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March 22, 2013

The Green Line in Cyprus

Filed under: euro,European Union — baseball91 @ 2:30 AM
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There was need in so many countries for low-interest loans that are essential to keeping its banks afloat. And thus the monetary policy of the Federal Reserve bank. Like for Cyprus where there is need for €5.8 billion euros for a bailout from the IMF and the European Central Bank and the European Commission (the troika).

The air over Cyprus with exasperation, anger and anxiety, while waiting. For the future. Standing in line for the future, hoping for money. Would new loans only swell Cyprus’ already badly managed debt?

When there was no there THERE. At the banks. In the soul of the leaders of Europe. Living in a fantasy world. The order has come from govenment to Cypriot banks to keep automated bank machines filled with cash as long as bank doors remain shut.

Standing at the autotmatic cash machine, Irena Margilou, 32, was hoping for automatic cash. “We don’t know what the future holds.” With what was perceived to be an embittered voice, per a New York Times reporter, the unlucky thirteenth person in an eighteen-person line wondered: “What is happening to European solidarity?”

Outlook negative: There was this legal difference between insolvency and bankruptcy versus liquidity, when those government bonds were the air which a nation breathed, before you dried up.

Barren. Lost fertility. Wealth destruction during this one week bank holiday, separating the good from the bad. Bloomberg News is reporting that finance ministers from the EMU currency bloc are pressuring Cyprus to shrink its banking system by, judging the good from the bad. How? The finance ministers for the 17 euro countries have proposed closing the two biggest banks – Cyprus Popular Bank and the Bank of Cyprus – while freezing assets of uninsured depositors; the good deposits would go into a good bank, while uninsured deposits would go into a bad bank and be frozen until assets could be sold. Losses to unsecured creditors, including uninsured depositors at the two biggest banks, would reach 40 percent under the proposal which the International Monetary Fund and the European Central Bank support. Did this sound like the unorthodox buzzcut for government bond-holders of Greece in 2012?

In June 2012, Cyprus became the fifth country in the eurozone to request an international bailout after lenders got caught up in the debt restructuring of Greece’s banks. To prevent a panic if not a revolution over the EU, insured deposits below the 100,000 euros ceiling of these European Union policy wonks would go into the so-called good banks, not sustaining any losses.

When governments took your money another way, other than through tax policy. When you lost your nest egg from government actions, in currency wars. When your sovereignty as a people was at stake.

This EuroGroup (the troika) meeting is over for the night. The the troika says it is important that Cyprus guarantees deposits under €100,000, and expects the country to quickly submit a new rescue plan. Frozen in late March, thousands of international companies who do banking in Cyprus cannot transfer money in and out of accounts to conduct business, with the banks all closed. As old rules of thumb from the right to eminent domain of nothing, if you lent €5.8 billion euros to bankrupt banks backed by an insolvent state, you no longer were a creditor but the owner of the bank – even when there is no THERE there.

As Standards and Poor’s cut their rating of Cyprus to junk bonds from CCC+ toCCC. When tens of billions of euros in bank deposits likely leave the country additionally, though not exactly overnight. Maybe when the banks open.

Why would you keep your money there? When there is no THERE there? And in a place where there was not much bond in this so called European Monetary Union. This was a rewritten script from 1998, when Russia quit paying on their $40 billion in debt. And Cyprus was was the number-one destination for Russian money being sent abroad. The German fear without transparency concerning this haven for Russian dirty money. So why would Germany bailout Russian dirty money? German intelligence reports, per Der Spiegel magazine, estimates the size of Russia’s deposits in Cyprus from €8 billion to €35 billion. And the number-one direct investor in Russia, with more than $13 billion in investments, is Cyprus according to the Russian Central Bank.

Russia and Cyprus are so intertwined from an economic perspective, when your sovereignty as a people was at stake, Cyprus could almost be another region of the Russian Federation. And history was not on the side of the people.



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January 15, 2013

Greek Mythology

Filed under: euro,European Union,New York Times — baseball91 @ 3:31 AM
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On Monday, all of Greece’s opposition parties – Syriza, Independent Greeks, Golden Dawn and the Communist Party – condemned the shooting which occurred in central Athens before dawn, adding to a wave of politically motivated violence in recent days as Greece struggles with its continuing EU economic crisis based upon currency. “Gunmen” allegedly sprayed bullets into the headquarters of Greece’s governing New Democracy party, though no journalist sighted the gender of the folks pulling the trigger. “Urban political violence has tended to flare in Greece at moments of political chaos and economic deterioration,” Liz Alderman of the NYTimes writes. There was no mention if she speaks Greek, or has studied Greek history.

“Democracy will not be terrorized,” the president said on Monday. According to the New York Times, the latest wave of violence followed the arrest of 101 “suspected anarchists” last week, with “firebombs” confiscated in an operation of riot police in central Athens at a building called Villa Amalia, “a longtime gathering point” for students and far-left groups. This protest in downtown Athens by the so-called “anarchists” ended when police fired tear gas into the crowd. Not to let details get in the way, but Liz Alderman failed to report that what had been confiscated were some 1,500 empty bottles, a canister with flammable substance, helmets and gas masks, along with other material which raised police suspicion. No description has been given how the bottles got there — if plastic water bottles bought by squatters in the building? What does seem apparent is sloppy reporting. What exactly would “long-time” mean in a place like Athens? The YouTube video would suggest that this was a simple demonstration by opposition and dissenters. And some of the confiscated material would be what a prudent protester might bring along.

Publication of a list of more than 2,000 Greeks with bank accounts in Switzerland, which the government was given but did little to investigate, had touched off “a scandal and galvanized public opinion in recent weeks, according to the NYTimes. This news item sounded like the Occupy Wall Street Movement, since it was Goldman Sachs which helped the Greek government hide from public view a transaction treated as a currency trade rather than a loan, as Greece quietly borrowed billions over a decade. With help from the wizards of Wall Street, the Greece government engaged in an effort over a decade to skirt European debt limits. So no wonder the lingering anger by the populace. (Not all that dissimilar to what had happened to those items in the budgets approved by the U. S. Congress that had kept the cost of war in Iraq off the books.)

This attack on Monday morning at the office of the New Democracy party followed attacks on “other symbols of the Greek establishment which are believed to have been carried out by far-left militant groups,” the New York Times reports, without mentioning who it is that believes that ‘far-left militant’ groups were involved. Those attacks over the last week involved home-made gas canister bombs at the homes of five Greek journalists on Friday as well as canister bombs detonated at several government office and banks last week. A Google search to find where exactly the places of “the spate of attacks on other symbols of the Greek establishments” occurred, clarified to be “several government offices and banks”, fails to find any specific mention anywhere else by news media. I wonder if Liz Alderman of the NYTimes would one day cite a specific place in a follow up story.

Claiming unbalanced coverage of the Greek financial crisis to be sympathetic to the imposed austerity programs of foreign lenders and imposed by the Greek government, Lovers of Lawlessness claimed responsibility for Friday’s attacks. In a statement posted on the internet, this group said the news media are the “main managers of the oppressing state designs, manipulating society accordingly.”

After the fall of the country’s military junta in 1974, Greek police in 2002 crushed the November 17 group after decades of attacks “against politicians and businesses. Other groups however have since sprung up, throwing firebombs during anti-austerity demonstrations, attacking police.” In writing about this “mounted” terrorism by “anarchist groups,” Liz Alderman of the NYTimes earlier misstated that Military Minority-Lovers of Lawlessness claimed responsibility for Friday’s homemade gas canister bombs attacks. A correction stated that a group called “Militant Minority-Lovers of Lawlessness, not Military Minority-Lovers of Lawlessness” claimed responsibility. Hmmmmmmmmmmm. Greek is a very tough language to master.

