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"So in kindergarden, since my school was run by people from the University of Chicago for the professorial children " --- another Lab Schoolee? --- no wonder I read your rants most days;-)

Keep it up --- doubt it will change much but it's at least comforting for me to know someone is thinking.

Blunt Force Trauma

Tectonic fragment linked to Tokyo's quake peril: scientists


Impatient Patriot

Wow My little head is overflowing today.
So much info so little space to fit it.
Nice work on that first post today.
Your demanding attention.

Elaine Meinel Supkis

Actually, the weather here in the Northeast is giving me a migraine headache. Heh. OUCH. Markets recovered when the gnomes were told by Congress, 'You are naughty, now take your loot and hide for a few weeks until we get the peons to clean up your messes.'

Elaine Meinel Supkis

Blunt Force Trauma, thanks for the earthquake link! This is EXACTLY like LA: the same fragment, the same position! This means there is logic at work here.


"Also, many mammals will go extinct soon. This is the REAL news"...

"bonny portmore"...


Paul S

I would note that on CSPAN today Glenn Fine, an IG for the Justice Dept was being grilled by the House Judiciary Committee on the Attorney General firings under "Dubaya" in 2006. There also, what is the point of having these hearings if there is no serious intent towards prosecuting Gonzales and his master Bush? House Committee members describe the top-to-bottom cronyism at Justice under Bush/Gonzales, where ideology not competence was the measure for employment. I hope the Committee acts quickly; members of the Bush administration have a nasty habit of fleeing the country when cornered.

Elaine Meinel Supkis

Paul, long ago, I gave up on the news about the slow motion Democratic pursuit of Bush and his gang. If they were any slower, they would fall behind elderly turtles.

Bear of Little Brain

At the end of another gloomy day in England, proof that our wet climate softens our brains:

'Gordon Brown has urged global markets to abide by a system of "morals", including "responsible risk-taking" and a "work ethic".'

What planet is he on? If you didn't laugh, you'd cry. But where did this fool say this?
'At the annual dinner of the United Jewish Israel Appeal'

They must have wet themselves trying not to laugh!

I despair.



Cheer up Bear of Little Brain.
In Australia, we think these bright minds of the UK and the USA are going fix everything.


Elaine, if I didn't know better, I would say that Jim Kunstler has been reading and taking inspiration from your blog. (IMO a great compliment.) Please see his latest post Oct 6th at Clusterfuck nation. He is starting to make you sound like an optimist.


Good morning all, the markets were not the only thing that got hammered yesterday, so did a guy named Fuld! LOL.

Check this out for a dose of Reality humor to make your day. OC, don't miss this one: http://tinyurl.com/3grahg

Payback is a bitch and a half, and I suspect were are going to see a quite a bit of it as the extent of the damage these thugs have inflicted on the world. You are right OC, they can run, but they can't hide. THe world has become a very small place.

Elaine Meinel Supkis

Jim K and I chat periodically. He lives not too far from my mountain.


Trading in Icelandic banks halted pending announcement: http://tinyurl.com/46ggey

This has a massive impact on 200,000 Britons who have accounts with Icelandic banks, notwithstanding that the BOE is guaranteeing the accounts.

Quite alarming as it will set of a daisy chain of implosions, much like sympathetic detonations.

Another good read: Will the Crisis Bring Down the Global Financial System? Go Get Your Dollars Out Now! FAST!!!



Thanks, I'm in Oz right now so slightly behind u guys.


Rudd is goin to save the day...err he better check with his banker first (China)...might be a bit of a hiccup to his plans if they don't line up with Hu and Wen.

The silly season is officially on - all these jokers is planning to bail out the Titanic with silver teaspoons after hitting THE iceberg. And they locked us in the boiler rooms...the B***



Your clairvoyant skills are contagious; all your regulars here are picking this up from u.


I think this is only the start. Soon, they can't even get out onto the streets without body guards.


Carli - that video made my day...hope he did get sucker punched.

Today I talked to several people who brought up the financial mess, and they were angry. This is good news as the only way to stop this insanity is for people to get mad enough to notice.

I have been handing out copies of the "Money Masters" to some friends and relatives.


Elaine, Fed might have just stealth cut the rate from 2.00 to 1.25 today! Helicopter Ben now goes invisible while Bazooka Hank fire away trillions of credits! When will our foreign creditors realize USD is worthless and dump them?

