Mobius Warns of Derivative Problem

When we rewarded corruption and mismanagement with the bale-out several years ago, we set up the conditions for amplifying the same problems, and what do you know? They are bigger now with derivatives much larger in relationship to global GDP than when they caused trouble last time.

Same culprits will cause new crisis: Mobius - The Globe and Mail: www.theglobeandmail.com/report-on-business/interna...40197
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China Making Another Strategic Move

The dollar's status continues to erode. "China began to allow the yuan's use for cross-border trade on a trial basis in 2009, and the program is expected to be rolled out nationwide this year." As the dollar weakens, realize that it doesn't necessarily mean price inflation spread equally across the board. Everything we import can go up, while wages can remain stagnant, which is what is happening now, and is a recipe for a lot of pain. The decade long approach to growing the economy through expanding the government's roll has metastasized into total dependency on that same expansion continuing indefinitely, but with about 45% of GDP being direct govt. spending at all levels, it has reached its practical limits.
HSBC: China to settle most trade in yuan by 2015 - MarketWatch: www.marketwatch.com/story/hsbc-china-to-settle-mos...05-30
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Wolves Will Prove a Huge Economic Factor for Western US

It is pathetic that "non-profits" make a killing on this predator that has contributed to draining parts of Idaho of their economic vitality. Since ranching and the sports recreation industry bring in outside dollars their economic impact is far greater than the initial gross revenue they generate. In other words what they bring in supports a lot of other business as well. This editorial addresses the wolf issue broadly and well. Consider the following quote speaking of the Equal Access to Justice Act: "This very abused federal program allows these "not for profit" organizations to file for reimbursement of their legal costs to keep environmental issues, including wolves, bogged down in court." In other words these "non-profits" make money on our destruction, and the money they get comes from us via the Federal Government. Nice.

Montana Mountain Chronicle: WOLF STEW STINKS!!!: mtnchronicle.blogspot.com/2011/05/wolf-stew-stinks....html
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Belarus on the Ropes

As this article notes, Belarus did fine as long as the subsidies arrived, but hit reality when spending grew, but subsidies didn't. While other dieing currencies make us look stronger because they are ahead in the "race to the bottom", we are fundamentally in the same condition. Please read this article to see what happens when fundamentals catch up to a defunct currency.

Belarusian ruble devaluation threatens to cause social unrest, paralyze economy - The Washington Post: www.washingtonpost.com/business/belarusian-ruble-d....html
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Speculative Boom Ending Badly

The speculative boom created by loose fiscal policy in western nations is obviously reaching its conclusion, with assets proving worthless because investment was made poorly since it was not market driven, but instead originated with the central planners/manipulators. This comment from the article: "The ECB is in a no-win situation now that it has become an enormous bad bank or, in other words, a dumping ground for bad loans, including ones from Ireland." No one knows how much bad collateral banks in the US hold either, due to changes in accounting rules meant to protect banks, but liable to compromise the system itself. As these bank assets go bad, the banks are instead backed by fiat currency, itself borrowed into existence by bankrupt governments, themselves deep in the hole, and still chronic over spenders. Today the Euro is pulling ahead in the "race to the bottom" among fiat currencies, but don't worry, the dollar is giving it "a run for its money".

The Hidden Cost of Saving the Euro: ECB's Balance Sheet Contains Massive Risks - SPIEGEL ONLINE - News - International: http://www.spiegel.de/international/business/0,1518,764299,00.html

John Williams on the Dollar

Is warning of a dollar collapse fringe? Maybe, but the US dollar has lost about a third of its value in the last ten years. Government intervention is off the charts, and still produces no growth. We are surrounded by years of evidence that we are in an ongoing crisis driven by deteriorating fundamentals. All the fundamentals are worse now than they were several years ago. We remain headed toward our financial reckoning day, not recovering from it. In the long run fundamentals always exert there influence. The financial reckoning will not be caused by "self-fulfilling prophecies" but will be the result of gross incompetence, corruption, and the abandonment of a sound political and cultural foundation in our country.

My Blog: kingworldnews.com/kingworldnews/KWN_DailyWeb/Entri....html
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Norway Wants out of Collective Mess

Just another development in the disintegration of the monetary and financial union in Europe.
Norway Stops Aid Payments To Greece | zero hedge: www.zerohedge.com/article/norway-stops-aid-payment...reece
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Former IMF Molester in Chief

It's another tremblor for the international banksters. I guess when your job is to molest the world financially, you molest physically when you get the chance. This leading socialist candidate to replace the current French president is quintessential in a number of ways.