According to the New York Times, a government spokesman warned on Monday of a “dangerous escalation of spreading terror.” The New York Times writer did not seemed concerned how a government might try to use more police powers to capture more political power. Have you ever covered the Republican National Convention in the United States, with mention of what a police state looks like with helicopters flying overhead to protect the delegates and maybe the media? In September 2008 there were more than 800 arrests made during the political convention in Minnesota, with one conviction which in hindsight calls the question of the use of police power; there were homes raided and the same kind of alleged evidence reported by the news media.

What is clear is that at least since World War II, it has never been more dangerous to be a journalist in Europe. “These attacks,” Reporters Without Borders said in a statement, “are the most visible expression of an increasingly dangerous climate for all journalists, who are being turned into the scapegoats of a crisis they are just analyzing.”

Perhaps the people in Greece expect journalistic standards to be elevated to reflect a society based upon civility, when journalism rises above the market tensions of those who were forced to sell ads. The same forces of lobbyists trying to affect legislation are at work each day in the world of television news. And this was more and more a generation which got its news from radio and television. There should be a concern, not just between all Greeks, about the fairness and understanding of the talking heads taking in money, paying for all the commercials on radio and television, and somehow capturing the Truth. Referring to dissenters as “anarchists” at a time when everything was being devalued — and you were so personally touched when everything here was devalued — was playing into the hands of those already in power. When some of those in power had along the way just quit doing their job(s).

Yes, stories of terrorism increase viewership/readership in the short-term, before the long-term affects set in on a civilization. Just like the affect of economic unification with continued political independence of nation-states which had fueled this identity crisis for the European Union. Those same factors had fueled a lot of divorces in my neighborhood with affects which lasted a lifetime, among individuals who had lost power in some kind of relationship, in most cases without adding to a “wave of politically motivated” violence.

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October 16, 2011

Newly Engineered European Bailouts

Filed under: euro,European Union — baseball91 @ 6:23 AM

“We are in the middle of a crisis. It is not over. It is to be taken seriously, but it is centrally an American crisis.” – German Finance Ministry spokesman Torsten Albig on September 15, 2008.

Economic physics. Can you spell C R A S H? The Great Depression was all about a crash. Credit markets dried up after The Crash on Wall Street. Secular declines, market trends which head in the opposite direction, follow crashes in long time frames anywhere from five to twenty-five years. With all the earmarks of deflation now setting in, in Europe.

WHILE EUROPE SLEPT

“At this stage, we’re quite confident.” – A spokesman for the French Finance Ministry, who said that French banks and French government debt agency, Agence France-Tresor, are not in danger from the market turmoil in the U.S. on September 15, 2008

The system. European banks have become pretend banks, with no money. Across Europe, according to Autonomous Research, loans to banks exceed their deposits by 6 percent. Among French banks, loans exceed deposits by 19 percent. In Greece, they swamp deposits by 32 percent.

THREE YEARS AFTER

On Saturday, Finance ministers and central bankers from the Group of 20 called on European leaders to deliver a comprehensive plan to address the European continent’s deepening sovereign-debt crisis. On Wednesday, representatives of the European Union had told European banks that they need to raise more capital to protect themselves against losses on sovereign debt, or politicians will do it. The G20 meeting included non-European countries who have pushed Europe to speed up the plan taking shape among euro-zone countries to address the euro crisis, with the scramble to save the euro and prevent Greece’s debt woes from spreading. Ah, I think they have not been reading the papers about the monetary wars.

About the market dynamics which serve as the regulator out of control world of currency. The Post Traumatic Stress Syndrome on currency which came to all currency out of monetary wars. The current euro crisis was such an after-effect. After the dollar has eroded forty percent over the past decade, the recent rise of the dollar over the past sixty days has itself been a cause of worry in the United States? To whom? Do you need further proof that a weak currency is inflationary than a trip to the grocery store?

If you believed the experts – and I do not – the cause of the bubble which began hissing in 2008 was sub-prime loans, as the political spin doctors in Washington were able to point fingers at bankers rather than at this monetary policy set by the Federl Reserve Bank and the Treasury Department in the Monetary wars. In September 2001 one euro bought 0.92 US dollars. On November 19 WTI crude oil bottomed at $16.70, days after China entered the World Trade Organization. Was it Europe, China, the US, or was this just significant cyclical events, as US debt outstanding through 2009 would more than double, the euro would appreciate by 95% against the dollar, and crude oil would appreciate by 780%. And was the EU foolish for getting dragged into the financing of the wars in Iraq and Afghanistan with no tax increases in the US?

It was a world where governments levy taxes not to finance its operations, but to give value to its fiat money as sovereign credit instruments. French Finance Minister Christine Lagarde in June 2010 had said that budget consolidation is “priority No. 1” for most G-20 members, as Timothy Geithner at the conclusion of the June 2010 G20 meeting expressed concern over the confidence in the system.

The current [euros?] crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. We are now in a period of wealth destruction. The system is broken.” — George Soros

Can you spell C R A S H? That is what wealth destruction is all about. Less concerned about the loss of buying power for their own citizens, a lot of nations pursue a policy of a weak currencies, hoping that will help their exporters. Especially in monetary wars which have funded the American wars in Iraq and Afghanistan, with no rise in taxes leveled on an American public over the past ten years.

As the European debt crisis threatens to halt an anemic global economic recovery, and efforts to deliver a plan to address the crisis dominated discussion at the G20 Paris talks. here is recent discussion over direct exposure of the U.S. financial system to the countries under the most pressure in Europe, with little regard to the indirect exposure. Last week, officials at Morgan Stanley worked overtime trying to calm investors about the bank’s $39 billion in exposure to French banks at the end of last year, not counting hedges and collateral. The total amount of insurance written do not reflect other offsetting trades that bring down these banks’ actual exposure significantly. For investors, the challenges in trying to assess the true exposures are real. At the end of the week, Morgan Stanley appeared to have relieved some investor fears over its exposure to Europe. (Some analysts argue that the amount today is far lower than $39 billion.) Therefore investors have to trust that the institutions are being appropriately rigorous .

“Many of the risks in these institutions are maddeningly hard to plumb, and open to a range of interpretations as banks reduce their exposure to a possible loss by the amount of collateral they have collected from a trading partner. Is the collateral that has been supplied to secure derivatives contracts solid? Is the bank valuing it properly? Can it be located quickly?” asks Gretchen Morgenson. How about in a deflating European economy, when there is no money being loaned?

Monetary war. After the Bank of England announced, in a desperate effort to stave off a new credit crisis and a UK recession, it would pump more money into the economy, the cost of borrowing sterling for three months in the London interbank market fell Friday, its first drop since June 8. Meanwhile, the cost of borrowing dollars and euros for three months in the London interbank market rose last Monday. Ten days ago the Bank of England had announced a fresh round of quantitative easing to stimulate economic growth, meaning it will print an extra GBP75 billion of cash to buy bonds. Data from the British Bankers' Association showed the three-month sterling LIBOR (London Interbank Offered Rate) falling to 0.95875% from 0.96000%. The spread between the three-month dollar LIBOR and the three-month overnight index swap rate–a barometer of banks' willingness to lend–widened to 30.4 basis points from 30.2 basis points Thursday. The euro rate rose to 1.50375% from 1.49563% Thursday, while the three-month dollar rate rose to 0.39111% from 0.38778%.

