Chicken Little Demands Apology Sky Falling

[darkbeaver]

I do not doubt that that is what we are facing.
scratch

That makes you like me a member of the silly chicken little minority according to fans of the status-quo. Any boy scout will tell us to "be prepared" sharpen your jack knife and pitch your tent on high ground any ordinary mall ape will tell you not to worry "go shopping take the family to Dozeny World" the western economies are fundementally sound. Yeah, and I'm a famous balerina.

 

[darkbeaver]

Letters of Credit and The Disruption of International Trade: Systemic Risk, Contagion and Trade Finance
Back to the Bad Old Days


Global Research, November 15, 2008
The London Banker and RGE Monitor

Back in the old days (pre-1980s), the term systemic risk did not refer to contagion of illiquidity within the financial sector alone. Back then, when the real economy was much more important than low margin, unglamorous banking, it was understood that the really scary systemic risk was the risk of contagion of illiquidity from the financial sector to the real economy of trade in real goods and real services.
If you think of it, every single non-cash commercial transaction requires the intermediation of banks on behalf of – at the very least – the buyer and the seller. If you lengthen the supply chain to producers, exporters and importers and allow for agents along the way, the chain of banks involved becomes quite long and complex.
When central bankers back in the old days argued that banks were “special” – and therefore demanded higher capital, strict limits on leverage, tight constraints on business activity, and superior integrity of management – it was because they appreciated the harm that a bank failure would have in undermining the supply chain for business in the real economy for real people causing real joblessness and real hunger if any bank along the chain should be unable to perform.
As the “specialness” of banks eroded with the decline of the real economy (and the migration globally of many of those real jobs making real goods and providing real added-value services to real people), the nature of systemic risk was adjusted to become self-referencing to the financial elite. Central bankers of the current generation only understand systemic risk as referring to contagion of illiquidity among financial institutions.
They and we all are about to learn the lessons of the past anew.
We are now starting to see the contagion effects of the current liquidity crisis feed through to the real economy. We are about to go back to the bad old days. Whether the zombie banks are kept on life support by the central banks and taxpayers of the world is highly relevant to whether the zombie bank executives pay themselves outsize bonuses and their zombie shareholders outsize dividends with taxpayer money. It appears sadly irrelevant to whether the banks perform their function of intermediating credit and commercial transactions in the real economy along the supply chain. The bailout cash and executive and shareholder priorities do not seem to reach so far.
The recent 93 percent collapse of the obscure Baltic Dry Index – an index of the cost of chartering bulk cargo vessels for goods like ore, cotton, grain or similar dry tonnage – has caused a bit of a stir among the financial cognoscenti. What is less discussed amidst the alarm is the reason for the collapse of the index – the collapse of trade credit based on the venerable letter of credit.
Letters of credit have financed trade for over 400 years. They are considered one of the more stable and secure means of finance as the cargo is secures the credit extended to import it. The letter of credit irrevocably advises an exporter and his bank that payment will be made by the importer's issuing bank if the proper documentation confirming a shipment is presented. This was seen as low risk as the issuing bank could seize and sell the cargo if its client defaulted after payment was made. Like so much else in this topsy turvy financial crisis, however, the verities of the ages have been discarded in favour of new and unpleasant realities.
The combination of the global interbank lending freeze with the collapse of the speculative, leveraged commodity price bubble have undermined both the confidence of banks in the ability of a far-flung peer bank to pay an obligation when due and confidence in the value of the dry cargo as security for the credit if liquidated on default. The result is that those with goods to export and those with goods to import, no matter how worthy and well capitalised, are left standing quayside without bank finance for trade.
Adding to the difficulties, letters of credit are so short term that they become an easy target for scaling back credit as liquidity tightens around bank operations globally. Longer term “assets” – like mortgage-back securities, CDOs and CDSs – can’t be easily renegotiated, and banks are loathe to default to one another on them because of cross-default provisions. Short term credit like trade finance can be cut with the flick of an executive wrist.
Further adding to the difficulties, many bulk cargoes are financed in dollars. Non-US banks have been progressively starved of dollar credit because US banks hoarded it as the funding crisis intensified. Recent currency swaps between central banks should be seen in this light, noting the allocation of Federal Reserve dollar liquidity to key trading partners Brazil, Mexico, South Korea and Singapore in particular.
Fixing this problem shouldn't be left to the Fed. They aren't going to make it a priority. Indeed, their determination to accelerate the payment of interest on reserves and then to raise that rate to match the Fed Funds target rate indicates that the Fed are more likely to constrain trade finance liquidity rather than improve it. Furthermore, the Fed may be highly selective in its allocation of dollar liquidity abroad, prejudicing the economic prospects of a large part of the world that is either indifferent or hostile to the continuation of American dollar hegemony.
. If cargo trade stops, a whole lot of supply chain disruption starts. If the ore doesn’t go to the refinery, there is no plate steel. If the plate steel doesn’t get shipped, there is nothing to fabricate into components. If there are no components, there is nothing to assemble in the factory. If the factory closes the assembly line, there are no finished goods. If there are no finished goods, there is nothing to restock the shelves of the shops. If there is nothing in the shops, the consumers don’t buy. If the consumers don’t buy, there is no Christmas.
Everyone along the supply chain should worry about their jobs. Many will lose their jobs sooner rather than later.
If cargo trade stops, the wheat doesn’t get exported. If the wheat doesn’t get exported, the mill has nothing to grind into flour. If there is no flour, the bakeries and food processors can’t produce bread and pasta and other foods. If there are no foods shipped from the bakeries and factories, there are no foods in the shops. If there are no foods in the shops, people go hungry. If people go hungry their children go hungry. When children go hungry, people riot and governments fall.
Everyone along the supply chain should worry about their children going hungry.
When that happens, everyone in governments should worry about the riots.
Controlling access to trade finance determines who loses their jobs, whose children go hungry, who riots, which governments fall. Without dedicated focus on the issue of trade finance and liquidity from those in the emerging world most interested in sustaining the growth of recent years, little progress can be expected.Trade finance is rapidly communicating the stress on bank liquidity to the real economy. It presents a systemic risk much more frightening than the collapsing value of bits of paper traded electronically in London and New York. It could collapse the employment, the well being and the political stability of most of the world’s population.
The World Trade Organisation hosted a meeting on trade credit in Washington Wednesday to highlight the rapid and accelerating deterioration in trade finance as an urgent priority for public policy.
I look at the precipitous collapse of the Baltic Dry Index and I wish them Godspeed.
Further reading:
WTP warns of trade finance ‘deteriorating’ amid financial crisis
Cost of some trade finance deals up sixfold – WTO
Shipping holed beneath the water line
Shipowners idle 20 percent of bulk vessels as rates collapse

