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What a manouver. *clap,clap* Liquidity is King, no liquidity no derivative and leverage fun; and now they have hooked up an Eternal Liquidity Machine straight into their veins. That was worth a 'Carlyle' front company pawn surely.

Maybe the FED needs a new acronym, ELM doesn't really work. How about LSD - Liquidity Siphoning Device, or something.

Elaine Meinel Supkis

Good one, Chris.


I'm on my way to NY State to care for my dying mother. She has only a few months to live and will die at home under the care of her neighbor/Dr., her friends, and her children.

Whatever money she has we will spend to make her comfortable, to assist her. This is the function of money now in my family. It belongs to all of us to assist our mother. Money needs a higher cause than itself.

The Chinese described a three generation curse,where the 1st generation is poor and makes a fortune, the 2nd, tries to sustain it and the third, squanders it.

Money is meaningless to me except that it makes those I love more free so that they can live and die w/creativity and w/out undue suffering.

Human creativity is real capital. Money is meaningless unless it facilitates that creative capital.

Sorry for the melodrama. I love this site!


Oh yeah! I'm boycotting the Chinese Olympics alright! In fact, I'm boycotting the nifty town seven miles away, because my dog can't be left alone for more that 20 minutes or she starts tearing down the doors. Plus, I just had all my remaining teeth yanked — They've been hurting like hell for two years now, so I decided to get dentures while my insurance still covered them. So far, so good. I admit I was scared.

This "Tibetan" rebellion in China has got to be the most futile endeavor since the Colbert For President campaign. A few over-accessorized American zealots will cancel their visit. I really have this quasi-paranoid notion that the whole "pro-monk" franchise is nothing but another little excuse for the US to welsh on it's $1+ TRILLION debt to China. I hate it when the mass media organs try to bullshit me. No wonder so many are getting their news from Alex Jones these days. The day after my teeth were pulled, I woke up with a hellacious flu, freezing in a warm room, and shuddering. So I've not been posting much.

But what are the presidential choices we've been dealt? (Never mind the dippy Congressional ones!) We need some kind of political overhaul, for sure. Screw the "autonomous federal reserve", and "supreme court." Those rabbits are in way too deep to find their way out of the hole they've dug! We could use a few good new ideas about now.

Well, the crocuses are just starting to open in the Connecticut River Valley. I should get to work on my linguistics stuff. That is really interesting stuff! It sure beats the hell out of the lame presidential "race."


I am sorry to hear of your mother's ill health. but I have much respect for your caring for her, and wanting only to make her final days happy. We were the same way with my mother, it's terrible to hear some people putting money first. May God care for her and you.


Indeed Meadows well said.

Wars typify needless destruction. I just read that for a sixth of what the war in Iraq will eventually cost, the US could fix Social Security for 50 to 75 years... Essentially this means Bush, by his decisions, will be responsible for the premature death of a lot of Americans; but, 'it was worth it' to him.

Phil Lovering

Chris posits LSD acronym. I like LPG ... liguid petroleum gas. First there is the leak in a container. Gas rushes out leak faster and faster, as liquid heats up and boils, until finally ignition temp and boom: fuel air explosion. Everywhere gas is -- go boom.


Despite today's rally, the risk of loss of cash as well as investment capital continues to unabated and unparalleled in history.

Banks and investment bankers were reliquified somewhat today, and were invigorated by market action; yet today's robust action is totally illusionary as much of their capital is is in illiquid and overvalued mortgage backed bonds.

The truth is that these organizations are highly leveraged and JPM, C, and BAC are loaded with ticking timebombs.

A "financial emergency is coming" as a lightning strike out of the blue; it will most likely come in April 2008.

The financial emergency can be the only outcome of banking insolvency that was established by this week's volatility in the capital providers sector.

The Leaders' Joint Statement that came forth from the March 31, 2006, Cancun Summit provides a framework agreement for North American emergency management to handle a disaster, whether natural or man-made; and most definitely an economic disaster is coming.

Given this week's failure of capitalism, the SPP, will ease the transition from capitalism to state corporate rule of the resources and people of the North American continent: the coming enforcement of the SPP places one's capital at great financial risk.

