Greenspan's PhD Is Fake

April 4, 2008

Elaine Meinel Supkis

Greenspan's PhD research turns out to be nothing. He is probably a fraud. Surprised, anyone? And from the Ninja Economist, more 'scary charts.' Just like yesterday, the day before and the last 100 days before that, almost all the economic news is 'bad news.' So world stock markets resume their fall. What a surprise. Again. Sub prime losses are now over $230 billion and climbing. Far from bottom, there is more to come as we knew way back last year. More American consumers are falling behind their many debt payments as job losses accelerate. This was easily foreseen by anyone with half a brain, of course. Not that the people running things have brains. Note that Greenspan was too stupid to write a thesis for his business Phd. Not that these things are worth the paper they are printed on. Like the dollar.

Dr. Greenspan's Amazing Invisible Thesis
By JIM MCTAGUE

Greenspan, who left the Fed in 2006 but is still consulted as a genius, might find a metallic exoskeleton exceptionally comforting come May, when the University of Texas Press publishes an unflattering book by Robert Auerbach entitled Deception and Abuse at the Fed: Henry B. Gonzalez Battles Alan Greenspan's Bank.

Auerbach, a veteran Fed basher, portrays Greenspan as a real-life Professor Marvel -- who, through double-talk or "garblement," transformed himself into a mighty economic wizard à la Oz. Auerbach strongly implies that Greenspan's 1977 Ph.D. from New York University was obtained in a few months with little more rigor than a matchbook-cover art degree and that Greenspan has kept his Ph.D. thesis secret in order to protect his vaunted academic reputation.
*snip*
"Normally," writes Auerbach, "a Ph.D. dissertation in a field such as economics must be in a form sophisticated enough to be usable in research, must make a contribution to the existing body of knowledge, and must be original, unpublished work. When approved, the Ph.D. candidate is normally required to supply a bound copy of the dissertation, which remains in the university's library and is available for future researchers to consult."

Auerbach, who has a Ph.D. in economics from the University of Chicago (Nobel laureate Milton Friedman was his thesis adviser), kept requesting access to the papers until NYU's provost, David McLaughlin, finally admitted in August 2005 that, "I can tell you that it was the practice of the business school, during the 1970s, not to deposit dissertations with the library. Thus, a copy of Greenspan's dissertation is not in the Bobst Library. We suggest that you contact Greenspan directly in order to obtain a copy of his dissertation."

Writes Auerbach: "Evidently, he wanted me to believe that NYU business Ph.D.s just took their dissertations home and put them in a drawer."

HAHAHA. So much for Greenspan's veritas. I suppose he got his degree due to his 'life experience'. Back then, it was being part of the Nixon 'Wage/Price Freeze' team? HAHAHA. He should have gotten his degree from Moscow University for Economic Research. As the US misspent money on a fruitless war with Vietnam and the Cold War, our economic condition evaporated. As always during wars, this spending caused inflation to take off. So, belatedly, our government went from 'guns & butter' into 'rationing'. The reason governments ration during wars is to prevent inflation, after all. But we did our rationing after losing the Vietnam War. I suppose Greenspan, learning about economic matters in this school of dementia, learned some interesting lessons about how one can use war to boost the money supply.

Greenspan's reign at the helm of the Fed will go down in history as one of the worse. And he has competition, too! Bernanke is giving him a good run for the debased money. Greenspan is a purely political hack who did whatever his buddies wanted him to do. This is why all charts showing money supply matters and the condition of banks go off the charts when he took over. The vacillations and severe rises and tremendous falls are painfully obvious. This raging instability was due to his political objectives which were to support wild government misspending and encourage bubbles in speculative areas. Incidentally, government and trade debts shot through the roof during all this. For this reason alone, he bears the crown of 'Worst Fed Chief...EVER.' And the name 'traitor' should be appended, too.

For this fool has destroyed our nation. This is no small matter. He made it easier for a troop of pirates and pack of hell hounds to pour into this nation's economy and strip it bare. All we have to show for this is a mountain of debts we can't pay.

To all INFLATIONISTS: I’ve almost ALL these charts are for you. Each MASSIVE write down is the DESTRUCTION of credit and money. Since these write downs go straight to the bottom line, this results in the MASSIVE de-leveraging of these HIGHLY leveraged corporations. Because they ALL have to de-leverage at the same time, risky assets (from simple equities, to real estate) all find themselves CONTINUOUSLY OFFERED, with NO SUSTAINED BID. This is DEFLATIONARY.

Also, for the last time: The Fed is NOT printing money. Nor will it. The current liquidity injections are NOT inflationary, as they are TEMPORARY and nothing more than SWAPS of one illiquid (toxic mortgage derivatives) asset for one liquid (U.S. government debt) asset.

Ninja's second chart has an important error:

I always note the 9/11 anomalies. This is when the government decided to cheat on nearly everything, commit open crimes without thought. The whole world felt sympathy for us and let us run riot so we ran riot. Note how the excess infusion was NOT soaked back up by the Fed. The first infusion was the Greenspan attempt at giving Bush a 'good' economy right after he stole the election. To prove to America, life under a dictatorship is preferable to freedom and democracy.

Also, the tax cuts instituted right before 9/11 are the major part of the fuel for inflationary fires we see even now. Despite many billions disappearing rapidly as the funny money vanishes like snow in the hot sun, so it is here: the money may be vanishing but the central bankers are replacing it as fast as possible! But the excess differential we see on this chart when the Fed refused to clean up the 9/11 injections is still fueling inflation. Until this is soaked up [and the Fed intends to never soak it up!----Unless Volker takes over!] we will have inflation.

Now for some truly stupid things from the International Monetary Fund:

Straight Talk: Inside Risks
Simon Johnson

Yet it’s also the case that, since July 2007, some of our most reliable indications about the exact nature of rapidly emerging financial problems have come from these very same markets for risk. In fact, looking back over the past six months or so, it’s now apparent that these markets have given us a quicker and more accurate heads-up about potential macroeconomic issues than have many conventional macroeconomic indicators.

