Money Matters

Sub-inflation Interest Rates Feed Inflation

June 24, 2008

Elaine Meinel Supkis

As global hyper-inflation increases, the Federal Reserve lowers interest rates which feeds this global inflation. Instead of understanding this, the Fed thinks it will fix this via the magic of free Funny Money™. Isn't that pathetic? 101 economists predict the Fed will keep interest rates at 2% or less for the foreseeable future and the Bank of Japan will keep theirs at 0.5% forever, too. And no one below the top 1% of both nations will see any benefits from this super-cheap lending. Instead, savings will continue to plummet in both Japan and the US. So the bankers are demanding the central bankers give them more billions to make up for lost savings. Eh? Gads. More inflation fun from the top two economies of this planet!

Bernanke Plays `Dangerous Game' Balancing Rate Talk With Action

(Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke, by voicing concern about inflation and the slumping dollar, has fanned investor expectations for an interest-rate increase as soon as August. He may regret it.

Raising rates may exacerbate the economic slowdown and roil banks whose losses sent their stocks down the most in a decade this month. Forgoing a rate boost next quarter risks damaging the Fed's credibility and deepening its divisions. Already this year, three officials have dissented on rate decisions.

While Bernanke's warning that the Fed will ``strongly resist'' a jump in inflation expectations led traders to bet on a rate increase, economists are more skeptical. All 101 in a Bloomberg News survey said the Federal Open Market Committee will keep the benchmark rate unchanged tomorrow and most analysts this month predicted officials will stand pat until 2009.

101 Dalmatian economists are certainly calling this one right: Bernanke and company will not raise interest rates no matter what the hell happens to the dollar, to inflation, to anything. This is because the Depression Japan model is our template. The Bank of Japan utterly ignores inflation. They try to suppress inflation by reducing the domestic economy to the barest necessities and then try putting the lower population on a starvation diet. This can work in the short run. Then, using this endless pool of free Funny Money™ that near-zero percent loans provide only for the export industries, they can ruthlessly colonize the rest of the industrial planetary systems.

The US ruling elites see how this operates and they never, ever discuss it. People think that ruling elites hate depressions. They do! But they LOVE inflations. Everything they pass to us peons gets inflated and they collect the life savings of all the lower classes, the other 90% of the people. They even openly talk about how good it is for people to be forced to buy risky schemes cooked up by the elites rather than old fashioned savings in banks that, in turn, loan the savings to borrowers at a decent interest rate.

The dual lending system Japan runs is now our own system: interest rates to the wealthy 1% elites is set far below the rate of inflation. Interest rates to the middle class run at a good 400-600 basis points over the rates set for the ruling elites. And the poor pay 2000-100,000 basis points more in interest on credit cards, quickie street loans and other schemes. The lower working classes who need credit the most are put in perpetual financial jeopardy, the middle class pays the full real rate of inflation but the top 1% of the US economic classes get a special treat: super cheap loans!

This greases their economic wheels big time, doesn't it? The middle class is told, 'If we don't give super-cheap, sub-inflation level loans to the biggest investors, speculators and capitalists, YOU will suffer terribly!' So the middle class falls to its collective knees and begs the central bankers to please, please, please give the richest 1% of the population super-cheap loans. Of course, the traditional banking system that requires reserves and savings won't pay a decent return on savings if interest rates are artificially low. The traditional savers who are the backbone of all true capitalist democracies are suddenly unable to save any money at all since it has a ridiculous return that is far, far below the rate of inflation. So they cease saving money in banks. Instead, they hand this over to the richest 1% to 'invest' in various schemes.

Alas, when you put your money into these schemes, it is NOT PROTECTED. Whereas, if you put it in a FDIC insured bank, it is protected. The trick here is for the Fed and the richest 1% financiers to force everyone out of the FDIC protection system and into the shark pool of dark finances that are unregulated and very risky! This way, we can have a collapsing banking system but no banks go bankrupt because there are no runs on the banks because there are virtually no savings in the banks that are not really banks anymore, anyway. They are conduits for risky investments in dark pool finances that are unregulated and very, very dangerous and which can drop in value from a +12% growth rate to a -90% loss rate. Instead of merely losing the profits of an 'investment' one goes into losing the principal, too! We see this clearly today.

In Japan, if a middle class person wants to have any savings at all that beat inflation, they must take great risks. Some play the FX markets and place bets on that roulette wheel. Even if they watch the FX news very closely, they are behind the 8 ball compared to the upper 1% who have tons of insider information since these people socialize and control the central bankers who control lurches in currency values, etc. In other words, it is a chump's game. People at the top like Soros can get filthy rich this way. But ordinary people are lucky to get out of this particular casino with any of their original pool of betting money intact.

Then there is the stock markets: the ordinary person tries to make money when stocks go up. The experts at the top make money off of fools playing for positive returns. They make money on stocks falling! This is called 'hedging'. When the lower classes give their money to hedgers to protect themselves in their own ignorance, the hedgers then go out and play risky games that are totally stupid and are merely pirate raids on various locales or are attempts at tapping into the darkest parts of the Cave of Wealth and Death. When these go blotto, the money vanishes and the hedge funders commit suicide or flee to other countries to set up shop again. Some actually go to prison. Or so we hope.

The Federal Reserve is using the sword point of cheap loans for rich people to force us all to walk the economic plank. Then they have the temerity, after creating MORE Funny Money™ to tell us we must make huge sacrifices to kill inflation! We, not the rich, must pay the price of all this extra liquidity these credit lines create! We must lose all our savings so we can save the global economic system that benefits the rich more than us. End of story.

U.S. banks may need $65 bln new capital: Goldman

(Reuters) - U.S. banks may need to raise $65 billion of additional capital to cope with mounting losses from a global credit crisis that will not peak until 2009, Goldman Sachs & Co analysts said on Tuesday.

The new capital would be on top of $120 billion already raised by the industry, analysts led by Richard Ramsden said.

What is this capital, damn it? What the hell is it? When banks want 'capital' they are talking about SAVINGS! If the damn bankers want me and others to SAVE money rather than to beg for loans, all they have to do is RAISE THE INTEREST RATES ON SAVINGS and the billions of dollars will flow in like magic. THEY KNOW THIS. And they do NOT want to do this! This gives savers power! This also forces the Federal Reserve and the government to insure our savings via the FDIC method. This makes no one in the ruling elites richer. It makes THEM POORER. No, the last thing these clowns will do is the sensible, traditional thing: raise the rates they pay us to save our money with their banks. Gads. This just pisses me off more than anything. 101 Dalmatian economists should be shouting this in unison, not yelling for eternal sub-inflationary returns so we can grease the wheels of the Ferraris driven by rich hedge funders!

Gallup Poll: Confidence in U. S. Banks Down Sharply

The percentage of Americans saying they have a "great deal" or "quite a lot" of confidence in U.S. banks has fallen to 32% -- down nine percentage points from June 2007 and 17 percentage points from June 2006 -- matching the 32% of March 1991 and near the three-decade low of 30% in October 1991.

Why trust a bunch of pirates, thieves, con artists and fakers? Why trust bankers who won't pay us a decent return on our savings? How can we trust rip off artists who use 101 Dalmatian idiot economists to keep us in the dark about this gigantic rip off scheme to suck up all our savings via inflation and super-low interest rate loans for only the very rich and very connected? Eh? Eh? I can't trust banks! NONE of us can thanks to the protection of criminals by the Federal Reserve that has worked insidiously since 1914 to destroy traditional banking and traditional values. Arrest them all.

Asian Clearing Union To Introduce Euro Alongside U.S. Dollar To Ease Payment Settlement

AHN) - Central bank chiefs of the Asian Clearing Union (ACU) have agreed to introduce the Euro alongside the U.S. dollar for settlement of payments among the member countries beginning January, 2009.

The decision was made at the 37th ACU board of directors meeting held in Nay Pyi Taw, administrative capital of Myanmar, on June 17-18, officials said in Dhaka on Sunday.

'The ACU board has agreed in principle to allow Euro as an alternative currency alongside the U.S. dollar from January, 2009 aiming to make the payment system easier,' Bangladesh Bank (BB), the country's central bank, Governor Salehuddin Ahmed told AHN along with a group of reporters in the capital, Dhaka on the day after returning from Myanmar.

As the majestic US dollar sinks to the bottom of the sea, let the captain tell the orchestra to strike up, 'Nearer My God To Thee' and maybe a Fox Trot or a Blue Danube waltz. The Nazis had their Jewish captives play that for the civilians being herded into death chambers, for example. This news should alarm Americans! We can't travel in the world much anymore if the dollar becomes useless. We will be trapped at home like the Japanese public is now trapped at home. In Japan, if you want to do business abroad, you must not use the yen. This keeps the yen weak and gives the rich owners of Toyota a huge business advantage overseas. Toyota executives can travel the world first class using their euros. Lower level Japanese, if they have any savings left after paying for food, fuel and housing, can also buy euros. So it will be for us: the dollar is obviously being replaced rapidly.

The US has embargoed Iran partially because Iran opened their euros-only oil bourse. But the EU continues its mad growth by sucking in more and more of the former Soviet satellites and it is now a bigger economic entity than the US so it is now replacing the dollar. Thanks a lot, New World Order idiots. You did it. You killed the Golden Goose, you ninnies.

Bond insurers want $125bn of cover wiped out

Bond insurers such as Ambac, MBIA and FGIC are talking to banks about wiping out $125bn of insurance on risky debt securities in what could be the only way to limit the financial damage surrounding the bond insurers.

Discussions about "commuting" these insurance contracts, which were sold by bond insurers to banks in the form of credit default swaps, have taken on a renewed sense of urgency amid a rash of ratings downgrades in the bond insurance, or monoline, sector last week.

Just as the FDIC has evaded protecting and insuring our savings, the monoline insurers want to weasel out of their own obligations. Just make it all vanish, they yell. Well, this monstrosity is directly connected to the fearful Derivatives Beast. They hope and pray that if the Federal Reserve and the Federal Government conspire to undo all their previous business promises and all their activities for the last dozen years, the collapse of the banking/investment system won't require them to pony up the money they promised.

For they have no money! Perhaps they will get the Fed to soak up this, too. Like the fake CDOs and SIVs the Fed has been squirreling away back in the Cave of Wealth and Death, so will all this. They want to go back on their promises. This means a huge hole in the financial systems. But if enough super-cheap loan Funny Money™ is created via government-insured and protected credit lines to all the financial houses, schemes and things created by pirates, why, there will be no hole, the Derivatives Beast won't suddenly go from totally invisible to the all-money-devouring monster it really is. It dwarfs the entire financial and asset values of the entire planet earth now. This stupid, hideous, nasty creature was made in order to protect risky investments. But it can't and won't: it will destroy everything in a F5 tornado of value destruction. For it has no base in reality. There are no savings supporting this monster. It doubles in size each year because it is a massive Ponzi scheme. Now, the effects of all this are showing up and the Derivatives Beast's owners are shown to be con men. Arrest them all. Don't give them another $200 billion in free money. Put them in PRISON.

Chinese agree 96% jump in ore prices

Global inflation fears deepened as Chinese steelmakers agreed to a record increase in annual iron ore prices in a move likely to boost the cost of cars, machinery and other products.

Chinese millers agreed to pay Anglo-Australian miner Rio Tinto up to 96.5 per cent more for their ore supplies this year, the largest ever annual increase and well above the 9.5 per cent increase paid last year.

The rise suggests that demand for commodities from emerging economies remains strong, in spite of the US slowdown, fuelling fears that global inflation will continue to rise. The rise – an average 85 per cent – surpasses the record increase of 71.5 per cent agreed in 2005, when the commodities boom gathered pace.

“Commodity-led inflation risks appear to be growing,” said Tobias Levkovich, Citi chief strategist.

The Derivatives Beast is growing. US government debt is growing. The dollar is dying. Inflation is raging. The US and Japan are both seeking wealth and power by weakening their currencies, giving super-cheap loans to the top 1%, starving or destroying their workers and eating up all savings of the middle class. And of course, this destroys the global economy. The US is the ultimate destination of all world trade. And if our middle and lower classes die off and can't buy anything but food and fuel, world trade crashes. The world's two top economies can't run super-depressionary systems at the same time and not throw the entire planet into a hellish economic situation! The Chinese are looking to the future. They want to control the source of all commodity systems. This way, they will come out of the looming global depression as our rulers. The US hopes to bankrupt Iran, bankrupt China, bankrupt Russia, bankrupt OPEC. But we are doing this by shooting ourselves in the head.

Isn't that stupid or what? We imagine the rest of the planet doesn't want us to go bankrupt and will keep us afloat forever. This is beyond stupid. I assure everyone, China and Russia and probably Japan all hope we become economic slaves and lose everything. They hope we die. OPEC is in the same frame of mind. They know that a dead US can terrorize the planet with our huge nuclear arsenal. They hope to disarm us the same we we disarmed Russia. If we think this isn't the plan, we are fools.

Vice Chairman Donald L. Kohn
At the Federal Reserve Bank of Boston's 53rd Annual Economic Conference, Chatham, Massachusetts

The Federal Reserve has been charged with the pursuit of price stability and maximum employment. Price stability is uniquely in the control of the central bank over long periods, and it is a prerequisite for the economy performing efficiently over time. The welfare costs of inflation result from many factors: the potential costs to households and firms that result from efforts to insure themselves against inflation or from confusion regarding real and nominal prices; distortions to the financial system related to inflation; imperfect indexation of the taxation, especially of capital income, and the related distortions to economic activity; and the costs associated with a slow adjustment of nominal prices and wages. The costs of inflation imply that central banks should aim for low measured inflation. Moreover, many of the costs of inflation--such as those associated with misconceptions regarding inflation, efforts to insure against inflation, and distortions to the financial system--are associated with the rate of change in the entire set of prices of goods and services facing households or firms, suggesting that measured inflation should be gauged by the rate of change in a broad set of prices. Accordingly, the Federal Open Market Committee (FOMC) has been emphasizing that it gauges price stability over the long-term by the behavior of the overall personal consumption expenditures price index.

The Federal Reserve is not supposed to deal with mere prices. They are to deal with BANKING. And a banking system that can't attract savings is a sick, sick, sick puppy. A banking system that attracts savings is healthy. Got that, Mr. Stupid Federal Price Regulator? Since the Fed pretends it is responsible for prices, ARREST THEM FOR FRAUD. Ever since they came into existence, the value of the dollar has plunged. It falls nearly all the time except during the Great Depression. Then, prices fell! Eh? What? And this is their model: to make prices fall? Isn't this how we have depressions?

So they won't do that! They encourage inflation but try to 'control' it but it was controlled by fake means. Fake policies. Fake analysis. A refusal to look at their own FRED graphs. Since Mr. Kohn claims that ultimately the central bankers control inflation, the fact that we have out of control inflation is his fault. And what we do when people screw up so badly that they destroy whole nations is, we arrest them, accuse them of treason and hang them. Right? Of course!

But what he wants is for us to let him continue to ravage us! He hopes to fix all this via letting in a flood of Chinese goods. And destroying all attempts at protecting our savings via FDIC insured banks. Isn't that criminal? Of course it is! He is a THIEF, a CON MAN and a fool. Arrest him.

California's unemployment rate rises to 6.8 pct

California's unemployment rate jumped to 6.8 percent in May and the state lost 10,900 more payroll jobs than it generated during the month, state officials said Friday.

The unemployment rate was 6.2 percent in April and 5.3 percent in May 2007, the Employment Development Department said.

The banking collapse, the inflation spiral all began during full employment. Why is this?

The US chose the Japanese model. The workers have not have pay raises in a long, long time. Inflation has ravaged them for years and years. Wealth has declined while the cost of borrowing has shot upwards. There have been fewer and fewer usury laws since the Floating Currency was introduced in 1974. The floating currency is sinking, by the way. What a shock, eh? Now we enter the really nasty spiral of declining jobs as well as declining wages. THIS IS DEFLATIONARY. This is the ideal state for the very rich. Labor is cheap, people are desperate and they get to have more slaves. Fun for them, hell for us. They must be stopped.

Chaos Erupts As Storm Victims Try To Get Food Stamps

Dozens Wait For Hours Outside Offices

The FSSA office at 4720 Keystone Avenue was overwhelmed by demand, and several people got confrontational. Lines began forming as early as 5 a.m.

"I was seriously affected by the storm. I lost everything, and I'm listening to people in line and they really didn't even need it," said Nikki Loyd. "They weren't even affected by the storm."

The calm broke when employees told them that they would take applications for people who live in eight zip codes in Lawrence and Warren townships -- areas most affected by storm damage.

The working class, pressed hard in the area of food and fuel, are now rushing to any opportunity to get a hand out. I saw this in the seventies and it is happening again. The foodstamp program was launched to deal with inflation in food. Over the last 30 years, it has not been raised much vis a vis the rate of inflation in food prices and now barely augments the finances of the very poor. Soon, it will end. By becoming totally worthless. This is how the ruling elites deal with inflation: we get to eat cake but we starve to death. Marie Antoinette knew this. Our present rulers know this. For some odd reason, they forget what happened next.

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Fed Reserve Wants Free Trade 'Inflation Fixer-upper'

June 23, 2008

Elaine Meinel Supkis

Free trade goes bonkers! Instead of using sensible tariffs and barriers to control trade, the US floating currency system uses the relative value of the dollar and grinding, terrible recessions to fix things that could be easily fixed the old fashioned way. But we are being warned, stopping the flood of imports will CAUSE INFLATION! Well, hate to say this, but if inflation bothers our bankers at the Fed so much, why aren't they raising interest rates and reserve ratios like China is doing? Eh? But no, we 'fix' excess liquidity by exporting US labor industries. Talk about insane. We visit Toyota today to see how this works.

Bernanke's Inflation Cure Loses Potency as Import Costs Rise

(Bloomberg) -- What's good news for U.S. businesses may turn out to be bad news for Federal Reserve Chairman Ben S. Bernanke's fight against inflation.

The surging oil prices that are raising exporters' costs to ship everything from steel to sofas to America are encouraging customers to buy more domestically made goods -- and giving the producers of those goods more room to raise their prices.

The result: As Bernanke and fellow policy makers meet in Washington this week, they may find themselves starting to lose the benefit of the flow of inexpensive imports the chairman cited in a June 3 speech as a key force holding down living costs.

``It's changing global costs,'' says Jeffrey Rubin, chief economist at CIBC World Markets in Toronto. ``It's a huge inflationary threat.''

Lord preserve us! These men are all TRAITORS. Bankers create inflation then tell us to eat this inflation in various ways that weaken our nation fatally. Why, if we ship all our labor-value-added industries and as many services as possible to other nations that have cheaper labor, why, things will be cheap here, eh? Only one fly in this ointment: the workers here see falling wages and even if things are 'cheaper' they are still increasingly out of reach of the workers! Duh!

Japan fought off inflation by cutting wages at home with ruthless efficiency. This still didn't kill the real rate of inflation but it certainly fixed Japan's trade problems! The Japanese workers are now so poor, they increasingly can't buy much of ANYTHING! And the fix for inflation the ruling elites there are thinking of using is to drop taxes Toyota pays and increase the domestic sales tax as well as cutting services. Guess what?

