Thursday, November 17, 2005

Driving the dollar up, the euro down

What’s behind the rise of one and fall of the other? Is it simple as a headline from the New York Times “Dollar Hits 2-Year High Against Euro”? Or is it as complicated as the manipulation of economies with the rankest political skullduggery of the neocons? Yes, certainly the latter.

Beneath this headline, Edmund Andrews’ article reported on November 8, “The dollar rose on Tuesday to its highest level against the euro in two years, propelled by rising interest rates in the United States and rising pessimism in Europe.” Obviously, the rising interest rates create a larger income stream for the government. In fact, the Fed has been steadily nudging the interest rates up in increments for months, in hope of strengthening the dollar.

One side effect is that the face value of bonds, which rise and fall in inverse proportion to interest rates, have been devaluing, although their yields remain fixed. This impacts on people with fixed income bond portfolios. For instance, if you wanted to sell off some of your bonds, you’d lose money on your original investments. Why?

Because the promise of higher interest rates, and therefore higher yields from new bonds, will draw new moths to the flame of investment. On the other hand, as cost of borrowing money rises, it’s tougher for American manufacturers to borrow, and, therefore, harder to compete effectively in foreign markets. So, all things considered, the glow of the dollar is not so rosy.

Nevertheless, the prospect of higher interest, the greed factor, is making investors’ mouths water around the market’s troughs. Despite the fact that the US “current account,” that is, our imbalance in trade and investment with the rest of the world, is headed upwards of $700 billion, at about 6 percent of the gross domestic product (GDP). This is not so good, either.

Basically the central banks of Asia hold more than 1 trillion worth of our dollar-denominated securities. They’re our bankers. Ironically, their money comes from China’s working families, who tend to save about half their gross incomes, which average about $880 a month. This instead of spending their way into debt, as the Los Angeles Times reported on November 9 in an article, “Anxiety Drives Chinese Fixation on Frugality,” by Don Lee.

Actually, I don’t think the Chinese are fixated on frugality at all. I think they are a little more real than we are in terms of keeping a nest egg to take care of elderly parents, themselves as they age, to have funds to educate their children and to supplement the widening holes in their government healthcare. Those are some decent family values, if you will.

Debt As a Way of Life

Following the spendthrift government, which lives on diving deeper into debt, Americans not only don’t save anything any more. Lee reports, “US households have been spending more than they have been earning in recent months. That contrasts with an average savings rate -- or savings as a percentage of income -- of 8 percent from 1950 to 2000.

Two thousand-one is about the time Bush Jr. took over the helm, and the skid from surplus to deficit took over. Our national deficit for fiscal 2004, ending Sept. 30, weighed in at $412.55 billion. Our accumulated national debt is some $7.5 trillion, as of now our personal revolving credit card debt rolled in at an all-time high. At the end of the third quarter of this year, the number was $801.5 billion dollars.

To the best of my ability, after a long search on the web, about 71 percent of credit card holders carry about $9,000 in revolving debt per annum. I understand that among these people are those using one card to pay Paul, another Peter, in other words, to live, and I have heart for them. But how many people are simply tugged endlessly by the American Dream marketing machine into living over their heads? Whoever you are, be careful.

In statistics gathered in 2004 for PBS’s Frontline show “Secret History of the Credit Card,” the average American family has eight credit cards. Of the nearly 144 million Americans who have general purpose credit cards, approximately 55 million of them pay their bill in full each month. Thirty-five million make just a minimum payment each month. Forty-five million are revolving in larger but not full payment. The industry jargon for a guy like me, who pays his bill in full every month, is “a deadbeat.” Imagine. And yet, they give me a high FICO score, whatever that is. I won’t start playing with the acronym possibilities, well maybe one: Friggin Intelligent Cheap Old-timer.

In 2004, the average revolving family credit card debt was $8,000. Interestingly, a credit card company must only give its customers 15 days notice when changing the terms of the cardholder contract. So keep your eyes on your statements.

