August 21, 2008
Elaine Meinel Supkis
Two stories from last year at this blog are very pertinent for today's news. The harmonic echoes from exactly a year ago are most astonishing! The price of oil is going up due to the US and EU itching to fight yet another major oil exporting nation, this time the very nuclear Russia with a long, long history of winning wars with Europe. Yikes in spades! And the dollar is weakening, duh. Paulson's 'bazooka' he pulled out to reassure investors ended up blowing investors out of the water. Another 'Duh' moment in economic history. We visit Seeking Alpha which sounds more like 'Seeking Alfalfa'. A clueless professor talks very stupidly about inflation. Why can't I teach economics? History shows that my analysis has been very good so far! Rats.
Federal Reserve Picks Up Many Bad Mortgages
It was just only this last year that the fiat femme fatales tried it again. All the bankers in Europe and the US united to tell us that gold was worthless. Despite it rising from $260 to $650 in the last couple of years, they said this was silly, why stocks and the value of houses beat gold hands down! But as the value of both of those begin to falter and fall, the central banks have been selling of tons and tons of gold and this has kept the price down but this is a form of mass suicide, not to be copied. True, when a depression hits, the value of gold will drop just like all other assets but unlike fiat currency, it won't VANISH. For this is what all holders of paper fear. Stocks don't just go up or down, they VANISH. The only way gold can vanish is if the government confiscates it or someone robs you, both being quite obvious hazards!
But even if you keep your paper in a safe and watch over it with a gun, it can be reduced to zero value with no one coming within 1,000 miles! This is the inherent hazard of holding any sort of paper wealth. All paper wealth is just a proxy for something else.
This brings us to the news today: the Federal Reserve couldn't just hand out money to the banks for free! So they 'temporarily' took pieces of paper with addresses and signiatures on them that are IOUs made out to mortgage companies who loaned money to a bunch of dead beats! OK: so what are these scraps of paper really worth? Eh? $100 billion or more like $0? In the real world the answer is 'ZE-fucking-RO! Zen zen, nothing, nada, zilch.' If these worthless pieces of paper were worth $100 billion they would have been sold out in the open and not in this ridiculous fashion where we can't see them and we won't know if they are worth anything at all and is this the 'rescue' that our rulers are pulling off at our collective expense?
OK, everyone! When did anyone notice that the Feds have been heavily interfering with private housing markets? How about since the Great Depression! This time around, they are not saving house buyers but the banks themselves. Lending has become a government agency. But the profits flow to the banks who are merely a conduit to the government! This means, if the bankers can write infinite mortgages, they get infinite fees while the Feds have to cope with the defaults. This is rapidly finishing off our reckless, wild-spending government systems. How very revolutionary this is! Bankrupting our government in order to save bankers who gave out bad loans so they could collect fees is the height of stupidity.
Germany Slides Off Economic Cliff Thanks To Strong Euro
As I predicted, re-establishing the weak yen/weak dollar/strong euro status quo will swiftly lead to a collapse of the European economy for this is a near-perfect repeat of the strong yen/weak dollar/no euro economy of the early 1990's. Japan's yen became very strong, the Japanese flew all over the earth, buying things, investing and vacationing like mad. Then suddenly, it all collapsed and as the American economy got stronger, Japan went into a real depression. Now it is in a fake one but the signs are all pointing to Europe going into a real depression soon.
*snip*
All this year, the US and Japan cleverly joined Europe as they all told China there was no earthly reason to increase their FOREX reserves to over a trillion dollars. I mocked this effort. I even suggested Japan put its dollar reserves where its mouth was but of course, Japan simply wanted China to be punished and reduced as a trade rival. China was not fooled by all this. Either they read me or they are smart. I am betting on the 'smart' part. I found them to be very swift learners when things happen fast.The IMF and World Bank joined the propaganda effort to stop China from running the world's biggest FOREX reserves. Then Russia suddenly appeared out of nowhere with the world's #3 FOREX reserves! Even I was taken back by this sudden surge. I did recognize what it meant, though: Europe's battle with Russia was lost. Russia could now control relative values of the euro and the dollar via their FOREX reserves! For the last 10 years, while Japan patiently built up their economic firepower via their FOREX reserves, I have warned the Federal Reserve about this and warned them, the US MUST MATCH JAPAN by buying up yen! In equal amounts!
The US continues to refuse to hold much in the way of euros or yen. This is because we can depend upon our allies and trade partners and leeches to balance our currency one way or another. We are content to have no sovereignty over our own currency. No nation should allow other nations to hold such power over the national purse. Yet, not only do we allow the central bankers of Europe but also Japan, determine the value of our currency and to do so for their own benefit. Germany got caught in the gears because they fear a weak currency. This year, they are fully involved in weakening the euro. Now, on to today's news:
Paulson's Fannie-Freddie `Bazooka' Shakes Investors
(Bloomberg) -- U.S. Treasury Secretary Henry Paulson's ``bazooka'' may be intimidating the same investors he intended to reassure.The powers Paulson won from Congress last month enabling a government rescue of Freddie Mac and Fannie Mae -- authority he likened to a weapon whose mere existence made it unlikely it would have to be fired -- may end up making a bailout more likely, say analysts and investors.
