Money Matters

October 25, 2008

Elaine Meinel Supkis

It is a very windy, thunderstormy October night. The leaves are being stripped from the trees, flying wildly high into the clouds, whipped far from the gentle embrace of the Mother Trees. So we are going to talk about Synthetic CDOs and figure out not only why they are all losing 80-90% of their value but also looking at the people responsible for this mess and how much did they actually know several years ago. Hint: they knew perfectly well, what they were cooking up. They just thought that October storms would never hit, would it? Right.

WSJ: Trouble for Banks, Insurers May Lurk in Synthetic CDOs

A recent rash of bank failures is wreaking havoc on a large but little-known corner of the credit markets, in a development that could mean more write-downs for banks and higher borrowing costs for companies everywhere.
Even as some lending markets begin to recover from last month's demise of Lehman Brothers Holdings Inc., the securities firm's default -- together with those of other U.S. and European banks -- is causing new dislocations in the multitrillion-dollar market for complex investments known as synthetic collateralized debt obligations.

Geeze, when Lehman Brothers became the Lameman Sob Sisters, one of the most ugly little details was the fact that all that paper they held which they sold as great investments were worth literally less than a dime on the dollar. Some were only a penny on the dollar. Even when a homeowner goes belly up, most often, the property does have some value! Usually, about 60% of the loan. Imagine if homes that were collateral for $500,000 sold for only $5,000 or even just $500? Only if there was some great catastrophe!

Sort of like all those fancy houses in the Galveston area. One middle class community was totally wiped out, leaving only cement floors outlining where the house once stood. This is what has happened to all CDOs of whatever tranche and type.

The Lehman mess has not been settled at all. The bidders at the credit default auction who were supposed to collect the debris and then resell it...HAHAHA...knew this junk was as marketable as popsicles in a January blizzard in Nome, Alaska. But they had to buy something because the government enticed them somehow. How? Well, I would think that the $700 billion lollipop was waved in front of them?

With all this pious talk from the gnome community about 'transparency' and 'trust'...well, this doesn't go particularly far, does it? This is like being in a poker game where the young ladies are asked to play strip poker while the gnomes put on more and more layers of coats and hats and even veils and masks.

Synthetic CDOs are magical things. They have no reality. But they exist. They are devious creations created by some of the most devious minds on earth. The search for the Holy Grail of untraceable, finger-printless, opaque, dark pool money machine was perfected a mere 10 years ago and it was unleashed upon this earth to exploit the Japanese carry trade's funny money 0% lending! See? When we talk about all these strange unicornic creatures created by the gnomes, we must never forget the ultimate reason: to exploit this amazing, once in the last 500 years event! Never, in modern times, has any major export/industrial nation run itself on a 0% system!

So the problem was, how to shimmy this good thing into the real economic world and thus, use it as a basis for building great wealth without lifting a finger or making anything exportable. Before we descend down the particular deep pit into the Outer Darkness, first, let's visit the Bionic Turtle:

The Bionic Turtle explains all about CDO's:

This illustrates a partially-funded synthetic CDO typical of the failed structure in the subprime meltdown. "Partially-funded" refers to the fact that only a fraction of the reference portfolio is collateralized (e.g., 7% to 15%); the investors purchase securities only on this funded tranche. "Synthetic" refers to the fact that credit risk is transferred not with a sale of loans to the SPE/SPV, but by the purchase of credit protection with credit default swaps (CDS).

He tries! He tries his best! Explaining this mess, do note with his graph, how the arrows all move contrary-wise. And how they basically dump all 'risk' onto others while absconding [to the bottom of the graph] with the real loot. Which is ALWAYS LESS THAN !0% OF THE VALUE OF THE DEALS! And the cherry topping this melange are the juicy fees earned, building, slicing and dicing these deadly deals!

After searching the web, I found this interesting magazine that is all about credit. Just 4 short years ago, they ran an enthusiastic article about the wonders of Synthetic CDOs and how they magically grow EXPONENTIALLY! Wow!

May 2004: CDO guide: cashflow versus synthethic CDOs

Balance-sheet and arbitrage CDOs can be structured as cashflow or synthetic instruments, although an increasingly popular formula among originators is to combine the two into so-called hybrid CDOs. The cashflow CDO, which formed the bread and butter of the market in its formative years, is a structure in which CDO notes are collateralised by a portfolio of cash assets purchased by the originator. In other words, in this classical structure the CDO owns the physical bond, loan or other security referenced by the instrument.
The volume of traditional cashflow CDOs has been eclipsed in recent years by synthetic products, sometimes referred to as collateralised synthetic obligations. In a synthetic CDO, no legal or economic transfer of bonds or loans take place, with the underlying reference pool of assets remaining on the balance sheet of the originator. Instead, the CDO gains exposure to credit risk by selling protection to others through a CDS, which functions very much like an insurance contract. In other words, the CDO is still being paid for bearing credit risk, just as it would do if it physically owned a bond or loan.
From the perspective of originators, there are a number of clear benefits associated with synthetic CDOs. One of these is that risk transfer via synthetic structures allows bank originators in the CDO market to ensure that client relationships are not jeopardised. That is an especially relevant consideration in the market for CLOs, given that deal documentation in the syndicated lending market often prevents the transfer of loan ownership. Even where loan transfer is permitted, CDOs would often need, in theory, to secure the written permission of each borrower in order to construct a cashflow, which would amount to an impractical burden.

A number of danger signs in this early article! First off, there is NOTHING LEGAL about these deals! Gads! How do we spell, 'ILLEGAL'? Legal means things are set in ink, signed by actual humans who can go to prison for fraud, for example. It means it leaves fingerprints, a trail, something physical. Instead, since these bizarre new thingies were NOT LEGAL, this meant the sellers and buyers could make up whatever stories they wanted with each other since no one ever expected to be hauled before a judge or examined by the SEC.

With that Republican idoit, Cox, in charge of the SEC, no one was ever allowed to interfere with deals. And indeed, more and more deals were done 'off the books' and in other obviously crooked ways. This was encouraged by Greenspan who claimed this was pure capitalism and not pure Ponziism. When these things took off, interest rates were at 1% and the search for places where higher rates could be charged was on. These Synthetic CDOs were all about removing obvious risks from the high-interest rate pools.

Business deals or home lending to risky people who were not good clients was the only way one could charge very high interest rates. But everyone buying these things were frightened about bankruptcy of these same, risky borrowers. So they needed come scheme to remove this threat. This is where the Synthetic CDOs were so very clever: they pretended that they could SELL the risks and thus, insure it!

The sales of these risks turned out to be a great way to feather many a gnome's nest. The fees and the sales and resales of these seemingly innocent things was a great way to make a buck for two years! Then the bad news began to come in: the bad risks were very bad risks. And were defaulting at record rates! And the people who supposedly were going to pay for these losses so that the original owners of these tranches would not be hurt, were unable to pay or unwilling to pay up!

The guys at Credit Magazine are just overawed at the idea that these synthetic CDOs are growing EXPONENTIALLY!

A Deutsche Bank report on synthetic CDOs traces the strong growth in investment-grade CDOs back to 2000, by which time – notes the Deutsche report – “the credit default swap market was expanding at a seemingly exponential rate. We estimate the outstanding notional amount was growing at about 75% per annum and that the market totalled about E800 billion. Between the US and Europe, about 150–200 names were actively traded.”
Since then, liquidity in the CDS market has continued to grow at breakneck speed, with some estimates suggesting that by the end of 2004, the CDS market will be worth some $4,800 billion.
For investors there are a number of important attractions associated with exposure to the CDS market rather than to cash bonds. CDOs made up of CDS allow investors to buy ‘pure’ credit because the structure separates the credit risk component of from the other asset’s risks, such as interest rate and currency risk.

The fantasy that the risk was separate from the credit was a fool's game. It was cynical. The people who cooked this up knew it was a con. This is why it was not LEGAL. Namely, no one responsible wanted their nasty little names attached to any deals. Goldman Sachs and JP Morgan's top dogs didn't want to be barking in the pen after a trial. Paulson had to drop his lucrative business when he saw what was coming. He knew two years ago, all hell would break loose so he got himself installed as Treasury chief so he could be in control of the main banking entity that matters when things go crashing down.

He is NOT some nice guy who is sacrificing himself for humanity. He has hundreds of millions of dollars of Goldman deals at stake here and he wants to protect this stuff. Indeed, he is frightened of being arrested for fraud. But Congress doesn't want to arrest him. They want him to catch the falling knife of the Synthetic CDOs. He promised them, he would. Alas! This is all attached to that super-monster beast, the Derivatives Beast. Who isn't just synthetic paper but all sorts of oddball deals like currency/interest rate swap games and credit default swaps. These goofy, stupid gnomes let this creature grow to be bigger than the entire planet earth! Illegally!

Wiki Synthetic CDO

A synthetic CDO is a collateralized debt obligation (CDO) in which the underlying credit exposures are taken on using a credit default swap rather than by having a vehicle buy physical assets. Synthetic CDOs can either be single tranche CDOs or fully distributed CDOs. Synthetic CDOs are also commonly divided into balance sheet and arbitrage CDOs, although it is often impossible to distinguish in practice between the two types.

Tweedle Dee and Tweedle Dumb. Can't tell them apart. And they are not physical. They are metaphysical with a vengeance. Any time we see something that is full of mysteries like this, full of outright contradictions or suspend the laws of gravity, we are seeing magic, not reality. Like, magic TRICKS. Now onwards to tonight's news:

CDO Cuts Show $1 Trillion Corporate-Debt Bets Toxic

(Bloomberg) -- Investors are taking losses of up to 90 percent in the $1.2 trillion market for collateralized debt obligations tied to corporate credit as the failures of Lehman Brothers Holdings Inc. and Icelandic banks send shockwaves through the global financial system.
The losses among banks, insurers and money managers may spark the next round of writedowns on CDOs after $660 billion in subprime-related losses. They may force lenders to post more reserves after governments worldwide announced $3 trillion in financial-industry rescue packages since last month, according to Barclays Capital.
``We'll see the same problems we've seen in subprime,'' said Alistair Milne, a professor in banking and finance at Cass Business School in London and a former U.K. Treasury economist. ``Banks will take substantial markdowns.''

Every one of the queer, strange, bizarre things cooked up by these crooks this last decade are collapsing! Not one of them is useful, sane or good. Whenever we see this sort of thing in the real, physical world, we usually decide, this is a crime. Drunks driving down the wrong side of the road, smashing into everything are criminals and liable to be arrested if they survive.

The utter and complete failure of EVERYTHING these guys cooked up shows determined criminality. Just like Enron collapsed into bankruptcy, thus showing the underbelly of their conspiracies and illegal deals, so it is here: how on earth can these things be legal if they are so lethal?

Recently, China had several scandals over children's milk, toys and things. Lead or melamine was poisoning and even killing children. This was a crime and the government moved to punish the people responsible. Namely, they have committed suicide or are in prison. So it is here! All the bankers and dealers who invented, created and sold this obviously illegal business should be punished!

You don't need a law saying, 'Do this or that and you get arrested.' The mere fact that all of them have conspired to create TOTAL and UTTER economic destruction on an epic scale is grounds for arrest! Terrorists are supposed to scare us and this is illegal, whatever tools they use to scare us. So it is with these guys! They are terrorizing the entire planet. They are destroying our nation and many other nations as certainly as bombers blowing up buildings or shooting officials! Send them to Gitmo!

Here is proof that the Fed under Greenspan had plenty of warning about all this. A report written in 2004:

This graph is a classic 'hockey stick' graph. There should be a big sign attached to all such graphs: DANGER! DANGER! UNSUSTAINABLE GROWTH!!! Any realistic adult looking at such a graph should scream, 'Oh my god! Oh, my god! We must stop this, now!' Not, 'Oh my, look at that! We found a magic way to make something grow very, very fast!' This irritates me no end. I saw such graphs years ago and began to howl about it. No one listened. This is because humans WANT to have things grow to infinity as fast as possible if they can do it. This delights them, not terrifies them!

Out-of-control growth pleases us immensely. So the only way to stop this is to train our youth to fear this graph. Whenever they see such a graph, they must immediately raise alarms and show anger and fear, not happiness. The Credit Magazine guys thought the exponential growth was great! Not hideous. So we have a philosophical problem here that has to be addressed by the schools. Pronto. And we must force Congress to look into this matter, too. For they are making our debts grow the same rate!

From the Federal Reserve: Understanding the Risk of Synthetic CDOs

Michael S. Gibson∗

Revised, July 2004

CDO tranches are sensitive to the business cycle

Because CDO tranches are sensitive to correlation, and correlation of defaults is typically driven by the business cycle, the correlation risk of CDO tranches can also be characterized, and measured, as “business cycle risk.” Using the model described in section 3 above, and interpreting the common factor as business cycle risk that is common to all credits, I can compute the exposure of each of the tranches of the hypothetical CDO to business cycle conditions. Speciﬁcally, I can compute the expected loss (EL) on the CDO tranche as deﬁned above, conditional on a certain value of the common factor.
Table 10 shows such a calculation. Three diﬀerent business cycle conditions are considered:
boom, trend growth, and recession. These correspond to setting M , the common factor driving defaults, at its 10th, 50th, and 90th percentiles, respectively. The table shows both the dollar amount of each tranche’s conditional EL in the boom, trend growth and recession scenarios, and the conditional EL as a percent of the tranche’s notional amount.
The equity tranche, in a ﬁrst-loss position, expects to bear defaults of about half its notional amount in a trend growth macroeconomic scenario and expects to lose its entire notional amount in a recession.
The mezzanine tranche, in a second-loss position, suﬀers no losses in a boom and minimal loss in a trend growth scenario, but suﬀers most of the portfolio’s EL in a recession.
In this sense, mezzanine tranches are leveraged bets on business cycle risk. Recall the hypothetical CDO’s mezzanine tranche. Its par spread is 315 basis points, compared with 60 basis points on the reference portfolio. In exchange for this higher return, the mezzanine investor is exposed to a loss of 64 percent of principal in a recession scenario, compared with 7.6 percent on the reference portfolio.
The senior tranche expects to suﬀer very little loss, even in a recession scenario. Figure 5 shows the expected loss on the three tranches across a full range of macroeconomic shocks (1st to 99th percentile). Beyond the 96th percentile common factor shock, corresponding to a less than 4-in-100 or less-than-once-per-25-years shock, the senior tranche begins to see its principal signiﬁcantly eroded by additional losses. While the senior tranche is not exposed to “recession risk,” it could be said to be exposed to “depression risk.”

This is so sad, actually. Mr. Gibson thought that these CDOs would lose 64% value? HAHAHA. More like 98%. And far from a once in 25 years' shock, all the tranches and rubbish collapsed totally and completely in less than 10 years! And because the economist writing this study for Greenspan is not all that wise, he looked straight at his graph showing EPXONENTIAL growth and didn't scream, 'Ach, mein Gott! Herr Grünspan! Achtung! Ungefährlisch!' Nope. Instead, he did recognize that something wasn't quite right and worried that in a recession, somethings might not work.

But he didn't think these things would CREATE a recession or even worse, a depression! He thought they might not be good in such climates. But didn't put two and two together and realize they would be the actual TRIGGER, the CAUSE of a depression. We see this clearly today. Today, all the central banks are in hysterics because of this stupid deal making. They haven't the faintest idea, how to unwind this without much of the wealth squirreled away in banks, vanishing in a horrid flash. Boom.

One of the things this paper has is a bunch of useless formulas. One is this simple thing: M T M [mark to market] = Fee − Contingent. This is what has failed. There is no market and the mark is way off the mark. Like, into the rough. And the whole point was to gain the Fee! After the pay-out. Elsewhere, the good professor talks about the Default hazard rate which he pegs optimistically at just 1 percent per year. Instead, it is a classic all or nothing matter. All the schemes floated at the same time and when one fell, they all collapsed. This is why we like to compare this with Ponzi schemes: critical mass means the whole thing collapses in a cascade. This is why Ponzi schemes are illegal.

Federal Reserve's 2004 CDO study: Conclusions

Synthetic CDOs are popular vehicles for transferring the credit risk of a portfolio of assets.
Using a pricing model for CDO tranches that does not require Monte Carlo simulation, [Elaine: HAHAHA]I analyze the risk characteristics of the tranches of synthetic CDOs. In a hypothetical CDO, the equity and mezzanine tranches contain 10 percent of the notional amount of the CDO’s reference portfolio but 70–90 percent of the credit risk.
This implies that credit risk disclosures relying on notional amounts are especially inadequate for ﬁrms that invest in CDOs.
A basic result is that equity and mezzanine tranches are leveraged exposures to the underlying credit risk of the CDO’s reference portfolio.
I explore several implications ofthis result. First, event though mezzanine tranches are typically rated low-investment-grade, the leverage they possess implies their risk (and expected return) can be many times that of a low-investment-grade corporate bond. Second, a mezzanine tranche’s risk and leverage depend on the riskiness of the CDO’s reference portfolio and the tranche’s credit enhancement. Third, because the equity tranche contains a large fraction of the CDO’s total risk, risk transfer is limited when the CDO originator retains the equity tranche.
CDO tranches and other innovative credit products, such as single-tranche CDOs and ﬁrst- to-default basket swaps, are sensitive to the correlation of defaults among the credits in the reference portfolio. Because correlation is unobservable, diﬀerences of opinion among market participants as to the correct default correlation can create trading opportunities as well as “correlation risk” to be managed. Finally, the paper shows how the dependence of CDO tranches on default correlation can also be characterized and measured as an exposure to the business cycle, or as “business cycle risk.” A mezzanine tranche, in particular, is highly sensitive to business cycle risk.

Again, this darkness! Things can't be 'observed'. Now you see it, now you don't! The biggest tricks in the trade of all stage magicians is to show you only part of what is really going on. The various machines, mirrors, cloth curtains, etc, are all there to mislead, conceal and confuse. The closer you look, the more you are deceived. This is because all good magicians use 'patter' to control people's perception of reality. Talking is magical. And it works! It can twist reality into a pretzel even though the dough is not tied in a knot.

U.S. has plundered world wealth with dlr -China paper

(Reuters) - The United States has plundered global wealth by exploiting the dollar's dominance, and the world urgently needs other currencies to take its place, a leading Chinese state newspaper said on Friday. The front-page commentary in the overseas edition of the People's Daily said that Asian and European countries should banish the U.S. dollar from their direct trade relations for a start, relying only on their own currencies. A meeting between Asian and European leaders, starting on Friday in Beijing, presented the perfect opportunity to begin building a new international financial order, the newspaper said.

Oh boy! The Chinese were the oldest magicians. When Europeans first invaded China, they were amazed to see some of the street tricks. A fad grew from 1700 till today, trying to do these tricks in the West. Las Vegas depends on the magic community to awe and confuse patrons. The Chinese have a long history with the business of paper money. They invented it, after all! I will write a little history about that tomorrow.

East Asian Countries to Create $80 Billion Fund to Deal with Financial Crisis

Leaders from East Asian countries agreed Friday to have the fund set up by the middle of next year.
Members of the Association of Southeast Asian Nations, Japan, China, and South Korea will be allowed to dip into the money when faced with a financial emergency.
Japan, China, and South Korea agreed to provide 80 percent of the funds, and Southeast Asian nations will give the rest.
"The pressure they're under now I think is more related to just a panic, the ongoing panic in financial markets. And, I think, the thinking is the $80 billion could be used as sort of a backstop for the regional authorities, that when they do experience pressure, to fend it off," he said.

Asians are groping for some way of dealing with this. Yet they are doing this with Japan! HAHAHA. Good luck. So long as Japan clings to the 0% system, they are endangering everyone. Right now, the carry trade is violently unwinding. But the hope is, in Asia, to rewind it and get the trade going again. This is a futile effort if the US is at 0%, too! A problem! For all of Asia has the biggest trade surpluses with the US. We are their profit center! So they are united in this regard. And so, this deal won't work if we can't bend to their will and resume consuming.

Email this post

Culture of Life News Main Page

October 25, 2008 | Permalink | Comments (61) | TrackBack (0)

Nothing New Under The Depression Sun

October 25, 2008

Elaine Meinel Supkis

As the US falls into the same system that runs Japan, we have to recognize that the effects of the 0% system is not going to fix the US trade deficit. The Treasury is allowing all our dear, bankrupt banks to announce that they are going to the bankrupt Fed for funds. We also look at a series of old, old newspaper clippings that clearly show that today's mess is nearly totally identical to past messes. The IMF is going to allow many of the 'first world' nations to borrow immense sums. And not live under IMF cruel rules, either, I bet. And we revisit the business of the Plunge Protection Team.

Fed: New rate cut likely, with record low within sight

The Fed lowered its federal funds rate, the benchmark overnight lending rate at which banks lend to one another, by a half-percentage point to 1.5% in an emergency announcement Oct. 8.
Many investors believe the central bank will cut rates by at least another half-percentage point following the end of a two-day meeting on Oct. 29. In fact, the fed funds futures on the Chicago Board of Trade are now pricing in a 26% chance that the Fed will cut rates by three-quarters of a percentage point to 0.75% by that meeting.

Well, with the Treasury and the Fed pumping money like mad, handing out loans like there is no tomorrow, why bother with any banking traditions? Why not have 0% interest like Japan? This sort of wacky thinking is contagious. Japan pioneered the 'endless zeros' and got away with it. So now, all nations that can do this are tempted to do this.

It should be obvious to even the experts that if 0% interest was a good thing, why, this would have been the interest rates from day one! Why have compound interest, for example? Why even have banking? If all we need is someone to sign off on loans that require no money down and the loans are based on $0 savings, why, anyone can get and pay for a loan! This charming,fabulous system is similar to the concept of Santa Claus: all we have to do, is be 'good' and he will give us free gifts!

Actually, this present Santa system is rewarding BAD children. The bankers across the planet went totally insane, underwriting trillions in loans, thanks to the Japanese 0% lending system. The housing bubble was global, not local. If we read the news very carefully, the first thing that springs to mind is, almost all developed nations had housing bubbles that ran alongside each other like horses hitched to the same carriage. If we look even closer, we see an interesting thing: nearly all the housing built during this global bubble were based on the same interest rates, usually around 5%, more or less.

Frantic governments periodically raised their local rates, even up to 6%, in order to cut back on this housing lending. It had no effect. It didn't matter if one's currency was strong or weak, all of them ended up in this global housing boom that was predicated on an endless stream of easy lending money pouring into the back door of all the banks, hedge funds and investment houses.

These same guys also flooded the world with lending for buy-ups and take-overs. All the money for this came from the same odd source: the 0% lending by Japan. The source for all this nearly free lending wasn't China, for example. China's rates have always been above 2%. There was briefly another source of cheap lending: Greenspan's 1% interest period from 2003-2004. But this was only one year. The Japanese have been doing this for over a decade!

The swelling of 'world wealth' coincides with this long period of free lending. Most of the money created this way was not in yen but in dollars. So the US lost control of who produces dollars. Since dollars are debt, the cranking out of epic amounts of debts meant this debased US dollars. Since this was done via Japan, this also killed the yen. So we saw, for about 6 years, the dollar and the yen BOTH in free fall vis a vis most currencies on earth.

Years ago, I often noted that the concept of the two top economic powers on earth both running cheap lending schemes coupled with WEAK CURRENCIES was insane and could not end well. Little Iceland shouldn't be the 'strong currency capital of the world' while the US and Japan were playing this cheating game. Both the US and Japan openly stated that they HAD to do this because they wanted their economies to grow.

And that inflation didn't matter. Well, we just got washed over by a tsunami of hyperinflation which has now receded. We are now in the other half of this destruction of all that Japanese/US 0% lending lunacy: equity and asset value destruction. Both the US and Japan desperately want to reinflate all the original items this flood of funny money inflated. Namely, stocks, housing, corporations, etc.

These items are 'wealth producers' because one can dump cheap debts on top of them! Commodities translate directly into inescapable inflation. But when artwork, diamonds, gold jewelry, vacation villas, yachts and custom cars rise in value as everyone eagerly bids higher and higher thanks to tons of free money, this gives the illusion of wealth. Paying more to fuel the yachts, custom cars, etc. feels like losing wealth.

It doesn't make one feel one iota richer. I will note here that the solutions being tried by everyone in charge of financial systems in the world are all aimed at 'controlling' the creation of money but no one is discussing what exactly got out of control in the first place. When Japan's FOREX reserves began to bulge in size back when the Asian Currency Crisis happened, this should have been recognized as a warning sign.

Everyone was in agreement that Japan, after an epic housing/stock market bubble of 1990, was in this 'depression.' Yet, they squirreled away an amazing amount of US dollars! How could they do this? Certainly, they were not rolling in dough in Tokyo. This riddle disturbed me back in 1999 when the Japanese FOREX reserves were less than $500 billion.

Back then, the economic giant, the US, had a reserve of around $70 billion. So the disparity was already massive and troublesome. For some reason, few, if any, economists or central bankers considered this to be a warning sign of impending economic destruction. When China, after 1999, began to do the same, there was rising alarm but this was only because it was China doing this. Even when Japan, who stopped at $650 billion in 2004 suddenly began to increase their holdings again, still, many people disregarded this coincidence. I was astonished at the ease with which China built their own FOREX reserves.

This infuriated the G7 nations who attacked China for this activity over and over again. While never attacking Japan. When China approached nearly $2 trillion in their reserves, Japan was at $1 trillion. Their race was joined by Russia, who built up their own reserves to be ten times greater than the US.