More apocalyptically, universal default needs to be triggered by three factors: (1) you go over your credit limit on another card (2) Fail to make a payment to another creditor, (3) apply for and receive a loan. That’s not exactly, a quick slap on the wrist before you drown. Yet, your credit card issuer can raise your annual percentage rate (APR) automatically for any one of the above three reasons. I said, watch those statements.

Also, the national banks, which issue most credit cards in the US (banks such as Chase, MBNA or Citibank), are regulated by the Office of the Comptroller of the Currency, part of the US Treasury Department. That should be comforting if you owe a bundle. And catch this one: the reason there are no legal limits on the amount of interest and fees that banks can charge for a credit card is that two, count ‘em, two US Supreme Court decisions permit banks to charge whatever the market will bear. Caveat emptor: even the Supremes are out to screw you. As if you doubted that for a minute.

So, bottom line, as to the dollar up, it’s up because the interest is up, and often up your wazoo. And somebody else will be screwed so the investor can make a few bucks. But then, I seem to have forgotten why the euro is down.

Why the Euro Is Down

First, as the New York Times article suggested, “For Europeans, the decline of the euro reflects new gloom -- possibly aggravated by 12 days of rioting in poor neighborhoods across France -- about growth in the euro zone’s biggest economies. Germany, France and Italy, which together account for more than half of the euro zone’s economic activity, are growing at barely 1 percent or less this year. Aside from the riots in France, Germany remains bogged down in a political stalemate that has greatly reduced the chances for a long-promised overhaul of economic regulations.”

And where are the riots coming from in Europe? Most notably in France. Well, the Times and other venerable papers will tell you it’s about disillusioned youth from North Africa living in high-rise slum projects, like those of New York or Chicago, who can’t get jobs, who are put upon by police, who are humiliated into despair, and had no option left but to torch cars after two young men were electrocuted in a police chase. Ah yes, deja vu all over again, the 60s redux. I can dig it. No one wants to be the invisible divisible man. Burn baby, burn. But who besides the youths are lighting the fires and the passions there?

In Fresher Detail

For that answer, let’s turn to that bearded D.C. muckraker, investigative reporter, former Naval Intelligence officer, and administration pain in the ass, Wayne Madsen, who brings us a breath of fresh information. Scroll down to November 9 on his website for "France imposed a state of emergency . . . "

November 9, 2005 -- France imposed a state of emergency as rioting continued for a 13th straight night and spread to more towns, including Calais, the French end of the "Chunnel" rail link to England; St. Raphael; Amiens; Grasses; Bassens; Savigny-sur-Orge, and Arras. Other cases of arson were reported throughout Belgium -- in Ghent, Antwerp, Lokeren -- and in Germany, where Cologne was hit for the first time with car arson.

WMR [Wayne Madsen Report] has emphasized that the arson attacks are well planned, coordinated, and only plaguing the three major NATO countries that opposed the war in Iraq. For that reason, European law enforcement and intelligence agencies should place 24x7 surveillance on Israeli diplomatic and intelligence personnel who may be engaged in "Lavon Affair" and "911" style false flag operations. Such an operation aimed at Venezuela's President Hugo Chavez may have just been uncovered in Trinidad and Tobago.

Keep going as if you’re on the Autobahn, fresh insight blasting in the window, you coming to this turn in the road . . .

What is happening in France has all the signs of yet another possible neo-con "false flag" operation in the same category as the Niger fraudulent uranium documents, the provocative actions of Israeli agents in New Jersey who were dressed up as Arabs during the morning of 9-11, unexplained Spanish and British government activities surrounding the train bombings in Madrid and London, and recent deadly bombings in Delhi during Hindu and Muslim holidays attributed to a previously unknown Kashmiri group. The neo-cons have been unhappy about India's Congress government (a government the neo-cons are trying to link to the UN Oil-for-Food scandal), which unlike the previous Hindu nationalist government, is making peace overtures to neighboring Pakistan. As with France, India immediately suspected closely coordinated planning in the bombings and sought to analyze intercepts of thousands of cell phone calls placed in the Indian capital shortly before the bombings.

