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Post by Watchman on Jan 24, 2006 17:14:03 GMT -5
Written by SiberNews Media Team Sunday, 22 January 2006
In its attempt to establish a world empire dominating every nation on the planet, the U.S. has exhausted its ability to finance the expansion and the country now faces imminent financial collapse. From all indications, it looks like 2006 will spell the end for America.
Consider these five important points:
Point #1 The U.S., Great Britain and Israel are preparing to attack Iran. As it appears the main reason for invading Iraq was to stop it from selling oil in Euros, likewise Iran has plans to dump the dollar come March 2006.
Point #2 U.S. Treasury Secretary John Snow issued a warning recently that the U.S. Government is on the verge of collapse - as the statutory debt limit imposed by Congress of $8.184 trillion dollars would be reached in mid-February - the government would then be unable to continue its normal operations. Considering the current total U.S. debt stands at $8.162 trillion dollars, once the official debt ceiling ($8.184 trillion) is reached, the U.S. government’s credit abroad (its borrowing power) is gone. Those countries (mainly China) who presently keep America afloat by holding U.S. Treasury Notes, will most likely no longer continue doing so.
Point #3 Bank Of America and Compass Bank managers (probably all other U.S. banks too) have been instructing their employees in the last few weeks on how to respond to customer demands in the event of a collapse of the U.S. economy - specifically telling the employees that only agents from the Department Of Homeland Security will have authority to decide what belongings customers may have from their safe deposit boxes - and that precious metals and other valuables will not be released to U.S. citizens. The bank employees have been strictly prohibited from revealing the banks’ new "guidelines" to anyone. (however, employees have been talking to friends and family)
The next time you visit your bank, ask them about it - then ask yourself, why is this information being kept secret from customers and the public - what’s really going on?
Point #4 FEMA has activated and is currently staffing its vast network of empty internment camps with armed military personnel - unknown to most Americans, these large federal facilities are strategically positioned across the U.S. landscape to "manage" the population in the event of a "terrorist" attack, a civilian uprising, large-scale dissent ,or an insurrection against the government. Some of these razor-wired facilities have the capacity of detaining a million people.
Point #5 The Patriot Act and the US Senate’s vote to ban habeas corpus (Nov 14th) - along with George W. Bush having signed executive orders giving him sole authority to impose martial law, suspend habeas corpus and ignore the Posse Comitatus Act, have together pretty much destroyed any notions of freedom and justice for Americans.
Summary: The U.S. economy is broken, the United States is bankrupt - the unchecked spending by this administration, the illegally waged wars against Afghanistan and Iraq, the cost of unprecedented weapons and military build-up - have all contributed to an irreversible emergency which is threatening our nation’s existence and our very lives.
Hospitals are closing, major corporations are declaring bankruptcy and/or moving their companies overseas, the monopolized news media spews nothing but lies, and our fearless leaders have turned out to be only ruthless criminals hell-bent on destabilizing our country and robbing us all.
Be aware - we stand at the threshold of total ruin - the international bankers and war profiteers care little for our lives and families - these demons worship money and all things vile and evil - they have very much to gain from war, misery, disease, famine, chaos and death (our deaths).
We are right on the edge - the Treasury is already overextended - the U.S. government cannot (and will not) care for its own citizens’ needs, nor secure our borders against illegal aliens - plus, the whole "terrorist" thing is a cruel hoax perpetrated against a trusting citizenry - and only designed to instill fear and garner support for the genocide taking place in Iraq.
Should America (along with British & Israeli forces) launch a war against Iran, or another country, without yet paying for, or even recovering from the current losses in Iraq and elsewhere - the costs of such of an invasion will overwhelm an already crippled economy and push the U.S. over the edge into oblivion.
Question: Considering the U.S. Treasury Notes that China currently holds (which keeps the U.S. economy going)...
Do you think China will continue to support a country’s economy (the U.S.) whose military launches a nuclear strike against its neighbor (Iran) - thus delivering a blanket of radioactive fallout over western Chinese provinces - killing hundreds of thousands, if not millions of its citizens?
I think not.
Factoring in the aforementioned points of "preparation" engineered by U.S. authorities, I’d say there’s a stinking rat in the woodpile ...can you smell it too?
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Post by Watchman on Dec 11, 2006 15:34:36 GMT -5
FT.com | December 11, 2006 Haig Simonian, Javier Blas and Carola Hoyos
Oil producing countries have reduced their exposure to the dollar to the lowest level in two years and shifted oil income into euros, yen and sterling, according to new data from the Bank for International Settlements.
The revelation in the latest BIS quarterly review, published on Monday, confirms market speculation about a move out of dollars and could put new pressure on the ailing US currency.
Market liquidity is traditionally low in December, and many traders have locked in profits, potentially reinforcing volatility.