In the US we see the Federal Reserve dropping interest rates far, far below the rate of inflation. And we see dropping wages and lost jobs and loss of buying power in the lower classes as well as the upper classes. The job losses in the financial industry are continuing and getting worse and worse. Citibank, for example, is laying off many more thousands of high-status workers. Usually, they fire the cheap labor first.

So we have dropping wages, loss of jobs and grinding down of the spending ability of the workers here just like in our ally, Japan. And like Japan, we see taxes on corporations being cut while all the hidden taxes on the working class are rising. Property taxes are way up, just for example. The hidden war tax that our mainstream media lies about so much has shot through the roof. Energy costs are killing us.

The US public isn't attacking Bernanke and his gang of thieves because we love cheap imported goods. We wish we could have more, not less. Just as unions have been attacked relentlessly for 'driving up inflation' so we see the concept of having even ANY American workers making stuff or doing things as 'inflationary.' This astonishing change in US values is utterly at odds with our ancestors. From 1781-1970, the US has been very protectionist. After the Great Depression, there has been a propaganda push to destroy all protective barriers. This has been amazingly successful. No one can earn an economics degree today without first being hammered with this bizarre propaganda story that trade protections in America caused the Great Depression!

I fight this idiot idea tooth and nail every day! One reader here mentioned that Mish, a very popular economics professor online, is furious that the US has finally set up a tiny barrier to Chinese pipes pouring into our nation! He thinks this will cause a Great Depression! I have said, based purely on economic data, the US struggled to protect itself from aggressive exporting by the bankrupt British Empire which tried to send its goods from all over the planet to the US. We had to set up many barriers to this starting in 1921 or we would have been stripped of all industries by 1940! The reason we could fight and win WWII was because we kept our industries intact behind a wall of tariffs and barriers! England should have sued for peace with the Germans and ditto, Germany, in 1915. Neither did this because both were being funded by the global banking houses that wanted this mad war to go on and on and on. It made the bankers very, very rich. And bankrupted Europe.

Europe has shown the ability to wage wars for long periods if bankers allow this. The 100 Years War and the Thirty Years War are two disgusting examples of this. Anyone who creates wars that are named after the number of years they rage is totally insane! And note that we are now prone to this, too!

Time to visit our mirror double, Japan.

Major Landlords Set Tokyo Office Rents High Amid Tight Supply

TOKYO (Nikkei)--Mitsubishi Estate Co. (8802), Mori Trust Co. and other large real estate companies are raising their office rents in Tokyo by an average of 15-20%, the steepest increase since the collapse of the bubble economy in the early 1990s, to reflect the low vacancy rate.
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JBIC To Lend Y1tln For Natural Resource Development In Australia

SYDNEY (Nikkei)--The Japan Bank for International Cooperation intends to lend roughly 1 trillion yen over the next five years to help finance natural resource development projects in Australia that involve Japanese companies, sources at the bank said Monday.
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Confidence Of Large Manufacturers Sinks To Record Low In April-June

TOKYO (Nikkei)--Rising materials costs caused the business confidence index of large manufacturers to decline to a record low of minus 15.2 in the April-June period, according to a government survey released Monday.
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Declining Car Use Forces Transport Rivals To Join Hands

TOKYO (Nikkei)--The transport sector is having to come up with new ways of getting from A to B as environmental awareness, fuel prices and perhaps even the cost of buying and maintaining a vehicle are pushing some commuters to rethink the way they travel.

I try to read the Nikkei News every day. It is a real eye-opener. Most of what passes for US analysis of Japan's economy are based on reading US news about Japan. Like much of our news, this is pure propaganda. And the Japanese will lie to US reporters without blinking an eye. Japanese industries enjoyed a golden era during this terrible 'depression' in Japan that hammered ONLY the working classes. The Japanese exporters have unilaterally decided to cut out the Japanese workers from all wealth sources and basically enslave them. This is working due to the fact that communist parties that flourished in the fifties in Japan have been utterly destroyed.

For a short while, Japanese businesses took care of workers and treated them kindly as 'family'. This was due 100% to the shadow of fear that the workers would revolt and take over. Slowly, as workers aged and got careless and let their unions die, as students ceased taking over Universities and agitating, as soon as everything got quiet in Japan, the industrialists counter-attacked. Under cover of the post-Plaza Accords bubble bursting, they ruthlessly suppressed worker's wages and increased hours. For a short while, the government spent wildly on public facilities and the social welfare got a lot of money.

Now, taxes are climbing rapidly, services are vanishing and the people there are being shoved literally off a cliff. The elderly are increasingly a problem. This is being dealt with via the 'put them on an ice floe and let them die' system. Most Japanese are no longer reproducing and therefore, there will be fewer or even no children to protect them when they cease being useful for the industrialist exporters who have taken over the country. This, dear readers, is the model the US rulers want for us! This is why I focus on Japan much more than China. China knows its own people are restive and difficult They fight back! Even under that dictatorship, they will resist the rulers sometimes with amazing risks and open fists! Koreans fight back, too. Literally, in the streets. Both are forces that give the rulers of these lands a great deal of sleepless nights.

But not in Japan! Or the US! We are sleepwalking the plank that ends with us falling into the ocean filled with sharks.

Japanese shares suffer big early losses

(MarketWatch) -- Japanese shares suffered big losses early Monday, extending their decline from the previous session, as exporters such as Toyota Motor Corp. and Nikon Corp. reacted to a strengthened yen and a decline on Wall Street. The Nikkei 225 Average lost 1.7% to 13,705.38, on top of the 1.3% drop Friday, and the broader Topix index gave up 1.7% to 1,333.77. South Korea's Kospi shed 1.7% to 1,702.27 and Australia's S&P/ASX 200 lost 1.1% to 5,229.20, while New Zealand's NZX 50 index slipped 0.3% to 3,273.68.

The investors in Japan know that Toyota and others depend on the US markets to make big profits. They may sell in Europe and China, for example, but the profit margins are much smaller! The US has had the ability to take on endless loans to buy Japanese imports. And these imports, far from being discouraged by our rulers, have been actively encouraged. Note how even Marketwatch now admits that the weak yen is a blessing to Japan and Japan works hard to insure this is the case! Only Marketwatch won't mention that little detail. Which is key to understanding banking, trade and our declining economy.

The Nikkei above, by the way, casually mentions that Japan is taking over Australia's commodity markets, buying out the stupid English Imperial settlers there and giving them a few AU dollars for precious resources. China is doing this too. All over the former British Empire, we see this. Is this happening to China or Japan?

NO! They are NOT letting ANYONE do this to THEM! DUH. Because the rulers are ruthless and vicious and know perfectly well that free trade is a poison and best served to stupid foreign devils who they hate because we tried to steal everything from them in the past! DUH. NEVER ever forget history. She has a long memory and writes in blood. Here are two charts I made showing the interrelationships of monetary changes, recessions and the different histories of Toyota versus General Motors:

Look! Toyota's stocks shot upwards AS GENERAL MOTORS FELL. The differential now is gigantic and growing by the hour. There are several elements to this but note how very much stronger Toyota is affected by small changes in financial values of floating currencies, negotiations by our ruling elites and our recessions! How obvious this all is! The Nikkei News mentions that more and more Japanese can't afford to own or buy cars anymore. They can't afford to drive them, either. So they are being forced out of the car culture. Toyota's stocks shot upwards WHILE JAPANESE COULDN'T BUY TOYOTAS! Is this our fate, too?

YOU BET IT IS.

Banks Trimming Limits for Many on Credit Cards

After fostering the explosive growth of consumer debt in recent years, financial companies are reducing the credit limits on cards held by millions of Americans, often without warning.

Banks that issue cards like Visa and MasterCard, as well as the American Express Company, are cutting the limits for customers who have run up big debts, live in areas that have been hit hard by the housing crisis or work for themselves in troubled industries.

Credit is now receding from US shores leaving free-spending Americans high and dry. We want more liquidity! We want more debts! But bankrupt people can't get this. Yet the time people want this the most is during times of rising inflation. And when do interest rates rise to prevent more loans? During times of rising inflation! This is a cruel, cruel system. The Fed is supposed to protect us from this cruel dynamic by preemptively raising interest rates whenever too many loans threaten to cause this inflationary spiral. Of course, the Fed does the exact opposite: it encourages and creates bubbles, not stops them. Arrest the Fed officers! Arrest them for treason.

NYT continues with this interesting sob story:

Many are already feeling pinched. Pamela Pfitzer, a family therapist with a stable six-figure income, was stunned when she went to a garden center near her home outside Sacramento in early April and tried to buy about $30 worth of flowers with her American Express card. Her transaction was denied, she says, even though she insists she had rarely missed a payment and had just made one for $1,000.

After inadvertently hitting her credit limit a few months ago and then falling behind on a mortgage payment, Ms. Pfitzer said her limit was lowered by American Express to $900 from $2,300. The flowers pushed her over the new cap.

Then last month it happened again, she says, when she tried to buy office furniture with her Wells Fargo Visa card. Although she had just made a payment of about $700, Ms. Pfitzer found out that her credit limit had been lowered to $2,000 from $2,800.

What the hell? This woman is a classic case: this dead beat who is so far in debt, she can't pay her mortgage regularly, she is out shopping? HUH? And is she buying necessities? Flowers and office furniture? I scavenge for stuff all the time. I grew up dumpster diving. For fun and profit. Much of my beautiful house was built from free, scavenged materials! Windows, doors, whole sections are free materials or gotten super-cheap from 'damaged goods' stores or I buy it from bankrupt people needing money.

This woman is totally irresponsible. She thinks she deserves credit even as she rings up greater and greater debts! And she is America! Our nation is up to our collective eyeballs in debts! And yesterday, I had to attack the Washington Post over their stupid article that made light of these debts. 'We are only running 3% of our GNP in red ink,' is the propaganda line being fed. Well, if the GNP falls, the percentage of debt to GNP shoots up, doesn't it? From 3% to 10% just for example! And who says we can run in the red all the time?

That leads eventually to bankruptcy. Note how the US Congress is exactly like this stupid woman buying flowers and furniture while deep in debt! We want China and Japan to bankroll our spending. We get mad when our credit line is reduced or cut off. But it will be both soon enough! It is inevitable. We can't go into debt forever. We can't run higher and higher trade deficits in order to destroy inflation caused by Asia extending us credit! This is IMPOSSIBLE.

Now for a good analysis from Mr. Schiff:

The Fed Unreserved
by Peter Schiff

What few economic leaders have acknowledged is that the Federal Reserve itself is responsible for the real estate and credit bubbles, which are the source of our current troubles. By keeping interest rates too low for too long, the Fed ignited a speculative fever and engendered a disregard for risk management that pushed asset prices above rational levels. Should we blame the private sector for taking advantage of all the cheap credit, or the Federal Reserve for supplying it? If a kindergarten teacher passes out handfuls of Pixie Sticks, and then leaves her classroom unattended for several hours, should we blame the five year olds for the hysteria that ensues?

The reality is that we should be restricting, rather than expanding, the powers given to the Federal Reserve. Since Greenspan, Bernanke and company have already inflicted so much damage with the weapons already in their arsenal, why provide them with heavier artillery? Only in Washington do those who screw up get rewarded for doing so.

Kisses to Schiff for telling the truth. A precious commodity here. He hopes for a gold standard just as I hope for it: to regulate the flow of CREDIT. He even hints at the need for old fashioned tariffs and barriers. Then there is this line which I love:

Mr. Schiff has some amusing analogies such as this one:

When it comes to economic performance during the past 150 years, the U.S. is the Big Brown of economies. 1858-1908 was the Kentucky Derby, 1908-1958 was the Preakness, and 1958-2008 was the Belmont Stakes.

Heh. I am not the only one to use the Triple Crown as a fable to explain things. He is correct here. Bravo. Do read the rest of his analysis. It is well worth the time.

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Let Them Eat Inflation!

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.

GEAB N°26 is available! LEAP/E2020 Summer 2008 Alert – July-December 2008: The world plunges into the heart of the global systemic crisis

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.

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Gnomes Can't Slay Inflation Dragon

June 20, 2008

Elaine Meinel Supkis

As the world struggles with central bank-created inflation, Mother Nature delivers one blow after another in agriculture. The Horn of Plenty is in trouble! In the US, the choice between candidates continues to vanish as now Obama endorses NAFTA as well as more Zionist wars. Also, the Chinese dragon warned us to NOT use 'protectionism'. Or they dump the dollar. As I predicted in the past: they have us by the short hairs. They own us. 170 hedge funds have been dragged back into the Cave of Death and are now a pile of bones. being crunched by the demons there. And talking about dead things, the ruling elites are very tempted to have their inflation vanish via savaging the working classes even more. A dangerous choice, very dangerous. 'Let them eat inflation,' is what Marie Antoinette said.

From 321 Gold: Dr. Fekete tackles the subject of inflation yet again:

I am driven to distraction by the constant reference to inflation by people who are talking about an increase in prices. How is it possible that the implausible falsehood that inflation is caused by rising prices has gained such traction?
*snip*
Inflation is, and can only ever be, too much money and credit chasing too few goods and services. It can either be caused by the extension of too much money or credit, or it can be caused by goods and services disappearing. As the latter can only be accomplished by government degradation of the currency, then it is really the same thing. Inflation is government creating money and credit over and above the supply of goods and services. That is it; it really is that simple.
*snip*
If the price of one good rises then the price of another good or range of goods must fall. Rising demand does not lead to a general rise in prices... not unless governments inflate the money/credit supply. Rising demand in one area can only be accomplished by falling demand in another area. Rising prices here equals falling prices there.

Dr. Fekete is one of the better analysts online. Inflation is a queer beast like any of the many creatures that come out of the Cave of Death. Most if not all of the creatures from this place are dangerous. All of them eat wealth when unleashed. They are sleep when things are in balance. Only when humans are tempted to grab all the wealth in the Cave of Death, do these creatures waken. One of the greatest operas written is the Ring Der Nibelungen cycle by Richard Wagner. Here is a scene from 'Siegfried' via You Tube:

The dragon is awakened. Siegfried kills it and thinks he won. But he won only his doom for when he gets the Ring of Power it controls SEX as well as money and power. And it is too potent, too powerful for mere humans. This puts Siegfried in the path of dying gods and elder goddesses and elemental forces he cannot control and they all kill him and destroy everything in Götterdämmerung.

Back to inflation: it is a major dragon in this cave. Always, the central bankers announce to us, they will go into this cave and slay the Inflation Dragon. But they are like the dwarves in the Ring cycle: they are the companions, the feeders of this dragon! They are the ones who waken this dragon in the first place! And when they stride into the Cave of Death to slay it, they instead turn on the Working Class Siegfrieds and run a spear into the back of this class of heroes. Then the Inflation Dragon eats them. Or so it is hoped by the gnomes who do this.

One of my other themes is about the true guardian of the Gates of Death as well as the Cave of Wealth: Libra. One of the oldest goddesses, next to Mother Nature, of course. She allows us humans to get something from the Cave of Wealth but only after we answer the riddles of her neighbor and friend, the Sphinx. Really smart people, when they approach Libra, notice that Pegasus is with her, invisible yet full of energy, ready to fly to the very Heavens. Smart people figure out the riddles of the Spinx then, when Libra asks what they want as a reward, they say, 'I want to ride Pegasus to the Heavens!'

Then the Divine Horse lifts them above the ordinary and takes them to the Muses where one can learn how to either dance, sing, make music, paint pictures, carve statues, write poetry, etc. In other words, one becomes a CREATOR. Which is the gift of Life! It is the Golden Apple of the Sunrise, it is the Rainbow Bridge to Valhalla. It is the Garden of Eden of the soul! It is worth more than all the riches in the Cave of Wealth! Indeed, this is recognized by the gnomes who will use magic money they get the other way to buy up history's supply of creative wealth. The beautiful, wonderful things created by people who refuse to take gold from the Cave of Wealth and Death...the ones who don't desire wealth! They create the true wealth which is more important that all other things.

Look at how inflation has moved into the art world. Prices have climbed to the very heavens even as the value of all other assets collapse! Even now! The ultimate store of value is from the people who ride Pegasus, not by people who make deals with dragons from Hell.

Back to inflation: Libra must balance all things. So when the Inflation Dragon wakens, first, it grants the gnomes great wealth as inflation rages in property or artworks, etc. The bidding war for the gorgeous goddesses who are tall and haughty also goes up and up. The price of prostitutes shoots up, too. Look at poor Spitzer! Heh. And his goddess was not very high in the sisterhood of lusty, money mad women! Yet he paid an astonishing price so he could lark with her! Trump is so much a gnome, he has to offer half of his wealth to get fashion models to touch his scaly skin!

The Inflation Dragon will give these 'blessings' in order to lure its prey into its maws. Then it EATS all the value of the assets and mistresses, etc. All are devoured and end up WORTHLESS. EVEN GOLD. Yes, even gold can be devoured by this beast! Then it is loose and full of energy and proceeds to eat all the food and energy on earth. People starve to death. People freeze to death. As the Inflation Dragon heartlessly devours whole nations, entire empires, people wonder, 'How on earth did this happen? Where did this thing come from???' And the gnomes in the banking and government systems who woke it up so they could have sex with flashy, tall, demanding females all shudder with fear. 'We didn't wake it up!'

So off they go, grasping their spears, their swords called 'Notung' [Suffering] in hand. The ruling elite male gnomes all gather each summer in California in the Bohemian Grove to pray to the Great Owl who is their god at the Gates of Death who lets them in. The final event at the annual Bohemian Grove coven meeting is praying to the Owl as they sacrifice 'Care' or 'Suffering'. These gnomes all pray to the Owl for fancy women to have sex with them and adore them. To do this, they all need money and power. Again, we see the logic of the gnomes which leads to the destruction of Valhalla.

Fortune: Obama: NAFTA not so bad after all

The general campaign is on, independent voters are up for grabs, and Barack Obama is toning down his populist rhetoric - at least when it comes to free trade.

In an interview with Fortune to be featured in the magazine's upcoming issue, the presumptive Democratic nominee backed off his harshest attacks on the free trade agreement and indicated he didn't want to unilaterally reopen negotiations on NAFTA.

"Sometimes during campaigns the rhetoric gets overheated and amplified," he conceded, after I reminded him that he had called NAFTA "devastating" and "a big mistake," despite nonpartisan studies concluding that the trade zone has had a mild, positive effect on the U.S. economy.

Does that mean his rhetoric was overheated and amplified? "Politicians are always guilty of that, and I don't exempt myself," he answered.

Obama says he believes in "opening up a dialogue" with trading partners Canada and Mexico "and figuring to how we can make this work for all people."

Generally speaking, the tallest candidate for President wins. Kerry was taller than Bush but the media cooperated with both Skull and Bones coven members and always had Bush on a small platform of both men were sitting when seen together. Lies were told about Bush's height. This is why all the gnomes wish to have sex with tall women. Bush's mother is tall, for example. Obama is tall. He will probably win since McCain looks and acts like a gnome married to a slender, tall woman. Indeed, he divorced his previous wife when she went from tall and lithesome to losing several inches due to surgery after a bad accident.

