International Traders Want Status Quo Back With 0% Lending

10/12/2008

Elaine Meinel Supkis


All the headlines this weekend are about how all the top international trade/commodity/manufacturing nations will coordinate a rescue of the impossible status quo of the last 35 years of the Floating Currency exchange system. This system allows the US to run perpetual trade deficits with the entire planet. In return, we solemnly promise to repay everyone via interest. Only we can't. This is why the last ditch effort here is to artificially drop interest rates to 0% so the US can afford to overspend forever. This forlorn hope of our trade partners will not work. Eventually, the bills will be so overwhelming, the return on lending so pathetic, no one will save money, all profits from 0% lending to the US will fuel inflation in ever-rising waves.


Europe's Leaders Race to Find Financial Solution

(Bloomberg) -- European leaders meet today to forge a new set of measures to combat the credit freeze after their failure to act a week ago contributed to the worst sell-off in the region's stocks in two decades.

French Finance Minister Christine Lagarde said leaders will aim to put ``meat and muscles'' on a commitment to safeguard key banks. German Chancellor Angela Merkel, whose government earlier this month rejected French suggestions to form a joint bank- rescue fund, said yesterday the euro region will implement ``the same toolbox of instruments.''
*snip*
Luxembourg's Jean-Claude Juncker, who heads the Eurogroup of euro-region finance ministers, said in a statement today that ``no financial institution of systemic importance'' can be allowed to fail. Juncker, who will take part in today's meeting in Paris, said that access to liquidity will be assured, efforts to unblock financial markets will be intensified and individuals' savings accounts will be protected.



Luxemburg is a pirate cove. England has lots of pirate cove islands used to undermine the entire banking/taxation system of the West. The sense of unity is impossible when so many nations are actually pirates. It is like trying to protect a fleet carrying gold from the New World to Spain by hiring a bunch of pirates. It won't work. A large percentage of the fleet will be looted. This is also why going to the pirates in the banking community to fix the mess these same pirates caused is dumb.


Nay, impossible. How did these pirates come into being, anyway? This is a pertinent question! Back at the end of WWII, there was a complete collapse of all empires except for two: Russia and America won WWII, hands down. All imperial rivals were either completely, physically destroyed or were utterly drained by the finances of the war. Russia, unlike America, also sustained very significant destruction and therefore, was starting off on a much weaker industrial and financial base.


The US was barely touched by any of the WWII damage. Not one city was bombed into oblivion. Not one factory was fried. So, by default, the only major currency on earth was the dollar. At the end of WWII, the US went into a recession. One of the biggest falls in the stock market came on the heels of victory. But this was due to two things: the huge overhang of war debts had to be digested and war spending inflation needed to be killed. Once this process finished, the US economy took off like a rocket.


All went well until the hopeless Vietnam War. At the end of it, we were so bankrupt, Nixon had to unilaterally, on a weekend, kill the gold peg. Then the Floating Currency regime was launched. This was at first, viewed with suspicion by Europe. They have a long memory of what floating currencies do: they sink.


But then they saw the ADVANTAGES of this new regime: they could flood the US with exports! From 1776 to 1976, the US sought with all its might to prevent others from unbalancing trade. The flow of US goods to Europe, South America, Asia and Africa had to always balance out or the government would raise tariffs and barriers. But with the launch of the new Floating Currency, the need to import oil meant the US had to drop this historic habit and engage in a new one: constant trade deficits.


Eventually, in order to stop inflation, the US engineered 'free trade.' This meant exporting all our industries to cheaper labor pools so we could bring the finished goods back in at cheap prices. If the government taxed this trade, prices would go up and we would have inflation. So, instead of taxing anything, the government began another historic new program: perpetual budget deficits.


At first, this troubled our government. To show concern, the Congress decided to pass a law that would trigger automatic budget cuts if the debt ceiling is reached. Then they put in a back door amendment: they could raise the ceiling in an emergency!


We then entered a perpetual emergency. At no time has anyone tried to cut anything. There is always an emergency! The threat of Russia was the Long Emergency of the Cold War. Then, when Russia went bankrupt, the new emergency was Muslim Threats. We did everything in our power to irritate the Muslims and drive them to despair and anger. Voila! An emergency!


So every year, like a clock, Congress raises the ceiling. At first, this caused lots of debate and raised some ire. But once people became accustomed to this, they accepted this fact and now it is a mere ritual. No one even bothers to notice, not the media nor the voters. Government overspending shot through the roof.


Cost of U.S. Crisis Action Grows, Along With Debt

(Bloomberg) -- The global financial crisis is turning into a bigger drain on the U.S. federal budget than experts estimated two weeks ago, ballooning the deficit toward $2 trillion.

Bailouts of American International Group, Fannie Mae and Freddie Mac likely will be more expensive than expected. States are turning to Washington for fiscal help. The Federal Reserve said this week it will begin buying commercial paper, the short- term loans companies used to conduct day-to-day business, further increasing costs. And analysts now say the $700 billion bank- rescue plan passed by Congress last week may have to be significantly larger.

``I always assumed they would be asking for more money along the way if it was necessary, and it looks like it's going to be necessary,'' said Stan Collender, a former analyst for the House and Senate budget committees, now at Qorvis Communications in Washington. ``At the moment, there's nothing happening here that's positive for the budget. Nothing.''

The 2009 budget deficit could be close to $2 trillion, or 12.5 percent of gross domestic product, more than twice the record of 6 percent set in 1983, according to David Greenlaw, Morgan Stanley's chief economist. Two weeks ago, budget analysts said the measures might push deficit to as much as $1.5 trillion.



The numbers are frightful! We are now in a paradoxical situation where the overspending is the emergency that triggers overspending as we try to overspend our way out of our overspending! This sounds insane and it IS insane. Utterly and totally mad. Yet virtually no one wants to stop this madness. The simple ideas of the past are ignored. We are not in a lending emergency, we are in a DEBT emergency. Which requires the exact opposite approach, the opposite medicine of a lending emergency.


G-20 Nations Agree on Need for More Cooperation, Mantega Says

(Bloomberg) -- Finance officials from the Group of 20 countries agreed on the need for a more coordinated response to the biggest global financial crisis in 80 years, Brazilian Finance Minister Guido Mantega said.

``The G-20 needs to be more agile, and transform itself rapidly so it can resolve the crisis,'' Mantega, chairman of the G-20, said at a press conference in Washington. The comments came a day after the Group of Seven finance chiefs pledged joint action to alleviate the credit crisis and prevent major banks from collapsing.

In a statement, the G-20 countries ``committed to using all the economic and financial tools to assure the stability and well functioning of financial markets.'' Officials will next meet on Nov. 8 and 9 in Sao Paulo, the statement said.



The financial markets cannot be 'well functioning' if the world's biggest economy is running in the red. This impossible situation has to be addressed. The natural forces which I call 'goddesses' because it is fun to think of them as this, these natural forces are wrenching the status quo very hard as these forces move things to equilibrium. In Nature, all things must reach a 'steady state' or they blow up. That is, nothing ever grows forever except perhaps the Universe itself.


The only place for Infinity is outside the Universe. Since the Universe has a definite beginning and most likely, end, the only place where Infinity can reside is outside the Universe. I call this 'The Outer Darkness' for there is no light since light travels, light creates time and space. So where there is no light, ie: outside of this Universe we inhabit, there is Darkness.

Continued>>
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