Debt Bubbles Continue To Roil World Markets

ΩΩThis depression is behaving nearly exactly like all previous depressions in the last 250 years.  All the modern systems set up by central banks and international financiers and an army of economics professors has done absolutely nothing to change the essential course of capitalist credit bubble collapses.  All the creaking machinery set up to prevent these events failed totally and this is due entirely to human  nature which operates very stubbornly on certain principals which seem unchanging in how it works since this is due to how our brains operate on a fundamental level.


ΩΩOne reason why I  keep telling stories about the Cave of Wealth and Death is to illuminate this dark area of the brain which is where the electrical brain processes that act according to very strict evolutionary laws, operates.  That is, we evolved to behave in this manner which seems extremely powerful, as a collective as well as individual force.  The hazards, temptations and risks we fall prey to are things which have been hard wired into our brains to the point, one could suggest this ‘boom/bust/yin/yang’ cycle is the definition of the human collective.


ΩΩThe wreckage from the latest credit bubble (promises to pay tomorrow what is borrowed today carried to the nth degree leading to infinity) cannot be simply swept aside.  Even if the good old ‘zero it all out via bankruptcy’ rule is very tempting, the reality of this is a nightmare: people die.  Often, huge, immense numbers of people perish.  This is why the Cave of Wealth is also very much the Cave of Death.  It is a place to fear, not run heedlessly inside to pick up all the alluring goodies scattered about the entrance!


ΩΩI choose to view all economics matters via the perspective of mythological characters based on thousands of years of humans telling each other stories about the elusive but harsh nature of how greed and lust for eternal life really works.  That is, in ancient times, people worked very hard to figure out how to live forever.  The Pharaohs of ancient Egypt tried all sorts of physical schemes whereby they could amass immense amounts of wealth and then carry it all off for all eternity via building elaborate tombs for themselves.  These ‘arks’ would then merrily sail into the cosmic sunset, filled to the brim with every possible thing a mortal might want, forever.  Eternal life!


ΩΩThis proved to be totally insane.  Relentlessly, no matter how queer the devices and clever the means, these instruments of preserving wealth and power forever are being raided and carried off and the dead bodies of the fools who tried this system are put on display to be gawked at by mere masses of ‘peasants’.  The cruelty of these systems is also obvious: anyone involved in the actual burials of these manic rulers were killed!  To keep the ruler’s location secret.  All over the planet, the same delusional belief in eternal physical life via burying or hiding the ruler with all his loot and then killing the poor saps who bury these monsters, this was played out over and over again.


ΩΩTribes which had no contact with each other over space and time, that is, could not know of each other’s schemes to bury bodies and hide all the ‘wealth’ of the dead rulers, yet again and again, the same stupid trick was used.  If there was no fabulous wealth, still, the favored horse or wife would be interred with the cruel, greedy dead person.  In China, desperate retainers convinced rulers to bury ceramic armies instead of living soldiers!  But in ancient cities in the Mesopotamian valley, entire armies and all consorts of the dead ruler were murdered so they could ‘serve’ him forever in the Land of the Dead.


ΩΩAnd many of these hidden dark graves were dug up and put on display!  We can’t resist digging up the dead anymore than we can resist trying to live forever in some fashion.  These death displays have been replaced by spiritual eternal life in various ways so the entire issue no longer depends on amassing great wealth and then burying it again when dead.  But the concept of carrying off wealth into eternity is very much a powerful central force within our brains.


ΩΩNow on to the news: Europe has dominated the planet for many, many generations.  At the very height of this domination when much of the planet was in the firm grip of the European rulers, they suddenly turned on each other and what was supposed to be a minor operation blew up into a World War and this power was still so immense and the empires so great, this led to a second World War and even then, thanks to the NATO alliance with the US, Europe still was able to dominate the world via the US empire.  This rule is coming to a final end.


ΩΩThe immense superstructure of culture, intellectual achievement, social engineering and financial creation is eroding away as energy and change shifts relentlessly back to Asia.  Even within Asia, the main industrial power, Japan, which embraced energetic change after 1865, is in steep moral, physical and cultural decline after lording it over much of Asia for 150 years (with a slight blip after being defeated in WWII).


