The Sphinx is Scared

September 27, 2008

Elaine Meinel Supkis

Dear readers, you all sent me the money needed to take the train to Washington, DC. There, I not only got great photos and met lots of people some of whom knew me in NYC as 'the Housewife From Hell' as the Daily News dubbed me long, long ago. I got very lucky and got to sit within arm's reach of Bernanke and Paulson. I used this occasion to 'touch' them both in the singular way I operate. A sign that this succeeded was the fact that a sudden, rather violent storm came roaring ashore and not only hit DC, but followed me home like a dog. So today, I am very happy to learn that Bernanke's sleep has been as disturbed as Paulson's sleep. Now, he is LEAVING THE FRAY and going into hiding! HAHAHA.

Bernanke Jumps Out of Political Fray After Warning of Collapse

(Bloomberg) -- Ben S. Bernanke jumped into the political fray this week when he urged quick action from Congress to deal with ``grave threats'' to the financial system. Now he's trying to jump back out.

The Federal Reserve chairman hasn't returned to Capitol Hill after two days of congressional testimony earlier this week. He has made it clear to Treasury officials and lawmakers that he isn't taking part in negotiating details of a $700 billion proposal to rescue the financial system even as the plan runs into a political buzzsaw.

By letting Treasury Secretary Henry Paulson be the point man with Congress, Bernanke may be trying to restore the Fed's position as a neutral party in Washington and preserve the central bank's independence. That's after he put both on the line by endorsing Paulson's plan and using the Fed's balance sheet to rescue creditors of Bear Stearns Cos. and American International Group Inc.

There is some great utility in getting physically close to someone one wishes to 'reach'. Since Bernanke won't talk to me or even want to know if I exist, I had to kind of impose on him. The first step is to draw him into the realm of mythological magical beings. When he confidently strode into the Chambers, he sat down right in front of me and then laced his fingers in front of his chest and impassively. He stared straight ahead without flinching, itching or moving a muscle.

I was not allowed to take a photo of him at this point in time so I took out my pad and began to scribble rapidly. As this was going on, I said out loud, 'Sphinx.' He flinched. This was the only movement he made. He heard me quite clearly, incidentally. For everyone around me heard this, too. Those of us who were in the back of the Chambers were forbidden to say anything. It seems one of the fine, young people in the back row were sufficiently riled and forwards that one of them held up a small sign which has now made the rounds of the internet.

Good for them! I think that Bernanke has finally figured out that he is NOT a very popular figure. He also is aware that some of us are eyeing him very closely in the Other Realm. This is the place where the Magic Flying Piggy Bank lives. Instead of people bowing and scraping for him, he is now somewhat aware that many of us look at him with some fury.

The United States has a Vice President who is always in an undisclosed place and who never, ever has press conferences or answers questions or appears in the Senate for questioning. We have a President who can't go out in the public for the last 6 years. Who holds press conferences about once a decade and who never answers questions at all. But rules unilaterally and even overrides Congressional bills he signs! Then there is the Jewish dual-citizen traitor these two shy rulers hired to be in charge of US security. Chertoff nearly never appears in the news or answers questions or even talks to us from his undisclosed bomb shelter.

McCain dearly wanted to run for President in this fashion. Palin, after flashing her glasses at us and scaring everyone, has now gone into hiding and wants to run with no debates, no press conferences.

I bet that poor Gollum, the creature who can't sleep at night and is tormented as he scratches for the Ring of Power and then, when slapped down, whimpers and whines. I read that the negotiations to save Gollum Sachs and JP Pirate has gone until 3am at night. Night is the hours when the Watchers are the most powerful. Awake or asleep, they can come flitting into minds. They carry a bag full of disturbing visions. They can transform reality with a snap of their clawed fingers.

It appears that no one who is supposed to be leading us is even putting up the facade of leadership. They are all going off to play golf. This sad business has leeched into the election. The United States is a very big nation with millions of people. Yet no one dares lead us for they will be removed for various tiny flaws. Yet the leaders who are at the top have grave flaws! This is a serious problem which is due to our media that is the gatekeeper to power. They pick and choose which things to focus on and inevitably, refuse to focus on anything meaningful. Then they gleefully accuse the public of being frivolous.

This banking collapse is not frivolous! It is very serious. There are many people who would like to insist, there is no crisis so why save the banks? Then there are the army of the rich who want the banks saved, who want their money to earn value and to gain that value and who are terrified that they will not gain great wealth. So they want a bail out that is essentially turning the US government into a mega-bank that gets to hold all debts generated for fees by the rest of the banking system!

We need to fix the banking system, of course. It needs desperately to return to its ancient virtues. The greed-is-good gang have used the powers of the banking system to grind out infinite loans so they could collect their 6% bonuses. They would happily do this forever. But the upper limit of debt has been reached. In trying to surpass this natural limit, they created many new lending schemes which had even better returns. And on and on this system grew as out of control bankers cooked up a stunning number of strange, warped 'instruments' which would allow them to ignore natural limits.

In Congress, our corrupt politicians have decided to plow everything possible into the latest spending bill which is a veritable Santa Claus sack of goodies.