Obama is going to win so all the gnomes are hammering on him to change him to their image. He will endorse all the things they desire. Every last one of them. Of course, they are very scared that the price of paying for the Inflation Dragon will be taken off of their hides! They want the ravages of this monster to be confined to the lower classes, the workers must be eaten! Wages must DROP, not rise! Then, inflation will fade as it finds nothing to eat since everyone is now starving or freezing to death. End of story. Obama's reward will be his entry into Valhalla. They did this for Powell. He endorsed illegal, amoral invasions in the Near East and in turn, his son was elevated to higher positions and everyone praised Powell in the media. Then, when he developed some scruples, he was unceremoniously dumped into the slums again along with his son and all other family members. No longer is he their golden slave!

But they hope Obama will not betray them but rather, join them in this despicable game. So here we are: no real choices. Except the McCain gnome is a holy terror so Obama is still the 'better' choice. But not a revolutionary change choice. Nor will he rock any ogre boats.

Bush meets with Chinese vice premier, lauds strategic economic dialogue

(Xinhau) Bush said he was also glad about the agreement reached at the SED meeting to launch negotiations on a bilateral investment protection accord between the two nations and hoped to see positive results from the negotiations very soon.

The president made it clear that trade protectionism is contrary to the interests of both China and the United states and both sides should stick to open and fair principles on trade issue.

HAHAHA. And the Chinese roll onwards! This did NOT make American news! Silence is golden. As I predicted long ago, the insulting show Bush put on, being very nasty to President Hu last year when he visited was all fake. It was for show. To make Bush look big in the US, to make Bush look like he was an emperor who could shove around the ruler of China.

HAHAHA. Fake! Arrest Bush for lying! Bush first sent his envoys crawling to the Dragon of China, begging for money, begging for wealth, begging for workers, begging for loans! And China laughed and granted some of the wishes. China is on top now. China and Japan now openly, not secretly, make accords that strengthen China. The failed attempt at taking over Tibet has failed and the US is very exposed in Asia. The loss of face in that matter was not for the Chinese to suffer but for us. The Tibetans now know they have been betrayed. The hot talk about boycotting the Olympics has faded as Bush personally invites the Chinese to sign papers giving them even more power over the US. They won each diplomatic round! Amazing, isn't it?

This is due to wealth: they hold our money, they hold our debts. They control us. They are our bankers along with Japan. Isn't this pathetic? At least Obama isn't stupid like Bush. He has the wit to know what he is doing when he betrays us.

Washington Post: Paulson To Urge New Fed Powers, Bank Would Help Police Wall Street

Treasury Secretary Henry M. Paulson Jr. plans to call today for the Federal Reserve to be given new, explicit powers to intervene in the workings of Wall Street firms to protect the financial system, adapting his vision of how the financial world should be regulated to reflect the lessons of the collapse of Bear Stearns.

"Our nation has come to expect the Federal Reserve to step in to avert events that pose unacceptable systemic risk," Paulson plans to say in a speech today, according to prepared remarks obtained by The Washington Post. But the central bank "has neither the clear statutory authority nor the mandate to anticipate and deal with risks across our entire financial system."

This is ridiculous. The central bankers had the power to force up reserve ratios. They had the power to PUNISH banks that gave out too many loans. They could correct things by raising interest rates when inflation was already rampant. But they didn't. So how is giving them more power going to fix that? They refused to stop the mess at the beginning. They denied there was even a problem. They still refuse to analyze of explain what is going on. So how can they regulate anything? They encouraged the growth of the Derivatives Beast until it passed a quadzillion dollars! And they made no move to slow down money creation. They should be abolished, not strengthened.

Raw Story: Record number of Japanese elderly kill themselves over poor health, money woes

The rash of elderly deaths helped push the country's overall number of suicides to 33,093 in 2007, a 2.9 percent increase and the second-highest annual tally on record, the National Police Agency said in a yearly report.

Japanese aged 60 and over were the fastest growing age group among suicide cases, jumping by 987 last year to 12,107 deaths, an increase of 8.9 percent from 2006. The age group made up 36.6 percent of all suicides in Japan in 2007.

The number of elderly suicides eclipsed the previous record high of 11,529 in 2003.

Health trouble was listed as the reason in 56 percent of the elderly deaths last year and economic worries were second, figuring in 15 percent of cases, the study said.

"For those aged above 60, economic and health reasons were closely linked. The figure underlined the fact that many old people were financially struggling, which could easily cause poor health," Masahiro Yamada, a sociology professor at Chuo University in Tokyo.

This is our future unless we stop this madness. Inflation rages because the government creates massive debts via public spending. And both Democrats and Republicans are madly voting for more and more and more spending and less and less taxes and all Presidential candidates are talking tax cuts. This is total insanity and has driven me up the wall for years.

Is the LEI Biased Upwards Because of Mammoth Decline in Fed Treasury Holdings
by Paul Kasriel

Since the Fed has opened up all of its different "facilities" to provide reserves to the financial system and destigmatized borrowing from the discount window, more and more reserves have been injected via these facilities. So as not to lose control of the fed funds rate on the downside, the Fed has had to "sterilize" these massive reserve injections via the facilities by reducing its outright holdings of U.S. Treasury securities.

There are some good charts with this story and I have heavily amended them to show better how things work:

Manufacturing has shrunk since 2000. We had a false bubble based on transforming manufacturing profits via value-added labor coupled with the creation of consumer goods and turned it into sterile palace building. Building McMansions. Houses are not profit centers except when loans are being handed out like candy and debt is building up. But these dwellings are losses except if one moves to a cheaper place! Since we must live somewhere, it pays to have a nice home that preserves our health and shelters our children. But we have to spend a lot of money on upkeep not to mention, labor. This is not a basis for an economy in the modern world!

US exports have grown but not enough to make up for the losses in manufacturing power. We lost manufacturing in the Dot Com collapse. And never got most of this back! A terrible mistake. Whose manufacturing grew? China and Japan! Both flourished since 2000. Both export heavily to the US. Both followed cheap currency rules to enable this. Both lent more money to the US so we could build McMansions rather than compete with them in world markets.

The Federal Reserve is hemorrhaging Treasuries. What happens when they have $0 reserves? I joked for years that the Fed is neither Federal nor has reserves. Now it will be certainly true. This is a total failure of the Fed and they want more power? HA. All the graphs show things are totally out of control now. This is why we have to have an honest conversation. For the FBI to be arresting hell hounds and pirates for lying about hedge funds while all this rampant lying about the condition of our banks that are really totally bankrupt: arrest everyone! I am horrified at the double standard. We can't fix things if the liars who are lying to us today are allowed to lie even more. Honesty, they like to say, is vital if we want this nightmare to end. Then they lie about themselves and their involvement in all this!

Pimco's Gnome wants inflation to fix prices!

Paul McCulley: Mr. Kohn:
Misery Is as Misery Does

Americans are working more hours for the same barrel of oil. That is a negative real terms of trade shock. Put differently, we are less rich or more poor than we were before oil prices took off. There is no getting ‘round this. In turn, there is no escaping collateral adjustments of temporarily higher inflation and temporarily lower growth and employment. The question of the hour is how this pain should be apportioned. Last week, Fed Vice Chairman Don Kohn provided the right answer, presuming there is a right answer (my emphasis):

“… an appropriate monetary policy following a jump in the price of oil will allow, on a temporary basis, both some increase in unemployment and some increase in price inflation. By pursuing actions that balance the deleterious effects of oil prices on both employment and inflation over the near term, policymakers are, in essence, attempting to find their preferred point on the activity/inflation variance-tradeoff curve introduced by John Taylor 30 years ago. Such policy actions promote the efficient adjustment of relative prices: Since real wages need to fall and both prices and wages adjust slowly, the efficient adjustment of relative prices will tend to include a bit of additional price inflation and a bit of additional unemployment for a time, leading to increases in real wages that are temporarily below the trend established by productivity gains.

I was preaching the raw, honest truth: a surge in oil prices raises the Misery Index, temporarily lifting both inflation and the unemployment rate. In turn, those outcomes beget lower real wages and, presumably, lower real profits, too. We are less rich or more poor – period. Thus, those who holler and scream at the Fed for letting the inflation genie out of the bottle need to calm down. A negative terms of trade shock is a real shock, so it must be translated into lower real wages and profits. That simple and that painful. Logically, it also must be translated for a time into lower, even negative, real short-term interest rates, the rate of return on money.

This guy is crazy. We have had sub-inflation rate interest rates for manufacturers and investment banks that are far, far below the rate of inflation since 1994! Thanks to the Bank of Japan and then, the Federal Reserve! This is the CAUSE of the bubbles that are now popping as rancid inflation infests all the lowest levels. Fixing this with even more sub-inflation level loans will make things worse and worse, not better! The workers have not had any pay raises to make up for inflation since 1994 and in many cases, not since 1984! This is due to 'free trade' which means cheap labor overseas in China or cheap yen in Japan enable to drop prices competing in markets in the US which made inflation 'disappear' for two decades. But it caused our trade deficit to soar out of sight and out of sanity's reach. It now averages nearly a trillion a year! An impossible sum.

NO ONE should yap about inflation without mentioning this stark, violent truth: OUR TRADE DEFICIT IS NOW OUR INFLATION. It started out as a killer of the Inflation Dragon. The gnomes took their Free Trade sword and told us, 'We will slay the inflation dragon with competition and price cuts!' And instead, they slew the American Workers! What a shock. And the Inflation Dragon they sought to kill ended up growing stronger, not weaker! It didn't die! It not only lives, it is very strong, very vigorous. And the solution?

Obama now wants more 'free trade.' This is because the New York Times, the Washington Post, the major TV station owners like Murdoch, all of them want 'free trade' and if he is against free trade, he will be slain! So he is joining them in this madness.

Times Online: Force of credit crunch made plain as 170 hedge funds crash in three months

Traders who have sold sterling heavily as part of a gamble that interest rates would fall have been hit by a swing in market sentiment amid widespread worries that the next move in interest rates from the Bank of England will be up.

One hedge fund manager said yesterday that his fund's returns for the year to date had been all but wiped out by the switch in sentiment. He said it had been a test of nerves whether to sell out at a loss or hold his position. The situation has started to improve in recent days, he added.

Last night I went through my past postings here. I was gratified to see a headline I wrote predicting the death of nearly all hedge funds! Last March, it was crystal clear to me that the yen/yuan/dollar games were turning toxic and the carry trade would end by summer and this would kill all the hedge funds who make money by playing these markets! HAHAHA. And I correctly said that it wasn't just housing that was going to kill the hell hounds. It was the international money games changing course. This is why all the efforts of the G7 have been aimed directly at restarting the Asian carry trade! They whined about a lack of 'liquidity' even though we are awash in red ink.

Things will get worse, warns Bank of England governor Mervyn King

In his most sombre message yet, Mr King said families were being squeezed hard by higher electricity and food prices on the one hand and slowly-increasing wages on the other.

He told Alistair Darling and leading City dignitaries in London that the experience would be even tougher than the credit crunch, and warned that the "era of cheap mortgage finance... is over".

Mr King said: "This year our real take-home pay will rise at a slower pace than national productivity. Rising fuel, gas, electricity and food prices, mean that average real take-home pay will stagnate this year.

If worker's wages don't go up and inflation eats up all savings as people go into debt to stay alive, of course, housing will drop in value since there is less income to spend on loans for bankers to sell! And cheap mortgages will be over, of course, as central banks have to raise interest rates to stop hyper-inflation. For the workers cannot eat all global inflation forever if the bankers insist on creating more and more magic Funny Money™. This is IMPOSSIBLE. As well as ludicrous.

There is only one cure for this: the US must STOP SPENDING MONEY. We must stop having record trade deficits. We have to stop having record budget deficits! We have to stop burning our future by driving SUVs we can't afford to drive. We have to change ourselves totally. And to do this, we need leadership. Instead of spending a trillion dollars to secure Iraq for Exxon Mobile who are now moving in to make profits there, we do not need more oil from Alaska which flows to Japan, anyhow, we need a new society based on rational uses of energy! We need to spend a trillion on renewable energy systems. We would be HALF WAY to energy independence if only we did this starting with President Carter! The man we revile even today for being too sensible.

The man the media has deliberately attacked or ignored. The media wishes he would just go away and not do the right thing. We want to get more gold from the Cave of Death even if this starts WWIII.

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Arrest EVERYONE Involved In Bubble

June 19, 2008

Elaine Meinel Supkis

One of my favorite themes is to say, 'Arrest them all!' Well, over 400 people involved in the recent big fat, ugly bubble are now under arrest. But not the important criminals! Greenspan still hobnobs with war criminals like Kissinger and Bush, just for example. Arrest them! Arrest Bernanke for lying. After all, if a bunch of hedge fund hell hounds and pirates can be arrested for lying to investors, how about the top people in the banking system? I can prove they are all liars. They see the exact same numbers and the exact same news stories as I see! There is NO EXCUSE. They are not stupid nor demented. They are con men and should be arrested! Not to mention Congress and the President: all criminals on so many levels, it hurts to even think about it. And the media liars! Tonight, we revisit a number of stories I wrote during the first 'boggle' in the stock markets before the markets roared to a new high and then utterly collapsed. It pays to retrace our steps so we can see clearly that I could see clearly and ergo: these criminals knew perfectly well, what the hell was going on.

Ex-Bear Stearns Fund Managers Indicted for Fraud

Former Bear Stearns Cos. hedge fund managers Ralph Cioffi and Matthew Tannin were indicted for mail fraud and conspiracy in the first prosecution stemming from a federal investigation of last year's mortgage-market collapse.

The two men were charged with misleading investors about the health of two Bear Stearns hedge funds whose implosion ignited the subprime mortgage crisis. Cioffi was also charged with insider trading in the indictment, which cites a series of e-mails between the two men. They both face as much as 20 years in prison if convicted of conspiracy, and Cioffi faces an additional 20-year term if found guilty of insider trading.

The U.S. government has been investigating possible fraud by banks and mortgage firms whose investments in subprime loans and securities plunged in value, causing losses that now total $396.6 billion. Cioffi and Tannin were also sued today by the Securities and Exchange Commission.

These are sacrificial animals. This is to tell the little con men not to overdo things when the big con men are at work undermining global banking systems and running things very deeply in the red while publicly lying about everything. I get up each day to make my weary way though the news and then tear into all the lies of the ruling elites. Are any of the real rulers being arrested tonight? HAHAHAHA. No. Just as the Real Rulers with toss the entire Jewish population onto the pitchforks of raging mobs, so it is with anyone who isn't sexually or socially very connected with the dominant Norman ruling elites. When the Dot Com scam collapsed, a few key people were tossed to the mobs to be rent to shreds. We got to see the chandeliers in the garages of the Enron executives in Texas. Some died, others committed suicide. Some went to jail. But did Greenspan go to jail? Bush?

Nope! They went onwards and upwards. They rang up $5 trillion in new public debt. They worked to create a second bubble that now is broken. And is now destroying our nation. Tonight, Congress is passing yet another stupid funding bill for our failed wars, another nearly-$200 billion we can't afford! And the debts are being sold to foreign powers that are very intent on destroying our nation and enslaving us. Arrest them! Arrest them all! HOW DARE THEY???? WE ARE GOING BANKRUPT!

Bloomberg:

In a separate move today, the U.S. government said more than 400 people were charged in a federal mortgage-fraud sweep called ``Operation Malicious Mortgage.''

At a press conference today in Brooklyn, Campbell said the Bear Stearns investigation is continuing.

``Hedge fund managers cannot lie to their own investors,'' Antonia Chion, an SEC attorney overseeing the agency's lawsuit, said in a statement. ``Even sophisticated investors look to fund managers to speak truthfully.''

They are being arrested for these lies? AMAZING. HELL'S BELLS! If we go to my postings here at Culture of Life from February 27th---a significant magic number day---to the middle of March, the first thing we see is that EVERYONE IN POWER WAS LYING NONSTOP! Lying about the value of currencies. Lying about the meaning of international trade. Lying about who was doing what to the global economy. Lying about the dangers of the weak yen while Japan runs huge trade surpluses with the US. Lying about our relations with China. Lying about interest rates. Lying about inflation rates. Lying about the health of stock markets. Lying about the basic condition of our banks. Lying about the dangers of the housing collapse.

Bloomberg:

On March 2, 2007, Cioffi hosted a meeting attended by Tannin and other members of the funds' portfolio management team, according to the indictment. Cioffi said ``the funds had averted disaster and led a vodka toast to celebrate surviving the month,'' according to prosecutors.

He directed those at the meeting ``not to talk about the funds' difficulties with others, including other members of the funds' team,'' who weren't present, the indictment alleged.

The indictment alleged that, throughout March 2007, Cioffi ``consistently acknowledged'' to Tannin and others that he was ``deeply concerned'' about the state of the funds, particularly because of their exposure to the subprime mortgage market.

On March 15, 2007, Cioffi allegedly wrote an e-mail to an unnamed colleague saying, ``I'm fearful of these markets. Matt said it's either a meltdown or the greatest buying opportunity ever. I'm leading toward the former.''

Heavens. This guy is being accused of suspecting something was amiss? HAHAHA. Well! I was on the ball! I was very loud, from February to March of 2007, yelling on not just a daily basis but sometimes three times a day about the impending melt down which to me, was utterly obvious from mid-February onwards. After March, Wall Street soared to new highs even as the canker which I explained thoroughly in February, was chewing up Wall Street like an army of termites in a rotting house with a leaky roof.

I and a few online commentators were crystal clear about the truth. If the government officials are going to arrest people for lying, they should reward those of us who told the truth, no? Like, give us the Medal of Honor or something. Heh. Or the very least, put people like me on TV so we can alert people as to what is really going on. Eh? We know who the truth tellers are! The proof is here online! And if LIARS are to be arrested, arrest them all! And I do mean all: Anyone with Goldman Sachs who are also in the government like Paulson, he should be behind bars and not the kind where they serve bacchanalian booze. My cartoons from that one month alone are very revealing. Let's start with some of them:

This cartoon is from February 26th, 2007. I was concerned about the situation concerning the value of both the yen and the yuan. The US officials were shrieking only at China and China was getting very angry about this and preparing to retaliate. I mentioned the danger time would come if China's FOREX reserves hit a trillion dollars. Which it did at this point in time.

Note how Miz Liberty is LYING. She is, of course, representing the many government and political officials and elected people who were lying in unison at the top of their voices, all saying what my cartoon character is saying.

February 27, 2007: Chinese Communists pull rug out from under USA capitalists.

As I kept on saying, the Chinese COMMUNIST government wanted a trillion dollars in FOREX money and then they would discipline us. The USA investors and tax evaders in our government thought the money would flow forever. As my blog title here says so clearly: Red Ink Kills Currencies.

From Bellepheron on Pegasus to Icarus or the son of Helios, when one rides the wild horses to the very heavens themselves, the fall is great and obvious. For several years, I have said repeatedly that a trillion dollars in FOREX funds would trigger the secret (HAHAHAHA) Chinese plan to upend the American empire via economic meltdown.