ΩΩBoth Europe and Japan can’t understand why things are going so badly wrong.  Yet, if we look closely at their cultures and societies, it is easy to see the signs of rot.  The idle poor grow in numbers and the ladder out of that pit seems to be gone along with any sense of needing to develop operational tribes, the fundamental basis for human organization since the days when we were apes in the savannas of Africa two million years ago.


ΩΩAs the ability to form families collapse, the xenophobic ethnic belief systems increase.  This is due to unease: humans need desperately to have some sort of tribal system due to our evolution!  We cannot be ‘alone’ except if we are going insane.  People who hide off in the hills, alone, are insane.  That is, they are anti-evolutionary and have removed themselves from society and whole societies do this sometimes.  Such as the fall of the Roman Empire led to a rash of hermits/sexless cloistered living systems springing up all over the place as the economic and political situation deteriorated badly.  On the other hand, the lusty, sexually active, growing hordes of tribes on the outskirts of civilization were full of energy and a desire to seize everything which is why they quickly overran the Roman Empire.


Greece Calls for Activation of Financial Rescue Package –

“There is the risk of the sacrifices of the Greek people being lost as rates of borrowing continue to rise,” he said, speaking from the Aegean island of Kastellorizo.


Trying to kill inflation is like this, too: the more the central bank raises rates, it is always too late unless someone like Volcker takes the bull by the horns and relentlessly outruns the Goddess of Inflation.  Usually, systems trot along behind this swift moving creature and don’t catch up, they collapse when she reaches infinity and moves much too fast.  We saw this in Zimbabwe recently.


Even as the US media hammered away at the Darfur (what’s that??? HAHAHA) for three years, they nearly totally ignored Zimbabwe’s attempt at running along with the Goddess of Infinity.  This didn’t puzzle me: Americans are not supposed to think that Weimar-style inflation can happen in the modern world.  Just as everyone in Europe and America were assured, the Great Depression was a one-time thing and we needn’t worry our little heads about it happening again because everyone knew, the Great Depression was caused by tariffs, not a stupid bank-driven credit bubble.  Snark.

. “The time has come for us to ask our partners in the E.U. to activate the mechanism we formulated together,” he said, referring to an emergency aid package arranged two weeks ago. The plan foresees up to €30 billion, or $40 billion, in loans from Greece’s euro-zone partners, as well as up to €15 billion from the International Monetary Fund.


This is a drop in the bucket compared to the US government sucking down the whale of mortgage loans represented by Fannie Mae and Freddie Mac as well as the $700 billion other stupid things we had to swallow in the fall of 2008.

. The activation of the E.U.-I.M.F. rescue plan, Mr. Papandreou said, “will send a strong message to the markets that the E.U. is not playing their game and will not leave its currency at risk.”


ΩΩMany Germans were very leery about the euro when it was proposed.  They prided themselves on their solid currency which was due to CAUTION which grew out of the bitter lessons of the Weimar attempt at going to infinity.  But the historical forces which drives all of Europe to form various ‘Roman Empire’ constructs such as the ‘Holy Roman Empire’ leads the democracies there towards ‘unification’ even as language, social and ideological ethnical differences make running such a thing nearly impossible.


ΩΩThe various waves of empire-building such as the rocket up and down empire built by Napoleon, these sweep across Europe and always crash due to an inability to coordinate all the different systems.  The US suffers from this even as we build an international empire, domestically, we are extremely divided and we have a nearly-common language, unlike Europe.  The government of Belgium, for example, fell this week over the same issues as ever: the Germanic-language speakers versus the French-language peoples.  If tiny shards of the EU can’t form a working government due to simple language differences, how on earth can Europe be an EU?  It is really a difficult thing.  China, for example, pushes hard for language unification aka the US.  India, on the other hand, is NOT one language at all and is growing mostly due to the use of English for business purposes.


ΩΩGreece is seeing riots this week as workers grow very alarmed at being laid off.  The mass layoffs of this depression are not done, we are in round three of this long decline.  The seeming health of the bankers is due entirely to looting governments.  I keep saying, governments have one rule: they MUST SURVIVE.  And if they fail, the consequences are literally deadly.  If there are no invaders, the populace can and will riot or flee or have insurrections based on tribal or religious ideologies.  That is, chaos will rise.