Christmas will be cancelled for this year only, we are experianceing technicle difficulties with our rich people, please do not adjust your set hahahahahhah just kidding, we know you can't change anyway.:lol:

 

[darkbeaver]

America's Dollar Denominated "Toilet Paper"
How to Deflate the US Superpower and Restore Economic Sovereignty

By Matthias Chang

Global Research, December 17, 2008
FutureFastForward.com

It Is So Stupid To Borrow US Dollar "Toilet Papers" For Trade Finance.
There Can Be Only A Credit Crunch For Dollars If You Are Stupid Enough To Want To Be Paid And To Pay In Dollars.
Otherwise, There Is Only An Illusion Of A Global Credit Crunch.
This Is The Global Con Game By Bernanke, Paulson,.


It may have made some sense, post-World War II to dollarise international trade when the so-called “Free World” was supposedly threatened by the “Communist Bloc” and the Imperial United States was offering “protection” in exchange for financial dominance.
The imperial design for financial dominance was the Bretton Woods dollar reserve currency scheme.
Since those days, the US has been abusing its financial power by the use of its greatest invention, the “toilet paper printing press” (now, the modern “electronic printing press”) to issue irredeemable fiat money.
Now the world is flooded with trillions of this toilet paper, namely US dollars.
The US Superpower is at the very precipice of the abyss and a wrong move will plunge it into the black-hole of financial Armageddon.
The world will not face Armageddon, only the US. The rest of the world will suffer pain, deservedly so, for being so stupid in believing in the use of US toilet papers as money!
To avoid this catastrophe, Ben Bernanke and Paulson as directed by their Shadow Money-Lender masters have devised an insidious scheme. The ultimate con-game!
Basically, what they have done is to try to turn a weakness into perceived strength.
Let me explain.
Countries have been so used to trading in dollars that they cannot think otherwise. They continue to borrow dollars to finance their imports. Their corporations continue to borrow dollars to finance their business expansion. It is as if the world is addicted to dollars, as a drug addict is addicted to cocaine and or crack!
The world has been brainwashed into thinking that without the US toilet paper, their global economy would come to a grinding halt.
How stupid!
Yet this is exactly the state of mind of governments and central banks all over the world. China is a case in point: blind reliance on the US dollar. But fortunately, they have other strengths which will see them through this painful period.
Taking advantage of this temporary idiotic global mindset, the Fed and the US Treasury have deliberately triggered a credit crunch for US dollar denominated toilet papers. The major global banks are hoarding the toilet papers and with-holding cross-border financing of every kind.
There is an ocean of toilet paper (literally in the trillions) but there is now created, a deliberate shortage of these very same toilet papers.
But where is the money? There is no money. It is an illusion!
What a ridiculous contradiction. But that is the present reality. The Fed has stated that they will pump US$8.5 trillion to resolve the crisis! You have to give credit where credit is due. This is indeed a brilliant con-game and the whole world has fallen for it hook, line and sinker – almost the whole world!
I refuse to accept this state of affairs.
Yet, the Nobel Laureates in economics have missed this stark reality by a thousand miles and are coming up with all kind of theories for the present global credit crunch of US toilet paper. Alternatively, it may be that as paid-scribes, they have been directed to spew economic nonsense to confuse other economists.
How was this illusion set up?
This happened when all of a sudden, and in total connivance, Brazil, Mexico, South Korea and Singapore got into the act by entering into swap facilities with the FED, each requesting a hefty US$35 Billion to “overcome their liquidity problems.” These countries could not get enough toilet papers! Wow!
Even the great magician Houdini would not have come up with this grand illusion of shortage in currency when there is an ocean of funny money. But it is an illusion and a stupid one at that.
So now, Bernanke and Paulson is advertising to the whole world, that they are prepared to do anything and use all financial weapons, including financial nuclear weapons to defeat the crisis.
For those countries that are short of toilet papers, the US will be the global guarantor and will be willing to lend trillions of toilet papers to help them weather the financial crisis and the credit crunch. How generous of the FED and the US Treasury. But there is a catch.
