How Did America Get In This Economic Situation And How Do We Get Out

[sidewinder]

OK SS, so WE see this, understand this and speak out about it.  But what about the majority of the rest of the bloody world are they just content to ignore the absurdity of what’s taking place globally in regards to these shifts in power? 

Again, slowly but certainly religion is being used to concentrate power along with control of natural resources.  Resources, which increasing populations having a taste of a better quality of life, will demand and take if necessary the things they view as deserved.  There are 5 billion Cellular phone users today, about 72% of the planet has access to the rest of the world and what’s happening.  Food shortages will not be accepted and governments will pay the price at some point if they deny their citizens these advances in QofL issues.  It’s not like the third world citizens are sequestered any longer.  All the apps available “connect” almost everyone and those without the technology know someone or live with someone who is connected to the rest of the world.  Of course government can always cut of the connections but that would likely just piss ‘em off even more and backfire.  Those governments screwing up first will see the rest jump at the op to take down any regime who,  has been a “problem” in the past for the “heavy hitters”.  It’s still the little guy who pays with life, health and fortune as the powerful get their way. It is easy to see what the article described.  Rising Quality of life means many things.  More consumption of what you export is one of them and when the well is dry then what?  Back to the tribes and tents OR you conquer and take.   

Yes, some may conflict with UN Resolutions and then again it just depends on who you are.  Another reason to tell the UN to piss off. 

[onlooker]

I think Joseph E. Stiglitz's article has some excellent answers to the question "How Did America Get In This Economic Situation?"

INEQUALITY

See:   

Of the 1%, by the 1%, for the 1%
By Joseph E. Stiglitz

May 2011

It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.

Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up ..........

http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105

[onlooker]

When an article says “top secret candlelight dinner was held at the White House” I get wary about the credibility of the article; but still, this article is very interesting.

According to the article, the Chinese government and the Obama administration (Of the 1%, by the 1%, for the 1%) have cooked a deal for American institutions and banks (another Of the 1%, by the 1%, for the 1%) on how to preserve their wealth.

This deal involves deliberate devaluation of the US dollar with a rise of the Chinese yuan to allow for mutual benefits.

See:

Why The U.S. and China Secretly Want A Devalued U.S. Dollar
May 9, 2011

Since my January article was published, the yuan has steadily risen versus the greenback. China had long wanted to enter the American financial markets. It had abundant US dollars to make acquisitions and at the same time needed to diversify out of its enormous US debt (TLT) position. The solution was simple: the US would deliberately weaken the US dollar in order to hope to fortify the proposed elevation of the yuan. Consider the cleverness of these stratagems. A bolstered yuan could allow the growing Chinese middle class to improve their lifestyle. In addition, China would now be able to go on a buying spree for foreign companies, particularly in the area of commodities and natural resources.

With the improved yuan (CYB) they would now be able to acquire foreign companies at more attractive prices then heretofore. An elevated yuan would allow them entree into American institutions and banks. It would also allow US citizens to transfer their cheap US dollars into the yuan at bank windows right here in the United States.

Remember that noises have been made establishing the yuan as the World’s Reserve Currency. The agreement was to facilitate Chinese acquisitions and financial entry into the US markets and thus establish a pro quid pro with the United States. Conversely America would also benefit by being able to sell products at advantageous prices and pay off our colossal trillion dollar debt with cheap dollars. Basically, this was the scheme achieved by China and the United States at that candlelight dinner.

http://goldstocktrades.com/blog/2011/05/09/why-the-u-s-and-china-secretly-want-a-devalued-u-s-dollar/

[onlooker]

The other interesting comment from the article Why The U.S. and China Secretly Want A Devalued U.S. Dollar is:

“Expect China to aggressively pursue strategic metal mining companies as part of a little publicized arrangement between the US and the Asian giant.”

There could be some truth to this statement. 

Not too long ago, when the US dollar and economy was stronger, Congress would scrutinize and swiftly block China from buying up American resources.

See:

Lawmakers try to block China's bid for Unocal / National security cited for opposition
By David Armstrong  July 16, 2005 

China's third-largest oil company has run into roadblocks in both houses of Congress over its bid to buy California's Unocal Corp., a controversial quest that has raised national security fears.

Sen. Byron Dorgan, D-N.D., introduced a bill in the Senate on Friday that would bar the Chinese National Offshore Oil Co. from buying Unocal, of El Segundo (Los Angeles County).

The 70 percent government-owned CNOOC has presented an $18.5 billion unsolicited bid for the U.S. oil and gas firm.

