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Audio: Operation 'Destroy The US Economy'
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PostPosted: Mon Oct 12, 2009 10:18 am    Post subject: Audio: Operation 'Destroy The US Economy' Reply with quote


The Beautiful Truth Show - 12th October, 2009

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Kitco launches index to measure "real" gold price

By Jan Harvey - Wednesday October 7, 10:30 PM

LONDON (Reuters) - Montreal-based gold dealer Kitco has launched an index tracking gold in a variety of currencies, that it says will enable investors to monitor prices independently from the U.S. dollar.

The Kitco Gold Index, launched late on Tuesday, follows the price of gold with the same basket of currencies used for the dollar index -- a mechanism that measures the U.S. unit against major currencies.

The components used for the dollar index are the Japanese yen, euro, sterling, Canadian dollar, Swedish krona and Swiss franc.

Spot gold and U.S. gold futures, both of which are priced in dollars, have gained ground in league with the U.S. currency's losses. Gold hit a record high earlier on Wednesday at $1,048.20 per ounce .

But gold priced in other currencies has seen nothing like the same sorts of gains. While the precious metal has gained almost 20 percent in dollar terms so far this year, gold priced in Australian dollars has fallen 5.6 percent .

Kitco said its index aims to determine whether the value of gold is actual, a reflection of changes in the dollar value, or a combination of both.

"When you take the dollar out of the equation, which this basket does, and you start looking at gold in the six-currency basket, you realise that this has been a dollar story," Kitco senior analyst Jon Nadler told Reuters on the sidelines of the Commodities Week Europe conference in London.

"We lose focus on real value or fair value by simply looking at the $1,000 situation."


US Luxury Car Sales Rebound in September
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‘Benign currency neglect’ could spell real danger for US economy

China calls time on dollar hegemony

US policymakers playing with fire as the dollar continues to tumble

Death of Petro-Dollar, Told Ya So

Is The Next Bubble Unavoidable?

Next asset bubble could come sooner than you think

The Weak-Dollar Threat to Prosperity

“The existing set of reserve currencies, including the U.S. dollar, have failed to perform their functions...We will not do without additional reserve currencies”
President Dmitry Medvedev

“The United States would be mistaken to take for granted the dollar's place as the world's predominant reserve currency. Looking forward, there will increasingly be other options.”
World Bank President Robert Zoellick

“We must return to independent and sensible monetary policies...otherwise we will be back to where we are now in 10 years' time.”
Angela Merkel

“One historic way of getting yourself out of this situation — or trying to — is to inflate. Either you do it deliberately or you allow it to happen...And if we permit that to happen then I think all these dollars will come tumbling down on us.”
Paul Volcker

“We know that failure of major financial firms in a financial crisis can be disastrous for the economy. We really had no choice.”

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They only function when open.

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PostPosted: Mon Oct 12, 2009 1:15 pm    Post subject: Reply with quote

I don't know how 'substantial' my capital is but I started moving it out of the $ into the Euro & CHF in 1996 (just had a feelin') so that for the last 5 years I doubt that I have had a single dollar to my name.
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PostPosted: Mon Oct 12, 2009 5:16 pm    Post subject: Reply with quote

Dress Rehearsal For Debt Peonage

Dr. Michael Hudson is a financial economist and historian. He is president of the Institute for the Study of Long Term Economic Trends, a Wall Street financial analyst and professor of economics at the University of Missouri Kansas City. His 1972 book, SuperImperialism, the Economic Strategy of American Empire, is a critique of how the United States exploited foreign economies through the IMF and the World Bank. He is also the author of The Myth of Aid, and Global Fracture, the New Economic Order. Dr. Hudson has written many articles on the current global financial crisis. A few of his most recent articles that we discuss today are "Instead of Real Financial Reform, Obama Capitulates to Wall Street" “Bogus Solutions To The Financial Crisis: The Latest in Junk Economics” and “The IMF Collects Debt On Behalf of the World's Largest Banks."

Bonnie Faulkner: Michael Hudson, welcome.

Michael Hudson: Thank you very much, Bonnie.

Bonnie Faulkner: [What is the] deal with the banks now claiming that they're profitable, because we all thought they were bankrupt. Have they really become profitable?

