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Guest Post: In A Currency Tug Of War The US Dollar Loses

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From Brandon Smith of Alt Market

In A Currency Tug Of War The US Dollar Loses

I imagine sometimes in my most optimistic moments
that one day I will live in the midst of a true free market economy,
where the tides of trade and investment, the ebb and flow of commerce,
are a rather beautiful thing. A marketplace without
centralized manipulation, were legitimate supply and demand are elevated
instead of obscured, and toxic financial instruments, crooked corporate
institutions, and even faulty currencies, are allowed to finally meet
their long deserved demise because they no longer serve the needs of our
nation and our culture. I imagine an economy that is not
only continuously shedding off old skins and renewing itself as our
society grows, but one whose primary purpose is to nurture and expedite
that growth. I imagine an economy that works FOR the people, not against them. Like I said, “optimistic”.

In today’s economy, we have something quite different. We
are imprisoned in a labyrinthian deathtrap of a mainstream system, one
that feeds endless fiat formaldehyde into the crusted veins of a long
since corpsified infrastructure; a financial golem, a wraith, a thing
that creeps across the dark horizon of our country’s future waiting to
unleash a special kind of hell. A thing that should not exist.

We live in an unnatural and monstrous economy. A Frankenstein creation…

This creation owes its wretched life to the efforts
of a relatively small number of international bankers, corporate
financiers, and of course, the private Federal Reserve; the mad
scientists of our age, consumed with a lust for power over everything. One day, in the distant future, we will finally understand and appreciate their “brilliance”, or so they tell themselves. The “plan” is simply too complex and wondrous for we nearsighted and frightened villagers to comprehend.

In fact, the plan is very easy to comprehend, and
not driven by brilliance, but hubris (one does not necessarily lead to
the other). The key to grasping the mangled workings of our economy lay in the lifeblood of our commerce; the dollar itself. If you know the dollar, you’ll know just about everything else. Ignore
the dollar, or assume comprehension without ample study, and you will
find yourself completely lost in the fog and chaos of the markets.

This brand of confusion is very evident amongst a
majority of investors, who seem bewildered by the seesaw activities in
global indexes, Treasury Bonds and currency exchanges, and more
specifically, the tug-of-war between the dollar and the euro. Why does debt instability keep cycling in the EU like a tornado? How could commodities decouple from currencies and act independently of “normal” market indicators? How
could the U.S. economy still be on the verge of complete meltdown after
three years of bailouts and quantitative easing measures? Where is all this headed?

Many of these questions can be answered by
examining the battle going on between major developed and developing
nations, including their currency policies, which appear to be at odds. However,
there is indeed a concerted and focused effort in play underneath all
the supposed “bumblings” and catastrophes around us, and this effort is
not being implemented for our benefit…

The U.S. / EU Game Of Hot Potato

About every three months, give or take a week, the
news is lambasted with yet another negative development in the EU,
usually linked to Greece. This quarter was no exception, as
S&P announced it was cutting Greece’s debt rating by three levels
to CCC, and warned that the country was dangerously close to default:

http://finance.yahoo.com/news/Greece-falls-to-SPs-lowest-rb-4175011898.html?x=0

Greece now has a lower rating than even Ecuador, which defaulted in 2009. The EU warns of a “systemic spread” of the debt crisis if the Greece situation is not contained. Whether this is true or not is of secondary relevance. The most important issue is the relationship between EU instability and the U.S. dollar.

One can’t help but notice (if they’ve been following currency and commodity markets) that
every time inflationary pressures break through another level in the
U.S., or the dollar index edges dangerously close to dropping below the
72 point support level, the mainstream financial media and numerous
establishment analysts suddenly turn their attentions back to Greece,
Ireland, Portugal, Spain, etc. The truth is that the problems in the EU never went away. They were never solved, nor was there ever any intention to solve them. The coverage and the transparency of those problems was the only thing squelched. The result is a brief but effective change in market psychology.

The Euro falls. The dollar index gains
back a portion of its losses, because the assumption among uninformed
investors is that the dollar will become a “safe haven” in the wake of
Euro destabilization. Gold and silver take a hit, usually dropping between 5%-10%. Oil takes a much smaller loss, but its steady rise is impeded for at least a few weeks. And, stocks around the globe falter. What
is important to recognize here, however, is that each time this game of
passing the “hot potato” is played the dollar tends to fall even
further afterwards, followed by a new explosion in commodities and
inflation. What we are witnessing, is an attempt by global
central banks to create a controlled decline of both the Dollar and the
Euro; bouncing one off the other, which skews index measurements in
order to hide the true extent of the damage being inflicted on each
currency.

The most recent market seesaw is complicated even further by the debt ceiling debate going on in the U.S. Congress. That
is to say, as the circumstances grow worse here in America, and the
dollar continues to devolve into primordial jelly, global central banks
need an even greater firestorm in Europe to drive investors temporarily
into the arms of the Greenback to slow its decline. They
certainly have a firestorm on their hands in the EU now, as a resurgence
of protests overrun Greece in response to extreme austerity measures
and social welfare cuts demanded by the IMF:

http://www.reuters.com/article/2011/06/15/us-eurozone-idUSTRE75D6JK20110615

One might ask, how will this tug-of-war end between the dollar and the euro? It can’t possibly go on forever, especially as each continues to degrade. Which one will come out on top in terms of market trust?

It is undeniable, the dollar will lose…

There is one primary factor that makes this inevitable, and that is the level of fiat creation going on in the U.S. We are out-printing every country on the planet, not to mention out-spending. But
here’s the kicker; the dollar is not only being weakened to prop up our
own failing system, it is also being weakened to prop up the EU!

