As we all know, the US economy resplendent with all of its mismanagement, the manipulations, and the seemingly never ending bailouts, is in a ditch. I’m not going to go into the particulars as to how we’ve arrived at this point because we all have our own ideas. Needless to say, anyone with two nickels to rub together, knows that these are desperate times. I will say that this current administration has been as nontransparent and as secretive as any in our history. As a consequence, our current situation has collapsed upon us with a great deal of notification but with very little warning.
Our financial system has not allowed itself to be cleansed because people like Mr. Greenspan thought he could control all things financial. Greenscam like many before him believed himself omnipotent because he had the administration just where he wanted them or was that the other way around? He was not omnipotent.
Economies, like any other living organism have a need to to take in nourishment, to ingest it, to digest it, and to eliminate the waste. A financial system is a living organism and we have treated ours very poorly. The nourishment for a financial system is capital and it ingests that capital in either a rational or irrational manner depending upon certain rules and regulations from the PTB (Powers that Be) , and eventually after digesting the information, it will eliminate waste by causing those businesses and financial entities not utilizing coherent and successful policies to go bankrupt.
The PTB have discovered one epiphany after another which have made them all omnipotent and therefore immune to the financial laws of time and space. America, its citizens and the global community at large are now paying the price. There are five concepts of which I would remind us:
1. We are in this mess because liberty takes constant vigilance. Have we been vigilant or complacent? Actions speak louder than words.
2. One cannot make educated decisions when markets are manipulated. The more the manipulation the more the probability of eventual failure. Everything appears manipulated–except the bond market and its weak on the edges.
3. We are all accountable because we take too much and give too little
4. The American political system is broken. Read all of Congressman Ron Paul’s missives and join the Campaign for Liberty.
5. Our apathy has been created by design and by not participating in the political system. Our apathy is a joy to the politicos, their lobbyists, the military, and the multinational corporations.
Keep them in debt and they are our slaves.
The United States is bankrupt today; of that there is no doubt. The slaves forgot to save a little for emergencies. The PTB plan worked too well! In fact we are beyond bankrupt, we are so far in debt as a country that we will never ever be able to extricate ourselves from this burden by any traditional means. I don’t believe we can inflate away the debt as the politicians have traditionally done.
That these debts will never be repaid by traditional means is the first sign of real global danger. Japan wants to be repaid in Yen not dollars. The Saudis purchase 3.5 billion in gold and that is but bubble gum money for them. The Chinese have 1.8 trillion of US dollars that they would much rather have in gold. Get the picture?
On top of the current bailouts, we have a credit card crisis that needs to be addressed (another bubble) along with the intricacies of these OTC derivatives and how they will affect the banks, the multinational businesses, and the US government (another bubble). We are still in Bubbleland and yet Mr. Bubbles has departed. Who better to preside over more bubbles than Mr. Bubbles himself. You can’t find a good bubble buster when you really need one. read more
“What no one is willing to admit is that the Fed together with Treasury spent close to US $3 trillion in six weeks to keep the market from going to where it will go anyway. There is a simple lesson that all people in government need to learn: since the industrial revolution began, no one has ever succeeded in changing the primary trend of any major market. Not once, not ever! You would think that Bernanke and Paulson would know that, and I’m sure they do, so that makes me wonder just what they are trying to achieve.” EBO
DT Analysis SAC
One of the best minds on the scene as far as I’m concerned. EBO has been mostly spot on and like is colleague Roger Weigand has a tendencay to tell it exactly as it is. Where as Mr. Saxena is talking of an inflationary tsunami, Mr Orlandini is talking about a deflationary spiral. Could they both be correct? Could there be a shorter term deflationary environment and a longer term inflationary, even hyper-inflationary environment? I think it might be possible. I’ll have more to say on this in the next article. In the meantime, here is the very erudite EBO. The Charts are omitted so you may have to visit http://stockcharts.com/index.html to review them.
WEEKEND REPORT (11/16/08)
Fighting the Trend
What a week! The world has had time to digest the Obama victory and assess the implications with respect to economic, domestic, and foreign policy. I think it’s a safe bet to assume that just about every major world leader will welcome the change. The Bush administration had a knack for alienating all of our allies on more than one occasion.
With the world economic slowdown, the issue of the wars in Iraq and Afghanistan were pushed to the back burner, but Americans continue to die there every day. I will be interested to see how Obama will try to extricate himself from a situation that has no viable way out. In a way Obama was lucky the economy turned down, so he really didn’t have to go into detail on how he would handle the war. Like John McCain and Hilary Clinton, Obama turned a blind eye and allowed Bush to do whatever he wanted in Iraq, so it would have been difficult to criticize something you supported for so long. The expenses for the war are treated as something outside the budget, as if it didn’t count, and it’s something that everybody seems just as happy to sweep under the rug. Unfortunately the war effort will cost somewhere between US $250 and US $400 billion in 2009, and that requires a very large rug! (These wars will cost in excess of 1.5 trillion before all is said and done and of course they are off budge items!! What is IN the budget?? See what I mean aabout telling it like it is!?Ed.)
