Japanese and Chinese Financial Wizards Begin Currency Wars

Elaine Meinel Supkis

I read many news stories claiming to explain what is going on in FOREX and bond markets. Most are very superficial and nearly all of them contradict each other. This is because the experts are unable to see the underlying connection of diplomacy, imperial economic logic, history and the human brain plus the critical element: magic. The tree of the world's economy has deep roots that are in a dark soil. And we are just insects, birds and squirrels living in the upper stories, wondering about the worms and snakes and moles who dwell below Just as the banking crisis confuses the story tellers, so does the developing news that Asia is now selling US bonds rather than buying them. Time for more speculation on my own part.

From Bloomberg:

Wall Street is getting no benefit from the biggest bond market rally in five years.

Lehman Brothers Holdings Inc. faces higher borrowing costs today than it did in June, even after the steepest quarterly drop in U.S. Treasury yields since 2002 pushed interest rates down for everyone from Procter & Gamble Co. to AT&T Inc. Investors are so leery of Bear Stearns Cos. that its 10-year bonds trade at a discount to Colombia, the South American nation that's barely investment grade. Goldman Sachs Group Inc. is being punished with a higher yield than Caterpillar Inc., the heavy-equipment maker.

Bond buyers view the nation's largest securities firms as no safer than taking a flier on subprime mortgages. That's a nightmare scenario for the industry's chief executive officers, who relied on cheap financing for leveraged buyouts, real estate lending and proprietary trading to produce record profits -- and paychecks of $40 million or more for themselves.

Ah, the magicians can't wave wands and have funny money appear! I weep for them as they struggle. To this day, when I am going to have a nightmare about being hit by lightning, it always begins with me being unable to turn on the lights. Another nightmare is when one tries to approach a goal and the closer one gets, the harder it is to move forwards until the goal is totally unreachable. These anxiety dreams are expressions of the real world: sometimes, the more energy one puts into something, the more impossible it becomes.

We are witnessing just such an event: the more the Central Banks pour 'emergency' money into the system, the less it does what they want it to do and what they want is for it to give them free money at 0% rates. They keep saying this or that is causing their actions to fail. But they make no sense at all for nothing has really changed on the surface. For example, the Japanese carry trade is supposedly based on them keeping interest rates a .5%! Has it changed? Eh? NO??? HAHAHA. Certainly that force is flowing merrily along, the Japanese even claim, they won't change it at all!

Bear Stearns and others want the Fed to give them super-low rates and the Fed is actually mulling doing this. The funny money magic act will spring into action the instant rates begin to drop. The desire to recreate the last three bubbles this way is overwhelming. Everyone imagines, all it takes is some fancy footwork and they can regain the flow of funds that the magic show conjured up for the last 30 years of 'unprecedented wealth creation.'

Snark. Right. A classroom in Sweden sent me this email:

Mortgages give you greater liquidity and flexibility. Let’s look at Sam and Nick. They both earn $75,000 a year. Both have $50,000 in cash. Both buy a $250,000 house. Nick wants to minimize his mortgage, so he uses his $50,000 in savings as a down payment and he opts for a 15-year loan at 6.75%. His monthly payment if $1,770 – but only 64% of that payment is tax-deductible interest; the rest is principal. Therefore, Nick’s net after-tax cost for his mortgage is $1,489. And to pay off his mortgage even quicker, Nick sends in an extra $100 with every payment. Of course, these payments are devoted entirely to principal, and therefore provide no tax deduction.

Nick’s decision to send extra payments to his lender is a critical point. You see, every time you send extra money to your mortgage company, you deny yourself the opportunity to invest that money elsewhere. Sam understands this, and therefore, he obtains a 30-year mortgage at 7%. He puts down just $12,500 and finances the rest. Even though Sam’s mortgage balance is bigger than Nick’s ($237,500 compared to $200,000), his monthly payment is lower because it’s a longer term. That’s not all. A full 88% of Sam’s payment is interest, meaning that Sam’s after-tax cost is just $1,234 a month - $255 less than what Nick has to pay! Sam invests these savings of $255 each month for five years, earning 8% after taxes per year. And, instead of sending an extra $100 a month to his mortgage company, as Nick does, Sam adds it to his savings.

