🚀 go-pugleaf

A economic tectonic shift is being felt around the world.

"If the Chinese Government and Hong Kong money tycoons are the
counter-party, strong threats from Washington could halt their buying --
unless, of course, there is something to the conspiratorial theory that the
Bilderberg Group are quietly establishing a new base of operations in
China/Hong Kong, with strong ties to London, as a counter-force  to the
still powerful but essentially debased US/Japan axis, with its strong ties
to London."

                                              *****
Sweden's monetary theorist and reformer, Boudewijn Wegerif, shares the
following:

For those who are interested, there has been an almost $19 hike in the price
of gold, with gold now marked at around $291 an ounce. Indications are that
a powerful, still anonymous counter-party has taken on the gold cartel set
up by Goldman Sachs, JP Morgan, Deutsche Bank, etc, with the support of the
FED and other central banks. The counter-party appears to be winning. But
don't count on it. There is so much to lose for the bullion banks in the
gold cartel, they will do everything possible to hold gold to under $300 an
ounce.

In today's Daily Telegraph Peter Hambro, chief executive of Peter Hambro
Mining and an experienced hand in the gold market, is reported as saying
that there are strong rumours that the Bank of China has become a big buyer
of gold. It holds $130 billion of foreign exchange reserves and as relations
with the US deteriorate it is switching them out of dollars into gold. "I
suppose they don't want their reserves managed by the central banker of the
enemy, Alan Greenspan," said Hambro.

(Source:
http://money.telegraph.co.uk/money/main.jhtml;$sessionid$T2Y0BJYAAAHOV
QFIQMGCFFWAVCBQUIV0?xml=/money/2001/05/22/cngold22.xml)

My records show that China had only 3 percent of its foreign reserves in
gold in 2000. If the Chinese Government and Hong Kong money tycoons are the
counter-party, strong threats from Washington could halt their buying --
unless, of course, there is something to the conspiratorial theory that the
Bilderberg Group are quietly establishing a new base of operations in
China/Hong Kong, with strong ties to London, as a counter-force  to the
still powerful but essentially debased US/Japan axis, with its strong ties
to London. Goldman Sachs and JP Morgan are in the process of setting up
their head offices in London and this can be read as another sign that the
writing is on the wall for Wall Street.

The Gold Anti-Trust Action GATA chairperson Bill Murphy, writing as Midas at
the James Joyce table at the Le Metropole Cafe, www.lemetropolecafe.com,
shared the following information from a trader, indicating that there IS now
a powerful, anonymous counter-party on the gold scene.

"The reason gold broke out is pretty simple. On the charts, we got to the
275 level on the futures and a firm called Goldman Sachs tried to sell
futures. In fact, I heard that Goldman was taunting the guys on the floor to
try and take the other side of the trade. Their attempt to keep the price
from rising was simply denied by A GROUP OF INVESTORS KEPT ANONYMOUS. This
cabal of investors took the other side of the trade many times as Goldman
continued to sell gold futures contract. By late last week, Goldman
continued to sell and buyers overwhelming outweighed all Goldman selling.

"Eventually, floor traders became shocked as Goldman could not push the
price any lower and that prompted a flurry of short-covering. The rumor has
it that Goldman has not unwound all of their short position and they still
may attempt to sell futures but so far the "other cabal" has stepped up to
the plate and matched Goldman. Again, to repeat, Goldman was taunting
traders at 275, almost laughing and mocking those that would try and take
the other side. Well, somebody their size took the challenge and fended off
the Goldman selling. They were cocky and got it handed to them. Folks, there
is a group on your side. They are long gold it seems and they're willing to
absorb all of Goldman's selling.

"This is what I hear happened last week and the scare shorts got when they
saw that Goldman could not control the gold futures price. The shorts are
now fully aware that the longs mean business. The game may have changed.
This is all a rumor but I believe it to be true. Take it for what it's
worth."