Michael Hudson: Yes, they have. There's a difference between profits and capital losses. They had a huge capital loss. It had nothing to do with operating profit. You can be bankrupt and still make an income. They had worthless garbage, worthless fictitious mortgages and packages in their portfolios to back the deposits. They were able to take about two trillion dollars worth of these junk mortgages and exchange these at the Federal Reserve for actual treasury bonds. This was the famous trash for cash tradeoff. They were able to give their junk to the U.S. government, which now holds their junk. That has solved their balance sheet (problem). Meanwhile they're very profitable. There was an article in the Financial Times today to the effect that banks are now making more money on late fees and penalties and overdrafts than they're actually making in interest.

So they're making money by increasing the cost structure of the American economy very strongly. The more they can increase the cost of doing business to American families and American companies, the higher their profits are. Their profits are directly proportional to how much they can raise the cost of doing business and raise the cost of living to Americans. The government has said (to them) raise the cost to Americans by enough to make yourself profitable.

Bonnie Faulkner: That reminds me of a friend of mine, someone who I know who has a line of credit with one of the banks, it's a small amount. He had been required on a minimum payment, this is a credit card, of 2% every month if he just wanted to pay the minimum. Now he's just gotten a letter from Chase saying well, you're going to have to pay the minimum of 5% a month, or pay this off. So I guess they can just change the rules any time they want.

Michael Hudson: Yes, that's in the small print, that they're allowed to change the rules, and if the person does not pay the 5%, then they have to pay very heavy late fees as well, and penalties. So Chase can collect a lot more money from the people that can't pay. They collect more by what is called predatory finance, making sure that they charge more than the customer can pay. Their objective is to take every bit of income from the customer's pocket and move it to Chase's pocket, or Wall Street's pocket. That's their business plan.

Bonnie Faulkner: What you're saying reminds me of something I read in the paper recently, about why the banks are not foreclosing on properties to get the thousand dollars or whatever they would get from the government to rewrite the mortgage, because if they just string along, they make more money off people going into default.

Michael Hudson: What they do is keep adding on late fees, so that when the default occurs, they can claim reimbursement for all of the late fees and nonpayments. Originally, banks made money off the interest people paid on money that they borrowed productively. The idea was that any profit or capital gain that the borrower gets, they turn over to the banks. But now the new idea is to make money on the inability of the customer to pay. fees, and finally they turn to the government to get reimbursement for the mortgage including all of the late fees and charges written into the mortgage.

Bonnie Faulkner: Exactly, and this explains why there aren't more homes actually in foreclosure, because they don't make as much money that way.

Michael Hudson: That's right.

Bonnie Faulkner: Today's new York Times reports "Guaranteed Bonuses Back on Wall Street," and that Obama's "pay czar," a man named Feinberg wont be able to affect most of these multi billion dollar guaranteed bonuses. The NY Times article went on to describe what it called "talent wars" in which the banks, bidding up the salaries of derivatives traders, currency speculators and computer trading specialists, etc., so that the salaries on Wall Street, at the top at least, are not just staying where they were, but are increasing.

Michael Hudson: That's right, the contract they've made with their traders gives them a guaranteed share of profits they make. Of course they're not really profits, remember. If they were profits, they'd have to pay taxes on them. Traders don't make profits, they make capital gains, which are taxed at only a fraction of what wage earners (must pay) get. Thus governments subsidize the traders, they subsidize the financial parasitism by saying we want the economy to stop producing industrial goods, to stop producing an income, we want the whole economy to operate on a basis of capital gains, of trading everything back and forth.

This is the post-industrial economy. You don't have to produce anything, and to make sure that we make money by trading, we're going to count all the trading profits as capital gains. Not only are they officially taxed at only half the rate as earned income, wages and profits, but if you take these gains and use them to buy yet more property, you don't have to pay at all. As Leona Helmsley said, "Only the little people pay taxes." Only labor and industry pay taxes, not Wall Street.

Bonnie Faulkner: Yes, her quote is one of my favorites of all time. Do you think she went to jail because she was telling the truth.

Michael Hudson: No, she went to jail because she falsified her reports. The fact is, had she handled things differently on an accounting basis, her principle was right. She was cheating on her tax returns, it was too embarrassing for the government not to throw her in jail. They did agree not to throw her husband in jail.

Bonnie Faulkner: According to your article "Instead of Real Financial Reform, Obama's Plan Capitulates to Wall Street" you talk about a financial regulatory reform proposal of Obama's that promotes Wall Street's product, debt creation, at the expense of the economy at large, and lets financial chieftains continue to self-regulate the debt industry, and by the way, to keep all the profits from the past decades worth of fraudulent lending scot free. Does Obama's plan make the Federal Reserve the sole regulator? What's going on?

