Fw The Coming Economic Depression

[Guest guest]

The Coming Economic Depression

 

By Mark S. Watson

New readers take note: This is a long running series of Articles that begins

here

December 2004 Update

 

Dollar Doldrums

 

The story in all the financial publications from Beijing to Moscow; New

Delhi to New York is the falling American dollar. The dollars travails are

real and genuine concern is being demonstrated in the worlds financial

capitals. China stated recently that;

 

“Certainly we don't want to run into the US situation of having a trade

deficit of 6 per cent of GDP. ...China's custom is that we never blame

others for our own problem,”- Li Ruogu, the deputy governor of the People's

Bank of China.

 

Headlines from around the world are discussing the dollar crisis. Now if you

turn on the evening news you may hear a snippet or two here or there about

it. But Chinese citizens were recently cued up in large lines to exchange

their dollars. The same has happened in eastern Europe as well. Something

ominous is happening to the US dollar and it is not a cyclical problem or

one that is rooted in transitory economic factors. There are fundamental

economic issues at the heart of the dollar crisis and this is what this

months update will cover. However this update will not fall into the

psychological extremes of 'blind faith' on the one hand and 'the sky is

falling' on the other.

 

 

Dollar Index: NYBOT

 

 

Source: Super Charts

 

 

 

Russia also expressed its intention to switch a major amount of its reserves

from dollars to Euro's. The amount they want to shift is $113 billion. This

is a hefty sum and signals a definite shift in economic policy. This move

will be watched carefully in Asian markets as well as they too may see it in

their best interest to shift some of their reserves from Dollars to Euro's.

China and Japan will continue, at least for a while to hold significant

dollar reserves to maintain their dominant trade positions with the US. Such

a move by Russia while widely and loudly announced could be more of a

negotiating position than real intention. While Russia will certainly move

to shift out of the dollar over time, how much and how fast is very much

open to question. Russia's announcement comes on the heels of high tension

in the Ukraine and is as much shooting a 'warning shot' over America's bow,

as it is interested in its currency reserves. Russia must protect itself

from a depreciating dollar as it adversely effects its international

financial condition. The dollar is going lower and the world knows it. This

means that eventually, nations will move away from the dollar simply out of

economic self preservation1. Central banks will probably continue their

attempts to intervene to attempt to bolster the currency for many reasons.

First many want to preserve the present economic order. A world without the

dollar as its reserve currency is a frightening thought, not just to America

but to America's myriad trading partners and those who hold substantial

reserves in dollars and depend on her markets to sell their goods.

 

Importantly and directly related this the dollar crisis is Russia's action

with Yukos and its dealings with other Western oil firms. Her actions show

the world that Russia is not going to fall under control or influence of the

US/UK financial and oil oligarchy. While many decry Russia's actions in the

Yukos affair as being unfair, this author not only does not blame Russia for

some of its actions but understands their deep reticence in allowing that

much foreign investment into its most important natural resources. Russia's

actions have been called 'treacherous' and 'dishonest' by many a western

writer. These authors never want to come to terms with the treachery and

dishonesty of Western firms throughout the world as they destroy large

swaths of the planet leaving behind corrupt and bribed governments,

impoverished populations, environmental devastation and violent, well armed

mercenaries that kill indiscriminately. There is no way in hell Putin is

going to let that be Russia's fate. He will never allow those nefarious

financial interests to gain a strong foot hold in its energy sector.

 

Russians desire to move permanently to more Euro's in their reserve holdings

is real and Putin has met with OPEC and EU leaders to discuss this very

topic along with pricing oil in Euro's. You see, Russia wants to be with the

'in' crowd of global economic power circles and has the oil the west,

specifically Europe needs. Thus, Putin's is trying to drive a wedge between

Europe/OPEC and the US by offering to price his oil in Euro's and hoping

that OPEC will go along. This is attractive to all involved except one

important fact; the occupant of the White House. Hyperbole aside the

President's competence and even emotional stability of the President is

being seriously questioned around the world. If Russia, OPEC and the EU got

together and decided to price oil in Euro's, the US economy would be in

shambles within a year. That kind of instability is in no ones interest.

