All articles written by Freydis unless otherwise noted

Mythical Giants

NASDAQ, the Dow plummeting, Asian currencies faltering again, ho-hum who couldn't see it all a mile away. Nothing changes because nothing is fixed, merely plastered over with billions in bailouts.

But what really irks me more than ever is the myth that China is an (emerging) economic superpower, a force we should apparently all genuflect to, or at the least be desperately attempting to get our collective 'meat-hooks' into before it's too late, be a Rupert Murdoch or something. Come on, what garbage. Most of China is a desiccated wasteland of sand and dirt and most of the people subsist as poor peasantry. In China the corruption level is endemic, mismanagement and waste are unbelievable and their currency isn't even convertible! I mean Taiwan, South Korea, they far out produce China and likely always will because they don't have to lie to themselves or the world about their rank and position. Oh right but they don't have over a billion potential consumers to sell to...

This whole emerging Chinese superpower myth is especially dangerous because it's increasingly being warped for political ends maybe even to manufacture another Cold War. Look at President Bush's latest realignment of military opponents from Russia to China. And think about it what if our spy plane had landed in Baghdad and Saddam Hussein held the crew for a few days and stole the equipment? U$ bombs would be raining on Iraq for weeks! Oh yeah China has a few nukes aimed in our direction (well not officially anyway but we all know what validity that has) but god forbid we reciprocate and point a few thousand in their direction. And isn't it interesting how so many U$ politicos active and semi-retired have significant vested interests in China from Kissinger to Sen. Dianne Feinstein? Indeed her state of California has a higher yearly income (GDP of $1.03 trillion) than ALL of China!

But why China, is it because they have over a billion people confined to ultra-crowded, polluted industrial cities on the pacific, east coast? Why not India whose population is rapidly approaching that of China and is predicted to surpass in the near future? Why aren't we hearing stories of the emerging Indian economic giant?

Although India's population is close to China's, 984,004,000 billion versus 1,242,980,000 billion; India has less than half the active working population of China, 314,131,370 versus 696,600,000, yet they produce over half the GDP per capita of China. India's GNP per total capita is $380 while China's is $750. [all figures from Brittanica.com]

So India actually has to support more idle persons ( 32 percent of pop works) yet still produces nearly equal per capita with China ( 56 percent of pop works).

India: 314,131,370 people produce $357,759,000,000 or $1139
China: 696,600,000 people produce $906,079,000,000 or $1300

Furthermore China spends (or rather wastes as an opinionated person might say) $53 per person on military expenses while India spends only $8!

But one very important thing to keep in mind with all these numbers is that China is a communist, closed economy that masquerades as a capitalist economy when convenient for the purposes of profit without pain. In other words it's still a planned communist economy and all these figures are either sheer estimates or officially provided state figures which everyone knows are inflated anyway. India has a convertible currency and an open economy. The difference far outweighs any apparent imbalances between the two. India has a significant corruption at all levels but China is as bad if not worse anyway. The attraction of China has always been the fact they're this closed system, a tease for the foreign capital. Yet India isn't as confusing or as misleading. The answer is clear: to invest in India makes more sense than China.

Unfortunately this doesn't answer the premise of this essay, why is so much hype focused on China? I think most of it is just that 'so near but yet never quite materializing' potential. It's the allure of China and just think if every Chinese family bought a new car every four years, wow, and we could sell it to 'em! The primary conundrum that has yet to be resolved is the fact that the capital is missing. The productivity doesn't exist and the economy of China is not nearly functional or anywhere near efficient enough to produce the savings needed to generate wage levels and stored wealth anywhere near that of the U$A. It's not impossible but it would take decades to do and as long as the Chinese government is the problem not the solution how likely is this? It's all predicted on the ludicrous delusion that the Communist party of China is going to pack their bags wave goodbye and just leave town soon, that thousands of years of Chinese tradition will suddenly go western capitalist - start trusting banks and such and that the Chinese economy will magically turn into an efficient production-consumption model of America. Nothing but pipe dreams and capitalist investor fantasies. 08.04.01

Daewoo Woe

If you think your financial credit situation is bad, Daewoo the South Korean mega-corporation is even worse. Not only that but Hyundai is in a similar situation having been notified by their creditors that they'll see no more loan extensions. South Koreans will care even if you don't at the moment, because when these employers go bust they will cause a chain reaction of sub contractors and small business' to collapse in unison throughout South Korea. So riddled with bad loans and mismanagement that they aren't even able to sell out to foreigners like GM. What effect this will have on the South Korean nation is yet unknown but doesn't look good. 10.11.00

Market Saturation

Our present globalized economic order has the masses disenchanted and the CEOs wealthier than ever before. Still they have nothing but what the people allowed them through apathy and the politicians through venality. Significant evidence mounts pointing to the fact that this gigantic party of which only a few have been invited may soon come to an end, party crashers aside. Responding to this perplexity of the 21st century dictates dual attack approaches. Most importantly from the level of the individual and community and secondly on a worldwide scale by spreading an understanding of what is happening to environment and the crumbling economic well being of the majority.