Michael Hudson: People he's appointed are the neoliberals from the Clinton administration, who were advocating the repeal of Glass-Steagal in 1999 and led to all of these problems. Essentially his lobbying team consists of Wall Street lobbyists. What Obama is being told is how do we de-regulate Wall Street so that the government has no power at all to regulate us or to tell us what we can do.

They've come up with a brilliant plan. All you need to do is take regulatory authority away from every government agency, and take regulatory authority away from every court, and put it in the hands of the Federal Reserve, and then put an ideological fanatic like (another) Alan Greenspan in charge of the Federal Reserve who refuses to regulate, just as Alan Greenspan refused to regulate. Wall Street, which for the last hundred years has been against all regulation, calling it socialism, thinks this is a wonderful idea. "Yes, yes!" they're saying, "this is a wonderful idea! We want to be regulated by one financial authority!" because they know that the Federal Reserve's role is to act as a lobbyists (in government) for the commercial ban king system, for Wall Street.

"Wall Street's product is debt, and it makes its money off debt. It makes its money off collecting interest on debt in the first place, and then collecting predatory fees and late fees and payments and foreclosing when the debt can't be paid."

So by appointing Federal Reserve bank regulator, you've appointed (the industry's) your own lobbyist as the self-regulator, which means a non-regulator. All you have to do is put someone like Ben Bernanke in charge of the Fed and the Fed will tell Wall Street "do whatever makes money, what's good for you is good for the economy" even if it's strangling the economy, even if it's leading to higher unemployment, even if it's de-industrializing the economy, and polarizing the economy between creditors and debtors.

Bonnie Faulkner: Now you mentioned Glass-Steagal, and in this article of yours, you point out that Paul Volkher was brought in as an economic advisor for Obama's proposed reforms, and indeed the former Fed Chairman, Bernanke's predecessor gave some good advice: reverse the repeal of Glass-Steagal. What happened with this?

Michael Hudson: He was brought in for window dressing, because people had respect for him. You want to bring in a group of people who are trotted out as advisors. Then you ignore everybody's advice you don't want to take. So obviously his advice is not being taken. In other words, investment banking is not the same thing as commercial banking. Commercial banking is supposed to be basically a public utility, not a means of financing and making money. Paul Volkher said these two things are just the opposite (of one another). As a matter of fact I had lunch last week with one of my old Chase Manhattan friends who used to work with Paul Volkher and he was reminding me of the differences in philosophy between our generation and the new generation that has come up which is somehow convinced that what's good for Wall Street is good for the economy, although Wall Street's product is debt, and it makes its money off debt. It makes its money off collecting interest on debt in the first place, and then collecting predatory fees and late fees and payments and foreclosing when the debt can't be paid. This is a difference in generations by people who really didn't ever grow up in an experience of a financial downturn.

Bonnie Faulkner: Since Ben Bernanke is the head of the Fed, should he be the sole regulator? Why would Wall Street want Ben Bernanke as its chief regulator?

"That's just who you want regulating Wall Street. You want a blind policeman in charge."

Michael Hudson: The reason why Wall Street wants Bernanke as a regulator would be clear if you looked back at what he wrote in 2004. He gave a speech that's on the Fed website to the Eastern Economic Association called "the Great Moderation" and he also gave a speech to the Fed called '"the Great Moderation". Now here, in 2004, he said that the period of the last twenty-five years, from 1979 to 2004 had been a great moderation, employment and output have never been so stable. Look at the balance sheet from 1979 to 2004. This is the greatest immoderation in American history. In 1979 you had the wealthiest one percent of the people, as I think I've said in your program before having 37% of the wealth. By 2004, they'd increased their share of America's returns to wealth, that is interest, dividends, returns to capital gains to 57%, and its about twice that by now.

Bernanke has a blind spot. Although he's nominally head of the Federal Reserve, which deals with finance, finance plays no role in his mind at all. In order to be head of the Federal Reserve, in order to have a financial regulatory position in the government, you have to ignore finance, you have to ignore debt, you have to assume that debt is not a problem, only a solution, and you have to assume that the financial sector adds to the national output, not acting as an overhead, absorbing wages and turning them into interest payments, absorbing corporate profits and diverting corporate capital away from investment into interest payments. You have to be blind to the effect of finance on the economy, and this blind spot goes all the way back to Ricardo, who was the lobbyist for the bank sector in England after the Napoleonic wars ended in 1815.

