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TonyGosling
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Location: St. Pauls, Bristol, England
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blackcat
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 Posted: Fri May 30, 2008 6:41 pm Post subject: |
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http://www.learcapital.com/marketcommentary/6731.html
| Quote: | THE SHELL GAME
Written by
Darryl Robert Schoon
Posted on
27 May 2008
Modern economics is not rocket science. In fact, it’s not science at all. It’s a game, a confidence game. Once paper passed for money, economics became an elaborate shell game designed to hide the fact paper had been substituted for silver and gold. Debt ratings are an attempt to quantify confidence in paper assets and are an essential part of the game. The shell game is called “Where’s The Money?” The answer is simple, it’s not there.
The question “where did the money go during the Great Depression?” has now been answered to my satisfaction. During the Great Depression, money essentially disappeared and, as a consequence, consumer and business demand collapsed as did prices, beginning a downward coreolis-like spiral that was to suck the global economy into an economic black hole.
My study of the Great Depression began in the 1990s and the subsequent collapse of the dot.com bubble provided a real-time corroboration of assumptions about the connection between loose credit, excessive speculation, and financial bubbles; and, now, in 2008, one of my most troubling questions about the depression has been answered—where did the money go during the Great Depression? |
| Quote: | For details on how the shell game is run, Professor Antal E. Fekete’s description of the check kiting scheme between the US Treasury and Federal Reserve provides crucial information for those perhaps wishing themselves to live off the earnings of others.
It is epitomized by an elaborate check-kiting conspiracy between the U.S: Treasury and the Federal Reserve. Treasury bonds, contrary to appearances, are no more redeemable than Federal Reserve notes. It’s all very neat: the notes are backed by the bonds, and the bonds are redeemable by the notes. Therefore each is valued in terms of itself, rather than by an independent outside asset. Each is an irredeemable liability of the U.S: government. The whole scheme boils down to a farce. It is check-kiting at the highest level. At maturity the bonds are replaced by another with a more distant maturity date, or they are ostensibly paid in the form of irredeemable currency. The issuer of either type of debt is usurping a privilege without accepting the countervailing duty. They issue obligations without taking any further responsibility for their fate or for the effect they have on the economy. Moreover, a double standard of justice is involved. Check-kiting is a crime under the Criminal Code. That is, provided that it is perpetrated by private individuals. Practiced at the highest level, check-kiting is the corner-stone of the monetary system.
GOTTERDÄMMERUNG The Twilight of Irredeemable Debt, Antal E. Fekete, April 28, 2008
http://www.professorfekete.com/articles%5CAEFGotterdammerung.pdf
"THE STUDY OF MODERN ECONOMICS IS SIMILAR
TO THE STUDY OF RELIGION IN A TIME OF IDOLATRY" |
| Quote: | the Fed has quickly cut rates from 5.25 % to 2 % but this time they will not ignite a housing bubble as they did the last time. This time, they will do worse. This time, they will burn down the house.
BURNING DOWN THE HOUSE
In the long run, there is no short run |
Rest of article at above link. For those interested (which should be everybody!) it is a brilliant article.
_________________
"The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell. |
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blackcat
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| Posted: Fri May 30, 2008 7:02 pm Post subject: |
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http://www.posdev.net/pdn/index.php?option=com_myblog&show=Why-are-the se-crises-happening-and-why-are-we-here-now-.html&Itemid=81
| Quote: | Why are these crises happening and why are we here now?
Posted by Darryl Schoon in Systems, Sustainability, Health, Finance, Economy, Communication, Business
I would like to thank Marshall Thurber and The Positive Deviant Network (the PDN) for the space they have provided for this blog. I am by nature not socially inclined and I have consciously circumscribed my contact with others.
After 63 years on this planet, I have a close and extraordinary set of friends and am wary of more. Marshall’s experiment with the PDN however brought me into a unique circle which has added much to my life.
This blog and my published writings would not now exist were it not for the PDN. So, Marshall, thank you again for all your friendship has given me since we first met in law school in 1966.
My first blog will offer a talk I delivered to the PDN in February 2008. The previous year I gave my analysis of the coming economic crisis to the PDN on March 1, 2007 and subsequent events have confirmed what I then predicted—the US and global economy are now moving towards an extreme financial crisis.
This year at the February gathering of the PDN, I spoke about the context of this and the many crises and shocks that will follow—economic, political, ecological, and spiritual. Why are these crises happening and why are we here now?
Life is whole cloth. Events, time, and space are not discontinuous, notwithstanding appearances. The present economic crisis has meaning for us beyond the issues of money and the reasons usually given. |
Listen to the speech or download the mp3 at above link.
_________________
"The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell. |
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conspiracy analyst
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Joined: 27 Sep 2005
Posts: 2279
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| Posted: Tue Jun 03, 2008 11:33 pm Post subject: |
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Second Great Depression in Detroit
Tue, 06/03/2008 - 10:23 — manystrom
by Michael Nystrom | June 2, 2008
I've had a minor obsession with Detroit for the past year or so, ever since I learned that one could purchase a single family home there for $5,000 or less. In the world of sky high housing prices in my adopted hometown of Boston, $5,000 wouldn't be enough for even a down payment on a tiny condo. In my neighborhood, converted duplex units start at $350,000. Apparently there are people willing to pay that much for half a duplex, but I'm not one of them. Needless to say, for countless young people like myself who have been shut out of the inflated housing market, the idea of a home of my own (and several investment properties to boot) for the price of a used car was intriguing.
When I told people of my Detroit obsession, nearly everyone laughed at me. "Why would you want to move there?," they asked incredulously. I took this as an encouraging sign - after all, any good investor knows that the way to riches is to find value where others simply aren't looking. Mocking laughter is an especially good sign. So it was with great optimism that when an opportunity for me to visit Detroit arose, I jumped at it. My wife and I were returning from a business trip to Taiwan, and by chance we had a stopover in Detroit.
The first thing that struck me when we got off the plane in Detroit and into our rental car was the price of gas. It was well over $4.00 per gallon - shockingly higher than when we left Boston two weeks prior. Our hotel was in a Detroit suburb called Southfield, which is about 15 miles from Downtown, but jetlagged as we were, we decided to take a peek at the city before doubling back and checking in at the hotel. Speeding down the highway towards the city center, we noticed the miles of sad houses lining the freeway on either side. Many of them - the majority of them - were semi destroyed: Windows broken, roofs collapsed, paint peeling away to expose the bleached gray wood below. Some were just charred skeletons. It was an eerie feeling, zipping down a modern highway that bisected a ghost town.
Digg It!
From my cursory observation, the downtown core was like any booming modern American city, a model of cleanliness. The glass and steel GM Renaissance center rose high above the city, sprouting forth from a gleaming, revitalized river walk park along the Detroit River. The downtown was unique in that the skyline is punctuated by the ornate architecture of well preserved, early 20th century skyscrapers. They just don't build buildings like those anymore. (Check them out at Forgotten Detroit). This was the Greenzone.
Both the Detroit Lions and Tigers have their sports stadiums downtown, and across the street is the beautifully restored Fox theater. (Beautiful pictures of downtown Detroit here.) The activity gave the downtown a festive, bustling feel - at least on the Tigers game night when we were there. Another bright spot was the Eastern Market - an outdoor meat, produce and local goods market amid brick stalls, old warehouses, antique shops and greasy spoon cafes. On the Saturday morning that we visited, the market was packed and bustling, both with foot traffic and unfortunately, automobile traffic. Parking was a nightmare, with cars idling in the streets and trolling slowly through the market looking for parking.
I suppose I have been spoiled by the excellent public transportation system of Boston. From my home in the leafy suburb of Arlington, I can walk to a subway station in ten minutes, hop the train, read the newspaper for a spell and arrive in the heart of downtown half an hour later. I couldn't help compare the two cities from a transportation perspective, which in my opinion is fundamental to informing real estate investment decisions in this age of $4 (and likely much higher) gasoline. Unlike Boston, which was settled before cars roamed the streets, Detroit was clearly built for, and centered around the automobile. In contrast to the preponderance of narrow lanes, winding roads, crooked one way streets, and overwhelming congestion that make driving in Boston a nightmare, the streets of Detroit are wide and straight. The main arterial in the city, Woodward Blvd, is a full eight lanes wide - four in either direction. The surprising lack of traffic combined with expertly synced traffic lights made it a pleasure to drive the long, wide open expanses. Stores and restaurants on either side of the wide boulevards were pulled far in to provide ample parking. But this made it daunting for pedestrians. Distances between anywhere on foot - even downtown - were immense, and psychologically exhausting. Simply crossing the street, all eight lanes of it, was an exercise in intimidation.
Between the downtown Green Zone described above, and the cultural center - home to Wayne State University, the public library, and the Detroit Institute of Arts (home of Diego's fabulous Industry of Detroit as seen in the movie Frida) - was a neighborhood known as Brush Park. It was a distance of perhaps a mile, but seemed so much longer by the lack of anything in between but vacant lots and abandoned houses.
Photo credit
People told me, and it does look like, the area is reviving. We spotted several new developments, and many classic older buildings being converted back into upscale condos. These can be had for a song. But the question that must be considered for an investor is whether real estate purchased today will appreciate or depreciate in the future. While the Downtown core was vibrant, and the cultural center area appeared pleasant, the outskirts of the city was the epitome of depression. Driving northwest out of the city on Grand River Blvd, another empty eight lane arterial, gave me the feeling that I was Will Smith in I Am Legend. Block after block, mile after mile the scenery was the same: empty, abandoned, dilapidated, boarded up, burned out, decaying storefronts and vacant lots. Most of the functioning businesses were streetfront churches or missions. Here and there were sad down-and-outers loitering on the corner, old men wandering in the vacant lots, poor souls in tattered clothes out in the middle of the street, trying to make the crossing from noplace to nowhere. It gave me such a deeply disturbing feeling that I am at a loss to describe. Here stands one of America's once great cities, a gilded age paradise, home of the automobile manufacturing giants and the dictum that what is good for GM is good for America and of course good for Detroit. Today, the prosperity that once built the sturdy, now vacant high quality brick homes and buildings has evaporated away with America's manufacturing economy.
A Tale of Two Depots
The greatest feeling of shock and despair came when, driving aimlessly and half lost though downtown, we rounded a corner to find towering before us the abandoned ghost tower of the Michigan Central Depot. Prior to my trip I had heard of this building, had even seen pictures of it on the internet, but nothing prepared me for the feeling I had when this ghostly building suddenly and unexpectedly materialized before our eyes like a pirate ship from the mist. It was sickening, shocking and profoundly disturbing. The building cost $15 million when it was constructed in 1913, designed by the same architects of New York's Grand Central Terminal.
Picture credit & more fabulous pics: Forgotten Detroit
As New York's Grand Central bustles, its unfortunate twin, rots away behind a hastily thrown up chain link fence, every single window broken, every facade defaced by graffiti, towering over the nearby and also abandoned old Tiger Stadium like a menacing spirit of prosperity past.
Wikipedia says that the station was built before there was much concern about competition from the automobile. It wasn't built in the center of the city, but on the outskirts - so most people arrived at the station not by foot, not by car, not by bus, but by street car or by the interurban. Interurban? What the heck is that? Even the vocabulary of the pre-automobile world is being lost to us. The reason that you likely don't know that word is because you've never seen one, and for that you can thank - guess who - General Motors.
