Thinking about mone-TERROR-ism By Fred Cederholm

Column for on/after November 25^h, 2007

I’ve been thinking about mone-TERROR-ism. Actually I’ve been thinking about the US dollar, the emergency OPEC conference, the big four TRILLION-aires, spending, and solutions. While working as a forensic investigative accountant on the Savings and Loan mess, I was told that when someone owes you $100,000s, you have a borrower. When someone owes you MILLIONs, you have a partner! Taking that to the next levels… when someone owes you BILLIONS or TRILLIONS, it is the one holding that debt who has the real problem, and its’s the debtor who is really the one in the driver’s seat.

You see the many facets of the complex global debt crisis are morphing from the sublime to the ridiculous. A week ago last Friday, the oil moguls of OPEC held the third emergency conference in the organization’s history. While the topic was supposedly oil broaching $100 a barrel, regulating levels of output, and peaking oil production; the real focus was on the continuing decline of the US dollar relative to other currencies and maintaining that dollar as the “official” currency of OPEC. Both of these aspects relate to the TRILLION-plus dollar holdings of these collective OPEC member nations and producers.

They have the problem. They have a huge problem! While they were supposed to be in a closed executive session, a live media feed was left on, and Europe was privy to the discussion and debates. I don’t believe this was an accident. The oil moguls wanted the outside to be aware that a shift MUST be coming down the pike. The accidental broadcast was effectively firing a warning shot across the bow of the US Treasury. Still the comments told the world that while the oil producers wanted a divorce from the buck, they are stuck in the loveless marriage for now because the split will cost them way too much. There is no easy way out, and there certainly was no pre-nuptual to protect their massive dollar holdings.

Decades of printing fiat currency fueled by this nation’s profligate consumption of goods, services, and energy – mostly on borrowed (or printed) money - have made the US the largest debtor on the globe. The US now consumes about one fifth of the planet Earth’s total output. Annual deficits – both trade (current deficit) and budget run in the hundreds of BILLIONs. These have done so for years. As a result there are now four foreign entity groupings which presently sit on over a TRILLION in US IOU’s and fiat money. These are China, Japan, the Arab OPEC’s and the EURO zone. Do they continue to hold their TRILLIONS – losing purchasing power on an almost daily basis? Or… do they divest (as is dump) and suffer the consequences – possibly bringing down the world economies in the process?

Anyone familiar with my columns knows I’ve been muddling over the threat(s) of our foreign held debt for some time now. Oil/energy, or the withholding of it, can be used as a weapon. I coined the word p-oil-itics some time ago and now I want my readers to TH*NK about mone-TERROR-ism as a further lurking danger to US/us. Here, money, or rather our own dollars would be used as the weapon against us. Forensic accountants qualify amounts then analyze how we got to where we are, what are the ramifications, and what are the solutions (and the costs of resolution). I’ve been doing just that of late and I must say that my current conclusions would be laughable if they weren’t so tragic in the long run.

“The Big Four” with their respective TRILLION-plus EACH can’t dump them. They can only ultimately continue to hold them, or spend them. Therein is the true dilemma – just how do you spend a TRILLION? With a TRILLION… you don’t shop at WalMart, you buy WalMart. You don’t buy a Cadillac, you buy General Motors. You don’t buy a 747, you buy Boeing. You don’t buy a computer fully loaded with Vista and Office, you buy Microsoft. You don’t open a mega-super-jumbo bank account, you buy the entire financial institution. Then too… there are now millions of homes coming on the market. If you are in “the Big Four,” is power shopping gone wild any solution? I don’t TH*NK so. I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.

Copyright 2007 Questions, Inc. All rights reserved

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Hey Buddy, Can You Spare $1,000 Trillion? By SB Kayser

I write each editorial under the impression that a major event is going to prevent me from drafting the next one. My fear almost came true. This one was scheduled to be released early October then delayed due to an avalanche of scary news unseen before in my lifetime. The threat of 'monetary terrorism' has only one remedy called 'financial detoxification'. However, thanks for taking the time to read this column, which could have easily been much longer. As you will see, nobody can stop this freight train.