The catch being – countries must continue to use the worthless toilet papers in global trade.
In one masterful stroke, the US has created an artificial demand for dollars thereby rescuing in the short term the plunging value of the dollar.
Since the global banks are not willing to lend and are insolvent, the mighty FED, the nasty and abhorrent creation of the global Shadow Money-Lenders, will be the lender of last resort to the whole world. It will be business as usual. That is what they hope. This is their final gambit. The last magic show!
And as I have written earlier, this is the OBAMA’s GAMBLE!
Countries need not trade in dollars, as after all, they are not even BUYING “MADE IN AMERICA GOODS”. AMERICA IS A NET IMPORTER, NOT EXPORTER.
So central banks of the world, especially the Third World, and the emerging powers of China and Russia: you have no need for US toilet papers when you sell your national products to countries other than the US.
And in so far as the U.S. is concerned, why are you demanding to be paid in toilet papers? Why are you not demanding payment in your own currency?
China and Russia are at the present moment on the wrong course. They hold trillions of US dollar denominated debts but act as if they are at the mercy of the US, fearing that if they do anything unfavourable to US or cahllenge the hegemony of the greenback, there will be a massive slump in the value of the dollar.
But that is a given in any event. So why play a game that has been rigged in the favour of the global Shadow Money-Lenders.
There is no reason why Russia and China should be in a recession or experience slower growth. They are suffering from the present so-called credit crunch because they continue to manage their economies in dollar terms and in a dollar mindset.
The US is playing suicide poker and calling one last card. They have nothing on the table but toilet paper.
The US will collapse in a minute, if not sooner if China and Russia were to categorically call the US’s bluff and say:
1) Close down the derivative casino now!
2) Buy back all the toxic wastes which you have unloaded on the unsuspecting global economies with currencies of our choice!
3) Since the US is in debt, the US must now borrow in the currencies of our choice to repay past debts and new loans!
Failure to comply will result in a credit crunch to US banks and companies. US can continue to use domestically their worthless toilet papers (to wipe the **** off the ceiling fans, if there are any left hanging from the ceilings) but there will be no more credit in toilet papers. Period. There will be loans only in other currencies.
This is the checkmate. .
So China and Russia should wake up and do what is necessary to save their economies as well as the global economy or their economies will end up in the **** hole as they are now playing the US / UK rigged game.
I am not surprised at the present state of mind of Chinese and Russian bankers. They have sent some of their best brains to be trained in Harvard etc., and by the fraudsters in Goldman Sachs, JP Morgan Chase, Merrill Lynch, Citigroup etc. They have all been infected with the Ponzi disease and as such cannot think otherwise. Otherwise, how do you explain their mental paralysis?
This is a simple financial puzzle.
There is no credit crunch. There is only a false or an illusion of credit crunch for US toilet papers.
Once there is no demand for dollars, there will be no credit crunch for dollars. The Shadow Money-Lenders con-game will be exposed for what it is – a giant fraud. Not unlike that of Bernard Madoff, only a thousand times more insidious and toxic.
I hope that I have made myself absolutely clear to the financial officials in Russia and China.
If China and Russia and the third world continue to stand pat, these economies deserve to be in the dog house.
Bernanke and Paulson are going to destroy the US and the global economy so as to fulfil the grand design of the Shadow Money-Lenders. Stop them before it is too late.
The Count-down has started!
Matthias Chang is a prominent barrister and author based in Malaysia. His website is www.FutureFastForward.com

 

[darkbeaver]

America's Dollar Denominated "Toilet Paper"
How to Deflate the US Superpower and Restore Economic Sovereignty

By Matthias Chang

Global Research, December 17, 2008
FutureFastForward.com

It Is So Stupid To Borrow US Dollar "Toilet Papers" For Trade Finance.
There Can Be Only A Credit Crunch For Dollars If You Are Stupid Enough To Want To Be Paid And To Pay In Dollars.
Otherwise, There Is Only An Illusion Of A Global Credit Crunch.
This Is The Global Con Game By Bernanke, Paulson,.