The fundamental concept behind globalized economic development is that by exploiting the developing world's resources a middle class can be constructed thereby facilitating new consumer markets primarily for the developed world to sell their products. As it stands today the high-wage industries in computing and information manipulation are only marketable within the developed realm itself, after all what does a homeless Indian or a Chinese rice-farmer have for database software when they don't even have electricity? Hence the astounding imbalance of accounts plaguing the U$A, all those billions of dollars flooding out to trading partners, making a paradox of pittance wages employing laborers that can't possibly afford the products they assemble. Vietnamese 'slaves' sewing $80 Nike shoes and Chinese peasants assembling $3000 High Definition Televisions. The absurdities of 'Free Trade' are legion, depletion of natural resources to uphold commodity based exporting, ballooning debt maintenance, devalued currencies and wage competition amongst a global labor surplus, None of it leads the developing world into anything resembling the vaunted middle class consumer clones but instead leads inexorably further into the abyss. The present order, just as its colonial predecessor, is supported by a one way road of exploitation, all wages are headed lower if for no other reason than the law of averages. Yes even Mr. Software developer making $120,000 a year, this includes you. Corporate consumerism means we're forced to forever run like mice in the production-consumption wheel, faster and faster. The greater the wealth the more intricately dependent one is to this order.

The worldwide labor pool will be exploitable for centuries but the natural resources won't last nearly that long. Real cost's can't be masked by externalization indefinitely. Already fuel and electricity prices are igniting inflation, forming that dreaded economic friction that leads to lay-offs and higher prices. Curiously this effect is magnified by pervasive automation. Certainly aluminum plants are the first victims of high power costs (deregulation you've done it again!), but auto manufacturing is a close second example. Having fired all their technical assemblers in favor of a handful of robot operators, now even the fortunate remainder are left facing job cuts due to the power demands of those tireless computerized machines. With oil prices hitting new high's food prices are headed up since it's all trucked or shipped in from the other side of the planet even when the same produce grows on the farm down the road. Oddly enough most oil producers are now constrained not so much by desire to increase production as in the lack of infrastructure to do so.

So the globalized economy is really predicated on the ability to mask the true cost of products via externalization machinations like low-wage regions, cheap commodities, financial fluidity and especially low energy prices. Alter any of those factors and it ceases to be profitable.

Only one exit for the global economy remains and that's to expand the consumer base thereby balancing trade between 'north' and 'south'. Yet every action on the part of Multinationals throughout the developing world has been to destroy the only base that could support a middle class, impoverishment for the short term gain of cheap labor. Ultimately the final chapter has already been written, globalization is doomed because all of the markets for developed world products (and corollary high paying jobs manufacturing them) have already been saturated. Not only that but having de-industrialized and specialized the 'north', our future is now nearly as bleak! What little remaining margin existed to soak up more of those goods has been inflated into a bubble. By artificially lowering interest rates below safe levels and blowing up the money supply the Federal Reserve has created a boom remarkable in its failure to benefit the rest of the planet! Now credit cards are maxed out, savings are negative. It's as if every family has concrete shoes made of mortgages and consumer debt without any lifejacket of savings. It begs the question, how well can you swim when the tide comes in?

[And the greatest irony may well be that the high-rollers in the computer-biz today will get burned the worst since their entire industry is founded on expansion and rapid technological obsolescence requiring upgrades. Who are they going to sell to in a domestic recession, something the IT realm has never faced?]

Within the corporate world, business can continue for a while longer pretending nothing is wrong and the future is rosy, selling their IT products to themselves, dot.com 'companies' trading advertising as 'revenue', creative accounting incomes and high stock valuations enabling corporations to pay their workers with stock and perform takeovers of failed ventures that multiply like flies in a cow-pasture. And as long as the banks keep the funds fluid and the loans coming this big-fish-eat-the-little-fish shell-game can go on as long as the FED keeps the interest rates low. And they will as long as they can keep foreign confidence in the value of the dollar high. If any major debt holders began to question any of the assumptions which underpin globalization or the U$ economic bubble for that matter the FED will be forced to raise interest rates to lure the money back into domestic bond-sinks. Eventually such inquiries will be considered because they're as much entangled in the globalized economy as we are. 07.09.00

Sacrificing the Gold Calf

If we believed the advertising for the advent of the Euro you'd think everyone and his worst enemy would want a piece of this hot investment action, best thing (to virtually exist) since sliced bread! What the European's are left with after the honeymoon is a total bomb, a colossal failure. But then those are appearing with unpleasant frequency as of late, eh? Seems the European planners have a keen ability to organize and execute spectacular failures like, say, Expo 2000 or the Millennium events in England.

The Central bankers realized some time ago that the Euro was going to hit hard but without ever leaving themselves an alternative they forged ahead anyway. Much like the release of Godzilla the movie they probably figure that even a dud could work with enough publicity. Or maybe they don't really care 'cuz they get paid either way. With the hype gone and the Euro still falling they needed to act to prop it up. The big players jumped in and conducted some show-off buy support but it was fairly uneventful. What to do now?

Well About the only thing the Central bankers could do was start selling gold. The reason is to eliminate the competition it poses to the Euro by driving down its price and thereby boosting demand for the Euro, albeit indirectly. The Bank of England for example is dumping 415 tons - over half of their reserves! Why else would they have pre-announced the massive sales of the metal? Certainly not to make a profit off of the deal since the immediate effect was to drop the price of gold! And what are the Bank of England and others turning the money from the gold sales into? Mostly Euros but also Yen and Dollars, duh! So now we see what a cozy relationship our trilateral buddies have after all, propping up the sagging demand for each others fiat currencies by simultaneously selling off the only real competition: gold.