The French politician who benefits the most from this explosion of violence in a country where Muslim citizens constitute a significant minority is Sarkozy. The losers stand to be de Villepin's faction of the Gaullist RPR party and a newly-resurgent Socialist Party, which rejects the neo-con international agenda. It is not coincidental that the rioting is mainly plaguing cities and towns governed by Socialist and Communist mayors -- leaders who are now caught between addressing the social problems that helped spark the violence and responding to calls for a return to law and order.

The Socialists, Greens, and Communists are charging Sarkozy with inciting greater violence and then failing to respond to it adequately, thus ensuring the rioting would spread beyond mainly Muslim areas in Paris to wealthier Parisian neighborhoods and beyond Paris to Rouen, Lille, Nice, Dijon, Strasbourg, Marseilles, Bordeaux, Rennes, Pau, Orleans, and Toulouse. Later, the closely coordinated rioting spread further to Lyon, Roubaix, Avignon, Saint-Dizier, Drancy, Evreux, Nantes, Dunkirk, Montpellier, Valenciennes, Cannes, and Tourcoing.

And off Madsen zooms, identifying the provocateurs, the Company & Friends. Not unlike those who haunted the 60s riots in America, and exploited the misery, despair, joblessness, institutionalized racism, fascism, and whole bag of political nightmares, which existed, and exist to a degree in France right now, and lend themselves to the same kind of violent exploitation.

Net net

I believe the French riots are orchestrated, unlike what the powers that be would have us think. As Madsen points out, the powers that be want to wreak havoc on the economies of those nations that disagreed with our going to Iraq. Madsen continues to post new incidences of the fire-bomb terror spreading even to the Basque region of France, while Sarkozy continues to refer to the North African youths as “scum” and that they should be hosed down, “Karcherized,” referring to equipment made by a German firm that once built ovens for the Nazis.

“Karcherized" (pressurized water hosed). [Note: Karcher is a German firm. Its founder, Wurttemberg native Alfred Karcher, sold 1200 "hardened furnaces" for smelting alloys until 1945, including during World War II. It now manufactures multi-purpose nuclear, biological, and chemical decontamination systems for the Pentagon.] Sarkozy delayed imposing curfews, permitting rioting to spread to 300 French cities, towns, and villages. It would be very interesting to see transcripts from signals intelligence agencies of Sarkozy's international phone conversations after the electrocution of two teens in a north Paris suburb.

So once again, even as the stink is rank in the air, the administration finds a way, this time through the dollar, through economic, political and social upset, to even a score with France. It's another filthy story on top of the Libby leak, the Plame outing, the Rove roving from reporter to reporter about Plame’s CIA operative status, the Cheney mention a month before to his chief of staff, Libby, (Louis Liebowitz) of just who Plame was: the wife of Ambassador Joseph Wilson, who had lambasted the administration for its claims of weapons of mass destruction, the availability of yellow cake uranium in Niger, and their imminent use, and predicted by that eminent talking head, Condoleeza Rice to culminate in a mushroom cloud, and so on.

But then filth is what these people are about. The filth of pointless violence, illegal war, mass murder, torture, misuse of hundreds of billions of dollars for war, misuse of human resources (2,000-plus of our soldiers gone, 200,000 Iraqis), fraud for personal enrichment, tax cuts for the rich, mauling of the poor and the environment, the Bill of Rights, the Geneva Conventions, etc. There is a list in hell waiting for them with the host smiling at the door. For these are, as Lyndon Larouche so aptly named them in the title of his latest book, the Children of Satan. These are the terrorists, inciting terror via disgruntled Muslim groups or dark operatives, in and out of government, contractors as they are called, to turn the world upside down, whether in France, Venezuela, or Timbuktu, or as they once did in Kosovo and Albania.

So how’s the dollar doing? Count on it to slide again. Because of the inevitable urge this government has to overspend on all the wrong things. Read back to 1929 and see if you find some of the same elements at play: intense margin buying, deep personal debt, an elitist US government, and a free market economy that would gobble your feet as soon as look at you. Read up to Roosevelt’s day when he put the unemployed to work to build up the infrastructure and give people back their self-respect, not to mention Social Security and unemployment insurance. He then built the strongest manufacturing machine ever to save us from the swine of the Third Reich. That’s simple human economics. That’s the kind of guy I’d like to see president today.

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