It may have made some sense, post-World War II to dollarise international trade when the so-called “Free World” was supposedly threatened by the “Communist Bloc” and the Imperial United States was offering “protection” in exchange for financial dominance.
The imperial design for financial dominance was the Bretton Woods dollar reserve currency scheme.
Since those days, the US has been abusing its financial power by the use of its greatest invention, the “toilet paper printing press” (now, the modern “electronic printing press”) to issue irredeemable fiat money.
Now the world is flooded with trillions of this toilet paper, namely US dollars.
The US Superpower is at the very precipice of the abyss and a wrong move will plunge it into the black-hole of financial Armageddon.
The world will not face Armageddon, only the US. The rest of the world will suffer pain, deservedly so, for being so stupid in believing in the use of US toilet papers as money!
To avoid this catastrophe, Ben Bernanke and Paulson as directed by their Shadow Money-Lender masters have devised an insidious scheme. The ultimate con-game!
Basically, what they have done is to try to turn a weakness into perceived strength.
Let me explain.
Countries have been so used to trading in dollars that they cannot think otherwise. They continue to borrow dollars to finance their imports. Their corporations continue to borrow dollars to finance their business expansion. It is as if the world is addicted to dollars, as a drug addict is addicted to cocaine and or crack!
The world has been brainwashed into thinking that without the US toilet paper, their global economy would come to a grinding halt.
How stupid!
Yet this is exactly the state of mind of governments and central banks all over the world. China is a case in point: blind reliance on the US dollar. But fortunately, they have other strengths which will see them through this painful period.
Taking advantage of this temporary idiotic global mindset, the Fed and the US Treasury have deliberately triggered a credit crunch for US dollar denominated toilet papers. The major global banks are hoarding the toilet papers and with-holding cross-border financing of every kind.
There is an ocean of toilet paper (literally in the trillions) but there is now created, a deliberate shortage of these very same toilet papers.
But where is the money? There is no money. It is an illusion!
What a ridiculous contradiction. But that is the present reality. The Fed has stated that they will pump US$8.5 trillion to resolve the crisis! You have to give credit where credit is due. This is indeed a brilliant con-game and the whole world has fallen for it hook, line and sinker – almost the whole world!
I refuse to accept this state of affairs.
Yet, the Nobel Laureates in economics have missed this stark reality by a thousand miles and are coming up with all kind of theories for the present global credit crunch of US toilet paper. Alternatively, it may be that as paid-scribes, they have been directed to spew economic nonsense to confuse other economists.
How was this illusion set up?
This happened when all of a sudden, and in total connivance, Brazil, Mexico, South Korea and Singapore got into the act by entering into swap facilities with the FED, each requesting a hefty US$35 Billion to “overcome their liquidity problems.” These countries could not get enough toilet papers! Wow!
Even the great magician Houdini would not have come up with this grand illusion of shortage in currency when there is an ocean of funny money. But it is an illusion and a stupid one at that.
So now, Bernanke and Paulson is advertising to the whole world, that they are prepared to do anything and use all financial weapons, including financial nuclear weapons to defeat the crisis.
For those countries that are short of toilet papers, the US will be the global guarantor and will be willing to lend trillions of toilet papers to help them weather the financial crisis and the credit crunch. How generous of the FED and the US Treasury. But there is a catch.
The catch being – countries must continue to use the worthless toilet papers in global trade.
In one masterful stroke, the US has created an artificial demand for dollars thereby rescuing in the short term the plunging value of the dollar.
Since the global banks are not willing to lend and are insolvent, the mighty FED, the nasty and abhorrent creation of the global Shadow Money-Lenders, will be the lender of last resort to the whole world. It will be business as usual. That is what they hope. This is their final gambit. The last magic show!
And as I have written earlier, this is the OBAMA’s GAMBLE!
Countries need not trade in dollars, as after all, they are not even BUYING “MADE IN AMERICA GOODS”. AMERICA IS A NET IMPORTER, NOT EXPORTER.
So central banks of the world, especially the Third World, and the emerging powers of China and Russia: you have no need for US toilet papers when you sell your national products to countries other than the US.
And in so far as the U.S. is concerned, why are you demanding to be paid in toilet papers? Why are you not demanding payment in your own currency?
China and Russia are at the present moment on the wrong course. They hold trillions of US dollar denominated debts but act as if they are at the mercy of the US, fearing that if they do anything unfavourable to US or cahllenge the hegemony of the greenback, there will be a massive slump in the value of the dollar.
But that is a given in any event. So why play a game that has been rigged in the favour of the global Shadow Money-Lenders.
There is no reason why Russia and China should be in a recession or experience slower growth. They are suffering from the present so-called credit crunch because they continue to manage their economies in dollar terms and in a dollar mindset.
The US is playing suicide poker and calling one last card. They have nothing on the table but toilet paper.
The US will collapse in a minute, if not sooner if China and Russia were to categorically call the US’s bluff and say:
1) Close down the derivative casino now!
2) Buy back all the toxic wastes which you have unloaded on the unsuspecting global economies with currencies of our choice!
3) Since the US is in debt, the US must now borrow in the currencies of our choice to repay past debts and new loans!
Failure to comply will result in a credit crunch to US banks and companies. US can continue to use domestically their worthless toilet papers (to wipe the **** off the ceiling fans, if there are any left hanging from the ceilings) but there will be no more credit in toilet papers. Period. There will be loans only in other currencies.
This is the checkmate. .
So China and Russia should wake up and do what is necessary to save their economies as well as the global economy or their economies will end up in the **** hole as they are now playing the US / UK rigged game.
I am not surprised at the present state of mind of Chinese and Russian bankers. They have sent some of their best brains to be trained in Harvard etc., and by the fraudsters in Goldman Sachs, JP Morgan Chase, Merrill Lynch, Citigroup etc. They have all been infected with the Ponzi disease and as such cannot think otherwise. Otherwise, how do you explain their mental paralysis?
This is a simple financial puzzle.
There is no credit crunch. There is only a false or an illusion of credit crunch for US toilet papers.
Once there is no demand for dollars, there will be no credit crunch for dollars. The Shadow Money-Lenders con-game will be exposed for what it is – a giant fraud. Not unlike that of Bernard Madoff, only a thousand times more insidious and toxic.
I hope that I have made myself absolutely clear to the financial officials in Russia and China.
If China and Russia and the third world continue to stand pat, these economies deserve to be in the dog house.
Bernanke and Paulson are going to destroy the US and the global economy so as to fulfil the grand design of the Shadow Money-Lenders. Stop them before it is too late.
The Count-down has started!
Matthias Chang is a prominent barrister and author based in Malaysia. His website is www.FutureFastForward.com

 

[darkbeaver]

How did that happen?