Specifically, you can see the market’s view on the default probability of various securities from the price of so-called credit default swap (CDS) spreads. The idea is that if you want to hold a security and protect yourself from the risk of a default, you can effectively buy insurance through this market—actually, you buy the option to sell (or "put") the security to someone else if it defaults. The CDS spread is the price (or effective premium) of that insurance. Because many of these CDSs are traded in liquid markets, the price of this insurance is updated in a rapid and transparent manner.

You know, if we want a fire alarm system that is the house burning down and the whole neighborhood noticing it, we could say, yes, the present system sends us warnings. Or if we want forest fire warnings to be a raging forest fire, yes, this is also a nifty notion. But if you don't want forest fires or houses burning, it is a truly lousy system. Rational people looking at statistics could clearly see what was wrong long ago. I have. And if I can do it, anyone can do it. We don't need a total collapse in a huge financial sector to be our warning that something is wrong!

And the IMF KNOWS THIS! But they have spent years in denial. As the G7 nations rapidly drove the planetary financial/trade systems off the cliff, these are the same nations that used the IMF to demand trade/budget stringent measures for all other nations, not themselves! Now, the bastard sheep are baaaing their way home again. And the things the IMF chastised other nations over, are now showing up on the G7 balance sheets.

Also, the IMF should, like me, be pushing for the ELIMINATION of all 'insurance' against defaults on these sorts of instruments! This 'insurance' gave them all room to write up hideous Alpine mountains of bad debts. There wasn't a bad deal these people weren't willing to underwrite. The only brake on reckless lending is FEAR. And if we remove fear of failure, they will write loans for anything and everything on earth, to infinity. Literally, not metaphorically.

Ergo: we must prevent them from having these hedges on their own bad bets. Indeed, they themselves know they have overblown the 'insurance' side of things. This is all part of that massive, hideous monster I call 'the Derivatives Beast'. The reason I picture it as a living creature is simple: it grows. It stirs and things go crashing down. It eats, too. Things it eats, vanish. It now dwarfs all other metrics in our global economy. By far. And the IMF should have attended to this critter! They knew about it! They could see it just as clearly as I! They know who is feeding this creature. And they do absolutely nothing. They can't even talk honestly about it or discuss some way of stopping it from growing to infinity. For infinity is fatal for all of us. The entire financial system of the world will be sucked down, in a flash, into this deed, dark hole and in the past, when this happens, the resulting depression can last for over a thousand years. So we have to deal with it and slay it. Outlawing this sort of hedging is one way. In my mind, the ONLY way to end this menace.

Gold-based believers like Ron Paul hope that will squeeze off this infinity-making machine. Perhaps it will. The truth is, we have to find some tool to end this madness. Time is running out. After the Derivative Beast passes the quadrillion mark, we are in very dangerous territory. And it is heading there...rapidly. Since it doubles every 5 years or faster, and is already passed the 1/2 quadrillion mark, we don't have much time left.

False ideology at the heart of the financial crisis

By George Soros

The proposal from Hank Paulson, US Treasury secretary, for reorganising government regulation of financial institutions misses the point. We need new thinking, not a reshuffling of regulatory agencies. The Federal Reserve has long had authority to issue rules for the mortgage industry but failed to exercise it. For the past 25 years or so the financial authorities and institutions they regulate have been guided by market fundamentalism: the belief that markets tend towards equilibrium and that deviations from it occur in a random manner. All the innovations – risk management, trading techniques, the alphabet soup of derivatives and synthetic financial instruments – were based on that belief. The innovations remained unregulated because authorities believe markets are self-correcting.

Regulators ought to have known better because it was their intervention that prevented the financial system from unravelling on several occasions. Their success has reinforced the misconception that markets are self-correcting. That in turn allowed a bubble of excessive credit to develop, which extended through the entire financial system. When the subprime mortgage crisis erupted it revealed all the weak points. Authorities, caught unawares, responded to each new disruption only after it occurred. They lacked the ability to foresee them because they were in the thrall of the market fundamentalist fallacy. They need a new paradigm. Market participants cannot base their decisions on knowledge, or what economists call rational expectations. There is a two-way, reflexive interaction between the participants’ biased views and misconceptions and the real state of affairs. Instead of random deviations, reflexivity may give rise to initially self-reinforcing but eventually self-defeating boom-bust sequences or bubbles.

Time for more charts! Click on chart to enlarge:

As usual, when we add important events as well as noting basic economic conditions, the chief often being the relative price of oil, we can see clearly how things got out of control. All the money charts show the same actions: starting in 1970, everything suddenly curves upwards. Inflation may rise and fall but ALL of the money charts show the same ever-steepening curve. What this chart above shows is how our government has flooded our own banking system with its debts. And how the sales of Treasuries are feeding underlying inflation that is HIDDEN FROM VIEW. This is, like our huge government debts, being shipped overseas and hidden in the bank vaults of our trade partners. Who use this as leverage for controlling our economy. For their own benefit.

Since much of this money was absorbed by our own banking system, enriching it and giving it a huge base to make loans, since it also has been parked overseas, this is the root cause of global inflation. Our own government is causing global inflation! And the IMF is supposed to go after nations doing this. But won't even discuss this matter. We know that our national debt has shot from $1 trillion in 1980 to over $9 trillion today. And will be double that in ten years or less. Like the Derivative Beast which is fed by our own government spending, this is an unrealistic growth rate. The US cannot double its debts every year for long. No one can. Nothing on earth, not micro organisms, molecules or large living creatures can multiply and double in size forever. Mother Nature has stern limits on this.

And always, when any system, thing or dynamic begins to double and redouble, it crashes. It doesn't slowly cease. It blows up. This is the 'hard landing' everyone talks about. But if we look at all the charts Ninja supplies in the above story, we can see a lot of 'off the chart' collapses. This is Mother Nature's way of stopping a ridiculous dynamic.