Treasury to Allow Banks to Announce Equity Injections

WSJ: The decision came after concerns that banks left off any group list would appear too weak for government assistance, spooking investors and depositors and potentially making troubled banks' situations more dire. Treasury officials were expected to announce investments in about 22 different banks Friday at 11 a.m.
They shifted gears after PNC Financial Services Group Inc. announced Treasury was investing $7.7 billion in its bank as part of the deal to acquire National City Corp. National City was denied government assistance and was forced into a sale.
One reason for regulators' rush to arrange the National City deal by Friday morning was the planned 11 a.m. announcement. Regulators worried that National City's absence from that list would spark a panic among customers and shareholders.
Among the banks that were going to be included on this morning's list were Capital One Financial Corp. and SunTrust Banks Inc., according to people familiar with the matter.

The US has nothing to invest. Japan, China and Russia all have RESERVES they can put up as the basis for internal lending. But not the US. I often joke that the Federal Reserve is neither federal nor has reserves. When the Japanese carry trade created all those dollars for us [aka: liquidity] we didn't 'grow' our own reserves to the same degree. Not even slightly.

Not one bar of gold was added. Nor did we buy a pile of euros and yen to the same degree as our trade rivals were socking away those new dollars. And let's look at today's news story about our dying banking system: depositors are fleeing it. I can't blame them. It isn't simply naked fear. It is the same problem savers in Japan are facing: they earn little to no interest on savings in banks.

A number of the smaller economies that were funnels for the Japanese carry trade were islands like Ireland, Iceland, New Zealand, etc. These places offered real savings rates if people deposited their money in banks located in these island 'kingdoms'. Desperate Japanese savers flocked to these places. When the US and UK both dropped rates too low, savers in these two places did the same. The world saw this flood of savings fleeing the world's top economies and this was supposed to be good, not evil.

The world became so accustomed to this, it became 'normal'. But this is very abnormal. Just like previous periods in time when there was a trade/monetary imbalance as the nation hosting global trade resolutions, England, tottered on the edge of final destruction starting in 1914 with WWI breaking out.

New York Times, October 4, 1914:

Europe resolved its financial problems by launching WWI. The US wasn't even in the war which, when this story about 'bank hoarding' was written. The war was only slightly more than two months old when the government was already fretting about the banking situation.

For the condition of the central banks in London and Paris were rapidly deteriorating. Germany was rapidly moving towards Paris. And the overextended British and French empires could not bring home their troops that were subjugating huge swaths of the planet. The US is at war today. Our war spending is at the same level as during the Vietnam/Cold War.

This war expenditure requires 0% financing. The US is relieved that Japan has violated all sound banking rules and has made this sort of war financing OK. Normally, during wars, interest rates rise as lending increases. Governments get around this by printing money and unleashing seas of inflation. The US has done this during the War on Terror.

We not only unleashed record overspending in the government, we stood idly aside while Japan cranked out dollars like crazy, too. Now, banks are 'hoarding money' just like in 1914. And the government is bankrolling the banks like in the Great Depression.

I hate to tell everyone this news, but the various tricks and schemes being used by Paulson and that Great Depression 'expert', Bernanke, are identical to the Hoover attempts at restarting the economy back in the early 1930's. Here are some random samples:

THE NEW YORK TIMES. July 2, 1930 BUSINESS MEN URGE FREER WORLD TRADE

International Chamber Sees in Exchange of Goods a Remedy for Present Economic Crisis. HOARDING OF GOLD DECRIED Resolution Adopted In Paris Calls for Cheap Credit and More Liberal Circulation of Capital. Decry Hoarding of Gold. Cites Causes of Crisis. Gold hoarding by central banks is partly responsible for the present critical economic conditions throughout the world, it is set forth in a resolution passed by the council of the International Chamber of Commerce, which has been meeting in Paris.

Again: the banks are hoarding gold! Oh my! And that is what is responsible for the banking collapse. We see this today: who has the biggest money hoards on earth? The banks? Or perhaps we should look at several major, central banks: Japan and China both are sitting on $3 trillion, just by themselves!

This goes back like a rabbit running into his hole to the idea that this hoarding is part of the global trade process which is due entirely to the US passively allowing everyone to flood the US with their exports! International leaders tried to hold meetings about this 'hoarding' by the banks. At these meetings, they tried to jawbone everyone into lending again.

But why lend at 0% interest? And if prices are falling, why borrow? The giant loans and even bigger reparations of WWI were in default. On top of that, Russia defaulted on the Czar's loans. So this was a triple whammy. The top creditor nation, the US, could no longer underwrite any loans at all since nearly everyone was defaulting on previous loans.

Not matter what tools the President used, it couldn't bring dead loans back to life anymore. So banks 'hoarded' their loot. China and Japan are doing this right now. Due to their currencies rising as well as their industrial exports contracting, they have to hold onto their hoards instead of lending. So even if they drop rates and Japan cannot do this, it won't change the dynamics of them holding while the US flounders about, seeking more and more loans for its increasingly gigantic budget deficits. Here is a story from two years later:

THE NEW YORK TIMES. March 25, 1932 Mills Reports Big Drop in Hoarded Funds; Vast Improvement Noted in Bank Situation

A large reduction in money hoarding and rapid slowing down of bank failures in recent weeks were shown in figures made public today by Secretary Mills.

In 1932, after a lot of meetings and rescue operations, everyone thought the firestorm of asset and equity destruction which was caused by bankrupt nations defaulting on massive loans, was done.

This proved to be delusional, of course. The worst was yet to come. Like this year, it was an election year. Hoover desperately wanted to have things set to rights. But wages were still dropping. Workers were being laid off. World trade had collapsed as everyone scrambled, like we will see next year, everyone who still had some industries left were desperate to protect them. And rightfully so! Any nation that refused to do this, ended up ravaged.

The US has, so far in the present cycle, stupidly volunteered to continue to sop up all global trade. But back then, we were a creditor nation so we were very wary about this. Back in 1933, the new President didn't walk into his office until mid-Spring. And one of the earliest decrees of Roosevelt was his confiscation of gold and the revaluing of the dollar to a lower peg.

April 6, 1933, Text of President's Gold Hoarding Order

The text of President Roosevelt's executive order on gold "hoarding issued today was as follows:
Forbidding the Hoarding of Gold Coin, Gold Bullion and Gold Certificates By virtue of the authority vested in me by Section 5(b) of the Act of October 6, 1917, as amended by Section 2 of the Act of March 9, 1933, entitled An Act to provide relief in the existing national emergency in banking, and for other purposes~',
in which amendatory Act Congress declared that a serious emergency exists, I, Franklin D. Roosevelt, President of the United States of America, do declare that said national emergency still continues to exist and pursuant to said section to do hereby prohibit the hoarding gold coin, gold bullion, and gold certificates within the continental United States by individuals, partnerships, associations and corporations and hereby prescribe the following regulations for carrying out the purposes of the order:
Section 1. For the purpose of this regulation, the term 'hoarding" means the withdrawal and withholding of gold coin, gold bullion, and gold certificates from the recognized and customary channels of trade. The term "person" means any individual, partnership, association or corporation.
Section 2. All persons are hereby required to deliver on or before May 1, 1933, to a Federal Reserve bank or a branch or agency thereof or to any member bank of the Federal Reserve System all gold coin, gold bullion, and gold certificates now owned by them or coming into their ownership on or before April 28, 1933, except the following:

Again, the business about bankers and savers 'hoarding' wealth rather than lending it! When banks can't offer any decent return on savings, why hand it over? So the government simply used the power of the sword to force savers into lending. The US has no savers now, not to the extent that they can even begin to cover the capital costs of borrowers who are going rapidly bankrupt.

The government's offer of less than 1% interest is not going to bring in any money into the system. Now let us discuss gold again: it being inert and geologically stable, it doesn't rust or shrink away, for example, it is a good icon to use as 'money' since one can hold it for a very long time and not see any changes in its geological status.

For example, we had stories last year about people in an Indian bank who lost their life savings because termites crawled inside and ate all the paper. There are no bugs that eat gold. Not even gold bugs eat their gold [hahaha...stupid joke]. The point is, gold hoarders can sit on their loot for a long, long time! And time is money. The more money circulates, the more it can 'grow' so if it becomes inert, this is a problem.

The world price of gold is declining right now, oddly enough. Just like in 1932. But then, suddenly, France decided to convert its dollar hoard into gold. The raid on US gold holdings was swift and devastating. This is why the President had to take draconian controls over gold in the US! We do wonder if Japan and China will do this, too.

France did it during the worst part of the Great Depression because trade with France was declining. Trade with Japan and China is now declining. Eh? The world price of gold is artificial since the biggest gold stashes are held by governments and still used as a secret handshake, so to speak.

But China and Japan COULD demand payment in gold. If they buy gold from the many gold bugs who would dearly love this, the gold bugs, who are in a slump right now, will be in heaven. This is possible. And it a weapon used by China and Japan while they negotiate with the US to deal with the immense paper holdings they have in their vaults.

Because History seems to be like an old dog going to bed and goes around and around in circles, the re-emergence of gold as the core of FX markets just may be around the corner, ipso facto. Now to look at this blog one year ago:

Culture of Life News, October 25, 2007: The Plunge Protection Team Circles The Toilet

The Plunge Protection Team holds more meetings. They are desperate to find some Hail Mary play to save their financial houses from destruction as the SIVs now go off the cliff. Meanwhile, China is strengthening their Asian trade complex and are working towards creating an Asia-centric economic system.
*snip*
There are supposedly around $400 billion SIVs swimming about the planet, most of which are drowning. $400 billion, to put things in perspective, is what we spent on killing Iraqis and stealing oil in Iraq for about 3 years.
I remember when Bush fired the Treasury Secretary when he warned this war would cost us $200 billion. This sum is big, by the way. Just as the Iraq war is bankrupting the US government, so will this global SIV fund mess. As each one sinks beneath the waves, the others take on more water. It certainly was a cool trick for all the financial houses to create these funds.
We forget why. When the stock market suddenly collapsed in 1987 and a number of banks went down along with a host of savings & loans, the US had to bail out a huge number of rich financial houses and some of the more outrageous financiers went to prison (fraud, of course) and to fix this, the Federal Reserve decided to allow a new form of financing that involved creating out-of-the-bank entities which we now call 'hedge funds'.
They were supposed to go bankrupt in bad times but NOT pull down the huge houses because they would be seperate entities. This solution has a huge flaw: because they can go bankrupt with no effect on the big entities spawning these hedge funds, they became very reckless and spawned a host of these creatures, every week, more and more were created.
A lot of thought went into creating as many variations on various fund types as possible. On top of this, since they believed their risks were hardly visible, they could float BBB funds that carried high risks but even higher interest rates. Soon, everyone rushed out and poured a lot of money into these BBB funds hoping to get super-rich, super-fast.

People hardly remember that flotilla of SIVs that vanished under the waves last year. Everyone was told, this was all under control, $400 billion was no big deal. I noted that this is not only equal to the war misspending by the US, it was also half the size of Japan's huge FOREX reserves.

So it is a huge amount of money that simply vanished. When this happened, all the credit default swaps were also taking on water and were soon swamped. These CDS deals are now sinking rapidly, very rapidly, faster than the SIV fleet last year. Just like in the Great Depression, all the deals and systems set up to funnel money and trade in the wake of WWI being launched failed one by one, in succession. Today, we see a host of failures becoming obvious.

For example, the credit default failures from the Lehman collapse are STILL not being registered. Indeed, there is fear that these things that are 90% in default, will utterly destroy the last remnants of world banking. So like a hen sitting on a hand grenade, the central bankers are clucking away, trying to find some solution to this impossible situation.

IMF Mulls Emergency Lending; Iceland Gets $2 Billion

(Bloomberg) -- The International Monetary Fund is considering an emergency program to prevent a collapse of emerging markets by almost doubling borrowing limits for members and waiving its standard demands for economic austerity measures. The fund is discussing plans to offer so-called hard- currency loans of three to six months, two IMF officials informed of the matter said. Separately, the Washington-based agency agreed today to lend Iceland $2.1 billion in accordance with existing rules after the island nation's banking system collapsed, threatening a prolonged economic contraction.

For years and years, the US and its IMF buddies told poor nations to bite the bullet. Now that we are up against the wall, we want puff balls, not bullets. So Iceland, a nation with a very, very high standard of living, doesn't have to do 'austerity'.

Argentina had to be treated so cruel back in 1999, children were literally starving to death to the horror of the rest of the world but the IMF didn't give a hoot. And Africa! Masses suffer terribly, yet have to pay off IMF loans in full! This dual standard is not lost on the rest of the planet. The Chinese know, for example, if they need loans, they pay through the nose and if millions of Chinese die, so what? But little Iceland, being 'white European,' will get generosity and assistance, not chains and blows.

Why is this? HAHAHA. Russia said they would save Iceland. This was a strategic move to take away a big NATO base there. So the IMF is saving Iceland since the US can't do it. Most of our foreign aid flows to Israel or to pay the military of dictators holding down Muslims for us across the planet. We can't also fund all of Iceland, too. Israel has a standard of living [in the Jewish quarters, of course] that equals Iceland, by the way.

BBC: Irish house of cards comes down

The Irish thought their Celtic Tiger economy had put an end to generations of emigration. It is not back yet, but the fact that people are talking about it again is a sign of how bad things have got. Ireland is the first country in western Europe to officially fall into recession, defined as two consecutive quarters of negative economic growth.
Places like Drogheda, a commuter town near Dublin, have been particularly hit. During the unprecedented boom years, the population here grew by a third. Now, it is an unemployment black-spot - ringed by new developments with empty, unsold houses.

More proof that the housing bubble was global. And the energetic financial games by many small nations has had a very toxic outcome. All these nations worked hard at one main thing: to grab US jobs via the outsourcing and offshoring mania. The US government not only didn't protect any of our own industrial base, it stood aside or actively assisted corporations in looting our nation by having us consume products which were imported or done overseas while the jobs and the tax base flowed overseas.

Ireland did this very aggressively in the computer field. Like India, they also did telephone work and other office jobs that used to be done in America for Americans. Since they are not part of our main economy, they are easily cast aside when the economy flags. Ireland has little real power and therefore, can't blackmail other nations into supporting them as they flounder about, for example.

Also, they used their new wealth to build lots of houses. The BBC article talks about people buying two, three or more houses. These people hoped to sell to someone else but were in reality, selling to each other for investment purposes. There were no tenants in the wings, begging for housing.

The US also has too much housing in the wrong places. Housing has to be reasonably close to jobs! And jobs are moving restlessly about the planet. One day, you have a job, the next, it has jumped to Asia or South America! Or even back to the US! This instability coupled with a housing boom is most dangerous. Houses can't jump from one country to another, after all. And workers stuck with overpriced/overleveraged properties have only one road open: bankruptcy and abandonment.

Russia's financial crisis is escalating

with lightning speed as foreigners pull funds from the country and the debt markets start to price a serious risk of sovereign default. Russia's financial crisis is escalating with lightning speed as foreigners pull funds from the country and the debt markets start to price a serious risk of sovereign default.
The cost of insuring Russian bonds against bankruptcy rocketed to extreme levels yesterday. Spreads on credit default swaps (CDS) reached 1,123, higher than Iceland's debt before it sought a rescue from the International Monetary Fund. Moves by Hungary, Ukraine and Belarus to seek emergency loans from the IMF have now set off a dangerous chain reaction across Eastern Europe.
Romania had to raise overnight interest rates to 9% on Wednesday to stem capital flight, recalling the wild episodes of Europe's ERM crisis in 1992. The CDS spreads on Ukraine's debt have topped 2,800, signalling total revulsion by investors.
Rating agency Standard & Poor's issued a downgrade alert on Russian bonds yesterday, warning that a series of state rescue packages worth $200bn (£124bn) could start to erode the credit-worthiness of the state. S&P said Russia's budget was likely to slip into deficit in 2009 as result of the dramatic slide in oil and metal prices this autumn, and cautioned that "the ongoing concentration of the financial system in state hands" had become a political risk.
Russian companies must roll over $47bn of foreign loans over the next two months, and a further $150bn or so next year, a task that has become close to impossible as investors flee Eastern Europe.

Russia has a huge FOREX reserve. Note how everyone is leery about Russia defaulting due to dropping oil/gas contracts but Russia is not running in the red? Eh? No nation is running deeper in the red, longer in the red, than the US. The only reason we are allowed this boon is NOT because the dollar is the world's premier trade resolution currency! It is because we are allowing everyone to destroy our native industries and markets.

Russia, like Japan and China, will not let just anyone come in and rearrange the furniture. There are far more controls there than here. In the long run, the nation that is in the most trouble is not Russia but the US.

What is goofier about this article is the remark that more and more Russian economic systems are falling into the hands of the Kremlin! Well! Looking at the US news, it seems that the US is taking over all mortgages, all banking and most of our industrial base is military so it is connected to the government quite directly. And we are doing all of this, deep in the red!

Much, much deeper than Russia. But since we allow everyone to invade our markets, this is just fine with the rest of the world. Indeed, this is the old status quo everyone wants to continue.

UK recession fears spark massive sell-off of sterling

The pound has slumped to a five-year low against the dollar, and is close to having its worst week since sterling was ejected from the European Exchange Rate Mechanism in 1992. Sterling fell as far as $1.62 during yesterday's trading.
Foreign exchange, gilts and equity markets all reacted strongly to the Prime Minister and the Governor of the Bank of England admitting that Britain is likely to enter its first recession in 16 years.
The turmoil in currency markets was reflected on world stock markets, as the FTSE 100 in London and the Dow Jones Industrial Average in New York plunged once again as company after company warned that the outlook for profits was deteriorating.

The yen is rising because it has a huge FOREX base behind it. England, like the US, has virtually no reserves so the pound is falling. The US dollar is not going downwards only because of the peculiar position of the dollar and only the dollar: the US is the world's main trade destination. Until this changes, the dollar must be 'strong' so they can profit from this one-way trade.

JCB workers take pay cut to avoid layoffs

Thousands of workers at the manufacturing firm JCB have voted to accept a pay cut of £50 a week to prevent the loss of 350 jobs, it was announced today. The GMB union said around 2,500 of its members at seven JCB plants in England and Wales had agreed to work a four-day week for the next 13 weeks to help the company weather the economic downturn.
Despite recording pre-tax profits of £187m last year, the company has been badly hit by the downturn in property and construction. In July this year, it warned of a "rapid decline" in demand.

The workers are the fundamental basis of all economies. Period. Not banks, not corporations. Workers must be able to buy for an economy to 'grow'. When workers can't buy, we get bad depressions or recessions. Working wages have not kept up with inflation.

The majority of profits have flowed increasingly into the hands of the few. It is getting worse and worse. In the Great Depression, workers at first did this sort of sacrifice. To keep all from being eaten by wolves, they would make joint sacrifices. But this only makes the recession or depression worse in the long run.

The fact that wages are falling and unemployment is rising is yet another indication that the unbalanced system we call 'the status quo' is failing. Reviving it by saving the very rich won't work. Indeed, the rich have bent all their energy towards dumping epic amounts of debt on all systems and on top of this, evading taxes. Just today, the top advisor to the NY governor has had to resign because it turns out, he hasn't paid or filed any taxes for years!

All the top wealthy people on earth are very good at gaming systems so they can evade taxes. The tax base has not kept up with wealth growth. Instead, thanks to the 0% rates being offered by governments themselves, government debt has grown. The PRINCIPAL matters! Even if we never pay any interest at all on this mess, as the principal grows, it still is destructive.

Margin Calls Prompt Sales, and Drive Shares Even Lower

In the last week, as the value of stock portfolios has plunged, executives and fund managers who had bought shares on margin — that is, using borrowed money — have been forced to sell millions of dollars worth of stock to settle those loans with banks.
Professional investors say that the margin calls probably added to the pressure on stock prices last week, when the average stock plunged nearly 18 percent.
Some analysts and investors are concerned about a situation in which margin calls occur in larger numbers, causing an even bigger wave of selling, even though most analysts say that stock prices are already historically low.

One smart thing that came out of the Great Depression were the rules concerning playing speculative games with loans. Namely, you can't do it! Margin calls, thanks to Greenspan and the host of right wing Ayn Randistas, are now eating away at everything.

People who borrowed super-cheap money can't hold stocks and other things when the value drops on the PRINCIPAL owed. Namely, if it isn't earning a profit, they can't eat the losses due to these loans. So they have to sell as fast as possible. Of course, this causes panics and price collapses! Which is why it must be illegal.

Citadel: liquidity strong, operating as usual

(Reuters) - Citadel Investment Group, one of the world's biggest hedge funds, said on Friday it has $8 billion in available credit and sought to quell rumors it was liquidating some portfolios after its two main funds had lost 35 percent since January.
Reacting to persistent market talk it had asked the U.S. government for a cash injection and that financial regulators were coming to inspect its accounts, Chicago-based Citadel held an unusual and hastily arranged conference call.

Just like the SIVs and CDS markets, the host creatures are dying. The hedge funds will die just like their grandpas, the Trust Funds of the Roaring Twenties died off, one by one, during the Great Depression. Again, our ancestors made these stupid things illegal. And the Ayn Randistas legalized and enabled it all over again.

Greenspan "shocked" at credit system breakdown

Former Treasury Secretary John Snow agreed that risk had been under-priced on a global basis. He said risks in mortgage markets were masked in part by accounting irregularities at Fannie Mae and Freddie Mac.
"A critical lack of transparency in secondary markets left policy-makers and regulators unable to discern the true nature and extent of the systemic risk that continued to build," he told the panel.
Greenspan urged that securitizers be required to retain "a meaningful part" of securities they issued. He said that regulatory reform will be necessary in the areas of fraud, settlement, and securitization to reestablishfinancial stability.
He also conceded he was "partially wrong" about his belief that certain derivatives, such as credit default swaps, did not need to be regulated.

My, how this god has fallen! He now admits to being 'partially wrong'? HAHAHA. How about totally, absolutely wrong from top to bottom, beginning to end? Until these clowns finally admit they were bonkers, we will continue to suffer. And Trust Funds/Hedge Funds will not function well no matter how 'transparent' they are. They could be stark naked and still be coyote ugly broads.

The risks of lending at 1% or less were painfully obvious to me, years ago. It should have been obvious to Greenspan. When he did this while Bush was cutting taxes to the rich, he knew this was a very, very naughty thing. But his excuse was, this all for the good of the nation because the stock market crash and 9/11 was so very unusual. Har.

WWI was a major emergency. So was WWII. The attack on Wall Street by the 9/11 gang [with some significant assistance from our own government letting them do their worst] was not anywhere near the level of global wars. And we know from history that the last thing a government should do when under attack is drop interest rates to near zero! It was unprecedented and stupid. But everyone loved it because who doesn't love tax evasion and free loans? The Gnomes blacked out all financial deal information from 'rescue' papers.

The Treasury Department has hired two big accounting firms to help keep tabs on the government's financial-industry rescue program, and once again certain basic elements of the deals are shrouded in secrecy.
PricewaterhouseCoopers LLP will provide internal controls for the government's $700 billion bailout fund. Ernst & Young will provide general accounting and consulting. The Treasury Department said the first phase of the three-year contracts will be worth $191,469.27 and $492.006.95, respectively.
That sort of specific detail is lacking in the agreements themselves. The Pricewaterhouse Coopers contract released by the Treasury Department on Tuesday has blacked-out text in the area covering the firm's bid, and also conceals the name of the PricewaterhouseCoopers partner who signed the deal. Another section listing the names of the
PricewaterhouseCoopers employees designated to work on the contract also is blacked out. *snip* A spokesman for Bank of New York Mellon said he did not know why the compensation information was redacted, and referred our question to the Treasury Department.

The gnome has not idea why all important information about how much money the same gnomes who destroyed our financial system will be getting? HAHAHA. Always good for a laugh! Will Paulson tell us why this is all so tip-top secret? HAHAHA. Again. I notice that all the pious calls from these same clowns for less secrecy falls to the cellar the minute we ask for any information! So much for nakedness.

Corporate-tax rates are falling

AS THE effects of the financial crisis ripple out into the wider economy, businesses are struggling. With access to credit all but choked off and global demand falling, firms are keen for any help they can get.
America's big companies have a friend in John McCain, who says he will cut the top federal corporate-tax rate from 35% to 25%. Once state and local taxes are added, the combined rate amounts to an average 40% of profits, the second highest in rich countries. Over the past decade, corporate-tax rates have fallen considerably, especially in the countries of the European Union.

Yup: here it is in a nutshell. Our corporations have screwed up the entire planetary financial systems. They control many governments via bribery, etc. They write the rules, damn it! And they want massive spending on things like wars, etc. And bail outs, of course, when they screw up everything! But THEY DON'T WANT TO PAY TAXES.

They hate taxes when they pay it. They encourage poor little debt-beasts like poor little Joe the Plumber to also hate taxes. Then these cruel rulers turn on Joe and tell him, when he loses his job, 'Sorry, chum. We can't afford to feed you or keep you alive. HAHAHA. Eat that, fool! Oh, and vote for me!' Yes, a real alliance.

Email this post

Culture of Life News Main Page

October 25, 2008 | Permalink | Comments (71)

Yen Rose Last Night To 90 To The Dollar!