The blind spot is inherent in the Chicago school of Milton Friedman and the University of Chicago monetarists. It seems ironic that a school that should calls itself monetarist and free market actually doesn't have any role for debt at all. It imagines that money and debt really reflect the economy's earning power.

So in their analysis, of the value of an asset, you take the earnings, the income that it can pay, and you capitalize it at the current rate of interest and you say "How much can I borrow against that amount of income. How much can you borrow against a corporation that earns a certain rate of profit. How much can you borrow against some real estate that earns so much over taxes, and whatever banks will lend, they define as wealth. So you define wealth in terms of how much a bank will lend, and how much of this can be turned into interest and rents for Wall Street. Of course if all the of the national surplus is turned into interest, there's no money for rising living standards, there's no money for increased capital investment, and the economy goes into depression, just as we're going into.

That blind spot is a precondition for (being appointed) head of the Fed. Bernanke is a well-meaning fool, he doesn't know what he's talking about. That's just who you want regulating Wall Street. You want a blind policeman in charge.

Bonnie Faulkner: Are you saying that Ben Bernanke defines wealth as debt?

Michael Hudson: He defines wealth as how much an entity can borrow, which is debt; in other words, its debt-bearing capacity.

Bonnie Faulkner: A quick follow-up on Paul Volkher. I've heard him roundly criticized for when he was head of the Fed of course took interest rates up to twenty, twenty-two percent and the claim has been made that that caused the de-industrialization of the United States. Do you agree with that?

Michael Hudson: It certainly stopped capital investment, because nobody can invest when you have to pay twenty-two percent. What he did was a response to the Vietnam war. the United States was running a huge balance of payments deficit, it was running a large inflation, and if he hadn't done that, raise the interest rates, living standards would have risen in this country. Raising interest rates to crisis levels was critical in order to prevent American living standards from rising.

The government believes that the key to economic management is to reduce living standards so there will be more money for the corporations and companies to pay the banks. That's the working business plan of the US government.

Bonnie Faulkner: That's interesting, because I was just about to ask you why the government would not want living standards to go up.

Michael Hudson: Because politicians respond to the campaign contributors they have, and the campaign contributors are Wall Street, the Finance, Insurance and Real Estate (FIRE) industries, and they want the economic surplus for themselves. They don't want it to go to labor. Essentially we're living through a transition from democracy to oligarchy and the oligarchy wants the money for itself, not for the people.

Bonnie Faulkner: Well, yes that makes sense, because if living standards went up, then we'd be having the money to spend on ourselves and not them.

Michael Hudson: That's correct.

Bonnie Faulkner: Getting back to your article on Obama's new financial regulatory reform proposal, you write that this financial regulatory reform that Obama is proposing has six major flaws. Do you want to talk about some of those flaws? You say that one of the flaws is the failure to give meaningful teeth to fraud reduction. And you talk about the consumer financial products agency, and I guess we've talked about that with regard to the credit cards.

Michael Hudson: It's more than that. When Obama bailed out Wall Street, he thought, "are the people really going to take this, we have to give something ostensibly to protect the victims of predatory finance. As long as we're giving $13 trillion to predatory finance we have to give something to its victims, so he said, not only am I doing the biggest giveaway in history, not only am I tripling American's federal debt to Wall Street, but I am setting up an agency to protect consumers from predatory finance.

But all that was was a proposal. Immediately the financial lobbies got in there and said don't give this any teeth, make sure that they don't have any power , so everybody, especially the Wall Street Journal is saying we'll go along with the giveaway to Wall Street, but we don't want any agency to protect consumers on this.. The belief now is that nobody's going to be around to protect consumers.

Bonnie Faulkner: Another flaw that you saw in Obama's regulatory reform proposal was the failure to reverse the shift to pro-creditor bankruptcy laws.

Michael Hudson: That's right, for almost a decade the banks have pushed what ended up in the 2005 Bankruptcy Act, which greatly increases the difficulty of individuals wiping out their debt for bankruptcy. The government is trying to make it impossible for consumers and homeowners and wage earners and homeowners to ever get free of debt by bankruptcy. Only the rich people can get rid of their debts. They get rid of their debts by turning it over to the public sector and making the government pay.

