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Richard

Elaine thanks for picking up on and publishing the Robert Gottliebsen Business Speculator article.

The National Australia Bank's decision to write off 90 per cent of its US conduit loans was a watershed event that means we have passed through Peak Currency: all currencies are now in a death spiral lower with the US Dollar.

The Australian Dollar, FXA, fell; it will not be achieving parity; and it is no longer a yen carry trade interest rate differentially favored investment destination.

The Canadian Dollar, FXC, is in a bearish pattern and it fell like a rock today as Bloomberg's Jamie McGee reports that Canada's Dollar Poised for Weekly Decline on Oil, Sales Data.

We are going to be seeing disinvestment from traditional long the Aussie and short the Yen based on risk aversion to debt; and we are seeing disinvestment from long the Loonie and short the Yen due to risk aversion to stagflation.

Thus the Yen Carry Trade, EUR/JPY, FXE:FXY, will be unwinding from its chart value of 1.702.

The world currencies have tanked and are now sinking; gold has risen supreme over stocks, bonds and all currencies.

Gold, GLD, is rising; for the common investor and all investors for that matter, gold is the now sole means of maintaining wealth; even if it, for a time falls lower now that the gold currencies are failing.

Speculators may be borrowing from the Bank of Japan to go long gold in the futures market, or invest in gold ETFs such as GLD and IAU.

Those with access to the 0.5% Bank of Japan lending window will now be going short the markets to garner wealth; which will only increase the Deflationary Hurricanes that Mike Mish Sheldon references.

My investment recommendation remains unchanged: I recommend that one dollar cost average a buy in gold within the next ten days with a diversified investment in gold at BullionVault.com, GoldMoney, and in a gold ETF, in a trust account, in Switzerland.

Curious

Anybody notice the "cheap central bank window" in japan is sort of being implemented by Bernanke here?

The big banks get free money while the mass get huge inflation and high interest rates on various form of loans. Regular folks can't get loan from regular channel anymore.

It could very well be that we are going to enter the two tier loan system for retail lending soon.

DrKrbyLuv

"INFLATION IS NOT PSYCHOLOGICAL. Otherwise, Dr. Freud would be on the dollar bill, not a US President."

LOL - great line!

Thanks for the suggestion Richard (above post) and I agree. ETFs scare me unless they are short term investments. My concern is that ETFs are someone else's liability while allocated gold would be an asset investment. Any clarification would be appreciated.

Anyone have any thoughts on e-gold or other gold based transaction "money" (as opposed to paper currency)?

Elaine Meinel Supkis

Remember:gold based currency systems is DEFLATIONARY and cause DEPRESSIONS.

The concept of a 'safe harbor' for savings in an economic hurricane/tsunami is a problem. Namely, history is very clear that when an empire goes broke, the 'pax' breaks.

When this happens, there is no safe haven. We are still at the dawn of this mess. At every step our nation takes the wrong road because we want to protect false wealth gained via debt accumulation. To destroy the debts all savings in any form will be hammered.

A sound government is one of the few things that preserve wealth best. This is why I keep saying, only when governments use gold as a restrictor, does it work as a system. You aren't saving anything if your gold is purchased with many dollars only to see this buy mostly food that used to be much 'cheaper'! Just for example.

My parents, when traveling in post-WWII poor countries found that the things people wanted to trade food, etc the most for was short wave radios, guns and medicine. They accumulated lovely jewels and fancy jewelry this way. So a valuable jewel was worth some manufactured good that was needed for life and limb.

Of course, this sort of barter collapsed in WWII itself where people would trade sex favors, cameras, artwork for cigarettes, etc. Cigarettes, not gold, was the 'currency' in 1945. Any rationed good was 'currency' like gasoline, even here in the US. Chocolate candy was 'money'.

Elaine Meinel Supkis

After WWII, the US had most of the gold on earth. But also had a 90% top tax rate. Since the government controlled the gold, the price was stable. To control inflation, the government sent money overseas to rebuilt the entire planet's financial and manufacturing systems. This prevented post-WWII inflation.