October 24, 2008

Elaine Meinel Supkis

Happy Birthday to my loving husband day! It is colder outside, Libra is finished and now we enter Scorpio, the constellation of the Goddess of Death. The Derivatives Beast continues to munch away, unstoppable. AIG is demanding more loot because it is a bottomless pit. The übergnome of the planet, Greenspan, admits that he may have had a tiny flaw in his economics plans! HAHAHA. But the real heavy news of the hour is the amazing skyrocketing value of the YEN! It is shooting upwards at an astonishing rate. The Japanese are beyond hysterical about this. They see their doom for it is killing the export trade golden goose!

This Time Is Different - by Stephen Lendman

The derivatives problem is especially ominous. At extreme levels and very dangerous. An estimated $180 trillion held by commercial banks alone meaning those with most of it are technically insolvent. JP Morgan Chase holds half of it. An "unprecedented concentration of risk in modern US history." The large counterparty default risk in this market isn't understood. Currently the Office of the Comptroller of the Currency (OCC) reports credit derivatives exposure (or risk of trading partner default) at $465 billion. Up 159% from 2007. Failure to address the derivatives time bomb "leaves a gaping hole through which financial panic can spread."

In addition, beyond the above lowball figure, no estimates are available of derivatives default amounts or forecasts of more likely in a continuing downturn.

In sum, a monumental problem. Too big to ignore, but precisely what Congress is doing. At enormous risk to the economy, businesses, households, the American way of life, and the nation as the world's economic superpower. Plus the effect on world economies and people everywhere.

A reader sent me this guy's blog. He is a very good read and has quite a resume. So let's give Stephen Lendman a boost! Tell him, he is right! And tell him about the Derivatives Beast and his many adventures in the Bottomless Pit. Oh, I haven't told all that many stories about him? Sorry. He is still germinating in my cartoon mind. But once I am done with all the pre-winter work which eats up most of my time, 8 to 12 hours a day, I will do a whole cartoon series about the Cave of Wealth and Death. How the gnomes raid this place, what the dire female goddesses do about all this and the baby, now grown up Derivatives Beast. And the magical flying piggy bank, of course.

This derivatives business was all about two big things: getting lots of loot via fees which came from passing risk from hand to hand, over and over again. And to eliminate the appearance of risk by pretending that in the end, someone would pay everyone if they lost their bets in world markets of various sorts. So they could do all of this with low, low interest rate loans! From the Bank of Japan. All these elements were in place in 2005 and I talked about them back then. It was pretty easy to see what was going to go wrong, too.

One of the biggest propaganda points being put out by all the players in this noxious game is this huge lie: 'NO ONE KNEW THIS WOULD CRASH AND BURN!!!!' But the internet proves this wrong. True, the people understanding this crash and predicting it were few in number. I am a proud member of this tribe. But within this tribe, very, very few people....I would suggest that I stand virtually alone...understood that the real problem was Japan's 0% lending, the weak yen and the Japanese carry trade.

Today's amazing news about the yen shooting up like a rocket against all currencies is proof that I am right! And more: the entire world is seeing stocks crash DUE TO THE JAPANESE CARRY TRADE CRASHING AND BURNING! As I predicted it would way long ago, in ancient times. Ah! This gives me a certain dark satisfaction. And the goddess of History lifts her feather and pauses while inscribing the past. She smiles grimly and laughs before resuming her story, 'The Decline And Fall of All Empires.'

Back to today's startling news:

AIG Taps $90.3 Billion From Fed, CEO Says More May Be Needed

(Bloomberg) -- American International Group Inc. has used $90.3 billion of a U.S. government credit line since it was bailed out last month, an amount that exceeds the size of the original loan meant to save the insurer.

AIG may need more than the $122.8 billion now available to the New York-based insurer, Chief Executive Officer Edward Liddy said Oct. 22. The company, which agreed Sept. 16 to turn over majority control to the U.S. in exchange for an $85 billion loan, got access to an additional $37.8 billion this month. AIG's latest balance was revealed yesterday by the New York Federal Reserve, and is up from $82.9 billion a week ago.

``This emphasizes the uncertainty for anyone trying to put a number'' on AIG's cash needs, said Bill Bergman, an analyst at Morningstar Inc. in Chicago. The financial-products unit that caused most of the firm's losses ``is a big black hole.''

Nearly double the rescue amount! Will the entire $700 billion, minus the 10% cut off the top so AIG officials can party, will all of this end up in the Bottomless Pit?

Yes, it will. This is why the government should have siezed AIG, put the executives on trial and then shot them dead at Yankee Stadium, Chinese-style. This, in turn, would put real fear in the gnome community and cause them to hesitate before doing insane, stupid things in the future. Of course, we could be merciful and have them spend a lifetime in Sing Sing up the Hudson river. These people are Enemies of the State since they are bankrupting our government.

I am happy that Bill Bergman admits that AIG is NOT an insurance company but rather, a Big Black Hole. and this hole is in the Cave of Wealth and Death. Instead of ending risk and being a well-funded counterparty to any claims of losses, AIG is a loss leader, not a loss fixer. And this is due to them playing games whereby they pretended to be an insurance company while really acting like a piratical hedge fund.

As I said years ago, hedge funds no longer hedge. A hedge is supposed to be a support when things go bad in regular markets. Instead, hedge funds became this vile creation that were supposed to bring in bigger and bigger profits come rain or shine. So they did this by exaggerating whatever systems were being used, NOT AS A COUNTERBALANCE! If commodities began to rise, all the hedge funds would run off to the Bank of Japan for cheap loans in the carry trade and then use this to speculate in commodity markets. If stocks were rising, they bought stocks. If stocks were falling, all of the hedge funds would short stocks.

The wild, rocky, violent ups and downs we are seeing in stock markets, commodities, forex exchanges, etc are all amplified effects of a massive number of hedgers hedging harder and harder. The number of hedge funds exploded in the last 8 years and the dire efforts of these endless numbers of pirates has unbalanced an already grossly out of balance global trade/monetary system. And now, we are seeing the entire thing sink.

AIG's collapse has but just begun. The US efforts at saving it has now created conditions that may lead to the bankruptcy of our nation. Imagine that: an insurance company, thanks to them feeding everything into the maw of the Derivatives Beast, kills our nation? Like I said, we must put these people on trial. Not scold them at a Congressional hearing.

Paulson Is Said to Plan Buying Stakes in Regional U.S. Banks

(Bloomberg) -- Treasury Secretary Henry Paulson is preparing to take stakes in a number of regional U.S. banks as he seeks to halt the freeze of credit to businesses and households, according to a person briefed on the matter.

The Treasury may announce the plans as soon as today, the person, who was briefed by bankers and Treasury officials, said on condition of anonymity. The purchases would be the second round in a $250 billion program to inject capital into financial companies, after an initial $125 billion was allocated to nine of the largest banks.

Why not cut to the chase: nationalize all our banking and then hand it over to the Chinese. They have the whip hand here, anyway. And they seem to be a bit more traditionalist when it comes to banking. If we are too queazy about arresting these criminals, let the Chinese army do it for us. We can continue to patrol Bagdad and the Chinese can patrol Washington, DC for us! A good deal, I think! Heh.

Seriously, here we are, losing our true sovereignty while Paulson struggles to bail out his fellow gnomes. He definitely should be arrested for conflict of interest, cronyism and conspiracy to strip the State of all our future assets. Ie: treason. By the way, the Chinese love this guy. I can see why. So do the Japanese.

Greenspan Concedes to `Flaw' in His Market Ideology

(Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said a ``once-in-a-century credit tsunami'' has engulfed financial markets and conceded his free-market ideology shunning regulation was flawed.

``Yes, I found a flaw,'' Greenspan said in response to grilling from the House Committee on Oversight and Government Reform. ``I was shocked because I'd been going for 40 years or more with very considerable evidence that it was working exceptionally well.'' Greenspan added he was ``partially'' wrong for opposing the regulation of derivatives.
*snip*
``If we are right 60 percent of the time in forecasting, we are doing exceptionally well; that means we are wrong 40 percent of the time,'' Greenspan said. ``Forecasting never gets to the point where it is 100 percent accurate.''
*snip*
He later added that he couldn't respond to every warning. ``There are always a lot of people raising issues, and half the time they're wrong.''

Dear Mr. Greenspan: anyone looking at my blog going back to the beginning can see that my call rate is far in excess of 60%. It is very close to 100%. So why am I not running the Federal Reserve? HAHAHA. Actually, Greenspan is such a habitual liar, he exaggerates as usual. He is NOT right 60% of the time. He is right about 1% of the time which is incidentally, the interest rate he set back in 2002 in the hopes that this would create 'market liquidity' and enable more lending. We were deep, deep, deep in debt when he did this. And worse, we already had a savings deficit which his 1% rate made much worse.

No banking system can run for long if there is no domestic savings! Relying on foreign money to capitalize any banking system is suicidal. This should be carved into the tympanum of the Treasury building after the Federal Reserve is torn down and the directors put in prison. Now, just to prove that I am usually right, we go way back in time to the earlier days of my little blog, the old one at Blogspot:

Culture of Life News, APRIL 30, 2005

Testing the Water: China Plays Currency Games

The the longest time Americans have demanded the Chinese revalue their currency. No such demands are made with Japan who can't connect their perpetual depression with their perpetual currency game of constantly devaluing the yen by purchasing excess American dollars which we happily churn out and ship off to Japan. Since the Japanese hold much more of our debt than the Chinese, one would suppose we would be much angrier about their currency manipulations.

After all, it is Japanese cars that are killing our native car industry!

But, as usual, geopolitical games of Go trump mere domestic politics and we allow this to continue. On the other hand, our identical situation with China somehow ticks off everyone in our government!

Way back in the ancient days of yore, I was told by other economists to stop bothering them all the time about Japan. 'Start your own blog, ' I was told. So I did! And today's amazing news about the huge unwinding of the Japanese carry trade confirms that I, not they, was right about the true nature of global monetary systems and the highest importance of the Japanese Carry Trade!

China did control the value of the yuan by using the same FOREX reserve system Japan was exploiting. Both China and Japan were weakening their currencies so they could export more and have higher export profits. But China was also trying to raise the lives of the workers in China while Japan was crushing them brutally. China was raising interest rates and reserve ratios to control inflation while Japan was faking inflation statistics in order to hide inflation. Then, when inflation was obvious, Japan simply said, 'Go to hell, we want free money and the carry trade no matter what, our fake depression is great for growth and profits!'

So back in 2005, this infuriated me. And I was nearly alone back then, thinking about all this.

From my old Blogspot blog, March 9, 2006:

Like our trade deficit, in the exact same timeframe, starting in 1983 under Herr Ronald "Give me $2.5 million, please, Japan!" Reagan. He made a neat deal with Japan. To make our inflation disappear, the Japanese would soak up the red ink our government began to grind out that year to pay for the Laffer Curve tax cuts. Once this system was set up, it ran awfully nice, for FOREIGN POWERS. Others piggybacked into the system. I even explained how it worked to the Chinese so they could grasp what "traitor" means. They are in absolute awe of the propaganda machine that kept Reagan in power and popular even until this traitor's death.

No one has been able to pull our country out of this nose dive. Clinton and Rubins gave it a shot but hit so much flack, they had to give it up. This is because the bait: cheap interest below inflation and exporting of said inflation is just jim dandy for nearly everyone even as the downside to all this becomes increasingly obvious to even Republican right wingers. But like crack addicts on cheap speed, we can't drop the pipe or stop injecting.

You know what happens to crack/speed freaks. The become violent and end up dead.

The graphs and cartoons from back then are just as relevant today as then.

Here is yet another old, old story of mine. If Greenspan read my blog, he could have had a 60% success rate in his predictions.

From that same week in 2006, one of my older yen stories:

The USA sucks up around 80% of all possible international funds of various sorts. This is to pay for the half trillion in government red ink and near trillion in trade deficits. In return, we printed money at an accelerated rate and now inflation is beginning to rage across the planet. Interest rates are shooting up and investment funds are vaporizing.

From the BBC:
The European Central Bank (ECB) looks set to raise interest rates in the light of rising inflationary pressures in the eurozone.
Economists are betting on a quarter percentage point rise in the cost of borrowing to 2.50% on Thursday.

The euro is the strongest currency right now so they don't have to defend it by raising interest rates alot.

Japan defends the yen by deliberately weakening it which is why their interest rates remain at a totally insane 0%. This is ridiculous since inflation is now raging in Tokyo according to on the street accounts. Even the prostitutes have figured out the dollar isn't worth what it was so even their prices are now climbing.
*snip*
All countries are exposed but none as much as the USA. Our rulers keep lying to us and claiming, the budget deficit is "only" 6 to 7% of our GNP which is of course, a very dangerous level but untutored people reading this information seldom realize what would happen if we can't get 7% of our GNP in the form of hard cash.

Crash/tinkle!

Since our GNP is so huge, this 7% is also huge! And since America has outsourced/outsized potential taxpayer's jobs, this means we can't fill this yawning gap by taxing the middle class. The rich can't be taxed at all since they rule us and they intend to keep things this way and besides, they squirrel away their money in off shore accounts, anyway. Since Americans can't tax the people with the money, this means cutting the budget by $500 billion not in ten years but next year. This is impossible unless our government either cuts the military to near zero or kills off most Americans who are dependent upon the government functioning.

Not one thing I complained about back then was fixed by any of the DC players who control events. Instead, we now see these same criminals trying to bail out their wacky economic systems by pouring in infinite US-Treasury/US taxpayer-backed funds into this Bottomless Pit. This pit is the home of the Derivatives Beast, of course. For the gnomes tried their best to make him infinitely bigger than the entire wealth of the entire planet! Again: this can only be fixed by punishing the people who did this. And negating the entire thing and starting over. With the humbled US and UK paying penance.

Soaring yen slashes Sony's profit outlook

Sony Corp. on Thursday revised downward by 270 billion yen its consolidated operating profit forecast for the fiscal year ending March 2009.

Sony now expects an operating profit of 200 billion yen for fiscal 2008, compared to 470 billion yen forecast in July.

The stronger yen, falling stock prices and stagnant personal consumption have packed a triple punch to Sony's business operations.

Japan is now in very serious trouble. All that Japanese carry trade is being violently sucked back into the Bank of Japan. As I keep saying, NO bank should EVER be allowed to lend at 0% for even one hour! Much less, many years. Japan stuck to its 0% regime for over a decade. Now, this must unwind and it is a huge, huge unwinding. The US passively allowed Japan to flood the planet with amazing amounts of 'liquidity' which everyone turned into dollar products. This meant the dollar was far, far stronger than in reality.

I remember the whole business about the 'Floating Currency' even back in the seventies! Namely, it was supposed to tell us the real value of the dollar vis a vis TRADE. And the dollar fell against the Deutsche Mark and the Japanese yen! This was what Bretton Woods II was all about. And the Plaza Accords, etc. All were attempts at making the dollar weaker. Each time, we also promised to balance our budget. But we never did this!

And Germany and Japan both took advantage of this to increase their trade surpluses with the US.

So here we are: the Germans decided after Germany reunited, to rebuild the Holy Roman Empire with France. And both pulled the rest of Europe into the new euro regime. And the euro was not controlled by one power like the yen or yuan. So instead of keeping parity with the dollar, it began to climb relentlessly.

The rise of the euro and the Japanese carry trade are connected. Before, everyone concentrated on controlling the trade value of the dollar. Suddenly, there was a major new currency representing a huge hunk, now bigger than the US economy. And this unbalanced things. Let's look at what happened last night:

The dollar has fallen to 91 yen to the dollar. This is over 5% down in ONE NIGHT! Even more amazing, the euro has dropped to only 115 yen to the euro, an over 10% drop in one night! For many months, the yen dropped along with the dollar against the euro. Like a huge spring, this is unwinding rapidly, far more rapidly than the gradual drop. Whenever anything unwinds with a big bang like this, it is an indication of an artificial system breaking down.

Polish, Hungarian Currencies Head for Worst Week; Stocks Fall

(Bloomberg) -- The Polish zloty, Hungarian forint and South African rand headed for their biggest weekly declines as the global economic slump fuels concern of a worsening credit crisis in emerging markets.

The zloty fell 2.7 percent against the dollar today, taking its weekly decline to more than 16 percent, the steepest since Bloomberg began tracking the data in 1993. The forint extended its weekly loss to a record 14 percent while the rand fell almost 17 percent in its biggest five-day decline since 1975.

Iceland sank beneath the waves. Now, other small countries are doing the same. There are many, many of these poor places that will see their sovereignty vanish along with the value of their currencies. Zimbabwe went underwater long ago and was a stark warning sign that was as clear as the Weimar Republik hyper-inflation mess that presaged the coming currency collapses of the Great Depression.

The Asian Currency Crisis of the late 1990's was another warning shot. The repairs done to the system were correct back then. But applied ONLY to a handful of Asia economies. Not to the causes of that crisis which was actually in the US. Just like this mess is due to the US taking on too much debt, etc. Back then, the Asian Currency Crisis coincided with the US balancing its budget. The entire Asian system is based on the US overspending on all levels.

This is why everything is now unwinding: the US can't take on more debt. And the debt we ARE taking on is not for buying anything. It is all vanishing down this massive Bottomless Pit where the Derivatives Beast eats every penny and belches. Nothing is being bought or created. This is creative destruction with a vengeance. Indeed, this is very much akin to the ancient Chinese practice of burning worthless paper money to bribe Celestial Guardians at the Gates of Death.

Denmark Raises Main Rate Half a Point to Boost Krone

(Bloomberg) -- Denmark's central bank unexpectedly raised the benchmark lending rate by half a percentage point to defend the krone's peg to the euro, threatening economic growth as the country teeters on the brink of recession.

Copenhagen-based Nationalbanken lifted the rate to 5.5 percent, it said today. The bank's mandate is to keep the krone pegged to the euro in a 2.25 percent band. In the past week, the krone fell 0.1 percent and on Oct. 13 fell as much as 0.7 percent.

``The krone has actually fallen slightly since they raised rates this morning, so they may have to raise again,'' said Jacob Graven, chief economist at Sydbank A/S in Aabenraa. ``One can't rule out an increase as early as today, or possibly in the coming days. Additional increases may well be larger than half a point.''

How bizarre. The US and Japan have both piled into the 0% rate boat. The US is still above 1% most of the time. But they are already planning to destroy the last of the savers in the US by dropping rates below 1%. I guarantee this. I know they will do this because they always do the wrong thing. If they are right 1% of the time, this is amazing. Forget Greenspan's boast about being right 60% of the time.

U.K. Pound Weakens Most Since at Least 1971 as Economy Shrinks

(Bloomberg) -- The pound tumbled below $1.53 in its biggest drop in at least 37 years after a report showed the U.K. economy contracted more than forecast in the third quarter, bringing the nation to the brink of a recession.

The decline surpassed that of Black Wednesday in September 1992, when the U.K. was driven out of Europe's Exchange Rate Mechanism. Gross domestic product contracted 0.5 percent in the three months through September, the Office for National Statistics in London said today, more than the 0.2 percent forecast by analysts in a Bloomberg survey. The FTSE 100 index slumped as much as 9.1 percent and the yield on the U.K. 10-year gilt headed for its biggest weekly decline in a decade.

``This is once-in-a-lifetime stuff, we're all sat under our desks with tin hats on,'' said Neil Mellor, a currency strategist in London at Bank of New York Mellon Corp. ``The U.K. is in the first step toward a recession and the dollar's bid because of repatriation flows.''

The pound is plummeting! Along with all the other non-essential currencies. Europe is very big yet the euro has dropped 10% against the yen! So of course, little England which is mainly a consumer society like the US, is being pitched overboard since the English have little room for more debt. And isn't big enough to resuscitate. The profits for Asia are much more slender than with the US. If Asia can prop up only a part of the global trade economies, they will prop up the profitable parts first.

Charts from currency trade site, Mataf.com:

All the major trade currencies that are also the biggest components of many national FOREX reserves are all collapsing against the yen all this fall and definitely last night. This is a clarion call that global monetary flows and trade are shifting dramatically! Here is yet more FX news that confirms that the Japanese carry trade has not only died but is now rushing home to roost:

Dollar plummets to 6-year low against yen

The Australian dollar fell this week to the lowest levels against the yen in at least six years as investors sold higher-yielding assets.

The currency headed for its third weekly drop this month as Asian stocks slid on signs the world economy is on the brink of a recession. Investors bought back yen they borrowed in so-called carry trades used to purchase assets offering higher returns in Australia.

The dollar also fell versus the US currency as the price of commodities the countries export plunged on concern demand will falter.

``What you have is the global economy going down, commodity prices coming off and the old theme of global de-leveraging,'' said Thomas Harr, a senior currency strategist at Standard Chartered in Singapore. ``All of these issues are negative for the Aussie and the (New Zealand dollar) and positive for the yen.''

All the hedge funds that did the same thing in unison for years which was to exploit the Japanese carry trade, are now unwinding simultaneously as they all try to cope with the Derivatives Beast's messes. They need cash. Not more loans. If we want to pursue the cartoon system I run here, what is happening is simple. The Derivatives Beast doesn't want more Japan carry trade loans. He wants real money. And this means getting the major governments of the world to feed him real meat and potatoes: future taxes, the wealth of empires.

The Nikkei:

Dollar Falls Below Y91, Lowest In 13 Yrs, 2 Months

TOKYO (Nikkei)--The Japanese currency accelerated its climb against the greenback Friday evening, briefly hitting 90.89 yen to the dollar, rising to the 90 range for the first time since August 1995.
**************************************************

Nomura Continues Global Quest As 'Last Investment Bank'

TOKYO (Nikkei)--As Nomura ramps up its bid to become a major player in global investment banking, about 8,000 former Lehman Brothers employees are on board, ready to contribute their M&A and underwriting expertise to the effort.
**************************************************

Crisis Chokes Sony Profits, Demands Strategy Makeover

TOKYO (Nikkei)--The accelerating downward spin of the world economy is biting deeper and deeper into Sony Corp.'s (6758) profits, raising serious questions about the future of the electronics giant.
*************************************************

Clearinghouse For Credit Default Swaps Seen Spurring Transparency

TOKYO (Nikkei)--The proposed establishment of central clearinghouses for derivatives products is gaining traction amid a growing search for ways to boost the safety and transparency of such instruments.
*************************************************

Stocks: Nikkei Slumps To Near Post-Bubble Low On Surging Yen

TOKYO (Nikkei)--Tokyo stocks accelerated their decline toward the closing bell Friday, leaving the Nikkei average to close just above the post-bubble low marked in April 2003.

First: Japan is hiring all those Lehman Brother people who helped create and feed the Derivatives Beast? HAHAHA. Talk about taking on a plague ship's cargo of rats! Second: the biggest profiteers on earth during the long Japanese carry trade decade were Japan's exporters. All the EU and US got from this cycle was epic debts and a loss of global trade shares. Third: CDS will NEVER be 'transparent'. I would say, it is slowly revealing its true nature as it appears inside of banks, eating up all wealth of the planet and anything the various desperate governments feed it. Fourthly: as per usual, when the yen goes up, the Nikkei goes down. Japan allowed this dynamic to be far to predictable.

Smart investors or people reading my blog have learned this years ago. I constantly remind people of this. Want to get rich? Short Japanese stocks whenever the yen rises. This is a danger for any system: when it becomes too obvious and everyone plays the same game, this destabilizes systems very rapidly and they die. Time to visit the past again, this time, exactly one year ago:

Japan Really Has Inflation Just Like The US

The world financial systems may be slipping but the effects in Asia are quite different from the effects in the US and England. Time to discuss this. Once again, we have to discuss the stupid, outrageous inflation statistcs created by our rulers. These are designed to cheat savers, retirees and anyone worried about relative value of their finaces. On top of the new FX trade system and monetarist philosphy, this system is rotten to the core and the destruction it is causing will become increasingly clear as things deteriorate.

From the BBC:

The world's wealthiest private investors are planning to put more money into alternative investments over the next three years, a report says.
*snip*
It found that only 48% of respondents planned to buy further investments in stocks over the next three years, down from 64% over the past 36 months.
*snip*
By contrast, 15% of respondents said they planned to invest in private equity funds, up from 11% over the past three years; while 21% said they expected to invest in hedge funds, up from 20%.

This article also noted that many of these 'rich' investors don't have the foggiest notion, what they are doing. They are simply looking to find the easiest place to park their money and then sit passively by while it grows. The hedge funds are not growing at the rate they grew just one quarter ago, they are off by about 30%. But they are still growing. There is always this business in money flows: the people in the know are the ones selling to lower level people and for the last six months, the top hell hounds have been trying very hard to convince people who can't read charts or understand the elements of world trade and money manipulations, to buy.

Just as the top bulls on Wall Street will talk up stocks when they know perfectly well, it is a bear market. They need to shift their funds and to do this, they need other people to be fooled into buying. They knew every bit as I knew, that the Bernanke helicopter drop didn't fix anything. But they also knew that if they sold this as a solution, many people would flood into the market and buy which means they get customers.

So it is here: stocks shot up before the announced rate cuts. Then, the market has gone on to higher highs. But note that there are intersperced huge falls. Up 200 pts, down 350 pts, up 100 pts, down 50 pts, etc. This is a classic see/saw movement we often see at peaks. The smart guys can see we are about to take a classic tumble. They are clearing out their own stocks while staking out some territory elsewhere. This has caused the price of bonds to fall since this is one Safety place people park funds whenever Risky crashes into a brick wall.
*snip*

From the Nikkei:
Winter Bonuses At Major Firms Up For 5th Year In Row: Keidanren
TOKYO (Nikkei)--Bonuses are set to increase for the fifth year running at major companies this winter, the Japan Business Federation, the influential business lobby that is better known as Nippon Keidanren, reported Wednesday.