Two day's before Dorgan's move, Rep. Richard Pombo, R-Tracy, said he plans to introduce an amendment to the House's Energy Policy Act of 2005 that would intensify scrutiny of Chinese policies.

http://articles.sfgate.com/2005-07-16/business/17381144_1_cnooc-china-s-state-owned-oil-companies-unocal

[onlooker]

But, times have changed.  America’s economy is suffering a reversal of fortune.  It appears that lately, China is permitted to enter America and buy up American resources. 

See:

GENERAL MOLY ANNOUNCES HANLONG'S SIGNING OF MEMO OF COOPERATION WITH EXIM BANK OF CHINA  Nov. 18, 2010

Under the previously-announced transaction between Hanlong and General Moly, Hanlong will provide a total of $745 million in financing to General Moly including a $665 million bank loan Hanlong will source and guarantee.   ........   The transaction with Hanlong is expected to provide all remaining capital necessary to place the Mt. Hope project into production.

~   ~   ~

General Moly is a U.S.-based molybdenum mineral development, exploration and mining company listed on the NYSE Amex (formerly the American Stock Exchange) and the Toronto Stock Exchange under the symbol GMO. Our primary asset, our interest in the Mt. Hope project located in central Nevada, is considered one of the world's largest and highest grade molybdenum deposits. Combined with our second molybdenum property, the Liberty project that is also located in central Nevada, our goal is to become the largest primary molybdenum producer by the middle of the decade.

http://www.generalmoly.com/index.php?option=com_content&view=article&id=89:general-moly-announces-hanlongs-signing-of-memo-of-cooperation-with-exim-bank-of-china&catid=1:news-releases&Itemid=49

See:

U.S. control of 'rare earth' minerals slipping 
By Lou Kilzer    January 30, 2011

Three bills countering China's rare-earths policies were introduced in the last Congress by Coffman, Sen. Lisa Murkowski, R-Alaska, and Rep. Kathleen Dahlkemper, D-Erie, who lost re-election in November.

Each bill involved some degree of government intervention. None won approval.

http://www.miningminnesota.com/news_view.php?id=289

Let’s see if there will be more unblocked buying sprees by China for American resources.

[onlooker]

The Obama administration targets federal pension funds to get what they want.  How low can they go?

Treasury to tap pensions to help fund government
By Zachary A. Goldfarb, Published: May 15 2011

The Obama administration will begin to tap federal retiree programs to help fund operations after the government lost its ability Monday to borrow more money from the public, adding urgency to efforts in Washington to fashion a compromise over the debt.

Treasury Secretary Timothy F. Geithner has warned for months that the government would soon hit the $14.3 trillion debt ceiling — a legal limit on how much it can borrow. With that limit reached Monday, Geithner is undertaking special measures in an effort to postpone the day when he will no longer have enough funds to pay all of the government’s bills.

Geithner, who has already suspended a program that helps state and local government manage their finances, will begin to borrow from retirement funds for federal workers. The measure won’t have an impact on retirees because the Treasury is legally required to reimburse the program.

The maneuver buys Geithner only a few months of time. If Congress does not vote by Aug. 2 to raise the debt limit, Geithner says the government is likely to default on some of its obligations, which he says would cause enormous economic harm and the suspension of government services, including the disbursal of Social Security funds.

http://www.washingtonpost.com/business/economy/treasury-to-tap-pensions-to-help-fund-government/2011/05/15/AF2fqK4G_story.html?hpid=z1

[sidewinder]

Onlooker

It appears that lately, China is permitted to enter America and buy up American resources. 

Some of us were saying "Your Grandchildren will be houseboys for Chinese" a few years ago.  Maybe that's more than a joke. 

We can see much more Chinese investment into American Business everyday.  Face it they have the USD and need to spend/invest them before they become worthless as we monetize our debt. 

This company MVP RV in California sold 0 units last year and suddenly bought a facility formerly occupied by large RV manufacturer Fleetwood, who filed BK and sold off the properties. 

MVP was quiet for a while but now it is known there was a Chinese Businessman who injected $310 Million into MVP and plans to export 30,000 RV's into China. 

The Chinese middle class is growing and they want the quality of life thing they have been watching us us for all these years but were out of their reach.  It's coming and coming fast if you ask me.

This article is simply that the almost broke MVP was taking over a Fleetwood plant last year, no mention of where the money came from.

It appears that lately, China is permitted to enter America and buy up American resources.

This article outlines the business deal with Chinese investor.
http://www.rvbusiness.com/2011/03/mvps-williams-details-chinese-investment/

There's new wealth in China and We'll just have to see how this goes.  One thing for sure with the amount of USD on hand and the dollar sinking it only makes sense to buy what you can before it gets more worthless.  That mean "things of value" lots of them.  And the US government almost has to allow them to spend the cash here or face being branded as the "crooks" they are. 