Russia and the members of the Organisation of the Petroleum Exporting Countries, the oil cartel, cut their dollar holdings from 67 per cent in the first quarter to 65 per cent in the second.
Meanwhile, they increased their holdings of euros from 20 to 22 per cent, the BIS said. The speed of the shift may help to explain the weakness of the dollar, which recently fell to a 20-month low against the euro and a 14-year low against sterling.
The BIS, the central bank for the developed world's central banks, is customarily cautious in its language. However, it noted: “While the data are not comprehensive, they do appear to indicate a modest shift over the quarter in the US dollar share of reporting banks' liabilities to oil exporting countries.”
The review shows that Qatar and Iran, whose foreign exchange policy has sparked widespread market speculation, cut their dollar holdings by $2.4bn and $4bn respectively.
Such shifts may be modest compared with the total assets held, but they provide a crucial indication on future thinking.
Currency switches are likely to be progressive, subtle and discreet, as untoward attention could hit the dollar, lowering the value of depositors' remaining dollar-denominated assets.
The last time oil-exporting countries cut their exposure to the dollar – in late 2003 – it pushed the euro to an all-time high against the dollar. Eighteen months ago, the exposure to the dollar of oil producing countries was above 70 per cent.
BIS data is the best guide financial markets have to the currency investment trends of oil producers, which otherwise do not?provide figures.?The?rise?in oil prices since 2002 means oil producing countries have amassed a current account surplus of about $500bn, according to the IMF. This is 2½ times the current account surplus of China.
Overall, Opec's dollar deposits fell by $5.3bn, while euro and yen-denominated deposits rose $2.8bn and $3.8bn, respectively. Placements of dollars by Russians rose by $5bn, but most of their $16bn additional deposits were denominated in euros.
The dollar has suffered weakness because of concerns about global imbalances and the future course of the Federal Reserve's interest rate policy.
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Post by Watchman on Jan 3, 2007 12:45:35 GMT -5
By JEREMY W. PETERS
Countries with large holdings of dollars in their foreign-exchange reserves are showing a new willingness to dump the dollar in favor of the rising euro.
The latest to make a major move is the United Arab Emirates, which joined Russia, Switzerland, Venezuela and others late last month when it shifted a chunk of its reserves into euros.
There have also been ambiguous signals from China about a possible pullback from the dollar, and recent word from Iran, the world’s fourth largest oil producer, that it would prefer to be paid in euros rather than the usual dollars for its oil shipments.
Still, currency experts say these moves are not likely to do any long-term damage to the dollar, for a number of reasons.
First, the central banks that are adding other currencies to their reserves do not appear to be driven by a belief that the euro will eventually supplant the dollar as the world’s key currency. Rather, they are doing what investors typically do to minimize risk: diversifying their portfolios.
Moreover, the amounts moved so far have been relatively small in a global market that trades trillions of dollars a day — only about $2 billion in the case of the United Arab Emirates, for example.
“There is some indication that central banks are moving to diversify reserves, but it’s at a very slow pace,” said David Powell, a currency analyst with IDEAglobal. “Is it the start of a massive shift out of the dollar? I would say no.”
Moreover, experts say that the impact of such moves by central banks is generally fleeting at best.
“Most people think it does not influence exchange rates for any long period of time,” said Edwin M. Truman, a senior fellow at the Petersen Institute for International Economics, who served for more than two decades as the director of international finance for the Federal Reserve. “It has some day-to-day effects, but not any big effects.”
News of the United Arab Emirates decision contributed to the dollar’s fall against the euro, the British pound and the Japanese yen last week. For all of 2006, the euro appreciated more than 11 percent against the dollar and the British pound rose nearly 14 percent.
But those trends seem to be driven by other forces, including varying prospects for growth around the world and changes in interest rates in the United States and elsewhere.
One reason that dollars are not likely to start pouring rapidly out of central bank vaults is that foreign countries risk devaluing their dollar-denominated investments, at least for a while, if they dump the currency. Even a slight suggestion that a central bank is thinking about swapping dollars for euros can push the dollar down in the spot markets, and in turn hurt all foreign investors in American securities.
China, which holds more Treasury securities than any other foreign nation except Japan, offers an example. In October, the most recent month for which figures are available from the Treasury Department, China held $345 billion in Treasury securities. That was up from $301 billion a year earlier. Its currency reserves total $1 trillion, about $700 billion of it in dollars, economists estimate.
So in many ways, it is in China’s best interest not to let the dollar’s value slip. Heavy sales of the dollar could make it harder for the People’s Bank of China to manage its gradual appreciation of the yuan against the dollar. Anything more abrupt, Beijing fears, would make Chinese goods less competitive in the United States and pose problems domestically for some of its state banks, limiting their ability to borrow.
Nonetheless, the rising euro is not something the United States or foreign investors can afford to ignore.
