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RedMahna



Joined: 07 Sep 2006
Posts: 1512
Location: USA

PostPosted: Thu Aug 07, 2008 12:43 pm    Post subject: Reply with quote

Quote:
For them it's a bonanza now Ironic , eh?


I am assuming so, because there is nothing simple about it... the more confusing - the better??
I am trying to figure this piece of news out: (Leh stock is in deep shit, but their private equity is buying cheap credit?? This sounds like pennies on the dollar balances that is becoming a big opportunity for private equities, M&A's and collection companies that are popping up all over america. Look up collection agencies. They are a scary new enterprise.)

Quote:
UPDATE 2-Lehman Private Equity eyes credit crunch buys
Thu Aug 7, 2008 11:14am EDT

By Aaron Gray-Block

AMSTERDAM, Aug 7 (Reuters) - Dutch-listed Lehman Brothers Private Equity Ltd (LBPE.AS: Quote, Profile, Research, Stock Buzz) said on Thursday it was seeking investment opportunities in distressed assets as the global credit crisis exposed buying opportunities.

LBPE, an affiliate of U.S. investment bank Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz), added its investments in special situations, including distressed funds, represented 21 percent of its total private equity exposure on June 30, up from 20 percent on March 31.

"We will continue to target special situations funds as well as top-tier buyout and growth equity funds," the fund said in a statement.

The market is shifting to a buyer's market, LBPE said, with investment opportunities expected to come as companies reduce exposure to credit-related assets or sell non-core or underperforming businesses.

The fund expects to increase its exposure to Europe and Asia, while continuing to have a majority of the portfolio in North America, where 71 percent of its total private equity exposure is invested.

LPBE also said on Thursday its net asset value (NAV) increased 4.6 percent in the first half of 2008 to $588.5 million, or $10.85 per share, on June 30, up from $562.5 million or $10.37 per share on Dec. 31.

"Despite turbulent financial markets and overall weakness in the global economy, our investment portfolio held up well during the first half of 2008," the listed fund said.

At the end of the second quarter, the fund's private equity investment level was 87 percent of NAV, up from 79 percent on March 31 and 75 percent on Dec. 31.

LBPE said it expected to be fully invested in private equity by the third or fourth quarter, having previously given a timeframe of by the third quarter.

LBPE's assets are managed by Lehman Brothers, which is also facing difficulties due to the global credit crisis as it reported a $2.77 billion loss in the first quarter, the first quarterly loss in its history as a public company.

Conversely, LBPE said it has invested $270 million in the post credit crunch environment between July 2007 and July 2008.

But it also said some of its investments in special situations were not expected to generate short-term gains, but that large gains were expected in the mid to long-term.

The company also said 41 percent of its NAV was being held at above cost, while 17 percent was being held below cost as of July 31.

Shares in Guernsey-based LBPE, which listed in Amsterdam at $10 per share in 2007 before hitting a low of $6.71 in January, were up 2.21 percent at $7.87, while the blue-chip index in Amsterdam .AEX was down 1.15 percent at 405.80 points. (Reporting by Aaron Gray-Block, editing by Will Waterman)


That highlighted sentence seems to be something that was said in your Reuters-Barron's article:
Quote:
Nouriel stressed that he is "quite bullish" about the state of the global economy and that he is positive about the medium and long term.


Hopeful, bullish, lying? Whatever... the fact still remains that these investments are re-puked paper and NOT ANYTHING TANGEABLE.

The market consists of:
Land, structure and resources above and below it (including animated lives and intellectual property, tho that is not the classic meaning of real estate, but it seems to be the meaning in corporate ownership)

Part of that is Cheaply produced shit you need

Part of it is Cheaply produced shit you want

Much of it is paper that states levels of positive or negative ownership of the above, and levels of positive or negative ownership of amounts of repackaged paper, and then re-packaged again, again, and again. First at a profit, then at a discount when it can't hold. Next in line will try to profit.


In a bubble, "buying low and selling high" goes berserk. it tries to out-high every time it sells.
That's like borrowing to place a huge bet on the dark horse who lost and then trying to sell the ticket afterwards. If there are no takers, the grantor will try to collect what it can including tangeables from the borrower (bettor), then from the guarantor (if any), but if they can't pay, then you sell it for less to another beneficiary and they try the borrower again, then the guarantor again, and so forth...

I had written to one of my state's senators in early 2007 suggesting the unthinkable that the government ought to discount all property by 30% and reduce every mortgage and home-equity loan balance by 30% and NOT re-term the maturity dates. The banks would take a 30% loss across the board. This would have helped to alleviate the problem for the majority of homeowners except those with total income loss. It is radical. The towns and counties would have made 30% less in assessed taxes if they were effected. The banks would have had less opportunity to pressure the stock market and buy one another out. Foreign investors would have been pissed off, but fuck them. They gambled too.

Now it's August 2008. I see worse mayhem with their remedies, and if the 30% couldn't correct it, we could go 50%. Why not pennies on the dollar to the people's benefit?

Anyone agree that home and loan balances ought to be reduced accordingly to save everyone's ass in a time of crisis? How about some patriotism here on the homefront?

Red

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Fintan
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PostPosted: Tue Aug 19, 2008 8:09 pm    Post subject: Reply with quote

Here's an article from the Moscow Times
showing that the income gap is truly an
international phenomenon of modern
monopoly capitalism....