They say the threat of government action is creating uncertainty that is raising the companies' borrowing costs and increasing the odds Fannie and Freddie will need taxpayer funding.
Joe Bazooka Paulson! He hauls out his big shot shooter and shoots himself in the foot. His offer to save the fair maid, Fannie Mae and her loutish brother, Freddie Mac simply meant all of Congress and the Federal Reserve and all those bankrupt bankers piled in and dumped these two vagrants into Paulson's lap. And who will rescue Paulson?
The Federal government. As I predicted, by the way, the Housing Bill passed by Congress is fixing exactly nothing except extending the agony of defeat in the banking sector. Everyone hopes to limp along for one more year. Then all will be well. But as I showed yesterday in the many graphs of the biggest banks in the US, they are nearing penny stock levels of value and can't raise money via selling stocks anymore.
Oil Rises More Than $6 on U.S.-Russia Tensions, Dollar Weakness
(Bloomberg) -- Crude oil advanced more than $6 after the signing yesterday of a missile-shield agreement between the U.S. and Poland bolstered concern that Russia may disrupt the flow of oil.The U.S. missile shield in Europe, which has ``a real anti- Russian potential, won't increase the continent's security,'' Russia's Foreign Ministry said. Russia is the world's second- biggest oil producer. Oil also climbed as the dollar fell to the lowest against the euro in a week.
``The tensions between Russia and the West were supposed to be simmering down but they are now ratcheting up because of Poland's agreement with the U.S.,'' said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut. ``The fall of the dollar is sending a huge investor flow into commodities.''
Way to go, Europe! Join the US in expanding NATO so that the Russian Bear gets totally pissed off. Then do a sneak attack on Russian allies and kill Russian soldiers in bed. Then sit back and watch a very enraged bear rip Europe to shreds! The stupid Georgian war against Russia is like hunting grizzly bears with a revolver. The bear eats lead and then eats the revolver and then eats the hunter. Even Paulson's bazooka isn't enough. Indeed, if one wishes to win a full scale war with Russia, one has to nuke all of Russia. Unfortunately, Russia can nuke all of Europe and America. So the price of oil is going up and this is another 'Duh' moment from our lovely gang of neocon nut cases.
Oil is also being restricted by Saudi Arabia. Saudi Arabia is losing money in our banking stocks. But they tried to save our economy with hyper-pumping of precious oil. Their reward was scant, to say the least. Now, the US is openly talking about throwing away Fannie Mae and Freddie Mac and thus, ripping off not only a very angry Russia with many nuclear bombs but a clever China that holds the same and our main oil supplier to the West, Saudi Arabia. As well as Japan. This won't work. We can do this if we want everyone out to nail our hides to the wall.
U.S. Stocks Drop on Writedown Concern; Lehman, Goldman Retreat
(Bloomberg) -- U.S. stocks dropped, extending the first weekly loss in a month, as investors speculated credit writedowns at financial firms will increase and a rise in oil damped earnings prospects for automakers and airlines.Goldman Sachs Group Inc., Morgan Stanley and Lehman Brothers Holdings Inc. led financial shares in the Standard & Poor's 500 Index to a one-month low after Citigroup Inc. cut their profit estimates. General Motors Corp. fell as much as 4.1 percent and US Airways Group Inc. plunged 11 percent as oil advanced the most in two months. Supervalu Inc. and Safeway Inc. slipped 3 percent after UBS AG said inflation will cut into supermarkets' profits.
Just three months ago, the media was told that Goldman Sachs was NOT hurt by the banking/lending collapse. Their clever dealers had schemes bringing in more loot. Which, incidentally, was directly connected to a fast series of very serious bubbles in all types and kinds of commodities. Especially oil. Now, the commodity markets are dropping, sort of, and Goldman is losing money! So Goldman wants commodities to rise again, they can't get rich any other way! They are truly torn in two. Stuck on the classic Horns of Dilemma here! And this is true of the entire system.
It was allowed to morph and grow totally in wacky ways to evade the obligation of the US to balance its trade and government budgets! We wanted to have our cake and eat it too and this meant we got stuck on these stubborn horns. Whatever we do to fix things will make other important things worse. If we set up better domestic energy and transportation systems starting with Nixon, we might have been able to survive this trap. Instead, we did the exact opposite.
If we retracted our empire after extracting ourselves from the Vietnam war, we might be able to survive. But we did the exact opposite after the Soviet Union fell apart. We expanded. And we went from tiny wars with barely armed Caribbean micro-islands to huge confrontations with Russia, all in a leap and a bound. This irresponsible action on our parts was unnecessary and deadly. We can't win even medium-sized wars, much less, this.