In 1921, GM lost $65 million, leading [GM President Alfred P.] Sloan to conclude that the auto market was saturated, that those who desired cars already owned them, and that the only way to increase GM's sales and restore its profitability was by eliminating its principal rival: electric railways. At the time, 90 percent of all trips were by rail, chiefly electric rail; only one in 10 Americans owned an automobile. There were 1,200 separate electric street and interurban railways, a thriving and profitable industry with 44,000 miles of track, 300,000 employees, 15 billion annual passengers, and $1 billion in income. Virtually every city and town in America of more than 2,500 people had its own electric rail system. Source
Subsequently, according to Wikipedia:
General Motors, Firestone Tire, Standard Oil of California and Phillips Petroleum formed the National City Lines (NCL) holding company, which acquired most streetcar systems throughout the United States, dismantled them, and replaced them with buses in the mid 20th century. After all was said and done, and all the streetcar systems gone, GM was convicted of violating the Sherman Antitrust Act, fined a whopping $5,000. Each executive was ordered to pay a fine of $1 for a conspiracy to force the streetcar systems to buy GM buses instead of other buses (but not for dismantling the streetcar systems, which were also being dismantled by non-NCL owned systems). Source
Still think that what's good for GM is good for America?
Detroit's abandoned train station symbolizes the ultimate failure of the automobile, the effects of globalization, America's throwaway culture, all wrapped up in the second great depression. The recent financial crisis and credit bust has memories of the great depression floating once again through the financial news with regularity. "Worst crisis since the great depression," we are told. It may or may not seem that way, depending on your vantage point. But ask the millions of residents of the once great industrial cities like Detroit, Cleveland or Pittsburgh, or any of the countless smaller industrial mill and textile towns that time has forgotten (cities like Lawrence, Fitchburg or Lowell in my neighborhood). For many in these cities, the second great depression has long ago settled in and is making itself quite comfortable.
Back on Highway 10 driving out to the suburbs, the dilapidated, burned out, crumbling and abandoned houses stretched on for miles. We exited the freeway to drive though a random neighborhood. It was surprising clean, like any you'd find in your home town. Big trees lined the streets, unique and majestic craftsman brick homes sat back from the curbs, most of them tragically abandoned, boarded up and falling apart, inspiring a feeling of loss and emptiness so deep. After a few miles of this, the suburbs once again grow "prosperous," which is to say that people can be seen again and the characteristic brick homes give way to nondescript square buildings so typical of suburban America. And in the distance, from the tangle of streetlights and strip malls, sprouting from the flatness of the suburban nowhere, rises a huge tower of glass and steel, the windows tinted gold in the style of the GM renaissance center. Surrounding this behemoth of a building far too large and out of proportion for its surroundings (the headquarters of the struggling Fifth Third Bank), a generic micro economy has sprung up to serve it. A steel and glass hotel where we were staying, strip malls with chain donut and sandwich shops, overpriced cookie-cutter townhouses that looked for the most part empty, a five story parking garage and acres of parking all tossed together in a riot of suburban sprawl.
I could not help but wonder when I saw it - would this gleaming modern office tower one day share the same fate as the Michigan Central Rail Depot? Its placement made no sense. In an era of $4.00 gasoline, with no public transportation, and out in the middle of nowhere, I wouldn't bet against it. After seeing the that majestic, beautiful rail station abandoned, I wouldn't bet against permanence of any kind.
But back to the question at hand. Is real estate in Detroit a good investment? The answer to that question is inextricably tied with Detroit's chances of revival. In order for property values to return, people must flow back to the city in droves. For this to happen, it must be an attractive place to live in work, and this requires a solid foundation of good, well paying jobs. But the Detroit economy remains heavily dependent on the auto industry, and the US auto industry isn't doing well. On the plane ride over, I read in the WSJ that the auto industry was a bubble. This is what the Detroit FP headline was on the day we arrived. And here is an excellent article from Portfolio magazine about how to revive the Big 3. Unfortunately, it is all about downsizing, cutting more workers, and cutting production. None of this is good for the D. Jobs in this country are disappearing from manufacturing as quickly as jobs disappeared from agriculture during the first great depression. The city must transform its economy.
Second, the lack of public transportation is a huge minus for the city. Without a car, it is nearly impossible to get around and the city is simply huge. There is a tiny tram that serves the downtown core - the "People Mover," but it doesn't serve the suburbs, and I didn't see many buses.
A third strike against the city, and Michigan in general, is the high prison population. According to this article, Michigan's prison system costs $5 million per day, or $2 billion per year and rising. This is another tragedy and a serious drag on the economy. The opportunity cost of a $2billion prison system is tremendous, especially considering that the state spends more on incarceration than on higher education. If the prison industry is the best growth industry a state can muster, then I'm afraid investors must consider other locations, if only from a moral standpoint.
My conclusion, at least for now, is that as attractive as the prices in Detroit are, there are good reasons why they are low. But please do not consider this as investment advice - I was only in the city for a day and a half, and there is certainly plenty about the city that I do not know. In my online travels, I found this potentially positive development:
Gov. Jennifer Granholm on Monday signed into law a package of incentives that supporters say makes Michigan the most financially attractive state in the nation for movie production. Michigan's film industry generated about $4 million in economic activity last year. When states such as Louisiana and New Mexico passed incentives similar to those signed Monday, their state film industries grew into $100 million industries.
Perhaps this is the beginning of a revival. Detroit has been on a 50 year downslope. A weaker dollar may allow the city to rise as a manufacturing hub once again. If GM would release the stranglehold on the city, it should build a streetcar system right down Woodward Ave. The street is wide enough that it could accommodate an interurban and still have 6 lanes for traffic. Construction would revitalize the city, and stops along the new tram could become popular destinations.
Detroit still does have great potential, in my opinion - one of the reasons for my minor obsession. One of its great advantages its proximity to fresh water. While the recent boomtowns have sprung up in the sunbelt, one day the residents of Phoenix, Las Vegas, Atlanta and other southern towns may find the climate is both too hot and too dry (as in the taps run dry) to be comfortable. In such an event, Detroit has a large, cheap housing supply, and plenty of fresh water. But for now, the city remains mired in a long, second great depression.
I am deeply interested in any comments or insights readers may have on Detroit, and other rustbelt and sunbelt cities. Please post your comments here. In the future, I will have more reports on my adopted hometown of Boston which I increasingly appreciate is expensive for a reason. If you'd like to be notified, please sign up to my low volume email announcement list. |
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blackcat
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| Posted: Thu Jun 05, 2008 9:32 am Post subject: |
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http://georgewashington2.blogspot.com/2008/06/derivatives-market-is-un winding.html
Visit the site for the hyperlinks mentioned.
| Quote: | Wednesday, June 4, 2008
The Derivatives Market is Unwinding!
A couple of months ago, a financial analyst who sells derivatives told me that fears about a meltdown in the derivatives market were unfounded.
Yesterday, he told me - with a very worried look - "THE DERIVATIVES MARKET IS UNWINDING!"
What does this mean? What are derivatives and why should you care if the market is unwinding?
Well, it turns out that the reason that Bear Stearns was about to go belly-up before JP Morgan bought it is that it had held trillions of dollars in derivatives, which were about to go south. (The reason that JP Morgan was so eager to buy Bear Stearns is that it was on the other side of these derivative contracts -- if Bear Stearns had gone under, JP Morgan would have taken a huge hit. But the way the derivative agreements were drafted, a purchase by JP Morgan canceled the derivative contracts, so that JP Morgan didn't experience huge losses. That is probably why the Fed was so eager to broker - and fund - the shotgun marriage. JP Morgan is a much larger player, and if Bear's failure had caused the derivatives hit to JP Morgan, it probably would have rippled out to the whole financial system and potentially caused an instant depression).
In addition, the subprime prime loan crisis is intimately connected to the unwinding of the derivatives market. Specifically, loans were repackaged into derivatives called collateralized debt obligations (or "CDO's") and sold to both big and regional banks and investment companies worldwide. The CDO's were highly-leveraged -- many times the amount of the actual loans. When the subprime loan crisis hit, the high leverage magnified the fallout, and huge sums of CDO derivatives became essentially worthless.
Do you remember when wealthy Orange County, California, went bankrupt in 1994? Yup, that was because it had invested in bad derivatives.
And, according to a recent article by one of the world's top derivative insiders, the market for credit default swap ("CDS") derivatives is also unraveling.
And reported just today, Lehman Brothers is now on the edge, due to exposure to derivatives.
Derivatives are the Elephant in the Living Room
The subprime mortgage crisis is bad, and is hurting many people, and slowing the economy. High oil and food prices are bad, and are hurting many people, and bringing down the economy. But -- according to top insiders -- derivatives are the elephant in the room . . . the single largest threat to the U.S. and world economy.
One reason is that, according to Paul Volcker, the former chairman of the Federal Reserve, the entire modern financial system is based upon derivatives, and the financial system today is entirely different from the traditional American or global financial system because derivatives - a relatively new concept - now underly the entire fabric of the financial system. In short, many of the people who know the most about derivatives say that the current system is a house of cards built upon derivatives.
Moreover, as mentioned above, the subprime and derivatives crises are closely linked. Similarly, Britian's New Statesman newspaper links derivatives and rising food and commodity prices:
"This latest food emergency has developed in an incredibly short space of time - essentially over the past 18 months. The reason for food "shortages" is speculation in commodity futures following the collapse of the financial derivatives markets. Desperate for quick returns, dealers are taking trillions of dollars out of equities and mortgage bonds and ploughing them into food and raw materials. It's called the "commodities super-cycle" on Wall Street, and it is likely to cause starvation on an epic scale.
The rocketing price of wheat, soybeans, sugar, coffee - you name it - is a direct result of debt defaults that have caused financial panic in the west and encouraged investors to seek "stores of value". These range from gold and oil at one end to corn, cocoa and cattle at the other; speculators are even placing bets on water prices."
Hiding the Ball
And yet banks and financial houses have hidden their derivatives exposure off the balance sheets. No wonder almost no one understands derivatives:
"Not only [world's richest man] Warren Buffett, but Bond King Bill Gross, our Fed Chairman Ben Bernanke, the Treasury Secretary Henry Paulson and the rest of America's leaders can't 'figure out'" the derivatives market.
Indeed, the government may have actively helped to hide the the derivatives mess since at least 2006. For example, according to Business Week:
"President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations."
Former fed chairman Alan Greenspan has been a huge booster for and defender of derivatives since 1999 or before (and see this). Did you know that the same guy that pushed subprime loans has also aggressively pushed derivatives for many years?
And the other regulatory agencies and Congress have taken a totally hands-off approach towards derivatives.
How Big a Problem?
How big is the derivatives market? Worldwide, it is $596 TRILLION dollars *. The derivatives market dwarfs the real market for goods and services, and acts likes an unregulated black market.
As one writer put it:
"It’s all smoke and mirrors. The financial system has decoupled from the productive elements of the economy and is now beginning to show disturbing signs of instability."
And its not just the U.S. Derivatives salesmen have sold these babies all over the world. Because banks, financial institutions and governments world-wide have bought significant derivatives, the fall out will not be limited solely to the U.S. See this and this.
If the derivatives market is truly unwinding, as my investment advisor friend and some of the top industry insiders say, we could be in for a very bumpy ride.
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_________________
"The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell. |
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blackcat
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| Posted: Tue Jun 10, 2008 11:48 am Post subject: |
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http://www.guardian.co.uk/business/2008/jun/09/housingmarket.housepric es
| Quote: | Traders predict house prices will fall by 50% in four years
· Investments based on property 'fall off a cliff'
· Job losses hit estate agents and mortgage firms
Phillip Inman The Guardian, Monday June 9 2008
The slide in house prices will continue for at least three years and crush the value of a home by almost 50% in real terms, according to a key index of property price futures. Indications from futures trading on long term property prices shows that the average UK home will recover its current value only in 2017.
By the end of this year prices will be down by 10% and by a further 10.5% in 2009, according to the index. Prices will keep dropping through 2010 and cut values by 23.5% when they hit rock bottom in 2011. House prices will then begin a slow climb back to current market values over a period of about six years.
