Tuesday, May 31, 2005


Worried Canadian banker

Even as China inks yet another treaty, another trade agreement, America's trade partners send out increasingly dire warnings to the world's most reckless spendthrift.
Bank of Canada governor David Dodge offered a bankerly rebuke to the United States on Monday for its borrow-and-spendthrift ways, which he suggested are a threat to world economic stability.

Less directly, he chided nations such as China for rigging their currencies to boost exports while building up larger and larger foreign-exchange reserves, creating a lopsided world in which Asian savings finance U.S. spending.
I will note here that Japan isn't mentioned. They are the architects of this system and they ruthlessly manipulate the yen to produce exactly this and they are being merely imitated and who is at fault in both situations?

The USA, of course. We colluded with all of this deliberately and for cynical reasons: both Japan and China and the American capitalists want to fleece the American people! Since they all have the same goal: to force America to go so far into debt we can't afford any social services, they cooperate in creating this present mess. This is deliberate and is being run from DC by the parties involved and thanks to their leader, Mr. Bush, they are succeeding wildly! What a surprise....yeah.
His comments echo those of many economists who have watched the United States evolve from the world's greatest creditor nation to the greatest debtor as Americans saved less, consumed more and imported more. China, meanwhile, took over much of the world's consumer-goods manufacturing and used its export earnings to soak up vast amounts of U.S. debt.

Supporters of the Bush administration have tended to argue that the three U.S. deficits — in international trade, current account and federal budget — do not matter to a superpower that prints the world's most widely used money.
The American Enterprise Institute has worked long and hard for this day: the day America goes bankrupt. They intend to impose a hyper-military regime upon us and make us die in their wars and of course, end democracy. This is a vast gamble that the capitalists have heavily funded as detailed on this blog, and they collude in this plan because they don't want to pay any taxes nor compensate workers for their time or injuries. Brutally working people to death is a goal for these people, make no mistake. Either they eliminate workers via robots and automation or they reduce them to replaceable bio-units to be used and then tossed aside.

When bankers and leaders of other nations send increasingly loud warnings, one would think our own government would address them but the curious silence or worse, blaming the Chinese, is the result. So obviously, this crisis is deliberate just like 9/11 was allowed to happen.

Bush himself said 2001, he "won the trifecta" when the terrorists attacked and the economy went sour, actually, it was falling apart before the terrorist attacks. Since that day, he engineered many changes in our economic situation all of which were designed to be frecklessly careless about where money is flowing, for what purpose and how much is created. For the USA and only the USA controls the money printing presses as the article here notes itself. The USA printed money like crazy, sent it to China in lieu of trade goods and the money recirculates as loans granted to the USA. If the USA stopped printing the money, this would end. Like that. It won't because too many rich people benefit from this not the least, the GOP which runs America and is running us into debt at an astonishing and deliberate speed.

This is why they keep saying Social Security won't exist in ten years. This is their plan and they are giving us all fair warning. Their fix for this is insane, of course, they know it won't happen, it is to kill time so people don't discuss what to do about the wars and budget deficits. Eventually, world events will impact America and we will be helpless.

This is beyond stupid, it is criminal. The rulers of America have pretty much given up on us and feel we are too big for our britches, so to speak and to whittle us down, they have to eliminate most of us because of declining world resources in the future. This is why they don't care about birth control anymore. We may reproduce but only if we die early.

And so it goes. Fun, fun, fun.

CHINA/NEW ZEALAND Free Trade Agreements Forged

Endangered species
New Zealand: home of the Hobbits and Misty Mountains. Sheep and Kiwis. A Pacific green paradise with a climate remarkably akin to Ireland. Breathtakingly beautiful.

And alienated from America due to disagreements with our ruler, Bush.

Helen Clark who is the administrator of New Zealand visited Hu and Wen both of whom rolled out the red wool carpet and courted her with great care and consideration. No ulimatums or demands unlike you know who.
The two sides exchanged views on bilateral ties, regional and international affairs and vowed to promote the building of a Sino-New Zealand free trade area.
Here it is, as usual: when leaders meet, never let anyone leave empty handed. This wasn't a "consultation" which our empire is so fond of, this is a collaboration. This concept of joint benefits seems nearly impossible for Americans to process since we assumen people must bend to our will because we are number one.
China and New Zealand kicked off FTA talks last December, seven-months after New Zealand became the first developed country to recognize China's market economy status.

The talks has gone through three rounds of negotiation covering commodity and service trade, investment and other economic sectors and the next round will be held in China in July.

"We exchanged stance and layouts on the FTA in the first rounds and will then discuss more specific topics in the next one," said an official with the Chinese Ministry of Commerce, who declined to be named.
Note the building block style of negotiation. This isn't working with Japan because the Japanese government made a deal with the USA to provoke difficulties which is why Koizumi visited the war shrine today. This "in your face" activity is going to cost Japan dearly in the long run. Maybe they think this crude method of negotiation will succeed. Alas, this works only if you are doing it to someone smaller and weaker and China is neither. This delusion is an American delusion which Koizumi has fallen for and will pay for in the bitter end when the farce collapses. Trade war with the EU which is splitting apart at the seams and the USA which is also splitting apart internally, politically, is inevitable since these two bodies are the world's biggest trading entities. But as noted here, the strengths of both are fragile in the extreme. The USA and EU are deep in a trade war with each other, a fact that American media glosses over but anyone reading European papers can see it is a hot topic over there, at least. Both are in a trade war with China which has a trade surplus with both. But united action is impossible for these two powers.
China will "positively and prudently" push forward the FTA talks along with New Zealand in line with mutual-respect, equality and mutual benefits, Wen told Clark during a one-hour talk in the Great Hall of the People in downtown Beijing Monday afternoon.

China will also further enhance cooperation with New Zealand on agriculture, animal husbandry, forestry, energy, and resource exploration and development, and expand exchanges on education andculture, Wen said.

Clark hailed trade and economic cooperation, saying New Zealandhas accomplished "three firsts" in its relationship with China as a developed country: the first to conclude a bilateral market access agreement with China for its entry to the World Trade Organization; the first to recognize China's status as a market economy and the first to start FTA negotiations with China.

New Zealand is now aiming at being the first developed country to conclude FTA talks with China, Clark told a business lunch on Monday.
The world wide collapse of commodity prices challenged many nations during the nineties. Now they are again, rising in power and value. China is carefully building relationships with nations that have natural resources we have. Why is this?

Simple: when they declare economic war on us, they won't need us anymore. This is one of several goals, the other being to bankrupt us so badly we have to dismantle our imperial war machine just as we forced Russia to do the same.

Monday, May 30, 2005

NOBLE CABANA Prize Winning Economist Houseboys

Ad: Cabana boy rum...
This is funny. And sad. Nobel Prize winners back booming China headlines the official newsorgan of the Communist Chinese. Right on the heels of the Fortune 500 jet setting billionaires little festival of greed, Wen invites a crew of eager prostitutes to be paid to spout praise and being good little guests, they deliver in full.
An award-winning US economist yesterday said China should ignore outside pressure and keep the yuan exchange rate stable. 1999 Nobel Laureate for Economics Robert A. Mundell kept up his consistent "no change" call at a special three-day forum--said to be Asia's biggest-in Beijing yesterday.

He was among seven other economic Nobel prize winners and five distinguished scholars who gathered to offer advice and comment on China's economic relationship with the global community. Each gave their view of China's place in the world's economy.

If the Chinese currency were revalued, overseas direct investment will decrease and lead to more unemployment, affecting even the rest of East Asia, he said.
Wen is very pleased, of course. 9 out of 10 economists say, China should stay the course!
Premier Wen Jiabao told the laureates China attaches importance to listening to global advice and opinion. Vowing to step up efforts to solve problems facing the nation, he added: "We are confident and capable of achieving the goals set for economic and social development."

The general consensus among the economists was the booming Chinese economy is beneficial to the world-including the United States.

Robert W. Fogel, who won the Nobel Prize for Economics in 1993, told China Daily that there were two reasons why the global community gained from China's development.

"First, China is producing more and more goods that can be of a very high quality and at a much lower price," Fogel said. "Secondly, China will need more goods and services from other places such as Europe and the United States," he said.
Yup. Cheap labor=big profits for the billionaires. They, in turn, fund the jobs of the "economists" who then parrot whatever the rich capitalists need to broadcast. This is why these people are so cluess. And heartless, as this despicable economist sneers:
Vernon L. Smith, the 2002 winner, said the huge and growing trade between America and China greatly benefits both countries.

"By outsourcing to foreign countries, US businesses save money that is available to invest in new technologies, new jobs and remain competitive in world markets. We should let it happen," Smith said. However, "many American citizens will not now agree with that."

"Their job losses are very visible while jobs created by new technology are not yet visible. When American businesses outsource goods and services to China, they save money," Smith said.
This Vernon character should have gotten the Nobel Snidely Whiplash Award. This creature can't tell us what new wonderful, technological jobs await us. Rickshaw operators? Beggars at city gates? The mind boggles.

How did inhuman (Nazi style) people win prestigious awards like the Nobel Prize for Economics? What planet does this happen on? This is most incredible not to mention...traitorous. Many economic "theorists" are encouraged to not look at their host nation as a place to protect or defend. Like their rich masters, they view us, the average Americans, as impediments to their dreams of disconnected freedom, free from paying taxes or dying defending one's homeland.
Citing American education as an example, Fogel said it had become an export industry, pointing out that at least two-thirds of his students are from abroad.
My taxes pay for the educational system including the massive college system. We are "exporting" by bringing in foreign students, giving them scholarships, educating them and then letting them go home to...compete with us ruthlessly. Great. Exports like this we need like a hole in the head! When foreign students outnumber Americans, this is a sign that something is very wrong indeed. I suppose the professors with tenure think this is jim dandy. But I am neither an economist nor have tenure. So I can smell the skunk here.