European banks now have become pretend banks, with no money. Across Europe, according to Autonomous Research, loans to banks exceed their deposits by 6 percent. Among French banks, loans exceed deposits by 19 percent. In Greece, they swamp deposits by 32 percent, writes Gretchen Morgenson.

This is why, writes Gretchen Morgenson, it is becoming such a problem for European banks that so many short-term lenders are declining to renew when loans come due. Money market funds, traditionally big investors in short-term paper issued by European banks, have been reducing exposures. A recent Fitch Ratings report shows that for the two months ended July 31, the 10 largest United States prime money market funds pared their holdings in European banks by 20.4 percent, in dollar terms. In the same period, the funds cut their exposure to Italian and Spanish banks by 97 percent.

But these money funds, with total assets of $658 billion, held $309 billion in debt obligations issued by European banks. That’s equivalent to 47 percent of these funds’ total assets. “We’re seeing a lot of the same things in the markets that we saw in the Lehman era,” Carl B. Weinberg, chief economist at High Frequency Economics in Valhalla, N.Y., told Gretchen Morgenson.

“The economic performance of euro zone countries is diverging at a fast clip,” writes Fred Norris of the New York Times, “when financing became hard to get for many exporters, and customers slashed orders.” The divergence is caused by the battle of deflation with inflation, in the long recognized monetary wars. The trend in countries like Germany is continuing for countries whose economies are in decent shape, though the recovery in trade in other European nations appears to be over. “The issue now is a simple one – the buyers cannot afford what they used to buy, writes Fred Norris. “Imports have returned to pre-crisis levels in Italy and France, as well as much more dramatically in Ireland, Portugal and Spain”— the largest nations forced to seek bailouts.

Pretend banks in a pretend world of union. These European nations have no more unity, never had union, like so many couples living together in sin. And when the going gets tough, a lot more people getting going or just tossed out.

Carl B. Weinberg outlined to Gretchen Morgenson of the New York Times what he sees as the major risks which fall into two categories. “Outside the U.S., we never really resumed credit growth since 2009,” he said. “Another hit now would bring credit down and impose a huge squeeze on small businesses throughout Europe and over here also.” Of the two areas of major risk, explained to Gretchen Morgenson, one is the potential for losses incurred by financial institutions that wrote credit insurance on European government debt and the European banks which own so much of that paper. The other major concern is the likely economic hit as banks in the euro zone curb lending significantly. A crucial mechanism linking financial players in the United States to the problems in Europe involves credit derivatives contracts. Carl B. Weinberg expects credit around the world to become even scarcer.

Accounting rule makers even disagree about the right way to approach the manner in which an institution offsets its winning and losing derivatives trades to come up with a so-called net exposure. Standard setters in the United States allow an institution to survey all the contracts it has with a trading partner and compute exposure as the difference between winning trades and losing ones. The Bank for International Settlement, Gretchen Morgenson point out, has a different standard for European banks.

“Stock investors have a bad habit of dismissing problems in the credit markets until it is too late. Make no mistake: the troubles of Europe and its debt-weakened banks will imperil the United States.” For many, it is no longer a question of whether but WHEN Greece will default on its government debt. “Back in the summer of 2007, the stock market was roaring, despite obvious problems in the mortgage market,” writes Gretchen Morgenson.

When credit is the air that business breathes. All over the world. In China, Cheng Siwei, head of Beijing's International Finance Forum and a former deputy speaker of the People's Congress, said interest rate rises and credit curbs to cool overheating were inflicting real pain on thousands of companies used by local party bosses to fund the construction boom. "The tightening policy is creating a lot of difficulties for local governments trying to repay debt, and is causing defaults," he told a meeting at the World Economic Forum in Dalian. "Our version of subprime in the US is lending to local authorities and the government is taking this very seriously."

If he had been correct about the United States in 2008, when Willem H. Buiter then of the European Institute, Professor of European Political Economy, London School of Economics and Political Science said that there “was little doubt, in my view, that the Federal authorities will choose the inflation and currency depreciation route over the default route,” his theory would seem to apply to the Eurpean Union. “Together will the foreseeable increase in actual government liabilities because of vastly increased future Federal deficits, this implies the need for a future private to public sector resource transfer that is most unlikely to be politically feasible without recourse to inflation. The only alternative is default on the debt.” He now works for Citibank.

And about those credit derivative that got AIG into the bailout. Still they are sold, unregulated, without requirements for companies to post reserves like the state regulated insurance industry. And speculators can really play games in such markets, with so little supervision. When the next bubble pops, the credit derivative folks with their Ponzi scheme will be the only people left with money.

Of course those European regulators did not address their own problems. In the words of Gretchen Morgenson, ""ONE troubling aspect of the euro zone crisis is just how large the European banks’ sovereign debt holdings are. "At many institutions, the positions dwarf what American institutions held in mortgage-related securities, for example, when compared to book values. Why? Regulators encouraged European banks to hold huge amounts of European government debt by letting them account for these investments as if they posed zero risk. — and that meant the banks didn’t need to set aside a single euro in capital against those holdings. Now, according to an analysis by Autonomous Research, 43 large European banks hold debt in troubled sovereigns that is equal to 63 percent of those institutions’ book values. Adding to the peril is that these banks are funded primarily by short-term investors, like buyers of commercial paper, rather than by depositors, as is more often the case with American banks. This was the same problem faced by Bear Stearns and Lehman Brothers, which collapsed after short-term lenders fled in panic."

Economic union was not true union. And in the age of the divorce, in the sign of the times, the custody battle was foreseeable in this failed relationship issue, involving credit cards.

“The average life span of the world’s greatest civilizations has been two hundred years … and once a society becomes successful it becomes arrogant, righteous, overconfident, corrupt, and decadent … overspends … with costly wars. Wealth inequity and social tensions increase. And society enters a secular decline.” –Marc Faber

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November 7, 2010

QE2: Setting Sail in International Waters

Navigating the news: With a lot of soul searching going on between the central banks and the treasury chiefs of the Asia-Pacific Economic Cooperation (APEC) finance ministers in advance of the Seoul G20 meeting this week, the Thai Finance Minister Korn Chatikavanij told Reuters that he is willing to implement further capital controls, either alone or in cooperation with other countries, to combat excessive inflows from ultra-easy US monetary policy. No finance minster wants their currency appreciating and the Thai baht is one of Asia’s best-performing currencies this year. Thailand’s finance minister said last Friday he accepted its currency would appreciate due to strong economic fundamentals, but
recognized the threat of as investors flooding the Thai markets, creating potential asset bubbles look for higher yields in Thai bonds and stocks,

To avoid stoking inflationary pressures, Thailand would work to avoid damage from a sudden reversal in speculative money. Those reversals like the Japanese were experiencing with a too-strong yen. Outside money and bubbles, with outside manipulators look to skim.

Searching for alternatives to the dollar due to its broad-based decline, policy options include making more use of the International Monetary Fund’s special drawing rights (SDRs), taking whatever necessary measures

This past week, the Federal Reserve Bank in essence announced a revised edition, called Quantitative Easing, Part 2. With the attempt to send interest rates down by .50 or .75 percent, comes ultra-easing monetary QE2. Maybe you caught Back to the Future, Part 2. Would we ever end up with this same cast of characters, where we were when all of this started? And would the ending seem the same?

In 2006, forty-six Filipino pesos bought one US dollar. On Friday there was short covering of the dollar as the Bangko Sentral ng Pilipinas intervened in the trading so the peso would not appreciate beyond the 42.50 peso-per-dollar level. In the words of one trader, “There was panic dollar-buying.”