There was also this from another Cafe member:

"Hi Bill, My name is J. C. and I have been a member of the cafe for what is
now going on my third year and I am also a Comex member and have been so for
20 years. I would like to share my observation of Friday's move with you.
Since Thursday Chase was trying to defend the 275 number. Every time we
approached it they sold 200 August contracts every dime up. The June/August
switch was offered at a buck so Chase started selling August at 27520-27580
and Goldman was a seller in June from 27450 to the high of 27490. Whenever
another trader bid 90 Goldmans broker screamed SOLD--COME ON which I am sure
you know means that Goldman had the world to sell. I turned to another
trader and said Chase and Goldman will not let this market trade above 275
and it did not settling at 274.30."

"Now on to Friday......The market opened a dollar lower and quickly traded
down to 27260, on small volume, the Euro was on it's lows and the dollar was
on it's high's (as you know that is not a good sign for gold) and it looked
like it was going to be a down day. Then Moore capital started to do some
buying in June and Refco was a buyer in August and the market was drifting
higher, and because of the Euro and the $ most locals in the ring were
short. Goldman and Chase again tried to defend the 275 number but on this
day it would not work......."

                                              *****


" When the IMF and the World Bank force a country to cut wages, lay
off workers, produce for export instead of
  their own people, and sell off public property to cronies for less
than its vallue, that's called "economic reform."

                     Robert Naiman, Toward Freedom magazine, November
1999, p2

                                              *****

" [T]here seems to be nothing to prevent the transnational
corporations taking possession of the planet and
  subjecting humanity to the dictatorship of capital.... In order to
crush any thought of organized resistance to the
 supporters of the new world order, tremendous police and military
forces are being used to establish a doctrine of
                                          repression...."

                            Christian la Brie, Le Monde Diplomatique (Paris)

                                              *****

 " The nation-state is not going to disappear anytime soon for the good
reason that citizens need some way to assert  control over multinational
corporations and capital. "

                                      William Greider, author

                                              *****

  " In the councils of government, we must guard against unwarranted
influence, whether sought or unsought, by
  the military-industrial complex. The potential for the disastrous rise
of misplaced power exists and will persist."

                      President Dwight D. Eisenhower in his Farewell
Address, 1961

                                              *****

 "The immiseration of the majority is an integral part of the Free World
package for the Third World, the unsavory aspects of the package -- the
terror, the direct spoilation of people and resources, and western
complicity -- must be rationalized and, as far as possible, kept under the
rug."

                                              *****

                Edward S. Herman, economist, author, and US media and
foreign policy critic

" ... no democratically achieved environmental, health or food safety
law challenged at tht WTO has ever been upheld. All have been declared
barriers to trade. "
                                              *****

 ... stopping the WTO is at best, a first step toward creating rules for
the gobal economy that tame corporate power and protect popular aims and
democratic processes. "

                 David Moberg - In These Times magazine, November,1999, p22

                                              *****

In Number 22 of  The Federalist Papers,  Alexander Hamilton specifically
warned:

     "One of the weak sides of republics, among their numerous advantages,
is
that they afford too easy inlet to foreign corruption.  ...  In republics,
persons
elevated from the mass of the community, by the suffrages of their fellow
citizens,
to great stations of pre-eminence and power, may find compensations for
betraying their trust. ...Hence it is that history furnishes us with so many
examples
of the prevalency of foreign corruption in republican government."

                                              *****
     Twenty years Ago Aleksandr Solzhenitsyn  ,  from a commencement podium
at Harvard,  saw it all  ( Aleksandr I. Solzhenitsyn, "A World Split Apart."
New York: Harper & Row, 1979):

   "...In World War II against Hitler, instead of winning the conflict with
its own forces, which certainly would have been sufficient, Western
Democracy raised up another enemy, one that would prove worse and more
powerful, since Hitler had neither the resources nor the people, nor the
ideas with broad appeal, nor such a large number of supporters in the
West--a fifth column--as the Soviet Union possessed.  Some Western voices
have already spoken of the need of a protective screen against hostile
forces in the next world conflict;  in this case the shield would be China.
But I would not wish such an outcome on any country in the world.  First of
all it is a doomed alliance with evil; it would grant the United States a
respite, but when at a later date China with its billion people would turn
around armed with American weapons, America itself would fall victim of a
Cambodia-style genocide.

    "..The two so-called world wars (they were by far not on a world scale,
not yet) constituted the internal self-destruction of the small progressive
West which has thus prepared its own end.  The next war (which does not have
to be an atomic one; I do not believe it will be) may well bury Western
civilization forever."