Thus we will have to see exactly how Russia actually proceeds with its

reserve switch announcement.

 

This is a time of global shifting and it is readily apparent around the

globe. This is not the time to be dependent on US news reporting, especially

TV news. I urge all my readers to avail themselves of the tools on the

Internet and get news from foreign capitals as well as good well balanced

financial news. It is out there and a great deal of it is free. This global

shifting will eventually leave the US in an incredibly weakened state and

should the dollar fall to a dollar index of .50, rest assured that America's

economic/and military preeminence will be threatened with such a development

This is not a time to be ignorant of what is going on in the world of

politics or in economics and specifically the with the dollar crisis.

 

While the dollars fall has had many worried, there are positives that are

generally attributed to a falling US dollar. First and foremost is increased

trade competitiveness abroad. A falling dollar makes goods made in the US

more attractive to foreigners because they are cheaper in their native

currencies. This is good news for American businesses. Yet there are still

many problems for the very same businesses if they are dependent on parts or

even labor that must be purchased abroad. This will assist inflationary

trends as those costs will be passed on to the consumer and reduce any

competitiveness the falling dollar would ordinarily provide if goods are

services needed for production must be purchased in foreign currencies.

 

One thing to watch for is China removing the peg of its currency to the

dollar. This is something that Washington has wanted for some time. Pegging

the Yuan to the dollar has protected the Chinese from one of the most time

honored method of protecting ones markets, that being currency devaluation.

China needs the US markets for its goods and in order to keep its goods

attractive to US consumers they need to have a stable exchange rate. The

Chinese have indicated that they will eventually pull the currency peg but

have not given a clear indication of when. Washington has pressured the

Chinese to move quickly but the Chinese have responded with their

characteristic candor that the US must set its own house in order;

 

" For the past 26 years, we never put pressure or problems on to the world.

The US has the reverse attitude, whenever they have a problem, they blame

others. "

 

The Chinese are not going to made the scapegoat for Americas fiscal

profligacy. The US has been rather adamant that the peg be removed and feel

that it gives the Chinese an 'unfair' competitive advantage. The Chinese

however are not immune to the criticism and conventional wisdom says that

they will move slowly towards greater currency flexibility. This will not

assist the decline of the US dollar, in fact it may exacerbate it to some

degree however it will provide the additional competitive edge that US

policy makers are seeking.

 

How Far To Fall?

 

How far the dollar will fall is the ultimate question being asked. The only

thing anyone can offer is speculation. I will offer mine here.

 

I believe the dollar could eventually fall as far as .50 Euro's. This is not

a prediction that is a set in stone as there are many variables that must be

considered. Some of which are:

 

· The Japanese: They may continue their policy of currency

intervention if the dollar sags too far too fast. This is likely but it may

not stem the tide of the falling currency because currency intervention are

not cure-all's; they usually only forestall the inevitable. This is

certainly true in America's case. If the US had shown fiscal responsibility

over that past several years and reigned in spending intervention would have

stemmed a temporary trend that would have allowed the dollar to maintain its

value while it put its house in order. This has not happened hence the

reticence of the markets to come to the aid of the dollar until tough fiscal

choices are made.

· Central Banks – These entities crave stability and the kinds of

international currency fluctuations with the worlds most important and

widely held currency is seldom welcome in these circles. Some kind of

Central bank intervention may transpire if the dollars fall causes a serious

threat to international stability. Such instability could take the form of a

derivatives failure of a large hedge fund or bank.