This was not just sub-prime American crisis. The Fed will now will print money to buy as much as $900 billion in U.S. government bonds through June 2011—an amount roughly equal to the government’s total projected borrowing needs over that period. The Obama administration reported a few week back the federal deficit hit a near-record $1.3 trillion for the just-completed budget year. When monetary policy was used to finance war. This was about the past unfunded costs, and the ongoing present costs. Not appearing in the budgets passed each January, which were affecting currency and that neither political party talked about.

Asian countries have piled up hundreds of billions in foreign exchange reserves since the continent’s currency crisis in the late 1990s in part because they felt the funds mishandled the situation.” Japan is sitting on one trillion dollars. The Chinese government has their $2.4 trillion in reserves. Only it was not to be measured in dollars, at this point forward. America, between the credit markets and the equity markets, was about to be reinvented. And a lot like when the bank held your mortgage, in the new world order American politicians would have to learn a bit of humility when going to meetings like the one this week in Seoul.

It was two years after a calamity that resulted in this new kind of totalitarianism when people cannot buy homes and cars from a banking system, and the rest of us cannot sell. We were stuck where we were, until the foreclosures.

Timothy Geithner – whose credibility is seen in the twelve month performance of the “strong” dollar that he cheer-led last November when that dollar was worth ten percent more when pegged to the yen – declined to comment on the U.S. monetary policy stance, saying today the U.S. has an “independent” central bank. This is the Geithner, who led the New York Fed in September 2008, slowly losing face with his promises, among finance ministers of the Asia-Pacific Economic Cooperation (APEC).


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October 18, 2010

America’s Dollar, With Post Traumatic Stress Syndrome

Filed under: currency,euro,Hyman Minsky — baseball91 @ 5:19 PM
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There was silence all around us, about the currency we used. It was the silence over who we think who we are, as a currency appreciated. The silence came with a belief in false strength, as if it was something that I had done.

Travel internationally and see it in a people. While a weaker currency was inflationary, no one who used the currency within the borders seemed to appreciate what was happening, in the view of the rest of the world over value. Or over judging values.

When currency policy was used to finance war, so that not many citizens thought about the war. There was a silence all around us. About war. Until tax cuts affected road maintenance. Maybe not today. Maybe not tomorrow. But someday soon. In the United States, the silence all around us was about war. Until tax increases came, or otherwise the currency would become worthless. No matter how many dollars we saved for retirement.

There was a silence all around us. In political campaigns. About war. And about the cost of war. When currency policy was used to finance war. The past unfunded costs, and the ongoing present costs. Which were affecting currency. Every day. When state government had no control over the erosion of currency. While the electorate seemed to only build new stadiums, drink beer and watch NFL football. An electorate with a loss of consciousness, if not just the beginning stages of dementia in a once booming generation.

The power to regulate currency was left to the market, as the Fed and the Treasury secretary had spent their tools to control the cost of money. Only after Congress had already approved of war. The elected representatives. With interest rates, banks were allowed to have some control of cost of money. In a world market fighting deflation.

The silence all around us was from the seemingly powerless, in whatever currency was used. Except come election day. An electorate, as one clinical symptom of depression, continued to be unable to focus. Perhaps as a result of battle fatigue, or one stage of a national Post Traumatic Stress Syndrome, the missing focus was on the cost of war. It was not just soldiers that would have to live the remainder of their lives with this Post Traumatic Stress Syndrome.

In a once booming American generation unable to focus beyond a counted cost of 50,000 American lives, with no attention to the 2 million Asians who lost their lives. It was not just surviving soldiers that had had to live the remainder of their lives with this Post Traumatic Stress Syndrome, and the loss of focus. In a once booming American nation once with a currency with the power to regulate governments in Southeast Asia, or to go to war in Iraq. A nation that had not learned the affects of war on currency that took twenty years to overcome, beyond the loss of life.

The United States was a nation, after both Democrat and Republican administrations, with a sub-prime belief in false strength of currency that was used to somehow bring Bin Laden to justice, with wars in Iraq and Afghanistan. My own considerable fear, with this Post Traumatic Stress Syndrome and the loss of focus after September 2001, was about a weaker currency which was hyper inflationary, in the soon to come future that would affect a nation for twenty more years. Or the reverse policy would be uncontrolled deflation, like the policy followed in Japan, where elected political leaders could only watch the affect of monetary policy adrift. Or the decade after the Great War in Europe that saw ongoing deflation, with a contagion that spread to these shores.

The drones of both Democrat and Republican candidates with post traumatic stress, and not really caring any more about the cost of these foreign wars –the wars lost sight of under the cover of TARP rescue of banks that no one had really protested against. It’s the war, stupid. It’s the stupid cost of war.

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September 16, 2010

As the Yen Rises

Filed under: China,currency,euro,European Union,Hu Jintao,Japan — baseball91 @ 3:48 AM
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Money always seemed to affect the outcome of elections. Japan was in June 2009 in the throes of its worst post-World War II recession. Exports were down 40.9% from May 2008, adding to doubts about the possibility of a quick recovery from the global recession. The euro since then has plunged compared with the Japanese yen. Marketwatch has frequently reported that the dollar gained against the Euro but declined against the yen, “in a pattern that has frequently emerged when traders grow nervous about the outlook.”

On June 4, 2010, Naoto Kan, a plain-spoken finance minister was named by the governing Democratic Party prime minister of Japan. His selection came after the sudden resignation of Yukio Hatoyama over broken campaign promises. Mr. Kan, the fifth Japanese leader in four years, faced a task to ignite Japan’s faltering economy and to temper the fast rise of a strong yen. The yen has surged to a 15-year high despite weaknesses in the country’s economy based upon its export-oriented economy, combined with falling deflationary prices. In September 2010, Mr. Kan won a closely fought vote within his own governing party to stay on as prime minister.

The deflation animal has been loose in Japan for some time. As the yen keeps getting stronger, because of its $1.02 trillion in foreign reserves, the Japanese government had lost control of their currency due to the strength of the Chinese economy, with few arrows in its quiver to fight the after affects. The yen gets strong, reflecting growth in China which lacks so much transparency. In the first two weeks of July 2010, the yen had gained 4.3 percent, trading at 92.39 per dollar as of July 10. With $685.9 billion of the securities in April, Japanese investors are the biggest foreign holders of US Treasuries, after China.

Saying the dollar may no longer reign supreme in the future, Masaharu Nakagawa, the shadow finance minister in the Democratic Party of Japan envisions “in the course of the region’s forming a single economic zone,” as he told AFP one year ago, an Asia united by a single common currency. He said during he recent campaign Japan should consider shifting its $1 trillion of foreign reserves away from the dollar into International Monetary Fund bonds. Twelve months before, Nakagawa had said, “Now is the time for Japan to say what kind of world it would like to create. Not to adapt itself to the given circumstances as it has,” since the end of World War II. People must take change into account as the world seeks a new order in the post-Cold War era, with a possibility the dollar might not function as the key currency any more in the medium term.

Their currency has appreciated about 10 percent this year against the dollar. Though Prime Minister Naoto Kan said last Friday the Japanese government would be gearing up to intervene in global currency markets to curb a strengthening yen to limit further damage to Japan’s export-led economy, intervention is expected to do little, with fewer arrows in its quiver. The the upward pressure on the yen is because of increased purchases of yen-dominated bonds by China while seeking to diversify its foreign reserves away from the dollar. The gross domestic product expanded in Japan 0.4 percent in the April-June period from the previous quarter — higher than an guestimated 0.1 percent.