If an average retail price inflation rate of 4% is included in the calculation and in addition the 8% drop in prices over the last eight months already registered by the Halifax index, the fall in values over almost four years will reach 47.5% in real terms.
The Liberal Democrat Treasury spokesman, Lord Oakeshott, said the figures revealed that property investors had little confidence in the market and were predicting steep and prolonged falls in prices.
"This government says this housing depression will be different from the early 1990s. Yes, that's right. It will be worse."
When not attacking government policy in the Lords, Oakeshott invests in property on behalf of pension funds through his investment vehicle Olim. He says he has watched the index steadily fall over recent weeks. On Friday it "fell off a cliff" after the Halifax published its latest house price survey.
Halifax said the value of a home fell by 2.4% in May, the seventh month in the past eight when prices have fallen.
The May figure spooked investors, who said prices were now falling more rapidly than at any time since the early 90s property crash. House buyers benefited from low prices until 1995 when values began to pick up.
Last week an economic consultancy, the Centre for Economics and Business Research, predicted that in 2008 almost 15,000 estate agents would lose their jobs. It said real estate output will also decline during the year by 3% in real terms, as the drop in mortgage approvals and housing transactions take its toll.
The slide is also hitting mortgage brokers, illustrated by John Charcol, which last week announced job cuts and made Katie Tucker, product specialist and one of the public faces of the broker, redundant.
The firm's chief executive, Ian Kennedy, is also reported to be in discussion with chairman John Garfield - one of the founders of the business - about his future. In January, the broker announced it was putting itself up for sale. But no buyer turned up and instead its founders were expected to inject more funds into the business.
The residential property futures market is based on the Halifax monthly house price index, published by the bank. It is an-over-the-counter market designed for banks, pension funds, insurance companies and housebuilders to trade on the future values of property. Tradition Property, a City-based property broker, operates a derivatives futures index based on the Halifax figures. |
So this is very good news right? We want prices to come down don't we?
_________________
"The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell. |
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Emmanuel
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blackcat
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| Posted: Tue Jun 17, 2008 8:28 am Post subject: |
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http://www.whatreallyhappened.com/freefall.php
Go to the link to use the "Implode -O- meter". Click on a bank to see how they are doing. Oh dear, oh dear oh dear!!!!!
_________________
"The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell. |
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blackcat
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| Posted: Tue Jun 17, 2008 8:43 am Post subject: |
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http://www.globalresearch.ca/index.php?context=viewArticle&code=BRO200 80615&articleId=9343
| Quote: | Unfolding Financial Meltdown on Wall Street
What’s The Difference Between Lehman Brothers & Bear Stearns? Lehman’s CEO Sits On the Board Of The NY Fed
by Dr. Ellen Brown
An earlier article by this author ("The Secret Bailout of JP Morgan") summarized evidence presented by John Olagues, an expert in options trading, suggesting that JPMorgan, far from "rescuing" Bear Stearns, was actually its nemesis.1 The faltering investment bank was brought down, not by "rumors," but by insider trading based on a plan drawn up much earlier. The deal was a lucrative one for JPM, handing the Wall Street megabank $55 billion in loans from the Federal Reserve (meaning ultimately the U.S. taxpayer). So how did JPM get away with it? Olagues notes the highly suspicious fact that JPM’s CEO James Dimon sits on the Board of the New York Federal Reserve. |
Rest of article at above link.
_________________
"The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell. |
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blackcat
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| Posted: Wed Jun 18, 2008 4:19 pm Post subject: |
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http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=A1YourVi ew&xml=/money/2008/06/18/cnrbs118.xml
| Quote: | RBS issues global stock and credit crash alert
Ambrose Evans-Pritchard, London Telegraph , Wednesday, June 18, 2008
The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.
"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist.
A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets.
RBS warning: Be prepared for a 'nasty' period
Such a slide on world bourses would amount to one of the worst bear markets over the last century.
RBS said the iTraxx index of high-grade corporate bonds could soar to 130/150 while the "Crossover" index of lower grade corporate bonds could reach 650/700 in a renewed bout of panic on the debt markets.
"I do not think I can be much blunter. If you have to be in credit, focus on quality, short durations, non-cyclical defensive names.
"Cash is the key safe haven. This is about not losing your money, and not losing your job," said Mr Janjuah, who became a City star after his grim warnings last year about the credit crisis proved all too accurate.
RBS expects Wall Street to rally a little further into early July before short-lived momentum from America's fiscal boost begins to fizzle out, and the delayed effects of the oil spike inflict their damage.
"Globalisation was always going to risk putting G7 bankers into a dangerous corner at some point. We have got to that point," he said.
US Federal Reserve and the European Central Bank both face a Hobson's choice as workers start to lose their jobs in earnest and lenders cut off credit.
The authorities cannot respond with easy money because oil and food costs continue to push headline inflation to levels that are unsettling the markets. "The ugly spoiler is that we may need to see much lower global growth in order to get lower inflation," he said.
"The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets," he said.
Kit Jukes, RBS's head of debt markets, said Europe would not be immune. "Economic weakness is spreading and the latest data on consumer demand and confidence are dire. The ECB is hell-bent on raising rates.
"The political fall-out could be substantial as finance ministers from the weaker economies rail at the ECB. Wider spreads between the German Bunds and peripheral markets seem assured," he said.
Ultimately, the bank expects the oil price spike to subside as the more powerful force of debt deflation takes hold next year. |
Closer and closer....
_________________
"The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell. |
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blackcat
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| Posted: Mon Jun 23, 2008 8:37 am Post subject: |
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http://www.theinternationalforecaster.com/International_Forecaster_Wee kly/Dollar_Diving
| Quote: | Dollar Diving
Posted: June 21 2008
The dollar has once again collapsed. Get ready for the next dollar debacle and the coming rally in gold and silver which have just broken out. The elitists have lost all credibility. The would-be lords of the universe have told so many pathological lies that no one "in the know" believes anything emanating from the forked tongues of Buck-Busting, Bear-Bashing, Big-Ben Bernanke and Hanky Panky Paulson. If our Fed Head and Treasury Secretary had been characters in the Walt Disney movie entitled "Pinocchio," their noses would have quickly grown to lengths that could have been wrapped around the earth's equator several times. God would have had to reverse the earth's rotation to extricate them.
Wall Street tells us the odds favor two quarter percent rate hikes to the Fed funds rate by the end of the year. We ask whether that would be before or after the economy collapses? If before, the Fed's rate hikes will destroy what is left of our economy, and the dollar will collapse, thereby erasing any benefits from the rate hikes. If after, you will see rate cuts instead of rate hikes as the Fed attempts to save the fraudsters on Wall Street who are not even remotely close to recovering from the credit-crunch despite what the elitists might tell you to the contrary. We ask who the morons are that make up these odds, and what planet they come from. They give aliens a bad name. These index predictions are just another form of jaw-boning and disinformation.
As soon as the economy starts its final descent into Davy Jones' Locker, which is likely to occur in the very near future, the Fed and the US Treasury will unceremoniously toss the so-called "strong dollar" policy into the nearest financial dumpster in order to save the economy and the fraudsters. Accompanying the "strong dollar" policy on its way to the dumpster will be the next round of derivative toxic waste that is on its way courtesy of the upcoming surge in fallout from tanking real estate markets in a process that will see the Fed blow what remains of its general collateral in exchange for such waste. Once the Fed's general collateral is exhausted, we will be ushered into a new hyperinflationary era characterized by direct monetization of US treasuries to fund our deficits and to absorb more toxic waste as it continues to pour down on elitist financial institutions like Niagara Falls.
A few measly quarter percent cuts will do absolutely nothing to slow the acceleration of inflation, especially if the Fed keeps the M3 at current levels. Only a double-digit Fed funds rate and greatly reduced M3 could have any eventual and meaningful impact on the inflation that is built into the system for at minimum the next year and one half at levels in the area of 15% to 18%, and even then the impact will not be felt until the current baked-in inflation has run its course. Direct monetization of treasuries to replenish Fed collateral and to absorb our growing deficits will put inflation beyond the point of no return, as will the breaking of OPEC dollar pegs.
As you can see, there is no way that any of the proposed diminutive rate hikes will have a positive impact on the economy, on the dollar or on the balance sheets of the fraudsters. Therefore, there will not be any rate hikes. Any increase in the Fed funds rate would be accompanied by an economic catastrophe of epic proportions that would occur as a direct result of the raising of that rate. Any rate hike would take a year to a year and a half to have an impact on inflation. By the time the anticipated Fed rate hikes could have any kind of impact whatsoever, the economy will already be in a state of rampant hyperinflation, and would be well on its way to depression, far too late to save the dollar or the economy. Ergo, the new elitist motto will soon become: "Damn the inflation, full greed ahead!"
The Fed's and the government's lies about inflation and other economic statistics have trapped them in an impossible situation. For instance, because they have tremendously understated official inflation for so long, they cannot impose a plausible solution to fight actual inflation. Any meaningful action they might take to give people relief by lowering the level of actual inflation must be scaled down to match what they are saying about official inflation and would therefore be totally ineffective and pointless. The same scenario holds true for other economic issues as well.
As if to accentuate the collapse of the dollar, open interest on the USDX plummeted on Wednesday by a gargantuan 20,461 contracts, from 46,665 to 26,204. This also means that since last week Tuesday, when open interest was boosted by the PPT by a huge 14,393 contracts to a total of 52,520 contracts to boost the dollar and to make it look as though Big Ben really meant business about the buck, the open interest has been cut by half, with a total of 26,316 contracts having been liquidated over the course of the past week.
The last time this kind of a breakdown in USDX open interest occurred was on December 19, 2007, when open interest dropped a whopping 22,966 contracts, from 57,389 to 34,423, when the spot USDX stood at 77.587. The spot USDX then plummeted to a double bottom of 71.459 on March 17 and 71.329 on April 22, before rebounding to a recent closing high of 74.146 on June 13. This week Friday, June 20, the spot USDX has already dropped to 73.030 from its recent closing high of only a week ago as the collapse of the dollar got underway once again. Between December 19 and June 13, the closing high for the spot USDX was 77.794 set on December 20, while the all-time low was set at 70.698 on March 17. If that pattern is followed again, we could be looking at a dollar breakdown to the low to mid-67 area. Then again, we could be looking at a total collapse as hyperinflation and severe recession continue to eat away at what is left of our hapless economy. Gold and silver are headed for outer space. |
Rest of lengthy article at above link
_________________
"The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell. |
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blackcat
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| Posted: Sat Jun 28, 2008 4:22 pm Post subject: |
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http://www.dft.nl/bedrijven/fortis/4339542/Amerikaanse__rsquo_meltdown _rsquo__reden_geldinjectie_Fortis.html
translation from https://www.kitcomm.com/showthread.php?t=19066
| Quote: | VOTRON TO REMAIN AFTER WAVE OF CRITICISM
U.S. 'meltdown' reason geldinjectie Fortis
June 28 08, 09:10
by our correspondent
BRUSSELS / AMSTERDAM (DFT) - Fortis expects within the next few days to weeks to complete the collapse of the U.S. financial markets. That explains the bank insurers interventions of the series Thursday at dealing with € 8 billion. "We are ready at the last minute. It goes in the United States much worse than thought, "said Fortis chairman Maurice Lippens, who maintains that CEO Votron to live. Fortis expects bankruptcies of 6000 U.S. banks that now lack coverage. "But Citigroup, General Motors, there begins a complete meltdown in the U.S.."