After the Federal Reserve was finally forced
through lawsuit to reveal the recipients of a large portion of bailout
funds distributed in 2008, it became clear that a considerable amount of
fiat (which becomes a debt burden for American taxpayers) was not going
into American pockets, or American banks, but banks in Europe:

http://www.businessweek.com/the_thread/economicsunbound/archives/2009/03/german_and_fren.html

Another important issue to consider is that the U.S. supports almost 20% of the IMF’s funding apparatus. This
means that every time the IMF issues another bailout to a European
nation, WE are footing at least 20% of the bill, on top of any capital
we send directly overseas. The IMF is currently putting
together a brand new bailout for Greece, barely a year after the last
debacle costing around $150 billion. And, again, Barack Obama is pledging U.S. “help” (i.e. lots of your money) to aid in slowing the crisis in Europe:

http://www.cnbc.com/id/43321461

This is why, in the end, America will hit the ground hardest. We are essentially covering the overhead for collapses on both sides of the Atlantic. Therefore, we are devaluing our currency at a far faster rate than the EU ever could. If
the EU was forced to print to bailout its own economic members, the
story might be a little different, but as the situation stands, the
dollar is being gutted to sustain foreign nations, so that they do not
have to gut the Euro.

Why would the Obama Administration, the Federal Reserve, and the IMF pursue such a policy? Well,
it makes little sense unless your goal is to deliberately implode the
dollar, destroy its world reserve status, and replace it with something
else (that something else being the IMF’s “Special Drawing Rights”). It also makes sense if you wish to draw Europe into a state of uncertainty, but not total anarchy.

If the Euro is allowed to collapse, then the idea
of a centralized union of nations, and especially a global union of
nations, becomes a financial joke. But, if the EU is merely
wounded, and the Euro slightly hobbled, global banks can claim that the
system “could still work”, if only it was “centralized more”. That
is to say, globalists will demand that EU nations erase all political,
not just economic, divisions, and accept the rule of a single guiding
governmental body. They will claim that the weakness of the
EU was caused because participating nations were “clinging to their
sovereignty”, instead of working together as one unit. In
fact, the suggestion to dissolve European sovereignty and giving more
power to a single ruling body is being pressed right now:

http://www.marketwatch.com/story/eu-must-move-toward-economic-federalism-2011-06-03

“…Barnier said the E.U. should try and
unify its economic and finance policy functions in much the same way it
has for foreign policy. The making of policy should be combined with the
political ability to carry those decisions out, he said. He also said
he can envision a day when member countries agree to merge the heads of
key E.U. bodies, "so we'd have a real president of the European Union."”

“…he suggested that E.U. members must
eventually allow more government authority to be centralized in order to
better implement economic policies for the region.”

This process of centralization is already underway in Europe, and AMERICANS are paying for it. In
the very near future, there will come a point at which the U.S. will no
longer be able to print from thin air without also provoking a loss of
world reserve status. The result will be a much faster implosion of the dollar compared to the Euro. Then, the roles will reverse, and it will be the U.S. asking for help from the IMF, and even Europe, to avoid complete default.

The Dollar’s Prominence Is Its Weakness

I often hear that because the dollar is so
prolific, and its use so global, there will never be any chance that it
will fall out of fashion. I’m not sure why so many consider
that a logical position, but hey, if you parrot a mainstream talking
point enough times, you might begin to believe it yourself. I would say, to the contrary, that the prominence of the dollar around the world is actually its primary weakness. The
fact that we have accrued so much debt, and the fact that there are now
trillions in U.S. Treasury Bonds floating around overseas, should not
be a comforting thought to anyone. The reality that
hundreds of countries and millions of investors blindly expect that we
will be able to pay off said liabilities should be terrifying to even
the most steeled economist.

All this “demand” for U.S. Treasuries and dollars
is predicated on the delusion that such instruments will continue to
hold significant value despite erosion in American marketplaces, and
that eventually, a recovery will wash away all risk. But what happens when the Dow breaks into a downward spiral at the slightest mention that the Fed will no longer continue QE? Markets are already wobbling under the threat. The theory of recovery will certainly be dashed. What happens if the Federal Reserve announces QE3 to "ease concerns", only to cause fear for the health of the dollar? What happens if the debt ceiling is raised yet again? What happens if it is not raised?

It’s a Catch-22. Regardless of which direction we turn, the “popularity” of the greenback is an expectation we cannot fulfill.

Imagine that you are a loan-shark (for some this might be fun). Now, imagine that you have lent considerable sums of cash to a chronic gambler who claims to be a millionaire. You figure, hey, he’s rich, he’ll be good for it. Suddenly, you discover he’s NOT rich. He’s in debt up to his eyeballs. His
luxurious home, expensive cars, extravagant yacht; its all an illusion,
a fantasy built upon borrowed money and borrowed time. His IOU’s aren’t worth the paper they are printed on.

You realize with fury, that this guy may never pay you back. So, what do you do? Well, you break his legs, of course! And, perhaps with a bit more gusto than some schmuck you had suspicions about from the beginning.

