Collapse Will Get Worse, Not Better

August 25, 2008

Elaine Meinel Supkis

As the unhappy central bankers and their wealthy investment banker buddies all wipe the crumbs off of their faces a the Teddy Bear Picnic, they have to deal with the crumbling banking system of the G7 nations. Things are getting worser and worser. We just walked in one big circle for a year, trying to escape from the Cave of Death and ended up in the same cave were a grizzly bear, the Derivatives Beast, is waking up from its hibernation. All the solutions these bankers have cooked up are all attempts at regaining the previous status quo. With some small fixes that would prevent too much easy funny money creation except they want to create more funny money. This is pure insanity.

To understand how we made zero progress in fixing the banking system, let's go back exactly one year to see the news back then, at my own blog:

Federal Reserve Sugar Daddy To Rich

What's this? What the hell is this? Remember the little children's fairy story our financial wizards read just the other day, the story of the good little bankers who went to the Gingerbread house and pretended they weren't really hungry at all, they were going to sample the sweets and set an example so other good little borrowers could see, the Gingerbread house was not a trap! Each nibbled $500 million and then smugly told us, they really didn't need one red cent. Not even one brass farthing. Hahahaha.

Right. Now more ugly details are coming out. We all must play Sherlock Holmes and figure out the riddle of this hokus-pokus banking scheme. Um, according to this letter a certain bank, the Bank of America, is in very big trouble. Oops. And it has to rescue a certain entity which shall not be named...Vortehedge Fund LLC! This dying doggie has to be rescued. It ate too many bad tranches and got very sick. The act of basically deciding it is OK to break the law since the Federal Reserve is a retirement home for addled wizards, sort of the final resting place called Hogheaven. And so we see the Bank of America 'borrowing' from 'itself' a tiny sum of money. Heh.

It was truly bizarre last year. All the biggest banks and the EU/UK/US banking consortiums all pretending there was no crisis. And pretending the systems being set up were experimental, not fundamental changes in the way the banking system was being run. And all parties assured each other and the rest of the world, the present global financial, monetary and trade systems would all work just fine in the future. No changes at the top were necessary. This desire for the old, dead status quo is still very, very powerful.

We see it at work in the American popularity contest for emperor: everyone is promising things that are impossible, dangerous and stupid. There is nearly zero talk about doing sane things to fix the mess. It is nearly universal, this desire for a happy-times, Santa-style economic system. We still want empire, too. Nothing has changed. Despite talk about change, all efforts are towards preventing even the smallest changes. The right wing is utterly defunct. They simply want to live in the fake Potemkin past of Reaganism. They really think that was a system that worked!

The lunacy is immense. Under Reagan, the US budget deficit ballooned. The trade deficit took off. The Derivatives Beast was born. The imbalances from trade and monetary values was so great, the US had to go to Japan and Germany and negotiate a series of agreements to weaken the dollar. Every single provision of the Plaza and Louver Accords was violated by all parties, right down the line. This should have caused a diplomatic break down with the winners of WWII, Germany and Japan. Instead, living in lotus-land, the US continued with the fiction that the US ruled the world and was not in harness with a bit firmly yanking on the US mouth.

All of this finally came to a head last August when the Japanese carry trade abruptly ended. Here is another story from a year ago:

Bear Market Will Rip Apart This Economic Termite-Riddled Tree

The building boom we went through was a total waste. It did not build energy-efficient housing. It didn't retrofit all housing with solar energy. It didn't improve our commuting except in NYC where the higher prices housing was concentrated in concentric rings around Manhattan, the only 'up' market left in America.

Wells Fargo lent to goofy buyers looking for housing way outside of cities where the commutes are killers. These houses are going to be abandoned when oil hits $150 a barrel. Already, oil is half way there. If these houses with 30 year mortgages will be 'habitable' in 30 years, this is pure fantasy. Impossible. My mansion, by the way, was a short hop to the oldest commuter line in New Jersey, the train to lower Manhattan. This is where stock brokers would move and this is why it was a valuable property even in a bad recession.

It is good to look backwards. Last year, oil was $75 a barrel. I predicted it would rise to $150 a barrel due to the US and Israel hammering on Iran. I also predicted a year earlier which was two years ago, the US/Israeli efforts at isolating Iran would lead to a world oil shortage and this would destroy the US economy. The parts of the US where housing values shot up the most are being abandoned. From Reagan onwards, the US political map was redrawn with huge, huge support for GOP-style politics in the 'exurbs'. These distant commuter enclaves were drawn to the hokey-pokey economics of wild overspending/wild money creation. This made exurbia possible. For it is very expensive. And extremely unproductive.