Both the US and the world saw tremendous investment in infrastructure and manufacturing, probably the fastest manufacturing growth in history. What we have today is the fastest growth in Asia coupled with the shrinkage of US growth into negative territory.

So unlike post-WWII, we are seeing a shift in manufacturing, not real growth.

Elaine Meinel Supkis

Oh, and yes, the US is now the Japanese carry trade. With the dual lending system.

don

As for Mr. Mozilo's Country Wide exposure:
Conde Nast Porttfolio (Aug. Edition) has an
excellent article on him. His VIP list of
loans extends to Christoper Dodd (D), Donna Shalala, Richard Holdbrooke, Paul Begala,
William Esrey of Sprint, just to name a few..
Robert Feinberg was the whistle-blower....

Elaine Meinel Supkis

Heh. This is why I have no debts. It means I can be free to talk about stuff.

Paul S

When I was getting student loans, I knew they were a scam back then. It's really despicable what the schools and the lenders are doing to students. What a great way to start out in life, saddled with debt. The country will have a nice future. With Student loans, everyone gets guarantees--except the student. The lender is guaranteed to be paid back even if the student doesn't pay him and the lender sends your loan money to the SCHOOL, not you. Why is that? Because then the school can keep your money for a week collecting interest AND, now here's the kicker, the school gets to charge you a loan processing fee!! Well why the heck not? Schools get to gouge you with above inflation rate tuition hikes anyway. In most states, the BIGGEST pork barrel is the University system. Too many politicians in their pocket. It just kills me when I hear the local education elite saying things like,"We can't lose Joe/Jane to a competing University/College...blah blah blah. Of course the solution to this "problem" is ALWAYS to give everybody in the in-State University system a big pay raise. Every time I hear this i think to myself, OK, Mr. Athletic director or Director of Research or whatever, if YOU want to go to San Diego State or UCLA or Michigan...May I drive you to the airport so you can leave. I will wave as your plane takes off, I promise. And the pols always buckle. BTW I love the way states will set up maximum pay ceilings--which end up not meaning anything because everybody merely applies for an "exemption" from the rule. The WHOLE system stinks.

Anthony

This Paulson guy is a total hack!
WTF?

http://www.nytimes.com/2008/07/27/business/economy/27hank.html?pagewanted=4&_r=1

Last fall, he declared that “the ongoing housing correction is not ending as quickly as it might have appeared late last year.” He repeatedly said that the problem wasn’t bad credit but market fears, so he encouraged banks to raise more capital and recommended other forms of financial engineering that didn’t gain traction.

Most notably, he advocated bundling bad loans into off-balance-sheet entities that theoretically would allow banks to improve their financial standing. The plan was a total flop and yet another signal that Mr. Paulson underestimated the severity of the problem.

Another initiative from Mr. Paulson was a program called the Hope Now Alliance, which the administration says has helped hundreds of thousands of homeowners stay in their homes through voluntary renegotiations with banks of mortgage payments.

milo

did you get your burley tobbaco crop in this year..they might grow in a few locations of sunsplashed areas on your yard and the seeds ae available over the internet by google searching tobacco seeds if you have er trust a pay pal account......funny tho, how trust could ..............................luck..........

rockpaperscizzors

AAARRG! student loans & don't forget the Parent Plus Loans. I had a federal subsidized PPL. It was a shark loan. I'd pay the monthly installment and also extra $$$ on principle only. Ha, they'd extract a interest payment outta the principle only payment. A shark loan company within our govt. So, I got a 0% interest credit card and put the loan on it and paid it off.
Universities are not only indenturing students but also hijacking the parents retirement and savings and mounting loan debt. How many parents have taken out 2nd mortgages and HELOCS for their kids college education?