The story of the upcoming world crash is hidden in plain sight. Even mayor Bloomberg has jumped in the gloom and doom bandwagon: a global economic downturn was looming, triggered by the "lunacy" of public debt, he declared last month. Meanwhile denial continues. Although nearly 70% of the Americans do fear a recession, the possibility of a major crisis is not considered. A crisis? Not in my backyard, most of them think. It all boils down to faith. To be fair, the 'empire mentality' was born with history. Eventually people wake up to the harsh reality that the empire lied to them. The only successful government programs are wars and economic crises. When two or three decades of prosperity end with a crash and geopolitical crisis, what does this mean - frankly? Once again, the numbers tell a very different story than which we are being told. Yes dear Readers, you're not hallucinating. There is currently at least a $1,000 trillion dollar black hole in the world economy. To get the full picture, please keep on reading.


more/long
http://moneyfiles.org/sbk07.html

Thinking about write-offs By Fred Cederholm

Column for on/after November 11^th, 2007

I’ve been thinking about write-offs. Actually I’ve been thinking about BILLIONS, Sub-prime/ Alt A mortgages, banks, the former S& Ls crisis, billions, and déjà vu. The late Illinois Senator Everett Dirksen, a great orator, is perhaps most frequently remembered for his quip: “A BILLION here, a BILLION there and pretty soon you’re talking real money.” Dirksen was playing on the fact that you reach a point where dollar amounts become so large, they have little relevance or meaning - unless they are broken down, pro-rated, and allocated to where they impact individual or household levels.

You see last week saw more headlines involving the write-offs of investments in mortgage derivatives in the TENS of BILLIONS by still more banks and brokerage houses. In the US, front page ink shifted from Citibank to Wachovia, our seventh largest banking group. Be (un)rest assured, there will be far more ten, eleven, or twelve figure hits to yet other banks, pension funds, mutual funds, and insurance company portfolios! Huge losses to date haven’t scratched the surface, trust me on this.

There are a couple reasons for delaying/ breaking-up the announcements into bite sized billion chunks. First, there is identifying the investments. These were packaged in all shapes, sizes, and formats. One may TH*NK they don’t have any exposure, but as analysts (and auditors) dig deeper; these surface in hedge funds, mutual funds, money market funds, insurance company portfolios - you name it. Second, even if identified as CDO based, debates wrangle over valuation. Since most of them appear to be “amorphous globs of anonymous fungible debt” - NOT identified to specific properties or mortgages which might have some residual or cadaver value – the valuation becomes an all (par) or nothing (zero) proposition. Besides, nobody wants to acknowledge such a hit until they absolutely have to do it.

The “politics of panic control” is the biggest reason for spoon feeding this debacle to the public in bite sized billions. If they could quantify the ultimate total losses (I’m certain some super-dome-ball-park figure is being bantered about behind closed doors), the global public just couldn’t deal with it, the equity markets would tank, and the world’s intertwined banking/ financial systems would collapse. The bite sized billions approach may unnerve the public, but at least there is a perception that the problem is being addressed and dealt with. And… nobody has been forced out of business, into receivership, insolvency, or liquidation – not yet anyway. Bite sized billions in write-offs just can work miracles.

When I worked on the last bank and S&L debacle now 20 years ago, I saw first hand the games played in delaying the inevitable. That crisis was swept under the rug during the early 1980’s for at least 4 to 5 years. The regulatory bodies knew the S&Ls were hemorghing. They had lent money long term at fixed rates, and funded those loans with short term deposits that ended up costing them more than the loans generated - a negative spread. You almost knew to the day/ hour when insolvency would hit. To buy time, the S&L’s were deregulated and got into lending beyond their mission or understanding. Such loans went bad from the get go and should have been written off, but write-offs accelerated insolvencies.

I reviewed examinations where hundreds of “sub-standard, doubtful, or loss” loans were actually classified “special mention,” the highest (most negative) classification not requiring any write-off. When I pursued the WHY behind this anomaly, I was told again and again “there was to be no classification of assets that would adversely affect capital.” Institutions were only “required” to write-off only what they could afford to do without hitting insolvency, a mandated take over, or liquidation. Delaying problem resolution ends in upping the final costs. I can see the same misguided propaganda approach being used now with these CDO write-offs. “A billion here a billion there… not to worry. These bite size billions we can swallow… no problem!” (That is… until somebody finally chokes and the whole system croaks.) I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.

