Rare Earth Metallica

ΩΩThe US managed to skate away from explosive war crimes just as we did with Vietnam and other ‘wars’.  But the economic collapse we allowed to fall into is less forgiving.  Harsh reality is right around the corner and where we must look to see where this is most is the evolving relations between a desperate, ZIRP-hammered, dying Japan and a dangerous, growing and powerful China.  Nearly unnoticed by US media and the American public, the severe tussle between the world’s #2 and #3 economies continues to evolve in ways that should alarm the US no end.



ΩΩThat is, these two players hold about 50% or so (I am guessing here) of US dollars in foreign hands as well as both are, together, the majority holders of US debts by foreign powers.  The outcome of this struggle for power and control will very much impact the US, whether our currency survives with any estimable worth in world trade and indeed, if we have a naval presence anywhere in Asia in 10 years.  To understand this business, we must roam about the news the last 48 hours:  G-20 Vows to Avoid Weakening Currencies as Leaders Prepare to Prod China


ΩΩThis news story was supposed to assure Americans that the agony of seeing all our jobs exit to nearly all trade partners will end if China merely changes its currency values with the dollars we print like crazy and export as fast as possible.  This schizoid news edict from the G20 meeting clearly shows how the trade war which has successfully destroyed the US is still in its earliest stages, not its end stage.


ΩΩThat is, the US still cannot recognize that it is a nation under siege and that the enemy isn’t China but G19 other nations!  That is, WE HAVE NO ALLIES.  We are alone, at bay, being torn to shreds by many smaller nations and in the middle of this 35 year carnage, a huge dragon inched inwards and now has its jaws clamped hard over…JAPAN’S throat!


ΩΩYes, China has Japan in a commanding position, Japan is now squirming and screaming but since Japan also gravely weakened the US economy, attempts at getting the US to menace China is flopping badly.  Let’s look at the news parade to see how dire Japan’s situation really is:  Yen Is Near 15-Year High on Prospects Japan to Refrain From Intervention.


ΩΩJapan already committed the ‘crimes’ that China is being accused of doing.  A frightened Japan will do this again and again even as Japan backs attacks on China’s currency manipulations.  This is a true high-wire act from hell: Japan is rather cynical that the desperate US will not make a peep if Japan violates the exact same strictures that were endorsed at the G20 meetings which makes total hash of the G20 desire to punish China and stop the rank devaluation of currencies seeking to be weaker than the dollar.




ΩΩThis is pure physics: if a huge falling object is going down, smaller items can’t fall faster than the big rock.  The all fall at the same rate.  So, if Japan does try to fall faster than the US, this is physically impossible due to the fact that the US has replaced Japan as the world’s carry trade currency.  Even when Japan manipulated their finances to total ZIRP, this didn’t change the natural course of the falling US dollar which will definitely continue to fall faster and faster since Bernanke is determined to  beat the Goddess of Zero in the Cave of Wealth and Death by…conjuring Her into Her deadly speed-freak sister, the Goddess of Infinity.



ΩΩAs we see in one of my older cartoons, the Goddess of Infinity is also a Medusa-sort of female and if her golden bonds are pulled off her wings, she flies and you can’t outrun her.


ΩΩThe US cannot play the devaluation game anymore than Japan.  This is due to too many countries holding too many dollars.  Release the golden thread binding the Goddess of Inflation’s wings and everyone will have to disgorge their dollars as fast as possible so they get maximum buying power before the money is totally extinguished as it reverts to it true value: the cost of the paper used to print denominations with many zeros.


ΩΩJapan and China had a big, big series of spats which led to direct economic retaliation by China:  Maehara Says Japan Mending China Ties, Seeks Rare-Earth Deals – Bloomberg.com

  • “It’s certainly not good for our own resource security to rely on a single country,” Maehara said yesterday in an interview in Tokyo. With China controlling 97 percent of the rare earth market, “we’re in the process of diversifying our supply sources.”


