All Hail The Stumbling Status Quo!

August 11, 2008

Elaine Meinel Supkis

As the world races to reimpose the old status quo, I look backwards and forwards in order to predict what will happen next. Commodities are being artificially suppressed, money is being encouraged to flow back into stocks and assets. And the desire to create more debt is the number one wish of the central bankers of the G7 consortium. Time to review the last year yet some more and to see if the US can resume being the consumer society despite not manufacturing anything except arms for World War III.

The Museum of the Bank of Englang: The Pound in Your Pocket Exhibition

This exhibition tackles the topic of inflation. A series of interactive exhibits - large-scale jigsaws, a safe to be cracked, a rollerball game, quizzes and touch-screens - unravel the meaning of inflation, how it is caused, why it matters and how the Bank’s actions affect it.

The centrepiece of the exhibition allows visitors to take the controls of a balloon and charter it on a stable course to simulate the role of the Bank in keeping inflation steady. During the flight a screen plots the course of the balloon as it is pushed up and down by unexpected changes in conditions. Visitors can increase or decrease the air in the balloon to keep it flying at the right height, in the same way that the Bank of England raises or lowers the Bank Rate to keep inflation on target.

The long, long collapse of the British empire continues. I know this exhibit was designed for children but frankly, this is exactly how the central bankers of the G7 nations talk. They try to convince us that they 'control' inflation via this interest rate magic trick. They all earnestly discuss the 'rate of inflation' and then they yap about 'taking away the punch bowl when the party gets wild' and other rubbish. They never, ever say, 'We are here to inflate balloons and if there are no balloons, we create them.' For they have one function: to fund wild government overspending and to enable imperial adventures and expansions. The very first central banks of England and France had exactly one goal: to fund wars.

There are two ways to 'control inflation': one is to raise interest rates. This is by far, the most unpopular method. The other is to brutally crush worker's wages. This is extremely popular with governments and central bankers. Workers don't complain if the rate of dropping wages is ameliorated by easy credit. This is why we see in the US and UK rising consumer debt and dropping wages. This, in turn, equals a 'non-inflationary' society. Until inflation comes, anyway. As it always does. Due to wild government overspending on imperial adventures.

Forget exaggerated news: the dollar is still the world's reserve By Etienne Swanepoel:

The global reserve currency since World War 2 has been the dollar. It is held in significant quantities by a variety of market participants as part of their foreign exchange holdings. Most commodities, including oil, are quoted in dollars.

According to a paper released by the International Monetary Fund (IMF), several factors determine whether a currency can play a reserve currency role. The underlying economy must be large and must generate a large volume of forex transactions. Reserve currencies are associated with open, liquid and well-developed financial systems. The issuing country must be regarded as politically stable.

A key factor is so-called network externalities: goods and services become more valuable as more people use them.

Of late, many have questioned the continued reserve currency status of the dollar. By last December, the dollar's share of reported reserves held by members of the IMF had declined to 63.9 percent from 72.7 percent in 2001.

During the same period the euro's share rose from 17.6 percent to 26.5 percent. It is said that the role of the dollar is in decline and that of the euro growing. Apparently, the replacement of the dollar by the euro is imminent. Others say the same in favour of the Chinese yuan.
*snip*
The imminent demise of the dollar is probably exaggerated - much like the death of Mark Twain. Reserve currencies lose their status over a long drawn-out period, rather than in one seismic shift. This was the case during the last shift, from sterling to the dollar. Until a credible contender comes forward the status of the dollar, barring catastrophic collapse, seems to be safe.

All stories about the US dollar as global reserve currency should carry many trade statistics. When it becomes very obvious that the US has a gigantic trade deficit with nearly every possible trade partner, we are not seeing a 'strong economy' or a 'stable government'. We are seeing a country in steep decline. Since everyone is running a trade surplus with the dying US, they naturally want this to continue! To their collective annoyance last August, the US dollar began its long nosedive.

Everyone even agreed, this was due to the US housing market collapsing and the silly Home ATM machines running out of cash. So everyone running trade surpluses with the US agreed, the problem was not too much lending to a country deep in trade debt. No, the problem was diagnosed as the US not having enough debt! 'We need more LIQUIDITY,' yelled the central bankers to each other. The dollars floating around the planet had been multiplying like rabbits thanks to all the central bankers giving easy loans at cheap rates across the planet and using the back door of the Japanese super-low loans to get this rolling.