All politicians recognized the rising power of the outermost suburbs as America openly abandoned almost all the city cores. Using the new highway system, people moved as far as possible from the cities. Unlike in Europe, for example, where people want to live at the center of the city as much as possible, gasoline in the US was kept much cheaper so the ability to spread was much greater.

Today, the markets and media go crazy whenever gas prices fall. Now, oil is 'only' $115 a barrel. But just one year ago, it was $50 a barrel less. The hope is, the price of oil will collapse. But even with consumption down, the US is still using far more oil today than in Reagan's day.

Here is an article about the IMF last year. The president of the IMF, Rato, gave a hysterically funny speech. As usual, he had nasty things to say about Russia and China. But didn't say a thing about the Japanese carry trade or the US trade and budget deficits.

IMF Praises Imperial Money Creation By US and Europe

The IMF is now a puppet show for small children. The rats and vampires who inhabit its halls no longer strike fear in the hearts of the third or second tier nations. Indeed, they are rapidly outpacing the European/American empire! And this is thanks to the greedy rulers of that empire! Hahaha. Talk about turning of tables!

Watch how the demented fool running the IMF talks about hege funds and private equity as being good things! Wow! And then he hedges his rash, foolish comments by talking about how SOME of them MAY have overreached and not understood risk.

IMF head Rato's speech:

6. The economic fundamentals, both in the large industrial economies and in most major emerging economies, including Brazil, remain strong. Our latest projections anticipate sustained global growth of about 5 percent both in 2007, and 2008, with major emerging markets leading the way. However, the balance of risks has tilted to the downside when compared with a few months ago, reflecting the impact of the recent turbulence in financial markets. These risks bear close watching.
7. The principal risk is that financial market developments affect the real economy through declining asset prices, tightening financial conditions with a repricing of risk, and weaker confidence. In such circumstances, the concern would be that consumption could suffer in the United States, producing knock-on effects elsewhere. However, to the extent that financial conditions return to normal, we believe these risks will likely be mitigated, as most corporations remain highly profitable and household finances continue to be sustained by solid employment growth. Thus, the U.S. economy should continue to grow at a moderate pace this year.

After last year's Teddy Bear Picnic, all the financial wizards who destroyed the global banking systems were certain they succeeded in preventing this collapse. So they went back to assuring us, all was well. We read Rato's speech with amazement. He was dead wrong about everything. He was a liar. He is still a liar. He should resign in shame. How can he live with himself, knowing he was this stupid, one year ago?

These clowns all imagine that finances is all about psychology. They think they control these systems. But when the systems break down, these same people claim they can't control these systems. But they understand them. Only we can see clearly that they obviously do NOT understand these systems. Indeed, these systems are breaking down because of this ignorance coupled with wizard-level hubris. These miserable wizards really think, all they have to do is chant the same formulas and all will be fixed. All they need to do is reassure everyone and Prosperity would then come around the corner, not the other Medusa-hags, Inflation and Depression.

When he made this stupid speech, the price of oil was shooting upwards. Never, never, NEVER does the US economy grow when oil prices climb. This is an iron rule. The US coped with the long rise from $11 a barrel to $150 a barrel by going into debt. This process doubled US debts in less than 8 years. Now, it can't be used anymore. We hit our credit limits. The only way to bring down oil prices is to stop using so much of it. The mechanism for this is a bad recession. Once the recession becomes very, very bad, then the number of people able to heat homes or drive from exurbs will drop, they will either live in the center of the cities or the displaced poor will live on street corners and die.

The IOUUSA movie sponsors are hoping to cut social services and retirement funding so the poor can die faster. Then all will be fixed. The rich don't get eaten by the Derivatives Beast and the poor get eaten by the Depression hag. Now, let's go to today's news:

Mersch Says ECB to Change Collateral Rules Soon

(Bloomberg) -- The European Central Bank will announce changes to the rules governing its money-market auctions in coming weeks to head off the risk of abuse by financial institutions, council member Yves Mersch said.

``At the margins there can still be cases where you see dangers of gaming the system,'' Mersch said in an interview on Aug. 23 in Jackson Hole, Wyoming. ``The Governing Council has been discussing the whole issue'' and has agreed on a ``certain amount'' of refinement to the existing rules, he said.