 

[darkbeaver]

Dollar plunges after record rate cut by US Federal Reserve

By Barry Grey

Global Research, December 20, 2008
World Socialist Web Site - 2008-12-19

In the two days since the Federal Reserve Board cut its benchmark interest rate to a record low range of 0 to 0.25 percent and announced that it will supply an unlimited amount of liquidity to near-frozen credit markets, the US dollar has fallen sharply on world currency markets. The panic sell-off of dollars is an expression of falling confidence in the solvency of US financial institutions and the credit-worthiness of the American currency, and mounting fears that the recession that began with the collapse of the US housing and credit markets could develop into a full-blown depression.
The Fed’s unprecedented move, widely described by commentators as a “shock and awe” action, has evoked both relief in financial circles that the US government is prepared to take extraordinary measures and fears that it represents a desperate and reckless move with potentially disastrous implications for the US and world economy.
In essence, the Fed tacitly acknowledged Tuesday that the US economy is breaking down under the weight of trillions of dollars of bad debt and could enter into a deflationary spiral similar to that which took place in the Great Depression of the 1930s. It made clear that it will print an unlimited volume of dollars to buy mortgage-backed securities, credit card debt, car loans and even long-term bonds issued by the US Treasury in an attempt to get banks to begin lending once again to businesses and consumers.
This is the financial equivalent of emergency triage on an expiring patient. It means a massive increase in US indebtedness and a further dilution in the value of the US dollar, a recipe down the road for an explosive growth of inflation, a further decline in the world economic position of American capitalism, and the further impoverishment of large sections of the US population. It takes place under conditions where US private sector gross debt has already soared from 118 percent of gross domestic product in 1978 to 290 percent this year.
The fact that the Fed, whose core legal mandate is to maintain the stability and value of the dollar, is nevertheless prepared to take such action is an indication of growing alarm over the depth of the economic crisis and the rapidity with which it is developing.
On Wednesday, the euro jumped as much as 4 cents against the dollar, the biggest single-day move since the euro was launched in 1999. The dollar plunged against the yen to its lowest level in 13 years. The dollar also fell in relation to the British pound and the Swiss franc.
In the space of two hours Wednesday, the euro soared from $1.4058 to an 11-week high of $1.4440. The dollar gained back some ground against the euro on Thursday, closing at $1.4180, after the European Central Bank moved to stem the rush from dollars into euros by cutting its interest rate on deposits from 2.0 percent to 1.5 percent. However, the dollar continued to fall against the yen. Gold futures surged.
Only a month ago the euro was at $1.24. In just the two days since the Fed’s announcement, it has jumped nearly 7.5 percent.
US stock markets, which had a sharp rally Tuesday after the Fed announcement, fell back on Wednesday and Thursday. The Dow Jones Industrial Average fell 99 points Wednesday and 219 points Thursday, giving up most of its gains from Tuesday. The retreat reflected mounting concerns over the implications of the Fed’s actions as well as new economic data indicating a continuing surge in joblessness and a further contraction in the economy in the coming months.
Financial commentators in both the US and abroad expressed concern over the deeper significance of the Fed’s moves. The Financial Times published a lead editorial Thursday entitled “The Fed Rips Up the Rule Book,” which began, “We are flying blind.”
It continued, “The Federal Reserve’s announcement this week that it was abandoning conventional rate measures in favour of directly propping up lending represents a bold experiment in policy. Ben Bernanke, Fed chairman, is taking a gamble, but he had little choice…
“The US real economy is crumbling and continues to deteriorate, the global downturn has been exacerbated by a crippled domestic financial system. Credit is not flowing to consumers and businesses because risk spreads are too high…. Restoring credit may be the Fed’s primary aim, but its measures are also an insurance policy against falling into a deflationary spiral… As growth returns, inflation might come back with a vengeance.”
A report by Credit Suisse Group said the Fed’s “easing and very low US rates will ultimately undermine the dollar across the board.”
C. Fred Bergsten, director of the Peterson Institute for International Economics, wrote, “The risk is that the deceleration of the dollar could cascade and push interest rates up as the rest of the world demands a higher return on US investments.”
Nouriel Roubini of the Stern School of Business at New York University summed up the Fed’s actions as follows: “Traditionally, central banks have been the lenders of last resort, but now they are becoming the lenders of first and only resort. As banks curtail lending to each other, to other financial institutions and to the corporate sector, central banks are becoming the only lenders around.
“Likewise, with household consumption and business investment collapsing, governments will soon become the spenders of first and only resort, stimulating demand and rescuing banks, firms and households. The long-term consequences of the resulting surge in fiscal deficits are serious.”
The backdrop to the Fed’s action is a raft of economic data showing an accelerating economic decline. Earlier this week there were reports showing a continuing fall in industrial production, a record drop in homebuilding and a record decline in consumer prices. These deflationary indicators were supplemented by a fall in crude oil prices below $36, despite a record production cutback announced Wednesday by OPEC, another massive increase, 554,000, in first-time jobless benefit applications for the week ended December 13, and the Conference Board’s report that its leading economic indicators gauge of future economic performance posted its biggest annual fall since 1991 in November, dropping 3.7 percent from the year before.
JPMorgan Chase analysts now estimate that the global economy will contract at a 3.7 percent annual rate this quarter and a 2.3 percent pace in the first quarter of 2009, marking the worst six-month period for the world economy since World War II.
Every day brings multiple announcements of job cuts across all branches of the private sector US economy. Such announcements over the past few days include 1,000 jobs at the insurance company Aetna, 2,500 jobs at hard-drive manufacturer Western Digital, 800 jobs at Caterpillar’s Mossville, Illinois engine plant, and hundreds of layoffs at Ford’s Flat Rock, Michigan plant, American Apparel in Los Angeles, Cooper Tire and Newell Rubbermaid.
The Fed’s massive injection of liquidity into the financial markets does not address the underlying causes of this downward spiral. The crisis is not one of liquidity, but of solvency. Decades of rampant speculation and outright fraud based on cheap credit and an expansion of debt, facilitated by government deregulation of the banks and financial markets, have produced a vast edifice of paper values that is now collapsing.
There is a general erosion of confidence in the credit markets. The basic problem is not the cost of credit, but the fact that banks and other financial institutions refuse to lend to one another, to other businesses and to consumers because they have no confidence in the financial viability of prospective clients.
At the heart of this crisis is the internal decay of American capitalism, marked above all by the dismantling of large sections of its manufacturing base, and the decline in its global economic position. A longstanding crisis of profitability in industry has led to a separation of wealth accumulation by the financial elite from the productive process and a massive growth of financial parasitism. There is no genuine solution to this crisis within the framework of the capitalist market system—only ever more brutal attacks on the jobs and living standards of the working class, combined with a growth of militarism and war.

