Tuesday, June 30, 2009

Even BIS Slams "Too Big to Fail"

The Bank of International Settlements - the "Central Banks' Central Bank" - slammed too big to fail. As summarized by the Financial Times:


Given that BIS is the ultimate insider, this is quite a criticism.

Update on the Chinese Economy


Here's an update.





In any event, that buying spree may be ending:






In other news, the Telegraph's Malcolm Moore notes:


While the Telegraph's Ambrose Evans-Pritchard argues:

China's banks are an accident waiting to happen...










Why Gold's Value Increases During the Later Stages of Deflation

Adrian Ash argues that gold's value actually increases during periods of deflation:

Does the price of gold rise or fall in a deflation?










In other words, Ash argues that you can't take inflation or deflation in a vacuum. During deflationary periods - like we have now - governments increase the money supply with a flood of new dollars, which is bullish for gold.

I have previously argued that gold may do well during the later stages of deflation:



Japan's deflation didn't definitively end until 2007 or 2008.





But is there proof for Ash's thesis that it is an expansion of the money supply which pushes the price of gold up in the later stages of deflationary periods?

There might be.

As the American Enterprises Institute notes:



Financial Writer Calls for Boycott of Discretionary Consumer Spending Until Honest Free Market Capitalism is Restored

Financial writer Karl Denninger is calling for a boycott of all discretionary consumer spending until free market capitalism is restored.

Specifically, Denninger says that we've tried to ask the government and big banks to start acting honestly, but we're just being ignored. The only thing which is both (1) legal and (2) effective is a boycott.

We can all live without a new ipod or big flatscreen tv until our boycott brings results, right?

Denninger provides a specific set of demands:

What are our demands? Here's the list:






  • The Fed agrees to full annual audits without exception.





Monday, June 29, 2009

Debasing the Currency is Leading to Financial Collapse . . . Just As It Has for Thousands of Years

In a fascinating 22-page study of money and currency, Christopher Weber shows that every government - from Athens, to pre-collapse Rome, to the Islamic countries in the Middle Ages - which stuck to the Greek standard of coins has been stable and prosperous.

Specifically, the Athenian Drachma contained 65.6 grains of silver. Even after Greece declined as a superpower, its currency remained stable.

The Roman Denarius, Byzantine Bezant, and Islamic Dinar all copied the Drachma, using around 65.6 grains of gold or silver in their coins.

For the many centuries the Romans, Byzantines, and Islamic rulers left this precious metal content alone, they had stable and prosperous money supplies and nations.

But after the Romans and Byzantines started to whittle down the precious metal content of their coins - and after the Muslims started issuing paper money - their currency went down the drain, their prosperity plummeted and their empires collapsed.

This may all sound like ancient history, except that Weber points out that:

The US dollar has been depreciating for generations. Seventy years ago it was first devalued from $20.67 a gold ounce to $35. Then 35 years ago the devaluation started gaining strength. The dollar has lost over 90% of its gold value since August 15, 1971.

History is repeating . . . Sound money is again being trashed, which is causing the collapse of the American empire.

Sunday, June 28, 2009



I agree.


If asked, Taibbi might even admit this parallel.



This was a controlled demolition sponsored by Goldman Sachs . . .











Saturday, June 27, 2009

What China's Push for An Alternative World Reserve Currency Means

Yesterday, after China called for a super-sovereign currency, the dollar slid as investors started seeing the writing on the wall. Specifically, the People’s Bank of China said the International Monetary Fund should manage part of members’ foreign-exchange reserves. See this.

“To prevent the deficiencies in the main reserve currency, there’s a need to create a new currency that’s delinked from the economies of the issuers,” the People’s Bank of China (PBOC) said in a review of the economy in 2008 released today. In March, the PBOC had urged the IMF to expand operations of its Special Drawing Rights currency (SDRs) and move toward a “super-sovereign reserve currency.”

The PBOC argues that the frequency and intensity of financial crises following the collapse of the Bretton Woods system suggests costs of the dollar-based system may have exceeded its benefits and that that the SDR could take on a key global role.

The PBOC statement comes a day after a top Communist Party research chief said that China should buy gold and U.S. real estate rather than Treasurys.

American officials and talking heads have attempted to downplay the irreversible trend of the dollar fading as the world's reserve currency. They have argued that China is in a dollar trap. With trillions in dollars, they argue, China cannot let the dollar tank.