The analogy is simplistic, but I think you see my point. The
U.S. is the fake millionaire, the rest of the world, the loan-shark
(believe me, Treasury investors can be just as ruthless when they
discover they might never be able to cash in their bonds). Very
soon, buyers of U.S. debt will wake up and accept that America will not
be able to honor all the loans it has compiled, and that the only
foundation we have left to stand is the endless printing of our central
bank. At that time, they will “cripple” our economic
structure by flooding our system with those same bonds as well as
dollars held in Forex Reserves that we allowed to become so prominent. Hyperstagflation, here we come…

For now, we have been saved by the distractions of
European debt default, and the simultaneous devaluation of the Euro,
among others. The guillotine comes down, though, when the
illicit money creation of the U.S. for itself and Europe eclipses the
debt instability of the EU, and markets the world over see which way the
winds are really blowing. Obviously, you cannot win a tug-of-war when you are pulling for the other team…

 


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Thu, 06/16/2011 - 09:08 | Link to Comment Sudden Debt
Sudden Debt's picture

 

THIS IS A TRUE FREE MARKET ECONOMY!!!

 

you just have to know the right people to get involved.

 

 

Thu, 06/16/2011 - 09:10 | Link to Comment Pladizow
Pladizow's picture

Who sets interest rates in your "TRUE FREE MARKET ECONOMY"?

 

Thu, 06/16/2011 - 09:18 | Link to Comment Sudden Debt
Sudden Debt's picture

The GDP generators of course.

 

Example:

Your pic: 0% interest rate, and a free QE1 if you send the rest of the pics.

 

BUT!!! If they drop below the belly button, the rates go up to 20%!

BUT!!! You can have a boobjob done at Dr. Goldman S. and rates go down again.

 

get it?

Believe me, this isn't a -18 year old access thing.

 

 

 

 

Thu, 06/16/2011 - 09:39 | Link to Comment Pladizow
Pladizow's picture

Congressman Weiner - is that you???

Thu, 06/16/2011 - 10:06 | Link to Comment Hurdy Gurdy Man
Hurdy Gurdy Man's picture

like

 

Thu, 06/16/2011 - 10:28 | Link to Comment TaxSlave
TaxSlave's picture

The PURPOSE of these trillions in bonds is not the government spending.  It's not to 'produce jobs', not to 'stimulate the economy', not to 'invest in America'.  It's not to produce a 'safe haven' for people fleeing out of other fiat currencies.

The PURPOSE of those bonds is to put us in bondage, forever.  The only thing that gives a bond its 'value' is the government gun pointing at your head.  It's 'secure' because the buyer has absolute faith in the ability of your government to extract the wealth to pay it -- from you.

I got news to any holders of U.S. treasury debt:

It's not my debt, and I'm not paying it. 

The 'debt' was incurred without my consent and in opposition to my interests, over my objections.

It cannot be paid back, mathematically.  And I will not produce at the point of a gun.  I am in hunker-down mode.  No more employees.  No more risking everything on projects that add productivity.  Any FRN's I get above cost of living expenses are kept away from banks and traded for metal at the earliest opportunity.  You might be able to inflate away my earning power, but you will not inflate away my savings.  And as you inflate away my earning power, you inflate away your own ability to pay off those bonds.

Anyone who holds those bonds deserves to lose every dime, they are the symbol and instrument of your attempt to enslave me.  You will NEVER get them all paid off.

Thu, 06/16/2011 - 13:44 | Link to Comment Rational Psycho
Rational Psycho's picture

+1

reminds me of Stefan's "The Money sold abroad is you!"

http://www.youtube.com/watch?v=Cd-SLRyuRq0

Thu, 06/16/2011 - 09:08 | Link to Comment Alcoholic Nativ...
Alcoholic Native American's picture

The fake millionarie not paying his mortgage.  Well guess what he's doing better than the chumps still paying. And nobody can touch him cause the rule of law is breaking down. Plus he thinks all the extra money hes spending in the economy is the only thing keeping the recovery together.

 

Thu, 06/16/2011 - 09:26 | Link to Comment the not so migh...
the not so mighty maximiza's picture

I don't know about this, The Chinese will take the U.S. over do to  contract violations.  Creditor/ debtor agreements will focus our new overlords to focus on the deadbeats.  The ones already paying on time have givin "protection money" to the Chinese.  Their are no armies involved in this outcome.  Debtor prisons will be back in vogue. 

Thu, 06/16/2011 - 09:31 | Link to Comment Alcoholic Nativ...
Alcoholic Native American's picture

And they will be filled with the youth with student loan debt,  not the senile boomers who feel entitled to their McMansions that they took out home equity loans on and are getting a kushy fixed income check.  

Thu, 06/16/2011 - 09:33 | Link to Comment the not so migh...
the not so mighty maximiza's picture

I have seen many boomers in debt up to eyeballs.  It will not just be the youth.  Youth provides better slave labor though to pay back debts.  Boomers will die after so much real labor work.  

Thu, 06/16/2011 - 09:41 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Ditto, very few are prepared for retirement and, depending on the profession, most of them are holding on to their jobs and planing never to retire.

Thu, 06/16/2011 - 10:21 | Link to Comment MachoMan
MachoMan's picture

They may pick and scratch a few properties here and there, but the Chinese have two primary ways in which to accomplish the feat which you describe above: (a) conquer us militarily; or (b) send enough of them over here to breed us out or push us out of the land.

In the end, the reason why we're so anxious to give them I.O.U.s is because, regardless of the pledged security (none?), there will be no tit for tat exchange of value.  They can try and infest our country, but they will get pushed out by the yokels...  how well do you think a chinese colony would go over in the mississippi delta?  Idaho?  Sorry, but the yokels wouldn't have it...  and the yokels get the last say.

In the end, we're going to tell them to piss off and if they want to do anything about it, then come get some.  (along with every other sovereign).

Thu, 06/16/2011 - 10:41 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Agree, goes double for baby boomer yokels with vast arsenals or vietnam/Iraq/afghanistan experience.