Everyone was going to Japan to get a loan and then use these loans to buy dollars and then use them to lend to others. Hedge funds did this so they could dump trillions in new debts on top of businesses, for example. The biggest buy-out/buy-up boom followed. Across the entire planet, housing markets went insane as the cheap, cheap loans were matched with wider and wider profit spreads due to all the nations outside of Japan, trying to play the Bank of England's balloon game we see in the top story here.

So interest rates rose across the planet, inflation quickened and Japan kept lending at sub-inflation rates. All this was funneled to the US to prop up our own lending markets which were totally saturated in red ink. The US investors, in turn, began to place bets in the commodities markets since the real estate was overbought, the stock market was so loaded in debt, there were no candidates for dumping except for perhaps Yahoo. Which is a stupid place to dump a load of debt! They resisted this.

US auto makers no longer were capable of taking on more debt. Pharmaceuticals, ditto. The commodities markets are very exposed. Inflation in housing makes people feel richer. It gives them an advantage whereby they can take on more and more debt if housing values shoot upwards in a bubble. Commodities are the reverse: they make people feel poorer. Paying more for food and fuel is very painful since these are consumed nearly instantly and can't be held for increased value, later.

Governments have to move swiftly to crush any food/fuel inflation. This is when they usually raise interest rates. But today is different! Every central bank is lowering interest rates as fast as possible in the teeth of inflation. They must! Lending is central to the system. Why is this?

Simple! The US runs entirely and totally on red ink and we are the biggest CONSUMING economy on earth. To get us to continue to consume our future, the world needs to lend to us as much as possible. So the G7 and the individual humans who operate within the G7 negotiating systems all met in DC last month, secretly, and hammered out a deal whereby they would strangle the commodities futures by tightening the rules concerning leveraged bids. To lure the hell hounds and pirates out of that sector, goodies were offered. Wall Street would get relaxed rules and they could all flock over there and bid up stocks rather than oil futures.

So stocks have been shooting upwards rapidly. Despite a global economic system heading very definitely into a contraction.

Economic Slump in U.S. to Worsen as Consumers Get `Squeezed'

(Bloomberg) -- The U.S. economic slump will extend into 2009 as the longest expansion in consumer spending on record comes to an end, according to a Bloomberg News survey.

The world's largest economy will grow at an average 0.7 percent annual pace from July through December, half the gain in the first six months of the year, according to the median forecast of 50 economists surveyed from Aug. 1 to Aug. 8.

This article makes it clear, US consumers can't spend unless we give ourselves 'tax rebate' after 'tax rebate'. Our government is very deep in the red. It may come to over a trillion dollars. Congress voted to raise the stupid ceiling that was supposed to stop government overspending, they raised it by over $800 billion to accommodate the anticipated shortfall this coming year! Any way we look at this massive overspending, it is not good. Coming on top of record overspending this last 7 years, it is totally insane.

I wish news media would stop this 'biggest economy' garbage. We are no longer the biggest economy. If they said, 'The biggest expansion in DEBT in American history comes to an end', we would be closer to the truth except it is NOT coming to an end! It is moving from one thing to another within the system. The attempts at increasing our debt abilities right when we are massively going bankrupt due to an inability to pay our past debts: this is insane. Except our trade partners will move heaven and earth to continue this because they, not us, benefit from this system.

Russia piling up international reserves

RBC, 07.08.2008, Moscow 12:21:59.Russia's gold and currency reserves stood at $597.3bn as of August 1, up $5bn, or 0.8 percent, from the previous showing. Combined with a $28.8bn increase over the previous four weeks, Russia's reserves climbed a total of $33.8bn, or 6 percent, in 25 working days. The rapid rise in reserves can be linked to the euro's significant appreciation against the dollar on international exchanges, as well as to the Central Bank's active purchases of foreign currency on the domestic market. Russia is currently ranked third according to the size of its reserves, after China and Japan, the world's leaders in terms of gold and currency reserves.

