From 'The Village Store' by F. Bedford 1899
November 30, 2007
Elaine Meinel Supkis
The Federal Reserve just released its latest Beige Book, that bland litany of economic data that leaves out all analysis of historical importance as well as not looking at obvious problems like the near-total seizing up of our entire banking system from top to bottom as well as turbulence in the ABX markets. And housing: a total train wreck. But don't worry, the Fed has a sharp eye on the Santa Claus elven workshop! They are very concerned about Xmas sales of Chinese goods. They hope we buy very energetically and are trying to help Santa by dropping interest rates. After all, the futures for oil have dropped below historic highs! Ergo: no inflation!
Looking ahead, the reports were slightly pessimistic about prospects for the holiday retail season. Most Districts reported that retailers expect growth in retail sales to be modest at best relative to last year, and retailers generally were described as having a "cautious" attitude about the upcoming holiday season
Santa Bernake certainly is cautious! The spoiled brats who infest our financial systems are after old Santy because they want their TOYS NOW, damn it. And the biggest brats of all like Goldman Sachs and Merrill Lynch have made a noose for the jolly old elf and will hang him if he doesn't give them what they want and they want FREE MONEY. Period. To hell with everything else. A big, red balloon is their desire.
Demand for residential real estate remained quite depressed, with only a few tentative and scattered signs of stabilization amidst the ongoing slowdown. Most Districts pointed to further increases in the inventory of available homes, with the earlier tightening of credit conditions for mortgage lending continuing to create barriers for some buyers.
The Fed has been turned into a loan officer whose sole concern is to see that we buy Xmas presents and overspend our budgets. Instead of frowning and saying, 'Do you realize, madame, sir, that no one in this community is saving money anymore? We are offering a good return on savings at the moment. You seem to have taken on too much debt already. We suggest you begin a savings program. We suggest that you trim expenses and come back when you have a better debt report.' I used to have to fill out requests for loans long ago. It was quite an experience.
The people who were the most anxious for more loans were the deepest in debt. People who were flush with money were very reluctant to take on ANY loan. As a person who has finally reached that point myself, I now understand the mentality of someone who is on the green side of the street. The anxiety for more loans is a classic sign that someone is too deep in debt already. The solution tends to be to consolidate all past loans and then pile on more. This is how our government runs.
The main topic of the GOP Presidential debates so far has been, who can do this even more. Cutting taxes and not paying off a penny of the principal due on our loans and then taking on even more debt seems to be an addiction with these guys. This is because all of the US is now sliding into 'debtors seeking more loans' status. Savings have fallen below 0% which is a historic signpost we cannot ignore. And the entity that should be focused on the dearth of savings is...the Federal Reserve!
I looked at this latest report and found absolutely no mention of savings. For the last 10,000 years banking has been based on someone saving first. Somewhere in the system, there has to be someone who puts money aside and allows it to be the basis of all lending. In the case of the US, since our savings rate is now below 0%, this means it is some foreign entity. In this case, it is Asian savers in the form of government set asides of FOREX reserves. Both Japan and China have been in this competition to see who can control world banking via holding currencies in reserve. Both have shot up in the last 15 years from $100 billion to $2.5 trillion. This vast growth in 'savings' is the ultimate basis for world lending. The EU, all together, has another $500 billion in FOREX savings.
The Federal Reserve is responsible for our national reserves which hold precious little in any sort of 'savings' at all. These US central bankers submit their reports with a blind eye on the world. One must marvel at this. For example, if anyone were sane, they would be focused on world LIBOR rates relative to the US rates, they would be figuring out how to increase savings here in the US because of the obvious direct connection of national banks holding massive savings to trade surpluses with the US. Since the EU also has a large collective FOREX reserve in addition to a large trade surplus with the US, this confirms the connection. The euro had to rise tremendously against the dollar to make even a small dent in our trade statistics that favor Europe, for example.
So the Beige Book should be tossed into the trash can and replaced with the Red Book. 'Power grows out of the savings accounts' should be the headline. Not, 'we better enable Xmas sales!' Once upon a time, eons ago, when my granddaddy was a young boy in the 1880's, an Xmas gift was a book. And maybe, a knife. And he was the son of a high ranking calvary officer! Not poor at all. My godmother, born at the beginning of the Civil War, got a dolly....one! Her entire childhood. Her daddy was a top embassy official. Very upper middle class!
My grandmother's childhood was marred by a depression in early 1890 which meant the sheriff took her pony cart, the pony, the fine furnishings, the house, everything. She didn't know how to button up her high shoes because servants did that. The sheriff felt sorry for her and let her keep her doll. Which, by the way, I broke 100 years later when I fell down a staircase while carrying it to a new location. Gah [beating my head on the floor]. The fact of the matter is, Xmas buying was an upperclass New England affectation that was brought over by the wave of German immigrants who got jobs as tutors and nannies. It was a slight increase in sales over the course of the year. The big sales time was after the harvest, of course, when farmers were paid for crops or honey gathering, etc. The butchering of animals fattened during the summer, etc.