Fortis took yesterday € 1.5 billion with a share issue. At the end of last year was the Belgian-Dutch group € 13 billion of new shares for the takeover of ABN Amro, for which it paid € 24 billion. Lippens bases its concern on interviews with bankers. "Two months ago we knew not so bad that it is in America. And it will be much worse. We have a thick mattress needed for the next eighteen months to come when we can bring to ABN Amro. "
Two weeks ago reported the U.S. investment bank and adviser to Fortis Merrill Lynch certainly € 6.2 billion in additional capital was needed. The VEB yesterday demanded clarification of Fortis: CEO Jean-Paul Votron stopped in late april Fortis maintains that after the purchase of ABN Amro does not need on the capital market. In one year € 30 billion in market capitalization destroyed. After Votron last confession kelderde the share price by 19.4%, although yesterday climbed by 4.4% to € 10.65.
The massive unrest around the bank insurers, especially with our neighbours in Belgium as a bomb broken. While the fuss arose in the Netherlands to the limited financial world, it is with our neighbours the call of the day. Not only is the bank dominates the streetscape, but by the mokerslag for the Belgian volksaandeel are also hundreds of thousands of small investors hit hard.
All Belgian newspapers opened yesterday with real rampenkoppen, where the free fall of the bank insurers was wide coverage. 'Fortis crashes, "" Rampdag for Fortis' and' Fortis loses 5.3 billion, "opened three leading newspapers.
The panic around the group across the border so great that the national regulator CFBA has had reassuring words to speak to the desperate savers. "The emergency of Fortis is no reason to bank run and money to get off," said a CFBAwoordvoerder. "The bank complies with all legal requirements, but has itself just very sharp targets."
Maurice Lippens claims that all major shareholders yesterday "unanimously support" have pledged.
Like arrows in the Netherlands focus mainly on CEO Jean-Paul Votron, who are heavily vertild appears to have complied with the takeover of ABN Amro. But while the Netherlands in Brussels calling his bonus of € 2.5 million to be paid back in Belgium is demanding his departure.
Who makes such big mistakes, must bear the consequences and therefore resign, "said Huybregtse chairman of the Flemish federation of Investment and Investors. The fall of the share is for him a confirmation that the takeover of ABN Amro far too expensive and was poorly timed.
"The former shareholders of ABN Amro are now taking a bath in champagne", stressed Huybrechts. "Who makes major mistakes, must go. Fortis is a really volksaandeel and with confidence that you can not cope reckless. "
The Belgian newspaper the Standard is tough on the CEO: "The kredietcrisis has affected all banks, but it is no excuse. Fortis is much sharper fall, "says the commentator. "Fortis has always denied that there was still a capital increase. They were therefore either lies or ignorance. Both are equally bad, so must Votron the honour to itself. He is the only one who has earned something to the whole operation. "
According to Belgian media wanted Fortis announce Thursday that the bonus Votron would be removed, but this is at the last moment not yet happened. Also, all press speculation about his succession, with the name of Filip Dierckx.
Votron itself will of being firm. "The shareholders are behind me and also in the top of the group, I only support for this I have put in operation," said the under fire lying Fortis chief executive.
The refund of the now controversial bonus points he resolutely. "What I do with my money, my case. The bonus had nothing to do with ABN Amro, but was about the year 2007, "said Votron. The CEO is a willing part of his salary in Fortis documents.
Votron may also still rely entirely on chairman Lippens, who denies that the bank itself on the takeover of ABN Amro has completed. "Votron remains simply the CEO. At present intervention, which is difficult, that's really show leadership. " |
And for good measure:-
http://www.gata.org/node/6392
| Quote: | Barclays warns of disaster as Fed loses all credibility
Submitted by cpowell on Fri, 2008-06-27 02:02. Section: Daily Dispatches
By Ambrose Evans-Pritchard
The Telegraph, London, Friday, June 27, 2008
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/27/cnba rc...
Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero."
"We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock under way. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."
Barclays Capital said in its closely-watched Global Outlook that US headline inflation would hit 5.5pc by August and the Fed will have to raise interest rates six times by the end of next year to prevent a wage-spiral. If it hesitates, the bond markets will take matters into their own hands. "This is the first test for central banks in 30 years and they have fluffed it. They have zero credibility, and the Fed is negative if that's possible. It has lost all credibility," said Mr Bond.
The grim verdict on Ben Bernanke's Fed was underscored by the markets yesterday as the dollar fell against the euro following the bank's dovish policy statement on Wednesday. Traders said the Fed seemed to be rowing back from rate rises. The effect was to propel oil to $138 a barrel, confirming its role as a sort of "anti-dollar" and as a market reproach to Washington's easy-money policies.
The Fed's stimulus is being transmitted to the 45-odd countries linked to the dollar around world. The result is surging commodity prices. Global inflation has jumped from 3.2 to 5pc over the last year. Mr Bond said the emerging world is now on the cusp of a serious crisis. "Inflation is out of control in Asia. Vietnam has already blown up. The policy response is to shoot the messenger, like the developed central banks in the late 1960s and 1970s," he said.
"They will have to slam on the brakes. There is going to be a deep global recession over the next three years as policy-makers try to get inflation back in the box."
Barclays Capital recommends outright "short" positions on Asian bonds, warning that yields could jump 200 to 300 basis points. The currencies of trade-deficit states like India should be sold. The US yield curve is likely to "steepen" with a vengeance, causing a bloodbath for bondholders.
David Woo, the bank's currency chief, said the Fed's policy of benign neglect toward the dollar had been stymied by oil, which is now eating deep into the country's standard of living. "The world has changed all of a sudden. The market is going to push the Fed into a tightening stance," he said.
The bank said the full damage from the global banking crisis would take another year to unfold. Rob McAdie, Barclays' credit strategist, said: "The core issues have not been addressed. We're still in a very large deleveraging cycle and we're seeing losses continue to mount. We think smaller banks will struggle to raise capital. We're very bearish -- in the long-term -- on high-yield debt. The default rate will reach 8 to 9pc next year."
He said investors had taken their eye off the slow-motion disaster engulfing the US bond insurers or "monolines." Together these firms guarantee $170 billion of structured credit and $1,000 billion of US municipal bonds.
The two leaders -- MBIA and Ambac -- have already been downgraded as the rating agencies belatedly turn stringent. The risk is further downgrades could set off a fresh wave of bank troubles. "The creditworthiness of many US financial institutions will decline in coming months," he said.
The bank warned that engineering and auto firms we're likely to face a crunch as steel and oil costs surge. "Their business models will have to be substantially altered if they are going to survive," said Mr McAdie.
A small chorus of City bankers dissent from the view that inflation is the chief danger in the US and other rich OECD countries. The teams at Societe Generale, Dresdner Kleinwort, and Banque AIG all warn that deflation may loom as housing markets crumble under record levels of household debt.
Bernard Connolly, global startegist at Banque AIG, said inflation targeting by central banks had become a "totemism that threatens to crush the world economy."
He said it would be madness to throw millions out of work by deflating part of the economy to offset a rise in imported fuel and food prices. Real wages are being squeezed by oil, come what may. It may be healthier for society to let it happen gently. |
Almost here now. Food riots and martial law in the USA - as planned!! Us next?
_________________
"The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell. |
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blackcat
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| Posted: Mon Jun 30, 2008 6:38 am Post subject: |
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http://business.theage.com.au/imf-finally-knocks-on-uncle-sams-door-20 080629-2yui.html?page=fullpage
| Quote: | IMF finally knocks on Uncle Sam's door
June 30, 2008
IMAGINE the Reserve Bank of Australia, concerned that its friends in the city of Sydney (but perhaps Melbourne) who, having wallowed in wealth all their adult lives, were no longer gainfully employable and their wildly extravagant lifestyles were in danger, and, having the powers to intervene in the market, decided to do just that on their behalf.
Imagine them offering to enter the market and buy shares that would prop up the foolish gambles of the bankers, gambles they had encouraged them, until recently, to take by providing them with cheap money.
On top of that, they told this group they would provide hundreds of billions of dollars in credits to these same profiteers on the grounds they were so big and important to the economy they were indeed too big to fail.
Then, imagine, despite pouring untold taxpayers money into stocks and allowing their cronies access to vast sums, the system continued to fail. So they announced they would need greater power and with it more secrecy.
For its growing band of critics has, perhaps unwittingly and in the interest of public good, this has become the principal function of the US Federal Reserve.
If this was to happen in Australia the International Monetary Fund would be hammering at the door of the Reserve Bank. But Australia does not have a President's Working Group on Financial Markets, commonly known as the Plunge Protection Team, that allows the US Government to prop up the markets by buying shares. But to imagine the IMF investigating the US financial system is unthinkable, or was. But, at the weekend, Der Spiegel reported that the IMF would conduct a full investigation into virtually every aspect of it.
Der Spiegel wrote that the IMF had "informed" Federal Reserve chairman Ben Bernanke of plans that would have been unheard of in the past: a general examination of the US financial system. The IMF's board of directors has ruled that a so-called Financial Sector Assessment Program is to be carried out in the US.
This, Der Spiegel wrote, "is nothing less than an X-ray of the entire US financial system", adding that "no Fed chief in US history has been forced to submit to the kind of humiliation that Ben Bernanke is facing".
The fact that the IMF is knocking on the very doors of its parents and waving legal papers about who lost the house, the car and the kids will, if the past is anything to go by, be buried in the US by pom-pom waving on CNBC telling all what a great time it is to buy.
But the news that the US Fed has now lost its last vestige of credibility did not end with the German report.
The Telegraph from London weighed in, following the Royal Bank of Scotland's statement last week (also lost on the US public) that it was time to head for the crags, and reported Barclays Capital's closely watched Global Outlook analysis that said US headline inflation would hit 5.5% by August and the Fed would have to raise interest rates six times by the end of next year to prevent a wage spiral.
If the Fed hesitates, the bond markets will take matters into their own hands. "This is the first test for central banks in 30 years and they have fluffed it," the report found. "They have zero credibility, and the Fed is negative if that's possible. It has lost all credibility."
Der Spiegel reports that the IMF is threatening to seriously study the accounts of America, something President George Bush is determined to prevent at least while he is in the White House, informing the IMF that it can begin its investigation but cannot complete it until he leaves office.
But the reckoning will come and it will shine a light in places where light has been desperately wanted for all too long.
"As part of the assessment," Der Spiegel said, "the Fed, the Securities and Exchange Commission, the major investment banks, mortgage banks and hedge funds will be asked to hand over confidential documents to the IMF team. They will be required to answer the questions they are asked during interviews. Their databases will be subjected to so-called stress tests — worst-case scenarios designed to simulate the broader effects of failures of other major financial institutions or a continuing decline of the dollar."
Under its by-laws, the IMF is charged with the supervision of the international monetary system. About two-thirds of IMF members — but never the US — have already endured this painful procedure.
Australian banks have been buffeted by the storms generated in the US, but strict standards enforced by a Reserve Bank that is independent of private banking interests has prevented such excesses, as vouched by their performance as compared with the broker-trader banks and the retail banks of the US. Shares in once-massive banks and brokerage firms have been stripped by as much as 70%, 80% and even almost 100%. We are taking a trim while US banks are getting a full haircut and shave.
Part of the problem is the US media, which has for so long pretended that all is or soon will be well, a bottom is near, a recovery awaits in the second half of the financial year that will sweep away all problems, sown over decades, in a new expansion, a cycle that is ordained to come. The latest fantasy is that with the quarter's end, new profit figures will invigorate the bull, which will seed fertility.
The next President will be handed at least two wars gone horrible wrong and, by then, an economy in similar shape. The bull will have to be a particularly fertile beast.
Der Spiegel reports: "When the final report on the risks of the US financial system is released in 2010 — and it is likely to cause a stir internationally — only one of the people in positions of responsibility today will still be in office: Ben Bernanke."
