6/22/2008
Elaine Meinel Supkis
The world's working classes are being told to eat all the banker's inflation. Savers are being told to eat the inflation created by the Bank of Japan and the Federal Reserve. The US government is supposedly unable to overspend much longer but they will so long as Asia buys US Treasuries. And this feeds inflation! The more our government overspends on useless wars and occupations of foreign lands, the worse inflation will be. We are in a dynamic that will bring global hyperinflation unless we kill off many millions of people who are slated to starve to death or die in even more wars.
London Times: Japan offers a helping hand to world banks
Japan has given its official blessing to a new mood of aggression in its banking sector as the country's powerful financial institutions turn their sights on deals with the outside world.Yoshimi Watanabe, Japan's Minister for Financial Services, told The Times that because the nation's biggest banks had so far emerged from the sub-prime crisis relatively unscathed, they were well-positioned to adopt a bolder stance over deals with Western counterparts.
Speaking only hours after it was revealed that Barclays is negotiating a 100 billion yen (£480 million) capital infusion with Sumitomo Mitsui Banking Corporation, Mr Watanabe said that the new aggressive attitude of Japanese financial institutions “is a change that should be very much welcomed”.
Amid rising foreign criticism of standards of corporate governance in Japan and accusations by senior European trade ministers that the country was “closed” to foreign investment, Mr Watanabe also declared that the banking sector would not be subject to any restrictions on foreign capital.
For several years now, I have detailed how Fortress Japan operates. I used statistics, graphs and charts to show that the 'depression' there is artificial and manufactured so as to give Japan a banking advantage over all the other banks in the world. Instead of being honorable and paying a realistic return on savings for the Japanese people, the entire nation has endured and still lives under this bizarre sub-1% regime that is totally ahistorical and frankly, impossible.
Even now, as inflation rages in Japan, the Bank of Japan sails onwards. The key is obvious: THEY HAVE NO NEED FOR ANY SAVERS IN JAPAN! They want FOREIGN money that comes in via the 'carry trade'. They want foreign money that comes in via high Japanese export of high-value added trade goods! This money has also filled the Japanese FOREX reserves to the tune of over a trillion dollars. And as we shall see below, the Japanese also hold the lion's share of US government debts. This is unheard of except for dying empires. All dying empires that are going bankrupt are in debt to foreign powers, even those which they have battled bitterly in the recent past. After all, there are still many people alive today who fought the Japanese in WWII.
Japan is now performing a banking coup which I accurately predicted. The only thing that prevented this was China. And after China forced the value of the yen to go up and up last summer, killing the Japanese carry trade and throwing a monkey wrench into global finances, Japan has settled all their external affairs with China in a series of both public and extremely private meetings. When the top bankers of Japan and China met in a series of incredibly important meetings last winter, I suggested they would resolve the issue of who owns what oil reserves that lie between Japan and China as well as banking issues such as forcing the other G7 nations to shut up about the yuan being too low in value.
Note that since then, Japan has not said a thing about Chinese finances. Nor did Japan join in the fracas when the US and UK worked with the Dalai Lama to overthrow the government of Tibet and break up China into increasingly smaller pieces. I see in the news this week open talk from the same CIA mouthpieces in the press, talk about splitting apart Pakistan that is already been shattered when East Pakistan became Bangladesh, for example. Now, we want to sneak agents in to the hinterlands and encourage insurrections there.
Back to the news about Japan: Japan has NOT really surrendered in WWII. The desire to forge a Co-prosperity Sphere with Japan ascendant is still ongoing. Only they have had to switch gears. The US is weakening rapidly and is barely functional now. While China is a growing power and a true menace. Japan has to forge tight relations with China or perish with the US when we go bankrupt. They have made it clear, they will not sink when our own ship goes down.
Back last August, by the way, I accurately predicted that the Japanese were not going to be much affected by the Western banking collapse. Indeed, in August when the US and Europe were screaming and running in circles, Japan pretended to scream too. Then, by the end of September, Japan shrugged and said, 'Ah....we were faking it. We are doing well thanks to our giant FOREX reserves and we think we will talk to the solvent Chinese....hahahaha.' Last January, Japan even announced they would replace England as the center of global banking. Well, this certainly seems to be true, eh?
