Wednesday, October 1, 2008

Feeding Frenzy In DC

October 1, 2008

Elaine Meinel Supkis

Once it was decided that the bail bill would pass no matter what, it was treated like the military spending bills: Xmas in July, so to speak. Money is meaningless as everyone bids up the ante and the bottom line is totally disregarded. In the middle of this crisis, the dollar is growing stronger against all currencies which is very bad news in the long run. For this is ultimately all about the trade deficit and the giant sucking sound that is the noise of all our industries, jobs and other vital things being sucked out of this nation. We are NOT Japan in any way, shape or form. We are a doomed empire.

BREAKING NEWS II: THE SENATE PASSED UNPOPULAR BILL. 74 to 25. Thanks a trillion, guys. Latest polls shows Congress has an approval rating of just 15%. Isn't this popular.

Breaking News: Senate Wants To Break The Magic Flying Piggy Bank:

President Bush on Wednesday urged passage. "It's very important for members to take this bill very seriously," he said. "It's important to get credit flowing again."

The legislation would usher in one of the most far-reaching interventions in the economy since the Great Depression.

Advocates say the plan is crucial to government efforts to attack a credit crisis that threatens the economy and would free up banks to lend more. Opponents say it rewards bad decisions by Wall Street, puts taxpayers at risk and fails to address the real economic problems facing Americans.

Because of Senate add-ons, the bill's initial price tag will be higher than the $700 billion that the Treasury would use to buy troubled assets. But over time, supporters say, taxpayers are likely to make back much if not all of the money the Treasury uses because it will be investing in assets with underlying value.

Hey, why not make this bill $10 trillion? Hell! The Derivatives Beast will eat wealth to the tune of around $600 trillion. So why not create $600 trillion out of thin air? Then everything will be worth a million bucks including a loaf of bread.

Yes, this is pure Weimar Germany all over again. Seems people can't learn from the past. Too much trouble, I suppose. The sky will literally be the limit. The dear, demented Goddess of Inflation is laughing while the Goddess of Depression is taking her meds because she is very sad. Sigh. The Derivatives Beast was creating the perfect conditions for a depression. Now, it is all pure manic inflation. We will see the upper limits of numerology probed deeply here. We might even find the next highest prime number this way! Forget using mere computers to find one with that many digits.



Section 19(b)(2)(A) of the Federal Reserve Act (12 U.S.C. 461(b)(2)(A)) is amended--
(1) in clause (i), by striking `the ratio of 3 per centum' and inserting `a ratio of not greater than 3 percent (and which may be zero)'; and

(2) in clause (ii), by striking `and not less than 8 per centum,' and inserting `(and which may be zero),'.

The amendments made by this title shall take effect October 1, 2011.

The Ron Paul site is a good place to get breaking news. Of course, the entire system is now determined to reach the El Dorado of infinite free credit. The wet dream of all dead beats is to have endless loans with no interest to pay and never pay off the principal. The US is pursuing this relentless program of super-low interest rates so our debts can continuously turn over with no rising penalties. With this, we can also 'grow' our economy via increasing our spending/debt levels to infinity. The 'consumer economy' depends on endless flows of easy credit.

I had trouble buying a used car for my son who is working, not even a student! Now, lending for buying cars has collapsed nearly totally. This is because the Derivatives Beast finally has appeared and is no longer invisible. It is rapidly eating up all credit and all reserves. Emergency dollars were hosed all over the banking system of the planet this week and it could not capitalize anything. This is because the magical Beast can eat infinite money. For the banking gnomes fed this creature.

It is a negative entity. So long as it is not released from the Cave, it will grow and grow but have no effect on the planetary monetary systems. But when key insurers such as AIG go bankrupt, this triggers all the credit default swaps that is the manifestation of the Derivatives Beast. So now, everyone wants it to go away and it is hungry. No longer content to be all negative numbers that don't exist, it desires above all things, to have positive numbers equal the negative numbers. This way, it is fulfilled and can then go back to sleep again.

Trying to get around this $600 trillion creature is impossible. But the US and others hope to evade it by doing away with even the most basic banking regulations and underpinnings. If everything is totally fake, then it doesn't matter if the Derivatives Beast, a concoction straight out of the twisted, greedy brains of the banking gnomes, won't matter, either. The Beast doesn't care for these niceties. Being a creature of the Outer Darkness, it is content to finish its conversion from invisible to visible, from black to white and from hungry to satiation.

From the Boyz at Bespoke Investment Group: Historic Strength for the Dollar

Less than one year after supermodel Gisele B√ľndchen started only accepting payment in Euros, the US Dollar is soaring today as financial troubles spread across the globe. In addition to having its best day ever versus the Euro since that currency was introduced in 1999, the US Dollar index is also having its eighth best day since 1971.

