Driving Global Banking Of The Cliff

September 3, 2008

Elaine Meinel Supkis

Today, we look at the increasingly nasty global banking crisis. Oil and gold are collapsing in price as the flock of vultures we call 'speculators' take flight. The loss of credit continues in the teeth of record-low interest rates from some of the most indebted countries on earth: the US and Japan! These two economic giants are driving the entire planet's banking system right off a cliff. Time to talk about cave men hunting ancient Ice Age animals and comparing that to today's equally bloody activities in markets.

Credit Mess: We're Only Halfway Done

Another prominent economics professor has said that total losses from the credit crunch will easily exceed the International Monetary Fund's early predictions of nearly $1 trillion.

Hyun Song Shin, a leading economics professor at Princeton University, said the financial crisis has entered a second stage and will likely bring total credit losses above $1 trillion.

The subprime mortgage crisis, which characterized the first phase, has already cost financial institutions more than $500 billion, Shin told MarketWatch.

The problem has now spread to the real economy, said Shin. Losses on credit cards, consumer and business debt should match or exceed those from subprime mortgages.

"We'll see as much as the subprime losses again on the other side, at the very least," Shin said.

Money is easy to graph. It can be compared to either water flowing or natural landscape of mountains, valleys and plateaus. It is an inner image of our prehistoric landscape. We stood there, on the ridge, squinting at the landscape of rills, hills and herds of Ice Age mammals moving restlessly about. And we clutch our spear shafts and rock back and forth on our heels, discussing how to cut out of the teeming herds, some monster-sized wooly mammoth, for example. The dogs sitting at our feet look up with anticipation of good eating.

Last year, the world's financial economy plunged off a cliff. Like a herd of wild kine or shaggy-maned, fat little horses, all ran off the cliff and crashed to the valley below. The hunters want to get down to where the dead animals lie in heaps only the huge Cave Bears and the Lions and Wolves are joining the armada of vultures and are feasting instead.

The present collapse isn't like the other oil-inflation related collapses in the past. This is because of one major difference: from 1974-2000, the US was in bad financial and trade shape but still had lots and lots of value left. Our credit was still credible. But the cure for the stock market bubble collapse and then the 9/11 attacks and the need to go to war to steal oil from Iraq led to the US using a trick that it never used before.

Never did the US stimulate a very heated economy with 1% interest lending. This remarkable event will go down in US history as the coup de grace that killed what was left of our banking system. The US was barely in the beginning of a recession due to wild speculation coupled with the dire effects of Wall Street literally being under attack and many businesses utterly destroyed when the World Trade Center crashed to the earth with a resounding boom.

Anxious to make Bush popular after he was caught being more interested in a children's goat story than in a massive terrorist event, to get people behind the Bush tax cuts and to encourage spending, Greenspan gave the GOP this great gift. When 9/11 happened, Bush was increasingly unpopular. The Greenspan 1% loans smoothed over everything and the US public, terrorized by the 9/11 attacks---which our military did absolutely nothing to stop---decided to go on a collective home decorating binge.

Everyone wanted to make America strong by living in McMansions with granite counters. And drive SUVs with impunity. This flood of easy lending launched by two forces, the Fed dropping rates to near-Japanese levels plus Bush and Congress unilaterally voting to not pay for anything with taxes but to charge almost ALL government spending to the US credit. This engorged global banks with lots of 'assets'. This is because debts are assets to bankers. Savings are debits since the bankers have to pay savers. When the US system of floating currencies was set up, the idea was launched that US Treasuries which are government debts are really money assets and can be used to create more lending. So the flood of US debts which, since 2000, have doubled. And before 2000, the US national debt was already much too high.

The US was already facing the fact that oil was beginning another great bubble. It relentlessly rose from $11 a barrel to over $100 a barrel. Gold did the same. The warning signs of impending inflation were obvious when Greenspan dropped rates to 1%. He chose to ignore this. Instead of spending $5 trillion in less than 8 years on rebuilding US energy systems and thus, defeating the rising oil costs which are increasingly imports. Instead, we ran around like a bunch of Martha Stewards, fretting about the table decorations and the curtain details while the house was burning down. Instead of installing alternative energy systems and building nuclear power plants, for example, we built more McMansions in the most geologically or storm-wracked sections of the North American continent.