Tiny Shetland island declares independence
(Reuters) - The owner of a tiny island in off Scotland declared its independence from the United Kingdom on Saturday, saying he wanted the territory, population one, to be a crown dependency like the Channel Islands.In a declaration on his Web site, Stuart Hill, who owns the 2.5 acre island of Forvik in the Shetland Islands in the North Sea, said he no longer recognised the authority of the government or the European Union, and cited a centuries-old royal marriage dowry deal as the basis for his claim.
"Forvik owes no allegiance to any United Kingdom government, central or local, and is not bound by any of its statutes," Hill wrote.
We lived in a tent for ten years. So it amuses me to see this guy doing the same. Maybe I should declare my little mountain to be a kingdom like say, Lichtenstein. After all, my family came here back in 1680. Then I can be a pirate banker. After all, this is the true banking system these days. When I look at banking statistics, some of the biggest banking entities are tiny pirate islands with virtually no buildings and no business, just post office addresses. Like the Japanese carry trade which is dark matter, these places are dark pools which can churn out 'credit' and 'liquidity' with ridiculous ease. Making magic Funny Money™ is a cinch if no one can tell where it is coming from or if it is worthless. Note that we now have global inflation....!!!!
Brokers threatened by run on shadow bank system
Regulators eye $10 trillion market that boomed outside traditional banking
(MarketWatch) -- A network of lenders, brokers and opaque financing vehicles outside traditional banking that ballooned during the bull market now is under siege as regulators threaten a crackdown on the so-called shadow banking system.Big brokerage firms like Goldman Sachs , Lehman Brothers , Morgan Stanley and Merrill Lynch , which some say are the biggest players in this non-bank financial network, may have the most to lose from stricter regulation.
The shadow banking system grew rapidly during the past decade, accumulating more than $10 trillion in assets by early 2007. That made it roughly the same size as the traditional banking system, according to the Federal Reserve.
While this system became a huge and vital source of money to fuel the U.S. economy, the subprime mortgage crisis and ensuing credit crunch exposed a major flaw. Unlike regulated banks, which can borrow directly from the government and have federally insured customer deposits, the shadow system didn't have reliable access to short-term borrowing during times of stress.
Why would they 'lose' if there are rules? HAHAHA. They are creating money and doing it dirty. Instead of following stodgy old banking rules that have been painfully hammered out over the last 1,000 years if not the last 12,000 years, instead of this, they created a pirate system that is dark, dank and straight out of the Cave of Death. This stupid thing they created isn't smart. It isn't good. It isn't sane. And it doesn't preserve wealth or protect savings. It is LOOTING. It is DEADLY. And it is rapidly destroying the entire Floating Currency system.
Which is wickedly unstable and stupid to begin with! A Floating Currency is like a log rolling down a river. We are supposed to jump from log to log and keep them stable and prevent log jams. Like we are seeing today. Why is this?
A zillion, quadzillion logs are now rolling in the river! They have created a massive log jam. And the fix these busy beavers have come up with is to put MORE trees into the river! Gads. I work very hard to come up with new picture stories explaining all this. It is amusing and annoying at the same time. For we still see the beavers hanging out with pirates, hell hounds and gnomes and all of them are weeping and screaming, 'We need MORE! MORE! NOW!' And this is exactly what we can't have now.
After all, China, Mexico, Canada, Australia, Europe, many lands are raising interest rates. But not Japan nor the US. Both are flooding the world with more liquidity. Both are chewing up the entire forest and dumping the trees into the log jam. Both are fanning the flames of inflation.
"The shadow banking system model as practiced in recent years has been discredited," Ramin Toloui, executive vice president at bond investment giant Pimco, said.
Toloui expects greater regulation of big brokerage firms which may face stricter capital requirements and requirements to hold more liquid, or easily sellable, assets.