But the dangers of this policy are that by driving the price of gold so low they're forcing the shutdown of mines and the mothballing of large portions of the mining industry. The long term trend is to constrict supply and inevitably drive up prices. Especially with all the forward contracts on the metal, I wonder if future demand can be met with an ever decreasing flow into the market? So unless the central banks have a brilliant plan to get out of the next crisis ala Houdini it could get pretty ugly. It reminds me of the way stars in their dying phases start expanding and burning heavier and heavier elements in a desperate attempt to extend their lives, eventually burning up everything in near orbit and exploding in supernova. 25.06.00

Boom 'n' Bust

Most of the East Asian economies burned by the financial debacle that started around three years ago haven't fully recovered, but they have at least regained their composure. Thailand, just as it's neighbors, had numerous financial faults and true even overvalued currencies but much of that blame resides not with sloppy or corrupt government, which they have, but with artificially cheap credit from financial speculators that fueled the artificial boom/build-up of these 'tiger economies'. What the tiger economies discovered is that what the bankers give they can also take away, and at very inopportune moments. The power that these financial speculators wield are quite real and potent, especially against nascent, highly leveraged commodity and export based economies.

My insinuation is of course that it's reasonable to question the 'accidental' nature of the East Asian financial debacle; and certainly I wouldn't be the first. Dr. Mahathir of Malaysia believes the entire scenario from Thailand to Indonesia was orchestrated by financial wire-pullers hungry for quick profits made via currency speculation. But I would say that wasn't the only goal. By examining the results we may get a better idea of why it happened. First of all East Asian nations have over the past decade relinquished control of labor markets - example the infamous sweatshops of Vietnam. But these same countries have not been so eager to hand over control of state industry to western business. Wresting these national assets from even the most venal administrations has proved no facile task. Failure to control them means significant risk to western investment for one because they can never fully trust them if they don't share the same goals, but also as competition. Today Indonesia and South Korea are two examples of the again re-emerging economies. They've been forced to shed much of the old, nationally coveted industrial crown-jewels. Example Ford motor company trying to buy South Korea's KIA. [I believe the deal fell through though because like so many others, KIA has too much debt to make it a viable acquisition. This points out the hazard involved... ]

Commodity prices have been kept low thanks to the continually devalued currencies of these countries. For the same reason notice the influx of cheaper consumer items into the U$, propelling the trade deficit into the stratosphere. Cheap commodities and cheap electronics help keep the domestic economy on a roll and that keeps the party in power too. Not too shabby a deal all in all, sure a few investors get burned but nobody puts all their money in one basket anymore, just write off the losses. The industrialists get to move in for the kill and buy up at foreclosure prices and the currency speculators made a killing all the way around. Everything works out great, well except for those poor slobs making shoes in Indonesia or the unemployed factory worker in South Korea but hey, they never really had a chance anyway, right? Yes doubtful we'll see too many western complainers, we all appreciate getting that cheap VCR and the new TV but the point is that what can be done by corrupt and greedy plutocrats to trash a developing country and the lives of a billion can be done to us as well. Best be on the lookout for a recession then ask yourself who profits from it?

In summary financial panics are not that difficult to instigate especially when the investors are already in over their heads in high risk foreign markets. They operate in herds and as soon an analyst or big-shot with significance points out that they may not get their money back because of this or that, they pull out like a run on the bank. 16.06.00

Breaking the Collective Chains of Capital (or at least trading them for new ones)

The implications of a one world single currency are truly staggering; if implemented it would completely repeal the laws of debt and capital, albeit in a virtual manner, the effects would be quite real. No longer would the free market dictate social policy. In other words, anything becomes possible so if we want to build Fort Knox on the Moon we could do it. The only restrictions of social or technological progress become those of resource and labor limitations, the fundamental rules of physics.

This is the beauty of fiat currency backed purely by consumer and banking sentiment. One currency means no competition or reference point to measure success or failure, value or waste.

A relativistic money supply could create severe imbalances between supply and demand but it could also do things completely impossible under our present capitalist system. Space exploration is a good example. Today it’s so expensive to launch even a one ton space probe into space that only international committee groups can afford to make a stab at failure. But with a uni-currency this restriction would be irrelevant. Think Soviet economy on a global scale and you have some serious potential for progress and/or fiduciary mismanagement.

Clearly this is something that's not overly practical given our present ability as a group to manage wealth and resources. By and large we are unable to collectively conserve and utilize money effectively without using primitive behaviorist elements inherent within capitalist consumer entrepreneur system of supply and demand. That doesn’t mean it will or should always be that way. At some point in the near future the need for a single world currency will be as crucial to human success and even survival as control of the weather. 09.05.00

Part II: Corporate Defaults

Sovereign defaults are always very serious matters, even when the amount of money may seem trivial. Pakistan's $32 billion in debt is relatively minor amount; at least in comparison to say the U$ GDP in the trillions. But in the political realm it's a much graver matter, bad credit, military dictatorships, impoverished and overpopulated people and nuclear weapons - not a good mixture for anyone.

Corporate bankruptcy is much more mundane but the actual cash amounts can often be in similar categories. The Irridium satellite telephone system partially backed by Motorola is a good case in point. This multi-billion dollar fiasco looked great on paper but any prudent analyst should have foreseen the inevitable cost-overruns and delays intricately associated with all space launches. Of course in today's stock market good intentions are all that matters anyway so the Irridum stock price, grossly over-valued,  never reflected the highly risky nature of the endeavor. Now it's Chapter 11 and not even listed except by a proxy corporation based in Bermuda, here's the very informative chart:
Basically $5 billion has been wasted and no one is likely to get any use out of this thing because it's so fantastically cost-inefficient. Undaunted by flagrant logical imperitaves, at least one other company is trying to do the same thing as Irridium - Teledesic LLC. Already having raised a cool $1.5 billion, funding doesn't look to be an impediment given our present glut of foolish investors.

