Jim Rickards: A Steady Decline in the Dollar is Planned!

• What was the G20 meeting discussing about? Bankers bonuses and pay? This is an issue that do not need much discussion. Just break up all the banks that are considered too big to fail into much smaller banks. Re-institute mark to market accounting. The bank bonuses are based on accounting shenanigans, mark to model accounting.  If you value a US$1M asset as US$100M, hey everyone can have a profit and obscene bonuses.
   
• The real discussion is the USD IMO. The rest of the world are unhappy at the state of the American economy. They know it is a matter of time before the USD collapses. Jim Rickards has some very interesting perspective on the USD, gold and the G20 behind the scenes discussion.

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The Economy Is A Lie, Too!

• Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He tells the truth about what is really happening in America.
    
  Americans cannot get any truth out of their government about anything, the economy included.  Americans are being driven into the ground economically, with one million school children now homeless, while Federal Reserve chairman Ben Bernanke announces that the recession is over.
   
  The spin that masquerades as news is becoming more delusional. Consumer spending is 70% of the US economy.  It is the driving force, and it has been shut down.  Except for the super rich, there has been no growth in consumer incomes in the 21st century.  Statistician John Williams of shadowstats.com reports that real household income has never recovered its pre-2001 peak.
   
  The US economy has been kept going by substituting growth in consumer debt for growth in consumer income.  Federal Reserve chairman Alan Greenspan encouraged consumer debt with low interest rates.  The low interest rates pushed up home prices, enabling Americans to refinance their homes and spend the equity.  Credit cards were maxed out in expectations of rising real estate and equity values to pay the accumulated debt.  The binge was halted when the real estate and equity bubbles burst.
   
  As consumers no longer can expand their indebtedness and their incomes are not rising, there is no basis for a growing consumer economy.  Indeed, statistics indicate that consumers are paying down debt in their efforts to survive financially.   In an economy in which the consumer is the driving force, that is bad news. 
   
  The banks, now investment banks thanks to greed-driven deregulation that repealed the learned lessons of the past, were even more reckless than consumers and took speculative leverage to new heights.  At the urging of Larry Summers and Goldman Sachs’ CEO  Henry Paulson, the Securities and Exchange Commission and the Bush administration went along with removing restrictions on debt leverage. 
   
  When the bubble burst, the extraordinary leverage threatened the financial system with collapse. The US Treasury and the Federal Reserve stepped forward with no one knows how many trillions of dollars to “save the financial system,” which, of course, meant to save the greed-driven financial institutions that had caused the economic crisis that dispossessed ordinary Americans of half of their life savings.
   
  The consumer has been chastened, but not the banks. Refreshed with the TARP $700 billion and the Federal Reserve’s expanded balance sheet, banks are again behaving like hedge funds.  Leveraged speculation is producing another bubble with the current stock market rally, which is not a sign of economic recovery but is the final savaging of Americans’ wealth by a few investment banks and their Washington friends.  Goldman Sachs, rolling in profits, announced six figure bonuses to employees. The rest of America is suffering terribly.
   
  The unemployment rate, as reported, is a fiction and has been since the Clinton administration.  The unemployment rate does not include jobless Americans who have been unemployed for more than a year and have given up on finding work. The reported 10% unemployment rate is understated by the millions of Americans who are suffering long-term unemployment and are no longer counted as unemployed. As each month passes, unemployed Americans drop off the unemployment role due to nothing except the passing of time.
   
  The inflation rate, especially “core inflation,” is another fiction.  “Core inflation” does not include food and energy, two of Americans’ biggest budget items.  The Consumer Price Index (CPI) assumes, ever since the Boskin Commission during the Clinton administration, that if prices of items go up consumers substitute cheaper items.  This is certainly the case, but this way of measuring inflation means that the CPI is no longer comparable to past years, because the basket of goods in the index is variable.
   
  The Boskin Commission’s CPI, by lowering the measured rate of inflation, raises the real GDP growth rate.  The result of the statistical manipulation is an understated inflation rate, thus eroding the real value of Social Security income, and an overstated growth rate.  Statistical manipulation cloaks a declining standard of living.
   
