Bad News Bears Watching By IMF Fools

August 14, 2008

Elaine Meinel Supkis

Once again, it pays to go back in time to last year on this day. The banking crisis had begun. Everyone was hoping it would only affect the world's #1 consumer society, the buying engine that pulled all the freight cars of the world economy. We see clearly that the top people in charge of global trade and banking were in total denial or told outright lies. These liars are still at it and were never punished for bald-faced lies designed to deceive people.

August 14, 2007: Don't Panic Says EU Bank's Hitchhiker's Guide To The Markets

After 2 market sessions of feeble effort, the markets tanked again today and are now struggling upwards thanks to the $400 billion Santa Trichet gift grab bag. The looney mega-deal hucksters are back with a $25 billion buyout that produces absolutely nothing useful or exportable at all. And world markets lost $3 trillion this month so the $400 billion is just peanuts to this elephantine mess created by our ruling class criminals at the very top of the world's economic pyramid.

From Bloomberg:

European Central Bank President Jean- Claude Trichet called on investors to keep their composure amid a period of ``market nervousness,'' after central banks pumped billions of dollars of emergency funds into the banking system.
The ECB ``will continue to monitor the situation whilst euro-area financial markets in general are going back to normal functioning,'' Trichet said in a statement today. Keeping calm ``will help to consolidate a smooth return to a normal assessment of risks in liquid markets.''

Is Trichet a descendant of the purser on the Titanic? 'Do not panic. First class, get in the lifeboats. Don't worry about your luggage or jewels. All is safe, this is just a precaution. Orchestra, play louder. You have to drown out the screams coming from the flooded steerage quarters.' And pray, Trichet, what is 'normal'? Eh? This obvious global bubble created by the US and Japan? The world's #1 and #2 economies? Do you realize both are trying to kill their currencies and this is why the world Titanic was deliberately steered at full speed, into this field of icebergs?

Weber chimes in:

Regardless of ``tensions in some market segments, European and German economic data continue to be positive,'' Weber added. ``They point to a continuation of a robust and broad upswing.''

As the prow of the Titanic rises majestically in the starry night skies, as they fire off flares but tell everyone, this is the 4th of July, yes, we are swinging upwards with a vengence. One thing that infuriates me is how all these chaps love to look at the up data but won't look at the data that always predicts recessions or crashes. If they were drivers, they would ignore the warning barrels and signs while admiring billboards.

So, a year ago everyone with even half a brain and possession of top positions in major central banks in the world knew the US was falling off an economic cliff. But everyone thought THEY were secure! The US would not fall on them! Everything was going to be just fine. A bunch of US home owners would default on about $2 trillion in loans but who cares? There was no idea that all of the top financial powerhouses were sitting on this powder keg of too much easy lending coupled with no ability to possibly pay back these loans. Only a few lonely voices were yelling about how bad this would be in the long run.

By August 14, 2007. it was plainly obvious that the tremors of late February were really precursors of the bigger earthquake that hit on 7/17/7 and the second week of August was certain to be a confirmation that something was terribly, terribly wrong.

Also from August 14, 2007: Japan Withdraws All The Funds They Put Into Emergency Pool!

In a throw-away sentence near the end of a BBC story is the astonishing news that the Bank of Japan suddenly and without much explanation, withdrew every yen of the rescue money they threw in this last weekend when the West's banking systems crashed badly. This is a riddle! Indeed, in Japan, they are boasting there is no banking crisis...for them. The big financial houses in America continue to devolve and their Midas touch is turning to lead swiftly. Time to look again at the Great Depression.

From the BBC:

Investor confidence in Europe was not helped by Swiss bank UBS warning that the market turmoil is likely to hit its earnings in the July to September period.
"UBS will probably see a very weak trading result in the investment bank," the bank said, and its shares fall 3%.

In Japan the mood was more upbeat, helped by the central bank withdrawing all of the emergency cash it had put into the financial markets.