Most of these sales were necessities and farm equipment. Not frivolities. Today, 40% of our commerce revolves around Xmas sales of all sorts. It has grown massively into this destabilizing force that warps the buying cycle and on top of this, features mostly frivolities and pleasures that are not good in the long run if one wants a sane economy. The childish factor has grown, massively. We are spending fortunes on entertaining children and lavishing on them a mountain of totally uncalled-for luxuries and heaps of junk. There is no longer a treasured toy or special friend. The child is surrounded by a wall of things that demand attention that has shorter and shorter spans. The inability to focus on anything is a salient feature of our culture and infects everything.
Banking and FinanceLending to businesses generally was at high levels, but the reports suggested a slower rate of growth than in previous survey periods. Commercial and industrial lending activity changed little or declined in the Cleveland, Atlanta, St. Louis, Kansas City, and San Francisco Districts, although it increased noticeably in the Philadelphia District and continued to show modest growth according to Chicago. Lending standards for construction projects and commercial real estate transactions tightened further in the New York and St. Louis Districts, and they remained tight more generally and reportedly held down the volume of lending for these categories in the Boston District. The reports indicated slight increases in delinquencies on commercial and industrial loans and slightly larger increases for commercial mortgages in many areas.
Consumer lending was little changed on net, while residential mortgage lending continued its downward slide. More stringent credit conditions remained a constraint for residential mortgage lending in general, with additional tightening during the survey period reported by Chicago, Kansas City, and Dallas; scattered reports suggested slightly stricter standards on consumer loans as well. Mortgage delinquencies increased significantly in many areas, and some Districts pointed to slight deterioration in credit quality for consumer loans.
As the family unit bids adieu to their homes, they still rush out to buy more toys. I have taken under my wing more than one family in trouble over the years. It is very frustrating to see them spending money on toys and entertainment as they drag all this from one home to another as things fall apart, worse and worse. The instant they gain an upper hand in their finances, they are lured by Xmas advertising to give to their children who they obviously love but are unable to supervise or care for appropriately. This is why one can go into miserable housing and see a fancy car that loses value in the front yard and inside, wall to wall toys and playthings for adults as well as children. Peter Pan's paradise!
Why the supposedly sober Federal officers want to enable all this baffles me. They should be saying, 'Bah, humbug.' My grandfather hated Xmas, by the way. He actually would say, 'Bah, humbug.' He also carried a vest pocket watch on a chain and wound it up every morning at 9am. He also saved money, of course. His ghost should visit the Fed this Xmas. A reverse Dickens.
Prices and WagesIncreases in prices of final goods and services generally remained modest, except for food and energy. Increases in the costs of energy and petroleum-related materials created upward pressures on transportation costs and the prices of some manufactured items; many producers responded by increasing final sales prices, although limited pricing power forced some to absorb cost increases in profit margins. In addition, food prices continued on their pronounced upward march, and some Districts highlighted price increases on various imported goods resulting from the lower exchange value of the U.S. dollar. Increases in final prices for products related to food and energy were moderate in general, however, and they were accompanied, in large part, by stable or declining prices for other products and services, including various construction materials and assorted retail merchandise.
These Beige reports read like the Soviet 5 Year Plans. The Fed does NOT control prices! Nixon tried that with his Wage and Price Controls and that failed. It made inflation worse. Roosevelt did this during WWII and undoing it after the war was very difficult indeed and probably delayed recovery from the war somewhat. Prices are not the Fed's concern as far as them controlling it all. ASSET prices in property is, on the other hand, directly due to Fed actions! They sat on their duffs while the property bubble caused by 1% interest rates grew and grew. They then began to raise rates one baby step at a time in order to undo their crime. But this caused the asset bubble to burst. Instead of lecturing everyone about the dangers of easy money via the Fed, the Fed is feeding a new bubble by dropping rates WHILE SAVINGS CONTINUES TO NOSEDIVE. And this is the key they won't mention at all.
Paulson, Banks in Talks to Stem Surge in Foreclosures
U.S. Treasury Secretary Henry Paulson is negotiating an agreement with banks to stem a surge in foreclosures by fixing interest rates on loans to subprime borrowers, according to people familiar with a meeting he led yesterday.Paulson, who will address a housing conference on Dec. 3, presided over a one-hour gathering at the Treasury Department in Washington with federal regulators, bankers and lobbyists. Citigroup Inc., Wells Fargo & Co. and Washington Mutual Inc. executives attended, said a person present, who spoke on condition of anonymity.