The US won't get rich poking Russia in the nose. Quite the contrary. The Pentagon is salivating over the possibility that McCain will rule us and open the spigots for wild, super-wild military spending on Cold War toys. Many manufacturers are praying for this. A good number of workers are hoping for this, too. But we can't afford this without heavy taxation. During the 1940-1970 era, we had high taxes to pay for this. Now, all we want is those tax cuts and hedonism.
Core Inflation Is Low and Stable by Mark J. Perry, Ph.D.
What about annual core inflation? It's been flat for 10 years now at about 2%, see chart above, is lower now than it was several years ago, and less than 50% of the long-term 4.58% average.As I suggested before on several posts, unless and until core inflation rises like it did in the 1970s (see chart above), inflation can't be "a clear and present danger," as Brian suggests.
This clown is a classic clueless economics professor. They were cranked out by the thousands from the Nixon era onwards. Nearly all of them, right wingers. 'Marxists' were systematically cleaned out from 1055-1975.
If you only weigh my skeleton, my weight hasn't changed in 10 years!
My comment:
Balderdash, that is the BEST remark yet! Love and and will use it on my blog.
All inflation graphs MUST show the various changes in tracking inflation. Otherwise, it is full of bullhockey. I used to be part of the annual inflation collection system whereby a Federal agent would come to my house and he and I would spend hours going over what I bought that year and how much it cost. I kept all my receipts for this purpose. He was the same man every year and we got to chat a lot about inflation statistics.
This was from 1975- 1982. Then, he ceased coming by. The first 'reform' of the statistics was launched! Since then, we have been inflicted with a goofy and worsening system that grossly undercounts real inflation.
Just like Japan is now doing. As inflation ravages the average Japanese, they get no recourse at all since the statistics refuse to reflect this.
Here is yet another story from Seeking Alfalfa:
Obama's Economic Policy and Reagonomics by Mark Thoma
This article by David Leonhardt describes Barack Obama's view of economic policy, and it is very similar to my own. Most of the time, it is best to leave markets alone, to let them work without intervention, and that should be our starting point. But markets fail, and part of the disagreement with those holding more conservative views is over how often markets fail, whether they can easily self-correct when there are problems, and how effective the government is at fixing problems when they exist.On the last point, I am a proponent of market-based regulation when it is possible to use it. For example, if you want to regulate the profit of a public utility, one way to do it is through rate of return regulation. Under this approach, prices are set so as to guarantee investors a particular "fair" rate of return. The problem with this is that there is no incentive for the firm to control its costs, the rate of return to investors will be the same whether it is efficient or inefficient.
This writer endorses Obama over McCain. McCain's economics program is McInsane. But Obama wants us to remain stuck on the Horns of Dilemma forever. The hope is, we slightly raise taxes on the rich and we continue onwards with slight reductions in imperial spending, sort of except AIPAC owns Obama these days and we have no choice. As usual. Here are some more remarks from this story's comments section:
robert.b.ferguson
Aug 21 09:47 AMLets see: raise taxes in a down economy, stifle energy production during a demand surge and remove incentive for growing wealth. sounds like a winning formula. good luck with that.
My comments:
Raise taxes? HAHAHA. The US is GOING BANKRUPT, everyone! Thank you, GOP, in particular.
But both parties are now spending like fiends. And the US public, like spoiled brats before Xmas, expect Santa Claus to come down the Federal Chimney and open us a bag of manufactured in Asia goodies.
We have to eliminate all our foreign bases, stop all our foreign wars, erect tariffs and barriers to imports and rebuild this nation before we go totally zombie. Anyone who thinks the present system can run another 25 years is insane.
Our entire nation is entirely in debt. We are up against the Great Wall of China. Our creditors are communists!!!! Hey, ever think about what this really means, anyone?
We are so messed up. Go ahead, America, cut taxes even more.
******************************************************
Sigh. I feel rather old. Since LBJ, I have suggested we cut military spending so we can constrain our budgets. This seldom happens. Only when a Democrat is elected these days, does the GOP cut military support. They won't support wars like in Bosnia, for example. They won't support anything. This clips the military's wings somewhat. If the Democrats run things with a GOP President, the same thing happens. Maybe having a divided government is the only solution. Better still, have the Parliament system with more parties so we can pressure the two big ones better.
The US doesn't want to pay any bills. There are many, many lies told about taxes. For example, when talking about the budget, seldom do the 'no new taxes' people mention that the US working class is funding the government much more than the statistics show. Most people who want to persuade us into thinking only the rich pay most taxes conveniently leave out mention of the SS surplus funding. This skewers the data grossly.
Since Reagan spooked everyone into upping the SS withholding payments, the working class as lost ground in the economic games. Wages are falling vis a vis inflation. And the contribution of the SS funds to running the government is concealed or deliberately excluded the same way food and fuel have been removed from inflation statistics. Ideologues would far rather dishonestly win arguments rather than seeking the truth.
The truth really isn't all that hard to find. She may be blind, but She is also a Goddess. She is also called 'Libra' and has those pesky scales we hate so much.
