Will 1987 Collapse Repeat Itself?

October 28, 2007

Elaine Meinel Supkis

The US and Europe seem bent on destroying not only themselves but the world's economy. The actions aimed at punishing Iran are punishing ourselves much more. All signs increasingly are pointing at a fall in finances, trade and sovereign wealth in the G7 nations. Oil exporting nations and China will flourish. Also, after computer trades were halted 17 times in less than 5 months, Wall Street just threw away this brake and now we can have full-blown panics. 1987, here we come! Exactly 20 years later! What next, another Great Asian Currency Crisis?

From the Times of London:

Iranian banks will be given the cold shoulder in the City after America’s imposition of new economic sanctions on Iran, a leading Anglo-Iranian business group predicted yesterday.

Lord Lamont of Lerwick, the former Conservative Chancellor and the chairman of the British-Iranian Chamber of Commerce, said: “I think the Iranian banks will find it very difficult to clear their US dollars in the City. This is quite a tricky issue.”

His comments came after Washington imposed harsh sanctions on the Iranian Defence Ministry and three state-run banks in a move that is expected effectively to paralyse the country’s banking system.

Lord Lamont also accused Henry Paulson, the US Treasury Secretary, of “jawboning” European banks. “What I think is a little unfortunate is threatening people who are acting within the law . . . European banks with branches in America shouldn’t have their business interfered with in Europe by America.”

Anxious to murder the Iranian Kitty, Miz Liberty is violently twisting arms of the New Warsaw Pact countries run by the Soviet Empire, Part II: The Madmen With Razors. The US isn't being reluctantly driven to these insane and inane acts, we are the drivers who are driven by certain small countries that have nuclear bombs and who bomb their neighbors over the slightest provocation or even with no provocation: Israel. I have to harp on this because the root cause of WWIII will be right there: in the Holy Land. The contradictions and clashes which we see growing are focused on that fatal place.

Europe's trade with the US is declining due to the euro rising. The euro is rising because all the oil pumping nations are changing to the euro. This is not being announced, it is just plainly obvious. The US managed to twist the arms and legs of the other G7 Dwarves and they finally agreed the blame China again while ignoring the yen and the dying dollar. But as the US twists the beards and tweaks the ears of the European dwarves, they are yelping now. They want to do business with Russia, with China, with Iran. They are gaining little playing with Miz Liberty if she is swinging a razor like the Grim Reaper in a downsizing mood.

The US doesn't buy Iranian oil so we can play this game. But India buys this oil as well as gas. Ditto, Pakistan. And China, of course. As well as Japan. So, Japan gets to buy much more expensive oil with their US dollars, HAHAHA. Oh, that is going to be a hard pill for Japan to swallow! China, meanwhile, gets to find new and novel ways to play footsie with Iran while pretending to be on our side as they prepare to take over center stage.

London Times:

Michael Thomas, director-general of the Middle East Association, which arranges trade visits to the region, said: “For British firms in Iran, at the minute it’s like pushing water uphill. It’s very hard to find a bank that will take a letter of credit, and companies are having to do barter deals with Chinese firms to get paid.

The Chinese know how to play this game. The US needs to boycott Cuba, Venezuela, the Sudan, etc., etc. But not Burma! We buy oil from them. The US boycotting game is flying in the face of free trade. Our foreign policies are full of contradictions and paradoxes. Tripletdoxes, for that matter. Pandoradoxes.

And out of these boxes, as if we are turning the crank of a Jack-in-the-Box, out pops $100 a barrel oil and a nasty recession. We are very vulnerable and if a boycott of Iran causes our entire economy to collapse, I would suggest we put Bush in a mental institution and take his razors and shoelaces away.

From Cryptogram:

The New York Stock Exchange said it will no longer impose curbs on computer-program trading that were put in place after the crash of 1987, claiming they’re no longer as effective in damping swings in prices.

The exchange will stop prohibiting brokerages from entering some program trades when the NYSE Composite Index rises or falls more than 2 percent, according to a notice sent to member firms today. The so-called collars had been in effect since 1988 and were triggered 17 times this year, according to a filing with the Securities and Exchange Commission.

One of my readers sent me this tidbit. I get so many leads every day, it is hard to keep up. This one is very revealing! Now they tell us the shut-down valve was activated 17 times? I bet that 90% of these times were in the last 3 months! This would mean it happened at least 5 times a month which would be more than once a week???? Oh. My. Opps! Time to irritate the Cat and make world oil prices bubble upwards! We are obviously in an crisis situation. The money pumping that hs kept things going is not preventing a collapse, it is getting worse, not better. Now, for example, the talk of a 'soft landing' and that the housing mess won't affect anything else is fading like the leaves, ripped from the trees during this week's huge storms here in Northeastern America. The winter is coming, ready or not!