Quote:
Rich Get Richer as Poor Get Poorer

08 August 2008 - By Nikolaus von Twickel - Moscow Region

Nikolai Nikitin by all appearances is Russia's Average Joe.

The 82-year-old retiree with blinking blue eyes supplements his monthly pension of 4,000 rubles ($170) with what grows in the garden in front of his small wooden house. His nephew Mikhail, 47, brings home another 15,000 rubles ($635) a month from his job as a security guard. Together they barely scrape a living.

Nikitin may not be so average in having surpassed the country's male life expectancy of 59 by 23 years. But in his neighborhood, he stands out for his poverty. Nikitin is encircled by wealth.


This is Barvikha, a dacha community in the woods just west of Moscow and a haven for the well-to-do since Soviet times. This is where President Boris Yeltsin welcomed special guests at a government dacha, a tradition kept up by his successors, Vladimir Putin and Dmitry Medvedev.

Wander into the fir-tree forest above Nikitin's humble home and you can peek through the high fences with surveillance cameras that guard the not always tasteful architecture of the country's rich and famous.

Or watch the heavy traffic roaring past Nikitin's dusty fence and you will see more Range Rovers and Rolls-Royces than in some of London's fancier districts.

Follow the limousines to Barvikha Luxury Village, a sprawling country house-style shopping mall on the town's western rim, and admire the breathtaking offers of expensive cars, watches, jewelry and designer clothes.

On a recent Sunday, customers flocked to the Bentley showroom, where prices start at about 8 million rubles ($320,000) for a budget model. The British-built high-end limousines have recently become an ubiquitous symbol of Moscow's nouveau riche, and a saleswoman, who would not give her name because she was not authorized to speak to the media, said demand was growing every month.

But she also explained that many customers were concerned about being recognized in their cars and therefore ordered tinted windows. "For instance, there are State Duma deputies who do not want to show that they have more income [than other deputies]," she said.

Speaking to the Nikitins, you feel one of the country's most striking paradoxes -- the growing chasm between the rich and the poor.

"They do not speak to us. They do not greet us," Mikhail Nikitin said of his well-off neighbors. "Sometimes I think they should all be sent to Moscow -- in an armored train," he said, laughing.

A Growing Gap

Stunning inequality has become a part of life in today's Russia, and the gap is steadily growing between the rich and the poor.

The country's number of billionaires shot up from 60 to 110 over the course of last year, according to Forbes' rich list published in April. The magazine's Russian edition valued the combined fortunes of the top 100 at $522 billion, or more than one-third of the country's economy, up 54 percent from $338 billion in March 2007.

The number of citizens with a net worth of more than $1 million, so-called "high net-worth individuals," increased 14.4 percent to 136,000 people in 2007, according to a report released in June by Merrill Lynch and Capgemini.

Yet the country's average monthly wage stands at just 16,253 rubles ($686).


To highlight that this is average, speak to day laborers like Sergei, a builder in Moscow's Kurkino district who said he earns 500 rubles a day -- just 10,000 rubles a month.

In addition, 18.9 million Russians live below the poverty line, earning less than 4,000 rubles ($170) per month.

However, official statistics claim that inequality in Russia is lower than in the United States, albeit significantly higher than in Europe.

The country's Gini coefficient -- a scientific standard to measure income distribution from zero (perfect equality) to one (one person earns everything and all others nothing) -- has crawled up from 0.395 in 2000 to 0.412 in the first quarter of 2008, according to the State Statistics Service.

In the United States, the figure was 0.47 in 2006, while most West European countries have Gini coefficients from 0.25 to 0.35, according to the UN World Human Development Report 2007/2008.

The official Russian figures, however, are inaccurate, and the inequality is really much higher, economists and sociologists said.
The numbers are flawed because of the enormous unofficial income that does not show up in official records, they said.

Companies are known to pay their employees low official salaries and add extra money on the side to avoid taxes. Civil servants, on the other hand, are known to accept "gray taxes" -- large payments from companies that expect administrative favors in return.

Such practices appear mainly to be a phenomenon for higher-income groups. Poor people, by contrast, have fewer opportunities to get extra cash unofficially.

Olga Kryshtanovskaya, a leading sociologist, said Russians are more prone to invest in and flaunt luxuries than in the West. "It is a Russian characteristic that even the poorest people have сrystal ware and gold at home," she said. The ongoing consumer boom is also a means of compensation for past poverty, she said.

But that did not mean that those who drive around Moscow in Mercedes and Bentley limousines are showing off everything they have, Kryshtanovskaya said, noting that she knew quite a few millionaires with "ascetic" lifestyles.

Sergei Guriyev, rector of Moscow's New Economic School, agreed that there was massive underreporting of income. Realistically, he said, the nationwide Gini index could be approaching 0.5, while the index for Moscow was as high as 0.6. This would place the capital in line with some of the world's most unequal places like Bolivia, Botswana and the Central African Republic, according to the latest World Human Development Report.

Another, more telling method to describe inequality is to divide the population by income groups. By that, official statistics show, the richest 10 percent of the country's population earned 31 percent of the overall income last year, and the top 20 percent took home 47.8 percent. Moscow's massive poverty gap is all the more ironic because this was the heart of the Soviet Union, the country that for 70 years propagated the end of inequality.