 

[Lester]

One has to think that if the banks won't lend to us, businesses, or even other banks then the money is worthless and cannot be used as a means for trade- let them hoard their money. If people have to use barter to trade for goods and services, that pile of money of the obcenely rich won't do them much good. For the USA to lend their major banks money at a zero percent rate of interest is simply socialism, not capitalism, but it is business socialism and does not benefit the great unwashed(you and me). I personaly don't think the U.S.can recover from this irresponsible fiasco they have delivered upon us and a cultural shift will take place- I don't see why the Government just doesn't take the banks over and resume lending- cut out all these middlemen. As it is, it's socialism in all but name.

 

[darkbeaver]

If one reads junk news, one gets junk forecasts. "The housing market is in terminal distress." This is the kind of nonsense that losers love. But real estate in the U.S. and Canada is about as solid as a rock. It has taken a dusting in the U.S. and C.I.B.C. is raising 1.75 billion to shore up theeir capital base because they were lending like drunken sailors in the U.S. C.I.B.C. will not fail, even though they'll take the largest ssingle hit.

Why, after a thousand failed forecasts, do people rely on nonsense? Because it is what they want to hear. They are desperate to see the failure of success. Why do they want America to fail, Canada to fail, our banks and our business, all to fail? Why do they love failure?



Because they are socialist losers. Why don't they give up when their dreams have not come true for the western world since Hitler? Because they are losers.

Jim, your financial forecasting sucks bigtime. Why? Because you're a capitalist looser. What success twit?

 

[darkbeaver]

One has to think that if the banks won't lend to us, businesses, or even other banks then the money is worthless and cannot be used as a means for trade- let them hoard their money. If people have to use barter to trade for goods and services, that pile of money of the obcenely rich won't do them much good. For the USA to lend their major banks money at a zero percent rate of interest is simply socialism, not capitalism, but it is business socialism and does not benefit the great unwashed(you and me). I personaly don't think the U.S.can recover from this irresponsible fiasco they have delivered upon us and a cultural shift will take place- I don't see why the Government just doesn't take the banks over and resume lending- cut out all these middlemen. As it is, it's socialism in all but name.

It's because the government and the wealthy elite (capitalists) are not two separate factions any longer, that apparently changed some three decades ago or more. The only backing for the US dollar right now is the military, of course it always was the most important business tool the Americans had. We will enter a period of stepped up conflict as the military desparately trys to prop up the dollar, Canada will continue to do it's part as we don't have a government seperate from capital and the transnationals either, it's P3 till the last bullet.

 

[Toro]

I do not doubt that that is what we are facing.
scratch

We are going to have a nasty recession but this is not a repeat a the Great Depression let alone be worse.

The Great Depression became the Great Depression instead of a nasty recession by tremendous policy mistakes by the government, particularly the Fed, which raised rates and withdrew a third of the reserves from the banking system. This was the primary cause of The Depression. The federal government also raised taxes to balance the budget and raised tariffs, triggering a trade war, both monumentally stupid policies in a recession. You also had a Treasury Secretary who thought bankrupting businesses and farmers and driving up unemployment was a morally right thing to do as Andrew Mellon believed that America had to pay penance for its sins in the Roaring Twenties. Hoover passed a stimulus act, but it was miniscule, equating to $22 billion in today's dollars. Compare that to the $700 billion to $1 trillion Obama is talking about.

The government may be fumbling around but the actions of the government today are the exact opposite than they were in the 1930s, and they will prevent a repeat of The Depression.

 

[darkbeaver]

What government? There's only Bernake and Paulson and Obamas Wall Street team and that spells depression.