  In bygone days of American prosperity, American incomes rose with productivity.  It was the real growth in American incomes that propelled the US economy.
   
  In today’s America, the only incomes that rise are in the financial sector that risks the country’s future on excessive leverage and in the corporate world that substitutes foreign for American labor. Under the compensation rules and emphasis on shareholder earnings that hold sway in the US today, corporate executives maximize earnings and their compensation by minimizing the employment of Americans.
   
  Try to find some acknowledgement of this in the “mainstream media,” or among economists, who suck up to the offshoring corporations for grants. The worst part of the decline is yet to come.   Bank failures and home foreclosures are yet to peak.  The commercial real estate bust is yet to hit.  The dollar crisis is building.
   
  When it hits, interest rates will rise dramatically as the US struggles to finance its massive budget and trade deficits while the rest of the world tries to escape a depreciating dollar.
   
  Since the spring of this year, the value of the US dollar has collapsed against every currency except those pegged to it.  The Swiss franc has risen 14% against the dollar.  Every hard currency from the Canadian dollar to the Euro and UK pound has risen at least 13 % against the US dollar since April 2009.  The Japanese yen is not far behind, and the Brazilian real has risen 25% against the almighty US dollar.  Even the Russian ruble has risen 13% against the US dollar. 
   
  What sort of recovery is it when the safest investment is to bet against the US dollar? The American household of my day, in which the husband worked and the wife provided household services and raised the children, scarcely exists today.  Most, if not all, members of a household have to work in order to pay the bills.  However, the jobs are disappearing, even the part-time ones. 
   
  If measured according to the methodology used when I was Assistant Secretary of the Treasury, the unemployment rate today in the US is above 20%.  Moreover, there is no obvious way of reducing it.  There are no factories, with work forces temporarily laid off by high interest rates, waiting for a lower interest rate policy to call their workforces back into production.
   
  The work has been moved abroad. In the bygone days of American prosperity, CEOs were inculcated with the view that they had equal responsibilities to customers, employees, and shareholders.  This view has been exterminated. Pushed by Wall Street and the threat of takeovers promising “enhanced shareholder value,” and incentivized by “performance pay,” CEOs use every means to substitute cheaper foreign employees for Americans .
   
  Despite 20% unemployment and cum laude engineering graduates who cannot find jobs or even job interviews, Congress continues to support 65,000 annual H-1B work visas for foreigners. In the midst of the highest unemployment since the Great Depression what kind of a fool do you need to be to think that there is a shortage of qualified US workers?

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Death of the American Empire…

• America is dying. Its rulers treat the Constitution with contempt. Through a few decades of dumbing the population down, the people no longer have the will to take the country back from traitorous leaders. The country is being raped by banksters with a complicit MSM. It’s economic statistics are no more than cleverly disguised lies. Yes, the economy is improving! But only for the banksters. The shills in the MSM continues to believe and promote the idea that China, Japan…foreign creditors have no choice but to continue buying treasuries. So all will be well. Clive Maund writes :
   
  The general public, who never understood the global financial crisis in the first place, have been hoodwinked into thinking it’s over. It’s not. None of the underlying structural abnormalities, distortions and excesses within the global financial system have been addressed and rectified, because to do so in a meaningful way would involve allowing a constructive depression to purge the system of dross and parasitic elements (like much of government itself) in what would amount to a teardown and rebuild.
    
  Instead, the same crew who got us into this mess are still in charge, and their “solution” to the global financial crisis has been even more extravagant helpings of what created the mess in the first place – namely money and credit creation. This shameless procrastination has not and will not fix anything – all it has done is postpone the day of reckoning and guaranteed an even worse crisis later.
   