The LAST THING these gnomic piratical hell hounds want to do is HOLD THE LIQUIDITY they are creating! They need to get rid of it as fast as possible so they can create more. The world is drowning in this liquidity and they do not want to have this stop. They want us to eat the inflation while they get to live like princes and princesses.
In the next semester indeed, all the components of the crisis (financial, monetary, economic, strategic, social, political… ones) will converge at the height of their intensity (1). Avoiding to repeat a description of the various sequences already anticipated in the previous editions of the GEAB, our researchers have decided to describe the trends that will be at work in the world's main regions in the next six months. Therefore they analyse eight fundamental processes that will mark the next semester and affect decisively the years 2009-2010,
I like to read Leap 2020. They have good analysis and this is a precious thing. The pie chart here is amazing: it shows clearly that the US has been selling its debts to the same characters who are ravaging us with trade excesses. And very emphatically, there is Japan, at the top! The US is frantic to cut trade with China but not Japan but these two should be viewed as two sides of the same coin. We have no allies anymore in Asia. We have OWNERS.
US Steelmakers Land Blow Vs. China
U.S. steel pipe manufacturers, who have been battling a surge in imports from China, won a major victory Friday when the International Trade Commission cleared the way for the imposition of stiff penalty tariffs for the next five years.The commission voted 5-0 that the U.S. industry was being harmed by the import of circular steel pipe. The decision marked the first time a U.S. industry has won a decision to impose tariffs on a Chinese product based on the argument that the Chinese government was unfairly subsidizing a Chinese industry.
The ruling means penalty tariffs ranging from 99 percent to 701 percent will be imposed on Chinese imports of circular welded pipe, a form of pipe used in a variety of construction jobs, such as home plumbing and sprinkler systems.
For more than two decades, the U.S. government had refused to consider subsidy cases against the Chinese government because China was classified as a non-market economy.
Pipe is NOT high-value added goods. Cars are. Japan is flooding us with cars. China is not. Nearly all of China's trade is at the cheaper level stuff of are outsourced work for US or Japanese corporations such as computers, for example. China will retaliate for this, by the way. It depends on their intentions. Since the US Congress and all Presidents now and future want to run huge budget deficits, we need the Chinese to buy our debts. China won't do this unless we make a deal. We will make the deals. This pipe thing is a sop. China is preparing to flood us with cars. We have to figure out how to stop free trade before it kills us. But it may be too late. No one listened to my past warnings about this.
http://www.bloomberg.com/apps/news?pid=20601213&sid=a5IgwR.6DR0s&refer=home
Hedge Fund Managers in Monaco Say Credit Crisis to Worsen
(Bloomberg) -- The credit market contagion that led to record losses at some of the world's largest financial institutions may be far from over, according to hedge fund managers gathered in Monaco this week.``These times will get worse before they get better,'' said Christophe Aurand, head of European operations for York Capital Management LLC, a $13 billion fund manager preparing to invest in distressed debt. He spoke at the GAIM International conference, Europe's largest annual hedge fund gathering.
More than 80 percent of the fund managers, investors and hedge fund service providers at the event said they expect the credit crisis will continue, a survey found. Almost a quarter said they expect the situation ``will deteriorate significantly.''
Banks worldwide have reported $397 billion of writedowns since the start of the U.S. subprime crisis last year. John Paulson, the founder of $33 billion hedge fund Paulson & Co. who made billions betting on a drop in the value of subprime loans last year, estimated banks are only about a third of the way through $1.3 trillion in writedowns and losses.
Monaco is a tax cheat haven hardly much bigger than my farm. Perhaps I should open a gambling casino here as well. Our little town of Berlin has been nearly totally destroyed by free trade. We could become a kingdom and set our own rules. Have the US military protect us while we pay nothing. A great thing, this empire stuff is, if you don't have to pay for it!
And note the hell hounds are giving up on persuading investors that all is well. They are now bears. They are also using their dark pool of Funny Money™ to flood the commodity markets especially diesel hoarding. They are trying to eke this trillion dollars off of the stuff we need to ship goods from China to the US. This way, they tap into international trade and get profits. This is killing world trade but these hell hounds cheerfully slay many a golden goose for their eggs.
