Oldtent Archives 2007 - 2008

Carmel. Do you know when the jazz festival is this yr?

http://www.hillgardens.com/composting.htm#21-day

and no turning!

Gold Anyone????

For some time now, the billionaire investor George Soros, whose name makes governments and businesses quake, has been arguing that the 60-year period of world dominance by the dollar is coming to a close.

“The US did exploit the advantage of being in possession of the reserve currency, by allowing a chronic current account deficit,” Soros said last week when I interviewed him for The Sunday Times.

Specifically, the US has for decades printed dollars and exchanged them for goods and services from countries that needed dollars to buy oil, which has been for sale only in dollars. It’s estimated that the US has benefited to the tune of some $11trillion in this way. “And now the IOUs are coming due,” Soros told me.

Surely the US won’t allow the dollar to lose its special status? “The US will do what it can, but there’s not much it can do.”

Hm. I wasn’t sure about that. America invaded Iraq soon after Saddam tried to sell oil in non-dollar currencies. In December, Iran stopped selling its oil in dollars…

“The US Treasury has been pressuring the gulf states not to abandon the dollar peg. But it’s only political pressure that stops them doing that.”

I asked him which currency he believes will take the dollar’s place.

“No other currency is sufficiently attractive,” he said. “They’re all overpriced. So there’s a general flight from investing in currencies to commodities – and that partly accounts for the explosion in the price of oil and food.”

One reason we’re in difficulties, he seems to be saying, is the sheer range of currencies used for trade. Does that mean we need a new approach? Should we, for example, revisit the economist John Maynard Keynes’s proposal just after World War Two for a special currency for international trade – he called it the bancor – which would not be issued by any single country? (At the time, the US overruled this, and insisted on the supremacy of the dollar).

Soros nodded. “I would welcome something like the bancor – it could come to that. The existing system is – I don’t want to say it’s breaking down, but it’s pretty creaky. We’re in a period of great uncertainty. Eventually, the system is going to need to be reformed.”

The irony, of course, is that the man proposing some new kind of international currency unattached to any particular country is the same super-speculator who has made billions by betting on national currencies.

Born in Hungary in 1930, Soros was the son of the Jewish writer Teodoro Schwartz (he changed his name to Soros in response to rising anti-semitism), a passionate exponent of the international language Esperanto. George Soros was taught the language from birth, making him one of a small handful of native Esperanto speakers.

It occurs to me that perhaps this early immersion in Esperanto explains his interest in the bancor – an international means of exchange which, alas, has little prospect of being widely adopted.  Source

Thanks for digging up the article.
I’m in San Salvador and am suprised at how the Salvadorans have used their monies to build roads and keep them clean. They have an astounding amount of economic stimulation here both in roads buildings and business activity. This could be Belize as long as Belize watchs the inflows from oil and it’s other abundant recources.

I’m located in Carmel by the Sea, California, USA. 93921.
And thank you again for sharing your highly developed talents.

Modern economics is not rocket science. In fact, it’s not science at all. It’s a game, a confidence game. Once paper passed for money, economics became an elaborate shell game designed to hide the fact paper had been substituted for silver and gold. Debt ratings are an attempt to quantify confidence in paper assets and are an essential part of the game. The shell game is called “Where’s The Money?” The answer is simple, it’s not there.

The question “where did the money go during the Great Depression?” has now been answered to my satisfaction. During the Great Depression, money essentially disappeared and, as a consequence, consumer and business demand collapsed as did prices, beginning a downward coreolis-like spiral that was to suck the global economy into an economic black hole.

My study of the Great Depression began in the 1990s and the subsequent collapse of the dot.com bubble provided a real-time corroboration of assumptions about the connection between loose credit, excessive speculation, and financial bubbles; and, now, in 2008, one of my most troubling questions about the depression has been answered—where did the money go during the Great Depression?