But consumers are not supposed to get rid of their debt, so essentially if you can't pay your debt we're moving into a society of what I call debt peonage. If you buy a house and you can't pay the mortgage, the proposals in the Wall Street Journal last Friday were that the government can come after you for your entire life. You have to live in a kind of debtors prison for the rest of your life in a Dickensian way, except that you're able to stay at home instead if in prison to cut the public costs, but you have to turn over all of your income to the creditors to pay for the junk mortgage you've signed into, the fraudulent practices of the last five years.

Bonnie Faulkner: I was going to ask you to elaborate on what debt peonage would look like in this country, but I guess you've kind of done that...

Michael Hudson: Debt peonage is when all of the surplus over and above basic needs goes to pay creditors.

Bonnie Faulkner: That's a good definition...

Michael Hudson: In other words, you're able to live, but all the surplus you produce, all that you earn, anything companies earn over and above break even costs has to go to pay the interest to the financial sector. It's what happened to the Roman empire and the result was the dark ages. The problem is that creditors live in the short run, and they tend to be parasites. It's just like in nature you have parasites. As they tend to have evolved in good Darwinian style they usually end up helping the host.

A good parasite will say, I want to take the host's blood and nourishment but I have to do something to help the host, I have to help it digest food or find new sources of nourishment. An intelligent parasite in nature doesn't take so much from the host that it kills the host because then it wouldn't be able to have any more nourishment. it wants to keep the host going. But at the very end of the process when the host is about to die, then the parasite lays the eggs which hatch and devour the host. That's the end stage. We're at this final stage of the credit cycle now. The financial sector realizes that it's broken the American economy, it's time to take the money and run. That's the stage of the financial economy we're into. We're in the bailout stage,( where they) take the money and run.

Wall Street's just trying to get the government to take its trash for cash as much as possible, to give it the bailout, and then it's moving that money abroad as quickly as it can to buy resources abroad, to buy foreign companies, to buy foreign debt, to buy foreign raw materials, to speculate in oil and copper and steel markets, to drive up the prices.

Essentially you're having the financial sector jump ship, realizing it's killed the American economy, and figure out how much it can carve up the economy as it takes whatever it can from (the wreckage of) the economy.

Bonnie Faulkner: What do you think this place is going to look like once they jump ship?

Michael Hudson: I'm dealing with two countries which are sort of the wave of the future, Iceland and Latvia, that have so much debt beyond their ability to pay that the result for one thing is emigration. A lot of Icelanders are emigrating, The people in Iceland and Latvia are running down their savings accounts in order to try to keep trying pay the interest on their houses that are falling in price. They're trying to keep up living standards although their family members are being laid off. First of all they dissipate the savings they have, paying them out to creditors, and finally to survive they're leaving the country. So you have depopulation, falling birth rates, rising death rates.

The IMF has gone to Latvia which is the most seriously indebted of the post-Soviet economies, and saying you have too many people who are using medical care. They've just cut back the hospital budget by 50%, they're saying you have to let the old people die. They've cut back the schooling by 50%. They say you cannot afford to educate your population. If you want an education, you must leave the country. They're saying essentially that Latvians have to cut their population by one third in the next couple of years.

Same thing for Iceland. One third of you have to lose your houses, have them plowed under, one third of your people have to emigrate, in order to pay essentially what we foreign investors want. We want your geothermal resources, we want your hydroelectric dams. We don't want the people. You have to run a budget surplus, not pay unemployment insurance, not industrialize, not invest, you have to cut your education and medical cost so that whatever you, the government extract from your economy you have to pay creditors. That's the dress rehearsal for the United States.

Bonnie Faulkner: If we're all going to try and emigrate, where will we go?

Michael Hudson: I don't know.

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PostPosted: Mon Oct 12, 2009 5:23 pm    Post subject: Reply with quote

Fintan, incredible audio and I honestly hope to become more forceful in many ways with spreading the word on whats going on, though it is definitely a war itself. You struck a great chord with the 'Moral Values' statement because it truly reminds me of MLK and the final threat he personified, being that of a force of moral accountability to/of the U.S with the Vietnam war (check out Wing T.V's (ugggh...) Evidence of Revision 6: MLK Conspiratus). So you reiterate MLK's points with the U.S and Morality and how that can actually move this country forward in a positive way.

It also had another interesting point: it does not matter whats used for currency, its the moral standing of the individuals in control. Dung has been used, sticks, fiat/paper, metals (including gold) etc etc. In any event, look forward to to future analysis and living in BFN lol.
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PostPosted: Mon Oct 12, 2009 7:37 pm    Post subject: Reply with quote

Excellent as usual, Fintan! Thanks for the clarity.