“You have to start to thinking that the euro can be of some risk to the dollar,” said Shaun Osbourne, chief currency strategist at TD Securities in Toronto. “Over the course of the next 5 or 10 years, I don’t think there’s any danger that the dollar’s pre-eminence is threatened. But in the long run, there is certainly the risk that does happen.”
One major issue driving investors away from the dollar is the possibility that interest rates in the United States and Europe may move farther apart next year.
The financial markets are currently expecting at least one interest-rate cut by the Federal Reserve sometime next year. That contrasts with predictions of further interest-rate increases by the European Central Bank. Because returns typically rise with interest rates, the euro seems like a more attractive investment.
“A lot of foreign investors think the Fed is going to cut rates in 2007, and that’s a rather dollar-bearish thing,” said Julia Coronado, senior economist with Barclay’s Capital.
Some economists predict the dollar will fall even more in 2007. The euro finished 2006 at $1.31, and some forecasters expect it to climb near $1.40, a level it has never reached in its seven-year history.
“We believe that the dollar’s decline versus the euro has further to run, with $1.38 a possible destination for the pair over the next six months,” said Tom Levinson, a foreign exchange strategist with ING Wholesale Banking in London.
Even so, few economists think the dollar is headed for an inevitable demise.
“The dollar is still the world’s No. 1 currency, and it’s going to stay that way,” said Nigel Gault, chief United States economist for Global Insight. “The euro is gradually going to become more important, but I don’t see it becoming more important than the dollar.”
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Post by Watchman on Jan 9, 2007 18:14:00 GMT -5
Global Markets Face `Severe Correction,' Faber Says (Update4)
By Ian C. Sayson and Pimm Fox
Jan. 8 (Bloomberg) -- Marc Faber, who predicted the U.S. stock market crash in 1987, said global assets are poised for a ``severe correction'' and it's time to sell.
``In the next few months, we could get a severe correction in all asset markets,'' Faber said in an interview with Bloomberg Television in New York. ``In a selling panic you should buy, but in the buying mania that we have now the wisest course of action is to liquidate.''
Faber, founder and managing director of Hong Kong-based Marc Faber Ltd., advised investors to buy gold in 2001, which has since more than doubled. His company manages about $300 million in assets.
The bullish outlook of traders in everything from bonds, equities and commodities to real estate and art suggests valuations are peaking, Faber said. Last year, the Morgan Stanley Capital International World Index of developed stock markets jumped 18 percent, while a survey of Wall Street's biggest bond- trading firms predicted U.S. Treasuries will post the best gains in five years during 2007.
``I am not a great buyer of assets now,'' Faber said. ``We may be in a situation where consumer-price inflation comes back and will have a negative impact on the valuation of assets.''
Faber, publisher of the Gloom, Boom & Doom Report, does have some favorites. Singapore and Vietnam are his top picks in Asia because stocks in Singapore aren't ``terribly expensive compared with interest rates'' in the city-state, while Vietnam's equities have ``incredible potential in the long run.''
Vietnam, Singapore
Vietnam's Ho Chi Minh Stock Index more than doubled last year and was Asia's best-performing benchmark. Singapore's Straits Times Index climbed 27 percent, beating a 15 percent increase in the Morgan Stanley Capital International Asia-Pacific Index.
So far in 2007, Vietnam's index has surged 10 percent, again leading gains in the region, and Singapore's is up 0.6 percent. The MSCI has dropped 1 percent.
Faber recommends investors steer clear of shares in the world's biggest developing economies after the emerging markets in 2006 outperformed their developed counterparts for a fifth straight year.
``Emerging markets could get kicked in the next three months so I'd be careful of buying Russian shares,'' Faber said. ``I'd also be careful of buying China and India shares now.''
Russia's dollar-denominated RTS Index surged 75 percent last year, while the Hang Seng China Enterprise Index, which tracks Hong Kong-listed shares of Chinese companies, jumped 94 percent. India's Sensex Index, which more than quadrupled in the past five years, is valued at 25 times estimated earnings.
Thailand, Japan
Faber also advises investors stay away from shares in Thailand, where he and his family are based. The nation's SET Index has been the world's worst-performing benchmark in the past month, sliding 15 percent as currency controls introduced by the central bank and bombs in Bangkok spooked investors.
``Valuations in Thailand are very inexpensive but I wouldn't buy tomorrow,'' said Faber. `` We have some political problems in Thailand right now. I'd wait for a couple of months.''
The SET is valued at 10 times estimated earnings, the lowest among 14 Asia-Pacific markets tracked by Bloomberg. MSCI's regional index is valued at 18 times.
On a more positive note, Japanese stocks may prove good bets this year, Faber said. The Nikkei 225 Stock Average climbed 6.9 percent in 2006 and the broader Topix index added 1.9 percent, the smallest gains among benchmarks for the world's 10 biggest markets.
