October 29, 2008
Elaine Meinel Supkis
World stock markets are shooting up like a rocket based on the perception that the G7 central bankers and politicians will restart the destructive status quo that involves the US allowing the flood of exports to enter our country and devastate our industrial base. Great news, eh? All this will be fed by an orgy of 0% financing. Sounds like all those auto commercials. As we watch the entire concept of banking go into this moral collapse, it pays to look closely at the deals we are accepting here. Just like those auto loans at a fake 0% interest rate: read the fine print and see the truth.
The LIBOR rate is finally falling. Or so hope our foolish experts. If only they can get this low enough, all will be well! I recall, during the previous 20 years, everyone who pretends to be economic experts marveled at how cheap credit was and how low inflation was, that is, after the 1971-1982 waves of increasingly bad hyperinflation.The comparable euro rate fell 2 basis points to 4.83 percent today, the 15th consecutive decline, BBA data showed.
I lived through this entire span of time as a working mother who had to cope with these waves of inflation as well as swimming in the real estate shark pool a lot of the time. So I always was hyper-aware of the interest rate fluxes. Also, we did business overseas so we were aware of currency valuation fluxes, too. Since this is personal and not something I read in a book, I have vivid memories of my problems during this time and how I coped with these sometimes, huge problems.
From 1971 onwards, as the US government and the private banking conspirators in the Federal Reserve struggled to keep the economy growing while piling up huge debts thanks to wars, the goal was always to have credit as cheap as humanly possible. The business about 'taking away the punchbowl when the party gets interesting' was just pure propaganda.
At no point has this ever happened. In the past, the Fed raised interest rates whenever anyone overseas came to knocking at the front gates of Fort Knox, demanding their new-minted dollars which often were created overseas via lending, be turned into physical gold. For example, when the Fed dropped interest rates to restart the US economy after the Great Crash of 1929, France merrily made loans in France based on their DEBT trade with the US and then they raided Fort Knox for gold! Even as the government was demanding the US bankroll Germany's reparations by lending to Germany so Germany could give these dollars to the US and then France would take these same dollars and trot back to the US to demand gold!
Now, we don't care about any of this since Europe tried this yet again in the 1960's and drained away 75% of the gold at Fort Knox. Now, we simply have no gold peg. Nations now live with this floating currency game which is making many people very rich and even more people, very poor.
The LIBOR rates are now dropping but are still hundreds of basis points above the fake rates set by the central bankers. The news that the LIBOR has dropped has to be offset with the news that the LIBOR drop hasn't even begun to catch up with the rate of artificial drops being engineered by the punch bowl boys in the central banks.
(Bloomberg) -- The Federal Reserve may lower its benchmark interest rate to 1 percent today and signal further reductions to levels unseen since Dwight Eisenhower was president.
Tumbling commodities prices and weaker consumer spending are slowing inflation, which officials described as a ``significant concern'' at their last scheduled meeting in September. Tomorrow, the Commerce Department will probably report that the economy shrank at a 0.5 percent annual rate in the third quarter, the most since the 2001 recession, economists predict.
The Fed ``will be very aggressive,'' said Mark Gertler, a New York University economist and research co-author with Fed Chairman Ben S. Bernanke. ``Inflation risks are off the table'' and ``the issue now is how bad the recession will be.''
World stock markets shot through the roof on wishful thinking that the US public will have access to 0% financing and thus, be able to buy, buy, buy more stuff. I shall disabuse everyone of this notion. It isn't going to happen.
But first, I have to address a philosophical issue today: the central bankers are destroying banking in their looney game of trying to control economies via interest rates! The role of bankers is rather simple: they have to balance the creation of credit with reserves and savings! They don't sit down and say, 'Should we make the economy hotter?' They shouldn't decide, unilaterally, 'We should cool the economy, it is growing too fast.'
After years of flooding Americans with credit card offers and sky-high credit lines, lenders are sharply curtailing both, just as an eroding economy squeezes consumers. The pullback is affecting even creditworthy consumers and threatens an already beleaguered banking industry with another wave of heavy losses after an era in which it reaped near record gains from the business of easy credit that it helped create.
Major high-street retailers are targeting poor families with bad credit records to prop up their Christmas sales during the credit crisis.
Dozens of high street stores are taking part in a doorstep lending scheme which charges poor families extreme rates of interest. Woolworths, Comet, B&Q and Mothercare and 92 other retailers have been accepting vouchers that are repaid by borrowers at an annual percentage rate of 222 per cent – more than 10 times the rate of a credit card.
Nearly exactly a year ago, I wrote about oil, inflation, interest rates and international central bankers messing around with global trade. The entire article including the data I published is one of my more important stories. The entire efforts of the trade circle of the EU/US/UK and Japan, the G7 group, was aimed at stopping the banking collapse by pouring into the gaping maw, not savings but money created by the central bankers. I was totally against this. I correctly said, the important thing here is to reorganize global trade so it is balanced.
One of our readers sent this link. I was curious about it since it involves tidbits of data. Like a cat's paw marks on wet cement...ever pour cement? At night, all the animals come to walk on it. When I poured the cement floor to my basement, the dogs, cats, a deer and one horse hoof print appeared at night on it. I didn't fill them in, they amuse me. Anyway, in the banking system, things have to run 24/7 so the Federal Reserve is always open for special solicitations for funds. Generally speaking, banks prefer to make deals with each other and not share 'business' but when business involves working with stinky things like trashy tranches, the Fed is the bank of last resort.
The other time of mega-high rates was in 1980 due to the Iran oil boycott and hyperinflation at home. Unlike Greenspan, Volker raised rates to equal the real inflation rate. I genuinely believe that virtually no one remembers this time period. I remember because I had to do business via barter back then due to high rates. Certainly, I couldn't call a banker. And that was also when banks gave me trouble with money I deposited. They held onto it for as long as possible while I wanted it as fast as possible. Check clearing took forever.