Plunge In US Commercial Property, an article by Daniel Pimlott posted on FT.com (Financial Times) May 21, 2008 provided a critical clue:

Commercial property prices in the US in February saw their sharpest decline since records began nearly 15 years ago as sources of finance for deals has dried up, according to data from Standard & Poor’s out yesterday.
The value of commercial buildings fell 1.03 percent between January and February, the largest monthly decline since at least 1993, when the industry was just emerging from a deep slump.
The fall in national property prices comes as banks have retrenched on lending due to credit crisis and the slowing economy, causing the volume of deals to slow sharply. The market for commercial mortgage-backed securities, which until last August was a major route to cheaper borrowing, has largely ground to a halt.
Sales of commercial properties were down 71 per cent in the first quarter compared with a year earlier, according to data from Real Capital Analytics.
The fact that sales of US commercial real estate fell an astounding 71 % from 1st quarter 2007 to 1st quarter 2008 is shocking and the implications are quite serious. The cause of the slowdown, however, provided the very clue I was seeking.

Commercial property prices in the US…saw their sharpest decline…as sources of finance for deals has dried up… as banks have retrenched on lending due to credit crisis…

DURING THE GREAT DEPRESSION
MONEY DID NOT DISAPPEAR
CREDIT DID

The answer to: Where did the money go in the Great Depression? is found in the metaphor of the shell game. It is now clear that money didn’t disappear during the Great Depression, credit disappeared.

The money was never there in the first place. Money had been replaced by credit in the shell game introduced by the Federal Reserve in 1913 when the Federal Reserve began issuing credit-based Federal Reserve notes in place of the savings-based money from the US Treasury.

For details on how the shell game is run, Professor Antal E. Fekete’s description of the check kiting scheme between the US Treasury and Federal Reserve provides crucial information for those perhaps wishing themselves to live off the earnings of others.

It is epitomized by an elaborate check-kiting conspiracy between the U.S: Treasury and the Federal Reserve. Treasury bonds, contrary to appearances, are no more redeemable than Federal Reserve notes. It’s all very neat: the notes are backed by the bonds, and the bonds are redeemable by the notes. Therefore each is valued in terms of itself, rather than by an independent outside asset. Each is an irredeemable liability of the U.S: government. The whole scheme boils down to a farce. It is check-kiting at the highest level. At maturity the bonds are replaced by another with a more distant maturity date, or they are ostensibly paid in the form of irredeemable currency. The issuer of either type of debt is usurping a privilege without accepting the countervailing duty. They issue obligations without taking any further responsibility for their fate or for the effect they have on the economy. Moreover, a double standard of justice is involved. Check-kiting is a crime under the Criminal Code. That is, provided that it is perpetrated by private individuals. Practiced at the highest level, check-kiting is the corner-stone of the monetary system.
GOTTERDÄMMERUNG The Twilight of Irredeemable Debt, Antal E. Fekete, April 28, 2008
www.professorfekete.com/articles%5CAEFGotterdammerung.pdf
THE STUDY OF MODERN ECONOMICS IS SIMILAR
TO THE STUDY OF RELIGION IN A TIME OF IDOLATRY

In the shell game of modern economics, credit replaces money and when credit gives rise to speculative bubbles, the collapse of those bubbles leads to the defaulting of debt which causes credit to disappear and the economy to collapse.

The credit based shell game, however, is nearing its end. The historic credit contraction that began in August 2007 is still in progress. Despite the efforts of central bankers, credit is still disappearing and, just as in the Great Depression, the credit contraction is continuing to spread causing more and more debt to default.

Credit, the fertilizer of human debt, when no longer available effectively spells the end of the legalized shell game masquerading as modern economics; but the kreditmeisters, their global confidence game now damaged by an unexpected lack of confidence on the part of the marks, sic investors, however, will not give up their scam easily.

THE CONUNDRUM OF THE KREDITMEISTERS

Those running the shell game, the central bankers and their codependent brethren, investment bankers, are terrified of losing their day jobs, They have lived well for three hundred years (since the establishment of the Bank of England in 1694) leveraging the productivity of others and we can be assured they will do everything in their considerable power to keep their lifestyle intact..

At this time the central bankers are collectively engaged in financial triage as they attempt to replace the credit that is rapidly being withdrawn in the face of ever increasing amounts of defaulting debt.