So here we are: last year, our finances went off the cliff. This year, we are now down in the valley where all the dead animals are rotting and where gangs of furious cave bears, prides of lions and packs of wolves are stalking us. And now, we have to figure out how to survive and climb back out again, intact. Indeed, when the world falls off of these economic cliffs due to excess speculative debt, the results are always the same: many, many people die. The climb out of the Great Depression killed off many millions of people! The epic wars left a wide swath of utter devastation in its wake.

This is why the metaphorical world of finance is so dangerous. It can morph instantly from a graph, a list of numbers, some calculations in a computer into a raging monster blasting us with nuclear fires.

Sean O'Grady: Credit crunch: 'It's just the end of the beginning'

Now, shortly after the unhappy first birthday of the credit crunch we are at what we might call "the end of the beginning". Even though Ken Rogoff, a former chief economist at the IMF, has chillingly warned that a "whopper" major bank will go under in the next few months, at least we know the rough parameters of the sub-prime problem – usually neatly and memorably rounded to about $1 trillion ($1,000bn). It may even be a little better than that: house prices are still falling in the United States, but mostly at a gentler pace. So some of the gloom may be lifting over there.

What's next? Well, there are two new looming threats to keep us awake at night. First, the certainty that what one might term the "normal" writedowns and losses associated with an economic downturn will add to the strains on banks' balance sheets just when they are at their weakest.

Banks are not merely 'weak'. They are USELESS. Anyone can write up loans. All we have to do is take a pen in the hand and write down, 'I lend you $XXXXX. Then, if everyone in the community accepts this as payment for a house, it becomes 'real'. End of story. Since it is this simple, all sorts of conditions and hazards were laid in the path of bankers who want to write these checks. They had to have 10% of the value of this loan in their vaults as 'savings.' Savings in the US collapsed due to Greenspan's 1% gambit. And today, banks still pay less than inflation for savings. This saves the banks money but they need this money to make loans.

So a new system was encouraged: instead of regulated banks giving out loans, anyone could do this so long as they SOLD their new loans for $XXXX to some schmuck in say, China or Norway. Then the loans were 'off the books' and therefore, the bankers didn't need any 'savings' to back up these loans! Great game! Only it crashed to a sudden halt in the summer of 2007. No one wants to buy these crummy, lousy mortgages or debts! Unable to sell off these funny money markers, the bankers are unable to lend. And this will not change until interest rates shoot up high enough to attract enough savings to support lending again.

And the LAST THING any of our central bankers want is high interest rates attracting savings. For this means non of them can run on debts. Governments feeding on sub-inflation level lending are happy to run in the red. The instant lending is good enough to attract savings, it will bankrupt the entire West which is totally and utterly addicted to easy lending rates for their governance.

The entire NATO alliance is based on trillions of red ink debts spent yearly. This runs a huge part of the manufacturing complexes in the Western alliance of NATO. Especially in the US. So we are not at the end of this crisis: it continues. It is worsening. It is not being solved at all. All parties are conspiring to make it much, much worse. They are all attempting to regain the status quo that led to all the animals running off the cliff and being eaten by cave bears, lions, wolves and vultures.

HSBC, China bank also interested in Lehman

(Reuters) - Europe's biggest bank HSBC Holdings and an unidentified Chinese bank are among potential buyers of Lehman Brothers, South Korea's Chosun Ilbo newspaper reported on Wednesday, citing a financial industry source.

HSBC and the Chinese bank, along with top U.S. hedge funds, are competing with Korea Development Bank (KDB), which has proposed to buy 25 percent stake in Lehman for 5 trillion-6 trillion won ($4.4-5.3 billion), the newspaper said.

Lehman is basically bankrupt. The Asian powers are like the vultures and in the case of China, the dragon that is picking at the corpse to see who gets what portion. One might get the belly. Another one, the eyeballs and tongue. Teeth rend at the inert body. Blood on fangs and noses, they shove each other aside. I wonder which unidentified bank in China is buying Lehman Brothers. I would not shock me to learn the buyer is someone I knew years ago. A high Chinese official told me, in my house, in New Jersey, 'I be BANK!' when he figured out how banks really work.