Remembering all this, we look at that 15% deal in mid-October with a sens of foreboding. When there was this sudden hike in the overnight funds meaning that someone came slinking up to the Fed window with a bag of cow droppings, they couldn't get anyone to give them lending loot except at a very high rate indeed. Namely, someone thinks these guys who are probably attached to some pirate ship out at sea, are not long for this world. Too bad we can't tell who this person is. As I keep saying, despite the claims that we have an open system, it is very much 'insider trading' all the time. We get to know enough to think we know what is going on. But this is an illusion. Here it is: we are in trouble due to wild lending at super-low rates leading to the bidding up of various assets and things of every imaginable sort from the futures markets to stock markets, housing markets, etc. The entire problem came about due entirely to the Federal Reserve dropping interest rates lower and lower back in 2001 starting from January 6th of that year. Previous to the election, they tightened the screws, claiming there was inflation even though we were obviously in a recession. Looking at all the data 7 years later, one notices immediately that all the nations of the world went into recession starting in late 1999 and through all of 2000, a time when the Fed raised rates over and over again.
The minute Bush was declared the 'winner' of an election he lost, Greenspan began to loosen rates...right in the teeth of Bush and the GOP irresponibly granting many huge tax cuts to everyone! Then we had 9/11 and rates dropped from a super-low of 3% to a super-duper, mega-low rate of 1%. Right in the teeth of obvious energy inflation. Energy is always a driver of inflation. It doesn't matter what the interest rates are, if energy is rising, inflation rages. This is because energy is a powerful component of all economic systems. From manufacturing to transport, energy is consumed. And as it rises, either wages are cut or profits vanish or both which causes either inflation if both can be passed on or a depression if neither can be passed on and trade and manufacturing slow down.
One of the readers here sent me a link to iTulip.com where one of the members mentioned that the oil crisis of the stagnation years from 1972-1984 was 'fake'. This is typical of many people who were probably too young to remember what happened during those years or were too politically unaware of what was going on back then. My own father was sent to Saudi Arabia in 1974 to be a friendly envoy to persuade King Faisal to cooperate with the US and bring down oil prices.
From Bloomberg: Crude oil climbed above $93 a barrel for the first time, extending this month's gain to 16 percent, after Mexico shut a fifth of its production and the dollar fell to a record low.
State-owned Petroleos Mexicanos, the third-largest supplier of crude to the U.S., halted about 600,000 barrels a day of output as a storm barreled through the Gulf of Mexico, spokesman Carlos Ramirez said in Mexico City. The dollar dropped to $1.4426 per euro, the weakest since the introduction of the 13- nation common currency in 1999. End Bloomberg quote.
There is now a lot of proof that dollars no longer are the basis for oil trading. Namely, every time oil is constricted in some way, the price shoots up more if paid in dollars than paid in euros. So inflation for anyone using or holding dollars is significantly higher than if they use euros.
This dynamic is fairly recent. Ever since Greenspan dropped interest rates to 1%. The aftershocks of this stupid ploy to 'revive' the economy after the Dot Com collapse are still shaking world energy markets. The US itself is aggravating all this by dropping interest rates in the teeth of obvious inflation above 5% and threatening more wars in oil pumping regions.
Why are oil prices dropping this season? It is equally simple: the US and EU have ceased attacking Iran. The threat of war is rapidly fading there. The US is confining its attacks to Pakistan and Syria, non-oil nations. It is leaving the Persian pussy alone. The guys at the top know perfectly well, if they make oil expensive right now, the global economy will continue to collapse. So they are tweaking foreign policy statements and actions to create the illusion of peace.
China's markets are continuing to rise. Of course, they too will fall in the end as a global recession caused by the US overspending and excessive debts and too-small reserves will grip everyone by the throat. Only we won't sail out of this with our empire intact and our power greater. China's retraction will be painful but ours will be fatal. This is due to the logic of all imperial collapses. Just as England, no matter how she twisted and turned, could not shake the depression she caused, so it is with us. Both Germany and the US grew stronger from 1933-1939 while England weakened. When WWII finally began, it really was a confrontation of the new Great Powers: Germany, Japan, the US and Russia. England struggled in vain to hold onto its rotting empire. If the US didn't fight Japan, the Japanese would have finished off the last of the imperial holdings of Australia and India, for example. But the US propped up Britain across the planet and in the end, did most of the manufacturing of war materials.
So now, in this collapse, China will be the world power when all this unwinds. It is quite simple: China isn't up to its eyeballs in debts. And if the US discharges its debts like Russia did twice in the 20th Century, this will destroy us just like it destroyed Russia. And unlike Russia, the comeback won't be easy. Russia has energy to spare. We are on the down slope of the Hubbert Oil Peak and are very vulnerable since our entire transportation and living systems are set to a model that assumes cheap, easy oil.
All over the news are stories about how the G7 are rushing to the Dragon Throne to beg China to bail out everyone. When China's ruler, Hu, went to Africa and openly bailed out IMF victims there, the US and Europe's media and punditry went totally insane with fury and fear. They claimed that China wasn't rescuing Africa but enslaving Africa. HAHAHA. So look at today's news:
Prime Minister Gordon Brown of Britain called Tuesday for China and the Persian Gulf states to put up more money to help the International Monetary Fund deal with the fallout of the credit crisis.
Mr. Brown’s appeal grabbed the spotlight ahead of a meeting on Tuesday with President Nicolas Sarkozy of France, who called the proposal interesting and vowed to work “hand in hand” with the British leader — just as they had on a coordinated rescue plan for European banks. Mr. Sarkozy said he also believed that the fund needed “additional means” to help ailing economies.
Sarkozy thinks he will get his mitts on Chinese money and then use it to aggrandize French powers? HAHAHA. Mon Dieu! So, China and OPEC are going to bail out Europe? And these guys in France and Britain will back slap each other and imagine, these two devastators of the Chinese and Ottoman empires will be given more power? Are they this blind to history?
