers.MGM Mirage, the world's second-biggest casino company, posted its biggest gain in three months after Dubai agreed to buy a stake in the company. Nymex Holdings Inc. climbed after its chairman said the world's largest energy exchange may be acquired.
Hahaha again. Note who is buying and who is selling. People who are in debt usually have to sell to the local pawn shop. Same with the big guys. They can't loan money to each other anymore so they are selling to the OPEC and Chinese powerhouses. We know how this will end. Learn Chinese. Learn to pray to Allah.
H&R Block Inc., the biggest U.S. tax preparer, said its Block Financial Corp. unit tapped lines of credit because market turmoil has curbed access to commercial paper.Block Financial, based in Kansas City, Missouri, drew down $200 million on Aug. 16, the company said today in a statement. It repaid that loan on Aug. 20, when it borrowed $850 million, the company said.
So, they borrowed from themselves then they went off to somewhere mysterious to get a loan of nearly a billion dollars to keep themselves afloat in this eternal sea of red ink? They can't run themselves. They need outside money, eh?
MORAL LESSON TODAY: you can't have banks if you have no savers. Japan has a bank only because it has a flood of money pouring in from the US. But banks within Japan are nearly dead. Japan is even cutting back on loans to the working class even further. The US has negative savings: all the banks need $250, that is a quarter TRILLION every year to keep afloat. This is a lot of money and if the monkeys working inside the infinite vault at some hidden mountain in the Harz mountains where witches dance naked on Midsummer night, they can fund our banking system forever as we go a trillion into debt on every level, Federal, state and local.
From the NYT, 'A Fear of Foreign Investments':
Officially, the United States welcomes all investments, except those that could compromise national security. “Money is naturally going to gravitate toward dollar-based assets because of the strength of our economy,” the Treasury secretary, Henry M. Paulson Jr., said in an interview. “I’d like nothing more than to get more of that money. But I understand that there’s a natural fear that they’re going to buy up America.”
OK, Paulson is insane. They are not coming here because we are strong, you idiot. They are coming here because we are WEAK. They can buy us because WE can't buy OURSELVES! How simple can it be? How stupid can he be? He is a very rich man who lusted to become the head of the Treasury so he could rake in more money selling us down the river! Arrest him.
Still, a note of caution can be heard. One of the American concerns is philosophical. The United States has for years preached the gospel of privatization, calling on other countries to sell their government-owned industries.Now, with sovereign wealth funds, many experts are asking whether cross-border investment is evolving into cross-border nationalization, raising the prospect of government interference in free markets, only this time, in other countries’ markets.
Another concern is the sheer size and potential growth of these funds. Their estimated $2.5 trillion in assets exceeds the sum invested by the world’s hedge funds. Moreover, Morgan Stanley, in a widely cited study, projects that these investment funds could grow to a staggering $17.5 trillion in 10 years.
Though sovereign wealth funds do not appear to have played a role in the recent turmoil in global markets, experts say they could in the future, in favorable or unfavorable ways — by selling assets abruptly and precipitating a crisis, or by bailing out funds or companies that are in trouble.
Ah, here it is! The Soveriegn Wealth Funds are now bigger than hedge funds in the reckless red ink West. According to these experts, it is going to grow...massively. In 10 years, they will be bigger than the biggest banking systems. Even the monkeys printing euros in the infinite caves under the Harz mountains won't be able to keep up. And of course, the SWF had nothing to do with the banking crash, the entity causing that was the spat between Japan and China over the weak yen. Note that the yen is again, trying to weaken but it was planning on being at 130 to the dollar, not 114 to the dollar at the beginning of September so I still give the laurels of victory to China in this little matter.
My favorite silly-person from the Washington Post when it comes to economics: Mr. Samuelson.
Just a few weeks ago, Fortune magazine pronounced the world to be in "the greatest economic boom ever." This may be, but the turmoil in stock and bond markets poses some unnerving questions. Is the global economy stable? Or might its periodic crises someday lead to a calamity?Go back a century, to when the world enjoyed another fabulous boom. From 1896 to 1913, trade roughly doubled. Declining steamship and telegraph costs were melding countries together. "There was something close to an integrated world market for most goods," Harvard political scientist Jeffry Frieden writes in his book "Global Capitalism." In 1870, wheat prices in Liverpool were about 60 percent higher than in Chicago; by 1913, the gap was 16 percent. European investors eagerly bought bonds of then-developing societies -- Argentina, Australia, the United States.