The peculiar depression in Japan rolls onwards. As we see a mirror image of the US system: fake interest calculations used to keep interest rates well below the rate of real inflation and huge bonuses for the upper tiers of the industrial/financial systems. For 5 years, the Japanese who keep the LDP in power have rewarded themselve increasingly while the workers get less and less and less. This corkscrew system also keeps Japan's imports down so they can run this surplus. I will note that the other G7 nations won't talk about this in public. We used to hear about it all the time since 1974!
*snip*
As I said, the yen was going to rise because the Japanese openly boasted they could make the yuan rise in value while the Chinese couldn't make the yen rise in value. In the news, they will pull all sorts of reasons for the yen's rise out of their hats but of course, up until now, all these things were obvious and the yen went down. We keep forgetting, China and Japan are trade rivals and they aren't just fighting over US market shares but also Asia and Europe. For a while, China raised the value of the yuan to please us but has been rather ill tempered about this as they saw the yen drop. So they have been moving since July, to raise the value of the yen. Back then, the Japanese boasted the yen would be 130 to the dollar. Hahaha.

So we will see this battle continue. The Chinese don't mind the yuan rising against the dollar so long as the yen rises against the dollar even more.

From Market Watch:

Japan's trade surplus climbed a higher-than-expected 62.7% in September from a year earlier, as continuing strong export growth to Asia and Europe offset weaker U.S. demand.
Exports rose 6.5% in September from a year earlier, easing from 14.5% growth in August, the Ministry of Finance said Wednesday in Tokyo. Imports declined 3.2%, marking the first contraction since February 2004.

September's trade surplus hit a record 1.638 trillion yen ($14.28 billion), the ministry said. Shipments to the U.S. declined while those to Europe and China expanded at a slower pace.

As I said before, the international trade game is now all about monetary manipulations allowing one way trade. Right now, the target nations are the EU. The Asian traders know that England and the US are nearly tapped out or over-developed now and they are fighting over Europe's markets. Both China and Japan are now holding EUROS more than dollars. Because the dollar overhang is so gigantic, it was the vast majority of the money they are holding, the percentage is still relatively small. But we can sense the shifting of the gears here. Even as the yen and yuan rise against the dollar, they have fallen greatly against the euro. And Europe is feeling this quite strongly. This is why their inflation rate is much lower than Japan, China and the US. If we use real statistics like the price of oil.

As far as I am concerned, the only thing that has changed since last year is, the dynamics downward have increased, the powers pushing up the yen and killing the carry trade are increasing. The world appears to lack liquidity only because the amazing flood of free funny money from Japan has totally shut down and the reverse has happened.

This is a classic Libra moment. As she steps down and we enter Scorpio, we get her deadlier sister, her ancient Egyptian twin, the poisonous one who lives under rocks. When I was a child, I learned swiftly to never pick up anything but to kick it first to see if there is a scorpion hiding there. I also used a knife in the outhouse on Kitt Peak [before there was plumbing] to stab these bugs before they bit me. I would cut them in half.

And so it is here: we are in new dangers but within this system is hope. Namely, that finally, despite all the efforts of everyone at the top, the goddesses will force everything into balance no matter what. And in balance comes health, growth and strength! For the present system is very bad for many people and will not end nicely. It has to end, anyway. Might as well do it before we all blow ourselves to smithereens.

Email this post

Culture of Life News Main Page

October 24, 2008 | Permalink | Comments (63) | TrackBack (0)

The Yen Continues To Rise, The Carry Trade Is Dead

October 23, 2008

Elaine Meinel Supkis

The yen continues to rise against both the dollar and the euro. The entire universe of the FX trade complex is in a roaring collapse as the old status quo of the Japanese carry trade violently unwinds. This is exposing all the hedge schemes and other monetary games to greatest destruction which is why world markets are reeling. The fundamental basis for all global lending has been the Japanese carry trade. 'Restarting liquidity' has required greatest efforts on the part of all central banks working with governments basically de-privatizing all banking systems WHILE STILL LEAVING ALL THE ORIGINAL GNOMES IN CHARGE OF EVERYTHING. This, of course, is dangerous and stupid.

First, we go to exactly one year ago to see what was happening. This is when all the powerful people running the world's economy first lost control of events and things began to collapse. Note the business about trying to get all currencies to decline against the dollar for trade purposes:

Culture of Life News from October 23, 2007: Central Bank Wizards Wave Wands Like Mad Today

More signs that money production, debt increases and money flowing into the offshore pirate coves is diminishing. It is obvious that we are sliding into a recession just like we can see the California housing boom going up in flames. The Economist magazine has a very strange editorial about how our wizards running the national banks created stability (HAHAHA) and killed inflation. I counter this by explaining who killed inflation and how this works. Also, right after the G7 meetings, all our trade partners went home and tried to kill their own currencies. By talking them down. HAHAHA, again.
*snip*
At $60 billion a quarter, the hedge hounds grew from near $0 to nearly $2 trillion in just seven years. Now they are growing somewhat slower. All the systems are slowing down. The stock market rises and falls on alternating fear and hysterical happiness, a classic sign of a bear market. Wild swings are a sign of bad times approaching. A $20 billion drop in the funds pouring into the Dark Pool system run by pirates on offshore islands is a sign they are not able to get the loot they usually want via hook or crook. The uneven trade due to high energy prices and hard working Chinese labor is still on track, producing wealth. But the consuming end of this is beginning to slow down: the USA.

The USA can't consume masses of stuff, merrily, if our wages and assets are declining. The US represents over 15% of world consumption. We are about 3% of the world's population so this means our consuming of resources and goods is grossly greater than anyone else. In particular, we consume more energy than any other group. Our energy consumption is double that of Europe or Asia. If we add onto this, the energy put into making and transporting goods sent to America, we actually consume another 5% of the world's energy via this trade.
*snip*
The world's economy is an ecosystem just like anything else in nature. All things must balance out one way or another. It is not an open-ended system. Just as we can't go into infinite debt, we can't have zero interest forever. Various actions designed to make money appear magically leads to debasement of currencies and inflation. Too much debt coupled with overbidding the value of real estate leads to depressions. Piling on debts on businesses leads to bankruptcies. Just as banks must attract not just borrowers, they must also attract savers, so it is with everything: paper houses are fine in earthquakes but a disaster in fires. Adobe houses are great in fires, a disaster in earthquakes.

So we try to devise systems which work in these yin/yang situations and none will be perfect. All are compromises. But lately, we have seen, thanks to the evolution of business schools and computers, attempts at creating systems that produce only wealth and never go downwards, instead of stabilizing our systems, this is destabilizing them much worse than pure laissez faire anarchy.

We keep crashing into the same rocks here: this planet's physical resources are limited, but money is unlimited. There are absolutely no restraints on creating funny money out of thin air. The real trick is to balance the act of creation against the reality of limited natural resources including limits on human labor. The magic of manufacturing is, it adds value to physical materials via human labor. With the creation of machines, the ability of even very poorly-trained, untalented humans can create the highest quality goods. With robots, this is even more so.

At one point in my long life, I used to make the prototypes for robots to manufacture computer products. When doing this, I and my co-workers had to be immensely careful. We had to measure and then re-measure things again and again. We had a rule: no one person could measure something by themselves. Why was this?

Indeed, NASA would get pissed off. They wanted to save money by having ONE person measure or calculate things from scratch. This caused huge, expensive disasters! The reason we had this double-blind checking system which depended on people not accepting each other's calculations was, it prevents 'self delusions.' Namely, we HALLUCINATE our errors away! I find this to be true in all human activities. WE SEE WHAT WE WANT TO SEE. Our minds edit out errors. This is human psychology.

This is why we make mistakes. And can't even see them. And indeed, the more power one has, the more one can avoid 'seeing' one's mistakes. Ergo: the people at the very apex of power are the most delusional and the least capable of fixing messes caused by miscalculations and errors! This is why we have revolutions, palace coups and bankruptcies as well as the death of all empires. And all empires die. All. There are no exceptions.

This is why I like to talk about mysterious mental processes so much. There is a huge following on line that seeks to 'understand' things via conspiracies. The people who imagine the ruling elites deliberately crash all systems is a false story line. I could merely say, 'Trust me, they do NOT want their pretty little systems to crash! Far from it! They do flee their messes and leave others to take the blame. But they do NOT want their darling little games to end in a crash.'

No, the preferred ending is for all the games to go on forever. For example, the Japan carry trade game was wonderful. All the people 'in the know' could do the same thing every day and make lots and lots of money. They dearly wanted this to continue forever. None more so than the Japanese! But it destabilized all the other systems of trade, monetary values and the debt levels of the entire planet which was suddenly flooded by epic amounts of red ink and so the Goddesses I talk about all the time woke up in the Cave of Wealth and Death and set out to destroy it all.

THE VERY RICH AND POWERFUL HAVE ZERO POWER OVER THE GODDESSES. Let me be perfectly clear here: the goddess of Inflation can be 'defeated' but this only brings the goddess of Depression into action and she takes over with characteristic brutality. In the case of today, the ruling elites came up with the CDO scheme that would lock out both goddesses and remove all risks and thus, allow everyone to flood the planet with funny money. This, of course, has failed most spectacularly. For the Derivatives Beast which the ruling elites created turned out to be far more destructive then the goddesses. He is a total demon.

This is due to the fact that the operation of money and banking is very much tied into the Outer Darkness where all things merge and converge at the same time. Where up is down and in is out. And can reverse instantly when the time is right. Even time is very twisted there where the past, present and future can be all at the same time, in a terrible crash of lightning. The ruling elites have learned over the centuries how to cope with their greed: they throw to the enraged masses someone else who takes all the blame. In most cases, this is the Jewish people. Who are a very small but very exposed minority.

The Jewish people, over the years of severe repression from 68 BC onwards, ruled first by pagans and then Christians in the West, evolved rapidly to have certain mental skills. Including cunning. But they have never figured out how to avoid falling into the trap of funding the Real Rulers and then being flung like so much meat to the wolves. Again and again, this is done. When the British ruling class owed their Jewish bankers too much money, they simply kicked them out. When they needed more lending, they brought the Jews back in. With the promise, they will be kicked out again if this is the best way to save the Crown.

This terrible history should alert the Jewish community to be more careful instead of working day and night to find some back door to the Cave of Wealth and Death and thus, exploit it so the Jewish community can get rich, quick. This is one reason why I talk about 'religion' so much here: the entire business of banking is magical. It is also haunted by history. And this history is all about Jews, Christians who hate paying interest on loans, Muslims who are following the same bizarre desires of lending without paying interest and these two massive religions have been joined by the Japanese who have exploited this desire for 0% interest to upend the Jewish/old-Dutch/early northern-Italian Renaissance merchant-banker's system of compound interest.

Why does compound interest work better than the 0% system? Many of my readers wonder about this riddle. Compound interest encourages savings and the use of capital gains to be put into banks and then 'farmed out' as loans. All savers wish to have a fair interest paid on savings. Otherwise, they buy gold and hide it under the mattress. The present collapse of the banking system has shown how this works: gold climbs rapidly as interest rates drop.

The present price of gold is dropping, you say! And yes, it is: this is due to hedge funds using gold as yet another way of making funny money. They took Japanese carry trade loans and bought gold futures. We know the real price of physical gold has not dropped nearly as fast as the price of fake gold, the paper futures. The mainstream media shows little interest in this little riddle.

Back to the collapsing systems and attempts to prop it up: the US is at the center of the entire rescue operation going on right now. The ruling elites are desperate to prop the dying US dollar up and propping up the US stock markets. They don't care if Argentina, Brazil or Iceland die. The humans living there can die! But the real rulers use the US military arm to control the planet and they, in turn, own our 'democracy' which has been totally undermined by bribes to the point, our 'representatives' rarely vote for anything that is popular with the masses anymore. If the vast majority of US citizens want an end to wars, they do NOT get it.

Just for one hideous example. Congress merrily votes to pay for more and more wars since the ruling elites want these wars. Same with health care issues or stopping the spying on US citizens, Gitmo, whatever. All these key issues end up going the way the elites desire. The lack of control and power is astonishing. But typical of any empire.

From my blog exactly one year ago:

The sudden fall in inflation comes right where this triple whammy begins: the fake inflation figures, the drop in world oil prices and China entering the industrial export markets. This wasn't due to any wand waving by financial wizards. Far from it. It is as if they were waving wands and then the sea went out at low tide. 'We moved the very oceans!' they crowed. Now, the tide has turned. The waves are rushing in, sweeping away all the pretty sand castles built on the shore. The wizards are frantically waving wands and the waves are bigger and bigger.

This is why the insanity of demanding China raise the value of the yuan is so striking: they do this and the last leg of deflationary costs will collapse! Not that our wizards will understand. Using fake inflation numbers will allow them to pretend all is well even as Americans freeze or starve to death due to declining incomes at the bottom. The elderly will be treated like the people of Gaza: put on short rations and then told to go off and die. This is why the right yells about spending on the elderly and then asks for trillions for wars.

*snip*

From China Daily: The Chinese government Monday said it objected to an overhaul of International Monetary Fund (IMF) guidelines for foreign exchange surveillance adopted earlier this year.
Li Yong, China's vice finance minister and the government's representative at the IMF and World Bank's annual meetings, told fellow ministers the IMF should strictly adhere to its tradition of consensus-based decision-making.
"We regret the IMF adopted in June its policy on foreign exchange surveillance, in the absence of consensus among its members," Li said in a speech. "We believe the IMF should focus on whether a member's exchange rate regime is compatible with medium-term macroeconomic policies, not the level of its exchange rate."

The IMF also needs to strengthen its oversight of policies of countries responsible for major reserve currencies, the dollar, the euro and the Japanese yen, Li said.

As I expected, the Chinese are now pushing back. They know the game is ending soon. Unlike the US, they also know that if they go into economic decline, they intend us to go into economic COLLAPSE. The US consumes far more than we make. Far more than our share. If this ends, China won't see its economy grow so fast but we will see our civilization go up in flames just like all those multi-million dollar homes with no sprinkler systems in California.

Last fall, the ruling elites decided after meeting very secretly in DC under the aegis of the Bilderberg Meetings, to cut out China and protect their own systems by crashing China and thus, teaching Hu a lesson. Only Hu was always one step ahead of them. This is because the Chinese are not babes in the woods, learning the dark arts of the ruling elites for the first time. They are champions at inside fighting in Byzantine systems! So the game of cornering China and defeating them and thus, turning that powerful creditor nation into the fool, failed. We see this defeat most clearly.

During last summer, the West was reduced to whining about the quality of the Olympic Games. Nonstop. This epic whine-a-ton backfired. Even as China faced very great difficulties due to Mother Nature and the CIA-sponsored riots in Tibet, the people of China's patriotism grew much stronger during the last year. This was not the plan! The plan was to bust apart China! Not make patriotism stronger.

In the US, the ruling elites use the excuse of our nearly-futile elections to drive us all apart. We have collective and regional disagreements. But instead of focusing on this and working out solutions and compromises as well as moving everyone forwards [for example, if someone hates abortions, they can not do this themselves but forcing others to bear children is stupid]. The US has many issues that unite us but instead, we are driven apart with fanaticism replacing rational thinking. Using bizarre propaganda routines like accusing a black man who wasn't even raised by a normal family and certainly, not a rich family, of being an 'elitist' was a classic example. The people who promoted this bizarre and insane idea were ALL true elite ruling class people! The pandering to workers based on race is another example. The refusal to allow Ron Paul and Kucinich air time in the mass media to talk about banking and economics is another example.

Isolating the followers of Ron Paul from Kucinich is another example. We have common cause and to unite under some sort of banner for reform and this includes cleaning up the media/election mess by forcing the media to carry free time for all candidates including minor ones in elections...we have a lot of work to do but are at odds and this helps the ruling elites who firmly believe in 'divide and conquer.' Which is why they tried to chop China in two last summer. I think that if they believe the US is going to be a threat, they will encourage North/South anger and break the US apart. Encouraging insurrections is just one more tool in their box, a very, very old tool. Machiavelli talked about this back 500 years ago and trust me, part of the education of the young rulers is his famous book.

Now, on to the news today:

Paulson lauds China cooperation amid market turmoil

(Reuters) – U.S. Treasury Secretary Henry Paulson on Tuesday praised China's cooperation in taming global financial turmoil and urged the next U.S. president to continue an active economic dialogue with Beijing.

In his first major speech on China in two months, Paulson said he has held useful and constructive discussions with Chinese Vice Premier Wang Qishan on the turmoil rocking global markets.

"It is clear that China accepts its responsibility as a major world economy that will work with the United States and other partners to ensure global economic stability," Paulson said in prepared remarks to the National Committee on U.S.-China Relations in New York.

Paulson said the United States has demonstrated that it will "do what is necessary" to strengthen financial institutions, unlock credit markets and minimize the impact of financial instability on the broader U.S. economy. He urged other governments to do the same.

Look at my old story above! China was the enemy! Note the utter change in tune today! China is our ally, our friend. China wants to fix our messes! Note also how Paulson still has to swipe at the Chinese saying, they must 'accept...responsiblity as a major world economy' and the Chinese must cooperate with us. But this is simple propaganda aimed at the US public. I am 100% certain that Paulson cringed and crawled like Gollum at the feet of the Chinese Dragon Throne and assured the rulers there that he didn't really mean what he says in the US. The Chinese will live with this. They are happy they have a collar and chain around Paulson's neck and they know that if the US or world notices this, things will get rather messy, a tad too fast.

The Chinese have patience. They believe in their 50 year plan. It has been awesomely successful. They know how it will end. They know that the US is still very strong and can easily cause WWIII and that is troublesome for the Chinese. They, unlike the US, are hemmed in and don't want stray nuclear warheads flying all around them. The US is still protected by vast oceans or the North Pole. So they would far rather avoid WWIII. The ruling elites want the US strong enough to fund our military so long as the military doesn't protect the US. Note that the rulers didn't care that New Orleans drowned while our navy was busy trying to annoy the Iranian Persian kitty cat three years ago!

They are most anxious to keep the US protecting EUROPE. That precious place filled with palaces filled with tremendously expensive art work, etc.---they do not want destroyed. This makes them rather nervous. For Russia can and will destroy all of this if they menace Russia too much. This is why they alternate between petting the Russians and parking US missiles on the border of Russia.

Back to Paulson: he wants the status quo with the ruling elites ruling the US and the world enabling them. Note that HE and not our 'President' or Congress, is telling world leaders, what the real deal is. This is INFURIATING. How dare he! How dare Greenspan trot around the planet, telling us what is going on?

Credit Suisse Posts $1.1 Billion Quarterly Loss

(AP) -- Credit Suisse Group (NYSE:CS) reported a 1.26 billion Swiss franc ($1.08 billion) loss during the third quarter Thursday, blaming bad investments and the global financial turmoil, and the bank said it was working to further cut its exposure to toxic assets.

Credit Suisse's second quarterly loss this year came as no surprise, following a warning by Switzerland's No. 2 bank last week that it expected to book writedowns of 2.4 billion francs ($2.06 billion) from its investment banking business during the quarter.

The losses are global and piling on top of each other. The headquarters of the gnome universe is in that old pirate hold of Switzerland. Back, when banking was born in Europe, the top mercenary bands were the Free Swiss. They took their loot to the Alps and lent against it via the northern Italian bankers who promised them compound interest returns. This fueled merchant bankers who were taking huge risks to bring to Europe, the trade goods of India, China and all of Asia as well as African commodity wealth like ivory, ebony, jewels and slaves.

The 'toxic assets' in the above story are not 'assets' but banking 'assets': namely, DEBTS. And above all, the interest profits in lending. The banks don't want the principal paid off, they hate that! They want the precious compound interest due to be returned to them, this is their profits! Savings are not assets, these are things the banker has to share the wealth with: the savers get their cut of the deal. This is why we are in trouble today: thanks to the Japanese 0% carry trade mess, savers were unnecessary. Debts ballooned far above even the minimal 10% reserves required of banks.

The great 'investment banks' like Goldman Sachs and JP Morgan, etc, all began to run on a 30-1 or worse, ratio. So when these assets ceased to cause money to flow into these banks due to no one paying the interest due, the entire value of the banks collapsed and there was no foundation to form a bottom. What we are seeing is a classic Outer Darkness business:

THERE IS NO BOTTOM. This is a classic 'bottomless pit.' If we read any stories about the world of warlocks, wizards, vampires, etc, if we look at all stories about that dream world of nightmares, the worst nightmare is to fall into this bottomless pit. This pit is the Cave of Wealth and Death, of course. When I was hit by lightning as a child, I fell into this place. It was very terrifying. The only thing that saved me was Pegasus came tearing past like a burning comet and I grabbed at him and was yanked upwards.

This is all dream metaphors, of course. My human mind grasped at concepts and pictures that helped me not despair as I struggled to breath again in the real world. So it is with money: it is magical yet it has to have a connection with real things. The only way out of this mess is to take away all the magic money from the bankers and turn it back into real things. This is what 'mark to market' is all about: making these imaginary values real again. And the banks hate this with a passion and are now unloading all of this into the central banks who are using the governments of Europe, Asia and the Americas to restore value by having the tax payers, not the bankers, eat the losses.

Allstate posts surprise $923M loss for 3Q

(AP) — Property, casualty and auto insurer Allstate Corp. on Wednesday posted an unexpected loss in the third quarter, hit by hefty hurricane-related losses and the ongoing global financial crisis.
For the July to September period, the company lost $923 million, or $1.71 per share, after a profit of $978 million, or $1.70 per share, a year earlier. Revenue fell to 7.3 billion from 9 billion.
Operating losses, which excludes investment gains and losses, totaled $190 million, or 35 cents a share — missing analysts' average profit estimate of 72 cents per share, according to Thomson Reuters.

Insurance companies are not about insurance. They are about making profits on money that comes from people seeking insurance against Mother Nature hammering them in the real world. The insurance industry is a middle man. We could put this money into a savings account and then fix things ourselves. But instead, we play the lottery. 'Maybe I won't get hurt but paying this small sum just in case is OK with me,' says the homeowner. The insurance company has to figure out something: 'Geeze, these houses in California have a good chance of burning down! And Galveston and New Orleans are regularly destroyed by storms! I better not insure them,' thinks the insurance agent.

But they insure them, anyway, because they are short sighted and don't like to think about reality. This is a peculiarity since they are supposed to be filled to the gills with people who calculate chance of losses. But then, the entire planet is going into the bottomless pit because the biggest bankers on earth played false risk games and insured each other against losses while totally unable to pay for these losses if they occurred!

And this, in a nutshell, is what the Derivatives Beast is all about: he was supposed to save everyone and eliminate risk but no one wanted to pay a REALISTIC insurance rate! They wanted a cheap rate and infinite expansion of risk! So they got it. In spades. Back to the infamous cave I yap about all the time: the Goddesses are many there. One of them is Lady Luck. She is the eldest of the goddesses. She is before Mother Nature. She existed before the Big Bang. She is random chance. She is the possessor of infinity as well as all fractional systems. She is a maniac who loves coincidences and convergences. This is her magic: when all the numbers are just right, she can have amazing reactions occur! These things are obvious to mathematicians who know that all their arts are very close to the Dark Arts of true wizardry. Indeed, the birth of mathematics is seeped in mystic knowledge and philosophical riddles.

You can't cheat Lady Luck. She doesn't stop rolling her knuckle bone dice just because we won the pot this time around. She does it constantly. Every day, she is doing this thing about risk: it is always CHANGING. We may have a one in a million chance that the San Andreas Fault will jump today. But we have a 100% chance of this happening this century! We might get hit by massive asteroids or comets once every 50 million years but it can happen tomorrow or right now! This is why calculating insurance is tricky and important: you can't have true insurance unless risk is figured out exactly so the company maintains a cushion when they must pay back. The credit risk pools all failed because NOT ONE of them calculated risk appropriately. They all goofed, badly. And this was because, they wanted to PRETEND that risk was gone so they could double and redouble risk. This was immensely profitable and the buying and selling of risk was utterly unregulated and thus, became a source of wealth by itself! So they wanted to do this even more, not calculate how ridiculous this was and stop doing it.

Citic Pacific Tied to Australian Dollar After Losses

(Bloomberg) -- Citic Pacific Ltd.'s attempt to manage currency risk means the Chinese steelmaker and property developer has four times more money riding on the Australian dollar than it earned last year.

The unit of China's largest state-owned investment company has contracts committing it to buy as much as A$9.44 billion ($6.3 billion) of the currency, according to an Oct. 20 statement. That's more than quadruple Citic Pacific's market value yesterday and compares with 2007 net income of HK$10.8 billion ($1.4 billion).

Citic Pacific has plummeted 66 percent in Hong Kong trading since disclosing it has an unrealized loss of HK$14.4 billion on the contracts, which force it to purchase Australian dollars at an average price of 87 U.S. cents. The currency traded at 66.72 cents as of 7:54 p.m. in Sydney.
*snip*
The Australian dollar may trade as low as 50.45 U.S. cents through March 31, according to Divyang Shah, chief strategist in London at CBA Europe, a unit of Commonwealth Bank of Australia.

I am 100% against the FX markets as they stand today. The entire floating currency mess is a mess and it is messy because it is wrong, it is bad, it is impossible and it is fatal to our nation and we have to kill it. Just kill it dead! It is no basis for global trade! The free trade movement ran on the same rails as the floating currency regime and both are now crashing into each other and we just have to can the entire system. The attempts of all corporations and nations to run this system has been a total failure. And this is why France and China are calling for an international meeting to talk about Bretton Woods II and the Nixon floating currency.