Unable to face reality, we play all sorts of occult and dark games hoping this will allow us to rule the earth without paying for anything, we hope the Chinese and Russians will fund our rule! The corporations which our government protects are nearly all now tax cheats for they want 0% taxes compared to the 35% they are charged with here. Since they are refusing to pay to the tune of nearly a trillion a year, this means our empire is running on lots of red ink instead. The conservative side of the blogsphere is running this futile campaign to present our rulers with a petition begging for them to be fiscally responsible. But this petition does not call for higher taxes, sending our navy to all those tax havens and taking them over and taxing all the corporations hiding there, no.
*snip*
OK: they set their rates and then try to get reality to conform with their happy ideal. They use various means to do this trick. I will note here that the Fed stupidly...VERY, FATALLY STUPIDLY...thinks the game here is to hold as little reserves as possible. NO OTHER MAJOR NATION DOES IT THIS WAY. None. They are all accumulating heroic reserves, far greater than the Federal Reserve. Many times greater! This is the new game.
The Fed, accustomed to setting the rules of international finance for 100 years hasn't figured out that this game ended in 1996 when Japan discovered the felicitous new tool for weakening the yen and thus, gaining trade advantage by hoarding dollars in their FOREX reserves. Then China joined them and one-upped them. Now Russia is doing this along with all the oil pumping nations including Venezuela and Peru, for example. Everyone is doing this! Now, India has joined. Meanwhile, the pointy pencils in the Fed haven't figured this out. Instead, they decided that huge FOREX reserves are not only useless but endanger the holders of these FOREX reserves!
They forget: these reserves have ONE FUCTION: to enable trade on better terms for the holders. Not to make profits via interest rates. Due to the games played by everyone, inflation is woefully understated. No, their only function is to gain profits via trade. Now, Canada must play this same game, they didn't hoard FOREX dollars and now the loonie is on par with the dollar and it is hurting Canada's trade with the US.
So....last year, I correctly explained the thinking and predicted correctly, future actions. Just as I said then, the EU and US powers are rushing off to Asia and even Russia, begging them to save us from our own debt follies. I fear, I sound like a broken record sometimes. I am truly sorry about this. But facts are facts: until the US recognizes the truth, I have to keep yapping. This is so tiresome. Now, back to today's news:
(Bloomberg) -- The dollar fell for a second day against the euro on bets the Federal Reserve will lower interest rates by as much as three quarters of a percentage point today.
The U.S. currency also declined against the yen and the British pound on speculation the central bank will continue lowering borrowing costs as rising unemployment and sliding home values cause the world's largest economy to contract. The yen rebounded from a record loss against the euro on concern slowing global economic growth will limit demand for higher-yielding currencies.
``When the dust settles, the dollar's fundamentals will pressure it to go lower,'' said Masahiro Sato, joint general manager of the treasury division in Tokyo at Mizuho Trust & Banking Co., a unit of Japan's second-largest publicly listed lender. ``Traders will focus more on falling rates and the rising costs of fixing the U.S. economy.''
The dollar weakened to $1.2730 per euro at 11:29 a.m. in Tokyo from $1.2683 late yesterday in New York. It fell to 97.50 yen from 98.03. The yen rose to 124.11 per euro from 124.32, after a 6.8 percent drop yesterday. The dollar may drop to 90 yen by year-end, Sato said.
Ah, the goddess Libra is still at work. She is trying to reset her scales. Everyone is resisting this. She will, in the bitter end, win. She is a death goddess, after all. Japan is terrifically worried that the yen will be 90 to the dollar. This will kill a lot of their export profits. The ability to drop interest rates is nearly gone in Japan. The central bankers, playing traders, not bankers, has kept rates insanely low, even in the teeth of obvious inflation in Japan, so that exports would flourish no matter what. This was very wrong and Japan should have been punished by trade partners.
(Bloomberg) -- Speculation the Bank of Japan will cut interest rates for the first time in seven years jumped after the Nikkei newspaper reported that the central bank may halve its target rate this week.
The chance that the central bank will lower the benchmark lending rate to 0.25 percent from 0.5 percent on Oct. 31 rose to 62 percent from 8 percent yesterday, according to calculations by JPMorgan Chase & Co. using overnight interest-rate swaps.
*snip*
Japan's stocks surged a second day as speculation for a rate cut spurred the steepest drop in the yen in three decades, boosting earnings prospects for makers of cars and electronics.
Miz Japan slits her yen's wrists! And the yen weakens! But the Japanese are furious that all its trade victims are doing the same, rapidly dropping to Japanese banking levels. When everyone reaches 0% financing, Japan will opt for -1% financing. And the death of international banking will continue!
Economic and Fiscal Policy Minister Kaoru Yosano said yesterday that a rate cut would have a ``symbolic'' effect if done in conjunction with other central banks, showing that Japan is taking part in global efforts to counter the financial crisis.
Yosano's comment ``suggested he hopes the Bank of Japan will lower rates to join its counterparts in the U.S. and Europe,'' said Ueno at Mizuho Securities. ``The government is signaling it wants the central bank to take action too.''
Prime Minister Taro Aso and Finance Minister Nakagawa were circumspect in their comments today on what the Bank of Japan should do.
``How can we tell the BOJ to lower rates? It's a matter for the BOJ, not us,'' Aso told reporters in Tokyo. Nakagawa said deciding whether to lower interest rates is ``up to the Bank of Japan, which is completely independent.''
HAHAHA. Aso is lying through his teeth, of course. The Bank of Japan is joined to the LDP by the hip. The Japanese people accept this deal. They have little experience in opposition politics so the country has basically been ruled by the samurai elites for hundreds of years and still is a closed, one party state.
(Bloomberg) -- Honda Motor Co., Japan's second- largest carmaker, jumped the most in 34 years, leading gains by automakers after the yen declined against the dollar and euro, boosting earnings from exports.
Honda rose as much as 19 percent, or 400 yen, its daily trading limit to 2,465 yen and traded at 2,365 yen as of 9:55 a.m. in Tokyo. Mazda Motor Corp., a third owned by Ford Motor Co., rose as much as 30 yen, or 17 percent, to 206 yen, and traded at 196 yen.
The yen was at 125.17 per euro from 124.32 after dropping 7.3 percent yesterday, its biggest decrease since the 15-nation euro's 1999 debut. A weaker yen inflates the value repatriated earnings from Europe and the U.S.