Gold bugs beware: yes, Russia is hoarding gold. It is not buying gold, it is holding gold it generates internally. Across the planet, marginal gold mines were cranked into operation when gold soared in value. Now, with much of the world's gold buyers in Asia and India no longer able to buy gold easily due to food and fuel inflation, the price of gold is dropping.

Also, the status quo of the G7 very definitely involves preventing any connection between gold and currency values. Remember: when you are fighting a huge, international cartel, the chances of them crushing anyone in their path is around 100%.

Below is a hilarious video of two guys fishing in Alaska and their encounter with a bear:

Think of the narrator as Paulson and the guy with the yellow bucket and the gun as Bernanke. They are afraid of the bear suddenly lunging at them. The system is set against bears. All bears must remember this harsh fact. When Bears Stearn went under, the sudden move by the Fed and Treasury was so they could intercept the bears and beat them back. The whole market was ripe for a big bear attack. For the system was totally and hopelessly mired in too much debt, too many bankruptcies and too much overspending. All, classic signs an economy is ready for a reversal.

Remember: the central bankers are NOT there to protect currency values. They exist to pay for wars and to enable markets to defy the bears. This means no 'creative destruction.' Indeed, the very things that have to be protected are the military/industrial portions of the markets. To do this, the reality of debt must be denied. Denial means lying about inflation, artificially killing commodity surges and preventing investors from pulling out of various equity markets. Even confiscating gold and other valuables, if necessary.

China introduces new forex controls

Analysts said the move could stem the rise in China’s foreign exchange reserves, the largest in the world, and slow the pace of the renminbi’s appreciation.

The changes were a “comprehensive revision” of the previous rules on foreign exchange, which were last updated in January 1997, the State Administration of Foreign Exchange, the regulator, said.

SAFE said it would take “safeguard and controlling measures” over its international payments system to protect the economy in a crisis. Fresh measures to bring “convenience to trade and investment” include a simpler process for Chinese companies and investors to get approval for overseas investment, SAFE said.

The flow of funds across the planet continue to change. The G7 want the status quo. So does China. But China also is under attack from Japan. So China is taking whatever measures possible to control money flows so they don't end up being duped like the US. They watch us very closely. NOT to imitate us! Not even slightly. They view us correctly as a model to AVOID. We are the very thing they fear becoming. They work very hard at this, too. The US misunderstands the Chinese methodology in all this. We think, because they talk very earnestly and long with US economists and leaders, that they admire us and need our advice.

This is pure hubris. They don't want our advice, they want to know how stupid we are and how we can't analyze significant information. Our pitfalls greatly concern the Chinese. We know that the Chinese public can't wait to imitate the US public. China, on the other hand, must control this urge.

Global Stock Markets: Let the Gains Begin

Let the gains begin. Fortune also smiled upon stock markets, with the S&P 500 Index scoring its first back-to-back weekly gain since April as the U.S. dollar rallied strongly and oil and commodities plummeted. The S&P 500’s gain since the low of July 15 has been 6.7%, with the Financial SPDR up by 27.8%.
*snip*
As expected, the Federal Open Market Committee held the Fed funds target rate steady at 2.0%. This is the second straight meeting with no change in the rate. The committee’s statement discussed high inflation; although the FOMC expected inflation to decline in the months ahead, the members said “the inflation outlook remains highly uncertain.” The statement acknowledged both downside risks to growth and upside risks to inflation, indicating no near-term change in monetary policy.
*snip*
International Trade (August 12): The trade deficit is predicted to have widened to $61.5 billion in June from $59.7 billion in May, with the oil import bill showing a noticeable increase. Consensus: $59.5 billion.

Retail Sales (August 13): Auto sales fell sharply to 12.55 million units in July. Non-auto retail sales were soft. The decline in gasoline prices in July should trim back the headline reading. Consensus: 0.0% versus 0.1% in June; non-auto retail sales: 0.5% versus 0.8% in June.

Consumer Price Index (August 14): A 0.4% increase in the CPI is predicted for July after a 1.1% jump in June. The core CPI is expected to have moved up 0.2% versus a 0.3% increase in June. Consensus: +0.3%; core CPI +0.2%.