But they can't replace this unless the US first stops spending trillions on military domination, etc. And no one who has power wants this to stop. I keep mentioning the horns of dilemma. Well, we are trapped on this until something happens. Namely, the bankruptcy of the US government will change world systems in a massive cascade just like the fall of Britain in the last century.

The total notional value of outstanding foreign-exchange OTC derivatives in the world increased 78 percent in the two years ended 2007 to $56 trillion, according to the Bank for International Settlements in Basel, Switzerland.

``They have gotten very popular in the last three years and a lot of people have been hurt already,'' said Joseph Ngai, a principal for the financial services sector in Hong Kong at McKinsey & Co., a New York-based consultancy. ``When prices fall, you have to keep buying at a loss.''
*snip*
``I'm not quite sure how many understood what they bought, but when everything was going up in a straight line it looked very sensible,'' said Song Seng-Wun, an economist at CIMB-GK Securities Pte Ltd. in Singapore. ``The great unwinding will see more casualties.''

Eaton Vance, Deerfield Sell Loans, Unwind Saps Credit

(Bloomberg) -- Eaton Vance Management, Deerfield Capital Corp. and Babson Capital Management LLC are being forced to dump their loan investments as prices tumble, sparking even more selling and causing borrowing costs to rise.

Investors sold a record $2.3 billion of high-yield, high- risk debt in the first three weeks of October because of clauses in their funds' borrowing agreements that require them to raise money when prices drop below a set level, according to Standard & Poor's. With loans plunging to a record low 66 cents on the dollar last week from 88.5 cents at the beginning of September, the threshold is increasingly being hit.

At least $50 billion of forced sales may be ahead if prices continue to slide, S&P analysts predict. The actions help explain the sudden decline in prices and highlight the obstacles faced by U.S. Treasury Secretary Henry Paulson in his efforts to unlock credit markets. As loan prices fall, yields are soaring, raising costs for companies just as the economy slows.

Everyone is forced to sell at the same time because everyone followed the same plans, made the same deals and had the same thoughts. Anyone who truly hedged the upside of the bubble were spurned by investors. Everyone who was making money in the bubble were rewarded. Since few or no one was really hedging, the hedges all vanished into smoke since all were feeding the fire, not acting as water on fire. This is the 'herding instinct' and this is why governments have to regulate markets. A regulator prevents everyone doing the same thing all the time. People who are really hedging have to be protected.

Over the Counter Derivatives are just one appendage of the Beast. So are the much nastier 'Credit Default Swaps' which are CDS for short. These things are bets: the bet is, the insurer will never have to pay out. There will be no asteroid hit or San Andreas earthquake. Then, when the inevitable happens, all falls apart! DUH. To have to keep buying at a loss is the reverse of making money. Money vanishes as more and more players default. There is no final pay off except if governments wish to support the system by paying all the losses. Note that this is choice #1 for these goofy gnomes. Instead of all of them going bankrupt, they keep on going while driving all governments into bankruptcy. Cute of them, isn't it?

The Japanese yen is now 97 to the dollar and 124 yen to the euro. Last August, the yen hit record weakness against the euro at 162 yen for one euro. August, one year ago, the yen was fetching 120 to the dollar. So the rise in value of the yen is very significant and ongoing. This is a key event. All the previous FX positions that expected to make money were predicated upon a weak yen and 0% loans from Japan. This is dying rapidly! Japan is in hysterics over this. The strengthening yen has killed the Nikkei and is troubling the export industries. They are very fearful of being undercut in world trade. Japanese cars are more expensive in America! Yikes! This means people will buy Fords!

Now we go to Nikkei News in Japan:

Exporters' Profits Weighed Down By Falling Euro

TOKYO (Nikkei)--Japanese exporters, which are being battered by the financial crisis and a global economic downturn, are seeing their bottom lines squeezed further by the euro's drop against the yen.
************************************************

Singapore Firm Looking To Invest Y100bn In Japan Property

SINGAPORE (Nikkei)--A real estate company affiliated with the Singaporean government plans to invest some 100 billion yen in Japan's property market over the next two to three years.
************************************************

Accounting Industry Head Opposes Freeze On Mark-To-Market Rules

TOKYO (Kyodo)--The chief of the Japanese Institute of Certified Public Accountants expressed opposition Thursday to a proposed freeze on mark-to-market accounting rules for stocks and other financial assets.

The Japanese are a CREDITOR nation. Like China. And like China, wants good accounting of mark to market, not the fake kind. This is because creditor nations are savers and thus, on the other side of the scale of the debtor nations. And the US system is set to run on debt, not build credit. Debt must always increase, never decrease. Even when times are good, we increase our debts even faster, not slower! This is why our government spend over budget even more during good times than in bad times. The only time this was not true was when the Republicans defied a Democratic President or the reverse, when the Democrats forced Bush Sr to raise taxes and balance the budget.

Goldman Sachs May Slash 3,200 Jobs as Credit Turmoil Worsens

(Bloomberg) -- Goldman Sachs Group Inc. plans to eliminate about 3,200 workers, adding to more than 125,000 job cuts across the securities industry this year.

Goldman will cut about 10 percent of its 32,500 workforce as the credit crisis worsens, said a person briefed on the plans who declined to be identified. Paul Kafka, a spokesman for Goldman in London, wouldn't comment.

Banks worldwide are shelving deals and cutting employees as the unprecedented turmoil in credit markets spreads and spurs concern the global economy may fall into a recession. Goldman, the top-ranked adviser on mergers and acquisitions this year, has dropped by almost 50 percent in New York trading this year, and plans to convert into a bank from a securities firm.

Goldman Sachs is like everyone here: toss the staff overboard and heave ho, away we go, pull those oars! As the Titanic sinks, they make it much worse with these firings. Everyone is firing so this means the recession is set in cement. No matter how much money our government gives these pirates, the workers will be walking planks on every corporate ship, big or small. Here is another example of this:

Merck 3Q net drops 28 percent; to cut 7,200 jobs

Drugmaker Merck & Co. said Wednesday it will slash 7,200 jobs as part of a new restructuring program that comes as its third-quarter profit plunged 28 percent, due to a hefty restructuring charge and flat sales.
The maker of allergy and asthma treatment Singulair and cervical cancer vaccine Gardasil said it will cut nearly 13 percent of its work force, including many executives, to lower overhead and become more competitive, in its second major restructuring in less than three years.

The US just announced that the government is guaranteeing 70% of all US mortgages. This is a huge, huge hole in the budget but they don't care. Do they? The US can be sold at some future fire sale. At least, the Asians hope this will happen. Because the US government is the final payer of almost all US lending to homeowners, this is causing our stocks to go up. What a price to pay! I hope Joe the Plumber who put his small house deep in hock last year, is happy.

Brazilian stock market suspended as index plunges

Trading on Brazil's stockmarket, the biggest in Latin America, was automatically suspended Wednesday when the main Bovespa index plunged more than 10 percent.

The stockmarket was suspended for 30 minutes at 1917 GMT, the fifth time in three weeks that the automatic suspension has gone into effect.

All the once-hot commodity market countries are going under. When they do this, it increases the chance of a depression. The fundamentals of world trade are still collapsing, not improving. When commodities shot up thanks to inflationary dollars coupled with wild pirate speculations, this was a bubble and not due to natural forces. Now that the gnomes can't get endless loans from Japan, the flood of free money has ceased. Ergo: the commodity markets are collapsing due to very few bidders with free money bidding wildly on every possible commodity, asset or equity. This is why the news about the yen is most important.

One last story from Japan for my kids:

Japan Copyright Authority To Allow YouTube Uploading

TOKYO (Nikkei)--The Japanese Society for Rights of Authors, Composers and Publishers (JASRAC) will soon announce that computer users may upload videos containing JASRAC-protected music content onto the YouTube video sharing site, it has been learned.

Well, we certainly enjoy Japanese anime and music a lot so it is a relief that it will be available on the web. The Japanese creators are wonderful people unlike their government. Indeed, many Japanese anime are very subversive! They also hate the politicians who are often portrayed as goons or dangerous maniacs! Heh. A healthy view.

Email this post

Culture of Life News Main Page

October 23, 2008 | Permalink | Comments (35) | TrackBack (0)

End The Fed Demonstrations November 22

10/22/2008

Elaine Meinel Supkis

The confiscations of systems and wealth generating locations is beginning. The US has opened yet another window into the awful nothingness of the Cave of Wealth and Death. The 'rescue' amounts are now well over $2 trillion and rising weekly. The 90% losses from Lehman's collapse in the CDO markets is still not being acknowledged nor examined realistically. Bush promises MORE 'free trade' as he and other rulers push yet again for more of the Doha Round process to finish its job of killing the US industrial base. All the taps are wide open and all of this future wealth is vanishing today. Hedge funds are failing fast due to not being hedges at all but scams. The global trade collapse is confusing many mainstream commentators who would love to think that all is basically well, this is just some sort of odd glitch. It is not.

Argentina to take over pensions

Argentina's President Cristina Fernandez has signed a bill that will nationalise the country's 10 private pension funds. The move will put the government in control of almost $30bn (£18bn) of investments and is aimed at protecting them from the global market turmoil. Shares slumped amid fears of the move's impact and critics accused the government of trying to grab the funds.
*snip*
Ms Fernandez said that Argentina needed to protect those with pensions amid falling stock prices around the world. However, expectations of the announcement sent Argentine shares 11% lower and critics said the government simply wanted its hands on the money ahead of a tough budget year.

The minute any government is on the prowl for wealth, no one is safe. It doesn't matter if the government is 'capitalist' or 'communist' or any other possible system. When a government is in trouble, they confiscate stuff. They usually do this unilaterally and get it all rubber stamped or they don't do this at all and there is a violent revolution/coup. The #1 job of any government is to stay in power. They will do this no matter how messy. In a number of 'democracies' the power structure is built up on this system of opposition that is supposed to vacillate between 'left' and 'right' or 'labor' and 'capitalist'.

Due to the great diligence of the lobbyists and the rich, most nations do not have this dual system. Instead, there are very small differences in philosophy or systems which waver between to poles that are so close as to be indistinguishable to outsiders. Even if there are differences, the election process irons this all out and candidates end up sounding exactly the same even if their intentions for rule are not the same at all.

This ends up causing most elections in Europe and America as well as many other places to be all about personalities, skin color, religion or promises of future bribes like tax cuts. The US has seen many years of tax cut promises which have now bankrupted this nation and destroyed our entire power structure. Due to hostile aliens buying most of our debt, we are now in a state whereby the Average Joe and Jane imagines there is no limit to the debt we can take since none of this shows up in the local systems. We see no reduction in our lives, no dire effects. The goods keep pouring in from Asia, the money keeps magically entering into our national banking system and all is well. More tax cuts! We want more and more!

Anyone who talks about this is attacked or ignored. The main story line being run by the right wing is very simple: social security and health care for Americans are bankrupting the nation. The left simply is ignoring overhead costs. Neither side is relishing a realistic conversation with the voters about the dangers of our empire running up huge debts and being the center of global export trade. So let's go back to the news to see how free trade continues to kill America:

Bernanke supports higher spending

US Federal Reserve chief Ben Bernanke has said more government spending may be needed to combat economic weakness. A fresh round of stimulus would be a good idea, he told the US House of Representatives budget committee. Although Mr Bernanke stopped short of saying the US was in recession, he said the American economy was now in a "very serious slowdown".
Hopes of a fresh economic stimulus package pleased investors, with the main Dow Jones index ending up 4.7%.

Each injection is bigger than the last. Each has less impact. Last year, whenever the Fed or the Treasury injected fake funny money, the markets went totally wild with joy. The stock market shot up so much last September that it reached a peak! Then immediately began its present fall. Back then, all the main speakers on TV and in the mainstream media said that the decline was purely emotional. Of course, having Cramer run around TV screaming, 'There is BLOOD in the streets', was rather hysterically funny.

There was no blood. It was red ink. But to bankers and Cramer, this is their lifeblood.

Fed to Provide Up to $540 Billion to Aid Money Funds

(Bloomberg) -- The Federal Reserve will provide up to $540 billion in loans to help relieve pressure on money-market mutual funds beset by redemptions.

``Short-term debt markets have been under considerable strain in recent weeks'' as it got tougher for funds to meet withdrawal requests, the Fed said today in a statement in Washington. A Fed official said that about $500 billion has flowed since August out of prime money-market funds, which with other money-market mutual funds control $3.45 trillion.

The initiative is the third government effort to aid the funds, which usually provide a key source of financing for banks and companies. The exodus of investors, sparked by losses following the bankruptcy of Lehman Brothers Holdings Inc., contributed to the freezing of credit that threatens to tip the economy into a prolonged recession.

``The problem was much worse than we thought,'' Jim Bianco, president of Chicago-based Bianco Research LLC, said in a Bloomberg Television interview. Policy makers are trying to prevent ``Great Depression II'' by stemming the financial industry's contraction, he said.

The rabbit is out of the magician's hat. The cat is out of the bag. Even the dimmest wits in America are figuring out two things: the bankers are really socialists but are exclusionary socialists. Namely, they want money to be created and handed to them, not to us. They want to use us as collateral. Ask any banker if money can be lent at cheap with no collateral. They will laugh maliciously.

No, to get those cute 1% loans, you need to put up some collateral. And the true collateral here is the US taxpayers and everything they own. Note the top story. All our collective and individual wealth can be suddenly seized. Since the bankers and their buddies own our political system, they will get whatever they need.

The other fact the US public has become dimly aware is, they will NOT be bailed out with this magic money. They will have to pay a price and a steep price. If they ARE bailed out with funny money, this will be extracted in less than five years just like the Bush tax cuts, via inflation of food, fuel and other necessities.

Since there is a lot of propaganda from kindergarden on up poured into brains to convince US citizens that we are NOT an empire, it is hard for voters to understand the profound loss of sovereignty and international muscle the US has suffered during this last 8 years of wild misspending, wild debt accumulation and wild military expansionism.

The bail outs are now at $2.25 trillion!

Paulson announced the plan Tuesday, saying "we regret having to take these actions." Pouring billions in public money into the banks, he said, was "objectionable," but unavoidable to restore confidence in the markets and persuade the banks to start lending again.

In addition to the capital infusions, which will be made this week, the government said it would temporarily guarantee $1.5 trillion worth of new senior debt issued by banks, as well as insuring $500 billion in deposits in non-interest-bearing accounts, mainly used by businesses.

All told, the potential cost to the government of the latest bailout package comes to $2.25 trillion, triple the size of the original $700 billion rescue package, which centered on buying distressed assets from banks. The latest massive show of government firepower is an abrupt about-face for Paulson, who just days earlier was discouraging the idea of capital injections for banks. Analysts say the United States was forced to shift policy in part because Britain and other European countries had announced plans to recapitalize their banks and backstop bank lending. But unlike the British authorities, the Treasury secretary presented his plan as an offer the banks could not refuse.

"It was "It was a take it or take it offer," said a person who was briefed on the meeting, speaking on condition of anonymity because the discussions had been private. "Everyone knew there was only one answer."
*snip*
"I don't think there was any banker in that room who was going to look us in the eye and say they had too much capital," Paulson said. "In a relatively short period of time, people came on board."
*snip*
The Treasury will receive preferred shares that pay a 5 percent dividend, rising to 9 percent after five years. It will get warrants to purchase common shares, equivalent to 15 percent of its initial investment. But the Treasury said it would not exercise its right to vote those common shares.

Note how this story frames it as if the bankers didn't have the slightest idea why Paulson was calling them to DC! Oh, how barking CLUELESS they all were! HAHAHAHA. But they claimed to this reporter, to be shocked, just SHOCKED that things were screwed up and were collapsing after the Lehman bankruptcy and AIG demanded a humongous hand out! Oh, no. They had to be FORCED to take a hand out.

This reminds me of last year's story nearly at this same time frame: the same clowns in that room with Paulson in September were with him last year, too. And he and Bernanke blasted open a new hole into the Cave of Wealth and Death and said, 'This is a new lending window! And to prove it doesn't hurt to use it, we are inviting bankers to use it.' Then the bankers, squealing like pigs at a party eating cake, grabbed money from this new magic window. And they were able to give themselves record Xmas bonuses.

Since then, they are edgy. Will people figure out their latest scam? So they return to the media to tell stories about how their arms were twisted for force them to suck up huge funds in the trillions and then hand themselves a 10% cut in the form of bonuses. 'Look at the bruises our buddy and fellow conspirator made on our arms when he twisted them!' they all cry in unison. 'Oh, it hurts! Oh, it hurts, Precioussss.' Gads, all these gnomes are Gollums, aren't they?

Serial liars. Whiners who don't hesitate to kill us if this gives them one more house, one more car to add to their collections.

Do our rulers know enough to avoid a 1930s replay?

The commodity and emerging market booms are breaking in unison, leaving no more bubbles left to burst. Almost every corner of the world is now being drawn into the vortex of debt deflation.

The freight rates for Capesize vessels used to ship grains, coal, and iron ore have fallen 95pc to $11,600 since May, hence the bankruptcy of Odessa’s Industrial Carriers last week with a fleet of 52 vessels. Cargo deliveries dropped 15.2pc at the US Port of Long Beach last month, but that is a lagging indicator.
From what I have been able to find out, shipping is slowing as fast as it did in the grim months of late 1931. “The crisis is now in full swing across the entire world,” said Giulio Tremonti, Italy’s finance minister. “It is hitting the real economy, the productive forces of industry. It’s global, it’s total, and it’s everywhere,” he said.

This is from the UK. Yes, we are in a classic collapse of world debt accumulation. Note the last word: accumulation. It is not 'growing' but is SHIFTING. From the banks to the governments who then shift it to someone else. So long as the governments of all nations accustomed to shipping things to the US continue to fund the US debts, all will return to 'normal'. This 'normal' is fatal to the US public. But we are not told this since 100% of the US media is totally pro-world free trade.

This fall off in trade isn't due to barriers in the US. It is entirely due to the US public unable to go deeper into debt to pay for imports. The hope is, oil will be cheap again and thus, the US doesn't send so much money to energy commodity nations and resumes buying mostly Asian and European manufactured goods again. But this is an impossible dream except if we can gain access to the 0%-0%-0% system I keep harping on. This is already morphing into a totally anti-capitalist system whereby the government hands out loans to everyone and takes cuts on future profits that are NOT taxes but are partnerships with the government in the position of being able to confiscate whatever they need to keep afloat! Some partnership, eh?

Already, the horrid housing bill I was massively against, is doing this. Anyone foolish enough to sign up for it will regret it for they are now serfs of the state, quite literally. They will have to work off the principal of their house no matter what and gain virtually nothing if they sell eventually. Certainly, their heirs will gain little or nothing. Eventually, all we will pass onto our children will be heavily mortgaged properties!

The upper classes of Britain were in the habit of putting up bigger and bigger mortgages against their properties. So did the Russian ruling class. Then, when things went bad, they all went bankrupt during WWI when they should have had the resources to run up war debts. Even when England ran up huge loans with the US banks, this still sent the entire British landed elites into the doghouse. Most of their estates are now owned by foreign capitalists or the state and are now museums or schools and so on. The Russians were simply killed or driven out and the State took over everything, lock, stock and barrel.

Bush vows big push for Doha deal before leaving

(Reuters) - President George W. Bush vowed on Tuesday to press hard for a successful conclusion of the nearly 7-year-old round of world trade talks during his last few months in office.

"The recent impasse in the Doha Round of trade talks is disappointing, but that doesn't have to be the final word. And so before I leave office I'm going to press hard to make sure we have a successful Doha round," Bush said at a White House summit on international development.

Even with an all-out effort, it would be difficult for negotiators to finish every detail of a new world trade agreement before Bush leaves the White House on Jan. 20.

Bush is a traitor. He should be impeached and put on public trial. In this trial, we must detail how he actively destroyed our entire economy as well as our industrial base. China is flying astronauts and doing space walks, India is going to the moon right after the Chinese went there and Russia is putting our astronauts in space for a fee! And our economy is collapsing, the sea of red ink is deepening. And we have no funds to pay for things like space exploration. The wars we are fighting are not fixing anything real. In Afghanistan, we are totally losing that war.

And here is Bush, pushing very hard to increase the damage. Alas, the mainstream media heartily approves of this. So they are the problem, too. Much of our media is owned by aliens like Murdoch. He recently became a dual citizen which is a hip-hip-hooray moment in history. Ha. He is a very clever man. He works hard to appeal to the far right wing here in America while spending money in that dear little 'socialism for Jews only' kingdom of Israel. The ruling elites who run our media are very much for socialism....for themselves, their kin and other assorted special people. Some, like the owners of the NYT, want even other Americans to have a tiny taste of socialism but NOT any job protections. The biggest bullhorn for 'free trade' is the New York Times.

This is why the average American worker, pushed against the wall, watching jobs vanish, can't get a grasp on what is causing this tragedy. These workers struggle to pin the blame onto someone, anyone. But have no leaders. Ross Perot performed this function briefly and disturbed the dual similar systems set up by the Republicans and Democrats! But he was pushed offstage when he tried to form a new party. The Libertarians and Greens can still be minor spoilers in very close elections but this gains them absolutely nothing. It merely decreases the differences between the GOP and Dem candidates!

Unlike in 1990 when the US trade deficit was only $20 billion or less per year, today it is a yawning chasm of nearly a trillion a year and is at the very bottom of what ails our economic systems. Yet it is not an issue in this election. So Bush has been emboldened to set this mess in stone! And has the approval of everyone at the top.

A warning to the Ron Paul people: you can't have a revolution without a huge change in one's mind about all sorts of things! Any reactionary revolution you attempt will simply give the present players oppressing you, MORE POWER. Not less. For reactionary thinking is all about the status quo. Got that? If you want the old, old status quo, you will be defeated. For they will grant you the ILLUSION of the old times while reaming you all out!

Since many of you want revolutionary change in finances and taxes, etc. Including the very important part of withdrawing from our empire, then you must do battle with all the forces on the RIGHT, not the left. For the right is run by guys who make easy money via the military/industrial complex and free trade. And you all will never get any of them to join this 'revolution' of Ron Paul! Got that?

The ONLY way you can effect change is to go to the left and join forces! This is why I opened up the frontal debate about socialism and the meaning of Marx and all that. If you all can't grasp the importance of this, well. That's life! Full of frustrations. As an ancient revolutionary, I am very familiar with how all this works. The upper echelon debates we held at various world conferences about how to better the working conditions of the greater masses of people in the world, we had to discuss how to do this politically and ethically. It was a harsh debate!

At one conference, the Black Panthers threatened to beat me up. I stood on a chair and dared them to come at me! At another, the Troskyites went after me. They accused me of historical revisionism. HAHAHA. When Monty Python came out with the 'Holy Grail', the scene of the peasant anarchists sent me to the floor, laughing hard.

Chinese President Hu holds telephone talks with Bush

(Xinhua) -- Chinese President Hu Jintao on Tuesday spoke over phone with his U.S. counterpart George W. Bush about international cooperation to cope with the ongoing global financial turmoil.

The leaders exchanged ideas about the planned international financial summits and strengthening international cooperation to stabilize the financial markets.

Bush said the United States hopes to make joint efforts with the international community to seek measures to overcome the crisis and maintain the stability of the world economy.

Bush is a right wing President, head of the GOP and like Nixon and Bush Sr, he is always playing footsie with the Chinese commies. Now, if I were Ron Paul, I would resign from the party just for that! But at no time in Paul's history, did he leave the party even as the leaders openly kissed the communists on the cheeks, much less, all that buss-bussing the Saudi king with smooches galore! The Chinese ruling dragon called Bush and ordered him to continue free trade or die. And of course, Bush agreed with all his heart.

THIS DIDN'T MAKE THE US NEWS. The above story is from China. They want their readers to know that the Glorious Leader has the US President on a short leash. Two years ago, Bush was very insulting to Hu. But that was for domestic consumption. In private, he crawled to the Dragon Throne and told Hu, he wouldn't interfere with China destroying our economic base. This, of course, is treason. Just like Reagan running off to Japan to make one ten minute speech for $2.5 million. Open bribery which was ignored by the US public and few today know of this treason.

Financial crisis is shifting power to Asia, says HSBC boss Stephen Green

Speaking at a financial conference in Dubai, the banker also condemned the financial model that has led to the crisis as "bankrupt".

The crisis, probably the worst since the 1929 Wall Street crash, will offer several lessons, Mr Green said, but added that the underlying trend of movement from West to East would "not be derailed".

"The rebalancing of the global economy towards Asia, home to over half the world's population, and its implications for the Middle East, is the shift that will affect financial markets most profoundly," he said.
*snip*
The HSBC chairman also criticised the bonus culture at banks, "which has so often encouraged too much opacity and excessive risk-taking".

He added that the "high-leverage model of finance is bankrupt" and said securitisation of loans would survive. "You cannot bring the whole of the world's capital markets back on to banks' balance sheets."

The West kept looking wealthy due to debt accumulations. But all wealth will begin to flow to the 'East' which is a historic change. For 500 years, it flowed to the 'West'. Thanks to the invention and use of cannons and guns and the industrial revolution. Now, this is reversing. Yet the EU/US system still wants the illusion of wealth, thus the need for 'credit'. From top to bottom. This credit is now being created out of thin air which is most dangerous. Soon as people understand this is so we can fund free trade, the better. And as soon as people understand that the capitalists of the West worship the Chinese communists...HAHAHA. And we are supposed to fear socialism!