· Eurozone Problems: There are serious problems in Europe as well as

America. Aging populations, mass layoffs, laggard economic growth are all

part of an increasingly troubled Western economic scene. This may mitigate

any sudden rise in the Euro over the dollar. In fact one of my favorite

commentators, Dr. Marc Faber states clearly that he believes that the dollar

is not in crisis, though he does believe that it is ultimately a 'doomed

currency'. He says this because he sees no good alternative to the greenback

The French Finance Minister expressed his concern over the falling dollar

and linked it the America's accumulation of deficits and later warned that

the dollar was becoming 'unhinged' from other currencies. The concern is

genuine insofar as it makes Europe's exports more expensive to US consumers

and puts them at a competitive disadvantage.

· War: This is greatest and least quantifiable variable. America's

war in Iraq is going badly. America is losing on the battlefield and in the

most important aspect in any occupation, the battle for 'hearts and minds'.

This too will weigh heavily on the US dollar should Iraq become even more

unstable and the flow of oil is repeatedly cut off. A major defeat of US

forces that makes it to the newsrooms in foreign capitals is another

variable that should be considered.

· Deficits – The speed and competence of a US fiscal and budgetary

overhaul that includes specifically Social Security reformation.2

 

 

The fall of the dollar has focused interest in precious metals and

currencies backed by the same. The gold dinar is making its debut in the

Arab world and is an officially recognized currency. As this is being

written (29 Nov) the price of Gold is at $453. This is a trend and not an

aberration. While the price may drop somewhat for profit taking rest assured

the price of the Yellow metal could easily one day reach $1000/ounce. This

does not mean that gold is worth any more than it did before, it simply

means that the dollar is worth less.

 

 

Current gold prices courtesy Kitco

Why is this happening?

 

 

For those of you who are new to this site and this is the first visit, you

may wish to go back and read earlier editions of this series. The primary

problem is debt. Several kinds of debt are weighing heavily on the dollar.

 

· Trade Debt – The debt we incur when we import more than we export.

· Fiscal Debt – The total national (governmental) debt (accumulated

current account debt) that we have incurred as a nation over the past two

decades.

· Current Account Debt. That is the debt needed to run the government

it is the difference between what the spend and what we take in in revenues

for the current fiscal year. This currently stands at about $2.6 billion a

day.

· Consumer Debt – Credit cards, mortgages, automobile and other

consumption based debt.

These are layman and not textbook definitions

 

 

These causalities are all worthy of several books but time and space do not

permit that. The key issues right now and the two that are most important,

in my opinion are the Fiscal Debt (National Debt) and the Current Account

Deficit. The current account debt is money that must be obtained. Why 'must

? Because either we get the money or one of two things happens.

 

1. We go officially bankrupt and the government shuts down.

2. The FED and Treasury begin to print the money we need. This is called

monetizing the debt.

 

The US government is not going to shut down, not if the lobbyists who spend

millions in legal bribes to get their pet contracts have anything to do with

it. The only other alternative is to print the money3, provided we are

unable to get the nearly half a trillion dollars in cash to run the

government another fiscal year. By the way, the fiscal year begins on

October 1st of every year. This year we entered the new fiscal year without

a budget. We still are operating under a continuing resolution and a link to

it can be found in the November Update. In my mind, the most pressing fiscal

problem is not the trade deficit but rather it is the current account

deficit. This is probably one of the most serious problems to face America

since the Civil War, and I do not exaggerate. The economic devastation that

can transpire if the dollar collapses is beyond the pale of anyones

experience. While many would argue that the great depression of the last

century would be similar, I disagree. Primarily because the US government

was not is such deep debt nor did it have such abysmal personal savings nor

was it de-industrializing, making any future production oriented economic

activity more difficult and expensive nor were there 280 million people to

feed, cloth, warm and shelter.

 

This is a bleak picture. Do the facts, all the facts really add up to such a

dismal scenario. Yes and no. As mentioned earlier the US needs to become

more competitive in order to keep jobs in America and business making money.

This means that US wages must decrease significantly. It also means that

some of the regulatory red-tape must be removed.4 Wage decreases are very

difficult to get. People would revolt, strikes would be common and moves to

reinvigorate Unions would abound. This is not something our elite want to

see. There is another way around this, namely let the dollar drop. People

make the same amount of dollars, but the dollars don't go nearly as far.

