NightBlogger

JIM KUNSTLER
“Presto Change-o”
…despite British PM Gordon Brown’s fatuous suggestion that we are ready to formalize it. The world is about to lose its “flatness” (sorry Tom Friedman) and get much rounder. For one thing, the racket of American “consumers” gobbling up the output of Asian factories in exchange for paper promises is over. For the moment, the Chinese are struggling with epic factory closures with the sudden prospect of a restive lumpenproletariet. The situation there is bound to get worse. Before long, these broke-and-hungry masses may actually challenge the present government. In the meantime, there’s no telling what the (unelected) Chinese government might do either to keep itself in power, or genuinely defend its country’s perceived economic interests. One thing is self-evident: we are not returning to the old racket of toys-for-treasury-bills. One thing China might do in economic self-defense is shed whatever US dollar-denominated paper is moldering in their vaults before it becomes valueless altogether.

As global trade relations wither, and they will, the US will be thrust back on its own devices, at the same time that oil resources grow punishingly scarce. Mr. Obama will have to contend with the necessary radical reform of all the activities necessary for daily life here. Near the top of the list — invisible to most of the public so far — will be the question of how we produce the food we need. Industrial farming is done, just as suburbia is toast. Mr. Obama will have to apply plenty of ass-time to the first stages of negotiating this bottleneck. I don’t even know what he can do policy-wise, though he can certainly make it plain to the public that we have to grow more of our food close to home and do it with fewer engines and fewer oil-based soil supplements. It is a problem of such surpassing difficulty that it was not even close to being in the election arena. The transition will probably occur by means of “emergence.” Self-evident necessity will prompt different behavior and different ways of doing things. Sooner or later, the new arrangements will self-organize — if we don’t squander resources defending an unsustainable status quo. One thing we can certainly predict is that growing our food will require more human labor and attention — meaning there will be plenty of work for people currently losing their jobs at The Footlocker and Arby’s, but it’s far from certain whether they will be happy in their new vocations.

We’re going to have to resume making things in the USA again….More

Macedoniaonline
Swiss financial guru Marc Faber tells swissinfo he sees hard times ahead for the world’s stock exchanges and even state bankruptcy for the United States. He is…[an] investment adviser, financier, best-selling author and the compiler of a monthly economic publication called The Gloom Boom and Doom Report. Faber sits on various boards of directors and investment committees, prophesied the stock market crash of 1987 as well as Asia crisis.

A credit bubble has been growing for 25 years. We’ve seen, in particular over the past seven years, an unbelievable credit growth, which fuelled economic development. Then there were structural changes in the economy, for example the sinking saving ratios that have had an effect on consumption and growth rates. The situation worsened in 2001 in the United States when the central bank lowered the interest rate from 6.5 per cent to an unheard of one per cent in 2003. This ultra-expansive monetary policy led to a credit growth that was five times higher than growth of the economy. A bubble growth and later the crash were the logical consequences.

…Anyone who thinks that everything will soon be rosy again is naive. It’s quite possible that worldwide stock exchanges will experience a similar development to that witnessed in Japan over the past two decades [the Nikkei index has fallen from 39,000 points to under 8,000]. Japan also shows that the large amount of money injected to stimulate the markets didn’t have the desired effect – but it did produce huge holes in the state coffers.

…between 1980 and 2007 people saved from their capital gains and not their income, as their income was spent. That was fine while property and shares increased in value every year. Today these people are highly indebted and are only beginning to save more by putting the brake on their consumption. That’s how every economy goes to the dogs – with or without injection of capital by governments. With the best of wills, I do not see a single catalyst that could lead to a new bull market in the world. At the moment, everything has gone down the drain. In the past few years everything went up – shares, commodities, consumer goods, real estate values, art and even bonds. Such a combination is extremely unusual. We saw the biggest investment bubble in the history of humanity. The current situation is possibly worse than the global economic crisis of 1929. And that is thanks to Alan Greenspan and Ben Bernanke. These two gentlemen must account for massive errors.

The losses are there and someone has to bear them. There are two possibilities. Banks go under and the stakeholders are left with nothing, as is the case with Lehman Brothers, or governments pump money into the financial system so that the incompetent financial clowns…[on] Wall Street can continue to eat in fancy restaurants. I am clearly in favour of the first because the consequences of these state interventions are massive budget deficits. To finance these, governments have to acquire money. For that they have to borrow money, which makes state debt and interest payments soar. US economists have come to the conclusion from the trends that there will be a US state bankruptcy.