JP Morgan economist Masamichi Adachi said the central bank's move would be taken by markets "as a message that there is no need to panic, that the short-term money market in Japan is stable".

However, it did not prevent shares in banks such as Mitsubishi Financial Group from continuing to fall.

What does Miz Japan have up her very big sleeves? The news that Japan has pulled these funds should be headlines everywhere but it isn't. Indeed, this is the only non-Japanese source of this news. And with little comment, too. This recent episode in 'The Constant Car Crashes of Fiats Run By Central Banks' isn't about French cars, it is about how inherently unstable the fiat currency FOREX system is and how it causes huge balloons and even bigger crashes over and over again with increasing fury.

JP Morgan has been struggling like crazy to dump as much of their lousy lending into the laps of Fannie Mae and Freddie Mac. I notice in the media, everyone is trying to blame FM and FM for their woes. Yet the markets shot upwards today on the premise that the government is demanding FM and FM boost the limits of the loans they insure and hold for the big bankers. This takes even more loans off of the banking industry's books. This, in turn, allows them to begin making goofy, unsustainable loans again. All is fixed!

Or rather, rigged. This fix merely means the quasi-government group that held more than 60% of US mortgages will end up holding 75% or even more US mortgages. And Greenspan and Poole both are demanding the US government nationalize 75%+ of all US mortgages and then re-privatize this...back to the bankers who made the damn loans in the first place....but taking a 20% or greater discount! HAHAHA. So the US taxpayers take a gigantic group haircut to the point, I would suggest we call this 'scalping'. And the bankers move their losses to the US government and then they can regain the working loans and merrily collect the interest due which was from when they lent the money in the first place. Whew. What a nifty scheme? Why doesn't the entire planet play this game all the time?

IMF Clarifies How It Will Monitor Economic Policies

By Jean-Francois Dauphin, IMF Policy Development and Review Department

The International Monetary Fund has published new procedures on how it will monitor member countries' economic policies, clarifying in particular how it will discuss with countries exchange rate issues and their impact on the global economy.

The new procedures are designed to facilitate the implementation of a landmark decision adopted by the Executive Board last year. This decision strengthened the IMF's surveillance of the economic policies of its member countries by placing external stability at the heart of IMF surveillance, and promoting greater focus and candor in its operations.

These additional steps reinforce the effectiveness of surveillance at a time of increasing strains in the global economy, with high commodity prices, slowing world growth and continuing global imbalances. The IMF has made good progress in implementing the 2007 decision. In particular, discussions between mission teams and member governments are now better focused on how members' economic policies impact the stability of their economies and of the economies of their partners, as mandated under Article IV of the IMF's Articles of Agreement. But progress has at times been hampered by technical difficulties in assessing exchange rate equilibria, and the frankness called for in some discussions of exchange rates has proved a sensitive matter.

The IMF has now issued a paper that provides additional guidance to help overcome these difficulties. The new procedures and the technical clarifications will help ensure that countries in similar circumstances are treated in a similar fashion, and will also improve the dialogue with member countries and the Executive Board.

"I believe we all agree that exchange rates are at the heart of the Fund's mandate, and that in this connection the Fund must deliver good analysis and clear assessments, with the ultimate aim of helping to focus the minds of policymakers and encouraging appropriate policy responses," says Mark Allen, Director of the IMF's Policy Development and Review Department.

HAHAHA. The IMF is worried about 'imbalances'? Um, no. They haven't shown even the slightest interest in stopping grossly unbalanced US trade and spending! Indeed, this is the glaring hole in the entire IMF universe. The entire global trade systems are now so utterly warped out of kilter, the whole edifice is now collapsing. And the IMF twiddles its fingers or points to China or Brazil or Russia. 'Hey, you better shape up or else!' yells the IMF bankers.

