Archive for July, 2011

Ultimate Political Theater

The Debt ceiling ‘debate’ and goings on in Washington DC is the ultimate in political theater. It is like pro wrestling for the politics junkie.

This is an example of the kind of pressure then release that is being done to draw attention to the dance of politics in the beltway.

The power to create ‘money’ rests with the state, what is more on show here is that the ‘state’ is something of a house divided and the particular political hot potato has a fuse on it … sadly if it is permitted to explode ~ something that I have a view that it will be permitted to go boom ~ then hundreds of millions of others will suffer so that the political, financial and military elite of the US and western world can ‘prosper’.

At least one other commentator has stated that World War III is starting out as an economic war, just as nearly every other global conflict of the past 300 years has…

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Debt Ceiling Debate or Political Theater?

When considering the Debt Ceiling Debate in the USA, keep in mind that the ‘congress’ actually holds the power to print money.

More at The Real News

All they need to do is awaken to this fact again and tell The FED and their ilk where to go and how to get there.

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GOLD makes a move …

From Michael Maloney:

Minutes from the Federal Reserve’s late June meeting show that some members are willing to keep the printing presses lit up if the economy fails to show job growth. In essence, the Fed is considering more free currency—or a real QE3.

This is the REAL MOVE for GOLD, there will not be a back up from this jump. The next version of Quantitative Easing will not be trumpeted in the press. Do not expect the Federal Reserve Board to even publish about what they are doing until AFTER it has happened.

Want access to gold? Connect with us…we have small (in grams), large (in kilos) or whole mines now available.

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Convergence and Quality of Life

Dr. Michael Berry, in his morning notes today writes about an issue that has come to my attention in a different way.

He writes:

Today there are two geopolitical / sociological blocs in the world. The Cold War may be over but the Resource Wars are just being joined. These two blocks are not geographically connected but instead are connected by a history their per capita quality of life. They are the West, comprised of Europe, North America, Japan and Korea (which we shall call Advanced) and the Emerging World (which we shall call Emergica).

It has come to my attention that an economic group beyond the BRICS has begun to form, Primarily containing Russian and India with technical support from UK and others in what Dr. Berry calls ‘Advanced’ nations. This block is forming mainly due to financial issues driven by the what must be now viewed as the imminent collapse of the US dollar.

In 1995 Vito Tanzi wrote:

Corruption … is far more widespread and universal than previously thought. Evidence of it is everywhere, in developing countries and, with growing frequency, in industrial countries … Prominent political figures, including presidents of countries and ministers, have been accused of corruption … In a way this represents a privatization of the state in which its power is not shifted to the market, as privatization normally implies, but to government officials and bureaucrats.

These bureaucrats are the ones that are making deals and breaking deals that are pushing the alternative agendas that Russia, China, India and the ‘Emergica’ that Dr. Berry writes are seeking new solutions.

The events of Egypt and Libya and the total difference with which they are being handled by NATO and the UN are clear examples of how this ‘privatization’ is going on and being managed.

Further from Vito Tanzi in 1998:

Corruption reduces public revenue and increases public spending. It thus
contributes to larger fiscal deficits, making it more difficult for the government
to run a sound fiscal policy.

It is this very lack of ‘sound fiscal policy’ that is the root cause of much of the pain felt in the world right now from the fallout of the financial crisis.

The rot has set in and because of its clear detection by many world governments they are taking steps to ensure that their economic futures are not determined by ‘Advanced’ leaders as Tanzi sees them…

I would love to read your views of these issues, please do comment.

If you would like to read more in depth on these and other issues subscribe to my free newsletter in the bar to the left of your screen.

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Euro zone contagion threatens to spread

With Greece and Ireland now reduced to junk bond status, and the resulting high interest rates the rest of the PIIGS are unraveling, just as was predicted about 18 months ago.

The mess that is called a financial system is overdue for a kind of shake up that has not been seen in many generations.

More at The Real News

If you are keen to understand how many generations I am talking about, check into the Dukes of Burgundy…about 1490.

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Credit? not in commodity trades

When items such as the discussion of ‘did the credit crisis affect world trade adversely?’ come up the ignorance of the questioners becomes plain.

Whenever a large order of iron ore or other such commodity is set into motion the ‘seller’ will not release the goods onto a ship until a valid ‘letter of credit’ comes into his possession. The letter is more like a certified post dated check than a loan, for it represents that money has been locked down or set aside for the seller from the buyers accounts and that the funds will transfer upon arrival of the goods so shipped. No check is in the mail will do in such situations.

Only for transactions involving IMF or other national import/export banks is there any borrowing going on, and even these transactions – since they are backed by either a national central bank or entity such as the IMF they were not affected in any way by the financial crisis.

The affect on the commodity marketplace came from the heavily cut buying power of consumers and industrial clients then having their order volume decrease. The banks and financial meltdown of 2007-2010 brought about a recession that dragged down all business cases for durable goods and the commodities needed to manufacture them, there was no direct impact on the ‘financing’ for such goods and commodities as they are all forward paid before shipment.

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Real Estate melt-down in China next?

The value of real estate is and always has been ‘what someone else is willing to pay’ for it.

Much of the housing real estate that was built in the past 10 years in China could only be described as speculative projects.

More at The Real News

Now that a lack of market in China is starting to show, the investors are not happy as the returns are not only disappointing, many of them are not going to ever even return the capital invested. The ‘creative accounting’ of Enron or TARP is going to be dwarfed by this elephantine misjudgement once more details get into the marketplace.

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More about China … the elephant in the room?

Again I am seeing retail level investments into resort communities all over Latin America from Mexico to Argentina.

The question I continue to raise is, “Who is traveling to these destinations?” and “Where is the real demand market?”

These same questions are coming now in China, where mega cities and gigantic airports are being built and finishing touches are done on some … finding that there are no buyers.

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