Never let them see you Smile…

I should be quite happy today. I finally made the decision I have been putting off for a week now. The hesitation actually cost me the one thing that could have made my moves brilliant if I hadn’t taken the time to think before acting. I find that it is in my nature to listen to those powerful feeling I might have from time to time and that thinking has never been one of my area of expertise. I find it incredible that some people have success in their lives when they think and plan everything. Even my plans have to be more like a direction than a reservation, because those always seem to shift as I move forward, just like everything else, In any case.

There is nothing to be glum about. The weather was beautiful today for the first time in weeks. I don’t have any pain to declare, and I am still completely in love, yet I still find ways to let myself be enraptured by the events around me by reacting to situations, with some quandary over importance I know doesn’t exist. The key to my independence, health and happiness, is to ride life and not try to drag pieces of it along with me, when I know I’m only going to toss them over the side of my day once I realize the ill necessity of them. (I can’t believe that Ill necessity isn’t one word… spell check.)

One of these days I will be constantly able to rest in compassion for the movie around me. After all it’s just a complex illusion of bits and pieces of information that are consumed by the moment they occur in, right, and I am just the ethereal perception of myself reflecting in an imaginary mind, which would explain the price of Gas being $4.00 a gallon. Now, if the Lakers can only take care of the Celtics the way they ambushed the Spurs, I might get my smile back!

A Dail-up would beat this shit…

Man, I feel like I’m trapped in the early 70’s on some crazy green screen monitor using a phone line to contact a bulletin board. It took something like 15 minutes to get to this page, just so I could complain about how inefficient it is. I have to admit that his whole month I’ve just been itching for time to move a little faster. It feels like winter can’t seem to get itself out. Every other day is snow or rain and frankly it’s making my thoughts gray.

When everything is asking me to be patient I sometime have to ask “why”. What if life really was a dream, like in “row row row your boat”, can’t we just improvise a little thrilling adventure into the spaces between adventures. I don’t know?! Maybe I’m just being lazy. I could put on all the clothes I own and walk over to the General Store and look at all the crappy trinkets Delaware North replace all the great camping gear with, when it was owned by the Hamilton Stores. The good news is that they recycle like mother *%@&ers.

Today’s not all bad though, even though my good poker friend got fired yesterday and I can’t see the sky again for like the fifth week straight. I guess I could look at the bright side, gasoline is almost at 4 bucks, rice, wheat, corn, corn oil, bread, eggs, milk and cheese, aren’t related to “core inflation”, which according to the Government of the United States, is under control! That’s good news. Oh, and housing hasn’t declined nearly as bad as some people thought it would. In fact home values have only decreased by 14% in the first quarter, and last year it was only 10% for the entire year. I guess that’s better than the “Great Depression”. We can still eat cake!

Well, I should probably find something to do…this only killed about fifteen minutes and the sky is still gray!

Risky Business: Playing the Blame Game

It really seems like Congress is spending more time worrying about how to avoid any direct responsibility for the Subprime Mortgage Scandal as they work out the details of a Mortgage Bailout Bill, then taking the time to look at lawmakers shortcomings in what has always been a highly regulated industry.

When Senators, like McCain, sight the fault in the pitfalls of housing prices as the irresponsibilities of buyers, when it was the Mortgage industries themselves who were required to investigate the details of the contracts, for indiscretions in the facts like income and assets, it leaves us all feeling a little cheated.

Now Congress is going to put the ‘Keepers of Mortgages’ at risk in order to NOT use tax payers money to solve the problem, requiring Freddie Mac and Fannie Mae to flip the bill for the Bailout.

This will put a something like $7 Trillion safety net at risk for the tune of $280 billion worth of trouble, while the Fed freely loans the banks an unlimited amount of money just to keep them alive and loaning, regardless of their risky loaning practices.

This entire outcome could have been avoided had the Fed put their initial efforts into nipping the entire thing in the bud by shelling out the 200 Billion, they force fed the banks, directly to the families and individuals who got caught up in the Subprime loaning frenzy. It would have halted the collapse and allowed the banks to recover on their own and kept the lid on inflation by slowing down spending as the banks sought to recover liquidity.

Instead Bernanke denied any risk (from the fallout) to the economy until it hit the front pages of the Media, making the Fed look like a nervous investor holding penny stocks instead of the reigns of the economy.