Over 5 years, Sam has about $79,000 in savings and investments. Nick, however, has no cash whatsoever, because he’s placed every available dollar into mortgage payments. So, when both men suddenly find themselves out of work, Sam is in excellent financial condition, but Nick is in real trouble. He has no savings to tide him over and he can’t gain access to the $100,000 worth of equity that’s in his house because the bank turned down his loan application since he was out of work. Indeed, Nick fell victim to the biggest misconception in real estate: A mortgage is not a loan against the house; it’s a loan against your income. Without an income, you cannot obtain a loan.

If Nick doesn’t get a job real soon, he’ll lose his house. How ironic! Nick, who never wanted a mortgage in the first place and did everything he could to eliminate his mortgage as quickly as possible, is now in serious financial jeopardy! Sam, though, is in much better shape. With $79,000 in savings, he’s easily able to make his payments each month. In fact, he can make mortgage payments for four years, giving himself plenty of time to find a new job!

And that’s really the point. When you have a mortgage, you are required to make only that month’s payment.

The propaganda luring people into debt is tremendous. I was sent this story about Nick and Sam because people can't understand the grasshopper and the ant story by Aesop. I used to live next door to 'Sam'. He used up every penny of equity in his mansion to invest and 'save'. He wanted 8% a year return which meant he took RISKS. He drove a Jaguar while I drove a cheap Geo Metro into the ground, putting 200,000 miles on it. He flew his private jet and had a winter vacation house and a fancy boat. Then, interest rates went up and the .com bubble blew up and one day, I saw the sheriff at his door. He was served papers and a week later, he vandalized his mansion and fled and I don't even know if he is alive, his trophy wife left him and sued him, how sad, no?

I, the ant, aka, 'Nick', paid off the property so when my dear husband became disabled and we had to fight in court for several years with no income! We won and didn't go bankrupt because we had no mortgage to pay off. People forget, there is this beast that lives inside the mortgage: the principal. You don't pay it off hardly at all the first 10 years! And if you have to clear your debts like selling the house, you have to pay this beast off, in FULL. The more you have to pay off, the worse it is. This is why I believe higher rates and lower principals are better than the reverse.

For real wealth does not begin unless one is out of debt. 'Nick' in this story can, if he loses his job, SELL THE HOUSE and go to greener pastures! Whereas 'Sam' would have to stay there forever and use up all his precious savings which, in a bad downturn, will probably vanish. For risky returns have a downside all these articles striving to show how one makes more money being in debt, leave out: they vanish. I keep reminding people, stocks don't just go up or down, with little warning, the entire value can suddenly vanish in less than an eyeblink!

If the DOW were honest, they would include all the 'ghost' companies formerly listed that are now at zero value. Seeing a list of red-lined companies and their value lost would sober anyone who claims stocks make money no matter what. They certainly do NOT. And the bigger the bubble bust, the more companies that go bust! So the $79,000 in investments and savings for Sam might actually be $10,000 in savings and if Sam is paying $1,000 a month on a mortgage, this will last him only 10 months if he doesn't eat. And at the bitter end, he still must pay the extra $50,000+ that he owes on his house while forced to sell it in a down market! As my formerly rich neighbor learned the hard way.

Investing money above and beyond one's debts is good. Tapping 'equity' in a house to do this is bad, bad, BAD. You have to live somewhere! So having a home is important and being able to leave a home and move is important and one shouldn't depend on only 'up' markets to do this. Someone has to be able to do this in 'down' markets.

Most people are 'Sams' who, when things go flop, go bankrupt. These many 'Sams' then drag down the entire world's economy by refusing to pay their obligations. They run away from their messes.

From Bloomberg:

Banks and companies need to refinance almost $140 billion of commercial paper in Europe by the end of next week and may push up yield premiums on corporate bonds, according to Deutsche Bank AG, Germany's biggest bank.

``This could be a pivotal seven to 10 days,'' Jim Reid, a credit strategist at Deutsche Bank in London, wrote in a note to investors today. ``This will inevitably lead to wider corporate spreads, especially in high yield.''

Borrowers are paying the highest costs in six years for commercial paper, IOUs maturing in 270 days or less, because of losses from assets related to subprime mortgages. The yield in the U.S. has soared to 6.33 percent for 30-day debt from 5.48 percent on Aug. 9.

Back to the international banking mess: We have been told over and over again by the magicians running this mess, the world's economy is very strong, we are all very rich and they had this magic formula for creating wealth that was reliable and infinite. Since July, they have been puzzled and bemused by events. Suddenly, their little banking schemes are widdershins! Why are their spells going backwards? They want us to think an army of Sams did this. Yup. Sam and his entire clan of 'let's go into debt at home and use the money to buy risky stocks and bonds' are now going bankrupt and thus, screwing up the magic spells.