Here is the IMF stability chart that shows how they will reach this mystical goal of stability:

The IMF has shown great talent at destabilizing second and third world nations. Forcing them to sell of assets, commodity sources, government systems, ports, roads, water systems, public parks, government buildings, military bases, whatever. What the populace is left with is....they get to hang onto all the debts! Isn't that wonderful?

The top box is labeled 'stable system of exchange rates.' HAHAHA. First: there is this gigantic market for trading currencies and placing bets on interest rate futures. I talked about this thing in the morning. It has a name: The Dreaded Derivatives Beast! It grows greater and greater and it NEEDS instability for in this, we find tremendous wealth. If there is stability, there is no way for people to bet on things going up or going down.

Soros can't get rich in a stable exchange system! Japan can't have a carry trade in a stable, balanced system! Countries with huge trade surpluses couldn't have the world's weakest currencies in a stable, honest, balanced system, eh? Actually, this diagram is meaningless. It doesn't give any names or track any real systems. The IMF's dishonesty in this case, is criminal. They know perfectly well and China has even taken some pains to point out that the IMF should be lecturing the US. And punishing the American people for overspending everything at every level and thus, destabilizing global currency values. And Japan's super-low interest rates have been kept there despite obvious and painful inflation in Japan. And the lying bastards in the US system are running rates hundreds of basis points below the rate of inflation. The IMF is supposed to stop this sort of shenanigans.

Wal-Mart's net climbs 17%; raises goal for 2008
CEO Lee Scott warns of tough global economy and pressure on customers

(MarketWatch) -- Retail giant Wal-Mart Stores Inc. on Thursday said its second-quarter profit rose a better than expected 17%, as bargain-hunting shoppers, hurt by the rising cost of food and gasoline, sought out low prices.

The company raised its full-year forecast but said that its customers worldwide are feeling economic pressure and suppliers are pressing for price increases. It also said that investments to update systems for merchandising, finance and human resources will continue to meet headwinds for the rest of the year and for several years to come.

Net income at the world's biggest retailer rose to $3.45 billion, or 87 cents a share, from $2.95 billion or 72 cents a share a year earlier, the Bentonville, Ark.-based retailer reported. Revenue rose 10.4% to $102.7 billion.

As the US economy struggles with the beginnings of hyperinflation, the US public runs off to that wonderful outlet for Chinese goods, Walmart. This, in turn, makes our awful trade deficit worse. The weak dollar has caused inflation here for several reasons: oil is more than double what it cost last year. Transportation costs from China to the US has risen. The people are now very short on money for goodies so they shop at the cheapest places and these places sell things made outside the US where labor is still cheaper than transportation costs versus labor costs in the US. So the only way the US can kill the trade deficit is to have a weak dollar but a weak dollar makes oil expensive and causes inflation at home. This is a TRAP.

The only way out is to strengthen the dollar but this causes an even bigger trade deficit at home since our export products diminish, our importation of cheap stuff from China rises and if we kill inflation here via killing wages of workers, they shop at Walmart and kill even more US jobs as Walmart only sells stuff from China. For the most part. This is an obvious vicious cycle we can't easily escape. Except by imposing large enough tariffs and taxation of foreign corporations operating in or through our country. Eh? How about it?

The IMF is wedded to Free Trade like Frankenstein's bride. No matter how badly battered the US economy becomes, this is one bride who begs to be beaten up by her trade partners, make no mistake. Let's go to trade rival, Japan, to see how that nation is faring during this brief, one year experiment with a weak US dollar:

Banks' Bad-Loan Cleanup Costs Jumped 70% For April-June Qtr

TOKYO (Nikkei)--Major and regional banks saw costs associated with disposal of nonperforming loans surge 70% on the year to roughly 400 billion yen for the April-June quarter, providing the latest indication that the economic slowdown is hurting businesses in a broad range of sectors.
********************************************
Firms Squeezed By Rising Materials Costs, Lagging Sales Prices