Thus, you have your wage decrease and not one person in ten would realize

that this is what you have done. Not only does the falling dollar hit wage

earners, forcing them to consume less, it also devalues the currency that

you must repay your loans with. This the dollar that once fetched 1.2 Euros

(in 4/01) now only gets about .75 of them. Big difference. This makes debt

repayment less cumbersome for the US but it also makes it much more

difficult to attract foreign investors into our treasury paper and bonds.

Simply put, who wants to earn 3% when the you will be paid back in currency

that has depreciated 30%? Only a fool would. A fool or a foreign central

bank. That is where we stand now. While foreigners have made available some

credit, it is not enough to fill the gap. They may pick up investing in US

treasuries but It looks less and less likely they will to the amount the US

needs. This is all written for all you lay people out there so that you will

really understand what is really being said when economists say 'concern

over funding of the US current account deficit'

 

Now in order to fund our current account deficit using the usual method of

borrowing Congress had to raise the debt ceiling. Where does it stand now?

Well the debt celling is now at $8,180,000,000,000, that's $8.1 trillion

dollars for those of us who aren't used to writing 13 digit personal checks.

That is the fiscal deficit that America faces provided we can find lenders

that will allow us to borrow the difference between the total fiscal debt we

have, which stands at 7.5 trillion dollars as of 30 November and the

legislative authority congress granted when they raised the debt limit. This

cannot continue and dear readers be assured, it won't for much longer,

despite what the high priced economists say.

 

The Next Big Thing

 

 

This leads us to some important questions. First, Social Security. Brace

yourself for big changes in it. While many are calling for minor tweaks the

real deal is that Bush wants a major overhaul and wants to ship it over to

his campaign donors over on Wall Street. They can't wait to get their hands

on it. Now some have stated incorrectly that Bush has not been particularly

warm to Wall Street, it must be noted that big Wall Street Banks are among

his largest campaign contributors. So please don't let some financial

publications tell you that Bush isn't very sympathetic to Wall Street, as

one publication in particular implied. This is the second thing, you see,

Wall Street sees this as a way to get their hands of billions of dollars in

fresh capital to use for their own well established and documented patterns

of financial chicanery.

 

Bush met with the nations largest banks shortly after is re-election. It is

unknown what exactly transpired in the meeting as no one is talking. But

lets keep in mind that these are Bush's biggest campaign contributors so I

would look for major changes in creditor/debtor laws to be ram-roded through

the House and Senate. While the financial press is spinning the recent

meeting that Bush had with the top US bankers as being one of 'gaining

support for Bush policies', it should be noted as well, that this is taking

place in the midst of a dollar crisis and that the meeting was a 'private

one' in which the details have not been released to the general public. Keep

your eyes on the money system and how they plan on financing this years

fiscal deficit. Whatever the plan is it will require participation of

America's largest Banks. Attendees to the meeting included the heads of

 

· Merill Lynch

· Goldman Sachs

· Bank of America

· Credit Suisse-First Boston

· Morgan Stanley

· Citgroup

· American Express

If you take a look at your 401(k) statement you have a glimpse of the future

of your Social Security if these guys get their hands on it. It will

probably go to mortgage payments on a CEO's Swiss Chalet, or a new Mercedes

for his mistress. Privatizing Social Security may be a good idea if you had

full control over what to invest in. Lets say gold, silver or platinum. Lets

say you wanted to put the bulk of your money in a set group of specific

stocks that you (not a broker) picks or even a foreign currency. Will they

allow this? No.

 

 

You see this is the fundamental problem, who controls the assets, you or the

Broker/Finance Company/Bankster. If someone else controls it, they will do

so to their and not your benefit. That is the lesson millions of retirees

learned the hard way during the 90's. Any reform of the system must contain

the ability of the saver (future retiree) to have full control (short of

cashing out before retirement) over where the money gets invested. This

should include foreign bonds, currency and stocks. Wall Street will fight

that tooth and nail because they want to get the government to force you to

use only 'Government approved' (read Bush donor) brokers and financial

institutions to 'invest' (read siphon off) into their buddies who run Wall

Streets biggest corporations.