Bernanke Says Fed to Judge Market `Turbulence' Impact
Federal Reserve Chairman Ben S. Bernanke said `renewed turbulence'' in markets may have shifted the risks between growth and inflation, cementing speculation the central bank will lower interest rates as soon as next month.``Uncertainty surrounding the outlook'' is ``even greater than usual,'' requiring the Fed to be ``exceptionally alert and flexible,'' Bernanke said in a speech in Charlotte, North Carolina, late yesterday. Officials must ``judge whether the outlook for the economy or the balance of risks has shifted materially.''
Let me be perfectly clear here: THE FED DOES NOT REGULATE THE STOCK MARKET VALUES! This is supposed to be capitalism. And the basis of capitalist investment and activity is due to using PROFITS to make future projections by INVESTING in NEW ENTERPRISES or using profits to buy a share in an existing business so one can have a slice of the profits accrued in the future! Where on earth does the Fed fit in all this? Their function is to regulate the money supply which means the banks and they insure that no banks make infinite loans to infinite people because this causes banking collapses like we are seeing now!
THE FED HAS FAILED. This is due to misunderstanding their mission in life and instead, pretending they are some sort of branch of the communist party and must redistribute wealth to the collective which means STEALING SAVINGS. Savings have vanished because anyone holding this gets hammered by Federal policies. So no one saves anymore. This is a spectacular failure of our central bank and is why Ron Paul wants is disbanded.
Here are some graphs from Kshitij Consultancy Services of India:Click on all images to enlarge.
First is the US dollar's LIBOR rates. This is the critical banking rate the Fed has the most control over and manipulates frequently as we saw in the news this last four months. The shape of this graph is very important: it shows the sudden collapse from the high rates that incidentally, happened WITH a bubble. The Dot Com bubble burst and rates were rapidly dropped. From October, 2001 to May, 2004, the LIBOR rates were below 2%. This was a long stretch for the US which seldom ever comes even slightly close to this rate in the past, outside of the Great Depression when prices were falling.
During this time, the price of oil began its historic climb from record lows to recent record highs. We see the shape of the new mountain on the other side of this valley and now rates are rapidly dropping again as the Fed seeks to revive the 2001-2004 bubble. Note that they worry about people being able to buy houses but NOT save money. This continues the fiction that we don't need to save any money at all in order to buy and sell housing. The door to ownership is 100% debt!
Note here that the British £ follows the exact same curve only at a much higher rate setting! Even though their LIBOR rates were 100 basis points higher than the US, they had the exact same housing bubble at the exact same time. Why is this? Ah ha! Part of the Riddle of the Economix Sphinx! Let's look at more charts.
There is a slight shift forwards in time for the Euro LIBOR rates! Their break with the 2% rates was in October, 2005. Incidently, this is when the US housing bubble burst. In both the US and the EU charts, the overnight rates shot up from October 2001 to March 2002. But then all fell lower and lower due to the Federal Reserve frantically pushing rates down as hard as possible.
This is the Swiss rates. It, too, has the same profile as the US and EU. It is overall, at a lower bp rate than both the US and Europe. It ended the super-near Japanese level lows in April, 2004 and then took off after August, 2005, right when the US housing bubble burst.
Last is Japan. The oddity of this chart compared to all the others is outstanding. It is all sub-1%. The flatness of this chart is not as obvious in this example because fractional differences show up as big changes where as the other charts rise and fall over 500 bp, this one rises and fall in this narrow 100 bp range. Note how the LIBOR rates are well over the official Bank of Japan rate of 0.5%! HAHAHA. Someone is cheating here.
The climb did start slightly retarded from the European rate rise. But this chart barely echos the mountain/valley pattern we see in ALL the charts of ALL major trade currencies in the world. The economic forces at work in the world are not suddenly suspended or turned upside down when encountering Japan, the world's #2 economy and trade power! This, not prices here in the US, is important for the Federal Reserve! Since Japan's affairs have a giant impact on our own banking system, this requires a close examination by the Fed and should be the important item on their table, not the Xmas wish book they call 'the Beige Report.'
E*TRADE Financial Announces $2.5 Billion Investment Led by Citadel
E*TRADE FINANCIAL Corporation today announced an agreement that will result in a cash infusion of $2.5 billion. The transaction, led by affiliates of Citadel Investment Group, includes immediate funding of approximately $2.4 billion with the remaining $150 million expected to fund by January 15, 2008. The investment fortifies the Company's balance sheet, allows the Company to focus on its core retail business and provides additional capital to manage credit risk.E*TRADE also announced that, effective immediately, R. Jarrett Lilien has been named acting Chief Executive Officer of the Company, succeeding Mitchell H. Caplan, who has stepped down from the position of CEO. Mr. Caplan will serve as an advisor to the Company on transition matters through the end of the year. Mr. Lilien, who is also a Director of the Company, has been E*TRADE FINANCIAL's President and Chief Operating Officer, leading the retail business since 2003. The Company will conduct an executive search for the CEO position, which will include Mr. Lilien and external candidates.