Proof of physical gold shortages while the price is plunging in the paper markets. http://www.reuters.com/article/ousivMolt/idUSN2140103820080821 . What a sham. If Americans start buying gold, as well as canadians. The price is going to soar.
Posted by: Ralph | August 21, 2008 at 02:03 PM
I don't know if it will soar, but the demand will be there, and so the "gold" will find its value!
Personally, I'm a fan of silver. The "common" coin metal.
Peace,
Ken
Posted by: Buffalo Ken | August 21, 2008 at 02:17 PM
Paulson and The Beard remind me of the Roadrunner cartoon where Wile E.Coyote
paints a black patch on the mtn wall thinking
he can fool the roadrunner into believing
its a tunnel. Poor Coyote. The Roadrunner
sails right thru his "tunnel" and when
W.E.Coyote tries the same, its he who is
flattened instead.
When The Beard opens his mysterious loan
window, the virtual economy, like neutrinos
sails right thru the rock, but the real
economy becomes road kill.
Soon the "real" will bite back and have lunch with the virtual economy.
Coyote...Its whats for dinner tonite !
Posted by: G. | August 21, 2008 at 02:19 PM
G - that is an incredible post. I agree.
I also think platinum is a neat metal and lately I'm coming to really appreciate laminate - even though when you try to put in laminate flooring you often get an unexpected lesson. Just happened that way for me.
Peace,
Ken
Posted by: Buffalo Ken | August 21, 2008 at 02:21 PM
In fact, I just split a small piece of the laminate in half - I could make this stuff and put it together in very valuable ways - if you know what I mean.
Laminate kept in a conditioned environment (minimul diurnal temperature chage and relatively constant humidity) will probably last damn near to infinity! Eventually some bug will come around and eat it, but anyhow, this is a product and material I think is worth investing - investing some time to better understand. I'd like to see the energy balance associated with its production. I think I could make it. I did split it up and I've been looking at its individual parts.
Anyhow, sorry for the ramble...
Posted by: Buffalo Ken | August 21, 2008 at 02:24 PM
But anyhow, since I've been rambling and since I consider some here friends let me just say I put in approximately 650 square feet of lamainate includign a 35 foot hallway with 8 or 9 doors (I can't remember just now). I pulled out the carpet and the tacking, the padding, and half a zillion mf'ing staples that should never have ever been put there in the first place.
Anyhow, I did all this work. I worked my ass off - and what did I get in the end. Bitching. Let me tell you - it is a good thing I have experience. Because I handled the situation well.
I got paid half my money and I plan on finishing the job (FOR GOOD) tomorrow.
So anyhow, just thought I would share that personal experience that has taught me many things. I am still living and loving life every day of the week!
Peace,
Ken
Posted by: Buffalo Ken | August 21, 2008 at 02:28 PM
Oh - I charged $2 per square foot. Plus $250 to take out the carpet.
I think I undercharged, but I knew I was learning. Next time - well, just wait and see! I plan on doing better, and this old farts should be happy because they have a hell of a floor that was installed with loving personal attention. I worked my ass off, but what did i get - bitchin. Sometimes it really makes me wonder!
My prices are going UP. If you know what you are getting, you will be willing to pay.
Posted by: Buffalo Ken | August 21, 2008 at 02:31 PM
So far I have put in 44 hours and I figure I have about 6 more to go. I've been paid for 2/3rds of the work. I plan on finishing the job with quality (as best I can), and then I will get the last third of my payment.
You can count on "2 More Hands".
P.S. Check out the "logos" at my site. I declare them public domain - use em if you think they will be helpful. Nobody owns an idea. Ideas are free.
Ken,
2morehands.com
Posted by: Buffalo Ken | August 21, 2008 at 02:35 PM
UK Telegraph:
"China has replaced the US as Japan's biggest customer, underlining the emergence of the country in the global economy."
http://tinyurl.com/56695n
Apologies if this has already been raised and I missed it. This moth-eaten bear ain't what it was!
Posted by: Bear of Little Brain | August 21, 2008 at 02:48 PM
Hey Elain, I know I'm flippant, but I think I could kick your behind in a typing contest. Are you willing?
Posted by: Buffalo Ken | August 21, 2008 at 02:49 PM
This is how it would work - or it is just an idea.
There would be an "assigned" webpage to go to. A comment would be required by a certain time (there would need to be a "starting" time).
Then it would be a simple ratio. keystrokes over time.
Peace,
Ken
P.S. I have lots of love and I think you do too!
Posted by: Buffalo Ken | August 21, 2008 at 02:54 PM
Hey Bear,
For what it is worth (perhaps not much), I respect you.
Your name is awesome and it is also a paradox.
Peace,
Ken
Posted by: Buffalo Ken | August 21, 2008 at 02:58 PM
Oh wait, I take it back. Elaine with an e, i don't want to go "against" u - i don't even think i could.....i am not of the wood.
But I respect those who are.