Copyright 2007 Questions, Inc. All rights reserved

Thinking about cuts By Fred Cederholm

Column for on/after November 4^th, 2007

I’ve been thinking about cuts. Actually I’ve been thinking about Sub-prime/ AltA mortgages, interest rates, return-on-investments, currencies, REPO’s, terminations, and job creation. If you divide last week’s quarter point interest rate cut by the Federal Reserve Bank’s benchmark 4.75% (rate before the cut), you get a decrease in that effective rate by 5.26%. While this may seem an overly simplistic way to predict the impact of the FED’s cut, bear in mind that the prices of crude oil and precious metals jumped almost immediately by that percentage. I suspect that the Dollar will shortly further erode against the world’s basket of primary free floating currencies by a similar percentage.

You see the sub-prime/ AltA mortgage crisis has not left us. If anything, the implications and ramifications of this lending debacle run amok are only beginning to surface in more sectors than were identified as earlier areas of concern. Investments were traditionally valued based upon their projected future cash flows, or proceeds. Such cash flows were at the core of the return-on-investments (ROI) used in determining the valuation, pricing or carrying value of investment vehicles. If the ROI was cut, this would negatively impact the valuation of the investments and price/valuation would drop accordingly.

The valuations of currencies as an investment vehicle – money itself held as an asset – work in the same manner. There is a (holding) time value to money, and that is called interest. When interest rates are cut, there is, by this definition, a re-evaluation of the valuation of the respective currency downward and its purchasing power declines. We saw this last week as the price increased on petroleum and metals. We shall see such trends continue in the equity/ stock markets for those investments denominated in dollars. The rate cut was “marketed” to the public as a solution/ fix to the mortgage mess. Rate cuts pricing interest “costs to borrowers” below the actual inflation rate created this bubble crisis in the first place. Returning to similar logic/ policy as the solution/ fix will only worsen things.

The rate cut stole the headlines, but it was the FED’s almost clandestine increase in repurchase agreements (REPOs) with financial institutions last week that should have really sounded the alarms. The FED can temporarily increase liquidity (amount of cash available for new lending) by “buying” investments from banks in the short term – with the understanding that the “selling” institution will buy them back at a predetermined date. Until August such REPO’s were limited to US Treasury Securities and the highest rated levels of commercial paper (corporate bonds). In August the FED began accepting the sub-prime mortgage backed securities known as CDOs. This should have been a red flag telling us that the FED had to accept these mongrels because no one else would! The crisis was worse than stated.

Last Thursday, the Fed conducted $8 BILLION of 14-day repurchases, $21 BILLION of seven-day repurchases and $12 BILLION of overnight repurchase agreements. The total exceeded the $38 BILLION which the Fed injected last Aug. 10, at the beginning of this global credit crisis. This was done to alleviate strains in short-term lending markets worldwide. To in perspective, this was the largest such single day infusion since the FED injected $50.35 BILLION on Sept. 19^th, 2001 following the Sept. 11^th, attacks on the World Trade Center and the Pentagon - making this a threat “equal” to the terrorism?

Mega BILLION crises (of write-offs) just forced ousters of chief executives Charles Prince at Citi-Bank and Stan O’Neill at Merrill Lynch. Chrysler announced job cuts of 12,000 – 1,000 of which at the Belvedere’ plant about 40 miles from us. Not to worry, the Labor Dept. just announced how 130,000 new jobs were “created.” They didn’t mention that 103,000 of those – 14,000 in construction and 25,000 in financial services - were hypothetically generated by statistical models. It’s not that they are not out there, they just can’t specifically be identified and located! Didn’t we hear THAT justification before in some other context??? I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.

Copyright 2007 Questions, Inc. All rights reserved.

Naomi Klein, By Joost van Steenis

Dear reader, this is the 93rd Letter of an Autonomous Thinker

The Shock Doctrine, The Rise of Disaster Capitalism is the new book of Naomi Klein.

About her book No Logo (see http://members.chello.nl/jsteenis/letter15.htm) I wrote that it contains a lot of interesting information but that it fails to make a link between information and action. It describes the disasters caused by capitalism but it gives no solutions.

Naomi tells in The Shock Doctrine again horrendous and very true stories about what happens in "higher circles". Again the masses only play the role of victims.

In the last chapter she utters a few optimistic words about initiatives of masspeople but just as in No Logo these initiatives are restricted to the playing grounds that are enclosed by the barbed wire that is controlled by the "higher circles". The rich and mighty only permit actions that do not attack their very existence.