Debt Rising in Europe – Interactive Graphic –

ΩΩGreece is a minor player in this tragic story.  The big ones are Spain and England, the two ancient rivals for Sun Never Sets rulers of the Main.  That is, more so than France, Germany or Italy or the Lowlands, these two were the chief rivals for sea power and fought each other for centuries until Spain’s bankruptcies finally sank the entire empire.  Then, France and England fought it out, in the French Indian Wars, the US Revolution, the Napoleonic Wars, until France and England were forced to be allies in WWI and then WWII.  Even today, the French and Brits don’t get along all that well and the French in Canada still agitate to be separated from the English-speaking parts of Canada, for example.


ΩΩBritain, much more than Spain, will cause a major collapse in global banking systems when it goes under.  It is the hostess to all the pirate coves which are used by renegade bankers and investors so they can create money out of thin air and not be regulated or taxed by any empire including even the British empire.  This is incredibly stupid.  That is, these pirates depend on the US navy and the UK alliance with the US to be protected.  Otherwise, Chinese ships could come sailing in and all these islands seized by them, just for example.  It could easily happen.  History tells us, this happens ALL THE TIME.


ΩΩLike the eventual bankruptcy of the US, the UK bankruptcy is inevitable since the government there has insisted on going to infinity in credit while deindustrializing and creating a massive underclass.  The country which pioneered the Industrial Revolution and which was the home of great scientists and creators as well as practical change has morphed into a pirate cove for desperate, non-productive minds working on schemes for bleeding capital out of all systems.  It is building nothing useful in Britain, they are draining Britain of all moral-based capitalist ethics.


ΩΩThat is, the Industrial Revolution was launched by people who were very moral while at the same time, rather cruel and relentless.  That is, the machines they created destroyed the rural village culture of ancient Britain and dislocated the populace of peasants but at the same time, it also led to social and physical changes which took the greater masses out of rural poverty and into a New World which we call ‘modernism’.


ΩΩSpeaking of which, the US has also gone into decline even as our stock market, etc, seem to have done just fine.  Here is an example: I found this DOW chart which shows the actual rise in the DOW over the last century and tied it to inflation showing the much lower actual growth in value if we key in inflation.


ΩΩNote that until the gold peg ended, we had fairly insignificant inflation even as inflation began after WWII.  It took off after Nixon killed the gold peg and allowed trade deficits to begin in ernest.  The stagflation was considerable.  But the following credit bubble is much worse: it is FAKE.  That is, it wasn’t due to an increase in industrial profits and power but rather, a decline.  It is all about rising debt kept fairly flat as far as inflation was concerned only by offshoring much of our labor mostly to Asia but also to Mexico and other Southern Hemisphere countries.


Dogs of the Dow – Inflation-Adjusted Dow Chart (1925 – Present)

ΩΩEnergy lies at the heart of Europe, Japan and the US (the G7) troubles.  During the years of the North Sea energy production, Europe sailed along just fine.  But that is quickly ending and the distress about Russia being the chief energy supplier is causing immense diplomatic as well as social problems: Russia aims to get some revenge for the mistreatment from Europe and the US after the fall of communism.  This causes great unease.  The international trading/banking houses were gleefully hiking up the price of oil via the commodity markets until the G7 governments warned them off.  Meanwhile, oil remains at over $80 a barrel and this is too high for Europe and the US.  The euro has fallen in value so energy costs are soaring there.  This is a typical trap: the OPEC nations are richer and Europe can export to the US easier but the energy costs are killing profits!


ΩΩObama has opened the door to more offshore drilling.  Eventually, we will drill out everything we can, the desire to consume is very great.  The recent grounding of all jets in Europe caused oil prices to fall somewhat and we can view this event as a warning of what it will be like when masses of people can’t jet all over the planet for fun and profit anymore: this is the future, after all. The nature of the Hubbert Oil Peak cannot be disputed.


Oil slick spreads from sunken rig –

ΩΩOil Spill From Rig Blast Is 10 Miles Wide, U.S. Says (Update1) – the promises Obama is making on behalf of oil drillers is going up in smoke.  The dangers of these systems must be recognized.  We pay a pretty price when we use fossil fuels as energy.  At the same time, as we see in the recent coal mine explosion, nothing changes and the workers go back into the hell holes they know are killers because they must and we are happy with this since we want the cheap energy.