It's time we start yelling about the excessive costs for a lousy undergrad degree.
Majority of these "universities" operate like puppy mills. Churning out substandard educations, indentured grads looking for nonexistent jobs. Grads forced to take job internships with zero pay. And none of them can afford an apartment without roommates.

The University system is parasitical and a major factor of student/parent debt, destruction of parent savings/retirement created by bloated, overpriced, and overvalued Ivory tower douchebags.

rockpaperscizzors

2 more banks go down in flames as the FDIC steps in another takeover.

FDIC takes over all 28 branches of 1st National Bank of Nevada and First Heritage Bank


CARSON CITY, Nev. (AP) -- The 28 branches of 1st National Bank of Nevada and First Heritage Bank, operating in Nevada, Arizona and California, were closed Friday by federal regulators.
The banks, owned by Scottsdale, Ariz.-based First National Bank Holding Co., were scheduled to reopen on Monday as Mutual of Omaha Bank branches, the Federal Deposit Insurance Corp. said.

Elaine Meinel Supkis

A bank in Arizona went belly up today, too. Fast and furious.

Rockpaperscizzors, yes, it is all a big scam to steal from everyone. At all levels, we see rising debts loaded onto our children, the parents, everyone. When I lived in NYC, I had to pay for private schools for my kids. I sat down and did the numbers and realized my kids would cost me over $45,000 each by graduation in High School if I stayed in the City so I moved fast even though it meant less money. So what?

That was years ago, It is much worse today!

Paul S

Well said, rockpaperscizzors. The time is LONG overdue for the University system to go at least 80% free market. Cut them off from mama's purse strings (mama being the taxpayer of course). If they want to crank the tuition up by 11%/year and enrollments decline, so be it. A dose of reality should wipe the arrogant smirks off their tenured faces. Spare me the tripe about all the research that will suffer. IMHO, Universities should not be corporate research centers. Let the corporations hire their own researchers. If it's so valuable, they will.

anthony

The Scam continues


http://globaleconomicanalysis.blogspot.com/2008/07/fdic-sponsors-subprime-mortgage-mess.html


FDIC Sponsors Subprime Mortgage Mess

Federal officials heap much of the blame for the subprime mortgage mess on lenders, claiming they recklessly made too many high-cost home loans to borrowers who couldn't afford them. It turns out that the U.S. government itself was one of the lenders giving out high-interest, subprime mortgages, some of them predatory, according to government documents filed in federal court.

The unusual situation, which is still bedeviling bank regulators, stems from the 2001 seizure by federal officials of Superior Bank FSB, then a national subprime lender based in Hinsdale, Ill. Rather than immediately shuttering or selling Superior, as it normally does with failed banks, the Federal Deposit Insurance Corp. continued to run the bank's subprime-mortgage business for months as it looked for a buyer. With FDIC people supervising day-to-day operations, Superior funded more than 6,700 new subprime loans worth more than $550 million, according to federal mortgage data.

The FDIC then sold a big chunk of the loans to another bank. The Superior situation could be costly for the FDIC. Texas-based Beal Bank SSB, which bought a portfolio of Superior loans, about half of them originated under the FDIC, is suing the agency in U.S. District Court in Washington. The suit claims many of the loans were made improperly and are plagued with problems.

In a recent court filing, the FDIC estimated that about 1,500 of the 5,315 loans it sold to Beal either have defaulted or are nonperforming. The FDIC already has bought back another 247 of the mortgages, most of them for violations of federal anti-predatory-lending laws intended to protect borrowers from unreasonably high fees or deceptive practices. Beal Bank has said in court filings that 73 of the repurchased loans were originated while the FDIC was running Superior.

Royal Dutch Paper

Here's the choice, useless humans: your children's educations or your masters' free lunch. You know which one they have been choosing.(quote)

http://www.conspiracypenpal.com/rants/econ.htm

Elaine Meinel Supkis

Thanks for the story, Anthony.

Of course, the government itself is guilty! Look at how it has run everything off the cliff! Can we expect any part of it to function properly?

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