G7 Leaders Refuse To See The Future

All things happen together, all things are tied in these bundles whether it be galaxies or groups of disparate people on our small planet.  All things affect each other in big or small ways depending on how close or far away events or things are but it is the movement of things that is of interest: this is how we predict the future.

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Looking to the past, taking note of the present can lead to foreseeing the future.  The world just passed through a major, epic money-printing bubble created specifically by the US when it dumped the restrictions of the gold standard and replaced it with the floating fiat currency system.

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At first, this unleashed a vast sea of excess dollars here in the US which turned into inflation that shot up to unprecedented heights.  High interest rates imposed by the Federal Reserve under Volker stopped this in its tracks, temporarily.  But what replaced it was far more dangerous: the money printing went merrily onwards starting with Reagan and hasn’t paused at all, flooding mainly the rest of the world with US trade dollars.

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Trillions of dollars floated overseas while ships bearing goods floated back here, disgorging huge masses of manufactured goods and oil.  The US public lived the Life of Reilly for a brief, historic moment.  And now, has to pay the piper.  As the US flounders about, slowly dying, all the exporters who expected to keep this status quo going are now going down with their ships, so to speak.

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The Europeans, thanks to letting the euro become much stronger than the dollar, have been throughly devastated by this currency current state of being: their ability to export to the US has collapsed.  Unemployment is shooting upwards.  Here is one example from England:  Young jobseekers told to work without pay or lose unemployment benefits.

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Graduates from college can’t find work so they are forced to work for free for major corporations who may or may not hire them, later.  Why is the government giving free labor to major corporations?  That is a most pressing question!  This is, basically, a form a slavery.  If one has wealthy parents, one doesn’t have to do this.  You just get no unemployment money.  But poorer students must accept this or else.

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The problem is, if there is this endless supply of free labor, why hire anyone?  Just take up one unemployed graduate after another!  Forever!  And it shouldn’t be free, the corporations should pay something, even if it is the minimum wage.

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There are jobs in England.  But the people getting them are nearly always foreigners who have been driven out of other EU countries due to them going into tail spins.  So, there is an Extra 150,000 foreign workers in Britain as unemployment rises – Telegraph

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Figures from the Office for National Statistics showed that unemployment was 2.62 million in the three months to September…The number of non-UK nationals in British employment was 2.56 million, up 147,000 from the same period year earlier.

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This can turn very ugly, very fast.  There is a reason why national socialism become extremely appealing to citizens of various countries during depressions!  There is good reasons why, after every historic asset bubble in history, all countries or rulers instantly impose trade barriers!  Property and state revenues must be protected.  And taxing people in depressions is unworkable whereas, taxing incoming goods is very attractive for everyone.

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Here is an example of how present leaders of governments, beholden to the Big Banks (in London, in this case) cannot see into the future not because they can’t but because they WON’T:  Sir Mervyn King: Britain on the brink of second credit crunch, Bank of England Governor warns – Telegraph

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“There is weakness over the next few quarters. No one can know what precisely the outcome will be,” he said.  “In the last three years, we have seen extraordinary events. Who knows what’s going to happen tomorrow, let alone next month?

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The banks can only issue loans to companies and home owners if they can find sufficient funding on the markets. According to the Bank of England’s inflation report, banks’ funding in the three months to September fell to levels not seen since Lehman Brothers, the US investment bank, crashed in September 2008…banks must raise a further £200 billion-£300 billion next year just to maintain their current lending levels.

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Translation: we ain’t got no capital.  Banks are lending, still.  But on a very slender base.  Much of their ‘asset’ base has been melting away, that is, loans they handed out are not being paid back so the loans have moved from the ‘asset’ side of the equation to the ‘deficit’ side.  Ergo: lending collapses, profits vanish.

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So, will the Federal Reserve lend the London bankers another $300+ billion like three years ago?  This is the ‘future’ the London bankers refuse to see.  Namely, the hour when the Federal Reserve can’t lend them $300 billion because this will cause the dollar to collapse even faster and the euro will shoot up even higher.

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And this is the funniest part of the financial trap everyone is in: the euro is strong even as all the major trade partners with Europe scream about how Europe is collapsing!  Few people point this obvious fact as odd!  I find it very odd.  Usually, when a country is going belly-up like say, Iceland, their currency suddenly plunges in value.