With easy financing and cheap money, projects like Irridium grow and die like weeds. Just think of the mega-malls that keep popping-up despite the fact almost none of them ever return a profit! And what about the dot-coms. Amazon.com has never turned a profit, neither has any other Internet corporation. They're all up to their eyeballs in debt, most of it short term of only a few years.  Never mind success, their continued survival is predicated on a rapidly increasing demand for their services. I know it seems really far-fetched right now but someday soon demand is going to plateau or heaven-forbid slack off, probably about the same time their loans come due. Corporate defaults are at fairly high levels now, but what about five or ten years from now? 

If I had the capital I would be investing in debt-mitigation and restructuring companies, or better yet starting my own. That seems like one sector poised for growth. 15.10.99

< For an enlightening look at mega-waste like Irridium see the 'Techno Blunders' issue >

 Greenspan’s Concern and Sovereign Defaults

With such a rash of debt defaults in places like Pakistan, Ecuador, Colombia, etc. and with US interest rates as low as they are, what is the world gonna look like when US rates start their inexorable climb?!

I mean the economy is pretty good right now and if so many nations are buckling what is it going to be like when the winds start really blowing? This should give pause for thought to any world banker I would think.
But really Greenspan and friends have been giving it consideration ever since the Asian crisis first hit. They have kept US rates artificially low in order to help the rest of the world 'dig out' by getting even more loans which their poor ratings would make it impossible otherwise. With weak investment returns on US debt the developing world has a shot at getting private financing. That scenario has been going on for 2 years now and Greenspan must know it is not something they can continue doing indefinitely. The truth is that the band-aid for the recessionary sectors of the world hasn't really helped them any and its putting the U$ into a very dark recessionary hole too! Now U$ treasuries are climbing, and interest rates have also been going up:

Evidently many investors are selling equities and not even switching to bonds, just going cash - the Y2K effect. It makes sense, with corporate paper (the dot.cons) flooding the market treasuries  are getting squeezed. Thusly Greenspan's comments shouldn't be surprising: "Economists have been unable to anticipate sharp reversals in confidence,'' Greenspan told a Washington conference organized by the Office of the Comptroller. "At a minimum, risk managers need to ... set aside somewhat higher contingency resources ... to cover the losses that will inevitably emerge from time to time when investors suffer a loss of confidence,'' he said [on Oct. 14 1999].

Brazil Revisited

A few months back Brazil was in a severe economic crisis with cash reserves rapidly dwindling and a harsh devaluation imminent. Then everything miraculously got better. Well nothing really changed, Brazil just narrowly averted disaster not with a miracle but with the aid of a near record breaking cash influx courtesy of the IMF. But that band-aid wasn't without it's price. And what is the price paid for maintaining this series of economic imbalances, such as the over-valuation of the REAL and a chronic budget deficit? The price is a decline of neighboring countries like Paraguay, Colombia, Venezuela and recently even once ‘healthy’ economies like Chile and Argentina. Basically the entire Central and South American continent is in deep trouble. So while the IMF and World Bank have been focusing on restoring the Asian economies The Americas are building up to be an even worse catastrophe!

But this is even more severe than it may seem at first glance because not only are these countries much closer to the U$ geographically but they are also both illegal drug sources and revolutionary hot spots. Over half of Colombia is controlled by Marxist guerillas and the government is reeling from losses to the point of legally ceding large portions of land to these revolutionaries. How much will the Colombian government give away when their economy defaults and goes bankrupt? 

The U$ will continue to raise interest rates in a desperate attempt to forestall looming recessionary inevitability. As that occurs the high-risk debt which literally keeps countries like Brazil afloat will become less attractive to investors because the U$ debt will be earning more in interest payments. In order to get the daily, weekly and monthly funding they need to stay in business, Latin American governments will be forced to pay more for their loans at a time when they can least afford to do so. Ah, how you say... continent wide multi-national IMF bailout?

What will happen to the friendly democratic, free-trade loving governments of Chile and Argentina? What happens when the IMF is no longer able to bail Brazil out fast enough  and the worlds 10th largest economy vaporizes? And what about Mexico when it's next currency crisis hits?

Good questions indeed.  29.09.99

From the September 21, 1999 Statement of Ann Williamson to Congress on Russian financial corruption

Any pyramid scheme remains viable only so long as its base continues to expand and it is that fact which has driven US foreign policy for much of the past century. Since politicians and investment bankers both have an interest in promoting deficits and in forcing taxpayers to redeem government debt, they were quick to come to terms on the advantages of underwriting foreign debt along with new markets and natural resources from abroad. Taxpayer-subsidized globalism then is not a new phenomenon, but it has reached an apogee of sorts under the guiding hand of the current Clinton Administration. 

Once the criminal financial flows from Russia and Asia were combined with the easy money common to presidential election cycles and began pumping into the economy in the spring of 1995, it wasn’t long before asset inflation hit US corporate share valuations. Throughout 1995 and 1996, the money supply kept rising, and along with it mutual fund holders’ paper wealth. Attracted by the double-digit yields found in risky, unregulated environments abroad, the banks - given the election year liquidity the Fed wished to export - lent unwisely and to excess. The moral hazard the 1995 $40 billion bailout of Mexico unleashed (the debt was refinanced, not repaid, with additional IMF lending and proceeds from eurobond sales in 1996) led to a tripling of international capital flows. Investors took greater and greater risks in the belief that the "new paradigm" promised taxpayer-provided redemptions if necessary. The consequence of all those dollars frolicking in exotic locales is a $141 billion bailout for Asia, more than $20 billion for Russia in 1998 alone, and $30 billion for Brazil in 1999.