 

[darkbeaver]

Systemic Economic Crisis: The Sequence of Global Insolvency Begins

By GEAB

Global Research, January 17, 2009
GEAB N°31

In 2007, LEAP/E2020 announced that US banks and consumers were both insolvent. More than a year ago, our team estimated that USD 10,000-billion worth in « ghost-assets » would vanish in the crisis. Both announcements came in complete opposition with the common opinion of that time; however they proved perfectly justified in the months after. In the same line, LEAP/E2020 today estimates that a new sequence of the fourth phase (so-called « decanting phase ») of the unfolding global systemic crisis has began: the sequence of global insolvency.

The heavy consequences conveyed by the global insolvency are anticipated in this GEAB N°31, of which this announcement presents an excerpt meant to put clearly what is at stake in this new sequence of the crisis. GEAB N°31 also details the 20 "ups and downs" of the year 2009 according to the LEAP/E2020 team : fifteen upward trends and fourteen downward trends, as many decision- abnd analysis-support instruments for all those worried or intrigued by the coming year.

Contrary to what political leaders and their central bankers seem to believe worldwide, the problem of liquidity that they are striving to solve by means of historic interest rate drops and unlimited money creation, is not a cause but a consequence of the current crisis. It is in fact a problem of solvency which is digging « black holes » where liquidities disappear, whether we call these holes bank balance sheets (1), household debt (2), corporate bankruptcies or public deficits. In consideration of the fact that a conservative estimation of these “ghost-assets” reaches already USD 30,000-billion (3), our team considers that the world is now facing a situation of general insolvency affecting in the first place the most indebted countries and organizations (public or private) and/or those depending most on financial services.

Market capitalisation of stock markets worldwide (in trillions of US Dollars) - Source: Thomson financial Datastream, 01/2009

How to make the difference between a crisis of solvency and a crisis of liquidity?

The difference between a crisis of liquidity and a crisis of solvency can appear rather technical and in the end not very decisive concerning the evolution of the current crisis. However it is not a simple academic dispute; indeed, according to the answer to that question, the actions taken by governments and central banks will either be useful or utterly useless, if not dangerous.

A simple example can help to understand what is at stake. If you meet a temporary problem of cash, and if your bank or your family agrees to lend you the money you need to cross over that difficult path, their effort is mutually beneficial. Indeed, you can resume your activity, you can pay your employees and yourself, your bank or your family get their money back (with an interest in the case of the bank), and the economy in general benefited from a positive contribution. But if your problem is not due to a question of cash-flow but to the fact that your activity has ceased to be profitable and will never be again because of new economic conditions, then the effort made by your bank or family becomes all the more dangerous that it was substantial. Indeed, in all likelihood, your first call for funds will soon be followed by more calls, always matched with promises (honest ones we suppose) that difficult times are about to be over. The more your bank or your family has lent you (and therefore the more it would lose if your activity is stopped) the more willing they will be to continue helping you. However if the situation worsens, and it will if it comes from a problem of profitability, there is a moment when the limits are reached: on the one hand, your bank will decide that there is more to lose in keeping supporting you than in letting you down; on the other hand, your family ends up with no money left because you have siphoned its entire savings. Then it appears clearly to everyone not only

DB: You can kiss your ass goodbye darling the whole mess is going down the tube to banker hell. Invest in munitions and body bags.DB:

 

[Kreskin]

DB: You can kiss your ass goodbye darling the whole mess is going down the tube to banker hell. Invest in munitions and body bags.DB:

I picked up body bags from Walmart. Right now if you buy 10 you get the 11th free. Good deal!

 

[Toro]

Insolvency isn't going to happen yet. We in the Wall Street Illuminati are long, and We will make the market rise. Then, once We have sucked all the losers back into the market, We are going to short it heavily and plunge the world back into the stone age.

BWAHAHAHAHAHAHAHAHAHAHA!

 

[darkbeaver]

I picked up body bags from Walmart. Right now if you buy 10 you get the 11th free. Good deal!

The zip lock ones are handy, you can reuse them.

 

[darkbeaver]

Insolvency isn't going to happen yet. We in the Wall Street Illuminati are long, and We will make the market rise. Then, once We have sucked all the losers back into the market, We are going to short it heavily and plunge the world back into the stone age.

BWAHAHAHAHAHAHAHAHAHAHA!

You can have all those loosers. Do you remeber Rachel Welch in 5000BC? The stone age didn't seem to bad to me.

 

[darkbeaver]

Worldwide Depression: Regional Impacts of the Global Crisis
Part II of "World Depression: Regional Wars and the Decline of the US Empire"

By Prof. James Petras

Global Research, April 5, 2009

For Part I of this article, see World Depression: Regional Wars and the Decline of the US Empire, by Prof. James Petras - 2009-03-30