Senate sends big spending bill to Bush to sign

(AP) — Automakers gained $25 billion in taxpayer-subsidized loans and oil companies won elimination of a long-standing ban on drilling off the Atlantic and Pacific coasts as the Senate passed a sprawling spending bill Saturday.

The 78-12 vote sent the $634 billion measure to President Bush, who was expected to sign it even though it spends more money and contains more pet projects than he would have liked.

The measure is needed to keep the government operating beyond the current budget year, which ends Tuesday. As a result, the legislation is one of the few bills this election year that simply must pass. Bush's signature would mean Congress could avoid a lame-duck session after the Nov. 4 election.

The Pentagon is in line for a record budget. In addition to $70 billion approved this summer for operations in Iraq and Afghanistan, the Defense Department would receive $488 billion, a 6 percent increase. The spending bill also offers aid to victims of flooding in the Midwest and recent hurricanes across the Gulf Coast.
Such a huge bill usually would dominate the end-of-session agenda on Capitol Hill. But it went below the radar screen because attention focused on the congressional bailout of Wall Street.

Absolutely everything was handed out, wasn't it? Is the US income growing by 6% a year? Is our GNP growing by 6% a year? Is tax revenues growing at all? NO! Instead of balancing the books, Congress increased spending significantly. If something grows 6% a year, it rapidly begins to double and redouble, faster and faster. This is an unacceptable level of inflation! And the interest rate is at 2%. And Bernanke will be asked to drop it to 1%. This is painfully obvious. Everyone hopes to have spending grow by 6% based on 1% interest loans. Even if this is done, since both the loans and the spending are in the red, this means US national obligations for the future will double every 7 years. It went from $5 trillion to over $10 trillion in this fashion already. This means, by 2014, it will be over $20 trillion. This is an impossible debt level.

Of course, the US budget is NOT growing by a mere 6% a year now. This time around, it is growing at 10%+ a year! If we do this for only 5 years, it will be over $20 trillion by 2013. Homeland Security, run by the Invisible Dual Israeli Citizen, was raised to $40 billion. The wars were raised to $70 billion. and the other parts are now at $488 billion and we haven't the slightest idea what the spooks at the CIA and other Black Ops are getting. I would suggest, at least $75 billion. This ads up to almost $700 billion. Which is a MAGIC NUMBER!!!! HAHAHA.

It is the bank rescue amount. I suspect this was chosen because it was a number haunting these criminal minds. They all know they are very naughty to run this level of debt to pay for their funky military/industrial complex. Americans who are angry about the $700 billion TARP bank bail bill are NOT angry about this untidy mess. Indeed, anyone suggesting we cut back on our paramilitary spending is viewed as some sort of traitor so no one dares cut a penny!

By the way, the imposition of a US standing army in the US itself for 'crowd control' is all part of the Sovietization of the US. This is all very sad and stupid but the US has accepted a high level of East German-style limitations on travel and public places, the push to completely control our nation via privatized military is rushing forwards.

US Corporate SPECULATIVE Debt Default Rate Could Top 23% by 2010

If realized, this estimate suggests that 353 speculative-grade rated nonfinancial firms could default between 2008 and 2010, with potentially more than 200 of these defaults materializing in the second half of 2009 and in 2010.

Consumer-sensitive sectors — such as consumer products, media and entertainment, and retail and restaurants — will be among the worst hit, in line with what happened in 1990-1992.

This is very much like 1929 headlines. All the speculators will be ruthlessly ground down by natural forces. Nothing can run in the red forever. Nor can money be made forever speculating without risk. The very speculations that seemed risk-free accumulate risk over time due to simple growth itself. Nothing grows forever. NOTHING. Except the Universe itself. And maybe, not even that.

Financial crisis: Bradford & Bingley to become latest victim

B&B, the eighth largest mortgage lender, is the latest banking institution to become a victim of the financial crisis and the deteriorating state of the housing market.

Its shares fell six per cent to an all-time low of 20p as it became clear that no rival bank was prepared to mount a rescue bid. Since the start of the year, B&B shares have fallen 90 per cent.
However, the British Banking Association reassured the 2.5 million customers who have £22 billion deposited with B&B. "Customers have no need to worry about any deposits in any British bank.

In the Great Depression, even Bernanke probably knows that the banks didn't all go belly up on October 17th. They all didn't die by October 17, 1930. They crashed down, one by one, day after day, week after week, month after month. Until Roosevelt became President and shut the entire thing down to save the survivors from the inevitable. To master this mess, he arbitrarily doubled the value of gold versus paper gold certificates and then confiscated all the private gold holdings. Via fiat. The US government was fiscally sound when he did this. Not going into bankruptcy like today.

Gretchen Morgenstern, the best economics reporter for the NYT:

Two weeks ago, the nation’s most powerful regulators and bankers huddled in the Lower Manhattan fortress that is the Federal Reserve Bank of New York, desperately trying to stave off disaster. As the group, led by Treasury Secretary Henry M. Paulson Jr., pondered the collapse of one of America’s oldest investment banks, Lehman Brothers, a more dangerous threat emerged: American International Group, the world’s largest insurer, was teetering. A.I.G. needed billions of dollars to right itself and had suddenly begged for help.