The current run on the dollar will continue: corporations and individuals should not be invested in stocks of any kind, even precious metal or natural resource stocks, as well as not having any money in any U.S. dollar cash position such as a savings account, a checking account, a money market account, a short term bond fund, a TIP bond ETF or TIP bond fund, US Treasury Bills, an ETF, a mutual fund variant thereof, or a $1 money fund; and even a dollar denominated short selling account.

Soon the US Treasury Bond Market will declare a defacto interest rate hike independent of Federal Reserve action, and government bond prices, especially the 30 Year US Treasury will fall like a rock: this will catapult gold to well over $1,000.

In as much as gold has fallen below its 50 day moving average, I recommend that one be long the Gold ETF, GLD and use margin credit to go short a number of things from the list below:

Companies Worthy Of Short Selling Because Of Their Huge Derivatives Positions

Companies Worthy Of Short Selling Because Of Their Mortgage Exposure

Insurance Companies Worthy of Short Selling Because Of The Credit Default Swap, CDS Positions

Investment Bankers

Mortgage Companies



Closed End Municipal Bond Funds

Basic Materials




Mortgag REITS

Real Estate and REITS

Real Estate Developers


Lumber and Building Materials



Consumer Discretionary



Credit Services






Emerging Markets


Elaine, do you ever visit the following site:


I'm guessing maybe not, but it sure seems like you and Karl Denninger are usually on the same wavelength (even if there may be political differences). :-)


Richard -- I enjoyed your detailed list of all the places NOT to put money, including the dollar. I am assuming foreign currencies would work just fine?

My favorite and most accurate European think tank just published their latest prediction about what is going to happen in the US and to the world economy over the next few months. Here's an excerpt:

LEAP/E2020 anticipates what the global systemic crisis (now obvious to everyone) will bring along in the next few months, as regards in particular to the negative side effects of the US Federal Reserve's bank loans currently contributing to weaken even more the US financial system, and as regards also to bank exposure in the US and in the most exposed European countries.

Simultaneously our team analyses the effect of today's US economic and financial crisis on the probability and consequences of an attack on Iran by Israel and the US before the next US presidential election.

The whole world is now aware that we are faced to a crisis of unprecedented scope and nature. This level of awareness enables our team to refine some of their anticipations.

About currencies for instance, our team undertook to review their estimation of the value of the US dollar against the three other strategic currencies - Euro, Yen and Yuan. LEAP/E2020 now estimates that the EURUSD exchange rate will reach 1.75 at the end of 2008 (instead of the 1.70 estimation made in 2006); the USDYEN rate should fall down to 90 and the USDYUAN down to 6 (4).

(4) LEAP/E2020 wishes to stress the fact that in the case of a combined US/Israel attack on Iran this year, our US dollar index estimations for the end of 2008 presented in GEAB N°23 would be even worse. About the rumours suggesting that a concerted action of the central banks will put a stop to the plummeting of the US currency, they do not have any basis: a similar action can no longer be implemented because central banks now have diverging interests due to the decoupling of the world's largest economic regions, as anticipated by LEAP/E2020 many months ago. The collapse of the US Dollar is the result of a US economy in recession and a related devaluation by 50 percent against the other big currencies.

The sentiment among foreign bankers is that there a greater that 70 percent probablilty that the US will start another war within months -- and 2008 Elections in the US will be "postponed." (Via a special "national emergency" provisions in the Patriot Act.)

How many times in the past two weeks have you heard Bush, Cheney, Dana Perino, and even that nitwit McCain mention the word "Iran" -- completely out of context?

Making money from holding foreign currencies is soooo easy. The problem is where to stash the foreign currencies. Any ideas?

Or is it better to get the money out of the US before the shooting starts?


One of the undercovered stories is the IPO of VISA.
Another undercovered story, the FED is absorbing bad mortgage paper. With the defaults coming on that paper, the FED will be one of the largest homeowners in the USA, and also one of the largest mortgage payment collectors since not all the sub-par mortgages will default.
It is good to remember, that liabilities and losses do not get "shifted to the government" they get shifted to the taxpayer/citizen/unborn children. Government is a wonderful tool for intertemporal transfers as well as intergroup transfers of wealth and risk and debt.

Bear of Little Brain

Pluto: I use the ETF's for currency plays, although there is a limited selection. Examples FXY for Yen; FXF for Swiss Franc; FXE for Euro.

