Two Perspectives on the Financial Crisis

Here are two perspectives on the current financial crisis.

Jim Willie gets almost hysterical at times in his revulsion at what is going on, but he still reveals a lot of info. Here is his take on the events of the last few weeks - what is really going on behind all the bailouts and mergers:

"Bataan Death March Tickertape"
http://www.financialsense.com/fsu/editorials/willie/2008/1009.html

William Engdahl has a much broader perspective on the grand strategies on the world stage. His tone is much more subdued and matter of fact, but his content is even scarier:

"BEHIND THE PANIC: Financial Warfare over future of global bank power"
http://www.financialsense.com/editorials/engdahl/2008/1009.html

These are increasingly desperate times. If the US banking system implodes, short term credit will severely disrupt ALL business operations in the US, including retail. This will threaten food supplies, utilities, and other necessities of modern life - likely resulting in considerable public "unrest".

Keep your eyes and mind open,
Michael Childress

Causes and Ramifications of the Big Bail-Out by Jim Willie

LOTS of things are happening these days that are far, far beyond the comprehension of the great mass of American taxpayers. For some clarification about how deep the rat holes go, and some projections of the likely ramifications and outcomes, see the latest commentary by Jim Willie at:

http://news.goldseek.com/GoldenJackass/1222286087.php

You would be well advised to start hunkering down now before widespread panic begins in earnest.

Keep your eyes and mind open.
Michael Childress

What's Going on with A.I.G. Bailout?

There has been a considerable uproar over the Federal Reserve Banks $85 billion load to A.I.G., in return for a 79.9% equity stake. Some commentators have complained that the Fed had no government authority to conduct this transaction – that Congress or the Treasury or some regulators should have given approval. This simply demonstrates the ignorance of both the American public and the media. The Federal Reserve Bank is NOT a government agency in any form, but instead is a privately-owned consortium of twelve regional banks, each of which is in turned owned by a number of private domestic and foreign banks. No approval is therefore needed.

As for the implications and ramifications of this and other recent Fed activities, please consider the following informative commentaries:

Christopher Laird
http://www.financialsense.com/fsu/editorials/laird/2008/0917.html

Darryl Schoon
http://www.financialsense.com/fsu/editorials/schoon/2008/0917.html

Keep your eyes and mind open.
Michael Childress

Surging Economy/Dollar - Political Operation?

It is very interesting to watch the resurgence of the US dollar and decline in commodity prices, especially oil and gold.  If the economies in the US and the world are not doing so well, then why is the dollar doing so well lately?  Shouldn't prices continue to increase for everything as inflation, the current account deficit, and government debt deteriorate?

Well, there is an explanation, if you are inclined to heed political conspiracy notions.

First of all, recall that about this time in 2006, just before the national elections (mostly for House of Representatives, but also some Senators), Goldman-Sachs conducted a major and ill-publicized manipulation of oil prices to effectively eliminate oil and energy as an issue in those elections [leaving other issues such as the "wars" in Iraq and Afghanistan on the forefront].  How?  

Simple.  Goldman-Sachs produces a commodity prices index widely used by various investment entities as a guideline for investing in different commodity markets.  Historically, this index included unleaded gasoline futures prices as about 8% of the total commodity index.  This means that to follow the index allocations, all the investment operations needed to invest about 8% of their assets in unleaded gasoline operations or futures contracts.  In August/September of 2006, gasoline and oil prices were high and getting higher.  To combat this trend temporarily, but long enough to effectively remove this trend as an election issue, Goldman-Sachs unannounced previously [except to privileged insiders, who made vast fortunes on the advanced warning] changed the unleaded gasoline proportion to about 2%.  This meant that all the investment houses then had to SELL about 75% of their investments, including gasoline futures, to re-align themselves with the index and knocking the feet out from under the gasoline and oil markets.  For a while, that is, because after the elections, oil prices resumed their climbs.  And when oil prices declined, the visibility of energy issues greatly decreased as an election issue - which meant that it was not really addressed by any of the candidates.