The only Wall Street chief executive participating in the meeting was Lloyd C. Blankfein of Goldman Sachs, Mr. Paulson’s former firm. Mr. Blankfein had particular reason for concern. Although it was not widely known, Goldman, a Wall Street stalwart that had seemed immune to its rivals’ woes, was A.I.G.’s largest trading partner, according to six people close to the insurer who requested anonymity because of confidentiality agreements. A collapse of the insurer threatened to leave a hole of as much as $20 billion in Goldman’s side, several of these people said.
*snip*
In the case of A.I.G., the virus exploded from a freewheeling little 377-person unit in London, and flourished in a climate of opulent pay, lax oversight and blind faith in financial risk models. It nearly decimated one of the world’s most admired companies, a seemingly sturdy insurer with a trillion-dollar balance sheet, 116,000 employees and operations in 130 countries. “It is beyond shocking that this small operation could blow up the holding company,” said Robert Arvanitis, chief executive of Risk Finance Advisors in Westport, Conn. “They found a quick way to make a fast buck on derivatives based on A.I.G.’s solid credit rating and strong balance sheet. But it all got out of control.”

I figured it was less than three traders would show up. It was only the Goldman Sachs and one forlorn chap from AIG. Goldman Sachs should be thoroughly investigated by Congress. Before doing this, all Congressmen who have gotten bribes from Goldman Sachs should be recused from this investigation. Then Kucinich and Ron Paul can tear into this business. Make them co-chairs. I will take notes in the audience. Heh. As I stated in the past here, Goldman Sach's lies about having virtually no losses due to their very clever trading rang hollow to my ears. Instead, they were very exposed which is why Paulson had quite a fire in his pants.

I noted at the hearings this week, Paulson's suit was rumpled. His blood vessels stood out on his hands making them look like the hands of a 100 year old Duchess. His little finger was crooked with tension. He had lost weight, too. A picture of a man in torment. I expect him to finish this all very badly. Very badly.

AIG had a trillion dollar balance sheet. But was exposed to the Derivatives Beast to the tune of over $50 trillion? Who knows. With the fall of Lehman Brothers, all the swaps and OTC deals were finally triggered en mass. And there was no way of stopping this massive cascade of derivative triggering rescues that were never anticipated by the juvenile delinquents hired to monitor and control these deals. Cleaning up the Derivatives Beast's messes will consume all things of value if we try to save these blasted, stupid banks and their infantile geniuses who created this mess in the first place.

Confidence ebbs as money markets freeze

Key parts of the financial system broke down this week as doubts about counterparty risks of the world’s biggests banks saw lending seize up.

Money markets froze as financial institutions refused to lend to each other because of fears of further bank failures.
*snip*
The heightened nervousness sparked bets that the Federal Reserve might opt for an emergency rate cut or slash key rates by half a percentage point from the current 2 per cent, while one of main measures of credit risk rose to fresh highs.

The spread between three-month dollar London interbank rates and average overnight rates jumped for the fourth day in a row to 206 basis points.

The TED spread, which compares three-month Treasury yields and three month dollar Libor, also remained over 300bp, around all-time highs, underlining investors’ caution as they switched into the safety of short-term government paper.
*snip*
The repurchase markets, where banks lend cash in exchange for collateral such as government bonds, have also ground to a halt. This week, banks admitted they were only prepared to lend out cash for the highest quality collateral such as German bunds. Some traders said that UK gilts were even being refused by some counterparties because of the heightened state of alarm over the financial system.

So everyone wants German bunds and don't want UK gilts? The US/UK WWII team has been falling off the same cliff here. This is a significant part of the G7. Both the US and Britain have neglected to attend to their trade deficits. For some bizarre reason, these growing deficits, like the budget deficits, have simply been allowed to balloon to whatever size they wish. So they double and double every decade.

The simple tools of classic banking have been cast aside along with the simple tools of trade restrictions which prevents messes. The food scandals pouring out of China due to China's primitive food manufacturing rules shows clearly that there are good reasons to restrict trade. One is, protecting consumers from poor products. But merely to keep out excessive trade, this is another very good reason to use tariffs and barriers. They are tools and not evil in themselves. The religion of 'free trade' is foisted upon the US and other nations in order to EXPLOIT people and resources, NOT PROTECT THEM.

Bank steps in to offer £40bn loans

The worsening financial crisis forced the Bank of England into an unprecedented intervention today as it offered at least £40bn to cash-strapped banks.

Lenders are hiking mortgage costs because of a sudden surge in the rate at which banks lend to each other for three months, as those hit by the credit crunch hoard funds.

The Bank usually offers three-month money on a monthly basis, but will hold auctions every week from Monday for the first time while the pressures in wholesale markets remain.

The central bank has not revealed the sums involved in future auctions but they are likely to be of a similar size to Monday's if desperate banks snap up the funds. The move comes as interbank three-month lending rates soared to 6.28 per cent yesterday - way above the Bank's official 5 per cent base rate.