Thu, 06/16/2011 - 11:46 | Link to Comment Pegasus Muse
Pegasus Muse's picture

"(b) send enough of them over here to breed us out or push us out of the land."

They best get on it.  They've got a lot of competition to our south where they're popping out Anchor Babies like rabbits.  Reconquista, chingadera!

Thu, 06/16/2011 - 11:46 | Link to Comment MrButtoMcFarty
MrButtoMcFarty's picture

I agree also....but I think it will only be after Bernanke has completed his mission to crush the serfs with inflation. Hopefully when that day comes and the yokels realize that the Banksters destroyed our economy then Banksters will become the child molesters of the new society.

Thu, 06/16/2011 - 12:31 | Link to Comment Hook Line and S...
Hook Line and Sphincter's picture

The whites become the new native tribes, checker boarded up in 'sovereign' enclaves, flanked by Indians, and both drinking firewater while lamenting about their sinovial eyed masters!

Thu, 06/16/2011 - 23:02 | Link to Comment lostintheflood
lostintheflood's picture

They can try and infest our country, but they will get pushed out by the yokels...  how well do you think a chinese colony would go over in the mississippi delta?  Idaho?

maybe...

http://www.idahostatesman.com/2010/12/31/1472023/chinese-company-eyes-bo...

Thu, 06/16/2011 - 09:28 | Link to Comment Hedgetard55
Hedgetard55's picture

"Imagine that you are a loan-shark (for some this might be fun). Now, imagine that you have lent considerable sums of cash to a chronic gambler who claims to be a millionaire. You figure, hey, he’s rich, he’ll be good for it. Suddenly, you discover he’s NOT rich. He’s in debt up to his eyeballs. His luxurious home, expensive cars, extravagant yacht; its all an illusion, a fantasy built upon borrowed money and borrowed time. His IOU’s aren’t worth the paper they are printed on. "

 

     That's the world's dumbest, and brokest, loan shark, if he can't ask why the "rich millionaire" needs to borrow money, and especially from a loan shark with a huge vig.

    

Thu, 06/16/2011 - 10:03 | Link to Comment RafterManFMJ
RafterManFMJ's picture

That's the world's dumbest, and brokest, loan shark, if he can't ask why the "rich millionaire" needs to borrow money, and especially from a loan shark with a huge vig

 

Your post would have been enough to garner you a movie deal in 2007. Tought luck.

Thu, 06/16/2011 - 09:29 | Link to Comment Tonesvette
Tonesvette's picture

Three scenarios ...

Outright collapse of the dollar and we go back to work exporting

China repatriates their dollars by buying America

US embroils the world in total war

I'm guessing War ...

 

 

Thu, 06/16/2011 - 09:36 | Link to Comment Alcoholic Nativ...
Alcoholic Native American's picture

With Islam, cause we all know those bastards flew planes into our World Trade Centers messing up our entire world economy.  The U.S. is the only one that can save us from the Islamic menance.

Thu, 06/16/2011 - 10:09 | Link to Comment falak pema
falak pema's picture

I can only explain your hallucinating phobia in very simple terms of personal body mechanics specific to your type of mind set :

Your ass hole hates to rise above your head when you pray. And your eyes hate to look towards a place called Kaba when you do same.

Apart from that I can't think of any rational reason you should confuse Islam with those very arab terrorists, disguised as true muslims, but in fact rebels to perceived betrayal of Wahhabism by a clan that is totally incestuous with the Bush lobby, and that came and said hello like rogue surrogates to their insolent, arrogant, hegemonic masters; anything a true westerner having read of Spartacus and Rome would understand right down to his short hairs, especially if fed on ..."In the course of human events...etc.". Be a true american and you'll forget your medieval phobias. Take a course in yoga and you'll cure your body mechanics of ass-hole "dystopia" feeling.

Disclaimer : I have no interest in Islam or in yoga personally except from far.

Thu, 06/16/2011 - 10:29 | Link to Comment ceilidh_trail
ceilidh_trail's picture

flake pema why are you so anti-american? It shows in all your drivel...

Thu, 06/16/2011 - 10:50 | Link to Comment falak pema
falak pema's picture

Hey, I am not anti-american. I can respect your opinion, "drivel" is fine by me. I don't buy Ethnic slurs or ideological mis conception, IMHO.

Why is being anti-american-administration-hegemonic-play being anti-american?

Is anti-papal play opinion during medieval times of Inquisition being anti-christian?

Facile to hide behind 'drivel' and 'anti-american' label. Just remember that the US administration since 1949 is the biggest betrayer of US founding father values...since the CIA was born and since Mccarthyism became synonymous for being pro-american.

I can't say it more simply than that. Either about the mind set or about what US foreign policy did abroad on its mayhem trail. They ran the world. Which makes it all the more disgraceful.

Thu, 06/16/2011 - 10:55 | Link to Comment Orly
Orly's picture

Well-defended, falak.

It is how the trolls keep the truth from everyone nowadays.  So simple.

Oh, you're trashing the Bushes: you're un-American.

Oh, you're trashing Obama: you're un-American.

Amazing how they can use the very trappings of "patriotism" to keep the people from the true mission of the Founders, especially Thomas Jefferson, who said, paraphrasing, "Oh, so you want to keep your freedoms?  Well, let me tell you something: once in a while you're going to have to ask tough questions of your 'leaders' and sometimes those people are going to end up strung from a tree."

Thomas Jefferson was the most un-American man who ever lived.

Don't ask, falak.  Go back to your X-Box and stop being a hater, okay?