Wall St banks seek to ring-fence bad assets

Wall Street banks are working on plans to separate troubled assets from the rest of their businesses in an effort to ring-fence problems and restore investors’ confidence in the financial sector.

A number of US firms are looking to follow the example set by UBS, which this week put securities linked to US mortgages into a separate subsidiary with a view to eventually reducing its exposure to the troubled assets, which have been responsible for more than $30bn of losses so far.

Just like with the hedges and the Derivatives Beast, the idiots who want infinite wealth are now trying to fence in the unicorn. They thought they would get infinitely rich on giving out infinite easy loans to the masses to buy houses, etc. And for businesses to merge, etc. Now that these loans are going bad, they are trying to stop this process from unwinding. Or rather, they want to shove it aside and make it an orphan of someone else while it loses value. Then they can find somewhere else to dump more mountains of debts and collect their fees. This is like garbage men who are paid to take away the garbage but then fill up the truck, return and dump it all on our front yards, then driving off to a new neighborhood to do the same.

Subprime Losses Reach $232 Billion With UBS, Deutsche: Table

Firm Writedown Credit Loss(a) Total

UBS 38 38

Merrill Lynch 25.1 25.1

Citigroup 21.4 2.5 23.9

HSBC 3 9.4 12.4

Morgan Stanley 11.7 11.7

IKB Deutsche 9 9

Bank of America 7.3 0.9 8.2

Deutsche Bank 7.4 7.4

Credit Agricole 6.5 6.5

Credit Suisse 6.3 6.3

Washington Mutual 0.3 5.5 5.8

JPMorgan Chase 2.9 2.1 5

Wachovia 2.9 2 4.9

Canadian Imperial (CIBC) 4 4

Societe Generale 3.8 3.8

Mizuho Financial Group 3.4 3.4

Lehman Brothers 3.3 3.3

Barclays 3.2 3.2

Royal Bank of Scotland 3.1 3.1

Goldman Sachs 3 3

Dresdner 2.7 2.7

Bear Stearns 2.6 2.6

ABN Amro 2.4 2.4

[bn:WBTKR=FORA:NA] Fortis [] 2.3 2.3

Natixis 1.9 1.9

HSH Nordbank 1.7 1.7

Wells Fargo 0.3 1.4 1.7

BNP Paribas 1.3 0.3 1.6

DZ Bank 1.5 1.5

National City 0.4 1 1.4

Bank of China 1.3 1.3

Bayerische Landesbank 1.3 1.3

Caisse d'Epargne 1.3 1.3

LB Baden-Wuerttemberg 1.3 1.3

Nomura Holdings 1 1

Sumitomo Mitsui 1 1

Gulf International 1 1

European banks not 8.4 8.4
listed above (b)

Asian banks not 4 0.7 4.7
listed above (c)

Canadian banks 2.4 0.1 2.5
excluding CIBC (d)
____ _____ _____

TOTALS* 206 25.8 231.8

They already have dumped $232 billion on our front lawns. There is at least another $232 billion to go. This is half a trillion dollars in bad loans that must be dumped somewhere. As communities struggle to deal with the fall out of all this bad lending, housing is abandoned, projects left half-done. Blight spreads across the planet as taxes are used to keep cities from burning down as arson, looting and vandalism rise astronomically. And they want to be cut out of this mess they made? This should NOT be allowed!

And we get to the concept of moral hazard. If everything is hedged and insured, there is no moral hazard. But the hazard becomes the very hedges and insurance themselves!

Why the Fed Can't Do What It Wants to Do

by Frank Shostak

A fall in the growth momentum of the Fed's balance sheet is the key reason why monetary liquidity is still depressed despite the very easy interest rate stance of the Fed. It is for this reason that interest rate spreads have continued to widen.

In order to have a narrowing in the spread, it is necessary to increase monetary liquidity, i.e., the increase in the growth momentum of the Fed's balance sheet. For the time being, given the weakening in economic activity, this is not easily done. Obviously, if the Fed were to decide to set the interest rate target to nil, then it could have the freedom to pump as much money as it likes. But by doing that it runs the risk of seriously undermining the bottom line of the economy.

Also, contrary to popular belief, the policy of setting and bringing the federal funds rate to a particular target rather than producing economic stability generates the exact opposite result. We have seen that to maintain the target the Federal Reserve must offset various disruptions in the federal funds market by buying and selling assets, i.e., by varying the pace of monetary pumping. It is this variability in the pace of the Fed's pumping, which is manifested through changes in the Fed's balance sheet, that is at the core of the boom-bust cycle menace (see chart).

Ninja keeps hammering away at the notion that we are seeing deflation. We certainly are. But we are also seeing inflation. Like in the 1970's, as we lose in a war, we get hammered by both. The dollar rapidly collapses in value. The devaluation of the currency is always done 'to fix global trade imbalances.' But this never, ever works. From 1970 onwards, the US has had a trade imbalance. It sometimes stabilizes briefly but overall, it has gone in only one direction: upwards. The same with government debts. Up and up. Briefly, Clinton had an advantage there but this was tossed out via the Bush tax cuts which doubled the debts and trebled them rapidly. The tax collecting by the Fed neutralized excessive money making. But the tax cuts have accelerated this money creation. But not at the Fed. The budget deficits neutralize money making by the Fed! So it looks deflationary.

BUT YOU CAN'T HAVE DEFLATION AT THE SAME TIME THERE IS INFLATIONARY BUDGET SPENDING! If the government is pouring money out of every possible pore and if this money is entering the stream, despite the trillion dollars in losses by the big banks, the excess finances of a government running deep in the red equals debasing of the currency. No nation spending wildly can have deflation except the Japanese. They managed this trick by isolating their government debts within their central bank. We don't have a central bank so this trick is harder for us. The Japanese, frankly, cheated. They killed inflation while having wild government spending via the simple trick of clobbering the wages of workers. And they had record cheap oil and commodity prices at the same time.