The two faces of Dominique Strauss-Kahn - US news - Crime & courts - msnbc.com: www.msnbc.msn.com/id/43099321/ns/us_news-crime_and...-kahn
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Puru Saxena Video Covers Financial Basics

This short video encapsulates most of the important issues facing global markets these days. Very well done.
video.cnbc.com/gallery/?video=1937291737
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The ECB's Last Card?

The central manipulators are desperately trying to avoid exposing the solvency of the banking/government cartel to the public. With trade and banking being an international mess, what happens in Greece doesn't stay in Greece.
European Central Bank threatens to pull the plug on Greek lending - Telegraph: www.telegraph.co.uk/finance/economics/gilts/852445....html
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More Rumblings about Goldman Prosecution

Is the government-investment banking cartel throwing a meatless bone to the public again? Will they sacrifice one of their own due to political pressures? It remains to be seen what is really going on here.
Goldman Sachs expects U.S. subpoenas soon: report | Reuters: www.reuters.com/article/2011/05/20/us-goldmansachs...10520
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Someone Seeing the Obvious in Europe

This article fleshes out the point I made yesterday about the Euro and the impact of a bunch of debt and derivatives going bad. Both Europe and the US have no way out of the debt hole they have dug, but in the mean time just give the addict another fix and put off the inevitable.
Could Greece be the next Lehman Brothers? Yes – and potentially even worse | Larry Elliott | Comment is free | The Guardian: www.guardian.co.uk/commentisfree/2011/may/17/greec...thers
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Gordon Brown Warns of Crisis

We have been in the midst of a serious financial crisis for years, but because we defer all the pain and protect the guilty, we accumulate and compound it. Instead of the distributed power of the free market and the discipline it enforces, we have chosen the concentrated power, and selective reward and enforcement, of government action. The powerful are protecting the powerful at the expense of the folks who don't have the time or money to lobby and buy protection. That is the way socialism works. I pray we remember how we got here when the wheels come off this cart.

World on course for next crisis, warns Gordon Brown - Telegraph: www.telegraph.co.uk/finance/financialcrisis/851728....html
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Post from greshambouma at CHUMLY

Greece Continues to Slide
Greece Continues to Slide:: In the complex world of international finance, the Euro falling apart would be a nuclear event. The threats in the past such as the Lehman Brothers imploding or the LTCM event would probably be hick-ups compared to the Euro fracturing. I wonder what implications it would hold for the derivatives market worth its hundreds of Trillions? Would there be a sound bank left? Is there a sound bank left now, given the accounting changes made (Mark to Market) to mask the insolvency created by the housing crisis?
Greece Reality Check: Euro Crisis Worsens as EU Leaders Play for Time - SPIEGEL ONLINE - News - International: www.spiegel.de/international/europe/0,1518,762769,....html
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Euro's Troubles Continue to Grow

"They (the banks) have been buying between 60 and 90 percent of the bonds issued in recent years." I wonder who buys our US Treasuries? I wonder where the banking profits (and all the huge management bonuses) are coming from? If our banking sector can create, then loan itself money at less than 1%, then turn around and loan it to the government at 3 or more percent, is there a risk free profit there? Has the banking sector been making any legitimate profits lately? Where? How? Loans to homeowners? Loans to businesses? It looks like the banking sector and the government are the same inbred brothel the world over.

Euro Zone Debt Crisis - Italy Next to Seek EU Bailout: Wealth Manager - CNBC: www.cnbc.com/id/42954173
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America on"Meth”

To borrow or tax within your economic system stimulates no economic growth, since there is both a negative and positive force at work in the economy. The private sector experiences the negative and the public a positive. What it does accomplish is reshaping the economy around public spending. But it drives things forward no more than blowing on your own sail to move your ship. On the other hand when the borrowing comes from outside the system, it is highly stimulative. It moves tomorrow’s activity into today, and since we confuse activity through the GDP report with economic health, we let the government chalk up a success every time they borrow and spend us out of a recession. The illusion disappears when we begin to pay back those we owe. The GDP report would become a useful indicator of sustainable economic expansion if we would subtract the total net increase in debt (public, corporate, and private) from the total economic activity summarized in it, until then, it is a very good tool used by economists to deceive the public.