Ever since exactly a year ago, the central banks of the G7 nations have had to intervene very heavily in order to keep the banking system going. Each time, in the past, they said this was all very temporary. And the Fed said, lending from the TLAF window was a test, a game, not serious. Everyone was doing it to enjoy the sensation of borrowing money and pretending to be bankrupt. Now that they are all going bankrupt despite these lies, we should toss out the business of 'this is temporary.'

Until significant sectors of the US and UK normalize and cease running in the red, our banking systems will be undercapitalized. Dropping interest rates simply decreases capital. Since savings are considered DEFICITS, no banks want this until this year. This is why governments can't allow investment bankers to have a 30-1 or an 80-1 lending/savings ratio like we saw last year. Banks want a 1,000-1 ratio. Or better still, infinity to 1 ratio. This would destroy any currency very fast. This is why the neglect of reserve ratios was most disturbing and isn't ending, it is continuing.

Now, here is an article I wrote a year ago, about Japan. The riddle of Japan's contribution to the collapse of the US manufacturing and banking systems must be solved if we wish to survive as a nation.

From one year ago at Culture of Life News: Japan's Export Markets Boomed As World Banking Collapsed

Japan's trade surplus profits rose 400% this last year. US auto workers cease their strike and lose pay and benefits as the depression being imposed on the working class relentlessly forces them back down the economic ladder and back into poverty and servitude. The British banking system is very weak yet the Queen is still allowed to run tax haven pirate coves that weaken England. Hahaha. And Carlyle, even as it hides under Her skirts, lost a lot of money in July. I examine all this and tie the lose ends together yet again. Oh, and the bears are supposed to be routed due to a rising stock market. How 1929 of them to say this!

Japan and Germany both had the greatest trade profit surpluses last year. This means both nations are the top trade powers on earth. Yet, when I was in Congress, everyone there at the hearings talked about Japan as if it is weak and not tremendously powerful. No one mentioned Japan's massive FOREX reserves. Certainly, the Sphinx didn't mention this. Considering that the Federal Reserve has no reserves now and is swapping the gold reserves...an important topic for Kucinich and Ron Paul to discuss once they eliminate all the guys on the Finance and Banking committees who take bribes from Wall Street.

The Nikkei this week:

Stocks: Nikkei Slides On Skepticism Over U.S. Bailout Plan

TOKYO (Kyodo)--Tokyo stocks fell Friday, with the key Nikkei index closing below the 12,000 level for the first time in a week, as investors grew skeptical about whether the U.S. government and Congress could soon reach an accord on the government's financial bailout plan.
*********************************

Nomura Chief Sees Big Boost From Lehman Deal

TOKYO (Nikkei)--Kenichi Watanabe expects a big strategic benefit from the acquisition of Lehman Brothers' core businesses in Europe, the Middle East and Asia.
***********************************

Core CPI Jumps 2.4% In Aug, Up For 11th Month

TOKYO (Nikkei)--The nationwide consumer price index rose 2.4% in August from a year earlier, matching the previous month's rise, which was the sharpest increase since October 1997.
************************************

C's Create Files For Bankruptcy Protection, Debt Y11.4bn

TOKYO (Dow Jones)--C's Create Co. (8921) said Friday that it has filed for bankruptcy protection with the Tokyo District court with debt totaling Y11.4 billion.
**************************************

Forex: Dollar Falls To Lower Y105 On Uncertainty Over U.S. Bailout Plan

TOKYO (Kyodo)--The U.S. dollar fell to the lower 105 yen level Friday in Tokyo amid growing doubts over whether the U.S. Congress will pass by the end of the week the government's financial bailout plan to stabilize the U.S. banking system.
**************************************

WSJ: WaMu Fails, Is Sold Off to J.P. Morgan

Federal regulators seized Washington Mutual and struck a deal to sell the bulk of its operations to J.P. Morgan in what is by far the largest bank failure in U.S. history.

Japan hasn't had depression in years. It has had inflation. Now, the inflation is moving along smartly. No recognition from the Bank of Japan of this reality. Also, the news that the yen is getting strong instead of dropping to 120 to the dollar which the exporters want, this is constant news in Japan. The US dollar gets weak, the Nikkei drops like a rock. This is so blatantly obvious, smart traders play this game outrageously and are getting very rich since this dynamic is so obvious.

The Japanese are also buying up the dying sectors of the US banking system! Another sign that they are not in a depression. Or outsiders would be buying up Japanese banks, not the other way around. the stock market in Japan always flounders when the dollar gets weak and US lending slows. This entire country's economic base is based on exports to the US.

U.S. will lose financial superpower status: Germany

(Reuters) - Germany blamed the United States on Thursday for spawning the global financial crisis with a blind drive for higher profits and said it would now have to accept greater market regulation and a loss of its financial superpower status.

In some of the toughest language since the crisis worsened earlier this month, German Finance Minister Peer Steinbrueck told parliament the financial turmoil would leave "deep marks" but was primarily an American problem.

"The world will never be as it was before the crisis," Steinbrueck, a deputy leader of the center-left Social Democrats, told the Bundestag lower house.