                                              *****

> http://www.prudentbear.com/credit.htm
>
> The Credit Bubble Bulletin  - by Doug Noland
>
> Feeding the Financial Beast
>
> May 18, 2001
>
> The Fed moved aggressively again this week, having now reduced
> rates by 250 basis points in less than five months. The only
> somewhat reasonable comparison would the 18-month period
> spanning January 1991 to September 1992, where rates were
> lowered from 6.75% to 3%. It is interesting to compare some
> key economic data between these periods.
>
> .....
> .....
>
> If the Fed is truly targeting faltering capital spending and
> profitability, especially within the highly maladjusted
> technology sector, it is making a major policy error. It was
> specifically the enormous financial bubble that developed
> post-1998 that led to massive and unsustainable over spending
> throughout the expansive high tech industry. It is also worth
> again addressing (as somewhat of a follow-up to last week's
> commentary) the powerful interplay between financial and
> technological innovation that has certainly not been given its
> proper due elsewhere. The unusually large margins afforded new
> and innovative products and services throughout the technology
> sector not surprisingly garnered extreme business and
> speculative interest. This keen attraction, combined with a
> contemporary credit system with a newfound capability and
> penchant for creating virtually unlimited money and credit,
> provided an absolute financing and spending powder keg.
> Consequently, a flood of money was available to throw at
> virtually any technology enterprise. This, not surprisingly,
> led to scores of negative cash flow and hopelessly
> unprofitable ventures receiving funding, whose expenditures
> provided enormous revenues that sustained artificially
> outsized industry revenue and profit growth. The more profits,
> the larger the flood of finance, and the greater the over
> spending. It was a textbook bubble, with monetary excesses
> fueling the boom through funding both uneconomic enterprises
> (that would not survive come the bursting of the financing
> bubble) and over investment that would ensure an abrupt margin
> (profitability) collapse at the first sign of business
> slowdown. A bust in proportion to the historic excesses of the
> previous boom was unavoidable. In sum, increasingly
> dysfunctional monetary processes that were both creating and
> directing massive financial excess at the sector assured its
> eventual collapse.
>
> Most unfortunately, the Greenspan Fed absolutely fails to
> address the true and clearly potentially disastrous underlying
> dilemma for the U.S. system: entrenched monetary processes
> that hopelessly perpetuate financial excess, self-reinforcing
> market distortions and dangerous economic maladjustments. The
> Federal Reserve simply refuses to govern a dysfunctional
> wildcat financial sector that has grown to momentous size and
> power, and whose self-serving pursuits propagate unrelenting
> and increasingly precarious lending and speculative excess.
> The great danger comes not from a slowdown in capital spending
> or a consumer who wisely chooses to temper his unsustainable
> borrowing and spending after many years of binge, but to the
> gross financial excess that runs unabated with the
> acquiescence and extreme accommodation of the Federal Reserve.
> Instead of moving to harness an out of control credit system
> that assures recurring credit-induced booms and busts, failed
> Fed policy only Feeds the Financial Beast. Indeed, this is a
> financial system, and leveraged speculating community
> especially, that blossomed directly from the Fed's early 1990s
> accommodation and hasn't looked back since. The resulting
> enormous speculative and banking profits afforded the
> financial players in the early 1990s, however, looked like a
> pittance compared to the windfall following the Fed's 1998's
> "reliquefication." Not only is the Fed loath to control this
> monster that it has been so instrumental in nurturing, it has
> now reached the point where the Fed is granting additional
> rewards for previous reckless excess. This has gone much
> beyond an issue of moral hazard. This is outright negligence.
>
> It is now simply a sad case of waiting to see when, where and
> how big and destabilizing the next bust; unrelenting monetary
> excess assures it. Certainly, nowhere are the excesses more
> pronounced than throughout the real estate sector. And like
> the gas that was thrown on the smoldering technology boom back
> in 1998/99, the Fed today fosters even more outrageous excess
> throughout mortgage finance. It is certainly worth noting that
> with the adopted Greenspan strategy of cutting rates early and
> quickly, there will be few bullets left when the massive real
> estate bubble bursts, taking consumer spending and the general
> economy down with it. We are today in the quite early stages