All the top wizards are being replaced with new wizards who are exactly the same and followed the exact same rules and threw the same spells. This churning is useless, of course. Heads must roll. In China, they get arrested. In Japan, they commit suicide. In the US, they float away on golden parachutes and land in other organizations and continue doing what they did in the past only with a slight variation. Citadel is yet another off shore pirate/vulture/Peter Pan organization hoping to get dollars on the penny. This purchase by Citadel sounds most mysterious. I suspect the funds both are trying to get rid of will walk the plank at some distant place and then deep sixed when no one is looking. To hide this, they go to Japan and tap into the continuing low interest rates based on fake inflation statistics and the death of savings there outside of the FOREX reserves run by the central bank itself.
This transaction removes the assets with the greatest market risk from E*TRADE's consolidated balance sheet. Effective today, E*TRADE has divested itself of its $3 billion asset-backed securities (ABS) portfolio, including its ABS collateralized debt obligations (CDOs) and second lien securities.
I visit the MarkIt ABX page every week. It is like watching a bull fight where the toreador has a machine gun. The bulls are bleeding from every pore but they still mill around except for the riskier bulls who are rolling in the sawdust, mooing mournfully. The E*Trade cow is dragging its udder on the ground as it staggers about. No wonder vultures are riding on its back now. What the vultures hope is, the machine gun won't shoot them.
Time to revisit what a ABX is: 
On January 18, 2005, the SEC promulgated Regulation AB which included a final definition of Asset-Backed Securities.
"Definition of ABS. The term "asset-backed security" is currently defined in Form S-3 to mean a security that is primarily serviced by the cash flows of a discrete pool of receivables or other financial assets, either fixed or revolving, that by their terms convert into cash within a finite time period plus any rights or other assets designed to assure the servicing or timely distribution of proceeds to the security holders. The SEC staff has historically interpreted the phrase "convert into cash by their terms" to exclude from the definition most assets that require positive action to be realized upon – such as non-performing assets and physical property. It has also interpreted the "discrete pool" requirement in such a way as to disqualify most securities issued in transactions where the composition of the pool is not set on the date of issuance or can change over time. The new rules modify these existing interpretations in certain respects while codifying them in others.
These discreet pools have turned into dark pools. And this was deliberate. The need to hide things is very important when one is doing the money-making wizardry. When the money vanishes, the wizards waving the wands disappear via a trap door and a new one steps forwards, closes the curtains, rearrange the magic box and then opens the curtains and continues the same magic spells under new names. Every time the SEC tries to shed light or forbid actions, the wizards move to a new location and redouble their efforts at hiding the truth or manipulating things so they can tap into it and milk it at 20% advantage. Their sole function is to make themselves rich at everyone's expense. Since their chief tool is playing with interest rates issued by the central banks, one has to make the political connection between them and the central bankers. We know that the major investment houses playing these heady tricks have taken over the entire system and are now running it so that it makes them richer and us poorer! This has to stop.
People ask me how. I can only say, we must learn the truth and then confront them all politically. This is a monumental task because everyone who has power and runs the media, etc, don't want us to know the truth or confront them at all. They want us to go away and die. So the only tool we have is each other. Eventually, perhaps people will listen and figure things out. The magic of money should be taught in schools so it ceases to be so mysterious.
Securities collateralized by home equity loans (HELs) are currently the largest asset class within the ABS market. Investors typically refer to HELs as any nonagency loans that do not fit into either the jumbo or alt-A loan categories. While early HELs were mostly second lien subprime mortgages, first-lien loans now make up the majority of issuance. Subprime mortgage borrowers have a less than perfect credit history and are required to pay interest rates higher than what would be available to a typical agency borrower. In addition to first and second-lien loans, other HEL loans can consist of high loan to value (LTV) loans, re-performing loans, scratch and dent loans, or open-ended home equity lines of credit (HELOC),which homeowners use as a method to consolidate debt. [2]
And here is the Hell on Earth for both the hell hounds as well as home owners and bankers. These HELs are vulture feed. Semi-dead loans, dying loans, sick loans. Loans to dead beats. They buy them cheap from desperate organizations that made stupid loans and then use various pirate tactics like harassing people mercilessly, to get some blood from stones. This includes throwing people out of their houses that are filled with useless toys.
The second largest subsector in the ABS market is auto loans. Auto finance companies issue securities backed by underlying pools of auto-related loans. Auto ABS are classified into three categories: prime, nonprime, and subprime:
Get your 0% loan! Step right up! Of course, these 0% loans can't be resold. But they don't exist. The auto sellers simply add around $2000 to $5000 to the price of the car and then sell the excess funding to the vulture or pirate. They, in turn, hire goons who come at night to tow away cars. That is the dark side of the force.