Unease about the economic outlook grows to unease about national security. There was a monetary arms race going on. Everywhere. One pundit noted that the state asset managers in China have replaced the PIMCO funds as well as the World Monetary Fund as a source of aid packages, without the prerequisites that used to come with the money. China’s currency reserves of $2.4 trillion is actually an Asia-wide phenomenon. And China had an internal real estate bubble all its own of which to deal.

The Cold War had been replaced with monetary arms race that involved debt instruments for the world, sources of strength, sources of weakness. As China was rescuing nations afte Septemberr 2008, trying to win friends among nations in need. With history against it, Japan was never going to make the list. The United States and Europe are happy to see their exporters gain a competitive edge against the Japanese.

The World Bank had predicted the global economy would shrink by 2.9% in 2009 in a revised outlook from a previous forecast of a 1.7% contraction. Slow growth leveling off to negative territory raises concerns of a double-dip recession. Or worse.

Unease. In Greece Alexandra Mallosi told the New York Times. “In other countries, young people are encouraged, in Greece they are held back.” The head of the International Monetary Fund, Dominique Strauss-Kahn, says that long-term unemployment could lead to massive social unrest. Victims of recession in their early twenties suffer lifetime damage and lose faith in public institutions. New research says Americans are more than $6 trillion short of what they need for retirement, on average $90,000 per potential retiree.


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September 12, 2010

The New Environmental Protection Agency

Filed under: euro,European Union — baseball91 @ 5:00 PM
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PHOTO from DummidumbwitFeel the anguish that came to those who spent time trying to know their spouse, or rather understand her/his thinking. This was the anguish that came to those who spent time trying to know their children who believed the government policy of Smokey the Bear.  “Only you can prevent forest fires.”  Or pregnancies. So don’t drink and light matches.

Feel the anguish that came to those who spent time trying to know your neighbor. The ones who had just moved in.  Or the folks who had only been here for five years, and still seemed new. Until everyone seemed new, after twenty years.  In my environmental.  Gender theorists say that people should be able to identify as male, female, in-between, neither or both, with schools teaching children that “gender is fluid,” that anyone should be able to choose to go back and forth between being a man or a woman. Stamp-out stereotypical gender-based divisions, beyond just the Schwengen area! Like the foundation of the European Union over the free movement of workers, this was sex beyond the Schwengen area, for New Age thinkers for the Millennials. In the New Millennium, in a world with a growing number of “nones,” with no political or religious affiliation.

So who was your neighbor? Who was the strange one? How had I been allowed to be looked upon by the younger neighbors as the strange one? Where everyone under thirty-years old believed in “Gender Equity.” And I was supposed to. When the concept was soon “grandfathered” in under the administration of the Environmental Protection Agency. Yet when man was not equal to deliver babies. And the women OBs did.

The Title 9 World. It was the law of the land.  in my environmental.  Gender Equity was picked up and spread by European and North American intellectuals as some kind of accoutrement like mustard, unchallenged in this day and age under the auspices of Western governments, spread via internet cafes around the Third World, by NGOs (non-governmental organizations), the European Union, the various U.N. agencies, and the European Parliament of Strasburg. Gender equity was relished in the new post-Darwin environmental science about creation, just as controversial as evolution had once been in the days of Darwin. The Western ideology of gender theory posits “human nature does not exist because the human being is merely the result of culture.”  So writes Tony Anatrella. The conflict in the story, in which everyone had a stake, was as much whether there was a God as much as whether or not “masculinity and femininity are mere social inventions,”  with the culture acting as the guiding force, directing the New World order which really was about the need for more income.  Gender equity is about having a share in capitalism.  And after the collapse of communism, gender equity was about the need for the woman to work outside the home, in a culture enslaved to consumption.  As the media – some powerful voices of media – were allowed in our homes and took control.  As if the greatest injustice in the world was not hunger, or life in Haiti, or in the devastated Congo, but gender equity.  Teaching in the Western world, on American college campuses, that men and women were the same – now this word from our sponsors.

Even if not True, gender theory appealed to more than 50% of the voters. Modern politicians as demagogues could not get elected unless they at least believed in Gender Equity.  And narcissistic people took to the cause. With emotional attachment.

Wrestling with identity, “gender equity” soon developed into Gender Theory.  So one day after seeing politicians, these same politicians, use the anniversary date of September 11th for their own personal cause, in the name of nationalism. If you did not, there was something wrong with you. And you could not be re-elected. Just as you could not get elected, especially as a Democrat, unless you believed in Gender Equity and abortion … and more and more, with Gender Theory.  Whatever it is that Gender Equity has come to mean. Somehow equated with the cause of birth prevention, in the days of the Environmental Protection Agency. In the aftermath of September 11th, I had come to recognize some of the things which the non-Western world dislikes about the imperialistic ways of Western media which invades their homes, night and day, without a warrant. When women could be as arrogant as men always had been–on putting fluorine in the water for everyone. Women were now taught to see under the one big umbrella as “reproductive rights,” as if fertility was a new invention which came only to those in the west who were politically active. Women who encouraged their sisters to be vigilant, as some kind of modern day Smokey the Bear, instructing Third World countries how to prevent forest fires and children. So population rates could reflect that of Europe, who economies were on the verge of a great downward spiral.

Gender equity. And the future. When civilization relied on women to have babies if a society would continue. When the world was not fair. And so the protest. Over reproductive rights and abortions. When the central focus was one of true meaning. Whether society and civilizations should be allowed to self-destruct. When war alone was inadequate to destroy civilization. (May I add Bud Selig’s name to the sentence about the destruction of civilization?)

Selling your soul. Men had always been allowed to self-destruct. The theme of selling your soul used to apply to men alone. In sport, in business. Have you ever seen the play “Damn Yankees”? As society wrestled with whether women should be so allowed.

It was part of their anguish that came to those who spent time trying to know their distant neighbors. Seeing women wrestle with their identity, with all of the same stages described by Kubler-Ross in her book, ON Death and Dying. The fears and the anger over fertility. The stages of death which had replaced life, in the name of gender equity. The anguish of the young ones whose teeth seemed whiter, whose grass seemed greener, but whose weeds were not visible. Only an acceptance of the forest if not the organic trees.

When civilization had become a woman’s issue. And smart men, who wanted a sense of peace in an anguished environment of clinical depression, just tried to get along and stayed silent. For now. About Gender Equity.  And feel the anguish that came to those who spent time trying to know their own kids who now believed in Gender Theory with its own gestation period  for human civilization, that had evolved out of Gender Equity.  

POST SCRIPT:
People tend to follow trends. People prefer to be surrounded by their own. Seen in white flight to the suburbs, in post-war American history.

There is invisible fear all around which is expressed in homophobia. Did you hear so many young people express passion about life-style? What is behind life-style, with an apathy about goodness? This is expressed as “the fear of being judged.” No one will dare ask the “What is wrong with you?” question if you surround yourself by others like you. In the so-called Age of Diversity.

Power. Civil rights? Or human ones? The discrimination lawsuits. There is the anger in this society over all the new protected classes. As special interest groups surround themselves, use social media, with people like them. And to take advantage of their secular power, “Government” then gets involved in private lives. Since churches will not. At least until recent times. And evangelicals and Muslims are demonized, by the media.

In the age of democracy people go to war over the Law and call it civilization. Bullying in different disguises, with their lobbyists in Washington. When the past is being sued. And people do not like change! When the world is not fair. As special interest groups bully back, within the Law. What is this perspective of a generation, as if gay relationships will ever change the world? When you leave not very much behind? The public proclamation about a private life that will come to an end, unless there are sperm banks, with all the irony that within the hatred of men by woman that a lesbian needs an honest sperm bank. Did you ever note the little mention of the equal number of misandrists in the world to the misogynists, in the challenge to create something long-lasting. Did you ever wonder about the balance for a child who grew up in a same-sex household? As that child tries to contend with the innocence that their parent had also once been born into.