TOKYO (Nikkei)--A broad measure of Japanese manufacturers' profitability has plunged to its lowest level as automakers, electronics companies and other members of downstream industries get slammed between soaring raw materials costs and retail prices that are not making up the difference.
********************************************
Total Market Value Of Jasdaq-Listed Firms Dips Below Y10tln

TOKYO (Nikkei)--The aggregate market capitalization of companies listed on the Jasdaq Securities Exchange start-up market sank below 10 trillion yen on Thursday for the first time in four and a half years.
********************************************
Investment Trust Assets Fall 6.6% In A Year On Subprime Mess

TOKYO (Nikkei)--Publicly offered stock investment trust assets had a net value of 60.95 trillion yen as of the end of July, a drop of 6.6% from a year earlier, according to data released Wednesday by the Investment Trusts Association, Japan.

Contraction coupled with inflation in Japan. Japan has given up trying to pretend there is no inflation. Seeing the US deny reality, the central bank there has chosen to ignore inflation, too. The IMF should punish both Japan and the US for destabilizing global monetary systems with this systematic refusal to face up to and deal with inflation both are creating. But no, this is OK with the IMF. For the US, Japan and Europe run the IMF for their own ends. It is a very unfair, unreasonable and outright fraudulent organization.

But it isn't just the IMF. Young people go to college, get degrees and then are hired by media owners to talk really stupid. Here is a fine example of really infantile analysis by a cute but utterly clueless young lady, Kathy Lien:

Kathy Lien: Five Forces Driving the Euro Down

In the two weeks that I have been away, there have been dramatic moves in the currency market. Not only did the US dollar carve out a bottom, but the greenback’s recovery has been impressive. In less 1 month, the EUR/USD has plunged 1000 pips, which is a drop of more than 6 percent. The psychologically level of 1.50 was easily broken and now, the currency pair is eyeing 1.45.

The Euro continues to get killed with the currency falling to a fresh 5 month low against the US dollar today. Although the primary catalyst has been dollar strength, growing problems in the Eurozone has intensified the selling pressure. Good news is coming out of the US more often than in the past while bad news continues to pour out of the Eurozone. Therefore it is no surprise that the strong Euro is finally catching up to the region’s economy. The Eurozone could not have remained immune to the US slowdown for much longer.

Five forces are driving the EUR/USD lower, and with no respite in sight for any of these trends, the currency pair should be headed for 1.45. These 5 factors are oil prices, eurozone and US economic data, market sentiment and the chances of a rate hike by the Federal Reserve before the end of the year.

Frankly, my dear girl, the economic news in America STINKS. Worse than Europe! It utterly stinks! To high heaven! Our trade and budget deficits: through the roof! Our industry: dying. Our military facing defeat at every level. What is going right? NOTHING!!!!!

Europe has made loud noises about somehow dropping the value of the euro. They realized they mad a mistake. But they didn't want it to drop too far when buying ENERGY. Now that the US and London have both cracked down on the army of leverage commodity traders, this is causing world oil futures to drop. This, in turn, allows Europe to drop the value of the euro and not get hammered by high energy prices for oil and gas from Russia and OPEC. This also eases inflation. The euro isn't being 'killed'. It is committing hari kari. Self-disembowelment. The US dollar isn't strong, it is being propped up like a drunk is lifted up and moved towards the door by the bouncers.

I see no 'good news' in America. If this poor girl thinks the improving trade figures for last month are going to continue, she is too naive and then some. The entire point for weakening the euro is so Europe can resume flooding the US with exports! DUH. Otherwise, why on earth would they bother? After all, everything they buy will be cheaper if the euro is stronger rather than weaker! But they see rising unemployment and unlike the US or UK, they don't want to become the chattel of foreign investors and industrialists.