But as Marc Faber has pointed out, 2 trillion dollars in reserves isn't really that much for a country with as many people as China has. And China long ago signaled that it was gradually moving out of dollars. The signals came in the form of (1) China moving out of long treasuries and into treasuries with a duration of 3 years or less, and (2) China using its reserves to buy commodities, instead of more dollars.

Nouriel Roubini argues:


And the senior economist at the Federal Reserve Bank of Cleveland argued last month:

While SDRs may be declared an official international reserve asset today, they are not likely to become the world’s key international currency anytime soon.

In other words, as explained by Nouriel Roubini, the Fed economist believes that the SDR may be declared the world reserve currency, but the current usefulness of the dollar as a highly liquid, international medium of exchange means that it won't be replaced in the near future as the key unit of international trade.

Would the SDR be a Better Reserve Currency than the Dollar?

Given the IMF's history of imposing draconian, destructive and anti-democratic measures on third world countries, I'm not sure that appointing the IMF as the issuer of the world reserve currency is a great idea.

But to understand the big picture on SDRs, dollars and other potential reserve currencies and mediums of exchange, we have to take a step back and look at what money really is.

It should be remembered that money does not itself have to be a valuable commodity. Obviously, gold is a valuable commodity and can serve as money. And, in many ways, having a gold-backed currency is better than having a fiat currency.

But in its most essential form, currency is solely a way to keep track of the exchange of goods and services. In other words, money is simply a way of keeping tally, a scoreboard, a record keeping system.

As such, money could be pegged to just about anything objective, such as the consumer price index (as long as it included food and energy) or - as China has proposed - a basket of 30 or so commodities.

In fact, there is no need for the U.S. or any other country to cede its sovereignty to a group of international bankers. On the other hand, there is no need for the rest of the world to be beholden to the dictatorial one-sidedness inherent in using the dollar as the world's reserve currency.

Instead, money can be returned to its most minimalist function of being a neutral yardstick to measure goods and services exchanged. In other words, instead of being an instrument of financial warfare and oppression, money can return to its function simply as an objective tally of who owes who what for the good and services they have provided.

As Ellen Brown explains in her book Web of Debt (as summarized by Stephen Lendman):

A global currency is another proposal - one that creates more problems than it solves. The world "is not one nation or one region," and who's to be boss and in charge. Further, if all governments issued the same currency, "the global money supply (would be) vulnerable to irresponsible governments (issuing) too much." Strong ones would end up dominating the weak, and national sovereignty would be weakened, perhaps ended. A "fully dollarized" world is a prescription for trouble enough to make scarcity "the order of the day."

Rather than one currency, "a single global yardstick" is needed "against which governments can value their currencies - some independent measure (by) which merchants can negotiate their contracts and be sure of getting what they bargained for"...

National currencies "would become what (they) should have been all along - (contracts) or promise(s) to return value in goods and services of a certain worth, as measured against a universally recognized yardstick for determining value."

Friday, June 26, 2009

No, Mr. Geithner . . . Financial Innovation is NOT a Good Thing

Tim Geithner was asked whether credit default swaps should be abolished altogether.

Remember, the Nobel economist who helped create the pricing formulas for CDS said the CDS are so dangerous that existing over-the-counter contracts should be voided:


Many other economists agree.

But in a question and answer session, Geithner said we need CDS for financial "creativity" and "innovation":

Question: During questioning before Congress you were asked why exotic investment instruments like credit default swaps shouldn’t just be done away with. You responded that you did not want to stifle “creativity” in the financial markets. Why do we want a “creative” financial market? – Anonymous

Answer: We want a creative financial market because a creative economy requires it—the innovations generated by our markets and institutions help to make our economy the most vibrant and flexible in the world. The new products, services and capital, they produce are exactly what help turn a new idea into the next big company. Overall, we do not believe that you can build a system based on banning individual products—our core challenge is ensuring we have a system that has a proper balance between innovation on the one hand and consumer protection on the other. We propose keeping the system safe for innovation by having stronger protections against risk in CDS and other derivative markets with stronger capital buffers, greater disclosure so investors and consumers can make more informed financial decisions, and a system that is better able to evolve as innovation advances and the structure of the financial system changes.
Of course, the U.S. economy is not "the most vibrant and flexible in the world". It is the most broke in the world.