Even as a trade war from hell is heating up and America blunders yet again into dangerous waters, water over our heads, our own "leaders" betray us, over and over again, eager to please the wrong people, lying to us, lying to themselves, when the economic history of the Decline and Fall of America is written, these people will get a whole chapter for themselves: "The Houseboys of the Noble Cabana".


Chinese textile fair, BBC news
I lurk around gold bug sites because the next and last bubble before the world realigns itself is gold. Here is a very interesting article about lending money for housing speculation that nails it pretty close.
I recently had an e-mail conversation with someone in the mortgage business, and this is what he had to say about one lender in particular, Golden West Financial (NYSE: GDW), a firm that has always enjoyed a blue-chip reputation: "For the past ten years, Golden West has been the most admired financial firm in the U.S., according to Forbes and Fortune. It has been dominated by two of the wealthiest people in the world, Herb and Marion Sandler, husband and wife co-chairs, who have run it with an iron fist since the 1960's and with highly conservative and principled residential mortgage lending. They have by far the lowest foreclosure rate in the industry on their loan portfolio, which is primarily invested in California.

"Their primary lending unit, World Savings, is now offering on owner-occupied homes 90% loan-to-value, no-income-verification, cash-out refinances into negatively amortizing, adjustable-rate mortgage loans. There is no liquid-reserve minimum, nor is there a stated-minimum credit score. This type of loan was not available even through the sub-prime private lending market just five years ago. Today it is being made available by the company that has built a reputation for soundness, ethics and character that makes Warren Buffet[t] pale in comparison. Do ya think Herb and Marion know what is happening in their company? If the icons of business ethics are doing this what do you suppose the rest of the industry, comprised of mere mortals, is doing?
This entire article details both in close up as well as nationally. I heartily recommend reading it in full, especially the loan officer's personal story.

My daughter, during the last housing bubble that popped in 1990, worked for a loan company as a cold call processor. She had the same experiences. It taught her a lot about speculation and moving money. The debate is no longer "is this a balloon" but "how bad will the pop be?" and in this case, the pop goes a weasel will crater your neighborhood because...

Philadelphia, its suburbs and indeed much of Pennsylvania have experienced a foreclosure epidemic as low-income homeowners take on mortgage debt they cannot afford. In 2000, the Philadelphia sheriff auctioned 300 to 400 foreclosed properties a month; now he handles more than 1,000 a month. Allegheny County, which includes Pittsburgh, had record auctions of foreclosed homes, and officials speak of a "Depression-era" problem. The foreclosures fall particularly hard on black and Latino families.

For some American homeowners, the greatest housing boom in U.S. history has delivered riches. They repeatedly tap their homes for equity and use the cash to purchase granite countertops, a BMW, even a trip to the Super Bowl. But there's a dark side -- a sharp rise in foreclosures that is destroying the single greatest generator of personal wealth for most Americans.

Foreclosure rates rose in 47 states in March, according to Foreclosure.com, an online foreclosure listing service. The rates in Florida, Texas and Colorado are more than twice the national average. Even in New York City and Boston, where real estate markets are white-hot, foreclosures are rising in working-class neighborhoods.
When foreclosures are rising in all but 3 states, this is an alarm bell considering that we are not in a recession at all but in a housing value boom. Employment is supposedly up and so are incomes but bankruptcy is up, too. As the bad news overwhelms the fragile system, all sectors begin to collapse, always beginning with the lowest levels. Just like in the 1920's, the farmers and lower working classes began to fall apart before 1929. Then everyone was sucked into the Depression.

Back to the gold bug sector of the internet comes this warning shot:
The Organization for Economic Cooperation and Development (OECD) is warning that the U.S. current account deficit will hit $900 billion or 6.7 percent of U.S. gross domestic product in 2006. These very large numbers are caused by a continued reinforcement of global imbalances: on the one hand, a very low U.S. savings rate, high U.S. consumption fostered by very low interest rates, and cheap Asian goods flooding the U.S. market (cheap because Asia subsidizes their exports through low exchange rates). On the other hand, we have lackluster demand in Europe and some Asian countries, notably Japan. OECD chief economist Jean-Philippe Cotis told the Financial Times: “We are not saying there will be a doomsday tomorrow morning ... but because the adjustments [to global imbalances] are relatively slow, we are running the risk that an accident will happen. [..] Time is running out – the numbers are getting big, big, big.”
"Accident"...what accident? How about 9/11 style implosion? The reverberations of that day still ring like a bell. The false wealth inflator that was launched by desperate men in the USA to paper over serious problems is now about to end as all such schemes end: in collapse that will destroy probably the entire banking/lending superstructure.

What event will trigger this? A war with China? A massive earthquake/tsunami on the West Coast? Volcanic eruptions? Six or more catagory 5+ hurricanes hitting the USA? It can be literally anything Mother Nature chooses to fling at us. Whatever it might be, we don't have the capacity to deal with it anymore. We spent our wad.

So time for a full blown trade war with China. After lecturing the Communist Chinese about free trade, they turn around and do exactly that to howls of protest from fake free trade countries. The fakest of all is Japan with Europe and the USA close behind. The entire lending system of the free trade countries rests on China and Japan recycling trade surpluses with the USA in particular. But this is about to come crashing down.
"Since the United States and European Union (EU) side have imposed quantitative restrictions China-originated textile goods, how can the Chinese government continue to impose export tariffs?"Bo said. The Chinese government must treat their enterprises fairly, he added.

Monday's decision was announced in the wake of EU decision to impose quotas on imports of Chinese textiles, as well as US decision to re-impose restrictions on seven kinds of Chinese textile and clothing imports recently.

On Jan. 1, 2005, when the global textile quotas were eliminated,China voluntarily imposed export tariffs on some textile goods so as to limit its export growth. On May 20, China again decided to raise the export tariffs on 74 categories of textile products, with a 400-percent hike for most of the products.

The United States and the European Union, disregarding these voluntary measures taken by China however, still imposed strict restrictive measures on textile import from China since the beginning of this year.
As the currency systems collapsed in the 1920s starting with Germany, trade began to suffer, too, as all entities tried to prevent Germany from exporting their way out of the financial bind they were in, in this case, paying back Britain and France and the Low Countries for war damages. Unable to raise the money via trade deficits with these nations and the USA who was bankrolling all of this, they cut their losses and tossed in the towel causing a domino effect. Trade barriers shot higher and Japan ended up excluded leading them to invade Manchuria and WWII was launched.

Easy to follow the money to the bitter end.

Gold bugs hope to glide through this by purchasing gold. Only this failed in 1930 and will be foiled again via government edict. The USA sits on the most gold in the world. The Fed is the ultimate OPEC of gold. They can raise or lower the value of gold in a snap or even outlaw it. They did this in the past and will do it in the future.

This is why the only real power is the oldest power: people cooperating with each other. United we stand and all that!

Sunday, May 29, 2005


Focusing is difficult if one is cross eyed or blind or is nearsighted. It is nice that some Congresscritters are trying this anyway, despite their severe vision thing disabilities.
A group of U.S. lawmakers banded together on Friday to focus congressional attention on how China's rise affects the United States in areas ranging from energy demand to trade to military spending. Randy Forbes, a Virginia Republican, said he and eight members of the House of Representatives started the bipartisan Congressional China Caucus to ensure that Americans become aware of China's emergence as an economic, political and military power.

"The public still hasn't gotten the full picture of what's going on with China because we're so overwhelmed with Iraq and Iran and North Korea," Forbes said in a telephone interview.

"I really don't see this country having developed the plans to deal with China like I know China has developed the plans to deal with us," he said.
Unfortunately, he doesn't know what the Chinese plans for us are. Nor does he understand the plans America's rulers have for us vis a vis China. Note that this Republican isn't calling for an investigation of all Bush/Cheney and other GOP clan members being in the pay or grips of Chinese entities thanks to sweetheart deals.

I remember when Bush first talked about the "Axis of Evil" in his State of the Union speech. Every Republican sprang to their feet and wildly applauded him. Oh, we were so tough after 9/11, weren't we?

So why is this so "overwhelming"? We won WWI and WWII not to mention the Cold War and three disparate countries that actively hated each other in the case of Iran and Iraq have drained our powers and rendered us helpless? This is too funny.
The caucus would meet frequently and enlist "the best minds in America" to educate lawmakers and the public on China issues, including a $162 billion U.S. trade deficit with the Asian giant, Forbes said.
So who are the brilliant minds that will be called to talk about all this? Friedman? Kristof? A Bush person? I can't wait to see which liars or fools are called forth here.

You can bet the Chinese communist leaders will be attending to this list, too. They hope the usual crew of inept or downright traitors are called up. In fact, they can bet on this. For you see, those Fortune 500 executives who just flew over to be wined and dined, as detailed on this blog, are now home to enforce their iron rule on America. And the flood of futile words and even more futile actions will continue.

For the nonce.

Friday, May 27, 2005


Take a good look. These three bank gov. are manipulating currency just like Greenspan....heh. Note their happy faces.

Speculators speculating on the status of the relative value of currencies are all agog watching China. On line, right wing and liberal economic forums bloviate about this, churning information that has been decapitated from reality.

Meanwhile, the Chinese continue to play the game their way.
China's central bank chief and a trio of top government economists lined up on Friday to urge a cautious approach to economic reforms, defying increasingly urgent U.S. demands for a swift revaluation of the currency. U.S. Treasury Secretary John Snow told Congress on Thursday he was confident that China would change the yuan's decade-old peg of near 8.3 per dollar within the next six months.