So now they are releasing one of the Four Horsemen of the Great Apocalypic Collapse. The mindless, unemotional machines will take over and ruthlessly sell, sell, sell. Note how the rulers keep changing the damn rules. Whenever they need to do whatever, they just remake the rules and do whatever they want. If they want a quick exit from the markets, they don't want some stupid rules stopping them from creating a huge panic. They are SCARED. And they see the price of oil shoot up and also, Iran hoarding money since they can't bank it with anyone so the money will sit there an form this horrid thing I call 'Sovereign Wealth' and in two years, Iran's FOREX reserves will rival Russia and China! And they will win this war with us! Unless we bomb them to hell and invade and then dissect their country. A very real possiblity which I don't think Russia or China will allow.

From Bloomberg:

Treasury two-year note yields dropped below those of benchmark 10-year notes to the widest margin in a month on speculation the housing slump will encourage the Federal Reserve to cut borrowing costs.

The yield curve steepened this week as losses at financial companies including Merrill Lynch & Co. led traders to bet that the Fed will reduce its benchmark lending rate at least a half- percentage point on Oct. 31. A government report next week is forecast by economists to show U.S. employers added the fewest jobs since June, adding to evidence of a slowing U.S. economy.

The old 'gas pedal/brake' monetarism at work. This is so stupid in the face of huge rises in world oil and energy prices! When oil goes up, so does natural gas, firewood, pellets, coal, etc. All energy systems rise at the same rate relative to each other. So we have this beast we call 'inflation'. And the US also owes everyone oodles of money and the best way to deal with this is to inflate the currency and devalue the coin and to gain trade advantage: ditto. So the Fed must do two things: lie about inflation and create inflation at the same time.

I was visiting the Bank of Europe's home page and they have lots of talk about the M3 funds which are tracked and are running at an astonishing 11.5% which is almost Chinese! But Europe isn't growing at that rate at all! This is inflation! Only China is seeing its GNP grow by 11.5% this year! But the US doesn't track M3 funds anymore. Like with inflation calculations, they simply threw it out. 'No one is interested in this anymore,' said the Federal Reserve's Goldman Sachs clones.

The US drops rates below 5% which is the floor for inflation, we will see hyper-inflation and the dollar collapse! They can't do this! They need to encourage savings and protect the value of the dollar or a bunch of Europeans will be in a panic since they can't sell to us and they aren't allowed to sell to the Iranian Cat who will now be building this huge FOREX reserve of euros which wil force the euro higher and higher!

Sigh, this is actually rather funny. Talk about a trap. The US is a debtor nation and all dead beats love to pay loans with debased currencies. This is why kings and princes debased the coins of the realm in the past: so they could pay for their palaces and wars.

From Bloomberg:

Fed funds futures on the Chicago Board of Trade imply a 92 percent chance policy makers will reduce borrowing costs by a quarter-percentage point to 4.5 percent at its meeting and 8 percent odds of a cut to 4.25 percent.

``The Fed will do what it takes to get the economy, housing and the banking system going,'' said Andrew Brenner, co-head of structured products in New York at MF Global Ltd.

Does the US need more housing? I would suggest we have a housing glut. I see empty houses all over the place. In my village, there are a dozen such empty houses. All over America, there are empty places hoping to sell. And what is wrong with this?

It doesn't fix our problems! We are not in a recession because of housing, housing is merely a symptom! We are in a recession because we import too much oil and manufactured goods and our trade deficit is now nearly a trillion a year! And we are too deep in debt and can't take on more debt and this last 2 years, even with super-low, sub-inflation level interest rate loans, Americans can't even afford to pay the interest due on these loans at this point?

We are saturated with debts! Lowering the interest rates won't put us out of debt! It will INCREASE our debts because it will make more sense to go even deeper into debt if this makes more money than saving money! Rewarding people spending beyond their means in order to keep our economy going even if this means punishing savers and hard workers: this is FATAL. The government must face reality. We can't continue this way. Certainly now while raising the price of world energy due to our demented razor rabble rousing manics running amok!

From Futurecasts, the Great Depression;

By the end of March, 1932, Britain had paid back $550 million of the $650 million emergency loan borrowed from N.Y. and Paris. Since WW I, French currency devaluations had cut the value of debts payable in francs by 80%, German inflation had practically wiped out debts payable in marks, and now debts payable in pounds sterling had been cut by between 25% and 35% by the devaluation of the pound.