``The yen weakening helps the carmakers,'' said Hideyuki Suzuki, a market analyst at Morningstar Japan K.K. in Tokyo. ``The market is rebounding from its earlier losses.''
I read in the British news that the former imperialist power is terrified that Honda might lay off English auto factory wage slaves! HAHAHA. The US is in the same fix: bit by bit, we are destroying our own industrial base and it is being sold or rebuilt by Asian powers. Honda desperately wants 0% financing. From JAPAN, not the US. Years ago, people got mad at me when I patiently explained that there was no such thing as '0% financing' for autos. This is ridiculously simple: if you pay cash for a car, the price dropped by around $2,000. If you got a 0% loan, you paid $2,000 more for the car! The differential was the interest payments that were set at about 7% per annum. Yet this game fools lots of people. What a shock that is. Heh.
(Bloomberg) -- China cut interest rates for the third time in two months to stimulate growth in the world's fourth-largest economy after the global financial crisis curbed exports and production.
The key one-year lending rate will drop to 6.66 percent from 6.93 percent, the People's Bank of China said on its Web site today. The deposit rate will fall to 3.60 percent from 3.87 percent. The changes are effective tomorrow.
China's expansion dwindled to 9 percent in the third quarter from 11.9 percent in 2007 and industrial production grew at the slowest pace in six years in September as export markets dried up. The Federal Reserve may reduce its benchmark rate today and the European Central Bank has signaled that it's poised for a similar move.
China's 10%+ growth rate is tremendous. And of course, destabilizes global trade, commodity markets and monetary systems. As China swells and grows rapidly, someone else can't. And that someone else is the G7. Including Japan. Japan's colonization of the US and Europe is a desperate move to save themselves from Chinese growth. The Japanese workers get 0% benefits from all this. Quite the opposite. The Chinese workers depress Japanese worker's wages just as certainly as it depresses American worker's wages.
(Bloomberg) -- The U.S. government should enact an economic stimulus package of between $400 billion and $500 billion before the end of the Bush administration in January, New York University professor Nouriel Roubini said.
Roubini, who predicted the current financial crisis in 2006, said the economy risks falling into “a self-fulfilling animal spirit recession that is more severe than otherwise” because of the collapse of credit markets and weak consumer and corporate spending.
“The only way to increase aggregate demand is going to be through” government spending on roads, bridges and other infrastructure, Roubini said at a Bloomberg conference in New York. “We need a huge plan, $300 billion is not going to be enough. I think we’re going to need a plan of $400 billion to $500 billion.”
We saw a huge banking collapse last August. It is continuing. Anyone reading the timeline of the Great Depression knows that the collapse of the banking system took over 4 years to complete and the recovery took 15 years before things began to seriously improve. All the gurantors of the system are now in danger because the entire system is in danger and NOT in nations with huge FOREX reserves. I like to put in a lot of seemingly disparate stories to see what comes into focus and today, it is obviously the hidden hand of the FOREX reserves we must look at to see what will happen next.
My prediction: the US will still refuse to understand how FOREX reseserves operate in the New World Order they, themselves, foolishly created. So, unlike China, the biggest reserves holder, we will continue with our super-low reserves regime and thus, will collapse into infamy and destruction. And killing the dollar won't make us richer if the Chinese have all the export manufacturing bases anyway. It just means we get raging inflation at home. Which the Fed will deal with by lowering our reserves even more! We will continue to follow the wrong magic formula while the Chinese follow a totally different formula and the Japanese will lie to us about their magic formula (the carry trade machine).
The derivatives beast is mostly interest rate swaps. ???
Posted by: ziff house | October 29, 2008 at 11:40 AM
Elaine - you should be paid for all that you do. Recompense is due.
Peace,
Ken
Posted by: Buffalo Ken | October 29, 2008 at 11:57 AM
I second the motion Ken! I read a lot everyday, no one comes close in focus, comprehension, analysis, and historical perspective. Always a pleasure to read. She would be a real asset working as a consultant with our Central Bank and the Asian development Bank.
Posted by: carli | October 29, 2008 at 01:06 PM
Actually, Elaine would do perfectly fine starting her own private bank. I, for one, would be a depositor.
I would expect however that all depositors would receive green eyeshades in lieu of formosan coffeepots.
Posted by: CK | October 29, 2008 at 01:24 PM
HAHAHA
That insipid ad with that putrid “saved by 0%” jingle made me want to “go Elvis” on my television.
*sigh*
I’ve been reading this blog for about a month and it’s interesting to me that even though I am not an “economist”, and have nowhere near the depth of knowledge and analysis presented here I was still able to figure out a lot of this stuff on my own.
It’s weird. I thought to myself: how can so many supposedly smart people be so wrong? Is that really possible? Alas it is! And now I can prove it, more or less, thanks to Elaine. I don’t know whether to laugh or cry.
One thing I figured out on my own was the capitalist myth of ‘wealth creation’.
Basically ‘wealth creation’ is in reality merely just using technology to extract energy more efficiently. (Not necessarily USE energy more efficiently). But all energy resources originate from the Sun, and the energy deposited in the Earth’s system is finite. Vast, yes, but finite nonetheless. Of course, this is not necessarily a problem as long as energy resources are abundant, or infinite. But since they are as of yet not, the laws of thermodynamics must eventually prevail. Perhaps this reflects to some degree why Prometheus got such a harsh punishment for tempting us with the gift of fire.
Interestingly, the exponential “hockey stick” growth of the global money supply and human population seems to be roughly congruent.
Now, I love God with all of my heart and I don’t mind dying so that God may live. But suffering and/or dying so the likes of Dick Cheney and Henry Kissinger can rule the world? Not so much.
God bless you, Elaine Supkis.
Posted by: JSmith | October 29, 2008 at 01:28 PM
what exactly should the US export? They are up against the greatest manufacturing machine on earth , all those litte hands.
Agriculture? probably ecological limits [from inputs] on that.