Some governments - especially those with an election on the horizon - actually want to devalue since national exporters, their goods now being cheaper, sell more goods. Global lenders like the IMF are also fond of devaluations because a rising national income from bargain exports leave plenty in the national kitty for principal and interest payments to them. (Global direct investors who stick to the dollar, quasi-"good guys", fear devaluations, because their profits calculated in a devalued domestic currency buy fewer dollars for repatriation.)

But when exchange rates depreciate rapidly the specter of capital flowing out of a country appears. Foreigners and residents put their savings elsewhere. The currency goes into free fall, its value plummets, more investors flee and at the end of the cycle, interest rates skyrocket. This is exactly what happened in Asia in 1997, in Russia in 1998 and in Brazil in 1999.

Yet to curse the speculators is useless; since the 1972 collapse of Bretton Woods that broke the international link between the dollar and gold, the fear of the syndrome described above is the only remaining bit of discipline in the international system. How much better, the globalists reason, if there were to be one central bank and one fiat currency for everyone so that then national leaderships (and the financial oligarchies they sustain) could inflate and rob their own populations in unison.

In time, U.S. corporate profits will decline as a consequence of the IMF-induced deflation and share prices of all but premiere multinational corporations will follow suit. Alas, those Americans up to their necks in credit card debt may well be the next class of debtors to be rolled, and American farmers have been suffering for some time from the collapse of farm commodities. In time, credit will dry up, government receipts will dwindle, the national debt will skyrocket and unemployment will increase. Eventually the government will inflate its way out of its accumulated debt. - Ann Williamson 

The Infinite Fiat

You know how the Soviet Union was a closed economy and thereby was able to set the value of the ruble at any price they wanted? Well that’s the beauty of fiat money – the government literally says what it is worth and the domestic economy has to accept it. Well sure it’s a great idea but the problem is that inevitably reality creeps in and the government is forced to justify the money value versus 'real’ money outside, usually set to a gold standard.

But what if every currency on earth was fiat money? And what if the economies were all intricately linked together in the holy bonds of ‘free trade’? Well then governments could set currency levels at anything they want to and never have to be bothered with reality intruding on the party - right!

Unfortunately that specious reasoning seems to have pervaded the simpleton elite that run the western finance system. Gold prices are being fixed and the ultimate goal is the removal of gold as the underpinning of value for money. New money for a new [world] Empire, eh? One currency for the entire world. That my friends is the ultimate power. Money talks but when it’s in so many voices it makes control difficult. The world needs one currency for one voice. Never mind good or bad, right or wrong it’s something that will happen given the present [planned] course of events.

One of the first steps is to eliminate the gold standard by force (if necessary). Force is being used now but the motivator is actually less insidious, mostly to cover astronomical losses incurred by such notorious funds as Long Term Credit Management and others who borrowed money at super low (1%) rates based on short gold positions then invested it in Wall Street to make big bucks real fast – then lose it real fast but that wasn’t part of the plan.

The problem is that these goals run counter to what the street and the consumer really wants and must be achieved through subterfuge and lies. Like every other globalist plan it is so shrouded in secrecy and cover-up that it's doomed from the start. No secret society has ever achieved any meaningful success. Why don’t they just come out and say what they want and how they plan to do it? Well because what this elite minority wants runs counter to what the majority mass wants which means (to them) it must be done in secrecy because we know more than you and we don’t need your interference thank you.

One interesting aspect is the fact that the Jewish predators banking on Holocaust victimization have forced the Swiss to sell large amounts of gold, which conveniently meshes with the above stated goal. Just today is another article that the Dutch owe a billion dollars (in wartime currency) to Jews in the form of loot stolen by the Nazis and not compensated or returned or whatever – like it really matters. Of course that $1B will turn into many times more than that after legal fees, interest, interest on the interest, you get the idea. [That's why they say, there's no business like Shoah business.] What legal precedent are the lawyers using to get this money anyway? Finally who is the real fool here, the wallet inspector or the idiot that hands him the wallet? 11.05.99

Back to the USSR

It turns out that the Russian central Bank may not be very honest after all. It seems that they have set up secret bank accounts and funneled conveniently timed speculative profits offshore. Much of the money they made was from the sky-high interest rates and government bonds that were floated before they defaulted. Hmm what a shock?!

Yeah well it is to some people. Several conservative editorials are even convinced that the Russians are rebuilding and preparing for war! That this whole bankruptcy thing is a big ruse.

Maybe it just helps to be Russian but I know these commentators are total knobs; the Russians have been doing the same thing they always do and the western leaders keep getting fooled. Every Russian knows that one should never let another know either your true intentions or your true health. Always trick the enemy and use the perceptions and fears they have of you to your advantage. This is why the Russians fund and upgrade the strategic missile forces even while the rest of the military starves. NOT because they plan to start WW III! Hell the warheads are probably plastic dummies anyway. [actually I wouldn’t put it past a Russian to steal the money for the rockets and replace them all with cheap phony mock-ups, I’d do it!]

Come on get a clue guys, the Russians don’t want war and they cant ever hope to fight or win one anyway; this is all for show and profit. But damn they sure are making a killing off the Clinton administration (and the west Europeans too). So who’s the fool here the poor destitute Russians who lost all their money? Or the western governments who stumble over themselves trying to prop up deceitful, decrepit demagogue puppet regimes?

