'Asia must prepare for dollar collapse'

http://english.aljazeera.net/NR/exeres/50B0028B-B417-4FDE-866C-842CB3280A4F.htm

East Asian economies need to prepare for a possible collapse of the US dollar, the Asian Development Bank says. The warning comes as the US trade deficit reaches a record high and global interest rates continue to rise. Masahiro Kawai, the ADB's head of regional economic integration, said on Tuesday: "Any shock hitting the US economy or the global market may change investors' perceptions given the existing global current account imbalance. "Our suggestion to Asian countries is: Don't take this continuous financing of the US current account deficit as given. If something happens then East Asian economies have to be prepared."

The "danger years" for homeowners

http://money.cnn.com/2006/03/28/real_estate/mortgage_danger_years/index.htm

Millions of mortgage borrowers are entering their "danger years," when delinquencies peak and owners risk losing their homes. Although borrowers are often told that the first year is the hardest, delinquencies have historically reached their highest points during the third and fourth years of mortgages, according to Doug Duncan, chief economist for the Mortgage Bankers Association (MBA). There are a few forces at play: After years of strained budgets, borrowers may have little in savings to draw on to handle a crisis; this is also the period when major repairs begin to crop up; finally, many home buyers go through life changes, including starting a family.

The number of Americans affected by the coming danger years could be huge. Half of all mortgage loans are three years old or less, according to the MBA. Nearly $3 trillion in mortgages originated in 2002, $4 trillion in 2003 and $3 trillion again in 2004. Many were refis, but there were also record totals of new purchases as well.

In addition, many of these transactions involved risky loans, such as interest-only ARMs and no-down payment loans. A recent report from the National Association of Realtors found that the median new home buyer put down just 2 percent in 2005. Forty-three percent put down no money at all. And according to SMR Research, some 25 percent of loans were interest-only, do nothing to reduce the debt on the house. "Lenders used to offer interest-only loans to only the best credit-quality prospects. That's no longer true," said Stuart Feldstein, founder of SMR Research.

http://news.bbc.co.uk/1/hi/business/4855118.stm

The Federal Reserve has raised interest rates for the 15th month in a row, by a quarter of a percentage point to 4.75%. The widely expected rise came at the end of the first interest rate meeting held by new Fed chairman Ben Shalom Bernanke.

http://money.guardian.co.uk/news_/story/0,,1738739,00.html 

An estimated 2 million people have lost their sex drive as a result of worrying about money, a survey showed today. One in five people who said financial problems had affected their relationship said the issue had hit their sex life, according to insurance giant AXA. Women are twice as likely to suffer from the problem as men, accounting for two-thirds of people who say money has ruined their sex life.

Kevin Phillips -- American Theocracy : The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21stCentury

http://www.amazon.com/gp/product/067003486X/qid=1143261625/sr=2-1/ref=pd_bbs_b_2_1/002-9374375-2331204?s=books&v=glance&n=283155

AMY GOODMAN: Talk about debt. Talk about the money aspect of American Theocracy.

KEVIN PHILLIPS: Well, this is a frightening thing, because its link to religion is there in a small way, which I’ll come back to, but its principal origin, obviously, is economic. As the United States entered the 1970s with inflation rising and oil prices skyrocketing and the Vietnam mess, budget deficits were rising, money was being borrowed. We no longer supported the dollar by buying – or allowing foreign central banks to buy gold in Washington, so what happened is debt started to skyrocket. And as debt skyrocketed, in the public sense, the budget deficit, we were having growing debt in the United States with mortgage, credit card, which was just starting in the 1960s, public and private debt in every dimension -- corporations, finance.

By the 1980s, this was going ballistic, and all of the huge deficits under Ronald Reagan, the so-called current account deficit, which was the international credit balances affecting the United States, how much we net borrow each year, has skyrocketed. It’s now closing in on more than 7% of G.D.P. This is borrowed prosperity. I think it’s somewhat ineffective for the left to say that money isn’t being sloshed around in the American economy. It is. But not only is it going to people at the top, it’s going to people who have ties to the financial sector, mostly by owning financial assets, but also because the financial sector in the course of the last three or four decades has replaced manufacturing as the pivot of the American economy. The financial services sector now represents 21% of gross domestic product, and manufacturing is down to 14%.

Now, because we don't make very much anymore, we have to import all kinds of things. Because we don't have too much oil anymore, relatively speaking, more than half of our oil has to come from overseas. This creates a massive current account deficit. Each year it forces us to borrow. We become at the risk of foreign creditors. And this, from the party that supposedly stands for fiscal responsibility. Now, neither of the parties stand for fiscal responsibility. But for the Republican system, most outrageous transformation.