Lehmans puts another 1,500 jobs on the block, including in London

The job losses, which are still being planned by executives at the company's New York head office, are expected to be spread among its 26,000-strong global workforce, including at its European headquarters in London, where it employs more than 4,500 people.
*snip*
Until now, most lay-offs have been concentrated in the structured finance and trading divisions where the toxic mortgage investments at the heart of the credit crisis were created and traded. Jobs in the US securities industry actually grew in number in the second quarter of this year, but they fell last month and analysts are expecting that reversal to accelerate in the autumn, when executives begin to plan for the year ahead.

Now, off to the oil pumping nations: wealth has poured into their coffers. But dangerous wealth. It brought inflation. It also lost its value quickly unless it could be 'capitalized' somehow. This is why all parties turned about and tried desperately to buy up systems in the oil importing nations. One nation the US buys lots and lots of energy from is Canada. Our neighbors to the North that we tend to ignore a bit too much.

TSX takes 471-point pounding as energy plunges

The Toronto Stock Exchange suffered its second-worst day so far this year with nearly a 500-point drop on the main index as energy stocks plunged in the wake of free-falling oil prices.

The S&P/TSX composite index fell 471.51 points, or 3.4 per cent, to 13299.74. That marked the biggest drop since declining more than 600 points on Jan. 21 and was only the fourth time in 2008 the benchmark lost 400 or more points in a day.

The TSX's energy sector led a broad-based decline in stocks in Toronto as crude oil fell $5.75 to $109.71 US a barrel on the New York Mercantile Exchange, its lowest close in five months. A few factors were at work here, including hurricane Gustav's failure to significantly damage oil production and refining capabilities in the U.S. Gulf Coast.

Fred Ketchen, director of equity trading for ScotiaMcLeod in Toronto, noted a strong U.S. dollar also helped drive down the going rate for oil, priced in U.S. dollars. It also contributed to the Canadian dollar falling 58 basis points to 93.58 cents US.

The energy index for Toronto stocks was down 6.5 per cent. Suncor Inc. dropped $5.89, or 9.7 per cent, to $54.91. EnCana Corp. was down $4.16, or 5.2 per cent, to $75.65.

Gold in New York was down $24.70 to $810.50 US an ounce, and other metals such as aluminum and copper also fell. This helped drag down the TSX materials index 5.9 per cent. Barrick Gold Corp. fell $1.95, or 5.3 per cent, to $35, drifting toward the bottom of its 52-week range of between $33.02 and $54.11. Teck Cominco Ltd. was down $2.54, or 5.7 per cent, to $41.82.

Oil rose from $11 a barrel to $148 a barrel in less than a decade. This is an amazing hike. Just amazing. And 50% of it was pure, unadulterated speculation by gangs of hedge fundies and others using cheap loans from the Bank of Japan, aka, the Japanese Carry Trade, to speculate on futures. And this drove up ALL commodities. This source of easy lending has been pretty much closed lately so they are all paying up their cheap loans and moving enmass to some new cliff. They are the ones who drive animals off of cliffs. Picture them as a bunch of drunks with blazing torches, setting whole prairies afire.

Right now, their ability to bid up commodities is flagging. But their blinding desire to get more money by making some sort of bubble is still the operation at work. The central bankers are very anxious to get these arsonists together in some new venture. How about investing in say, armaments? Yes, there is plenty of money to be made there. Usually, when world economies fail, this is the solution. Note how the US is spending more and more on military things. And picking fights with more and more dangerous foes. Now, with the world's top nuclear empires!

At the beginning of summer, I warned all the people who believed that gold would protect wealth, it wasn't even possible. It might outrun inflation briefly. But in general, it is only a commodity. One that is ruled by the exact same forces at work on all other commodities. So when I told everyone, gold was going to decline for the near future, a lot of people got angry at me or told me, I was no longer a good surveyor of the future.