Who won WWII? Well, wars are being waged constantly. Trade wars, that is. The US banking system's failure is due to the entire US and UK trade and budget systems running too deep in the red, too long. Absolutely no one in power is even slightly interested in fixing this fundamental problem. Instead, with the bank rescue bill and the budget bill in the US, the deficit spending has greatly increased. Then, when we add onto this, the rescues: this is fatal.

Here is Denniger's video where he talks about all this:

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Comments

[hokey pokey]

Elaine,

As I was trying to explain all this banking and derivative stuff to otherwise intelligent friends and family, I've had quite a bit of trouble coming up with good metaphors. (none are receptive to mythological metaphors)

So I've settled on M.C. Escher's artwork and the example of a mobius loop as a Ponzi symbol.

Escher's piece of a hand drawing a second hand, in turn drawing the first hand.

Or the water continuously flowing 'downstream' around a sluice in a circle, forever.

Oddly, many people 'get it' when I've shown them Escher's drawing and a mobius loop.

Maybe they just needed 'visual' explainations or visual logic, turned inside out, to finally 'See the Light'.

http://www.mcescher.com/Gallery/back-bmp/LW355.jpg

http://www.mcescher.com/Gallery/recogn-bmp/LW435.jpg

http://www.mcescher.com/Gallery/recogn-bmp/LW439.jpg

http://www.mcescher.com/Gallery/recogn-bmp/LW444.jpg

[Jeremy]

Elaine, retail has been hit very hard. I have noticed an obvious decrease in sales since June. Do you think retailers will start going out of business soon?

[hokey pokey]

Denninger's latest video is smokin'

MAKE THIS VIRAL - STOP THE BAILOUT! SAVE AMERICA!

http://market-ticker.denninger.net/

[GK]

How charming to talk about this as if we have a chance to save the US from the criminals in charge.

FYI, have a quick look at your future with your new Chinese masters.

Using African Slave labor to put a man in space. How novel an idea. I wonder where the F*** they got that idea.

http://www.dailymail.co.uk/news/worldnews/article-1063198/Chinas-new-slave-empire--disturbing-eyewitness-account-Peter-Hitchens.html

As for their general treatment of African workers, Lukwesa says he knows of cases where Chinese supervisors have kicked Zambians. He summed up their attitude like this: 'They are harsh to Zambians, and they don't get on well with them.'

Sata warns against the enormous loans and offers of help with transport, schools and health care with which Peking now sweetens its attempts to buy up Africa's mineral reserves.

[Paul S]

I watched the video. And I've watched the vids on his website. There is only one flaw in his logic. This Bailout bill is a done deal; the skids have already been greased. They are just playing charades right now. The "rebels" who are "opposed" to a bailout are being given some time to pose as representing the taxpayer. (Although a small few really ARE opposed to the bailout.) This way they have a shot at saving their seats next election by saying, "Hey I fought the bad guys. I tried." It also gives the more corrupt members of Congress, like Nancy Pelosi and Hillary Clinton, more time to shake down their patrons for more money. BTW: Nancy and Hillary: Great job girls! You two prove that a girl can be just as sleazy as a man. Talk about striking a blow for equality! We have a government that must do its work in the dark of night. That about says it all.

[Abelian]

Hi Elaine,

Welcome back from Washington.

NYTimes reports a breakthrough ( 11 pm PST) in the giveaway bill.

The bill includes pay limits for SOME executives whose firms seek help, aides said. And it requires the government to use its new role as owner of distressed mortgage-backed securities to make more aggressive efforts to prevent home foreclosures. In SOME cases, the government would receive an equity stake in companies that seek aid, allowing taxpayers to profit should the rescue plan work and the private firms flourish in the months and years ahead.

The choice of "some executives" and "taking an equity stake in some companies" is very telling.

The small banks should be very worried, because they are about to be taken apart by $700 billion vultures.

[Zulu]

Insightful commentary in original language. I wonder why the Sphinx flinched? A sphinx is supposed to be unflappable. There must be a serious chink in these elites armor.

[Neon Vincent]

Elaine, here is something that I stumbled across which is admittedly wacky (what is it you're always saying about disinformation campaigns to trap the unwary?) but which I enjoyed.

SECONDARY SAUSAGES FROM THE D.C. SAUSAGE MACHINE

London, 27th September 2008:

WHATEVER FLAVOUR WAS ORDERED, WON'T BE DELIVERED
Last week, the newly installed Washington-based sausage machine was primed by the Chief Sausage Makers, Messrs 'Paulson und Bernanke', to bring forth a splendidly flavoured batch of sausages with a long shelf-life, so that the manufacturers themselves could stock up with food for the winter months ahead, without having to worry about how to make ends meat (oops, meet).

Having primed this sausage machine, it cannot now be turned off until it has completed the cycle, so the manufacturers are lumbered with having to accept whatever flavour of sausage comes out.

Unfortunately, due to a strike, or several strikes, on the shop floor, the production line has, the manufacturers now contend, been sabotaged, to such a degree that unwanted ingredients have been inserted into the mix, which will now deliver sausages with a bitter taste from the purveyors' perspective. And since they cannot turn the machine off until it has completed its cycle, they are stuck with whatever flavour of sausage is delivered the other end.