"Fed Sets Floor Below Rate Target, Engineering `Stealth' Cut"


Oct. 6 (Bloomberg) -- The Federal Reserve may have cut borrowing costs today without actually saying so.

The central bank used authority granted under last week's financial-rescue legislation to effectively set a floor under its main interest rate that's lower than the 2 percent target set by policy makers last month. The Fed may now pay interest on bank reserves while it floods financial markets with liquidity, pushing down the overnight lending rate by about 0.75 percentage point to 1.25 percent.

``Absolutely, it's a stealth easing,'' said John Ryding, founder and chief economist of RDQ Economics LLC in New York and a former Fed researcher.

The announcement, and a Fed decision to double the auction of cash to banks to as much as $900 billion, failed to avert a 3.9 percent decline today in the Standard & Poor's 500 Index. The index has tumbled 28 percent this year even as the central bank has expanded credit more than at any time in seven decades, including a 3.25 percentage-point cut in the main rate during the past 13 months.

``The problem is it's an easing that's trying to offset a massive tightening in the market. Net-net, are we easier in policy? In some sense the answer is no,'' Ryding said.

By paying interest on reserves, the Fed can pump more cash into the financial system without worrying the overnight lending rate will drop to zero at the end of each day as banks withdraw excess reserves. The move doesn't preclude a further reduction in the target rate by the Federal Open Market Committee.

Biggest Surprise

The 0.75-point spread, announced today, was the biggest surprise in the Fed's moves to implement its authority under the financial-rescue legislation, economists said. The Fed set the new rate Oct. 3, the same day the House approved the bill and President George W. Bush signed it into law.

The FOMC, composed of the Washington-based governors and 12 Fed regional-bank presidents, meets about every six weeks to set a target for the overnight lending rate, which the New York Fed tries to achieve by buying and selling Treasury securities from bond dealers.

The Fed requires banks to keep a level of reserves at the central bank. On those funds, the Fed will pay a higher rate equal to the average target rate over a one or two-week period less 0.10 percentage point. For excess reserves, the rate is the lowest FOMC target over a period less 0.75 percentage point.

The Fed said it would raise or lower the spread so the New York Fed trading desk can keep the federal funds rate near policy makers' target ``based on experience and in response to evolving market conditions.''

The central bank didn't set a meeting schedule for discussing the reserve-interest rate.

Channeling Cash

The federal funds rate will probably trade below the FOMC's target as long as the Fed is channeling cash into the banking system, thereby prompting financial institutions to park their funds with the central bank each day. The rate may trade closer to the policy target when the credit crisis eases and the Fed begins to withdraw its emergency lending.

Still, a ``soft federal funds rate does not provide a perfect substitute for a cut in the target,'' former Fed Governor Laurence Meyer and former Fed researcher Brian Sack, now with Macroeconomic Advisers LLC in Washington, said in a research note to clients.

The Fed said today ``the rate on excess balances should be set sufficiently low to provide an incentive for eligible institutions to trade funds in excess of required reserve balances and clearing balances in the federal funds market.'' The rate should also discourage banks from trading funds ``far below'' the federal funds rate.

The interest payments begin Oct. 9.

Start Lending

A higher rate on payments may give banks too much of an incentive to keep funds at the central bank, said Peter Hooper, chief U.S. economist at Deutsche Bank Securities Inc. in New York and a former Fed official. ``The whole objective here is to get banks to start lending again, and the more you pay them to hold on to their reserves, the less likely they'll be willing to lend.''

Even if the funds rate trades below the 2 percent target, it doesn't mean the FOMC is deploying a new policy tool by paying interest on reserves, said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``I doubt the FOMC will want to give up their Fed funds rate target as the key indicator of monetary policy.''

To contact the reporter on this story: Scott Lanman in New York at slanman@bloomberg.net
Last Updated: October 6, 2008 18:02 EDT


Elaine, this is insane, just insane! Now if you borrowed from the Fed. They pay interest to YOU. This is NEGATIVE INTEREST RATE. We are absolutely !@#$ed. This is WORSE than 1990 Japan. Japan is a saving country. Bernanke is turning USA into Zimbabwe!


