CLICK HERE LARGE PRINT EDITION: GLOBAL BANKING COLLAPSE GETS WORSE « Culture of Life News
The spiral of very bad news continues to flow in from all parts of the planet. This doesn’t even slightly surprise me. The US was allowed to run for 35 years with growing trade and budget deficits which are utterly unsustainable. The entire system depends on the US over-consuming and deindustrializing itself, fatally. Finally, the end heaves into view. Just like it did for the British Empire, 100 years ago.
“Batten the hatches. This is not just a recession. This is the sharpest deceleration Australia’s economy has ever seen,” the company’s quarterly report said.
Thanks to its strong export ties to China, Australia – once dubbed the “miracle economy” – managed to escape the downturn that hit the US and British economies last year.
However, with China’s growth now slowing and the mining boom effectively over, it is widely accepted that the country will join the long list of countries suffering from the global financial crisis.
Access Economics said the federal budget was “buggered” because of its heavy reliance on the price of commodities, which was now falling. It said the four year boom enjoyed by the country had disappeared in four months of “chaos”.
All bubbles pop much, much faster than they grow. Even as everyone can see an obvious bubble, they are helpless when it happens. Like the Romans at Nero’s feast, people get drunk and are unable to react. Then, they see millions of rose pedals falling from above. More and more pile up until they are smothered.
The roses, in this case, are fiat dollars. All the central banks of the world happily churned out loans and did many of these based on US trade dollar leverages. The key nation doing this has been Japan. This gave Japan tremendous trade leverage with the US, too. Which is why they did it. I often complained about the ridiculousness of having the world’s #1 and world’s #2 economies running up such huge debts and one of them being mired in a ‘depression.’
I often said, the Japanese depression was increasingly fake as inflation moved along increasingly higher there and they had more and more GNP growth. I said, the ZIRP business in an inflationary, growing economy, was nasty. And it is! The US now has a collapsing economy and this, in turn, is hammering Japan’s economy.
Japan not only started the ZIRP business, the zero interest game, they locked out much of the world’s economic activities due to constantly lowering wages and reducing consumer credit. Now, everyone is being forced to lower wages and reduce consumer credit and interest rates across the planet are plunging to zero! Japan’s monumental trade profits didn’t percolate downwards at all.
(Bloomberg) — Japan’s demand for services dropped in November as a deepening recession prompted companies to fire workers and lower wages.
The tertiary index, a gauge of money households and businesses spend on phone calls, power and transportation, fell 0.9 percent from October, the Trade Ministry said today in Tokyo. The median estimate of 26 economists surveyed by Bloomberg was for a 0.8 percent decline.
Toyota Motor Corp. and Sony Corp. are firing workers to cope with the global recession that triggered a record drop in exports in November. Wages slid and job prospects worsened in the month, and economists say consumers will keep cutting back as the slump in the world’s second-largest economy intensifies.
Due to peculiar social conditions in Japan, there were no worker’s riots, unionization or battles for power over all this. Instead, the entire workforce simply gave up the ghost and accepted a perpetually declining condition. Being the world’s #2 economy, Japan’s inability to soak up more consumerist commerce has been a huge hole in world trade.
(Bloomberg) — HSBC Holdings Plcled banking shares lower in Asia after Royal Bank of Scotland Group Plc flagged the biggest loss in British history, fueling concerns among investors that the industry crisis is deepening.
HSBC, Europe’s largest bank, lost as much as 8.8 percent and traded at HK$57.20 in Hong Kong at 10:16 a.m., the lowest since October 1998. An index tracking 84 Japanese lenders fell 3 percent in Tokyo. Banks in Australia and Korea also declined.
RBS tumbled 67 percent in London yesterday after saying it may post a full-year loss of as much as 28 billion pounds ($40 billion). The U.K. government is stepping up an industry bailout, less than a week after Bank of America Corp. received a $138 billion rescue and Citigroup Inc. announced plans to split in two.
We are in a riddle here: who can we all borrow from if all the banks in the world are bankrupt? The answer is, everyone borrows from their own governments. But most governments are running deep in the red, already.
As Americans pile into their huge SUVs that are polluting the planet and go off Xmas shopping using credit courtesy of Asia and Europe both of whom are frantically offering us billions in debt instruments so we will keep on buying their stuff while we lose one factory after another here at home, the NYT calls this “an addiction”. Well, I call it “Traitors in America selling us down the river.”
t’s an addiction. Every day, the United States sucks in more and more of it from abroad, just to keep the nation going. We speak, of course, about foreign money.