The problem with delay in the Fed’s actions is that the limited tools available to them have put inflation at a roar and the Dollar in the drain, sending investors into Oil, Gold, and Food Commodities which are spiraling out of control and stoking inflation like a billow, while the Labor Department feeds us huge lies like the price of Gas actually fell in May by 0.2 percent after it was “adjusted for demand”. WTF…

Everything these geniuses are doing now are insane if you ask me, like they want to help create the biggest collapse ever just to make the history books. The only problem is that there wont be any paper left by the time its over if we stay the course on this, let alone a printer…

The Risks of Rescuing Borrowers
Limits Weighed for Commodities Investors

So Many Home Owners, So Little Time

Shiela C. Bair – chairman of the US Federal Deposit Insurance Corporation wrote an OpEd entitled “How the State can Stabilise Housing Market” in which she is suggesting to the White House a plan involving loaning $50 billion to home owners with unaffordable mortgages as a way to stop the decline in housing prices, which is pushing some home owners with prime mortgages to jump into foreclosure as a way to shed their negative equity holdings.

It seems that the real problems, with the housing price declines we’re seeing across the country, have little to do with just the few (1 million) Subprime investors that her plan will effect. Currently there are 4 million borrowers holding adjustable rate loans that have either already jumped to higher interests or will soon.

It would cost the Federal Housing Authority approximately $200 billion to pay-down 20% of their loans and add a partner to their profit taking if they were to sell their house before any FHA loan could be fully paid.

Former economic adviser to President Reagan and current Harvard professor Martin Feldstein, in his own Editorial has offered a similar plan that will make $300 billion available to the FHA to loan to home owners, but has more stringent rules then the plan offered by the FDIC. It extends the duration of the loan to 15 years instead of the 5, Shiela is suggesting, but in the end its just another loan with more complicated strings than a simple foreclosure.

The Fed has thus far loaned several hundred billions directly to the banks that have used it not to turn around and loosen up on the tight reins of liquidity we’re seeing, but rather they have continued their momentum of tightening.

It would have made more sense to have given the funds they made available to the home owners who have been caught in this trap instead of the lenders who created the problem in the first place through extremely poor lending practices. It may have even stopped the collapse in house prices if it had been done in the timing of the bank bail-outs.

The real losers in this fiasco are the families that have refinanced their homes in the last 5 years, when home values were high, and are now sitting on negative equity, and none of them qualify for any kind of relief.

Neither plan seems to be a shoe-in for Congress or the White House, which believes that any bailout should be done privately. The essential question of the day seems to be timing. If action on this matter waits then what some people are calling an adjustment may over shoot the bottom, either that or the momentum will be too much to stop at all. A lesson we should have learned from Japan in the 90’s.

The Dollars Fading Glory – Changing of the Guard

In the last year, running parallel with the Subprime Mortgage Problems and the sharp price increases of Oil, we have heard a lot of news about the declining value of the Dollar against the World’s other currencies. What does that mean for the Dollar and The US in political and economic terms.

For the last 50 years the US has lead the way in the Geo-political arena due to its military strength, but mostly due to its financial position in the Global Economy. The strong steady value of the Dollar made it a safe investment for most countries as well as a secure currency to pay for and accept payment on goods and services, not only from the US, but other countries like China who trade globally with foreign currencies. Most oil producing countries have traditionally accepted Dollars.

These factors, in the past, have kept demand for the Dollar high and have allowed the US to charge huge deficits by borrowing in the form of Treasuries to foreign countries to pay their bills in Dollars. That may soon be coming to an end according to George Soros, Hedge Fund Billionaire. He has refferred to it as an “end of an era”.

The US wealth, through institutions like the World Bank and the IMF, has allowed the US to dictate many of the terms and conditions of the World’s economic climate via loan conditions and policy favoritisms, which often favor US Corporations and US trade policies, but these factors are beginning to shift.

There is a trend leaning toward commodities, as a safe haven as the Dollar continues to fall against the World’s currencies. International Business Vendors are beginning to require payment in Euro’s to prevent losses from long term conditions of contracts due to the Dollar’s possible decline over the duration of the agreements. Confidence in the Dollar, which once stood as an icon of strength, is waning.

The Change.

This week Korea announced the Asian Monetary Fund (AMF), an agreement between South Korea, China, Japan and the Association of Southeast Asian Nations (ASEAN). This fund, some $80 billion,will help member states cope with any liquidity crisis, a South Korean official said Sunday*. The fund will also allow member states to borrow without the terms and conditions often part of IMF loans. This will present a dramatic shift in the World’s economic political climate as other currencies vie for global influence.