But is Geithner right that financial "creativity" and "innovation" are good things?


The Canadian banking system is the world's most stable banking system precisely because it is boring instead of innovative.

Paul Krugman writes that banking has to be made boring again, to prevent the kinds of results which came from high -flying finance in the 1920's (the Great Depression) and late 1990s early 2000s (the current melt down). Krugman also notes:
Indeed, the most "boring" type of banking system imaginable would be to take the power to create credit away from the private banking giants and give it back to the government, as the Founding Fathers originally intended. By abandoning the "creativity" and "innovation" which has allowed the banksters to charge trillions in unnecessary interest fees to the American people bankrupt our nation and drive us into a Depression, we can get back to the "pursuit of happiness" which our forefathers fought and died for and which the Declaration of Independence promises.

See also this.

Here's the actual Geithner exchange (page 8):

GeithnerAnswers -

Thursday, June 25, 2009

Triple Cross or Inside Job?







Is Lance right that Mohamed tricked the FBI?





























Wednesday, June 24, 2009

How To Increase Your Intelligence and Get Smarter

A new study by Utrecht University finds that speeding up the brain's network may increase intelligence.


  • Essential fatty acids in general
  • Omega 3 fatty acids (As one article says: "Recall that your brain is comprised of at least 60% fat and the fatty or lipid part of your brain helps to transmit information rapidly across your neural networks".)
  • Phosphatidylserine, commonly known by the initials "PS"

  • DHA
And certain types of music - such as certain selections of Mozart - allegedly can speed up your brain waves

But the Utrecht study doesn't just say speed of brain waive propagation is important:
A new study has finally solved the decade-old mystery about where exactly intelligence lies in human brains after scientists found that it's everywhere.

A team at Utrecht University has found that the most efficiently wired brains belong to the most intelligent people -- a finding that suggests that improving this efficiency with drugs could offer a tantalising means of boosting IQ.

According to lead scientist Martijn van den Heuvel, "The concept of a networked brain isn't so different from the transportation grids used by cars and planes.
In other words, it is efficiency in the brain's connectivity which may be the key.



And as Kenneth Wesson writes:

Greater brain stimulation promotes an increase in the number of dendrites ("little trees") connecting the billions of cells in the brain. Neurons sprout and re-sprout new dendrites connecting more and more brain cells throughout one's life giving all of us the neuro-physiological wherewithal to learn throughout our entire lifetime.

Multisensory experiences further extend these plentiful and precious connections throughout the entire cerebral cortex and they form additional links with other sub-cortical structures inside the brain. Conversely, reducing the quantity and/or quality of experiences and learning opportunities diminishes the brain's neural pathways permanently decreasing one's ability to learn. However, the human brain is capable of creating trillions of interrelated neural networks rendering our capacity to learn virtually limitless, if the proper foundations are laid early in life during the critical periods of the developing brain.


While the "power" of a brain can increase in direct relationship to the number of cells composing it, the human brain's capability is best calibrated by the number of connections that develop among its billions of brain cells. Neurons are constantly rearranging their 500 trillion-plus connections (via the dendrites) in response to new information and experiences. UCLA's Arnold Scheibel stated that, "Only when the neuron develops these extensions from itself, does it begin to significantly increase its surface area as a total unit and provide more and more of a ‘landing field' for other incoming neural messages" coming in from active healthy neurons...

Music at sixty beats per minute (Baroque music, Mozart, Bach, Handel, Vivaldi, and others) helps to lower blood pressure and aids in relaxing the body's large muscle groups, which allows for a greater amount of blood flow and blood utilization in the human brain. Although the brain is only 2% of the body's weight, it consumes over 20% of the body's energy, nutrients, and oxygen.



Exercise also helps keep your brain



On the other hand, high levels of cortisol - the chemical released by the body when one is under continuous, unrelenting stress - and poverty can physically impair the brain and people's ability to learn.

Tuesday, June 23, 2009

Spacefaring Bacteria

In 2002, several scientists claimed that bacteria high in Earth's atmosphere came from space.

Last year, scientists said that bacteria in the upper atmosphere may actually make rain. Specifically, they said that bacteria can freeze at fairly warm temperatures, so that the "biological ice nuclei" form condensation nuclei which triggers rain.