"We've got their attention and they're gonna move," Snow told law-makers, many of whom agree with U.S. manufacturers that the peg unfairly undervalues the yuan by perhaps 30 percent.

But Zhang Yansheng of the powerful National Development and Reform Commission said a lot of work was still needed in areas such as currency, taxation and foreign trade policy in order to minimise the impact of yuan reform on China's economy.
We certainly have the attention of the Chinese! And they know they have Bush by the balls. The ballooning real estate bubble interests them.
Almost 13 percent of real estate investment in China comes from overseas, and 20 percent of local residence buyers are either foreigners or compatriots from other cities or countries, according to a report on Shanghai's finances just released by China's central bank.

In Shanghai, where housing prices have been rising amazingly fast in the past two years, the average price in urban and suburban regions has exceeded 10,000 yuan (some 1,200 US dollars) per square meter.

Some overseas investors, expecting RMB/yuan appreciation, have bought dozens of apartments in China's coastal cities, including Shanghai, according to the State Administration of Foreign Exchange. Many local Chinese have joined in on the speculation, hoping to profit from a jump in housing prices.
I find two things interesting here: foreign money is fueling a balloon in real estate in China and it is also fueling one in America. And the Chinese official newspaper openly talks about this unlike the studied cluelessness exhibited nearely universally in American media.

The Chinese speculators read the news and act accordingly.
Affected by the recent anticipated adjustments in the RMB, quite a few Shanghainese residents lean towards getting rid of the U.S. dollars they own. In April this year, many Shanghainese banks have experienced the pressure of rising volume of foreign currency transactions. Many banks reflected that near end of April and beginning of May, residents' forex transactions amounts were up 30% or more over last year. Certain individual banks even reported single day currency transactions amounting to several hundred thousand U.S. dollars.
Americans always thought they are crafty wheeler-dealers. The real rulers like to make money on derivatives and speculation that is not dangerous to them because they are "in the know" and unlike the sheep they fleece, they know they manipulate things outrageously and they have the preknowledge thanks to dinner parties and going to the right clubs and riding on the same corporate jets and owning the hearts and minds of influencial politicians and Federal agents.

So everything is under control...not! Alas, they handed the keys to this "get rich quick" heaven to the Chinese communists who now are "in the know" and can "wheel and deal" events to their own pleasure. This is why America's rulers are now united in screaming at the Chinese to do what they need done, now, or else.

Or else...what?

While our rich run around, tearing out their hair, the Chinese continue to move forwards. They embraced Uzbekistan just as we decided to condemn the dictator there, thus endangering our troops stationed there to prop him up of all things, the allegations of degrading the Koran prove to be true, not false, and even though this startling admission from the Pentagon is top news overseas, it is strangely (not) muted here at home. The average American still thinks the reports are all bunk.

Thank you, media whores. You did a whiz bang job for Rove, didn't you?

China is on the move again, this is truly amazing news. Which is why you don't see it in America:
The armies of India and China plan to hold unprecedented joint counter-terrorism and peacekeeping training programmes, the Indian army chief said on Thursday.

General Joginder Jaswant Singh said the plans had been discussed with visiting Chinese chief of general staff, General Liang Guanglie, who began a six-day tour on Monday.

Military ties between the two Asian giants have vastly improved and their soldiers have gone on joint mountaineering expeditions, played volleyball matches, exchanged gifts and shared meals on the frontier, Singh said.

"The momentum given by the leaders of our two countries is being enhanced further by the two militaries," he told reporters, referring to the upswing in diplomatic ties between the world's two most populous countries.

"On the roadmap of military-to-military cooperation in the future (are) exercises where both countries could carry out together to counter terrorism or on U.N. missions," he said on the sidelines of a defence technology conference in New Delhi.
As our alliances fray at the edges, China is strengthening its hand for the coming confrontation with Japan which is heating up already.

And speaking of Japanese imperialism...
Japanese officials are investigating claims that two men living in jungle in the Philippines are Japanese soldiers left behind after World War II.
Bonzai and all that.


More and more economic writers are wringing hands over the housing bubble. They all understand this is due to low interest rates. When the super low rates first came about after 9/11, I was puzzled. The economic and banking matrix didn't suddenly change for the better allowing us the luxury of low interest rates thanks to money pouring into banks in savings. With a huge kitty of savings, of course, banks must put the money to work thus the low interest rates.

This didn't happen. Right after the funeral orations, Bush said, "Go shopping!" "Go to Disneyworld!" and to insure this, the Feds dropped interest rates even as Bush also ominously said, "Go to war!"

Taxes were immediately cut, too. Everyone was yelling about spending and the Fed fed this via incredible interest rates which we all knew were below the rate of inflation thus were funny money made up for us to party with and party we did. Relentlessly. Each time it looked like sensiblilty was going to rear its party pooper head, the Fed dropped rates more. People took out money from their new Home ATMs and poured it into a host of things and everyone became richer, seemingly. The monthly payments for homes dropped even as prices shot up, a certain sign that money was valued below its true value.

Greenspan was called a genius for creating this systematic elevator to nowhere. In physics, when a bubble gets too big, it begins to tear as the membrane or gravity stretches, the bubble disintigrates. Ever blow too much air into a child's party balloon? It gets thinner and thinner and then suddenly pops and the fragments fly through the air at a tremendous speed. This is why, in all the bubbles for the last 500 years, the price of whatever is the bubble's object balloons in price at a tremendous speed at the last minute before disintigration.

Krugman of the NYT wonders plaintively:
So what happens if the housing bubble bursts? It will be the same thing all over again, unless the Fed can find something to take its place. And it's hard to imagine what that might be. After all, the Fed's ability to manage the economy mainly comes from its ability to create booms and busts in the housing market. If housing enters a post-bubble slump, what's left?

Mr. Roach believes that the Fed's apparent success after 2001 was an illusion, that it simply piled up trouble for the future. I hope he's wrong. But the Fed does seem to be running out of bubbles.
You never "run out of bubbles" if money is free and it doesn't matter that no one is saving anymore. Creating bubbles is ridiculously easy. The ultimate bubbles are currency bubbles: inflation/deflation or gold.

And guess what has been going up lately? And the IMF is talking about diluting the gold market by selling of their gold hoard. And as I selected yesterday, the thing to watch now is gold because Bretton Woods 2 is collapsing and just like when Bretton Woods 1 collapsed, the price of gold suddenly shot up teriffically as the real estate market collapsed...which is why I bought real estate during that time frame, not gold...yes, Mr. Krugman, so long as our rulers want to play games, they will find the ultimate marker for this: gold. And if they still hand out loans, they will do this until that final game is done and then all currencies will be revalued brutally.

This is why it is dangerous to let the people benefitting from bubbles run things. The men running this gambiling casino called "America" are all desperadoes who don't care if this collapses into a pancake. Just remember. Bush called the 9/11 year "winning the trifecta".

Did he ever.

Thursday, May 26, 2005


Central State Museum Kazakhstan
Gold is the oldest metal. It caught the eye of stone age humans. At first, humans looked only for rocks that could be shaped into tools which meant mostly flints and obsidian. But once humans conquered the rigors of the Ice Ages, they turned their minds to the subject of creating beautiful things. This is when carving of images, decorating bones and drawing on stones and cave walls suddenly appeared.

And they found gold.

Easily melted and shaped by hammering, gold shimmers and shines like the sun reflecting off of still water. The sun was most precious as the last Ice Age reluctantly loosed its grip on the land. And gold was the sun that never set. Gold has some uses in industry because of its density and stability but its primary purpose is magical. It glitters and catches the eye and the precious sunlight qualities makes it most precious to us all.

We worship gold. It is a religious matter more than anything.

Gold has been used as a marker for money. It is tangible and beautiful so it stands in place for value. Silver does this too, only it is much more common thus cheaper value. Rarity has something to say in this matter. So why am I talking suddenly about this?

"Gold mining 'key to poor nations' says the BBC today. I read the article and then saw this:
"The gold industry is of tremendous and growing importance to highly indebted countries," WGC chief executive James Burton said.
Want to guess which country produces the most gold today? Hmmm....here is the list of countries panning for gold:
GLOBAL GOLD PRODUCTION 2004 (metric tons)
South Africa: 343
United States: 262
Australia: 258
China: 217
Canada: 129
Indonesia: 114
Ghana: 58
Tanzania: 48
Mali: 39
Guyana: 15
The world's biggest debtor nation is the world's second biggest digger of gold. Isn't this..poetic justice? The African nations frantically sell gold so they can pay off high debts incurred by projects riddled with corruption and inappropriate technology handed over to the nascent rulers who took over from the colonial empires.
The WGC also called on the International Monetary Fund not to sell its gold reserves as a means to fund debt relief for poorer countries.

The warning comes as the UK - as current head of the G8 group of the world's seven most industrialised nations and Russia - is calling on the IMF to sell some of its gold reserves to fund debt-relief plans.

However another member the United States has opposed the move.
Ahem. Hahaha. Russia used to be a gold rush country. This is why Siberia was annexed: gold and fur. The Czars wanted and needed both. When one looks at the great horde of riches of the Czars, one is looking at the fruits of this gold rush, for much of it is from the period of time when Siberia was ruthlessly exploited. Unlike the American gold rush, the Czars controlled the mineral assets of Siberia and used prisoner slave labor to dig out and process the gold. This is why the gold produced a lot of fancy knick knacks and goodies for the rulers of Russia and precious little wealth for the people which is one reason why the Czar and his family were lined up against a wall and shot.
Oxfam, which supports the sale of gold reserves to finance debt relief, said that the policy has the support of leading African gold producers including Tanzania and South Africa.

