Doomsday for the Greenback
April 13th, 2007This guy’s Magic 8 Ball is saying the same thing as mine.
Via: Information Clearing House:
The American people are in La-la land. If they had any idea of what the Federal Reserve was up to they’d be out on the streets waving fists and pitchforks. Instead, we go our business like nothing is wrong.
Are we really that stupid?
What is it that people don’t understand about the trade deficit? It’s not rocket science. The Current Account Deficit is over $800 billion a year. That means that we are spending more than we are making and savaging the dollar in the process. Presently, we need more than $2 billion of foreign investment per day just to keep the wheels from coming off the cart.
Everyone agrees that the current trade imbalances are unsustainable and will probably trigger major economic disruptions that will thrust us towards a global recession. Still, Washington and the Fed stubbornly resist any change in policy that might reduce over-consumption or reverse present trends.
It’s madness.
The investor class loves big deficits because they provide cheap credit for Bush’s lavish tax cuts and war. The recycling of dollars into US Treasuries and dollar-based securities is a neat way of covering government expenses and propping up the stock market with foreign cash. It’s a “win-win†situation for political elites and Wall Street. For the rest of us it’s a dead-loss.
The trade deficit puts downward pressure on the dollar and acts as a hidden tax. In fact, that’s what it is–a tax! Every day the deficit grows, more money is stolen from the retirements and life savings of working class Americans. It’s an inflation bombshell obscured by the bland rhetoric of “free markets†and deregulation.
Consider this: In 2002 the euro was $.87 on the dollar. Last Friday (4-6-07) it closed at $1.34– a better than 50% gain for the euro in just 4 years. The same is true of gold. In April 2000, gold was selling for $279 per ounce. Last Friday, at the close of the market it skyrocketed to $679.50—more than double the price.
Gold isn’t going up; it’s simply a meter on the waning value of the dollar. The reality is that the dollar is tanking big-time, and the main culprit is the widening trade deficit.
The demolition of the dollar isn’t accidental. It’s part of a plan to shift wealth from one class to another and concentrate political power in the hands of a permanent ruling elite. There’s nothing particularly new about this and Bush and Greenspan have done nothing to conceal what they are doing. The massive expansion of the Federal government, the unfunded tax cuts, the low interest rates and the steep increases in the money supply have all been carried out in full-view of the American people. Nothing has been hidden. Neither the administration nor the Fed seem to care whether or not we know that we’re getting screwed –it’s just our tough luck. What they care about is the $3 trillion in wealth that has been transferred from wage slaves and pensioners to brandy-drooling plutocrats like Greenspan and his n’er-do-well friend, Bush.
These policies have had a devastating effect on the dollar which has been slumping since Bush took office in 2000. Now that foreign purchases of US debt are dropping off, the greenback could plunge to even greater depths. There’s really no way of knowing how far the dollar will fall.
That puts us at a crossroads. We are so utterly dependent on the “charity of strangers†(foreign investment) that a 9% blip in the Chinese stock market (or even a .25 basis point up-tick in the yen) sends Wall Street into a downward spiral. As the housing market continues to unwind, the stock market (which is loaded with collateralized mortgage debt) will naturally edge lower and foreign investment in US Treasuries and securities will dry up. That’ll be doomsday for the greenback as central banks across the planet will try to unload their stockpiles of dollars for gold or foreign currencies.
That day appears to be quickly approaching as the 3 powerhouse economies are overheating and need to raise interest rates to stifle inflation. This will make their bonds and currencies all the more attractive for foreign investment; diverting much needed credit from American markets.
Research Credit: Life After the Oil Crash
New Zealand Dollar Gaps Through 73
April 13th, 2007You might have thought I was exaggerating when I wrote, “New Zealand farmers are going to get nailed to a cross made out of yen and euros.” If anything, that statement wasn’t strong enough.
And what are they proposing in Wellington? Raise rates, making the carry trade action even more severe!? Driving the thing even higher? I don’t know who’s behind the wheel of this thing, but it’s not Kiwis. There is some kind of insidious, international banking octopus thing happening here. New Zealand politicians are selling their own country out to a global criminal elite that is going to eat this land alive and spit what remains out into the sea.
I wonder: will the government still blame the Kiwi consumer for this as they get wiped out, lose their homes and unemployment kicks in, AND the New Zealand dollar continues to rise because of the carry trade?