The dollar is stronger yet our economy is belly-flopping. Naturally, everyone is contracting now because US wild overspending is contracting slightly. Just as Greenspan lowered rates to 1% for over a year when it was obvious, commodity inflation as well as equity inflation was taking off, so it is today: Bernanke is dropping rates to 2% and hoping this will inflate things again even as he claims he hates inflation. Just a little inflation, that's all he wants. Only we know from the stagflation years, the inflation that vanishes due to government suppression of prices only comes back, bigger and badder, again and again.

Dollar at crossroads amid brighter US outlook

Analysts say the turn towards the dollar reflects surprise that the fallout from the credit crisis has had such a marked effect on economies outside the US.

They say other central banks, unlike the Federal Reserve, have been slow to respond to a potential slowdown, refusing to cut interest rates as they focus on fighting inflation.

However, Jean-Claude Trichet, president of the European Central Bank, warned of a slowdown in the eurozone in the coming months, quashing expectations of higher interest rates.

The trend is expected to be confirmed by data from Germany this week, which is forecast to show that growth contracted in the second quarter.

Japanese officials have warned that the economy is heading for recession, while UK data continue to deteriorate and the Reserve Bank of Australia has said it is set to cut interest rates.

Ulrich Leuchtmann at Commerzbank said in a note he expected the dollar to rise “like a phoenix”. He said low US interest rates were not a burden on the dollar but an attraction, proof that the Federal Reserve was able to react quicker to turmoil than other central banks.

He said that in a very short period, “sentiment turned by 180 degrees – the market now believes that the US economy once again will be able to leave a crisis behind very quickly”.

David Deddouche at Société Générale believes a wider adjustment is taking place that will send the dollar higher.

What they are saying is, thanks to the 2% interest rates at the Fed, they all pray that US consumer spending will fly to the moon as happy US citizens spend money like there is no tomorrow. OK, first, the US must save Fannie Mae and Freddie Mac so housing values can climb again. Then the Home ATM will be reactivated and all will be well. This is impossible. As I pointed out in the past, when a system is 100% in debt, even 0% loans can't be paid off if the principal is too high. There is a limit! If money is made too easy to gain, we get inflation. Many nations have terrible inflation.

Iran, for example, has to rejigger their currency. They have 30% inflation. This is too high. I am assuming they don't have the wizards at the Fed that have the 'hedonistic values' game going whereby they eliminate inflation by the nifty trick of dropping the actual cost of things due to size of screen changing, faster computers, etc. US inflation is at least 12% right now if this stupid 'hedonistic' business was terminated. Iran is in a race with the US to see who will go bankrupt first. The US has a lot more to lose in this stupid race to the bottom. To destroy a tiny, barely armed nation, the world's biggest empire is willing to go bankrupt? Gads. Talk about a bad bargain.

If readers click on the two pages below, they can see how the Bank of Japan used to have normal interest rates until 1994. Then they began the present system which as brought them great external power and moved them into the top position as the greatest manufacturing power on earth:

Click here for Bank of Japan's interest rates from 1966-1988.

Click here for Bank of Japan's interest rates in the last 8 years.

Japan has managed this trick via crushing the wages of workers. They aren't the only ones tempted to do this, by the way. The US and UK are following suit.

27 June 2008--UK Quarterly national accounts 1st quarter 2008

The UK gross domestic product (GDP) in volume terms rose by 0.3 per cent between the fourth quarter of 2007 and the first quarter of 2008. This is revised down from the previous estimate of 0.4 per cent. The level of GDP is 2.3 per cent higher than the first quarter of 2007.

Between the fourth quarter of 2007 and the first quarter of 2008:

The total volume of output in the production industries fell by 0.2 per cent, although, within this, manufacturing rose by 0.4 per cent. Construction output rose by 0.4 per cent over the quarter and the output of the service industries increased by 0.3 per cent.

In the sector accounts:

The household saving ratio was 1.1 per cent in the latest quarter compared with 3.0 per cent in the previous quarter (Table J3).