U.S. Strategists
The U.S. outpaced Japan last year, with the Standard & Poor's 500 Index climbing 14 percent and the Dow Jones Industrial Average surging 16 percent.
Strategists at 14 of the biggest Wall Street firms all estimate that U.S. stocks will advance this year. The last time they were in agreement was for 2001, when the S&P 500 dropped 13 percent.
``It's going to have to be something unexpected and somewhat dramatic'' to spur the type of pullback that Faber predicts, according to Wayne Wicker, chief investment officer at Vantagepoint Funds in Washington, which has about $28 billion in assets. ``Given the current environment we see today, I don't see anything imminent, other than a huge amount of money chasing deals, as a real negative.''
Last year saw a record $3.68 trillion in takeovers, led by AT&T Inc.'s $86 billion purchase of BellSouth Corp., according to data from Bloomberg. Mergers and acquisitions will rise by at least 10 percent this year, analysts at Deutsche Bank AG, JPMorgan Chase & Co. and Bank of America Corp. forecast.
Gold, Oil
Faber said gold should rally further on expectations that supply of the precious metal will decline and demand for it will increase to hedge against inflation. Gold climbed 23 percent last year, its sixth year of gains.
``The price of gold will continue to go up and probably very substantially,'' Faber said. ``In the long run, it's very clear that central banks are basically increasing the supply of money and the supply of gold is obviously very limited.''
Oil prices are also tipped to rise as political instability in the Middle East and other petroleum-producing areas threatens supply and global demand increases. Crude oil in New York added less than 0.1 percent to $61.05 a barrel in 2006, after tripling in the previous four years.
``Everyday the world is burning more oil than new reserves are added,'' Faber said. ``You wont see $12 dollars again'' for every barrel of oil. ``The trend is likely more to be upside because demand in Asia is going to double over time.''
To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net and Pimm Fox in New York at at Pfox11@bloomberg.net
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Post by Watchman on Jan 16, 2007 12:39:04 GMT -5
Financial Times | January 14 2007 David Oakley and Gillian Tett in London
The euro has displaced the US dollar as the world's pre-eminent currency in international bond markets, having outstripped the dollar-denominated market for the second year in a row.
The data consolidate news last month that the value of euro notes in circulation had overtaken the dollar for the first time. Outstanding debt issued in the euro was worth the equivalent of $4,836bn at the end of 2006 compared with $3,892bn for the dollar, according to International Capital Market Association data.
Outstanding euro-denominated debt accounts for 45 per cent of the global market, compared with 37 per cent for the dollar. New issuance last year accounted for 49 per cent of the global total.
That represents a startling turnabout from the pattern seen in recent decades, when the US bond market dwarfed its European rival: as recently as 2002, outstanding euro-denominated issuance represented just 27 per cent of the global pie, compared with 51 per cent for the dollar.
The rising role of the euro comes amid growing issuance by debt-laden European governments. However, the main factor is a rise in euro-denominated issuance by companies and financial institutions.
One factor driving this is that European companies are moving away from their traditional reliance on bank loans – and embracing the capital markets to a greater degree.
Another is that the creation of the single currency in 1999 has permitted development of a deeper and more liquid market, consolidated by a growing eurozone.
This has made it more attractive for issuers around the world to raise funds in the euro market. And, more recently, the trend among some Asian and Middle Eastern countries to diversify their assets away from the dollar has further boosted this trend.
René Karsenti, executive president of ICMA, said: “It is the stable interest rates in Europe that have helped and the fact that [the euro] has strengthened and shown resilience.”
Since the start of 2003, the European Central Bank's main interest rate has fluctuated only 1.5 percentage points, ranging from a low of 2 per cent in the middle of that year to 3.5 per cent, its rate today.
In comparison, the Fed funds rate, the main US interest rate, has fluctuated 4.25 percentage points, ranging from 1 per cent in the middle of 2003 to 5.25 per cent, its level today. The euro has also risen to trade around $1.30 against the dollar, from around parity three years ago. Sterling issuance has grown in the past three years, reinforcing its attraction as a niche currency among some investors. The yen, in comparison, has fallen out of favour.
Overall, international capital markets have doubled in size in terms of bond issuance during the past six years.
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Post by Watchman on Jan 25, 2007 14:00:59 GMT -5
Financial Intelligence | January 23, 2007 John Browne
Some very worrisome news came out of China this Saturday - but it got a little more than a blip in the U.S. press.
At a high-level financial conference this past weekend, China's Premier Wen Jiabao said, "China would actively explore and expand the channels and methods for using [its] foreign exchange reserves."
Considering that the bulk of China's reserves are in U.S. dollars, it should send tremors about the future of the greenback.
The dollar has been reeling in recent years. A shift by China out of dollars - as Wen is hinting - could be catastrophic.