ECB officials have become increasingly concerned that banks are taking advantage of collateral rules that are broader than those used by the Federal Reserve and the Bank of England. The danger is that banks struggling to sell securities damaged by the credit-market turmoil will dump them on the ECB and become overly reliant on central-bank funds.

Sigh. Once upon a time, central banks had bank vaults. In these vaults were blocks of gold. This was used as the basis of all banking. In addition, all the member banks had to collect something we called 'savings'. This was also called 'liabilities' by the bankers since THEY had to pay these savers 'interest'. The interesting thing about interest is, this money has to be relent at a higher rate so the bankers could then collect interest, too. And they were allowed to do this on a reserve of savings of less than 10%. Even with the central bankers controlling this reserve requirement, the member banks often ended up in the ditch, overextending loans too much.

This is because they love collecting interest rather than paying interest! The investment bankers decided to play this game with less than 1% reserves. To do this, they needed the Bank of Japan's 0% lending. At 0%, a bank can lend forever. Doing this, the Bank of Japan was able to squirrel away a FOREX fund of over a trillion US dollars. US banks sit on virtually no reserves while Asian banks sit on mega-reserves. And this is hyper-unbalanced. And mirrors unbalanced trade relationships.

Now, the central bankers no longer hold more and more gold as they lend. They don't hold more and more capitalist profits. Or more and more worker's savings. The FAKE interest rates are responsible for this situation! Since all the central banks set rates below the rate of real inflation, everyone is putting their money into various instruments that they hope will grow faster than the other nasty hag, Inflation. But Inflation gets stronger and bigger, the faster money grows! The more everyone seeks a greater return outside of the banks, the more powerful Inflation is and Her gold and crimson wings beat ever-faster.

Instead of making banks the destination of savings and profits, the central bankers for the last year have been doing the EXACT OPPOSITE. Killing savings totally. Destroying anyone's desire to park even a penny in a bank! Instead of encouraging everyone to put money in banks and make bankers pay the price of realistic lending, the central bankers are desperate to make it easier for bankers to dump loans and bonds making no profit, in the central banks.

So these pirates can sail off leaving the mess in the hands of the central banks which then dump the entire mess on top of the governments of the sponsoring nations. If saving the investment and lending houses ends up killing entire governments, whole empires, this is NOT A FIX. It is a disaster. But the bankers own the politicians in the 'liberal democracies' so they feel they can pull this off and then stand back and pretend they are not responsible for the messes they created.

Libor Signals Tighter Credit as Banks Balk at Lending

(Bloomberg) -- Most of the bond strategists and salesmen that Resolution Investment Management Ltd.'s Stuart Thomson talked to last August expected the credit crunch to be long over by now. Instead, money markets show there's no end in sight, and it may even worsen.

``It's like an ongoing nightmare and no one is sure when we're going to wake up,'' said Thomson, a money manager in Glasgow at Resolution, which oversees $46 billion in bonds. ``Things are going to get worse before they get better.''

In a replay of the last four months of 2007, interest-rate derivatives imply that banks are becoming more hesitant to lend on speculation credit losses will increase as the global economic slowdown deepens. Binit Patel, an economist in London at Goldman Sachs Group Inc., said in an Aug. 21 report that nations accounting for half of the world's economy face a recession.

The premium banks charge for lending short-term cash may approach the record levels set last year, based on trading in the forward markets, where financial instruments are sold for future delivery. Back then, concern about the health of the banking system led investors to shun all but the safest government debt, sparking the biggest end-of-year rally for Treasuries since 2000.

``These problems going into year-end are likely to be worse this time round because of the amount banks have to refinance in December,'' Thomson said, citing a figure of $88 billion. ``The suspicion is that banks are still hiding losses. The banking system relies on trust and at the minute there quite simply isn't any.''

The bankers can't trust each other because they are all criminals. Arrest them all. Hell's bells! Don't they realize what they are saying? The central bankers are rivals, not buddies. The US persists in this childish notion that if we spend trillions of dollars protecting our 'allies' when they are all reaming us out in global trade. But we are all rivals and deadly rivals, at that. All negotiations over monetary matters are equally dishonest. Everyone rushes home and madly seeks ways of violating any rules, systems or mutual agreements! This is much closer to rival Mafia gangs rather than some sort of international accord and common goals. The common goal is for everyone to assist the US in going bankrupt.