While Der Spiegel claims that IMF intervention (my expression) is a humiliation for the US, the real significance may be that this is another blow to American exceptionism.
While the examination is far reaching, and deeply intrusive, Canada, Britain, Italy, indeed two-thirds of IMF members, have participated in the program. The new President will soon discover the age of US exceptionism is over.
Meanwhile the US markets have entered bear territory, the economy has done likewise and we are at the beginning of a long and tortuous process before rebuilding can even commence.
David Hirst is a journalist, documentary maker, financial consultant and investor. His column, Planet Wall Street, is syndicated by News Bites, a Melbourne-based sharemarket and business news publisher.
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and closer and closer....
_________________
"The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell. |
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blackcat
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| Posted: Thu Jul 03, 2008 9:03 am Post subject: |
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http://www.campaignforliberty.com/blog/?p=115
| Quote: | Something Big is Going On
The following statement is written by Congressman Paul about the pending financial disaster. He will introduce this statement as a special order and insert it into the Congressional Record next week. Fortunately, we have the opportunity to debut it first on the Campaign for Liberty blog. It reads as follows:
I have, for the past 35 years, expressed my grave concern for the future of America. The course we have taken over the past century has threatened our liberties, security and prosperity. In spite of these long-held concerns, I have days—growing more frequent all the time—when I’m convinced the time is now upon us that some Big Events are about to occur. These fast-approaching events will not go unnoticed. They will affect all of us. They will not be limited to just some areas of our country. The world economy and political system will share in the chaos about to be unleashed.
Though the world has long suffered from the senselessness of wars that should have been avoided, my greatest fear is that the course on which we find ourselves will bring even greater conflict and economic suffering to the innocent people of the world—unless we quickly change our ways.
America, with her traditions of free markets and property rights, led the way toward great wealth and progress throughout the world as well as at home. Since we have lost our confidence in the principles of liberty, self reliance, hard work and frugality, and instead took on empire building, financed through inflation and debt, all this has changed. This is indeed frightening and an historic event.
The problem we face is not new in history. Authoritarianism has been around a long time. For centuries, inflation and debt have been used by tyrants to hold power, promote aggression, and provide “bread and circuses” for the people. The notion that a country can afford “guns and butter” with no significant penalty existed even before the 1960s when it became a popular slogan. It was then, though, we were told the Vietnam War and a massive expansion of the welfare state were not problems. The seventies proved that assumption wrong.
Today things are different from even ancient times or the 1970s. There is something to the argument that we are now a global economy. The world has more people and is more integrated due to modern technology, communications, and travel. If modern technology had been used to promote the ideas of liberty, free markets, sound money and trade, it would have ushered in a new golden age—a globalism we could accept.
Instead, the wealth and freedom we now enjoy are shrinking and rest upon a fragile philosophic infrastructure. It is not unlike the levies and bridges in our own country that our system of war and welfare has caused us to ignore.
I’m fearful that my concerns have been legitimate and may even be worse than I first thought. They are now at our doorstep. Time is short for making a course correction before this grand experiment in liberty goes into deep hibernation.
There are reasons to believe this coming crisis is different and bigger than the world has ever experienced. Instead of using globalism in a positive fashion, it’s been used to globalize all of the mistakes of the politicians, bureaucrats and central bankers.
Being an unchallenged sole superpower was never accepted by us with a sense of humility and respect. Our arrogance and aggressiveness have been used to promote a world empire backed by the most powerful army of history. This type of globalist intervention creates problems for all citizens of the world and fails to contribute to the well-being of the world’s populations. Just think how our personal liberties have been trashed here at home in the last decade.
The financial crisis, still in its early stages, is apparent to everyone: gasoline prices over $4 a gallon; skyrocketing education and medical-care costs; the collapse of the housing bubble; the bursting of the NASDAQ bubble; stockmarkets plunging; unemployment rising;, massive underemployment; excessive government debt; and unmanageable personal debt. Little doubt exists as to whether we’ll get stagflation. The question that will soon be asked is: When will the stagflation become an inflationary depression?
There are various reasons that the world economy has been globalized and the problems we face are worldwide. We cannot understand what we’re facing without understanding fiat money and the long-developing dollar bubble.
There were several stages. From the inception of the Federal Reserve System in 1913 to 1933, the Central Bank established itself as the official dollar manager. By 1933, Americans could no longer own gold, thus removing restraint on the Federal Reserve to inflate for war and welfare.
By 1945, further restraints were removed by creating the Bretton-Woods Monetary System making the dollar the reserve currency of the world. This system lasted up until 1971. During the period between 1945 and 1971, some restraints on the Fed remained in place. Foreigners, but not Americans, could convert dollars to gold at $35 an ounce. Due to the excessive dollars being created, that system came to an end in 1971.
It’s the post Bretton-Woods system that was responsible for globalizing inflation and markets and for generating a gigantic worldwide dollar bubble. That bubble is now bursting, and we’re seeing what it’s like to suffer the consequences of the many previous economic errors.
Ironically in these past 35 years, we have benefited from this very flawed system. Because the world accepted dollars as if they were gold, we only had to counterfeit more dollars, spend them overseas (indirectly encouraging our jobs to go overseas as well) and enjoy unearned prosperity. Those who took our dollars and gave us goods and services were only too anxious to loan those dollars back to us. This allowed us to export our inflation and delay the consequences we now are starting to see.
But it was never destined to last, and now we have to pay the piper. Our huge foreign debt must be paid or liquidated. Our entitlements are coming due just as the world has become more reluctant to hold dollars. The consequence of that decision is price inflation in this country—and that’s what we are witnessing today. Already price inflation overseas is even higher than here at home as a consequence of foreign central bank’s willingness to monetize our debt.
Printing dollars over long periods of time may not immediately push prices up–yet in time it always does. Now we’re seeing catch-up for past inflating of the monetary supply. As bad as it is today with $4 a gallon gasoline, this is just the beginning. It’s a gross distraction to hound away at “drill, drill, drill” as a solution to the dollar crisis and high gasoline prices. Its okay to let the market increase supplies and drill, but that issue is a gross distraction from the sins of deficits and Federal Reserve monetary shenanigans.
This bubble is different and bigger for another reason. The central banks of the world secretly collude to centrally plan the world economy. I’m convinced that agreements among central banks to “monetize” U.S. debt these past 15 years have existed, although secretly and out of the reach of any oversight of anyone—especially the U.S. Congress that doesn’t care, or just flat doesn’t understand. As this “gift” to us comes to an end, our problems worsen. The central banks and the various governments are very powerful, but eventually the markets overwhelm when the people who get stuck holding the bag (of bad dollars) catch on and spend the dollars into the economy with emotional zeal, thus igniting inflationary fever.
This time—since there are so many dollars and so many countries involved—the Fed has been able to “paper” over every approaching crisis for the past 15 years, especially with Alan Greenspan as Chairman of the Federal Reserve Board, which has allowed the bubble to become history’s greatest.
The mistakes made with excessive credit at artificially low rates are huge, and the market is demanding a correction. This involves excessive debt, misdirected investments, over-investments, and all the other problems caused by the government when spending the money they should never have had. Foreign militarism, welfare handouts and $80 trillion entitlement promises are all coming to an end. We don’t have the money or the wealth-creating capacity to catch up and care for all the needs that now exist because we rejected the market economy, sound money, self reliance and the principles of liberty.
Since the correction of all this misallocation of resources is necessary and must come, one can look for some good that may come as this “Big Even” unfolds.
There are two choices that people can make. The one choice that is unavailable to us is to limp along with the status quo and prop up the system with more debt, inflation and lies. That won’t happen.
One of the two choices, and the one chosen so often by government in the past is that of rejecting the principles of liberty and resorting to even bigger and more authoritarian government. Some argue that giving dictatorial powers to the President, just as we have allowed him to run the American empire, is what we should do. That’s the great danger, and in this post-911 atmosphere, too many Americans are seeking safety over freedom. We have already lost too many of our personal liberties already. Real fear of economic collapse could prompt central planners to act to such a degree that the New Deal of the 30’s might look like Jefferson’s Declaration of Independence.
The more the government is allowed to do in taking over and running the economy, the deeper the depression gets and the longer it lasts. That was the story of the 30ss and the early 40s, and the same mistakes are likely to be made again if we do not wake up.
But the good news is that it need not be so bad if we do the right thing. I saw “Something Big” happening in the past 18 months on the campaign trail. I was encouraged that we are capable of waking up and doing the right thing. I have literally met thousands of high school and college kids who are quite willing to accept the challenge and responsibility of a free society and reject the cradle-to-grave welfare that is promised them by so many do-good politicians.
If more hear the message of liberty, more will join in this effort. The failure of our foreign policy, welfare system, and monetary policies and virtually all government solutions are so readily apparent, it doesn’t take that much convincing. But the positive message of how freedom works and why it’s possible is what is urgently needed.
One of the best parts of accepting self reliance in a free society is that true personal satisfaction with one’s own life can be achieved. This doesn’t happen when the government assumes the role of guardian, parent or provider, because it eliminates a sense of pride. But the real problem is the government can’t provide the safety and economic security that it claims. The so-called good that government claims it can deliver is always achieved at the expense of someone else’s freedom. It’s a failed system and the young people know it.
Restoring a free society doesn’t eliminate the need to get our house in order and to pay for the extravagant spending. But the pain would not be long-lasting if we did the right things, and best of all the empire would have to end for financial reasons. Our wars would stop, the attack on civil liberties would cease, and prosperity would return. The choices are clear: it shouldn’t be difficult, but the big event now unfolding gives us a great opportunity to reverse the tide and resume the truly great American Revolution started in 1776. Opportunity knocks in spite of the urgency and the dangers we face.
Let’s make “Something Big is Happening” be the discovery that freedom works and is popular and the big economic and political event we’re witnessing is a blessing in disguise.
This entry was posted on Wednesday, July 2nd, 2008 |
Visit above link to read responses or contribute your own.
_________________
"The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell. |
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blackcat
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| Posted: Sat Jul 12, 2008 6:12 am Post subject: |
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http://www.whatreallyhappened.com/gameover.php
| Quote: | Game Over: Thirty-Six Sure-Fire Signs That Your Empire Is Crumbling
by David Michael Green
So. You've built yourself an empire, eh?
Well, bully for you!
What's next, you ask? Well, now you've got to do what everybody does when they have an empire, of course. You've got to worry about it falling apart, mate!
But how to tell for sure? Let me see if I can be helpful. Here are some rules of thumb to keep in mind, thirty-six sure-fire indicators that your empire is falling apart:
You know your empire's crumbling when the folks who are gearing up their empire to replace yours start blowing up satellites in space. And then they don't bother to return your phone calls when you ring up to ask why.
You know your empire's crumbling when those same folks are cutting deals left, right and center across Asia, Latin America and Africa, while you, your lousy terms, and your arrogant attitude are no longer welcome.
You know your empire's crumbling when you're spending your grandchildren's money like a drunken sailor, and letting your soon-to-be rivals finance your little splurge (i.e., letting them own your country).
You know your empire's crumbling when it's considered an achievement to pretend that you've halved the rate at which you're adding to the massive mountain of debt you've already accumulated.
You know your empire's crumbling when you weaken your currency until it looks as anemic as a Paris runway model, and you're still setting record trade deficits. (Hint: Because you're not making anything anymore.)
You know your empire's crumbling when "the little brown ones" (thank you George H.W. Bush - certainly not me - for that lovely expression) in country after country of "your backyard" blow you off and proudly elect anti-imperialist leftist governments.
You know your empire's crumbling when you can't topple those governments and replace them with nice puppet regimes - like in the good old days - even if you wanted to. And you badly want to.
You know your empire's crumbling when one of their leaders comes to the United Nations and makes fun of your emperor, calling him the devil, and joking about smelling sulphur where he just stood. And though a few folks cringe, everybody laughs.