There is trouble with taking sides, in history. Presented as meaningful evidence of what happens when churches take sides, in Spain, there were so many churches intentionally damaged in a civil war. It is what happens when churches take only one side. In that no one can legislate love or impose purity laws, there were 7000 priests executed in the Civil War in Spain that involved Muslims, Christians and Jews.

Social Studies. The blessed part, to the great unsettling. The connection of language to a LAND and its people. The language of art – not religion as much as a holiness connected to birth for a female; death for all of us. Dignified birth and dignified death, with various degrees of holiness. What happens in a society – with not half the world is interested in art – as a society tries to make women masculine … but some form of backlash? As sport, in another great unsettling, along with all the world became more violent. Yes, feel the anguish that came to those who spent time trying to know their family, or rather tries to understand their thinking.

Bring Your Own Device (BYOD)

Link: http://www.goodreads.com/quotes/tag/misanthropy

June 6, 2010

Those ‘give ‘em what they want’ Methods

Markets. The restlessness on display of people, in markets. Amidst the moral hazards. With warnings of worldwide “fragility” in financial systems. With worries about the solvency of Greece involving high deficits, fake budget figures, and low growth. And now worries about Hungary. And then maybe Spain?

It should be about more than just warnings concerning the economies of the world. It is more about real people. It was ten years ago, on the eve of the new millennium, in a tradition of the 50th year (the Jubilee Year) — as quoted in Leviticus where those enslaved because of debts are freed, lands lost because of debt are returned, and community torn by inequality is restored — that Pope John Paul, Bono, Bob Geldof, Muhammad Ali, Quincy Jones, and Youssou N’dour called for debt forgiveness for Third World nations.

After five years on the job, at 6 p.m. on Friday the 13th, in September 2008, Timothy Geithner as the president of the New York Federal Reserve summoned the heads of major Wall Street firms to a meeting in Lower Manhattan to review their financial exposures to a collapse of Lehman Brothers, and to work out contingency plans over the possibility that on Monday, September 15th, the government would need to orchestrate an orderly liquidation of Lehman Brothers, and stabilize the financial markets, according to the New York Times. The journalist at the time seemed to have smelled something. The meetings which involving the top executives from Goldman Sachs, Morgan Stanley, J P Morgan Chase, Citigroup and other financial companies, had continued through that weekend as Henry Paulson and Timothy Geithner first proposed that corporations voluntarily step in and rescue Lehman Brothers. It was how capitalism and markets were supposed to work.

Vikas Baijaj of the The New York Times had reported that same weekend American International Group and Merrill Lynch might be in need of billions of dollars in capital to strengthen their businesses, facing a similar crisis. The world now knows of the spreading troubles and growing concern about the collapse of big financial institutions. And the systemic risk.

Too big to fail. Systemic risk when deliberately borrowing more money than someone can afford to repay. The moral hazards of credit derivatives. With warning of the potential for economic meltdown. In the late 1990s, Brooksley Born, as head of the Commodity Futures Trading Commission, tried to convince the country’s key economic power-brokers to take actions that could have helped avert the crisis. “We didn’t truly know the dangers of the market, because it was a dark market,” said Ms. Born.

Counting the cost. Of systemic risk. The missing transparency. What is the extent of our power to regulate, in an era of aggressive expansion? After living the good life? Before the good life crashed, who was going to complain about the missing regulation? After a $38 million investigation, Judge James Perk unsealed a 2200 page report about balance sheet manipulations at Lehman Brothers which discussed the failure of Ernst & Young to abide by the Generally Accepted Accounting Principles. Ernst & Young seemed to have abided by the “give ‘em what they want’ method of accounting. After all, Lehman Brothers had been paying for the report.

On those moral hazards. In public service and to public policy concerns over moral hazards in private business. In big government, in bed with its sponsors. Some economists argue against debt forgiveness on the basis that debt forgiveness would motivate countries to default on debt obligations. Debt forgiveness for pretend banks instead of Third World nations — who would have ever thought. Printing up new currency and demanding reserves be held in what had become pretend banks.

As for public policy concerning the ongoing pay of chief executive officers, government has not stopped the derivatives? What had happened to the world of credit derivatives? It still was here, without reserves backing the financial vehicles? What had happened to the systemic risk? This week in testimony before the Financial Crisis Inquiry Commission, Warren Bufffet was asked by a panel member, Brooksley Born, the former chair of the Commodity Futures Trading Commission, if the derivative market was “still a time bomb ticking away.”

“I would say so,” he said.

After all of the working groups and government-sponsored investment efforts. Of the total $30 trillion funded world-wide bailouts and stimulants, American sources had funded up to $20 trillion dollars, through markets from “direct lending and indirect backstops” with the litany of bailouts, stimulus, conduits, mortgage freezes, and foreclosure programs. According to the New1 York Times, the derivatives market in 2007 was $531 trillion, up from $106 trillion in 2002. And the same people were in charge? While global central banks and government agencies continued policy of creating credit. Cheap money. Where were interest rates set — the Federal Reserve Bank policy that was responsible for this mess? And it has been 5 months since the Financial Crisis Inquiry Commission got underway. Where was our own spotlight being shed by the commission on lustration of capitalism?

Following the collapse of communism, the word was “lustrace.”  As the invisible ink became visible, buying up properties.  Lustrace, either religious or political, is the ridding by communities of ceremonial impurity. More complicated ceremonies involve confession of sIn.  In the days after the Berlin Wall fell, in the movement toward privatization, when those in power during Soviet Administrations stayed in power.  Proponents of Lustrace laws said that lustrace would prevent members of the old regime from exploiting their old advantage in the system and regaining influence.  Lustrace was, as a community was to be purified either from collective guilt or from the accumulated ill-doing of a period of time, this attempt at considering sanctions or penalties designed to purge former party members, collaborators, or really evil informants, at reducing systemic risk in public service.

To come Undone.  How had individuals amassed so much material goods under Marxism? From Latin lustratio, “purification by sacrifice,” a lustration is any of various processes in ancient Greece and Rome whereby communities or individuals ceremonially rid themselves of impurity. Methods vary, from sprinkling with water, washing in water, rubbing with various substances, such as blood/clay. Fumigation also has been used, when we have been surrounded by the impure.  For examples of lustration, there is shared  bloodguilt, or pollution incurred by contact simply of the profane or ordinary state of a place which made it dangerous to come into contact with sacred rites or objects; or pollution incurred with a corpse, or with childbirth. When a community is to be purified, either from collective guilt or from the accumulated ill-doing of a period of time, different processes have been used from culture to culture. One usual Greek method was to lead through a village certain animal (s) or person (s) capable of absorbing the pollution and to lead them then out of the city. Instead of letting power stay with the same suspects, the operative word, in nations which never had reconciled what had happened since Hitler had come to power, was this LUSTRACE— in the post Berlin Wall days of Czechoslovakia or East Germany, following the collapse of communism. What of all the collaborators in various degree of secret service to the system?

Systemic risk with public monies. Systemic risk in public service and to public policy concerns over moral hazards. This was a larger story than the destruction done in one day on September 11, 2001.

Some economists argue against debt forgiveness on the basis that debt forgiveness would motivate countries to deliberately borrow more than they can afford, with recurrence of a default on their debts. Moral hazards and public policy concerns over ongoing pay of chief executive officers — and to their cronies, like Timothy Geithner.