Private non-financial corporations showed net lending of £0.2 billion in the latest quarter, compared with net borrowing of £3.2 billion in the previous quarter

England is sliding off the cliff. It used to be the world's premier currency and global power. Now, it is a pathetic midget clinging to the US empire so it can pretend to be powerful. It also is heavily undermining the US empire by running a series of global pirate coves at various English protectorates. This, in turn, has undermined the US ability to tax anyone and pay for its great imperial overspending.

UK economy 'worse than thought'

The CBI, the UK's largest employers' organisation, has warned that the UK economy is deteriorating faster than it previously thought.

There was "no doubt that the mood has darkened in the last two or three months," its director general Richard Lambert warned members in a letter.

Forecasters, including the CBI, had been "over-optimistic" about the economic outlook, he added.
High inflation and slowing growth have prompted fears of a possible recession.

Below is a graph showing how 'service industries' shot skywards in England while 'manufacturing' was pretty much flat:

Like the US, if we cut out the military/industrial spending in England and yes, they are doing this too, it is much, much worse. If we show only export manufacturing versus the service industry, there is virtually no manufacturing at all. As it is, the entire economy is mostly service. During the Victorian era, even as England was the factory for the world, there were so many unemployed people, they were exported, too, enmass. As well as a host of them became servants for the rich. A typical English estate was patrolled by an army of servants of every possible description.

Now, it is as if the English and American economies are slave estates with many servants moving chairs at the dining table, carrying water or coal up and downstairs, answering the door, puttering around in the gardens, sweeping and dusting the knick nacks, etc. But no one is working the estate farms. The cows are in the hedges, the sheep in the corn. Little Boy Blue is snoring away or opening doors for the master. Plenty of house slaves, virtually no field hands.

Confessions of a risk manager

IN JANUARY 2007 the world looked almost riskless. At the beginning of that year I gathered my team for an off-site meeting to identify our top five risks for the coming 12 months. We were paid to think about the downsides but it was hard to see where the problems would come from. Four years of falling credit spreads, low interest rates, virtually no defaults in our loan portfolio and historically low volatility levels: it was the most benign risk environment we had seen in 20 years.

As risk managers we were responsible for approving credit requests and transactions submitted to us by the bankers and traders in the front-line. We also monitored and reported the level of risk across the bank’s portfolio and set limits for overall credit and market-risk positions.

The possibility that liquidity could suddenly dry up was always a topic high on our list but we could only see more liquidity coming into the market—not going out of it. Institutional investors, hedge funds, private-equity firms and sovereign-wealth funds were all looking to invest in assets. This was why credit spreads were narrowing, especially in emerging markets, and debt-to-earnings ratios on private-equity financings were increasing. “Where is the liquidity crisis supposed to come from?” somebody asked in the meeting. No one could give a good answer.

This confession is full of lies! GADS. It ticks me off no end. 'Where is the liquidity supposed to come from,' was asked ONLY when the Japanese yen strengthened. The carry trade unwound and left all these guys happy to dump debt onto assets with their pants down around their ankles. January, 2007:

January, 2007:

All the real financial news is terrible but of course, the rich dudes at Davos are all upbeat because they all have golden parachutes like the loser who was fired by Home Depot. I wish I got $210 million every time I flubbed! Our military that learned nothing from Nam want $70 billion (yes, billion) more, too. Bankruptcy looms.

The dollar is going to hell in a hand basket all right. This is ridiculous. Several years ago, readers at other sites used to argue with me about free trade and the dollar. They were fooled into believing the best tool to deal with trade imbalances was to devalue the dollar. All my warnings about the downside of such policies fell on deaf ears.

The childishness of most monetarists is astonishing. They really think no one can add 2+2 or figure out what compound interest is. They thought the Chinese who invented a lot of the fiscal tools we are now abusing, would be fooled by us. How clever.

They think everything is hunky-dory!

DAVOS, Switzerland (AFP) - The world economy is set for another year of strong growth, a panel of experts has predicted in Davos, reflecting the upbeat mood of business leaders here about prospects for 2007.
The first debate Wednesday kicked off the four-day World Economic Forum in bright form, with the dominant view that global expansion would continue this year despite a predicted slowdown in the US economy.

Laura Tyson, a professor of economics at the University of California, Berkeley, said 2007 could be another fairytale year but cautioned that "the big bad wolf was hiding in the forest" in the medium term.