I keep pointing out, the money needs of the big industrialists and financial houses dwarf the mortgage market. This is equal to hundreds of thousands of California over-priced properties. And this is just normal flow for the interbanking systems. People forget that most businesses and all governments never bother paying off debts for the simple reason is, they are all Sams! They think debt is good! And you can make infinite debt! Indeed, the magic is all about creating debt, rolling over debt and INCREASING debt!

How simple. There is a catch: the devil in this deal is, there is an upper limit to debt creation. It is not infinite. The way central banks deal with this obvious limitation that says you can't have more debt then you are worth or can pay the interest on, by either dropping interest rates really, really low or debasing the currency, causing inflation so high, the old debts vanish in a poof.

But these are dangerous spells! For they are like Oroboros, the snake at the base of the World Wealth Tree: it eats its own tail. When the magicians try to continue wealth making via magic, the wolf Fenrir begins to howl and the Tree of Wealth begins to drop its leaves and everything begins to whither and die. No matter how many times they try the same trick, it only makes things worse. We have entered this zone and this is why the Deutsche Bank officer is worried if things will 'work'. He knows the Central Banks can make infinite fiat money. He knows this will then flow to his bank and they can then give it out as loans only they can't do this anymore except at Japanese-level loans.

But the creation of this money causes inflation so rates must go up! And they don't want it to go up! Why is all this happening, they cry.

I am obsessive about the banking game going on in Asia and I am now 100% certain, Japan and China are now engaged in a full-scale FOREX currency war and we just saw the opening shots this last two months. And the West, up to its eyeballs in debts thanks to super-cheap interest rates created by Japan and China for the last 10 years as they used their FOREX machines to create TRADE SURPLUSES for themselves, is now in a heroic clash of wills: no longer are they worried about keeping the US afloat, they are aiming their ire at each other.

To have a faint idea of how this looks, recall the movie, 'The Lord of the Rings' and in the 'Fellowship of the Ring' section, Gandalf and Saruman throw spells at each other. Now imagine blundering in between them as they zap each other, yelling curses. Blam!

Many a golden goose has been cooked in history. Indeed, much of history is all about recipes for cooking golden geese! And the favorite ingredients are, over-extension of military obligations, failed wars, especially in the swamps around Babylon, and too much debt. The world banking system is shuddering and cracking because the two older wizards, the USA and the UK empires, are continuing their century-long collapse into bankruptcy! This bankrupcty first hit Britain in 1929 when it couldn't collect money from the defeated but not finished, German empire.

The US enfolded the British empire into itself and saved it from total ruin and military occupation by Germany and Japan and then, Russia. But the obligations and temptations of empire has soaked into the US itself and sent it down the same debt-loaded chute that Britain skidded down so rapidly already. Both the older empire and its younger self are up to debt to over 100% of their GNP and both are rapidly deindustrializing in a gross attempt at keeping the money magic going even as it is killing them: the interest can't be low unless they export inflation to other lands and this weakens them at home, further. The end of this process is obvious.

The US and Britain are losing ground, continuously. The more we cling to the notion we can get out of this fix by manipulating interest rates and injecting more money into the sytem that is collapsing due to the US and UK being in too much debt...impossible.

From Bloomberg:

Two-year Treasuries returned 1.09 percent in August, the best monthly performance since 2003, according to indexes compiled by Merrill Lynch & Co. At the same time, holdings of U.S. bonds by governments and central banks at the Federal Reserve fell 3.8 percent, the steepest decline since 1992.

The dollar's slump to a 15-year low against six of its most actively traded peers is turning the gains into losses for international bondholders, prompting China, Japan and Taiwan to sell. Overseas investors own more than half of the $4.4 trillion in marketable U.S. government debt outstanding, up from a third in 2001, according to data compiled by the Treasury Department.

Ah, this story begins to dimly see the light! Last year, I wrote with astonishment that Japan was NOT supporting US bonds by buying them but was selling them...to China! China wanted these bonds so they could control our government, not because they are some sort of 'investment' bringing in more money. These bonds are political. Last year, Japan was punishing our government for wanting Japan to pay for us defending them better than defending America! Japan wanted us to foot the entire bill.