ΩΩHumans are dying not only in accidents but oil wars—Iraq continues to blow itself up while Iran has war games as a warning to the G7 to keep out—humans are dying so we can go on vacation in exotic places, live in climate-controlled houses and entertain ourselves in various idle ways.  Offshore oil rigs are not totally secure!  Mother Nature sees to that. Now, back to mere humans:


Moody’s Slapped With Subpoena: Credit Rating Agency Not Cooperating With Crisis Investigators

The panel created to investigate the roots of the financial crisis slapped credit rating agency Moody’s Corp. with a subpoena Wednesday for failing to turn over key documents.


It’s the first subpoena issued by the Financial Crisis Inquiry Commission to compel compliance, the panel’s chairman, Phil Angelides, said during a conference call with reporters. The commission faces a December deadline to produce a report documenting and explaining the causes behind the worst financial crisis since the Great Depression.


ΩΩMoody’s Corp shouldn’t exist.  It should be called what it is: a con game.  A fraud.  Proof is obvious.  So terminate it.  And terminate the entire derivatives swap meet markets, too.  Obviously, these things are menace to society.


Op-Ed Contributor – How Wall Street Became a Giant Casino –

Wall Street’s purpose, you will recall, is to raise money for industry: to finance steel mills and technology companies and, yes, even mortgages. But the collateralized debt obligations involved in the Goldman trades, like billions of dollars of similar trades sponsored by most every Wall Street firm, raised nothing for nobody. In essence, they were simply a side bet — like those in a casino — that allowed speculators to increase society’s mortgage wager without financing a single house.


The mortgage investment that is the focus of the S.E.C.’s civil lawsuit against Goldman, Abacus 2007-AC1, didn’t contain any actual mortgage bonds. Rather, it was made up of credit default swaps that “referenced” such bonds. Thus the investors weren’t truly “investing” — they were gambling on the success or failure of the bonds that actually did own mortgages. Some parties bet that the mortgage bonds would pay off; others (notably the hedge fund manager John Paulson) bet that they would fail. But no actual bonds — and no actual mortgages — were created or owned by the parties involved.


ΩΩMore proof that these things should be totally terminated.  Obama did strike out at the guys playing these games.  He is trying to get us to back banking reforms.  I see the shadow of a rather angry Volcker here: no longer pushed aside, the President is actually listening to him at last.  Will it be too late?  HAHAHA….the real bull that has to be gored here isn’t the Derivatives Beast, it is Free Trade.


ΩΩLast of all, during this last month, my work in construction has resumed and a month ago, the price of plywood we use for exterior construction was at $6.45 a sheet.  I thought this was rather high.  Especially since the market was so bad for construction. Well….it jumped to $7.50 then $8.75 a sheet during the last month and then, in the last week, it shot to $10.35 a sheet and then three days later, $14.00 a sheet!  MY GOD!!!! What is going on here?


ΩΩGads….the traders, warned off of the oil markets, flooded this and other important commodity markets with lots and lots and lots of…hang on here…Japanese carry trade borrowed money which means, they have to make mini-price-bubbles in this thing or that thing, over and over again, pouring in, all at once, together, into the same arenas, driving up the price of important things we need and then rushing for the exists to do this to another commodity.  Note how the gold arena is nearly empty of these guys!  The gold bugs can’t figure out why their precious bull market vanished.  Well, it moved to plywood, dummies.


ΩΩI wish I had money to invest (I live on a very restricted income) and could play this game!  Sheesh.  It is painfully obvious.  Preventing the Japanese carry trade is life and death!  So long as that thing exists, we will have speculative credit bubbles ripping apart real economies.  For example, the crippled housing business will now suffer due to high cost of important materials in a market with few opportunities to see prices rising effortlessly.  At the lumberyard, I and other builders were grousing about the price of plywood and its impact on contracts. You know, when you sign a contract assuming building materials will cost a set amount, if it suddenly doubles in price in one week, you are SUNK.  Big time.


ΩΩThis was the story of the stagflation years, by the way.  And I started off during the worst of those years!  I remember them very, very well.  It was hell.

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Filed under .money matters, energy, evolution, Free Trade, Politics

9 responses to “Debt Bubbles Continue To Roil World Markets

  1. flipspiceland

    If the world gradually becomes a constantly roiling entity, then doesn’t the human adjust to this ‘constant’ state?