Well, as usual, I was right. Gold went up not because it was good. It rose because speculators could take fake funny money loans from the Bank of Japan and then buy gold with it. Then, selling the gold later, pocket the difference. Very simple. But just like with oil or real estate, gold hit a limit or fell off that cliff there. And now it lies dead, in the valley below, with the cave bears, etc. Rule of life: ALL things that increase in value will be increased in value until the value implodes. THE ONLY WAY TO STOP THIS IS TO STOP THE LENDING. When there are no easy term loans to play these games, they end. Plop. Like that.

The usual way is to raise rates. This isn't happening this time which is why I am NOT happy at all! What is happening is, there are no more people around who can buy the many loans being offered. Since we forwent saving any money, all loans must be moved off the books. And right now, the ONLY method is to simply MAKE IT VANISH. This is the 'trillion dollars lost' aspect. Inflation can't grow if bankers simply tell everyone, 'We threw a trillion dollars off the cliff. See? The cave bears, etc, are eating the trillion dollars. Sorry.'

Bank of England Gives Lenders Estimated $354 Billion

(Bloomberg) -- U.K. banks probably have tapped the Bank of England for more than 200 billion pounds ($354 billion) less than two months before its emergency funding plan is scheduled to end, according to UBS AG analysts.

The central bank's so-called special liquidity scheme, established in April and set to close in October, allows banks to swap mortgage-backed securities hurt by the credit squeeze for government bonds. Banks may face insolvency unless central bank Governor Mervyn King succeeds with his plan to put in place a new money-market system, UBS said.

``A permanent solution is needed,'' said the London-based analysts led by Alastair Ryan in a research note to clients dated Sept. 1. Otherwise ``U.K. banks will have perhaps 200 billion pounds of exploding funding'' to refinance within the next three years and would be forced to cut back lending and shrink assets. House prices could decline 40 percent without central bank help, Ryan said.

HAHAHA. A permanent solution is needed? HAHAHA. Sharpen those spears, hunters! The solution: have the central bank hold all loans and make loans with no savings! England is $8 trillion in public debt. Japan, ditto. The US: $10 trillion. These red ink messes can fund an epic new world of global lending? HAHAHA. This is why 'analysts' should either retire, commit suicide or jump off of cliffs so they can entertain the cave bears.

Chancellor Alistair Darling warns slump could be the worst for 60 years

In an interview with The Guardian Mr Darling says that the slowdown will be “more profound and long-lasting” than people had expected.

In the Government’s gravest assessment of the economy, which comes after a warning from a Bank of England policymaker that two million people could be unemployed by Christmas, Mr Darling admits that he had no idea how serious the credit crunch would become.

The Chancellor says that Mr Brown and the Cabinet are partly to blame for Labour’s woes because they have patently failed to explain the party’s central mission to the country. The Chancellor says that the economic troubles faced by Britain and the rest of the world “are arguably the worst they’ve been in 60 years”.

WHAT HAPPENED 60 YEARS AGO????

Oh, yes: that is when the US had to save everyone after they all plunged off of the Great Depression cliff and then into the cauldron of WWII. Millions of people died. The US ended that epic war by dropping not one but two nuclear bombs on barely-protected civilian populations. Yes, mass murder and slavery was the choice of the German and Japanese empires. Russia chose to starve the Ukraine people to death. I would suggest that if this crisis is on the order of that one, our central bankers and the stupid leaders of the G7 nations should stop poking at Russia's eyeballs and look backwards. Good grief.

Russia is a CAVE BEAR! And the Chinese dragon didn't even exist a million years ago. But we whack at its tail with impunity, too! And the vultures: they are circling overhead. And what is the solution?

Expand NATO and isolate the animals feeding on the corpses of our economic messes? The Arabs? HAHAHA. Yes, we go to war with Iran, with Russia, with China. WWIII: here we come. OFF THE CLIFF.

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Comments

[Ralph]

Dear Elaine,
I listened to Sarah Palin tonight and I am 100% convinced this woman does not understand the word DIPLOMACY. She is a brutal warmonger. No doubt in my mind. Mccinsane and Palin will nuclear 1st strike Iran. This woman is the goddess of death and Mccinsane is just decimated. Together they equal war,death,nukes. I hate Obama because he is a tool. However, Iam voting for him because he is a somewhat normal human being who I dont think is a true viscous warmonger who will use use a nuclear 1st strike. With Obama we get 4 years to work on the Campaign for Liberty and get Ron Paul and Jesse Ventura as close to the white house as possible. With Mccain and Palin we might not be here in 4 years.