"The IMF believes it can be done in a way that would not hurt the price and would not penalise these countries," said Oxfam spokeswoman Helen Palmer.
Question: why does the IMF have to sell anything to cancel debts? The USA plans to ditch our debts by simply ditching them. This happens all the time. Argentina did this recently. What the IMF is doing is holding onto debts that were ridiculous in the first place and forcing poor people to pay them or else. Selling gold off will only tear apart the gold investors who will be out for blood and I am talking about quite a few rather rich people including the Saudi Royals and gold investors who surround Bush especially those who mine the gold.

I remember when Greg Palast was taken to court for an article detailing the bloody history of some of these people. The gold mining scam in Indonesia which ended with a literal splat as a man who claimed he found vast gold mining potential there jumped out of a helicopter. Some on line groups worried about world oil supplies are also worried about money suddenly collapsing as the monetaristic religion of the Bretton Woods deals collapses so they have invested heavily in gold. And what will the real rulers do?

Jerk around the gold market, of course.

Fort Knox has a lot of gold that can be dumped. This makes America a key player, being one of the very top gold producers as well as holder, we do have an arm lock on this particular metal right now.

My position is, there is no safe haven. All things intertwine and every time someone thinks they have a nifty "out" they discover there is none. The only thing in this universe that has real value is humans cooperating. Yes, the unity of mind and action is the Holy Grail. This is why joint ventures are better than the lone hero. Why families stubbornly survive and even thrive when things are hard. The lonely individual is a lion's dinner.

The story of Midas' touch is ancient and true. You can't eat gold. Gold can't buy love. It can be useful but not when everything is falling apart. When the Mongols took Babylon they asked the ruler, "Look at all your gold, why didn't you use it to buy more troops?" and the Vizier couldn't answer them.

I was reviewing Paul Kennedy's famous book, "The Rise and Fall of Great Powers" and noted suddenly that he didn't talk about gold hunting. When the Europeans went forth on their ships they were seeking ways to China to see if they could pry off, via theft, the great wealth in Asia. They couldn't attack China directly but could pry off bits and pieces of the outer edges. When Columbus stumbled upon the New World, the very first thing he noted in his diary was astonishment at all the gold jewelry and how swiftly the stone age people wanted iron and were willing to trade gold for iron. Columbus had to threaten his crew with punishment because they nearly tore the ships apart selling the nails for gold. When Columbus returned to Spain, he came with excited tales about gold. The poor people of the New World were forcibly turned into miserable slaves to dig up and send off to Spain all that gold. Most died.

The quest for gold was because China demanded payment in gold for trade. No goods. This is why the Chinese fell behind the ravening Europeans in technology and they forced Europe into invading since this was a great way to get back all that gold: burning cities and stealing everything, outright. Which takes us to today: America is where all the gold has been flowing, all excess lending money is flowing here and we are going deeper into debt as we spend it on frivolities and silly stuff, neglecting our people, our industry, everything.

We are the new Old China.

Wednesday, May 25, 2005


The earth is flat, Friedman tells us, but he can't find America's top executives to see if they can fix the mess we are in. Are they hiding under Bushes? Yes, indeedee! Are they hiding in gated communities? Yup. Are they even in America at all? Only when they have to be here.
After six weeks of being a foreign correspondent traveling around America, the biggest question I have come home with is not "What's the matter with Kansas?" but rather, "What's the matter with big business?"
Earth to Friedman: nothing is the matter with big business. They are doing hunky dory. No more taxes, no more regulation, no one stopping them from becoming agents for China. As this blog has written about in the past, the magazine, Fortune 500 had jet loads of these MIA execs flying into China to wine and dine and cut deals. They are very much in evidence...overseas. They are busy selling off factories here and shipping them off to communist China. Duh.
America faces a huge set of challenges if it is going to retain its competitive edge. As a nation, we have a mounting education deficit, energy deficit, budget deficit, health care deficit and ambition deficit. The administration is in denial on this, and Congress is off on Mars. And yet, when I look around for the group that has both the power and interest in seeing America remain globally focused and competitive - America's business leaders - they seem to be missing in action. I am not worried about the rise of the cultural conservatives. I am worried about the disappearance of an internationalist, pro-American business elite.
Why can't Friedman find these people? I track them daily, easily. He can too, if he can't, he can read this free blog! Friedman wants to know why General Motors isn't for universal health insurance.

Taxes. This means they pay Federal taxes and they and their buddies want to kill Federal taxes. They want to kill the unions. Using the health insurance issue as a club to smash in the heads of the unions is well worth it. They have zero interest in a good health policy for all Americans. They hate this concept. They think all other industrial nations are nuts to have this, they want communism like the Chinese have. Ahem.

Poor flat earther Friedman wonders why these corporate monsters don't want a sane energy policy. Well, they won't make money on this, to build a new infrastructure will require investing in America and take away money building factories in China. So it is dead in the water. When the Chinese sell us energy systems, and they will, they are very interested in this stuff, we will buy from them. Why invest at home?

The budget deficit is because we privatized everything so everything costs a fortune since it has little supervision and the executives get huge bonuses and so on. Win/win for them, lose/lose for our kids who will have to foot this bill. Right now, the pigs are at the trough and oinking their heads off. There is no way American executives want to end this gravy train!

I believe our top executives are mostly traitors. They mouth American pieties but don't practice what they preach. Their political arm is the same: traitors. AWOL Bush and Deferment Cheney both refused to fight for America and democracy during the Vietnam War. All the GOP aside from McCain did likewise. They hid at home and bravely waved their flags in the dark. This culture of fake patriotism has now devolved into open back stabbing. They want money, they want it now. When Ronald Reagan left office, he ran off to Tokyo to collect his pay from his masters there who gave him $2.5 million for a garbled speech from the demented old man. Everyone smiled and waved to the cameras. This was most astonishing, the first President to openly solicit and recieve huge funds from an alien government that he was previously negotiating trade talks with...and no one called him to account. Indeed, he was elevated to saint status when he died.

Now it is all over. No one is going to sacrifice for America except a tiny handful who grows smaller in number every day, 55 killed this month alone! When will this end?

When the world becomes round again.

Sunday, May 22, 2005


Surrounded by mountains of billowing white froth, Greenspan peers owlishly through his lookinglasses and sees "many local bubbles". We suppose when these bubbles cover the landscape he might note, "There are bubbles everywhere". But then, he might not. We can only guess at what goes through his brain.

Last month, Greenspan told real estate buyers to use adjustable mortgages.
"But it's not hard to see that there are a lot of local bubbles," he said Friday, without specifying these local markets. Greenspan said price surges might "simmer down" as housing became less affordable.

"It's pretty clear that it's an unsustainable underlying pattern," the Fed chief said. "People are reaching to be able to pay the prices to be able to move into a home."

The central banker went beyond his comments in February by describing how he saw "very significant acceleration" in the turnover of U.S. homes, partly because of purchases of second homes. He said speculation in both the housing and mortgage markets had accelerated.

Greenspan said buyers were using riskier financing techniques, such as "interest only" loans, to squeeze into houses. Adjustable-rate and interest-only mortgages accounted for nearly two-thirds of new loans in the second half of 2004, according to the Mortgage Bankers Assn.
Now he tells us! Using all sorts of tricks to lower the monthly payments is suddenly a no no! Knock me over with a check book!
Fueling the state's sizzling market has been relatively low mortgage rates. Even as the Fed has pushed up short-term borrowing costs in the last year, long-term rates — those to which most mortgages are tied — have remained near 40-year lows.

A sharp rise in mortgage rates could pop these local bubbles, some experts say. Homeowners with adjustable-rate loans will see their payments jump when long-term rates rise.

What is uncertain, experts say, is just when these bubbles might burst. The stock market didn't crash until 2000, four years after Greenspan's "irrational exuberance" comment.
Perhaps these chuckleheads running things here will figure out the concept of "time lag". It affects all kinds of things, it is a natural property of kinetic energy systems. But of course, people aren't supposed to understand simple scientific rules which govern reality. No fun in that.
Greenspan's remarks Friday before the Economic Club of New York were largely about energy prices. A modest easing in oil demand because of higher prices should keep crude oil inventories rising in the United States and elsewhere for some months, he said.
Time lag feedback strikes again. When the world arrives at the Hubbert Oil Peak, one of the effects is a drop in price as everyone is forced to cut back consumption. If oil consuming nations devalue the currency via inflation, this muffles the effects of the Peak so it seems there is no crisis. Prices going down means there is plenty of oil!

This is false. The Peak isn't the end of oil, it is the maximum pumping of oil. This means the year the Peak is reached is when seemingly the oil is gushing like crazy, record amounts. Then the next year, slightly less. Prices go back up with a vengence. Consumption falls yet again. More parts of the earth go dark, Africa is nearly totally dark now already, for example, as seen from space. The remaining users get more oil and pretend all is well. Then the drop accelerates. This is when things begin to fall apart for the chief oil using nations like America, specifically America. America uses oil more recklessly than the whole world combined. Per capita, we consume double the nearest competitors.

This housing bubble and the Hubbert Oil Peak are intimately intertwined. In our foolishness, we are extending exurbia to the breaking point, recklessly creating a hyper-oil consuming culture. This is the last gasp. Just like the last dinosaurs, a sprint towards hugeness then collapse.