Note also how one picnic visitor to Jackson Hole admits the mess this August is WORSE than last year. Arrest all the central bankers! Their failures are now totally obvious to even dimwitted people. Which, of course, excludes politicians. They are still blissfully unaware of how this is all evolving. The bankruptcy bill was supposed to fix the possibility of too many bankruptcies, for example. This led to a flood of bankruptcy filings right smack dab in the middle of the housing bubble!

Everyone who feared bankruptcy all filed at once. This was a huge bleeding wound in the banking system starting at the end of 2005. If anyone is talking about the connection of this mad rush to go bankrupt before the bill passed and the collapse of the housing bubble, I haven't heard it yet. Well, the bankers got what they wanted and this ended up being a knife in the chest. The recent bill to fix the mortgage mess is similiar: it fixes NOTHING. But encourages more skipping out on previous loans. So no one is responsible for any promises and thus, cannot be trusted. What a surprise.

Bernanke, Buiter, Draghi Diverge on How to Forestall Crises

Fed Chairman Ben S. Bernanke, European counterpart Jean- Claude Trichet, former officials and economists meeting in Jackson Hole, Wyoming, split over whether central banks should be made responsible for financial stability and how closely to heed the concerns of Wall Street.

``We shouldn't delude ourselves into thinking we are going to build a panic-proof system,'' former Fed Vice Chairman Alan Blinder, who attended the conference, said in an interview with Bloomberg Television. ``But there are choices between less and more panics, more virulent ones, less virulent ones, and that is the way we want to push the system.''

HAHAHA. As the banking system collapses totally, they are still talking about panics? I would suggest, they should all be in a panic! They created this giant mess. And are still creating it. Far from controlling panics, their every action insures future panics. Instead of removing the punch bowl when the party got hot, they poured 150 proof vodka into the punch bowl. Now, everyone is passed out on the floor or puking up into the Fed toilet. And the solution?

More vodka. Like boys at a frat party, they crawl around the floor littered with broken glass, seeking another drink. Alan Blinder is just as incapable of understanding what is going on as all the others. He admits, the Fed can't control things. But he spend the 1990's imagining that the lack of inflation and the growth of jobs was good. Even though it was fatally based on two things: the destruction of US industry as we sent our manufacturing overseas. And cheap oil. The thought that oil would be cheap forever was the delusion at the center of US thinking. Oil may get cheaper again. But it is very unlikely.

View of economy somber from Fed mountain retreat

(Reuters) - A towering grizzly bear guards the doorway to the Federal Reserve's annual policy retreat in this Teton Mountain resort, serving a reminder to central bankers of the battle to sooth the credit crunch.

"This turmoil is not going to go away quickly and will require serious efforts to overcome it," a top official of the International Monetary Fund, John Lipsky, told Reuters. "A year ago there was a real sense of uncertainty and confusion. People were perplexed by the turmoil that had come on quite suddenly. I would say the mood this year is one of greater clarity...let's call it a bit more somber," said Lipsky, the IMF's first deputy managing director.

I am including the above story because it illustrates how hideous things really are. The entire reason I am linking to older articles is because I knew what was wrong long, long ago. It isn't enough to be a 'bear.' One has to carefully explain the mega-complex with all its parts and then locate the points of greatest danger. And in the present case, virtually no one is noticing the insanity and bizarreness of the Bank of Japan's near-0% interest rates as being a major force in the collapse of global banking. So long as this exists, this black hole continues, international banking will collapse. The ending of this business last August caused the obvious collapse to finally manifest itself. Restoring the carry trade only worsens things, not fixes them.

And this is why I rage so much! Every time the status quo of June, 2007 is revived, all these guys sigh with relief and run back to Tokyo with their hands open, begging for more funny money! They are not honestly trying to fix this. Many economics professors focus entirely on China and there is a near-total silence about Japan's ZIP code, the Zero Interest Program's dire effects are ignored.

Jackson Hole in the head:

"The financial storm that reached gale force some weeks before our last meeting here in Jackson Hole has not yet subsided, and its effects on the broader economy are becoming apparent," Bernanke told the conference on Friday.

Lipsky said the U.S. economy might contract slightly in the second half of the year. Even if it skates the generally accepted rule of thumb for a recession -- two consecutive quarters of contraction -- he warned it will suffer a clear period of sluggish growth, with the IMF forecasting growth of 1.3 percent this year and 0.8 percent in 2009.