The ernest Chinese felt they should warn us so several months ago, as they approached that sum, they warned us to cut spending and start saving...ALL OF US. Not just any one person. Having warned us, now comes the inevitable storm.
*snip*
The level of venality and delusional thinking is astonishing! I bet he is coming up with all kinds of childish explanations for what is happening today. The grasshoppers still laugh at us ants who toil to save and fix things. The reckless amorality due to cheap Asian loans has corrupted our nation's leaders and pundits. Well, the loans will dry up and the Chinese investors have figured this out.
*snip*
At the beginning? Hell's bells! It started at 9am, 9/11/1. Today is another magical, harmonic day. 2/27/2007 adds up to 9/11 in reverse. 2+2+7=11 and 2+0+0+7=9. How interesting. And because our rich and powerful leaders pray to the Devil that is Death and they use magic numbers, it doesn't suprise me to see Lady Luck pulling their collective legs and paying them back on a super-duper magic number day.

We should have changed the way we did things after 9/11. Going steeply into debt and letting the trade deficit go haywire and using oil like there is no tomorrow as well as wild military spending and starting ridicukous wars all over the place was the worse thing we could do and we did it.

This cartoon is from that dire day. The entire world's stock markets all crashed badly for only a couple of days. This was all papered over using lots and lots of FUNNY MONEY™ ground out by Japan.

China changed course in February. They had many meetings of the communist leadership and determined it was time to bring things under control. No more free for alls. And this would change the flow of money in the world as we now can plainly see.

http://elainemeinelsupkis.typepad.com/photos/uncategorized/cargo_cult_america_big.jpg
Classic Panic Attack Roils World Markets February 28, 2007

HAHAHA. So, Chinese officials launched this crash and then they gently told the investors in China who read Chinese newspapers, 'Just kidding.' I must be the only person in blogland who noticed the Chinese communists are holding a big meeting this month to discuss our futures. A great time to see what control they have over our lives.

Washington Post thinks magical thinking caused the stock crash Feb. 27th.

The Dow opened down about 130 points and then fell close to 200 by mid-day. But shortly before 3 p.m., stocks took a sharp decline, falling at one point 546 points, more than 4 percent. The index righted itself briefly, regaining more than 200 points but then began falling again.
Officials later said the precipitous fall was caused by a technical problem that caused a backlog of sales orders to come through suddenly.

Houston, we have a problem. Heh. In all panic attacks throughout history, keeping the data flowing as fast as the fear is impossible. So it always 'jumps' at us suddenly. Way back during the last 10 years, the guys running the show on Wall Street boasted their new computers will NEVER EVER fall behind! Oh no.

February 28th, 2007: Bernanke and his buddies desperate to stop panic.

What would happen if all these proud American capitalists discovered the communist 'Let a Thousand Flowers Wilt' Chinese have total control over the DOW Jones average? Isn't that heartening? The people who this week professed they wanted to re-invigorate the Communist dogma are also the same people who can topple our economy simply by talking about raising taxes and preventing people from buying stocks using loans?

HAHAHA. Man, those reforms, if done here, would cause our billionaires to go belly up. No wonder they panicked and they aren't even in China where they punish economic crimes with a bullet to the back of the head!

So, all the economic news is bad, even they admit it but it is fine, all is well? Even Greenspan said we 'might have a recession at the end of the year.' Of course, by then, it will be painfully obvious to even Americans that something is terribly wrong. Right now, the top 1% is happy so we should all applaud. Clap, clap, clap.

Alas, this won't bring Tinker Bell Housing Bubble back to life. Her lights are barely flickering. Of course, the latest mantra is, only the 'bad' loans will collapse and this won't kill all those hedge funds, right?

March 6, 2007: A fool and his yen are soon parted.

The Bank of Japan, buying a huge amount of American debts, just 'saved' the world's economic systems...for the moment. Everyone is hysterically celebrating this terrible day. I am truly a Cassandra to point out, this intervention is the most destructive thing that ever happened to America and it may have sealed our fates.

By Nick Godt, MarketWatch
Last Update: 4:34 PM ET Mar 6, 2007
NEW YORK (MarketWatch) -- U.S. stocks rallied on Tuesday, lifting the Dow Jones Industrial Average by over 150 points, as investors extended a recovery in Asian markets and the dollar overnight, spurring hopes that markets can regain a portion of the massive losses suffered over the past week.
"We're seeing this action positively," said Michael Malone, trading analyst at Cowen & Co, noting that buying volumes have picked up. "But we do expect further volatility in the coming sessions."

The Dow Jones Industrial Average ($INDU: 12,207.59, +157.18, +1.3% ) gained 157 points to 12,207, posting its biggest one-day gain since July 2006.

The joy is noticable. The crisis is past! Things will return to the old 'normalacy'. And this status quo is what is destroying us. The army of liars, losers and traitors are now back on the warpath, whooping it up, laughing drunkenly as they now are convinced, nothing will stop them from looting America!

As this first crisis unfolded, Japan and China traded many insults and accusations. Japan hid behind the G7 and pretended it was ONLY China that was playing the weak currency/giant FOREX reserves game even though it was China imitating Japan.

Note that I show Wall Street on fire. The Fed doused this fire by playing footsie with Japan and conspiring to keep the Japanese carry trade rolling along unhindered. This was the key to everything: the 'repairs' that were applied were deadly poisons that made things much, much worse. If the US and Japan had imitated China in raising reserve ratios, limiting leverage in the markets, raising interest rates, then all would have been well after a smaller contraction. Instead, Japan and the US made things much, much worse.

And here is my article from the same day these criminals had their meeting where they discussed what to do, namely, lie about the truth: March 2, 2007.

Chinese peasant investors smarter than American elites.

Like people trying to learn to swim in the North Atlantic after the Titanic began to sink, our beloved economic pundits are toiling hard, thrashing around in iceberg-strewn seas, explaining to us how China did NOT start the present panic which happens to be ongoing according to today's tickertapes.

By Clay Chandler, Fortune February 28 2007: 12:42 PM EST HONG KONG (Fortune) -- It's the start of a new lunar calendar here in China and what better way to commence the Year of the Pig than with profit-taking stampedes on exchanges in Shenzhen and Shanghai that drag down markets around the globe?

On Feb 27, China's domestic exchanges tanked nearly 9 percent, suffering their steepest one-day fall since the death of Deng Xiaoping in 1997. As traders in Europe woke up to word of China's losses, the UK's FTSE sank more than 2 percent, while the French and German exchanges dropped 3 percent.

Of course, what is happening now it very much like the weather: there are many elements involved. The sun, the moon, even, the tilt of the planet, the temperature of the oceans, volcanic activity, how many trees are in forests, all these things create weather. We just saw a major storm pass by here. Dozens of helpless people living in trailers or going to flimsy schools built with no rebars in the walls, etc, died horrible deaths this week. It is one thing to analyze why a storm happened but pretending there was no storm is just stupid.

A lot of the pundits paid to lie about things are pretending there is no storm, this is a normal correction and the housing market is going to shoot to the moon next month along with the cow and the dog with the fiddle. And Santa Claus will return this Xmas and shower us with more Chinese goodies.

And Santa Claus is Chairman Mao. If Mao's heirs want to extend us endless loans at cheap rates we can get goodies while selling the Chinese practically nothing except a few Boeing jets! Europe just lost all its Airbus transport contracts! The 380 just did a 360 degree turn and is nosediving into the Seine. Should this huge disaster cause world markets to drop?

March 12, 2007: New Century's collapse is the beginning, not the end.

So, the New Century pirate executives will sail off into their rich sunsets, pockets bulging? Like Enron? Arrest them all.

The mortgages will now be forced and the people paying this company monthly money will have to get new loans! From whom, pray tell? The Chinese??? Major banks will take a bath, too. But the hedge funds and the investment bankers will skip town. And Morgan Stanely: do they read my blog? Then who warned them they should clean out all New Century paperwork? Eh?

As usual, the insiders are the rats who jump a sinking ship after gnawing holes in the hull. Einhorn might end up being treated like Lay: arrested and charged but allowed to 'die' at home. Or jump from a window.

Here is yet another cartoon from early March of 2007 which shows how the US was very desperate to help kill the value of the yen so that the liquidity would flow even faster. Which it did!

March 13, 2007: Stock Market Dies as yen strengthens

The Enron leaders persuaded their younger hires to rip off people. To file fake reports, illegal accounts and to torment customers so they could squeeze out more profits. This meant at one point, nearly destroying the entire economy of the state of California. Far from feeling patriotic or a sense of simple morals, the boys working within Enron were caught on tape jeering about how they were going to rip off grannies and destroy whole communities.

This childish and destructive attitude has pervaded many systems now. This is why the GOP ran up huge deficits while laughing drunkenly. This is why our President launched a war and then refused to call for any sacrifices from his young supporters. On top of this, the older foxes in the hen house trained these kids to be foxes without telling them, they were eating their own families.

For when these schemes collapse, the families of these now unemployable youth will be drowning in the red ink their children produced.

Yesterday's announcement by one hedge fund run by Eichorn that they misscalculated their negative side of the ledger by a whopping $500+ million barely got any headlines. These guys know how to add and subtract. You can bet, their finance and accounting departments were filled to the gills with very young and inexperienced people who were told to cook the books and who got fabulous bonuses for doing this and now they will be arrested. For it is illegal to cook the books.
But even as of today, we don't see any headlines about how this is totally illegal. This is because all these corporations now do this and all of them have lied to the poor graduates fo business schools who now will be facing personal ruin for joining a criminal enterprise.

Conning people out of their savings is a crime. People went to prison when the Ronnie Reagan schemes unscrolled and caused a major banking industry collapse. Things were shaped up under Rubin working with Clinton but the GOP, as usual, kicked over the table and ended the rules and we go off the same cliff again.

March 14, 2007: The Plunge Protection Team staves off total meltdown.

The Plunge Protection Team pulled out all stops today to 'stop the panic.' They were all over TV and radio, telling the people who know little to stay the course and there is nothing wrong and the 'down' days are done, all is well. But we know all is far from well: the USA's basic numbers are frightful and all point to serious problems that will only grow worse as time passes.

This cartoon was drawn with a great deal of fury. For the lies all the principal parties in charge of America were telling early March were being told for one purpose only: to give time for all the top traders inside of the biggest investment houses to unload all their bad deals! Remember: Goldman Sachs had the audacity to boast that they unloaded all their garbage before August, 2007! And since a top GS officer is in charge of the Treasury, the ease with which they could pull this stunt is obvious: a conspiracy! They LIED about the value of the junk they sold off. They DECEIVED everyone they sold these stupid CDOs and SIVS and all the paper that turned to ashes. They now are happily buying up huge amounts of our oil and are storing it so they can sell it for a premium when their buddy, Bush, launches a war against Iran Kitty. Note that the cat is in a number of the above cartoons!

March 17, 2007: Sub-prime loans will DESTROY all Hedge Funds!

The rich are now frantically finding ways of unloading their soon to be worthless certificates and other scaps of paper upon frantic, fearful lower level investors seeking a safe haven in the developing storm. All sorts of bizarre money/gold/oil/real estate games are intersecting with geo-political matters as the race to see who will collapse first commences. Will it be Iran? Russia? China? Or the USA?

Back when I wrote that, I was making predictions. This was not universally accepted by the public. Due to the tremendous number of lies and evasions from all the top ruling elites who were united in describing a false scenario. That all was not only well but was going to be better and better. They were still in total denial about the housing collapse! They kept saying, 'It will be short.' Or, 'It isn't so bad, look, people are still buying houses!' Etc. There were endless lies. And We know who was lying because they were put on TV and got lots of space at the biggest venues like the NYT or WP or CNN, etc. They were everywhere!

ARREST THEM ALL.

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Gnomic Sexual Desires Fuel Inflation

June 19, 2008

Elaine Meinel Supkis

Today we talk about gnomes and their sexual desires and how this creates inflation. Politicians in England want pay raises that are higher than the real rate of inflation. But they want to kill inflation by restricting the take home pay of English workers. The real rate of inflation in England is double the official rate. Just like here in the US. Our Congress dares not raise their pay right now. Not that they have to worry, they make their money via graft. The Bank of Scotland warns depositors of a global melt down. Which started nearly exactly a year ago. Better late than never, I say! And the BIS in Basel issues a report that supposedly fixes all these inflationary messes. Only it doesn't fix anything. Heh. All the international banks are battening the hatches as the hurricane of red ink swamps all boats.

The Telegraph: The Real Cost of Living Index: 9.5 per cent

Rising food and fuel prices, as well as increased taxes and other household bills, mean the average family must cope with inflation that is twice as high as official estimates, according to new research by The Daily Telegraph and moneysupermarket.com, the price comparison website. Taking all these factors into account, the Real Cost of Living Index (RCLI) is rising at 9.5 per cent.

No wonder hard-working families wonder how the Retail Price Index (RPI) can be only 4.2 per cent and the Government's preferred measure of inflation – the Consumer Price Index (CPI) – claims inflation is only three per cent.

It really was a very clever idea. Inflation feels good when it is launched by the central banks! The banks that are part of this system all see a flood of new money which they create as if they are gods, money out of thin air. They get a double profit from all this. First, they get the fees which are generated by creating credit and then handing it out. Then they get to sell these loans to investors who pay yet another fee to the banks. The gnomes who run these banks then think, 'Ah, I get tremendous profits if I lend money to anyone who comes to me looking for loot! I will put ads online and in the papers telling everyone that four out of five customers seeking loans will get them! Hell, I will make it five out of five! This will make me very rich and I can buy myself a trophy wife.' The gnome rubs his hands with joy and gets out his pen and begins to write up loans.

This endless spinning of straw into gold is where inflation comes from. Since no gnome can resist the temptation to lend to everyone and thus, get his or her grubby hands on magic money, governments have set up systems to prevent this. They are called 'central banks.'

But the central banks are just as prone to corruption of morals as any ordinary gnome. The demonic rulers of the central banks think, 'If I let the gnomes make endless loans and spin all the straw into gold, I will be hailed as a god and worshipped by fools who can't see that the gold is really still straw. I'll let this go on for a while. If things go wrong, I can claim that no one could have possibly foreseen this turning into inflation! Then, they will beg me to stop the inflation. HAHAHA.'

The politicians who run the government that is supposed to control all this will try to evade the mess they have helped to create due to a refusal to regulate the magic money making activities of the banker gnomes who seek to buy trophy wives with the ill-gotten gains. The government can raise pay at will and will always complain if they can't beat inflation caused by these gnomes. In America, the Congress no longer worries about this. Most of them are multi-millionaires who gain office in order to undo laws and regulations controlling the activities of sexually hungry gnomes who need huge heaps of money to attract females of 'high quality'. The corruption in the US government is nearly total now. Lobbyists buy the loyalties of the poorer members while pirates and hell hounds run for office or are appointed into positions that control finances and laws. And from there, they work tirelessly to create....INFLATION. Because they are pretty much insulated from the dire effects of inflation while they gain nearly all the benefits of inflation, they will create inflation!

The Independent: MPs may rebel over block on pay rise

MPs are threatening to stage a revolt over being held to a pay rise of about 2 per cent, taking their income to £63,000 a year.

Senior backbenchers are calling for parliamentarians to be given salaries of £75,000 after the next election with expenses on top. But Gordon Brown has called for restraint and ordered the Cabinet and all ministers to forgo their pay increases this year as part of the attempts to control public sector wages, which have been cut in real terms while inflation has almost doubled.

Set an example? HAHAHA. In Japan, all traces of commodity inflation is being hammered down via the novel method of reducing worker's wages. This is causing dire side effects there such as the physical death of the workers and the loss of a future generation as babies are aborted or abandoned. If global inflation gets worse, the Japanese will cease to exist in 30 years! Not a wise solution.

Dealing with economic problems in the past, England used to export this to the New World, Australia or other lands like Africa, Asia and all the islands on the earth. Now, this is less likely but still, emigration continues as Brits flee economic problems at home.

U.K. Retail Sales Unexpectedly Rise by Most on Record

( Bloomberg) -- U.K. retail sales unexpectedly rose by the most since records began two decades ago as Britons bought more seasonal food and clothing during the warmest May ever.

Sales rose 3.5 percent, the most since the series started in 1986, after falling 0.3 percent in April, the Office for National Statistics said today in London. Economists forecast a 0.1 percent drop, the median of 37 estimates in a Bloomberg survey shows. Sales rose 8.1 percent on the year, the most since 2002.

The reading suggests rising food and energy costs and falling house prices have yet to provoke a slowdown in consumer spending. Governor Mervyn King said yesterday that policy makers won't flinch in their fight against accelerating inflation, which will require British living standards to slip and growth to weaken.

``This is off the scale,'' said Michael Taylor, an economist at Lombard Street Research Ltd. in London. ``This number shows more resilience in the U.K. consumer than we had thought, but the underlying picture remains one of weakness. My view is that interest rates are on hold for the rest of this year, and then cuts next year.''

Every time we go through an inflationary cycle, we have the same cycle: first, the money flows into assets like housing, stocks and other investments. This is the 'happy times' stage. Using 'leverage' which is actually getting loans from gnomes, happy dead beats spread this magical fresh money across the land. The money for houses turns into money for cars, money for works of art, money to invest in stocks, money to impress high quality females who need to be petted and then might even have SEX with the dead beats! Wow! An absolute orgy of fun for all and sundry who don't look to the future but pile on debts. Soon, everything at the top end of the economic scale has doubled, tripled or quadrupled debt loads. Savings collapse as everyone is buying things because they are 'assets' and going up in value.

At dinner parties where gnomes show off their buxom, tall, exotic sexual partners, there is excited talk about how all the things these gnomes possess are now 'more valuable than ever!' Whoopee! Everyone hopes to sit idle while the inflation in value of all their possessions shoots upwards. But then, the gold turns back into straw. The money ceases to boost the value of sexual objects or possessions. Suddenly, the money is flowing into things people must consume to stay alive. The money not spent on survival simply vanishes! Poof. The value of all the gnomic possessions drops and this can vaporize trillions of dollars without any physical money being burned or buried. Since this is all numbers, the numbers simply reverse and the value is gone. Since the gnomes all use the potential value of things to hand out loans, they can't hand out loans! This is called 'loss of liquidity.' Soon, even having sex with expensive wives isn't worth much, in general, trophy wives get rather frigid if the gold turns to straw and either they leave or they refuse to even kiss the gnomes...life is miserable and the leads to rages. Meanwhile, normal humans are either starving to death or suffering in some unimaginable way due to the inflation caused by sex-mad gnomes.

And who says economics isn't a sexy topic?

About the constant refrain from the media that 'despite bad economic news, consumer spending is UP!'---Always, at the beginning of the bad part of inflation, the commodity hike part, the bad news about dropping assets cause politicians and the media to wonder if things will get worse. But of course, consumers seeing that money is becoming rapidly worthless, rush out and buy everything in sight! Hoarding begins! This is hailed as a great thing and a sign that 'consumers are strong' rather than just another weary signal that inflation is taking off.

From Seeking Alpha, Feb. 15, 2008:

So the big economic news this week was the “surprise jump” in YoY consumer spending; various media outlets trumpeted the news and the markets rose as a result. Even the dollar rose on the news.

From Bloomberg:

Retail sales in the U.S. unexpectedly rose in January, easing concern that the world's largest economy has already slipped into a recession.