> of what will eventually prove a protracted period of economic
> decline.
>
> .....
> .....
>
> Along with fueling the real estate bubble, it has become
> apparent that this current bout of rampant money and credit
> excess will have a major impact on the energy sector. The
> unfolding energy crisis is very much a global phenomenon, with
> Brazil soon to begin rationing electricity and surging prices
> impacting consumers and businesses in Europe, Asia and
> elsewhere. Here at home, prices have jumped sharply and
> millions prepare for a summer of blackouts. The situation is
> turning desperate in California, with Governor Gray Davis
> announcing Wednesday that the State of California is moving
> aggressively into the energy production business. There is
> going to one heck of a capital-spending boom in the energy
> sector in California and likely throughout the country.
>
> It is certainly to the point where one ignores the profound
> ramifications of the California energy crisis at one's peril.
> First of all, the major spike in electricity prices provides a
> clear example of the degree to which extreme price
> unpredictability and volatility have become an unfortunate
> hallmark of the highly maladjusted U.S. bubble economy. We
> have witnessed unprecedented volatility in the U.S. stock
> market, surging rents and real estate values in key markets,
> rising prices in a broad list products and services, wild
> component and product price fluctuations throughout the
> technology sector, as well as extraordinary price movements
> and extreme volatility in currency, precious metals and energy
> markets globally. The Greenspan Fed and U.S. financial sector
> may have mastered the art of sustaining a financial bubble,
> but at the cost of extreme instability and acute system
> fragility.
>
> .....
> .....
>
> Last week, I touched upon the boom-time "New Economy"
> delusions of a structural shift in productivity and profits.
> This week I would like to address the equally critical
> misconceptions regarding risk that have played a momentous
> role in fostering this historic bubble. The unfolding
> California energy crisis certainly illuminates some very
> fundamental and critical misunderstandings. First, the popular
> notion that the marketplace (almost like magic) creates
> stability and prices that tends toward equilibrium is patently
> false in an environment dictated by rampant money and credit
> excess. Indeed, credit-induced bubble economies are
> specifically dominated by forces cultivating disequilibrium.
> Second, the perception that the mechanisms and strategies of
> contemporary finance reduce risk is absolutely fallacious.
> Derivatives, in particular, provide a mechanism for individual
> players to mitigate/hedge risk. It is a completely different
> proposition, however, for the system as a whole ("fallacy of
> composition"). There is no way an entire market can hedge, as
> outside of the market there are no parties with the
> wherewithal to remunerate in the event of large system-wide
> losses.
>
> The general perception (actively marketed by Wall Street) that
> risk can be mitigated by derivatives has and continues to play
> a major role in this bubble. As we have witnessed repeatedly
> in various markets, the availability of derivative
> "protection" changes behavior, inducing participants toward
> riskier activities that significantly augment risk for the
> system as a whole. Furthermore, credit bubbles foster
> exponential debt growth, asset inflation and resulting
> speculative excess, as well as severe marketplace and economic
> distortions that as well grow exponentially over time. It is
> critical today to appreciate that Credit Bubbles generate risk
> exponentially, and Fed policy is greatly exacerbating this
> process. And while there is much finger pointing today in
> California, the State's energy crisis is very much the
> consequence of boom-time erroneous notions and credit bubble
> excess. It is as incredible as it is alarming to see how
> quickly California went from expecting huge budget surpluses,
> as far as the eye could see, to financial crisis.
>
> .....
> .....
>
> Sure, the historical models do support the silly claims that
> there is little in the way of interest-rate and default risk
> for the GSEs. Yet, the California utility fiasco provides
> irrefutable evidence of how abruptly the financial environment
> can turn hostile, and the extreme danger of relying on past
> experience as a predictor of the risk inherent in this bubble
> economy. Actually, it is at the minimum disingenuous to use
> recent data to claim minimal risk in mortgages financed at
> current inflated real estate prices, with unusually low
> mortgage rates, with the consumer sector highly over borrowed
> and having extracted unprecedented amounts of home equity,
> while the U.S. economy commences a downturn after years of