At our current rate of trade and budget deficits, foreigners need to purchase $2 billion in dollar-denominated assets each day just to keep the dollar stable, said Axel Merk, who manages $60 million at Merk Investments and runs the Merk Hard Currency Fund.
Over half the national debt is now financed by foreigners, according to Roger Ibbotson, chairman of the financial consulting firm Ibbotson Associates in Chicago and a professor at Yale School of Management. That’s been true since 1980, but the difference now, he says, “is the scale of the game.”
“I guess everyone wants to keep this game going,” Ibbotson said. But if one of the countries we’re most dependent on drops out, it could be “like a bank run.”
When empires fall apart financially, the whole world trade systems collapse. It happened to the Spanish empire. It happened to the British Empire. It will happen to our empire. Anyone who knows anything about history minus the stupid propaganda points (like pretending we were fighting for democracy during WWII) knows that when an empire reaches its apex it nearly always goes into a financial frenzy, building palaces and stadiums, getting more and more reckless with their currency, wild military exploits that bring home no spoils, only corrupting the empire further. Diminishing returns on a shrinking market as the distant provinces demand support. All empires react by pulling back but only after they go bankrupt and it is pointless.
Why is the interest rate in Japan so pathetic? They have inflation. They import 100% of their oil, for example. Yet they are flourishing while our economy is on the ropes, kept alive only by history’s biggest spending spree. One last time, we rush to the stores to buy stuff we no longer make. Once more, we fall into the same, stupid trap. As the sun sets on our empire, we send our leader (snark) abroad to be insulted and laughed at, a caged bear with a begging bowl, covered with fleas. Even now, the lesser provinces like Israel and Poland, drags on our diplomacy, demand we pay them tribute, not the other way around.
The tidal forces at work back then are now flowing in the exact opposite direction. Money is no longer flowing out of every pore of every bank across the planet. All banks across the entire planet are seeing the opposite: FUTURE returns are vanishing forever. People are defaulting on loans.
If the problem was banks not lending, this is very easy to solve. But when the problem is people not paying their loans and defaulting, then we get depressions. Everyone is firing workers and closing down things and this leads to more bankruptcies and this process of everyone shutting down as fast as possible is guaranteeing more bankruptcies. This is a vicious cycle, of course. One that Japan was very familiar with.
The flood of easy lending ended the exact same month the Japanese carry trade stopped. We can trace this reversal of money movement to exactly July, 2007. The yen is still 90 to the dollar and this is very painful for Japanese export one-way trade. But Japan should never had been allowed to be so aloof about equal trade deals in the first place.
The cartoon at the top of the page is one I drew back then. The US is an easy credit addict. We are now suffering from withdrawal pains.
OK! Number crunching time: World External Debt is a whopping $44.6 trillion…3 years ago! It has balloned since then and is probably at around $52 trillion or more. Most likely, more. The US was at $10 trillion over a year ago and has climbed another trillion or so since, I am assuming. England is probably $9 trillion now and this is terrible! Good barking grief!!! How can they do this? They are a tiny country! They have a fraction of our population! They have… they DON’T have much of a united kingdom at all and the Queen is ripping them off by allowing off-shore financers avoid paying taxes! And they are spending as if they are a huge empire and this includes military occupations of many countries they have no right to be in.
When I saw this number, my jaw dropped on the keyboard and dented it.
Next on the list is Germany. Nearly $9 trillion. Gasp. Mein Gott. Das ist aber ganz schrecklich! Wie können sie das tun? Ganz grausame.
France and Italy, other members of the 7 dwarves, follow behind. ‘Hi ho, hi ho, it’s off to bankruptcy we go!’ they sing as they march behind the US into the Dragon’s lair. ‘Hey,’ yells Sleepy Trichert, ‘Someone tell the Dragon to turn on the lights!’ Next comes Netherlands and Miz Japan bringing up the rear. All seven of the conspiritorial G7 dwarves are… ALL IN DEBT UP TO THEIR DAMN EYEBALLS. Or the tops of their pointy caps, I may suggest.
So….the deep in debt 7 dwarves are back to attacking the much thriftier Dragon for not being financially responsible?
That article was from 2 years ago. Let’s go to the CIA to see the numbers from 2007:
- World external debt has shot up by $7 trillion.
- US debt has shot up by over $2 trillion
- UK debt has shot up by over $2 trillion
- France has shot up nearly $1 trillion
- China went up $600 billion
- Germany has gone up only $500 billion
- Ireland has gone up $500 billion
- Netherlands has gone up over $300 billion
- Japan has DROPPED by $100 billion
So world debt grew massively…except in Japan. Always the exception to all the rules. The chart, of course, is woefully out of date. The US debt has climbed much more than a trillion in just six months! And plans to climb several more trillion in the near future! The number at the top, the total, is from 2004 and is really out of date. It is about $66 trillion which happens to be the number of the Derivatives Beast! HAHAHA. Hell’s bells, isn’t that queerness?