Posted by: ziff house | October 29, 2008 at 01:53 PM
Interestingly, the exponential “hockey stick” growth of the global money supply and human population seems to be roughly congruent.
Also congruent with oil production, a bell curve peaking right now.
Posted by: ziff house | October 29, 2008 at 01:54 PM
The first step is not exporting - the first step is to stop importing. Obviously this will need to coincide with manufacturing that which previously had been imported and of course was necessary. Many imports just now ain't nothing but feffen fluff. Same with santa - what a farking fluffer he is...
Peace,
Ken
Posted by: Buffalo Ken | October 29, 2008 at 02:02 PM
What the hay - Poem of the day..
________
fleffen farkin freakin creaking stinking fluff - what you thinking --- McDonalds plastic crap and stuff? This stuff don't last. Make it at home why don't ya.....jump and flump and fromp and framp on the feffer as he tries to make things better...
_____________
end of goofy poem..
Ken
P.S. Anyone seen the gold, the silver, and the US Dollar today - funky!
Posted by: Buffalo Ken | October 29, 2008 at 02:08 PM
Think about this possibility because it could happen - all these derivative players hanging on their rope are shorting the US Dollar - played it up some, now they are ready for the fall, or so they think......
I doubt this is happen although I do think the US Dollar will "find" its natural value. As will the Canadian Dollar and the Swiss Franc and all the other currencies.
Volatility is the name of the game I suppose, but even so, volatility always gives way to a more steady-state.
Peace,
Ken
Posted by: Buffalo Ken | October 29, 2008 at 02:15 PM
Come on folks. Don't you know that Elaine has dozens of fact checkers, researchers, go-fers, and technical staff. Not to mention a vast fortune accumulated from profiteering on her knowledge of economic facts and trends.
***** JUST KIDDING OF COURSE! *****
Although I would venture a guess that her hubby is a valuable source of encouragement and strength.
Posted by: Grok | October 29, 2008 at 02:15 PM
Grok - As Heinlein would say "I Grok".
Posted by: Buffalo Ken | October 29, 2008 at 02:17 PM
"Second Planet Needed to Meet Natural-Resources"...
http://tinyurl.com/5bednr
The above is WAY behind...
http://tinyurl.com/2fm5kp
It`s the real reason why we will not come out of this depression and the real reason we are going into one as time will tell.
Posted by: Tell | October 29, 2008 at 02:24 PM
Ken.....My all time favorite sci-fi novel. But sadly, it was Charlie Manson's favorite too! Just shows you what bad people can do to a great theme.
Posted by: Grok | October 29, 2008 at 02:32 PM
"If a private enterprise is a failure, it is closed down - unless it can get a government subsidy to keep it going; if a government enterprise is a failure, it is expanded. I challenge you to find exceptions."...
"Milton Friedman, Why Government is the Problem, Wriston Lecture (1991)"
Posted by: Tell | October 29, 2008 at 02:35 PM
''Second Planet Needed to Meet Natural-Resources"...
David Suzuki told everyone this years ago , except it was 4 or 5? planets.
I've always marveled that the chinese thought they could live at USA standards.
Posted by: ziff house | October 29, 2008 at 02:37 PM
Gov'ment? Privit? Huh? It's all just more college brahminariat media cartel refuse! Exactly how stupid are we all really expected to be?
Posted by: blues | October 29, 2008 at 03:38 PM
I have a long-time friend who works right under one of the Cabinet Secretaries in the Bush Administration. My friend heads the negotiation teams that go to Singapore, South America, and other Asian countries.
Several years ago I took my friend to New Orleans to keep an old promise I had made. We talked one night at dinner about what my friend does for a living. At the time, I knew nothing about international trade or money or anything that I have learned here.
I asked my friend who the most difficult negotiators where, and my friend said the Asians were the worst. They would not accept anything and were very difficult to deal with. I asked my friend what we were trying to get Brazil (where my friend had just returned from) to accept from us in trade, and my friend said that we were trying to get them to accept our "financial products" in exchange for their corn and beans and coffee.
The conversation turned to other light hearted matters, but I always remember that conversation because I did not know what was meant by "financial products". Now I do.
Basically, my friend's job was to get other countries to invest in our swindles, con games, and other money making schemes in exchange for their raw goods or value-added items. They were resistant to this because they had their own home-grown flock of con-men and swindlers and did not need to import any.
Like ancient Rome, we had nothing to trade. We produced nothing but feces and ponzi schemes.
Posted by: DeVaul | October 29, 2008 at 04:01 PM
Hey Guys,
Whats the difference between a Wall Street Banker and a whore?
When a whore screws you, you get value for your money.
Posted by: PK Scott | October 29, 2008 at 05:17 PM
when a whore screws you, you get COOTIES.
Ken, LOVED your poem! Dr. Suess is a laughing in the afterlife!
About trade negotiators: HAHAHA. A herd of some of the stupidest people on earth.
When you negotiate with the Communist Chinese, if they cease smiling and are angry, it means you are making progress. They get more and more pissed and then, when the deal is done, they are your eternal friends!
They despise people who don't like hacking it when negotiating.
In Monty Python's Life of Brian [a tremendously funny movie!] there is a scene where Brian desperately needs a disguise to hide from the Romans and the merchant insists on haggling. If he doesn't haggle properly, the merchant begins to complain very loudly.
A movie all negotiators should watch and discuss. Heh.
Posted by: Elaine Meinel Supkis | October 29, 2008 at 05:52 PM
When Argentina, for example, borrows dollars, it must scrounge dollars to pay off the loan.
When U.S. borrows, it merely prints dollars to pay off the loan.
Big advantage to U.S.
And a good way to break the world; establish a New World Order; work for zi juus.
Posted by: PLovering | October 29, 2008 at 07:15 PM
1% Ben! Weeeee. He's to mimic Japan. What's next? A claim of NO inflation?
Fed Cuts Rate to 1% to Avert Prolonged Recession (Bloomberg)
Hahahahahahaha, I'm dyin'
http://tinyurl.com/6ow3cg
Posted by: Blunt Force Trauma | October 29, 2008 at 07:33 PM
There are some positive benefits to the concept of 0% loans. Maybe borrowing money should be free with only fees involved?