The US really didn't grow this last 8 years. It's debts grew very rapidly. The GDP was nearly all consumption, not manufacturing growth. Sane commentators noted this repeatedly. But until the goofy wizards at the top of the banking system notices this, we are doomed. This is why I want them all removed. Every last one of them. 35 years of abject failure has to come to an end!

By the way, we have to now go into the other dire matter, the Holy Land. The US is not growing. But a certain economy which has people that now have a higher standard of living than 90% of this planet, their economy is growing and growing pretty fast. Faster than the US economy, even when we use the fake figures, is growing. The US has not managed better than 3.5% growth during a huge bubble. But Israel is growing very fast even as it gets huge amounts of funding from the US taxpayers.

Israeli Second-Quarter GDP Grew at 4.2% Annual Pace

(Bloomberg) -- Israel's economy grew faster than expected in the second quarter, as booming chemical and fertilizer sales drove exports.

Gross domestic product expanded at a 4.2 percent annualized rate in the April-June period, the Jerusalem-based Central Bureau of Statistics said in an e-mailed report today. That beat the median forecast of 4 percent growth from five economists surveyed by Bloomberg. Still, growth was the slowest since the 2006 war in Lebanon, and eased from 5.6 percent in the first three months.

``A 4.2 percent rate doesn't really amount to a slowdown, it's actually a good pace of growth,'' Vered Dar, an economist at Psagot Investment House Ltd., said in an interview. ``There will be real slowdown in second half.'' Today's figures don't include ``anything that changes my expectations,'' he said.
*snip*
Although the shekel has lost about 8 percent of its value since the central bank increased its daily purchases of dollars on July 10, the currency is still up about 16 percent from the same time a year ago.

This little nation has the ability to milk the US political system from top to bottom. Israel has a huge trade surplus with the US. The US funds Israel's military spending, we pay for their ghetto walls they are surrounding the Palestinians with and we outsource a lot of military spending to this leech country. Note also how they are manipulating the value of their currency to maintain all these advantages. Note also how all the economics professors are silent about these matters.

The head of the Israeli central bank was at Jackson Hole this week. You can bet, no one yelled at him any more than they yelled at the Japanese bankers. Instead, the talk was about how to punish Russia somehow. And keep the oil flowing from the Arab kings. Without interfering with Israel's domination of Palestine and the US.

By Mike "Mish" Shedlock

One key point here that none of the articles above have addressed is that it's not just Lehman that has lost control. The Treasury and the Fed have lost control as well. If there are no US buyers, and I believe it would be a good thing if there are not, neither the Treasury or the Fed is in a position to bail out Lehman.

The Fed and Treasury may not like it one bit, but the flood of dollars those dollars foreigners are sitting on eventually have to come home. And they will come home by buying US assets. That is the price the US has to pay for the unsustainable US credit binge we have been on. So if a huge deal with Korea is announced, expect to see the Treasury begging Congress to approve it.

Mish is always a good read. The US is for sale. Top of list: our politicians. This looming election will go down as the most corrupt, most expensive in US history. The corruption is now painfully obvious. We whittled down our selection to twin warmongers, twin wild spenders, twin fatalists seeking to return us to a dead status quo that is killing our country. The owners of the media want this. The bankers want this. And the American people must want to want this! The money pouring into this election is mostly from hostile powers seeking to destroy us. Just like our present inability to buy up our own systems that are for sale, we can't buy our own politicians anymore. Even when people scratch together their own hard-earned money to support candidates, these same candidates turn around and whore themselves to the Real Rulers, the super-rich.

AIPAC's list of potential donors dwarfs most fund raising attempts by people like the readers of Kos, for example. They are petty cash, not the people who call the shots. This is why they get shot down so often by politicians who use Kos to start but run off the to great lobbies to run for office. Then there are the super-rich. The media is yelling about Obama using the flap over McCain's senility about his own houses and cars. The guy has so many, he can't keep track. The media claims, this is a low blow. But it is material!

McCain's vast wealth, like the Clinton's corruption money that has flowed to them ever since Hillary became a Senator, is not enough. The Clintons wasted many millions of their bribery money, running for office. McCain has spent his wife's fortune the same way. But if there is any sign of someone gaining the emperor's throne, money pours in from all over the planet. So we have a bunch of rich billionaires telling us Obama is an elitist. Then they turn around and bribe him just like they bribed Bubba Clinton. And McCain's pretense at campaign finance reform has dissolved into this rancid search for hundreds and hundreds of millions so he can run stupid ads comparing his rival to cute white chicks!