[onlooker]

SW's May 17, 2011 quote:

We can see much more Chinese investment into American Business everyday.  Face it they have the USD and need to spend/invest them before they become worthless as we monetize our debt.

It appears that lately, China is permitted to enter America and buy up American resources.

the US government almost has to allow them to spend the cash here or face being branded as the "crooks" they are.

 

~    ~    ~

SW,

In 2011, it is reported that there more Chinese investments going into American businesses.  This is history repeating itself.  Japan was permitted to establish their businesses on American soil in the 1980s when Japan's economy was ascending.  So today, as China rises and its redbacks, America has to let down its guard, and like you say, permit the Chinese to enter and set up businesses in America.

See:

Investment Opportunities in Japan and the Southeast United States
http://www.jetro.go.jp/en/jetro/profile/speeches/2002/sep16.html

See:

JAPAN'S GUNG-HO U.S. CAR PLANTS
By Louis Kraar  January 30, 1989
http://money.cnn.com/magazines/fortune/fortune_archive/1989/01/30/71569/index.htm

I think that only the clueless American citizens will be taken aback when they see a foreign entity and not their own government throwing them financial life lines.  These who are informed will understand that their own government have long thrown them under the bus (see: http://www.usdebtclock.org/#   ) and there was no other option but to let more foreign investments in and sell their natural resources.

[sidewinder]

Speaking of getting thrown under the bus.     

http://www.therightperspective.org/2011/05/19/obama-threw-israel-under-the-bus-romney/

Idiots in government come in all sizes, colors and material.  This one is no different.  When I heard this today I simply could not believe it at first.  This one statement may well be his political undoing.  As though he has not done enough yet.  We still have at least a year and a half more of these screw ups out of the oval office. 

[onlooker]

SW`s May 19, 2011 quote:

When I heard this today I simply could not believe it at first.  This one statement may well be his political undoing.

I agree.

After Obama`s re-election campaign handlers have propped him up to be a hero for bringing down OBL, I think they must have winced, and dropped their mouths in utter disbelief on hearing Obama publicly calling for Israel to return to its pre-1967 borders.   

http://skipmaclure.files.wordpress.com/2010/12/obama-oops.jpg

If the following article is to be believed, then Obama has just committed career suicide.

See:  http://www.jcpa.org/jl/vp446.htm

[onlooker]

It has been rumoured that China and Russia have been developing a yuan – ruble trade settlement deal.

See:  http://georgewashington2.blogspot.com/2009/10/china-and-russia-developing-yuan-ruble.html 

But, it is no longer a rumour. 

There’s now a minute publicized news in comparison to the Super Bowl, American Idol, Oprah’s departure to newer ventures, etc … about at a ground (make that country) breaking deal event that the greenback will eventually be a goner.
See:

Russia, China signed deal to switch to trade in rubles, yuan
By Nizhny Novgorod     June 23, 2011

Russia and China will switch to trade in rubles and yuan to boost bilateral trade and economic cooperation, following an agreement signed between the central banks of both countries, Russian Central Bank Deputy Chairman Viktor Melnikov said on Thursday.

"This agreement allows for settlements through Russian and Chinese banks not only in the freely convertible currencies but also in the yuan and the ruble," Melnikov said.

http://en.rian.ru/business/20110623/164798920.html

[sidewinder]

Notice the dates and amounts of the trade levels.  By 201 16 the US is gonna be in deep ka ka and the house of cards may be ripe for falling by 2020.

Irresponsible manipulation of the reserve currency and all the political BS that goes along with it leads to to it's downfall and the ruination of hard working Americans.  It is not the people but the politicians who as typical bureaucrats have no clue what they are doing. 

If the US gets past 2020 intact it will be a miracle or the result of Europe's failure being deeper and worse.  Either way most of the world is simply tired of the status quo and being led around by the short hairs by the banksters.  Can't say as I blame them, they can ruin their own economies just as well without all the "help"  from the west.  Somebody in Washington had better start returning to reality and soon before it's far too late. 

OK rant over.   

[sunseeker]

Thanks OL.
SW Feel another rant coming on 


Long winded/late in the day post

END GAME...

Time To End The Empire

http://geraldcelentechannel.blogspot.com/2011/06/time-to-end-empire-dr-bob-bowman.html


David Stockman.  Budget Director under Ronald Reagan(You guys are better informed on Mr Stockman than I am).

We’re doomed on both sides of the pond

http://www.infiniteunknown.net/2011/06/22/former-budget-director-david-stockman-warns-on-us-bond-armageddon-first-default-could-be-to-imf/

An extract from some research that was forwarded to me.........

An opportunity missed....