Bespoke Investment Group: Changes in P/E Ratios During the Current Bear Market

Since the S&P 500 peaked on October 9th, the index is down 17.85%. As shown, Financials are down the most at 43%, followed by Telecom (-27.5%), and Consumer Discretionary (-20.15%). The other seven sectors are actually outperforming the index as a whole, and the Consumer Staples sector is actually up 1.64%.

During bear markets, P/E ratios typically contract as prices fall faster than earnings. During this bear market, the S&P's P/E ratio has risen from 19.62 to 25.67. This P/E expansion can be attributed to the 3 worst performing sectors. Financial and Telecom P/Es have both gone negative, and Consumer Discretionary is pretty much negative at 1,402.

So, as Kathy tosses her locks of hair and chirps about how wonderful it is that the dollar is stronger and stronger thanks to the good news from the US, this contrary article from the Bespoke Investment people paints one ugly, nasty picture, doesn't it? Financials down nearly 50%???? WOW. All systems but one, in negative territory? The only thing growing is 'consumer staples'. Which is FOOD!!!! And I go shopping, Kathy dear, and guess what? Prices are NOT coming down. They are still rising. And I am furious about this inflation. How dare she belittle this?

And the US is a major global food producer. We really don't need to import much of anything. We import food only because the dollar is stronger then many currencies despite huge trade imbalances. And this still doesn't protect us from inflation. So the 1.64% growth in spending on FOOD is NOT GOOD NEWS. And certainly doesn't even begin to offset all the losses.

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Comments

[calvino]

Wrong, madam. The oil is going down because we are three and a half months from elections. Senator Obama promised to tax the oil majors and they are willing to take a cut on their margins for three months to have another four years at the pig trough with Johnny Boy McCain, who missed three votes to continue alternative energy credits. That's the same as a no, considering he was in his Senate Office on one of the votes. Peculiar, considering that his state could power neighboring California by investing in thermal solar plants. It's not so bad Johnny, it's the Spanish utilities who want to bankroll the plant, so no worries about Americans getting anything out of this. Additionally, the Arabs are not stupid, they understand that at four dollars, we will develop fuel efficient and alt energy transport. So they will take a loss for three months to get four more years. You don't remember the energy prices during the 06 election season, but I do. Gas went down a dollar, from Spring to Fall, and right back by Spring 07. But none of this is really important, considering that the Chinese have underage gymnasts in the sports circus. Now that really gets my goat. I stray from the important stories sometimes.

Kathy Lien is a mouthpiece for people who need ex posto facto explanations after they move their money. I point that out to her sometimes, but she is too stupid to realize that she is stupid. She and the rest of the bimbo parade on Bimbo Financial Television have not traded a share in their own account in their entire lives.

btw, Cleveland Cliffs is getting circled by Harbinger Capital, on the behalf of a very large steel concern, from Russia. See, more money for hedge funds, and less low value added labor for us in the USA. Our steel workers will be retrained to program object oriented code for the new service economy.

[Elaine Meinel Supkis]

She is a 'goddess' sent out by her owners to lure in gnomes.

All of the TV lovelies are that.

Of course, the big oil giants have cleaned out our wallets and are now going to give us a break in the hopes that we will vote for oil baron tools. Bush had this several times! This is why he won a second election. Then WHAM, the oil giants hammer us.

I said way back in 2000, 'Beware of putting not just one but two oil businessmen in the White House!'

[Masthead]

Wasn't the IMF headed up recently by the notorious warmonger Paul Wolfowitz?

Who was booted out for giving his girl friend a job but not for his criminal behavior?

[Paul S]

WalMart: the biggest group of corporate welfare kings ever in retail. They would have a tough time competing without their tax breaks and other subsidies. And the Waltons aren't some of the wealthiest people in the world because they like price wars. Amazing. Some of the folks most negatively impacted by WalMart shop there. I guess some sheeple will never wake up.

[Reimund from Berlin]

You wrote: But everyone thought THEY were secure! The US would not fall on them! Everything was going to be just fine.

In Germany some experts still think exactly that everything will go to be just fine.