The worldwide depression has both common and different causes, affected by the interconnections between economies and specific socio-economic structures. At the most general-global level the rising rate of profits and the over-accumulation of capital leading to the financial-real estate-speculative frenzy and crash affected most countries either directly or indirectly. At the same time, while all regional economies suffered the consequences of the onset of the depression, regions were situated in the world economy differently and subsequently the effects varied substantially.
Latin America
Brazil with its free market policies in disarray and huge class divisions undermining any domestic recovery, its high velocity fall in exports and industrial production is heading toward a deep recession despite the boasts and claims of Wall Street and the White House favorite, President Lula da Silva.
In January 2009, industrial production fell 17.2% year to year. Gross domestic product contracted 3.6% in the last quarter of 2008 (Financial Times, March 11, 2009). All indications are that negative growth will persist and deepen during the rest of 2009. Foreign direct investment and export markets, the driving forces of past growth are in sharp retrenchment. Lula’s privatization policies have led to extensive foreign takeover of the financial sector, which has transmitted the crises from the US and EU. His ‘globalization’ policies increase Brazil’s vulnerability to the collapse of foreign trade. Capital flows are strongly negative. Hundreds of thousands of workers lost their jobs between December 2008 and April 2009. The 5 million impoverished landless rural workers and the 10 million families living on a one dollar a day food-basket handout from the government are excluded from effective domestic demand as are the tens of millions of minimum wage workers living on $250 dollars a month. The purchasing power of highly indebted family farmers is no substitute for shrinking external demand. All sectors, rural and urban, of the capitalist class are freezing new investments as private credit evaporates, overseas investors flee and local consumer spending declines in the face of the deepening recession. Lula’s claims of ‘decoupling’ and his growth projections of 4% are seen as ‘seeding illusions’ to cover up the onset of a severe economic recession. Lula’s blind support for globalization and the ‘free market’ is a central determinant of Brazil’s deepening recession.
Brazil descent into negative GDP is the pattern throughout the region. Argentina is headed for minus 2% growth, Mexico –minus 3% and Chile 0% or less. Central America and the Caribbean, which are highly ‘integrated’ with the US and world economy are experiencing the full force of the world depression in skyrocketing unemployment resulting from the collapse of tourism, declining demand for primary commodities and a serious drop in remittances from overseas workers. There will be a sharp rise in extreme poverty, crime and a potential for popular social upheavals against the incumbent right and center-left governments.
The spread of imperial capital throughout the world, dubbed ‘globalization’ by its defenders (and imperialism by its critics), led to the rapid spread of the financial crisis>>>>>



No longer the beneficiaries of the petro-dollar boom – as prices, profits and rents collapsed - and no longer the powerful bankers and holders of debt, the Gulf Arab ruling class has few external and internal resources and outlets to project a ‘recovery program.’


>Worse still, in the midst of this emerging economic collapse, the militarist state of Israel serves as a regional destabilizing force projecting its power and colonial ambitions throughout the region. Through one of world history’s most unique configuration of power, the economically insignificant state of Israel, operating through the activity of several tens of thousands of strategically-placed, highly organized, disciplined and ideologically committed loyalists in the Diaspora, control key levels of political power in the US government.<



The sky has forking well fallen on the capitalist pig dogs, I'll gracefully accept the apology no later than twelve and a half hours from now, no wait a second, now, no one more time, now, ****ing chinese battery, ok now, there we go. Tick tick tick tick tick


resonable demands--list of

1/release the lab animals
2/ 1 ton of prime BC bud
3/ a fiftythree foot reefer filled to the top with Corona Beer, bottles only
4/ a fully fueled flying saucer (a new model)
5/ fire all the capitalist bankers
6/ trono gets the cup next year
7/ expensive rubber boots #10 1/2

I have the easter bunny and the tooth fairy. no tricks or they gets dipped in the maple syrup vat. tick tick tick tick

 

[darkbeaver]

Banking as Economic Parasitism

by Vladimir Nuri
THIS IS A large and extremely detailed document that can be downloaded (pdf) or read at this link. It is a breathtakingly high overview of the very institution of money and banking, and would most definitely not be taught at any college or seminar. I cannot recommend it highly enough, in spite of, or because of, its length of 62 pages. The full title is: Fractional Reserve Banking as Economic Parasitism
Warning: Clicking on the link below will download the whole 62 page document:
www.thetransitioner.org/wen/tiki-download_file.php?fileId=3
As a taster, here is a short extract:

 

[Toro]

Depression is off the table.

 

[darkbeaver]

Goldman Execs Blame Anti-Semitism

by Charlie Gasparino

Charles Gasparino is CNBC's On-Air Editor and appears as a daily member of CNBC's ensemble. He is a columnist for the Daily Beast and a frequent contributor to the New York Post, Forbes, and other publications. His forthcoming book about the financial crisis, The Sellout, is scheduled to be published later in 2009.
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Alessandro della Valle / AP Photo Charlie Gasparino reports that senior executives inside Goldman are in a panic over its image, trying to hire a "brand manager"—and even blaming a prejudice against the firm's Jewish chiefs.
How worried are Goldman Sachs executives about their ability to manage the coming media tsunami when bonus season comes around?
Paranoia might not be too strong a word to describe the mind-set. People inside Goldman tell me that some senior executives say they believe the onslaught of negative stories detailing Goldman’s manifold ties to upper levels of government, charges that it somehow fraudulently profited from the subprime crisis, and now the press about the firm’s record earnings is so out of proportion to reality that the coverage contains an element of anti-Semitism—subtly playing off the racist myth of a conspiracy of Jewish bankers controlling the world for their own benefit. (Goldman was founded by a Jewish immigrant, and after years of being run by Gentiles Jon Corzine and Hank Paulson, is once again run by a Jew, Lloyd Blankfein.)

“Blankfein is scared to death about what might happen when the bonus numbers hit,” one executive says.​

Blankfein, I am told, isn’t paranoid but really concerned about being placed in an untenable pos