As my chart above shows, this is gone with the wind. Inflation is raging in commodities. The recent off the cliff fall of commodities was FAKE. It was engineered by the G7 central bankers who basically lied to everyone. Do note that today, they are whispering some of the truth.

THIS IS BECAUSE THE NEWS SHOWS THEM TO BE OUTRAGEOUS LIARS!

Mortgage Securities Back Fed Loan to Bear Stearns

The securities backing a $29 billion Federal Reserve loan to Bear Stearns Cos. consist primarily of "mortgage-backed securities and related hedge investments," the Treasury Department said.

The disclosure, in a letter to the Senate Finance Committee staff, is the first official comment on the securities behind the controversial loan, made March 16 to facilitate J.P. Morgan Chase & Co.'s takeover of Bear. The Fed made the loan with the ...

I knew this was the deal from the first hours of the rescue. I knew it was a scheme to shift the costs of bad deals onto the backs of the Federal Government. And note the chart above: basic degradation of the currency is due to excessive government debts pouring into banks. They use this to make more loans. But they can't, if previous loans are going bad. So they must shift all this onto the government's ledger. This means the government runs MORE in the red. This gives the banks more money to play with as they buy government bonds. Which become 'assets.'

Geithner Says Officials Must `Act Forcefully' to Stem Crisis

New York Federal Reserve Bank President Timothy Geithner said capital markets are still ``substantially impaired'' and policy makers and financial industry leaders must ``act forcefully'' to stem the crisis.

``What we were observing in U.S. and global financial markets was similar to the classic pattern in financial crises,'' Geithner said in his prepared testimony to the Senate Banking Committee. He cited ``a self-reinforcing downward spiral'' of asset sales, ``higher volatility, and still lower prices.''

The New York Fed chief also said that the central bank's emergency actions to rescue Bear Stearns Cos. were aimed at halting a ``classic'' financial crisis that would have caused ``protracted'' damage to the U.S. economy.

Fed officials are trying to defend the aid to Bear Stearns as an emergency move to stem deeper damage to the U.S. financial system. Lawmakers are investigating the deal, concerned that government funds may be at risk and that regulators failed to recognize the mounting crisis.

This self-reinforcing downward spiral' is the only way Mother Nature can fix out of control upwards systems. She has NO OTHER METHOD. If one wishes to not be part of such a yin/yang, Miz Risky/Miz Safety cycle, one can stop it in its tracks by raising interest rates every time the bankers get tempted to hand out endless free loans. This system was the system set up eons ago to stop wild banking. But the mandate of the Fed has morphed into 'make the economy go up and up and up no matter what, forever, as fast as possible.' Since this is illogical as well as irritating to the Great Goddess, it becomes the classic 'Boom/Bust' cycle. Which the Fed was supposed to prevent.

Geithner and his buddies created several bubbles and they are now popping. They should all resign. We should put Ron Paul in charge of the Fed for a few years. His grim solutions will fix the banking system. But we want a broken system. This is the nub of the deal. What we want is now impossible. But no one wants to admit this fact.

Overdue Consumer Debts Highest Since 1992, ABA Says

Consumers fell behind on car, credit-card and home-equity loans at the highest level in 15 years during the fourth quarter, another sign the U.S. economy is slowing, according to an American Bankers Association survey.

Payments at least 30 days past due increased across all eight categories of loans tracked, the Washington-based group said today in a statement. Late loans climbed 21 basis points to 2.65 percent of all accounts in a consumer-loan index created by the group.

It is painfully obvious that the bottom most layers of our economy are in full collapse. Low wages/rising inflation always kills the lowest classes first. They feel the pain the first and the worst. And this is why the guys at the top shouldn't misbehave. But frankly, they don't care if the lower layers freeze or starve to death. They can't understand history and how the lower ranks deal with this in the end. Why isn't the history of the world taught?

It is too grim. So it is sugar coated.

Paulson Says U.S., China Must Work to Increase Energy Security

Treasury Secretary Henry Paulson said the U.S. and China, the world's two biggest emitters of greenhouse gases, must work together to reduce their dependency on oil and increase energy security.

``Our two countries share the challenge of achieving balanced economic growth along with energy security and environmental sustainability,'' Paulson said in the text of a speech today to the Chinese Academy of Sciences in Beijing. ``It will take resourcefulness, creativity, determination and a long- term commitment to achieve the results we seek.''

The US is grinding teeth over the issue of China. They, like I, know perfectly well that China is actually stronger, not weaker, after suppressing the US-sponsored uprising in Tibet. The hope was, the Chinese would walk away from the US and cease diplomacy. Grimly, the Chinese plow onwards. They know our rulers need them. They know that if they cut us off, our entire economic system, this misbalanced, messy system, will collapse rapidly. The only question for the Chinese is tactical: when to do it.

Recently, they got all the oil destined to the US, coming from Venezuela. The US is menacing Iran and we are losing oil resources in South America? HAHAHA. On the other hand, a deal is being hammered out to have us suck down all of Canada's oil. I hope the Canadians like the Amero.

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Comments

[RobG]

Over at Mish's site (http://globaleconomicanalysis.blogspot.com
/2008/04/fed-uncertainty-principle.html) he outlines some excellent observations of what we learn from the latest actions of the FED:

#1 Fed Uncertainty Principle:
The fed, by its very existence, has completely distorted the market via self reinforcing observer/participant feedback loops. Thus, it is fatally flawed logic to suggest the Fed is simply following the market, therefore the market is to blame for the Fed's actions. There would not be a Fed in a free market, and by implication there would not be observer/participant feedback loops either.

Corollary Number One:
The Fed has no idea where interest rates should be. Only a free market does. The Fed will be disingenuous about what it knows (nothing of use) and doesn't know (much more than it wants to admit), particularly in times of economic stress.