The US government will in future have new debts of at least $1,000 billion (SFr1,165 billion). That’s on top of the current state debt of $10,000 billion. And that doesn’t take into account state programmes to stimulate the economy. The government will have no other choice than to print money, which in the long term will lead to inflation. More

The nonpartisan Committee for a Responsible Budget estimates all the government economic and rescue initiatives, starting with the $168 billion in stimulus checks issued earlier this year, total $2.6 trillion. Where is this money coming from? No where! Currently, the US fiscal deficit is being monetized by the Fed. That means they’re printing money or creating digital dollars out of thin air. The US will experience HYPERINFLATION Weimar Republic style sometime in 2009.

“If you think that the current economic crisis is something that has never happened in history before, you may be wrong! After the collapse of the agriculture sector in Zimbabwe in 2000, the inflation in that country skyrocketed to 231 million percent a year! Just think about it - 231 000 000%! Unemployment went up to 80% and a third of country’s population left it. Let`s now have a look at the photos that you may not be able to see anywhere else in the world.” More

Barron’s
Taiwan Dumps Fannie, Freddie And Uncle Sam?
Taiwan’s financial regulators reportedly have ordered that nation’s insurance companies to pare their holdings of the debt and mortgage-backed securities of Fannie Mae, Freddie Mac and Ginnie Mae securities, according to a report on the Internet site of Asian Investor magazine. Such an order would be a stunning rebuke to Washington, coming a little more than a month after the federal government effectively nationalized the mortgage giants. Fannie and Freddie last month were placed into conservatorships with the Treasury standing ready to inject up to $100 billion through purchases of preferred shares in the government sponsored enterprises….the Taiwanese action is a blow to the reeling U.S. mortgage market, which has been supported by the Republic of China’s purchases of agency securities. According to U.S. Treasury data, Taiwan owned a very substantial $55 billion of U.S. agencies along with $43 billion of Treasuries as of June 30, 2007, the most recent date for which these data are available. More

Also See: Global systemic crisis Alert: The US will default on its debt

Dr. Lee Warren on USA Economic Disaster

Dr. Lee Warren Part 2

Christopher King
As provocation, I would have thought that a much better example was the approval recently given by the US Congress for a USD 400 million package for clandestine operations against Iran. More an act of war, really. Clandestine operations apparently means supporting terrorist groups, subversion, sabotage, kidnapping and assassination within Iranian territory. What would be the USA’s reaction if, say, China were to openly allocate similar funds and undertake similar activities against the USA? After years of American intervention in its affairs, sponsored war against it together with current lies and threats, Iran’s missile test seems a very sensible and modest defensive measure.

This is reminiscent of the USA’s attitude to water-boarding. It’s merely “enhanced interrogation” when the USA does it but if anyone else waterboards a US citizen, President Bush will seek the death penalty. Surely, this says something about the president’s mentality and American ethics.

Still considering provocation, however, wasn’t Israel’s recent rehearsal of an attack on Iran provocative? No? Or the USA’s agreement with the Czech Republic for the installation of a missile system component on Russia’s border? Condoleeza Rice says that these missiles won’t be aimed at Russia and I think that she’s right. The purpose of this missile system is puzzling because Condoleeza’s statement that it protects the US and European Union from Iran and other rogue states is obviously nonsense. Militarily, it’s useless. However, if it can irritate Russia into retaliatory missile deployment and cold-war rhetoric, this gives multiple perceived benefits for the USA:

► Ability to blame Russia for more military spending, giving profits for firms such as Haliburton
► Ability to sour relations between the EU and Russia and disrupt further rapproachment
► Distract from US violence in the Middle East by giving Europeans problems nearer home to worry about
Read More

Gas prices around the country at a glance. Areas are color coded according to their price for the average price for regular unleaded gasoline. Go here

Source: USA TODAY
Bank robberies are up in cities across the USA this year and, although the reason is unclear, the down economy is a suspect. “The economy is driving some of this,” says Chris Swecker, chief security officer for Bank of America and former assistant director of the FBI’s criminal division. “We’re even getting some anecdotal stuff from bank robbers.” Swecker said Bank of America analysts study the interplay between the increase in bank heists and foreclosures, credit defaults and unemployment rates. “We haven’t drawn any conclusions yet, but we are certainly looking at it,” he said. The Los Angeles metro area has had 189 bank robberies this year, compared with 156 at the same time last year, according to FBI spokeswoman Laura Eimiller.

Also See:
Shoplifting on rise across nation

Photo beggs

Pravda
Russia has won a 4-billion-dollar contract with Saudi Arabia in a competition with the USA and France. This achievement of the Russian defense complex can be explained by both the high quality of the national military hardware defense equipment and the blunders of its Western competitors.

Russia has entered the market area which has traditionally been under the USA’s control. In this case it goes about Saudi Arabia. Rumors of Russia’s intention to sign a multi-billion-dollar contract with the country appeared in November of 2007 when then-President Vladimir Putin met with the Saudi Crown Prince Sultan bin Abdul Aziz Al Saud. Read more