Money is debt. Dollars are IOUs. Since the vast majority of global trade and banking is in dollars, this makes the fiat currency grossly over-grown in size. Yet, we are in a severe deflationary spiral!
I suggest, this is because vast oceans of paper money value is in paper products like mortgages, SIVs, CDOs, etc that are rapidly losing value. So the ‘money’ vanishes since it is future money, not present money. There is no way for the mass of systems mired in debt, to pay this off, in full. The US could do this by making magic money. But no one wants this. Except for the damn bankers!
The US’s trade deficit requires China to print money!
The little discussed downside of the dollar peg is all the money China has to print to maintain it. China’s Central Bank puts the extra dollars it receives from its trade surplus into its growing foreign reserves and then prints yuan to pay Chinese exporters. This results in an increase in China’s base money supply by an amount equal to the increase in its foreign exchange reserves. While China’s ability to keep accumulating US reserves is endless, its ability to keep its money supply under control is not.
An interesting read. Only it is all reversed: the US, due to our need for more debt money, has to get this from either Japan or China. China is now spending more, not less money, while ONLY JAPAN is reducing debt spending. So this means, the US has to get Japan, not China, to do this trick. The world is NOT flooded with yuan. It is flooded with DOLLARS. And we plan to hyper-flood it with dollars in the near future.
California is cutting money to children and the disabled. The sums needed are less than we spend in one year fighting barely armed peasants in Afghanistan. All we have to do is, stop fighting and spend this money in California. HAHAHA. Will Obama figure this out? NO. He is surrounded by Zionists who desperately want us bogged down, fighting pesky Muslims.
More US debt. Note that we top the CIA list. I hope the CIA goes, in greatest alarm, to Obama and tells him about this. And cows will jump over Gaza and not get shot.
SHANGHAI (Dow Jones)–Bill issues by China’s central bank will likely fall more than 70% this year as Beijing eases monetary policy, the clearing house for China’s interbank bond market said in a research note.
The People’s Bank of China will likely sell less than CNY1 trillion ($146.3 billion) worth of bills this year, down sharply from CNY4.23 trillion in 2008, China Government Securities Depository Trust & Clearing said in the note published last week.
Outstanding PBOC bills will likely total CNY3.2 trillion by the end of 2009, down from around CNY5 trillion by the end of 2008, the clearing house said.
Since Japan is doing this, China must do this. And we must do this. We won’t do this. So what does that make us? We are opening the spigot. They are both closing it. The Asian people know how to batten down the hatches. We leave all our windows and doors wide open. Who is the deepest in debt? The US, not China, not Japan. Japan’s is 1/10th our debts.
‘Time to Sell’ Treasuries, Biggest Korean Fund Says
A rally that sent U.S. Treasuries to their best year since 1995 is coming to an end, South Korea’s National Pension Service, the country’s biggest investor, said.
U.S. government efforts to combat the recession will prompt the Federal Reserve to raise interest rates this year, said Kim Heeseok, who oversees $160 billion as head of global investments for the service in Seoul. The decline would snap a surge that sent the securities up 14 percent last year, according to Merrill Lynch & Co.’s U.S. Treasury Master index, as investors sought the relative safety of debt.
“It’s time to sell U.S. Treasuries,” said Kim, who took over as head of investments at the start of the year. “The stimulus plan may cause inflation. The U.S. will raise the benchmark interest rate.”
Asia is now in a new format: they are no longer trading with the US, they are in World Turtle mode. The world, you see, rides on the back of this Turtle. We are the turtle, of course.
The credit-rating agency’s downgrade comes at a delicate moment for Euroland’s weaker bloc. Several states already face difficulties raising money on the bond markets. The yield spreads on Spanish debt rose yesterday to a post-EMU high of 122 basis points above German Bunds, though still below levels for Italy, Ireland and Greece.
Explaining the downgrade, S&P cited the “structural weaknesses in the Spanish economy” and predicted a long recession that will raise public debt by 18pc of GDP and may entail a huge bank bail-out.
Brussels predicted that unemployment in Spain would reach 19pc by next year, pushing the jobless total to near 4.5m. Opposition leader Mariano Rajoy called on finance minister Pedro Solbes to step down as a “patriotic duty”. “This is a man who has thrown in the towel. He’s given up, he’s got no ideas left and no clue what to do next,” he said.