Like I keep saying, our fears are greatly misplaced. And this is deliberate. A massive amount of energy is spent on misinforming people so they split along left/right lines and argue about teen pregnancies and skin color. The day white workers unite with black ones in the US is the day the Establishment fears the most. The day the right wingers end their battle over who gets to tell women whether or not they must have babies is the day the workers will be stronger. By insisting on enslaving women to their fertility, many right wingers end up appealing to never-do-wells like the Palins and their sexually active children who have no self control at all. If we focused only on the Prize which is the Economy, the left and right can unite. But so long as the right wants to control the personal physical bodies of one half of the work force, this will never happen. This is the same over the race stuff: all the right has to do is stop worrying about skin color and instead, look at people's connections with the Cave of Wealth and Death, we will have great power to change. And change has to include some sort of reward for workers: socialism in the form of social security retirements, free schools for the children, support for young mothers, good health care! How simple is this, anyway?

Protests and Hecklers Have Mortgage Bankers Longing for Good Old Days

Mr. Rove, the Republican strategist and former adviser to President Bush, was accosted onstage during a convention panel here on Tuesday morning by a protester who tried to handcuff and arrest him “for treason.” Mr. Rove tried to elbow her away before she was taken offstage.

No one was injured and no arrests were made, but the stage-storming was just the latest outburst at an event that usually packs all the excitement of a mortgage calculator. On Monday, another panel was interrupted by protesters demanding a moratorium on foreclosures, and hecklers screamed at attendees through bullhorns outside.

Arrest them all! HAHAHA. I love that young lady who bravely tried to enforce the laws of the land! I have done over 30 citizen's arrests and have had the joy of barking, 'You are UNDER ARREST,' while the criminal struggles to get out of my grip. I salute this brave woman! And note that she is doing the hard work here! She has been arrested but she is a HERO. A hero isn't someone who grins and just sits there while telling followers to have a 'revolution.'

This brings me to one fine Ron Paul supporter who is doing the right thing. Dr. Kirby in our comments section left this important message:

END the FED
11:22:08

On November 22, 2008 there will be protests at every Federal Reserve Bank and office in the country. Activists will demand an end to private banker control over the nation’s money supply and the return to a hard, commodity backed monetary system. The slogan is simple and direct: “End the Fed!”

The November 22 protests are intended as a kick-off to an ongoing campaign to educate and organize the public and take concerted, planned action. ONLY the conscious action of We the People can save the nation from ruin, plunder and total socialist tyranny. The time is NOW.

Protests will be held in the following 38 cities:

Boston, Philadelphia, New York City, Buffalo, Cleveland, Cincinnati, Pittsburgh, Richmond, Baltimore, Charlotte, Atlanta, Birmingham, Jacksonville, Miami, Nashville, New Orleans, Chicago, Detroit, St. Louis, Little Rock, Louisville, Memphis, Minneapolis, Helena, Kansas City, Denver, Oklahoma City, Omaha, Dallas, El Paso, Houston, San Antonio, San Francisco, Los Angeles, Portland, Salt Lake City, Seattle, Washington, D.C.

For more info and to sign-up for the protest, go to:
http://www.endthefed.us/

I hope to be in Manhattan with the camera and my note pad. Hope to see others there! I heartily endorse this demonstration. If anyone attends the other demonstrations, please send me emails about it and I will publish these! Bravo.

Velocity And The V-Shaped Recovery
Brian S. Wesbury and Robert Stein

Rather than being the first of several negative quarters of economic growth, we expect this will be a temporary capitulation to the credit crunch, with almost all of the economic losses postponing economic activity into what will turn out to be a healthy period of growth in the second half of 2009. To be precise, we expect real GDP to be flat in Q1-2009 but then grow at an average annual rate of 3% in the final three quarters of next year.

The reason: This sharp drop in growth is due to a temporary drop in velocity, due to a true credit crunch, with some panic thrown in for good measure. It is not a typical recession caused by fundamental, economy-changing events such as higher tax rates, tighter money, protectionism or other public policies that stifle innovation or entrepreneurship.
*snip*
If there is a slowdown in the turnover of money--say a 5% decline--the impact on nominal GDP growth is no different than if the money supply itself shrinks by 5%.

But there is good news. After ham-handing the rescue operation for months, the cavalry has finally arrived. The Fed has injected massive amounts of liquidity, driving the federal funds rate to roughly 1%--where it traded last week.

The cavalry is like the Keystone Kops. And it has rescued nothing. It simply took the magical flying piggy bank and used it to pour insane amounts of money into this mess. Displaying our ire over all this is important which is why the November 22 demonstrations are a good step in this direction. Just remember, a demonstration is useless unless it inconveniences someone powerful. This is why Congress was nearly totally united in passing laws outlawing US citizens interfering with anything the rulers are doing. We can't block doors anymore. We can't stop traffic! Or we can be put in prison. And calling for this is illegal, too. So I can't say, 'Stop traffic at Wall and Broad Street' or I would be inciting a revolution.

All dying empires do this. They outlaw even the slightest expression of ire. Note how that worked in the past: argh! Not at all. The Chinese communists crushed the Chinese students brutally. But then we took over part of Manhattan across the street from the UN and embarrassed both the Chinese and Bush Sr. and forced them to do some of the things we wanted. Like giving Chinese students in the US amnesty. At one point, Mayor Koch ordered the Manhattan police to arrest me and scatter the Chinese students. I said to the head of the NYPD that the only way they could haul me off was to kill me. They backed down. But since then, we have lost huge areas of citizen rights and live in a full police state. Last time I was in Manhattan, the military was occupying Penn Station and doing huge searches of random passengers. It was an armed camp, not a democracy of free people.

Frankly, it reminded me of East Germany, circa 1968.

CDO Cuts Show $1 Trillion Corporate-Debt Bets Toxic

(Bloomberg) -- Investors are taking losses of up to 90 percent in the $1.2 trillion market for collateralized debt obligations tied to corporate credit as the failures of Lehman Brothers Holdings Inc. and Icelandic banks send shockwaves through the global financial system.

The losses among banks, insurers and money managers may spark the next round of writedowns on CDOs after $660 billion in subprime-related losses. They may force lenders to post more reserves against losses after governments worldwide announced $3 trillion in financial-industry rescue packages since last month, according to Barclays Capital.

``We'll see the same problems we've seen in subprime,'' said Alistair Milne, a professor in banking and finance at Cass Business School in London and a former U.K. Treasury economist. ``Banks will take substantial markdowns.''

Back to the economy: the derivatives Beast still is munching away. Yesterday, the Lehman business with the 90% losses was supposed to be finished. Then, no news! I looked and looked. But found other news relevant to all this business:

Hedge Funds Worldwide Post Record Losses in September

(Bloomberg) -- Hedge funds worldwide posted record monthly losses in September, according to Eurekahedge Pte., as short sale bans and client redemptions amid the credit crisis hurt funds including Citadel Investment Group Inc.

The Eurekahedge Hedge Fund Index, which tracks 2,431 funds that invest globally, declined 4.7 percent, preliminary figures from the data provider show. The drop is the biggest one-month loss since it began collecting data in 2000 and the index, down 7.9 percent through September, is set for its worst year on record.

``The volatility has been difficult even for seasoned veterans to manage; one day the markets plunge on apocalyptic fundamentals, and the next day they surge,'' said Robert Howe, founder of Hong Kong-based hedge fund manager Geomatrix (HK) Ltd., which oversees $32 million. ``As many managers just liquidate to wait out the storm, or clients do it for them, money drains out of all investment strategies.''

These stupid gnomes can't manage volatility? HAHAHA. They were supposed to be geniuses at this stuff! Not fumble bums. All the hedge funds are dying in unison because they all ended up doing the same things at the same time. This is NOT hedging! It is herding! HAHAHA. And they herded themselves right off of the same cliff.

Wiki definition of hedge funds:

A hedge fund is a private investment fund open to a limited range of investors which is permitted by regulators to undertake a wider range of activities than other investment funds and which pays a performance fee to its investment manager. Although each fund will have its own strategy which determines the type of investments and the methods of investment it undertakes, hedge funds as a class invest in a broad range of investments, from shares, debt and commodities to works of art.

As the name implies, hedge funds often seek to offset potential losses in the principal markets they invest in by hedging their investments using a variety of methods, most notably short selling. However, the term "hedge fund" has come to be applied to many funds that do not actually hedge their investments, and in particular to funds using short selling and other "hedging" methods to increase rather than reduce risk, with the expectation of increasing return.

Hedge funds are typically open only to a limited range of professional or wealthy investors. This provides them with an exemption in many jurisdictions from regulations governing short selling, derivative contracts, leverage, fee structures and the liquidity of investments in the fund. A hedge fund will nevertheless voluntarily limit the scope of its activities via its contractual arrangements with the individual investors in order to give them some certainty surrounding the specific investments that will be invested by the hedge fund itself.

The assets under management of a hedge fund can run into many billions of dollars, and this will usually be multiplied by leverage, meaning that their influence over markets is substantial. Hedge funds dominate certain specialty markets such as trading within derivatives with high-yield ratings and distressed debt.[1]

See? They are not hedge funds at all. So we must rename them 'Herd funds' and view this like a herd of cattle being run off a cliff by a prairie fire or wolves chasing them. The main hedge tool was to short each other's organizations. This is sort of like running a protection racket which involves stabbing, robbing and kneecapping each other! As Cramer noted, 'There is BLOOD running in the streets!' HAHAHA. They shorted and cheated each other. And now are bleeding to death. What a stunning development.

Credit Suisse Funds

Barklay's Funds

Now back to the main reason they do these things: gnomes need lots and lots of money so their heartless souls can find goddesses to have sex with. To do this, they need palaces, yachts, diamonds, furs, antiques, artwork, etc. This is expensive as hell. They need all those Joe Plumber sorts to moo like cattle and be herded off the cliff so the gnomes can strip them of their last dimes.

Lloyds chief tells staff: you'll still get bonuses

The chief executive of Lloyds TSB, one of the banks participating in the £37bn bank bail-out, has promised staff they will receive bonuses this year despite Gordon Brown's promise of a crackdown on bankers' pay following the investment by taxpayers.

Eric Daniels has told employees that the historic government intervention will not change the behaviour of Lloyds, which is in the throes of the rescue takeover of HBOS brokered by the prime minister.

Arrest them all. Back yet again to Lehman's mess:

Notice to All Investors of Lehman Brothers Principal Protected Notes From the Securities Law Firm of Klayman & Toskes

The Securities Law Firm of Klayman & Toskes, P.A., www.nasd-law.com, announced today that it is investigating the sale of Lehman Brothers Principal Protected Notes ("Lehman Principal Protected Notes") by full-service brokerage firms to their customers. Also referred to as guaranteed linked notes, these securities were "structured products" that combined fixed income investments with derivatives. What resulted was a product that supposedly provided the protection of fixed income, with the upside of the stock market. Lehman Brothers (OTC:LEHMQ.PK) sold its North American investment banking and capital markets businesses to Barclays earlier this year. In the deal, Barclays agreed to buy Lehman's operations, along with trading assets valued at $72 billion, and trading liabilities worth $68 billion.

Lehman Principal Protected Notes were marketed by several brokerage firms, including Lehman Brothers, Citigroup, as conservative investments. Investors looking for income were advised that Lehman Principal Protected Notes would provide preservation of capital, a modest yield, and a slight gain in principal. In a brochure issued by Lehman Brothers, it stated that their "structured notes," which includes Lehman Principal Protected Notes, had "100 percent principal protection" and "uncapped appreciation potential" based upon the gains in the S&P 500 Index. In reality, however, investors of Lehman Principal Protected Notes were subject to a significant amount of risk.

Well, at least they can be sued. But that doesn't scare the other gnomes hardly at all. They all have very expensive lawyers, oodles of lawyers. They can tangle things up in court for years and years while they prepare their escape from the long arm of the law which is about 1" long, I fear.

Email this post

Culture of Life News Main Page

October 22, 2008 | Permalink | Comments (88) | TrackBack (0)

Joe the Poor Plumber And The Bank Rescues That Kill Him

October 21, 2008

Elaine Meinel Supkis

Last year exactly, the G7 nations were all fighting with the US to get the dollar stronger. This was their first reaction to the banking crisis that began on 7/17/7. Today, they are grimly settling in with a very fragile return to the status quo which was lost back then. So stocks go up, of course. AIG is now running in circles trying to avoid being arrested for fraud, grand larceny and treason. Send them to China to be punished! And dear readers, those of you who hate socialism, read today's posting very carefully. The Rich LOVE socialism for themselves and intend to make you all pay for all this AIG-style socialism while you get nothing in return except a lifetime of debt. This is called 'peonage' or 'serfdom', not freedom.

Culture of Life News, October 21, 2007: Greenspaniel and the G7 Dwarves Fight Over Dollar Stuff

More information is now spilling out of the cave where the G7 dwarves met. Seems, as I predicted, the dwarves are not so united after all. Indeed, they are swinging hammers and axes at each other. The bank melt down is to be blamed on the Chinese Dragon who sent some observers to this confederation meeting. Hu needs to be entertained as he whacks rivals in the shins at home. HAHAHA. Turns out, the US vetoed condemnation of the weak US dollar. HAHAHA. Everyone wants BIGGER trade surpluses with the US. And reality be damned.

From Bloomberg:

The dollar fell to an all-time low against its major trading partners after the Group of Seven failed to address the record decline following a meeting of finance officials.
The policy makers, representing the U.S., U.K., Japan, Germany, Italy, France and Canada, stuck to language in prior statements by saying ``excess volatility'' in currencies is ``undesirable'' and that currencies should trade in line with fundamentals. They also intensified calls for China to let its currency strengthen, during the Oct. 19 gathering in Washington.
``The statement gives the market a green light to sell the dollar,'' said Brian Dolan, chief currency strategist at FOREX.com, a unit of the online currency trading firm Gain Capital in Bedminster, New Jersey, which has about $250 million of funds under management. ``With no comment from the G-7 about its weakness, the dollar could decline to $1.45 per euro in a month.''

OK: no one believes me, it seems. The problem isn't the yuan. It is the yen. I can't understand why this is so hard to understand. We don't talk about the yuan 'carry trade' because there is none. China's interest rates are in line with the rest of the world. China, like the rest of the world, has inflation. China can see the value of the yuan rise if the US and Europe wish to hold Chinese yuan but we don't hold hardly ANY yuan in our own FOREX reserves.

The game is, if one wants a weak currency, they must buy the currency of their trade rivals and then hold them. Ergo: if Europe and the US want the yuan to be strong, they must ask for lots and lots of yuan and then HOLD THEM. This poker game is laughably easy to understand. But they don't want any yuan or yen. Europe and the US want the world to do the way we made Germany and Japan do it with first, the Bretton Woods II Accords and the Plaza Accords. In these cases, the US, as the world's reigning empire, ordered everyone to weaken the dollar vis a vis their currencies and so they did. the Plaza Accords caused Japan to go into this huge balloon which pretty much destroyed their domestic economy.

There is this titanic battle going on: the US Titanic is sinking. It is plainly obvious to everyone except in the US, we have to all shout in unison, 'We are NUMBER ONE', not, 'Man the lifeboats!' And the average American should wonder about all those lifeboats that are rowing off to socialist Europe. The very rich need houses in America but want houses in Paris, London or Rome. Just to give a few examples.

Last year, note how all the G7 also wanted China to make the yuan more valuable. Note that there isn't so much as a peep about that, today. The stark contrast is painfully obvious. China wants global trade to resume based on the 2000-2007 status quo. Naturally! But so does Japan. China's gambit of forcing the yen up while demanding the G7 condemn Japan has worked! All discussion about the yuan has been dropped. Not only that, China is the creditor nation, not the US. So they sit in the cat-bird seat and can call all the shots.

Another story I wrote last year on this same day: Non-G7 Nations Mock G7 Dwarves

All the non-G7 nations are mocking the IMF and the entire G7 business. Led by Russia and China, they are trying to get the US and Europe to do something about their financial problems that are threatening the world's banking and trade systems. And it is time to visit Japan yet again, this always bothers me, how the US ignores the challenges of Japan and how the West focuses only on China but can't see how this interacts with Japan and how Japan is not on our side at all. Time to visit the IMF and the CIA web sites to talk about all the numbers and facts pertaining to this matter of US/Japan trade.
*snip*
So far, China hasn't bothered with chiding the IMF. This is because the IMF is impotent due to lack of banking power. The Brazilian and Agentinian ministers are doing the slapping for China. Both go to China for funding now, not the IMF. So they are emboldened to the point of open sassy back talk. The G7 dwarves just had their meeting and ended it in the traditional way: yelling at China while Japan stands to one side, sniggering. While I was visiting the Deep Water Ports in New Jersey, I noted that the Japanese ships were cloaked in anonymity while the Chinese ships had huge names painted on their sides. I constantly harp about Japan because of this cloaking device they use.

See? Last year, it was obvious to me that China, not the US, was now calling all the shots. And Europe understood that. This story was the very last time Europe tried to get China to raise the value of the yuan against the dollar. Instead, both they and Japan switched gears. Japan, later that month of October, 2007, ran off to China and had very, very secret negotiations over the business about the relative value of the dollar and basically, China agreed to call off their campaign to raise the value of the yen vis a vis the dollar and both focused only on strengthening the dollar.

My sole interest in the relative value of all currencies in the goofy, dangerous, unstable Floating Currency Regime launched unilaterally by President Nixon is philosophical. I do not seek to make money, gambling in this very rigged game where players who are not the inside players [Goldman Sachs, for example] try to make a fortune trying to guess what manipulative games governments intend to play. It is a fool's casino, in the end. I want to bust up this game, not enable it. This game is destroying world trade, the United States and might even cause WWIII. Therefore, it is bad and I want it ended.

Evidently, Europe agrees. They lived through WWI and WWII. They caused WWI and WWII. So they have some hesitation about starting WWIII. But they still want unbalanced trade with their supposed ally, the US. And this will cause WWIII just as unbalanced lending and trade caused WWI and WWII. Most Americans are not aware that England was no longer the premier manufacturing nation in 1914. Germany reached equality with England and better for them, DESPITE BEING THE ONLY SOCIALIST NATION IN EUROPE, they had a budget surplus and became the world's creditor power back then! This stunned England and frightened France.

Let me say this as clearly as possible: nations that opt for German-style socialism [NOT Russian or Chinese communism!] always become great powers. They do NOT go bankrupt. This means strengthening the industrial base while protecting, not ravaging, the work force. National health is a key component here. The US got rich by winning WWI and WWII but did this while increasingly imitating Germany. After Reagan won, we chose to become Mexico, not Germany. So workers were wrecked, cheap foreign labor was allowed to ooze across our borders, a flood of imports from cheaper labor pools were allowed and encouraged to pour in and union strikes were basically outlawed.

So the US workforce lost power over their workplaces, their incomes began to decline, and debts rose. Joe the Plumber is this foolish young man who thinks black men are at fault for his frustrations, he thinks socialism will kill him. Yet he is drowning in debt. He keeps piling more and more debt on his home rather than pay it off like his father probably did. He has precarious or even no health insurance. He can't pay his taxes and is in arrears. I feel sorry for the poor sap.

For his power has not been sapped by socialists, it has been sapped by the ruling elites who want to drive this fool into slavery! Within the 'Civil War Recreationists' groups, the vast majority of the game players who love to recreate the past are white males dreaming of the good old South and slavery. I know them, personally, and their dreams. We have argued quite loudly in the past about this. I come from the old Norman upperclass that turned all the once-free people of Europe into our slaves. We called them 'serfs' but we OWNED them. None of them could marry without our permission. Their children couldn't leave unless we got paid. We would go tromping about on horseback, restlessly seeking other estates for extra sons. Each son in the Steele family, for example, the eldest was always named 'Henry' and the second son, 'Richard.'

The 'Richards' are more famous than the 'Henrys' because they had to do more to earn a new estate. But Henry Steele, in the US, was one of the founding members of the Skull and Bones, for example.

The Meinel side of my family came from Germany. 'If you have enough socialism, the peasants will not revolt,' is the motto. So, within the ruling class there is a split: some want all those pathetic Joe Plumbers to be serfs again. The others fear that Joe might bonk everyone on the head and go mad and start a revolution. Even riots are scary! So they support keeping these guys happy. So far, all that was needed was cheap lending below the rate of inflation. But years and years of lending cheap has depleted our entire banking system due to too few people saving money.

So it is now collapsing in a deep, dark pool of red ink. Keeping this system going is the problem for the rich. Who can't resist looting all the rescue operations despite obvious dangers.

Maureen Dowd:

London’s News of the World sent undercover reporters to hunt down the feckless financiers on their $86,000 partridge hunt as they tromped through the countryside in tweed knickers, and then later as they “slurped fine wine” and feasted on pigeon breast and halibut.

The paper reported that the A.I.G. revelers stayed at Plumber Manor — not the ancestral home of Joe the Plumber, a 17th-century country house in Dorset — and spent $17,500 for food and rooms. The private jet to get there cost another $17,500, and the limos added up to $8,000 more.

In an astonishing let-them-eat-cake moment, the A.I.G. big shot Sebastian Preil held court at the bar and told an undercover reporter, “The recession will go on until about 2011, but the shooting was great today and we are relaxing fine.”

There were at least three New Yorkers bagging birds — Jeffrey Malkovsky, a senior director at A.I.G.’s Manhattan office, Hilary James, the general manager of the Bristol Plaza Hotel, and her friend, John Roberts, an A.I.G. adviser.

Oh, how the AIG executives laughed as they gave themselves this 10% bonus for landing the Big Kahoona. This giant $700 billion fish allowed them to party like there is no tomorrow. They feared they would be arrested, not showered with gold!

The news of their wild parties are now circling the earth. Maybe poor Joe the Plumber might wake up and realize his cans of cheap beer are little compensation for him taking on the entire debt load of this bail out. But then, he is blinded to this reality. He wants more funny money, he wants to join the party. He wants to win the lottery.

Many years ago, when NY was going bankrupt, the politicians were told that if we encourage gambling, this would be a HAPPY TAX. People would voluntarily join the games if they had a very slim chance of winning something. The state then takes a huge cut of the funds raised. I voted and lobbied against this. My speeches back then were pretty simple: 'This will kill the work ethic and in addition, kill any desire to pay any taxes. This will undermine democracy and by setting up a very few winners while the rest of us have to keep playing the game, this will destroy the whole basis of democracy which doesn't survive if there is a huge split between rich and poor.'

Well, since 1974, the split between the rich and poor have grown greatly. This is killing our democracy. In elections, discontent with the poor is encouraged alongside luring voters by promising tax cuts and increases in government spending. Today, we pay for our entire, huge deficits by selling our souls to foreign powers who are seeking to turn us into peons. And this is getting worse, not better. The US cannot support ANY tax cuts for the next 100 years! This is hopelessly irresponsible. But if anyone suggests we pay taxes, they are kicked out by the US voters. Who fear socialism but don't fear bankruptcy to Saudi Arabia and China.

AIG to Halt Lobbying Efforts

American International Group Inc. said it will stop lobbying lawmakers and regulators, after coming under congressional pressure and questioning over how it is using more than $120 billion loaned by the government to keep the company afloat.

The financial-services giant has also cancelled about 160 events scheduled for coming months, that were to cost a total of $80 million, AIG spokesman Nick Ashooh said on Monday. Congressional overseers have raised questions over a series of lavish events thrown by AIG in the days after its government rescue last month, including a $440,000 weekend at a California spa for top business producers.

"We're reviewing all of our expenses and activities. As part of that we have suspended lobbying activities," Mr. Ashooh said.

Democratic Sen. Dianne Feinstein of California and Florida Republican Sen. Mel Martinez wrote to AIG Chief Executive Edward Liddy on Friday, telling him not to use its government loan to try and roll back tougher mortgage-industry licensing requirements and other controls.

Gah. Arrest everyone including everyone in Congress who has accepted a penny from AIG. Mr. Ashooh should be paraded down the Central Mall in chains. At the Lincoln Memorial, he can then offer an apology to all Americans. Then we seize everything he owns and I mean, everything. When one of my ancestors went bankrupt, he left his child with NOTHING. She was crying so the sheriff let her keep her dolly, shoes and a small suitcase. Thank you. This creepy gnome still has his many palaces, art and other goodies. This is unconscionable.

Michael Hudson is a former Wall Street economist He was Dennis Kucinich’s Chief Economic Advisor in the recent Democratic primary presidential campaign

These bailout terms suggest that what Wall Street wants is pretty much what colonialist Britain achieved for so many years in India and Africa: puppet leaders with an imperial political advisor, in America’s case a Secretary of the Treasury and a vice-regent as head of the Federal Reserve System. But what the rest of the economy needs is a genuinely free leader able to impose better and more equitable laws to write down debt, not build it up and bail out more bad loans. Within the present administration itself, Sheila Bair, head of the Federal Deposit Insurance Corporation, complained in a Wall Street Journal interview that she didn’t understand “Why there’s been such a political focus on making sure we’re not unduly helping borrowers but then we’re providing all this massive assistance at the institutional level.” She “described painstaking efforts made by lawmakers in crafting the federal Hope for Homeowners program to make sure it limited resale profits for borrowers who received affordable home loans,” by giving the government a share of the rising sales price.

A very good analysis at Counterpunch. The US government's help for home owners is to take 50% of all profits on future sales of houses. But not 50% of all profits from AIG or Citibank or any of the pirate organizations looting America.