In the 1990s, the key economic power-brokers of the United States “were totally opposed to it (regulation),” Brooksley Born said. “That puzzled me—what was it that was in this market that had to be hidden?”

As Under Secretary of the Treasury for International Affairs (1998–2001), Timothy Geithner had worked for Treasury Secretaries Robert Rubin and Lawrence Summers. Where reportedly, Summers was his mentor, other sources called him a Rubin protégé — the key economic power-brokers of the 1990s. There was no lustrace, on Wall Street or Washington following the total collapse of the investment banking world.

Of all the bad mores. Of the financial rescue of banks. Of institutions, and not people. With little more than just debt forgiveness for those five investment banks, but all the other financial institutions in the United States. And derivatives still are a perfect way of getting rich, while avoiding taxes and government regulations, in a volatile global market. Derivatives still remain a lucrative business, with all of the Generally Accepted Accounting Principles. At Ernst and Young. Those terrorists operating within the system who affect my safety inside my own home.

After wide and “robust discussions,” G20 ministers heard this weekend French delegates strongly defending the credibility of the Euro after its recent plunge to a four-year low. In a change of tone from the document produced by G20 finance ministers six weeks ago — the concluding communiqué introduced a call on world governments to put their fiscal houses in order. With differences over how quickly to rein in public spending, Treasury Secretary Timothy Geithner warned at the G20 meeting that fiscal tightening won’t “succeed unless we are able to strengthen confidence in the global recovery.”

I wonder from what Geithner these days has begun “to insulate himself? With the Financial Crisis Inquiry Commission underway, according to a January 2010 Bloomberg piece by Hugh Son, the Federal Reserve of New York, under the leadership of Timothy Geithner, told AIG to withhold documents and delay disclosures of details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails over a five month span starting in November 2008 between the company and its regulator show.

In November 2008, the New York Fed had taken over negotiations between AIG and the banks as losses on contracts tied to subprime home loans threatened to swamp AIG, weeks after its taxpayer-funded rescue. The New York Fed ordered the crippled AIG not to negotiate for discounts in settling the credit derivative swaps, crossing out the reference to discussion of a discount of up to $13 billion that tax payers funded, according to the e-mails. AIG excluded the language when an SEC filing was made public on December 24, 2008. This was the backdoor bailout of Goldman Sachs and more than a dozen banks which were owed $62.1 billion of the credit derivatives. A news account reported that a REGULATOR decided that Goldman Sachs and more than a dozen banks would be fully repaid; was this actually a New York Fed official — the New York Fed — deciding that AIG could not discount anything, all to the benefit of Goldman Sachs?

At the time, Geithner “was recused from working on issues involving specific companies, including AIG.” In a separate statement, a spin doctor said that Geithner, after his nomination for Treasury secretary on Nov. 24, 2008, “began to insulate himself weeks earlier in anticipation of his nomination.” Let me see……Former New York Federal Reserve Board member Timothy Geithner who worked at the New York Federal reserve through the Bush years. In a January 2010 statement, a spokesperson said that Geithner, after his nomination for Treasury secretary on Nov. 24, 2008,“began to insulate himself weeks earlier in anticipation of his nomination.” From the New York Federal Reserve Board.

In a world where governments levy taxes not to finance its operations, but to give value to its fiat money as sovereign credit instruments, Timothy Geithner expressed at the conclusion of this week’s G20 meeting concern over the confidence in the system. Whereas French Finance Minister Christine Lagarde said yesterday that budget consolidation is “priority No. 1” for most G-20 members. He has seen what had happened in 5 months to the currency. His own currency.

In the United Kingdom, government was actually discussing increasing taxes and cutting spending. Canada this week ACTUALLY raised interest rates. Senior Hungarian government official Peter Szijjarto said Friday the previous government had manipulated budget figures and lied about the state of the economy, leading to a new question if Hungary was June’s candidate to replace Greece in the fiscal peril of 2010.

There would be a massacre in bond markets when interest rates rise, and where there will be no safety in stocks. After all the money which has poured into the perceived safety of bonds.

The rules all changed in September 2008, with government intervention into private enterprise, which was not enough to halt the unraveling of the financial system, not back up by reserves. For the day the losses would come. The clear and present danger, when markets were no longer free. Because political leaders just quit doing what they had always done. Regulating. Detached leaders trying to get re-elected, unable to get a handle on the grieving process of loss. Unable to regulate. In denial over the global economic imbalances.

In a world still trying to deal with loss, the G20 met with noble intentions to grapple with the harsh reality of the depth of the public debt morass, with all of the communal consequences, including risk of global instability.

In once free markets, which were allowed to pursue truth in valuations, what would happen to currency? In the New World Order? To freedom? To all freedom? After the Ponzi schemes called derivatives still were supported by governments. As economies stressed, and became the cause of new wars. When the “law of force” meets the “force of law.”

Director of currency research at GFT Forex in New York, Kathy Lien, said: “You won’t see major players be blatant about increasing their gold exposure and reducing their euro exposure. But it is a trend we’ve been witnessing in the past few months.” In Russia. in Iran. And with those Euro holding in China under review. According to data on the Russian central bank website, the central bank of Russia trimmed its currency reserves by $6.6 billion in May, increasing its gold reserves by $1.8 billion. With more signs of shifting movement lately of euros and into gold –In an unconfirmed report — an Iranian news agency reported last week that Iran had begun switching €45 billion of its foreign-currency reserves into gold and dollars.

It is all about currency. And bonds. When there was no place to hide. What makes the Dow 10,000 this month look better than the Dow in February 1996 when it was at 6500? When there was a lot less stress in the world over currencies.

It was the currency, stupid. Campaign 2012 was going to be about the currency. Anger was one response. Or actual moves made to protect a currency. Because of the injustice of the bailout. And falling currency values throughout the world. When people no longer trusted government. When confidence was lost in people who messed with the system. Because of greed and power. The greed that financed political campaigns. Of Democrats and Republicans. As most of us looked on helplessly, at the elected transparent Democrats and Republicans. Or with either contempt or disgust. With a brewing restlessness on display over the greed, and the “give ‘em what they want’ method of accounting. Whereas few of those enslaved because of debts were ever freed. And more and more became Third World Nations.

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April 15, 2010

Those Tea Parties



In his book, “The Three Trillion War,” Nobel laureate Joseph Stiglitz and co-author Linda J. Bilmes state that the total economic impact of the Iraq War may be $4 trillion or more. And that was before the United States escalated things in Afghanistan.

Former White House economist Lawrence Lindsey was fired as economic adviser to President Bush partly because of his estimate of the dollar cost of the Iraq war. In an excerpt of his own book in Fortune magazine five years after, Lindsey wrote his projections were partly right. “My hypothetical estimate got the annual cost about right. But I misjudged an important factor: how long we would be involved.” Mr. Lindsey also stated his belief that one reasons the administration’s efforts were so unpopular was the choice not to engage in an open public discussion of the consequences of war, including its economic cost.”

Congressional Democrats had predicted the Iraq war would cost about $93 billion, not including reconstruction. Peter R. Orszag, director of the Congressional Budget Office, said, “It’s clear that operations in Iraq and Afghanistan have gone on longer and have been more expensive than the projections initially suggested,”

So far this has been a tax-free Iraq War, and not included in the Congressional Budget, as I recall a piece that was written in 2002. According to an item that ran on the MSN news page, the cost was carried over. I see little media coverage since that time indicting where the war shows up in the president’s budget.