During negotiations, Japan started selling our bonds. We settled with them whereby we took on more debt from them and they began to buy our bonds again. Meanwhile, China was buying bonds like mad to put us into THEIR debt! Re-watch the Gandalf/Saurman battle and note how they discuss finances while attacking each other. Heh.

Well, Japan had this wonderful scheme going whereby they would lend everyone carry trade money but ONLY IF THE YEN GETS VERY WEAK. This is so they could de-industrialize the West or establish factories in the West owned by themselves! Haha! They even openly discussed their currency value target: 130 yen to the dollar by October. In July, China demanded the G8 nations attack Japan for currency manipulation and force the value of the yen to rise.

The bankers and governments of the West not only refused, they encouraged Japan to continue! So China began the currency battle with Japan, forcing the value of the yen upwards. No longer were they going to put their money into our bonds, we don't listen to them! So they sold off our bonds, they are SELLING OFF OUR BONDS and BUYING YEN!!!!

I know this particular wizard rather well. Heh. And the Japanese wizard is furious and it is increasing its FOREX reserves so it, too, is selling our bonds! HAHAHA! And so, they think, if their FOREX reserves rise to $1.5 trillion, they will beat the Chnese wizard's magic spells! So the Chinese wizard sucks down more yen. Yipes! Japan goes to tremendous lengths to prevent anyone from wanting yens! So they crush their own workers even harder than ever and voila! No inflation....

From the Nikkei:

ANALYSIS: GDP Moves In Line With Potential Growth Rate Despite Qtrly Drop

TOKYO (Nikkei)--Japan's real economic growth for the April-June quarter fell 1.2% on an annualized basis, entering negative territory for the first time in three terms, according to revised figures released by the government Monday.
********************************************
Asia Stocks, Currencies Fall On U.S. Econ Worries

SINGAPORE (Dow Jones)--Stock markets across Asia recovered from early losses Monday, but most still wound up in negative territory as traders worried that a surprisingly weak U.S. job creation report is a harbinger of economic recession.
********************************************
Stocks: Fall Sharply On Revised-Down GDP Data, Wall St. Tumble

TOKYO (Kyodo)--Tokyo stocks fell sharply Monday, driving the key Nikkei index to a three-week low, as selling prevailed across the board following a downward revision of Japanese gross domestic product data and Friday's tumble in U.S. equities.

The foolish Japanese wizard is happy he can keep rates below 1% for another ten years. He is so certain of this particular spell, he can't see the dangers. The Chinese wizard figured out this game and its weakness! Perhaps they read my news service, a very real possiblity since they know who I am! Japan can't be the world's #1 trade surplus profit center and the #2 economy and at the same time, as its industry expands, they can't also be the world's weakest currency of any major nation! If China can buy yen, they can drive it up in value especially against the YUAN. Meanwhile, the dollar weakens against the yen because the Chinese are buying yen to make it stronger against the yuan. This is a new flow for world money.

The Japanese have to bring up the value of the yuan vis a vis the yen by buying yuan! See? Few currency traders recognize this profound shift in world FOREX trade. I suspect certain oil pumping nations aside from Iran are demanding yen, too.

From the Japan Times:

Japanese investors, who held $612 billion as of June 30, are on course to cut for a third year, according to the Treasury. China trimmed its U.S. debt by 3.4 percent in the second quarter to $405 billion, the first reduction in three years. Taiwan pared by 10 percent in the past year to $57.5 billion, while South Korea slashed holdings 25 percent this year to $50 billion.

So, they reduced their holding in Asia by around $150 billion? At the top of this page, the bankers mention the crisis facing them, dealing with about this much money, no? Again and again, I mention how all banking systems need someone somewhere to save. Everyone can't go into debt all the time, to the uppermost limit. Someone has to be saving something. For all the Sams running around, there has to be at least one Nick! Indeed, if you kill off Nick, the whole system crashes and burns and all the Sams go bankrupt.

Well, Nick in Asia is no longer playing the 'let's give Sam infinite money in loans' game anymore! So we have to tell Sam to go to hell, here.

Japan Times:

Asian central banks also reduced Treasuries last month in an effort to curb dollar gains against their currencies. Taiwan's central bank cut its currency reserves by $4.9 billion in August, mostly by selling U.S. bonds, George Chou, a deputy governor of Central Bank of the Republic of China (Taiwan), said in an interview.