Posted by: Buffalo Ken | August 21, 2008 at 03:09 PM
i prefer tile and laminate - i'm still figuring the laminate out, but i will get it cause i always do (or at least i always have.......as far as my imagination can sense...
Posted by: Buffalo Ken | August 21, 2008 at 03:10 PM
I type faster than I talk and I talk too fast as it is, Buffalo.
And yes, I mentioned the story about China and Japan being each other's biggest trade partners just last night.
Posted by: Elaine Meinel Supkis | August 21, 2008 at 04:03 PM
It is true. I am passionate. I have been putting out challenges LEFT and right......one after another....
Nobody took me up on my challenges. I guess I am the champion - at least, in my own imagination.
This post makes six, I was hoping to stick with five. I love five. I love eight. I love the King of Hearts. I sent Nancy Pelosi a message a long time ago - she didn't listen. I just ate a forest-empowered hot pepper that i grew in my own garden today - just like i hear hillary does.
Anyhow, this pepper almost blew me away, but I survived.
6th post and last for the day. Do you believe me?
Posted by: Buffalo Ken | August 21, 2008 at 04:04 PM
Elaine - I knew you would show up!
Posted by: Buffalo Ken | August 21, 2008 at 04:04 PM
Can you type this fast? I am not scrolling.
I was falsely accused and I am not happy about this. The accusers are about to run headlong into the convictors, and the convictors have a whole bunch more hands.
2 more + 2 more and so many more you wouldn't believe....
The time for justified retribution has arrived.
Peace,
Ken
Posted by: Buffalo Ken | August 21, 2008 at 04:06 PM
Hey - check out my stuff if you are interested. It is very inter-linked. I think it is a Good story, but I suppose, what do I know. Although my name is Ken.
Ken of the Buffalo.
Posted by: Buffalo Ken | August 21, 2008 at 04:07 PM
I have lots of stories out there. Stories that are no longer publically available, but I'm pretty sure they were saved.
Also, I am willing to sell these stories to the proper organization. One that I feel syntergistic with - if you know what I mean.
Hey, one of my stories was a long one about Tejas and Mejico.
Incidently, what do you think about Fay - she is sure dropping a log of rain. And did you here about the plane? How sad it must have been when the fire was burning so hot. I here now that they say B-7 came down because of fire - i'm not sure i believe this - what do you think.
The fate of the country may rest upon you answer - but of coure, it may not. Obviously.
I love numbers.
Posted by: Buffalo Ken | August 21, 2008 at 04:15 PM
Hey - I was saying to my daughter just today an idea I had about how cars could be driven in a way that made them so naturally efficient.
They might even be able to compete with trains, but I guess nobody wants to know. Not even GM.
Posted by: Buffalo Ken | August 21, 2008 at 04:17 PM
Just really everyone. Leave me alone and I will do likewise.
Sorry for all of this incredible luminous foolishness - i just couldn't help myself.
Peace from me to you and from my family to your family. Peace is what we need. It is time for Peace. Don't you think.
Posted by: Buffalo Ken | August 21, 2008 at 04:19 PM
I call 8. I call infinity. I mean it. I am mean. Real mean.
Posted by: Buffalo Ken | August 21, 2008 at 04:35 PM
I'll take 9 too. Pluto is for sure a planet. It was once thought of as so, it always will be at least in the minds of some. Some men and some women. The women are the ones who really matter when it comes to keeping track of time. Don't you know and don't you just love Pluto!
Posted by: Buffalo Ken | August 21, 2008 at 04:37 PM
Thanks for the compliment, Ken.
Missed the China/Japan trade comment yesterday. Must have been staring out the window in class again! Sorry, ma'am. ;-)
Actually, what stopped me half-way was this:
"England was a defacto OPEC country. Protected militarily and economically by the US."
I was going to respond because that's not quite true (there was a popular movement that wanted US bases and nuclear weapons off our soil - me included; but it's not worth opening that old sore, to say nothing of which oil companies shared in the North Sea booty/plunder).
Anyway, I finally decided not to write that essay! ;-)
Hence, I never finished reading your posting. Ho, hum.
All the best
Posted by: Bear of Little Brain | August 21, 2008 at 04:53 PM
as i said Bear - I respect you. Everyone who knows anything about the wilderness respects bears. Bears demand respect and they get it.
Posted by: Buffalo Ken | August 21, 2008 at 05:30 PM
England's leaders are every bit as bought as American leaders are. Just look at Blair and Major. That goes for nearly all European leaders actually.
Posted by: Christian W | August 21, 2008 at 05:33 PM
Christian you seem to have much wisdom. What does the W stand for?
Posted by: Buffalo Ken | August 21, 2008 at 06:18 PM
Ordinary Brits were sensible. But they didn't run the Common Wealth. Now, the Commoners get the kit and kaboodle after all the Wealth is gone.
Posted by: Elaine Meinel Supkis | August 21, 2008 at 06:43 PM
yes as it should be in my humble opinion...
the "commoners" get everything...
Posted by: Buffalo Ken | August 21, 2008 at 06:58 PM
Hi, Elaine.