Government officials have pointed to large reductions in poverty and unprecedented rises in income. Official statistics show that the share of the population living below the poverty line has plummeted from just above 20 percent in early 2006 to 13.4 percent in the course of last year.

From 2001 to 2007, the number of poor has been more than halved, from 40 million to 18.9 million.

And incomes have risen spectacularly. Inflation-adjusted real wages rose more than 11 percent from April 2007 to April 2008. In the course of two years, real incomes on average climbed 25 percent, according to official data.

Yet while economic growth boosted by record oil prices has helped the government to achieve impressive numbers, inequality has grown.

For one, differences between the country's regions are huge. Whereas the average income in Moscow is 30,818 rubles ($1,233), in Dagestan, the country's poorest region, the average income is just 6,923 rubles ($276).

Even though most of the country's wealth is accumulated in Moscow, the capital also boasts a much higher fraction of people living under the local poverty line. According to the city's statistics service, last year 23 percent of Muscovites lived in poverty, defined as a monthly income of less than 5,758 rubles ($230).

Many experts agree that high levels of inequality pose multiple problems, threatening social cohesion and an increase in crime rates.

Middle Class and Taxes

The government, it seems, has decided to address the problem by focusing on the growth of the middle class.

President Dmitry Medvedev has said that only a fast-rising middle class "can become the buttress of democratic development." He has also said the middle class should make up 60 to 70 percent of the country's population by 2020, on par with levels in Western Europe.

Yet sociologists said that while 22 percent of the population is middle class by income, only 7 percent of the population could be classified as belonging to that group if education and self-consciousness are taken into account.

Many blame the tax system for galloping inequality.

"I don't know one other country in the world where the tax system stipulates that the poor share with the rich, rather than the rich sharing [their wealth] with the poor," said Oleg Smolin, a Communist State Duma deputy.

Smolin identified the country's flat income tax, introduced in 2001 at 13 percent, as the main culprit.

He said that since opportunities for tax evasion were more widespread among higher income groups, the system was turning absurd. "We have gone even further [than the flat tax] to a regressive system -- the more an employee earns, the less he gives back to society," he said.

To bridge the income gap, he said, the government needs to introduce a progressive tax system.

Kryshtanovskaya, who heads the Russian Academy of Science's center of elite studies, also backed the introduction of progressive taxes and said financial controls should be increased. "[The government] should be able to control payments like in most other economies around the world, where the majority abides by the law," she said.

While Guriyev agreed that inequality was too high, he strongly warned against changing the flat income tax regime, arguing that it was important for pulling the economy out of the shadows.

Rather, he said, it is necessary to tackle inequality because as long as it is high, "it is very hard to resist temptation to tax the rich, which in turn undermines economic growth."

The most promising path, he said, would be to promote equal opportunities through the reform of health care, education and housing.

Guriyev said it was a good sign that the Kremlin's national projects addressed exactly these issues. "This shows that the government understands pretty well what needs to be done," he said.

The national projects, overseen by Medvedev when he was first deputy prime minister, target health care, education, housing and agriculture. Spending reached 256.5 billion rubles ($10.8 billion) last year.

A second state initiative, special economic zones, is intended to diversify regional development by creating greater economic activity outside of Moscow and the oil-rich regions.

In addition, the government is hoping to tap its sovereign wealth fund to address the problem of inequality between generations.

As with so many things in the country, the challenge lies in the implementation. "It will be very difficult to get qualified bureaucrats for the projects," Guriyev said.

He warned against attempts at large-scale redistribution of wealth because this would jeopardize private property. "Any attempt at expropriation would scare away badly needed foreign and domestic investors," he said. As examples he listed Latin American countries like Bolivia and Venezuela, where nationalization had been suppressing economic activity as well as driving foreign money away.

He said the Yukos affair, where the state had forced the country's biggest private oil firm into bankruptcy, had similar effects, since the oil industry has seen both investment and output declining.

Smolin, however, lambasted a law introduced in 2005 that abolished taxes on inheritances and gifts received from family members and relatives.

What was meant as a gift to all our citizens who pass on apartments to their children actually "turned out to be a grandiose present for the so-called oligarchs, who handed down colossal real estate wealth to their children and close relatives," he said.

The Communist deputy also said salaries needed to be significantly raised in sectors where they are lowest, including agriculture and education.

He criticized the fact that a professor can earn roughly the same salary as a congressman in the United States but that the difference in income between the two is huge in Russia.

"Wages in education, science and arts are laughable. Teachers in some regions earn just 150 euros [$232] per month, while a Duma deputy like me is making 200,000 rubles [$8,500] a month," he said.

Communist deputies, Smolin said, are giving almost half of that back to their party.

"The government steadily refuses to raise salaries for the intelligentsia and public servants, saying this would propel inflation. But at the same time, it is pumping gigantic sums into its state corporations, which in the opinion of many, including liberals and experts, pose the much bigger factor for inflation than public sector salaries," he said.

Power of Inflation

Inflation is actually itself a contributing factor to inequality, because it tends to hit the poor more than the rich.

A study released last month by audit firm FBK found that an inflation rate of 14 percent this year would translate into 25 percent in real terms for the poor.

This is because poorer people spend a higher fraction of their income on staple goods, and food prices rose much more than the average, the study found.

Also, wealthier people have easier access to sophisticated financial instruments that avoid inflation, while the portfolios of the poor tend to have a larger share of cash.