Mexico Central Bank Raises Rates, Ignoring Calderon's Remarks
(Bloomberg) -- Mexico's central bank unexpectedly raised its benchmark interest rate, ignoring suggestions by President Felipe Calderon that borrowing costs were too high.The decision to raise the rate a quarter percentage point to 7.75 percent signals the bank doubts Calderon's measures to freeze some food prices will do enough to reduce prices. Mexico joins Chile, Brazil, Vietnam, Turkey and banks around the world in raising rates to fight inflation driven by food and energy.
All major nations aside from the US and Japan are desperate to dry up liquidity so inflation stops. And they will fail. So long as the world's #1 and #2 economies are playing this alternative game, all other attempts at stopping global inflation will fail. Not until the US goes into a full scale collapse. Then we will end this inflation. Japan is hysterical about preventing us from not shopping. They very much desire we buy their export products! They will give us whatever liquidity we need to keep on going into debt. This is why we are deep in debt! Duh. Then we send this money to Mexico for manufactured goods and oil. And Mexico finds this money increasingly worthless.
China's Zhou Examines `Stronger' Inflation Policies
(Bloomberg) -- China's central bank Governor Zhou Xiaochuan said his bank may formulate ``stronger policies'' to tackle inflation exacerbated by the government's latest fuel- price increases.``Surely higher energy prices will send some pressure to the consumer price index, so we may have stronger policies against inflation,'' Zhou told reporters in New York today before a meeting with U.S. business groups. Zhou didn't elaborate.
The world's second-biggest oil consumer after the U.S. yesterday unexpectedly raised gasoline and diesel prices by at least 17 percent from today, and increased power tariffs to rein in energy consumption. Crude oil prices are 91 percent higher than a year ago. China's retail fuel prices are about half the levels of the world's benchmark, Wang Qing, chief China economist at Morgan Stanley in Hong Kong, wrote in a June 6 report.
China just may give us a blow to the economic forehead if we don't stop making liquidity faster than they can store it away. They also want us to stop the oil wars, stop boycotting Iran, stop talking about blockading Iran, stop all this WWIII talk. Then oil prices will fall. Russia is happy as a pig in mud over all this.
BBC: Darling calls for pay restraint
Chancellor Alistair Darling says pay rises for people "from the boardroom to the shopfloor" need to be "consistent" with the 2% inflation target.
He told BBC One's Andrew Marr show the need to keep inflation under control "applies to each and every one of us".
*snip*
Mervyn King was speaking at the Mansion House dinner and made it clear that inflation was set to rise, while growth and house prices were likely to fall. Mr King also warned that real take-home pay would stagnate, making life difficult for some families. His words came as Chancellor Alistair Darling said the Bank would have new powers over UK financial stability. This would be in addition to its objective of setting interest rates, he told the annual dinner of business leaders.
How sweet of Darling to ask everyone to EAT THE DAMN INFLATION. Then it will stop. The incomes and savings of everyone will vanish but not the bankers who caused all this. And what if the Bank of Japan continues to create new money via the carry trade? And what if the US continues to do the same with nearly as low rates as Japan? What then?
Well, the British people can die. Many millions of people will die thanks to this inflation eating diet. It will work in the end, eventually, after enough people are driven to total poverty and then starve to death. Isn't that charming?
And this is why such advice leads to street violence and revolutions. 'Let them eat INFLATION!' says Marie Alistair.
New President Won't Have an Easy Time Paying for New Initiatives, Fiscal Experts Say
Economists expect the deficit to top $400 billion when the fiscal year ends Sept. 30, rivaling the all-time high of $413 billion set in 2004. Meanwhile, Congress recently adopted a spending plan that projects a $340 billion deficit in 2009 -- a number likely to grow, lawmakers say, as the cost of the Iraq war rises, the economy weakens and the flow of revenue slows.Against that dour financial backdrop, the next president will have to decide what to do with President Bush's signature tax cuts, which are due to expire at the end of 2010. Obama and McCain have both promised to keep at least some of them, but that would increase the deficit by $150 billion a year or more. Preventing the alternative minimum tax, or AMT, from expanding to the middle class would add billions more.
