Friday, November 11, 2005

Stocks Soar on Promise of More Debts for USA

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By Elaine Meinel Supkis

On Thursday, after our government, forced to peddle more debt instruments, got other nations to bankroll us yet again, the stock market soared on hopes of endless, ruinous debts. Record trade deficit=record red ink for America on every level. Other nations cynically fund us for nefarious reasons which should alarm us.

From Marketwatch:
On Thursday, the Dow industrials rallied 94 points at 10,640, Nasdaq Composite climbed 21 points at 2,196 and the S&P 500 gained 10.3 points at 1,230, after a five-month low in crude-oil prices as well as a successful Treasury bond auction.

Front-month crude fell 66 cents to $57.14 a barrel in electronic trading Friday, while currencies were little moved.

The bond market will be closed Friday due to the Veterans' Day holiday.
We wanted over $250 billion for rebuilding after the hurricanes and didn't get it but we got a lot of loot. Why?

Well, Rumsfeld just visited China who had him not only watch their military games but promise military co-operation also China just moved on the China Sea oil and are setting up to begin drilling. The Japanese are fuming but can't do squat unless the USA does the military stuff. Japan has to keep the yen cheap so they will continue buying our bonds ditto the Chinese. Both want to esvicerate our industrial base and it is now a competition to see who eats it up the most, the Chinese will win that struggle for power because they can consume so much more than the Japanese, being far bigger.

Our foreign policy lies in total ruins now. The happiness of the investor class depends on an amazing amount of red ink. These people, in turn, give our rulers in DC money to keep up the bad work. Since destroying America makes so many people rich, we consume and destroy like crazy now. It is a tidalwave, a sea of red ink.

The price of oil dropped a tad due to the fact that China cut foreign consumption to control outflow of funds. They want money for loans but not for going away like our currency. We have increased our foreign purchases of oil so that September' trade deficit was an astonishing $66.1 billion. This runaway frieght train is plunging down the steep mountainside, isn't it?

$530 billion in red ink in just 9 months. At this rate, it will be over $700 billion this year. This is astonishing. Just because we run deep in the red since we let the Japanese keep their currency very cheap back under Reagan doesn't mean this is a good thing because we are still standing. Now that the Chinese have latched onto the same program of draining us dry, our huge nation is now anemic as all hell. Why was Bush whining about the value of the yuan just this week, right before the Chinese purchased our debts? Doesn't that make no rational sense? And why didn't he whine about the yen which is ridiculously cheap now, 117 to the dollar? Makes no sense at all! There is no way a currency of a nation deep in the red on every front to exist unless other entities deliberately overvalue it for political or economic benefits that serve themselves in the long run!

From the NYT:
But other economists say the trade deficit will remain at today's levels, or could deepen, because domestic demand for foreign products remains strong and the dollar has strengthened against the euro and Japanese yen this year, making American exports more expensive in other countries

"Only with very weak U.S. growth or a major drop in the U.S. dollar will the trade deficit improve on a sustained basis," said Ethan Harris, chief United States economist for Lehman Brothers. "The reason you need these dramatic movements is that the U.S. has, according to almost every study, an incredible appetite for imports."
Amazing. The economists can't understand why the dollar suddenly this year, got "stronger"? This is what happens when one doesn't look at the diplomacy, the political goals of all parties in a situation. Why on earth do they think the only solution to this riddle is for America to become weaker? Huh? What the hell?

A major drop in the dollar would destroy us because the price of oil would then shoot up which is what it did this year. Since oil is marketed in dollars, all other nations, to keep their oil imports cheapers, bought American debts so the dollars would be soaked up and the price of oil then drops...duh. So our printing presses run like crazy but like a dry sponge, it is all soaked up. Unfortunately, these loans are like iron chains, we are being tied down more and more by them. They are a very bad solution to the problem of the cost of energy. We will continue to overconsume energy while overprinting dollars to keep it cheap so we can consume more and more of it and the rest of the world has to be a counterweight to keep the price of energy down, they soak up the dollars and return it to our homebase with a obligations attached which are very bad for us, for the ultimate price is, we lose our entire industrial base and our future and our ability to change course when we have to refit our country when the logic of the Hubbert Oil Peak sets in earnest in the next ten years (we are just coming to the peak production years right now, namely, the most oil ever will be pumped!).

We are in a race against time. The window of opportunity is rapidly closing. If the world wants to loan us money, we should be using it to upgrade our rail networks, put solar units on all homes with southern exposure or appropriate surfaces, build wind generation and build nuclear power plants. We need to do the expensive stuff now so we have it later when it matters.

But more, we need to protect our industrial base. Allowing it to collapse is probably the dumbest thing an empire can do. This is fatal. This will mean the end of our power when industrial giants like China start to dictate terms.

And they will, it is inevitable. And we won't like it one bit.

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