In the past ten years we have been treading economic water, just keeping our noses above the surface, in spite of massive government stimulus. The debt is an anvil around our collective economic neck, but it is a weight offset as long as we add to it. When we stop adding to it, and stop we must, only then will we feel its full weight. Since direct government spending at all levels is around 46% of GDP, our total dependence on it is far greater since 46% just measure the initial direct spending and not the extended economic impact. The amount of creative destruction necessary to move us to a sustainable economic model is staggering, but like weaning off"meth”, it must be done, or we are toast. It is time to take the DTs in order to avoid the trip to the morgue. I pray that the addict breaks free from her federal Kevorkians, and once again embraces life with dignity, restraint, responsibility, and liberty.
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Central Banks (besides ours) Continue to Re-monetize Gold

Central banks have turned into net buyers of gold in the last several years. Instead of attacking the yellow relic, they are buying it by the ton to use it as reserves--the money that backs the money, in the banking system.

Central Banks Purchase 127 Tons Of Gold In Q1 | zero hedge: www.zerohedge.com/article/central-banks-purchase-1...ld-q1
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Smoking Greece to Burn the Euro House Down

Greece's only viable option seems to be exit the Euro, print its own currency, and pay its debts with its own devalued currency. Everyone is calling that default. If that is the case, the US is in default already.

Walker's World: Digging holes for euros - UPI.com: www.upi.com/Top_News/Analysis/Walker/2011/05/09/Wa...36580
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Irish Govt. Raids Pensions

The stated purpose is to fund a job stimulating spending. By now, we should know better. Govt. spending sends limited resources where they should not be in an economy, creating long term structural problems for short term political payoffs. Look at all the resources dead ended in ethanol production in our country. And robbing the retirement accounts of an aging population shows how desperate governments become as they try to maintain the status quo.

Irish Bombshell: Government Raids PRIVATE Pensions To Pay For Spending: www.businessinsider.com/irish-bombshell-government...011-5
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The New Finn Party Leader Calls It As It Is

I couldn't agree more: "It is not the little guy who benefits. He is being milked and lied to in order to keep the insolvent system running. He is paid less and taxed more to provide the money needed to keep this Ponzi scheme going." And remember the dollar has weakened against the Euro. It looks like to race to the bottom is accelerating with the incense being offered to the bankers and the private sector working folks being slaughtered on the altar.

Timo Soini: Why I Don't Support Europe's Bailouts - WSJ.com: online.wsj.com/article/SB1000142405274870386420457....html
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More on Greece

The Euro is a currency in need of desperate intervention, but what does that say about the health of the dollar, which has weakened relative to the Euro over the past year?
EU under pressure to slash ruinous Irish and Greek bailout bills | Business | The Guardian: www.guardian.co.uk/business/2011/may/09/eu-pressur...bills
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Greece is Smoldering in the "Reality Averse World of the Euro Zone"

The EU is trying to orchestrate another bail out so that the banks and investor class can transfer more losses from irresponsible lending (as in lending to any government) to the public. Who can blame the Finns for wanting to swim up stream on this one?

A Scheme to Make Ponzi Proud - WSJ.com: online.wsj.com/article/SB1000142405274870386420457....html
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Cost of Gas Impacting Households

Will this cause GDP to go up as more households turn to their credit cards to pay for what they can't do without? High gas prices were one of the drivers behind a positive reading in GDP several years ago, even as America descended into a recession (or remained in one that was intensifying). This is kind of like the CPI. The CPI is held down in part by a stagnant job market, and deflating housing costs. But your house turning more upside down, and your real wage shrinking only show up as positives in a government report reflecting a Marxist economic theory.

Gas prices eat up $368 a month of your income - May. 5, 2011: money.cnn.com/2011/05/05/news/economy/gas_prices_i...ories
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Greece Considers Withdrawing from Euro Zone

Without Central Bank guarantees Greece would be paying 16% on its debt right now, according to the chart in this article. If Greece exits the Euro Zone this article points out a number of likely consequences. One that they didn't point out is the way it would probably shock investors the world over into reality when it comes to the safety of government issued debt. Makes you wonder how long it will be before the Fed loses the ability to suppress our interest rates. I guess they could avoid that if they were the sole buyer and we simply financed all our debt with the printing press. Wait. Aren't we doing that this quarter?

Athens Mulls Plans for New Currency: Greece Considers Exit from Euro Zone - SPIEGEL ONLINE - News - International: www.spiegel.de/international/europe/0,1518,761201,....html
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Jim Rogers on UK Bailout

Britain illustrates our financial position well. The austerity measures aren't enough to keep it solvent, but cause too much pain in the government dependent economy/populace to implement with any more rigor. You can tell when socialism matures in a country--it is bankrupt. America itself is a mature socialistic system, with nowhere to go but either through a painful restructuring and return to a free market, or toward a hopeless and chaotic embracing of the totalitarian state.