As of Wednsday at Calculated Risk:
Here is a great local story on housing in the D.C. area. From "Real Estate Roulette" by Hillary Howard:
"It's expensive to buy a house. Around the Beltway it's not just expensive -- it's hard. Buyers are routinely offering 10 to 15 percent over the seller’s asking price and they're still not getting the deal. Many buyers are even putting escalation clauses in their offers. And, some of those escalation clauses promise to outbid the highest offer. This is what it's come down to."
This is classic sign of hysteria. The fact that the majority of purchases are by speculators and that these people are using dubious instruments such as the new "pay only the interest" loans bodes ill for everyone. The new bankruptcy laws won't help the banks since they will only get to collect back properties that will be nearly worthless in a saturated market. They will be forced to foreclose and sell at firesale prices in the end. We expect to see around $2.5 trillion dollars go up in smoke in this coming bubble collapse. It won't be pretty.

And to anyone who says, "People need housing", just remember, one can live in a tent or under a bridge or triple up with family members easily. More than once in history, people lived under hedgerows while mansions stood silent and empty.

Friday, May 20, 2005

* GOOD NEWS...not

Death Star
Pause seen after strong week" trumpets CBS. This is how they explain falling stocks. "Profit taking". Ie: more sellars than buyers. Why this profits anyone is beyond me. When I sell stuff I like to do this in a rising market. You don't make good money selling on the downside! If something continues up after I sell, this merely confirms to me that it was a wise decision. Panic sales happen when everyone waits for the "top".
Adding to a bearish posture was overseas economic news, as both French and South Korean GDPs rose by less than economist forecasts, with French GDP up 0.2% and South Korean GDP rising 2.7% in the first quarter, though the benchmark stock market indexes in both countries were in positive territory.

The dollar was steady against major rivals and crude-oil contracts were back above $47 a barrel.
Once again, the oil/stock see saw. One goes up, the other goes down.
The Philadelphia Fed's manufacturing index plunged to 7.3 from 25.3 in April, the lowest since June 2003. It was the largest one-month decline since January 2001, a drop that helped to spark the first Fed easing in 2001.
This came out yesterday so today, if the market goes down, it isn't "profit taking" but "panic attack".

The fundamentals are looking pretty nasty. Here is where the real hemorraging is occuring: In Iraq.
The Rising Economic Cost Of The Iraq War--- Fighting in Iraq has been prolonged and remains intense enough that it has pushed the total cost of U.S. military operations since Sept. 11, 2001, close to that of the Korean War.
Despite the yawning federal deficit, Congress hasn't blinked at this price. And while annual defense spending is now as high as it ever was during the Reagan buildup, the U.S. economy as a whole is much larger, making it easier, in economic terms, for the nation to shoulder the bill.

Yet the costs for Pentagon operations are likely to pile up in years ahead. By 2010, war expenses might total $600 billion, according to the Congressional Budget Office. Much depends on when - and how many - U.S. military personnel can be withdrawn from the Iraqi theater of operations.
OK. Several things. This "war" isn't the Korean war. It is very expensive because of the American warlords looting the Treasury. Everything is goldplated and nearly useless. Even today, years after starting this war, they can't figure out how to make bullet proof vests or armoring the Hummers. This half hearted effort is costing a fortune. Of course, this being an official military article, they pretend this doesn't matter. The "economy is bigger" they claim.

Only the "bigness" is due nearly entirely to the military/industrial complex chewing through masses of money!
"We can't be any more certain about the trend of the defense budget than we can be about the number of troops that will be deployed overseas," says Steven Kosiak, director of budget studies for the Center for Strategic and Budgetary Assessments.
This is an outright lie. Famously, the budget cruncher for Bush warned him it would cost over $200 billion to invade Iraq and Bush and the Pentagon screamed that this was a lie, it could be done for a mere $25 billion. So the bearer of bad news was summarily discharged and replaced with a toady and Rumsfeld slogs on. If the military can't figure out costs then they should hire someone who can. Obviously.
Fighting in Iraq "is lasting longer, and is more intense, and the cost to keep troops in the theater of operations is proving to be much greater than anyone anticipated," wrote Rep. John Spratt (D) of South Carolina, ranking minority member of the House Budget Committee, in a recent Democratic report on war costs.
This is a rank lie. Obviously. SC slurps up tons of military budget dollars and is a key player in this hemorraging of red ink.
More spending on the war is sure to come - even if the U.S. begins to draw down troops levels. While it is difficult to estimate precisely, it is sure to be in the hundreds of billions, experts say. The Congressional Research Service pegs the cost of U.S. operations in Iraq and Afghanistan at an additional $458 billion through 2014.

This is hardly cheap, but given the overall size of the U.S. economy, and the levels of defense spending maintained during the cold war, it is well within the bounds of recent experience, according to Center for Strategic and International Studies military expert Anthony Cordesman.

Total defense spending in 2006 will probably be around 4 percent of gross national product, notes Mr. Cordesman. The average since 1992 for this measure has been 3.6 percent.

"When it does come to economic and federal 'overstretch,' defense is unlikely to be the cause," Cordesman argues in a recent report.
If I tear out any more hair I would be a Hari Krishna devotee. This 4% of GNP is a false number. Since much of our GNP is in the red, and since much of the money generated today by industry is for wars, this is the beating core of what is destroying us from within.

And obviously, our military doesn't teach math skills. $458 billion more on the wars in Afghanistan and Iraq until 2014? That is a mere $50 a year. Right now we are spending $5 a month. 108 months in 9 years times $5 a month equals $540 billion dollars. So this is assuming not only no inflation but an over all drop in costs. Anticipating spending only $4.2 billion a month for 9 more years is insanity. This brings the bill anticipated from day one to the furthest projection in the future: $758 billion. But using realistic numbers this is: $840 billion. Add inflation costs and it rises to a cool trillion dollars. For bringing "democracy" to Iraq and Afghanistan.

The military, being basically a parasitical organization, finds this to be OK and even nothing big. It ain't their problem we are seeing wall to wall budget deficits. The yawning deficits will be taken care of the Uzbekistan or North Korean way: starve everyone else but the military. If there is objections to this, kill the civilians.

A lot of the tension between red states and blue states can be traced to several money flows that benefit the military/industrial complex which is moving aggressively to implant themselves in a citadel of power in the red states. This consolidation of power will be enforced via brutal suppression of the cities if it comes to that. Right now, managing the flow of free money that pours in from overseas keeps everything greased and running without violence. When that flow ends as it is doomed to end, it could get pretty ugly.

Lastly, for a mere trillion dollars we could put solar arrays on nearly every roof in America. Spending this loot on the Iraqi wars is sheer lunacy.

Thursday, May 19, 2005


flying Wallendas
Long Term Capital Management is an entity many people have forgotten what with the unending stream of big bankruptcies that seem to be accelerating, isn't it? This group died a miserable collective death a mere five years ago. The men who created this group were all friends of Alan Greenspan. When Russia went bankrupt so did they.
The idea behind LTCM was quite simple to articulate but not necessarily that easy to implement. LTCM was to look for arbritage opportunities in markets using computers, massive databases and the insights of top level theorists. These opportunities arose when markets deviated from normal patterns and was likely to re-adjust to the normal patterns. By creating hedged portfolios the risks could be reduced to low levels. According to the model developed by Merton the risk could be reduced to zero, but in practice some of the crucial assumptions of Merton's model did not hold so the risk of the hedged portfolios was not really zero, as subsequent events proved.
Ah, the zero risk derivatives that magically make money just pour into one's lap while one is busy with going to parties or bidding on properties in the Hamptons!

A lot of people were burned in this crash and Greenspan rushed to play his monetary magic, dropping interest rates suddenly. I remember that time because just a few months earlier, he huffily said he wasn't going to drop interest rates despite mounting unemployment.

Derivatives are a strange beast that exists because of "gaps" in relative values as money travels from one ledger to another, as it is translated into other forms. This game of leeching pennies from every dollar that moves through the systems is a game played in the World Casino. Everyone who is anyone plays this game. All the great banks and all the great nations have a hand in this little game. They know that money doesn't really exist so sucking up a portion every step of the way can't be stopped or noticed by the peons.

This money has grown in leaps and bounds
until today it is gigantic dwarfing the size of 2000's derivatives market.
Federal Reserve Chairman Alan Greenspan again pushed for limits on the multibillion-dollar mortgage holdings of Fannie Mae and Freddie Mac, saying such restrictions would not hurt the thriving housing market.

Greenspan, who has been pressing Congress to limit the holdings of the two mortgage giants, warned on Thursday that their debt poses a risk to U.S. financial markets.

As Fannie and Freddie grow ever larger, their ability ''to quickly correct a misjudgment in their complex hedging strategies becomes more difficult,'' Greenspan said. ''We are thus highly dependent on the risk managers at Fannie and Freddie to do everything right.''
Where to begin? Tearing hair out? Screaming about human folly? Since when, starting with Adam and Eve, has any humans done anything "right" even half of the time?

This is why we develop "fail safe" systems and all sorts of checks on doing things. The Flying Wallendas could do amazing things...only they died regularily when things didn't go "right" for just a split second.
At the end of 1990, Fannie's and Freddie's combined portfolios amounted to $132 billion, Greenspan said. By 2003, their combined holdings came to $1.5 trillion.

''The assets required for Fannie and Freddie to achieve their mission are but a small fraction of the current level of their assets,'' Greenspan said. Thus if Congress were to limit the two companies' holdings so that they can achieve their mission, a substantial liquidation would be required over time, the Fed chief said.
Fron $132 billion to $1.5 trillion in less than 13 years? Pray tell, what happened during that time?

Did Americans go on a savings spree? So there was an extra trillion dollars to spend on mortgages and "things". What are these "things"? Since mortgages of money of dubious origin isn't the bulk of the money held by these mortgage entities, what are they? One shudders to think. What are the money managers betting on? Remember, derivatives are not investments. They are bets placed concerning relative values and speed of movement of money. Who are they betting against? And how is this worm working its way into the heart of the financial systems doing?