You point out that "Our entire nation is entirely in debt. We are up against the Great Wall of China. Our creditors are communists!!!! Hey, ever think about what this really means, anyone?"
Well, yes, I have, anyway. People can be such fools. Definately herd animals. Reality has such concreteness and eventually disturbs the dreaming sleepers.
Posted by: Market Watcher | August 21, 2008 at 06:59 PM
but those of the "little house" know..
Posted by: Buffalo Ken | August 21, 2008 at 06:59 PM
the first step is to get rid of Pelosi. Either that or elect Cincy Sheehen.
These are the only options I see left.
Impeachment would have been so much easier.
Don't U think?
A "dumbbbbbbed down populace" will lead to a dumbed down nation...
Posted by: Buffalo Ken | August 21, 2008 at 07:01 PM
Elaine .... Libra came out today and slew the US Dolllar ... yes the Dollar fell lower and gold and oil Rose as currency traders drove the USD/JPY down.
The US Dollar, $USD, fell lower to close at $76.11 and gold rose to close at $837.
You wrote that "This year they are fully involved in weakening the Euro".
The weakening of the Euro, FXE, began in late June 2008, as I documented in my article, June 22, 2008, article 'EUR/JPY Shows Bearish Dark Cloud Cover Candlestick'. I wrote that "the chart of EUR/JPY, FXE:FXY, the barometer of the yen carry trade, shows a bearish dark cover candlestick which is presenting also as a lollipop hanging man candlestick. It looks like a great unwinding of the yen carry trade is at hand, with disinvestment in stocks and currencies to take place".
Then in my August 7, 2008 article 'An Elliott Wave 3 Down Commences In The EUR/JPY, I document that the currency traders heavily sold the Euro, FXE, the Australian Dollar, FXA, and the Canadian Dollar, FXC, the British Pound, FXB, and the Swiss Krona, FXC.
Now, the US Dollar, $USD, will be joining the other currencies in falling lower together.
Gold could fall once again to its August 15, 2008, $790 value. Neverthelss, the result of today's trading is now clear, cogent and convincing: given that Peak Dollar and Peak Currencies have passed, that gold is now the defacto world currency and the means and measure to garner and accumulate wealth.
In a world of failing currencies, and falling stock value, international tensions will grow, small wars like in the Congo will become more frequent and global conflict expand to the point where World War III will happen, as the EU US Western World Government seeks to consolidate control over oil reserves in Iraq and Iran, with the pretext for war being a military strike on Iran, over its nuclear ambitions.
Posted by: Richard | August 21, 2008 at 07:48 PM
@Buffalo Ken: Witting, my last name =)
Posted by: Christian W | August 21, 2008 at 08:10 PM
Elaine,
You ARE a teacher of economics:
"Bankrupting our government in order to save bankers who gave out bad loans so they could collect fees is the height of stupidity."
I rest my case.
By the way,
As I watch all the new American gung-ho aggressive posturing against the "Russkies" (we used to emphasize that what made them so evil was their Communism, but now we're just going to straight ethnic hatred), the most disturbing part is not getting a lot of attention.
Back in the MAD (Mutual Assured Destruction) Cold War days of the 50's, 60's, 70's, and 80's we landed on a bizarre kind of balance-of-power with a shared policy of "we better not start any actual fighting, because we'll kill each other completely". The only real destabilizers were the RAND Corp. theorizers and "father of the H-Bomb" Edward Teller, who kept insisting that the U.S. could "win" a nuclear war, by suddenly sending all our missles at the Societ Union in a surprise first strike.
Sure, there'd be a dozen or two nukes of the Soviets that would survive the attack or get launched in time, and a few million Americans would have be "sacrificed." But these clowns used that new magic toy the "computer" to run spreadsheets (based on their power-loving magical-thinking assumptions) that "proved" that America would "win" WWIII by having a higher "survivability" rate after all the glowing dust settled.
This insane approach was openly discussed, and the masses were even exposed to it in movies like "Dr. Strangelove" and "Fail Safe." The absurdity and suicidality of this "How to win a nuclear war against the Commies" mentality was so obvious that it didn't manage to become official U.S. policy.
MAD ultimately served its peace-keeping purpose by exhausting the finances of both the Soviet Union (which then came apart politically) and the U.S. (which underwnet massive budget and trade deficits that resulted from using endlessly expanding credit to replace real money in order to stay "prosperous").
The new Russian state and America started nuclear disarmament, and everybody stopped threatening WWIII. There was a "peace dividend" that led to budget surpluses in the U.S. and allowed Russia to eventuall get on its feet economically.
Now, here's the real scary part. In the ensuing 20 years, the U.S. has pushed the anti-Russian military organization NATO into every possible country on Russia's borders and is now highly-publicly putting anti-missle missles in them.
What's so bad about anti-missle missles? Isn't this just "missle defense?" Why are the Russians so paranoid?