  • Former Prime Minister Yukio Hatoyama led a delegation to Vietnam last week in an effort to secure rare earth supplies after China reportedly cut exports of the minerals following a territorial dispute over uninhabited islands in the East China Sea. Maehara said he will raise the issue with Chinese counterpart Yang Jiechi at this week’s Association of Southeast Asian Nations gathering in Hanoi.


ΩΩJapan’s futile and even rather childish attempts at getting other countries they once invaded to give them rare earth metals has led to the total defeat of the Japanese export machine.  That is, there isn’t any such metals for sale in the world outside of China except for a very precious few and the price of all of this little amount available shot to the moon due to all the hungry, hungry international commodity traders acting like vultures and swooping in to rip it up and take off with the parts in the hopes of making a killing, forcing Japan to pay very dearly for these metals.


ΩΩChina has a MONOPOLY.  And like any nuclear power country that can’t be attacked, invaded or intimidated, the Chinese can choose to play either hardball or tiddly winks: the Chinese, alone, get to decide what happens next.  The Chinese people are very sensitive to all of this since there is little love lost for the Japanese governments, past, present or future:  Anti-Japan demonstrations across China – Asia, World – The Independent

  • The ruling Communist Party newspaper issued an editorial calling the protests “understandable,” but urging demonstrators to plunge into their work and studies rather than take to the streets. The government has encouraged nationalist outrage after Japan seized a Chinese fishing boat captain in disputed water but it also is wary of public protests, which have the potential to spin out of control and even challenge one-party rule….


  • Marchers carrying Chinese national flags chanted “love China” and “boycott Japanese goods”. But other signs touched on sensitive domestic issues ranging from freedom of speech to high housing prices. One displayed in Baoji called for multiparty democracy, a challenge that could confirm fears among the communist leadership that a protest movement, if left unchecked, could evolve into confrontation with the party.


ΩΩIn Japan, all is pretty much quiet.  Every few days, another dead body is found in someone’s closet or bedroom as the catastrophe of the collapse of the Japanese families accelerates.  For example, yesterday’s dead body story was about a young girl who lived in a hostel run by her grandparents with her mom and an employee and she got sick, and was not taken to the hospital but rather, died of an ordinary infection.


ΩΩIt took 3 months for the mother to tell the grandparents!  They lived in the same smallish building!!!  How is this possible?  When the employee called the authorities, they found the girl in her bed as a mummy showing her bones!  The family expressed surprise that anyone was even interested in this corpse left upstairs.


ΩΩEvery time anything happens in China, the US and other G7 nations leap to their feet to declaim, ‘China will have social unrest!’  Well, Japan has no unrest, unlike active France or Germany, Japan is dying.  The US seems to have no unrest, too.  Are we dying?  ZIRP seems to be draining all life from our nation and Bernanke thinks what we need is a mega-dose of raw inflation as if this money printing will revive business and bring back jobs we lost to Asia.


ΩΩDeflation Disappears With Bond Market Showing Growth (Update3) – Bloomberg.com

  • Expectations for rising consumer prices have increased faster in the U.S. than any other bond market this month as central bankers made the case for monetary easing through additional asset purchases. Yields on 30-year Treasuries climbed as much as half a percentage point since September to 2.61 percentage points more than similar maturity inflation-indexed debt, the widest gap since May and an indication for anticipated gains in consumer prices.


  • Core prices, which exclude food and fuel, were little changed in September, capping a 0.8 percent increase in the past 12 months, the smallest year-over-year gain since 1961.


  • Investors are showing more interest in TIPS to protect against falling values of fixed-rate payments if the Fed is unable to rein in inflation once the economy, which expanded at a 1.7 percent annual rate in the second quarter, accelerates.


  • “I actually see the prospects of inflation returning to about 2 percent over the course of the next year, gradually rising,” Federal Reserve Bank of Philadelphia President Charles Plosser said at an event in Philadelphia on Oct. 22. The “kindling” is already in place for higher inflation, he said.