$1.5 trillion is a funny number. This is about the amount of American debt China and Japan are holding right now. Isn't that funny?
Unwinding some of Fannie's and Freddie's holdings would not raise mortgage rates for homeowners because so many big banks and other lenders compete with them in the home-loan market, he said.

Greenspan said the Fed also sees little evidence to support the notion that the availability of fixed-rate mortgages is tied to the size of Fannie's and Freddie's portfolios. He also said it is ''difficult to see'' how the two companies' portfolios can influence home ownership.
Earth to Greenspan: the "portfolios" that are grinding out all that gold that is going into Ma and Pa Kettle's pockets as their properties shoot up in value even as everyone just sits at home comes from somewhere and it ain't Scrooge McDuck. If Fannie Mae and Freddie Mac didn't have access to this Magic Mill that grinds out gold only if the Giants China and Japan didn't work day and night turning the churn, there would be no money for mortgages in America at all. Except at realistic interest rates, namely, rates that attract savings rather than people begging for cheap loans.

Recently I have recieved "offers" from banks, we being in the zero debt classification, to deposit money in a bank and get a $50 bill as a "gift". I told them, "How about giving me 6.5% interest." They laughed nervously. Hahahaha. Yeah, right. No way.
Much of the increase in home ownership seen in recent years seems to be due to growing incomes of households and generally low borrowing costs, he said.

''Without the needed restrictions on the size of (Fannie's and Freddie's) balance sheets, we put at risk our ability to preserve safe and sound financial markets in the United States, a key ingredient of support for housing,'' he said.

Federal regulators last year accused Fannie Mae of serious accounting problems. It was ordered to restate earnings back to 2001, a correction that could reach an estimated $11 billion. The accounting fiasco, which partly involved how derivatives were accounted for, led to the ouster of the company's chief executive and top financial officer.

Freddie Mac had its own accounting debacle in 2003, which also involved how derivatives were accounted for, and three top executives were forced out. It had misstated earnings by $5 billion for 2000-2002.
Greenspan doesn't want to change this bizarre system. We note he won't chat candidly about these mysterious derivatives. He just wants to keep handing out mortgages only slightly more severe terms, that is all. When the derivatives accounting scandal happened, we waited to hear a real accounting about the accouting, For unaccountable reasons, this never really happened.

Open up the books! We need to know where all this money is coming from and where it is going and who is on the high wire, gingerly walking over the Grand Canyon of Debts.

NEWS: Krugman of the NYT says this:
Here's what I think will happen if and when China changes its currency policy, and those cheap loans are no longer available. U.S. interest rates will rise; the housing bubble will probably burst; construction employment and consumer spending will both fall; falling home prices may lead to a wave of bankruptcies. And we'll suddenly wonder why anyone thought financing the budget deficit was easy.

In other words, we've developed an addiction to Chinese dollar purchases, and will suffer painful withdrawal symptoms when they come to an end.

I'm not saying we should try to maintain the status quo. Addictions must be broken, and the sooner the better. After all, one of these days China will stop buying dollars of its own accord. And the housing bubble will eventually burst whatever we do. Besides, in the long run, ending our dependence on foreign dollar purchases will give us a healthier economy. In particular, a rise in the yuan and other Asian currencies will eventually make U.S. manufacturing, which has lost three million jobs since 2000, more competitive.
Great minds think alike, no? Or someone is reading this after all!


opium den
Thanks to economic contractions further wracking the poor third world and reduction in use of oil by the first world, the price of oil has declined somewhat reviving hopes that there is no geological limits to oil pumping. The IMF sighs with relief and signals thatall is well, this crisis will pass and everyone can resume gorging.
The International Monetary Fund's forecast of global economic growth this year is unchanged at 4.3 percent although the U.S. current account deficit is still weighing on the world economy, IMF managing director Rodrigo Rato said on Thursday.

Oil prices have not accelerated further, but the U.S. current account deficit has not been corrected, Rato said, adding that the European Central Bank should not rule out an interest rate cut if economic growth weakens.
Are we losing our minds here? According to ancient laws of commerce, interest rates were set according to level of risk or to attract funds to lend. Over and over again, we see our rulers demanding that we "save" yet they provide no incentive to save. Earlier, Culture of Life News ran the story about elderly being tricked into signing up for long range "investments" only to find they can't access the money, all this for a reasonable return of 7% which is what the banks should be offering for ordinary deposits!

Instead, even the IMF, those former hard nosed lenders of last resort, pretend that interest rates are set only for one purpose: to keep recessions at bay. This monetarism view of money is what fuels the coming currency/wealth crisis: lending money world wide at a price that is cheaper than money itself. Namely, this is one huge gift to ourselves. The first world grants this over and over again, this open ended "loan" that seems to grow and grow and be less and less effective as it grows. Instead of printing mere dollars, we create it out of thin air via number crunching by computers. No mere printing press has to make this money visible. This is why the funds in DC for our retirement don't exist. It is a dossier in a folder in a safe that merely notes the fact that this money is owed to us in some future event.
`Oil prices are around where we put them, but there has not been an acceleration from there. Neither has there been any increase in inflation,'' Rato said. ``Monetary policy has been quite effective.'' A sharp rise in oil prices in the past year has raised concerns that inflation would rise and economic growth slow sharply around the globe.

But Rato said crude prices around $50 per barrel did not look that high any more, although the U.S. current account deficit had not been corrected.
In other words, our masters have decided the price of oil is OK. They managed to create money out of thin air to surround this oil hike and thus make inflation dissappear. Of course, the mechanism they used was to simply lie. They pretended that the real 6% inflation rate in America isn't there because it doesn't cover computers or cars. This lie is going to destroy us.

Interesting, isn't it, how this "economist" hails this whole mess as "monetary policy has been quite effective"? It did "work", of course, in the sense that it allowed them to contiue stealing from savers and transfering this wealth to the rich. The rich invest, not save. They buy stuff, not park it in bank accounts.
He also said the European Central Bank should not rule out a cut in rates if growth weakened.

``Under the scenario of greater weakness in the European economy it should not be ruled out,'' he said.

``We think that no type of measure should be ruled out if the weakness becomes much more pronounced. That is our position and we believe that it is difficult to argue against it because a central bank has its options open by definition.''

The ECB has signaled it is in no hurry to raise the main euro zone rate from an historic low of 2 percent, where it has remained for almost two years. But ECB policymakers, worried that inflation pressures may build up, have said a cut is not on the agenda.
Now the cautious Europeans are imitating the rash USA. They are viewing the vast slush of international funds to be something they can raid at will no matter how low the interest rates. These same monsters will make a straight face and tell the second and third world nations that they have to balance their budgets and pay realistic interest rates or else.

China is now taking over Europe's industrial base. To do this, they are offering tons of money in return at below the rate of inflation, the exact same deal they gave us. The Europeans are now taking the bait. It is probably too late to change course. Once addicted to monetarism and free loans they can't resist this. Even though in the end, they are digging their own graves.

This has happened not once but repeatedly in history. Rome lost the trade game with China. Britain was losing it in 1800 when they used their rising military power, thanks to the struggle with Napoleon, to turn on China in the early 1800s and attack successfully. Maybe we all think we can repeat the Opium wars again.

Wednesday, May 18, 2005



Just this last hour, Reuters found some pundits to say pretty much what this blog has been saying about the stock market rally and the loud noises Bush and Congress are directing towards the triumphant Chinese.
The U.S. stock market's upbeat reaction to the heated rhetoric between Washington and Beijing over China's currency has puzzled some strategists who say a revaluation of the yuan is ultimately negative for equities.
Should China revalue its currency, the huge inflow of its goods to the United States would become more costly for U.S. consumers and companies, potentially ramping up inflation, which could hurt corporate profits and stock prices.

Ah! They see part of the trap! We can't go somewhere cheaper to buy whatever since almost all the whatevers are being made in China now. So it won't be cheaper. And a much stronger yuan means they can outbid us for oil and note how the stock market rises and falls in tandem with the oil see saw. Oil up/stocks down, oil down/stocks up. Add to that the inflation see saw and we get this four way rocking motion: oil up/inflation up/stocks down, etc. Of course, this latest see sawing has been produced by rank lying with the Feds crowing about no inflation when there certainly was inflation.

Back to the Chinese:
"The last thing the Chinese like is to come across as being bullied into making a decision," said one strategist, who preferred not to be named "It usually backfires."

But stocks rose sharply after the announcement on Tuesday and continued their gains on Wednesday, when the Dow closed at a one-month high. Wednesday's rise was spurred mainly by other factors such as lower oil prices and tame inflation data, but the gains illustrate the lack of concern by equity investors.

OK. Who is the cowardly "strategist"? Greenspan? Seriously. Reuters, please, if you must quote people, call me. Or email me at emeinel@taconic.net. I will be thrilled to clue you in on these matters.
Anthony Chan, managing director and senior economist at JPMorgan Asset Management, argues that a revaluation could nudge up prices, ultimately meaning the Federal Reserve needs to push up interest rates to battle inflation.

"The news on the Chinese front is good for the U.S. economy, but I remember just a short time ago that good news for the U.S. economy wasn't necessarily good news for the equity market," Chan said.

He argued that a revaluation could make Chinese products more expensive, giving a breather to U.S. manufacturers who could potentially produce more in the United States. It could also give U.S. producers some leeway to raise their prices.

Higher inflation isn't "exactly news that the Fed would be dancing about, and ultimately not news the equity market would be dancing about either," Chan said.

Mr. Chan at least isn't shy. And he understands half of this trap we are in. This is rather amusing. Perhaps the Reuters article will explain the trap entirely?
Peter Schiff, chief global strategist at Euro Pacific Capital Inc., thought a float of the Chinese currency would be bad news for the U.S. economy because "our economy is based on the artificial low interest rates and low consumer prices that are a direct result of this peg.