Here's why: Once again the Strangeloves hired by the Pentagon are crawling out from under their rocks and whispering into the ears of Gates (formerly known as Rumsfelt), Bush, Rice, etc, the following message: "If we surround Russia with anti-missle missle systems, then we can launch a first strike! They'll be crushed, and any responding nukes they manage to launch will be stopped at their borders. HAHAHAHA!!"
Sound familiar? Too bad the media has become the captive of the government and our return to insane war planning is not getting public attention this time. This unbelievably dangerous thinking is why the ABM (Anti-Ballistic Missle) Treaty was signed with the Soviet Union in the first place - both countries knew the same thing.
It's also why Bush and the "New American Century" NeoCons unilaterally abrogated the ABM treaty and re-started the Space-Based Defense Initiative (Star Wars), in order to give the U.S. a free hand to prepare to destroy Russia. Of course, we'd never actually USE that power, or so we say.
This is what the whole Georgia thing is all about (we were creating an "Israel of the Caucasus" to be our regional attack dog and the Russians decided enough is enough).
While Iraq, the economic meltdown, "terrorism" and the elections hold our attention, both the U.S. and Russia are hurtling to Hot War brinkmanship that is much more dangerous and expensive than it ever was during the Cold War.
Posted by: Michael | August 21, 2008 at 08:16 PM
Fortunately, the Europeans put a stop to US plans to admit Georgia into NATO. Imagine how bad the situation would be had Russia attacked a NATO nation.
NATO should have been eliminated long ago as it is essentially on organization to confront Russia. The US neoconns have played a bad game here hoping to make money selling arms and by siphoning off oil revenues from the Caspian region.
The US mainstream media is totally silent about the fact that Israel was selling Georgia weapons and training. Now, the bear is looking to renew ties with Syria - Syria has offered to allow Russia to position their missiles on Syrian soil.
Israel will feel the blow back from Georgia's aggressive behavior more than Europe and the US.
The crazy notion by the US and Israel has been that they had to stop Iran from developing nukes. Guess what, it's much quicker and less expensive to simply buy nuclear warheads. Anyone think Pakistan, China or Russia will ALL continue denying these sales in the future?
And you can forget the pretend support of the US by NATO allies. Most depend on Russia for oil and natural gas. With winter coming, Europe will think twice about messing with Russia.
It will now be very difficult to get any NATO countries to extend NATO's liability to Georgia. This is the only good news.
Posted by: DrKrbyLuv | August 21, 2008 at 08:28 PM
Hope you are right, Dr. KrbyLuv. By the way, glad to see you back [no hard feelings about things from my end, OK?].
About MAD: I knew about several incarnations of the stupid idea, all we have to do is a sneak attack on Russia....and....
See, when the L-5 Society was supposed to be about the Peaceful Uses of Space, inside the organization, at the very top, in the form of my sister's new fiancee, we had this grotesque idea which was the germination of Star Wars. Will Safire took it up while I was outraged by the suggestion that we have a super-missile shield that would then be a screen that would allow us to destroy all the humans in Russia.
Gah!
The L-5 Space colonies would be used to launch this war from space!!!! I said, 'Russia will nuke us before we can install any such system. The closer we get to activating this, the more likely the Russians will nuke us. They must do this!'
Well, here we are: the very same neocons I debated at that Princeton Club gathering are running our war planning and planning World War Fucking III.
Got bomb shelters?
Posted by: Elaine Meinel Supkis | August 21, 2008 at 09:42 PM
Watch Algeria fall... Europe will be very cold this winter.
Posted by: whine and cheese | August 21, 2008 at 09:44 PM
Gives the concept of Cold War a bit of realism, eh? Heh.
Posted by: Elaine Meinel Supkis | August 21, 2008 at 10:26 PM
Are you all insane?This is not war with slings that you are talking about. If just ONE nuclear rocket take off from any place of the world with this stupied world is OVER. There wont be USA, Germany, Georgia, Russia, China, New Zealand or Chili.... It will be OVER.Mankind will extinct! PERIOD!
Posted by: Ivendur | August 21, 2008 at 10:58 PM
Dear Ivendur: I grew up inside of the military/industrial/CIA complex. I have actually seen not only nuclear bombs blown up in tests but a lot of rockets and missiles. My dad was the one who brought out the Nazi rockets from Germany at the end of WWII.
I have devoted my entire life to stopping nuclear war. I fear it tremendously. We are always on the verge of tripping over into this hideous war. So the deliberate provocations leading us right back to where we were in 1955 when I was only 5 years old and read a headline in a newspaper in Chicago's train station saying, 'Cold War Heats Up.'
OK: nuclear disarmament has been totally perverted by the US and Israel into a hideous farce. Disarming smaller nations we want to invade! Not disarming the US, Russia, ISRAEL, France, England, China, India, Pakistan. Nope. Instead, most of these nuclear armed critters are in control of the Dead UN.
The UN was used to illegally disarm and then stomp on Iraq. An international crime! NO ONE will EVER disarm again. Ever.
