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|Joanne98 (1000+ posts) Send PM | Profile | Ignore||Thu Oct-16-08 03:29 PM
|China And The International Trust GAAP|
October 16, 2008
Elaine Meinel Supkis
The Big Bad Bank Bail Out didn't create any bubble. After a one day celebration, reality came roaring back and stocks fell back to where they came from: the cellar. The bear market continues despite all the money being tossed to the Derivatives Beast. Nothing has been fixed. But today, we take a break again and look to the past as well as examining GAAP
Markets feel the chill from China
Share prices tumble amid fears that downturn is spreading east
His comments caused panic in the commodity markets. The oil price dropped by 5 per cent to a 13-month low, and copper, aluminium and nickel all slumped. Only gold, seen as a safe haven in troubled times, stayed stable.
Economists are already cutting forecasts for China. The International Monetary Fund (IMF) last week predicted growth of 9.7 per cent this year and 9.3 per cent in 2009. The danger is that the health of China's economy is hard to measure, and Beijing's economic policy even harder to predict.
China's economic policies are NOT hard to predict. I wonder why this fabulous lie is constantly repeated? Is it supposed to make things mysterious so people reading the news can't see the future? I find the future tremendously easy to predict simply because I know some people's long range plans. These plans don't always work out exactly as expected so they shift gears periodically to steer things back to the original goal.
For example, I know that the ruling elites are constantly worried about their ability to produce heirs. This plagues all rich and powerful people. It seems that fertility declines with each generation of rulers. Every once and a while, there is a productive queen or king. So Victoria, for example, had many children. They spread across the planet, marrying other royals and their children were thus, very closely related to the other imperial thrones. Suddenly, we had a genetic mess where first cousins were TOO closely related and all of them married each other in quick succession.
The resulting children had a number of genetic weaknesses and diseases. The Islamic royals dealt with this problem of inbreeding by having harems drawn from the entire empire. But this floundered because they and the Byzantines preferred to be ruled by eunuchs who were men who destroyed their ability to have children. This happened to Manchu China, too. So the most able, sane and ambitious sons were all eliminated from the gene pool while the ones who wanted simply to breed mindlessly would have many children in their harems.
So the ruling elites who observed all of this formed genetic societies that would make a stronger genetic future by eliminating the weak, etc. This fused with Naziism and the whole business about the Aryan Race business. To this day, the conflict between people who want 'white Europeans' to breed and thus, are fighting abortion, etc, and the women of the ruling class who don't want to be tied down by child bearing, rages in the US. In Europe, they basically decided to simply cease child bearing to the point, the replacement rate has fallen.
Back to China: China has a goal. The Chinese are very leery of establishing a dynasty. The Maos failed to produce powerful children and Stalin, for example, literally murdered his wife and destroyed his own children. Hitler was hopelessly unable to breed at all. The Chinese hope to have a meritocracy whereby the best and brightest move to the top. In addition, they planned to 'be bank' long ago. They recognized that their loss of power in the past was due to their inability to keep up with changes in global finances such as when Spain flooded China will silver after conquering the New World.
This caused great distress in China as the value of the silver and gold holdings of the traders and the Dragon Throne suddenly began to drop, rapidly. This was stopped by the desperate move to close China to trade with Spain. This, in turn, started the European wars with China. The Chinese wish very much to understand the history of gold, silver and international trade so they can chart a course whereby this will never happen to them again. The flood of US dollars into China, for example, is a similar problem to the 1650 crisis.
Time to visit my own blog from August 31, 2007, right at the beginning of the banking collapse in the West: Bush's Speech Is Meaningless But Hu's Speech Is Scary
The news from China is interesting today. They are changing direction. No question about this. The world banking system is still in crisis as bankers pretend they have infinite resources yet they must borrow from each other all over the place as they shift funds like mad trying to give the appearance of liquidity. The Federal Reserve has decided to inflict terrible inflationary losses on all savers as it tries to save the madcap 'consumer society' of reckless American spending.
China's top leader Hu Jintao has called for accelerating banking reform to push forward the sustainable and healthy development of the country's financial sector.
Hu, state president and general secretary of the Communist Party of China (CPC) Central Committee, made the call on Wednesday when presiding over a brainstorm of the Political Bureau of the CPC Central Committee.
Members of the Political Bureau attended and discussed the lectures by two banking experts, Ba Shusong, a researcher from the State Council Research Center for Development, and Li Fu'an, a senior economist from the China Banking Regulatory Commission.