/:

Thu, 06/16/2011 - 11:08 | Link to Comment falak pema
falak pema's picture

I love Apricots, lol, does that make me true american?

Orly, I just ate Apricots from my garden. Buckets of them as summer is early. We are also going to make apricot jam with it. I hope your chicken breast BBQ went well.

Trooooolllling my way to the kitchen....

 

 

 

Thu, 06/16/2011 - 11:23 | Link to Comment Orly
Orly's picture

It was very nice, thanks.  Today is chicken pot pies with the leftovers.  :D

Disheartening as it can be for those of us who have espoused lunatic conpiracy theories all these years, I do feel that the tide is turning and fairly rapidly at that.

More and more people are beginning to question many, many things about what we have been told all this time.  My prediction is that the mainstream media is about to pick up the ball and run with it in a big way.  The shame they will feel for not having investigated this stuff thoroughly before, along with the guilt they feel for having been bought and sold by the CIA for the price of a salisbury steak is going to break them finally.

The most motivating factors in the end of this world seem to be guilt and shame and the people who should have done something back then will do it now.  It is all going to come out in the wash and our suspicions will be vindicated one and for all.

I am surely looking forward to that day, I tell you.

Thu, 06/16/2011 - 11:46 | Link to Comment falak pema
falak pema's picture

We had a president in France who used to say : "donner du temps au temps".

Meaning "let time work..." It was a two edged philosophy. It allowed things to decant and for the truth to be seen in true perspective without passion. But it also allowed people to try and rewrite history to defend a political line that was felt worth defending by vested interests for future indoctrination of people's mindset.

I hear what you are saying and one day the history of "power plays" and real motivations will become clearer. But the fight to cover up the trail will never falter either as big interests are at stake to defend the purity of any Empire, which writes its own official history. And this remains vested as long as living people, witnesses, are still there to stoke the fires of that ongoing fight. It only ends, belongs truly to history, the days ALL living witnesses are dead and the spin loses its passion. Then only the cold eye of history rests. If it has all the facts...made available to it!

Thu, 06/16/2011 - 12:36 | Link to Comment downrodeo
downrodeo's picture

let us, the tin-foil clad freedom fighters, congregate and spread our good tidings of liberation!

 

O. i'm with you 100%. Either they will start to report this stuff in the spirit of ZH and other truth tellers, or they will become so ridiculously absurd in their misinterpretations of events that they will become a laughingstock and lose all [or should i say any remaining] credibility. I doubt that MSM giants would allow themselves to dwindle into insolvency and irrelevance in order to maintain the public myth, but I suppose not even that would surprise me given the apparent misanthropic cynicism of the MSM.  

Thu, 06/16/2011 - 12:53 | Link to Comment Orly
Orly's picture

"I doubt that MSM giants would allow themselves to dwindle into insolvency and irrelevance in order to maintain the public myth..."

I am banking on it.

Besides the guilt and shame that I mentioned above, the two other motivating factors will be pride and money.  They are not going to have their livelihoods and thus their legacies tarnished because of what they know are absolute lies.

It will happen much sooner than you think.

Thu, 06/16/2011 - 09:40 | Link to Comment BlackholeDivestment
BlackholeDivestment's picture

...almost.

...there is no U.S., there is the ''want'' defining the writing on The Great Wal Mart of China.

''by peace shall he destroy many''

...and then all hell breaks loose ...about 3.5 years later.

Thu, 06/16/2011 - 11:48 | Link to Comment MrButtoMcFarty
MrButtoMcFarty's picture

Which benefits TPTB the most?

 

That is what will happen.

Thu, 06/16/2011 - 09:29 | Link to Comment Oh regional Indian
Oh regional Indian's picture

It's compound interest. Geometry will trump mathematics every time.
Even Einstein knew that much.
ORI
http://aadivaahan.wordpress.com/2010/07/07/another-pearl/

Thu, 06/16/2011 - 09:43 | Link to Comment falak pema
falak pema's picture

ORI, you mean compound geometric growth will trump simple arithmetic growth...they are both math! I think Einstein knew much more than just this progression disparity!

Thu, 06/16/2011 - 10:23 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Was wondering who would say that. ;-)

3,4,5 are just numbers till you put them on the side of a triangle shaped just so.

That is where the majick begins Falak. Mathamatics is number play.

Geometry is living numbers.

You cannot precisely square a circle in mathamatics, but you can surely do it on a drawing or a field.

Eh Falak?

I'll say it again, geometry trumps mathamatics everytime.

ORI

PS: Beyond pithy isms like this and the ability to cover a board with meaninglessly complex squiggles and constants, Einstein's papers were his wife's. Didn't you know that? Also a lot of work that he tok credit for had already been published.

He was a zionist shill too. Think about that for uno momento, SenoR Falak "Sidi" Pema!

The Great Dr. Al Mr. Atom bomb, oh noooooooos, don't build it, look the part with hairy ears Al was probably the greatest plagiaristic success in history.

ORI

 

 

Thu, 06/16/2011 - 10:38 | Link to Comment falak pema
falak pema's picture

Ori, you should write a book on your conspiracy theories...and the insider knowledge on the inside of the inside of their private celebrity lives....))). 

My humble attempt at novelistic play is much simpler and tries to espouse known history and never find an inside play for historical play that I cannot substantiate. That leaves my fictional characters lots of latitude for insider plays in mythical ways to spice up the novelista in as many novel ways I can think of. 

I feel no shame for having fallen into your logic trap. Its a game like chess. So its Ok by me. I love your concept of living numbers. I won't quarrel with you on semantics...