There are many examples like the one above. Seeking Alpha recognizes this. But then, that publication is not part of the mainstream media. For obvious reasons, sane commentary on things, people who remember the past, are not wanted.

RBS issues global stock and credit crash alert

By Ambrose Evans-Pritchard, International Business Editor

"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist.

A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets.

Such a slide on world bourses would amount to one of the worst bear markets over the last century.

"Cash is the key safe haven. This is about not losing your money, and not losing your job," said Mr Janjuah, who became a City star after his grim warnings last year about the credit crisis proved all too accurate.

RBS expects Wall Street to rally a little further into early July before short-lived momentum from America's fiscal boost begins to fizzle out, and the delayed effects of the oil spike inflict their damage.

"Globalisation was always going to risk putting G7 bankers into a dangerous corner at some point. We have got to that point," he said.

The small boost to our economy has come only after the gnomes running our government plopped on even more debt. Already nearly $10 trillion in the red, they added more and talk about adding infinite debt. After all, if debts don't matter, if the interest rate is way below the rate of real inflation, why not? Inflation is over 10% here but interest rates are at 2%. This is like super-magic-money making at its best! Borrowing is cheaper than savings! Wow! And this also drives people into buying things instead of saving! This will....CREATE HYPER INFLATION!!!! But the gnomes don't care. This will get them better sex, more fun. They need this badly. Bored gnomes are bad gnomes. Hell, busy gnomes are totally evil. Now we visit the Übergnomes of Switzerland:

Principles for Sound Liquidity Risk Management and Supervision

“The Basel Committee’s goal in developing these global standards is to significantly raise the bar for the management and supervision of liquidity risk at banks” stated Nout Wellink, Chairman of the Basel Committee and President of the Netherlands Bank. “The Committee fully expects banks and supervisors to implement the enhanced principles promptly and thoroughly. We will vigorously assess the degree to which the principles are implemented.” The principles support one of the key recommendations for strengthening prudential oversight set out in the Report of the Financial Stability Forum on Enhancing Market and Institutional Resilience, which was presented to G7 Finance Ministers and Central Bank Governors in April 2008.

The draft principles represent a substantial revision of the Committee’s liquidity guidance that was published in 2000 and reflect the lessons of the financial market turmoil. The work was drawn from recent and ongoing work on liquidity risk by the public and private sectors and is intended to strengthen banks' liquidity risk management and improve global supervisory practices. “The principles are based on the fundamental premise that a bank’s liquidity risk framework should ensure it maintains sufficient liquidity to withstand a range of stress events, including those that affect secured and unsecured funding” noted Nigel Jenkinson, co-chairman of the Basel Committee’s Working Group on Liquidity and Executive Director of the Bank of England. Arthur Angulo, the other co-chairman of the Working Group and Senior Vice President of the Federal Reserve Bank of New York, added that “supervisors, for their part, should assess the adequacy of both a bank's liquidity risk management framework and its liquidity position. In order to protect depositors and to limit potential damage to the financial system, supervisors should take prompt action if a bank is deficient in either area.”

Good grief. They are going to fix things, eh? They and the other central bankers, international bankers? HAHAHA. A gnome convention is a fun thing to see but the whores make the most money there. The supervisors should have made strong moves to STOP LENDING some time ago, about 20 years ago. They also should have screamed like crazy when Nixon killed the US dollar and cut off the gold standard. But they didn't. Either the meetings of all these gnomes include nay sayers like myself or maybe Fekete, just for example, or they should be disbanded as useless. When they talk to each other, they get all itchy. 'We need to figure out how to make lending easier and create more liquidity,' they say to each other.

Here is their latest list of suggestions that are coming far too late:

1. Governance and the articulation of a firm-wide liquidity risk tolerance;

2. Liquidity risk measurement, including the capture of off-balance sheet exposures, securitisation activities, and other contingent liquidity risks that were not well managed during the financial market turmoil;

3. Aligning the risk-taking incentives of individual business units with the liquidity risk exposures their activities create for the bank;
Stress tests that cover a variety of institution-specific and market-wide scenarios, with a link to the development of effective contingency funding plans;

4. Strong management of intraday liquidity risks and collateral positions;

5. Maintenance of a robust cushion of unencumbered, high quality liquid assets to be in a position to survive protracted periods of liquidity stress;

6. Regular public disclosures, both quantitative and qualitative, of a bank’s liquidity risk profile and management. Comments may be sent via e-mail to [email protected].

Gnomes would rather be tortured on a rack or whipped by their mistresses rather than have any of these 'oversight' rules imposed on them. If things totally collapse, they will assent to new rules that are actually old rules they got rid of via political manipulations. Note, by the way, that we may email BIS to complain about all this. Heh. Have fun. So far, the Bank of China is the only major central bank, with Europe's central bank close behind but weakening rapidly, China has been doing sensible and sane things. Raising the reserve ratios radically, raising interest rates while providing for the lower classes via subsidies. The West is demanding all other nations not do this. The lower classes MUST be ruthlessly exposed to inflation caused by sex-mad gnomes! This is the fastest way to sop it all up so the gnomes can go back to luring in females via making magic money again. The impatience of these creatures is very great. They want this crisis to end, pronto.

Paulson & Co. Says Writedowns May Reach $1.3 Trillion

(Bloomberg) -- John Paulson, founder of the hedge fund company Paulson & Co., said global writedowns and losses from the credit crisis may reach $1.3 trillion, exceeding the International Monetary Fund's $945 billion estimate.

``We're only about a third of the way through the writedowns,'' Paulson, 52, told the GAIM International hedge fund conference in Monaco today. ``There are a lot of problems out there and it will continue to be felt through the year. We don't see any signs of stabilizing.''

'ARRGH!' Cry the gnomes, 'You mean to say, the magic money will vanish for two more years? Or more? NOOOOOO!' This is pure torture for them.

NYT talks about Lehman Brothers:

As the tally of losses keeps growing, many bank executives — and their shareholders — keep asking the same question: When will the pain end?

But the finish line just seems to keep moving further away. Even when the losses end, bank executives are looking toward a new era of lower returns, thinner profits and fewer jobs. Greater scrutiny from regulators is forcing Wall Street firms to reduce their use of leverage, or borrowed money, which had fueled profits in good times but backfired when the credit crisis struck last summer. Nearly every finance company is cutting jobs and battening down.

“They are going to have to build a new business model,” Richard X. Bove, a financial services analyst at Ladenburg Thalmann and Company, said of investment banks. “I do not believe those businesses have the ability to generate the kind of profit they did in recent years without all the leverage.”

YEARS of lower profits? YEARS of no ability to make magic money? This is withering news for gnomes everywhere. They will have to service themselves? Or settle for uglier wives? No! They can't bear this. Ugly+ugly=hideous. Ugly has to marry Beauty! Since future profits are not possible, they need a new system. They are banging heads, trying to figure out some new Ponzi scheme. Reducing their 'leverage' is code for cutting them off from magic money.

NYT:

Some analysts predict that independent brokerage houses will merge with commercial banks, if the government begins regulating them. That uncertainty leaves executives at these companies unsure of how to plan for the future, said David Trone, an analyst at Fox-Pitt Kelton Cochran Caronia Waller, who is predicting bank consolidation.

“We’re in a weird limbo now,” Mr. Trone said.

In the conference call Monday morning, Mr. Fuld said that he believed the government had a right to add regulation of the investment banks, since the Federal Reserve has opened its over-night lending facility to them. But he said it was too early to know what form those regulations would take. Mr. Fuld said that he would be open to a merger with a commercial bank if that proved to be a more profitable way for Lehman to operate.

If there is an offer for a deal with a commercial bank, he said, “I clearly have the obligation to take that to the board, and if it’s reasonable, to be considered.”

“But today,” he said, “with the power of this franchise, we can very much go it alone and be very strong.”

Gnomes are NOT in a 'weird limbo.' They are in their natural state: ugly and alone. They hate this. They long for the embrace of love in the arms of gorgeous females who pet their heads and promise to love the cute gnomes forever and ever. But oh, they do want that golden Ring of Power, first. Just put in on the finger. So many stories have been told about all this. Notice Mr. Gnome Trone: he needs money, he needs liquidity, he needs leverage. But he is still strong and can go alone. Alas, for him, he may end up alone! This is his greatest fear.

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China Buys Entire Copper Mountain

June 18, 2008

Elaine Meinel Supkis

Everyone is trying to escape inflation. The Chinese are doing a two pronged attack on inflation: they are buying up commodity sources and markets and they are applying traditional bank rules that cut inflation such as raising the reserve ratios and interest rates. Meanwhile, the US struggles to re-animate all the bubbles that are the result of too much credit and liquidity from the central bankers of the G7 nations. Understanding how free trade worked with the floating currency regime to create vast bubbles and inflation surges is very important. As we see in the news this year.

Peru's 'copper mountain' in Chinese hands

By John Simpson
BBC News, Mount Toromocho

It could become the most productive copper mine anywhere on earth. Now it belongs, in effect, to China.
When open-cast mining begins, in three or four years, a Chinese mining company, Chinalco, will send the copper back home to be turned into electrical wire.

The plan is to use it to carry out the electrification of the whole of China. The Peruvian government is happy with the $3bn (£1.53bn) that Chinalco will invest in the Toromocho mines.
The Chinese will be even happier. They have got themselves a bargain.

China's modernization of their nation continues. Just as the government invests in high-speed German train technology or building alternative energy systems, they also are rapidly preparing the ground for direct exploitation of world resources. They are not so worried about the fees and charges they must work with when buying up commodity sources in various nations. This is a government to government deal and the Chinese expect to be able to handle this to their advantage while not building up a reservoir of hatred like the ham-fisted US methods of dealing with South or Central America, for example.

The Chinese want to circumvent the speculators in the G7 nations as well as the flotilla of pirates who infest the global trade/banking systems. In other words, the Chinese do not want Goldman Sachs to muscle in on markets for stuff they need in manufacturing or feeding their people. The Japanese are so worried about the same things, they too are going about the planet buying the same resources the Chinese want. Indeed, I strongly suspect the Japanese and Chinese have worked out a joint relationship concerning all of this. Behind our backs, of course. We see this in other areas:

Japan, China to Explore for Gas in East China Sea

(Bloomberg) -- Japan and China agreed to jointly develop a disputed natural gas field and cooperate in exploration in the East China Sea, ending a four-year argument between Asia's biggest energy consumers over who owns the reserves.

The agreement ``proves that Japan and China can solve difficulties together,'' Japanese Foreign Minister Masahiko Komura told reporters in Tokyo.

HAHAHA. Note how the Japanese boast about doing this with zero US input! China now has a direct line to the headquarters of Fortress Japan. This isn't the only deal they are working out behind our backs. There will be many, many more. This is the fruits of the long, two year fracas over the Japanese insulting WWII vets by honoring war criminals. The US looked the other way while Japanese leaders literally spat on our graves. But the Chinese acted with tremendous ferocity and rage. Fury over losing face made them play hard ball with the Japanese who then surrendered to the Chinese in this matter and in turn, the Chinese suddenly made friends with Japan and rewarded the Japanese leaders for playing this rough and tumble diplomatic game. I covered this story a lot as it developed. I was furious at Bush and Condi Rice, one of the stupidest and most gullible State Department head ever. And she has great competition in that regard.

Like Spain and Portugal or England and France dividing up the planet for exploitation so they would not have military confrontations in distant lands, so it is with China and Japan. They don't want any wars to erupt in their home territories. So they have a new and very secret accord. While our navy stupidly sails merrily about both countries, tootling our horns. Note there was no change in status for us after China kicked sand in our face last year by denying our ships entry to Hong Kong's port, for example. This really impressed Japan. 'You shoved the round eyes into the sea and they retreated. Ahhhh!' said Miz Japan, rubbing her hands.

Indeed, this signaled the end of US power in Asia. The retaliation was for the CIA to enable an uprising in Tibet and then use this as a club to beat China over the head right before the Olympics. It seems to be failing at this point. Which makes China stronger.

Next: a long article by Henry Liu which struggles to explain free trade and the floating currency mess.

China joins export game by Henry C K Liu, Asian Times:

The central banks of these countries competed to keep the exchange values of their currencies low in relation to the dollar and to each other so that they could transfer more wealth to the US while the dollars they earned from export had no choice but to go back to the US to finance the restructuring of the US economy toward new modes of finance capitalism and new generations of high-tech research and development through US defense spending. In 1979, China under Deng Xiaoping joined the export game as a path for domestic development to become the world’s biggest exporter of labor-intensive manufactured goods three decades later.

Constrained by residual limitation on rearmament resulting from their defeat in World War II, both Germany and Japan were unable to absorb significant high-tech research funds in their own defense sectors and had to buy weapon systems from the US all through the Cold War. By continuing to provide a defense umbrella over Japan and Germany after the Cold War, the US managed to preserve its leadership in science and technology, with financing coming mostly from the exporting nations’ trade surpluses. The more the export economies earned in their dollar-denominated trade surpluses, the poorer these exporting nations became in real national wealth.

Twenty-first-century neo-liberal market fundamentalism is not the same as 19th-century mercantilism in that trade surpluses in the form of gold would flow back to the exporting economy. Trade surpluses denominated in dollars for US trade partners merely expanded the US economy globally. The sucking sound that Ross Perot warned about regarding the North American Free Trade Agreement during his 1992 presidential campaign turned out not to be the sound of US jobs migrating to Mexico but the sound of foreign-held dollars rushing into US equity and debt markets.

Normally, I agree with Mr. Liu but in this case, he misunderstands history. I can't blame him. He reads books and looks at stuff but didn't live it or work with it in the past. And one thing I know a LOT about is the relation of the US military/industrial complex and Japan and Germany! I lived overseas and my parents were very involved in all of this. I saw it all close up. Guess what?

Germany, just for example, was VERY involved in our military research and development! Gads! My dad's job in WWII was to go into Germany and bring out the many German scientists and technicians and bring them to the US so we could pick their brains! Even more: many of them went back to Germany! I lived with them! They flew back and forth, 5 years in Germany, 5 years in the US. Ditto, the Japanese! I lived with these scientists.

They taught what they did in the US...BACK HOME. They came home, they went here, they moved about, hauling information and training with them. Ditto the Chinese! I had Chinese rocket scientists live with me and they went back to China afterwards. My dad did this after WWII and the Father of Rockets in China once lived with my dad! When I was a child! Because of the Cold War, the US was very anxious to pull in European and Japanese scientists and engineers. We spread the building of Cold War stuff to all our allies. Then we spread this to China! HAHAHA. Gads. Slit the throat! This was to flummox the Russians. Only we needed the Russians so we invited them here, too and they also fly back and forth between Mother Russia and the West and carry this technology with them.

Liu is totally off base in this case. The reason why Germany, Japan, China and Russia all accepted Funny Money™ while doing this was because they were getting everything from us that mattered: our technology, our skills, our factories, our power. Liu thinks they were content to get paper.

HAHAHA. NO WAY IN HELL. They used this paper to either buy up our commodity sources, buy our infrastructure or buy out our factories. We are being enslaved by them and they do this using these worthless pieces of paper that are WORTH A LOT TO US HERE. As we shall see below in the latest government statistical reports. The wealth of America is definitely flowing to our trade partners.

Barclays will tap sovereign wealth funds to cover its capital needs

Barclays shares surged yesterday after Britain's third-biggest bank set out its intention to raise capital from strategic investors and surprised investors with an upbeat trading statement.

Barclays said a new equity placing and a pre-emptive offer to existing shareholders were "under active consideration". In the open-offer placing, which could come as early as this week, Barclays would agree to sell a stake to strategic investors to cover its capital needs. But it would offer a portion of the new shares to existing shareholders in a "clawback" operation.

See? The top banks in the US and UK must go abroad to seek these dollars. They are begging for these dollars. They are diluting control of their banks because they need these dollars held by Japanese or Chinese. As the Chinese told me very tartly back in 1984: 'We be bank'. Let's look at the last 36 years of the DJIA:

I broke up this time scale to show the different eras. The floating currency era was a time of rising interest rates and Wall Street was totally flat. Then the interest rates began to drop BECAUSE THE US WAS LETTING IN FREE TRADE. This surrender of our sovereignty brought temporary prosperity as US markets grew rapidly due to the Baby Boomers hitting their first family building years while their WWII parents were at their top earning potential years. But starting in 1994 when Japan began to flood the planet with Funny Money™ thanks to their dual process of super-low 0% interest loans coupled with madly exporting manufactured goods led to a feel-good time in the US with super low interest loans here coupled with cheap oil and a huge hike in M3 finances.

This became a massive double bubble. The first one popped in 2000 as Greenspan raised interest rates for a year. Then he dropped rates like a rock when Bush took over and the flood of Funny Money™ doubled. We got a second bubble in stocks, one that is now falling apart. All the engineers of this bubble trouble can see clearly that having both the Bank of Japan and the Federal Reserve drop rates to 1% or less leads to big bubbles. But instead of fearing this, they WANT this to happen! This is the catastrophe that plagues us.

Treasury's TIC Data Shows Solid Foreign Investment

(RTTNews) - The Treasury Department revealed that foreign investment in the United States remained solid in the month of April, despite a wide trade deficit and continuing turmoil in the U.S. financial markets.

Net foreign purchases of long-term U.S. securities came in at $104.8 billion in April, the Treasury Department reported Monday. The department released Treasury International Capital (TIC) data for April, revealing that net foreign purchases of long-term securities, excluding non-market flows such as stock swaps and principal repayment on asset-backed securities, came to $115.1 billion.

Of the $115.1 billion in net purchases, $63.5 were made by foreign investors and $41.3 were made by foreign official institutions.

This news requires the raw data. Which a kind reader sent me. Thanks!

U.S. International Transactions: First Quarter 2008

Foreign-owned assets in the United States

Foreign-owned assets in the United States increased $411.0 billion in the first quarter, following an increase of $380.4 billion in the fourth.

[NOTE: 'assets' are DEBTS. This is increasing like crazy, isn't it?]

U.S. liabilities to foreigners reported by U.S. banks increased $85.7 billion in the first quarter, following an increase of $124.0 billion in the fourth.

[NOTE: our liabilities are not increasing as fast as last year but this is little comfort. Liabilities is fancy talk for 'savings'.]

Net foreign purchases of U.S. Treasury securities were $68.9 billion in the first quarter, up from $60.1 billion in the fourth.

[NOTE: they are buying MORE US debt!]

Transactions in U.S. securities other than U.S. Treasury securities shifted to net foreign sales of $20.1 billion in the first quarter from net foreign purchases of $110.5 billion in the fourth.

Net foreign purchases of U.S. stocks were $8.7 billion, down from $56.2 billion. Transactions in U.S. corporate bonds shifted to net foreign sales of $10.6 billion from net foreign purchases of $37.9 billion. Transactions in U.S. federally sponsored agency bonds shifted to net foreign sales of $18.3 billion from net foreign purchases of $16.4 billion.

Foreign direct investment in the United States increased $46.6 billion in the first quarter, following an increase of $55.7 billion in the fourth. The slowdown was more than accounted for by a shift from an increase to a decrease in net intercompany debt investment in the United States. In contrast, net equity capital investment in the United States and reinvested earnings both picked up.