China's reserves recently surpassed Japan's - now exceeding $1 trillion. Some 70% of these reserves - more than $700 million - are in dollars.
Interestingly, The Wall Street Journal carried this critical story on page A7 of Monday's editions with this pleasant spin headline: "China Shift on Reserves Isn't Likely to Hit Dollar."
Perhaps I am missing something. China keeps most of its reserves in dollars - and its leader just announced they plan on diversifying their portfolio. This means it won't affect the dollar?
It is of note that the Financial Times placed its report on the China development smack in the center of Monday page one. Why would U.S. media wish to play down such an important item?
While we believe that in the short-term the dollar may not be hurt - the item should send tremors down the backs of U.S. dollar investors planning to hold the greenback over the long-term.
The Journal reported that Wen's statement was the "highest-level confirmation yet that China is thinking actively how it can use its reserves, which have increased by more that six times since 2000 and made China one of the worlds largest holders of U.S. Treasury bonds."
Later the article observed that, ". . . currency traders are hypersensitive to any signs Beijing is losing its appetite for the U.S. currency."
The FT went on to observe, "This policy switch opens the way for China, which has been largely passive in managing its money to establish an agency akin to Singapore's government."
As I wrote in my Financial Intelligence email in December and in our sister publication, Financial Intelligence Report, as the U.S. dollar depreciates, China is actively reviewing its holdings of gold.
When China resumes, or even announces its intention to resume, its purchases of gold, expect the price of gold to respond, as we have constantly warned, possibly in a major manner.
Of course, we believe it is not in China's short-term interests to disrupt the currency markets or the U.S. dollar, of which it holds some $700 billion.
But, in the longer-term, we believe China will use all its strengths, including economic and military to further its path towards super power status.
In this respect, we note last week's news (given a low profile in our mainstream media) that China had shot down one of its own defunct satellites, 500 miles out into space, at the same height as U.S. military satellites. What sort of message does that send to any observant investor or military strategist throughout the world?
To us it means that China is already on the march to super power status and is our main challenge, even in times of peace.
We urge our readers and investors to pay great heed to the recent announcements and especially actions of the Chinese, even if buried deeply in our news media.
We believe that China's actions are set to influence such key items as the U.S. dollar (and therefore U.S. interest rates), world commodity prices, gold, and U.S. defense strategy and spending.
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Post by Watchman on Mar 2, 2007 19:11:44 GMT -5
London Independent | March 2, 2007 David Usborne
Fresh anxiety erupted about the health of the world's major economies yesterday after investors in stock markets across Asia, Europe and the United States once again staged significant retreats two days after Tuesday's unexpected global equity sell-off.
In New York, the Dow Jones Industrial Average plunged more than 200 points in the first minutes of trading, seeding fears of a repeat of Tuesday's massacre that saw a 416-point collapse on the index.
With slowdowns emerging, notably in the housing market and car manufacturing in the United States, signs are building that it economy may be at a pivot point, with some observers worrying about decelerating expansion and possibly a recession looming.
The fearful mood was exacerbated by comments from Alan Greenspan, the influential former chairman of the US Federal Reserve, about the possibility of the US entering recession before year's end. He told a conference in Tokyo yesterday: "By the end of the year, there is the possibility but not the probability of the US moving into recession." He has argued this week that corporate profit margins appear to be narrowing, indicating that a recent economic expansion has reached a "mature phase".
Market watchers warned of several more bumpy days to come, pointing to the renewed erosions in stock markets globally yesterday. The Shanghai stock market slippedan additional 2.9 per cent. The London FTSE index closed down 55.5 points or 1.5 per cent. The Dow later recouped most of its early losses as some more encouraging economic data was released and closed down 34.29 points. But fears remain that there may be worse to come. All the markets have fallen significantly during the course of the week.
Senator Hillary Clinton, a candidate for the US presidency, last night called events of recent days a "real wake-up call" for the United States, saying it was "increasingly losing control" of its economic sovereignty because of the globalisation of economies and policy-making, including in China.
"We are in a different environment," she said, noting the $2.2 trillion (£1.1trillion) foreign debt held by the US. "Obviously, the level of public debt that is held by central banks and foreign government is a problem and I don't want our government to ignore this wake-up call."
A degree of calm was restored to the New York market after indicators were released showing better-than-expected manufacturing numbers for the US. The Institute for Supply Management's index of manufacturing activity registered 52.3 for January, stronger than the 50.0 reading analysts had expected. By convention, a recession is considered to be in the offing if that number falls below the 50-point mark.
The US Commerce Department revealed that seasonally adjusted personal income in the US rose by 1.5 per cent in January, which was also a better result than had been anticipated.
Investors have been spooked by this week's gyrations after enjoying 12 months of almost unbroken growth in stocks. No one was more shocked than the new Chinese investors who watched in dismay on Tuesday as the Shanghai index tumbled almost 9 per cent.