Smolin warned that the current status quo posed a grave threat to political stability.

"The relative stability we have is based on the golden rain of oil revenues. It might be easily destroyed," he said.

People may not be taking to the streets now, but at the beginning of 2005, some 500,000 to 2 million people protested the monetization of state benefits, Smolin warned.

Kryshtanovskaya said the main reason for the current stability is that even the poor are seeing a chance of being better off soon -- a major difference from the 1990s. "Back then, one segment got richer, while the rest got poorer. Today, everybody is getting richer, and everybody is busy earning and spending money," she said.

Kryshtanovskaya said there probably was no point in the country's history where more wealth was being generated. During the last large-scale economic expansion in the 1960s and early 1970s, much was eaten up by the military-industrial complex. "Today, a lot goes into welfare, and that is probably unique," she said.



The Problem: Wealth Disparity
What the Government Has Done:


- Launched the national projects in 2005 to expand the underdeveloped middle class by improving basic living standards through the investment of billions of dollars in housing, health care, education and agriculture.

- Increased pensions and public sector salaries. Among the more recent pledges, Prime Minister Vladimir Putin in May promised 25 billion rubles ($1.1 billion) in extra payments to military servicemen this year and said scientists' monthly salaries would be boosted from 20,000 rubles to 30,000 rubles

- Encouraged studies on how to expand the middle class. In April, the Institute of Contemporary Development, a Kremlin-connected think tank, announced a comprehensive survey on this subject.


Possible Solutions:

- Change the Tax Code to introduce progressive taxation, requiring higher earners to pay more. This solution, however, seems to have very little support within the political establishment.

- Rethink tax rules on gifts and estates. Tax-free inheritances do not only perpetuate wealth but also inhibit economic competition, a view publicly shared by U.S. billionaires Warren Buffett and George Soros.

- Fight inflation, which tends to impoverish the poor while leaving the rich unharmed.

- Bring disproportionate salary increases under control. Wages grew by 28 percent year on year in April, and some officials have warned that the country risks falling into an inflationary spiral as Latin American countries did in the 1990s and have said wage controls might be necessary.
Improve transparency and public control over cash flows both in the public and private sectors. Dry up "gray taxes" like bribes and other financial gifts for bureaucrats and encourage firms to pay full wages and taxes. Experts believe that this is a Herculean task, given the country's record of tax evasion and money laundering.

http://www.themoscowtimes.com/article/1010/42/369661.htm

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RedMahna



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PostPosted: Tue Aug 19, 2008 10:33 pm    Post subject: Reply with quote

Fintan:
Quote:
Many experts agree that high levels of inequality pose multiple problems, threatening social cohesion and an increase in crime rates.


And then someone buys a security system to make themselves feel better.

One thing my Mom said about communism was that everyone worked and there was no crime. Don't get me wrong, she didn't like Communism, and she escaped in '56.
But the opposite of all that just seems to be this extreme competitiveness. It's nothing less than open season on everything, and the guy who dies with the most toys wins. It's acceptable human behavior while at the same time being the exact quality which defines an animal a beast or whatever wild instinct-driven thing you like. The rationale is "better me than you," while the distractions and rewards make it more like a game... because it isn't really a question of survival, not when a certain level of spoils have been reached. But it is a question of survival when the fear of losing any of it exists. That's the essence of greed.

So, Russia sounds like a late version of the USA. China is or will be doing the same. The grass is always greener on capitalism's lawn before open season starts. Hey, I'd like that idea too - open season to compete for anything I want. Some people obviously are really cut out for it. But it's not designed for equality, only in theory. You'd think open season is equality... you can equally try to get ahead, figuratively speaking, and that psyches most people into it being the fact.
Reality is there are too many handicaps not addressed that put many folks at a disadvantage from the start or along the way. And who knows that the best? The ones with the most and the ones with the least. The wealth has to come from somewhere... the ones in the middle are too busy trying to go up and fight from going down to have time to care whether the system is fact or theory. For however long that system lasts, anyway... cos the grass will start looking a little worn out.

If you're sitting around contemplating this on more days than not, then you might have too much time on your hands which means you're on the way down (or there already) or waaay up top and don't need to be busy doing something profitable. The system may be worried that you might be planning on changing things, like fixing the grass on the other side.

Some days I am really disappointed at how logic is only opinion and of little use.

Red

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duane



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PostPosted: Thu Aug 21, 2008 8:31 am    Post subject: Reply with quote

A. cleanup capitalism
B. switch to communism or socialism
C. none of the above

C is the obvious choice by what does that look like?

http://www.processedworld.com/carlsson/nowtopia_web/index.shtml

Nowtopia is a book about a new politics of work. It profiles tinkerers, inventors, and improvisational spirits who bring an artistic approach to important tasks that are ignored or undervalued by market society. Rooted in practices that have been emerging over the past few decades, Nowtopia’s exploration of work locates an important thread of self-emancipatory class politics beyond the traditional arena of wage-labor.

the REAL hippies had it right all along

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Fintan
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PostPosted: Fri Aug 22, 2008 3:31 am    Post subject: Reply with quote

Quote:
The 'Housing Bubble' Song Laughing

http://www.youtube.com/watch?v=Ivp4YqGCI-s


Quote:
Skewed Unemployment Statistics Mislead America

08/12/08 Dustin Ensinger

An indisputable sign of the dismal state of the U.S. economy is the closing of stores by retail giants such as Dillard’s Inc., J.C. Penny’s, Lowes, Office Depot and Macy’s. It is no longer the mom-and-pops shop down the street being run out of town by the corporate giants. Foot Locker will be closing 140 stores, Gap Inc. 85 stores.