Thu, 06/16/2011 - 13:31 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Maybe I should eh?

Maybe I am?

Hmmmmm.....

Your prose is rich, only too heavy on a rare occaision, always a pleasure.

ORI

Thu, 06/16/2011 - 12:34 | Link to Comment Hook Line and S...
Hook Line and Sphincter's picture

It always seemed to me that geometry, like mathematics, are simple but useful reflections/projections of a soul temporarily bound by the perception of physicality.

Thu, 06/16/2011 - 13:47 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Nice.

ORI

Thu, 06/16/2011 - 09:26 | Link to Comment SwingForce
SwingForce's picture

Let me ask this: Credit Default Swaps on sovereign debt, which currency are they predominantly written in?

Thu, 06/16/2011 - 10:16 | Link to Comment GoinFawr
GoinFawr's picture


All currencies are fungible.

Let me ask this: who wears the pants in the creditor/debtor relationship?

Thu, 06/16/2011 - 10:51 | Link to Comment Boxed Merlot
Boxed Merlot's picture

Reminds me of the stories about the church in the middle ages and their relationship with kings.  The issue then was who has the authority to annoint who? 

 

As an interesting side note, even father Abraham who the three major religions of the world all recognize as foundational paid homage to the king of Salem.

Thu, 06/16/2011 - 12:08 | Link to Comment SwingForce
SwingForce's picture

My point is, after whatever happens in Greece happens, when it comes time to pay off the failed swaps, there will be a mad scramble for USDollars. IMHO.

Thu, 06/16/2011 - 13:30 | Link to Comment GoinFawr
GoinFawr's picture

And it is a good one SF. There's nothing like 600 quadrillion in red ink lying around at the ready to create an artificial, if temporary, dearth of something; gotcha.

OTOH, my questions are:

Creditors ultimately choose any method of repayment, denominate the debt in what you will. If you were a creditor what level of ever-increasing counterparty risk would you want in your currency of repayment?

Who are the creditors of that 600 bazillion, and who are the debtors? IE Who will be taking the 6000 bazillion hit on their investments, and who will be defaulting?

It all hinges, IMHO, on how much of that 6000 gazilliion has already been offloaded onto the gov'ts of the world, how much more there is to go before 'mark to market' will destroy every economy that's been suckered into taking it, and how far the banks that created those weapons of mass financial destruction have managed to distance themselves from the consequences.

Thu, 06/16/2011 - 09:33 | Link to Comment Robslob
Robslob's picture

Simple enough:

1) Everyone must first go back to "loving" the dollar

2) Then it crashes

3) Guess who wins both ways?

Thu, 06/16/2011 - 09:30 | Link to Comment sunnyside
sunnyside's picture

So at what point do enough people ask the simple question of "What is or could be wrong with a fractional reserve banking system based on a fiat currency with a private central bank?"

 

Thu, 06/16/2011 - 09:40 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Come on now.  You do more than simply break his legs.  You identify the useful organs and extract them in order to recover some of you losses.  The real problem comes when you find out that not only was he a gambler, but he was also an alcoholic and drug addict and all the organs are useless.  At that point you might be able to do something with the blood or bone marrow if he was a universal donor, otherwise, you are left with the only option of burning the body to warm your tea.  Although, that is one dumb loan shark if he is loaning a "millionaire" money, everyone needs to do their own homework, even loan sharks.

Thu, 06/16/2011 - 09:34 | Link to Comment gwar5
gwar5's picture

World Tax: Everyone in the world who holds FRNs is being taxed to subsidize the US debt every time the US Fed Reserve debases the USD. Can't blame people rioting over that.

Thu, 06/16/2011 - 09:36 | Link to Comment falak pema
falak pema's picture

If TD's account of QE-2 transfer to EU PDs is true...its USD bolstering of Euro in a big way. EU now tied into temporary USD monetary dominance, even if its built on hot air,  to save euro banking system. The central bank led 'hot potato' war will be China vs USD. The upcoming role of IMF will be fundamental in this stand-off. 

While the US oligarch market led HF/PD plays will continue to spark commodity, interest, and currency raids all over the world for speculative ST gains, the basic central bank ground work to save monetary system from SYSTEMIC RISK, which rogue oligarchical speculative plays superbly ignore and feed-off, will be to build the new monetary global mark to allow the world economy to TRY avoiding total collapse, in the upcoming deflation cycle which is inevitable. Its a question of kicking the can by US and tightening of belts on EM sides, until the monetary divide leads one side to throw in the towel.

Big tug of war now in perspective, between central bank led initiative between EM and DC stand-offs, in this interim period where each side will try and gain some short term psychological advantage. Any EU-USD rivalry will not be central bank led but rogue HF/PD speculative plays. This will be tempered by QE-3 monetary pumping to weaken USD, fuel export commodity inflation and support DJIA-WS, all the while the USD falls.

We will see clearly the outlines of this new-new world monetary order after January 2013 and before end 2016. 

But the dates are obviously just star gazing as any new black swan appearance could upset the apple cart!

Thu, 06/16/2011 - 09:41 | Link to Comment hamurobby
hamurobby's picture

I think short term, Benny will hold off on qe whatever to give the Euro some breathing room, Maybe a 50% retrace eurusd, What do you think?

Thu, 06/16/2011 - 09:53 | Link to Comment barkingbill
barkingbill's picture

will war be able to save the dollar? will america's military serve to help the dollar? this angle must also be looked at it. in the end i also believe though that the dollar is headed for loads of trouble

Thu, 06/16/2011 - 10:23 | Link to Comment GoinFawr
GoinFawr's picture

When was the last time the US wasn't at war?