[Ralph]

Oil went up a factor of 13 times from its low. However, Gold only rose 3 times. The gold/oil relationship is totally out of whack due to central bank intervention. The comparison can no longer be used justifiably. Physical gold and silver cannot be obtained without paying a massive premium. The gold/silver market is out of whack due to manipulation and in due time will correct itself radically.

[Elaine Meinel Supkis]

Lord knows, everything is out of whack now! Once gold ceased to be the basis of the global empire's monetary value, all things ceased to have a direct relationship.

And yes, Ralph, our choices are fewer and fewer as an election evolves. Palin is totally insane. Not to mention, an open traitor who is calling for Alaska to become part of OPEC and leave the US itself. How DARE the GOP foist her on us?

[Ralph]

New Nationwide newspaper called USA tomorrow is being launched. YOU MUST WRITE ARTICLES FOR IT!!! YOU MUST BE HEARD!!!

[Ralph]

Plus you can make a buck promoting and getting it out on news stands

[Elaine Meinel Supkis]

Give the URL.

[Richard]

Elain you write: At the beginning of summer, I warned all the people who believed that gold would protect wealth, it wasn't even possible. It might outrun inflation briefly. But in general, it is only a commodity.

That was good advice at the time as on July 14, 2008 the carry traders sold commodities, gold and oil to take profits.

They invested in the financial sector, homebuiding, retail, consumer discretionary, US Treasuries, and just today of all things the mortgage sector, especially the mortgage backed securities guarantors like Radian Group, RDN, and the other bond insurers like Ambak, ABK, and MBIA, MBI.

They run the stocks up and run them down.

Just the other day Dell announced diminished growth opportunities, so the carry traders sold it, the semiconductors, and the NASDAQ 100; this has now turned the NASDAQ lower.

And they are using the 0.5% interest loan window at the Bank of Japan to go long the bear market ETF SSG and REW.

Today was an epic investment sea change shift: The growth shares, like IWO and JKH, are falling, whereas the value shares are holding up, on the financial, IYF, sector strength.

The US Dollar failed to move higher as the USD/JPY fell, even though the EUR/JPY fell lower decimating natural resource stocks.

Today may have been Peak Dollar: I've been looking for it; and thought it occurred on August 11th, then the 15th, then the 22nd, and the 29th! But today, Peak Dollar could very well be in as a gravestone doji shows in the Dollar, DX, in Jesse's article 'Charts in the Babson Style Midweek 3 September 2008'. It is a is a remarkeable site. And note that this is full retracement to the October Citigroup CDO Bust. This gives extra credence to possibly finally being Peak Dollar.

The former well springs of liquidity, the USD/JPY and the EUR/JPY, have now gone toxic on risk aversion to inflation, debt and decreased profit and growth opportunity.

These will now be saws of destruction working to cut asunder fiat wealth; and in the process of sawing, gold will fall out as the worlds's currency and measure and means of garnering and preserving wealth.

Yes, Libra will come forth to establish true wealth.

A systemic risk event or events are coming and gold in the vault, that is BullionVault or GoldMoney will provide safety from the tides of economic destruction.

I also recommend a purchase of SKF in a trust account along with a short sell of MBI, ABK, and RDN, SCA, MTG, RAM, SUR, and AGO.

And I recommend a small short position in USD/JPY in a Forex account.

In as much as gold relative to US Stocks GLD:VTI is above 1.15, I believe there is and will be an ongoing and measurable investment demand for gold.

US Treasuries are no longer a lifeboat of safety as they seem to be topping out and have been contaminated by mortgage backed securities accepted by the Fed under its TAF facilities.