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Yet, we see the euro strong as ever…against the dollar.  True, the yen has suddenly gotten stronger this year.  And Japan is a total economic disaster!  This, too, is not explained to the public.

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The world’s worst debtor nation happens to be Japan:  Japan concerned about hikes in Italian, Spanish bond yields: Azumi – The Mainichi Daily News

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Azumi also stated his view that the International Monetary Fund should join worldwide efforts to address the problem and that Japan should be part of such a crusade…Azumi underscored that Germany is a key player in turning the situation around by creating a “funding scheme” or “firewall” to prevent the fiscal problems in Greece and Italy from spreading to other eurozone members and triggering a banking crisis in Europe as many major lenders hold the government bonds of such troubled countries.

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Japan holds EU debts because Japan wants a strong euro so Japan can export to Europe.  End of story.  Japan doesn’t want the EU to disintegrate since the EU has been the easiest economic union to leverage with minimal debts and euros.  That is, to leverage the US dollar to be stronger, Japan has to hold over a trillion in US debt and FOREX dollars!

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But to leverage Europe is infinitely easier.  It is hilarious that the country that has twice as much government debt than GDP is demanding that Germany fix things in Europe!  And suggests that Japan could save Europe!  HAHAHA.  By, of course, buying EU debts…but ONLY if Germany bankrolls it and insures no losses!

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Then, Japan can invade Germany’s markets inside the EU because the euro will remain very strong and Japan hopes, the yen would weaken again.

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As a friendly reminder of the horrors of huge asset bubbles, here is the Japanese stock graphs for the last half a century:  File:Nikkei 225(1970-).svg – Wikipedia, the free encyclopedia

Note the slow, steady accumulation of value that suddenly, thanks to currency games, it shoots upwards after 1984.  It became a classic ‘hockey stick’ graph and always, always, always, when anything on earth or in a galaxy or in cyberspace goes to infinity, it reaches a climax and then collapses.

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Note how the collapse above jiggles and jangles along, always ultimately downwards.  No steady build up ever happens again. There are sudden, small, peaks which then collapse rapidly.  It is all about ultimately, losses.

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For a sad comparison, look at the US credit bubble of the Great Crash of 1929:  House of Cards

The same bumpy ride downwards.  The same slow build up to another hockey stick opportunity.  Recovery from these bubbles is tremendously slow.  This is due to the loss of capital reserves and the solution, crushing wages of workers to raise ‘productivity’ leads to stagnation, despair, thrift and lack of markets.

 

The UK floated along for a short while after the US, Spain and Irish property bubbles popped.  But prices in England are now in decline again, after bouncing back, slightly, from highs two years ago.  This, too, is a classic hockey stick graph.  There is no way it will resume climbing higher and higher at a faster and faster rate.

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All of Europe and the UK are fixing this mess by restricting government spending as much as possible and reducing wages and overworking staff to raise productivity and this will cause a vast depression to take over.  So, here in the US, we see the same things:  As Deadline Nears, Deficit Panel Is Still at Deep Impasse because they can’t raise taxes on Wall Street and are scared of cutting our vast, bloated military empire so they have to cut the lifelines to citizens, a dangerous thing in a democracy.

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Here we see how money from Wall Street continues to warp our Congress and destroy our connections with the government:  Wall Street Rallies for a Senate Ally

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Mr. Brown, a freshman who harnessed populist Tea Party anger to win the seat once held by Edward M. Kennedy, has taken more money from the financial industry than almost any other senator: all told, more than $1 million during the last two years, according to data from the Center for Responsive Politics.

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Of the 20 companies that accounted for the most campaign donations to Mr. Brown, about half were prominent investment or securities firms like Morgan Stanley, Fidelity Investments and Bain Capital. His donors include such blue-chip names as Gary Cohn, the president of Goldman Sachs, and the hedge fund kings John Paulson and Kenneth Griffin.

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When he won a popular vote, he voted for the citizens.  But now, under fire from the left, he is being bankrolled by the bankers who are scared to death of Occupy Wall Street rage.  So, he will use this easy bribery money to run many TV ads and to fund attacks on his rival.