The Fed’s Interest in Paying Interest
Posted by David Gaffen

One of the less-heralded — but long-sought — components of the $700 billion bailout legislation is that it gives the Federal Reserve the authority to PAY INTEREST ON BANK RESERVES, the assets banks are required to hold but until now were prohibited from paying interest.

The hope is that these interest payments will help increase banks’ capital at a time when there is an excess of bank reserves in the system, which constrain banks because they take up valuable space on a balance sheet that might be reserved for other assets, such as loans or mortgages, that actually earn banks money.
Coupled with the billions in toxic assets that banks are holding as a result of bad decisions in the mortgage markets, the banks have been constrained from doing new business because of the excess reserves in the system.

“If the Fed has to provide excess reserves you’re strengthening the banking system if you can pay them a market interest rate,” says Lou Crandall, strategist at Wrightson ICAP. “Otherwise, you’re penalizing them by forcing them to hold sterile assets.”

The massive increase in excess reserves has taken place over the last few weeks, dating to around when Lehman Brothers Holdings failed. Reserve Bank credit was $908 billion on Jan. 3, 2008, and sat at $906.8 billion on Sept. 10, 2008. By Oct. 1, this had ballooned to $1.481 trillion. The reserves are created through the sharp increase in the various Fed credit facilities created, and in normal times, excess reserves are quickly removed from the system. Not so now, because of the cash-hoarding occurring at the banks.

However, at the end of each day, banks don’t want to keep these excess reserves on their balance sheets, because they are undesirable as non-interest-earning assets. In fact, banks have been trading these assets back-and-forth with each other, causing the overnight federal-funds rate to drop to near 0% at the end of every day of late as banks tried to unload their unwanted reserves.

The problem with this is that it results in a de facto easing of the federal-funds target, but it happens in a way that is completely out of the control of the Federal Reserve. The target rate is currently 2%, but the effective funds rate on Thursday was 0.67%. Should this continue, it would disrupt the markets further and have ramifications for money-market funds, among others.

The new provision will allow the Fed “the ability to literally flood the U.S. financial system with money without it impacting the federal funds rate,” writes Tony Crescenzi, chief bond market strategist at Miller Tabak. “This is because banks will ’sell’ or deposit their excess money at the Fed rather than chase the funds rate lower when they have excess money to sell.”


Great article Elaine. I always wanted to witness history in the making, and your analysis is the best clip of reality in the world(even comes with preview of future!) Onward we go to witness the end of the current economic era!


First earthquakes, and now asteroids! HAHA!


An asteroid discovered earlier on Monday by an Arizona observatory will hit Earth's atmosphere over Sudan in a few hours but will burn up before it can hit the ground or endanger aircraft, astronomers said.

The asteroid will create a large fireball at about 2:46am GMT on Tuesday as it burns up, the team at the Harvard-Smithsonian Centre for Astrophysics said.

"We want to stress that this object is not a threat," said Dr. Timothy Spahr, director of the International Astronomical Union's Minor Planet Centre at Harvard in Massachusetts.

"We're excited since this is the first time we have issued a prediction that an object will enter Earth's atmosphere," Spahr added in a statement.

The asteroid, known as a meteoroid, is between 1 metre to 5 metres in diameter.

"A typical meteor comes from an object the size of a grain of sand," said Gareth Williams of the Minor Planet Centre.

"This meteor will be a real humdinger in comparison."

Elaine Meinel Supkis

I have seen meteoriods burn up in the atmosphere. It is quite amazing. Looks like a flaming jet crashing. Yes, dear old Mother Nature is toying with us.

CEO Nutcracker

The Martial Law Mission in under way as of Oct. 1.

dictators and their gnome masters are getting nervous.


"Paul, long ago, I gave up on the news about the slow motion Democratic pursuit of Bush and his gang. If they were any slower, they would fall behind elderly turtles."

....on Quaaludes.

Thanks for keeping this unfurling disaster fun, Elaine! HAHAHA

Paul S

The video of Lehman CEO punched out has been pulled. Sorry I missed it. I certainly do not endorse violence, but am fairly certain much fiercer 'responses' towards banksters than punches will happen. When the formal means of justice break down, vigilantism almost always ensues.


Elaine, are you familiar with Catherine Austin Fitts?

She worked with HUD and watch $59 billion get looted from the government.


Overwhelming American communities with mortgage, auto and credit card debt as we shift manufacturing and research capacity, jobs and approximately $10 trillion of capital offshore-much of it by illegal means-has been the US economic strategy since 1996.