Corollary Number Two: The government/quasi-government body most responsible for creating this mess (the Fed), will attempt a big power grab, purportedly to fix whatever problems it creates. The bigger the mess it creates, the more power it will attempt to grab. Over time this leads to dangerously concentrated power into the hands of those who have already proven they do not know what they are doing.

Corollary Number Three:
Don't expect the Fed to learn from past mistakes. Instead, expect the Fed to repeat them with bigger and bigger doses of exactly what created the initial problem.

Corollary Number Four:
The Fed simply does not care whether its actions are illegal or not. The Fed is operating under the principle that it's easier to get forgiveness than permission. And forgiveness is just another means to the desired power grab it is seeking.

[Bear of Little Brain]

Have to get this off my chest:

Just watched Geithner and friends testifying. What a loathsome piece of sh*t Geithner is. All mouth and hands and slime. He isn't fit to be selling second-hand cars. Yuk, yuk, yuk.

And aren't the New York Fed and JP Morgan just different parts of the Rothschild multi-headed monster?

Aaaaaagh!

Sorry.

[rockpaperscizzors]

Here's an interview of Lynn Forrester de Rothschild and her support of Hillary Clinton

by Kentroversy
Just as I have been telling people through my writings and interviews -- Hillary Clinton is the Global Elite's choice for President of the United States in the 2008 election.
On October 5, 2007, a member of the oligarchical Rothschild family -- Lynn Forrester de Rothschild had gushed incessantly about how great Hillary will be for America "and her fellow capitalists."
http://kentroversypapers.blogspot.com/2007/10/rothschild-family-supports-hillarys.html

[Richard]

You write: "One can stop it in its tracks by raising interest rates every time the bankers get tempted to hand out endless free loans. This system was the system set up eons ago to stop wild banking."

The government bond market place is doing what the Federal Reserve has failed to do; while the Fed liquifies basically insolvent banks, the marketplace independent of Federal Reserve action just now has started to call Treasuries lower and interest rates higher.

A run on the US Treasury Bonds has commenced; it is just a trickle now, but will become a brook, then a running river

The investment application is to be long gold, GLD and with margin credit while it is still cheap, short Treasuries by being invested in the Rydex bear Treasury mutual fund RYJUX.

[PLovering]

A contemporary of Greenspan and one of Wall Street's wise men, being interviewed on TV, said Greenspan was a well-known putz -- even before Greenspan was fired from his job on Wall Street.

[Rosco]

An old funny expression:

Good Judgement comes from Experience
and
Experience comes from Poor Judgement

[Elaine Supkis]

Rosco, only if one learns from experiences. Some people are incapable of this.

Everyone else: yes, yes, and more yes. I agree with you all.

[GK]

I believe Richard is correct. The Rothschild control the worlds governments primarily via the bond markets. They operate under 50 year plans. WATCH THE BOND MARKETS.

Elaine, do you know why RYJUX dropped 66% between Feb 7 to Feb 16 2003?

http://finance.google.com/finance?q=RYJUX

Phase 1: Drop interest rates, load world up on debt. Crush savers and push them into soaring stock market.

Phase 2: Credit Crunch. De-leveraging starts collapse of stock market. Crush stock investors and scare them into cash and gold.

Phase 3: Massive Short of gold market. Crush long gold investors and scare them out of gold into safe treasuries.

Phase 4: Crank up Interest rates. Crush treasury investors and scare people into world war with China.

Phase 5: Lend China billions (trillions?) of dollars to fight war with US.

Phase 6: De-industrialized and depopulated world rebuilt from remaining industry in China under hybrid fascist/capitalist/communist/one electronic currency/secular humanist model.

But I could be wrong.

[Bear of Little Brain]

Just toddled over to soon-to-spontaneously-combust Karl Denninger's blog. He mentioned that Jamie Dimon is on the board of the NY Fed. Didn't believe it could possibly be true, but

http://www.newyorkfed.org/aboutthefed/org_nydirectors.html

IT IS.

Where does this corruption and collusion end?! This cannot end well.

[Bear of Little Brain]

So there was Geithner and Dimon, testifying as if they had only the demise of Bear and the good of the People in common, and acting oh so goody-goody.
In the UK, in common parlance, we call it, "taking the piss".

[Bear of Little Brain]

Sorry to be so crude, but I'm getting quite angry about all this. It's not just in the US. It's the same, but different, here in the UK.

Wildly off-topic but:

In January, Parliament voted for the EU Reform Treaty, by-passing any requirement to hold a referendum, which a Constitution would have required, as per past promises. The PTB know they would lose a referendum here, so they are dodging around it.
January 1, 2009, the UK is effectively subjugated to the EU. A quick skim through the Treaty seems to give a lot of Power to someone designated "The High Representative of the Union for Foreign Affairs and Security". A title which is a bizarre mix of Flash Gordon and George Orwell. "Reichs Chancellor" is so much more succinct.
As this stuff is drawn up by the usual dissembling lawyers, it is easy to overlook the fact that it makes it quite possible for any state that chooses to secede to have its fate decided by a panel from which that state is specifically excluded. I have a vision of an impoverished and rebellious UK population being repressed by German and French EU troops. My forefathers will be turning in their graves.
In the meantime the pound is headed for parity with the Euro, probably deliberately, to make it acceptable. Time to leave, me thinks.
BTW, Elaine, Elizabeth R (who is German, of course) signs off on all this.
Sorry to veer of-topic

[Bear of Little Brain]

GK:

My gold is on the CFR's proposal to have a world currency based on some claim on gold (no doubt "Albrecht" Rothschild has plenty to contribute, so it will suit him/them). See Benn Steil's essay:

http://www.foreignaffairs.org/20070501faessay86308/benn-steil/the-end-of-national-currency.html

After your prediction for gold and the recent sell-off in gold and silver, I'm feeling a little anxious. Still, maybe Crazy George will get on and bomb Eye-ran soon, so maybe I'll just hold on and hope for the worst! (No, I'm not serious. If Worldwide Peace and Love break out tomorrow, I'll happily see gold collapse. But I'm not holding my breath.)