U.S., Cuomo Open Credit Default Swap Investigation

(Bloomberg) -- The U.S. government and New York Attorney General Andrew Cuomo opened a joint investigation into the $34.8 trillion credit-default swap market, the top federal prosecutor in New York said.

The probe seeks to ``determine whether any federal laws have been violated'' in the market for the swaps, which function as a kind of insurance contract for bond losses, and will complement an earlier inquiry by Cuomo's office, U.S. Attorney Michael Garcia in Manhattan said today in a statement.

Cuomo has been probing credit-default swap manipulation by short sellers allegedly spreading false rumors about financial firms. Prosecutors are looking at whether they attempted to drive down stocks, including bankrupt Lehman Brothers Holdings Inc., according to a person in Cuomo's office who declined to be identified. The U.S. is also probing Lehman's failure.

Cuomo figures he will be President some day if he gets some scalps. But then, the media will find some flaw in him and he won't win the golden crown in the end. For of course, no one will donate huge sums to him if he imprisons any of the scam artists who are looting America. On the other hand, unless he choses to be a true revolutionary and not just slightly annoy the gnomes, we won't see any change of direction. I know that people are very fearful of 'change' even though that is Obama's motto. McCain's motto is, 'More houses for me and my friends'. Which isn't changing anything at all.

Citi Squeezed in Debt Markets as Wells Grabs Deposits

(Bloomberg) -- Just when deposits became the big prize in banking, Citigroup Inc. missed the brass ring.

The bank's proposal two weeks ago to buy Wachovia Corp. would have created the biggest pool of deposits in the U.S. -- ``unassailable'' as a source of stable, cheap funding and ``well in excess of the next-largest competitor,'' Chief Financial Officer Gary Crittenden said at the time.

Instead, having lost a takeover battle with Wells Fargo & Co., New York-based Citigroup slipped to No. 4 in deposits and has to hustle for them alongside banking newcomers Goldman Sachs Group Inc. and Morgan Stanley. With debt markets in flux and terms of the government's bailout plan changing by the week, Citigroup needs more deposits to temper a surge in the cost of financing its $2.05 trillion balance sheet.

Citibank was on a pirate looting mission when along came Wells Fargo who shot them down and robbed the Brink's trucks. Now that they have the combination to the bank's safe, they can grab the money there and recapitalize themselves while the US taxpayers get stuck, paying for all the losses.

From six months ago, Greg Palast:

Now, Bush, our Debt Junkie-in-Chief, needs another fix. The US Treasury, Citibank, Merrill-Lynch and other financial desperados need another hand-out from Abdullah's stash. Abdullah, in turn, gets this financial juice by pumping it out of our pockets at nearly $100 a barrel for his crude.

Bush needs the Saudis to charge us big bucks for oil. The Saudis can't lend the US Treasury and Citibank hundreds of billions of US dollars unless they first get these US dollars from the US. The high price of oil is, in effect, a tax levied by Bush but collected by the oil industry and the Gulf kingdoms to fund our multi-trillion dollar governmental and private debt-load.

The US Treasury is not alone in its frightening dependency on Arabian loot. America's private financial institutions are also begging for foreign treasure. Yesterday, King Abdullah's nephew, Prince Alwaleed bin Talal, already the top individual owner of Citibank, joined the Kuwait government's Investment Authority and others to mainline a $12.5 billion injection of capital into the New York bank. Also this week, the Abu Dhabi government and the Saudi Olayan Group are taking a $6.6 billion chunk of Merrill-Lynch. It's no mere coincidence that Bush is in Abdullah's tent when the money-changers made the deal just outside it.

Bush is there to assure Abdullah that, unlike Dubai's ports purchase debacle, there will be no political impediment to the Saudi's buying up Citibank nor the isle of Manhattan.

This is why Citibank lost. And this is why the Saudis have to learn more harsh lessons. They will be ripped off, one way or another. The Chinese are very aware of this tendency. They have hedged things sufficiently that if we do rip them off, they can destroy us. This is why the US is very careful to not let the Chinese get too pissed off. The guys pulling these strings figure, the Saudis will still have to play with us since we protect them. We don't protect China. And Saudi Arabia has only one way out: to go to China for protection. This, they are increasingly considering.

Mortgage Bankers to Ask U.S. to Lift Fannie, Freddie Loan Limit

(Bloomberg) -- The U.S. Mortgage Bankers Association plans to ask the Federal Housing Finance Agency to increase the limit for Fannie Mae and Freddie Mac purchases or guarantees of single-family mortgages to $625,500 to bolster the housing market.

The mortgage bankers' residential board of governors is scheduled to vote today on the recommendation, which would call for an increase of 50 percent above the current limit of $417,000, at the trade group's annual conference in San Francisco.

Why are they doing this? Housing prices are falling, not going up. Well, the answer is obvious: the bankers love making huge loans. But hate HOLDING them. So they need to increase the size, volume and speed of growth for Fannie Mae. So it will end up being a totally SOCIALIST program that holds ALL mortgages. 100% of all US housing loans! And then the banks can make infinite money while having $0 in capitalization. This is all part of the future 0%-0%-0% system I keep warning everyone about. This sort of socialism is EVIL. It is statism of the worst sort. Instead of providing health, safety and schooling, the government privatizes all this but nationalizes all housing debts! What a DUMB DEAL.

Note that already, the government is demanding 50% profits on any increase in value of homes being 'rescued' in this latest plan. This is forever. This kills the housing market if people figure, they will get little benefit from selling. And if they try buying a new house and all houses now cost more, they fall further behind and need more debt to do this. It is a debt trap!

Going bankrupt springs one from this trap only Congress voted to close off that option. So we go into this grinding hell where more and more people will end up in this prison where they get virtually no benefit from selling their homes anymore. Why improve it if you can't gain the profits from that? This, in turn, kills my own market: improving houses! Huge parts of the US will turn into slums.

NYT: Consensus Emerges to Let Deficit Rise

Resorting to credit has long been the American solution for dealing with expensive crises — as long as the solution has wide public support. Fighting World War II certainly had that support. Even now many Americans tolerate running up the deficit to pay for the wars in Iraq and Afghanistan, which cost $11 billion a month combined. And so far there is wide support for an initial outlay of at least $250 billion for a rescue of the financial system, if that will stabilize banks and prevent a calamitous recession.

“There are extreme circumstances when a larger national debt is accepted as the lesser of two evils,” said Robert J. Barbera, chief economist at the Investment Technology Group, a research and trading firm.

There are also assumptions that help to make America’s deficits tolerable, even logical.

One is that people all over the world are willing, even eager, to lend to the United States, confident that the world’s most powerful nation will always repay on time, whatever its current difficulties.

“So far the market is showing that it is quite willing to finance our needs,” said Stephen S. McMillin, deputy director of the White House Office of Management and Budget.

Here it is, yet again: smug idiots like McMillin. He is obviously the idiot in charge of figuring out the Bush budgets which were the most unbalanced in American history. So what, if we are selling 90% of these debts to the Chinese and Japanese? He doesn't bother wondering why they are buying our souls. He has no soul.

We will have no recession tomorrow but we will face total economic annihilation in 2012. What a deal! The US public has been sold this bill of goods for 8 years: deficits don't matter. They are all OFF-SHORED. Hooray for that! All my life, even as Presidents ran in the red, we were told this was bad. But now, with Bush running us into the ground, it is suddenly good or at least, the lesser of two evils. So, evil #1 is paying our own way which means we can't spend like fiends. And evil #2 is that we sell our entire nation to the Chinese and Japanese and pray they don't come over here and demand we kiss their feet and become slaves?

Good grief. TREASON, I say! Treason!

China's Central Bank Pledges to Help Fight Crisis

(Bloomberg) -- China's central bank pledged to step up cooperation with global counterparts to help combat the financial crisis that's driving down stocks worldwide and threatening to tip economies into recession.
*snip*
``Economies that are able to, such as China, Japan and the Middle East, should all participate in efforts to ease the financial crisis,'' said Xing Ziqiang, an economist at China International Capital Corp. in Beijing. ``Otherwise it will eventually be a lose-lose situation for all.''

Xing said buying Treasuries may be one way of helping the U.S. through the crisis.

China should take part in the bailout of the U.S. financial system to protect the value of dollar-denominated assets and sustain export demand, Chinese researchers wrote yesterday in the official Shanghai Securities News.

And China is going to save us. And they know what will happen next for this is part of their 50 year plan. One that I thought was thoroughly audacious back in 1986. Well, it is on track and will succeed.

China Shipping's Traffic May Plunge as Exports Slow

(Bloomberg) -- China Shipping Container Lines Co. forecast traffic will decline for the first time in at least four years as the global economic slowdown and a stronger yuan curb demand for Chinese-made toys, electronics and clothing in North America and Europe.

``Traffic will drop at least 10 percent for the full year,'' Zhang Denghui, assistant president of China Shipping (Group) Co., parent of China Shipping Lines, the country's second-largest container line, said in an interview yesterday. ``An even much larger drop is possible, as the full impact of the global economic turmoil is yet to come.''

China wants to restart the status quo. So does Japan. Odd, this article doesn't mention Japanese nor South Korean or even Taiwan shipping. All of which are in the same boat. And all of which are working with China to restart the status trade quo.

ECB's Nowotny Sees Global `Tri-Polar' Currency System Evolving

(Bloomberg) -- European Central Bank council member Ewald Nowotny said a ``tri-polar'' global currency system is developing between Asia, Europe and the U.S. and that he's skeptical the U.S. dollar's centrality can be revived.

``What I see is a system where we have more centers of gravity'' Nowotny said today in an interview with Austrian state broadcaster ORF-TV. ``I see for the future a tri-polar development, and I don't think that there will be fixed exchange rates between these poles.''

The leaders of the U.S., France and the European Commission will ask other world leaders to join in a series of summits on the global financial crisis beginning in the U.S. soon after the Nov. 4 presidential election, President George W. Bush, French President Nicolas Sarkozy and European Commission President Jose Barroso said in a joint statement yesterday.

Nowotny said he was ``skeptical'' when asked whether the Bretton Woods System of monetary policy, set up after World War II and revised in 1971, could be revived to aid global currency stability. The U.S. meeting should aim to strengthen financial regulation, define bank capital ratios and review the role of debt-rating agencies.

HAHAHA. And who will chair this? China, the US or some Europeans? If it is Europeans, they will set up which currencies to be this tripod of power? And where is the yen in all this? And how on earth can they 'set bank capital ratios' when CHINA has the highest ratios and the US and Japan have virtually none? And then global interest rates: is it going to be the high Chinese/EU rates or the 0% rates of Japan and the US? And how to hash all this out?

This conference could be like the disarmament conference run by Britain from 1912-1914. Britain wanted to freeze Germany and Japan's naval build ups, not to mention, stopping the US ships. So they agreed to reduce their navy a tad if everyone stopped competing. Then WWI broke out. And the Brits needed the US to provide them with shipping and the US took over world shipping and the global naval power by 1945. Utterly. And then lost it all from 1974-2008 to the point that we have virtually no merchant marine and a very expensive navy that is forcing us to go to the true naval powers of Asia to fund our navy via loans which we must repay them with interest!

And this is treason. We lost our merchant marine while protecting the merchant marines of the world who are flooding us with imports which our rulers want because this way, they can enslave poor little old Joe the Plumber and others who dream about being owners, not slaves. Gads. What a circle we are in.

Email this post

Culture of Life News Main Page

October 21, 2008 | Permalink | Comments (78) | TrackBack (0)

Socialism Is Good For Workers

October 20, 2008

Elaine Meinel Supkis

As the US tumbles into a bad, bad recession, we are having an election. And there is virtually no discussion about what is really wrong. Indeed, the main focus in this election isn't war or our trade deficit or yawning budget deficit, it is nearly all about race. To the fury of many who want otherwise. But then, from day one in the US, it has been all about race and slavery which were embedded within our Constitution and excised very painfully and often, extremely violently. I will discuss this history later. First, the economic news. After central banks nationalized the G7 banking systems, they managed to sort of restart the old status quo. This is bad.

US industrial output plunge steepest in 34 years

US industrial production plunged a shock 2.8 percent in September, the steepest fall in 34 years, due to hurricanes in the Gulf of Mexico and a strike at Boeing, the Federal Reserve said Thursday.

Hurricanes Gustav and Ike, which hammered the Gulf of Mexico region, a key hub of the US oil and gas industries, and a machinists strike at Boeing that has crippled civilian aircraft production, "severely curtailed output," the central bank said.

The plunge in output far exceeded analysts' consensus forecast of a scant 0.8 percent decline. It was the strongest fall since December 1974.

All summer, the media and our ruling elites trumpeted the great, great news that the trade deficit was declining. It will, of course, continue to decline as the price of oil temporarily retreats. This is because over one third of our trade deficit is energy-related. Also, as people lost their incomes for buying stuff, they bought less manufactured goods as well as energy goods so that causes the deficit to decline. Throughout the last 35 years, the only times our trade deficit declines is during bad recessions.

So it is NOT a sign that we are expanding our international markets. It is more a reduction in US consumer spending. So last summer, we had all this chatter about how our exports have increased. On the other hand, as I expected, we see this fall that industrial production has collapsed! Since the very beginning at Culture of Life News, I have said that Boeing is our major and, aside from other weapons systems, nearly only major industrial export power. The US Presidents spend a lot of time, selling Boeing jets ever since Nixon went to Japan and Boeing got all entangled in bribery of Japanese Prime Ministers afterwards.

The Boeing strike ruins our trade statistics. Since our trade partners have to buy SOMETHING from us, they usually opt to have their governments buy these jets because this doesn't open up their own domestic markets to other US manufactured goods used by ordinary consumers. Recently, Japan chased out a Korean domestic goods manufacturer who has a huge market share in China and the US but ZERO in Japan. But Japan buys lots and lots of Boeing jets. And is gradually prying off of Boeing, significant sections of that company's manufacturing process so that these export numbers are really not real.

They do NOT take into account that the finished jets sold to Japan are partially made in Japan and then shipped to the US for final assembly. This inability to look closely at or understand the dynamics of 'free trade' lies at the very heart of the US banking and industrial collapse. We know that, if free trade is kept in place during this bad, bad recession, when the recession is done, US manufacturing will be a good 10% or more, smaller than before this recession. And since over half of US manufacturing is military, if we stop our endless wars and raising the Pentagon budget by 6% or more a year, that will collapse, too.

But this military budget is a huge burden on US taxpayers and is bankrupting our nation. And exporting all this stuff is not going to fix things since this merely puts off the day when we can't afford to do this any more than Russia could when they went bankrupt. I remember when we could buy all sorts of nifty Russian military stuff like night scopes for very little. We bought a number of Russian military goods during that time including the very warm hats! I kind of miss that now.

But Russia knows that they have to manufacture other things and are slowly changing gears. Also, they have revived their military markets and are selling briskly to people we don't like very much. And are renewing their rocket technology, they fired off more experimental missiles in the Pacific this month and are not only making deals with countries we hope to intimidate but are the ONLY way we and Europe can access that space station! Now, who won the space race? Remember: races don't end when we get to the moon.

McCain, Palin hint that Obama's policies are 'socialist'

(CNN) -- Sen. John McCain stepped up his rhetoric against his Democratic rival on taxes in his weekly radio address Saturday, comparing his plan to "socialist" programs. The remarks were part of a theme McCain has used since the final presidential debate, but his most recent comments were the first time he used the word to describe Sen. Barack Obama.

In the radio address, McCain didn't directly call Obama a socialist, but he let the now-famous Joe "the Plumber" Wurzelbacher nearly do it for him.

"You see, [Obama] believes in redistributing wealth, not in policies that help us all make more of it. Joe, in his plainspoken way, said this sounded a lot like socialism," McCain said Saturday.

I am a pro-socialist who is also a pro-traditional banking and pro-civilization person. I love the opera, love ballet, love fine arts, good wines and other good things. I also like fighting, shooting, hunting and other things which incidentally, were also enjoyed by the ruling elites in the past. I support traditional banking simply because it worked in the past. When it didn't work was always connected with wars so I assume that wars are bad for good banking. Period. So wars should be avoided and taken on only very reluctantly which is why our Founding Fathers did NOT want a standing army.

The stupid 'Joe the White Skin Head Plumber' business is typical of this election. The guy used to belong to a racist party. He has been arrears in his taxes. He hates 'socialism' and you can bet, he will be screaming for socialism when he becomes old if he can survive that long. There is this very significant number of white racists who love to have 'socialism' but hate SHARING it with others. So they have chosen to hate all socialist systems for the time being. Social systems of ANY sort feature taxes. From the dawn of civilization, the one thing that all civilizations have in common is the concept of taxes and the concept of the government protecting the people during bad times.

If a ruler didn't protect the people in bad times, he or she would fail. Either invaders would destroy the kingdom or there would be uprisings and palace coups. This is why all smart rulers don't crush the workers entirely or let them die if there is a food shortage. This is why smart rulers fear food inflation. This can cause French Revolutions, just for one glaring example. Why so many working class Americans hate 'socialism' annoys me. For it is not sane.

Japan had a very extensive social safety net and a lot of socialism in the past. But then, they have a mono-tone society. But lately, the ruling elites have experimented with ripping up this safety net and at last, the people on the street are beginning to show some signs of unrest. So I expect the LDP to repair this broken net, fast. Our other trade rival, Germany, is very socialist and has high taxes. They have a decent trade surplus with the US and others, too.

China does NOT want to be the US at all. They look at us as a goose to be butchered in the end. If you ask any Chinese what system they want, most would say, 'Germany', not 'the USA.' All sophisticated civilizations that wish to be the top export producers and top social leaders on earth are at least half-socialist societies. The US is seen nearly universally as CHUMPS not CHAMPS. When the traditionalist, Bismark of Germany, understood the utility of socialism, he aggressively embraced it and Germany had Social Security 100 years before the US got it! And instantly, Germany became one of the greatest powers on earth, and this was directly connected to Bismark's reforms.

The Guys From ‘Government Sachs’

Indeed, Goldman’s presence in the department and around the federal response to the financial crisis is so ubiquitous that other bankers and competitors have given the star-studded firm a new nickname: Government Sachs.

The power and influence that Goldman wields at the nexus of politics and finance is no accident. Long regarded as the savviest and most admired firm among the ranks — now decimated — of Wall Street investment banks, it has a history and culture of encouraging its partners to take leadership roles in public service.

It is a widely held view within the bank that no matter how much money you pile up, you are not a true Goldman star until you make your mark in the political sphere. While Goldman sees this as little more than giving back to the financial world, outside executives and analysts wonder about potential conflicts of interest presented by the firm’s unique perch.
snip*
“There is no conspiracy,” said Donald C. Langevoort, a law professor at Georgetown University. “Clearly if time were not a problem, you would have a committee of independent people vetting all of the potential conflicts, responding to questions whether someone ought to be involved with a particular aspect or project or not because of relationships with a former firm — but those things do take time and can’t be imposed in an emergency situation.”

In fact, Goldman’s admirers say, the firm’s ranks should be praised, not criticized, for taking a leadership role in the crisis.

“There are people at Goldman Sachs making no money, living at hotels, trying to save the financial world,” said Jes Staley, the head of JPMorgan Chase’s asset management division. “To indict Goldman Sachs for the people helping out Washington is wrong.”

Goldman Sachs gnomes are 'leading' us to the slaughter. They have destroyed America. All the choices they have made are wrong. We are in the present mess thanks to them! How can anyone sane praise this utter take-over of our Treasury, the Federal Reserve, Congress and many state houses as a good thing? We are way, way down the wrong road and we are there thanks to them! Goldman Sachs should be investigated and the people who are 'serving' us this stew of destruction, they should be arrested for treason.

Treason is NOT offering simple socialist programs like the ones Germany has had since 1860. Treason is free trade which has driven the US into deep debt and destroyed nearly all of our own industrial base. Treason is destroying our entire banking system to a degree not seen since the Great Depression. Treason is trying to restart this very bad status quo. I am glad the NYT is finally telling us about these stupid ruling elites from Goldman Sachs. But note that they confuse readers by praising these clowns!

And that law professor: who says we don't have time to discover exactly how connected the guys 'rescuing' us are to the guys who created this problem in the first place? In my mind, NO rescue is possible without first finding out WHO SCREWED UP. And then punishing them. We don't wait to see if these very same criminals can save us, first! If we want this done in a hurry, I think it can be done in less than one week. When I went to Congress, there was some rather frightened talk about the possibility that Americans might put 2+2 together and attack Goldman Sachs but that has faded. Now, with the media telling us these pirates are rescuers, all is well. The status quo will continue for a while longer.

Wall Street banks in $70bn staff payout

Pay and bonus deals equivalent to 10% of US government bail-out package

Staff at six banks including Goldman Sachs and Citigroup are in line to pick up the payouts despite being the beneficiaries of a $700bn bail-out from the US government that has already prompted criticism. The government's cash has been poured in on the condition that excessive executive pay would be curbed.

Pay plans for bankers have been disclosed in recent corporate statements. Pressure on the US firms to review preparations for annual bonuses increased yesterday when Germany's Deutsche Bank said many of its leading traders would join Josef Ackermann, its chief executive, in waiving millions of euros in annual payouts.

Goldman Sachs rewarded themselves. So did the JP Morgan pirate community. The gnomes knew they could skim off 10% and hoped to get away with it. It was NOT headline news in the US media until the Brits broke the story. Thanks to the Guardian, most Americans now know the ruling elites used this damned rescue to reward themselves. This last week, the AIG gang went off to Scotland on a multi-million dollar jaunt to shoot grouse and grouse about the peons interfering with their fun. They drank expensive brews and brooded about the unfairness of life. Why, we are criticizing their efforts to cultivate contacts via these wonderful parties where they fly about the planet in their private jets!

This, too, was in the British news, not American news. US newspapers don't send reporters snooping around Bilderberger gatherings or if ABC sent a reporter to check out who was at the Democratic party's corporate parties held by the super-rich, the reporter is beaten up by the cops. At the Republican party, the media didn't even try to do this. Any reporters reporting on the demonstrations was beaten up or arrested, too. So this guarantees the media won't look at anything, anymore. And they don't look much at all. But the news that AIG got tens of billions from US taxpayers and then went off to have expensive parties has leaked out via the internet. Joe the dumb Plumber doesn't talk about this. He hates worker's socialism, not corporate socialism.

Paulson's Capital May Bring Blackstone, Carlyle Back

(Bloomberg) -- The U.S. Treasury's pledge to inject $250 billion into banks may coax private-equity leaders Stephen Schwarzman, David Rubenstein and Henry Kravis to resume investing after more than a year spent mostly on the sidelines.

The founders of Blackstone Group LP, Carlyle Group and KKR & Co. LP told investors in Dubai this week that the biggest government intervention in the financial system since the 1930s will help attract private capital to lenders. The U.S. plan, following similar steps by Britain and other nations, may lead to investments of tens of millions dollars, not the $20 billion- plus deals that capped the leveraged-buyout boom of 2006-2007, they said.
*snip*
``There's a crying need for capital, and now there's a chance that the government will invest alongside,'' said Rubenstein, the 59-year-old co-founder of Washington-based Carlyle, whose $80 billion in assets rank it second in the buyout industry after Blackstone and ahead of KKR.
*snip*
Participants described a buyout world that differs markedly from its peak, when debt-laden deals such as the $43 billion acquisition of power producer TXU Corp. and the $26 billion takeover of Hilton Hotels Corp. brought the once quiet industry into the public spotlight. There have been $194 billion in announced buyouts this year, a decline of 70 percent from the same period in 2007, according to data compiled by Bloomberg.

Hooray for socialist spending on pirates and gnomes! Isn't this damn cute? At the very least, one would hope that the GOP working class supporters would figure this simple math out: They PAY $trillions of dollars to bail out and fund corporate banking criminals who plan to CUT social security to the workers supporting them via future tax burdens. On top of this, these cheeky chaps are telling Mr. and Mrs. Joe Plumber that due to this future tax burden, why, THEY must lose social security! HAHAHA.

The only reason I see so many white working class people supporting this insanity is pure racism. I can't fathom any other reason as to why American workers, unlike workers in nearly all other sane nations, are slitting their own throats.

The Federal Reserve's graphs showing how much banks are borrowing to stay alive are shocking:

Here is a close-up look of the critical period from July 17, 2007, when the Japanese carry trade began to seriously unwind, to the end of September when the derivatives risk swaps collapsed in chaos started the present stampede to the Federal Reserve to get 'capitalization':

All past banking crisis eras, we never, never saw this level of bank borrowing from the Federal Reserve. Never. Even the 9/11 savings was only $12 billion and was considered to be a huge, huge intervention. Since then, as Goldman Sachs took over even more parts of our government, we are now enmeshed in a situation where the amount is rapidly heading towards a trillion dollars! Instead of discussing this, again, our media and the politicians won't talk about this at all.

Ron Paul and Kucinich are the exceptions and they seldom are in the mainstream news. Now, I know that many Ron Paul supporters are angry with me because I am mad at Paul for hanging out with a very, very racist Republican Party. I warned him, he should cut his ties if he is sincere about what he thinks and says. But he will NOT. Not even after, in Texas, his own supporters were locked out of the GOP convention! So I am assuming he values something in the GOP and that something is rather ugly. No revolution can happen without embracing the slogan, 'EQUALITY, Fraternity and Country!' Germany's fling with inequality under the National Socialists was a total failure which led Germany into nearly total destruction and the dismemberment of the entire nation.