I had the misfortune of being around a TV today playing CNN...and heard them actually say the recession was over! Good Lord, I had to laugh out loud. Unfortunately, I was the only one who got the joke. So sad.

But there is that nagging question...how in the hell can we fix this when our entire power structure is being run by such immoral bastards? I'm at a loss as to how Joe Q Public can be effective against such bullshit. I have done my dead level best to pull out of the system and spread the word, but the level of apathy is so high, seems most folk just shrug their shoulders and go right back into the rat race.

Plenty of people bitch about the economy, but no one is willing to face down these pricks and demand some action. Such a dilemma to wrestle, especially with no clear plan of action to follow towards a resolution.
Any suggestions?

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PostPosted: Tue Oct 13, 2009 3:20 am    Post subject: Reply with quote

.....the level of apathy is so high, seems most folk just shrug their
shoulders and go right back into the rat race. Plenty of people bitch about
the economy, but no one is willing to face down these pricks and demand
some action......

"Green Shoots" propaganda is keeping a lid on the situation
for now, along with the fact that these still IS a rat race to
go back to --for now!

Those dynamics are likely to change in the months ahead.

Any suggestions

Gotta put the thinking hat on for that.....

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PostPosted: Tue Oct 13, 2009 3:25 am    Post subject: Reply with quote


Gotta put the thinking hat on for that.....

Yeah I'll say. Don't we all.

Real nice Audio Fintan. I could always use a good shake-up.

This is going to take a lot more than turning on, tuning in, dropping out, and growing our own carrots.

For sure...Wink

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PostPosted: Tue Oct 13, 2009 3:26 am    Post subject: Reply with quote

Jim Rogers: The Next 10 Years

by Heather Bell - October 09, 2009 12:40 PM

I’m moving to China … possibly to live in a bunker. At least that was my inclination after listening to a presentation by Jim Rogers yesterday.

Now don’t get me wrong―Mr. Commodities wasn’t all doom and gloom. In fact, his talk was both informative and highly entertaining. But Rogers doesn’t sugarcoat things―he’s very matter-of-fact about his concerns and projections for the future. And most of them don’t bode well for the U.S.

I’ll be posting an interview with Jim Rogers on the site in the coming week, but for now, I just wanted to offer some highlights from his speech at ETF Securities' mini-conference and the Q&A that followed.

1. The 21st century belongs to China

According to Rogers, the 19th century was the era of the British Empire and the 20th century was the U.S.’ heyday. But the 21st century is China’s (though the rest of Asia is definitely going to get a boost too).

The reasons for this are many, but some points brought up by Rogers include the following:
The Chinese want to live like we do;
They are more eager to work;
They are better at saving;
There are 1.5 billion Chinese citizens (and 3 billion people in all of Asia), and we owe them money. They are, according to Rogers, “among the best capitalists in the world.”

There will be some setbacks, of course, Rogers says, but these are opportunities. “If you see setbacks in China, you should pick up the phone and get more involved,” he advised, before adding his favorite refrain, “The best advice of any kind that I can give you is to teach your children and grandchildren Chinese.”

China’s path to world domination started with Deng Xiaoping’s capitalist programs in 1978, and there hasn’t been any looking back since. Rogers views China’s dominance as nigh-on unstoppable except for one little thing: its water problem. There are parts of the country that are running out of water, and when the water disappears, Rogers points out, so does civilization. However, the country is acting aggressively to combat the problem, and he doesn’t view it as that much of a threat.

2a. Jim Rogers is not a Ben Bernanke fan

Yep, it’s a fact. No “Team Bernanke” shirts for Jim Rogers (who said to scattered applause during the Q&A session that if he was in charge of the U.S. economy he would “abolish the Fed and resign.”).

Rogers is appalled by the government’s actions—Bernanke’s in particular. The U.S. government’s strategy calls for the debasement of the dollar, he says, calling it a “horrible policy.” While he concedes it can work in the short term, it NEVER works in the mid- or long term.

“He’s going to run those printing presses until we run out of trees, because that’s the only thing he knows,” Rogers said of Bernanke.

Add that on top of the country’s rapidly growing astronomical debt, and Rogers believes you’ve got a recipe for disaster.

2b. The U.S. dollar is screwed

Consider this a corollary to point 2a. Its status as a reserve currency is teetering on a precipice, in Rogers’ opinion, and he’s not alone. In fact, so many people are selling dollars right now that he’s sitting tight, waiting for a possible—and ultimately unsustainable—rally in order to exit the market. Of course, if it fails to rally and just drops again …

“I’ll just have to panic and sell like everyone else,” Rogers said.