Thought: currencies transferred overseas are documented, so you may find yourself on the "no-fly" list when you want to collect; possible currency controls I'll leave to your imagination ("unpatriotic" actions warranting confiscation?).

Interesting times. Aux armes, mes braves!

Elaine Meinel Supkis

Governments take over monetary exchanges all the time and prevent access to overseas accounts. This has happened in the past and WILL happen in the future. When things really crash.

This is why I examine past crashes very closely. The ONLY working system to protect us in downturns always is political action leading to change. And this election cycle has devolved into being all about NOT changing ANYTHING AT ALL! Not even ending a war that is bleeding our economy literally to death.


Hi Elaine,

This is another brilliant article, and I feel that I need to say something here.

I think it is time for you to remove Mike Whitney's articles from your blog. I have read them all and I am very disappointed in how he glosses over or completely ignores major causes of our current disaster. We all know the consequences and effects. What we need to know is the cause of these crises, and only you provide that information.

Mike Whitney has plenty of places that will publish his articles. Those who come to your website do so in order to learn both cause and effect, and not just mere reporting on what is happening because of some mysterious causes that we cannot find or explain or understand. The Silver Bear Cafe does an excellent job of that, as well as other sites.

I truly do not see Mike Whitney's articles as adding anything at all to what you have to say, and I have read them all.

Elaine Meinel Supkis

DeVaul, a number of readers used to send me all his postings but on top of this, Mike and I are quite friendly. I like doing cartoons for him and this pleases him. Note that usually, I insert my disputes into his story...he reads these comments and we discuss things via emails.

So please give him a break, OK? And thanks for the feedback.


I know you all are friends. I have nothing against him personally, and I know he is way above the average reporter.

I just tire of him not connecting obvious dots and just leaving a blank hole for the reader to guess at what might be there.

I think he should consider that when writing his articles.


Well, I wanted to say thanks to everyone who has commented in this thread. All very interesting, insightful, and lively additions to the conversation, and I won't mention you all by name. And, of course, spot on as always, Elaine. Thank you once again for your news service!

DeVaul, I understand your point, but I have to disagree to Mark's defense. Reading his last article, I felt he glossed over some things, and missed some of the "bigger picture", "connect-the-dots" stuff. I was going to comment on it, and then I realized, the biggest point that seemed to have been untouched in his article, was actually in the title! "The Fed is just an Extension of the Banking Establishment; The Bear bailout proves it".

Now, here's the thing: I see Elaine and Mike as being a very right brain / left brain kind of combination. Elaine uses metaphors, symbolic language, and speaks to the passions; whereas, Mike is very direct, logical, descriptive. Where Elaine sings a painting, Mike submits a map into evidence. Both are necessary and appreciated, in my books. And I'm glad to know I can catch him here, where the folks "in the know" are (not just Elaine and Mike, but all the regular commenters, as well), while 'norms' can absorb his POV in an easy-to-digest format alongside standard head-up-its-ass leftism on other sites.

Mike: In my books, you and Elaine are on the same page as Gore Vidal, Jim Stanford, and few others. Maybe John Lennon. Even Noam Chomsky is a bit of a fetishist, if I may say so. Please keep it up!

Elaine Meinel Supkis

And I learn a tremendous amount from the comments here. I find most of them well written, concise and intriguing. I feel blessed to have such readers and want to thank everyone for taking the time to talk here. Thank you!

Also, unlike many 'blogs', I notice little 'snark' here. Snarking is fun but very limiting in the end. The round table talks here are much more fun, I think.

And thanks for that, everyone.

Bear of Little Brain

Pluto: I use the ETF's for currency plays, although there is a limited selection. Examples FXY for Yen; FXF for Swiss Franc; FXE for Euro.

Thought: currencies transferred overseas are documented, so you may find yourself on the "no-fly" list when you want to collect; possible currency controls I'll leave to your imagination ("unpatriotic" actions warranting confiscation?).

Interesting times. Aux armes, mes braves!


This site has BY FAR the best comments/discussion of any blog I have seen. It is quite a mystery to me how Elaine does it. Maybe the erudite articles intimidate the normal troll patrols.

Jerri Larimore

Sometimes, learning should be taken the hard way. For us to realize our teeth's significance, one should experience losing it. Probably pain is all that matters for us to learn. Are we going bankrupt? Hopefully not.

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