AMY GOODMAN: You quote the Times, talking about the borrower industrial complex.

KEVIN PHILLIPS: It really is. And the example I like to use is the rise of the credit card industry, which is now really a major industry. And in the course of the 1990s and the first couple of years in this decade, they succeeded in getting legislation and decisions from the federal courts, basically, that allowed them to charge any interest rate and charge any fee. And as a result now, somebody whose perceived credit risks seems to change, can all of a sudden wind up paying 28% interest on credit cards. The credit cards charge you fees for everything you can imagine. The low-income people get victimized the most. It’s a giant industry in the United States. After Enron went under, MBNA, which was a big credit card company, took its place as George W. Bush's number one political patron in terms of contributions. So it’s rotten. It’s rotten. This is out of control. We are a money culture now.

AMY GOODMAN: If China, Japan called in the debt, what would happen?

KEVIN PHILLIPS: Well, they can't call in the debt. But what would have to happen would be they would sell their U.S. securities basically, treasuries or – and so would some of the semipublic institutions in China, companies that are really government companies and so forth. You would have a massive crisis in the global financial markets. The assumption is they can't do it, because they would lose so much of the value of what they hold. But they could do it slowly, and they could shift to the euro and possibly to the Japanese yen, a basket of currencies to gold. There are all kinds of things they can do. People who know a lot about this just sit and worry: when is something like this going to happen?

AMY GOODMAN: Alan Greenspan gave a surprisingly frank warning about the state of the country's finances. He said the prospective increase in the budget deficit will place at risk future living standards of our country. Can you talk about this?

KEVIN PHILLIPS: Oh, they’re already massively at risk, and they’re already declining. And he knows it. For the last five years, you haven't had a net after-inflation growth in real family income, because of the slow growth pattern. The slow growth pattern in the country comes because so much of the money is going to people who don't need to buy certain things, and because there's so much debt that it clogs the responsiveness of the economy to stimulus. And he knows it’s a total mess. Paul Volcker, his predecessor as fed chairman, has basically said there’s 75% chance of a financial crisis. Now, again, the major media don't like to discuss this, but I think they are beginning to verge on a readiness to discuss it. And if there’s one thing you can be sure of, George Bush couldn’t describe all this intelligently if you spent 48 hours briefing him.

AMY GOODMAN: You don't think he's smart?

KEVIN PHILLIPS: No. He's got a certain smart sort of fraternity boy, towel-snapping, would make a good second vice president of the First National Bank of Amarillo, but, you know, nothing particularly for heavy lifting.

http://www.democracynow.org/article.pl?sid=06/03/21/1418243

The similiarities to Morgan and 1929 stock market crisis are chilling. Brrrrrrr.

Sharp Sell-Off Hits Gulf Markets

http://news.bbc.co.uk/2/hi/business/4809390.stm

Stocks across the Gulf region have sunk for a third consecutive day amid a "crisis of confidence" which pushed the Dubai market to 11 month lows. Experts blamed the losses on fears that stocks in the region were overvalued.

Arab Stock Markets Hit by Losses

http://english.aljazeera.net/NR/exeres/140F02FE-0CEE-4785-B7A4-4DD1976B94D2.htm

Stock markets in the Gulf region and Egypt suffered major losses on Tuesday, triggering angry protests in Kuwait and prompting some analysts to forecast a crash after a solid five-year upward run. The market in Opec kingpin Saudi Arabia, the largest in the Arab world, dropped sharply for the fourth consecutive day, reflecting what analysts said was a sharp correction across the region.

Billionaire Boosts Saudi Stocks

http://news.bbc.co.uk/2/hi/business/4810206.stm

Saudi stocks have rebounded after Saudi billionaire Prince Alwaleed bin Talal announced he would invest significantly in the Saudi bourse.

The House of Morgan by Ron Chernow, 1990

September 5, 1929, Black Thursday.

On October 22, the president sent a frantic messenger to Lamont expressing concern about the "speculative situation which seemed to him to be running very wild." The next day panic selling hit selected blue chips, with Westinghouse dropping 35 points and General Electric 20. The balloon was about to burst. The following morning, Winston Churchill stood in the visitors' gallery of the New York Stock Exchange. Within the first two hours of trading, almost $10 billion was lost on paper. The drops posted were so sharp and the resulting shrieks so fearful that the gallery was closed by late morning.