Indeed, some scientists have speculated that bacteria cause rain as a means of transportation, so that they will "rain out" from the upper atmosphere to the surface of a planet.

Now, scientists have discovered a "hibernating" bacteria in a salt mine in Utah which they believe has been in suspended animation for 250 million years. There is evidence that this ability to hibernate for long periods of time is also useful for travel through space by the bacteria:

Bacteria have the ability to go into a kind of semi-permanent hibernation, but survival for this long was unheard of. After lying dormant in the salt crystal for 250 million years, the scientists added fresh nutrients and a new salt solution, and the ancient bacteria "re-animated."

Dr. Russell Vreeland, one of the biologists who found the bacteria, pointed out that bacteria can survive the forces [of] acceleration via rubble thrown into space via a meteor impact. If it is possible for a bacteria to survive being [thrown] off the planet and to stay alive within a salt chunk for 250 million years, then in a sort of "reverse-exogenesis" it may be possible that earth's own microbes are already out there.

Indeed, there is a more down-to-earth analogy to the idea of spacefaring bacteria: the humble coconut. Coconuts can float across long distances of water in the ocean, and when they land on a hospitable island, start growing.

Monday, June 22, 2009


Huffington Post notes:


The judgment is very good for America.





Hitting wrongdoers with big fines will help fix them.








Sunday, June 21, 2009

CIA Agent: "Government Officials Like Cheney Are Not To Be Trusted When They Assert Something Without The Support Of Incontrovertible Evidence"

Former senior CIA Agent Philip Giraldi writes:

If there has been any "lesson learned" from the past eight years it is that government officials like Cheney are not to be trusted when they assert something without the support of incontrovertible evidence.

While Giraldi's article was about torture, his point applies to 9/11 as well.

Instead of "incontrovertible evidence" for Cheney's version of 9/11, the 9/11 Commissioners themselves now doubt the "official" 9/11 story:
In fact, many high-level intelligence officials at the CIA and other government agencies doubt the government's version of 9/11:
  • Professor of History and International Relations, University of Maryland. Former Executive Assistant to the Director of the National Security Agency, former military attaché in China, with a 21-year career in U.S. Army Intelligence (Major John M. Newman, PhD, U.S. Army) questions the government's version of the events of 9/11.

Saturday, June 20, 2009

The Four Reasons the Mainstream Media Is Worthless

There are four reasons that the mainstream media is worthless.

1. Self-Censorship by Journalists

Initially, there is tremendous self-censorship by journalists.

For example, several months after 9/11, famed news anchor Dan Rather told the BBC that American reporters were practicing "a form of self-censorship":




As former Washington Post columnist Dan Froomkin wrote in 2006:





And Air Force Colonel and key Pentagon official Karen Kwiatkowski wrote:

(page 26).

2. Censorship by Higher-Ups







There are many reasons for censorship by media higher-ups.

One is money.



3. Drumming Up Support for War











As the mainstream British paper, the Independent, writes:



One of of the reasons is because the large media companies are owned by those who support the militarist agenda or even directly profit from war and terror (for example, NBC is owned by General Electric, one of the largest defense contractors in the world -- which directly profits from war, terrorism and chaos).






4. Censorship by the Government



Tom Brokaw said "all wars are based on propaganda.

And the head of CNN said:




* * *


Of course, if the stick approach doesn't work, the government can always just pay off reporters to spread disinformation. Indeed, an expert on propaganda testified under oath during trial that the CIA employs THOUSANDS of reporters and OWNS its own media organizations (the expert has an impressive background).


Indeed, in the final analysis, the main reason today that the media giants will not cover the real stories or question the government's actions or policies in any meaningful way is that we live in a country that is not all that free (see point number 6). Mussolini said that fascism is the blending of the government and corporate interests, and the American government and mainstream media have in fact been blended together to an unprecedented degree.

See this book and the following 5-part interview for further information on 9/11 and the media: (Part 1Part 2Part 3Part 4Part 5

Can We Win the Battle Against Censorship?

We cannot just leave governance to our "leaders", as "The price of freedom is eternal vigilance" (Jefferson). Similarly, we cannot leave news to the corporate media. We need to "be the media" ourselves.

- Abraham Lincoln

- Dr. Martin Luther King Jr.

– Margaret Atwood

- Howard Zinn (historian)

- Thomas Jefferson