ΩΩIf Bernanke piles up several trillion US dollars and then lights a blowtorch to it, he will get a classic Bonfire of the Vanities.  For the Goddess of Zero is Ice but the Goddess of Inflation is Fire.  Zero/depression preserves money even as it destroys asset monetary values while Inflation/devaluation of currency leads to a TEMPORARY rise in asset values but a destruction of the currency and this, in turn, destroys not just people’s savings or the value of their homes in real terms but destroys EVERYTHING.


ΩΩThat is, depression is an unhappy time indeed but you come out of it with your money intact and thus, a capitalist base for future expansion whereas if you debase the currency, you end up…with NOTHING.  All capital is destroyed and thus, no true economic expansion occurs.  Note the words I highlight in this article: falling values/increased faster/anticipated gains/exclude food and fuel/rein in inflation: all of these are key Cave of Wealth and Death terms of the darkest, most hideous sort.


ΩΩWe are going to chop off our arms and legs in a vain attempt at escaping from the free trade trap.  Instead of protecting specific elements of our culture and economy, we are going to use our currency to do ALL the heavy lifting which means, the ONLY way we can fix this mess is to destroy the dollar so utterly and totally, no one will trade with us!


ΩΩYikes.  Talk about insane.  One expression of a loss of monetary value is translating a currency into gold.  Gold is flying high and will reach $1,500 to an ounce by Xmas if Bernanke does devalue the currency by over 20% as he is threatening.  That will annoy the Chinese but then, they have a monopoly in something far more important that gold!  They control the planet’s entire rare earth production and are aiming to control more than that as they increasingly disgorge more and more US trade dollars.


ΩΩBack to our darling allies in Japan:  Igarashi Says Yen Sales Most Effective When ‘Surprise’ (Update1) – Bloomberg.com.  Trick or treat!  HAHAHA.  Yes, surprise the stupid gaijin!


  • “A surprise move would probably be effective to some extent,” Japanese Vice Finance Minister Fumihiko Igarashi said in an interview in Tokyo yesterday. “We can’t make an announcement in advance that we will act, but, on the other hand, we can’t say that we won’t act either.”


ΩΩThey are so bold now, they don’t even have to pretend to be consistent, act as allies or anything: the Japanese will do exactly as they please, to hell with the stupid US invaders who thought they won WWII.  Accustomed to stomping the US in world markets and defying futile US attempts at stopping the J-Juggernaut.    It is quite breathtaking to see this cheek and the utter lack of any response by the US but then, our President is too busy being pushed around and slapped repeatedly by the Israeli Jews and his own demented political party to take any heed of the Japanese kicking him in the balls.


ΩΩFOREX-Dollar sell-off resumes post G20, Fed policy key | Reuters

  • The dollar dropped broadly on Monday, hitting a 15-year low versus the yen, as a Group of 20 agreement to shun competitive currency devaluations was taken as a green light to resume dollar selling by investors.


  • At the meeting in South Korea, G20 finance chiefs struck a surprise deal to give emerging nations a bigger voice in the International Monetary Fund, recognising the quickening shift in economic power away from Western industrial nations. They also agreed to exchange rates being market-determined.


ΩΩHAHAHAHA.  What can we say about this news???  The entire farce of the pointless ‘floating fiat currency regime’ is, exchange rates will seek a natural relationship with all others via the expansion or contraction of trade deficits/surpluses.  Thus, magically balancing world trade.  It failed.  It failed when launched in 1972 and it failed all the way up to today and will continue to fail as the Japanese say, ‘Yen sales are most effective if it is a surprise for the gaijin.’

  • Analysts said the outcome pointed to a status quo in currency markets, with the dollar staying under pressure due to market expectations for the Federal Reserve to unveil a second round of quantitative easing as early as November.



ΩΩThat is, the new status quo with the dollar (AND THE YUAN) floating downwards while the yen shoots upwards will continue!  This is terrible news for Japanese exporters but a delight for all of the Japanese citizens who lost buying power as wages drop.  Now, oil is cheaper and cheaper and so is the chance to escape from Japan and go on shopping sprees in China.  While dodging angry demonstrators.  Actually, they will go to other Asian nations and lord it over the people just as the Europeans flooded into these same places when the euro was rising rapidly.