The Bespoke boyz are hilarious. The photo shows some very young, fresh kids who obviously have not much a grip on history. All of the record 'float' days listed above are days I recall rather well! For these periods always preceded huge changes. Namely, the Bretton Woods II, the Plaza Accords, the Louvre Accords, etc. Every damn time, the dollar was strong, the trade deficit was growing and the US was clawing away at Germany and Japan, in particular, to weaken the dollar.

Since 1996, the US has given up on trying to control the yen and the German currency which is now the euro. We just surrendered and accepted gigantic trade deficits in return for 'cheap goods' thanks to Germany and Japan keeping the dollar as strong as possible.

In the last 3 years, the euro has been the world's strongest currency. This is causing huge pain in Europe and is the cause now of a huge push to weaken the euro so trade with the US can resume its mostly one-way characteristic which we see with Japan, for example.


Higher Cost of Foreign Oil Continues to Be Major Factor in the Increase The United States had a record monthly deficit of more than $1.1-billion in its trade with foreign countries in August, the Commerce Department reported today.

January 1, 1978 The Trade Deficit Mounts Accompanied by Dire Warnings

The outlook for world trade looked gloomier than ever last week: The United States reported a continuing, massive trade deficit. The Japanese reported a larger-than-expected trade surplus. And the Organization for Economic ...

Apr 15, 1988: Stocks Plunge 101 as Trade Gap Rises Unexpected Hike Pushes Interest Up, Dollar Down

A declining dollar eventually is supposed to narrow the trade deficit by making foreign goods more expensive in the United States and American products cheaper abroad. But it is difficult to staunch the flow of imports as long as spending remains robust in the United States.

West German Finance Minister Gerhard Stoltenberg also played down the significance of the one-month surge in the U.S. trade deficit, which was disclosed only one day after top economic officials from the seven leading industrial democracies again vowed to work together in their efforts to stabilize the dollar.

"There is some evidence that the rebuilding of the American economy is picking up steam," said David Hale, chief economist at Kemper Financial Services in Chicago. "Most of the growth in exports appeared to be in capital goods rather than consumer items. That will help U.S. industry turn out more goods in the long run. But, for now, it just makes the trade deficit much, much worse."

In 1988, the dollar did decline thanks to the Louvre Accords. But the drag on the economy was now so great, it didn't balance trade enough. As we see today, the dollar goes up or down and trade goes up or down but it remains very firmly in the red ink side of the ledger. Also, the first old story here complains about a one billion trade deficit! Wow!

First, this means the dollar was much better than today in purchasing power. Wow. Second, this is now a drop in the bucket. It is about 12 hours worth of trade deficits! Not 12 months. This is very serious. Here is a second Bespoke article which I was so disgusted, I argues with the premise of the story:

Bespoke Investment Group

Judging by the performance of the Dollar index today, investors seem to be putting more faith in the US economy than the rest of the World. As shown below, the Dollar found a bottom on support levels early last week and has really taken off again today (currently up 2.5%). We'll take it.

Elaine Supkis Oct 01 10:41 AM My Website Culture of Life News here!

HAHAHA. The dollar is up because all our trade rivals are united in making the dollar stronger. This is why the Treasury had to ship out epic amounts of dollars to all the other global central banks this last 48 hours.

They all want to hold US dollars so they can stimulate even more lopsided trade with the US. The US has the world's biggest trade deficit, by far and away. And is thus, central to global trade.

We cannot allow this. A strong dollar is a disaster for us. The obvious and easiest cure is to have a tax on imports to the US. This will negate these naked attempts at weakening currencies that should be strong like the yen, for example.

But the Japanese won't allow this. Nor the Chinese. The EU, China and Japan all hold collectively more than $3.5 trillion in US dollars in their FOREX reserves. For crying out loud. We now have no reserves at all.

paultaut Oct 01 11:07 AM Tax imports? Our inflation rate is high enough without another adding additional taxes.

You must not believe in Santa Claus. 85% of our toys are imported. GRINCH

Elaine Supkis

Inflation is eating us alive. Taxing imports will do two things: balance the Federal budget and slow down the tsunami of imports that are shredding our industrial base as well as undermining our entire economic system.

Cheap TVs are fun but not if they are killing our nation. NO nation in history lasts long as a sovereign power if they run vast trade deficits.

We got cheap TVs from China and pay an arm and a leg to buy a loaf of bread or a gallon of milk. Or a tank of gasoline. This is NOT a good deal for us. I would far, far rather have the reverse. The most irritating thing about clueless economics pundits especially young critters like these Bespoke guys is, they are so damn NAIVE! No one is investing in the US because we are strong. They are taking over the US because we are WEAK! And they do this by removing our industries to their countries, not by buying up our industries.