Securities backed by credit card receivables have been benchmark for the ABS market since they were first introduced in 1987. Credit card holders may borrow funds on a revolving basis up to an assigned credit limit. The borrowers then pay principal and interest as desired, along with the required minimum monthly payments. Because principal repayment is not scheduled, credit card debt does not have an actual maturity date and is considered a nonamortizing loan.[2]
You bet, it is nonamortizing. It is open ended until death takes the debtor to the great Workhouse in the Sky. In Victorian times, they laconically said, 'He bought the farm' when the debtor died. The ABS market began with these things. Instead of holding debts, banks wanted to get rid of them and this 'security' measure was the chosen tool. Note how this has proliferated since that last banking crisis! For 1987 is an important year in the chronicle of the death of US finances. The system needs a big, fat dark hole where debts can drop and then, the troublesome ones vanish without the system breaking down. Only problem with this solution is, magic may look as if it has made something vanish but it hasn't. It lurks in the dark and grows into a monster which returns and wrecks havoc. This force cannot be denied. The Federal Reserve wishes it would go away and if they just move some levers and wave wands, we can race ahead, laughing, ignoring fundamental problems.
On January 17, 2006, CDS Indexco and Markit launched ABX.HE, a synthetic asset-backed credit derivative index, with plans to extend the index to other underlying asset types other than home equity loans.[4] ABS indices allow investors to gain broad exposure to the subprime market without holding the actual asset-backed securities.
Time to visit MarkIt and see what the charts there show:
We can see how the market began its nose dive in July. As the global banking crisis launched by the US gains strength, the ABX index collapses rapidly. The loss of wealth here is outstanding. Many a fund has collapsed due to this. These funds show only the tip of the iceberg, these funds are the ones FORCED to sell. Citadel is NOT putting its funds it took over today onto the markets. It is being deep-sixed at some distant tax haven island! But look at how things fell, then, when the Fed dropped interest rates, there was the slightest hope. Now even that is gone and all are heading to zero. And this is why the Fed is flailing about, trying frantically to drop the LIBOR rates that insist on trying to go upwards! This is to stop ALL these funds from going obviously bankrupt. If they have even the slightest value, Citadel and other vultures can sit on them for a long time until people forget about them existing and then quietly throttle them. This stops the 'panic'.
Is the roof falling in on the housing market?
Perhaps the biggest cause for concern is the scale of house price inflation over the past decade or so – and, hence, its unsustainability. Since 1997, house prices have trebled. So much of our cash has been ploughed into bricks and mortar that British households have accumulated more debt than any other major advanced economy. This year our total borrowings exceeded the national income for the first time: £1.3 trillion (£1,300,000,000,000) to pay back. At about £200,000, average house prices are at nine times average earnings, the highest ever. The dream of home ownership for many first-time buyers remains just that – an unattainable fantasy. For those who do manage to scramble on to the first rung of the ladder, mortgage repayments eat up an unparalleled proportion of their disposable income – about a fifth. That equals the record level reached in 1991, when interest rates were at 15 per cent. Household savings rates are at near 50-year lows. People cannot stretch any more to buy a home.
Just three months ago, Britain was boasting about how their markets were up and up unlike the US. Now the cat is out of the Northern Rock bag and is scratching at #10 Downing Street's door. Just a two years ago, the income/housing ratio was an already nasty 6X. Now it is 9X? Wow. Well, the central bank made this happen by giving banks 'free' money that was way out of whack with the British SAVINGS RATE. Yes, savings rate. The Bank of England does NOT sit on a trillion FOREX dollars like the very tricky Bank of Japan.
In the next article, we will talk with a former high ranking officer from a Japanese bank. She has a lot to say about all this. I will hint that our housing bubbles are a continuation of the Japanese housing bubble and the agency responsible for all these bubbles is the Bank of Japan.
and that the mortgage interest burden stands at 20% of gross income (up from 11% in 2003). Even if demand were strong enough to continue to push up house prices, the recent credit crunch has reduced the funds available to potential house buyers as lenders have reined in borrowing. There is also the additional expense from the extension of the controversial Home Information Packs (HIPs), which cost on average between £300 and £350, to all properties from December 14th (HIPs are currently a mandatory requirement for properties with three bedrooms or more).
We are at 110%. England beats us here. And getting back to where we have savings again is a long, hard road. The US had a 70% indebtedness rate only 20 years ago! We can't make it 200% nor can the dying Birtish Empire's last remnants.
Given the current credit squeeze, there will be few attractive offers from banks to refinance for a better deal. Indeed, many lenders have tightened their lending criteria as a result of the problems in the US subprime mortgage sector. According to a report from Moneyfacts (an independent financial research group) as of October, lenders had withdrawn 40% of buy-to-let and residential mortgage products over the past three months. In the case of “bad credit” mortgages, there was a 72% drop after rapid growth prior to the problems in the sub-prime mortgage market. According to Moneyfacts, even people with good credit ratings have suffered a 16% decline in the number of mortgage products available.