This is just so terrible, it makes my head hurt to even talk about it. So we must talk about it.
Posted by: Elaine Meinel Supkis | August 21, 2008 at 11:08 PM
From a story last January about all this:
http://elainemeinelsupkis.typepad.com/diplomacy/2008/01/nuclear-war-kee.html
Nuclear War Keeps Intruding Into Our Troubled Waking World
Dear readers, I don't know how most people look at these images but just posting them here made me cry. I can't bear looking at videos of nuclear bombs. I grew up in the shadow of the Valley of Death and WWIII. My father, due to his high standing within the missile/nuclear/advisor to Eisenhower community, knew a tremendous amount of highly-classified material which I was partially privy to as a child because frankly, my very favorite game was The Ghost Spy. I spied on my dad. A lot.
Posted by: Elaine Meinel Supkis | August 21, 2008 at 11:14 PM
Hey, it works!
To post pictures, you just have to do the ----img src---code bracketed with the < and " at the beginning and a " and > at the end.
Posted by: Elaine Meinel Supkis | August 21, 2008 at 11:18 PM
Erecting tariffs and trade barriers should include ANY item manufactured outside the US. Including items made by corporations with US headquarters like GE, Nike, etc. If it's made outside the US it's a foreign import Let's see Jack Welch counter THAT. This country should also put US corporations on notice that if they run afoul of their host country, they are on their own. The US Embassy, the 7th Fleet...no longer available. The only thing we will do is to send Jim Cramer of MSNBC over to make stock market predictions/recommendations. Maybe the bad guys will die laughing.
Posted by: Paul S | August 21, 2008 at 11:28 PM
Dear Elaine, thank you for your replay. I undestand you completely and i belive you. I'm pretty younger then you, and i grew up in family where i use to hear that there is nothing more terribly wrong in this world but the WAR!Now when i'm 30 yeard old, i can feel and understand what my parents meant back then.It is SAD!SAD and cruel!And if you think for a bit it is ALL about the MONEY! Nothing else!Is this world doomed?Really doomed!
Posted by: Ivendur | August 21, 2008 at 11:37 PM
I know you like to expose the two faced nature of the Japanese miracle economy so I thought you would like this -
http://www.guardian.co.uk/business/2008/aug/22/japan.socialexclusion
"All it takes is a short train ride to be transported from the affluent, neon-lit streets of central Osaka to the grinding poverty of Japan's biggest slum.
However, you won't find Kamagasaki on any official maps. Osaka's bureaucrats would rather the world knew as little as possible about the maze of dingy streets, tarpaulin-covered parks and high-rise dosshouses that symbolise growing social inequality in the world's second-biggest economy.
When jobs are plentiful, life in Kamagasaki continues largely unnoticed by the rest of Japan. But these are hard times for the thousands of casual labourers who descend on the local employment-welfare centre every morning at dawn, not knowing if they will spend the day earning hard cash on construction sites, or queuing for handouts at the local soup kitchen."
Posted by: klintock | August 22, 2008 at 05:45 AM
Ivendur, et al,
It is indeed frustrating to see the unchecked insanity proceed with little notice or care from our leaders and much of the population.
Thanks Elaine for sharing your keen understanding of international economics - your columns, and the insights by others here, have been a real eye opener.
I remain optimistic that eventually, the people will recognize what is happening. We still hold the power to restrain and reform our government.
Posted by: DrKrbyLuv | August 22, 2008 at 07:07 AM
DrKrbyLuv - I agree with you.
The People will come thru.
"We" the People always DO!
Peace from me to you and from my family to your family. I extend Peace outwards in my own "insane" sort of way, but this is not an insane hope; rather, it is the only way I can hold onto hope because the "world" seems insane to me - but I know it is only a couple so-called elite few and all we need to do is move them out of the way. Simple. Lets cut the strings discriminately if you know what I mean.
The idea train has commenced. Can't you sense it?
OK today, I am going to finish that stinking laminate floor job. God, I will be happy when I am out of those old folks house - no offense to them, I just can't stand it hearing so much propaganda blurting out from the seemingly constantly turned on TV. Today, I will have my MP3 player. Today I finish the job. Hooray for me...ha...ha....ha.
No more posts today - do you believe? It don't matter anyhow and nor does money matter. Money sucks. Money is about to go down.
Posted by: Buffalo Ken | August 22, 2008 at 07:48 AM
Klintock, yes, I have the Telegraph article. This is the fate of all those excess males in Asia, by the way. The sociological force that binds mothers and daughters is VERY powerful. The natural form of human society is a matriarchy.
All societies that give women a choice gravitates towards a stronger mother/daughter bond. Mother in laws are pure hell from top to bottom. I say this as someone who has had to deal with mother in laws almost all my life.
So when women have some freedom of choice, if the man is in a culture that has him habituated to being served rather than him sharing and a culture of the Evil mother in law treating her son's wife as a servant, women gravitate towards mothers, not husbands.
Posted by: Elaine Meinel Supkis | August 22, 2008 at 07:55 AM