Foreign official assets in the United States increased $173.5 billion in the first quarter, following an increase of $145.5 billion in the fourth.

Net shipments of U.S. currency to the United States were $0.9 billion in the first quarter, down from net shipments to the United States of $3.5 billion in the fourth.

[NOTE: Our trade rivals are HOLDING dollars, not getting rid of them!]

*************************************************

Investment income

Income receipts on U.S.-owned assets abroad decreased to $198.7 billion from $214.6 billion. The decrease was largely accounted for by a decrease in “other” private receipts (which consists of interest and dividends). Direct investment receipts also decreased.

Unilateral current transfers

Net unilateral current transfers to foreigners were $31.2 billion in the first quarter, up from $29.8 billion in the fourth. The increase was mostly accounted for by an increase in private remittances and other transfers.

U.S.-owned assets abroad increased $286.6 billion in the first quarter, following an increase of $153.8 billion in the fourth.

[NOTE: this is $125 billion less than foreign assets held in the US as we see above.]

U.S. claims on foreigners reported by U.S. banks increased $218.9 billion in the first quarter, following an increase of $115.9 billion in the fourth.

Net U.S. purchases of foreign securities were $38.8 billion in the first quarter, up from $4.2 billion in the fourth. Transactions in foreign stocks shifted to net U.S. purchases of $28.0 billion from net U.S. sales of $9.3 billion. Net U.S. purchases of foreign bonds were $10.8 billion, down from $13.5 billion.

[NOTE: this is far less than foriegn powers buying our securities.]

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The U.S. current-account deficit--the combined balances on trade in goods and services, income, and net unilateral current transfers--increased to $176.4 billion (preliminary) in the first quarter of 2008 from $167.2 billion (revised) in the fourth quarter of 2007. The increase was mostly accounted for by a decrease in the surplus on income. In addition, the deficit on goods and net unilateral current transfers to foreigners both increased. An increase in the surplus on services was partly offsetting.

[NOTE: if we keep up this deficit, it will be around $700 billion this year which is totally insane!]

Goods and services

The deficit on goods and services increased to $174.9 billion in the first quarter from $173.8 billion in the fourth.

Goods

The deficit on goods increased to $211.0 billion in the first quarter from $208.9 billion in the fourth.

Goods exports increased to $317.8 billion from $303.2 billion. The largest increases were in nonagricultural industrial supplies and materials and in agricultural products. Consumer goods also increased.

Goods imports increased to $528.8 billion from $512.1 billion. The increase largely resulted from an increase in petroleum and products. Among non petroleum products, the largest increase was in nonpetroleum industrial supplies and materials.

[NOTE: we export more and more and more but import even more and more and more. We have to stop the rapid rise in imports. This especially means importing of oil.]

Bush was on national TV today yelling about how we must pump more oil out of our last oil fields. He wants us to consume all the oil we have and leave nothing for our great grandchildren. This is a catastrophe. We don't need to consume all the oil in America as fast as possible. We need to conserve this so we have something to pass onto our future progeny! We have to control our desire to eat ourselves out of house and home. And we can't make infinite bubbles that give us infinite wealth. This won't work and isn't working as the statistics obviously show.

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Washington Post's Housing Collapse Fairy Tale

June 17, 2008

Elaine Meinel Supkis

The Washington Post continues its series about the global banking collapse. Only it is very trivial and sticks strictly to the surface. This doesn't surprise me. If we leave out important parts of a story, a novel can be turned into a short story! This 'Cliff Notes' version of recent history illuminates little. We have to change the entire basis of the floating currency/deficit war spending/free trade system we live under today. It is totally unsustainable. Talking about this is forbidden in the mainstream. The owners and advertisers who control all our media want to pretend nothing is really wrong that can't be papered over.

The Bubble: How the housing bust started a panic in Florida, felled a storied bank and raised the specter of recession.

By Alec Klein and Zachary A. Goldfarb

The Washington Post

Jan. 10, 2008. In his first public remarks of the year, Fed Chairman Ben S. Bernanke acknowledges that the problems that had begun in the subprime market now "affected the prospects for the broader economy."

Unemployment was rapidly rising, hitting its highest point -- 5 percent -- since November 2005. On Jan. 19, a Saturday, a weekend of urgent conference calls among Fed officials began.

Bernanke and his colleagues -- Vice Chairman Donald L. Kohn, Fed Governor Kevin M. Warsh, New York Fed President Timothy F. Geithner and others -- agreed that the central bank needed to sharply cut interest rates to stimulate the economy. But they debated whether a big cut before a routine meeting -- only a week and a half later -- would make the Fed seem as if it were simply responding to declining stock markets. Bernanke implored the group: If it's time to act, the Fed should act.

Two days later, on Martin Luther King Jr. Day, stock markets throughout the world suffered some of their largest drops since Sept. 11, 2001. Meeting by videoconference, the Fed voted to cut its key rate three-quarters of a point, the biggest single-day cut in nearly a quarter-century, and announced the move before U.S. markets opened Tuesday. The Fed continued to lower rates but couldn't stop the economy's plunge. More banks reported losses.

Meanwhile, President Bush, working with Congress, signed into law a $168 billion economic stimulus package, offering tax rebate checks.
*snip*
As he learned about the unfolding crisis, Bernanke feared a global economic collapse if Bear Stearns went under. Money-market funds where Americans deposit billions of dollars in savings had lent money to Bear Stearns. And the company's important role in the financial markets -- trading countless securities for big investors -- would come to a halt. Other investment banks, Bernanke worried, would be next.

The economic stimulus only made things worse. In anticipation of this bounty, many businesses held off dropping their prices and the oil industry anticipated a flood of easy money and so oil prices surged upwards starting in January. Much of this 'stimulus' has already been burned up by SUVs and trucks. The net gain for the productive side of the economy was trivial if any. This spending spree was not focused on any target. It was just an outright 'gift' handed out in Santa Claus fashion. But like so much of our spending money these last 20 years, it wasn't savings or profits being handed out.

It was DEBT which we have to pay back with interest for the foreseeable future! The fix is totally toxic. I do like getting money but I can see that this is NOT money at all but DEBT. When Congress, Bush and the Federal Reserve all joined in this helicopter drop of free money, they all neglected to inform us that we have to pay them back for this largess. Instantly, the media went to work broadcasting ads which were very focused on spending this huge loan on trivial, useless, stupid things. On top of this, as per usual, Congress joined Bush this year in voting yet another $160 billion on our two failing wars in the Muslim world.

The Taliban just blew up a prison and freed everyone and are now busy as ants stripping a picnic table of all food. I once amused myself as a child, in Death Valley, watching an army of ants get under my jelly sandwich and then they headed towards their nest, the bread rippling along the stony ground. When they got to the entrance, they couldn't get it in. It took them hours to tear it apart, crumb by crumb and haul the loot inside. A life lesson not to forget. The Taliban are like those ants. They go into their holes and hang out while we stomp around outside, killing everything in our path. Then they come out and haul off everything we leave behind.

The US is going bankrupt. I have yet to see a single headline in any major media that openly states the truth. Just like Pravda never had a headline, 'Soviet Union Iz Bankruptski!' nor did the East German news casters say, 'Der Mauer ist kaput!' People simply reacted to the obvious and the USSR went USSUnder and the Berlin Wall was torn apart by happy mobs. In our own case, what is announcing our bankruptcy is inflation. The Federal Reserve is ripping up our money into smaller and smaller pieces and saying, 'It is not torn up! Take it!'

In the WP story, they talk about the collapse of the Teacher's Fund in Florida. It has one detail that interests me:

Washington Post:

That's not good enough for Pons, the Leon County superintendent. "Everybody was chasing the interest rates," he said. Pons has been pulling out funds from the pool, and he plans to get out the rest -- about $20 million -- as restrictions permit. His new strategy: He's parked the school district's money over at Capital City Bank, where his good friends gave him the emergency loan. "So I can get to it," he said.

Yes, by gum! Everyone was CHASING interest rates! This is because the official rates were set well below the real rate of inflation! This is a crime. The Federal Reserve used every dirty trick they had to artificially keep rates too low starting from January, 2001---which was well before 9/11---to keep rates far below the real inflation rate. They did this even as Bush and the GOP----again, well before 9/11----dropped taxes. Anyone trying to get a decent return on their funds they saved were in serious trouble thanks to these actions.

As I have pointed out in the past, the money flowed heavily into real estate because rates there did NOT drop like the Fed's rates. The sweetheart deal the Fed had with the investment banks and other bankers was NOT extended to housing, etc. But rates for housing were still historically low. So people wanted to take advantage of this. By refinancing. The key thing here is, the profit spread between the artificially, dangerous low rates set by the Treasury and the Fed in collusion with each other and thanks to outright lies about inflation, this spread was more profitable than other forms of savings regimes. So everyone poured their savings into these new housing lending accounts.

The second temptation was, these accounts were ranked according to risk. And the loans handed out to illegal aliens, prisoners, con artists, condo flippers and real estate speculators were at a higher future rate that would supposedly go up and up and up WITH inflation...these were very popular and funds available for lending in this field shot right through the roof!

These loans had 0% down on top of everything. For a short while, it looked like everyone would become trillionaires. But the system collapsed when the first bills came due. Con artists, condo flippers and illegal aliens are not particularly trustworthy by definition. Sane people don't lend their life savings to characters that are outright outlaws. Yet this is what happened.

Normal banks that followed old banking rules and which were careful about who they lent these savings to were unable to compete because they couldn't offer a good return on savings. I know my bank in 2004 offered only 1.25% return on my cash! I was better off hoarding coal or diesel fuel than putting my money in a bank! So no one saved the old way.

By April, it was widely feared that the United States was falling into recession. Bernanke, appearing before Congress, would only allow that a "recession is possible."
*snip*
Alan Greenspan, who was famously opaque while presiding over the Fed during the bubble, bluntly defends his tenure. "The prevailing notion is that the bubble is indigenous to the United States, is caused by Federal Reserve policy and if the people at the Federal Reserve, especially the chairman, were sensible, this thing would not have happened," Greenspan said in an interview. "History is being rewritten, and I will tell you this is not the history that I remember."

His view is that long-term global interest rates, not the short-term rates that the Fed controls, drove housing bubbles around the world in the past decade. "The tie between Federal Reserve policy and housing prices is just not there," Greenspan said.

Greenspan should be arrested for impersonating an economist. Hell, arrest all these guys. They can't figure anything out or better still, they are deliberately lying to us. Greenspan is ultimately right: HE didn't create this mess. The US created this mess via our stupid floating currency regime coupled with free trade leading us to huge trade deficits. And our budget overruns due to wars. But note he doesn't mention the Bank of Japan's role here. Nor does he say, 'The New World Order idiots who are my good friends and drinking partners did this to us!' Nor does he point a crooked finger at the G7 negotiators who work day and night to insure this wicked, crooked system continues its destructive path.

G-8 Says Commodity Prices Replace Credit Squeeze as Major Risk

(Bloomberg) -- Finance ministers from the Group of Eight nations said surging food and fuel prices have replaced the credit squeeze as the biggest threat to the world economy.

``The predominant concern is the inflationary effect that oil in particular and also food prices are having,'' U.K. Chancellor of the Exchequer Alistair Darling said yesterday after G-8 officials ended talks in Osaka, Japan. Deputy German Finance Minister Thomas Mirow said oil's rise to a record means ``an enormous withdrawal of purchasing power.''

Now let's go to a Canadian bank report. They have a lot of the bad, bad, bad news and Greenspan should read this document. Ditto, Bernanke. If anyone thinks that this mess is over thanks to the government freebies and more misspending and more money lending by the Bank of Japan, they are nuts. It is going to get worse! As these graphs below clearly show us.

National Bank Financial weekly report:

Worst results since 1991

In the first quarter of 2008, U.S. FDIC- insured institutions posted their worst results since 1991, excluding the last quarter of 2007, marked by very heavy losses on securities trading and goodwill writedowns.

The poor showing in the first quarter of 2008 is attributable to provisions for loan losses. Per $100 of assets, this charge reached $1.13 after hitting $1.00 the previous quarter. Chart 2 shows that the last time such heavy loan-loss provisions were recorded goes back to the quarters following the 1990-1991 recession.

During Gulf War I, the US was having difficulties due to the invasion of Kuwait a year earlier. The US won that war pretty easily but then we settled down to restricting Saddam's oil sales. The US economy then fell off the cliff. So did Europe and Japan since they depend on our markets for sales. The chart below is all about the Producer Price Index. We can see clearly, inflation is not at 2%. Fed rates are set at that low level. But nothing sane is happening at that level.

Here is a graph from the bank report. I heavily amended it as usual.

First of all, there is the shocking sight that the return on assets completely collapsed this last spring! Wow. Secondly, we can see clearly the 1989-1992 recession and the savings and loan messes. Very suddenly, starting in 1993 but especially after 1994, onwards, we have this huge increase in net income as % of assets with the banks. The banks had it very, very good during that time span. But the collapse is complete and very sudden. This last quarter has been a slight improvement only because of heavy 'freebie' lending from the Federal Reserve and the taking in of all this bad debt by the Feds who now have isolated it from the banks bottom lines. This includes forcing Fannie Mae to eat a lot of the losses. But the present level is unsustainable. It is doomed to go negative soon.

More non-current loans in pipeline

The large loan-loss provisions set aside in the two previous quarters have amply exceeded net charge-offs, which were already greater than usual. The difference has boosted loan-loss reserves on the books from $87 billion to $121 billion over the period. These provisions could serve to cover future charge-offs. By posting hefty loss provisions in this latest quarter, might U.S. FDIC- insured institutions be trying to cushion their next results against other massive loan charge-offs?

If this is indeed the intent, we have every reason to believe that that these efforts will be for naught. Truth be told, insured institutions have been caught off guard as, despite the considerable charge-offs already posted, non-current loans1 (those not yet charged off) have gone from $83 billion to $136 billion over the same period. Consequently, loss provisions, which just barely covered the amount of non-current loans on the eve of the last quarter of 2007, totalled no more than 89% of these loans at the end of the first quarter of 2008. A coverage ratio at such low levels had not been observed since the first quarter of 1993.

In this regard, there are no indications that the escalation in non-current loans is about to turn around. In fact, instead of diminishing, the amount of loans 30-89 days past due has progressed slightly in the first quarter from $107 billion to $111 billion. A good portion of these loans are likely to become non-current in the second quarter.

Th is graph shows how the rate of default is shooting up far beyond the rate from the previous Gulf War period.

The level of default is nearly double of the rate of rise of the previous recession/war period. There was a slight bulge in defaults following the Dot Com collapse. I know that some of my 'wealthy' neighbors went under during that fiasco. Today, some of them are desperate to undo their debts too late and will probably end up running from the sheriff like the others who had fancy cars, fancy wives and private jets.

I colored in yellow the 'good times' between the two bankruptcy peaks. This was a time when our government ran up trillions in red ink. And the trade deficit shot up even worse. This report, by the way, mentions that the rate of default is growing worse, not improving. As we can see from this graph above, the rise in defaults from 1984-1991 lasted for over half a decade. The improvement took another half a decade. The bell curve from 1984 lasted until 1995 which is 11 years. Then there was stability, more or less, based entirely on the production of vast seas of red ink elsewhere.

Then the next rise and fall of defaults was from 2001 to 2005 with the peak at 2003. This is when the housing bubble was pumped up to an extreme thanks to Greenspan dropping Fed rates to 1%. The 1% free money for banks that pushed savers into taking on greater risks to beat that super-low-sub inflation rate immediately, not after, say, 5 years but INSTANTLY set off a rise in defaults! These began to shoot up in less than ONE YEAR after the bottom was reached for dropping default rates! In other words, there was nary a pause from declining rates to a sudden hike in default rates!

From 2005-god alone knows when--we are in an era of rising default amounts and rates. It is already far greater than the 1991 rate! And has barely begun. In the beginning of 2007, it was already obvious that we were going into a recession as bad or worse than the earlier ones. The rate of default was exactly as high as the highest rates in the 1991 recession! As I keep saying, it takes 5 years to go into a housing contraction and another 5 to depart. This present case is a clear example that this rule is iron-clad. The mini-recession that Greenspan 'cured' by dropping rates to 1% simple proves this point. The height of defaults was coincident with the beginning of higher rates! The time delay effect is obvious: the housing bubble blew up right when it looked like things were getting better! Defaults were dropping! But this illusion of health vanished instantly with the higher rates. And defaults took off with a vengeance.

The Holy Grail for the central bankers is to produce infinite wealth with no inflation and no peasants pounding on the doors, carrying torches and pitchforks. The virtues of ancient systems are not good enough because they regulate things only approximately. This means there are cycles of booms and busts. But the cures that supposedly prevents these happy times/unhappy times are not stopping this dynamic. I fear, these fixes are worsening things. For humans are poor agents for regulating things. Mother Nature does this via the cruel method of 'survival of the fittest.' If we want a civilization, we have to balance our desires with a forward looking view of forces at work. We have to be able to understand the dynamics at work. And we have to realize that some forces are best left to work their way just like flood waters can't always be stopped nor earthquakes prevented. We can only build solid structures that can survive floods, lightning, earthquakes and other hazards. We can't have no hazards. That is impossible.

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Culture of Life News Main Page

Free Trade In Free Fall

June 17, 2008

Elaine Meinel Supkis

We see global inflation raging nearly out of control now. Everywhere except for one country and one country only: Japan. The G7 conspiracy to help Japan pretend there is no inflation at that one, singular country is at the heart of the raging global inflation that besets everyone. The need for access to a central bank that can provide super-cheap loans continues. This and this thing alone is at the basis of all international trade and banking! And the central bankers definitely believe that if only they can keep this one window to the Cave of Wealth open forever, they will never, ever see a global recession. This is pure insanity! The flow of news shows us that this is not going to work.

Fukuda Hints At Early Sales Tax Hike, Says Now Is 'Crucial Time'

TOKYO (Kyodo)--Prime Minister Yasuo Fukuda indicated Tuesday that an early hike in the consumption tax may be unavoidable to finance rising social security costs, saying now is a ''crucial time'' to make a decision.
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Is M'bishi Benefiting Too Much From Resource Boom?

TOKYO (Nikkei)--Mitsubishi Corp. (8058) is busy countering criticism that it is raking in too much profit by taking advantage of spiking prices of resources. It is not just that the firm is on track to post its sixth straight record profit; what is also raising eyebrows is the size of the profits it is racking up.
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MOF Mulls Issuing Lottery Bonds To Bolster JGB Sales To Individuals

TOKYO (Nikkei)--To shore up sluggish sales of government bonds tailored for individual investors, the Ministry of Finance is considering introducing lottery bonds that offer chances to win cash prizes, government sources said.

Since the very first days of Culture of Life's news launching, I have been working hard to prove that the Japanese 'depression' is totally fake. It is a regime imposed upon the lower half of society. Japan was, since WWII and even longer, a one party state. It is run along the lines of states like say, North Korea or China. It is not a modern 'democracy' at all. Since the ruling LDP has no need to please the voters, they have gone further and further out on the limb as they chop finances, social supports and other services to the mass of voters.