Selling mortgages can only happen in a land where there is still some plenty. In this case, savings. I harp about this only because all the top bankers in the West refuse to even MENTION this, much less, encourage this. We can't go from wild spending to cruel saving in this violent see-saw fashion. The controls that prevent wild money making, wild speculation and wild buying are in the hands of the central banks. And they have to recognize that when they make massive bubbles, it MUST deflate. There is no other alternative which is why the central banks have to recognize a bubble when it starts and an easy way to do this is to gage the savings rate. If it is dropping while the economy hums, this is a BAD SIGN. It means a bubble will develop. People should save in good times and spend in bad, not the reverse. When the reverse happens, this means the system is out of whack and savers are not being rewarded enough. Ergo: higher interest rates must occur.
The Economist Intelligence Unit believes that the lagged effect of more restrictive monetary policy, combined with the impact of the recent credit crunch and slower employment growth will likely lead to a slowdown in household consumption over the next year. We project that private consumption growth will decelerate to 1.7% in 2008 from an estimated 2.9% in 2007. This will drag down UK GDP growth to a forecast 1.9% in 2008—compared with an estimated 3.1% this year. The possibility of a sharp downward correction in house prices could have serious negative consequences for household consumption and hence poses some downside risk to our forecast.
The West is over-consuming. Proof of this? Obvious! We are going into debt to buy Xmas toys. And our houses are filled with children's and adult's toys. And none of this is making us richer via capitalism. We are simply going into debt to buy imported toys. Why the Fed is feeding this is the key to our joint economic decline! Wailing at China to stop sending us stuff we want to buy on credit is pure childishness and makes us like like idiots.
Mervyn King, the Governor of the Bank of England,
yesterday issued his starkest warning yet of the dangers facing the British economy, amid fears of a worsening of the global credit crisis and threats to both domestic inflation and growth.Mr King warned MPs on the House of Commons Treasury Select Committee of "rather uncomfortable" times ahead, with a "big risk" that the credit squeeze could intensify. He said the "sheer uncertainty" and fear of what lies ahead among US banks in particular was driving wholesale interest rates back up to levels seen at the height of the summer credit crises.
Mr King added: "In recent months, the near-term outlook for both inflation and growth has become less benign." He also had a particular word of caution for those in the property market. "For the UK, the consequences of [turmoil in financial markets] are difficult to assess and are likely to be evident first in the housing and commercial property markets." King puts UK economy on danger watch.
Merry Christmas and bah, Humbug! We aren't in a damn 'credit squeeze'. This is how spendthrifts talk when they demand more loans. We have reached our spending LIMITS. And the central banks can't be Santa Claus forever. Or Rudolf the Red Nose Reindeer will be served at some Chinese or Japanese embassy dinner in the future. Along with the whale meat that gets Greenpeace so angry.
It appears to me my guys in Japan have won this round. The Yen was rising strongly and starting to hammer the markets. Now it appears the carry trade is back in business, falling yen, skyrocketing markets.
I did the calculations and now the US big 3 auto companies got 52% of the domestic US market.. and the Japanese big 3 got 32%.. all Japanese together have got 36% in October.
Posted by: aa2 | November 30, 2007 at 10:12 AM
Hey, Aa2---you are fast! I am still editing the story here! Heh.
And you are right, by the way.
Posted by: Elaine Supkis | November 30, 2007 at 11:37 AM
The New York Sun today is launching an assault on Sovereign Wealth Funds. The story is on the front page, above the fold. The Sun is a small (14 pages) weekday broadsheet but is one of the flagship outlets for the Neoconservatives and is quite influential. It is where controversies are first ginned up before they go national.
Posted by: Frank | November 30, 2007 at 12:02 PM
That is a Jewish paper so it is no surprise they are alarmed about SWF.
Posted by: Elaine Supkis | November 30, 2007 at 12:11 PM
Again, the NYTimes continues its assault on Venezuela ahead of the referendum.
http://www.nytimes.com/2007/11/30/
business/worldbusiness/30chavez.html?ref=world
The article says that corrupt regimes like Nigeria and Azerbaijan and heeding the call for Venezuela to provide financial transparency to Western officials.
What a bunch of crap.
This is the 4th such article the Times has published to try to destabilize or misrepresent the first attempt at giving the people more power.
The article quotes a senior director at Fitch Ratings..questioning how Venezuela invests its money...the same Fitch ratings which inflated subprime mortgage ratings in the U.S.
The article continues to malign Venezuela for running deficits due to high social spending...I suppose our 9 Trillion dollar military debt is a better use of funds than supporting the poor.
The jist of the article is the Western governments aren't happy that they don't have a Noriega or Pinochet in office to brutalize the people in exchange for Friedmanesque rape and pillage of the countries economy.
