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I still don't get how the Carry Trade benefits the Japanese wizards? What is the basic point of extending all these cheap loans? Does it contribute to suppressing the value of the Yen?


Wow, Elaine!

Thanks for explaining the entire modern world economic system to us. You should really compile all this into a book and sell it. I am sure someone will buy it if you can find a publisher. Might make life easier for you and your family and teach future econ grads the real story of the Second Great Depression.

Can you imagine what Bernanke's version would be like?

Elaine Supkis

Duval, thanks for the letter you sent. Just looked at it and laughed.

Frank, the Japanese rigged up this system of creating what they hoped would b a perpetual 'cheap or weak yen'. This is supposed to prevent the US from valuing the yen upwards via another Bretton Woods or Plaza Accord deal. This way, they and say, 'So sorry, we can't change, this is due to our depression.' They LOVE a weak yen because they get more and more of our auto market this way and Toyota is dominating the entire world and is #2 in the USA. A major goal is for all Japanese corporations to dominate the US market, something the Chinese and Koreans are fighting.

The 'carry trade' was when some wheeler dealers figured out how to exploit the 0% Japanese interest and expand it 100X over. At first it was just one or two guys then twenty then a flood. Now, all top traders were doing this until the Chinese began their 'make the yen strong' program which is ongoing.

Elaine Supkis

Devaul, sorry about the clumsy spelling of your name. I just finished screwing in a whole bunch of boards and my fingers were stiff.

mike s

Elaine...you have been right about so much.

Just think who would have been left holding the bag if President Bush had gotten his way and put social security money into the hand of wall street , HAHAHAHAHA...the average little guy and gal would have been left hold the cdo / siv bag (an empty bag) and the big shots would have gotten away with an even another highway robbery.

Here's a link to the collapsing northern rock bank and how off-shore private equity funds hold the securities of dubious value underlying norther rock's assets.

Looks like the royal bank of england is on the hook ie taxpayers.

thanks for all your effort




I've said the same thing to her, several times, in email. Elaine absolutely needs to write a book, or a small set of them. However, the real trick will be finding a publisher, given who runs the media and with what purpose it is run.

As far as Bernanke's version of events, I'm beginning to have my doubts. Greenspaniel would have already had rates below 3% by now. It really did look like Bernanke was going to make the Wall Street crybabies pay the piper back in August, when the Fed left rates unchanged at their regular meeting. I strongly suspect that not long after that, Paulson delivered the BushCo messaage of "cut rates NOW - or else."



You are welcome. Are you boarding up your house?

There is another letter coming which contains an insert that I would have thrown away anyway. Seems the top moneymen already know what will happen and are positioning themselves to take advantage of the mess THEY created. Great!

What truly pathetic lives these men lead.



Perhaps you are right about Bernanke. Elaine's cartoon of him at that Idaho picnic comes to mind....

However, I am still very suspicious of Bernanke. I really find it hard to believe he did not know his former boss was lying or that he also would be called before Congress to explain our "economy" once he reached the pinnacle of power at the Fed.

How could he advance so far and not know what was really going on? Is the ruling elite's big secret really so carefully guarded that only the head of the Fed would know about it? I just don't buy it.

Willful ignorance is the same as "knowing" in my book.


Elaine, you are too funny somestimes...

"Time for a victory lap for my brain that is about to split in two, trying to figure this all out."

I laughed for a minute after reading that line

Elaine Supkis

Thanks for the Northern Rock link, Mike. Jean, I have to laugh when I write or it gets too boring or stupid. Somewhat.

Devaul, the guys writing that news letter are nuts. Talk about Pollyanna bananas! And my take of everyone at the top: they know perfectly well, what is going on. They PRETEND to be clueless. Note how they all have hedges and helicopters and Paraguay ready for exits.


Agreed about the people at the top, Elaine. But I'm wondering if perhaps Bernanke doesn't know what you do - that this whole mess is going to be horrific at best, and that if any fix other than raising rates to be higher that real inflation is attempted, the whole system is going to outright collapse? I've seen some video of Bernanke being grilled by Ron Paul and others in Congress. I just get the sense that he's being evasive, but that's not real happy about having to do that; his heart doesn't really seem in it. (Paulson, in comparison, strikes me as a soulless prick from the lowest level of Hell.) I'm certainly not expecting Ben to blow the whistle, but I do wonder if perhaps he wouldn't prefer to let the messmakers be the ones to pay the price, rather than crash Western Civilization for the benefit of BushCo & Pals.