The Spanish housing market was very much like Florida. Much of it was vacation houses for people living further to the North. When the banking collapse began in the US and the northern European states, it quickly took over the southern vacation/retirement communities. The same empty fun in the sun houses sit abandoned in the Mediterranean as in the Gulf of Mexico.
RBS Plummets Amid Concern Bank May Be Nationalized
Royal Bank of Scotland Group Plc slumped by the most in two decades in London trading on concern the government may have to take full control of the bank after forecasting the biggest loss ever reported by a U.K. company.
The stock dropped 67 percent, the most since September 1988, to 11.6 pence, paring the Edinburgh-based lender’s market value to 4.6 billion pounds ($6.7 billion).
“Nationalization at zero value is implicit in the price,” said Derek Chambers, an analyst at Standard & Poor’s Equity Research Ltd. who has a “hold” rating on the stock. The stock price “is an option on the vague chance that it doesn’t get nationalized.”
First Iceland, then Ireland and now Scotland: like a tsunami, the wave of collapses are moving relentlessly southwards! In Europe, it is moving from East to West. Scotland can nationalize the bank. But it does nothing about the collapse of the currency and trade.
RBS on the brink as shares plummet by 69% and City is warned: ‘You’re about to become
Bank shares plummeted today after the Royal Bank of Scotland revealed it was facing the biggest loss in UK corporate history just as the Government launched its latest attempt to stave off economic disaster.
RBS, which owns NatWest, saw its value plunge by a massive 71 per cent at one point to a 23-year low after announcing it stands to lose up to £28billion for last year, almost double the previous record loss for a British company.
The bank’s new chief executive Stephen Hester said it was time to ‘fess up’ to the mistakes made during the boom years as he revealed it will lose £7 to £8billion on lending and another £15 to £20billion from taking on Dutch bank ABN Amro.
Losing only $35 billion? Well! That is peanuts for our banks! They lose $1150 billion without blinking an eye! And get bailed out, too! The glories of being the global trade currency…which is not for much longer.
Former Royal Bank of Scotland boss Sir Fred Goodwin, branded ‘the world’s worst banker’, was blamed last night for forcing taxpayers to write off a £2.5billion loan to a Russian oligarch.
The money was lent by the bank, which is now controlled by the Government, to Leonid Blavatnik, 51, a London-based billionaire who owns chemical giant LyondellBasell, which is on the verge of collapse.
Treasury officials examining RBS’s books were horrified to learn that they included the sum to Mr Blavatnik, which has now been written off.
A senior official said the loan was more evidence that the recklessness of banks was a major factor in the credit crunch.
‘These bankers doled out ridiculously large sums to foreign investors to finance deals which had nothing to do with Britain,’ said the official.
‘It is only now that we are going through the banks’ accounts that we can see the true scale of their irresponsibility. Some of it is every bit as crazy as the American sub-prime loans scandal.’
Competition forced bankers to offer loans to every con man on earth. Now, we get to find out exactly how many. I’d say, the majority of the people getting loans were cons. They used offshore islands and the Japanese carry trade. Now, these loans are collapsing. Duh.
I bet the vast majority of the super-rich are both cons as well as DEBTORS. I say, let’s restart debtor’s prisons only have them for people borrowing more than a million dollars. And of course, the bankers who went bankrupt lending to Mafia bosses of various ethnic groups, should also be sent to these prisons.
The Irish government is placing heavy restrictions on the accounts of major debtors of Anglo Irish Bank (ANGL.I) under legislation nationalising the top-3 bank.
Under the draft law, which will be debated in parliament on Tuesday, anyone who owes the commercial lender 20 million euros (18 million pounds) or more will be prevented from withdrawing money if the total in their accounts would drop below the amount owed.
The only way the debtor can get around the restriction is by applying for the written consent of the bank itself. A copy of the legislation is available here. Irish media have reported that the Quinn Group, onehere. Irish media have reported that the Quinn Group, one of the largest family-owned businesses in Ireland, is Anglo’s single largest debtor.
Right now, since so many cons took up huge debts, we can’t trust most debtors to be honest. And honest people in debt are being forced into bankruptcy due to the overall economic collapse due to all the cons who got immense, multi-billion dollar loans to buy up and destroy, many businesses. Remember: the madcap buy-up/buy-out mania fueled by the bankers and the con men featured wage drops and layoffs. And THESE are the reason the global economy is collapsing.
All those useless, stupid deals were very destructive. We burned down our capitalist system in order to park immense and stupid loans on top of every possible equity platform.
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