From Google News: Experten: Wirtschaftängste sind unbegründet
sueddeutsche.de - vor 8 Stunden gefunden

Translation: Experts: Economic fears are unfounded
sueddeutsche.de - 8 hours ago

We all live in a Bloomberg-Wonderland.

(Sung to the melody by the Beatles' "We All Live in A Yellow Submarine")

[Elaine Meinel Supkis]

Yes, Germany is certain the euro will weaken since Europe's central bank is deliberately doing this. Buying dollars and selling euros. So they figure the unbalanced trade with the US will resume.

[Phil]

Tax payer bailouts are coming to an end, making the FED almost irrelevant.

Foreign central bankers have taken control, which explains the precipitous drops in oil and gold, and bounce in the happy dollar.

Zi juus central bankers are about to pull the plug on our broken banks, hedge funds, Freddies, Fannies, and others, and nationalize the works: Think Command Economy.

A Resolution Trust Fund is aborning to mitigate the financial collapse between now and the elections.

[whine and cheese]

The banks financing the hedge funds were in distress, and so the funds had to close their winning trades and move the money elsewhere.

If you think this is the end of the copper/oil/gold market, you're mistaken.

[Elaine Meinel Supkis]

It is laughably easy to kill commodity markets as we just saw this summer. History is clear that they can be killed off. Even if it is done with rather great brutality or even bloody methods such as invasions, just for example.

[Buffalo Ken]

If I was a country, I would want a STRONG POWERFUL currency. One that can purchase MUCH.

In my speculative opinion, the US will not get this. Continuing on speculative, I think the US is about to be PUNISHED severely. I don't know about you, but I sense FIRE.

[Buffalo Ken]

I can feel the fire about to start - can you. I want it to burn. Do you? Burning is better than staring a gun in the face. Don't you think?

I think a very simple, simple rule of the wilderness is "don't mess with bears". Anyone who is connected with nature understands and knows this.

As best I can tell, Russia responded to an offensive action and Russia responded with force. Would you expect anything else from the Proud Strong Incredible and Amazing "Russian Bear". I'm impressed.

The US on the other hand is led by a bunch of dum ass criminals who are about to have thier asses handed off on a platter. Don't you think - speculatively of course.

[Buffalo Ken]

Hey today is my Birthday. 8/16/65.

I am going to do whatever the hell I want to!

Peace,
Ken

[Buffalo Ken]

OK - back to "my shell".

My shell it smells so nice.
My shell is oh so well - ho, ho, ho.
My shell is NOT at the north pole.
Don't you know?

Da - Santa Claus is not friendly. Santa is a meager and weak attempt at replacing the solstice event. Solstice is what it is all about at that time of the year. Honestly - this is obvious, isn't it?

[Buffalo Ken]

And all this "materialism" that Santa has come to mean. Who wants this?

Factories in China - I suppose the used to but I'm not sure anymore - they need to start improving on their quality. The concepts are incredible, but the quality is lacking.

Kids - Kids can have fun in a pile of dirt. Kids do not need too much stimuli. Better, they figure it out without too much prodding - if you know what I mean.

WalMart - this should be obvious.

The oil addicts - duh and double duh if you think this calls for any debate.

So best I can tell most of us don't want it to be the way it is. Simple - lets change it for the better. Really it can be done most rapidly. I said a long time ago (relatively speaking) on this blog that "speed is tricky".

Peace and last post for a "long" time - I really appreciate everyone's insights here at this internet place.

Ken

[Elaine Meinel Supkis]

Happy birthday, big buffalo dude. :)

[Client Nine]

Is that bottle of Darvocet still sitting near your mousepad? Go ahead and take yourself a couple. Then it will all be alright, Ken. I don't like to see you suffering so. Not on your birthday.

[Elaine Meinel Supkis]

Maybe he can share it online, sort of.

Like writing: "One sip...urp. Great stuff'.