Okay, another contentious elections looms now in September 2008.  This time around, the US dollar has mysteriously increased substantially in strength relative to other currencies and commodities, especially oil and gold.  Since the market fundamentals have not changed at all, why is there this big bounce?  Well, perhaps this is a repeat of the 2006 market manipulation, but this time for the dollar.  To my knowledge G-S has not made any overt manipulations of its various indices.  However, the political advantages of eliminating the strength or weakness of the dollar as a campaign issue for the forthcoming elections in November cannot be over-emphasized.  Except for the wars, the only real issues apparent in the national media are essentially personalities.  And since neither party has advocated a significant change in military operations anywhere, the only issues the public will witness, aside from fixed factors of race and gender, is essentially who will do the best job of bitch-slapping the opposition.

How could G-S manipulate the markets?  Very simple indeed.  Recall that the US Treasury Secretary is Mr. Paulson, former President and Chairman of Goldman-Sachs; in effect, Goldman-Sachs IS the Treasury Department, just like J.P. Morgan IS the Federal Reserve Bank.  Together, these corporate/goverment (no difference any more, is there?) bureaucrats constitute the Working Group on Markets, commonly referred to as the Plunge Protection Team by knowledgeable commentators.  It has been estimated that this Team, in cooperation/collaboration with the vast financial resources and acumen of G-S and Morgan, have about $1 Trillion in assets with which they can invest in futures, options, and contracts as they see fit.  This is more than enough to guide any markets anywhere in the world in any fashion they see fit.  So by buying a chunk of dollar call options or long futures, they can effectively increase the demand for dollars world-wide, and increase its value with respect to all other currencies and to anything that dollars are used to buy, such as oil and gold.  Note that this can be effected even while the total US money supply is reported increasing at about 14-15% annually!

WHY would they want to do this?  Currently G-S, Morgan, and cronies are making vast fortunes on the credit they extend to essentially everyone in the world, but especially the U.S. government.  Just to cite ONE operation, consider that Congress has just passed the latest annual increase in the federal debt ceiling by the usual $800 billion - indicating clearly that despite the publicized deficits, the REAL increase in debt is that $800 billion.  This money, or actually the credit line extended, is created out of thin air by the Federal Reserve Bank, but interest is still collected as if it were real money.  Who in the world would want to give up this enormous cash cow?

Well, as long as no questions are raised about the system, nothing will change - until, of course, the whole system collapses when the government can no longer even pay interest payments on the current $9+ trillion dollar debt.  So the Powers-That-Be conduct periodic market manipulations to ensure that during the election season things seem to be doing pretty well, with a stronger dollar and lower commodity prices (in 2008), or with lower oil prices (in 2006).  Out of sight and out of mind for the electorate.  And since it is a given that no contender would have been allowed to become a candidate if there was the slightest chance of any REAL change in the system, the whole scheme is preserved in tact.

Keep this in mind during this election.  What are the real issues here?  What were they a few months ago, when oil was over $140 and the exchange rate for dollars to ANY other currency were pretty much lowest on record?  What does it tell you about the level of enlightenment in the American populace when the only real issues are race, gender, age ["experience"?], and "morality [??]"? 

Keep your eyes and your mind open.

Mike Childress

Financial Markets Believe McCain Will Win in '08

Good analysis of why financial markets believe Senator McCain will win in '08:

http://www.financialsense.com/fsu/editorials/danielcode/2008/0828.html

Just before the '06 elections, mostly for Representatives, Goldman-Sachs manipulated the unleaded gasoline futures markets so that gasoline prices dropped sharply, but temporarily. This effectively removed the economy as an issue in that election period, leaving the "Wars" in Iraq and Afghanistan as the main issues. This time around, it looks as though the Powers That Be are again manipulating the markets to keep the economy out of the picture - oil and gas are cheaper, the dollar is stronger, gold and silver and other commodities are lower, and the media "talking heads" are chanting in unison that the economy, exports, and GDP are doing much better. Mr. Needham in the above commentary suggests that this is temporary again.

Keep your eyes and mind open.
Mike Childress

William Engdahl's Financial Tsunami Essays #3

What is Alan Greenspan’s REAL legacy as chairman of the Federal Reserve Bank? Here is a summary of his actions and speeches beginning in 1987 – see if you can find any correspondence between the two.

http://www.financialsense.com/editorials/engdahl/2008/0123.html

Keep your eyes and mind open.
Mike Childress