Across the planet, the 'fairytale year' is actually the Witch and the Gingerbread house and we are going to be eaten by her or maybe Goldilocks and the three Bears will come home and spank us. Or maybe Little Red Riding hood, she pulls back the covers and is eaten by the wolf.

This cluelessness to the mess these clowns are creating infuriates me because they know perfectly well their looting expeditions are going to sink the entire world's economy as the inevitable readjustment is done as the dollar's nose-dive destroys everything around it.

The main currency of the world going under is very significant. It is a sign our empire is fatally weak and will keel over dead. The Chinese know this.

So, the big brains in this crack outfit couldn't see the future???? HAHAHA. They obviously were not reading my poor little blog here. If they did, they would have seen clearly what was coming down the old road to hell.

Here is my article from just one month later, in February, 2007:

Bernanke has hauled himself out of Cloud Coo-coo Land to assure investors there is nothing wrong and the Chinese Communists didn't spear the world's stock markets like it was a flounder in a barrel! Nope. He makes an excellent Baghdad Bob, doesn't he?

Did the Congressmen and women laugh and then throw him out?

Appearing before the House Budget Committee, Bernanke also said, "There didn't seem to be any single trigger for the market correction we saw yesterday," Washington Post staff writer Nell Henderson reported. He said the Fed and the president's working group are monitoring the situation but that the markets "seem to be working well, normally."

HAHAHA. There wasn't 'one trigger'---there was a full FIRING SQUAD. All of whom read Mao's Red Book in their youth. 'Power grows out of the barrel of a market panic,' he wrote. Or maybe it was, 'World markets are like a barrel of monkeys, just drop a banana in and watch them riot.'

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!

How much were these guys paid to be wizards and advisors to investors? I am curious. I bet they gave themselves giant Xmas bonuses last December. Why anyone listens to them baffles me. They need at least one 'bear' in the room to whack them on the side of the head periodically. But as we see from that video, these guys shoot bears. They don't listen to them.

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Comments

[BankySmurf]

great blog. love your cartoons.

http://www.youtube.com/watch?v=fx-fKHm6GAU

[Ralph]

YOU ARE THE BEST, #1, GOLD MEDALIST. This comment of yours is truly, exactly what has been going on for years. "Commodities are being artificially suppressed, money is being encouraged to flow back into stocks and assets" www.gata.org, Catherine Fitts has the proof. They are actively suing the FED and Treasury. You should be their spokeswoman and DEMAND THEY BE ARRESTED. They have big meetings and have a huge following. You have the brains they lack. Perfect fit.

[G.]

The whole financial world's economy is nothing but a middle ages cocke and bull
show.

Soon the early cocke will get the
bull and give us the bird.

[Anthony]

The guys on the trading floor starts to notice the "switch flicking" by Japan and China.

http://www.dailypfennig.com/currentIssue.aspx?date=8/11/2008

Several readers sent me an excellent opinion piece by James Turk which appeared on GoldMoney's website. Mr. Turk points to central bank intervention as a major reason for the recent dollar strength. The article agrees with what I was saying last week; that the dollar has no fundamental reason to be rallying. The reports and news out of the US have not been favorable to the greenback, and the twin deficits in the US continue to soar out of control. I mentioned that the recent moves of the dollar smacked of intervention, as the dollar only wanted to move in one direction, ignoring any data which would typically send it back down. Turk points to some data which backs up this intervention theory:

"When central banks intervene in the currency markets, they exchange their currency for dollars. Central banks then use the dollars they acquire to buy US government debt instruments so that they can earn interest on their money. The debt instruments central banks acquire are held in custody for them at the Federal Reserve, which reports this amount weekly.

On July 16, 2008 (the closest date of the weekly reports to the July 15th low in the Dollar Index), the Federal Reserve reported holding $2,349 million of US government paper in custody for central banks. In its report released today, this amount had grown over the past three weeks to $2,401 million, a 38.4% annual rate of growth. To put this phenomenally high growth rate into perspective, for the twelve months ending this past July 16th, assets in the Federal Reserve's custody account grew by 17.3%, which is less than one-half the growth rate experienced over the past three weeks.
So central banks were accumulating dollars over the past three weeks at a rate far above what one would expect as a result of the US trade deficit. The logical conclusion is that they were intervening in currency markets. They were buying dollars for the purpose of propping it up, to keep the dollar from falling off the edge of the cliff.