European leaders press for new economic order

(AP) — The idea is ambitious: World leaders joined by aides to the new U.S. president-elect would gather before the year's end in New York and attempt to forge a new vision for the global economy.

French President Nicolas Sarkozy has teamed up with British Prime Minister Gordon Brown to press for such a summit, and the French leader travels to Camp David this weekend to lobby President Bush to sign on.
Brown, buoyed by the praise he won for engineering a British bank bailout that inspired U.S. and European rescues, is proposing "radical changes" to the global capitalist system, including a cross-border mechanism to monitor the world's 30 biggest financial institutions. Sarkozy has floated the idea of reforming rating agencies and even exploring the future of currency systems.
Details remain vague and the obstacles are many.
*snip*
Behind the lofty rhetoric, Brown and Sarkozy are backed by a degree of clout.

They have proved instrumental in the past two weeks in corralling European governments to dig deep into taxpayers' pockets to shore up banks, unfreeze credit, and soothe markets.

Charming duo. They persuaded Europe to burden the taxpayers to sustain the crummy banking system? HAHAHA. The market Europe wishes to soothe it the unbalanced global trade markets. They need to keep it out of balance and to do this, they have to prop up the present banking system. But they are aware that this is now impossible under the dying dollar regime so they want another Bretton Woods so they can figure out some clever solution. Even desperate enough to talk openly about returning to the gold peg! Only no one can do this and have infinite growth!

The desire for infinite growth has not died at all. Everyone wants this because it is immense fun. This is why I talk about the real roots of all wealth and how the invisible beings who control this system operate. It isn't a joke or an attempt at being childish. It is the harsh truth. The only way global trade has any stability is when an empire can compel some sort of system and using military as well as economic powers, enforce their rules on everyone.

This is what is failing today. Asia and Europe are NOT on the same page here. Europe wants the US to be stronger and stronger, militarily, so it can defend Europe's market shares including the very important shares with the US. All of Europe runs trade surpluses with the US. They intend to keep this no matter what! Asia is the same except China does NOT want US military power in Asia. So this is a very significant split. When world economic leaders meet to hash out how to keep the status quo going, China's only interest is to insure that this status quo continues to bleed the US dry. Europe wants to prop up the US, China wants the US to go bankrupt.

Since Europe still will not spend much money on defending themselves and since Japan cannot defend itself due to its size and declining young population, if the US goes bankrupt, Europe will be totally exposed to Russian domination and Asia will be dominated by China. Both Russia and China know this which is why they support Europe's bail out plans for the US. They hope dearly that Europe will go very deep into debt to bail out this system. And burden the taxpayers there with supporting a collapsing capitalist system. While still trying to be socialist, incidentally. All of Europe absolutely adores socialism.

Britain faces deflation for first time since 1960

The Monetary Policy Committee last week unexpectedly cut rates by a half percentage point to 4.5pc in the face of the financial crisis. However, there is also growing evidence that inflation, which has risen above 5pc in recent months, is set for a dramatic fall. The Retail Price Index – the most comprehensive measure of UK high street prices, will drop at an almost unprecedented rate to -2pc by the second half of next year, according to new research from Fathom Consulting.

It said the fall was largely due to the drop in mortgage costs and house prices, which together form a large part of the RPI. However, lower food and energy prices would also play an important role. Since modern comparable records began in 1956, the RPI has dropped into negative territory only once, in the late 1950s and early 1960s, but it only dropped as far as a rate of -0.5pc.
*snip*
Whereas high inflation tends to encourage borrowing, deflation encourages saving and, as a result, discourages companies from investing and spending today what they could save for tomorrow.

If the UK is facing deflation a la Japan, so is the US. The only reason we are not facing the exact same fates is simple: our trade partners want us to inflate our way out of this mess so we will resume buying their trade goods. So we will be allowed to reinflate our economy. And China, Japan and others will continue to inflate their FOREX reserves. Which will be used to lend money to the US and thus, buy up all our banking, industrial and infrastructures.

Interest rates to hit lowest level since 1694

The Bank of England faces cutting borrowing costs to beneath two per cent - or even as low as one per cent - within months as it battles to protect Britain from the financial crisis and the worst recession in decades, economists said.

Such a drastic move would bring rates, currently 4.5 per cent, to their lowest level since the Bank was founded in 1694.

The rate cut would be good news for borrowers, who have faced sharp increases in their mortgage rates as embattled banks have raised the cost of borrowing in recent months.

However, it would be a blow for Britain's savers, who have seen their almost £1 trillion worth of deposits eroded by 16-year high inflation.

I keep saying, 0% interest is impossible and even evil. Japan got away with this only because they discovered how to use their FOREX reserves to fund their banking system and they also prevented their own people from getting any cheap loans at all so 100% of this 0% lending went ONLY to their own industrialists who were exporting. And critically, to US and European banks! Who happily slid into this 0% lending trap. Now, our bankers are imitating this 0% interest only we have no FOREX reserves to back this up.

The meeting these clowns are planning to rebuild the global monetary system has to have some historian to stand there and scream, 'YOU CANNOT HAVE ZERO INTEREST RATES! Japan can't do it! You can't do this!'

None of this is going to fix the overinflated real estate markets. Only rising incomes can do this and incomes are going down, like in Japan, not up. This is also all about socialism: it is more important to have good housing and to be careful with national finances than to have wild bidding wars over properties due to super-cheap lending.

Give reckless bankers ASBOs says trade union leader

Mr Fletcher, the deputy general secretary of Napo, the British probation officers' union, said that speculators who had acted irresponsibly should be given an Asbo and banned from working in financial services.

They should also made to sign "acceptable behaviour contracts" like young offenders, in which they would promise never to repeat their offences, he added.

Mr Fletcher said he could not see any difference between the misery inflicted on the public by young criminals and the financial pain brought on by the credit crisis.

HAHAHA. Arrest them all! But why have this wimpy 'sign a good behavior contract' when the real solution is painfully obvious. Now, we go to the rising industrial/economic giant, China, to see how THEY are handling this problem:

Ex-Beijing official gets death sentence

(AP) -- A former Beijing vice mayor in charge of overseeing Olympic construction projects has been given a death sentence for corruption, a court clerk and his lawyer said Sunday.

The Intermediate People's Court in Hengshui, a city outside Beijing, ordered the death sentence Saturday after finding Liu Zhihua guilty of taking bribes, said a court clerk who would only give his surname, Ma.

However, the sentence was "suspended" for two years, Ma said. The reprieve means if Liu shows good behavior, his sentence will be commuted to life imprisonment.

Um, who will succeed here? Britain or China? The fear of a slap on the wrist versus a bullet to the back of the head? If the GOP is at all serious about all those pathetic Joe the Skin Head Plumbers, they would be talking about punishing the bankers the Chinese way, not giving them a 10% cut of all rescue operations.

China to help Pakistan out of economic crisis

(Reuters) - China has assured Pakistan of help to get out of its economic crisis, the Pakistani ambassador to Beijing said on Friday, but he gave no details and did not say if China had agreed to urgently needed new loans.

Pakistan, a nuclear-armed U.S. ally, is struggling to come to grips with a financial crisis. Islamabad's rapidly dwindling foreign reserves are at their lowest level since 2002.

It needs $3 billion to $4 billion or it risks defaulting on a $500 million bond due to mature in February, economists say.

China, not the US, is taking over all global rescue operations. China just announced they are going into a joint nuclear power plant building project with Pakistan. Pakistan borders China. And a province of great trouble for China is the one that borders Pakistan. China does NOT want Pakistan in chaos and most certainly does NOT want Muslim radicals running Pakistan. So China, alarmed at the mess there, is rushing in to save Pakistan and will bend all their will towards this project.

Nor do they want Pakistan broken into pieces like we tend to do to any nation we 'help'. Russia also wants Pakistan intact and non-radicalized. So they, too, are courting Pakistan's rulers quite successfully. And this is what a huge FOREX reserve can do: rescue operations as well as currency controls. And the US doesn't understand this at all. We think, we can just print up money, not buy rubles, yuan or yen.

Email this post

Culture of Life News Main Page

October 20, 2008 | Permalink | Comments (83) | TrackBack (0)

Some Fun Poems From Readers

October 19, 2008

Elaine Meinel Supkis

Some readers have sent me a series of really nice poems so I hope everyone isn't too unhappy with comments or cartoons I publish here and instead, enjoy some sarcastic or lovely poems. I do hope everyone realizes that I enjoy debates here and welcome any and all comments. I don't get mad if people have other opinions, far from it! In diversity lies knowledge! The act of debating things leads to understanding. And the value of poetry is, it transcends all of this for it is a love of language and all debates are improved by using language playfully and spiritually as well as mockingly. I want to thank everyone for sending these poems!

The Link for Shedlocks' piece today......http://globaleconomicanalysis.blogspot.com/2008/10/worthless-guarantees-and-printing.html

Shedlocks' Worthless Guarantees and Printing Presses

Read Shedlocks' piece on the net today
Warm on my couch I shivered anyway
For it was worthless guarantees and printing presses
Mish, he knows all the stresses

Rudd, Sarkozy, Merkel, Barroso and Junker
Damn but the worlds' become a klunker
Over and over I think of possible druthers
In the end, I fail, its' Sally Struthers

Mish is complete, he finally 'cludes Brown
All will be well for he is of renown
He mentions blankets and breakups
I've begun to get hiccups
All these governments, they only know stickups!

Collapse and printing presses jump up to see
Yes the futures in buying guarantees
Worthless, Hells Bells and pussyfoot come to the fore
We've heard it all before

Guarantees for 5 years, close scrutiny for 1 year
Yes, it's all crap, just crap we fear
Declaration, creep, scream and temporary crunch
It's definitely all of a bad, bad lunch

Mish must recline, his days' work done
I look at my stocks, the works' just begun!
My sandwich so cold with lettuce wilted and sad
My financial life is headed for the slab...I'm going mad

An Empty Pot Sold as Beautiful Futuristic Flowers To Be

Or, so say our gilded and sage political powers
It is little that they know about flowers
It simply is not within their self-honored powers
When they announce Beautiful Futuristic Flowers
The public knows in their own minds, such sours

The world announced today that billions arrive at the rescue
Tomorrow is the icing on the cake, it is all so fake
For the public knows the true scent of fescue
This government promise, has no rescue

The stock market rose on hopes high for all time
Too bad, it was based on odorific, debt based financial slime
Financial algae from the bottom rises
It's all so predictable, there are no real surprises

Trillions have gone to Europe, right soon
Will prove to be no life-saving boon
Too soon the congratulantions rise
The future, coming soon enough, will show no surprise
Currency swaps, they will meet their demise

The pundits wax, the pundits wane
As our once proud economy is slain
A financial corpse so soon to be
It is plain for any to see
Especially for those who can look at empty pots and Beautiful Futuristic Flowers to be
Knowing the difference, as so few can see
Rescues? They are not to be
For it is plain for any to see

Jim Strong 10 13 08

Jim Strong 10 12 08

WHILE WATCHING THE BLOOMBERG NEWS
(A group of spontaneous impressions with no Freudian slips intended)
Jim Strong 10 12 08

ROCKIN CHAIR MUSINGS

Had money in my wallet
I remember it well
Will I roll a wheelbarrow full?

The man in the box says not to fear
Henry Pauslon's almost here!

I pull a long draw on my crushed half-cigar
Truth has already long gone afar,
And I'm goin' fast, like my cigar

Paulsons' not comin', its' not to last
He stutters out fairy tales, its' a blast!

Hes' smokin' somethun', and it ain't a cigar
I think of Cash, and Johnnys' last tune
Yes, I'm thinkin' of "When the Man Comes Round"

Jim Strong 10 8 08

COLD DAYS AND DOLLARLAND

It's coldest in winter going downhill
Get the jacket tight before the spill

The speed is fun, the drop supreme
Skiings better than chasin' green

Most things are good that are fast and true
Strange to feel joy when turning blue

But if you are a dollar going downhill
Paulson will tell you to slow it down

He loves green dollars and dreads the blue
For blue is death, oh, oh so true

It's best a skiier to be, no debt and free
Chasin' dollars in Dollarland gives no glee.

Jim Strong 10 08 08

GREENSPANIARDS DiSCIPLES (Goldspaniards Fate)

Yes. It's there, so plain to see!
Bernanke and Pauslon
Feathered on the wind
Gone

From sanddollars
To Dollars
To sanddollars all

The planners advanced
As all looked askance
Lost Booty in a sea of banks

Columbus would weep
While Americans sleep
Marooned on sandbars of banks

For the Spanish Main was all in vain
Huge Booty grabbed for the tranches

He who had wealth
Found it taken by stealth
Lost in bags of bad ranches

Yes. It's there, so plain to see!
Bernanke and Paulson
Feathered on the wind
GONE........ So Long!

Jim Strong 10 08 08

The Sanddollars' Return

The sanddollar died
With the dollar astride
The minds of all on the planet

Now the sanddollar sings
As the dollar swings
Widely on the gibbet of Bernanke and Paulson

No gold can one buy
All Asia has claimed
Vast bullion upon the planet

Once Islanders used the sanddollar for trade
And, again, the sanddollars' stock rises
Once again led by half-vast ideas
We shrink, draw back and sheathe our own biases

Jim Strong 10 09 08

Remembering the Ways of US GRANT

I wake to the sounds of smoke and long guns
Been dreamin' of old battles and rising suns

The tv is shooting sound to my brain
It's Billy Maze...the cause of the pain

The Bloomberg Beauty winks and cajoles
Damn, hold on to your Chinese shoe soles

Paulsons' stuttering magic is shaky and stressed
Pack the stuff, Love, for we're movin' West

Brewed some coffee, and it warmed my soul
The Boss just called, he's in a hole

My friends at work have left the plant
It's lonely there, I take up the slack

I vision the day when we look in the eye
And part for all time my brother and I

For he is the one who built the plant
He ran it well, like US GRANT

Jim Strong 10 09 08

A Wild Ride with a Coffee Cup

It's Deidre with swordpoint eyes
As a Bloomberg Joan of Arc
She floats from the screen
Sure, deadly, well paid and sharp

Perfect teeth, no hair out of place
Wallets o'er the world slip out into space
Other empty pockets wander down the street
They all remember when times were sweet

The news of today, out front from the outer spaces
Will it mislead the horses from their traces
For all has changed, and we are off to the races
The Chinese all scramble, holding onto their faces

My Banker, he knows things are afoot
Silent and quick he steals thru the door
With a worried look
At a loss he wondered what his mind was for
And, in the end had a wild ride with his Coffee Cup
I'm SURE!

Jim Strong 10 09 08

Sensing New Life for Our US GRANT

Wealth and weal from the land of steel
Has slowly morphed to the land of steal

Grain once raised for our hungry crowds
Now sails the seas for other crowds

Our coal cars roll for anothers' fires
We seem to be all tied in wires

Yes, digital's our game
Edison and Einstein see all in awe
Electrons must flow
And we once conscious lose ourselves in cold cyberspace

Our swords and plowshares once common and proud
Now risk coming from elsewhere, flawed and dull
Like castoffs from afar
Which they are

It's Marx and Engles at the fore
However did they reach our shore?
A Northern Command now opens its eyes
We ourselves in a new guise

How will we ever get it back
With horses tired and traces slack
Electrons dwindling and cyberspace fading
Once more I dream back
Once more on this day, it is US GRANT

Jim Strong 10 09 08

Smiling Queen

Yup, it's a foul T-shirt, cruddy whiskers, some crust in my eye
I focus so badly, it's drudge to my eye
It really is Drudge upon the screen
So dusty and spotted he can hardly be seen
The news and its writers so columned and clean
The markets are sinking, like never been seen
These days all scrambled, I never get sleep
I'm going back to bed with my Smiling Queen

The Boss he's a'callin, our stock has fallen
Our thinkin' caps on for the Market Caps gallin'
All fingers are flying, the keyboards rattlin'
Are secrets kept, there's fear of TATTLIN'

The cigarette burns, its' smoke slowly risin'
I think of teepees on the horizon
Times of old bows beckon so well
It is hard to think in this living financial HELL
I crush the half-burned expensive weed
The tv sounds like it's Boss Tweed
Once again

This money stuff beats all I have ever seen
Yes I'm goin' back to bed with my Smiling Queen

Jim Strong 10 09 08

Marxist Coup, Adieu?

Not suspected this Marxist coup
It was all so subtle, smooth, and so suave-oo

The banks will all be government owned
The whole world awaits the annointed one cloned
The houses long gone, new occupants planted
Only greed wanted it all with Power for granted
Like water over a fall...to
To

Thirsty waders, all hungry, angry, sunburned, ragged and all
Anxiously waiting for Manna to fall
They get in a new house waiting line
Government redistribution so sublime
Their wish so surprising, not what it seems
Wakes all so crudely, to vanquished dreams
And neighborhoods filled with unappreciative ones
This time the deeds really been done?

Some politicians and revolutionaries have been of like mind
Born in the dark with no light of reason
Biding their time and planning all seasons
Their machinations have all led to treason

Houses for all and medicine for free
Money need only be picked from the tree
The sweat of hard workers is for someone else
All will live in the same crummy house

No Congress is needed with the messiah to be
His wisdom and grace we are told will be
Lies vacant truth will be soon to see
For the so-called messiah is only the same hack
As the worlds' seen so much of before..They're BACK!

Jim Strong 10 09 08

SETTING TO SEA IN A COLENDER BOWL

Setting to sea in a colender bowl
Clenched tight together these fear gripped souls
Wide-eyed and breathless
With mouths gaping and speechless
Their departure had been indeed, careless
...And hasty....And hapless

The drop had consumed their total worth
Paper printed proved an ultimate dearth
Their plans were grand, the stand had been proud
Now, they're lowest lowest and nearly bottom bound

Dodd, Frank and Cox had done their best
Pelosi had screamed her nastiest
$700 billion had not met the test
Swirling faster down into the Earth
The Federal Reserve sucked dry
Has fatally faded under the scud-speeding sky

The Italians a world meeting seek
Having spotted the fatal leak
A new order is what they seek
Wish we all could have a peek

Each time the powerful President speaks
The markets expand the fast flowing leak
It's instant answers we demand and seek
Leaders' wisdoms are not so shiek
With their every vowel....
The markets, they howl...and shrink

The colender floats further from the shore
Ever lower that's for sure
Bernanke and Paulson white and grim
Bail with both hands against a loss of trim
Now small, distant with a final list
For... they are now one-inch from disappearing into historys' mist

Jim Strong 10 10 08

Oil, Ships and Letters of Credit

Friction-free as Popeyes' goil,
Simple humor, yes, easing the toil
Barrels flowing, rolling and emptying each day
A satisfied world lives well, but the cost isn't hay

Miracles of the modern age, Hooray!
Ships sail smooth, oil greasing the way
They line up like ducks as they near the port
Gettting to dock is the worlds' best sport

Clogged letters of credit now threatening the flow
Now everything's going slow
Shaken bankers now huddle and whisper
It is now time to fear for your sister

Clogged ports growing tight
All trades in fast flight
Workers vainshed to hills afar
We clench our teeth and wish on a star

While we smile about Olive-oil
We cringe in fear, now, about our oil
For low riding ships now crowd our offshore horizons
And we restlessly sleep with our oil-filled visions

Needed good news instead of somethun' gallin'
Oil and hay they have now fallen!
The Bloomberg news now smiles today
Not seen often these days
Boy! Oh, Boy! We're going to pay!

Jim Strong 10 10 08

My Last Dollar

The crumpled and balled bill left my hand
Its' value nil, its future sand
Sped along its perfect parabolic course
Ricochetted in a dusty cloud, of course
Off the wall with no sound it fell
To arrive amidst the others that had flown so well
Swell

An end so sad
No more use to a bourse
Won't even buy a ride on a horse
Its green intricacy hidden now from view
I remember a pocketful...a slew

For the dollar has met its end
Its gone fully 'round the bend
And to the can I have no more to send
It's for sure and certain.... THE END

Jim Strong 10 10 08

Bloomberg Girls

I do not know their numbers anymore
The come and go, I can't keep the score
Shiny beautiful faces with moving lips and phrases so quick
I don't see how they keep their lipstick

Eyelashes flutter and papers nearby rustle
Damn, I sure know they can hustle

Rapid info they pass around
I am speechless, can't utter a sound
It's so un-bee-leev-able
My mind spins, it's so in-cal-cul-able

With numbers so sad and mass info to sort
I am on mental abort
My Parents wisdom comes out of the blue
Memories wise stock my mental stew

Kaleidoscopic defragmentation conquers my mind
The beauties swirl with their moving lips and phrases so quick
They won't disappear, try to think of St. Nick

Oh, those beautiful faces with moving slick lips and phrases so quick
In their secret mind they are thinking of that significant other, maybe it's Dick.

Jim Strong 10 10 08

It's Architects They Aim to Be

It's architects they aim to be
With all our money it's plain to see
Bernanke and Paulson powers to be
It's architects they aim to be

Ayers and Rezko are main in a fresco
A fresco Ferguson sees as so risko
He's building a case, so powerful and tight
A big ones' plans are about to take flight
RICOs reach is long and tight
A slippery ones' past is not so bright

Bernanke and Paulson powers to be
Care not who the President be
All power surrendered by Congress you see
Bernanke and Paulson have no need to flee
For its architects they aim to be

A new world order is coming you see
Piles of dollars far as the eye can see
Building castles of power as housing crumbles, you see
Yes, it is architects they aim to be

Forty billion a month F and F must buy
Our economys' smoke climbs in the sky
The bailout screams as letters of credit die
Our money, our credit on the fly

It's architects they want to be
A new world order for all to see
It's so stupid and dumb with their spastic thumbs
The whole country is taking TUMS

The banks may close, a holiday free
They need to be strengthened with our dollars you see
Dollars as bricks sing their song to be
For its architects they want to be

Printing money is as sweet as honey
THey are ready for that now, Sonny
With unlimited ink, it'll be done in a blink
Really! Yes Really! Before we can think!

Slowly we are all beginning to see
It's not us they are serving so well
It's money and power and in a castle to dwell
For they are building hard and they are building fast
The castle high in which to last

The castles' moat will be wide and deep
After all it will protect the keep
They need it all to build their dream
Damn it all we want to scream

Yes it's architects they want to be
Historys' angels for all to see
And they cannot get there at all you see
Without picking our big money tree
For it's architects they aim to be!

Jim Strong 10 12 08

I am publishing some reader's poems. Want yours published? If so,
what name do I use?

Elaine
On Oct 12, 2008, at 7:39 PM, Anthony Oertel wrote:

> My name is Anthony Oertel. I understand the American empire and
> economy will collapse soon. However, I have written some haikus that
> may last forever. I would appreciate your opinin of my poems.
>
> Sitting in a room
> Unfamiliar to me
> Sidetracked by daydreams
>
> Her skin's smooth terrain
> Traveled by my fingertips
> Again and again
>
> Brown eyes shine brightest
> In the absolute darkness
> Of a tortured soul
>
> I built a new soul
> Using the remaining pieces
> Of my broken dreams
>
> I always wanted
> You to fall in love with me
> But did not know how
>
> Spirits pass through me
> On the same wind traveling
> Over my body
>
> The road I travel
> Can't know my destination
> But it supports me
>
> I get close to you
> You lean forward with a smile
> Our eyes close to kiss
>
> Moonlight and midnight
> Walking downtown boulevards
> Under neon lights
>
> Under troubled skies
> People scurry for cover
> Leaves dance on the wind
>
> Sometime memories
> Reappear in night's quiet
> And I can't escape
>
> San Francisco night
> Two birds fly past my window
> Your face in the fog
>
> Lovers in search of
> Barren, isolated places
> To hide broken hearts
>
> A lie silences love
> As an empty heart echoes
> Sobs of betrayal
>
> I know what I've found
> Every time you're around
> Sight, touch, taste and sound
>
> You lost one lover
> You thought it was all over
> You ran for cover
>
> The night air crackles
> A footstep breaks the silence
> We are on our way
>
> Naked emotions
> Am I only what I feel
> When I look at you?
>
> The small of your back
> A sweet spot for massaging
> S-shaped oasis
>
> We walk through a dream
> Two shadows from one moonbeam
> We're not what we seem
>
> I awake at dawn
> A lonely companion
> To my surroundings
>
> Wild nights by firelight
> Smoke and sparks jumping upward
> To a cool climax
>
> We meet on the street
> You put your arms around me
> We walk hand in hand
>
> Rain on the windshield
> Rainbow in rearview mirror
> Black cloud overhead
>
> Without a shadow
> Love can stand unrecognized
> In the light of day
>
> I'm on the outskirts
> Is there a map to your heart?
> A road paved to love?
>
> Wake me up slowly
> As the darkness disappears
> Around you and me
>
> I sit in silence
> Listening says, "I love you."
> Louder than my words
>
> An inner vision
> Only when you close your eyes
> And see past the dark
>
>

October 19, 2008 | Permalink | Comments (27) | TrackBack (1)

Money Matters

Tip Jar

Recent Posts

Recent Comments

Archives

Carry Me Home, Sweet Japanese Bankers!

History of Chinese Trade and Money

Synthetic CDOs Slit Many Banking Throats

Nothing New Under The Depression Sun

Yen Rose Last Night To 90 To The Dollar!

The Yen Continues To Rise, The Carry Trade Is Dead

End The Fed Demonstrations November 22

Joe the Poor Plumber And The Bank Rescues That Kill Him

Socialism Is Good For Workers

Some Fun Poems From Readers

About