These Russian leaders have done no wrong to the west – if you get ripped off its because you are stupid and thus you never deserved to have the money in the first place! However towards their own people they have done a great injustice and many peasants will starve because of it. But no one ever said the Russians were an altruistic lot. 01.3.99

Shifty Fed, Bond glut and a new IMF nation

Well my suspicions have been confirmed, the most recent surprise Fed rate cut was an attempt to save the U$ banking system most specifically Bank America. Recently the President resigned and the bank has lost millions in the hedge fund DE Shaw. All this comes from a web site "Inside Wall Street Oct 22 1998 3:33PM CST". What is becoming increasingly obvious is that the entire banking system will fail if any one bank fails, not just a big one or a few small ones, no - any one. Chase Manhattan bank for example has nearly $6 trillion dollars in derivatives investments. Of course they have only a fraction of the equity to back it up just like nearly every other bank in the world. None of this comes out of the blue for the people that know what's really going on like the Federal Reserve, it's all they can do to put on a serious but not scared face and give reassurances to the TV crews. I'm sure when they go home at night and barricade the doors and stock up on bottled water!

As far as the bonds go, well it's just another inevitability. Too much debt both corporate and governmental and too few dollars to buy it up. Someone is going to get locked out, maybe the Fed, maybe the banks, maybe everybody who knows yet. Just the tip of the iceberg as things get worse....

Finally Pakistan with a total debt of $32 billion is begging the IMF for $5 billion to tie them over for a year. Being racked by sanctions a domestic recession and corruption scandals; Pakistan is broke. Someone is gonna pony up because its not thinkable for them to default, not NOW anyway! And they've got nukes too! Actually India isn't much better off but they're like China - a closed economy that is insulated but only in the loosest sense of the word. 26.10.98

Cap'n Credit Crunch?

Elaborating on the ominous note I ended with before, the reason Russia will bury everyone has to do with the ability of financial institutions to disperse funds as credit. As Russia gradually detaches from the modern economic system they will default on many billions of dollars of debt. These bank losses will mean that credit everywhere will be much tougher to get. Many developing nations from Brazil to Romania rely on large quantities of short-term bonds to maintain their spending. They will be forced to either jack up interest rates to astronomical levels or else go bankrupt because they can't rollover their loans.

This is the most dangerous problem in the near term especially since it can't be solved. Even if Russia lasts, what about Ecuador or Columbia or Venezuela. It only takes one country to set the global credit system in a state of panic. In fact this has already been occurring on a smaller scale; both Mexico and Brazil have canceled debt offerings due to 'outrageous' prices being demanded. The whole system gets leakier every day and we've reached the stage where no party or parties have the funds to stop all the leaks. 16.09.98

Japan drowns in a sea of cash

The Japanese financial problem is peculiar because its basically Keynesian policies run-amok. Or such policies used at the wrong time maybe. In other words they have TOO MUCH liquidity. This is why rates are at 1% (recently changed to .25%). Most of the government funding goes to the construction sector which employs a whopping 10% of the labor force. After years of lavish projects fueled by cronyism they state cant continue to build useless monuments. FDR may be proud of the policies but everyone else is cringing at the results. However this conundrum is no easy task to solve and this is why everyone says 'fix it!' but never suggests how!

What to do? Raise interest rates and increase the value of the currency, i.e. load up on gold to back it up (decrease the money supply) But that will be tough because it will crash the weak economy.

I could spend pages describing the Japanese mess but it really looks like an unsolvable problem. The only way to postpone failure on a mass scale is to have the government bail out everyone. How they will come up with the money is a good question, especially since Japan has lost $6 trillion [$8 trillion according to latest info Oct. 99 - Ed.] in wealth over the past decade due to asset value deflation - the losses continue today. 04.09.98

The Exploding Russian inevitable and presidential pleas

Well we now see what Yeltsin's word is good for - zilch. Today the ruble is officially free to trade down to 9.5 to the dollar. A devaluation in everything but name. Tonight I got to watch Clinton tell the world he's sorry (for being caught) and think about the Russians who are back to 'square one' after some seven years.

"It's back to square one," said Oswald Reim, a money manager who heads the emerging markets team of UBS AG, Europe's biggest bank formed this year out of a merger of Union Bank of Switzerland and Swiss Bank Corp. "The trust Russia had built up among international investors and among the local population has been destroyed," he said. "Defaults are now very likely for Russian banks. If Russia announces a debt moratorium and if it cannot get any financing, it could also well be that we may see a default by Russia." -Reuters.

No kidding? Could that be why they declared a 90+ day debt moratorium, in effect refusing to pay debt for that time period that hasn't been clearly defined as ever ending? Now how do they expect to get any NEW financing after that 90 days?

Come on this is purely a semantic discourse. Russia both devalued and defaulted on its currency and debt respectively. I'm sorry but the debtor doesn't just decide "oh I'll just not pay for 90 days, we'll pay you when we get enough money..." That sounds like something the Russians would do.....

Today the financial investor we're downplaying the consequences, saying that they don't have any serious exposure to Russia. It's obviously a panic reaction statement because this Russian reversal caught them completely off-guard. They know this is BIG. It's big because it paves the way for China to devalue, for the HK$, for everyone else. Someone will have to suck up the bad debt. It will effect all of Eastern Europe and cloud the skies for all the developing markets.
I have a feeling tomorrow or very soon the financial 'experts' will change their tune. I've noticed that these 'experts' have been consistently behind the power curve lately. They're really in a defensive, cover-your-ass mode. This is dangerous because they aren't predicting the next crisis they just react when it happens!

Once again we need to read between the lines here. These experts are in over their head because we have an unholy mixture of domestic needs, politics and a global financial storm that effects everyone in different ways at different times.