Time for bed, diddly-dum.

Oh, on Greenspan: Marc Faber once said he worked with Greenspan; that he was a hopeless economist; and was an incompetent colleague. I think he said he worked with him "until he was sacked", but I'm not sure.

[Bear of Little Brain]

"until he was sacked". By "he" I meant Greenspan, not Faber. Must be getting tired.

[OC]

US lost control of Basra - that means oil will not be flowing out of Iraq into US hands. The recent fight demonstrated that Iran has control over all militias in Basra. When the Kitty said stop - all the militias stop.

The Kitty has been mulling to cut a deal with Dragon in return for protection. Now it can go to the Dragon's cave to cut a deal like Putin.

Only oil from SA and Gulf states remain under US control for now. The rest will go to the Dragon.

[Anthony]

http://www.financialsense.com/Market/wrapup.htm

Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Oman and Bahrain control 40% of the world’s proven crude oil reserves. And the recent commodity price boom has swelled the coffers of governments that control commodity exports or heavily taxes the revenues earned by private commodity exporters. As a result, the assets managed by Persian Gulf sovereign wealth funds (SWF’s) have ballooned to roughly $2.5 trillion from $472.5 billion in 2004.

Funds derived from oil and gas export revenues account for roughly two-thirds of the total assets held by sovereign wealth funds (SWF’s), with the rest controlled by Asian surplus exporters. Saudi Arabia is planning a SWF for $900 billion, and the Abu Dhabi Investment Authority controls $875 billion. The Kuwait Investment Authority oversees $213 billion, and the Qatar Investment Authority had an estimated value of $60 billion at the end of February.

By 2015, the Persian Gulf SWF’s could grow to $6-7 trillion. If Chinese, Russian, and Korean SWF’s are taken into account, the total global SWF value could top $12 trillion, or nearly the size of the US economy. One has to wonder what direction the Persian Gulf SWF’s will take, if the Illinois senator Barack Obama wins the US presidency in November, and hastily withdraws US troops from Iraq.

[GMG]

Dear Elaine,

Much of what is taking place as it relates to the crisis in the financial world is outlined in Naomi Klein's book "Disaster Capitalism". I haven't read it yet, however I've listened to at least one of her interviews. In her book, she documents how many policy,securtiy, and market failures throughout our history has allowed the government to usurp civil liberties and personal freedoms. I want to find the time to read this.

Thank you,

GMG

[Elaine Supkis]

England tried to hang onto its oversized empire after the disaster and bankruptcy of WWI. It was laughably easy for Japan and Germany to prove that rule to be a paper tiger.

So it is with us today. China just stabbed Iran in the back today. But this was after Paulson made some sort of deal. As my cartoon showed. The deal is secret, of course. But I can venture a guess. Non-interference in Asia in exchange for us running riot in the Middle East.

China's view: we will bleed to death there as we try to steal everything. China gets all of Asia. We can't take the oil in the middle east, we can only protect is so it can flow to Europe. Europe is KILLING us in global trade of manufactured goods.

Both Japan and Europe got HUGE deals this week for, all together, around $150 billion! And the US has HUGE trade deficits with both entities. So we will be the soldiers to protect Japan and Europe's oil.

With Chinese blessings. Ouch.

[Carli]

rockpaperscizzors, you may have the wrong Rothschild, it looks like McCain is it. Read this article:

http://www.washingtonpost.com/wp-dyn/content/
article/2008/03/14/AR2008031403897.html?
sid=ST2008031404122

[rockpaperscizzors]

Carli, I checked my source and (Lady) Lynn Forester (de Rothschild) married Sir Evelyn de Rothschild (his current 3rd wife), "When 67-year-old British banking scion Sir Evelyn Rothschild first set eyes on 44-year-old Lynn Forester at the 1998 Bilderberg conference—the matchmaker was none other than Henry Kissinger—she was already a woman of major means."
http://www.portfolio.com/views/columns/the-world-according-to/2007/10/05/An-interview-with-Lady-de-Rothschild

Here's the one supporting McCain: Nathaniel Philip Victor James Rothschild, born July 12, 1971, is a British financier who is Co-Chairman of Atticus Capital LLC, a 2004 Young Global Leader, and a member of the prominent Rothschild banking family of England.
http://en.wikipedia.org/wiki/Nathaniel_Philip_Rothschild

Probably in-house fighting...just like the Pritzker's

[rockpaperscizzors]

Elaine, thought you would enjoy Businessweeks Ed Wallace's commentary. Imagine, he's as fed up with the liars in charge as well.

There Is No Gas Shortage
But Washington, Wall Street, and ethanol and oil and gas companies want you to think there is, says automotive expert Ed Wallace

"They see speculation in the market, I see decline in global inventories. I don't think this is a big surprise, that we've had a jump in price when there has been a decrease in crude inventories."— Energy Secretary Sam Bodman, Bloomberg News, Mar. 5, 2008

"It should be obvious to you all that the [gasoline] demand is outstripping supply, which causes prices to go up." — President George W. Bush, Associated Press, Mar. 5, 2008

One wonders if verifiable facts ever get in the way of this administration's statements on issues that are critical to the average American's wellbeing. After all, last time I checked, when politicians are elected to public office, or appointed, as is Energy Secretary Samuel W. Bodman, they must take an oath to the American people before assuming their new positions. How can they forget a sacred oath so quickly? Were they daydreaming when they took it, so it never meant anything to begin with? Maybe it's just another promise you have to make to get into office: When you're securely incumbent you can ignore even solemn oaths you took....
Gasoline reserves on hand are at the highest levels since the early 1990s, which is remarkable considering the nation's refineries have been cutting back on the production of gasoline because their margins have declined. In fact, average gasoline reserves on hand have risen since this past October, while oil reserves in this country have gone up virtually every week this year—and only fog in the Houston Ship Channel that kept oil tankers from unloading their crude one week kept it from being every week. ....