    When I visit NYC or any major metro of comparable size it appears to me that all the people who lived there might as well be from another galaxy. I’m certain that when they visit our fair city they think they’ve landed on planet Blah.

    It seems that we just adapt or die and from the looks of it, most adapt to the ‘constant’ state. I see people sitting at outdoor cafes in Palestine. I’ve seen Romans doing the same thing with AK 47-armed guards a few feet away.

  2. Joseppi

    “…can’t figure out why their precious bull market vanished”

    Precious plywood speculators will soon migrate out of the precious plywood market as they slowly realize that the government will fail in it’s desperate attempts to reinflate a housing market bloated with over-leveraged inventory.
    Construction materials bugs will also discover that one commodity, paper money, is in Zimbabwean stratosphere supply.
    This will cause a frantic stampede in the herd of “construction bugs” to a commodity that throughout the history of humanoids-with-money, has has become a shelter in financial storms.
    Not wanting to cause any undue chaos in this rush out of this past relic of construction monuments to global debt, and into the brave new world of financial innovation, where money is linked to non-corroding metals of intrinsic time honored value – I will presently refrain from mentioning the name of it here.

  3. melponeme_k

    What happens to the gamblers after they totally destroy the currencies of many nations?

    Here is to hoping that China remains impervious to their gambles and allows them to flail along with the failing international currencies. We’ll only have justice on the day they lose it all and in turn lose their influence with their water boys in government.

    Unless they pull the fascist card. They have played that before and failed every time. It won’t stop them.

  4. TweedleDeeDumb

    Actually there are two realities in the living brain cells of Mensa members.

    1) BECAUSE of God, physiology within the living cell is made possible and is sustained.

    2) BECAUSE of the Fall, histological degenerative pathology can be expected.

    No scientist can create 1 living cell of anything. Nor will they.

    This is due to the inability to create the spiritual base.

    God holds the keys.
    And this can be VERY irritating to the defiant.

    Supposed evolutionists assume living cells without a spiritual base..

    ..there’s never been any of those.

    Having said that, the “evolution industrial complex” will continue in full fantasy, undergirded by the straw scaffolding of the Babel tower of humanism.

    Lots and lots of $$$$.

    But the demise is coming.

  5. JT


    I can make a human inside of another human without using my hands.
    I have proof.

    Does that make me a magician?

  6. Ritchie

    ”People who hide off in the hills, alone, are insane. That is, they are anti-evolutionary and have removed themselves from society and whole societies do this sometimes.”

    Isn’t that you Elaine? :)))


  7. DeVaul

    “Well, it moved to plywood, dummies.”

    This would be a great title for any book you write about the bankers/speculaters/gold bugs and their abstract financial tug-of-wars.

    “What happens to the gamblers after they totally destroy the currencies of many nations?”

    Good question. My guess is they run and hide like cockroaches until the lights go out again, or they commit suicide since they are unable to live without their high-flying lifestyles and dreams of infinite wealth.

    If they are arms makers, they will fly under the radar and then hire themselves and their factories out to whoever defeats their nation, just like the Germans did after WWII, unless the victors were pillaged, in which case they will be enslaved in Siberia and their factories dismantled and shipped back to the victor’s home territory.

    Vae Victis (Woe to the vanquished.)

  8. PFO

    Hello Elaine,

    Excellent analysis of our predicaments, but a little slow on the historical up-tick.

    “Europe has dominated the planet for many, many generations . . . This rule is coming to a final end.”

    Or is the rule of the generations who took over during “The Enlightenment” coming to an end?

    “That is, the Industrial Revolution was launched by people who were very moral while at the same time, rather cruel and relentless.”


    “it also led to social and physical changes which took the greater masses out of rural poverty and into a New World which we call ‘modernism’.”

    Without putting too fine a point on it ‘modernism’ IS the immoral system of cultural, economic, political, religious and social slavery that is now going away!

    Just because the boss wears a different face [race] or suit of clothes doesn’t mean he/she has any different outlook, anywhere on the planet, especially since they were ALL educated at the same schools!

    Somewhere in the BeneLux Region of Europe tonight sleeps The Great Catholic Monarch; who is mentioned in over 300 prophesies since the 3rd. Century AD.

    He will wield a great and terrible broom.

    Kindest regards,

  9. Pingback: The great interest rate rip off - Page 768 - The Consumer Forums

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