This was a "discharge in bankruptcy" - a payment of debts by means of a "capital levy" - a "monetization of debts." However it is described, the resulting decline of capital and loss of purchasing power is a powerful automatic austerity measure imposed by markets suffering from a loss of confidence in currency.

It always succeeds in restoring equilibrium at some lower level of economic activity. However, in the 1920s, when the Weimar government resorted to monetary expansion to make up for the loss of purchasing power - to "maintain liquidity balances" and prevent economic decline - the result was skyrocketing inflation and economic depression at the same time, and the destruction of its middle class.

As always, inflation didn't prevent depression. After a short period of pleasant results, it caused depression. A much milder form - termed "stagflation" - would afflict the U.S. in the 1970s.

Of course, reparations and war debts were payable in gold or hard currencies like the dollar, and so were made much more burdensome by debtor nation currency devaluations.

Grim reading. A young person writing a paper asked me for information about the 1932 banking and investment collapses following the stock market collapse so I gave this URL, a decent site that is a good timeline. I don't agree with all the analysis there but it is a fine timeline, very fine. As I leafed through it last night, I saw this section and read it carefully: a perfect mirror. We have war debts. Out of our $9+trillion Federal Debt, a good $5 trillion is war/Pentagon related. No other nation is spending like this. Even with a debased dollar, we are still outspending nearly the entire planet, together.

This week, both Japan and China have sent rockets to circle the moon and they are spending money on high-speed trains and other things we can't buy. We are buying war. Our remaining old Shuttle jalopies dutifully try to take off an go to a low orbit but we are losing the space race yet again!

Great Depression:

93% of war debts - principle and interest - was owed by four nations. England owed $3,645,605.000. France owed $2,230,000,000. Italy owed $430,956,875. Belgium owed $183,883,000.

In January of 1932, Germany had stated flatly that it could accept nothing less than full cancellation of all reparations.

And here is what happened in 1932: ENGLAND, the world's most powerful empire finally went bankrupt. This caused the economic downturn to become a quagmire. The winners of WWI owed $10 trillion and couldn't pay this off any more than defeated Germany could pay this off. During WWI, all sides refused to use any diplomacy or tact or surrender or stop or anything. They fought until they were all ruined. Utterly ruined. Yet they didn't accept this defeat. To this day, Britain imagines they won WWI. At least the Germans figured out, they lost.

So it is today. Britian, Europe and the US all imagine they are winning the wars that are ripping up the last remains of the Ottoman Empire. But this is bankrupting them all. We are going to crawl out of this mess, deep in debt and desperate to fix things via cheating everyone by debasing the currency. And this will cause a depression.

From Newsday:

he former head of the Long Island company that provided most of the body armor for U.S. soldiers in Iraq and Afghanistan was arrested at dawn Thursday in his Manhattan apartment by FBI and IRS agents on charges of fraudulently looting the company and investors to pay for a lavish lifestyle.

That lifestyle included supporting a stable of trotting horses; a face-lift for his wife; a diamond, ruby and sapphire-encrusted belt buckle in the shape of an U.S. flag; and an $8 million bat mitzvah for his daughter, which featured music stars including 50 Cent and Kenny G, according to Benton Campbell, the U.S. attorney for the eastern district.

David Brooks, 53, the founder and former head of DHB Industries, which had been located in Westbury, was the highest-paid head of a public company on Long Island in 2004, making $2.7 million in salary and bonuses, plus tens of millions of dollars in stock options.

The wild spending on war just doesn't stop. Bush asks for money, Congress gives it to him and then both charge this to the Chinese who we then attack and demand they make the yuan stronger so we can repay them with even cheaper and cheaper dollars! This rip off scheme doesn't fool anyone. It is tolerated only so long as we industrialize and empower China.

From London Times:

THE powerful American financial services group GMAC, half-owned by the car giant General Motors, is to spearhead a rescue bid for Britain’s stricken mortgage bank Northern Rock.

GMAC is to play a pivotal role in the bid being put together by Cerberus, the secretive New York private-equity house.

GMAC was for selling cars made by GM. Then they used it for selling credit cards and then for running up all sorts of debts. Then GM sold it to hell hounds beause GM is dying here in the US. Now, the auto workers will lose health insurance and die. But Cerberus is going to milk this cow no matter what! Britain no longer is the world's banker, it is the world's bankrupt. The happy sunny days of the powerful pound are growing cloudy and dim. As the sun sets on this once-mighty empire, they are now the world's most indebted former Great Power. To a degree approaching the debts of Germany post-WWI.