  Recession, depression and deflation have their rightful place in the scheme of things, which is to straighten the system out after a prolonged period of profligacy. The willful obstruction of these forces is ultimately counterproductive and futile. Almost all of you will be aware of the longstanding inflation versus deflation arguments, which still rage. What happened last year is that the deflationary forces that had built up to explosive proportions suddenly burst into the open. However, instead of allowing these cleansing forces to do their grim work, The US Fed and government and then Central Banks worldwide decided to beat them back with a massive inflationary frontal assault of money and credit creation.
   
  There should by rights have been many more bloated carcasses like Lehman Brothers floating down the river, but instead we have the legacy of an army of zombie corporations, hopelessly corrupt and mismanaged, lurching towards us like the figures in the The Night of the Living Dead. The same rotten management with their crony connections in government, the same leeching off shareholders and the public purse, and the same soaking of gullible foreigners with share and bond issues. However, there is a limit to everything, and as made clear by Karl Denninger in his recent article “WARNING: Deflationary Collapse Dead Ahead”, the US debt is continuing to accelerate into the stratosphere, racing way ahead of GDP so that it is effectively unserviceable already.
   
  Any significant increase in interest rates would make it blatantly obvious that it is unserviceable and lead to default – this is why interest rates have been held at such an artificially low level for so long, but this itself is creating massive problems. For a start it is undermining the dollar which is threatened with collapse, and extremely low rates and inflation of the money supply are also encouraging another carry trade boom in commodities and other assets. Another big danger is that the US can no longer count on dull-witted foreigners to keep buying increasingly large tranches of Treasuries to keep the party going. Foreigners are slowly wising up and refusing to fall for it, which means that in order to meet its funding requirements the US Fed and government are having to buy their own garbage, which is of course hugely inflationary.
   
  So what we have is a bizarre stagflationary situation, where an attempt is being made to beat back massive deflationary forces by means of further money and credit creation. This continues to ramp up the national debt to astronomic levels requiring a continuance of zero interest rates to avoid default. The zero interest rates and continued expansion of the money supply threaten to destroy the dollar, but if rates are raised significantly default will rapidly ensue. This is a classic Catch 22 situation and it is quite clear that the United States is on its way to becoming a third world country. If default occurs and the banks in the US close their doors things could get ugly really fast, with the prospect of 100 million people with guns going on the rampage looking for food and essentials – and someone to blame. Martial Law and a curfew with a “shoot to kill” policy would have to be declared instantly – fortunately this has been catered for by the provisions of the Patriot Acts.
   
  There is however one escape route that might enable the US to avoid the indignity of ending up like Zimbabwe, and that is for it to “surrender” to its creditors and submit to being economically carved up by them. In effect sovereignty would be lost, but face-saving measures might be permitted such as allowing the inhabitants to continue to celebrate Independence Day, and to fantasize that the Constitution of the US still applies and to plaster flags everywhere, provided that the “Made in China” reference in the corner of the flag is clear to see. On the plus side the paranoid nonsense at airports will probably be curbed and meals may even be reintroduced on flights, with curries and sushi as an option. The creditors will call the shots and the US military machine will be neutered, so that there will be no more military adventures on the other side of the planet to secure geopolitical objectives. US military bases will all be closed down or maybe refurbished as schools. Israel could find itself with a sudden severe funding crisis.
   
  Major US corporations will effectively be run by foreigners who will restructure them as they see fit – which could be good news for US waistlines as workers start their day with Tai Chi and a session on the treadmill. Large tracts of Real Estate and other assets will be taken over in lieu of debt repayment. The Hamptons may be largely peopled by Asian entrepreneurs. There will be work for Americans in their own country, however, with plenty of vacancies bagging groceries and stacking shelves in supermarkets at decidedly modest rates of pay and plenty of other service opportunities for their new masters such as gardening and window cleaning. “Green cards” may even be permitted for the lucky few – not to enter the country but to leave.
   
  Since those in control of the US have demonstrated their unwillingness to allow recessionary forces to do their necessary work of correcting the extreme imbalances within the economy, there are only two options left – default and deflationary implosion – ruin, or a comprehensive takeover of the country by its creditors, both of which options probably occurring after a period of runaway inflation as the Fed and government desperately try to stop the inevitable. If the former occurs the shockwaves will reverberate around the world, like last year, and we can expect a collapse in commodity and stock markets.
   