This is very embarrassing, as the sausage manufacturers had informed their entire marketplace that the sausages in question will taste very nice, even though they will be the most expensive sausages ever made (costing an estimated $700 billion). Accordingly, since the entire marketplace is expecting sausages to be delivered (because they have been so advised), the manufacturers have no choice but to proclaim the success of their new recipe (even though when they come to sample the new sausages they may choke and regret that they ever started up the machine).

Much more at the link.

Then there is this rumor which was posted as a comment on Daily Kos. My skeptical reaction to it is immediately downthread. However, I'll post the interesting part of it and see what you think.

Rogoff is dead on when he says that there is plenty of money waiting in the wings, but many may never really understand why those funds a being held back. Presently, there is $14 trillion sitting in a set aside account at Citibank awaiting release and this fact was briefly mentioned by Bernanke when he testified in front of the Senate banking committee earlier this week. However the issue was dropped, there was no follow through. We can thank the Queen of England and the Chinese for their generous donations with strings. Get rid of the Federal Reserve.

Fact: during the last G-8 meeting in Germany I believe last March a date certain was set for the full implementation of the Basil II accords. That date being August the 29th just past. Elements within our own government fought this move tooth and nail and when that date passed, the US was given a 30 day extension which is up at 12:00 midnight this Tuesday.

What does this mean? If all US banks that did business with other banks around the world were not compliant meaning that all transactions were transparent and taxable, they would be precluded from doing any business with the rest of the world. The reason for the blow up at the White House? Members of the G-8 threatened to dump all of their T-bills as of the opening of the Asian markets Sunday evening which is the real reason why politicians were running around as if their heads were exploding along with Paulson and Bernanke stating that a bailout had to be in place prior to the Asian opening.

The fix is in place and the bottom line to all of this is that the US will survive and for the time being, the boy King will be allowed to take the credit for saving the entire world form financial ruin. The best part of the deal is the the Federal Reserve which has been an albatrose around the necks of us all for nearly 100 years will eventually disappear and be replaced by a new treasury banking system with dollars backed by real assets such as precious metals.

Everyone else thinks he misinterpreted what he read at crooksandliars.com and at the link from which the first excerpt above came. What do you and your readers think?

[Bokonon]

“Please do not call it a bailout,”“This is a bridge loan to take distressed assets off the books of financial institutions.” Stephen S. Roach, Chairman, Asia, Morgan Stanley, Hong Kong SAR
World Economic Forum, Tianjin 27 Sep 2008

[JT]

So the bailout passed then.
350 billion.
The one thing that was not discussed at all in the hearings was which banks will get this money.
Well I guess Goldman and JPMorgan have all their bad papers ready to go and they will have their money the same day this thing opens and I´m sure they don´t have to give any stocks to the taxpayers.

My views:
a. this money lasts about 3-4 months (Paulson gets off the hook in 4 months).
b. housing will continue to go down for at least 2 more years (as Elaine says)
c. there will be NO cheap credit available for the public, no matter what was promised.
d. nothing will save the housing market
e. dollar will fall (and thats a good thing for the US)
f. inflation will hit as soon as the next president is in office, how bad depends on oil. There´s a good chance US will weather this if US manages to devalue the dollar and keep oil prices down at the same time. High oil prices = inflation will kill the economy in 2009.
g. banks have to be saved eventually (maybe one more trillion next year). This money just passed only saves GS, JPMorgan and all that gang. More is needed next year.

You shoud remember that US has one advantage over everyone else on this planet and that has enabled all the prosperity for decades; the Dollar.
You only owe dollars so you can devalue at will. Everyone elses debts increase if they devalue their currency (debts are in foreign currency).
Oil is the only problem. Oil causes inflation that US cannot export to everyone else, maybe the drop in demand will help this time.
There will be a recession but I think you will get through this, providing oil doesn´t go back up too much.

[Elaine Meinel Supkis]

OPEC is NOT going to get a huge haircut so the US can continue to import oodles of oil.

So that game is over. OPEC didn't act when prices fell after Russia suddenly entered global energy markets in the 1990s. Well, today, there is no Russia to come into markets so Saudi Arabia can raise the price of oil to keep their gigantic welfare state going.

In the 90s, when they couldn't do this, the government nearly fell. Bin Laden was very popular there back in those years. If welfare is cut, SA's king dies.

[JT]

Yes, you´re right.
So far at least it seems when the dollar drops oil goes up, but maybe US can affect this (biggest customer), I don´t know.

You are so right that there is only one solution; up the interest rates to 5-6% and get the savings back to banks.
I´m afraid it will take more time and more bad news for this to sink in.
In my country the stock market dropped 42% in a year, but I see no effect in everyday life yet.
Everyone gets 4,7% interest for one month deposit from the bank here, it´s still too low but gives some protection from inflation.
Recession is not so bad, Ken and many of your readers will propably feel better about everything. It puts some sense back to life (hard work puts food on the table, not playing with the stock market or the value of your house).
Fear is the easiest way to rule people, if the DOW falls 2000 points, the rich loose money. Ordinary people are less affected. You are being pushed into this by fear.