"China is providing a massive subsidy in the form of low interest rates and low consumer prices," Schiff said.

"For all the tough talk -- it's all politics -- the last thing the U.S. government wants is for China to float the currency," Schiff said.

BINGO! Give Mr. Schiff a lollypop! He says outright what Culture of Life News has been bellowing since day one! Knock me over with a tea caddy!

My hopes rise. Will the article explain the really terrible part of this trap? Sadly, no. It stops short of that final goal. China is buying our national debt. They are doing this because they want us to go deeply into debt and we are cheerfully doing this and as we dig our collective grave they watch the mound outside grow and measure it carefully.

Already we are up to our heads in this little pit we are digging.

Snake Eats Own Tail: Walmart in China


Oroborous is the World Snake that eats its own tail. And this tale today is about such a beast, Walmart. We well remember the tax cut we were given by Bush after the Supreme Court gave him the country. To quiet us all down, he began to ladle out bribes and before 9/11, the economy was stalling. When the tax cuts were ladled out, all the pundits and Bush told everyone to go shopping and prop up the economy. So everyone went on a shopping spree.

Now these same people are warning everyone to start saving even though interest rates are below the rate of inflation.

Back four years ago, Walmart ran a series of ads about spending the windfall tax cuts that began the great spiral into bankruptcy. The ads showed lawn furniture and lawn tractors. Things that are non added value items. They even had price cutting on these frivolous items to encourage sales. It worked.

Now Walmart is slowing down in America. Saturated markets coupled with the bane of all big box stores: eventually they degrade and become replicas of Soviet stores with scant good things and lots of dirt and disorder as the chair tries to create profits by cutting staff. Walmart has to expand or implode.

So they are expanding in China.
The world's largest retailer opened its 46th store in China on Wednesday, a tiny fraction of its more than 5,000 stores worldwide.

"Our goal is to open 12 to 15 units this year," John Menzer told reporters as crowds flooded the opening of the Beijing store.

Wal-Mart bought $18 billion worth of goods from China last year. If the company were a country, it would be China's sixth-largest trading partner.

But Menzer declined to say whether a possible change to China's yuan currency, which the United States says is undervalued and gives Chinese exports an unfair advantage, would impact its business. "I can't comment on government issues, I'm a retailer. We will continue to export from China. Pricing is only one part of the equation," he said.

Wal-Mart posted a 31 percent jump in its China sales last year to 7.6 billion yuan, with its number of stores rising 30 percent, China's Commerce Ministry has said.

Many Americans say, incredulously, "China will never hurt us, they need us". Obviously, Walmart is expanding into China because it is a huge market and will, in time, displace America. If only 20% of China can shop at Walmart this translates into the same number as Americans in this country. It is obvious that China will dwarf the American market in the long run.

In this see saw world, China is going up and we are going down.

Tuesday, May 17, 2005

Bush Decides to Play Hard Ball With Our Creditors


The Chinese sent really obvious warnings. Evidently, this failed.
The Bush administration warned China today that its currency policies were "highly distortionary" to world trade and implicitly threatened to retaliate if Chinese leaders did not change course within the next year.

In language far harsher than any it has used before, the Treasury Department declared that China's fixed exchange rate between its yuan and the dollar posed a risk to itself as well as to global growth.

But the administration stopped just short of accusing China of outright currency manipulation, a move that would have immediately started a process of direct negotiations with Chinese leaders and the possibility of retaliation if those talks failed.

Typical for a coward. Slap around making loud noises but don't hit for real. This is called "bluster" and the Chinese, unlike the Americans, read things carefully and closely. Guess who came to dinner today in China?

The Fortune 500 as well as the head of the Chamber of Commerce, all begging for Chinese labor, Chinese money, Chinese business. Surrounded with these eager men clamouring for a ride on the Chinese Economic Iron Rooster, the Chinese will spit on this latest attempt at stampeding them into currency change.
The administration warned that if Chinese practices continued without "substantial alteration," they would likely qualify as "manipulation" under American law and prompt more direct demands by the United States.

The harsh language marked at least a partial abandonment of the Bush administration's two-year attempt to cajole China with "financial diplomacy."

Please, stop driving me into lunatical laughter. If manipulating currency is so evil, why aren't we attacking Japan? And of course, derivative players in the currency markets not to mention...Greenspan, Mr. Monetarism is the Way to Go. Nope. It just isn't nice for the Chinese to play this game too.
Left to normal market forces, currency analysts say, the value of the yuan would have climbed against the dollar. But China and other Asian governments have kept the value constant by buying hundreds of billions of dollars in United States Treasury securities.

This is all about the Great Gravy Train, the Mill that grinds Gold, the Golden Goose laying gold eggs: this is where the magic lies that is making our homes amazingly valuable even as they just sit there, inert. This is our entire economy. This is why we are not paying taxes. This is why we can spend like fiends on wars in Iraq and money for hurricane "victims" who weren't hit by any hurricanes and money for Churches. This vast tidal wave of money comes courtesy of Japan and China manipulating the currency so they can have an advantage in trade.

And we are addicted to this money. The noise Congress is making is all fake. It is to rock the workers to sleep thinking someone gives a hoot. Not one Congressman will call for the head of any head of a Fortune 500 company. No one is going to balance the budget or completely cut the money spent in Iraq or anything. Greenspan won't raise interest rates to a realistic level.

Everyone will continue to push the Chinese to keep grinding out the gold. The Giants grumbles as they grind. Some day awfully soon, they will pause and curse us and start grinding salt.

Every Pundit Last Quarter Said Energy Prices Didn't Matter


I get the New Yorker Magazine. There was a long article about energy not causing inflation. It ended with the classic, "We are in a new paradim! The old ways have fallen!" Whenever one sees these fatal words what is happening is the triumph of propaganda over hard reallity. There is seldom a new paradim.

Same here. Inflation is intimately yoked to energy. To pay for energy the USA always tries to slip the noose by inflating money to make up the difference. This always fails in terrible ways. Same this time. As usual, prices have to go up because of energy costs for nearly all systems use energy and it eats into the bottom line quite directly. So this last quarter, when energy prices went up, prices of all other things rose this quarter, ipso facto.
Wholesale prices rose by a hefty 0.6 percent in April while industrial production dropped, the government said Tuesday in a pair of reports that offered a mixed picture of the country's economic health.

Inflation, on the one hand, is moving ahead, with wholesale prices lifted by more expensive energy, cars and cigarettes. But industrial activity _ production at the nation's factories, mines and utilities _ is faltering.

No shit, Sherlock. Always, when energy goes up in price, production goes down as everyone stops buying stuff and making it becomes more expensive. When the price of world oil dropped a smidgen yesterday, stocks shot up in value. Oil up=stocks down and vice versa. For years, when this blogger explained this simple formula, note the big bull market of the nineties coincided with the cheapest energy prices ever---she gets yelled at as if she is dumb or something.

The real estate Magic Mill continues to grind out wealth even as the Chinese are not increasing the purchase of our debt instruments, the Japanese have still been able to keep the golden conveyer belt running but this can't go much higher.
In other economic news, the Commerce Department reported that housing construction jumped by 11 percent in April, compared with a 17.6 percent drop reported in March. The advance in April increased the total number of housing units builders broke ground on to 2.038 million, on an annualized basis. That exceeded analysts' expectations.

On Wall Street, stocks dipped. The Dow Jones industrials lost 9 points and the Nasdaq was off 4 points in morning trading.

The latest snapshot of inflation also surprised economists. Before the report was released, they were forecasting a 0.4 percent rise in overall wholesale prices and a 0.2 percent increase in "core" inflation.

This blog loves "surprised economists". These clueless entities should be put to work in Chinese coal mines. Then maybe, just maybe they will learn to use their wits instead of mouthing insane propaganda palbum. No one could possibly be surprised by today's news. Impossible.

Readers here know that this blogger will never appear in the regular news examining what is happening economically or politcally.

The housing bubble is rapidly reaching insanity levels. Wealth is pouring into them in the hopes that it will grow in the Magic Mill and crank out again as vast wealth. Presto, chango! What a wonder this is! Frantically building huge mansions, this activity happened before! Readers of this blog know we recommend the book, "Only Yesterday". This book is an invaluable guide to the future. It details how the housing bubble and the stock bubble took turns blowing each other up further.

We are in a future world of hurt.

Back To Business In China

Here is a picture of a rich old male American eager to sell his soul so he can be even richer and seemingly more powerful
Chinese Premier Wen Jiabao (R) shakes hands with Thomas J. Donohue, president and chief executive of the United States Chamber of Commerce, during a meeting in Beijing, capital of China, May 16, 2005. (Xinhua Photo)

While the USA attacks the media at home for reporting things accurately yet again and as the USA media ignores the big news of the century which is the horrific fact that the USA itself is going rapidily bankrupt, the Chinese keep their eyes on the prize.

World eyes China as new source of fortune says today's headlines in the Chinese official media. Last week's weak turn out to vote for the ruling party in Taiwan dismayed the Chinese leaders but they, like the Culture of Life News editor, saw clearly that the 14% vote of support from the general population (the turn out was less than 25%) renedered the vote meaningless as a gage of popular support. So as their agenda goes, the Chinese continue to move forwards with all the plans. The top plan is to take advantage of American gullibility and desire to betray the USA in profound ways if this makes an individual richer.
The 2005 Fortune Global Forum, a prestigious world business summit, opened Monday in Beijing with Chinese President Hu Jintao inviting global businesses to take full advantage of the fast-growing economy of China and Asia.