As for the speculators, in 2000 approximately $9 billion was invested in oil futures, while today that number has gone up to $250 billion....

Possibly just to ensure oil prices don't respond to real-world market conditions, Goldman Sachs (GS) forecast on Mar. 7 that turbulence in the oil market could cause oil to spike as high as $200 a barrel. This flies in the face of all known information—but then again, Goldman Sachs is the world's biggest trader of energy derivatives,
http://www.businessweek.com/lifestyle/content/apr2008/bw2008041_945564.htm

[Anthony]

people are still trying to figure out what chinese is saying in AEIA, but probably just disclosing what they are exporting to Iran. Who knows, let's see if the Iranian goes banana against the chinese.

http://www.armscontrolwonk.com/1840/ap-china-passes-iran-nuke-intel-to-iaea

— hass · Apr 2, 10:44 AM ·

Once you get past the media spin, this isn’t terribly interesting news. China gave the IAEA info on its nuclear deals with Iran — which were already covered by the IAEA. The suggestion that this intel had something to do with nuclear weapons is added by the reporter, obviously to suggest that something incriminating has been found.

[Dutch]

Hold on Rock, what happens when inflation hits the fan? Everyone goes on a buying spree! I agree there is no shortage of oil, but what needs examined here is "contracts". The question I believe is WHO owns these contracts? Once again war rears its ugly head.

[Elaine Supkis]

Oil speculators are bidding against each other. When there is something else going up, they rush there and continue the same.

There is EXCESS FINANCES out there in the greater world. The US and Japan both continue to pump out deficit spending and easy lending to the big players. So even as money 'vanishes' it is being engineered very swiftly.

This is a hazard, bad hazard. it is the system we have lived under since Kennedy was shot.

[Dutch]

Especially the big players, we have been squeezed out.Deflation on our end?
Credit=Inflation
Cash=Deflation
Capitol Credit Banking System- I believe we have been a cashless society far longer than we realized or even knew.

[Dutch]

Speaking of the fed, I saw the helichopper man on TV today, did you notice the shakiness in his voice? And where was Ron Paul? Also did you notice the head of HUD resigned?

[Elaine Meinel Supkis]

Yeah, I got the tail end of it. I was outside nearly all day digging up the Big Old Tree Stump. It was at least 200 years old. And hard as rock.

And Ron Paul: he is the Invisible Man as far as TV is concerned. TV is the Eye of the Insane. I avoid it as much as possible, frankly.

And yes, the head of HUD resigned in disgrace. How unusual. Heh.

[Jim B]

Any Rothschild ever been on Charlie Rose? NO!!

Kissinger yes, for the hour, more than once, and fed questions AND answers by Bohemian Grove MC, Mr. Rose. Gore Vidal treated kindly on the show, the opposite of Noam Chomsky (who's been getting a lot of print for what it's worth as a left gatekeeper). In fact, I've never seen Charlie rude, except in the case of Noam.

Lynn and Evelyn got hitched in time to watch the Towers from their ringside seats. (Thanks again to GK for the heads-up).

Night, all...

[EL JOHNNY]

The USA's powerful eltie is greasing up the levers and gears of media power, getting ready to open the ole trap door. Guess who's back? I saw that Andrea Mitchell, Allan Greenspan's wife, has returned working as a correspondent for NBC, I believe it was.

Her job, when Alan was the chairman for the Fed, was to be the Fed's bag lady for bribes to the media giant's high senior executives, i.e., to flatter, gain, and maintain the nation's trust in the Fed by means of the media's pabulum portrayal of the Fed.

I am somewhat startled to meet people everyday who do not realize that the Fed is a private, unaudited bank, whose biggest stockholders remain unknown to the country. A big sucess for Allan and the boys. Thanks Andrea for pitching in.

Watching those lying banking and committee sacks of shit on TV these past couple of days, deceiving the public with their arcane language is a big insult to the nation that placed their trust in these institutions.

The committee politicans questioning the Fed folks appear to know very little about what they are supposed to be ascertaining regarding the source of this financial chaos on behalf of and for the benefit of the nation. Many act so dumb.

No one appearing on this Howdy Doody show even got close to the beast of the derivatives. They refuse to say the word and elucidate on it. How appalling and insulting. It appears that the corruption of DC and NYC is so thoroughly complete and insidious that civil unrest, revolt, and war is inevitable when the truth finally worms it's way down to the average man.

I am selling my homestead and I must declare that this sub prime financing of 106 percent financing is still going on in the FHA mortgage market.

This crack cocaine like addiction to easy money is soooooo hard to break. Its like saying, "It felt so gooood when I was doing it, but now I feel so dirty, so I am going to be recedivestic and keep doing it".

E's perceptions of the world are so easy to understand and so right on the money that she should be a re hab counselor for the scoundrels on TV.

THROW THE BUMS OUT! POWER TO THE PEOPLE!

[Bear of Little Brain]

Rock:
Come on , man, "sacred oath" is what we are supposed to abide by. Not them. That's how they screw us.

[Anthony]

Well, big companies start downsizing. This will hit hard down the road.

Motorola to cut another 2,600 jobs
http://www.engadget.com/2008/04/03/motorola-to-cut-another-2-600-jobs/

Dell to cut even more jobs as it reduces costs
http://www.engadget.com/2008/04/03/dell-to-cut-even-more-jobs-as-it-reduces-costs/

[Elaine Meinel Supkis]

HUD is the home for political corruption. All my life, I have seen people go into HUD and then get caught doing something lousy.

[Derek]

The first infusion was the Greenspan attempt at giving Bush a 'good' economy right after he stole the election.

The first infusion was a year prior to the election, to stave off any Y2K bank runs. De Facto interest rates went to 1% for a short time, like they did again right after 9/11, and then officially a year later.