Here’s something that I haven’t read anywhere. Most of the Arab nations were content to sit by and let the US mire itself in Iraq, because they were more than content watching the price of oil rise from US $50/barrel all the way up to US $147/barrel. When things are good, and the future looks even better, you tend to ignore things like a war in a neighboring country. Now oil has plunged all the way back down to US $52/barrel catching many Arab countries undergoing a huge expansion, based on all those future profits they’re no longer going to receive, and they’re not going to be able to make ends meet. Economic hardships mixed with religious fervor could very well drag many Arab nations into the Iraq war, especially if Mr. Bush tries to do something in Iran before his term ends.
It is very important to understand that the deflationary process that began in the United States is spreading throughout the rest of the world, and the Arab nations will not be an exception to the rule. The rulers in countries like Saudi Arabia are a minority and hang on to power by spreading the wealth, and if there is no wealth to spread, they will find it difficult to reign. What’s more, most Arab countries hold considerable US debt as reserves and they are learning that these reserves may be worth little or nothing. Religion is a major influence in the Arab world and if the economic situation continues to deteriorate, it wouldn’t take much to turn the Arab world openly against the US. In short, Obama has to walk a very fine line and extricate himself from Iraq as soon as possible. read more
By Puru Saxena
Nov 14 2008 11:07AM
www.purusaxena.com
There are so many excellent writers and analysts one knows not where to begin with recommendations. I have been keeping track of Mr Saxena’s work and I believe he has a clear mind. Highlights are from your editor. These are excerpts from his article published on November 14. You can find him on Kitco. I am going to publish the antithesis of this inflationary scenario by offering you Enrico Orlandin’s work of November 18 2008. EBO, as he signs off on his missives, his committed to a deflationary scenario. I truly admire the insights of both of these individuals.
Deflation Hoax
In my view, the economic news will continue to disappoint in the months ahead, business activity will remain sluggish and corporate earnings will shrink. However, the financial markets are a discounting mechanism and I suspect most of the bad news has already been absorbed by this market. Furthermore, investor sentiment is horrendous today and we have witnessed genuine distressed selling in the past few months. So, I wouldn’t be surprised if we get a rally from these oversold levels. Now, whether or not this rally will fail in a few months time is anybody’s guess but I suspect the financial markets will be significantly higher in 4-5 years from now. I must admit that I don’t have a clue about the short-term prospects (neither does anybody else) but I do know that stocks are now poised for above-average long-term gains.
Central banks and governments are printing TRILLIONS of paper currencies around the world, the US has now become a socialist society and all this money-creation should result in a huge inflationary tsunami in the future. In my opinion, those who are forecasting deflation, don’t understand our monetary system. What we have seen in the recent past is not deflation but a contraction in asset prices due to liquidation. Today, governments and central banks have the ability and motive to expand the supply of money ad infinitum and you can bet your house that paper currencies will lose tremendous purchasing power over the next decade. So, cash and fixed income assets will probably turn out to be the worst assets to own. In fact, I would argue that US Treasuries are grossly overvalued today and they are likely to crash somewhere down the road. In a few years from now, long-term interest rates in the US will go through the roof as the US Dollar and its overvalued bond-market collapses.read more
Our new President Elect–Can he affect change? Is it a new day? Is there real change in the air? I do believe there is once again hope in America because of our new President-elect. It feels to me that we have come through a long dark tunnel and hopefully America can get back on track once again. But I remember feeling like that after Clinton departed?Is this all a “pipe dream”? And then we elected “W and the Neo-cons”. It was like having a national tooth pulled without Novocain for eight long years. Today, November 11, 2008, I just heard on NBR that the Patriot Act was being enacted permanently. Now, what was I saying about change in the air?
Washington, DC is still Washington, DC and no single person can undo what has been done by a group of politicians unworthy to hold office in any country for the past eight years. I love America and for what it represents, but as we all know, this Country has gotten off track and we are as just as responsible as the next guy. We were too busy at the punch bowl and we’ve become spectators to our own political system. Our Republic has been through amazing times, trying times; and we are resilient as a people. But we are starting from a very deep black hole and our new President Elect doesn’t even want to be part of this weeks G-20 meeting. Can you blame him? The message is clearly “it’s your mess–you created it and I’m not getting involved until my watch begins”.
But Ladies and Gentlemen–consider this one thing, America was created for the people by the people and it is supposed to be our country. We need to take it back from those entities that treat us like “feeder cattle”. That means we get off the couch and into the game.
We begin by contacting our congress people until they know us by name. We form neighborhood groups oriented towards positive political change. We begin at home and remember the names of Washington, Jefferson, Adams, Franklin, Lincoln, FDR, Kennedy and we remember what sacrifice is. read more