[geoffery battams]

it is soon hunting season in england and it is going to be very welcome .there is a lot of chinese water deer and rabitts and pheashants running around .people will soon be struggling to pay for food and those who live in the inner citys will be hit very hard .investors are on you tube giveing advice about this and that but they seem to have lost track of the hard cold fact that money is going to be toilet paper it is going to be worthless .i have brought garden tools and dug my garden up brought plenty of seed .people dont hoard money which is going to be fit for lighting fires with .invest in some survival assets guns torches canned food rice etc because time is short soon money will not be accepted by any one. spend it now while it has any value buy things for your survival you cannot eat a new laptop or a widescreen tv. get real people i know it is hard to believe you need to realise and accept that money is going to be worthless

[WG]

The only time money can becomes worthless is during hyper-inflation Zimbabwe style, not a possibility this cycle. Hyperinflation will cause all the millions accumulated by Bush and his rich goons to turn to nothing, so they will rather start WW3 than print money into hyperinflation.

I agree with Elaine that current events increase the chance of WW3 every single day, and no amount of survivalist supplies can last you through it.

If we manage to avoid WW3, then we will get depression as housing, cars, stocks, bonds, and everything of value loses value. Cash on hand will be worth many times MORE since you can later buy that $1 million house for $100k cash, and those SUVs will be worth their weight in scrap metal. Instead of becoming worthless, hard cash will become KING!

Thus, I think the best investment strategy right now is just to keep your job if you can, sit on hard cash and wait out the crash. Also pray hard that WW3 does not start.

[PJSV]

This is worth reading:

http://www.globalresearch.ca/index.php?context=viewArticle&code=TRI20080903&articleId=10053

http://www.globalresearch.ca/
index.php?context=viewArticle&code=
TRI20080903&articleId=10053

[Karmaisking]

There is no question we are headed for World War III. All the signs are there.

[OC]

PJSV,

What happens when the Chinese, Japanese, Russians and Saudis turn up with trillions of USD to buy up the entire country of USA because of falling land prices? (Hint: 70% of USD is in the hands of foreigners)

Would US repudiate this huge amount of USD or accept them and lose the country?? If they repudiate USD, won't it make it worthless to park your wealth in USD???

[OC]

PJSV,

My apologies, I mean to direct my question to WG.

Isn't this another example of Horns of Dilemma that Elaine is so fond of mentioning...

[geoffery battams]

if we go to war with iran our demise will come but only quicker if we dont go to war it will come but only slower. money is going to lose value either way if the dollar falls to a near worthless level due to a economic crash it will be just bits of paper.if it falls due to attacking iran it will still be a useless piece of paper high inflation will come regardless of war or peace.war will cause oil to shoot thru the roof causeing economic collapse plus high inflation. if i am sitting on a pile of food etc and someone offers me lots of money for it .why would i take worthless pieces of paper for it? if food is in very short supply then it will become very valueable.the only thing i would accept is other material assets for it .something i can hold and know is real.of course i do realise that if mad coke head bush starts fireing atomic missiles about i wont be here to worry about anything. but i have to try and protect my children and hope against hope that i and they will survive

[andrei]

The floating system is destined to sink. And will be replace by another. Possibly back to gold.

Gold is a commodity now, but in the future?...

[OC]

Geoffrey,

Sounds like Kiyosaki's latest investment recommendations on the 5Gs: Gold, Ground, Grub, Guns and Gas.

[geoffery battams]

oc/i think guns camping gas grub and especially ground land because you can grow things on it build on it and if you have enough land it will enable you to survive. haveing a rich dad of course would help

[Elaine Meinel Supkis]

Both Russia and China have large gold and silver accumulations. Both are aiming at becoming the global currency. If OPEC decides that Russia is the global oil trade currency, this will be due to the Arabs also liking the idea of gold as the basis for international trade currencies.

It will be the richest irony in history for the two communist nations to reestablish the gold standard, eh? Really ironic.