Hu pledged in his speech to push forward banking reform in an all-around way, focusing on building a modern banking system and innovating organization, service and administration of the sector.
He stressed to accelerate the banking reform for the countryside, and push forward the healthy development of the financial market.
OK, I don't know what these reforms are but the fact that the Finance Minister was suddenly demoted and kicked out the door right after the Bank of China opened its vault holding Americans certificates of deposit only to discover these were frauds, China has decided suddenly and unilaterally to change direction. We will see the increasing gale force winds from this change in the next year. I predict, this will overturn our expectations of eternal cheap prices and easy loans. I suspect the third part of the Great Plan To Bankrupt America will be set into motion. This plan was but a gleam in Chinese leadership's eyes back in the mid 1980's. But it is the long range plan.
This is where the Chinese step in: they faithfully raised interest rates and the value of the yuan and Japan and the US have joined Europe in ganging up on China. Playing this game has earned them nothing at all. The Chinese are now having a brainstorm meeting to decide if it is time to change world banking systems. Already, we feel the effects of them withholding cheap loans to the US and sucking down US dollars in the form of FOREX reserves. The US rates dare not drop below Chinese rates. As I show here, the US rates are similar to the rates in China for 60 month CDs.
This is because we run in the red. We have to find buyers for our government bonds. Japan holds the world's biggest amount of US bonds. China is #2. The Chinese have ceased buying these. The US needs super-low interest rates so we can run up bigger debts but we can't do this if the world can buy higher-return rates in China! And China won't buy this from us if they make more money at home. Obviously. And if we are determined to have a trade war with China, then we will have to play the interest rate war, too. Chopping rates is not a great step forwards for the US. If the US imitates Japan even more and drived down inflation by crushing workers completely, this will not save us since this will cause Japan to collapse as buyers of goods in America vanish.
Already, the Chinese are beginning to bet that the free trade free ride of the US is pretty much over. They know that we can't borrow forever. In banking, if you run up too much in debt, banks and credit cards raise your interest rates because you become a risk for bankruptcy. This drives people into bankruptcy faster, of course, the snowball effect. But this is also true of nations. We can't stop spending suddenly. Yet our attempts at controlling our debts have failed. The 0% loans from Japan has wrecked our ability to control ourselves. This is super-free money when inflation is more than 5%! China has flooded us with goods only because they have cheap labor but China wants to improve the lot of the workers so they can be an internal economy. This sounds strange since we see many stories about the horrors of labor in China and the pollution, etc. This is true but then, this is typical of any nation that is industrializing. The US, Britain and Europe went through these same, exact stages. In Japan, anyone pointing out poisonous pollution was beaten or killed by goons working for the industrialists...in the 1970s! The pious chat about protecting workers is all garbage. After all, conditions here in America are so degraded, many citizens have been forced out of various jobs and replaced by illegal aliens working for less than former union wages.
Last year, China did a ruthless shift in authority. Here in the US, we just saw such a shift. Paulson took over Congress and the Presidency and now is the autocrat ruling our nation. For some stupid reason, people are being told that this gnome straight out of the Gollum Sachs black hole will save us. I am pleased to see that the majority of Americans are very suspicious of this little monster. But our elected representatives, for the most part, are quite pleased with the Paulson coup. If things continue to go bad, they can blame him, not look in the mirror at the true authors of this mess.
Not that Paulson isn't also responsible! More about him later. Back to my own musings in the past, here is another old story from last year, exactly one year ago, today:
October 16, 2007: Money Is Flowing AWAY From USA
The US has floated our Titanic Consumer Economy on a sea of money that poured into our pond. Now the money is draining out due to the weak dollar and even weaker banking situation here. Somehow, Wall Street mananged to heave upwards, the DOW for a few precious weeks, time enough for the Big Players to either sell out or to extricate themselves from their financial failures. The bad news now is so overwhelming even people who watch Cramer strut and fret are scratching their heads and saying, 'You know, maybe there is something wrong. Gold and oil are climbing faster than a mountain goat while my house dropped another $10,000 in value this week!'
Most Americans pay no attention to the flow of money but everyone who ever watches or plays the FX markets knows that this is a very important thing to watch. The relative value of currencies, the financial health of countries are bound up in this matter. One day, money might be pouring into a country and all is well. Suddenly, the money doesn't just stop, it begins to flow outwards at sometimes astonishing speeds. Argentina might be the destination of all loose change one day and bankrupt a week later.
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