In a way, this concept is consistent with the principles of Islamic (Sharia) and early Christian law. Interest on loans could be discontinued and instead, allow lenders to charge a fee and or rent/lease arrangements.
Look at what is happening with interest bearing loans. Many mortgages are re-setting to higher levels, some effectively doubling the monthly payment amount.
And, look at credit cards. They are automatically rate adjusted based on automatic updated differences in credit scores. People are reporting new interest rates ranging as high as 25-30%. Credit card maximum balances may be arbitrarily reduced, requiring the borrower to instantly reduce the balance.
Why not eliminate interest on all loans?
Loans could include a significant down-payment and/or collateral. The lending institution could be allowed to charge fees and in the case of real estate, rent over the life of the loan.
What happens to credit cards? I dunno, maybe they become debit cards.
What happens to fractional lending? It stops, and people would need to be encouraged to accumulate money in savings accounts by allowing them to be paid part of the fees charged on loans - contracts.
I'm sure there are many flaws in what I am suggesting and I look forward to hearing any comments.
Posted by: DrKrbyLuv | October 29, 2008 at 07:43 PM
Yes, inflation is retreating as the price of oil declines. Perfectly obvious.
Now: they must tell us over and over again, the price of oil has little to do with inflation. And wars aimed at oil pumping nations has nothing to do with global inflation.
Posted by: Elaine Meinel Supkis | October 29, 2008 at 07:45 PM
Renting instead of paying interest?
HAHAHA. My ancestors understood what feudalism was all about: we collected the rent, the peasants paid and woe betide anyone who failed to pay us!
This is why my ancestors practiced sword fighting and jousting.
Posted by: Elaine Meinel Supkis | October 29, 2008 at 07:47 PM
Elaine - no, I meant pay rent until the contractual payment obligations are met. Then, full ownership - no rent.
Home owner provides a down-payment of maybe 20% and they pay off the balance; divided by the term. For example, a $100,000 mortgage contract might break down as follows:
$100,000 - $20,000 down-payment = $80,000 Balance
Loan fee: $2,0000 (Paid to arranger & lender/saver)
Monthly payment (20 Year mortgage): $333
Monthly rent: $800
Monthly rent and principle paid to lenders and some monthly fees to the loan arranger
Posted by: DrKrbyLuv | October 29, 2008 at 08:41 PM
"Slaves To The Orgy Of Money"
I love that title.
I have been trying to guess what the endgame of this orgy of money will be.
Is it:
1. Vaporize the value of the dollar to technically not have to pay $12 trillion in debt.
2. Hoard cash until US interest rates soar up to 18% (Obama/Volcker) THEN start lending?
3. Centralize all banking power into a super-constitutional monopoly structure.
(Super meaning 'above' the constitution)
I think 1 and 2 are too dramatic and could harm the military that backs our currency and it will be the more mundane #3.
In the unlikely event that Obama can avoid voting machine hacking that creates a 'surprise' McCain win we may get VOLCKER-18% Plan #2.
I am not voting for either of them (go third parties!) but I think that fear of 100% dems in house and executive branch, latent racism, voter roll purges, vote challenges and Diebold voting machine hacking make for an almost guaranteed McCain win. He and his banking criminal friends are perfect for implementing SUPER-BANK plan #3.
Any other predictions out there?
http://www.theinternationalforecaster.com/International_Forecaster_Weekly/Slaves_To_The_Orgy_Of_Money
"In the end, all these large banks will come crashing down like a ton of bricks because they are irretrievably insolvent, and then they, along with the privately owned Fed, will be nationalized and merged into one super-entity, which will be given all regulatory power over the financial industry. They will no longer have to kill off the small fry by creating catastrophes. They will simply regulate them out of existence until their banking and financial interests have achieved god-like, dictatorial power. "
Posted by: GK | October 29, 2008 at 08:45 PM
GK,
Option 3 can't work - most nations will go to China rather than IMF. One Super bank - China, Japan, OPEC and other Asian nations such as Taiwan, Singapore (all pro-China)which are cash rich (as opposed to debt) as the new G7.
Option 2 - new G7 has the most cash as reserves and that include Yen and Euros.
Which leaves Option 1 as the only viable option just like the Sterling Pound in 1930s.
Posted by: OC | October 29, 2008 at 09:22 PM
Elaine, this is the guy the Fed, Treasury and all the Central Banks in the world should hire to oversee the coming economic crash. The man knows what he is doing!
http://www.youtube.com/watch?v=XRCbkBfdBrQ
DrKrbyLuv, I agree with you on the rental issue, your are talking about a lease-purchase contract. The numbers make sense but consider this, the price of homes in the US and everywhere else in the world stand to drop by 70-80% over the next few years. Thank you deflation.
The time to buy would be then, not now. To buy or own now means going into negative equity (unless you bought your home 15-25 years ago). If you buy at close to bottom then all the rental you paid (which is tax deductible, as an expense), and the savings you made on property taxes and fees, not to mention the savings on loan fees will far, far outweight the lease-purchase contract. Try to instead negotiate a Right of First refusal on the home purchase X amount of years in future, that way you do not lock in todays price and pay tomorrows negative equity.
Posted by: carli | October 29, 2008 at 10:07 PM
carli -
Thanks for bringing up the tax consequences and deflating home prices.
I agree, now would not be a good time to buy if one may chose the time window. But, I don't think homes prices would bubble near as much if the business incentive was to collect the principle as opposed to originating more mortgages (most are sold off with guarantee).
I also question conventional wisdom that says one should own as opposed to rent (provided they can write-off interest). If interest were eliminated, no tax deduction would be needed.
Many mortgages were used to upgrade the homes with the hope growing your home investment. For example, $50,000 kitchens, $30,000 master bedroom bathrooms, hardwood floors, etc. Turns out, these were terrible "investments." Home upgrades would be better spent on energy reduction and sustainability.