Why aren't they doing what they did before which was to park excess dollars in their FOREX reserves? Eh? I am guessing and we will know for certain in six months, they are no longer doing this because they are all involved in yet another Asian Currency Crisis triggered again, by Japan trying to make the yen weaker! Last time, in the late 1990's, Japan destroyed all their currencies while trying to belly-flop the yen. They needed the yen weak after the Plaza Accords because their trade surplus with the US was stinking to high heaven and this caused their own bubble economy to collapse and they figured, the only thing to do was to destroy the value of the yen and then INCREASE THEIR DOLLAR FOREX RESERVES so we could never increase the value of the yen!

Ahem. Starting with the Asian Currency Crisis, Japan's FOREX reserves were normal sized, around $50 billion. Suddenly, it ballooned to nearly a trillion dollars in just 7 years! China followed suit because I said in the 1980's, 'Imitate Japan'. They knew, if they did what Japan was doing, something good would happen. Even the currency negotiations that hurt Japan were important because it showed Japan wanted to fix our financial magic spells. Then, the failure of this could be used to demonstrate the need for new spells and voila! Magic works again.

Japan has not been asked to do a Plaza Accords ever since they tanked all of Asia's currencies. The US is terrified of this happening again! So under the radar, Japan has reached its goal for a weak currency. And so China did this, negotiating the value of the yuan, letting it rise.

But now Japan is trying to circumvent China and use other Asian nations so China and Japan now are directly facing each other off. They will move quite swiftly because unlike our bird-brained wizards here in the US (in the book, the Lord of the Rings, Saurman mocks the brown wizard who was the go-between for himself and Gandalf), these two wizards are exploding with liquidity which both can move very rapidly from one venue to another.

Let me explain: all summer long, the goofy wizards in Europe and the US kept telling the Asian wizards, their FOREX reserves were useless and even stupid. They were not only a waste of time but unnecessary!

We will now see how this huge pool of real money, not funny money like the Bank of Europe or the Federal Reserve can tap via the printing press, this money can appear instantly flowing in a new direction. What ever direction these giants want things to flow, it will overwhelm anything else. I have warned everyone about this for a long time. The fact that Russia is now playing the same game is extremely dangerous. Especially since Russia had some secret accords with China dealing with the fools in the European Union and the US putting missiles on Russia's borders!

And Russia knows the only way they can stop this, is to bankrupt the US itself! And China can be very motivated to do this, too. Very. And foolish Japan is destroying the strength of the US because deep inside, they want to pay us back for WWII. Deep psychological needs are often not acknowledged or even examined or understood, note how everyone likes to deny Freud's truths about the unconcious mind!

From Market Watch:

U.S. stocks headed to a steady opening on Monday, with investors cautious before next week's policy-setting meeting of the Federal Reserve, where the central bank is expected to trim rates after Friday's shockingly weak payrolls report.

"We're looking at a pretty stable start, which is good after the low close on Friday," said Marc Pado, U.S. market strategist at Cantor Fitzgerald.

"We have to get through a couple of obvious landmarks here -- there is caution ahead of 9-11, with lingering concerns about some attempt somewhere on the anniversary, and then we're only a week away from the FOMC [Federal Open Market Committee meeting," Pado said.

Here in America, blissfully unaware of the growing storm in Asia, the US hopes the wizards there will give us endless goodies in exchange for increasingly worthless dollars. We think they hoard our dollars because America is strong, not terribly weak. We think they would never, ever plunge us into bankruptcy because they want to collect an infinite number of fiat dollars. Dislodging this insane idea is nearly impossible, I have found. So we learn the hard way.

From Market Watch:

He is particularly alarmed at the relationship between personal disposable income and personal consumption expenditures and residential investment expenditures. That is eco-babble for the amount of money people take home after taxes minus the amount they are spending on everyday goods and services and what they spend on buying and fixing up their homes. According to that calculation, Americans have been running deficits in six of the past seven years.

Prior to the recent, unprecedented string of deficits, Kasriel says there have been only seven other years American households have been so upside-down in their finances since 1929. Two of those were during the Great Depression. Three more were just after the end of World War II. Another was in 1955, then again in 1999. That leads to an obvious question: If they can't afford it, how are people continuing to spend as Thursday's report of retail sales suggested they are continuing to do as if all is well?

We are seeing the last Sams run up huge debts. The process is nearly done. The banking system has been given a reprieve by the Central Bankers who conjured up half a trillion in funny money and this has to earn interest so the bankers moved this briskly into the hands of all the Sams seeking more loans so they can live beyond their means. And this will keep the markets open for a little longer.