The U.S. powers will do everything to keep Venezuela from succeeding because if it does, the rest of Latin America will follow very quickly.
Posted by: Big | November 30, 2007 at 02:22 PM
Big,
The New York Times' Venezuela "reporter", Simon Romero, is pretty much the Times' South American Judith Miller, a shameless purveyor of disinformation:
Posted by: Frank | November 30, 2007 at 03:15 PM
Thanks for the info on Simon Romero. I love the website.
The other slimy article was written by Jens Erik Gould.
Posted by: Big | November 30, 2007 at 03:47 PM
Aa2 said....
" did the calculations and now the US big 3 auto companies got 52% of the domestic US market.. and the Japanese big 3 got 32%.. all Japanese together have got 36% in October."
I always have trouble when these types of numbers are tossed around. In that, they don't state the overall sales versus this time last year or last month, etc. They may have sold, say; 50,000 last year and only 25,000 this year. So 52% of that is not so great compared to last year's sales. 52% sounds great, but again, what are the real numbers?
Recap: 52% of what, exactly? Is this a percentage of an overall lousy sales period anyway for all car manufacturers as people are buying less frivolous, big ticket and durable goods as reported?
I need more data and science to these numbers of 52 and 36 percent.
Posted by: Blunt Force Trauma | November 30, 2007 at 04:10 PM
Elaine
You asked for something to do. Here is one strategy.
Refuse to accept Federal Reserve money in payment of money owed. Accept only US silver coin dated 1964 or earlier.
This has the advantage that you can be paid in the market value of the silver but only have to report the face value for tax purposes.
When the people no longer accept the Federal Reserve money they will automatically end the Fed and US government conspiricy to defraud the citizens of their savings and control of their government.
Don't leave it up to rock stars and Brazilian models to do this hard job.
Thanks for the interesting and prolific reports
Pete McLaughlin
Posted by: Pete McLaughlin | November 30, 2007 at 05:59 PM
Believe it or not, I have not only pre-1965 money in coin as well as bills, I have old gold certificate dollars that the government made illegal!
Posted by: Elaine Supkis | November 30, 2007 at 06:11 PM
This is somewhat off topic, but what do you guys think of the AP reports that the administration is planning to make massive cuts in the Homeland Security budget?:
http://news.yahoo.com/s/ap/20071130/ap_on_go_ca_st_pe/security_grants
I have a very conspiratorial worldview, so my gut wants me to believe that this is a first, very early indicator of the false flag operation that is being planned for next years elections.
Then the administration could say, "Oops, we need to redouble our efforts and put all that money back into Homeland Security! Oh, by the way, no elections this year. Or any year for that matter. Go back to sleep America!"
Posted by: 2012MIHOP | November 30, 2007 at 07:47 PM
Since when have traitors EVER protected us from anything at all? Maybe they will let Santa crash into someone's chimney.
Posted by: Elaine Supkis | November 30, 2007 at 08:36 PM
Big/Frank,
Sounds like a guy I went to school with, Big Frank.
Anyway, Someone recently pointed out that Chavez is being maligned for doing two things that the majority of the American people wish our leaders ( for lack of a better term ) would do. Radically change for the better national health care, and tax the f*ck out of Big Oil. He bartered oil for Cuban medicos/EMT's plus more than doubled oil taxes.
Posted by: Al | November 30, 2007 at 09:45 PM
Big = Basic Income Guarantee
Venezuela is an example of what happens when corruption fails the people and 70% live in poverty. They search for a charismatic leader.
In this case, Chavez seems to be a benevolent dictator who is trying to increase freedom rather than restrict it. Of course to do this he has to restrict the freedom to be sociopathic.
A good documentary to watch is "The Corporation" which illustrates sociopathic behavior of companies. Most normal people don't know that companies are chartered and that the charters can be revoked at any time. This should be done more often.
This is what Chavez is doing. The people believe in him to stop the injustices of Western Imperialism and neoliberalism, and are willing to give him he power he needs to carry it out.
When you have a Trillion dollar U.S. war/cia/media deception machine constantly at your throat, you have to be strong or they will walk all over you.
Associated Press just published a piece saying that Chavez will control the assets of two Spanish Banks if the former King of Spain doesn't apologize for telling him to Shut Up.
Somehow I question the truth of this article.
On the oil tax issue, the Venezuelan people were robbed for tens of years by U.S. and foreign oil companies, and by rich insider Venezuelans who are like the "Gollum Sachs" characters Elaine talks about.
Definition of sociopath:
One who lacks a sense of moral responsibility or social conscience.
Posted by: Big | November 30, 2007 at 10:13 PM
Another definition:
An entity interested only in their personal needs and desires, without concern for the effects of their behavior on others.