William Nordhaus from Yale University wrote in the New York Review of Books in December 2002 in an article entitled “The Economic Consequences of War,” about the the long-term management of the economy, with the management of planning cycles. “The fabulous Nineties—with soaring stock market, falling unemployment, declining defense spending, budget surpluses, and bubbly optimism—were followed by the Bush administration which made no serious public estimate of the costs of the coming war. The public and the Congress are unable to make informed judgments about the realistic costs and benefits of the upcoming conflict when none are given. Particularly worrisome is the promise of postwar occupation, reconstruction, and nation-building in Iraq. If American taxpayers decline to pay the bills, this would leave a mountain of rubble and mobs of angry people in Iraq and the region. Closely related is a second syndrome, frequently found in past conflicts, of entering war prepared militarily but not economically. The finances of the nation have deteriorated sharply since George W. Bush took office. The annual federal budget has deteriorated by $360 billion from the spring of 2001 to the fall of 2002, and, even with a short war, budget deficits are likely to mount in coming years. The Bush administration has not prepared the public for the cost or the financing of what could prove to be an expensive venture.”

Nor has the Obama Administration. Market participants, wrote William Nordhaus in “The Story of the Bubble,” at this point do “remember how they lost $6 trillion on absurd and wildly overvalued speculations. A similar exuberance is unlikely to recur in the near future. More likely is an economy in which large federal budget deficits lead to cuts in existing civilian programs and doom critical priorities such as comprehensive health care.”

That tax-free Iraq War, as conceived by the Bush White House, was one ongoing economic consequences of war. There was now the subsequent tax-free Afghan War. These wars would soon change American history. Would you like to come over for tea?

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March 30, 2010

The Tip of the Iceberg in Greece

Ayn Rand wrote in Something to Reflect On (1959), “Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion—when you see that in order to produce, you need to obtain permission from men who produce nothing—when you see that money is flowing to those who deal, not in goods, but in favors—when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you—when you see corruption being rewarded and honesty becoming a self-sacrifice—you may know that your society is doomed.”

Troubles in Greece, representing 2% of the EU’s economy, have weighed heavily on the Euro. Following a downgrade last Wednesday of Portugal’s credit rating, comment s reported from Hong Kong were that “Greece is only one case,” said Zhu Min, deputy governor of the People’s Bank of China, “but only the tip of the iceberg. We don’t see decisive action that tells the market, ‘We can solve it, we can close it,’ so the market is very volatile.”

Fitch Ratings cut Portugal to AA-minus and said a further slide was possible if the country doesn’t do more to bring down its budget deficit. The downgrade in the credit rating of Portugal was due to weak fiscal figures—though not as dire as Greece’s. The Euro has been off 7% against the dollar since the beginning of the year, taking another hit Thursday in Asia after Zhu Min’s criticism of the EU’s handling of Greece. He warned that the “U.K. is weak. America itself is weak, because in a two- to four-year horizon, U.S. debt will climb to 110% [of GDP] and stay there for a while.”

Referring to the large amounts of government debt issued to bail out banks and funding stimulus programs in the West since September 2008, he said, “The governments tried to put every burden from the financial sector onto their own children. Now they find nobody can save them.” High levels of debt throughout the developed world, he added, would keep growth low for several years. Chin as the world’s largest holder of foreign-exchange reserves is a major investor in the Euro. He stated his belief that fiscal problems could spread to Spain and Italy.

“Bonds have seen their best days,” Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co, said in a March 25 interview with Tom Keene on Bloomberg radio. Alan Greenspan warned that rising yields on government debt will drive up American borrowing costs is resonating with the world’s biggest bond traders, who say this month’s losses in the market for US Treasuries are just the beginning. Yields on 10-year notes, the benchmark for everything from mortgages to corporate bonds, climbed as high as 3.92 per cent last week from a low of 3.53 per cent in February. A February survey of 10 dealers showed that budget deficit, which hit $1.4 trillion in fiscal 2009 will drive Treasury sales to a record $2.43 trillion this year.

After Fitch downgraded Portugal, the dollar rose as the euro tumbled raising fears of continent-wide contagion from Greece’s troubles. However, U.S. Treasuries did not. The 10-year Treasury dropped 1 7/32, driving its yield to 3.829%, its highest level since Jan. 4. At other moments of financial panic, U.S. government debt has been a safe haven. No more.

Economists and strategists also predict rising yields in Germany, the UK, Canada, Japan and the rest of world’s major economies, Bloomberg surveys show. Breaking Europe’s diplomatic etiquette, Luxembourg’s Foreign Minister Jean Asselborn told German radio station Deutschlandfunk that the European Union and its single currency are “a peace project, a community of destiny,” adding Germany has a duty to act if a fellow Euro member needs help, writes Andrea Thomas and Adam Cohen in thee Wall Street Journal.

Bill Gross of the PIMCO funds said investors should invest in shorter-maturity US and Brazilian securities and longer-term German and “core” Europe bonds, avoiding the debt of the UK. Higher yields are the “canary in the mine,” Alan Greenspan said, where historically there has been “a large buffer between the level of our federal debt and our capacity to borrow. That is narrowing. And I am finding it very difficult to look into the future and not worry about that.”

Daniel Bell is a sociologist who is listed by the New York Times Literary Supplement as among the authors of the 100 most important books in the second half of the twentieth century, with his books End of Ideology and The Cultural Contradictions of Capitalism. He thinks that a new kind of society was emerging, post-industrialism, information-led and service-oriented, which will replace the industrial society as the dominant system, resulting in a shift from manufacturing to services; the centrality of the new science-based industries; and a rise of new technical elites and the advent of a new principle of stratification.

The news this week. About off-shore oil-drilling. The news this week that forgets the hope and change theme. That theme addressed to a young audience that forgets so soon. Forgets the sins of Kobe Bryant, who got a new contract. Forgets Tiger Woods who will be making his comeback at The Masters. And forgets the betrayal of America whose leaders of Wall Street were rescued in September 2008, by tax dollars. And with this comes news of the release of a sequel by Oliver Stone to his 1987 movie “Wall Street: Money Never Sleeps.” Gordon Greeko delivered a great speech in the original “Wall Street” About greed in all of its forms…in love, in life,in sex. It was, this greed, present in much more than just money. And this society in deep trouble. As the illusion has become real..and the bigger the illusion, the more that they want it. With the census that is due back, with all the census workers, the new census workers, hoping to pump up the economy. After the more than 8 million jobs lost since this recession began, there were the temporary U.S. Census positions.

“I create nothing. I own. We make the rules,” said Gordon Grekko. Oliver Stone was talking about the bubble. In 1987.

Did you believe in the devil? Did you think history repeated itself?

Tom Brokaw wrote a book about the Greatest Generation. The one born at the very end of the Roaring Twenties. Daniel Bell was one of them. He discussed the intellectual movement of his time. In academia. Bell wrote in The End of Ideology that “The twice-born” generation which found its wisdom in pessimism, evil, tragedy, and despair, after the optimism based upon an ultimate faith in the rationality or common sense of men was shattered by war and the Great depression. That greatest generation was, writes Daniel Bell, “both old and young ‘before our time.'”

Money is the barometer of a society’s virtue. When virtue was determined not in the short run, but in the marathon. It was the admission by the Greek government in 2009 that the government in power had lied about budgetary matters. Not unlike what happened in Bulgaria, where were now forthcoming that the government had lied about money, in the past in order to be admitted into the European Union. Not all that dissimilar to what had happened to those items in the budgets approved by Congress that was keeping the cost of war in Iraq off the books.

Yes, money is the barometer of a society’s virtue. \

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