HAHAHA. The GOP's plan was always to drive up the debt to a point, no one could use credit to keep the peasants here in the US alive in an economic downturn. The whole point of this and the philosophy of the landed gentry is, 'Starve those bastards to death or force them to emigrate!' This is a very dangerous plan. What if the peasants wake up and figure out they were cheated? And then they attack? A serious problem indeed. The Praetorian Guard are paid to keep the peasants at bay but half of them are overseas trying to keep raging peasants at bay everywhere. This is why history is funny about uprisings: they happen in the heart of empires and kings and despots can die in these revolutions.
America hopes to sell this debt. And to whom? Why, Japan and China! Of course. And we are starting a trade war with...China? HAHAHA. Right! We have to balance our budget. To do this, we pull back our imperial overreach.
Treasuries Gain as Traders Scale Back Bets on Fed Rate Increase
(Bloomberg) -- Treasuries rallied, posting their second weekly increase this month, as traders pared bets the Federal Reserve will raise interest rates before September amid signs that stress is returning to financial markets.Demand for the safety of government debt rose as the cost of protecting corporate bonds from default increased to the highest in two months. Lehman Brothers Holdings Inc. forecast Fannie Mae and Freddie Mac, the two largest sources of U.S. home loans, may lose more money in the second quarter as the housing market deteriorates, and Merrill Lynch & Co. said regional bank stocks are in ``capitulation mode.''
The banking crisis continues. Not all our national debts are held by the Asians. The pirates and hell hounds own us too. Note how they get away with murder, even with suggesting we eat inflation for them so they can make money like mad.
Bond Sales Soar in Europe as Companies Plan for Slump
(Bloomberg) -- Companies in Europe borrowed more money from bond investors in the past three months than in any second quarter on record, paying the highest interest costs in a decade on concern credit conditions may deteriorate further.Sales jumped to 252 billion euros ($391 billion) from 227 billion euros in the same quarter of 2007 and from 149 billion euros in the first three months of this year, according to data compiled by Bloomberg. Bouygues SA, the world's second-biggest construction company, and U.K. phone company BT Group Plc led this week's sales of 18.4 billion euros, 43 percent higher than the weekly average for the past year.
Bonds are for bears. And we are in a contraction that has to get worse if the consumers and workers have to eat inflation which means they can't buy anything except bare necessities.
Large U.S. banks' stocks in capitulation mode: Merrill
(Reuters) - U.S. large-cap regional banks' stocks now appear to be in "capitulation mode" and will likely trade below fair value in the near term as more dividend cuts and capital raises, high credit risk and an uncertain earnings outlook all weigh on their share prices, an analyst at Merrill Lynch said. Analyst Edward Najarian said he does not expect credit metrics to recover until 2010 and forecast more dividend cuts and capital raises at banks, including Bank of America Corp (NYSE:BAC - News) and Wachovia Corp (NYSE:WB - News), in the second half of this year.
Back last year, actually, in 2006, I warned that all downturns take a while to go through. The 'short' one of the Dot Com collapse never was 'fixed.' The markets never returned to full strength when you factor in inflation. Manufacturing is still below where it was in 1999, for example. Housing shot up but now it is below where it was in 1999. The brief 'hysterical happy bubble' era was really a period of decline. For the US rang up Federal deficits to the tun of over $5 trillion and over $6 trillion in trade deficits. This $11 trillion in red ink is on top of the housing red ink which is another $11 trillion. This was not a period of capitalist prosperity.
It was 100% pure debt. Which has to be eaten as inflation. Thank you, Greenspan.
"Reuters) - The owner of a tiny island in off Scotland declared its independence from the United Kingdom on Saturday, saying he wanted the territory, population one, to be a crown dependency like the Channel Islands.
In a declaration on his Web site, Stuart Hill, who owns the 2.5 acre island of Forvik in the Shetland Islands in the North Sea, said he no longer recognised the authority of the government or the European Union, and cited a centuries-old royal marriage dowry deal as the basis for his claim.