> extreme excess. The bottom line is that the continuing real
> estate bubble now poses considerably greater systemic risk
> than the technology bubble, and this risk expands by the day.
> It is furthermore just ridiculous that the Greenspan Fed is
> inciting further excess that is certain to create a major
> financial and economic disaster down the road.
>
> It is worth addressing a key aspect of the current environment
> that, among other things, helps explain the extraordinary
> divergence between high and volatile energy prices and the low
> and relatively stable cost of money: there is a fundamental
> difference between derivative markets for intermediating
> commodity and financial risk. Central bankers are, of course,
> incapable of creating oil, natural gas, or electricity. For a
> critical commodity with the characteristics of electricity,
> buyers are at times disposed to paying what would normally be
> viewed as exorbitant prices to secure adequate supplies. The
> Fed is particularly impotent in such markets, where wildly
> modulating liquidity in the spot market (supply and demand
> imbalances) can lead to dramatic and destabilizing price
> movements. Similar results in interest-rate markets would
> today be catastrophic. Not to worry, however, as the Fed has
> tremendous influence in the massive financial derivatives
> marketplace. Not only can the Fed directly create liquidity in
> the "spot market," it has tremendous power (as we have seen
> repeatedly) to inspirit the creation of financial sector
> liquidity that quickly rectifies supply imbalances throughout
> the financial markets. In this regard, one cannot overstate
> the critical role now played by the Fed with its liquidity
> assurances. Greenspan has been seduced by such power.
>
> Indeed, the viability of the $100 trillion plus derivative
> market is absolutely dependent on assurances of uninterrupted
> liquidity that only the Federal Reserve can effectively
> provide. And nowhere is the Fed's role more critical than with
> the mammoth interest-rate swaps market. The swaps market, in
> particular, holds the key for the GSEs ability to endlessly
> balloon their balance sheets, with this unprecedented
> liquidity creating mechanism at the heart of the U.S.
> financial sector's insatiable demand for securities. It is a
> ruse, however, to claim that the risk associated with this
> unmatched credit creation can be "hedged." This extraordinary
> (experimental) monetary regime that so effectively
> "transforms" mountains of risky loans into trillions of
> dollars of safe "money" is absolutely dependent on both GSE
> liquidity and the viability of the massive derivatives market.
> So, right here one can isolate the critical relationships at
> the heart of history's greatest financial bubble.
>
> .....
> .....
>
> While this cozy mutual dependence that has developed between
> the Greenspan Fed and the derivative players has been
> instrumental in fostering the U.S. bubble, it has become
> increasingly dysfunctional and precarious over time. Instead
> of providing a mechanism to isolate and disperse financial
> risk as advertised, the derivatives market has become a
> mechanism to disguise risk and perpetuate unprecedented credit
> excess. Clearly, the GSEs and Wall Street are abusing the
> common perception of derivatives as a risk management tool, as
> they recklessly perpetuate unimaginable leverage, endemic
> speculation and general financial excess. And with the system
> under considerable stress due to the collapsing of the
> technology bubble, the aggressive financial players have
> unwavering (and justified) confidence that the Federal Reserve
> will continue to accommodate history's Greatest Credit Bubble.
> This is the Fed locked in policy disaster. Monetary policy has
> been left to court a dysfunctional relationship with the
> masters of financial excess, a circumstance that to this day
> fosters momentous financial and economic distortions that
> absolutely assures financial and economic crisis.
>
> The GSE's ability to balloon their balance sheets and fuel a
> real estate bubble is much dependent on the continued
> expansion of the interest-rate derivatives market. Indeed, the
> notion of derivatives providing a mechanism to mitigate risk
> is the key to the unfettered money and credit creation, hence
> the unlimited availability of credit. In truth, derivatives
> are but a convenient repository for risk, where crisis lurks
> whenever this risk rises to the surface. At some point, there
> will be a severe dislocation.
>
> .....
> .....
>
> A strong perception holds that there is little risk associated
> with the Greenspan Fed's aggressive rate cuts. This is but one
> more example of the consensus view being way out in left
> field. We are certainly watching the price of gold carefully,
> with bullion rising almost $20 this week. While it is a very
> key commodity, it's trading has for some time been distorted