After the great bubbles in stocks and housing burst in 1991, the country hunkered down to process out all the excess finance created by these bubbles. The bubbles, in turn, were the results of the Plaza Accords which suddenly boosted the value of the yen against the dollar. The Plaza Accords, in turn, were hammered out with Germany and Japan so the value of the dollar would plunge in a controlled fashion only vis a vis these two currencies. The crisis in the dollar from 1974-1987 was due to the startling truth that both Germany and Japan won the economic war that began in 1933. Both manufacturing powers had succeeded in overpowering the US manufacturing power in world trade. The US, for ideological reasons, didn't want to contest this great victory of the Axis powers because the US was still trying to control international military politics vis a vis Russia and China.

So, here we are today: Japan and Germany utterly dominate the US when it comes to international as well as US domestic trade in value-added manufacturing. If we deduct the Boeing business from the Japanese ledger, the complete collapse of US manufacturing sales in Japan is obvious! Virtually the only high-value manufacturing items we sell to Japan are Boeing jets! One of my very first postings online was about the dishonest use of Boeing jet sales to jigger our trade numbers. Namely, the jets are purchased only as a balm, as a method of keeping the US calm about the real struggle for power in the auto markets, for example. Even with the Boeing contracts, the true value of all this is hidden from the US public. For all the governments who buy our jets want something in return for this favor.

The Japanese make this very clear: much of the Boeing work has to be done in Japan. The deal is, Japan will perform a service to the US finance in order to keep this hideously lopsided trade going. And the deal is painfully obvious at this point: the loans that come pouring out of the Bank of Japan has become the fundamental basis for all US and probably all European banking. Definitely, all the pirate cove islands depend on this source of easy money! The belief seems to be, if only the Bank of Japan can keep up this 'depression' everyone else will ride on the back of this depression and use it as a hobby horse to keep liquidity flowing even in the teeth of rising global inflation of historic proportions.

Indeed, the greater the inflation, the more the other G7 nations need the Bank of Japan's super-low interest rates! So we have a classic 'Outerdarkness' moment: the imbalances in one realm cause imbalances in other realms. As these get increasingly worse, the solution is to make the imbalances worse and worse in the hopes that this can go on to infinity. If we push down hard at one point, at the opposite pole, it goes up higher and higher. I harp on this topic because understanding the greater picture is essential if one wishes to see into the future. This means having some philosophical or intellectual framework which can be used as a guide. To have this, one has to look backwards in history to see what has happened before so we can gage where we stand today, relative to all other events in history.

And on top of this, one has to have a belief system so one doesn't get lost in a forest of details! So I mount Pegasus and go flying off into the celestial star structures of religious beliefs that stretch back to the beginning of story telling of our distant ancestors who were coping with the horrors of the Ice Ages. The present woes we are witnessing are barely a flea bite compared to the grinding nightmare of global climate collapse! One of the things that are at the basis of understanding all things is the concept of death and how wealth is intimately connected with dead plants, dead animals and dead humans.

This is part of the balance between life and death: the ultimate scale balancing here is sex and accumulating wealth for future use. Just as the very first civilizations saw great rulers of the earliest cities being buried in the earth with a number of female slaves, horses, wheeled chariots and lots and lots of loot, the impulse to balance life and death in various fashions has been a human mania. Namely, what is here on earth and used by the living has to be balanced with a mirror amount in the darkness of death.

Back to modern times: throughout history, humans have created entities who 'judge' matters and who 'bring things into balance'. One of the older manifestations of this is Libra. Scales are very ancient. We suspect they came into being when newly-domesticated grains needed to be measured out. When we weigh things today, we use metal measuring devices that are regulated by governments. Such as the metric scales. Using some metal weight as a guide to measure value is very ancient. And for much of human social/civic history, this metal has been gold.

When the world's banking masters decided collectively to do away with this business of balancing the scales against some metal, some outside regulator, things have gotten very seriously out of whack. Starting with Bretton Woods II, the US has sought to use political power to gain some balance. This has utterly failed because the US has no idea what its political objectives are and indeed, is hijacked in this matter as outsiders as well as American special interests use tremendous sums of money as bribes to keep the system totally out of kilter. The US has a grossly out of balance trade deficit as well as a rising budget deficit. Because this has run now for over 35 years, we have accumulated a negative balance to such a degree, our entire banking system is now collapsing.

Which takes us back to the news in the Nikkei today: the US collapse is due to Japanese manipulations of their own banking collapse that was brought on by the Plaza Accords. The Plaza Accords was very dishonest. It was supposed to balance the value of German and Japanese currencies vis a vis the dollar and via this method, it was supposed to balance trade with both rivals and the US! THIS NEVER HAPPENED!

It was obviously a total failure. We knew this back in 1994. We know this today! The US trade deficit with both Germany and Japan GREW. On top of this, both nations began to buy up many of our industries here in the US or they colonized our work force by moving some of their excess production to the US. They worsened the condition of US labor by placing these factories in former slave states that prevent unionization. So even as they had unions in both Japan and Germany, they didn't allow US workers to unionize. This, in turn, drove competition in the US markets and punished any unionized businesses that were native. Over the last 20 years, this process has driven US unions out of work. At this point in time, the ability of US unions to even exist has now basically killed them. With this, the ability to buy Japanese and German manufactured exports to the US has begun to collapse. The only way to balance this was for Germany and Japan to supply US workers with easy loans. With this, they would be encouraged to buy Japanese and German goods.

So the balance in trade has moved into the banking system. The entire concept of banks since the very beginning thousands of years ago, was very simple: banks took the profits or savings of non-bankers or the bank itself and INVESTED THIS in futures which we call 'loans'. And to make a profit off of savings and in turn, to attract savings, the bankers offered to pay for holding these savings. We call this 'interest rates'. The rates paid to savers was always somewhat less than the amount lent to borrowers. To keep all of this in balance, bankers had to insure they had a 'reserve' to use as the basis for lending.

The US financial system got so out of whack, the balance between savings and lending collapsed. The US doesn't save at all at this point, not at a rate that is discernible. We kept borrowing and borrowing. The only way any economy can do this is if there is a 0% interest rate being charged on loans! This, in turn, always cause a collapse in savings. So the only way this can be done is to have NO reserves. And indeed, the US basically has no reserves. The danger of this system is obvious: it causes a collapse in the value of the currency. As the currency is debased, it creates this thing we call 'inflation'. Inflation is really depressing the value of savings. If you save money, it shrinks in value. So this is a depressing factor.

I notice that when I read the news and the central bankers of the G7 nations and in particular, the US, all love to talk about depressions and inflations but they don't mention savings and the effect of both on savings. A balance here is obvious: depressions in PRICES means savings are rising in value even if they get no interest values. Inflation in PRICES means savings are dropping in value no matter what the interest rates unless those rates are very much higher than inflation. Savings shrink! Whenever we have inflation cycles in PRICES, savings collapse. You can't save money if it is vanishing very fast thanks to inflation! We see this today quite clearly: the value of gold has dropped from recent highs due entirely to inflation. The value of the dollar vis a vis other currencies has fluctuated even as inflation roars here at home. This is due to the central bankers artificially trying to keep all currencies in balance despite raging international inflation.

This takes us back to the Nikkei news from Japan: Japan has keep its trade very unbalanced via taxes and various tricky barriers. And restricting incomes of the Japanese people while at the same time, making it nearly impossible for them to borrow money to buy imported goods. This is the most extreme case of manipulating the balance of Libra in modern times. Japan is the world's #3 economy along with Germany, China and the US. Yet Japan will not allow these top trade rivals to penetrate Japanese markets. For the last year, the LDP has been trying to raise consumption taxes in order to cut off even more international trade.

The unbalanced Japanese banking system has been hitched to Japanese export markets. The 'savings' in global banking are no longer the accumulated wealth of the working class seeking banks as a means of protecting their savings, it has collapsed totally. The 'savings' today are FOREX reserves held by the central banks of Asian and oil pumping nations. These savings are the basis of global banking. Since the US banking system has no savings AND VIRTUALLY NO RESERVES, the holdings of these other banks balance the $0 held by the world's biggest trade partner. But this is not balance. Or rather, it is driving the increasing trade deficits in the US as the US has to unbalance trade more and more in order to gain access to the stored value in these massive FOREX reserves.

The LDP is increasing taxes on what the poor Japanese people eat, drink and use in order to KILL INFLATION by RESTRICTING BUYING. If one insists on buying something in Japan, the government takes a bite. Japan, like all other nations, is experiencing terrible inflation in commodities. This has been 'fixed' by dropping wages to make up for rising overhead caused by global inflation. This, in turn, has been caused by a flood of easy lending that comes from the Bank of Japan. The Bank of Japan has a giant FOREX reserve due to the imposition of an insane banking system based on 0% return on savings imposed on the people of Japan in order to fix the sudden rise in the value of the yen via the Plaza Accords. So, to keep the 0% interest regime, Japan must keep prices down in Japan itself. So they can claim there is no inflation and therefore, they don't need to pay savers for their money. Instead, since prices are 'dropping', savings gain value even as they get no returns.

But this fiction is collapsing since the price of many things in Japan are rising! So, to fix this, the Japanese people will be taxed so whatever pitiful savings they have will be soaked up in the sales of items. So the Japanese people are being made poorer in two key ways: their savings are falling further and further behind the real rate of inflation while their wages are dropping like a rock in order to prevent commodity inflation from showing up in prices! This is literally whipsawing the Japanese working classes to death.

Nukaga Says Japan Faces Little Threat From Inflation

Bloomberg) -- Japan's Finance Minister Fukushiro Nukaga said the world's second-largest economy faces little threat from inflation even after his Group of Eight colleagues said rising oil and food prices are their chief concern.

``Unlike Asian and European nations, Japan's economy on the whole is not facing inflationary concerns,'' Nukaga said at a briefing today after hosting a gathering of his G-8 counterparts in Osaka, Japan.

The G-8 finance ministers said spiraling commodities prices pose a ``serious challenge'' to the world economy. In Japan, inflation at 0.9 percent is within the central bank's zero to 2 percent range, signaling policy makers are unlikely to raise interest rates as long as costlier fuel and food squeeze companies and households and smother economic growth.

The top Nikkei story above about how the central bank and the government of Japan can't sell government debt unless they 'sweeten the deal' is very telling here. The normal thing to do is to raise interest rates! But this would destroy the ILLUSION of 'no inflation.' Japan must import nearly all of its commodities used by the manufacturing process as well as consumed by the Japanese people. Japan can't even feed itself! And yet, they claim there is no inflation while the entire planet has raging inflation in exactly the very things Japan imports the most? This is PURE INSANITY. And an obvious lie!

The US should not tolerate this. So long as Japan is dishonest about commodity inflation and use their workers as a sponge to sop up inflation at home so they can issue super-cheap loans to the major exporters in Japan...this is a frontal attack on the US markets! It is HOSTILE. It is DEADLY! And the US has one method for dealing with this sort of criminality: we put up tariff barriers to Japanese goods that are priced in this dishonest fashion. We cannot allow any of the top 5 manufacturing powers to gain market share here via slashing worker's wages....only, alas, this is what the US is trying to do!

To balance things out of balance, the US has been ruthlessly cutting worker's wages and destroying unions as fast as possible in a bid to undercut prices of other manufacturers. Japan has retaliated by doing the same, double down. For the US dares not tax its workers to death on top of cutting wages! At first, the Japanese workers benefited from all this via cheaper and cheaper prices despite lack of wage gains. But now they are being hammered by inflation just as the US workers are being hammered by inflation.

Both the US and Japan depend on cheap Japanese loans to provide 'liquidity' to global banking. Why is this?

It is because there is less and less worker's savings to keep the cheaper loans going. And as inflation and depression of wages continue to reduce worker wealth, we will eventually wipe out all the wealth of the working classes who will be bankrupted and stripped of all financial gains in the past. Deep in debt, even if this debt is CHEAP, the workers in the major manufacturing powers will end up impoverished and global trade will collapse because workers can't buy the output of capitalism!

Emerging markets face inflation meltdown

By Ambrose Evans-Pritchard

Central banks across much of Asia, Latin America, and Eastern Europe will soon have to jam on the brakes or risk a serious crisis as inflation spirals into the danger zone.

As the stark reality becomes ever clearer, this year's correction in emerging market bourses and bond markets has now accelerated into a full-fledged rout.

Shanghai's composite index touched a fourteen-month low of 2,900 yesterday. It follows moves this week by the central bank raised reserve requirement yet again, draining a further $60bn from the banking system. Chinese stocks have now slumped by almost 50pc since peaking in October.

In India, Mumbai's BSE index has lost 27pc of its value as the exodus of foreign funds accelerates. The central bank has raised rates to 8pc to curb inflation and halt a run on the rupee, but critics still say the country waited too long to tackle overheating. The current account deficit has shot up to near 3.5pc of GDP. A plethora of subsidies has pushed the budget deficit to 9pc of GDP.

Russia, Brazil, India, Vietnam, South Africa, Indonesia, Nigeria, and Chile - among others - have all had to raise interest rates or tighten monetary policy in recent days. Most are still behind the curve.

The frantic efforts of all the other nations trying to stop this run away freight train is failing. All these other nations, in an attempt to balance the grossly out of balance US/Japan/EU trade and banking relation are failing because they aren't big enough to force half of the global trading system to balance! Note that the nations struggling using classic banking tools are NOT the G7 nations! The G7 have been having many more meetings this last year as they struggle to reassert the old status quo that is hopelessly unbalanced. As the heads of these states conspire to reimpose an obviously broken system upon the rest of the planet, we get global inflation.

Which is the theft of SAVINGS. This cannot continue forever, of course. The US, Europe and Japan hope to translate all the commodity wealth of this planet into paper which they then destroy via their banking schemes. This way, they can hijack all the world's resources and consume it and in turn, have the paper money backing this, vanish into thin air as we collectively burp happily and go on about our business! This criminal desire to cheat our trade partners extends to ourselves: within the G7, the desire to CHEAT AND STEAL is very great and ongoing. Just as the people negotiating our trade deals and running our banks are all criminals, thieves and pirates seeking to enrich themselves at the expense of the American People.

Financial Times: Calls to tear up 'offset' CDS contracts

Dealers in credit derivatives are being urged to "tear up" some of the outstanding trades that could pose a potential risk to the financial system as part of renewed efforts by US regulators to improve the crucial sector's infrastructure.

Efforts to tackle operational inefficiencies in the infrastructure underlying the notional $62,200bn market for credit default swaps, which is lightly regulated, have taken on a fresh urgency because of the credit crisis, and is likely to draw more scrutiny in coming months.

The Derivatives Beast is where all the dangers of this out of balance, deadly banking system is packaged. The Beast has grown massively since the day the Bank of Japan dropped interest rates to basically 0%. The accumulation of Japan's FOREX reserves coincides very neatly with the appearance of and growth of the Derivatives Beast. This story above isn't about the entire Beast which is now over $600 trillion in size. It is about the CDS part which is a NOTATIONAL value of $60 trillion but its overall effect is set at $600 trillion. This is 'backwards banking'. In other words, normally, banks attract savings and then lend based on a 10% reserve base. In the Derivatives Beast's universe, this is reversed in a mirror image. This is how the bankers today 'balance' things that are utterly out of whack. NONE OF THIS IS REGULATED. The central bankers of the G7 now want to have some rules because even they can see this thing has gotten entirely out of control. But they cannot fix this unless they fix the fundamentals.

Which is the US budget and trade deficits. Which are getting worse, not better.

Hedge fund flows shrivel in first quarter-data

(Reuters) - Hedge funds attracted $2.6 billion in net new money during the first quarter, marking an 81 percent drop from what they pulled in during the fourth quarter, data released on Monday showed.

First-quarter inflows to these loosely regulated funds slumped $11.1 billion from the fourth-quarter figure of $13.7 billion, data from Lipper TASS, a unit of ThomsonReuters show.

As global inflation rages alongside wage cuts of workers, there has to be, ipso facto, less and less 'savings' for the hedge funds to 'grow'. Obviously, the global banking system is in a giant contraction. The great fear is, this will trigger an explosive change in the nature of the Derivatives Beast. To keep this from happening, all the central bankers are LYING ABOUT INFLATION. And frantically trying to drop interest rates in the teeth of one of the biggest inflationary cycles I have seen. This is why Japan is using very brutal or questionable methods of raising revenues for running sub-1% interest regimes. This is why the Federal Reserve of the US has jiggered the statistics to track real inflation. This is why interest rates are ridiculously low yet the banking system continues to spiral down this black hole of nothingness.

G-8 Urges Emerging Markets to Cut Oil, Food Subsidies

(Bloomberg) -- The Group of Eight nations called on emerging markets to cease subsidizing the price of oil and food amid concern such support was propelling demand and prices higher.

``It is imperative to remove supply side constraints and export restrictions, replace general food subsidies in developing countries with well-targeted help for the poorest,'' G-8 finance ministers said in a statement after meeting today in Osaka, Japan.

Basically, the conspiratorial piratical criminals of the G7 nations [China is the G8th member and I know they did NOT endorse this demand!] want the rest of the world's governments to STARVE OR FREEZE their people to death! They want the Japanese solution applied without mercy! THAT will kill inflation! HAHAHA. Only it will lead to great violence! Revolutions, wars and hysteria. Pitchforks and all that!

Argentina farm strike turns violent

CNN) -- A three-month standoff between the Argentine government and farmers over export taxes turned violent Saturday.

Local reports said there were several injuries and 18 arrests, including Alfredo De Angeli, a farm union leader who has been one of the most outspoken critics of President Cristina Fernandez de Kirchner's export tax.

Military police scuffled with farmers as they tried to remove them from a road that protesters had blocked with their trucks.

Just one of many examples from this week's news stream!

Free-Trade Era May Be Nearing End Amid Food, Growth Concerns

(Bloomberg) -- After six decades of ever-expanding international commerce, the high tide of free trade is ebbing.

As tens of thousands of South Koreans protest U.S. beef imports, rising commodity prices push nations to keep more food for domestic consumption and the U.S. chooses a new president who might be less supportive of free trade than his immediate predecessors, the world may be facing the end of a cycle that began in the immediate aftermath of World War II.

The liberalization of global trade has come ``to a screeching halt,'' said Fred Bergsten, director of the Peterson Institute for International Economics in Washington. ``It'll take years to rebuild the foundations of free-trade policy.''

The cause is more political than economic. ``This is a challenging time to be in the pro-trade wing of any party in virtually any country,'' U.S. Trade Representative Susan Schwab said June 12 at the U.S. Chamber of Commerce. ``It's hard to be for open trade, whether you are in India or the European Union or in China.''

Free trade has led to a huge imbalance in trade. Libra wishes to reset the scales. She can do it very violently or we can tip toe in and correct it quietly. But we can't correct this unless we understand this process and we understand that the US cannot consumer 25% of the world's resources while paying for all this with eternal, constant IOUs to our trade partners. This is why attempts at making the dollar strong fail. There is NO WAY any currency should be strong if trade is this unbalanced. But Japan conspires to strengthen the dollar and this artificially keeps up the trade imbalances.