September 1998. Merrill Lynch Private Banking in London.

The market environment had been deteriorating for weeks, made worse by Russia’s recent sovereign default. Suddenly, word spread that the company’s CEO and chairman, David Komansky, had demanded that every trading desk throughout the firm report its exposure to a hedge fund called Long Term Capital Management (LTCM) by the close of play that day. It turned out that LTCM had been haemorrhaging money for months. In the first three weeks of September 1998, the fund’s equity had fallen from $2.3 billion to just $400 million. Since it had liabilities of over $100 billion, that effectively meant that it was leveraged 250-to-1. When you’re that insanely geared, a fall in portfolio value of just 0.4% means that you are completely wiped out. LTCM was trading just about everything, with just about every Wall Street firm that mattered. So it was no surprise that financial markets froze. A forewarning of what would happen a decade later when Lehman Brothers failed – given the giant hedge fund’s interconnectedness with everything and everyone else.

In the aftermath of the LTCM debacle it become clear how deeply embedded the fund was within the global financial infrastructure. It lost over $1 billion in swaps (implying the threat of significant counterparty risk at Wall Street banks). And it lost over $1 billion in equity volatility trades (ditto). LTCM also lost hundreds of millions of dollars trading emerging markets, developed stock markets, equity long/short trading, yield curve (government bond) arbitrage, US stocks and junk bonds.

LTCM was the financial equivalent of Typhoid Mary. Market stability was only assured after a consortium of banks agreed to recapitalise the business and inject new funds. Those banks included Bankers Trust, Barclays, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, Merrill Lynch, JP Morgan, Morgan Stanley, UBS, SocGen, Lehman Brothers and Paribas. The one big counterparty of LTCM that refused to participate and put its hand in its pocket was Bear Stearns – and Wall Street would take its revenge on them roughly 10 years later. All of LTCM’s original
partners were wiped out.

The collapse of LTCM should have been an explicit warning to the financial authorities of what happens when a single trading institution (LTCM wasn’t even a bank) becomes, too big to fail. The fear that suffused all financial markets at the time was that as LTCM liquidated its holdings, it would force banking counterparties and other traders with similar positions to do likewise, triggering a chain reaction of violent and uncontrollable selling.

LTCM was the first example in recent history of a financial house holding the world to ransom due to imprudent risk controls. Once it was finally wound up, the regulators across developed markets should have vowed: never again. Auditors and regulators should have promised to keep a keener eye on leverage, and ensure that large trading organisations - not least the banks - never allowed their leverage to get out of control, threatening the entire financial system in the process. But they did not. We are living with the consequences to this day.

What Jim Rogers has to say (I'm a big fan)...

I am terrified every time Ben Bernanke speaks.....

http://www.youtube.com/watch?v=IcAmanOeDAY&feature=relmfu

Some proof backing Jim Rogers point of view...

http://theeconomiccollapseblog.com/archives/say-what-30-ben-bernanke-quotes-that-are-so-stupid-that-you-wont-know-whether-to-laugh-or-cry

The House of Rockerfeller.....

The fear that the public will realize that their tonic is useless and their whole show is just a stage act, and the people run them out of town.

http://www.corbettreport.com/meet-william-rockefeller-snake-oil-salesman/


ATB 

[sunseeker]

Marcus Tullius Cicero  Budget plan for the Roman Empire in the year 55BC

"The budget should be balanced, the treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, assistance to foreign lands should be curtailed lest Rome become bankrupt, the mobs should be forced to work and not depend on government for subsistence. " 


If he were alive today I'm sure he'd be making a simular speach.


ATB 

[sidewinder]

 

Marcus Tullius Cicero  Budget plan for the Roman Empire in the year 55BC

"The budget should be balanced, the treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, assistance to foreign lands should be curtailed lest Rome become bankrupt, the mobs should be forced to work and not depend on government for subsistence. " 


If he were alive today I'm sure he'd be making a simular speach.


ATB 

That one has been under debate in many places but, it most likely originated in" A Pillar of Iron" (1965), Taylor Caldwell's fictionalized account of the life of the senator. (In fact, Collins noted that it was on page 483 of the edition he had in hand.)

Collins held that the alleged quotation "is totally without documentation," and that "the great bulk of [Caldwell's] quotations are false." He further observed that "[a] historical novelist has a perfect right to put invented conversations and anecdotes into a novel, but should not represent these inventions as authentic history."

The message is a good one all the same just doesn't sound like anything Cicero said.  One thing Rome was not known for foreign aid in a monetary sense, they would just conquer, take what they wanted and leave behind some knowledge.  Cato said something similar to this but this quote can likewise not be attributed to Cato either. 

Not messing with you ......  Just saying.