[Anthony]

China-Iran nuke sutff. This is interesting. So

we have Tibet- wedging Iran/China - Paulson trip. I smell a job being done by the neocon because china doesn't want to vote attacking Iran.

surprisingly, the chinese seems to play defensive instead of sharp jab. (direct counter attack, dumping dollar, hinting major money move, etc) So they really try to be good with Olympic going on. At least they got a friendly taiwan regime now.

http://chinamatters.blogspot.com/2008/04/china-surprise-for-iaea-iran-dossier.html

There’s nothing in the article implying that the Chinese dished to the AP’s business reporter in Vienna, George Jahn.

I waited for Presstv to pull or modify their report, but they never did.

In fact, they repeated the assertion that Chinese diplomats were responsible for the leak in three followup articles, including the one containing the Chinese government’s formal denial that any communication took place:

Chinese Foreign Ministry spokeswoman Jiang Yu said Thursday that the report was "totally groundless and out of ulterior motives.'' The Chinese official did not provide any further details.

On Wednesday AP quoted two senior Chinese diplomats, who spoke on condition of anonymity, as saying that China has provided the IAEA with classified intelligence to use in its probe into Iran's nuclear program.

China has repeatedly opposed the imposition of further sanctions on Iran, in the United Nation Security Council, and has constantly called for a diplomatic solution to Iran's nuclear standoff with West.

[Reimund from Berlin]

Hello Mr. Soros, anyone home?

What is regulated by what?

1.: financial authorities ... they regulate have been guided by market ...
2.: authorities believe markets are self-correcting

Aha.

Because regulators -- guided, i.e. regulated by market -- which regulate the market have failed, there will be what?

More authorities because authorities, i.e. regulators believe markets are self-correcting!

Great.

Not.

[shargash]

IMO, one of the most dangerous attitudes on the planet right now is that there is plenty of oil around. Crude oil production peaked in 2005. It has been generally flat, on a bumpy plateau, ever since. Global demand is still rising. If you have flat production and rising demand, prices go up. That's econ 101.

Production from the world's largest oil producer (Russia) has been down every month this year. OPEC is pumping flat out, and their production was down in March. Saudi Arabia is investing 10s of billions of dollars trying to get two new fields online, but the projects are behind schedule and over budget. Mexico is down. Venezuela is down.

Why is this attitude dangerous? Because there are going to be oil shortages in the upcoming months (or a few years at the latest). Failure to recognize that we are past Hubbert's peak and that global production is declining is going to cause people to draw the wrong conclusions and do the wrong things. When OPEC's production inevitably starts to drop, people will blame OPEC for "hoarding" oil. To some extent this a reasonable response, because the oil producers have been lying about how much oil they have. However, it is based on a serious misunderstanding of the fundamentals of oil. It will cause people to propose solutions that will only make the problem worse.

We need a massive effort to get off oil, but the big oil producers, the shills for the oil companies, and the Bush administration don't want us off oil, so they lie. People believe the lies, so we don't do what needs to be done.

Blaming speculators is a red herring designed to divert attention from the real problem -- a dangerous addiction to oil. It is true that there is a lot of speculative money in oil markets. However, the long money and the short money are very nearly in balance. Most traders don't believe in Hubbert's Peak, so there are many, many traders who are shorting oil.

In addition, less than 10% of the world's oil is sold on oil futures markets. Anyone who thinks oil futures are too expensive can simply refuse to buy expensive futures and buy the actual oil, where there is NOT ONE CENT of speculator money.

The tiny bit of oil sold on the futures markets is "marked to market" on expiration day. When they expire, the price is set to the spot price.

Yes, there is some arbirtrage that can have a temporary effect on actual oil prices. But futures contracts are derivatives, which means they derive their price from actual oil, not the other way around. This is fundamentally different than stock price speculation. You simply can't have more than a temporary effect on the price of a commodity by bidding up futures contracts. If there is actually a glut in supply, the people who bought expensive long contracts will get hammered and futures prices will collapse. That this has not happened is proof that there is not "plenty of oil."

Whatever oil prices do in the very short term, they are going up medium term and longer. The wealthier countries, and countries that have locked in "right of first refusal" contracts (hint: a certain dragon, and not the US), will not see shortages at first. But the poorer countries will; this is already happening.

Eventually oil exports will start dropping like a rock. Russia is the biggest oil producer, but it is not the biggest exporter, because they have a big economy. That economy is growing, so their domestic use of oil is going up even as their production is going down. Do you think Putin is going to sell oil to the rest of the world and strangle his own economy? Even Saudi Arabia, which is the world's largest exporter, has been reducing exports even as it's production stays flat. It has a growing economy too (all that oil money), and it's exports will decline, even if their production does not.

This is a very dangerous situation. It is going to develop in a very few years. And most of the world is in denial.

[Elaine Meinel Supkis]

A speech I made back in 1973: 'The window of opportunity to retrofit our society to deal with the Hubbert Oil Peak will begin to close on our fingers after 2000.'

Yes, we should have started back then when the oil crisis was war driven and purely political.

But we chose the easy road. Now we will hit the Old Tree Stump.

[Carli]

rockpaperscizzors, thank you for that link it was good to read as it gave a very good indication as to where the elite are placing their bets.

That family has always gambled on both sides of the fence, remember the Napoleonic Wars? They made it really big playing both sides. However, I am curious to see which side of the family bet on the winning horse in this case. Sadly, I don't think it will make much difference for they all take their orders from the same set.

[Dutch]

I appoligize Elaine, it was FHA , sorry I dont know about HUD. (Does it matter?)HAHA

Peak Oil is bullshit these guys can say what they want. Peak is as phoney as Gore's globlal warming bullshit. Go dig a hole you will see the oil is still there.

[new homes for sale]

Generally, with this investing model, people invest into things which they think the value will go up with time. Commonly, people would buy up and invest into real estate with the hope that it will appreciate and they can sell it off for the profit later on. However, there is no guarantee that real estate you own will appreciate. The price can go down! I have seen it with the houses of my relatives and my friends. They are stuck with it, for selling it would incur a loss.

[anthropology dissertation]

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