  Until that happens it will be case of inflate and inflate, to forestall rising rates and liquidity problems, which will make gold and silver probably the best investments around, but you sure don’t want to be around once the music stops. It is therefore to be hoped for the common good that the US authorities make the right decision and surrender to the mercy of their creditors before it’s too late. Either way the American Empire is finished.

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Global Warming or Global Freezing: Is the Ice Really Melting?

• Man made global warming is a scam. It is a well known fact that many planets in the solar system were also warming up and this is because of the sun. However, the sun has been going through a ‘quiet’ period of little to no sun spot activity. This seems to be causing a global cooling.  The real purpose of this scam is the drive to world government and a global carbon tax on all citizens. F. William Engdahl opines :
    
  President Obama just made a melodramatic appeal at the United Nations for global measures to dramatically curb what he called “the climate threat,” current euphemism for what is more popularly known as Global Warming, the theory that man-made CO2 emissions from cars, coal plants and other man-made sources are causing the earth to warm to the point the polar icecaps are irreversibly melting and threatening to flood a quarter or more of the earth’s surface. There’s only one thing wrong with Mr. Obama’s dramatic scenario: it is scientifically utterly wrong. Since 2007 the polar icecaps have been growing not melting and the earth has been cooling, not warming.
   
  If the fear of death from a fictitious Swine Flu were not enough, the scare stories on world media such as BBC or CNN, showing melting icebergs are dramatic enough to cause one sleepless nights. The Secretary General of the UN, Ban Ki-Moon even made a recent appeal while standing on an Arctic ice-flow, claiming that man-made CO2 emissions were causing “100 billion tons” of polar ice to melt each year, so that in 30 years the Arctic would be “ice-free”. One organization, the WWF, claimed that the Arctic ice was melting so fast that in eighty years sea-levels would rise by 1.2 meters, creating “floods affecting a quarter of the world.” Wow! That’s scary. Goodbye Hamburg, New York, Amsterdam…
    …….
  The reality about Arctic ice is quite different. Although some 10 million square kilometres of sea-ice melts each summer, each September the Arctic starts to freeze again. The extent of the ice now is 500,000 sq km greater than it was this same time last year – which was, in turn, 500,000 sq km more than in September 2007, the lowest point recently recorded (see Cryosphere Today of the University of Illinois, http://arctic.atmos.uiuc.edu/cryosphere/ ).
   
  By next April, after months of darkness, it will be back up to 14 million sq km or likely more. As British science writer Christopher Booker remarks, “even if all that sea-ice were to melt, this would no more raise sea-levels than a cube of ice melting in a gin and tonic increases the volume of liquid in the glass.”
   
  Sunbeams from cucumbers?
  The current global warming propaganda scare is being hyped by politicians and special interests such as Goldman Sachs and other Wall Street financial firms that stand to reap billions trading new carbon credit financial futures. They are making an all-out effort to scare the world into a deal at the December Copenhagen Global Warming summit, the successor to the Kyoto agreement on CO2 emission reduction. It’s been estimated that the Global Warming bill supported by Barack Obama and his Wall Street patrons, passed by the House of Representatives but not by the more conservative US Senate, would cost US taxpayers some $10 trillion.
   
  In the UK, where Prime Minister Gordon Brown is fully on the global warming bandwagon, the BBC, the Royal Society are proposing wild schemes for “climate engineering,” including putting up mirrors in space to keep out the sun’s rays, or lining the highways with artificial trees to suck CO2 out of the air, to be taken away and buried in holes in the ground. Perhaps it would provide make-work for a few thousand Britons unemployed by the ravages of the recent financial collapse, but it would do nothing else than waste taxpayer money already stretched to the limits in bank bailouts. The entire farce has been compared to satirist Jonathan Swift’s Gulliver who meets a fictional character trying to extract sunbeams from cucumbers.  
   