US economists are contemplating a change in the balance of power between world markets, where New York can nowadays find itself hostage to foreign market performances.
"It's kind of the tail wagging the dog," said Arthur Hogan, chief market analyst at Jefferies & Co in New York. "There's no stability in Asian markets, and no stability in European markets. We're trading the market as the rest of the globe is."
After the "Shanghai Sneeze", as some called it, officials tried to soothe investors. There was a brief claw-back on Wednesday in New York after Mr Greenspan's successor at the Federal Reserve, Ben Bernanke, said in congressional testimony that "there's a reasonable possibility that we'll see some strengthening of the economy sometime during the middle of the year". He played down a report that showed that a 2006 fourth-quarter expansion of the US economy was slower than previously estimated.
There was no saying how the week would end for world markets today. "The aftermath of Tuesday's major sell-off will linger for the next couple of days," said Peter Cardillo, chief market economist at brokerage house Avalon Partners. He added, however, that "fear of recession is overblown".
That Mr Greenspan is still able to move world markets even in retirement is certain to raise questions about whether he would do better to keep his counsel.
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Post by Watchman on Apr 11, 2007 14:54:09 GMT -5
WND Exclusive Quietly waging economic war as it builds nuclear program
By Jerome R. Corsi © 2007 WorldNetDaily.com
While the world press has focused on Iran's plans to move ahead with enriching uranium, Tehran continues to wage economic war against the U.S. dollar behind the scenes.
Tehran has reached a decision to end all oil sales in dollars, according to statements by Iran's central bank governor, Ehrabhim Sheibany, in Kuala Lumpur at the end of last month.
Zhuhai Zhenrong Trading, a Chinese state-run company that buys 240,000 barrels of oil per day from Iran, approximately 10 percent of Iran's 2.2 million barrels per day total output, has confirmed a shift to the euro for its Iranian oil purchases.
About 60 percent of Iran's oil income is currently in non-dollar currencies, according to Hojjatollah Ghanimifard, who is responsible for international affairs for National Iranian Oil.
(Story continues below)
Even Japanese refiners who buy some 550,000 barrels of oil a day from Iran have indicated their willingness to buy Iran's oil in yen.
China, which buys approximately 12 percent of its crude oil supply from Iran, signed last year a long-term $100 billion deal with Iran to develop Iran's giant Yadvaran oil field. Estimates indicate China could draw 150,000 barrels of oil from the Yadvaran field for the next 25 years, assuring Iran's position as one of the major suppliers of oil to China for decades to come.
One possibility is that China may begin paying Iran for oil in yuans.
Meanwhile, China which now holds $1 trillion in foreign reserve holdings, announced March 20 it will no longer accumulate foreign exchange reserves.
This is more bad news for the dollar, since approximately 70 percent of China's $1 trillion in foreign reserve holdings are held in U.S. dollar assets.
About half of China's foreign exchange U.S. assets are invested in U.S. treasuries, which are vital to financing the continuing U.S. federal budget deficits.
The recent push by Iran to demand payment for Iranian oil in currencies other than the dollar marks a move away from a previous announcement that Tehran planned to open an Iranian oil bourse in March 2006, designed to quote oil prices in the euro.
Iran has yet to open an Iranian oil bourse, but demanding payment for Iranian oil in currencies other than the dollar is seen by many experts as a more direct attack on the dollar, especially if the Iranian decision backs a worldwide move away from using the dollar as the underpinning of world foreign exchange reserves.
Iran's central bank governor Sheibany also confirmed Iran is cutting U.S. dollar reserves to less than 20 percent of its total foreign reserve currency holdings. Iran plans to manage its foreign reserve currencies from oil sales in a basket of 20 different currencies.
The move by both Iran and China to hold fewer dollars in their foreign exchange reserve reflects a desire to diversify foreign exchange reserve portfolios amid concerns the dollar will continue to lose value versus the euro.
The dollar has lost 9 percent of its value against the euro in the last year and is down 35 percent against the euro in the last five years.
WND previously reported the late Iraqi dictator Saddam Hussein virtually signed his death warrant when he obtained the United Nations' permission to hold his Oil for Food foreign exchange reserves in the euro.
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Post by Watchman on Jun 15, 2007 13:41:36 GMT -5
It's Official The Crash of the U.S. Economy has begun
Global Research | June 14, 2007 Richard C. Cook
It's official. Mark your calendars. The crash of the U.S. economy has begun. It was announced the morning of Wednesday, June 13, 2007, by economic writers Steven Pearlstein and Robert Samuelson in the pages of the Washington Post, one of the foremost house organs of the U.S. monetary elite.
Pearlstein's column was titled, “The Takeover Boom, About to Go Bust” and concerned the extraordinary amount of debt vs. operating profits of companies currently subject to leveraged buyouts.