Naomi Klein writes about Disaster Capitalism but does not understand that capitalism is always a disaster for the underlying people. Capitalism maintains a fundamental inequality between the haves and the have-nots and is always aimed at the improvement of the situation of the people at the top. That sometimes the masses also get an improved life is not in contradiction to the goals of the elite that always tries to maintain and improve the own privileged position. This egoistic behaviour is the basis of the capitalist system.

Naomi Klein tries indeed to give the masses hope on a better and autonomous life but fails because she does not question the capitalist principles.

On page 27 she applauds the (leftist) words of Sergio Tomasello, an Argentinean leader of landless farmers: "The structure has to change".

That is the wrong idea, that is exactly the reason why the Left never can stop the subordination of the masses. The people have to get their own power. When a new structure is implemented, new "higher circles" will come into being and the situation will resemble very much the old situation. The development after the leftist (sometimes communist) revolutions of the past have proven that the masses are as powerless as in capitalist countries.

The "high gentlemen" in the governments, the army, the industry and other sections of society are only interested in the continuation of the idea of the "free market", a system that is based on unequal power relations.

Power relations and not the system must stand central in mass actions. When the masses do not develop an own independent power, all efforts for a better world are doomed to fail. And this power must be guided by the intention that the elite cannot anymore live the life it lived before and that the masses do not want to live anymore the subordinated life they lived before.

The change from the Old World to a New World will occur with a shock. But though the Shock Doctrine seems to resemble my ideas about Political Catastrophes (see http://members.chello.nl/jsteenis/catastrophes.htm ) it is a different concept.
The Shock is used to implement an existing theory (in this case Milton Friedman's ideology of a free market). The future society is already embedded in the present theory. The situation will not change fundamentally because the masses remain subordinated and the elite continues to rule and live from the same elevated position as before.

In my (political) Catastrophe Theory the present activity of the masses grows until the point is reached that the present situation can not be maintained. Then there will be a fundamental change. A new situation, a really New World is reached in which the same people (masses as well as higher circles) see the world on a different way. Only then the possibility will arise that all people will have the same status.

The propositions of Naomi Klein and other leftists only improve the life of the masses within the boundaries that are built by the privileged elite. When the importance of equal power to each individual is denied, Disaster Capitalism can return any time.

Yours truly, Joost van Steenis

http://members.chello.nl/jsteenis

Ways to increase masspower

Gold Rising against all Currencies y Greg Silberman

November 01, 2007


The savvy US Investor is faced with a tough but clear problem.

He or She realizes the US Dollar is chronically ill. He or She realizes the need to protect their assets to maintain purchasing power.

The unsavvy US investor believes the rubbish inflation numbers put out by the government. They takes no action to protect themselves until its too late and obvious the cost of living is exploding. Unfortunately, and at that time, they will have no means of generating an income sufficient to keep pace with inflation!

But for the savvy US investor the answer is (supposedly) clear – diversify into foreign currencies such as the Euro, Swissie, Pound, Aussie, Loonie or Gold....

MORE
http://blog.goldandoilstocks.com/2007/11/gold-rising-against-all-currencies.html

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Thinking about gold By Fred Cederholm

Column for on/after October 28ust, 2007

I’ve been thinking about gold. Actually I’ve been thinking about investments, image, monetization, media coverage, and Armageddon timing. The goldbugs, those investment professionals who push investing in this yellow precious metal, have been coming out of hibernation. We are seeing more media coverage in random commentaries about gold. I’ve even received a few emails from readers laden with questions. While I am hardly knowledgeable in this area, I have been fascinated by gold and silver as they relate to history, economics, monetary policy, and gaudy celebrity “bling” jewelry.

You see precious metals are really kind of flukes in the broad spectrum of investments and economic history. They as objects are pretty much just… there. I mean “in and of themselves”… you can’t eat them, they don’t warm you, they don’t shelter you, and they don’t (comfortably) cloth you. Their value over time was substantially derived from image and perception. “Good as gold” surfaces as a buzz phrase for the most part only in times of change and danger. The so-called “intrinsic value” of them becomes a factor when there are fears of rising inflation, political instability, and monetary stability. Every twenty or so years, they spring to life. There is a flurry of activity. Prices spike. The crisis prompting their resurrection fades. Prices subside. They return to another prolonged slumber.