Thu, 06/16/2011 - 09:58 | Link to Comment Imminent Collapse
Imminent Collapse's picture
Ruthless competition based on narrow-minded self-interest is ultimately destructive of even those things which it seeks to maintain.

The Urantia Book

 

Thu, 06/16/2011 - 09:59 | Link to Comment spanish inquisition
spanish inquisition's picture

TPTB are trying to keep the big 3 range bound, going to lose a lot of money if they get out of range too far. If forced, they may cut a few weak members out of the Euro to save the Dollar and Yen. Then tighten Euro control and sweep up the laggards in a few years. I think if one goes they all go.

Thu, 06/16/2011 - 10:05 | Link to Comment gringo28
gringo28's picture

spot on. all those EURUSD bears conveniently omit the true funding source for the EU - the Fed. Ben will print to stave off a credit event in Europe, if he isn't already doing so. the part I love is the market's reaction to this as if it were all occuring in a vacuum. the question always is "who benefits?" and "why?". Germany gets a temporary bump to its exports and Ben gets some reprieve on the commodity side.

Thu, 06/16/2011 - 10:08 | Link to Comment Hurdy Gurdy Man
Hurdy Gurdy Man's picture

but why - to feed the industrial-military-congressional complex yet again with the hugest nastiest war between USEurope and RussAsia?  omg, ballon full of bbq

 

Thu, 06/16/2011 - 10:14 | Link to Comment Quinvarius
Quinvarius's picture

It is an exercise in futility to guess how the central banks will manipulate their currencies into the ground.  They yank and add liquidity at a whim to maintain trading ranges.  Every liquidity yank damages the economy and requires a bigger liquidity add later on.  Every thing they do to make a short term difference damages the purchasing power of their currencies down the line.  What they did to the Yen after Fukashima is proof that these guys idiots live in a paper world that has zero connection to reality.  Physical gold and silver are the only things you should be buying until this whole paper confidence scheme implodes.

Thu, 06/16/2011 - 10:29 | Link to Comment Downtoolong
Downtoolong's picture

You realize with fury, that this guy may never pay you back. So, what do you do? Well, you break his legs, of course!

Only when you’re ready to die yourself. If you disable or kill the debtor he can never pay you back. The creditor must then recognize a total immediate loss. If you keep the debtor alive, there is still hope that he might be able to pay you back some day, and for the moment you can still claim your assets are real. Unfortunately, once debtors are allowed to accumulate inordinate amounts of debt they gain the upper hand in a warped debtor/creditor relationship where option number 2 seems better (lesser of two evils) to the creditor. Large debtors can threaten to take the entire world economy down with them if they default. Ergo, bank bailouts, sovereign government rescues, debt forgiveness, and the sickest solution of all; more credit. I think this is a more accurate (and very sad) view of the debtor/creditor relationship today. I call it hostage capitalism.  It’s how the world is turning right now and it’s forcing the biggest transfer or wealth from creditors to debtors in the history of mankind.

Thu, 06/16/2011 - 10:36 | Link to Comment Stuck on Zero
Stuck on Zero's picture

Human nature is funny.  More often than not when my company has had to fire a manager for lack of performance the fellow claims that his poor performance is due to a lack of power.  We had an executive secretary who was hired specifically to assist the CFO.  She failed to do anything well at all.  Personnel was getting ready to fire her when she told the stopped the CEO in the hall and told him she needed to have four or five people under her to do the tasks she was asked to do.  The CEO nearly pissed in his pants.  He wanted to tell her that she was hired to do the work.  He didn't she was fired and someone competent was hired in her place.  The new VP of Sales turned out to be a turkey.  He missed every mark and his staff said he was all talk and no action.  He went to the CFO and said that he should be made CEO and wanted this to be suggested to the board.  His sorry ass was kicked out soon enough.  We have a new term for these people: Gatekeepers.  Absolutely incompetent people who can't perform useful services but who want to be paid for sitting between people who need services and those who perform them.

What's the relevance?  We have a government and finance industry in this country that can't competently do anything.  Instead of trying to do anything useful they want to expand their powers.  They're all gatekeepers. Fire their asses.

Thu, 06/16/2011 - 10:43 | Link to Comment LawsofPhysics
LawsofPhysics's picture

No shit, the layman's term is "middlemen".  Fire all the middle men (entire financial sector) so that those of us with real value to exchange can get back to work.

Thu, 06/16/2011 - 10:52 | Link to Comment MachoMan
MachoMan's picture

The middlemen are being pinched...  this is called structural unemployment...  and it will continue for the foreseeable future.

Thu, 06/16/2011 - 10:51 | Link to Comment stant
stant's picture

maybe this is why they let martin armstrong out of prison. the outcome is irreversible no need to silence

Thu, 06/16/2011 - 10:54 | Link to Comment MachoMan
MachoMan's picture

Am I missing something here.  How is it the dollar falls first to the euro when it is the dollar's strength propping up the euro (through devaluation of the dollar)?  If this support is withdrawn, then...?  The author omits any causal connection here...  obviously there are derivatives behind the scenes, probably placing U.S. banks on the hook, but a glaring omission it seems.

Further, why is it that an appreciation of the euro cannot also ultimately cause it to collapse?  If the FED cannot maintain its desired ratio between the currencies, and the euro is allowed to appreciate, then what will the underlying economic state of affairs of euro members as well as their relationships with one another and how long can this appreciation last before default?  (hint: worse and not long).  If the euro states have yet to default because of U.S. and I.M.F. (read: U.S.) support, then why should they be able to withstand withdrawal of U.S. support, either by way of forced withdrawal or a collapse of the dollar?