ΩΩSpeaking of the euro:  Germany Says Fed Is Headed ‘Wrong Way’ With Monetary Easing.  Unlike Japan, Germany holds vast sway over all of Europe and probably, Russia, too.  So they have many more allies to take on board if they go after the US and it looks likely.


ΩΩOh, last of all, another example of China buying everything in sight, that is, the Chinese in other locations such as Singapore Exchange Said to Plan $8.2 Billion Offer for Australian Exchange.  Already, this is causing hysteria in Anglo-Australian circles and there are now rushed moves to get this deal killed.  Futile, I would add.

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Filed under .money matters, Free Trade, gold, Politics

6 responses to “Rare Earth Metallica

  1. nah

    America has lots of rare earths “Mountain Pass in California ran the gambit 15 years ago”… industry will be industry, if anything a glut of protectionist resources will lead to trade wars
    as i understand it rare earths are not as concentrated as oil reserves inside of unstable asian countries… and boy thats a plus

    and please dont miss the train

  2. Pingback: Currency Traders Drive World’s Currencies Higher And Dollar Lower To Claim Sovereignty Over Currencies …. Stocks, Bonds And Commodities All Rise Higher On Today’s Lower Dollar « EconomicReview Journal

  3. billibaldi

    Remember children, QE2 is not currency wars. There must be an error in translating into Deutsch.

  4. Aussie

    @ Elaine
    Re: …Nearly unnoticed by US media and the American public, the severe tussle between the world’s #2 and #3 economies continues to evolve in ways that should alarm the US no end….

    You are right about the dangerous times.

    Japan is in a quandary because they fear the US will fade away as their “body guard’; most Japanese don’t want the US bases in their territory because of the social costs incurred by their presence; realize their main market is the China; they paid homage to as the regional hegemon or Middle Kingdom.

    The Japanese are trying to foment enough tension to keep the US in the game and simultaneously negotiate peace with China and still export into the US. The ball of wax is full of contradictions.

    I suppose the Gordian knot will be cut when the US decides on the path to maintain “gentle waves eroding its Empire of Sand” or a retreat to nation building and isolationism.

    The US is probably the last maritime based Empire in which Western ascendancy ruled the world for nearly 400 years.

    Will the return of historical Asian ascendancy happen in the age of nuclear weapons and the stupidy of man?

    Perhaps the age of continental concert of powers organized around alliances consisting of US+Canada; LATAM; Europe+ Russia; China + Eurasia; Middle East + Caspian?

    Perhaps continental energy efficient sinews will favor adjacent regions with its trains + pipelines + Solar in desserts instead global sea logistics?

  5. Joseppi

    Results are in from today’s Tiddly Winks competition….

    “The proposal by the Commodity Futures Trading Commission, which has a dismal record of prosecuting efforts to exert undue market control, seeks to clear up some confusion about its traditional test for price manipulation.

    Commissioner Bart Chilton said the proposal should help the agency enforce its rules. He said the silver market needs particular attention.

    “I believe that there have been repeated attempts to influence prices in the silver markets. There have been fraudulent efforts to persuade and deviously control that price,” Chilton said. He declined to provide further details.”


    How there were multiple buyers of mortgage MBS….. at the same time

    How the Western fiat system is being challenged by the Asian financial players


  6. adamm

    Get used to the term “Greater China”, coming to a theater near you. And the South China Sea and the Yellow Sea indeed becoming the near abroad, and not US lakes. Note a huge buildup of the US base in Guam, a frantic but futile action: US Building $8 Billion Super Base on Guam

    Why would China export “raw” earths, when it can incorporate them into value added finished products? Even the Saudi’s produce petrochemicals, and who complains they “hoard oil for domestic upgrading”??

    Printing more money may create some illusion of wealth, temporarily. And higher “gdp” numbers or other such nonsense. And may stave off collapse for a short time, but create conditions much worse shortly thereafter.

    The point is: after 2 years of severe manipulation of finanze ponzi systems, the zombies are marching around and ready to finish the job they started.

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