Sprint Nextel will shut down 125 retail locations, which will affect nearly 4,000 employees after 5,000 layoffs last years. The next round of large layoffs will likely be in the automotive industry, where Ford’s sales plunged 28 percent in June, along with General Motors and Toyota.

The closings of these beacons of American consumerism are all very serious signs that the economy is contracting rapidly. And the fact that banks have largely cut back on loans because they are fearful of bad debt, has only exacerbated the problem. The effects are being felt by nearly everyone: real estate brokers, bankers, both large and small, furniture workers, salespeople and even construction workers are seeing their hours drastically reduced or even wholesale cuts.

Americans are not getting the real story on the sad state of the economy, according to John Williams of Shadow Government Statistics. According to his calculations, the U.S. economy entered recession - defined as two consecutive months of negative GDP growth - at the end of 2006. Furthermore, he claims that the Commerce Department and Labor Department purposely released skewed statistics to paint a rosier picture of the economy. One area where this is evident is the Labor Department’s unemployment statistics.

According to Williams, the government takes six different measures of unemployment, u1-u6. The American people normally see the much more conservative estimate, which is currently a modest 5.5 percent unemployment rate. However, the u6 measure is more like 9.7 percent, and because of the methodology used, Williams claims that the true number is actually 13.7 percent unemployed - a much larger margin of unemployment than the government wants its people to realize....

http://economyincrisis.org/articles/show/1637

Into the Abyss: Fannie Mae and Freddie Mac

08/21/08 Craig Harrington

Fannie Mae and Freddie Mac are now nearly worthless, having each lost nearly 90 percent of their value in the last year alone. Fannie Mae shares dropped to just $3.75 on Thursday; Freddie Mac shares bottomed at one point at $2.68. A government bailout is now all but certain, and the possibility that the two federally-sponsored giants will be dismantled and sold for scrap is now a serious concern, according to Reuters.

The continued downfall of the two firms has been well-covered in the media, but the sheer magnitude of the problem is difficult to encapsulate. The 52-week share prices for Fannie Mae and Freddie Mac show a disturbing mirror image. The two companies posted monstrous budget deficits in the second quarter of 2008: $826 million for Freddie Mac and $2.3 billion for the larger Fannie Mae. And now, what amounts to a hostile government takeover is in the works. This takeover is likely to wipe out most common shareholders while also costing the American taxpayer an additional $225 billion or more.


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RedMahna



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PostPosted: Sun Aug 24, 2008 11:33 am    Post subject: Reply with quote

hey those are some pretty good songs... why haven't they gone top 40? they are waaaay better than jonahs brothers and hannah montana (fuck if i mis-spelled their names).

seems there's more reason to have a social awareness and social revolution than the sixties, yet we have no crosby, stills, nash and young or any of those artists and hit songs.

fintan, what happened with art in the computer age? it no longer is allowed to be seen and heard except via the internet if you look for it... but kept off the public airways.

red

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PostPosted: Sun Aug 24, 2008 1:38 pm    Post subject: Reply with quote

Quote:
RedMahna: fintan, what happened with art in the computer age?


Art began the computer age as a team of mostly left-handers built
the Apple Mac and revolutionized personal computing. Then, as usual
the innovation was quickly cannnibalized by the right-wing drones --
typified by Beastmaster Gates.

In the mainstream, that computer revolution spured an expansion
of mass-production which overwhelmed innovation. But Art has now
become entrenched in a million websites and tens of thousands
of individual YouTube channels. Drones still gawp at the collective
network TV, but the drones do not drive things, they are followers.

Individual Art is now empowred and active at the heart of a
communications revolution, which, despite the social change it
has already wrought, is still now only in it's early stages
Watch the collective lies fall - one by one.

Stay tuned....

Meanwhile, back in the land of the money in your pocket...
Read the following article in full. Highly recommended.

Quote:
Is the "Commodity Super Cycle" Dead or Alive?

August 20, 2008
By Gary Dorsch, Editor, Global Money Trends

“Those who had been riding the upward wave decide now is the time to get out. Those who thought the rally would last forever, find their illusion destroyed abruptly, and they, also, respond to the newly revealed reality, by selling or trying to sell. And thus the rule, supported by the experience of centuries, - the speculative episode always ends not with a whimper, but with a bang,” so wrote John Kenneth Galbraith in his book “A Short History of Financial Euphoria.”

Tens of thousands of traders piled into the commodities markets in recent years, attracting nearly $280 billion, bidding-up everything for crude oil to corn, coal to soybeans, and silver to sugar. The speculative boom was most evident in the agricultural and energy sectors, where commodities doubled and tripled from a year ago, and sending official inflation rates to multi-decade highs around the world.

Central bankers in Canada, England, and the United States whetted the speculative appetite of commodity speculators, by slashing their interest rates, and increasing their money supplies. “The truth is that liquidity is the only significant weapon in the central bank’s arsenal, but it will not necessarily go where you want it to go, when you need it to go there,” Martin Meyer wrote in his book “The Fed.”