> by aggressive central bank selling and untold supply created
> in the derivatives market. Such market dynamics, like those
> that pervade throughout financial derivatives, create great
> potential for speculative excess, instability and inevitable
> dislocation. We have expected that a rush to unwind derivative
> speculations would at some point create panic buying of the
> actual underlying metal. Has the Fed's extreme aggressiveness
> set off this process? Will a dislocation in the gold
> derivatives market precipitate other derivative problems,
> perhaps in the swaps or currency markets? Is the dollar
> similarly vulnerable to a derivative market dislocation? It is
> certainly our view that the Fed is pursuing the course of
> greatest risk, the senseless perpetuation of the Great Credit
> Bubble.
>
                                              *****
An analysis of the dollar bubble, by Larry Elliott of the Manchester
Guardian:
>
> http://www.guardian.co.uk/business/story/0,3604,493651,00.html
>
Excerpt:
> Dollar bubble about to burst
>
> Larry Elliott
>
> Monday May 21, 2001
>
> The Guardian
>
> Apart from John Prescott's bit of argy-bargy, not a lot happened
> in the the election last week. Labour will win by a country mile
> because real incomes are rising, public spending is increasing and
> the Tories cannot come up with a credible answer when asked how
> they would pay for their tax cuts.
>
> You know that and I know that. At some point over the next couple
> of weeks, it may be worth returning to British domestic politics,
> but for the time being let's turn our attention to something that
> presents a rather more difficult intellectual challenge:
> explaining what is going on with the US economy.
>
> The fact is that last week's really important events - and events
> that may impinge on Britain before too long - took place on the
> other side of the Atlantic. On Tuesday the Federal Reserve cut
> interest rates by 50 basis points for the fifth time in as many
> months, expressing concern about the health of the US corporate
> sector where investment spending is falling rapidly and stocks are
> run down in an attempt to boost profitability.
>
> On Friday, the US trade figures were released showing an increase
> in the deficit from $26.86bn (o18.66bn) in February to $31.17bn in
> March. Put another way, that's $1bn a day.
>
> Good news
>
> Now, call me old fashioned if you like, but I was always told that
> running a trade deficit of this size was a sign of economic
> weakness, and would result in a depreciation of the currency in
> order to make imports dearer and exports cheaper. Apparently not.
> According to the Reuters news wire, dealers on Wall Street see the
> increase in the trade deficit as rattling good news because it
> shows that the cuts in interest rates are stimulating consumer
> demand.
>
> "While the trade report suggested the economy was weaker than
> earlier thought at the start of the year, economists said it
> augured better times ahead, with the import number indicating
> consumers have not been scared into snapping their pocketbooks
> shut."
>
> So, because the trade figures were so "good", the dollar rose
> against the euro on the foreign exchanges, making life for the US
> corporate sector even more difficult. Dell, the world's biggest
> producer of computers warned that earnings in the second quarter
> were likely to disappoint, and no wonder.
>
> Don't worry if you're baffled by this, because a lot of clever
> people in the world of economics are baffled by it as well. "The
> rise in the dollar since February has been puzzling", the Bank of
> England said in its inflation report last week, "as it has been
> associated with falls in US growth forecasts and short-term
> interest rate expectations relative to some of its major trading
> partners". Loose translation: all our models say the dollar should
> be falling like a stone but for some reason it is going up.
>
> The International Monetary Fund cannot explain it either. It
> devoted a special section in last month's world economic outlook
> (WEO) to the factors driving the weakness of the euro and the
> strength of the dollar, which it said seemed "to defy explanations
> from conventional exchange rate models". Conventional exchange
> rate models treat the value of a currency as just another price
> that will fluctuate in order to bring a market into equilibrium.
>
> If you are running a big trade deficit, the price of your currency
> will fall; if you are running a trade surplus it will rise.
> Economics text books say that this is what happens under floating
> exchange rate regimes, but in the real world the big three
> currencies - the dollar, the euro and the yen - are grotesquely
> misaligned.
>
> The IMF has looked at all the possible explanations for the
> strength of the dollar against the euro and concluded that the
> likeliest cause is the flow of hot money out of Europe and into