And as usual, Paul Craig Roberts tells us the truth:

A Weak Dollar, Bad Fed Policies and Hedge Fund Speculators
By Paul Craig Roberts

In my opinion, the two biggest factors in oil's high price are the weakness in the US dollar's exchange value and the liquidity that the Federal Reserve is pumping out.

The dollar is weak because of large trade and budget deficits, the closing of which is beyond American political will. As abuse wears out the US dollar's reserve currency role, sellers demand more dollars as a hedge against its declining exchange value and ultimate loss of reserve currency status.

In an effort to forestall a serious recession and further crises in derivative instruments, the Federal Reserve is pouring out liquidity that is financing speculation in oil futures contracts. Hedge funds and investment banks are restoring their impaired capital structures with profits made by speculating in highly leveraged oil future contracts, just as real estate speculators flipping contracts pushed up home prices. The oil futures bubble, too, will pop, hopefully before new derivatives are created on the basis of high oil prices.

And in closing to this long story today: Germans have a long group memory about banking woes. The average German is becoming nervous about the relative value of paper money and are taking measures that are frankly, hopeless, in an attempt at protecting themselves and their savings.

Support for euro in doubt as Germans reject Latin bloc notes
By Ambrose Evans-Pritchard, The Telegraph:

Ordinary Germans have begun to reject euro bank notes with serial numbers from Italy, Spain, Greece and Portugal, raising concerns that public support for monetary union may be waning in the eurozone's anchor country.

X-factor: German bank customers are favouring notes that start with the distinctive ‘X’ serial numbers, which show they have come from Berlin

Germany's Handelsblatt newspaper says bankers have detected a curious pattern where customers are withdrawing cash directly from branches, screening the notes to determine the origin of issue. They ask for paper from the southern states to be exchanged for German notes.

The German public is a canary in the mine. The bird is trying to fly out of the Cave of Death because they realize that the financial system is shaky, at best. They have been buying up things that can survive inflation and this is across the planet: anyone with savings is hoarding. And the Germans are very suspicious about paper money and they obviously wish their government would severe the euro relationship and thus, the money circulating mostly in Germany would retain value while paper printed in the other EU nations would decline and thus ends the confederation. The recent vote in Ireland to nix strengthening the New Holy Roman Empire and its New World Order aspirations has troubled the central bankers and the G7 conspirators. They don't want any nation in Europe to put all this to a vote! They hate democracy. Just as Japan has no democracy. The Will of the People is to be evaded as much as possible.

This way, the entire banking/trade system of the last 35 years can be reset with little trouble. At least, at the top.

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WP Tries To Tell Housing Bubble Story

A very old cartoon I did when Bernanke first walked into his new office. I always hated him.

June 15, 2008

Elaine Meinel Supkis

A very special treat tonight! The Washington Post decided to explain the entire housing crisis from the beginning to the end. Since they were party to creating and enabling this mess, they tell nonstop lies about it. What they really should do is run all my cartoons starting with February, 2006. These clearly show that one human in this realm figured out EVERYTHING exactly right! My news service was as clear as a bell and the cartoons from back then are hilarious and frightful because they are so perfectly exact. Not that the WP wants to know this. They hate my guts. So off we go, to laugh it up: the collapse of the housing bubble and the clueless criminals who created this!

Let's review the past today with the Washington Post but first, we should look at an old cartoon I drew back in March, 2006:

The Fed will meet again and raise interest rates even as they discount the sudden downturn in housing since their sole function is to prevent inflation from showing up on business ledgers. Of course, this means co-ordinating Federal fiscal policies with policies designed to kill unions and prevent any workers from ever getting any pay raises no matter how tiny.

This cartoon references to the change China made in their banking relations with the West. They were no longer going to buy our mortgages! This was the beginning of the 'drying up of liquidity' that drove the US insane with fury. We wanted the money to flow back home in the form of cheap loans. But the Fed was being forced into raising interest rates because inflation was beginning to seriously rage out of control. Oil prices in April, 2006, hit a new record of $73 a barrel. Doesn't that sound quaint? That is almost half of what it is this month! But this restriction of money making introduced by the Chinese infuriated the G7 nations that wanted dearly to continue making money for free. As my old cartoon from spring, 2006, clearly shows:

These were some of several 'housing bubble' cartoons I drew from 2005-2008. I will focus only on the four months of March to June which is the time frame of much of today's Washington Post article about the housing bubble bust up. The key parts of this article are several:

The fact that much of the housing bubble was due to ALIENS, often illegals but this detail is glossed over.

The fact that Greenspan had NO IDEA what the hell he had unleashed on us with his 1% interest rate cuts coupled with huge tax cuts sponsored by Bush.

The fact that Bernanke had NO IDEA what the effects of his own actions were concerning the evolving bubble blow up.

My main point here is, someone had a most excellent idea what was going on. I detailed each step of the evolving mess one by one. Did rather a remarkable run of cartoons which were mostly ignored by the general public since the mass media does not exist to enlighten but rather, is a propaganda machine designed to be more like smoke and mirrors and fuzzy numbers. The media exists to LIE about pertinent matters. The biggest lies they can tell is, 'NO ONE could see into the future! NO ONE could figure out how this works! NO ONE could understand it, not even the top economic geniuses could fathom what was going on!'

Well, call me stupid, but it is painfully obvious, if we all read or look at my cartoons from this key critical time frame of when Bernanke took over from Greenspan, I knew PERFECTLY well, what the hell was going on. It was painfully obvious. How could anyone NOT see reality? Or so I would rage on a daily basis. Back then as well as today.

For it is very vital for these criminals to pretend they are dumber than a box of tampons in a men's bathroom. They have to convince us that they are unable to look forwards in time and weigh the future results of their machinations. They seriously need to impress us with the idea that we are all leaves flowing down the gutter and into the drain, they are not the ones who control the fire hydrants that are flooding the streets.

Here is an early March, 2006 story about the housing bubble collapsing that is truly awesome considering that I am not running anything aside from this little blog:

This is inevitable. Seems the home-ATM machine truly is shut down. Just like one can deplete all the money in one's bank account, so can one run up to an upper limit in taking on loans. Loans against the value of real estate are tremendously cheaper than unsecured loans. The merchantile boom was due entirely to this effect. Now it will all crash down.

I did a number of cartoons about the Home ATM machine and this one illustrates how falling wages due to Free Trade and the Friedman Flat Earth New World Order was going to destroy the value of real estate. This cartoon was drawn when the housing price falls had barely begun. It was so far from obvious, most news stories from that time period were all about how there was NO housing bubble and it did NOT pop since it didn't exist. The expectation was, the Federal Reserve would stop raising interest rates and housing would take off again.

But across the planet, the central bankers coordinated the raising of rates and the US, starting from the end of 2004 at a mere 1% rate, had the most to climb! Only Japan refused to raise rates despite obvious global inflation caused by the Bank of Japan's carry trade. Back to the Washington Post article:

Washington Post story about the mortgage bubble: Staff writers David Cho and Neil Irwin and staff researchers Richard Drezen and Rena Kirsch contributed to this report.

Greenspan puzzled over one piece of data a Fed employee showed him in his final weeks [2006]. A trade publication reported that subprime mortgages had ballooned to 20 percent of all loans, triple the level of a few years earlier.

"I looked at the numbers . . . and said, 'Where did they get these numbers from?' " Greenspan recalled in a recent interview. He was skeptical that such loans had grown in a short period "to such gargantuan proportions."

Greenspan said he did not recall whether he mentioned the dramatic growth in subprime loans to his successor, Ben S. Bernanke.

Bernanke, a reserved Princeton University economist unaccustomed to the national spotlight, came in to the job wanting to reduce the role of the Fed chairman as an outsized personality the way Greenspan had been. Two weeks into the job, Bernanke testified before Congress that it was a "positive" that the nation's homeownership rate had reached nearly 70 percent, in part because of subprime loans.

Gads. Mr. Magoo sees better than this dumb duo. Proof of this lies in my cartoons! Here are some from news stories on my blog from the winter of 2006:

Here is my article with the above cartoon from back when Greenspan was scratching his balding head over all these mysterious things:

So, the government printing presses (all computerized "money", actually) injected $60 billion make believe bucks into the system this week in order to reinflate the stock and housing markets! What happens next? Wouldn't you like to know!

Note that I drew Greenspan pumping a bubble bigger and bigger. The machine he is using for his pump is the Federal Reserve Board. Note the quaint amount he pumped into the system causing greater inflation: a mere $60 billion! Today, the Fed pumps in trillions and then marvels at the inflation this causes!

Bernanke, the same month he took over this mess, was very loud about how all was well. "The economy is on track", he assured us. I quickly drew the above cartoon and snarled, 'Bridge out!' Note that in the WP article, Bernanke assured Congress that the 70% home ownership rate that included an army of illegal aliens, we very good for America. Now, I have this ugly habit of talking about verboten things. Throughout this housing mess, few people dare to shine a light on the dark topic of how many illegal aliens bought houses. The majority of people who vanished swiftly and left the keys behind are from this group. This is vital for the US to talk about this since it is one of the huge social forces at work and we can't fix this mess while lying about this matter.

Here is my cartoon from back then:

March, 2006, I attack Bernanke who says the economy is 'on track':

Bernanke told Congress what they wanted to hear: everything is coming up roses and the economy is "on track" and we are going to grow and grow and the Chinese can't sink our ship since they "only" hold around a quarter of a trillion plus in government bonds (!!!!!) so they can't deep-six us. I suppose this is part of the war plan to make the Chinese laugh to death?
And no one mentioned "Japan".

When Helicopter Bernanke stepped up to the plate to bunt the ball into the catcher's mitt, Bush got rid of Snow, the Treasury Secretary. He replaced hims with a pirate!

Here is an article I wrote during the month of April, 2006:

Bush keeps shoving out one Secretary of the Treasury after another whenever they give him bad news such as the one who warned him the war in Iraq would cost at least $250 billion. Now, Snow has to go because he is worried about the sea of red ink and the popping housing bubble.
*snip*
New York Times: "Names circulating in Republican circles as possibilities for the Treasury job include Stanley O'Neal, the chairman and chief executive of Merrill Lynch, and Henry M. Paulson Jr., the chief executive of Goldman Sachs."

Hahaha. Last time we did this we got the Great Depression. Isn't this going to be fun.

Again, I was right. I hit homers while the pros bunt into the backstop.

Back to the Washington Post story:

Then came the 2001 terrorist attacks, which brought down the twin towers, shut down the stock market for four days and plunged the economy into recession.

The government's efforts to counter the pain of that bust soon pumped air into the next bubble: housing. The Bush administration pushed two big tax cuts, and the Federal Reserve, led by Alan Greenspan, slashed interest rates to spur lending and spending.

Low rates kicked the housing market into high gear. Construction of new homes jumped 6 percent in 2002, and prices climbed. By that November, Greenspan noted the trend, telling a private meeting of Fed officials that "our extraordinary housing boom . . . financed by very large increases in mortgage debt, cannot continue indefinitely into the future," according to a transcript.

First of all, Greenspan did NOT begin lowering interest rates after 9/11. He began instantly the same week Bush walked into the White House via Supreme Court coup. Not only that, the tax cuts did NOT begin after 9/11, they began nearly a year earlier. The very first thing Bush and GOP Congress did was wildly cut taxes even as Greenspan opened the taps wide by granting massive rate cuts. Why did they do this?

Wall Street! As my earlier cartoon showed, Greenspan was more interested in pumping up stocks, not saving the American people. And I also have shown that as rates dropped starting in January, 2000, interest rates on mortgages did NOT fall very fast at all and indeed, the spread between that and the Fed rate grew greater and greater! So it wasn't cheap money that fed the housing bubble.

It was THE SPREAD BETWEEN RATES. All other avenues to make money easily were slammed shut by the 1% rates by the Fed BUT NOT HOUSING. Housing was HIGH! Comparatively speaking. So it was PROFITABLE. This little fact is of course, glossed over by everyone, it seems. Except for us online writers who never appear in the news.

Back to the Washington Post's bizarre history:

On that winter night in 2005, the company hosting the gala honored itself with an ice sculpture of its logo. Pinnacle Financial had grown from a single office to a national behemoth generating $6.5 billion in mortgages that year. The $100,000-plus party celebrated the booming division that made loans largely to Hispanic immigrants with little savings. The company even booked rooms for those who imbibed too much.

The reporters are obviously aware of the illegal alien angle to all this. By Xmas, 2005, people deep inside of the banking system knew that many of these loans especially in California and Florida were made to a group of people that were 'non-people' in the sense that they had no civil standing in any courts of law except for deportation or criminal courts. Lending half a million to someone who is illegally in a country is pure insanity for any bank! There is no way in hell, this should happen! The entire point of lending is, you know the person will honor their contract as best they can! But if they are illegal aliens, they cannot do this even if they wanted to do this.

This issue irritates Hispanic politicians so it is not talked about in Congress nor will the media so much as hint at it. Indeed, this article is unusual since it does allude to this important fact! But it isn't the main point in this story. No, the story rattles on in ways designed to lull us to sleep. The 'nobody had a clue' story is being retold over and over so the true criminal minds don't get hauled to court.

Back to the goofy WP article:

In the Washington area, the housing boom coincided with a surge in the immigrant population, especially Latinos in places such as Prince William County. For many of them, subprime and other unconventional loans were the only way to attain the American dream of owning a home. Pinnacle's customers included construction workers, house cleaners and World Bank employees, who "saw an opportunity to get into a house without putting much money on the table -- to save money to buy furniture to decorate the house," said Mariano Claudio, who in his late 20s was helping run Pinnacle's emerging-markets division, which was dedicated to immigrants.

Pinnacle ran ads on Spanish-language television and radio, set up booths at festivals and sponsored soccer matches at George Mason University.

Again: no mention of ILLEGAL immigrants. The suggestion is very careful. We are supposed to think, the buyers using the subprime loans had green cards or recently became citizens. The subprime 'no questions asked' were utilized by illegals because....NO QUESTIONS WERE ASKED. This is why the fees didn't matter. The structure of the loans were unimportant. If the illegal aliens could resell the home and make $100,000 in cold hard, cash...they left the country! They were there to 'flip' these houses and then run back home before Homeland Security nailed them at work!

To demonstrate how Bernanke operated back in the spring of 2006, here is another old article that is pertinent to the issues of today as we drown in inflationary red ink:

CNN---April 27, 2006: Bernanke: Energy a threat

But Fed chief says the economy is healthy and that central bank may pause to assess new reports.

By Paul R. La Monica, CNNMoney.com senior writer

Federal Reserve Chairman Ben Bernanke told Congress Thursday that record high oil prices remain a concern that could pose a risk to both economic growth and the inflation outlook.

"Increases in energy prices have pushed up overall consumer price inflation over the past year or so," Bernanke said. But he added that the inflation outlook is "reasonably favorable."

Federal Reserve chairman Ben Bernanke told Congress that energy prices were an inflationary concern but that the Fed may still soon pause in its interest rate-hiking campaign.
Special Reportfull coverage

Bernanke said the economy has rebounded "briskly" after Hurricane Katrina last year but warned the pace of growth would slow a bit as the year progresses.

"The economy has been performing well and the near-term prospects look good," the new central bank chief told the Joint Economic Committee of Congress.

The price of oil shot up that week to new records. This was thanks to the US turning down a UAE bid to buy ownership of our main ports. Here is my article about how the UAE made threats after Congress backed down on the deal to sell all our ports to them.

And the cartoon. Below is another cartoon from that week. Showing how well Miz Liberty recovered from Hurricane Katrina, note the patched umbrella, she flounders in a sea of raging red ink. Back in 2006, the US was pushing hard for wars with Iran! The price of oil reflected this. The need to minimize the dire effects of raging oil hikes was most important and Bernanke joined his bosses in pooh-poohing the whole threats of war against Iran=>higher oil prices=>inflation.

Below is a cartoon showing Congress spending like a drunk elephant. China is the one lending money back to us so we could misspend it on war threats against Iran.

The same month Bernanke and Greenspan were so utterly clueless [right!] about the effects of their suddenly hiking interest rates after leaving them at 1% for over a year, the frightful effects of the 1% regime was now blazingly obvious. The value of the penny, even debased as it was, now it cost more to mint pennies than they purchased. This meant, pennies were now flowing to China to be turned into copper and zinc.

Free trade went on and on and in 2006, hit an all time record of nearly a trillion dollars. This was pure insanity. All parties at the top should have noticed this hideous fact but they refused to talk about it or do anything about it.

And this is because the US was at war in Iraq and spending there was totally out of control just like our budget deficits and our trade deficits.

That spring, I finally had enough proof that the Japanese desired a very weak yen and thus, were tenaciously clinging to their sub-1% interest rates no matter what. I noted that the Nikkei goes up when the yen goes down.

If I were an international trader, I would be very rich playing that obvious game. It is still going on and there are armies of pirates and hell hounds who watch this dynamic like hawks. This is a serious point of inflation creating Funny Money@ that ravages the planet.

From spring, 2006: the Bretton Woods II Accords was now on fire due to inflation. Note the black river of oil in this cartoon.

This one irritates me. The DNC pretended to be horrified by wild tax cutting while spending on wars and talking about attacking Iran, causing global oil prices to shoot upwards. But alas, the DNC is as eager as the GOP to do the exact same things.

The New World Order Pyramid of Power and high oil prices! HAHAHA. Back then, this cartoon was spot on and today it is twice as spot on! Notice the prices: already, I pay $5.17 for diesel! And there it is in this cartoon which was predicting the future. The black cat arcing its back with the twin towers burning is from the official DARPA badge made after 9/11. We made fun of this badge back then and it was hastily withdrawn. But I will always remember it.

My pathetic news service in early May, 2006:

After the press got Wall Street excited about no more interest rate hikes, the Fed raises interest rates yet again. This is because, as usual, wars and oil together create tremendous inflation and it has barely begun. This is why the price of gold is shooting up in value.
*snip*
Investors confused? Hahaha. Like horses when a barn burns down, they can smell the smoke and see the flames but safety is inside the barn. This is why one has to blind the horses by throwing towels over their eyes in order to lead them away. Often, they escape and run back to the barn.

And finally, some more cartoons from that rather busy spring blogging here:

The graph below is an artistic rendition explaining how the easy lending regime unleashed by the Federal Reserve, Fannie Mae, Freddie Mac and the US government drove the US public deep into debt:

Assets held free and clear by homeowners plummeted. True, 70% of the residents both legal and illegal, now 'owned' homes. But they didn't! The BANKS and LENDERS owned more and more of America, not the supposed home owners. Recently, there was this scandal of all the US government representatives who ran off to Countrywide for easy term loans. They all decided to 'cash in' on their rising home values. To use the Home ATM machine. So many of them went very deep into debt. This is why they don't really mind inflation. They get to pay off all this with debased currency. THEY ARE NOT SAVERS. They are DEAD BEATS.

And this graph shows clearly how tax cuts create inflation and fuels debt accumulation. Both are bad. We are not a nation of savers, we are a nation of grifters and drifters. And we don't want to clean up this mess. We want to be Las Vegas! And we are, alas. And the Cat Houses are Congress. And the juggling/card sharp casino act is the President and the vanishing lady with the magician is our courts and the Federal Reserve.

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