 

Why is social Security mentioned here? Simple, it is a huge contributor to

our debt, now and especially in the not too distant future when the

baby-boomer's retire. Foreign investors, that is, those who must lend us

money to fund our current account deficit, know this. They also know that we

have not had the political will to tackle these problems. Now they are

demanding it. America has severely exacerbated these debts with, what many

foreign investors view, as a reckless, ill conceived, poorly executed and

extremely expensive war, that they are paying for with their lending. Some

just don't think is a wise investment and don't want to be paying for a

military machine that may one day cut their own throats. They must also

consider the increasingly evident probability that they may not even get

their money back.

 

These same investors can see that the entire budgetary system is broken.

Congress passed huge $388 billion spending bill (yes there is still enormous

spending but no budget) and inside the bill was a provision to allow the

Appropriations Committee to look at the tax return of any ordinary citizen.

Why would they want that kind of power? You figure it out. The fact is that

these bills are so large and poorly written, they are not even read by our

representatives. The Congressmen are basically told by their staff, lobbyist

or party leadership how to vote and that is what they do.

 

No one who voted on the massive omnibus bill had time to read it beforehand

-- the bill itself was more than 1,600 pages; with accompanying explanation

it measured 14 inches thick. Only now are congressional staffers and the

press corps and affected parties starting to figure out just what's in it.

Some of the more candid members of Congress -- Sen. John McCain notable

among them -- have since joined the good government groups in denouncing the

process behind the bill, particularly the large number of " earmarks'' doled

out to individual senators and representatives. - The Kentucky Post

 

This is why it seems almost pointless to voice your opinion anymore on

anything, the system is just that broken. What will save it? National

Bankruptcy and people rising up in the streets to demand, (not request)

honest government and responsible fiscal policies. Now, as long as Joe

six-pack has his can of beer and an HDTV, he isn't going to do a whole lot,

not even if government thugs break in his front door and abuse his family

right in front of him. His answer to life's problems is alcohol and Prozac.

 

 

More Bad News.

 

Earnings in Corporate America are not stellar, despite the constant

unexplained rise in the Stock Market. John Mauldin did an interesting little

study (scroll down on link) of Quarterly Corporate earnings and how they are

not very reliable. Indeed anyone with a newspaper could figure out that

Corporate accounting and reality are mutually exclusive terms.

 

CEOs who regularly report quarterly earnings below expectations, or

quarterly earnings showing wide variability over time, are likely at some

point to lose their jobs. Too bad, but CEOs usually end up with pretty good

severance pay, so we see no need to shed tears over that. The real losers

are the shareholders because of the constraints and temptations this crazy

system puts in the way of the company's management. We base this case on two

National Bureau of Economic Research working papers published in June of

this year. Both studies are worth careful reading. - John Mauldin

 

The shenanigans are real and they do effect the shareholders and ultimately

the financial health of corporations. What happens if negative trends cannot

be identified and corrected due to cumbersome, evasive and deceptive

accounting practices. The answer is: Enron.

 

 

Controls on the Street

 

This is a sad time for responsible corporate governance. The SEC looks set

to buckle under pressure from Wall Street and relax reporting requirements

on public companies with a market capitalization of between 75 and 700

million dollars. The question revolves around what are called internal

controls which are those rules and procedures within the company that allow

for accurate financial reporting and that can detect fraud and other

criminal activity. Wall Street seems to have a serious aversion to stepped

up reporting and wept loudly and profusely to the SEC, wanting them to make

it easier on them. The SEC delayed the introduction of the rules which are

an outgrowth of laws passed after the Enron and WorldCom debacles. As long

as we have an SEC that can only bring civil and not criminal charges and the

political interference that is common from our elected representatives (up

to and including the President) when their friends rob pension funds, don't

expect these new rules to do anything except add to the billable hours and

the revenues of accounting firms.