The irony that a dark pool, occult organization headquartered at one of Elizabeth's tax haven pirate coves is going to save a British bank is truly pathetic.

From the Independent:

British retailers are facing a tough Christmas as shoppers feel the pinch of rising living expenses. But experts warn that the real crunch will come in 2008.

The British Retail Consortium says that there is "clearly nervousness" among its members in the run-up to Christmas, with consumer spending under pressure from higher mortgage costs and utility and tax bills.

All the evidence shows that retailers have been discounting goods and offering promotions over the past few weeks to counter weaknesses in high-street spending.

In the US, everyone is chewing their fingernails over the bizarre Xmas sales season. I dislike this system totally. Most retail sales are focused on this time of year and this stupid ritual. And it has utterly deformed not only our economic landscape making it very uneven and unbalanced, it also destroys our need to grow up and learn to save and conserve. It is directly responsible for the irresponsible 'give me presents, Santa' attitude of the West. We want goodies and we want it for free!

And now, most of these goodies are from China. The trade deficit Europe, England and America have with China is growing. The growth may slow down somewhat but we are not sending Xmas presents to China! That is the problem.

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Comments

[Big hearts come later]

Glad we decided not to travel this Christmas and spend spend spend. At this rate we'll need it for more important tasks like staying fed.

From today's Denninger report:
http://market-ticker.denninger.net/

"Last week some $75 million of "fed funds" (that is, interbank overnight credit) was transacted at a rate of 15%, and "a bunch" went through in the low to mid 7s."

What this means is the US wasn't ready to accept whatever this bank was offering as a reserve requirement, and the bank ended up paying triple the overnight rate!

Wow.

[Carlos]

It would be interesting to see the volume of put options betting against a collapsing market in the coming weeks and months now that the trading curbs have been lifted by the SEC. One could with some degree of accuracy predict the slight-of-hand distraction date of a developing major event.

In any case, it's very possible the Razor Blade mook's have decided to pull something drastic (they are looking quite desperate of late); the wait will not be long.

With their ratings at all time lows, they need a rout to distract or justify another illegal incursion, and maybe even cancel the Presidential elections. After all, they have had lot's of practice and experience doing this all over the world. It should be a walk in the park at home.

[Blunt Force Trauma]

"I would suggest we put Bush in a mental institution and take his razors and shoelaces away."

Nooooo, we should let him keep those items in his solitary confined space. Self-inflicted due process will hopefully ensue.

[Blunt Force Trauma]

"We have war debts. Out of our $9+trillion Federal Debt, a good $5 trillion is war/Pentagon related. No other nation is spending like this. Even with a debased dollar, we are still outspending nearly the entire planet, together."

Talk about 'going down in flames'. This is pure, unabashed insanity. All of it predicated on lies and the continuance of murder.

Speaking of insanity:

http://www.informationclearinghouse.info/article18626.htm

[Elaine Supkis]

Thanks for the Denninger report, Big Hearts! I will check that news out!

[PJSV]

US military close open revolt, Pravda says:

http://english.pravda.ru/opinion/feedback/16-10-2007/98912-us_air_force-0

http://english.pravda.ru/
opinion/feedback/
16-10-2007/98912-us_air_force-0

[JSmith]

"Will 1987 Collapse Repeat Itself?"

The market reverse-crashed on Friday, up 284.

Don't know if you saw this or not, but you, too, can be a FOREX trader.

www.FOREX.com

Set up an account and pretend you're George SOros!

[blues]

The troops are pooped! Check this one:

http://www.ipsnews.net/news.asp?idnews=39788

[Elaine Supkis]

Smith, the damn market went up because the damn OIL corporations, namely Exxon/Mobile, etc, are going up.

[DeVaul]

Search and Avoid Missions. Wow.

I don't blame them -- not one bit. Only idiots would stand around and direct traffic in Iraq just because they were ordered to. We can only hope that our men will refuse to fight en masse as soon as possible so they can come home from this evil nightmare Bush and his gang created.

[Elaine Supkis]

That is how the stupid Vietnam war ended: soldiers simply refused to go out into the bush and murder civilians.

[mannfm11]

You know sometimes fact is stranger than fiction. The stock market has been in territory that financial reality can't support since 1995. Prior, 3% dividends have stopped the SPX in its tracks. Thus there isn't any reason for the market going up other than the fact that it is a game being played by a group of brokers and hedge funds and supported by idiot corporations going into debt and buying their own shares back. Value really has no reason here. It is only a game. At some point it will become value when the players have to drop the game and several get stuck on the wrong side. For the public playing stocks, it is for entertainment purposes only, kind of like the slots.