Monday, November 16, 2009

The Lands of Sponge Bob Square Pants and His Wonderful Bubbles

Like the American cartoon that has flooded our televisions, for those who have cable and get the US channel Nickelodeon, and the minds of our children (yes I saw a Sponge Bob walking around taking photos with tourists on Red Square, right beside the Stalin and Lenin look alikes...very disturbing), watching the American financial leadership is like watching the Sponge Bob show. I am still assigning roles, mind you, but Bernanke, the chief of the private pirate bank called the American Federal Reserve is definitely Squidward the Squid and Gerthner head of the misnamed Treasury Department (a ministry that has no treasure outside of little pieces of debt paper it sells for other paper) is Sponge Bob, the ever eager, ever ready, ever energetic numb skull who loves most of all to blow his wonderful bubbles.

Not to be out done by the previous generation of American and English bubble blowers, who for the past 20 years have solved one train wreck after another, by constantly switching from one rail road to a yet bigger gage rail road, pulling a yet a bigger train to wreck. Now, with the US/UK and really the world economies in free fall from the insane housing/hedge fund/debt bubbles, these slap stick comedy characters have decided to solve it all with one more, one great, one magnificent, stupendous and stupefying bubble of all bubbles. But unlike Sponge Bob's $.25 bubbles, this mother of all bubbles (mother as Lilith was/is the Mother of all Monsters) is a King Bubble built upon tens of trillions of dollars of created debt and cash, all manufactured in a short 10 months and still being churned out at an incredible rate.

The mother of all this is the creation, for the first time, of the USD Carry Trade. What is a Carry Trade? It is where one can borrow money from a country at a zero or near zero rate and invest it with abandon into other higher paying investment and than repay the original debt for little loss. Add to this buying on leverage and you have a bigger disaster than ever.

What? Leverage buying is alive and well?

Well yes, absolutely. The Yanks and Limeys, you see, have done absolutely nothing, zip zero nothing, to fix the issues that got them and then pulled all of us, into this fine mess. Instead of fixing the giant corruption, the capitalism, which is nothing more than corporate fascism and instead of reimplementing real free markets, real free enterprise and a mercantalistic system, they have instead told their biggest thieves and destroyers of the common man's life that hay: You are to big to fail: so here, have plenty of more cash and debt and we will continue selling it to the suckers and fools of the world. In this category, I place our central bank, which for the life of me, I will not understand why, continue to invest in American debt.

Thus they created a giant American carry trade, which in turn has spurred a giant run on commodities, yet again, a continued selling of toxic assets and a new housing boom in the US. Yes, all those old bubbles are back, but linked together by the American Carry Trade monetary bubble, creating a yet even bigger disaster for the world. But how bad could a carry trade bubble collapse really be? Ask the Japanese, their decade old carry trade bubble collapsed a year ago and in the process, they lost 38% of their manufacturing output in 4 months and for the first time since the end of WW2, have shanty towns.

Of course the US can not loose the equivalent amount of industrial production that Japan lost, it no longer has it, it will have to start an industry borrowing, just to have enough to shut down and foreclose upon.

This will of course, again pummel our economies, as our central banks and investment funds, for some God forsaken reason and blind faith in American debt, continue investing in what has become the world's biggest money pit. But for all our suffering, the darkness settling on the Anglo world will be much, much worse.

Is it any wonder than, that my friends and contacts in America tell me everyone is buying up ammunition and weapons in insane numbers?

2 comments:

Jonathan said...

It's true, Stanislav. People ARE buying guns and ammo in insane numbers here. Ammo is in short supply in many places.

And the good thing is that most of the gun owners are the people who oppose the left, living in the rural parts of the country.

Of course, there are a lot us who are bow hunters. Bows are nice because you make your own ammo, you don't have to register them, and they are easy to maintain and even fabricate. They are also silent. You just have to be proficient with them, and you can be as deadly as any sniper. Hunting game of course. That's what I mean.

Publius said...

Thanks for your truth telling courage. I don't agree with everything you write, but that's not necessary, is it? We humans, being mortals, cannot be right about everything.
But you seem to be on the side of justice, unlike our overlords here in the USA. The people (aka peasants) in America are not happy with their elites. And yes, they have plenty of tools that they usually use for hunting.