 

One of the best controls is free market mechanisms. If you have people who

are not bought and paid for to rob the funds they manage, the markets are a

potent and extremely powerful way to enforce proper financial disclosure and

reporting. CalPers (related stories) is one of the few major investors in

the nation that has really turned up the heat on Wall Street to force them

to come clean on a wide variety of issues, from corporate compensation, off

shoring revenues to hide from the tax man, internal controls and more. They

do not need regulatory authority, they can simply pull their billions out of

whatever offending corporation refuses to heed their extremely reasonable

demands. This is how a free market is supposed to work; if your company is

fudging its numbers and playing accounting tricks they should be punished

with a swift and permanent loss of investment. This is not how the GOP wants

the game played. Harrigan, who heads CalPers, has accused Governor Arnold

Schwarzenegger of trying to get rid of him. Not because he isn't making

money for its 1.4 million retirees. He is. But there are those in Arnold's

party who do not want to see the kinds of controls that CalPers insists on

before it invests money, they want the money but few controls, even less

accountability and no undue interest and curiosity into accounting practices

(Note: Harrigan was removed on 2 December)

 

What happens when there are not proper internal controls and excessive

executive compensation and foggy annual reports? I will tell you in one word

once again. Enron. Wall Street is afraid. They are afraid if they have to

report earnings honestly and expense stock options, the gravy train will

come to an end, and when the books are audited for real, investors will not

like what they see and someone may even get mad enough to send them to jail,

where many of them belong.

 

" It would be unconscionable if the Schwarzenegger administration and a few

narrow corporate interests — such as the Chamber of Commerce, who have

opposed corporate reform efforts — were to use the [Personnel Board] as a

pawn in their fight against shareholders and fundamental fairness in our

nation's financial markets, " - Letter to the CalPers Personnel board from

the Presidents of several unions and the heads of consumer and retiree

groups

 

I will let you in on a secret. CalPers is the nations largest pension fund

and it is a golden egg Wall Street wants to get its hands on. As long as

they know they will not go to jail for theft, why not try and steal it? Lets

face it Ken Lay is still free as a bird as is Bernie Ebbers (former CEO of

WorldCom). Wall Street wants to continue to have lax internal controls and

poor public oversight so they can continue to inflate earnings and borrow

against non-existent revenues, leaving the shareholders in a lurch as they

bail out in golden parachutes. The nation has learned nothing after the

scandals of the 90's. There is only one lesson that will resonate with the

American people; Prolonged poverty and want and I have news for you, this is

coming to many an American household.

 

Want more on lax corporate governance? Many of you remember a story I

covered about Citibank being told to close its offices in Japan because of

shady dealings in its Private Banking section. The details are covered in

last months update. Here's how Reuters summed up the testimony of Douglas

Peterson, CITI Bank CEO in Japan on 30 November;

 

“Citibank Japan CEO Douglas Peterson told a parliamentary finance committee

that lax corporate governance and an " aggressive sales culture " were behind

abuses at the private banking unit, ordered closed by regulators in

September.” (link)

 

The Story went on to say

 

The private bank was cited for widespread violations including manipulative

sales practices and failure to screen out money laundering, and its closure

was among the harshest punishments issued to a foreign financial firm in

Japan.

 

How bad are these internal controls in the nations banks, especially

Citibank?

 

 

“The world's biggest financial services company, invested $6.8 million for

Yasser Arafat, Palestinian Authority documents show. At the same time, the

late Palestinian leader was paying militants and channeling authority funds

into his personal accounts.” - Bloomberg

 

Even the Europeans are getting cold feet at the fraud going on in Wall

Street. Look this is no longer a secret, the whole world is seeing this, and

if the only thing your nightly news is talking about is Julia Roberts' twins

you really need to find new sources of news. Norwegian life insurer KLP is

selling shares in Marathon and Exxon. Why?