In language remarkably alarmist for the usually ultra-bland pages of the Post, Pearlstein wrote, “It is impossible to predict when the magic moment will be reached and everyone finally realizes that the prices being paid for these companies, and the debt taken on to support the acquisitions, are unsustainable. When that happens, it won't be pretty. Across the board, stock prices and company valuations will fall. Banks will announce painful write-offs, some hedge funds will close their doors, and private-equity funds will report disappointing returns. Some companies will be forced into bankruptcy or restructuring.”
Further, “Falling stock prices will cause companies to reduce their hiring and capital spending while governments will be forced to raise taxes or reduce services, as revenue from capital gains taxes declines. And the combination of reduced wealth and higher interest rates will finally cause consumers to pull back on their debt-financed consumption. It happened after the junk-bond and savings-and-loan collapses of the late 1980s. It happened after the tech and telecom bust of the late '90s. And it will happen this time.”
Samuelson's column, “The End of Cheap Credit,” left the door slightly ajar in case the collapse is not quite so severe. He wrote of rising interest rates, “As the price of money increases, borrowing and the economy might weaken. The deep slump in housing could worsen. We could also discover that the long period of cheap credit has left a nasty residue.”
Other writers with less prestigious platforms than the Post have been talking about an approaching financial bust for a couple of years. Among them has been economist Michael Hudson, author of an article on the housing bubble titled, “The New Road to Serdom” in the May 2006 issue of Harper's. Hudson has been speaking in interviews of a “break in the chain” of debt payments leading to a “long, slow economic crash,” with “asset deflation,” “mass defaults on mortgages,” and a “huge asset grab” by the rich who are able to protect their cash through money laundering and hedging with foreign currency bonds.
Among those poised to profit from the crash is the Carlyle Group, the equity fund that includes the Bush family and other high-profile investors with insider government connections. A January 2007 memorandum to company managers from founding partner William E. Conway, Jr., recently appeared which stated that, when the current “liquidity environment”—i.e., cheap credit—ends, “the buying opportunity will be a once in a lifetime chance.”
The fact that the crash is now being announced by the Post shows that it is a done deal. The Bilderburgers, or whomever it is that the Post reports to, have decided. It lets everyone know loud and clear that it's time to batten down the hatches, run for cover, lay in two years of canned food, shield your assets, whatever.
Those left holding the bag will be the ordinary people whose assets are loaded with debt, such as tens of millions of mortgagees, millions of young people with student loans that can never be written off due to the “reformed” 2005 bankruptcy law, or vast numbers of workers with 401(k)s or other pension plans that are locked into the stock market.
In other words, it sounds eerily like 2000-2002 except maybe on a much larger scale. Then it was “only” the tenth worse bear market in history, but over a trillion dollars in wealth simply vanished. What makes today's instance seem particularly unfair is that the preceding recovery that is now ending—the “jobless” one—was so anemic.
Neither Perlstein nor Samuelson gets to the bottom of the crisis, though they, like Conway of the Carlyle Group, point to the end of cheap credit. But interest rates are set by people who run central banks and financial institutions. They may be influenced by “the market,” but the market is controlled by people with money who want to maximize their profits.
Key to what is going on is that the Federal Reserve is refusing to follow the pattern set during the long reign of Fed Chairman Alan Greenspan in responding to shaky economic trends with lengthy infusions of credit as he did during the dot.com bubble of the 1990s and the housing bubble of 2001-2005.
This time around, Greenspan's successor, Ben Bernanke, is sitting tight. With the economy teetering on the brink, the Fed is allowing rates to remain steady. The Fed claims their policy is due to the danger of rising “core inflation.” But this cannot be true. The biggest consumer item, houses and real estate, is tanking. Officially, unemployment is low, but mainly due to low-paying service jobs. Commodities have edged up, including food and gasoline, but that's no reason to allow the entire national economy to be submerged.
So what is really happening? Actually, it's simple. The difference today is that China and other large investors from abroad, including Middle Eastern oil magnates, are telling the U.S. that if interest rates come down, thereby devaluing their already-sliding dollar portfolios further, they will no longer support with their investments the bloated U.S. trade and fiscal deficits.
Of course we got ourselves into this quandary by shipping our manufacturing to China and other cheap-labor markets over the last generation. “Dollar hegemony” is backfiring. In fact China is using its American dollars to replace the International Monetary Fund as a lender to developing nations in Africa and elsewhere. As an additional insult, China now may be dictating a new generation of economic decline for the American people who are forced to buy their products at Wal-Mart by maxing out what is left of our available credit card debt.
About a year ago, a former Reagan Treasury official, now a well-known cable TV commentator, said that China had become “America's bank” and commented approvingly that “it's cheaper to print money than make cars anymore.” Ha ha.