From the Independent:

Gordon Brown faces a damaging showdown with union leaders, who warned yesterday of an autumn of discontent over public sector pay and threatened to defy the Government and demand a referendum on European reform. The leaders of hundreds of thousands of public sector workers warned that ministers faced strike action over below inflation pay deals if they did not give ground on Mr Brown's 2 per cent ceiling on wage deals.

The fiction of no inflation is collapsing. We will see labor unrest here and in Asia. The game is over and we will move into a new dynamic system that is not as happy as the present case. Governments will fall! Starting with the Japanese leader, Abe. Yet another minister in his present 'new' cabinet is accused of graft and corruption. Sounds a lot like the Bush maladministration.

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Comments

[D. F. Facti]

This is too distressing. You are right that it is impossible to dislodge the idea that debt is a good thing. I remember years ago a woman several tiers above me on the economic ladder saying that she and her husband "had to" run up debts, so they could take them as tax deductions. They blamed welfare, of course, and social problem-solving via government for their high taxes. They were the two-MBA family - no kids, hot shots whom the WWII era executive leadership actually nurtured. They want to blame the baby boom for inventing itself, but the demanding wiz kids didn't do it alone. Advertising, television, the entertainment component of our culture, all well established before you and I could walk - and a refusal of the WWII military types who authored the Vietnam disaster to repent of their triumphalist ways - those things have contributed mightily to this epic mess.

Like the young people I know who think that I am cranky for distrusting fancy corporate "wealth" - they have never known anything any different. Their reality is quite different from mine.

Babel. For sure.

[blues]

Well, they are all well and truly screwed now. They should have known. Why didn't they? Maybe they took some bad advice? People are very good at taking bad advice! Let's just say I know about this game. being from Connecticut and all. They absorbed it all, and now the Piper has turned on them. Big surprise? They don't call it the Nutmeg State for nothing. Known for fake wooden nutmegs!

[DeVaul]

I am really surprised that a class of Swedish kids would write something like that. Germans tend to think things through a bit more than we do, so I thought all Germanic cultures were like that.

What they put forth is the same crap that mutual funds trumpeted for years before the dot com bust, and STILL DO!!!!

It is sad that these kids are being spoonfed a truckload of lies by their elders. Left to their own devices, they might quickly see that reality is much different than the clean, surefire mathematical formulas pushed by economic conmen.

Many people now think that a tax deduction is the same as a tax credit. It's not. If you have no mortgage, you end up with more after tax dollars than someone with a mortgage. Basic math eludes everyone now.

Once upon a time adults viewed their own children as needing guidance in how to survive in a harsh world. Now, these same adults view them as "markets" that can be "exploited" for personal gain.

This is worse than any hell the Christians and Jews could ever imagine, and now that all the oil is gone after just 100 years, it will get even nastier.

[Canuck]

A classroom in Sweden? What’s your confidence on that? The telling item of a mortgage tax deduction, are these applicable in Sweden? I can tell you that there is no such thing in Canada unless you run a business from your home and designate a part of your home a business asset (interest only deduction). I doubt socialist Sweden does either.

[Elaine Meinel Supkis]

Oh dear, don't misunderstand the class in Sweden! They sent me an article from the AMERICAN NEWS that was trying to illustrate how being in debt makes one richer!

This story line is all over the place. I have seen it more than once. At no point in these tales do the media people say that the person paying off the house is free to sell and move and still has lots of equity.

[Elaine Meinel Supkis]

Also, I just spent much of the day at the hospital today, my husband's brain damage caused him some problems. He will be out in a week. I am going to be a bit pressed for time for the next few days.

[Al]

Elaine,
Take care, God be with you two.

[Canuck]

Sorry to hear that, all the best.

[Neuro Artist]

I am Swedish, but since 9 months I live in Istanbul. The interest of a mortgage (or any other loan) IS 30% tax deductable against income tax in Sweden. The housing bubble is IMO at its peak right now in Sweden (things usually happen about 2 years later in Sweden), almost no-one I know about who buys a house in Sweden first time finance it with any less than 90% in loans (100% seems to be the norm, the last 4-5 years). The insane growth in debt among the Swedes lately has fueled a shopping boom with american style malls growing up everywhere, selling chinese produce, apart from the vegetables which are grown in Spain by African slaves (who are not able to survive on farming in Africa, because the EU is dumping its agricultural surplus there, so they risk their lives to get across the border to slave for a pittance at the plantations).