 

The move follows a report from consulting firm GES Investment Services,

which urged institutional investors to steer clear of three major US oil

companies – Marathon, Exxon and Ameranda Hess - following allegations of

corruption among the companies. - IPE

 

Fraud, corruption in US oil Companies? Perish the thought! You won't find

this story in any US newspaper. While Americans may fall for the propaganda

tricks of the US media and make excuses for the evil of companies run by

people who hold high office, still get paid by them, while they give the

very same companies no-bid contracts, to the civilized world this is called

corruption. The civilized and mentally alert world being just about anywhere

except Wall Street, the US Media and the US Government. Bribes of foreign

officials, coups, regime changes, 'war without end', billions missing in our

war in Iraq. What does it take to get people to wake up?

 

In closing Corruption is a primary factor that is causing the coming (and

now underway) economic depression. Charts and graphs can describe the effect

but the causes stem from many factors some of which are:

 

· Decreasing democratic input into national decision making

· Reduced or non-existent law enforcement on the rich and powerful

· Mental laziness on the part of the general population

· The increasing use of propaganda techniques in national news

reporting.

· Plain old graft, theft, fraud and corruption.

 

These trends are accelerating and the wise should prepare for the coming

economic shocks ahead.

 

More News

· A Texas newspaper floated the idea that Former Senator Phil Graham

may wind up at the head of the US Treasury. This is the Phil Graham whose

wife sat on the board of directors at Enron. I say, why not just put Ken Lay

in charge of the American Treasury? Since it was Graham and his wife that

facilitated much of what Enron epitomized. It was Phil Graham that sponsored

the so called 'Enron exemption'. I said it once and I'll say it again,

America is being looted.

· The Eurozone is also having economic problems. The EU manufacturing

Index fell to a 14 monthly low in November. It's recovery is also in

question. In fact, German Manufacturing actually contracted for the first

time in 15 months. German unemployment is also at a six year high.

· The crisis in the Ukraine sparked Bank runs and currency controls.

The Parliament has brought down the government in a no-confidence vote.

· The Defense Lobby successfully blocked an Intelligence reform bill

that would have removed billions of dollars in budgetary authority from the

Pentagon.

· The state of Tennessee Dropped 430,000 poor and disabled people

from its health care rolls in an effort to trim spending.

· The producer price index spiked 1.7% in October, that's a 21%

annual rate. If that is the 'cooked-up' rate that the government is passing

out, then inflation is much higher and these facts will not be lost on

international investors. “There are just massive amounts of inflation

brewing,” said Joseph LaVorgna, chief U.S. fixed-income economist at

Deutsche Bank Securities in New York. This fact along with our massive

deficits explains with crystal clarity why the dollar keeps descending to

new lows across the board.

· Wall Mart reported that its 'black friday' sales were below their

plan. Wal-Mart is a bellwether retailer and its performance is important in

gauging consumer sentiment. It seems that everything from high gas prices

and energy costs are blamed for the lackluster performance. However the good

news (?) is that visa spending on cards was up 15.5% to $4.1 Bln from a year

ago. This of course can be spun as good or bad news. It is good that people

are consuming and buying things, it is bad that it must be charged to a

credit card. America consumption is the engine of the global economy but

that engine is increasingly burdened with higher energy prices, high debt,

rising interest rates and falling wages.

 

More Random Thoughts On A Post Crash World.

 

The the amount of angry mail I received after the last update, I guess this

is the least popular feature of this series of articles. Yet I am only

responding to what people have repeatedly asked me to answer. What will a

post crash world look like? I could say bread lines, starving children and

millions of homeless people homesteading in vacant and foreclosed slums

huddling for warmth. That is not necessarily what I see, at least not right

away and, as I told one rather irate reader, I call it is I see it, not as

anyone else wants me to write it.