Here is reality:

The New York Legislature Cuts Medicaid So Severely It Will Have The Effect Of A Neutron Bomb Culturally Destroying Health Care

In a special session of the New York State Legislature on August 20, lawmakers agreed with Democratic Governor David A. Paterson to make hundreds of millions of dollars in budget cuts in order to reduce the state’s budget deficit for this and future years. The cuts will immediately reduce the $122 billion budget for this fiscal year by $427 million. They are expected to cut next year’s budget by $1 billion and slash another $2.4 billion by fiscal year 2011-2012.

The legislature passed a 6 percent reduction in services, including $141 million in cuts to health care. This includes a reduction to Medicaid funding, which services the health needs of poor people, by $127 million.

The state cuts in payments to hospitals and nursing homes will be especially painful, due to the reduction in matching funds from the federal government.

People will die. Foreign people will also die. Most dying empires thrash about quite violently. The US will be no exception. The value of all the hyper-military complex corporations shot up this month thanks to US saber rattling right on Russia's front doorstep. Oh, goodie. We get to revive our economy by spending more and more money on nuclear bombs and missiles aimed at Russia.

Email this post

Culture of Life News Main Page

Comments

[Anthony]

This is why I think the crisis is far from over.

No more cheap oil and no more cheap cash, hence collapsing banking profit. (ability to replenish capital)

The economy is too slow to generate new wealth to keep pace with the collapsing fake money. Keep handing out cash and bailing out everybody turns out to be not enough to prime the collapsing cycle.

China, Japan and europe on the other hand has the ability to soak up "the good money" and accumulate liquidity inside their border. All those new cash Bush is printing, ends up in China and Europe.

So, big US banks are going to suffocate as economy continue to slow. Liquidity and wealth will keep draining out of the country.

Weak and corrupt leadership aren't helping either.

[Paul S]

You made the point earlier Elaine that bears repeating here: look at our so-called "choices" for President. Obama/Biden, both Senators (so much for 'change you can believe in'). McCain,US Senator. And Mccain's VP would not surprise if s/he is also a US Senator. Now, what the hell kind of choice is that? Why is it NOT a topic, when it so obviously SHOULD be a concern? These guys, like the bankers, are sooo inbred, NO amount of reality is going to affect them. And I don't think they are delusional. The bankers, and the politicians, especially the ones in the bankers pockets are cynical, calculating criminals; more sociopaths than deluded. BTW: great cartoons (as always) on the 'Teddy bear' picnic.

[ralph]

GO to Ron Pauls campaign for liberty rally in Minneapolis. Its not much, but as Americans who love freedom,rule of law etc.. its all we have. Im going, not because its going to make a difference, but, because its SOMETHING. We have to make ourselves heard. Enough is enough!!!

[DrKrbyLuv]

The scale of corruption is beyond comprehension. Corrupt politicians, bankers, clergy, media, health care...the list goes on and on and on. Somehow, we became a nation of "me" instead of "we."

Our country was sold off, we are now simply a fascist client state of Israel.
____________________________________________

Ralph - I'll see you at Ron Paul's liberty rally in Minneapolis! Like Ron Paul said "Let it not be said that we did nothing"

http://www.youtube.com/watch?v=nWJ34YANTYU

[G.]

Burn the Beard

[DrKrbyLuv]

Chris Martenson recently added to his crash course; Chapter Seventeen: Peak Oil

http://www.chrismartenson.com/peak_oil

It's excellent!

[Michael]

Elaine,

You and I went through the 80's, the 90's, and the last 8 years watching the national savings rate drop like a rock and the creation of credit (as a substitute for earnings and savings) supernova. We scratched our heads as aggregate debt (government, business, households) just kept going up and up while wages stagnated, industries closed, and infrastructure rotted. What were these idiots thinking? Where and when would it end, we asked; because we (unlike 90% of Americans) knew it WOULD end.

Personally, I was amazed it managed to go on as long as it did (it topped out with aggregate debt at 350% of GDP - Weimar Germany levels). Sure, the politicians and bankers are trying to keep the spasming body alive with - surprise! - more credit creation, but it isn't working because limits exist and they have been reached.

The other thing we've been watching and shaking our heads about hasn't happened yet: the refusal by Chi-Pan, Russia, and the Sheiks to keep buying our debt. We see the same complacent "of course this irrational behavior will continue indefinitely, it's how the wonderful world financial system works" propaganda, and again we just wonder where and when the end is going to come.