“Once public opinion is convinced that the increase in the quantity of money will continue and never come to an end and consequently, the prices of all commodities will not cease to rise, everybody becomes eager to buy as much as possible and restrict his cash holdings to minimum size. If the credit expansion is not stopped in time, the boom turns to crack-up boom, the flight into real values begins, and the whole monetary system founders,” Ludwig von Mises prophesized in 1949.

Such was the case in the 12-months leading up to July 2nd, when the speculative frenzy in the commodities markets, suddenly began to turn into a bust. Within the span of four-weeks, kingpins of the commodities markets had plunged 20% or more from their July peaks, and dumped into bear market territory. When the parabolic booms were followed by wicked corrections, the eternal skeptics of the “Commodity Super Cycle” began to wake-up from seven-years of hibernation.

While the Fed, the British, and Canadian central bankers were stoking the mania in the commodities markets, a coalition of six influential central banks, from Brazil, China, Europe, India, Korea, and Russia, were working collectively in the opposite direction. The Group-of-Six, led by ECB chief Jean Claude Trichet, tightened their monetary policies, in the hope of derailing the powerful “Commodity Super Cycle,” which was wrecking havoc across the global economic landscape......

READ ON:
http://www.sirchartsalot.com/article.php?id=93

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Last edited by Fintan on Sun Aug 24, 2008 3:04 pm; edited 1 time in total
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RedMahna



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PostPosted: Sun Aug 24, 2008 2:20 pm    Post subject: Reply with quote

Good article...

Quote:
While the Fed, the British, and Canadian central bankers were stoking the mania in the commodities markets, a coalition of six influential central banks, from Brazil, China, Europe, India, Korea, and Russia, were working collectively in the opposite direction. The Group-of-Six, led by ECB chief Jean Claude Trichet, tightened their monetary policies, in the hope of derailing the powerful “Commodity Super Cycle,” which was wrecking havoc across the global economic landscape......


Well, that's what the Fed should have done to begin with, but instead GW was out there cheerleading for voters to hand over their Soc Sec to Wall St investors just prior to the top-cycle and subsequent busts.

I have no lost love for Wall St and investment banks. They seem like losers, and yes, many suit-and-tie guys will be re-writing their resumes, but money was made within all these bubbles that were substantial enough to offset the bookkeeping of big purseholders.

How can you cry for someone who can't make their yacht payment?

red

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PostPosted: Thu Sep 11, 2008 12:22 pm    Post subject: Reply with quote

Quote:
Cannibalism
[Cf. F. cannibalisme.]
The act or practice of eating human flesh by mankind.
Hence; Murderous cruelty; barbarity.

Quote:
Lehman Shares Plunge on Questions of Survival

By Heather Landy and Howard Schneider
Washington Post Staff Writers
Thursday, September 11, 2008; 12:20 PM

NEW YORK, Sept. 11 -- Stock in Lehman Brothers plunged Thursday as concern persisted about the storied firm's future, despite a restructuring plan announced by company executives.

Lehman executives on Wednesday had rolled out a plan that included a sale of major parts of the company's portfolio, hoping to quell speculation that the firm was nearing collapse because of its involvement in risky real estate investments.

Wall Street's day two reaction: Lehman's share price fell nearly 40 percent in initial trading, to about $2.75 a share, continuing a precipitous fall from more than $60 a share as of February.

Other financial stocks were also hit hard Thursday, evidence of doubt that the ongoing crisis in the mortgage and real estate industries is nearing an end. Merrill Lynch dropped about 12 percent, to about $20.50 a share, and troubled Washington Mutual was off 14 percent, to about $2. The Dow Jones industrial average overall dropped sharply when trading opened, by about 150 points, before bouncing back to a more modest loss of less than 50 points.....

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/11/AR2008091101525.html?hpid=moreheadlines

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PostPosted: Thu Sep 11, 2008 1:20 pm    Post subject: Reply with quote

i'm sure i am being presumptive and overly general when i say this, but money was made during the downfall of these that you point out, fintan, as well as with many other stocks/companies over the history of trading... many paper losses, many real losses, but in the end, the acquiring firms & investors will be the new winners, who will start another cycle all over again.

it's always been that way. the millionaires will likely file their bankruptcies and also start all over again. the suits will walk with their packages and move to yet another organization, and the vulture M&A's and Equity firms will absorb some of them as their board members, blah-blah-blah.

it's just us 401K'ers, company employee shareholders, and IRA investors who made up so much of the stock price that I feel pity for. but without us, there's no game to play, i suppose. there's no game to play without consumers and end-users. right?

weekends are fun. wait and watch for takeover news. bagholders.

question is - the market crash predicted for sept 2008...
1. is this it?
2. if so, how much truthful info will we get from the govt?
3. will we know who really owns what after the dust settles?
4. how will commerce be affected and how well will it all be orchestrated to keep everyone from panic?
5. is there something big going on and the elections/9-11 coverages are kind of diverting our attention?
6. are americans bored with financial news lately? (yawn... nothing to see here.)

hell if i know. maybe i'm just over-reacting, as usual.

red

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PostPosted: Thu Sep 11, 2008 3:31 pm    Post subject: Reply with quote

Financial cannibalism is the name of the game.

question is - the market crash predicted for sept 2008...
1. is this it?