If I’m wrong about the influence of the carry trade, can anyone explain to me why the New Zealand dollar is rising with Kiwis behaving like American consumers?
Hint: The Kiwi consumer is a big fat red herring that is being used shift the focus away from the international looting that the government is allowing to continue.
The government needs to cool the jets of the Kiwi consumer, BUT where is the plan to limit the carry trade funny money casino for wealthy foreigners? Hmmm?
Via: Bloomberg:
New Zealand’s retail sales rose almost four times the pace expected in February, driving the nation’s currency to a 23-month high on expectations central bank Governor Alan Bollard will carry out his threat to raise interest rates.
Retail sales gained 1.9 percent from January when they rose 0.7 percent, seasonally adjusted, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg News survey of 13 economists was for a 0.5 percent increase.
The biggest surge in spending since March 2004 will further stoke the economy and inflation after growth accelerated in the fourth quarter. Governor Bollard raised the official cash rate a quarter point to a record 7.5 percent last month, saying a pickup in domestic demand may fan price increases and force him to increase borrowing costs again.
“The pickup in growth is gathering momentum, adding to signs that interest rates need to increase,” Craig Ebert, senior markets economist at Bank of New Zealand Ltd. in Wellington, said before the report was released. “This would set the scene for another above- trend spending increase for the March quarter.”
The New Zealand dollar jumped after the report. It bought 73.52 U.S. cents at 11:03 a.m. in Wellington from 73.11 cents before the report was released.
Bollard Threat
Bollard on March 8 said domestic demand and housing must slow to reduce inflation pressures. He said a further rate increase may be required unless consumer spending cools.
Gold: Switch Off Your Targeting Computer
April 13th, 2007WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
I don’t like calling the action in the pits of the most diabolical casino that the world has ever seen, but I’m being forced to pay attention to this. I’m just trying to hold on to as much of the little bit of money that Becky and I have been able to save.
What happened as the U.S. dollar sold off (again) today? Gold gapped down, but then what happened? Gold came right back. This nonsense might be institutions dumping their gold bets to cover their losses on funny money trades involving the U.S. dollar. The immediate bounce back in gold might indicate that there is substantial accumulation interest lurking just below the market. Shaking the apple tree is resulting in people picking up the apples.
Pull the gold charts yourself. Do you see the triangle formed by the higher lows approaching that ominous overhead resistance?
Read about ascending triangles, if you don’t know about them already.
If you’re a gambling person, this might be good bet. (Hint: We’re all gamblers now, whether we like it or not.)
Of course, the U.S. dollar has been clobbered and may be technically oversold. While the U.S. dollar is in a descending triangle pattern now (bearish), it has also formed a creepy double bottom on weekly charts (bullish). So, what is it: a double bottom, or a descending triangle?
Let me consult my Magic 8 Ball…
My best guess is that this is not a bottoming formation on the dollar, and that the downtrend will continue. Why? The subprime mortgage paper apocalypse is spreading to “lower” risk paper in the Alt-A liar loan category. That might be bullish for the dollar is some weird Plunge Protection Team kind of way, but I doubt it otherwise. I wouldn’t be surprised if we see a fakeout bounce on the dollar before the long red candles start bleeding down computer screens everywhere.
Place your bets, boys! It’s make or break time. The Cryptogon Magic 8 Ball shorts U.S. dollars on any upside and buys gold on dips. These times are always full of fakeout moves, so there’s no point in quoting support and resistance numbers, since those will be fiddled with as part of the routine.
As usual, don’t listen to me. Switch off your targeting computer. Does the Force whisper anything in your ear as you speed through the trench at full throttle?
It’s going to be over soon, one way or the other. That’s the beauty of critical make or break points in trading.
Digging In: Britain’s Green Revolution on the Home Front
April 12th, 2007Once people understand the complex of issues related to food, the rest falls into place pretty damn fast.
Via: Guardian:
During the second world war the government famously urged every able man and woman in Britain to “dig for victory” – to grub up their flower beds and tear up their lawns to grow vegetables to avoid widespread hunger. Today, a new British land army of gardeners appears to be doing the same to avoid eating industrially-produced foods.
New figures from the Horticultural trades association show a 31% increase in the sales of vegetable seed to householders, and a corresponding 32% decline in the sale of flower seeds. We are also buying nearly twice as many seedlings and young edible plants like tomatoes and marrows, and are growing far more herbs than ever before.