3. Commodities, commodities, commodities

OK, as mentioned before, there are 3 billion people in Asia, most of whom are aspiring to play the home version of the American Dream game show. And let’s face it: American society is largely about consumption. We like stuff―we buy it, we wear it, we eat it, we flaunt it, we sometimes even bedazzle it (yeah, Google that). So that’s a lot more consumption on the global level. Rogers notes that while consumption is expected to increase exponentially, not a lot of capacity has been added in the last few decades for a lot of commodities. Meaning, not a lot of new refineries have been built, and not a lot of new resources have been discovered or excavated for a variety of commodities.

In terms of oil, Rogers cites the fact that Saudi Arabia has not seen any new oil discoveries but has consistently said for the past two decades that its reserves are at 260 billion barrels (in which time it has sold 60 billion barrels). He also points out that farmers are a rapidly disappearing species. So to sum up―that’s a lot more people competing for diminishing resources (including the all-important energy and food). Basic supply and demand theory pretty much takes it from there.

“Commodities are the second-largest asset class in the world,” Rogers noted. And they are “the best anchor” for your portfolio, he adds.

Rogers says the typical life span of a commodities bull market is 18-20 years. We’re currently in year 11 right now. Yeah, it could end tomorrow, but that whole supply and demand imperative could also extend this bull beyond its typical time frame.

During the Q&A session, though, the conversation took a darker turn. One questioner asked if the increased competition for resources might lead to war, and Rogers allowed it was a possibility, though he hoped it would not come to that. He pointed out that when a rising power clashes with an established power, the result is usually war, and said that research consistently shows that resource shortages lead to war. So, sure, commodities shortages might start World War III, but if you invest in the commodities themselves, you might at least be in decent financial shape when the shelling stops—and I’m not being flippant at all. War drives up the costs of commodities.

4. U.S. government bonds are the next big bubble

Well, would you lend money to us? Rogers says short-term bonds are probably OK, but he advises getting out of anything with a longer maturity. He calls it “inconceivable” that anyone would lend money to the U.S. for 30 years at the going rate, and notes that the U.S. was a creditor nation as recently as 1987.

“Now the U.S. is the largest debtor nation in the history of the world,” he said.

And for bond portfolio managers, he had some very pointed advice: “Get a new job.”

5. Protect yourself

The underlying theme of Rogers’ entire speech was that the world is changing, and here are some things you should know if you want to come out the better for it (and for your family members, clients, etc., to also come out the better for it) financially. Based on Rogers’ observations, it seems recognizing that change is a key step, but so is adapting to it (see advice regarding learning Mandarin, for example). And in Rogers’ eyes, commodities are a good way to achieve this protection. No investment is certain of course, but right now, he thinks commodities look pretty darn good.

Best Comment Of The Night

Addressing one audience member’s question, Rogers asked if the young man were an MBA. The questioner admitted to holding an MBA and was promptly told he should swap his MBA for an agriculture degree from Texas A&M.

“You should become a farmer,” Rogers said.

That’s an old line for Rogers, but he added a new wrinkle. If you’re not going to become a farmer, you should open the first Lamborghini dealership in Iowa. Because with farmers closing in on extinction just as the world needs more food, that’s probably what they’ll be driving in a few years.


Meanwhile here's a terrific interactive global map
showing the stimulus and deficits by country:

The cost of the financial meltdown: Deficits and spending

Minds are like parachutes.
They only function when open.
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curious george

Joined: 19 Aug 2009
Posts: 363

PostPosted: Tue Oct 13, 2009 11:11 am    Post subject: Reply with quote

I have been immersed in markets all of my professional life. In fact my highly developed skeptical mind( Wink ) can be thanked by the study of our corrupted manipulated machine we call the markets. Before I figured the markets, I was a your typical naive American. I just wish I had the wealth to match my experience but that is another story into itself.