He starts out just fine for once. I wonder if our arguments in the past have had an effect. He even goes back in history like I go back in time all the time. He mentions a big boom... that was also a depression since it killed profits in the biggest empire on earth, England. Prices dropped and dropped. Farmers in England were slaughtered thanks to railroads and steam ships bringing in the bounty of the US to Europe. England was losing power, fast. Germany and the US as well as Japan, even, were rising rapidly. This boom ended with a big bang, one of the biggest bangs on earth: WWI. This was a boon to America and a total disaster for England.
England won the war only because of the US. And England ignored reality and continued to try to expand its exhausted empire even as this was obviously impossible. The pre-WWI time frame is important. In 1907, the US had a market panic and a banking collapse. Also, just prior to this, we had the Spanish-American war and the terrible occupation of the Philippine Islands. England had the Boer War which was over gold mines. Japan and Russia had a war, too. The world banking system was funding imperial conflicts that were threatening world peace and finally, pitched the whole world into a massive series of wars.
Samuelson:
Compared with this earlier extravaganza, today's boom still impresses. From 1990 to 2005, trade rose 133 percent. Supply chains are increasingly global. Since 1985, imported components as a share of worldwide manufacturing output have doubled, to almost 30 percent. Cross-border money flows (for stocks, bonds, loans, real estate, entire companies) are huge: $6 trillion in 2005, says the International Monetary Fund. Finally, the boom has reduced acute poverty. The share of the world's population living on $1 a day or less has dropped from 40 percent in 1981 to 18 percent in 2004, the World Bank estimates.
And it is nearly identical to the conditions that caused WWI. Small wars show the weakness of the empires. New empires grow rapidly stronger. The industrial base of the world's mightiest empire is collapsing due to free trade and falling prices coupled with rising imports. And there is a banking crisis hitting the empire and its largest provinces, the troubled and troublesome European branch of the American Empire. China is now playing the role of the USA in this new conflict. And Japan is playing Germany while the Ottoman Empire is again, the main flash point.
Of the cross-border money flows, much of this in the US is red ink flowing in and US wealth flowing out. Mr. Samuelson, flirting with reality, actually mentions WWI at this point and he admits England couldn't rule the economic world after that. I must pat him on the back for this.
Today's global economy undeniably faces some big, potentially destabilizing threats, oil being the most obvious. The world now uses 86 million barrels a day; almost a quarter comes from the Persian Gulf. The rise of new trading powers, particularly China, has altered global politics. Conflicts may grow; cooperation may be harder.Global finance also belongs on the list. Anyone claiming to understand today's world financial system is either delusional or dishonest. There are more financial players (hedge funds, private equity funds) than ever, more types of securities (more "derivatives" and more loans, such as mortgages, bundled into bonds) and more cross-border transactions.
Oil isn't a 'threat' except to a certain country that consumes way too much oil compared to other nations. The oil flowing isn't destabilizing, the consumption of oil by the US which is running all its systems deep in the red, this is the destabilizing part of the equation. It infuriates me how people like him gloss over the true nature of what is going on. China is consuming more oil. Well, duh! And they pay for it and they don't run in the red! So they are NOT destabilizing the world. The nation that is paying in red ink is doing this: the USA.
I'm glad he admits he doesn't understand the world financial system. But his contention that NO ONE understands is pure hog wash. I will clue him in to some reality: THE CHINESE UNDERSTAND IT VERY WELL. If he needs proof, all he has to do is look at who is accumulating profits, who is making deals and who did NOT have to dump half a trillion dollars into a bank rescue just last week! DUH. Not only that, I understand the important working parts of the international banking system and frankly, if one has a proper perspective and a good grounding in history, this isn't so very hard to do. I do scramble to keep up with all the funny-money details the debt-ridden West cooks up. This is produced by an infinite number of monkeys in a cave in the Rocky Mountains, clicking away on an infinite number of computers, coding programs that spin money-lending in various creative ways which have to use various funny names to hide the truth that these infinite schemes are variations on the old investment trust funds that were outlawed for good reason.
Time for more fractured Fairy Tales:
Global capitalism, Frieden writes, survived earlier only until it stopped producing widespread prosperity. No problem, say many economists. The U.S. economy may slow (housing remains a drag), but Europe, Japan and many "emerging market" countries have strengthened. The rest of the world is depending less on U.S. trade deficits, which could subside. Government central banks such as the Federal Reserve will prevent any financial panic. Global Insight, a forecasting firm, predicts world economic growth of 3.6 percent this year and next, down only slightly from 3.9 percent in 2006.