Desperate men stood on the steps of Federal Hall, hands in their pockets, their hats pulled low, staring grimly ahead. They stood six deep outside the Stock Exchange. Having bought on margin, many investors were ruined outright. Newspapers noted a strange noise filtering through the canyons of the Street - a roar, a hum, a murmur. It was the cumulative sound of thousands of stunned people giving vent to their feelings. Violence was in the air.

The Morgan role in rescues was now automatic. The bankers' rescue on Black Thursday proved longer on symbolism than on substance. They pledged $240 million to buy up assorted stocks and stabilize the market.

At the end of the trading day, the bankers regrouped for a second meeting and designated Lamont their spokesman. Almost at once, Wall Street began to issue bravely hopeful statements. The headlines in the Wall Street Journal the next morning featured not the crash but the rescue: "BANKERS HALT STOCK DEBACLE 2-HOUR SELLING DELUGES STOPPED AFTER CONFERENCE AT MORGAN'S OFFICE" $1,000,000,000 FOR SUPPORT." The market staggered through Friday and Saturday morning trading without a fresh crisis.

Let's blame China.

US Government Near to Debt Limit

http://news.bbc.co.uk/2/hi/business/4780844.stm

US Treasury Secretary John Snow has told Congress to raise the government's credit limit in order to avoid having some of its operations shut down. The government needs Congressional authority to borrow and the total accumulated debt is now close to its limit of $8.2 trillion (£4.7 trillion). If the limit is not increased, the government could find it difficult to pay debts or borrow money. Congress is expected to agree to an extension, averting any debt crisis.

Baby Boomers or Bums?

http://www.cnn.com/2006/US/02/15/babyboomers.planning/index.html

This mammoth generation -- at once lauded for its commitment to social change and derided for its perceived self-indulgence -- has grown up and is now going gray.

Some experts say the boomers did not plan well for their future, especially their financial futures, relying instead on the whimsy of a historically rosy economic era to carry them along.

Others contend the boomers may have had sound, long-term plans, but were sandbagged by economic and political shifts so dynamic that the boomer generation became preoccupied with adapting to their new world and rewriting the social contracts that bind our nation together, instead of fulfilling long-term financial and personal goals.

"I think they've been baby bummers," says Suze Orman, a personal finance expert and host of her own financial advice television and radio show. "We are a fascinating generation," she says, admitting that she's a boomer herself. "We're really independent and free-thinking," but from a financial perspective, "we did not save money, and we loved to spend money. Many of (the boomers) were saved by the real estate markets, and their wealth was created for them; they did not create it themselves."

US Trade Deficit Widens Further

http://news.bbc.co.uk/2/hi/business/4790012.stm

The US trade deficit has hit a new monthly high of $68.5bn (£39.3bn), with imports of oil and cars continuing to grow significantly. January's deficit was 5% higher than a month earlier and exceeded the previous record of $67.8bn seen last October.

The deficit with China continues to grow amid persistent calls by Washington for China to further revalue its currency. The US trade gap with China rose 9.9% to $17.9bn.

China & America -  Perpetual growth economies competing to the perpetual end. The struggle over the single most key resource - oil - has fully evidenced itself. America is in a financial vice. Where's the vision?

http://www.cnn.com/2006/WORLD/meast/03/05/zawahiri.tape/index.html

Muslims urged to make West 'bleed for years'

A taped message attributed to Osama bin Laden's deputy calls on Muslims to attack the "economic infrastructure" of the West and stop Western countries from "stealing" Mideast oil, according to recordings posted on Islamist Web sites Sunday.

http://www.formofmoney.com/ximperialhubris.html

Imperial Hubris

Just under the noise, death, and rhetoric yielded by the foregoing episodes of war lies a largely ignored factor that may constitute al Qaeda’s main war effort – the steady bleeding of the U.S. economy. The immediate impact is massive expenditures – at all levels of American government – that will add permanently to the size and cost of government. In addition to the cost of hiring thousands of federal employees for homeland security purposes; acquiring buildings, equipment, and training to make them effective; and requiring proportionate upgrading at state, municipal, and local levels; there lie what must be substantial amounts of unpredictable expenditures for overtime wages – in government and business alike – whenever Washington raises the threat level, or when high levels of security are provided at public places or functions heretofore not seen as serious security risks.

The September 11 attacks were not apocalyptic onslaughts on Western civilization. They were country-specific attacks meant to inflict substantial, visible, and quantifiable human and economic destruction on America.