  A major new study published in the respected Journal of Geophysical Research of the American Geophysical Union, Influence of the Southern Oscillation on tropospheric temperature, by scientists Influence of the Southern Oscillation on tropospheric temperature J. D. McLean, C. R. de Freitas of the School of Geography, Geology and Environmental Science, University of Auckland in New Zealand and R.M. Carter
  (http://www.agu.org/pubs/crossref/2009/2008JD011637.shtml), confirms that over the past fifty years, since 1950, fully 81% of tropical climate change can be linked to the Pacific weather phenomenon known as El Nino. And the remaining 19% they linked to increased solar radiation. No man made emissions played a role.
   
  El Ninos, termed by scientists El Nino Southern Oscillations or ENSOs, are believed by climatologists and astrophysicists to be related to eruptions in solar activity which occur periodically.
    …..
  El Ninos are linked to floods, droughts and other weather disturbances in many regions of the world. In the Atlantic Ocean, effects lag behind those in the Pacific by 12 to 18 months. They tend to occur every three to eight years. La Ninas are the associated cooling phase of the Pacific Ocean cycles.
   
  According to the US National Oceans and Atmospheric Administration, in North America, El Niño creates warmer-than-average winters in the upper Midwest states and the Northeast. California and the southwestern US become significantly wetter, while the northern Gulf of Mexico states and northeast Mexico are wetter and cooler than average during the El Niño phase of the oscillation. In Asia and parts of Australia El Nino causes drier conditions, increasing bush fires.
   
  This sounds remarkably like what the Global Warming scare chorus claims is the result of manmade CI2 emissions or as they now slyly term it, “climate change.”
   
  Warmer 1000 years ago?
  In Sweden a new study (, in  published by Haakan Grudd of the University of Stockholm’s Department of Physical Geography and Quaternary Geology confirms that the Arctic today is not warmer than in previous historical periods centuries ago before coal power plants or automobiles. Grudd’s study concludes that “The late-twentieth century is not exceptionally warm in the new record: On decadal-to-centennial timescales, periods around a.d. 750, 1000, 1400, and 1750 were equally warm, or warmer. The 200-year long warm period centered on a.d. 1000 was significantly warmer than the late-twentieth century and is supported by other local and regional paleoclimate data.” (H. Grudd, Torneträsk tree-ring width and density ad  500–2004: a test of climatic sensitivity and a new 1500-year reconstruction of north Fennoscandian summers, Climate Dynamics, Volume 31, Numbers 7-8 / December, 2008, in
  http://www.springerlink.com/content/8j71453650116753/?p=fcd6adbe04ff4cc29b7131b5184282eb&pi=0.) Put simply, the earth was warmer one thousand years ago than today. And there were no records of SUVs or coal plants belching CO2 into the atmosphere back then.
   
  The only problem with these serious scientific studies is that mainstream media entirely ignores them, preferring dramatic scare story scenarios such as Barack Obama presented in his UN speech or the UN’s Ban Ki-Moon in his staged Arctic ice drama.
   
  Strangely enough, none of the Global Warming proponents that I am aware of have tried to correlate ENSO activity with global temperature changes. Should we instead be proposing to outlaw El Ninos or forbid solar eruptions? It makes as much scientific sense as banning or capping CO2 emissions. Global Warming as a new religion is one thing, but we should be clear that the high priests are the same Gods of Money who brought us Peak Oil religion a few years ago and the current trillion dollar financial meltdown known as asset securitization.  The reality is that Global Warming like Peak Oil and other scares are but another attempt by powerful vested interests to convince the world to sacrifice that they remain in control of the events of this planet. It’s a thinly veiled attempt to misuse climate to argue for a new Malthusian reduction of living standards for the majority of the world while a tiny elite gains more power.
   
• See also :
   
  Czech President: U.N. Climate Meeting Was Propaganda!
  Man Made Global Warning is a Hoax. It’s the Sun !
  The Great Global Warming Swindle !

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