So, to recap, either the euro collapses before the dollar (presuming the FED can withdraw support without collapsing the dollar) or immediately after/concurrent with the dollar (when support is withdrawn)...  ok.  got it.  dollar loses. 

Thu, 06/16/2011 - 12:11 | Link to Comment Stuck on Zero
Stuck on Zero's picture

Euro  ---  Dollar

Democrat ---  Republican

Good cop ---  Bad cop

Liberal --- Conservative

All diversionary tactics for TPTB.

Thu, 06/16/2011 - 13:12 | Link to Comment Orly
Orly's picture

"How is it the dollar falls first to the euro when it is the dollar's strength propping up the euro (through devaluation of the dollar)?  If this support is withdrawn, then...?"

In the US, it is commonplace for parents to co-sign a car loan for their children.  You may ask, why would a car dealer put his faith in a kid to make the payments?  The clear answer is they didn't.

Instead, the car dealer is making a bet that the parent will make good on the loan because either he doesn't want to lose face with the child, he doesn't want his credit record ruined, he doesn't want the child's credit record ruined, or a combination of all three.

Right now, traders are giving the Euro the benefit of the doubt that the US will make good on European credit.  Is it such a leap?  Did you read the stories over the week-end that said the Fed has underwritten European banks to the tune of some $600 billion (that we know of...).

The car dealer is smiling, in that perverse way...you know the one.  He knows he's covered, even if the parent has to take out another loan to make good on the child's debt.  Call it QE III or something more exotic but the principle is the same.

I'm not really sure on this one, though. It is quite possible that the Fed could leave the child out to dry, which, ironically, would raise its own credit level because the world would then know that the US taxpayer will no longer pay for eight weeks of French holiday, nor the rest of the Greek welfare state.

It definitely remains to be seen.  Stay tuned.

:D

Thu, 06/16/2011 - 13:34 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Nice analogy Orly.
Shucks, I just realized something strange. Analogy, in keeping with biology, technology...et. al. means an analogy is an anal-ogy. Strange.
But nice analogy nonetheless. I think it's the parent going to his loan shark to settle a bank debt to keep a clean Fico is where the trouble begins.
Anal-ogically speaking.
of course!
butt of course!!!

ORI

Thu, 06/16/2011 - 11:21 | Link to Comment LowProfile
LowProfile's picture

The U.S. is the fake millionaire, the rest of the world, the loan-shark

Boy, you sure got that backwards!

Thu, 06/16/2011 - 12:29 | Link to Comment MrButtoMcFarty
MrButtoMcFarty's picture

COMPLETELY OT....but quick question....

 

If you had the opportunity to ask a USN SEAL who was purportedly part of the team that took down OBL at a military function dinner a question....privately...offrecord...

 

What would that question be??

 

My first thought/question:

 

Who got OBL's AK47?

 

Suggestions welcomed....you've got until about 6PM CST or so....

 

Thu, 06/16/2011 - 12:55 | Link to Comment Orly
Orly's picture

How many of the SEAL team perished in that chopper?

Thu, 06/16/2011 - 13:05 | Link to Comment falak pema
falak pema's picture

seals never perish...they are immortals in combat.

Thu, 06/16/2011 - 13:46 | Link to Comment MachoMan
MachoMan's picture

ask him if they practiced the operation on silhouettes with water guns or how long obl took to thaw out.

joking aside, I'd ask about the level of opposition they faced...  It seems to me that this locale would be particularly troublesome given proximity to military academy/retired military persons....  how long it took...  these sorts of things...  then compare to official story.  But, the only way to catch him is going to be to ask things that weren't released and then ensure that the information that wasn't released was mutually exclusive with what was... 

I'd also be curious as to whether anyone on the ship saw the body...  the procedure for burial at sea...

Thu, 06/16/2011 - 13:46 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Yup, only baby seals perish in unarmed (on one side) combat in certain cold northern countries.

ORI

Thu, 06/16/2011 - 14:40 | Link to Comment GoinFawr
GoinFawr's picture

The babies are off limits in Canada now, don`t know about some of the others...

I think I`ll head somewhere there is still snow and pit some cherries on it for full effect; red splattered on white isn`t just dramatic on a flag, you know.

"I`m here `til Thursday. Try the veal!"

Thu, 06/16/2011 - 13:54 | Link to Comment Orly
Orly's picture

Did you see bin-Laden at the compound personally?

Based on your experience, was the compound more in line with a CIA-protected safe-house or a fortified rebel strong-hold?

Do you find the code-name "Geronimo" unsettling to you in any way?

How much cash was found on the property?

Wasn't it relatively "easy" to move your men into the compound, as though "Al-Qaeda" were expecting something else entirely, until the new state-of-the-art chopper crashed and burned and the shooting started?

I appreciate any answer you may have for these questions.  Thanks so much for your service.

:D

Thu, 06/16/2011 - 14:01 | Link to Comment Imminent Collapse
Imminent Collapse's picture

Ask them why they didn't know that you can't land a helicopter in an tight area with high walls - I am told by an employee at the plant that builds those choppers that the helicopter doesn't get the air necessary to maintain altitude.  Seems pretty fundamental, especially when you supposedly practiced for weeks in preparation for the operation.  BTW the other chopper landed outside the walls and the Seals scaled them. 

Thu, 06/16/2011 - 16:32 | Link to Comment MrButtoMcFarty
MrButtoMcFarty's picture

Maybe the Garmin wasn't updated.

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