"Forvik owes no allegiance to any United Kingdom government, central or local, and is not bound by any of its statutes," Hill wrote. "
Elaine - this is why I love you.
Posted by: Buffalo Ken | June 22, 2008 at 11:50 AM
I can only hope my daughters will be as you...you are valient in the highest degree...or at least, you are to me...
Ken
Posted by: Buffalo Ken | June 22, 2008 at 11:55 AM
Hey, one last thing for the day. We need to try to understand uncertainty. Uncertainty is not a threat. Uncertainty is what life commences from....seems or feels as such to me....just trying to be as honest as i can be...
Posted by: Buffalo Ken | June 22, 2008 at 11:58 AM
and one more last thing to the last thing and the thing is you never know what the thing might have in tow
Posted by: Buffalo Ken | June 22, 2008 at 12:12 PM
i am not playing around....what about u....
i hope not...because it will be better
....for both us if we each choose....
to work together for the benefit
of all.
My opinion...thats all it is.
Posted by: Buffalo Ken | June 22, 2008 at 12:15 PM
Hey well ok, just one more...my daughters they watched this movie called "mean girls". They could oh so do it that way if they wanted to, but i don't think they do...
Posted by: Buffalo Ken | June 22, 2008 at 12:26 PM
six posts so decided to go to 7
Posted by: Buffalo Ken | June 22, 2008 at 12:32 PM
u get me - u under stand....
you got standing...i'm not so sure...
but what do i know?
I'm just of the
buffalo...
Posted by: Buffalo Ken | June 22, 2008 at 12:33 PM
...... yep... After Olympic, China is going to say.. eff ya'll. Now it's our turn to play ball.
so two big events:
1. Israel-Iran war
2. What China will do after Olympic
These will determine the overall post- US Dollar landscape. (God help us, Bush is still in charge. So the greedy bankers are all in charge and will save themselves)
http://www.leap2020.eu/GEAB-N-26-is-available%21-LEAP-E2020-Summer-2008-Alert-July-December-2008-The-world-plunges-into-the-heart-of-the-global_a1800.html
The method used in the past decades is no longer available: no one will accept to buy large amounts of Dollars in order to rescue the US currency if some voluntary policy (like the one described previously) is not implemented by Washington. As they will not do it, the rest of the world will draw its own conclusions: everyman for himself, knowing that from mid-August onward, as Beijing is relieved from the constraint of the Olympic Games, a large number of “tough” options (6), put on the back burner until the Games, will resurface (7).
Posted by: Anthony | June 22, 2008 at 12:47 PM
now you are free...to do what you want to do...
Posted by: Buffalo Ken | June 22, 2008 at 01:04 PM
As this criminally flawed system spawns tornadoes of inflation scooping everything off the peasants dinning room table and evaporates any savings in the cupboards saved for such emergencies - and as you say, Elaine, All that glitters has a shadow - even gold will not hold up to the sleight of hand ticks of currency chicanery by the Masters of Universal Greed - What should the peasants do to defend themselves? We need to have some practical tool or weapon to mitigate the onslaught of the malefic forces. O woman of magical blogging abilities and Macro sensibilities we beg you to shed some light on whether there is any salvation in savings and what form this monetary buffer should be in these stormy times.
Posted by: Jojo | June 22, 2008 at 02:07 PM
Dear Elaine,
Regarding your comment on the little Shetland Island and the independence of your own homestead.....Remember "The Mouse That Roared"?
Posted by: natty bumpo | June 22, 2008 at 03:22 PM
Dear Elaine,
Regarding your comment on the little Shetland Island and the independence of your own homestead.....Remember "The Mouse That Roared"?
Posted by: natty bumpo | June 22, 2008 at 03:22 PM
Everyone is trying to start pirate islands. I figure, since several mountain principalities are doing this too, why not my little town that was sacrificed on the altar of free trade? Be a free booter!
By the way, I LOVED the Mouse that Roared. The book is even funnier than the movie. By the way, all CIA people read the book back during the Kennedy era.