[Confused]

Cheyney just announced a $1bn donation to Republic of Georgia, USA being in financial problems how/who is going to pay for this. How do I jump on this scam and what Standards of Operations will this donation be held against.
Please tell me about scams like these I want to know

[Tell]

"Angola becomes Africa’s largest oil producer"...

http://tinyurl.com/5nhht3

[Tell]

"WhatReallyHappened.com attacked again. Who next?"...

http://tinyurl.com/6btrg5

[Tell]

"Information Clearing House Publisher Threatened"...

http://tinyurl.com/5vwhtk

[Elaine Meinel Supkis]

Georgia is playing 'The Mouse That Roared' full tilt. In that story, a small mountain dependency decides to con America into sending them billions of dollars in 'aid'. So they start a war that rapidly escalates into a confrontation between Russia and America that starts WWIII.

[rockpaperscizzors]

Elaine, the powerful banking dynasties and investment houses who created these fiasco bubbles in housing, commodities,government deficits, etc... has starkly exposed the shadow ruling elite of governments to the "unwashed" masses. And the falsehood of fiat currencies. Paper wealth is the ultimate belief system of illusional power. In the elites ultimate quest of power, they've destroyed the magical illusion that enshrouded fiat currencies from the masses. Their magical incantations are failing and the belief system is literally going up in smoke as trillions of worthless manmade paper currencies burn like wildfires in every financial system worldwide. It reminds me of California's uncontrollable forest fires every summer.

People can agree to exchange resources for any reason they wish without an exact accounting. It is their belief that they must measure that exchange precisely and keep a record of it.
Like Rip Van Winkle, the slumbering masses have awakened to the hoax of paper wealth.

[Jeremy]

WG,

Do you think America would start WWIII to try and prevent hyperinflation? It is hard to imagine war hitting home...I guess because I am 33 and have only read about world wars....but it seems like that is the direction the world is running towards.

[charlottemom]

It certainly looks as if we're headed to a war. While McCain and Palin were celebrating the modern day Spartan Family at the rep convention, Cheney was in Georgia setting the table for US-Eur-Israel/China-Iran-Russia confrontation. Who knows what future commitments he promised. God help us.

[RobG]

Ahhh, this headline tickled my funny bone:

"Flock of banks—including HSBC—seen flying lazy circles over Lehman"

www.financialweek.com

[Bear of Little Brain]

The collective noun for turkeys is a flock. How appropriate. For vultures, it's a colony, BTW ;-) :
http://www.rinkworks.com/words/collective.shtml

[Paul S]

It's frightening to think of what kind of fantasy world the Bushes and their neo cons live in. I don't claim to know military strength versus military strength, but if the Bushes want to play rough with Russia, the neo cons are in for a surprise. Unfortunately, and obviously I hope this doesn't happen, but it may take a HUGE miltary disaster for people to wake up and realize that the neo cons are completely deranged. This kind of disaster appears to happen to all Empires as they implode to second class status. I guess it has to happen to the USA as well. Russia has a fearsome level of firepower and they appear to mean business. I doubt they are merely posturing.

[Elaine Meinel Supkis]

Vultures are conventions. They love to perch in large congregations in dead trees or on cliffs. Then, when the sun shines, they hoist themselves high and glide over the earth, eagerly eyeballing and sniffing for dead things. Once they find it, they plunge downwards.

[Bear of Little Brain]

Engdahl has a nice article on the Russian situation and a summary of VERY recent events in Ukraine. Even the notes are enlightening:
http://tinyurl.com/5dumg8
I would also suggest checking out his web site, time permitting.
http://www.engdahl.oilgeopolitics.net/
You will find that Georgia's Saakashvili is more gangster than president.

[GK]

Elaine, what do you think will happen to these grass-root campaigns to stop the "Mouse that Roared" scenario of nuclear holocaust to fulfill Biblical prophesy?

http://www.apocalypse-no.net/de/en/

A Munich-based historian Wolfgang Eggert, 46, will launch an Internet petition tomorrow (Friday Sept. 5) to demand action on powerful Jewish and Christian cults that want to instigate a nuclear holocaust to fulfill Biblical prophesy.

He thinks cult members must be exposed and removed. He points to the Jewish Chabad Lubavitcher sect who want to hasten Armageddon in order to facilitate the Messiah's return. Their religion calls for them to manipulate events, including instigate nuclear war, to bring back the Messiah, Eggert says.