UK Economy: 'The UK Will Need a Bailout Soon': Jim Rogers - CNBC: www.cnbc.com/id/42926502
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Current "Recovery" Wearing Thin

"The truth is that a double-dip recession was temporarily held in abeyance through a massive government effort to boost consumption." So says the article. Don't miss the last two paragraphs. The ability to expand America's government to fill the void of a shrinking private sector, and to create temporary economic growth, is lost. For decades the public sector has been the engine of growth, masking serious economic problems. We have not had a real recovery in the last decade, and are not experiencing one now. Remember the last "recovery" that created the debt bubble/housing bubble? How did that manipulation work out for us? This intervention with massive government spending, negative real interest rates, and insane money supply expansion shows all the signs of the classic blow off phase of an accelerating and unsustainable trend. Just look at charts of total US debt, and the money supply.

Double-dip recession is now undeniable Outside the Box - MarketWatch: www.marketwatch.com/story/double-dip-recession-is-..._news
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More Moves Away from the Dollar

Many countries are taking serious steps to discontinue use of the dollar as the trade (and bank reserve) currency. In the news lately were the BRICS (Brazil, Russia, India, China, and South Africa), now we can add Japan and South Korea to the list of those trying to protect themselves from the likes of Greenspan, Bernanke, and our public spenders. A few short years ago US Treasuries were "the safest investment in the world". They are becoming the most shunned. My point is, America has not seen its "great recession" yet, in spite of a steady downtrend (recession) starting in 2001, masked by stimulus and currency manipulation. Just a reminder, when we print and spend, we rob those that hold our debt. No one likes to be robbed.

Asian trio to study dollar alternative: report - MarketWatch: www.marketwatch.com/story/asian-trio-to-study-doll...05-04
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PIIGS Continue to Bleed

While the PIIGS bleed, it would be nice to know how much of the transfusion America supplies through the IMF. The bankruptcy theme of Europe, Japan and the US will not go away, but instead gets worse with each of these responses inspired by totalitarian thinking.

Portugal Bailout by Europe to Hit $116 Billion - www.nytimes.com: www.nytimes.com/2011/05/04/business/global/04portu...=eta1
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Even Newsweek sees Inflation

And it quotes John Williams! "The way inflation is calculated by the Bureau of Labor Statistics has been"improved” 24 times since 1978. If the old methods were still used, the CPI would actually be 10 percent."

The Great Inflation of the 2010s - Newsweek: www.newsweek.com/2011/05/01/sticker-shock.html
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Conservatism

A true conservative is opposed to the government management of charity, health care and education precisely because he values them so highly. The moment a conservative abandons his core values of compassion, charity, indeed a love for his neighbor in every way, is the moment he abandons his conservative soul. The problem with the government doing any of the above, is that it turns them into an exercise in self-preservation and power consolidation, perverting them beyond recognition. As our founding fathers pointed out, it was because they were concerned with the"general welfare” of all that they strictly limited the functions of government to specifically enumerated powers, and limited the physical presence of the federal government to a postage stamp sized piece of ground known as D.C. The system that we have was built on a consistent Christian worldview or philosophy of government. Our founding fathers reformed the English system, itself a Christian Theocracy, and made it more consistent with a biblical understanding of the role of government. A theocracy weds the government of the church and state, giving the church access to the sword and the state control over the gospel. We rejected that, without rejecting the Creator.

In a Christian worldview, the state is accountable to the Creator for preserving justice consistent with the Natural Law. The church has stewardship of the gospel, accompanied with charity. And the family, itself a governing body, disciplines, instructs and nurtures the children, and much more, also to be carried out with a sacrificially high regard for others. Such a system is the only system that can be demonstrated historically to produce freedom. The French for instance had a rebellion inspired by the libertarian cry of"liberte”, but without the Common Law understanding of freedom, it produced none of it. A definition of freedom extracted from our Declaration of Independence would be as follows: freedom is being able to exercise your unalienable rights within the constraints of the natural law (or universal moral law). Freedom must be defined by the natural law, because it is, itself, a natural right that is revoked when it is exercised in a way that deprives others of their natural rights. The political philosophy that is expressed in the Declaration of Independence and which inspired the Constitution was the culmination of about a thousand years of struggle and progress in the development of the ideas of freedom beginning before the Magna Carta. I pray that we will not so quickly abandon what took so long to achieve and at such great cost.
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