Following the same play book they used in the aftermath of the dot.com collapse, the Fed has quickly cut rates from 5.25 % to 2 % but this time they will not ignite a housing bubble as they did the last time. This time, they will do worse. This time, they will burn down the house.

BURNING DOWN THE HOUSE
In the long run, there is no short run

In retrospect it will all be clear, the mistakes, the reasons, the excuses, the results. Now, however, in the beginning of the collapse, events appear more problematic, the outcome still unknown. Nonetheless, even in the fog of unexpected events, certain things can be known and safely predicted; and, one of them is that we are now on the road to hyperinflation.

Appointing “Helicopter Ben” Bernanke to head the Federal Reserve now is akin to sending Sammy the Bull, the mafia hit-man, to negotiate with the Palestinians and Israelis; and when the news comes back that Sammy the Bull shot and killed the Palestinians and Israelis at the negotiating table, we should not be surprised—just as we should not be surprised that Ben “the printing press” Bernanke is erring on the side of excess in the current economic crisis by providing even more credit, by shoving even more debt based paper into now a burning house.

WHEN A HOUSE OF PAPER MONEY BURNS

Hyperinflation is to inflation like pneumonia is to a cold. Though similar, the former is much more consequential; and whereas pneumonia can sometimes kill, hyperinflation is a veritable death sentence. Hyperinflation always ends in the total destruction of paper money. In hyperinflation, the value of paper money reverts to its mean—ZERO

Great Day ehh ??

tinyurl.com/4aud9m

tinyurl.com/2cvjza

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abtd
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Appreciate your quiet thanks last night.  Where are you located?  I didn’t find you on the locator.  Seems I recall something about the main island a while ago, is that right?

Glad you enjoyed the photos.  BTW I am in the drier forested ecosystems in Oregon, rather right on the edge, at the base of the east side of the Cascade Mountains.  My photos were of Letharia columbiana, sister specie to your Letharia vulpina, as shown here.

Did you know that Bordergold had a drive thru break-in of the front window facade early thursday morning. If you know anyone that drives a burgundy dodge caravan that was left behind the cops would like to deliver it to them ..

This wasn’t some UBC alumni prank was it? Just kidding   ..

PS, hope you had a great time this weekend..Cheers

..WAY YO GO…

  If the GCC drops their peg to the dollar, how will that be spun as positive? How will it impact the price of oil?

  Seems like pretty major news.

Just took some gold and silver off the market and wanted to tell my bug friends.

www.gold-eagle.com/intra-daykit.html

Aussie GOLD stocks…….

tinyurl.com/rb8sc

JBI

Options meaning futures, rather than an option to buy a share.

My natural inclination towards free markets means that I should favour options trading even if it does lead to manipulation of prices.  That is one of the prices to pay for truly free markets.  People will find ways to profit from them which may not be morally acceptable.  However, the situation has evolved where maybe 99% of options are traded without any intention on the part of the purchasers to fulfil their obligations under the contract by delivering the fundamental commodity, share or currency to the writers.  It is accepted that options are a paper game, and at expiry time the contracts are either rolled over into a new contract with the exchange of cash to cover the difference in value, or paid out in cash.  An extreme example of this is in silver, where there appears to be not enough silver available to fulfil all the contracts outstanding if they were all called to account.  This is not a “free market”, it is gambling on both the price of silver, and, crucially, the market not calling for the contract to be met.  In other words, here the free market only works only for so long as it is not made to work!  Everything will be fine, so long as everybody does not do what they are entitled to!  This is not a free market, this is insanity.

To a lesser extent it applies to other commodity futures too, but traders in oil, wheat and pork bellies have the additional comfort of knowing that very few people can take physical delivery, due to lack of infrastucture for storing the commodity.

The doubtful morality of futures trading comes from that lack of certainty that the trade could be completed, due to insufficient supply.  If it was compulsory to physically complete a futures contract,writing wheat contracts six months before the harvest is due could only be done on the assumption that there will not be major weather disruptions, or transport or harvesting issues, unless the writers had a stock of physical available to them so that they could guarantee delivery no matter what.

So, let’s have futures trading only available to those who have physical to back up their paper.  Gambling on the price will still be available, but the elimination of purely paper trades should provide much less volatility.