You know your empire's crumbling when just about your entire military land force is tied up in a worse-than-useless war launched on the basis of complete fabrications, that every day is actually making you less - not more - secure from external threat.
You know your empire's crumbling when almost half the soldiers in that war are high-paid mercenaries, and you don't dare institute a draft.
You know your empire's crumbling when you send soldiers into war with two weeks training and a lack of armor, and then you keep them there for three, four and five rotations.
You know your empire's crumbling when a member of the Axis of Evil can test missiles and explode nuclear warheads, and all you can do about it is mumble some pathetic warnings about how they better not do that again or there will be consequences.
You know your empire's crumbling when you even think that there is an Axis of Evil.
You know your empire's crumbling when a rag-tag military hodge-podge of irregulars has you pinned down in an endless fight you can't win, but also can't lose.
You know your empire's crumbling when you're too dumb to even ban Humvees as a first step toward ending your dependency on a foreign-owned crucial resource.
You know your empire's crumbling when you trade your prior moral leadership on human rights issues for global disgust at your torture, 'extraordinary rendition' (a.k.a. kidnaping for torture) and the dismantling of nine centuries worth of civil liberties progress.
You know your empire's crumbling when you blow off international law that you once helped create, and undermine the institutions of international governance that you once helped build.
You know your empire's crumbling when opinion polls confirm that every month you're more and more despised throughout the world.
You know your empire's crumbling when you can't even pull off the hanging of a tin-pot murderous former dictator without turning him into a hero.
You know your empire's crumbling when you're the richest country in the world, but nearly 50 million of your people don't have basic health care coverage.
You know your empire's crumbling when the World Health Organization ranks your healthcare system 37th 'best' in the world, just above Slovenia, and just below Costa Rica. (And far below Colombia, Cyprus, Saudi Arabia and Morocco.)
You know your empire's crumbling when instead of making it easier for citizens to obtain a higher education, you're making it harder and more expensive.
You know your empire's crumbling when your government gives tax breaks to industries as a reward for exporting your jobs elsewhere.
You know your empire's crumbling when the so-called 'opposition' party can't even turn that obscenity into a viable campaign theme and use it to clobber the worst emperor in your history.
You know your empire's crumbling when your middle class has been stagnant for three decades, while the wealth of the hyper-rich continues to climb through the roof.
You know your empire's crumbling when your reaction to that is to exacerbate the problem by enacting tax policies that massively increase further still the gap between the rich and the rest.
You know your empire's crumbling when the predatory class has taken over your government and is stripping the country of everything not bolted down to the floor. And then it sells the floor itself, as well, to your rivals.
You know your empire's crumbling when you're spending tens of billions of dollars you don't own on new nuclear warheads and space weapons that don't work, to be used against an enemy you don't have.
You know your empire's crumbling when one of your cities drowns and your government does next to nothing before, during and after.
You know your empire's crumbling when a massive environmental nightmare is looming around the corner, and your emperor not only ignores it, but claims it isn't real while taking steps to exacerbate it.
You know your empire's crumbling when your emperor is warned by a CIA briefer of an imminent terrorist attack of vast proportions, and responds by remaining on vacation and dismissing the briefer with the words: "All right. You've covered your ass, now."
You know your empire's crumbling when the same emperor drops everything to fly across the country from his vacation home in order to sign a bill intervening on the wrong side of a personal medical drama involving a single family.
You know your empire's crumbling when gays and immigrants are used as diversionary issues to keep people from thinking about the pillaging of their country and their wallets actually taking place. And it works.
You know your empire's crumbling when people are getting more religious and less scientific, not the other way around.
You know your empire's crumbling when your political leaders start to be chosen by dynastic rules of succession.
And you especially know your empire's crumbling when the most idiotic child of one of the least accomplished leaders in its history is not only crowned as the next emperor, but is even revered for a time by most of the public as a great one.
Rome? Britain? Spain?
At this rate we'll be lucky to end up like Belgium. |
_________________
"The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell. |
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acrobat74
Trustworthy Freedom Fighter
Joined: 03 Jun 2007
Posts: 836
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| Posted: Sat Jul 12, 2008 6:50 pm Post subject: |
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http://www.economist.com/opinion/displaystory.cfm?story_id=11670314
| The Economist wrote: | The credit crunch
Britain’s sinking economy
Jul 3rd 2008
From The Economist print edition
It is going to get nasty; exactly how bad depends on the Bank of England and, especially, Gordon Brown
THE portents are increasingly gloomy. More and more signs are pointing to a punishing slowdown—with a recession looking likelier by the day. After 16 years in which Britain’s GDP has grown without halt, a downturn will come as a painful shock. Yet what may matter more is how Gordon Brown’s enfeebled government responds to the bad times ahead.
A stream of unwelcome news has reinforced fears that the British economy, still the fifth-largest in the world in 2007, is set to shrink. Those concerns were crystallised on July 2nd when two large firms reported serious setbacks. Taylor Wimpey, the country’s biggest homebuilder, revealed that it had been unable to raise the extra finance it needs to shore up its balance-sheet. Marks & Spencer, a food and clothing retailer, reported falling sales and Stuart Rose, its chief executive, gave warning of “stormy times ahead”. Both companies’ shares, especially Taylor Wimpey’s, tumbled heavily in subsequent trading, and the pound also fell in response as foreign-exchange dealers became more fretful about Britain’s prospects.
The markets are pinpointing two areas in which the economy is most vulnerable to a downturn: housing and retailing. Just as America’s growth has been dragged down since 2006 by falling residential investment, so Britain is now suffering a sharp contraction in homebuilding. That forms part of a broader slump in the housing market, in which turnover is shrinking because mortgage finance has dried up and house prices are tumbling (see article). Households are already being squeezed by the soaring costs of fuel and food. Now they are feeling even poorer as their homes fall in value, which makes them reluctant to shop.
Official figures, it has to be said, paint a more uplifting picture. The national accounts show GDP grew at an annual rate of 1.1% in the first quarter, a modest pace compared with the trend rate of 2.5-2.7% but some way from recession. Yet business surveys are signalling a downturn. Consumer confidence is at an 18-year low; for big purchases it has plumbed a 26-year low. And even if the official numbers turn out to be right, the prospects for both GDP growth and consumer spending look dire as living standards stagnate because of rising inflation.
Not just recession, M&S recession
Maybe the British economy will muddle its way through over the next year or two without going into recession; but it would be surprising if it did. Like other rich countries, Britain is feeling the downdraft from the credit crisis at a time when rising inflation makes it hard for the central bank to provide succour. But it is more exposed than most for three main reasons.
First and foremost, the housing bubble was one of the frothiest in the world. Real house prices increased by around 140% in the ten years to early 2007. In Spain (see article) and Ireland, where price gains rivalled Britain’s, heady housing-market booms have given way to bust. House prices in America are falling faster than during the Great Depression.
Second, British households are the most indebted in the G7, and the tide of cheap credit that caused the housing and consumer-spending booms has ebbed particularly fast in Britain. Within Europe, British mortgage lenders were especially keen on securitising home loans (pooling them to back bonds sold on to investors). The virtual closure of the securitisation market over the past nine months has thus had a disproportionately big effect on mortgage finance in Britain.
Third, economic growth was buoyed in recent years as the City thrived on the back of all the clever financial deals that have now come unstuck. An economy that came to rely as heavily as Britain’s did on finance is clearly vulnerable to an extended banking crisis. The era in which GDP growth was supercharged by a financial-sector boom is over.
From hubris to humility
Adapting to this new world will be hard. Business tycoons who grew rich on cheap, sound money will need new skills; so will David Cameron’s Conservatives, whose focus has been on social policy, not economics. But for Mr Brown, a stumbling economy will be an especially chastening experience.
When he was chancellor of the exchequer, inflation was low and stable, national output grew quarter after quarter, and year after year Mr Brown boasted of his brilliant management. Now his claims look hubristic. Indeed, public fears about the economy are the main reason why the Tories have surged in the polls. Having made his economic reputation in fair weather, Mr Brown must now cope with more troubled times.
Two temptations present themselves. One will be to mount a fiscal rescue package. If Mr Brown had fattened the public finances during the good times, as he should have done, then this would be no bad thing. Unfortunately, he did quite the opposite. And now the Treasury has bent its supposedly binding fiscal rules by borrowing £2.7 billion ($5.4 billion) this year to help tax losers from Mr Brown’s final budget. The government cannot afford more vote-pleasing handouts.
A further, and larger, worry concerns monetary policy. Siren voices are arguing for the Bank of England to cut interest rates again. It should ignore them. Consumer-price inflation is already at 3.3% and expected to rise above 4% (double the official target rate) later this year. Britain’s economic prospects already look bad enough. Letting inflation escape would cause even more pain in the long run. The abiding lesson of monetary history is that the higher inflation gets, the costlier it becomes to bring down again.
Therein lies Mr Brown’s second temptation. Making the Bank independent was one of his genuine achievements: he has no day-to-day control over it. But he could still influence outcomes by raising the inflation target and thus loosening monetary policy; and a government whose electoral prospects look as dire as this one’s do is bound to be tempted.
If Mr Brown succumbs to that temptation, he might pick up a few more votes at the general election due within the next two years—but probably not enough to win. And he would then go down in history as a prime minister whose tenure was as disastrous as it was brief. |
_________________
Summary of 9/11 scepticism: http://tinyurl.com/27ngaw6 and www.911summary.com
Off the TV: http://www.youtube.com/watch?v=M4szU19bQVE
Those who do not think that employment is systemic slavery are either blind or employed. (Nassim Taleb)
www.moneyasdebt.net
http://www.positivemoney.org.uk/ |
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Disco_Destroyer
Trustworthy Freedom Fighter
Joined: 05 Sep 2006
Posts: 6342
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| Posted: Sun Jul 13, 2008 12:08 pm Post subject: |
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http://uk.news.yahoo.com/afp/20080713/tts-us-banking-company-indymac-f inance-p-3c8ed92.html
| Quote: | US bank IndyMac seized amid intensifying crisis
AFP - 1 hour 20 minutes agoLOS ANGELES (AFP) - Federally-seized IndyMac Bank was due to reopen Monday after suffering one of the biggest bank closures in US history, as the troubled US mortgage industry struggles to stem further meltdown.
The regulatory Office of Thrift Supervision (OTS) announced Friday it had placed the California-based bank, worth an estimated 32 billion dollars, under the control of the Federal Deposit Insurance Corporation (FDIC).
The mortgage lender, which will reopen as IndyMac Federal Bank, marked the largest bank failure in a year of mortgage and foreclosure crisis highlighted by a surge in defaults and a plunge in housing prices which are rippling through the US economy.(http://uk.news.yahoo.com/fc/budget-economy.html)
The FDIC stressed Saturday that it was seeking to return the bank to private operation within a few months.
"When we reopen Monday, we will begin the process of marketing this bank to try to get it back into the private sector. We expect that to take about 90 days," FDIC spokesman David Barr said on CNN television.
Barr said the FDIC had already fielded more than 9,000 calls from panicky customers wondering if their money was safe.
FDIC guarantees 100 percent of personal investments up to 100,000 dollars.
The bank was the fifth FDIC-insured failure of the year, and is expected to cost the FDIC between four and eight billion dollars, wiping out as much as 10 percent of its 53-billion-dollar Deposit Insurance Fund.
OTS regulators said the closure was prompted by withdrawals of 1.3 billion dollars made by the bank's customers since June, when doubts were raised publicly about the bank's long-term viability.
"The institution failed today due to a liquidity crisis," OTS director John Reich said Friday.
The decision had been anticipated after IndyMac's share price collapsed. The bank's stock, which traded at more than 28 dollars per share one year ago, closed Friday at just 28 cents per share.