It seems like the Roman empire finally is going down. Most people will be very surprised that it happened so quickly, well they were to busy following the Paris Hilton smokescreen, to be able to think.

Best wishes to you and your husband, Elaine!

[Carlos]

The biggest rats are bailing in droves while their minions plug the leaks in the dike to give them enough time to clear their hoard. It's going to get real interesting very soon.

All the best to you and your husband, Elaine!

[Elaine Meinel Supkis]

It seems we have very violent weather when he is hospitalized. I know I get headaches from big storms...we had so much lightning this last several days! I can't imagine what goes on in his head under these circumstances!

I had to wait extra hours to post the Tuesday's story due to lightning storms.

About Sweden: thanks for the news! I fear we have seen all of Asia funneling the growing trade surplus to them back to ALL of us in the form of easy debt money...a difficult tar baby for us to let go.

[DeVaul]

Elaine,

I hope your husband recovers enough to go back home soon.

And thanks to Neuro Artist, I now understand a recent graph I saw showing the five countries with the most retail shopping space (footage). Sweden was in the top five, which I thought was really weird based on my former knowledge of Sweden.

I am glad that stupid article did not originate in the Swedish classroom. It sounded too much like a brochure from a mutual fund, but this is the nonsense that we teach our children now.

[Dennis]

Elaine, best to you and husband. as a forex trader, really enjoyed this piece, very illuminating. psych part very thought provoking too. well, here's a bit of my economic cartooning cheer you can print out... http://www.whattolearn.com/humor.htm
and thanks

[Neuro Artist]

Dennis,

Whats your next career?

[Elaine Meinel Supkis]

Prime minister of Japan! Of course. They need a new one. The job is open.

[PFO]

Hello Elaine,

Very interesting WEB page; I just stumbled onto it today.

For the past week I've been getting financial, political and religious vibes that Friday [9/14/07] is going to be a very significant day.

Too many threads to explain why here, but your comments about many realities impacting at the same moment are eagerly read.

Kindest regards,
PFO

[aitrader]

Hmmm...deleting user comments with a different spin than your own? Shame on you.

[aitrader]

Ooops - my bad. My comment was in another topic. Apologies.

[Elaine Meinel Supkis]

Someone is deleting comments here?

Huh?

[John]

Everyone has to have ups and downs to have ups again. Italy is a great place so the romans didnt lose anything anyway. What diference does it make really??? Yes people spend more than they earn and banks allow them because they get interest MORE FOOL THEM. When things get tough it will only be the ones that spent beyond there means that get stung so again its there own fault. I dont really see how the largest companies in the world will stop making profits when they have offices globally so who really cares. Have you ever stopped to think that prices will fall in america and europe so they can convert there profits from the growth in the countries they moved a lot of factories too back to pounds and dollars and euros? The picture of doom and gloom is a bit pointless. America went to war with japan flattened the place and made them pay them to re-build it. NICE!!!! But look at them they all watch american TV shows and play baseball etc they might as well be americans. Now iraq and afghan need building up after flattening the places and well hey whos going to pay the bill?? They are in oil no doubt. the british handed back hong kong so there is an influence and also some kind of strong bonds between the rich business people and both US and UK. The bigger picture is there is more growth in china. population wise and also in building the place up. The smart business brain would have calculated the sum to make them cost effective in playing a part in that growth even if it means your own nation gets told they cant have a loan for a few years and pays more for some milk!!! So they move a lot of the factories there and to south america. Those places are going to be built up into debt and the same people will be in the drivers seat. Benefit from it dont complain invest in the same growth potential its not going to go away. Its a big business of nations where all the leaders are getting very rich. You can trade forex and there are plenty of options and pairs to choose from or better still you can save your money in a bank in a country offering greater interest. Or you could move to a diferent country. I think the real magic is happening and the media stirs up the frenzy. I think the dot com bubble burst because the rich folk that like to have an edge wanted it to happen and then they bounced back with there own form of domination. If you convince everyone there is a problem then there will be a problem. When america invaded iraq they took out all iraq TV and then brain washed the people using american media. You hear something long enough the chinese whisper becomes reality. Brain washing is an important way of doing what you like then some guy takes the fall and a new guy comes in as the hero. BUSH was the best guy for the job the perfect guy for the fall. He only finished the job his father couldnt do the first time round.

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