Not until after Nov 4th Smile

2. if so, how much truthful info will we get from the govt?

Laughing

3. will we know who really owns what after the dust settles?

Core banks of the Federal Reserve and accomplice cartel banks.
And of course the US Gov (See Freddie and Fannie)

4. how will commerce be affected and how well will
it all be orchestrated to keep everyone from panic?


a: Stagflation.
b: TV/Media Propaganda.

5. is there something big going on and the elections/9-11
coverages are kind of diverting our attention?


See 3 above. Wink

6. are americans bored with financial news lately?
(yawn... nothing to see here.)


Yep. but not for long.......

This is a nutshell version:

Quote:

http://www.youtube.com/watch?v=khP49ykg96E


Meanwhile....

Quote:
Is the “Commodity Super Cycle” Dead or Alive?

By Gary Dorsch, Editor, Global Money Trends - August 20, 2008

Those who had been riding the upward wave decide now is the time to get out. Those who thought the rally would last forever, find their illusion destroyed abruptly, and they, also, respond to the newly revealed reality, by selling or trying to sell. And thus the rule, supported by the experience of centuries, - the speculative episode always ends not with a whimper, but with a bang,” so wrote John Kenneth Galbraith in his book “A Short History of Financial Euphoria.”

Tens of thousands of traders piled into the commodities markets in recent years, attracting nearly $280 billion, bidding-up everything for crude oil to corn, coal to soybeans, and silver to sugar. The speculative boom was most evident in the agricultural and energy sectors, where commodities doubled and tripled from a year ago, and sending official inflation rates to multi-decade highs around the world.

Central bankers in Canada, England, and the United States whetted the speculative appetite of commodity speculators, by slashing their interest rates, and increasing their money supplies. “The truth is that liquidity is the only significant weapon in the central bank’s arsenal, but it will not necessarily go where you want it to go, when you need it to go there,” Martin Meyer wrote in his book “The Fed.”

“Once public opinion is convinced that the increase in the quantity of money will continue and never come to an end and consequently, the prices of all commodities will not cease to rise, everybody becomes eager to buy as much as possible and restrict his cash holdings to minimum size. If the credit expansion is not stopped in time, the boom turns to crack-up boom, the flight into real values begins, and the whole monetary system founders,” Ludwig von Mises prophesized in 1949.

Such was the case in the 12-months leading up to July 2nd, when the speculative frenzy in the commodities markets, suddenly began to turn into a bust. Within the span of four-weeks, kingpins of the commodities markets had plunged 20% or more from their July peaks, and dumped into bear market territory. When the parabolic booms were followed by wicked corrections, the eternal skeptics of the “Commodity Super Cycle” began to wake-up from seven-years of hibernation.......

.....

The direction of gold prices and inflation expectations also hinge on the
direction of world oil prices. It’s doubtful that the ECB hawks and the
Group-of-Six central banks would have been so successful in knocking
gold and oil prices lower without the help of Saudi king Abdullah, the
central banker of oil. Iran and Venezuela would like to see the Saudis cut
their oil output at the upcoming OPEC meeting on Sept 9th to stabilize the
oil market, and prevent prices from moving lower.

However, the Saudi kingdom might be looking at the US political calendar,
and would feel more comfortable with a John McCain presidency, thus
Riyadh might be inclined to leave its oil output unchanged awhile longer
.
Already, the 25% drop in crude oil prices from five-weeks ago is paying
dividends for Riyadh. In a sharp turnaround, Republican John McCain has
opened a 5-point lead on Democrat Barack Obama in the US presidential
race, wiping out Obama’s solid 7-point advantage in July, and taking his
first lead in the monthly Reuters/Zogby poll.

http://www.sirchartsalot.com/article.php?id=93


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PostPosted: Thu Sep 11, 2008 4:19 pm    Post subject: Reply with quote

Quote:
The Feds are Running Scared

Bill Bonner - Thu 11 Sep, 2008

And now, the downturn is global...and it will be longer,
and harder, than practically anyone imagines.


Paris, France

The fog of war – that is, in the “war” between inflation and deflation – is
lifting. We’re beginning to see more clearly which way the battle is going.

“America’s giant mortgage companies nationalized,” is how Le Monde
treated Monday’s big story. “The biggest bailout in history...” it went on.

But what does it mean when the world’s most free-market government
nationalizes its largest finance industry? It means a couple things:

First, that the days of “laissez-faire”, even ersatz laissez-faire, are over.
No more deregulation. No more tax cuts. No more free trade agreements.

Second, that the feds are running scared. They are in retreat. The battle
between a natural market correction...and an unnatural, inflationary
boom...is going against them.

We were right all along – or almost right; when the dot.com bubble burst
it marked the beginning of the end – the end of the bull market on Wall
Street...the end of the credit expansion that began in ’82...and the peak
of American power and influence in the world
.

The decline since then has been delayed and disguised – by a flood of
new liquidity from the feds. But now, there’s no stopping it. And it’s much
worse than it would have been 8 years ago. Because Americans became
more and more used to spending money they didn’t have; now they have
more debt than ever. And because the Chinese and other foreigners
became more and more used to selling things to people who couldn’t pay
for them; now their new apartment buildings are empty and their new
factories are quiet. And now, the downturn is global...and it will be longer,
and harder, than practically anyone imagines.