Thanks
Posted by: DrKrbyLuv | October 29, 2008 at 10:36 PM
Don Coxe; no reccession ,quick bounce back ,magic piggy banks
http://watch.bnn.ca/headline/october-2008/headline-october-21-2008/#clip104894
Posted by: ziff house | October 29, 2008 at 10:45 PM
DrKrbyLuv, agreed. In business and investing timing is everything, it dictates profit or loss. Doing your homework and paying attention to the interlocking economic issues is paramount. The gnomes have made everything so complicated that one has no choice. Either that or the poorhouse.
I like the sound of a no interest regime, and it would make the gnomes jobless, something which resonates with most of us here. However, it would take at least a generation to wind down the conspicuous consumption habits brought about by cheap money and easy debt. As Elaine always reminds us, savings, not debt is the key to prosperity.
We have a ways to go still, but even if a few succeed on this track the rest will follow. The gnomes have lost all sense of credibility. They are exposed and afraid. And they are playing more and more alone with their imaginary "money" friend. We may yet see them turn into clay figurines to adorn our lawns.
Posted by: carli | October 29, 2008 at 11:32 PM
ZiiFuckerling got buggered by zii juuz again? What happened to you Fuckerling, a vanload of blackcoats ran a train on your ass?
Posted by: calvino | October 30, 2008 at 12:37 AM
Calvino; so whats the bug up your nazi ass. off your meds moonbeam??
Posted by: ziff house | October 30, 2008 at 01:51 AM
If the markets were having a problem finding the bottom, Wednesday rate cut just guaranteed we are screwed. Oil is currently around $70 a barrel compared with Monday's low of $61. The Yen is around 98 however the US dollar index now has dropped from 87.5 to 83.5, it will be very difficult to weaken the Yen faster than the US dollar devalues along with China's and HK peg to the US dollar. They have just accelerated the competitive devaluation and stagflation process. Our trade rivals won't buy our trade products, while we soon won't be able to afford to buy theirs. Commodities are now the new game in town while stocks, bonds and currencies get trashed along with workers' wages and savings.
The solution involves IBs and AIG top executives a lamp post and some rope.
Posted by: Q | October 30, 2008 at 02:06 AM
My Dear Fellow,
We were there when Good King Edward signed the Edict of Expulsion in 1290 which expelled zi juus from England for practicing usury, infanticide and ritual murder: usually involving the crucifixion of christian boy.
Now, here we are 800 years later in America, and zi juus are still practicing usury and infanticide in our land.
No question, America needs to repeat an Edict of Expulsion, so as to deport zi juus and their evil and Satanistic practices from our lands.
Posted by: PLovering | October 30, 2008 at 02:35 AM
Apparently Misses Supkis was there when Cromwell reversed ZiiFuckerling's edict and your fleshy chamberpot as well. Your appearances in history were Legion and end as a demon swine running off a cliff.
Posted by: calvino | October 30, 2008 at 02:53 AM
Plovering, the expulsion of ANY religious or ethnic minority is a CRIME. Got that?
A CRIME. Many countries do this. INCLUDING ISRAEL. But it is a CRIME.
Just because many countries or rulers do this doesn't make it humane, good or a model one should follow.
Calvino; you just have to wake up some day and realize that Zionists have been endorsing and justifying ethnic cleansing!
Zionists are creating Naziism. The refusal to understand how Jews have embraced far right wing ethnic cleansing Naziism is at the terrible core of the entire problem concerning the rise of anti-semitism. It is definitely rising! Polls in Europe shows that, despite Jewish attempts at passing draconian anti-free speech laws, anti-semitist feelings are rising rapidly BECAUSE of these laws!
In the US, a person is swiftly banned if they discuss Israel or Jewish attempts at politically dominating all public systems in order to protect their own brand of neo-Nazi ethnic cleansing. I have been a notable victim of this.
The only road out is simple: to denounce religious based states! To denounce race riots like the ones that go nearly totally unreported in Israel thanks to the heavy blanket of Jewish censorship of Jewish crimes.
I still remember when it was illegal for Protestants to proselytize in all South American countries, for example. But in the dear old USA, we allow anyone to preach anything they want...sort of.
We have freedom of speech...less and less, of course. We are slowly losing ground because Jewish people who control a great hunk of our media, want ethnic cleansing to be clean fun in the Holy Land. So they are now trying their hardest to limit the first amendment.
We have to talk about this but people like Plovering are Zionist CLONES. They want what you, Calvino, want. Alas for us all! I HATE THIS WITH A PASSION.
Posted by: Elaine Meinel Supkis | October 30, 2008 at 03:53 AM
About Cromwell: we were nobles who fought on the Protestant side and when the King returned, we were THROWN OUT!
We were REFUGEES! And the Spanish wanted our heads, too! We had only two places we could go: Amsterdam or the New World. Which was just a howling wilderness.
We settled in the Hudson Valley.
So I don't want any crap about anyone being thrown out of a country.
Posted by: Elaine Meinel Supkis | October 30, 2008 at 03:57 AM
I just wonder how recklessly stupid all our economists are? When risks are high, interest rates should go up, like they just almost did. But this scared everyone to force them down again? But risks are still there!
Now we are going to see all that happening again, reckless lending, buying record cheap stocks with lended money and soaring last spike in stocks, or some other totally foolish bubbles. When all that comes down again, no one has anything left. And when yen finally rises in value, no one can pay up their debts to Japan anymore. Defaults, anyone?
If the governments are so worried about our economy, and freezing of financial markets, they should let the central banks (or other institutions) lend money to enterprises, but NOT TO BANKS. Some banks are full of money but they do not dare to lend anyone because they are either scared or they want to everything come crashing down, after which they can buy up everything.
In the recession, government can make it easier for the economy by investing and keeping things rolling. There is always plenty of infrastructure in need of building, upgrading or repairing. But I am afraid USA government went into too much debt while economy was going "good" (actually, NO ECONOMY EVER is going good while DEBT IS GROWING; that should only happen in recessions).
Actually, I started to thing how "stupid" Japan seems in this, when everyone defaults they are not getting anything back? Or will they simply own everything that is indebted to them then?