 

I see primarily a highly technical society using the means at its disposal

to control Americans consumption, borrowing, wages, traveling, housing,

schooling, and even thinking. This is where I think many commentators miss

an important societal crosscurrent that is present for anyone to see who

reads an occasional newspaper or magazine. That crosscurrent is this; we are

living in an increasingly Technological Society. This was the title of a

book done many years ago (1964) by a man named Jacques Ellul. He was a

prolific and extremely gifted writer whose horrific vision of the future is

happening right before us. It is a cold, hard, yet scholastic look at man's

use of technology to control society and its generally ill informed and

heavily propagandized people. Forget Orwells1984, Elluls work is far more

illuminating and scholarly and explains the psychological, technological,

societal, and ideological conundrums of modern societies and demonstrates

the tendencies towards fascism that is the result of modern technological

advances.

 

The dictatorial state has efficiency as its goal, it submits to the laws of

technology, for it understand that only be giving technology free reign it

can hope to derive profit from it. Jaques Ellul5

 

 

The ideas that were put forward in my last update are not new observations,

they have been successfully ingrained in the unknowing public as being

politically incorrect' and 'dangerous' even to mention. They are often

derided as 'conspiracy theory'. This is all part of successful and effective

propaganda. Propaganda must explain the obvious in terms that is most

beneficial to the propagandist and explaining to people that they are to be

managed and controlled is not something that people want to hear. They

however, do want to hear about 'security' and 'safety', so this is the

propaganda model used to sell the increasingly stringent controls already in

place in American society.

 

 

Please allow me to digress for a moment to the 2004 presidential election.

It has been clearly documented that in some counties there were far more

votes than registered voters (see link), far more, in fact, election

changing more. This is not 'conspiracy theory', as some irresponsible news

organizations have claimed. Check the link, do your own research as a

lawsuit will be filed to find out exactly what happened. Now how does this

happen in the 21st Century? It happens when you have computerized

(technological) voting without a paper trail, without adequate controls on

the software and when you have the owner of the company who owns the voting

machines stating publicly that he is going to do what it takes to get Bush

elected. Dear readers, this is not a partisan attack, I find Bush and Kerry

equally loathsome choices to occupy the White House. This is a question of

whether or not the people get to have a real say in who runs the country and

where we go as a nation. Please take note that this is the second time we

have had serious questions about the legitimacy of US Presidential elections

That would be eight years of rule that may or not be democratic6. I say

this with the utmost seriousness and without the usual hyperbole that

accompanies web writers. This is a fundamental issue because, if the

President was not democratically elected (by real votes rather than

electronically concocted ones), then we are looking at a new order arising.

One where the people believe that they have a democracy but don't. You see

the beauty of democracy is the faith that people have in it. As long as

people believe that they are living in one they are far less likely to

revolt against tyrannical leadership, unwise decisions, unpopular wars and

the destruction of their liberties. It can all be done 'in the name of

democracy'. I believe7 that the elements that are in power now want to

permanently do away with democratic input at the federal level. Why haven't

you heard about the legal efforts on Ohio voting, the over 93,000 more votes

than voters that showed up in just one Ohio County. Click here and it may

give you an idea. This is why Congress doesn't bother to read the bills it

votes on, and why the President can declare war with a constitutionally

mandated war declaration by the Congress. The less democratic input to the

important elements of statecraft, the easier it is for the Corporations to

get their way in such 'unimportant' issues as 'war without end', 'no-bid

contracts' and banking bills that take away privacy, freedom and what

remains of borrowers rights8, the ability to suspend a persons

constitutional rights if he is deemed a 'terrorist'9. This is the way I see

the coming collapse, it will not be televised, it will be transitioned in

with a great deal of controls put on the people while they cheer the

electronic shackles their leaders fasten on them. Standards of living will

slowly erode, public services will become more problematic and America's

preeminence in the world will wane. This is the best case scenario, and

rather than tell you what a worst case scenario looks like, I will let your

own imagination give you a picture. For those who want a little more

information on our increasingly technological society and methods of

population control here is an article.