"China and Asia are quickly becoming a new growth engine for the world while the global boom is also generating more important opportunities for China and Asia," said Hu while addressing a grand opening ceremony of the forum in the Great Hall of the People, the seat of China's national legislature in central Beijing, on Monday evening.

"China's economic growth has brought and will continue to bring win-win opportunities to Asia and the World," Hu told the 800-strong audience, among whom were the CEOs of more than 80 of the world's top 500 businesses.

Think the Americans running this tet a tet in China aren't traitors? The Chinese know and rub it in:
In a remarkable symbol of respect to the Chinese hosts, the forum has for the first time changed its traditional blue logo into a red one, or the "color of China." However, the organizers' original plan of holding the opening ceremony at Tiantan in southern Beijing, or the Temple of Heaven where ancient emperors prayed for national prosperity, was disrupted by rainy weather.

Remember Bush sitting with Putin applauding the parade of communist flags and symbols? It was hilarious. Now this. The Chinese probably will ask American executives to spend a minute waving Little Red Books next year. Symbols matter. This is why Americans who pretend to be patriots like to bloviate about how the American flag should be sacred. Well, the color red is, as the article states, "China". The fact that Fortune magazine kow towed concerning this matter says volumes about the craven desire to make money no matter what it means to the home people in America.
"No company can succeed without tapping the potential of the Chinese and Asian markets," said an official with General Motors, whose CEO Rick Wagoner is also attending the forum. Troubled by poor sales recently, GM is trying to find a remedy at the forum to help revitalize the sluggish Asian vehicle market.

And China has made it clear that it wants to help. "China will keep opening up its market ... and work still harder to help foreign investors and create an even better environment for trade and economic cooperation...," pledged Hu in his speech.

"Help" in this context is to move all the GM manufacturing to China. Do not doubt this. This is the program. After taking in auto manufacturing, the Chinese plan to remove all civilian aircraft manufacturing to China too. And they will succeed in this because our top executives are all traitors who care only about themselves. Culture of Life News has covered this extensively. In their own words, the top executives say outright they want nothing to do with keeping American workers either alive or well off. They want a flat earth as Friedman is fond of saying. Flat in like "run over like a skunk on the highway" flat.

Unlike America, China has energy plans that are relatively sane which this news service is discussing at the Culture of Life Energy pages.

All in all, there seems to be no good news for the American worker but tons of great news for American multimillionaire bosses. For now.

Not later.

Monday, May 16, 2005

Looks Like a Bit of a Blow A'coming

The Atlantic Seaboard and the Gulf Coast could be in for another bad hurricane season, one of the government's top forecasters said Monday.

Conrad C. Lautenbacher Jr., head of the National Oceanic and Atmospheric Administration, predicted 12 to 15 tropical storms, seven to nine of them becoming hurricanes, and three to five of those major hurricanes, with winds of at least 111 mph.

This is going to be expensive. The last furious summer, Bush and Congress opened up the taps and a tsunami of "free" aid poured into states Bush needed to carry during the election. People who had second homes there were given very expensive free trailers to use while vacationing courtesy of FEMA. Growers whose farms were missed by the hurricanes got huge subsidies. Everyone got a lollypop and this cost us absolutely nothing...yet. Courtesy of Asia who paid for this and took IOUs in place of money.

But this summer might see a totally different financial landscape. This time, we won't have $25 billion to scatter hither and yon. What if we have $0 dollars? The bleeding ulerous wound of Iraq has now begun to drain the main corpus Americus dry. If we get leveled like we did last summer it just might end up spelling the end of FEMA.

FEMA is part of the Homeland Security. To save money, the Pentagon is going to close airbases near Ground Zero. This is because they didn't do anything back then and probably won't protect us tomorrow, either. So why even pretend?

Mother Nature isn't a terrorist. She is a Darwinian who really does believe that she is red in tooth and claw. She is the expert at destruction. If She really wants to show us a thing or two, She certainly can. She has demonstrated the power of death more than once. Get Her going and you can face extinction. So how is America preparing for this coming summer attraction?

How about let's go to the beach and build more sand condos.

Capitalism Red in Tooth and Claw


The Neo Darwinists working with the Neo Cons are creating America in an old image: the Robber Baron Era when America went around attacking natives across the planet, on the continent as well as overseas, seeking empire as the capitalists at home struggled to create interlocking monopolies and cartels that were unregulated and that used the imperial powers of the government to kill workers and keep them disorganized and poor because these older Neo Darwinists believed that survival of the fittest equalled survival of the most powerful.

Everyone is grist in their Mill which will grind everything to dust so that it can become gold like in the ancient Norse myth.
In his time at United, which began shortly before the airline filed for Chapter 11 protection, Mr. Tilton has - wittingly or not - used bankruptcy protection as a competitive tool. And he has gained respect in the industry, however grudgingly, for doing so.

If nothing else, United has made itself an airline to be reckoned with - not in the traditional way, through strong operations, but in a completely new way, by leveraging its weakness.

United's bankruptcy, which has lasted longer than any airline case since 1989, has given the company the opportunity to take steps that other carriers have found difficult, if not impossible. Cutting wages and benefits, for one. Renegotiating and rejecting aircraft leases, for another. And the biggest step: terminating its four employee pension plans.

"United has become a much more formidable competitor than we were" when it filed for bankruptcy protection, Mr. Tilton acknowledged in an interview.

These capitalists love a mean man. "Mean and lean" is praise. The "lean" part always refers to worker benefits or pay or numbers. This view of humanity sees them as dross and excess. Work the fewest the longest and pay them the least is the philosophy of these men as they themselves take long vacations and play golf and go to parties while deducting all as "work related", yeah, right. It is hard work figuring out ways to weasel out of one's obligations!
"They're seen as being strong because they're in bankruptcy," said Gary N. Chaison, professor of industrial relations at Clark University in Worcester, Mass. "It's a remarkable use of bankruptcy as a strategy."

Sigh. Just this month Congress passed a bankruptcy bill forcing the little man and woman to pay up or else. Can't run away from obligations! Meanwhile, these same monsters in industry who pushed this bill are admiring how United is using the cover of bankruptcy to be lean and mean and ruthlessly going for the jungular! Hooray for them. Onimously, we also see the capitalists running America salivating over the idea of our country declaring bankruptcy and then out competing the competition in Asia by ruthlessly shedding all obligations at home and becoming overnight a sensation with all of America working desperately for pennies, the elderly and poor dying rapidly, making America stronger again via the Neo Darwinian mechanism of survival of the fittest.

Yes, this is their game plan.
Last week's court decision permitting United Airlines' parent to dump its pensions on the federal government is part of a sweeping trend that could make the nation's employers more competitive, but at the cost of leaving workers and their families bearing big new risks.

In a nutshell, a broadening swath of corporate America is retreating from the safety-net business and is shifting responsibility to employees.

The decision by a Chicago bankruptcy court focused on the problems of a company strapped with $6.6 billion in pension costs. But the court's solution is one that even healthy firms are seeking to copy in one fashion or another, shifting benefit costs away from themselves and making fewer promises to their employees.

As detailed here at Culture of Life News, Bush has said out loud he intends to reduce Social Security Disability and Survivor benefits. He has no intention of allowing these needy people who are presently covered, staying alive. If they can't work and their families can't keep them alive, off you go! Die.
"People like to think of employers as social welfare organizations, but they're not," said Sylvester Scheiber, a partner with the financial consulting firm of Watson-Wyatt and a member of President Bush's 2001 Social Security Commission. "In an increasingly competitive world, they don't have room to do much else but focus on the competition."

Here it is again. Some fancy panty effete male working for Bush talking about how companies need to stop helping workers and start exploiting them with ruthless vicious intensity. This well fed man who is supported by American tax payers in his mission dares to tell us in our faces that our corporate entites must work us to death and provide zero services and benefits because of "competition".

And what is this competition?

It comes from very unionized socialist Europe and "we will never lay off or fire our workers" Japan and communist China. The Chinese have embraced the capitalist system but even they acknowledge this is temporary, the goal is to imitate Europe. We refuse to understand this. We think we should be imitating the Chinese, struggling up from great poverty.
The number of big company employees (those with 200 or more workers) in line for retiree health benefits has plunged from 66% in 1988 to 36% last year, according to the Kaiser Family Foundation, a nonpartisan health research group in Menlo Park, Calif. With health insurance rates for current employees posting double-digit jumps, employers have shaved an estimated 5 million workers from their insured rolls since 2001. And they have passed along many of the recent cost increases by nearly doubling the amount — to $222 a month — that employees must kick in for a typical family plan, according to Kaiser.

In addition, some companies have turned to health savings accounts. These were proposed by the president and approved by Congress in late 2003 and became available last summer. They have some of the same characteristics as 401(k) accounts in limiting firms' responsibilities and leaving it up to individuals to manage the money in them.

The number of people covered by health savings accounts has more than doubled from 438,000 last September to more than 1 million, according to America's Health Insurance Plans, the industry's Washington-based trade organization.

In a little-noticed report last year, the American Benefits Council, chief lobbyist for large corporations on benefit issues in Washington, offered a 10-year vision of employees replacing employers as the chief providers of retirement plans and health insurance.

"Individuals … should assume primary responsibility … for their own financial security," the report said. "Employers should be primarily responsible for sponsoring programs that help workers … in their efforts to achieve and maintain personal financial security."

All the Red Teeth Red Claw men are out in force telling us this is a great thing, being "personally responsible" for keeping ourselves alive when we get sick or injured. Not one of these men or women preaching this garbage is self insured. All of them are well covered. They know they and cynically ignore this just like Congress ignores its benefits and plans all generous and totally protective.

They have an umbrella and are handing us a lightning rod.