Money can be made via investments in precious metals, but you really have to know what you are doing. Whether one actually purchases (and takes possession of) the metals via ownership of coins or bullion, speculates thru futures contracts, or buys stocks in companies who explore, refine, market, or trade the metals; timing of the transactions is critical. Things tend to languish, and then BOOM, there is a meteoric rise (or decline). Who can forget back to early in 1980 when the Hunts of Texas took silver prices to celestial records and then were forced to ante-up for a BILLION dollar margin call in one day? Gold prices escalated in harmony with silver back then in that metals’ boomlet – usually it is the other way around. The time to buy is before the headlines hit; the time to sell is as they hit! THAT is how the real money is made – getting in low and getting out high. Holding only tends to COST the investor.

Recent press has chronicled ongoing erosion of the US dollar relative to the other currencies of the world. A Buck now only gets you about seven-tenths of a Euro - or less than one-half of a British Pound. Ongoing status of the US Dollar as the world’s reserve currency is highly open to question. There have even been news stories (not reported in the US) that Israel now wants its mega-millions of annual US aid tendered in Euros so as not to be forced to absorb any future currency translation losses!

The US effectively went off the gold standard under Franklin Roosevelt in the 1930’s; the final nail in the coffin for any fixed pegging of “Bullion-to-Bucks” occurred under Richard Nixon in 1971. Since then… there has been no true disadvantage to a fiat US Dollar (one having no intrinsic backing) as virtually all of other world currencies were likewise “fiat monies” (having no intrinsic backing either). The mere fact that so much paper currency is being printed/ circulated worldwide has raised the alarm that the “system” of the central banks is broken and corrupt. There are movements now afoot to return to “the good old days” of currencies backed by gold and/or silver. While such “hard metal backing” did promote a more stable money supply in the sense that Uncle $ugar’s gold or silver certificates did not lose 96% of their purchasing power as have the Federal Reserve Notes since their creation in 1913, it was virtually impossible to fluctuate the money supply – upwards or downwards – to meet the needs of swings in the economic cycles which are natural occurrences in history.

The present specters of impending runaway inflation, global political unrest, absence of any hopes for a peace in the Middle East, further declining interest rates, energy availability concerns, and roller coaster valuations in the world’s stock/equity markets; all will once again push gold stories to the front page. Will “good as gold” prove to be any answer? Time will tell… I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.

Copyright 2007 Questions, Inc. All rights reserved.

The Deal of the Century By James Jaeger

Dear Concerned Citizens:

For those of you who are wondering how our deal with Saudi Arabia goes, study the attached diagram. This diagram is not complete, but it will give you an idea. I will forward more information and possibly more sophisticated diagrams if you express an interest by writing back.

Put simply in words: United States citizens pay dollars for gasoline that comes from Saudi Arabia under control of the Kingdom, also known as the House of Saud. Much of this money, then called "petrodollars" earned by the House of Saud, is used to purchase US T-bills, i.e., US debt. Interest on this debt is paid by the US citizens. This interest is then allocated to corporations like Halliburton and other multinational engineering and consulting firms. These multinationals then build infrastructure for Saudi Arabia, much or most benefiting just the Kingdom. A significant amount of the petrodollars that went into US T-bills is then allocated by Congress into the military.


The US military is thus expected to use its resources to protect the House of Saud from the millions of disgruntled Saudi citizens (such as the 17 that flew jets into our buildings on 9/11) and other countries around the Middle East that don't like US foreign policy or presence in the area. These citizens/countries are disgruntled because they don't like the following:

a) seeing the House of Saud selling off so much of their oil to the US at under market prices;

b) the Kingdom allowing the US military to place tanks on holy lands, such as Meca and Medina,

c) the U.S., being 5% of the world's people, consuming 25% of the worlds energy and

d) causing a significant amount of global warming that effect all. As a result of the Deal of the Century, and other things, terrorists, such as Osama bin Laden, arise from the ranks of the Saudi people and attack the US, US allies and the House of Saud itself. Profits derived from the above mentioned multinational firms building Saudi infrastructure are hidden away in off-shore corporate accounts so they can avoid paying taxes to their host country, i.e. the US.

James Jaeger

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Visit: http://www.FiatEmpire.com