October 24, 2008
Elaine Meinel Supkis
Happy Birthday to my loving husband day! It is colder outside, Libra is finished and now we enter Scorpio, the constellation of the Goddess of Death. The Derivatives Beast continues to munch away, unstoppable. AIG is demanding more loot because it is a bottomless pit. The übergnome of the planet, Greenspan, admits that he may have had a tiny flaw in his economics plans! HAHAHA. But the real heavy news of the hour is the amazing skyrocketing value of the YEN! It is shooting upwards at an astonishing rate. The Japanese are beyond hysterical about this. They see their doom for it is killing the export trade golden goose!
This Time Is Different - by Stephen Lendman
The derivatives problem is especially ominous. At extreme levels and very dangerous. An estimated $180 trillion held by commercial banks alone meaning those with most of it are technically insolvent. JP Morgan Chase holds half of it. An "unprecedented concentration of risk in modern US history." The large counterparty default risk in this market isn't understood. Currently the Office of the Comptroller of the Currency (OCC) reports credit derivatives exposure (or risk of trading partner default) at $465 billion. Up 159% from 2007. Failure to address the derivatives time bomb "leaves a gaping hole through which financial panic can spread."
In addition, beyond the above lowball figure, no estimates are available of derivatives default amounts or forecasts of more likely in a continuing downturn.
In sum, a monumental problem. Too big to ignore, but precisely what Congress is doing. At enormous risk to the economy, businesses, households, the American way of life, and the nation as the world's economic superpower. Plus the effect on world economies and people everywhere.
A reader sent me this guy's blog. He is a very good read and has quite a resume. So let's give Stephen Lendman a boost! Tell him, he is right! And tell him about the Derivatives Beast and his many adventures in the Bottomless Pit. Oh, I haven't told all that many stories about him? Sorry. He is still germinating in my cartoon mind. But once I am done with all the pre-winter work which eats up most of my time, 8 to 12 hours a day, I will do a whole cartoon series about the Cave of Wealth and Death. How the gnomes raid this place, what the dire female goddesses do about all this and the baby, now grown up Derivatives Beast. And the magical flying piggy bank, of course.
This derivatives business was all about two big things: getting lots of loot via fees which came from passing risk from hand to hand, over and over again. And to eliminate the appearance of risk by pretending that in the end, someone would pay everyone if they lost their bets in world markets of various sorts. So they could do all of this with low, low interest rate loans! From the Bank of Japan. All these elements were in place in 2005 and I talked about them back then. It was pretty easy to see what was going to go wrong, too.
One of the biggest propaganda points being put out by all the players in this noxious game is this huge lie: 'NO ONE KNEW THIS WOULD CRASH AND BURN!!!!' But the internet proves this wrong. True, the people understanding this crash and predicting it were few in number. I am a proud member of this tribe. But within this tribe, very, very few people....I would suggest that I stand virtually alone...understood that the real problem was Japan's 0% lending, the weak yen and the Japanese carry trade.
Today's amazing news about the yen shooting up like a rocket against all currencies is proof that I am right! And more: the entire world is seeing stocks crash DUE TO THE JAPANESE CARRY TRADE CRASHING AND BURNING! As I predicted it would way long ago, in ancient times. Ah! This gives me a certain dark satisfaction. And the goddess of History lifts her feather and pauses while inscribing the past. She smiles grimly and laughs before resuming her story, 'The Decline And Fall of All Empires.'
Back to today's startling news:
AIG Taps $90.3 Billion From Fed, CEO Says More May Be Needed
(Bloomberg) -- American International Group Inc. has used $90.3 billion of a U.S. government credit line since it was bailed out last month, an amount that exceeds the size of the original loan meant to save the insurer.
AIG may need more than the $122.8 billion now available to the New York-based insurer, Chief Executive Officer Edward Liddy said Oct. 22. The company, which agreed Sept. 16 to turn over majority control to the U.S. in exchange for an $85 billion loan, got access to an additional $37.8 billion this month. AIG's latest balance was revealed yesterday by the New York Federal Reserve, and is up from $82.9 billion a week ago.
``This emphasizes the uncertainty for anyone trying to put a number'' on AIG's cash needs, said Bill Bergman, an analyst at Morningstar Inc. in Chicago. The financial-products unit that caused most of the firm's losses ``is a big black hole.''
Nearly double the rescue amount! Will the entire $700 billion, minus the 10% cut off the top so AIG officials can party, will all of this end up in the Bottomless Pit?
Yes, it will. This is why the government should have siezed AIG, put the executives on trial and then shot them dead at Yankee Stadium, Chinese-style. This, in turn, would put real fear in the gnome community and cause them to hesitate before doing insane, stupid things in the future. Of course, we could be merciful and have them spend a lifetime in Sing Sing up the Hudson river. These people are Enemies of the State since they are bankrupting our government.
Continued>>>
http://elainemeinelsupkis.typepad.com/money_matters/2008/10/october-24-2008.html
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