Blunt Force Trauma

No one by the likes of CNBC, Bloomberg or the 'Great Roubini' are as thorough as Elaine!

This was definately a 'drink and a sandwich' read, but wow, this needs to be taught at the junior high school level. Hopefully, we'll be able to avoid a third Great Depression. Unlikely though, as we are making whole new mistakes ushering in a second one right now. We didn't learn much from our history. Just skewed it a little. The result is to be the same.

See you in the soup lines.

Blunt Force Trauma

John said...

"Paulson, in comparison, strikes me as a soulless prick from the lowest level of Hell."

LOL. Isn't he a former Gollum Sachs pinch-hitter? That explains it all right there.

Neuro Artist

I don't think this is going to be a 'second great depression'. It is panning out to be the ultimate disaster. There isn't going to be a 'third great depression' after this one. Goldman Sachs were bragging a week a go or so how they had shorted the multibillion dollars loans, they had issued to poor risks. Of course their stock price rose. However the problem is that those who took the risk of these bad loans are not in a position to pay Goldman Sachs anything, since they are going bankrupt. All these promises of safety that the derivative market promised, are just empty, nothing, nada, the stack of cards have just begun falling, and it is going to be the collapse of all financial activity that involves money, which mean there is not going to be governments, electric companies, internet providers, gas stations, water works, law enforcement, sewage treatment, hospitals (since they can't pay for people working there with something they find valueable). In the close future, you'd better stock up on physical things that are worth something in the context above, if you want to survive, the avalanche is coming. The system was built on trust, that if you insured against a risk on the derivatives market you would get paid when the going got tough, when that trust is gone it is just going to fall to pieces and all monetary activity will come to an abrupt standstill. Money is also based on trust....


Elaine, thanks for taking the time to write this. I'll have to read it a few times, some things don't sink in the first time. or the second. Looks like you had a nice holiday meal. Glad to hear this, and take care.


Neuro Artist writes a serious possibility that all must consider.

Not only is money based on trust, but societies are based on trust. Trust that the system isn't rigged. Noone plays at a casino when they find out that the house cheats.

Much of the media manipulation is to convince people that our economy is fair. That society is a true meritocracy, and that if you end up at the short end it is either your fault either through will or genetics.

My wife is reading the book "The Mommy Myth" by Susan Douglas. It is an interesting read, which illustrates a timeline of the corporate media's takeover of the American family.



We should consider barter trade, cold hard cash as in metal coins or skills once the system crashes...do be careful not to be branded a hoarder as governments have a tendency to confiscate during emergencies..

Elaine Supkis

I still find the $500 TRILLION hard to grasp. I wonder why this isn't headline news across the board. But people buying Little Elmos made in China with toxic eyeballs is more important.



Can't u hear the dragon laughing so loud in his cave??? He is going to crash this system ...and pick up pennies for the billions of USD worldwide. Miz Japan is fence sitting and once she decides to join China and Russia...the game is up!!! Beowulf better wake up fast...deal of the century is closing fast!!!

Elaine Supkis

Nothing will be worth pennies. It will be worth a million dollars...for one gallon of gasoline.


Not if China barters by using either gold or manufactured goods...note that most of the manufacturing is now based in Asia...in the end ME wants a good life and will accept payment in kind. A fall back to 15th Century economic model between China & ME??

Elaine Supkis

You know, trade with the Middle East and China is very, very, very ancient. China made silk and porcelain goods and got gold in return. Now, they will get black gold. We are busy selling weapons right now, over there.


Speaking of trust, it appears our Congress Critters (I like that term, Elaine, so I am using it too) already know what is coming. They are passing a law called the "Radicalization and Domestic Terrorism" act or something like that.

It will allow them to brand any American citizen a terrorist if they agitate for change or an official accounting after a major catastrophe, which they know is coming.

I do not have a problem with barter. That was how I got my front porch fixed many years ago. I traded my pottery for the carpenter's labor. It worked fine. No one got cheated and we did not have to kill any trees to sign papers and then shred them.

I think those who have never really worked hard in their lives will find the barter system not much to their liking. Those who are disabled or old must be taken care of because they cannot trade much other than their time and perhaps some small amounts of labor. The fat, lazy bankers will demand that many people die so that they can live off of the remaining people's labor.

I hope Americans will reject this system and I hope our soldiers will also, but I am not holding my breath.