The company announced in the past week it had halted lending and was planning to shed 3,800 jobs, more than half of its work force.
At its peak in 2006, the company, which had been reeling under the foreclosure crisis, employed 10,000 people. The latest layoffs would have reduced the work force to around 3,400.
IndyMac's woes came as US mortgage finance giants Fannie Mae and Freddie Mac were being pushed to the brink as a meltdown in their share prices in the past week raised fears of a government bailout.
The government-chartered, shareholder-owned Fannie Mae and Freddie Mac underpin some five trillion dollars in home loans.
In volatile trade Friday, shares plunged some 50 percent for both firms before a partial recovery. Freddie Mac ended with a loss of three percent and Fannie was down 22 percent, but both have lost around 75 percent since the start of the year.
The two firms said separately that they were "adequately capitalized" and had ample liquidity despite swirling market fears, while Treasury Secretary Henry Paulson on Friday offered no indication of imminent intervention.
"Today our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission," Paulson said.
IndyMac bank had been sent into freefall after comments by Democratic Senator Charles Schumer last month concerning the bank's health prompted a flood of withdrawals by panicked customers.
Schumer had sent letters to federal regulators, quoted in the Wall Street Journal, saying he was "concerned that IndyMac's financial deterioration poses significant risks to both taxpayers and borrowers and that the regulatory community may not be prepared to take measures that would help prevent the collapse of IndyMac."
The OTS's Reich said in the newspaper that Schumer's comments gave the bank "a heart attack."
Schumer quickly responded: "If OTS had done its job as regulator and not let IndyMac's poor and loose lending practices continue, we wouldn't be where we are today," the Journal quoted him as saying.
Reports said IndyMac's collapse was the second biggest in US history behind the 1984 failure of the 40-billion-dollar Continental Illinois Bank. |
_________________
'Come and see the violence inherent in the system.
Help, help, I'm being repressed!'
“The more you tighten your grip, the more Star Systems will slip through your fingers.”
www.myspace.com/disco_destroyer |
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conspiracy analyst
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Joined: 27 Sep 2005
Posts: 2279
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| Posted: Mon Jul 14, 2008 10:31 pm Post subject: |
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Norrthern Rock goes global with Indymac's copycat defaults...
http://tinyurl.com/6qfnzq |
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conspiracy analyst
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TonyGosling
Editor
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Location: St. Pauls, Bristol, England
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TonyGosling
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conspiracy analyst
Trustworthy Freedom Fighter
Joined: 27 Sep 2005
Posts: 2279
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| Posted: Sun Sep 14, 2008 9:34 pm Post subject: |
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Chinese economists warn of the “biggest adjustment” in 30 years
By John Chan
12 September 2008
While last weekend’s bailout of Freddie Mac and Fannie Mae received plaudits from Wall Street, it was also warmly welcomed by the Chinese government. Most immediately, Beijing was concerned about the tens of billions of dollars in bonds that Chinese banks hold from the two mortgage giants. At the same time, China’s manufacturers are desperate for any sign that the US will emerge from the subprime crisis, which has sapped consumer spending and therefore purchases of Chinese exports.
Several leading economists in China have begun to warn of major difficulties flowing from the economic slowdown in the US, Europe and Japan. After the expansion of the economy on the basis of selling cheap consumer goods to the US and other Western markets in the 1990s, a sharp decline in demand could lead to mass unemployment and provoke widespread social unrest.
In an interview with the First Financial Daily published on September 1, Li Xiangyang, deputy director of the World Economic and Political Research Department of the official Chinese Academy of Social Sciences (CASS), admitted that the subprime meltdown was a rude awakening for Chinese economists, who had long understated the risk of major global crises.
Li was referring to the fact that many Chinese economists adapted to Western neo-liberal theories in the 1990s, believing that the global recession in the 1970s and the Great Depression of 1929 were events of the past. “This conception has been dominating China’s economic circles for years,” Li said, adding that it had weakened an awareness of the emerging global downturn.
Since the Chinese Communist Party (CCP) regime turned to the capitalist market in 1978, the official Stalinist ideologues and academics have all but dropped their “socialist” window dressing and now openly serve the new capitalist elite. Dismissing the Marxist theory of capitalist breakdown as “outdated,” they claim that world capitalism has learned to regulate its contradictions and that the economic depressions, social revolutions and imperialist wars of the first half of the twentieth century will never return. Such arguments are now looking seriously flawed.
Li admitted China was facing the “the most serious external shock in the 30 years of reform and opening up”. China was a closed economy throughout the mid-1970s period of world stagflation—a combination of economic stagnation and high inflation. Its market reforms only began in earnest in 1978. Even during the Asian financial crisis in 1997-98, China escaped most of the impact because the developed economies in North America and Europe were largely unaffected. China still had a closed capital market, unlike today when hundreds of billions of dollars in “hot money” or speculative capital has flooded into the country. Li warned that it was now impossible for China to “decouple” from the global economic crisis.
The restoration of capitalism in the former Soviet Union in 1991 and China’s transformation into a vast sweatshop following the crushing of protests in Tiananmen Square in 1989 provided a much-needed boost to world capitalism. The low-cost goods made in China enabled US economic policy makers to maintain a cheap credit policy without the fear of inflationary pressures. Low interest rates formed the basis of the housing bubbles and debt-driven consumption in the US over the past decade, which in turn provided a huge market for Chinese goods.
Now this process is coming to an end. Li explained: “The subprime crisis was actually a ‘correction’ to years of debt-driven consumption in the US, marking the end of unsustainable economic growth based on ‘spending tomorrow’s income today’. However, the cost of this ‘correction’ was borne by the rest of the world. Within the US economy, the ‘spend tomorrow’s income today’ debts of private companies were socialised. The savers paid the bill for the lavish spenders, through government interventions. Meanwhile, American debts were globalised: global savers paid the bill for American consumers, through inflation and devaluation of the dollar. This is the privilege of being the holder of the world currency.”
The comments reflect a certain bitterness among the capitalist elite in China, which now confronts declining global demand and rising commodity prices, while the giants of US finance capital are being bailed out. Li called for China to develop its own transnational corporations, rather than simply remain an assembly line for Western multinationals.
Rising debts and insolvencies
Andy Xie, a former chief Asia analyst for Morgan Stanley, also warned in the financial magazine Caijing on September 1 that China was facing its biggest challenge in three decades. He pointed out that for the first time in 30 years, Europe, Japan and the US were contracting simultaneously, creating enormous difficulties for Chinese exports. In addition, a huge inflow of speculative capital had created unstable asset bubbles in China. Many companies and local governments confronted a crisis of insolvency if the bubbles burst.
More fundamentally, rising production costs were undermining the entire basis of China’s economic expansion as a platform for cheap manufacturing. Exports accounted for 40 percent of China’s gross domestic product (GDP) and contributed 4 percent of the country’s total annual growth. Xie said problems with exports could be traced back to 2004, when global commodity prices started to rise. Rising prices led to demands for wage increases. As a result, large numbers of labour-intensive firms, which had always operated on thin profit margins, had been pushed to the edge.
Xie pointed out that the sentiment among entrepreneurs was that things would get better. As a result, firms kept their production plans and attempted to maintain export growth over the past three years. Now, with the danger of a downturn in major markets, many exporters faced serious problems. Export corporations listed on the Hong Kong stock market had seen their share values fall by 50-80 percent in the past two years, raising fears of a collapse in the export industry.
Corporate debt had grown as manufacturers turned to real estate and share markets, only to suffer more losses. So far this year, China’s share markets had plunged by 59 percent, wiping out $US2.86 trillion in value. Local governments, which were dependent on selling land rights and taxing real estate transactions, were also heavily indebted.
Xie predicted that non-performing loans would increase substantially in the next 12 months as the property boom flattened out. “The problem is very serious,” he warned. According to one official estimate, some 65,000 small and medium firms went bankrupt in the first half of this year, throwing 20 million people out of work. Many employers simply fled without paying wages to workers or debts to the banks.
Xie, a staunch advocate of the market, opposed any government assistance for ailing enterprises. Instead, he called on the government to prevent bankrupt businessmen from fleeing with their assets and creating major difficulties for banks. “[T]he action of local officials to spend money to rescue them is very stupid. The money could be stolen. To protect China’s financial security, the most effective policy is to ban heavily indebted entrepreneurs from leaving China,” he wrote.
Xie’s solution to China’s problems is another round of economic restructuring—as was carried out in the aftermath of the Asian financial crisis a decade ago. At that time, Beijing implemented sweeping privatisation of state enterprises and public housing, joined the World Trade Organisation (WTO) and built a national highway network. Tens of millions of jobs in the state sector were destroyed, even as the costs of housing, education and health care skyrocketted due to the lack of public funding. According to Xie, these draconian “market reforms” laid the basis for the boom of the past 10 years.
Xie’s proposals to address the current crisis include developing Chinese transnationals, investing more in infrastructure and further deregulating the state-controlled financial system. Such a perspective is in line with calls by many economists in recent years for China to reduce its reliance on exports and expand the domestic market. But the transformation of a cheap labour platform into a consumer-driven economy inevitably confronts obstacles.
The domestic market
The Wall Street Journal on September 2 pointed to some of the difficulties in expanding domestic consumption in China. Far from increasing, consumption in China has declined as a proportion of GDP from around 50 percent in the 1980s to just 37 percent. Fixed asset investment accounts for 45 percent of the GDP, which has led to massive overcapacity. “Behind China’s macroeconomic imbalances lies a political calculation,” the newspaper explained. “With 10 million job seekers migrating into urban areas every year, China had to provide lots of jobs to avoid mass unemployment and social unrest. Because consumer income and spending were so weak, the government felt it had no choice but to pump up capital investment and exports.”
Huge vested interests oppose any shift to domestic consumption and higher wages. For local officials, jobs are already becoming harder to create. In the past decade, China has eliminated an estimated 20 million manufacturing jobs due to improvements in productivity. High wages are the last thing that provincial and local governments want as they confront growing competition for investment, not only within China, but from Vietnam and India.
Other methods of putting money into the pockets of consumers also face opposition. The government could lift interest rates on consumer deposits, but businesses would oppose any increase in their loan repayments. Further appreciation of the yuan would increase domestic purchasing power for imported goods but at the expense of export competitiveness. The government could reduce personal income tax but if that meant increased corporate taxes, it would be resisted by the powerful business elite.
A new labour law was introduced this year mandating employers to provide pensions, social insurance contributions and other benefits for workers. As is the case with other regulations in China, many businesses simply flout the law and enforcement is weak. China could increase domestic consumption by investing in public schools, healthcare and unemployment compensation, so that workers and the rural poor would not have to save in case of illness or job loss. But as the Wall Street Journal explained: “These measures are opposed by many local governments that often prefer to spend money on building roads and bridges. That behavior may boost GDP more quickly, but it also provides more opportunity for corruption and payoffs.”
So far, the economic slowdown has been gradual. But there are danger signs. The Chinese finance ministry recorded a 13.8 percent annualised growth in tax revenues in July—almost a fifth lower than the rates in the same month last year and the first half of this year. The announcement raised concerns that China has little room for stimulatory policies such as tax cuts to compensate for falling growth rates.
While it is still growing at around 10.4 percent, the Chinese economy is riddled with internal contradictions that could rapidly produce an economic, not to mention political and social, crisis should it be hit with a major external shock. That is why Chinese economists are nervously watching events in the US where a further financial meltdown could not only cause huge losses for Beijing, which holds hundreds of billions in US investments, but end the flood of foreign investment that has sustained the so-called Chinese miracle. |
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conspiracy analyst
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Joined: 27 Sep 2005
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| Posted: Sun Sep 14, 2008 9:55 pm Post subject: |
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Has the West Reached Its Limits?
by Richard C. Cook
Global Research, September 14, 2008
"Change" Part I
“Train-wreck” doesn’t even begin to describe what is starting to happen to the U.S. today with the financial crisis, an onrushing depression, and the failure of George W. Bush’s war policy as he is faced down by Iran and the Russian bear.