[Elaine Meinel Supkis]

Correct, Anthony. As I said, the G7 governments met and decided---at the emergency Bilderberger meeting in DC, to prop up the dollar by this very method you mention.

[whine and cheese]

TOo bad putin is showing how weak the US truly is... I think we need to realize that if the US does not intervene, we are officially on the retreat globally, and we have to options:

1) consolidate and pray for conditions to become favorable ...
or
2) engage in the ultimate stimulus package: war

[PLovering]

Ralph: Thank you for reminding me of Catherine Austin Fitts.

Catherine is the real deal.

[GK]

Here is the genocidal plan, straight from the central-banker controlled Reuters, for 'helping' us peasants deal with their war/fiat currency inflation.

DRINK THE KOOL-AID AND EAT F&^%ING JELL-O.

The primary wealth of a nation is the health of its people. And then owning the means of production. Both are being sold off.

http://www.reuters.com/article/reutersEdge/
idUSN1151452020080811

CHICAGO (Reuters) - Food companies, which have been raising prices for a year or more to combat soaring commodity costs, have a new message for consumers: "We can save you money."

The idea is to position well-known food brands as an antidote to the higher price of eating out. Investors have already warmed to the idea, renewing interest in food makers like Kraft Foods Inc (KFT.N: Quote, Profile, Research, Stock Buzz) Kellogg Co (K.N: Quote, Profile, Research, Stock Buzz).

During its quarterly earnings call with analysts late last month, Kraft Chief Executive Irene Rosenfeld, for example, emphasized the value of Kool-Aid drink mixes, Jell-O powdered gelatin and other items for consumers looking to save money.

[Christian W]

Jell-O, Soylent Green what's the difference...

[DrKrbyLuv]

The Federal Reserve plays their intervention games in trying to rally people back to their Wall Street casinos where the dice are loaded and the roulette wheels are rigged. Some win, most lose and the house gets their cut.

Let's say you invest $1,000 in stock,and make a 50% gain in year, you did well in generating a $500 unrealized gain, now your stock is worth $1,500.

Let's say the next year, the equal opposite happens - your stock drops 50%. Now your stock is worth $750. Even though the market was technically flat over the two year time period, you lost $250 which of course becomes realized when you sell.

The system requires that the market must continually go up, separated by huge corrections. The hyper intensity for growth can be witnessed by the fact that quarterly reports become critical - incentives are packaged so managers do what it takes to deliver the best numbers possible. They get rid of people, cut back on new product development, reduce benefits, etc. They abandon the future for the present.

The model is simply not sustainable.

The process encourages corruption and eventually it will consume itself in the need for feed. We will see this unfold when the credit default swap bubble bursts. There aren't enough buckets to bail out the sinking ship when these hit.

Regardless, we need to become better investors/consumers. Sustained growth is just not in the cards with our system. But we are free to invest elsewhere

For example, there are many dividend paying stocks available through foreign markets and a better opportunity to grow. These foreign companies retain earnings to keep strong, thus enabling product development and appropriate investments towards the future.

Let's go back to my original example, but this time with a company that strives to pay their shareholders dividends. Let's say you invest $1,000 and your stock value goes up 50%, now you have $1,500. Since this a company that pays dividends, you may get a $250 dollar dividend, while your stock goes up to $1,250. They allow you to realize part of the gain unlike most US companies. And, you can stay away from the dollar.

Another opportunity to become better consumer-investors is by rejecting the dollar. I am hopeful that GoldMoney or some other gold currency (they use goldgrams) will take-off providing people with an alternative to the fiat currency.

Of course, one must exercise due diligence in researching these alternatives. I plan on jumping aboard by buying allocated gold stored in Switzerland...the big question I have is when.

I think the gold down-correction will continue for a little while longer. And, as Elaine and others have mentioned, there is always the concern market manipulation.

[GK]

Technically, calf hooves vs human bones.