It is truly staggering that none of the “mainstream” political candidates from either party has attacked this subject on the campaign trail. All are heavily funded by the financier elite who will profit no matter how bad the U.S. economy suffers. Every candidate except Ron Paul and Dennis Kucinich treats the Federal Reserve like the fifth graven image on Mount Rushmore. And even the so-called progressives are silent. The weekend before the Perlstein/ Samuelson articles came out, there was a huge progressive conference in Washington, D.C., called “Taming the Corporate Giant.” Not a single session was devoted to financial issues.
What is likely to happen? I'd suggest four possible scenarios:
Acceptance by the U.S. population of diminished prosperity and a declining role in the world. Grin and bear it. Live with your parents into your 40s instead of your 30s. Work two or three part-time jobs on the side, if you can find them. Die young if you lose your health care. Declare bankruptcy if you can, or just walk away from your debts until they bring back debtor's prison like they've done in Dubai. Meanwhile, China buys more and more U.S. properties, homes, and businesses, as economists close to the Federal Reserve have suggested. If you're an enterprising illegal immigrant, have fun continuing to jack up the underground economy, avoid business licenses and taxes, and rent out group houses to your friends.
Times of economic crisis produce international tension and politicians tend to go to war rather than face the economic music. The classic example is the worldwide depression of the 1930s leading to World War II. Conditions in the coming years could be as bad as they were then. We could have a really big war if the U.S. decides once and for all to haul off and let China, or whomever, have it in the chops. If they don't want our dollars or our debt any more, how about a few nukes?
Maybe we'll finally have a revolution either from the right or the center involving martial law, suspension of the Bill of Rights, etc., combined with some kind of military or forced-labor dictatorship. We're halfway there anyway. Forget about a revolution from the left. They wouldn't want to make anyone mad at them for being too radical.
Could there ever be a real try at reform, maybe even an attempt just to get back to the New Deal? Since the causes of the crisis are monetary, so would be the solutions. The first step would be for the Federal Reserve System to be abolished as a bank of issue and a transformation of the nation's credit system into a genuine public utility by the federal government. This way we could rebuild our manufacturing and public infrastructure and develop an income assurance policy that would benefit everyone.
The latter is the only sensible solution. There are monetary reformers who know how to do it if anyone gave them half a chance.
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Post by Watchman on Aug 7, 2007 10:38:30 GMT -5
'US economy 'in danger zone with oil price'
Reuters | August 3, 2007
Near record high crude oil prices have put the US economy in the "danger zone" and the world's producers must boost supply to prevent shortages, US Energy Secretary Sam Bodman has said.
Sustained US crude oil prices near the $US80 ($NZ105.79) level could harm the US economy, and both Opec and non-Opec producers should "look at what the facts are," Bodman told reporters.
"We're in a. . . danger zone right now, so that's why I hope that both Opec and non-Opec nations will look carefully at the facts," Bodman told reporters.
It was one of the strongest warnings from a Bush administration official to date on the impact of high crude oil and gasoline prices, which are already starting to take their toll on US consumer spending.
US crude oil futures on Wednesday hit a record intraday high of $US78.77 a barrel, surpassing the previous peak of $US78.40 set in July 2006. The benchmark US oil contract settled up 33 cents at $US76.86 on Thursday.
Bodman said that so far high oil prices have only had a "modest" impact on the US economy. But Bodman said he was concerned about the economy's ability to bear up under sustained oil prices near the $US80 level.
"I am concerned that where we are operating, in the ranges that we're talking about now where you are approaching $US80," Bodman said.
Despite rising calls from the United States and the International Energy Agency – advisor to 26 industrial nations – Opec officials so far say the producer group will not hike output.
Qatar's Oil Minister Abdullah al-Attiyah said today that Opec – which pumps about a third of the globe's oil – can do nothing about the high price of oil and that there is no shortage of crude in the market.
Bodman said that a spate of US refinery outages that slowed US gasoline production are no longer to blame for rising crude oil prices, with the nation's refineries running at more than 93 per cent of capacity.
"We can no longer explain (high oil prices) here in this country on the basis of refinery problems," Bodman said.
"So I merely hope that the Opec people, as well as non-Opec nations, make a judgment to look at what the facts are," he said.
There are rising signs that US gasoline pump prices near $US3 a gallon are starting to dent consumer spending.
The US Federal Reserve, in minutes from its late June meeting released on July 19, said personal consumption expenditures are rising more slowly "at least in part" because of rising gasoline prices.
And Wal-Mart, the world's largest retailer, on July 12 linked modest merchandise sales growth in June and early July to high gasoline prices.
"Consumers continue to be challenged financially, with more pressure on discretionary spending," said Eduardo Castro-Wright, CEO of Wal-Mart's US operations. "Gas prices have moved to be their chief concern."
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