Their members include Paul Wolfowitz, the architect of the Iraq War which began with an attack named after a Cabalist diety, "Shekinah" ("Shock and Awe.") Especially worrisome now is Chabadnik Joe Lieberman who visited Israel in March with his buddy John McCain. There is concern over Sen. Carl Levin who is Chair of the Senate Armed Services Committee. Other prominent Orthodox Jews who might be part of this cult include Bush Attorney General Michael Mukasey, Homeland Security Director Michael Chertoff and former Pentagon Controller Dov Zakheim, implicated in the disappearance of "trillions" of dollars.

[Michael]

Elaine,

"England is $8 trillion in public debt. Japan, ditto. The US: $10 trillion. These red ink messes can fund an epic new world of global lending? HAHAHA."

They not only think they can, I promise you they will try up to their very last breath.

That's the whole point of fiat money - you can print as much of it as you want. Unlike Weimar Germany and Zimbabwe, the U.S. supplies the world's reserve and commodities-trading currency (and the rest of the world apparently wants to keep it that way); that means no one is going to refuse to take the dollars we print (at least for now).

Our government and central bankers are exploiting this to the max; Bernanke is the first Fed chief to openly and proudly talk about printing as much money as he feels like to meet financial needs, and his actions show he means it. And the politicians promise to solve our finacial problems with more and more tax cuts and spending programs.

The bizarre scenario wherein foreign investors tuck away boatloads of devaluating dollars into vaults and use them to buy our ever-expanding debts - strictly for the purpose of supporting U.S. financial stability and their own export industries - permits us to "solve" ALL financial and fiscal problems by churning out more and more debt - the sky's the limit (or rather, there is no limit in the minds of our leaders).

That's why the Fed is nationalizing all debt: every bailout, every "swap" that hands out Treasuries for junk debt, is based on the ASSUMPTION that there is no real limit to the amount of Federal debt that can be created. If the world's investors are crazy enough to buy all the debt the U.S. government can supply - at ever lower rates of return (what economists call "inelastic" demand for U.S. Treasuries), the Feds will happily keep printing them forever.

U.S. inflation is already at 14% because of this "endless credit creation" mindset (using consistent CPI statistics standardized to 1980 methodology). It is in the process of going higher. This is because "endless credit creation" means "endless inflation creation." Asset bubbles? The least of our problems (because they are self-correcting - hence the current "housing crisis", Nasdaq crash, etc.), and they are an INHERENT re-ocurring phenomenon in all captalist economies.

However, you are correct that military adventurism and even major wars are the most effective and common way Anglo-American politicians divert angst away from financial crises and justify ever-higher levels of national debt. The only question is where and when the next conflict will start and how much harm will be done before we exhaust ourselves completely or our creditors finally pull the plug on us.

No happy endings here, kids, and gold won't save you from the outcome any more than a bomb shelter will.

[Bear of Little Brain]

Interested by the "Shock and Awe" insight, GK:

Quick check on "Shekinah". Seems to be some feminine side of the divine spirit. Tried to plough through some of the Wiki stuff, which didn't mention the feminine side bit (unless I missed it). Maybe it's just dim old me, but these tortuous religious constructs always end up looking like the intricate ravings of intelligent, but disturbed, minds.
Unfortunately, these are the kinds of lunatics running our asylum.

[Elaine Meinel Supkis]

Oh, the Dire Goddesses! HAHAHA.

All the modern religions are based on these ancient forms that correctly understood who really was in charge of the Gates of Death and the Cave of Wealth.

These ancient crones keep records, you know. They laugh as they read passages to each other. You don't want to hear them laughing.

The fact is, the modern gods are all constructs which is why they are INVISIBLE. The ancient ones were quite visible, by the way. They are star systems in the heavens as well as denizens of our dream world. Jesus, Mohammed and Buddha were all humans used to channel these weaker, invisible gods.

But the older ones proudly carry their own identities. We are told, they are 'myths' which is supposed to diminish their powers. But their powers are innate, not granted by humans. They do what they were designed to do for they are forces of nature, power grids and matrixes which humans have assigned stories and images to see them.

It makes it really easy to talk about all sorts of things if one accepts these various entities as 'real'. For they are part of our collective history.