The exploding inevitable was inevitable. The next ones don't have to be but unless the problems are proactively addressed they will become inevitable. The USA has to make the first moves but our executive leader is basically in a state of house arrest! His legal battle is just getting started and his guilt is one of the few things not in question! 16.08.98

American Competition

Here’s a novel idea, if America is really just a corporate entity void of any cultural or racial tradition then why not create a new America. This new State would lure workers and intellectuals with promises of lower taxes and more benefits, a State with even greater freedoms! What if say Costa Rica was to establish a new Constitution and create a zone of superior economic potential and liberty to a select few immigrating citizens? Of course not too many States would be willing to make these radical changes especially the ones that have hundreds of years of culture and tradition. But I’m talking about another State like the U$. If the domestic monopoly could be broken just think of the wonderful world it would open up each nation competing to offer more freedoms and benefits to its people! Now that I’m deeply in Wellsian utopian fantasy land why not go a step further and set up entry restrictions. In other words have states of scientists and states of manufacturers and states of IT workers. Even have states of doctors and dentists that contract out to work in other states. In fact why not make the state an extension of the syndicate / union? If money is so much more effective as a judge of success then why not replace all the old vestiges of Nation and culture?

This may seem ridiculous but it highlights the absurdity of the American ideal. The ideal that people are really a-national and culture-less and all they want out of life is a job, car and a house. Most Americans really believe this (or say they do); but they’re clue-less, isolated exceptions. Of course no other State would ever conceive of radically converting to the U$ system in order to compete with them. Isn’t that amazing? they realize the successes of our system but they still don’t want to sell out and change to our ways? They are so narrow minded that they actually want to keep those outmoded concepts like language, culture and governmental authorities!

I think the idea does have a bit of legitimacy to it but it will be a cold day in hell before any of it ever gets implemented. Government doesn’t change radically like would be needed; even Canada feels no need to ‘compete’ with the U$ on this scale and they, if anyone, really should be because they can’t even keep their professional class from leaving to the U$; their currency is rapidly turning into pesos too! 06.08.98

October Revolution

The pervasiveness of stock market investment in American society represents a severe hazard to all levels of economic life. Everyone and nearly all institutions have a stake in the markets. From 401(k)s to mutual funds to all scales of public and private investors to government departments even. The trend is similar to the mania of the 1920s. Strangely enough the stock market crashes in October such as in 1869 (or was it 1879?), 1929, 1987 and 1997, and now at 1999 maybe??? exactly 70 years later? Unlikely, but it sure would be a bizarre irony.

The biggest differences between the 20s and now is that back then America was a land of poverty-ridden farmers and a few rich urban folks. The rich ones played the wild markets with massively overextended margin funds. When the completely uncontrolled fall came it meant many investors lost more than they ever owned often by 10 or 100 times! Also the 20s had much less liquidity than today even on a relative scale so in other words America was much more poor and that made keeping the banks open more difficult (also they weren't FDIC insured).

Although a crash would be difficult if not impossible to recreate today like in the 1920s the effect would be even worse because, like I stated earlier, everyone is exposed to the inflated wealth effects of the stock markets. We may have more money today but it is largely due to the wealth creating effects of the same stock market! That and loose credit which is much like the overextended margin of 1929 investors.

Both eras had similar corrupt and ineffectual leadership: Coolidge and Hoover versus Clinton and Gore. Also the 20s had a parallel techno fad/ revolution; they called it radio we call it the Internet but the concept and the effects are the same! 04.09.98

"Global Depression"

The World Bank recently declared that the plummeting Yen if left unchecked would trigger a first world inclusive global depression. This is the first time I've heard a respectable outlet utter the 'D' word. Today Rubin spent $2 billion to buy Yen thereby pushing back the value to 136:1 or so. The unfortunate consequence for his department was a fantastic sell-off in US bonds from a record low of 5.6 to 5.73+/_ in one day! That's gotta hurt when the government dumps its next load of paper on the markets!

The World Bank realizes what most won't say, that it's a veritable domino effect. In the front row are several small dominoes - all the Asian nations who have already fallen like Indonesia, Thailand, South Korea, and a few tipsy ones like Hong Kong. The second row of larger dominoes is China, Russia and Japan, all of which are teetering back and forth slowly. It doesn't matter which one falls over first because they will knock over the next very large domino of Germany which is solidly planted now. The biggest domino sits in the back, fat, rich and stupid - the U$A.

Remember that the yen, yuan or ruble will sympathetically trigger falls in their counterparts if any individual weakness occurs. Germany with its heavy debt exposure to Japan and Russia can't escape any negative movements from either country.

Once again just like in Indonesia, Japan holds all the cards, the U$A will continue to bail out both the yen and Japan as a whole buy sucking up their imports even at the cost of domestic industry.

The news media say that Rubin must have won concessions from the Japanese since he reversed course and used US influence to shore up the leaking Japanese ship. I doubt it. The west just doesn't understand the thinking of Asians.

In fact the west, especially the U$ consistently inflates the status of the Japanese economy, just like we did with the Soviet Union during the cold war. Our leaders send the Japanese confusing signals ; they know their real situation but we keep treating them differently. I think one of the biggest reasons the Japanese are afraid to privatize and open their markets is because it will be admitting how flimsy the whole paper tiger is! It would destroy the collective myth. The second (obvious) reason is loss of indigenous authority over their economy.

East will never meet West and every time they try the West gets burned be it in Vietnam, Korea or India. OK I suppose Hong Kong is an exception but the British always directly ruled it anyway. The point is that no one seems to learn from history.

Rubin literally averted a global meltdown by a matter of days. The Yen was hours from 160:1 and then 170:1. No way could the Yuan withstand that kind of pressure even for a week. This is serious stuff and it's by no means over yet. 17.06.98

Surprise, surprise!

Yesterday the news wires stated that the IMF had fully acquiesced to Indonesia's demands, giving them their next cash payment with few if any legitimate strings attached. Today the riots are continuing and getting increasingly violent.