Other changes that will effect the US more directly will be the waning of US Dollar demand forcing the government to run a balanced budget effecting its ability to finance its leviathan military force.

The United States spends 3.7% of its GDP on its military. This is historically low for the United States since it peaked in 1944 at 37.8% of GDP (it reached the lowest point of 3.0% in 1999-2001). Even during the peak of the Vietnam War the percentage reached a high of 9.4% in 1968.** In Dollars and Cents that equals $711 bil, or 48% of the entire World’s military budget. Total expenditures for 2008, for defense purposes, will exceed $1 Trillion.

This could have several different possible effects that may take some time to yield, but what is immediate will be the need for the US to rely more on cooperative efforts of other countries and their militaries if they wish to continue the war on terrorism. Currently other countries are far less adamant as the US when it comes to the military as a primary means to global security.

The Problems

The current global economic conditions are being stressed by many factors. Record oil prices are pushing up inflation around the World. Food shortages that may be the result of a combination of increased demand from countries like China and India with runaway growth, fuel stocks for ethanol from the US and Europe, that are shaping the worlds farming, shortages of fertilizers and the Global Climate changes we’ve seen in Australia, now suffering a 6 year drought, and UG99 Wheat Rust that has broken out in Africa and the Middle East.

The World’s banking and lending agencies are writing off billion of Dollars as the fallout of the Subprime Mortgage mess floods the globe. The banks are responding with tighter lending standards putting more pressure on businesses, and consumers. Bankruptcies that were once exploding mostly in the US are beginning to occur in Europe from similar loose lending practices, and the governments involved, mainly the US, are simply unwilling to do what it will take to put a dead stop to the foreclosures that are bring down the value of properties and collapsing home owners equity. Many home owners now owe more than the value of their own homes.

If these weren’t enough, the war on Iraq and the possible threat of attack over what the West considers to be nuclear violations on the part of Iran, are pushing up the speculation on oil which if taken too high could essentially put the breaks on the World’s Economic Growth and grind down global trade to a halt, but these aren’t the real issue that needs to be resolved.

The big issue is what will take the place of the Dollar? China is unwilling to use its currency in open trade, allowing it to keep control over its currencies value. The obvious choice would seem to be the Euro, but here’s why that won’t be the solution. Europe is currently headed into a similar cycle of foreclosures and the lending problems the US is currently in. Their inflated currency will have strong effects on exports that will eventually begin to effect their growth and inflation due to high oil prices may limit the European Central Bank from being able to respond, similarly to the US Fed ’s difficulties.

The Solution

The solutions are very simple for someone like me, who has little to loose when it comes to Global Economics. Either way I can still grow food and spear fish in an abundant ocean, while living in a bamboo hut.

The first thing to do is to pull the US Military out of foreign territories and restore control of the middle east to its sovereign. Cut military spending and divert those funds into alternative energy sources that won’t put a strain on the World’s food supplies, end US Farm subsidies, and stop promoting growth and capitalism as a right.

Promote conservation and energy self sufficiency through tax incentives and laws forcing major changes in technology. Stop the collapse of real estate values and bailout the home owners instead of the banks and the construction firms that lead to the bubble in the first place.

Learn to cooperate with the World’s Societies to build a harmonious relationship with the Earth, allowing indigenous life styles to share in the cultural cornucopia instead of forcing hunter gatherers to civilize into good consumers, which merely adds to the demand on the World’s already strained natural resources.

And lastly, let the rule of law no longer be a shroud of protection for the true criminals of the world. Let the courts hear the cases of crimes against humanity when the Union Carbide’s of the World fill communities with deadly gas, or the Bear Stearns’ create an economic mess that displaces families into bankruptcy and humiliation by the millions, instead of rewarding them for their failures.

The fact is that Consumer based Capitalism has put greed at the helm of our Global Ship and Supply and Demand, no matter how you dress it up, will always mean those who have and those who do not. The uncertainty of the Global Economy will not be solved by a shift of leadership if that leadership is based on similar principles, but will only compound it and historically these ideas have lead us into World Wars and Cold Wars to decide the fate and direction of our Global Paradigms.

*According to www.tradingmarkets.com
**According to www.Wikipedia.com
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