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And in the future, vote for the rich 1%.  Gingrich, another tea bag bum, also plays this game only he was always for the top 1%.  He has to pretend to be one of us.  Gingrich Said to Be Paid $1.6M by Freddie Mac – Bloomberg

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His primary contact inside the organization was Mitchell Delk, Freddie Mac’s chief lobbyist, and he was paid a self- renewing, monthly retainer of $25,000 to $30,000 between May 1999 until 2002…“I spent about three hours with him talking about the substance of the issues and the politics of the issues, and he really got it,” said Delk, adding that the two discussed “what the benefits are to communities, what the benefits could be for Republicans and particularly their relationship with Hispanics.”

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Gingrich’s second contract with Freddie Mac was a two-year retainer for which he was paid a total of $600,000, said two people familiar with the agreement.
What he did for the money is a subject of disagreement. Gingrich said during the CNBC debate that he advised the troubled firm as a “historian.”

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Wow!  I didn’t know that Fannie Mae paid historians so handsomely!  Of course, they could have paid a million bucks to a real historian.  I could think of a few who would have given them excellent advice.  But not Turdblossom.  He has zero ability when it comes to historical facts.  He makes up stuff and then pretends it is real!

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I find it also funny that Bush and his bed buddy, Gingrich, peddled loans to Hispanics.  I have detailed in the past that when the housing bubble got entirely out of control, the number of Hispanics who got loans shot through the roof from 2004-2006.  The proportion went from less than 15% of all loans to over 40% of all loans.

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The Hispanic community ended up holding the bag of bad loans on inflated properties, mainly in southern and western states like California and Nevada, for example. The collective value of property held by Hispanics have collapsed and they collectively went from being well-off, relatively speaking, to super-bad, poor, in just three short years.

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Back to our Congress and its irresponsible actions, we now see that the GOP leader, Boehner refuses to help any American citizens find jobs:  War Drawdown Savings Can’t Go To Jobs and the Fed Is Now The Largest Owner of U.S. Gov’t Debt—Surpassing China | CNSnews.com

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Thus, at the end of September 2010, the Chinese owned about $339.9 billion more in U.S. Treasury securities than the Fed owned at that time. By the end of September 2011, the Fed owned about $516.7 billion more in U.S. Treasury securities than the Chinese owned.

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The U.S. Treasury Department divides the federal government’s debt into two general categories: debt held by the public—the type owned by the Chinese and the Federal Reserve—and “intragovernmental debt,” which consists of what essentially are IOUs the Treasury gives to government trust funds such as the Social Security trust when it takes and spends their money on other things.

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The current total national debt of $15.0336 trillion, reported by the Treasury today, consists of approximately $10.3145 trillion in debt held by the public and $4.7191 trillion in intragovernmental debt.

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What this means is, no one wants to buy our national debt anymore.  When a country has to buy its own debt (ergo: Japan!) this means it is heading into bankruptcy.  When this debt is over 100% of GDP, this means big trouble ahead.

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China is on the verge of dropping our credit rating if Congress can’t pass a budget.  The Pentagon is freaking out because if there is no budget, they won’t get even more increases as they prepare for more wars not only with Iran but with China.  They are opening more bases in Asia, in Australia, in Eastern Europe.

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Russia has made it crystal clear, they will nuke Europe if we try to park our nuclear missiles on Russia’s borders or meddle in Slavic or Serbian territory like we are doing right now in Kosovo, hair trigger to WWI.

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Back at home, here, we get exactly half a dozen or less criminal cases against the bankers, nearly all at the lower levels: Foreclosure Fraud: First Criminal Charges Filed In Nevada Over Robo-Signing

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And last of all: Wells Fargo Says 80 May Be the New 65 for Retirees.   The bankers and Congress know that we can’t retire.  And graduates can’t find jobs.  And so what.  Oh, stop OWS demonstrators!  They are evil!  Yup.  That is the story.  sunset borger

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12 Comments

Filed under .money matters

12 responses to “G7 Leaders Refuse To See The Future

  1. RobG

    “Why is the government giving free labor to major corporations? That is a most pressing question!”

    Because .gov loves corporations. The corporations collect and forward Income Taxes, voluntarily. They also make campaign donations. But the big reason is the (unconstitutional) income tax revenue.

  2. Peter

    As the average lifespan for Americans is 78,they will have to work for 2 years after they are dead!
    How does that work?Zombies,anyone?

  3. RobG

    “I have detailed in the past that when the housing bubble got entirely out of control, the number of Hispanics who got loans shot through the roof from 2004-2006.”