Neuro Artist

Its like a great pyramid scheme, where all the money in the world and more is on the table right now, no-one can afford to loose so the stakes have to be raised. More money/derivatives must be created at a greater and greater rate to cover up the bad risks. Thor drinking the oceans is a good analogy. The scale of this is just too impossible to mentally grasp.

Is it even possible to unwind this in a structured way at this point? Probably not, and human psychology would probably prefer to put the pedal to the metal and drive it off the cliff, than to stop, repair the car, the road, the toxic environment, sort out the mind of the driver, and all the debts taken to buy and repair the car, the road, the environment, spent on booze and good times.

This time I don't even think we need to consider that government will confiscate our properties, government becomes irrelevant at the same time as their fake money becomes irrelevant, that doesn't mean government officials, and law enforcement people will not come and try and steal your valuables, they probably will, and other desperados too

About the Tibetans, the interesting thing is that all the pagodas and temples destroyed during the cultural revolution, were not destroyed by the chinese, but by Tibetan youths. I believe the present Dalai Lama is essentially a good man without evil intentions, who of course has his flaws like any human being. But he has indicated that he is not going to re-incarnate any longer, which may be his vote of no confidence in the system committing all kinds of atrocities against Tibetans over the centuries....Probably though, a Buddhist theocracy is better than the other religious alternatives, but that doesn't mean that it is any good.

I hitch-hiked through Tibet (from Nepal to the Xinjiang province of Northwest China) in 1995. Fascinating place, with fascinating people, very friendly, but I believe the Tibetans are in a minority in Tibet nowadays.


Thanks for getting all that data elaine.. I am a data monster like cookie monster.. really interesting seeing all the m3's together compared to each other.


It does look like Japan's subprime exposure was small. I speculated on another forum that they got their a-- handed to them in the late 80's on bad american investments and were much more cautious since. They are like me, treasuries is their main holding right now!

t t

great blog!

Elaine Supkis

Both the Japanese and Chinese gave us loans but DO NOT HOLD THEM except for government treasury bonds and this is to control our government.

Europe is the one caught holding lots and lots of US CDOs. Poor saps.

About Tibet: my parents were there when the Chinese invaded. They got out, barely. Over the mountains to Nepal. We knew the Nepalese royals really well. They were all brutally machinegunned dead by the Evil Uncle who now rules there, except the people are tossing his ugly mug out the door, thank heavens.

Neuro Artist

I actually walked across those mountains, after leaving Nepal, I found that there was a landslide and no buses were travelling, so in a true Forrest Gump fashion I decided to walk, and after walking for half a day, someone asked if I wanted a ride, which I unlike Forrest accepted, and then I just hitch-hiked to Lhasa, where I came down with hepatitis, which I contracted from drinking dirty water in south India, thought I had altitude sickness, since I was feeling so weak, before someone pointed out my yellow eyes. Was resting it out for a few days with high fever until I got my strength back to hitch-hiking, was actually considering taking the bus from Lhasa, but the 5x the chinese where overcharging foreigners for bus-tickets, made me decide on hitch-hiking. I was first going with a very friendly Tibetan lorry driver, until he was not going any further. After that I paid a chinese lorry driver a 100 Yuan to take me to the Xin-Jiang province. This was one of the worst rides of my life. The truck went empty and since the suspension was adjusted for a full load (very hard), and the road was like a plowed frozen field. It meant that I probably spent more time airborne than on the seat, and the truckdriver was scolding me for making noices with my feet slapping the floor, further they stopped to sleep at a mountain pass more than 16000 feet high, it was extremely cold, when the sun rose it was ice on the inside of the windshield. It was a 36 hour ride, and I was very tender in my entire body when I arrived. Nepal is an interesting country managing to stay independent between 2 superpowers (India and China). I'll bet they have a highly evolved diplomacy. I have only spent a few days in Nepal though.

Elaine Supkis

What a great story, Neuro Artist! And you are certainly an old-style 'explorer' who would go wherever one is flowing. I have hitchhiked many times. As a younger girl. Have many amusing stories about those journeys, none of which were boring. Knowing how to cook outdoors has been a great boon in these travels. Even drivers are curious about that and enjoy these meals.

Once, I saved my life by showing some rather vicious bikers who were going to kill me, I could skin and cook a rabbit they ran over. Then I did a deer. They then wanted to keep me. I had to slip away several cities later. With a wig and a full disguise.

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