But as you have pointed out, you need banks and some of them have to survive and be saved. And that takes a lot of money.
No good solutions, but US will soar again in ten years. You have so much enthusiasm for everything and you will get to work, I´m sure of that. You Elaine are a prime example of everything I love about the US.

People my country more safe, but at the same time a bit more paralized and hesitant to act.

"We musn’t underestimate American blundering."
- Blunt can google this ;) -

[Bear of Little Brain]

One down…
"A wealthy financier said to be overwhelmed by the current global banking crisis has died after throwing himself in front of a commuter train."
http://tinyurl.com/3png8u

[clymer]

Barney Frank should be ashamed

[blunt Force Trauma]

Now it's to be Monday.....

I hope that it would be to scrap it. Unlikely. Lokks as though THEY"VE decided on how it should be worded and will now vote on that.

WASHINGTON (AP) - New Hampshire Senator Judd Gregg says everything has been worked out in the historic $700 billion Wall Street bailout.

Gregg is the chief Senate Republican in the negotiations over the bailout aimed at keeping credit flowing and saving the nation's shaky economy from collapsing.

Congressional leaders hop to have a House vote on the measure tomorrow, with a vote in the Senate coming later.

Under the plan, the federal government would purchase mortgage-backed securities and other bad debts held by banks and other investors. The money should help troubled lenders make new loans and keep credit lines open. The government would later try to sell the discounted loan packages at the best possible price.

[JT]

Well, Elaine was right again, just found this news.

Rosneft wants to sell half its oil through Russia's online fuel exchange which opened on Tuesday. It’s hoped the bourse will drive down energy prices as buyers compare offers in real time. The latest rates on diesel and jet fuel are now available to anyone with internet.

Russia's energy supreme, First Deputy Prime Minister Igor Sechin, has been shown around the country's first online oil exchange.

“This is a key way to make oil price formation transparent,” Sechin said.

Rosneft says trading on the bourse will mean savings for consumers at the petrol station.

“This removes intermediaries and will bring down the price of oil. We hope 50% of our trade will eventually go through these exchanges,” Rosneft’s President Sergey Bogdanchikov said.

It's the world's first oil exchange not dollar-denominated.

Prime Minister Vladimir Putin calls this the starting step to make the ruble an international reserve currency.

http://www.asia.ru/russia/news/document23173.shtml

[Bear of Little Brain]

The stench of corruption is overwhelming. Let it burn and start again. One meaning of a revolution is political; another is the return of a wheel to its starting point. The concept underlying both is the same.

Elaine mentions 6% p.a.. This is a doubling roughly every 12 years and is an example of the exponential function. Boring old maths, but:
When logic and proportion
Have fallen sloppy dead
And the White Knight is talking backwards
And the Red Queen's "off with her head!"
Remember what the dormouse said;
"FEED YOUR HEAD

I've mentioned these videos before, and here's Part 1 of 8. Until we all understand the exponential function we're screwed, whatever happens in the near future. Please give it the eighty minutes or so needed. So, let's feed our heads:

Dr. Albert A. Bartlett's presentation on "Arithmetic, Population, and Energy. (The Exponential Function.)
Part 1
http://www.youtube.com/watch?v=F-QA2rkpBSY

;-)
All the best everyone

[Bear of Little Brain]

That was interesting. Tried to post links to all eight parts, but hit a spam filter. Maybe Elaine can dig out the filtered version, but no big deal.

[don]

As I sift through the analytical numbers
and you tube resets, the answer was at
the grocery store right in front of my
face, The National Enquire-the end of
the world is coming, Who would have thought
this periodical could predict the financial
crisis. I was subscribing to the Wall
Street Journal and Transcripts combined paying for information I could have got
for 1.50 at the check out counter..........

[Don]

Elaine: the history lessons are wonderful.
The correlation from one year to the present
and how the continuation of screw ups by
this administration and Wall Street keeps growing every day. Within a couple years,
I hope to read about the many who will be
serving time for corruption, and to see how
much debt is really on the lost scrolls of
Wall Street. As I have posted in the past,
we have so much history but we have learned
nothing: Finances and Wars ??????????????

[Gary W]

While we're doing quotes, let me remind you of this (attributed to Winston Churchill): "the Americans will always do the right thing, once they have exhausted all other options". But he was an imperialist warmonger too.

As for the bankster rescue, I don't think there's anything I could add that hasn't been said a thousand times already. Except, I haven't seen anyone tie this in with other social problems like climate change, industrial pollution, overpopulation, and resource depletion, especially in the form of peak oil. The powers-that-be will prop up business-as-usual at any cost. Things are going to get worse, much worse, before they get better. It's looking like the whole human species is bankrupt (except for people in the Third World who live in mud huts and spend their lives carrying water and hunting for firewood), and we need a jubilee for humanity.

[Elaine Meinel Supkis]

I once had a dream during the seventies hyperinflation years. I was shopping and soup was only 8 cents a can again. I was so happy.

Then I woke up to reality and had a wave of sadness. Today, I am inured to this. I expect inflation. Note that soup is well over a dollar a can.