Jojo: the ONLY tool we have is to be organized and to go after the guys in the headquarters. In DC. We have to push for campaign reforms, we have to open up the media and so on. It sounds very annoying but this is the truth: Daily Kos is aiming to strengthen the grip of the Democrats. But the real problem is BOTH of the old parties. I am very much a third party person these days. Past days, too.
Posted by: Elaine Meinel Supkis | June 22, 2008 at 03:45 PM
Elaine, thanks for the article, it is factual, complete, thought stimulating, and has a great flow to it.
There may be a relenting in the rise in the supply of money
Data from the St. Louis Fed shows a topping off in MZM:
Date And Value Of MZM
2008-05-12 8670.6
2008-05-19 8720.2
2008-05-26 8748.0
2008-06-02 8762.2
2008-06-09 8753.7
The chart from Now And Futures.com shows a topping out of M3
The question arises, "Just what is topping off? ... The data and charts show a topping off of 'money supply', perhaps better said, the data and charts show a topping off of 'liquidity'.
I document in my article 'Topping Out And Downturn Of Oil Brings Stocks To The Edge Of A Major Downturn' that 'peak wealth' has now turned down ... the question arises: "Are we seeing a topping off of inflation?
That is why your article is so timely and important.
We have arrived at the end of the era of investment prosperity and are beginning on the era of the investment demand for gold.
I believe that the yen carry trade has been one of the two great investment dynamos of the age of fiat wealth prosperity; the other dynamo has been Alan Greenspan credit liquidity, and more recent Bernanke helicopter drops of liquidity onto the markets, by reducing the interest rates and provision of TAF, TSLF and PDCF facilities.
The chart of the EUR/JPY, FXE:FXY daily, and FXE:FXY weekly, serves as the barometer of the yen carry trade and indicates that the TAF rally ended May 19, 2008; and the yen carry trade rally ended for all practical purposes on June 10, 2008; but the Bank of Japan lending window has remained open providing loans at 0.5% interest which has sustained investment right up through the end of stock market trading on Friday June 20, 2008 in indexed commodities ETFs and mutual funds, such as oil, USO, which traded up 2.1% manifesting a doji to close at 109, as West Texas Intermediate Crude, $WTIC, did likewise to close at $136.
This week's rise in the gold ETF, GLD, as well the rise in currencies, FXE, FXY, FXA, FXB and FXS, came partially through yen carry trade loans, and the other part came through investors buying both these gold currencies and gold itself.
The Federal Reserve's provision of the framework agreements of TAF, TSLF, and PDCF have only served to debase the US Currency, destabilize bond and stock markets worldwide, and inflate the price of commodities, RJI, especially oil, USO, gold, GLD, and agricultural commodities, DBA globally.
This week's 3.5% rise in Gold, $GOLD, and the US Dollar's, $USD, 1.5% decline, documents that an investment demand for gold is underway, as investors seek refuge in the safety of that hard asset from concerns over inflation, as there is a growing disinvestment from stocks especially in the BRICS, EEB, as the yen carry trade unwinds, as concern grows over Timothy Geithners' call for unified regulation of banking globally, as well as the likelihood of a military strike upon Iran's nuclear facilities, under the authority of The Declaration of EU US 2008, or by the Israeli air force itself.
Posted by: Richard | June 22, 2008 at 04:50 PM
Question to all smart people out there...
What would be the impact of "Asian Monetary Fund" against current global trade imbalance?
It seems to me, then Asian exporters country can smooth out extreme exchange rate tilt against speculator. So a massive trade imbalance cannot be attacked by usual market player. (heck, now even Japan can't do it without ruining the point of AMF)
so...
what will happen to IMF, Bretton wood agreement and dollar exchange rate?
It seems to me the logical conclusion would be. We are now against the entire asian money (albeit uncoordinated) There is no way we can pressure any single asian country to change their exchange rate without one of them say "wanna try me?"
Posted by: Anthony | June 22, 2008 at 08:54 PM
This is why Asians have both huge FOREX reserves AND are madly buying up our government debt! This way, they OWN us! Isn't that simple?