In the past 10 yrs there has been a rare day where I didn't study charts of markets for less than 7 hours. Yeah, I find it a fascinating exploration of sorts. What I find fascinating is finding natural realities of fractal patterns and natural number sequences like Fibonacci. I also study market from the standpoint of wave movements. As manipulated as our markets are they still require “flow” to keep them alive and “flow” creates orderly patterns that show up in charts. I am not bragger type so I only share this info as a way to add a some credibility to my info. I also have nothing to sell you but my the truth as I see it. So here goes:

Like Fintan and many other wise professionals who expect the dollar will continue to decline; I too believe the dollar will eventually decline considerably further too. However my time frame and some additional sequencing of events not mentioned are likely to begin occurring. Unlike many of the media networks who are currently hyping a continued dollar selloff now; I expect the dollar is due some significant near term strength that may last a 1-2 years minimum.
As much as the wise Jim Rogers trashes the dollar. He is still holding dollar. He has had plenty of opportunity to sell it on it's last strong run last year.

Jim Roger Quote from Fintan’s last post:

"Consider this a corollary to point 2a. Its status as a reserve currency is teetering on a precipice, in Rogers’ opinion, and he’s not alone. In fact, so many people are selling dollars right now that he’s sitting tight, waiting for a possible—and ultimately unsustainable—rally in order to exit the market. Of course, if it fails to rally and just drops again … "

The next wave of corporate defaults will likely be the catalyst for a strong dollar. The US won't be crashing alone. Europe will fall along side US. Just as the Dollar's strength and the stock markets weakness ended in Nov07; the Dollar and stocks should likely do the same thing again this Nov 09. This should be a massive dollar rally higher and the final crash in the stock market.

From the study of Currency market charts, I have noticed that they always find balance points. The balance point is basically the conclusion of the circle. Once the circle completes itself, a new one must be formed. Trends are basically the life cycle of a circle. As chaotic as the charts appear, there is a consistent order that when reveled illustrates balance and balance often precedes price reversal. The currency markets that I study are all teetering on major balance patterns that have taken a minimum of ten years to complete. A reversal of ten year pattern could be devastating.
Allowing the dollar to go higher would appear to be a positive initially but as it continues to go up, the money would dry up and the robber barons would just be bigger robbers. They would buy up everything on the supper dupper cheap cheap. Like they did during the depression.

I am still critical of my own perspective as there is still one fundamentally question that keeps me open to continued unrelenting dollar selling. Historically there has never truly been a time when a fiat currency has ever been allowed to appreciated during an economic depression. The depression of 1929 existed the way it did since we were stuck in the gold standard. With the gold standard, banks couldn’t free up cash as gold couldn’t be printed. Would the central banks allow an appreciating currency amid a depreciating economy?...They allowed the dollar to go on a wild run higher in 2007 and 2008 when stocks were tanking. Since the US dollar has been going up as US stocks and Euro stocks go down there has been been this inverse relationship for over a year and a half on some currency pairs and 2 years on others. Currently stocks are setting up to fall again so it is easy to conclude that this will happen again with dollar appreciation likely to lead stocks lower. Since the media outlets are not speaking of this idea makes it all the more likely.

In my experience, I have had to learn that if charts point up and logic points down, then the thing is likely going up. Anything is possible in the markets.

It has been said that "curiosity" killed the cat but it might be more accurately stated that "seriousity" killed the cat.

Last edited by curious george on Tue Oct 13, 2009 11:18 am; edited 3 times in total
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curious george

Joined: 19 Aug 2009
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PostPosted: Tue Oct 13, 2009 11:12 am    Post subject: Reply with quote

Stay Curious Cool
It has been said that "curiosity" killed the cat but it might be more accurately stated that "seriousity" killed the cat.
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PostPosted: Tue Oct 13, 2009 12:01 pm    Post subject: Reply with quote

The MSM hs been screaming for over a year about the disaster in Spain. Yet a simple walk through the Barcelona city centre will show this scare talk to be total bs. The place is as packed as normal with tourists with tons of money to spend(certainly more than I have to spend), restaurants and shops are packed as usual. There is significant inflation though. The only prices that are down are property prices(asking prices down about 30% from the highs of a couple of years ago) which is a normal market adjustment. Traveling through spain and portugal this summer reflects much the same story. Life goes on - at least here - people buy stuff and sell stuff. Economies continue to function.
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PostPosted: Tue Oct 13, 2009 2:45 pm    Post subject: Reply with quote

The last three audios have been fantastic, Fintan. Keep 'em coming!

MichaelC- don't know about the inflation in Spain, but in Italy, where I was working earlier this year, the prices of things increased significantly with the introduction of the Euro (according to my students, who were all pretty senior business and government employees). Everything was rounded up overnight from the Lira which meant a near doubling in price. Every price except that of labour, of course. Wages didn't rise at all.
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