Not much difference if you are a power/money mad central banker, alot if you have any soul.

[Elaine Meinel Supkis]

All markets are by definition, manipulated. The ungenerous information the people on the street get is often too little or too late or preferably, both. At least the sellers of assets, equity, stocks and bonds would like to think.

This is how they profit. When a game is 'good' for them, they play it to the hilt. When there is no more sword blade left showing and red ink blood is now all over the place, they lie about the truth and sell as fast as possible.

[Anthony]

I sometimes wonder if people will finally wake up and say "wait a minute, stock market value is not what the price say."

It's only going up because a group of people think they own something, which in practical level really owns nothing. (rarely right to vote or able to attend voting, no dividend, etc etc)

It's just paper being pushed here and there representing the illusion of owning a corporation.

Enron would be a good example.

[Paul S]

Putin may be showing the US how weak the US is, but the message is NOT getting through to "Dubaya" or his warmongering neo cons. "Dubaya" is issuing harsh warnings to Russia. Almost ultimatum sounding. I think we soon could get real world evidence proving how effective US Navy Aircraft carrier defenses truly are--or are not. Is "Dubaya" deluded enough to think the Russians are afraid of him? I believe the answer is 'Yes'.

[Elaine Meinel Supkis]

America's media wants war. The main media owners are Jewish and they feel that if they destroy Russia, they can destroy MUSLIMS.

I reported about how Russia and China, acting in concert with each other, are making huge, huge inroads with the rulers of the oil pumping nations. Saudi Arabia knows that if they side entirely with the Israelis and Americans, they might have a major uprising at home as well as total loss of any legitimacy with international Islam.

Also, if they lock out Russia and China, both will court IRAN who they fear for religious and geopolitical reasons. So Israel is very frightened of TWO things: Russia and China becoming big allies of Saudi Arabia AND OR Russia and China backing Iran!

The only solution is to bog down Russia in a huge war elsewhere!

The problem with this plan is, it can cause WWIII. And I know it WILL cause WWIII. The Jews don't fear WWIII because they think it won't happen. The US right wing Christians salivate over the idea they can have WWIII so they can fly to Jesus covered with blood and nuclear debris.

We have to stop this madness.

[DrKrbyLuv]

The US and Israel have been intervening and antagonizing in the affairs of the old Soviet bloc states, such as Georgia for some time. And we have been surrounding Russia with a missile defense system that is obviously not located to protect the US.

Depending on who you chose to believe, Israel has become the 2nd or 4th leading exporter of weapons on the planet. This is not an accident but rather part of a long term plan to continuously develop improved weapons systems and to grow this profitable international market.

Georgia has been well armed and trained through the US and Israel. If the is an "evil axis" it is clearly the sordid partnership between the US and Israeli power brokers.

[Paul S]

I should make clear re my last post: I very sincerely HOPE that the conflict between Russia and Georgia dies down peacably and there is NO conflict between ANYBODY. As much as I despise "Dubaya" and his neo cons, I don't wish harm to anyone, including the contractor/mercenaries (let's call them what they are) of Haliburton et al.

[Elaine Meinel Supkis]

I would safely say that non of us want a raging war in this region or any of the oil pumping regions. The rulers just got the oil prices down a tad and are trembling with fear because higher oil prices made Russia more powerful. They desperately want them lower.

But this won't be if oil pipelines are blown up, etc. Already, they are being closed in this region.

[Buffalo Ken]

I thought folks here might be interested in this article. Its hard to make heads or tails of this situation.

http://www.informationclearinghouse.info/article20478.htm

Peace,
Ken

[Jeremy]

I have been interested in Simplicity for a long time and have truly started to embrace this practice more, and after reading all of this information about the true condition of our nation, I am determined to live in Simplicity. It seems like we are living in severe circumstances and people are totally blind to it. Instead of seeing the truth of what is going on in the world and with our nation, people are still consumed in their materialistic lives and lost in their "America will always be #1" attitudes. I have been reading the articles on this website all day and I am quite concerned about the future of America. I think George W. has played a gigantic role in ruining our country.

[cheap loans]

That's an amazing post.
The situation is becoming worse because of the inflation.
May we all Hope for the best to happen to all.