[Bear of Little Brain]

Gary W:
"Except, I haven't seen anyone tie this in with other social problems like climate change, industrial pollution, overpopulation, and resource depletion, especially in the form of peak oil."
That's what Dr. Bartlett was doing in the 1990's (see post above for link).
Another Churchillian quote:
"History will be kind to me, for I intend to write it". Which he did, but in retrospect.

Aside: when Barney Frank stops reminding me of Deputy Dawg, I'll take him seriously!

[DrKrbyLuv]

Elaine, thanks for going to Washington and for your great insights, photos and art. Made me feel a more integral part of history.

Like our financial institutions, I think our congress is being overwhelmed. Our media adds to the hysteria by promoting the terrorism brought against the people - quickly do what we say or suffer the loss of jobs, pensions, savings, future generations, and on and on.

If the problems were simply economic, we could rally as a people and prevail. Unfortunately, the financial mess is just a symptom of a larger problem - the real problem being the tyranny and subjugation of the ruling elites.

The elites have seized our executive branch and made the CIA and the fed rogue operators to execute their goal of a new world disorder.

I don't see any sound solutions coming from Washington or wall street. The solution must come from main street via revolution. If we want freedom and prosperity returned, we must rise as a people.

"But what do we mean by the American Revolution? Do we mean the American war? The Revolution was effected before the war commenced. The Revolution was in the minds and hearts of the people. . . This radical change in the principles, opinions, sentiments, and affections of the people was the real American Revolution."

John Adams to Hezekiah Niles

[Elaine Meinel Supkis]

I am reading Ben Franklin's autobiography at night. Very interesting guy.

[GK]

I will provide a summary of Ben Franklin for Retarded Americans:

"Neato experiment with kite and lightening!"

For anyone else not half asleep:

Ben Franklin = Freemason = Zionism

Here is a copy of a book he wrote in 1734!

http://digitalcommons.unl.edu/libraryscience/25/

This is an online electronic edition of the the first Masonic book printed in America, which was produced in Philadelphia by Benjamin Franklin in 1734, and was a reprint of a work by James Anderson (who is identified as the author in an appendix) printed in London in 1723.

This is the seminal work of American Masonry, edited and published by one of the founding fathers, and of great importance to the development of colonial society and the formation of the Republic.

The work contains a 40-page history of Masonry: from Adam to the reign of King George I, including, among others, Noah, Abraham, Moses, Solomon, Hiram Abif, Nebuchadnezzar, Augustus Caesar, Vitruvius, King Athelstan the Saxon, Inigo Jones, and James I of England. There are extended descriptions of the Seven Wonders of the World, viz. 1) the Great Pyramid, 2) Solomon’s Temple, 3) the City and Hanging-Gardens of Babylon, 4) the Mausoleum or Tomb of Mausolus, King of Caria, 5) the Lighthouse of Pharos at Alexandria, 6) Phidias’s statue of Jupiter Olympius in Achaia, and 7) the Colossus at Rhodes (although some maintain the 5th is the Obelisk of Semiramis). It is a celebration of the science of Geometry and the Royal Art of Architecture, as practiced from ancient times until the then-current revival of the Roman or Augustan Style. “The Charges of a Free- Mason” and the “General Regulations” concern rules of conduct for individuals and of governance for Lodges and their officers. The work also includes five songs to be sung at meetings, one of which—“A New Song”—appears in print for the first time and may have been composed by Franklin.

The document suggests that Masonry, in its modern Anglo-American form, was rooted in Old Testament exegesis (“So that the Israelites, at their leaving Egypt, were a whole Kingdom of Masons, … under the Conduct of their GRAND MASTER MOSES”) and in contemporary Protestant ideals of morality, merit, and political equality.

http://en.wikipedia.org/wiki/Freemasonry

In some countries anti-Masonry is often related to anti-Semitism and anti-Zionism. For example, In 1980, the Iraqi legal and penal code was changed by Saddam Hussein's ruling Ba'ath Party, making it a felony to "promote or acclaim Zionist principles, including Freemasonry, or who associate [themselves] with Zionist organisations."[79] Professor Andrew Prescott, of the University of Sheffield, writes: "Since at least the time of the Protocols of the Elders of Zion, anti-semitism has gone hand in hand with anti-masonry, so it is not surprising that allegations that 11 September was a Zionist plot have been accompanied by suggestions that the attacks were inspired by a masonic world order.

[Simon]

The financial crisis widens with the bailout plan passing the congress.
Meanwhile, Germany and France accuse Wall Street of 'contagion'

http://www.abcnews.go.com/GMA/story?id=5902773&page=1

http://afp.google.com/article/ALeqM5i39GvLWqintIPXe2Pnh5e_EVhMOA

I think the sign here is the wider schism between US/UK and the other developed nations, Germany/France/Japan/Europe/Australia . Both are trying to benefit from other's bailout actions without spending their own reserves.

America is also not very subtly stirring up conflict in Europe using Georgia and trying to do the same in Asia with Pakistan.

For if Europe falls back to cold-war relation with Russia and the Indo-Pakistan conflict flares via Kashmir the world would have no choice but continue the cheap lendings to US.
Pakistan allows China to bypass the Malacca straits into the Persian Gulf which is controlled by Singapore ie US