Confirmation that the worm is turning away from flower growing to vegetables comes from the Royal Horticultural Society and seed companies, which say that vegetable seeds sales are now outstripping flower seeds for the first time since the second world war.
Suttons, which sells nearly a third of all household vegetable seeds in the UK, said this week that there had been a massive increase in vegetable growing in Britain. “We are seeing a big move away from flower seeds to vegetables. There has been a dramatic rise in things like sales of onions and potatoes. Spuds in particular are nearly 60% up on last year, which was 20%-30% up on the year before,” a spokesman said. This year the company expects a 30% increase in its sales of UK vegetable seeds.
…
The reasons given for the shift to vegetable growing in the most urbanised country in Europe range from a political desire to not be beholden to large supermarkets, to a new awareness about healthy food and the environment, and deep dissatisfaction with industrially grown food.
Research Credit: Path to Freedom
‘Water Police’ Crack Down in an Ever-Drier Australia
April 12th, 2007Via: Christian Science Monitor:
At first glance it looks like a police car – a white vehicle with a black-and-yellow checkerboard stripe running along its flanks. But as the patrol vehicle turns a corner in the leafy district of Paddington, in central Sydney, its true purpose becomes clear from the bold black lettering across its trunk: “Water Restrictions.”
Australia, already the driest inhabited continent on the planet, is in the grip of its worst-ever drought.
The water crisis is no longer about desperate farmers in the Outback watching their sheep and cattle perish. Over the past six years, it has extended its grip to the cities and is changing the way Australians regard a resource they once took for granted. The patrol car is one of 50 that cruise Sydney’s streets around the clock, every day of the week, sniffing out water wastage.
Research Credit: Becky
Cryptogon Reader Contributes $54
April 12th, 2007Thank you, Pookie.
America’s Plan for Baghdad: Carve City Into Sealed Areas
April 12th, 2007Via: Independent:
Faced with an ever-more ruthless insurgency in Baghdad – despite President George Bush’s “surge” in troops – US forces in the city are now planning a massive and highly controversial counter-insurgency operation that will seal off vast areas of the city, enclosing whole neighbourhoods with barricades and allowing only Iraqis with newly issued ID cards to enter.
The campaign of “gated communities” – whose genesis was in the Vietnam War – will involve up to 30 of the city’s 89 official districts and will be the most ambitious counter-insurgency programme yet mounted by the US in Iraq.
The system has been used – and has spectacularly failed – in the past, and its inauguration in Iraq is as much a sign of American desperation at the country’s continued descent into civil conflict as it is of US determination to “win” the war against an Iraqi insurgency that has cost the lives of more than 3,200 American troops. The system of “gating” areas under foreign occupation failed during the French war against FLN insurgents in Algeria and again during the American war in Vietnam. Israel has employed similar practices during its occupation of Palestinian territory – again, with little success.
Three Generals Spurn the Position of War ‘Czar’
April 12th, 2007Via: Washington Post:
The White House wants to appoint a high-powered czar to oversee the wars in Iraq and Afghanistan with authority to issue directions to the Pentagon, the State Department and other agencies, but it has had trouble finding anyone able and willing to take the job, according to people close to the situation.
At least three retired four-star generals approached by the White House in recent weeks have declined to be considered for the position, the sources said, underscoring the administration’s difficulty in enlisting its top recruits to join the team after five years of warfare that have taxed the United States and its military.
Research Credit: SA
Kurt Vonnegut Dies at 84
April 12th, 2007Via: Seattle Post:
Kurt Vonnegut, the satirical novelist who captured the absurdity of war and questioned the advances of science in darkly humorous works such as “Slaughterhouse-Five” and “Cat’s Cradle,” died Wednesday. He was 84.
Pentagon Plans Troop Extension for Iraq
April 11th, 2007Via: AP / San Francisco Chronicle:
The Pentagon will lengthen tours of duty for all active-duty Army units in Iraq to 15 months from the current 12 months as the military struggles to supply enough troops for the conflict, two defense officials said Wednesday.
Defense Secretary Robert Gates planned to announce the decision Wednesday afternoon, said the officials, who spoke on condition of anonymity because they were not authorized to speak on the record.
It is the latest move by the Pentagon to cope with the strains of fighting two wars simultaneously and maintaining a higher troop level in Iraq as part of President Bush’s revised strategy for stabilizing Baghdad.
