Stephen Bové - Art, Technology, Right Action

Wednesday, November 21, 2007

The Collapse of the American Empire Part N

Just in case you care about your net worth or the stature of your country's morals, credit or currency (and those things are strongly correlated):

Bush ‘approved lies’ in CIA leak case that exposed spy whose husband opposed Iraq war, says former aide...A former White House press secretary has accused US president George Bush of approving “lies” after the media was told that top-ranking aides were not involved in a leak which exposed an American CIA agent.


U.S. Stocks Tumble, Wiping Out S&P 500's Gain for Year; Exxon Mobil Falls U.S. stocks fell, wiping out this year's gain for the Standard & Poor's 500 Index, after concern that losses from mortgage defaults will spread through the economy pushed down shares of banks and commodities producers.

U.S. 10-Year Bond Yield Below 4% for First Time Since 2005 as Stocks Drop Treasuries rallied, sending 10-year note yields below 4 percent for the first time since 2005, as a decline in global stocks spurred demand for the safety of government debt.

11/06/07 and 11/15/07
Ex Soros/Quantum hedge fund guru and global investing expert Jim Rogers calls Fed Chairman Bernanke "a nut" AND "a fool" all in two weeks:

Federal Reserve Chairman Ben Bernanke is ``a nut'' and interest-rate cuts by the central bank are harming the U.S. economy by fueling inflation, investor Jim Rogers said.

``Bernanke loves printing money,'' Rogers said in an interview in New York. ``This man is a nut. The dollar is collapsing, commodities are going through the roof, which means inflation's going through the roof. These people are leading us to terrible problems down the line.''

``He is a total fool,'' Rogers said. ``He said Americans who buy only American goods are not affected if the value of the U.S. dollar goes down. I was terrified.''...``If you only buy American products and the dollar goes down, the price of oil goes up, copper goes up,
wheat goes up,'' he said. ``That affects you. He doesn't understand the economy as far as I can see.''

Jim Rogers (see above) "urged people to get out of the dollar and says he expects to be rid of all his U.S. currency assets by summer next year.

``If you have dollars, I urge you to get out,'' Rogers said in an interview from Singapore. He is chairman of New York-based Rogers Holdings, formerly known as Beeland Interests Inc. ``That's not a currency to own.''

An alarming spike in the 'Ted spread' between commercial Libor and US Treasury bills, now near 150 basis points. "Libor is at a premium to T-bills not matched the great crash in 1987...- Charles Dumas, chief strategist for Lombard Street Research

The flight from risk has led to a sudden unwinding of the $1,200bn yen "carry trade" as hedge funds and Japanese investors close risky positions. The yen has snapped back violently from yen118 to yen108 against the dollar since early October, with similar moves against other Anglo-Saxon currencies. "We're seeing a liquidation of the carry trade. For years it created liquidity for global equities in an upward spiral, but this has now turned into a downward spiral. Base metal prices are falling, which that tells us that Asia may not be as strong as we thought," - Hans Redeker, currency chief at BNP Paribas

Saudi minister warns of dollar collapse: The dollar could collapse if Opec officially admits considering changing the pricing of oil into alternative currencies such as the euro, the Saudi Arabian foreign minister has warned. In an embarrassing blunder at the meeting in Riyadh, ministers' microphones were not cut off during a key closed meeting, and Prince Al-Faisal was heard saying: "My feeling is that the mere mention that the Opec countries are studying the issue of the dollar is itself going to have an impact that endangers the interests of the countries. "There will be journalists who will seize on this point and we don't want the dollar to collapse instead of doing something good for Opec."

The Iraq War has cost Americans well over $1 trillion. According to a study by the Democratic Staff of Congress’ Joint Economic Committee, entitled “The Hidden Costs of the Iraq War,” “The economic costs to the United States of the wars in Iraq and Afghanistan so far total approximately $1.5 trillion… That amount is nearly double the $804 billion the White House has spent or requested to wage these wars through 2008.” The report also calculates that the wars in Iraq and Afghanistan have already cost the typical family of four more than $20,000. As the report notes, “The full economic costs of the war to the American taxpayers and the overall U.S. economy go well beyond even the immense federal budget costs already reported.” Unlike previous assessments, these estimates look at the conflicts; “‘hidden costs’– including higher oil prices, the expense of treating wounded veterans and interest payments on the money borrowed to pay for the wars.” [Washington Post, 11/13/07]

Staying the course in Iraq could cost an additional $2 trillion. While the war in Iraq has already incurred a tremendous cost on American taxpayers and the American economy, staying the course in Iraq is a choice that would have huge additional costs. It is estimated that staying the course in Iraq could cost an additional $2 trillion in total economic costs, including interest payments for war-related debt payments. [Joint Economic Committee, Majority Staff, 11/07]


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