When America hits that iceberg, it would be wise be living somewhere else.

[donh]

I can remember when NY's budget first crossed the $1 billion mark. That was what - about 38 years ago? It is now $122 billion? This is a greater than 12,000% increase? Actually, the state's budget page says that the coming budget is only (only?) $80 billion. Still, this is an eighty fold increase in 38 years. This is an average increase of 12% per year. Some of this is an increase in services, pensions and corruption etc. Even so, it implies that inflation has been high for a long time.

Plus, local and state governments have to pay for purely domestic labor and products almost exclusively. Little can be "outsourced" or discarded (like pensions) compared to corporations. We have built large expensive governments while stripping or exporting value out of the private sector of the economy. This is not sustainable.

The real irony is, many government programs benefit corporations immensely, even foreign corporations, yet corporations fight paying taxes tooth and nail.

[Royal Dutch Paper]

Interesting choice Obama made. Biden? A DuPont man no doubt,a deleware senator, credit card central. Not to mention that dupont owns conoco and phillips 66! (As well as the state of Deleware!) Mwhahahha. And I thought bush, cheney and rice were bad!
Nice article Elaine. Still, with what Mish says about Lehmen, I am pretty sure that they do have a chair(s) at the fed. Maybe a systematic crash is in store after all.(the combo of freddie, fannie and Lehman?) Still nervous about Denver. Tax the poor, thats the only way these jokers know how to raise revenue. Makes me wanna PUKE!

[Echelon Pole]

Wall Street

[Elaine Meinel Supkis]

Seriously, I was invited to the Ron Paul party. I got a press pass and everything. Then my father in law came by on Saturday to tell me, he was going to be operated on Sept. 2 and then post-op Sept. 3rd. A total washout for me. Have to take care of family.

I hope the Ron Paul people have fun. I hope they yell very, very loudly. And same with the other minor candidates. Yelling very loud is the only tool left.

[Elaine Meinel Supkis]

Echelon, just click and drag the link. I will then visit and use it.

Thanks in advance.

If you want to post pictures, just use the img src code with the two <" "> opening and closing code tags.

[Q]

Well I guess I will be writing in Ron Paul and Dennis Kucinich, and in the process get place on the watch list. Guess it does not matter much, seeing the USS Iwo Jima and her escorts just left Norfolk and heading towards the Middle East, 3-4 weeks tops, where a massive fleet has already been assembling. A lot of people are moving mountains to keep the the dollar strong and the yen carry trade moving along for the moment. I still expect oil and gold prices to be crushed until the moment the bombs drop.

The largest local dealer had no silver bullion of any sort late last week.

www.debka.com/headline.php?hid=5532
quote.ino.com

[Elaine Meinel Supkis]

No bullion for sale? Ah! Interesting. There are levels of fraud at work here, deep inside the rare metals markets. I think it is seizing up. Due to a flood of funny money and 'leveraged' paper bets now coming due as prices fall.

I had a very strange dream last night. Went into the systems where wizards work, that dream/real world where forces intersect.

[Echelon]

The poster, a concept for next version of The Wall Street movie.

Memorable quotes:
Mullah Cheney: Greed is God. Greed captures the essence of the evolutionary spirit.
Bud Bush: Mission accomplished. Every battle is won before it is ever fought. Sun-tzu, The Art of War.
Bud Bush: Why do you need to wreck this economy? Mullah Cheney: Because it's wreckable, all right?
Bud Bush: Life all comes down to a few moments. This is one of them.

The source code tell I mixed up " and ” , maybe this will work?
If not Poster: http://bilder.vgb.no/2522/img_48b3dd05aeb79.jpg

[Ralph]

Elaine this article sums up the derivatives beast, its origin and purpose. Please review it. http://www.gata.org/node/4242 Thank you.

[London Escorts]

A professional London Escorts agency booking service with more than 50 girls available 24/7 for high class elite girls for in call and out call availability. Escort London For professional dating of London Escort girls. Escorts London

[Easy Ways Of Earning Money]

Oh it is effective and very intersting i love to read it.

[London Escorts]

Finest London Escort agency with sexy and young girls available from around the world for incalls and outcalls. Call 078- 4680- 0306 for top London Escorts.

[Kiev escort]

Intresting aricles you got here.
It will be intresting to find anything more concerning this topic.
Thx you for inform that information.