The destruction of economies after WWI and WWII were extensive. Russia and China completely ceased to be productive capitalist societies at all. Half of Europe after WWII was sunk into the same depressing circumstances. Fascist looting capitalism survived WWII and is in full bloom in the US as we seek to loot oil pumping nations, for example. Note how they are no admitting our economy will 'slow'. Our deficits will 'subside'. We won't be driving SUVs in that case, much longer. The smug belief that central banks, accessing infinite monkeys making infinite money, will handle any panics is so funny, I think I will slip on an infinite number of bananas, I'm laughing so hard.
He does end this article on a darker note. But not dark enough. This 'boom' was for the USA, a BUST. It was fake. It was unhealthy. The fact that the Fed had to drop rates very low in order to juice up a dead economy after the last stock market crash in 2000. Instead of waiting for things to unfold properly, the government cut taxes and opened the sluice gates of the red ink resevoirs at the Fed and off we sailed, off the cliff. Also, thinking that Europe will prosper is pure insanity. The euro is up not on strength but on Europe's WEAKNESS. They can't drive down the value of their currency like all their trading partners ar doing so viciously. People smarter than Samuelson warned that this present system featuring the most powerful nations deliberately destroying their own currencies for trade advantage, was dangerous and stupid. But nobody listened to these warnings. We wanted imperialist wars, confiscation of OPEC oil wealth, Anschluss with our trade partners to the north and south and a continuation of our easy, pretend-peace time fun and games just like the British upperclasses insisted on playing around right up to the famous regatta off the coast of Jutland in August, 1914, just as a Serbian assassin took aim at the ducal heir of Austria.
Elaine, I have a somewhat different take what happens after the end game comes and goes. Rather than expect we'll be once again off to the races, but abiding by rules laid down by a new banker; I see the whole world taking it down a notch or two or three. America sees the world through a unique set of eyes. The whole world really doesn’t want what we have and they aren’t necessarily experiencing the same “death of novelty” like we are in our culture. I believe the failure is completely self induced. A fractal breakdown of an odd non-linear system brought on by the loss of life’s meaning and the mainstream distribution of psychoactive prescriptions.
I don’t see China lusting for the non-negotiable McMansion lifestyles. It is not in their culture. Japan appears to have bought into certain false concepts of gadget happiness and it’s driving the country mad in my opinion. Europeans have certainly had the material wealth needed to “have it all” but opts not to. They find greater pleasure in the cloak of their cultures and not what some marketers tell them will make them happier.
When the frenzy of the financial market domination subsides combined with the reality that fossil oil energy dependency forces humbler expectations we will all get back to living more like human beings again.
Posted by: Cato | August 22, 2007 at 03:21 PM
Perhaps you are right. Europe used to be very big into the finer things, when I lived there, I bought and wore much better made, higher quality clothes than I wore in America. It was quite noticable.
Posted by: Elaine Meinel Supkis | August 22, 2007 at 07:10 PM
Now those are hedonics that I can relate to. I do agree that craftsmanship, well designed and engineered products are to be admired. I remember growing up with a great appreciation for German engineering and Scandinavian design. Nothing better as a kid than the beautiful style of a high-quality European slide rule or multi band radio.
We truly enjoyed better products because they were manufactured in smaller number, often by hand. You felt you really got something lasting and important. I hope we can get back to that again because it's important for all levels of society to participate in supplying the country's needs including those that appeal to our vanity.
We seem to believe that more diversionary gadgets will do the trick. Financial services are another empty promise. Schemes asking us to pay more for products and services of very questionable value. That's why this stuff is so damaging to us all.
A few weeks ago Ben Bernanke was asked how he invests his money. He claimed he had no particular insights about to do that. So, he put everything into Treasuries and a few annuities worth a couple million. Liabilities: a ten year student loan for his kids. A ten year student loan? Could it be he knows he's going to inflate that debt into oblivion?
A furniture retailer in my town runs ads that never ever show you any furniture. And to most of their customers it probably doesn't matter. The entire sixty second commercial booms on endlessly with assurances that you "make no payments interest until 2012". I prefer to bide my time. With one eye on the Mayan Calendar and the other fixed on my TV set, I'm thinking about taking their deal.
Posted by: Cato | August 23, 2007 at 04:31 PM
A cometary finale!
Posted by: Elaine Meinel Supkis | August 24, 2007 at 09:05 AM