    Many were not citizens. So they would flip houses and send the profits back home, later to retire wealthy. When the market tanked or they could not service the loan, they simply headed back home to their native country. The video I saw showed the houses, still full of TVs, stereos, furniture all bought on home equity credit, and abandoned.

  4. Paul S

    “This can turn very ugly, very fast. There is a reason why national socialism become extremely appealing to citizens of various countries during depressions! ” True. It also explains why the American Communist Party reached its height in popularity during the Great Depression. If you note the public approval ratings of Congress, they are at historic lows. And Congress couldn’t care less. Americans lost big chunks of their 401k’s in 2008 and not a peep of protest from them. How can the world’s most violent crime nation also be the world’s meekest when it comes to tolerating corruption from their government? I don’t get it.

  5. Joseppi

    “When a country has to buy its own debt (ergo: Japan!) this means it is heading into bankruptcy.”

    Mathematically, yes, but as we have seen with Japan, since the fiat currency regime is based on mere confidence, whether real or imagined, national budgets can run deficits longer that what should be mathematically possible.
    I speculate that with the imbroglio of the Euro that the only-game-in-town US currency/bond market that the FED will continue it’s fraudulent QE and conjure up support with a mixture of desperation and statistical propaganda longer than most could ever imagine.
    Domestically, as long as the squeeze is applied slow enough, there will be a holding of hands in collective prayer that the fiat swindle continues until the very last card of the illusion falls.
    I would guess, while adjusting my turban, chewing on a fortune cookie, and peering into the crystal orb, that the last card will fall sooner or later.

  6. I have detailed in the past that when the housing bubble got entirely out of control, the number of Hispanics who got loans shot through the roof from 2004-2006.”
    yes this is sad but troooo

    America is ruined..with millions more breaking in!
    Here in Santa Monika [skid row of the west] there are so many homeless and illegals on the streets.

  7. Elaine….’This is, basically, a form a slavery. ‘
    The govt has unpaid interns….at schools, maybe libraries.

  8. ‘The problem is, if there is this endless supply of free labor, why hire anyone? Just take up one unemployed graduate after another! Forever! And it shouldn’t be free, the corporations should pay something, even if it is the minimum wage.’
    Once a college student confided in me ‘Internships are junk, once its over for a student the business can find another UNPAID intern’!

  9. Pingback: Central Bank Chief Tells Troubled Nations They Are On Their Own …. EU Leaders Call For Structural Reforms And Centralized Fiscal Supervision …. The Seigniorage Of Diktat Has Commenced « EconomicReview Journal

  10. DeVaul

    @Paul S,

    “How can the world’s most violent crime nation also be the world’s meekest when it comes to tolerating corruption from their government? I don’t get it.”

    I think it has to do with people being too old to care now. My own boss is a typical example. He knows he will lose all his money in his 401k account, but still leaves it there instead of withdrawing it and paying off his daughter’s huge student loan debt, like I suggested. He is paralysed with indecision, so he plunges headlong into his meaningless job and just hopes everything will turn out ok.

    Some call this “denial”. I call it the “deer in the headlights syndrome”.

    A deer is very keen to avoid known predators, but it is not familiar with automobiles, so when it suddenly hears something approaching and turns to look, it is blinded by something moving way too fast for it to react to. I suppose it is genetic.

    In the same way, humans are not genetically predisposed to deal with the fast and furious maniacal banking gnomes and financial entrepenuers and all their schemes and funny money. Like the deer, by the time they actually understand what is happening, they are roadkill. A few humans recognize these psychopaths and understand how they operate, but most do not, even after being repeatedly attacked or fleeced by them. Again, I suppose it is genetic.

  11. Paul S

    @DeVaul: Good points you raise but I don’t think they go the whole way to explaining the root causes of this Wall Street takeover of the US economy. The folks who caused this current mess are silk suited thieves. They are morally and ethically bankrupt. I guess you could call them sociopaths. Still, that doesn’t explain the way the average American stands for all this. A corporate owned media helps explain why there is not a more visible outrage over the decline in livng standards. Too many sheeple are going around saying “USA!USA! Number ONE!” It’s an amazing phenomenon to watch.

  12. ‘There are jobs in England. But the people getting them are nearly always foreigners who have been driven out of other EU countries due to them going into tail spins. So, there is an Extra 150,000 foreign workers in Britain as unemployment rises – Telegraph’
    UK admits 1 or 2 million immigrants a year?

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