Posted by: Big | November 30, 2007 at 10:16 PM
It seems like any threat, however small, to our ruling class just brings out the viciousness. From Pat Robertsons death threats to the AP articles Big mentioned, even dumbass DLC liberals like Kevin Drum who refer to Chavez as a dictator. Makes me feel paranoid. I'm not particularly smart, just well-informed and if I know this stuff why doesn't everybody else ?
Posted by: Al | November 30, 2007 at 11:21 PM
The bottom line with Chavez is Venezuela has oil. The MSM wouldn't give a damn about him otherwise. How much have you heard about Belize? No oil, no news, who cares? Benevolent dictator, let's not start parroting the propagandists. Chavez was elected, beat out a coup with the support of the people and won a recall attempt. Now Bush, that's a dictator, no elections won and over rules the Constitution. As for the extension of the presidential term in Venezuela, some might argue that FDR would still be president of the USA.
Posted by: RGB | December 01, 2007 at 02:27 AM
Blunt Force.. you are right with statistics you really have to be specific, which I wasn't very. I look at auto numbers from all the major manufacturers each month. Early next week we should get November's numbers for the US market. I also try to get the sales numbers in other markets like China and Russia, but those are more like quarterly numbers or annual.
The 52% is the percent of the total US auto sales in October. I think there was around 1.3 million units sold in October, so they are looking at about 670k units.
The press usually reports sales growth or decline by comparing the latest month to the same month the year before. Which to me is one statistic but needs to be put in context. For example if the market declined by 5% year over year but a company was down 3%, they actually increased market share. Another issue is the selling days, some media and some companies adjust for number of selling days each month. Which I personally do not like, I like the raw numbers.
Posted by: aa2 | December 01, 2007 at 04:10 AM
Al - The fact that you read Elaine's site proves that you are smarter than the average bear.
RGB - As far as the benevolent dictator comment. I recognize that someone who has been elected, beat referendums, escaped coups, and has popular support cannot in the true sense be called a dictator. My point was that when people are desperate , they choose authoritarian personalities who can be either malevolent or benevolent in the use of their power. The more power they collect, by vote, force, or manipulation, the more important their intent becomes.
The thing about Chavez is that he is collecting power to ENABLE a functional social democracy. An economic democracy, initially funded with Oil, but hopefully over time the Venezuelan communal governments will expand worker owned factories and farms, decreasing the reliance on expensive imports and building a sustainable economy irrespective of the price on oil.
Without oil this could not even be though of, never the less accomplished.
However, I don't believe that oil is the reason that the media is attacking it.
The mainstream U.S. media, not the people attack true democracies because they are tools of propoganda power and thus enrich their owners.
They rely on advertising fueled conspicuous consumption and encourage the indebtedness of our nation.
Our governments attitude is that it MUST be stopped. Because if it suceeds, the TINA argument (There is No Alternative) fails and the sleeping dragon of the American poor/middle class will awake and the status quo of raping the people in the U.S. will fall.
Posted by: Big | December 01, 2007 at 11:51 AM
Kind of like when Chomsky talks about the "threat of a good example". While the oil has a lot to do with it, Haiti or Panama or a lot of others didn't have oil but the threat of a good example or the TINA thing can be enough to get an imperial power riled up. I think the oil is used more as a selling point. As I recall hella people justified the Iraq invasion in their own minds by dwelling on the prospect of cheap gas.
Posted by: Al | December 01, 2007 at 01:12 PM
Exactly Al,
The powers that be want to make all alternatives to Vulture (Crony) Capitalism equivalent. The 21st Century Socialism that Chavez espouses is more like the Economic Democracy Worker Cooperatives like Mondragon in Spain than top down government control of production.
But...conflating the two, bringing up red-scare propaganda, and then ( I'm predicting) siting increased risk of terrorism ( bring in Iran), will be the next steps.
Once Fidel goes, the U.S. will take Cuba down...which will interrupt the medical programs in Venezuela. Columbia is already a tool of U.S. policy, both on the drug front and military.
The question will be whether the U.S. piggy bank is really broken this time, and China/Russia rise to the occasion. That isn't a panacea, because human rights in China/Russia ( and thanks to Elaine we know Japan as well) are very bad.
The race to the bottom continues.
Posted by: Big | December 01, 2007 at 02:09 PM
Venezuela supports CUBA and sells US oil! A double reason to attack, right?
The US has always hated democracy in third world or subject nations. Note how we support Saudi Arabia! It doesn't matter to us who rules, so long as the PEOPLE in various places are kept IN THEIr PLACE which is below our boot heels.
The end of 1984: Winston, just remember, history is a boot stamping on your face.
Posted by: Elaine Supkis | December 01, 2007 at 09:22 PM
I don't think we're supposed to talk about this, the US hating democracy in subject nations. It's like not supporting the troops or Israel. or questioning dropping the bombs on Japan. Americans don't like to hear accepted wisdom criticized.
Posted by: Al | December 01, 2007 at 11:49 PM