But in an even broader sense, the West, as a civilization, after a century of world war and the utter failure of global finance capitalism, may have reached its limits.
Those with a vested interest in the status quo dismiss any suggestion that something is wrong. This includes Donald Luskin, author of an article in the Washington Post on Sunday, September 14, titled: “A Nation of Exaggerators: Quit Doling Out That Bad Economy Line.”
Luskin writes, “The relentless drumbeat of pessimism in the media and on the campaign trail” is “a virus.”
He continues: “Sure, there are trouble spots in the economy, as the government takeover of mortgage giants Fannie Mae and Freddie Mac, and jitters about Wall Street firm Lehman Brothers, amply demonstrate. And unemployment figures are up a bit, too. None of this, however, is cause for depression -- or exaggerated Depression comparisons.”
Continue reading, and you find out who Luskin is: a campaign adviser to John McCain.
We know that “where you stand depends on where you sit”—and who pays you for advice. So is a catastrophic meltdown coming?
If so, probably a majority of the people in the world are thinking: “Serves them right.” For the last 500 years, the West has been striding across the globe, armed to the teeth with firearms, warships, bombers, and—more recently—depleted uranium, enforcing the “white man’s burden” by enslaving nations and peoples and confiscating everything of value—ranging from art objects to gold to oil—that can be carried away.
The financiers behind it all have also used the diabolically clever practice of creating money “out of thin air” to put the natives everywhere into debt, and, when that has proven insufficient, of doing the same to their own populations.
All this is rationalized by various brands of racism, cultural superiority, social Darwinism, historical determinism, “dominion of the Elect,” “God’s chosen people,” etc. Or, simply, “might makes right.”
Some call it “The New World Order.”
So today, we Americans, denizens of the “land of the free and the home of the brave,” victors in two world wars, bearers of “democracy” to Afghanistan and Iraq, allies of the brave Israelis who hold high the banner of Judeo-Christian values among the ungrateful Palestinians—well, we Americans owe our own bankers almost $70 trillion at most recent count. With the government takeover of Fannie Mae and Freddie Mac, we owe holders of bad housing loans, including the governments of China , Korea , and Japan , another few trillion.
The bluster of Kissinger, Brzezinski, the Kristols, the Christian fundamentalists, and their paid-off politicians and media millionaires notwithstanding, America —indeed, the entire West—has been found out, perhaps even checkmated on the world stage.
The Bush/Cheney wars in Afghanistan and Iraq have blackened America ’s name forever. Iran has called our bluff. In Israel the gap between rich and poor is increasing as much as in the U.S. According to an article by Ian S. Lustick, the Palestinians have stood up to the Israelis to the point where more Jews are emigrating from that country than are moving in, and where those who remain are increasingly huddling around Tel Aviv as a safe haven. (Ian S. Lustick, “Abandoning the Iron Wall: ‘ Israel and the Middle Eastern Muck’,” Middle East Policy, Vo. XV, No. 3, Fall 2008.)
In the 1990s, the European bankers used U.S. and NATO forces to dismember Yugoslavia so George Soros and the Rothschilds could gobble up Balkan resources. But that strategy is failing in the Caucasus, where the Russians fought back against the genocidal attack by Dick Cheney’s poodle, Mikheil Saakashvili, the New York-trained attorney the CIA got elected as the president of Georgia .
And now the people of Ukraine , the “Little Russians,” realizing what the West has in store for them, are rushing back into the Slavic fold and may be only a year or so away from reuniting with their “Great Russian” cousins across the border.
What is telling is to watch the Western financier press, chiefly the Washington Post and the New York Times, fume about Russian prime minister Vladimir Putin and his “authoritarian” manner. An example is the article by Times correspondent Ellen Barry on Putin’s September 11 press conference in Moscow . She wrote, “In three-and-a-half hours, in tones that were alternatively pugilistic and needy, Vladimir V. Putin tried to explain himself.”
I’m sorry, Ms. Barry. You and your editors may think your writing is cute, but Vladimir Putin is the foremost figure on the world stage today. He will remain so after George W. Bush leaves the White House disgraced.
Putin is heir to an epochal movement of patriots who began in the 1970s to take back Russia from within. It started with a base of operations within the KGB and the Orthodox Church, led to Gorbachev’s glasnost in the 1980s, and culminated in the Second Russian Revolution of 1991. At that point, the Western financiers gleefully rushed in to support an assault from the Russian “oligarchs” who were looting Russia of everything it owned.
The oligarchs were the shock troops of a financier assault that had already begun to overlap in the West with the Russian Mafia. Cheered on by the Washington Post and aided by academic advisors from places like Harvard, this international syndicate nearly destroyed Russia during the 1990s. But when Putin was appointed interim president by Boris Yelstin in 1999, and after winning the presidential election of 2000 in his own right, he began to fight back.
From the mid-1970s to today, thousands of Russian gangsters, along with many hard-line Bolsheviks/Stalinists, were allowed to emigrate. Many settled in the U.S. and are here today, and many more settled in Israel . In fact, one reason the price of condos in New York , Miami , Tel Aviv, and elsewhere has inflated so much reportedly is the flood of cash from racketeering.
The crooks have allied themselves with the Colombian drug cartels and have heavily infiltrated the world’s financial systems, even setting up their own banks for laundering money and speculating in the commodities markets.
Today, Putin is cleaning out the remaining gangster class. His efforts reached a milestone in January with the arrest in Moscow of Semion Mogilevich, called “the world’s most dangerous man.”
Putin has declared that the world will not be governed in a “unipolar” manner; i.e. by the U.S. military as the police force for the global financiers. This does not mean Russia has to be our enemy. In fact the world would be much better off, and much safer, if we joined with Russia as allies in keeping the peace.
But to do that our system would have to change, because finance capitalism is far too unstable to coexist with other nations as equals. It must either grow or die, because it always needs new victims to pay the interest on its usury practices and to finance its speculative balloons. As a last resort, it needs the kind of financial institution bailouts being engineered by Secretary of the Treasury Henry Paulson, where the only remaining stopgap is borrowing from public funds and adding to the national debt.
Once economic growth stops, as has now happened, and all the bubbles to restart it have blown up, as has also happened, the end really is nigh. Especially if the host—the U.S. —is bankrupt.
What is coming at us today isn’t just another downturn. If people like McCain adviser Donald Luskin doubt it, maybe, instead of writing campaign propaganda, they should ask the fired CEOs of Fannie Mae and Freddie Mac, the stockholders of Lehman Brothers, whose shares have dropped ninety percent in less than a year, and the millions who are losing their homes.
Presidential candidates Barack Obama and John McCain are calling for “change.” Well, if I were standing on a beach with a 100-foot tsunami roaring in my direction, I would call for change too. Except I would not be standing around arguing about the meaning of the words “lipstick on a pig.”
Richard C. Cook is a former U.S. federal government analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, NASA, and the U.S. Treasury Department. His articles on economics, politics, and space policy have appeared in numerous websites and print magazines. His book on monetary reform, entitled We Hold These Truths: The Hope of Monetary Reform, will soon be published. He is the author of Challenger Revealed: An Insider’s Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age, called by one reviewer, “the most important spaceflight book of the last twenty years.” His website is www.richardccook.com. Comments or requests to be added to his mailing list, or for information on his Special Report entitled “Election 08: Crime Family Food Fight or Threat to Mankind?” write EconomicSanity@gmail.com. |
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TonyGosling
Editor
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Posts: 18335
Location: St. Pauls, Bristol, England
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Whitehall_Bin_Men
Trustworthy Freedom Fighter
Joined: 13 Jan 2007
Posts: 3205
Location: Westminster, LONDON, SW1A 2HB.
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| Posted: Wed Sep 17, 2008 12:07 am Post subject: |
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Stuck to the side of our compacter lorry - MoD waste paper basket collection this evening.
| Quote: | George Monbiot.
He said in his book, The Age of Consent, that the best way for Third World countries to recover from their debts would be to default on their debts en masse and in a co ordinated way. We start with Uganda and then Gambia, Congo, Botswana, Argentina, Chile, Peru... In this way the world's banking system is destroyed as $trillions must be written off - "invade, then" being the response to the bank when it incontinently demands its money back.
I couldn't think of a better time to do it. Turning the US into a poorer country than Iraq because the US $ has no worth (it only exists thanks to being the world's most used currency - Saddam used Euros because of this) would be a sad side effect, but given the choice between a Neocon geriatric and a megalomainiac in November, that's no great loss!
Shrubber |
_________________
--
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com
http://aanirfan.blogspot.com
Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing." |
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TonyGosling
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Joined: 25 Jul 2005
Posts: 18335
Location: St. Pauls, Bristol, England
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conspiracy analyst
Trustworthy Freedom Fighter
Joined: 27 Sep 2005
Posts: 2279
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| Posted: Wed Sep 17, 2008 8:22 am Post subject: |
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Asset prices of outstanding mortgages are in freefall. Britains largest mortgage provider with 20% share is going down this morning, will it reach the floor by the afternoon?
HBOS
Sector: Banks
Share Price: 105.00p
Change Today: -77.00p
Price Data
Currency UK Pounds
Price 105.00p Price Down
Change Today -77.00p
Volume 48,166,758
16-Sep-08 Close 182.00p
Shares Issued 5,269m
Year End 31-Dec-07
Dividends
Latest Previous
Final Interim
Ex-Div 12-Mar-08 08-Aug-07
Paid 12-May-08 08-Oct-07
Amount 32.30p 16.60p
Share Price
Detailed Price Data
Share Price 105.00p Price Down Close 182.00p
Change Today -77.00p Volume 48,166,758
Percent Change -42.31% Day High / Low 204.75p / 105.00p
Update Time 08:55:06 Year High / Low 978.99p / 105.00p
Bid 120.00p Last Trade Price 160.20p
Offer 90.00p Last Trade Amount 9,311
Open 200.00p Last Trade Time 12:39:55
Share Price Changes
Period Price Change Percent Change
1 week 299.75p -194.75p -64.97%
1 month 299.50p -194.50p -64.94%
3 months 326.41p -221.41p -67.83%
6 months 460.02p -355.02p -77.18%
1 year 812.16p -707.16p -87.07% |
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TonyGosling
Editor
Joined: 25 Jul 2005
Posts: 18335
Location: St. Pauls, Bristol, England
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Disco_Destroyer
Trustworthy Freedom Fighter
Joined: 05 Sep 2006
Posts: 6342
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| Posted: Thu Sep 18, 2008 10:18 am Post subject: |
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| Quote: | "The Game Is Over?"
"It's got to get worse."
"All the government's doing is trying to make the situation worse in the long run by posponing it....." |
When is the election? Let the conservatives battle it out?
_________________
'Come and see the violence inherent in the system.
Help, help, I'm being repressed!'
“The more you tighten your grip, the more Star Systems will slip through your fingers.”
www.myspace.com/disco_destroyer |
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Disco_Destroyer
Trustworthy Freedom Fighter
Joined: 05 Sep 2006
Posts: 6342
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| Posted: Thu Sep 18, 2008 10:22 am Post subject: |
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Oh and US Gov. is bailing out AIG.
Apparently worlds 5th largest Co. according to assets held 
_________________
'Come and see the violence inherent in the system.
Help, help, I'm being repressed!'
“The more you tighten your grip, the more Star Systems will slip through your fingers.”
www.myspace.com/disco_destroyer |
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