> the US, encouraged by the perception that America offers better
> prospects for growth and profits. This is amply borne out by the
> data. Net portfolio flows into US assets, according to the IMF,
> have increased from $25bn a year in the early 1990s to $500bn a
> year in 2000. What's more, the composition of these flows has
> changed over time, with foreign investors spurning the safety of
> US treasury bonds in favour of equities, where net flows have
> risen 12 fold over the past decade.
>
> So, let's recap. Here we have an economy that is running a current
> account deficit of 4% a year. It is one that has an overvalued
> currency and one where the corporate sector is showing all the
> classic signs of distress; falling profitability, cutting
> investment and laying off staff. It is an economy dependent on
> constant flows of hot money but which also gives investors the
> absolute right to leave with their money whenever they want. Faced
> with a similar set of circumstances in Thailand, dealers could not
> get out fast enough.
>
> The US is not Thailand and the dollar is not the baht. Even so,
> you would be forgiven for wondering whether it is true that all
> the really smart people are working in the City these days rather
> than in the civil service, the media or education. Nick Parsons,
> currency strategist for Commerzbank and a man who understands the
> psychology of markets as well as anybody, says there are two
> rational explanations and one irrational one.
>
> The two rational ones are; first, that whatever the problems of
> the US economy it has a central bank that is proactive. Unlike the
> European Central Bank, which appears to delight in stuffing the
> markets, the Fed has done what dealers have expected; cut often
> and cut big. There is something in this: the ECB has the William
> Hague problem; it lacks credibility.
>
> Second, while Europe may have stronger growth than the US this
> year, it will still be affected by a slowdown on the other side of
> the Atlantic. Germany is already struggling as a result of a
> one-size-fits-all monetary policy and will struggle even more as
> exports to the US dry up.
>
> And the irrational explanation? Simple: the only reward for being
> right six months before everybody else is a P45, so the safe bet
> is to do what everybody else does. The herd mentality is powerful
> and, at the moment, the herd believes that Alan Greenspan has the
> situation under control, or at least pretends that it does.
>
> Dangerous
>
> It doesn't take a genius to deduce that this is a situation
> fraught with danger. The dollar has appreciated by 65% against the
> euro over the past six years, well in excess of any conceivable
> improvement in US productivity relative to Europe, and at some
> point will fall. If it were to fall slowly and steadily there
> would be a gradual readjustment, but the chances of this happening
> recede with every week that the currency remains absurdly high.
>
> The bubble in the dollar will eventually become as obvious as the
> bubble in hi-tech shares, and the market reaction will be the
> equivalent of someone shouting "fire" in a crowded cinema.
>
> Can Greenspan save the day? I doubt it, because he is now part of
> the problem. The feeling that Greenspan is God has encouraged the
> belief that the US economy will snap back as a result of easier
> monetary policy, boosting corporate earnings and thereby
> justifying faith in both equities and the dollar.
>
> In the short term this may work, but only at the expense of yet
> another consumer binge and a further burgeoning of the trade
> deficit. Far from being the "maestro", as Bob Woodward called him
> in his book last year, Greenspan is more like a quack doctor
> dispensing happy pills to the gullible.
>
> The IMF is aware of the dangers. In the WEO it said that there
> must be "a proportion of the euro area outflows that would be
> repatriated if returns abroad turn out to be disappointing".
> Another way of putting it would be that the dollar is an accident
> waiting to happen.
>
> It is already the case that the number of financial crises in the
> modern post-1973 era has been double that of the Bretton Woods and
> pre-great war gold standard eras and before many months are out
> the world's finance ministries could have another really big one
> on their hands.
>
> Or rather two, for as figures out in the UK will show, Britain's
> trade deficit is not looking too clever either and sterling is
> also defying gravity against the euro. There is trouble ahead.
>

Finally, here is an article the planned expansion of NAFTA from  the
Spotlight  (sort of a Village Voice of the humanitarian anti-globalist
right.  It is the paper that exposed the power of the Bilderbergs to the
world.):

http://www.spotlight.org/05_17_01/Plundering_Plutocrats_Behind_N/plundering_
plutocrats_behind_n.html


Dick Eastman
Yakima, Washington
United States
Every man is responsible to every other man.