This just in: “Top China developer’s sales fall sharply.” Maybe it was the
distraction of the Olympics, but China’s biggest listed property developer,
Vanke, said sales fell 35% last month
.

And this too: Yesterday, gold fell more than $30 – to $757. The euro rose
to $1.40. Oil is rising this morning, on fears of Hurricane Ike, but it closed
yesterday at $102. Our guess is that it will sink to the $70 range.

And here’s Le Monde again:

“Good news, finally...almost everywhere, inflation remains under control
and in retreat.”

Wrong. Wrong. Wrong. Inflation may be in retreat. But it’s not good news.
It means the whole world is sinking into a slump – not just the US and
Britain.


And that’s what the feds are afraid of. Sec. Paulson justified the takeover
of Mac and Mae on the grounds that the markets and the taxpayers
needed “protection from a systemic risk.”

What was the risk? That both Freddie and Fannie would go broke, that
houses would fall to what they were really worth, and that – when the
federally-chartered agencies stopped paying their debt to foreign lenders
– the whole world financial system would melt down. Driven by
fear...Paulson took the bold action...

And now...for the next act:

The US economy has grown during these last 2 decades. But it has grown
only because consumers have been willing to go deeper into debt. This
was not good growth. It was not healthy growth. But at least it was
growth.

You get growth by spending money. If the consumer spends – it is growth
in retail, consumer items, services, and so forth. If business spends – you
get more jobs, more capital equipment, more buildings, trucks, computer
programs, etc.

But what if neither consumers nor business is willing to spend?

Sunday’s government takeover of the US mortgage finance industry
looked like a godsend to many investors – and to Le Monde. The
government made it clear – if it weren’t already obvious – that it wasn’t
going to abandon its two federally-sired mortgage twins, Fannie and
Freddie. More importantly, it signaled that the feds were ready to spend.

Bill Gross’s PIMCO made $1.7 billion by betting on the bonds of Fannie,
Freddie and other agencies. You could have made some money too. We
explained the “Paulson Doctrine” in these pages – which guaranteed the
bonds would eventually be saved – several weeks ago. The Paulson
Doctrine maintains that the feds will let the shareholders take losses – but
not the bondholders. Why? Because the largest bondholders are foreign
countries – notably China. And America desperately needs more credit
from these large, overseas financiers.
Foreigners hold trillions of US
dollars and US dollar-denominated debt. If they begin to fear the
government is not behind it, they’ll dump it fast – which would be the
end of the current dollar-based monetary system.

So, the move to bring Fannie and Freddie under direct government
control was widely seen as a plus for everyone. Foreign lenders know the
game is still rigged -- so their money is safe. Homeowners think they’ll be
able to continue living at someone else’s expense. And investors
hallucinate that the government has “done something” to put this
mess behind us.

But we have a question: Where do the federales get the money? The
slump – though it has barely begun – has already clipped corporate and
individual tax receipts. Plus, social welfare programs are becoming more
expensive. As unemployment increases – it was recently tallied at over
6%, the highest level in 5 years -- the safety net catches more and more
people.

“I’ll tell you how it works,” said a taxi driver. “You’re lucky you live
overseas, cause this country is a mess...”

We had been taking a snooze in the back seat. Then, we noticed a jerky
movement in the car. When we opened our eyes, we found the cab had
drifted to the middle of the road. On the long drive from Charlottesville,
VA, to Dulles Airport, our driver was falling asleep.

In attempt to revive him before it was too late, we made conversation.

“I’ll give you just one little thing I know from personal experience,” the
cabbie went on, “I had a call to pick a woman up here in Charlottesville.
She’s a Medicare customer. Do you know about that? Well, she had lost
her car and she had come up here to the hospital. And then she was
ready to go home. But she didn’t have a car. And I guess she didn’t
have anyone to pick her up. She called a cab.

“So I drove her home...all the way down to North Carolina! The fare was
$1,100 – which is a lot for a taxi cab. But then, she didn’t have to pay it.
She just signed one of these vouchers. (He showed us a simple white
form...) And then I turned it into the government. So you see, you paid
$1,100 to drive her down to North Carolina in a cab!”

The feds have dozens, maybe hundreds, of these absurd programs.
When the sun shines, they grow like kudzu. Rain falls upon them like
Miracle Gro.

Fannie and Freddie, between them, have assets of $5.4 trillion and debt of
$1.7 trillion. No one knows how much it will cost to keep them in business,
but it is bound to be a big number. And the federal deficit is already as
big as it has ever been – and growing. Where will the feds get the
additional money to support US housing?

We all know where – they have to borrow it. And now another question:
We saw what happened when individuals borrowed too much; all of a
sudden lenders didn’t want to extend them any further credit. Even Wall
Street giants – such as Bear Stearns...and now, Lehman Bros. – can go
bust if they borrow too much or speculate too wildly.

Can the US government go bust too? Well...there is that printing press...
The federal government can’t go broke, technically, because it can pay
off its debts with money it prints up, just for the occasion. But in the
event, the dollar itself would collapse in value. Foreign lenders would
cease to extend credit. And then, the only choices open to the US would
be to cut back...or to print up even more money. We’re a long way from
the end of this show...but this takeover of Mae and Mac is a big step
toward the final curtain.


http://www.dailyreckoning.co.uk/economic-forecasts/global-downturn-11098.html

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