If they do buy them up, they do this during periodic swings when the US government insists they strengthen their own currencies. Then, after a feeding frenzy, they resume hoarding dollars in FOREX reserves and weakening their own currencies. Only Europe has refused to play that game for 3 years.

BUT THAT IS OVER NOW! Now, Europe wants a weak euro. And so presto-chango---it is weakening. The US remains everyone's target for exports.

Click here to see Denninger's rant about the TARP carp:

You have heard that its all "American Gambles"

You have been told repeatedly by George Bush and Henry Paulson that this bill is about a "rescue" of Main Street, not Wall Street.

You have been lied to repeatedly.

Other videos of this speech have been yanked by Denninger. Going to his web page is the best solution here.

About why Paulson wants to buy foreign bonds that stink is simple: we have no trade surplus. We need foreign money to come here to capitalize our banks. So we have to buy these things so foreign powers like Japan, China, South Korea, Russia and Germany can capitalize our banks by buying our US government debt or plonk money into our banks!

The US is running a GARGANTUAN budget deficit. We want the Chinese and Japanese to buy it. They will not do this unless we vacuum up these crummy investments we sold them previously. It is pretty simple. They will extend us a trillion in credit if we suck up a trillion in their losses. We then pay them interest on all this over the lifetime of our children and on....until they dump us in History's ditch.

U.S. Economy: Manufacturing Contracts Most Since 2001

The Institute for Supply Management's factory index dropped to 43.5, the lowest level since October 2001 and below economists' forecasts, the Tempe, Arizona-based group reported today. A reading of 50 is the dividing line between expansion and contraction.

Today's figures show that manufacturing, which had weathered a domestic slowdown because of record exports, is now starting to buckle as expansions from Japan to Germany falter with the global financial crisis. The housing slump has already spread to autos, and other industries may follow as mounting foreclosures, tougher lending rules and rising unemployment choke off spending.

See? Our manufacturing is collapsing. But so is our trade rivals. They seriously want to restart this merry-go-round.

Credit Crisis Boosts Swaps on GE, Boeing, Textron Finance Units

(Bloomberg) -- The cost to protect against corporate bond defaults rose on concern that the credit-market crisis is beginning to engulf some of the best-financed companies in the world.

Credit-default swaps on the finance arm of General Electric Co. reached a record before the company said it will raise cash by selling $12 billion in common stock and $3 billion of preferred shares to Warren Buffett's Berkshire Hathaway Inc. Contracts on the finance arms of aircraft makers Textron Inc. and Boeing Co. also reached records. Contracts on newspaper publisher Gannett Co. rose after it tapped a revolving credit line to ensure it has funds to repay commercial paper. 
GE's debt protection costs soared earlier today on concern that the company will have trouble refinancing commercial paper it uses to fund operations and will have to tap backup credit lines from its bankers, said Tim Backshall, chief strategist at Credit Derivatives Research LLC in Walnut Creek, California. 
After the U.S. Securities and Exchange Commission last month banned short-sales on the stocks of 969 companies including GE and Textron, investors may be using credit-default swaps to bet against companies, said Sameer Gokhale, an analyst with Keefe Bruyette & Woods Inc. in New York, in an interview yesterday.

``You can still short in the credit markets,'' Kleinbaum said.

And this is an aspect of the Derivatives Beast! Since it is now visible and very hungry, it is better than gnomes doing naked short selling. It naturally sucks down stocks! A giant vacuum cleaner.

FDIC's Bair Gets Bigger Role in Financial Rescue Plan

(Bloomberg) -- Federal Deposit Insurance Corp. Chairman Sheila Bair is being thrust into a bigger role in resolving the credit crisis as her better-known counterpart at the Federal Reserve runs into limits on what he can -- and wants -- to do.

The FDIC this week, for the first time, invoked its authority to avert a breakdown in the financial system by assisting Citigroup Inc.'s purchase of Wachovia Corp.'s troubled banking operations. Bair also asked Congress to temporarily increase the size of individual deposits the FDIC insures to head off bank runs.

I wonder if Bernanke is pissed that I said, 'Sphinx' to him? HAHAHA. I hexed him good. Now, he is running away, away. He wants to wash his hands of all this. 'OUT DAMN SPOT,' he shouts, jumping out of bed at night. Yes, something very queer is going on. Bush and Cheney have vanished. Chertoff is about as invisible as the Derivatives Beast was until July this year. Now, Bernake is making scarce.

If none of these clowns want to run things, why not hand them off to smarter or braver folk? They can all retire to Paraguay and wrangle with the angry peasants there.

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