Interestingly Camdessus, the IMF's mouthpiece, simultaneously stated that Asia is coming out of its mire better than ever, emerging as renewed economic powerhouses with their economies free and open to global development. Yeah and pigs fly; well what else would you expect him to say anyway, the truth? Somehow I don't think the students in Jakarta who can't afford rice or cooking oil or the financial investor in Tokyo would have the same rosy picture as Camdessus. 06.05.98

Wish I was you man

It must be great to be in the position of Suharto in Indonesia, to be a dictator of some 30+ years with your own personal rubber stamp government presiding over the fourth most populous country on the planet and the world bending over backward to write you a blank check - literally! The US was so serious about wooing him that they sent Walter Mondale to ask him to change his policies! 'Yeah OK Mondale I'll change everything for you and the USA!' The truly fantastic part is that Suharto wins no matter what happens in Indonesia! If the country collapses he just takes his money and retires in Tahiti or someplace. And if Indonesia pulls through he gets the rest of his life to use unlimited police powers to control the masses and enrich his family. After all, who can replace his family? They own most of the countries infrastructure and they don't have to fear anything because everyone else is panicked out. Australia for instance has already guaranteed wheat shipments and a no hassle political support policy, other nations are doing similar projects.

And through all this why have I never read or heard a news story reflecting this thesis? I mean it's not exactly difficult to figure out who the winner is going to be here?! The media make this story sound like world war III, the end of the world while anybody with twin functioning neurons can deduce that the IMF and everyone else will end up doing whatever it takes to keep Indonesia afloat. It may be reverse psychology. In other words the media is setting up a doom and gloom situation just so that the inevitable 'cave-in to their demands' outcome looks justified given the severity of the circumstance.

Seriously, look at the precedent this will set. No longer does any nation need to have fiscally responsible government. The IMF will have to bail you out, otherwise the world economy will collapse like a colossal pyramid scheme! Are any of South Koreas former leaders going to jail? What about the crooks in Thailand? Ha! No, no, no, it's called incompetence and you can't be punished for that in a democracy.

After all is said and done the same people get ripped-off this time as every time, generation after generation and brother I sure don't need to say who they are! 22.03.98

The Rise and Fall and Rise of the Nation State

What is the third revolution after the agricultural and industrial?
Information and electronics have profound implications to humankind. The electro-info revolution is the third in the infamous series. Humans do everything they can to escape the fate of evolution - everything that makes living easier is ‘advancement’. the current method of using our technology is killing us! We’re addicted to a drug and just like an addict can’t live without his poison, our society cant live without its techno-narcotics.

Our society is fat, lazy, stupid, weak and using every ounce of dwindling strength to make our pathetic shell of existence easier to rot in. Computers make life cerebral, processed food poisons our useless bodies in spite.

Technology is a tool just like a hammer or a cyclotron, how we use those tools is determined by our current social philosophy. The artificial evolution of the modern era serves to proliferation the worst and most unfit specimens. I know this will not last forever, and I also know that the longer it lasts the more harsh the reprisal will be. The more weak a populace is the easier it is for a strongman to dominate them. Human history is merely a chronicle of the strong few overpowering and manipulating the weak majority, thus the more weak is the average the more potential dominators come into play.

Modern ultra-business is a dominating threat to al humanity. Aided by the rise of the InfoTech revolution these entities [mega corps] vie for control of the worlds wealth. If racial factors were ignored, in 100 years or less these corporations would surpass today’s groups of allegiance to become the new ‘nation-states’. In other words Germany would become Daimler-Benz--DASA-Bayer etc. (one company with numerous agencies). The USA would become several ‘states’ e.g. GM-IBM-General Dynamics-Pactel etc. men and women would work and live for their states and ‘emigrate’ when switching employers.

Each individual Mega-corp. will vie for world domination, hegemonies will rise and fall, and economic wars will be lost by the bankrupt. It’s already known that natural resources are a third world business today, and information technology is the first worlds. In essence the third world is merely the first world 100 years ago.

There are two problems with this 21st century ‘utopia’: 1) non-biological entities like commercial business can never have any long term cohesion or allegiance 2) artificial human creations on the order of very large business are inherently unstable! The first factor is intuitive to every sane human being, culture, religion, art, music, morality, ethics, all are nonexistent in business. If these things did exist they would be a nation not a business. Men and women work for their employer because they need the money and money is the same whether its handed out from company A or company B! The second factor becomes painfully obvious In recent months. Barings bank, B.O.T. of Japan (almost), BCCI, USA S&Ls, all the epitome of modern business yet they vaporized not after a prolonged war or a slow social decay but in a period of hours!

The solution to the problem is nothing less than radical - a biological entity that serves no other interests but its own - a nation state. The ethnic nation is not an outdated concept - it has many years left before it can be considered obsolete. Humankind must realize that only a few very strong people can survive on a rapidly shrinking planet and if you don’t have the will to live someone else does and will kill you in a nanosecond for a few more minutes of life.

Race is a means to an end, the end a new species. No race is holy; no race or ethnicity will survive without a constant struggle. No man is worthy of anything except that which he can take and keep. anyone who detests these words is ignoring the inevitable [if you don’t like the rules then you shouldn’t have agreed to play the game!] because every crack-baby that's born, every drug that adds 10 years to lives of the ancient, every war that finds a diplomatic solution, every social protection provided by government, every liberal democracy, and every pastor and priest and prime minister and president and spineless bureaucratic is working night and day towards the establishment of this biological conflict. May they dig and dig and dig until the mass grave is big enough for all of them!  05.10.95