This was a strategy that depended on massive government spending and market intervention. It was intentionally designed to leave us where we are now. There clearly is a plan. I am not privy too it. However, what is happening is not an accident. The people who run the world are plenty smart. Originating a great deal more debt than anyone could carry, let alone pay back always ends in failure and bankruptcy of someone or something. So Fannie and Freddie's failure or nationalization was always in the cards - it was a matter of when.

If your goal is total centralized control, this is a great way to achieve it. Between Freddie, Fannie, Ginnie Mae, FHA, VA and the Federal Home Loan Bank Board, the federal government no longer regulates or provides credit to the residential mortgage market - it is the market.


Elaine, I hope you didn't think my previous post was criticism of Jim. I think he is an ideas man and a wordsmith par excellence and I look forward to Tuesday mornings with Jim (normally read just after I read your posts.)

The other resident of your state of great interest (to me) is Gerard Celente of Rhinebeck. Gerard predicted that the consequence of the collapse or financial 911 would be a taxpayer revolt.


I like the English, or should I say the British. They have a sense of honor I find quite touching. I think its something they learn as children when reading up on their history.

Of course, that sense of honor gets eroded quite rapidly once they start working. I suppose it would be more accurate to say that I find the remnants of their honor quite touching.

The City types are like city types everywhere. A shark in Australia is just as dangerous as a shark in Hawaii.



Here is an interesting article from itulip.com:
'The US Treasury has just nationalized the Federal Reserve due to looming Fed insolvency'


The pace of collapse is accelerating even as we type.

Elaine Meinel Supkis

Oh dear! Bokonon! I meant, I know Jim and he is wonderful! He is coming over to visit and have dinner next month. He is most fascinating. I hope to wrangle an interview with him when he comes, by the way.

Elaine Meinel Supkis

OC, I pointed out that our Reserves has no reserves anymore. They and the Treasury are BOTH bankrupt in the real world. But our trade rivals want us alive, not dead.

But selling weapons to Taiwan might end with us being dead.



No worries, by the time the deal comes through for the delivery of weapon systems, it'll be too late to matter to all the parties involved.

The economics 9/11 is now. It is just plain stupidity to irritate China with nothing to gain for it; just like the Tibet issue during the Olympics.

On the other hand, it might be a backdoor way for US military industry to pass sensitive weapon technologies to China via Taiwan.



I'm sorry, am getting to be cynical and grouchy in my old age.

Elaine Meinel Supkis

OC, the ITulip forms format is ancient! I hate that format style where you must click through a cascade of comments one by one. Ick.

But the information is good.

By the way, long ago, I said the Fed Reserve would go bankrupt due to having practically no reserves. This is a running joke here at Culture of Life News. The instant the Japanese began to hoard dollars, the US should have hoarded yen. We didn't and now we are paying the price, literally. Everyone is now hoarding dollars and we can't fix this mess.

Elaine Meinel Supkis

OC, you are about as cynical as I am. HAHAHA. I am going back to bed now. Sleep soundly! Enjoy life. Fall here is very beautiful.


Paul S, try this link for the Lehman punch:

On another front, the Russians are getting quite vocal (what's taken them so long?) after loosing 20% of market cap yesterday, expect them to begin accepting payment for oil and gas in currencies other than dollar. This is going to accelerate pretty quick once deleveraging ends.

Putin: Dump the dollar, trade in rubles
"I don't understand why we are still trading in U.S. dollars ... while we are well aware of the problems faced by the U.S. economy," Putin said. http://tinyurl.com/3g5he2

Paul S

Saw the video. Thanks for the link Carli.


"Keating Economics"

"The current economic crisis demands that we understand John McCain's attitudes about economic oversight and corporate influence in federal regulation. Nothing illustrates the danger of his approach more clearly than his central role in the savings and loan scandal of the late '80s and early '90s."...


Paul S

I beleive that once the full force of the banking collapse is exposed, other countries with a score to settle with the US will be lining up to dish out some payback. It won't be just the domestic front that implodes. They say that bad things happen in threes. We will probably get more than three though.


"other countries with a score to settle with the US will be lining up to dish out some payback"

Paul S

With 12,000 nuclear weapons and God knows whatelse...

At the end of the day...I don`t think so.

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