We used England to buy up most of our debt only England is going bankrupt faster than the US! The dark pools of the pirates is being used to buy dollars and debt only with hyperinflation taking over, they don't want either of these much longer.
YES, gold is rising again. But I view this as a way of wiping out 'wealth'. Why is this?
WEALTH IS VALUE-ADDED LABOR. Wealth is peasants, slaves, harvests and manufacturing and trade. Gold is a regulator that prevents inflation. It is trying to do this today, soaking up excess dollars in this inert substance that has one function: to be stored, not used.
IE: this is what Fort Knox was! A place to stick gold and keep it OUT OF CIRCULATION. This, in turn, made the dollar stronger. Gold is still trying to soak up excess dollars but cannot possibly keep up with it.
Inflation is eating dollars faster than gold can neutralize it safely. Inflation of consumables literally eats excess dollars which then VANISH! Into thin air. Gone.
This is why we see global inflation. If people are 'eating' their dollars in the form of raging inflation in food and fuel, they can't buy much gold, can they?
This leads to the next dynamic: depressions. Once all the savings and wealth of the workers and middle class is burned and vanishes without a trace, then there is NO money! At least, in the hands of the people who keep economies going. Namely, the working forces.
We will end up like Japan: depressed workers toiling under increasingly dire conditions. Unable to have children anymore, suicidal and in despair. What a great future that is, no?
Posted by: Elaine Meinel Supkis | June 22, 2008 at 11:04 PM
UP until his recent posts, I had thought Mike Shedlock to be a serious economist. However, bring out the furry eyebrows and the big red nose for Mish. What an ultramaroon. This is just an opinion. Nevertheless, any one who drags Smoots Hawley out on the carpet to compare it to tariffs on Chinese steel, deserves the whole clown getup. While pontificating on the horrors of protectionism and the GDP destruction wrought by Smoots, 'MIsh' forgets to mention that Smoots was a gold standard world, and that the Middle Kingdom was not destroying our manufacturing sector by hoarding one and a half trillion dollars in Treasuries to prop up the dollar and to misdirect our economic resources away from manufacturing and into particle board McMansions. So this Groucho is for you Mish, you fucking clown. In my humble opinion of course.
Posted by: calvino | June 23, 2008 at 01:31 AM
Yes, understanding all the elements is very, very hard. It is an uphill battle. I can do this because my father was advisor to 5 Presidents and I grew up at the top, so to speak. Went to school overseas. I had to learn about relative value of money the hard way, while living outside the US and while listening to or reading my dad's letters where he complained about policies that made his international work [hard to bribe if money is losing value, you know!] harder and harder.
When he opened a Swiss bank account in frustration in 1972, I knew we were going into a very serious currency crisis. My ex-husband, who worked for a Greek shipper alerted his boss to this fact. A lot of international traders were hammered from 1972-1976.
I like Fekete as a place to get information because that professor isn't an ivory tower twit. He worked in the real world and has a sure, strong handle on tracking all things at once. Nimble and on his feet, I admire him greatly.
I have disagreed with Mish in the past, by the way. You have to read him very carefully and compare him with others [like here]. Indeed, I highly encourage this! If anyone relies on any pundit, they can be led astray. We all must learn from each other all the time. This is a group effort to understand.
This is also why I mention Karl Marx: when US propagandists wiped him off the books, the stupidity level of commentary and understanding became obvious. We can't analyze economics if we totally ignore some of the smart things Marx wrote! Especially the business about 'capital', 'profits' and 'value-added labor.'
Posted by: Elaine Meinel Supkis | June 23, 2008 at 08:14 AM
Marx is taught in sociology classes now, not in the economics department, if that tells you anything.
Posted by: calvino | June 23, 2008 at 08:23 AM
Elaine
So many of today's problems are tied to US wars of aggression and the gargantuan military budget that this requires.
Ron Paul is the only mainstream politician to point out the obvious connection between US foreign policy and rapidly escalating economic problems around the world.
The economic and financial costs of our reckless Zionist dictated foreign policy is a verboten subject in the mainstream media and among almost all mainstream politicians. This says a lot about what their REAL priorities are.
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