Posted by: Duski | October 30, 2008 at 05:56 AM
Gads, I write a bit bad when I'm emotional! But I cannot help it, I feel like stupid and blinds are leading the world economy. And everyone more clearheaded is pushed to the sidelines for the one truth they are offering!
Roubini made good predictions (that everyone with some common sense could have made, like no economy can grow forever with going more and more in debt!), and he might soon be our next messiah. But will he do any better? Pouring more money into the failed system of finances? Lend money to real production and industries, not to some failed funny money production. Even better, build up your infrastructure: while giving jobs to thousands, you would be creating a better environment and chances for all future companies to prosper.
Posted by: Duski | October 30, 2008 at 06:06 AM
One might want to ask the Iriquois and the Aztecs about the virtues of allowing unlimited immigration of people with Judeo-christian virtues and values.
Posted by: CK | October 30, 2008 at 06:08 AM
CK, include the Inca, Hawaiians, Filipinos, Chinese, Indians, in your list. Ad infinitum. With even a small amount of intelligence one can surmise that the people who make the loudest noise dish out the most misery. We have a saying in our language, "An empty can makes a lot of noise."
If the ones who moan about the wrongs heaped on their kind had even an iota of sincerity, they would include all races, and all peoples who have ever been massacred, sacrificed or politically or religiously persecuted, in their cause. If instead of wearing their elitist cause like a badge they were to reach out and make peace they would go much further in acieving the peace they rant about.
Instead of using their horrid history as an excuse to perpetuate the very misery they themselves have experienced. It's a very shallow mindset, and one that guarantees that in some yet unknown future they too will experience a vanload of blackcoats run a train on their asses.
Imagine the Indians and Chinese with their billions thinking like these people!!!??? Looking for retribution at any cost. Thank God there are thinking people in numbers.
Posted by: carli | October 30, 2008 at 07:48 AM
carli - I second that for sure!
Peace,
Ken
Posted by: Buffalo Ken | October 30, 2008 at 08:06 AM
Correct. Just for example, the Chinese have been discriminated against. They were not allowed to become American citizens after working here. Some stayed after building the Western half of the continental railroad system. My dearest playmate, when I was a child, Fan, was the great grandchild of these hard-working Chinese.
And her family had to wait until the Civil Rights Act to vote!
In many other countries, there are anti-Chinese riots where the natives burn Chinese businesses, etc.
Then there is Japan: utterly hostile to anyone who is not Japanese. One could find many examples very easily. But the worst is the annihilation of the natives of North and South America, Australia: they were mostly slain by diseases because of their isolation from Eurasia and Africa.
Posted by: Elaine Meinel Supkis | October 30, 2008 at 08:30 AM
Elaine, Ken, will we ever learn that by harming others we ultimately harm ourselves? Pain inflicted has a return address. No one has a monopoly on smarts, no one! You kill someone creatively, and his people will find a more creative way to kill you. This is the way of morons.
I learned early on in high school (in those days kids were gang oriented, it was a very physical mindset, lots of testosterone), that in every group there was always one person who was the most insecure, the one who would find any excuse to start anything, and get the whole gang into a fight they were not looking for. I labeled these types as "matches". After watching their M.O. for some time, I came upon the idea of singling the "matches" out. In a mix up I would go for the match and pound him good. Every fight the match got the worst end of it. Until he got tired of getting pounded and stopped creating trouble. Better the light than a fist in his face. Peace came easily after this.
It's the same the world over, you have a few starters that get the whole, rabble involved while they make profit and live the life of Riley. These are the guys whose houses should get "Predatored", while they are in them! Amen.
Posted by: carli | October 30, 2008 at 09:10 AM
Carli- I've seen the game the "matches" play in action. I call it "let's you and him fight." Our politician class is very good at it.
Over time, hundreds of empires have collapsed. The matches seek to place blame on some outsider group -- zi juus, minority subprime borrowers, hippies, bankers, whatever -- to release their frustration rather than taking the painful steps to rebuild constructively. If I may play match here, let me blame human stupidity. Quick, everyone, go look in a mirror.
Posted by: flash | October 30, 2008 at 09:45 AM
@Carli: Didn't want to make too long a list of it. When the shoe is on the other foot, the previously downtrodden are always more than willing to stamp their boots in some "other's" face.
Posted by: CK | October 30, 2008 at 10:39 AM
Regarding all the current economic emergency room cases:
|¯ Pouring more money into the failed system of finances? Lend money to real production and industries, not to some failed funny money production. Even better, build up your infrastructure: while giving jobs to thousands, you would be creating a better environment and chances for all future companies to prosper. _| — Duski
This is exactly correct!!! Of course, maybe the Asian bankers would turn down the financing for that sort of thing!
I am disturbed about the "zi juus" bullshit. Being a human being comes before being a religious consumer. We should all oppose the the evil of theocracy, which intrinsically bears the seed of bigotry. This does of course include the theocratic Government of Israel. What we really need to do is stop selling the USA to China in order to give arms and money to the Israeli Government.
Remember too, the people who pull the strings of our brahminariat media cartel are ultra-rich, are global "citizens" have no loyalty to anything but themselves.
About the mortgages, credit cards, etc., I think maybe there should be a law that, from now on, all credit repayment should be limited by law to what individuals can afford to pay. Maybe no more than would leave each family $1,000 to live on, with $500 for each additional family member. And no more foreclosures until things straighten out, and compact energy efficient villages built on level roads (along contour lines of constant elevation) in safe locations are constructed.
We need wealth control. No one should be allowed to own more than 40,000× what it costs a normal person to barely survive for one month. The moment you allow 1% of us to own 99% of the wealth, they are going to also own royal power, and they can easily yank democracy right out of our hands.
THIS IS AN EMERGENCY!
Posted by: blues | October 30, 2008 at 10:49 AM
I suppose this is fairly obvious, but I think for awhile there have been many "inhumane" leaders (thats a nice word for it), but we can do better. Also, as Elaine says: "The blog is mightier than the sword".
Peace,
Ken
Posted by: Buffalo Ken | October 30, 2008 at 10:57 AM