Wednesday, November 18, 2009

Let Us Bow Before China & Japan - If That is What it Will Take to Keep the Grinch at Bay

The United States is barreling down the hillside, fast approaching the currency crisis checkpoint. Barack Obama being at the head of the barrel is desperately trying to slow the tumble by personally pleading with our two largest creditors China & Japan - a fact largely missed by the folks at Fox News who continue to be fixated on how far Obama bowed before the Japanese emperor.
For God's sake get with the program folks! We as a country are BANKRUPT. At this point no degree of bowing would be too LOW, we are at THEIR mercy. So the sooner the good folks at Fox News throw off the false sense of machismo and bravado, the faster they and the rest of this country can come to terms with the new reality.
Our endless drive to consume, our desire to stay blissfully ignorant of the real issues surrounding us and instead fixate on the President's cat/dog, our blind allegiance to crony capitalism even if it came at the cost of lower wages and shipping our jobs overseas, our blind faith in aligning ourselves with one or the other political party, when BOTH carry on the same retarded policies, our blind worship of money as a measure of human achievement (look at the number of folks clicking photos outside Trump Plaza in New York), our insane wars that have caused millions of people to die but we never view their suffering as ours...all this will ultimately be the cause of our undoing. The United States days as a superpower are not numbered...they are GONE. Our greed has ruined this great country.
Warren Buffet talks about innovation as the great strength of the American people, we do not disagree with American ingenuity, but how can you innovate when you don't have any money? Innovation require one to take risks. Will a poor person or country take the same levels or risk as a rich one? We think not. When you are worried about putting food on the table and feeding your family, when capital available to start a business is scarce, when the end market (consumers) does not have the cash flow to buy your product, when universities don't have funding to carry on scientific discoveries, innovation will most definitely take a backseat.
We end with some very pertinent thoughts from an article titled Paper Promises, Golden Hordes in The Economist. The article highlights the instability in the current global currency system and how the United States is staring down the barrel of an eventual currency crisis. Ofcourse this crisis will not just affect the U.S. but the entire world, and most definitely China.
TWO hundred metric tonnes of gold would occupy a cube of a little more than two metres on a side; it would fit into a small bedroom. But India’s purchase of that volume of gold from the IMF last month has had an outsize impact on the markets, helping push the price well above $1,100 a troy ounce.
For bullion bulls, the implication is clear: central banks no longer trust the creditworthiness of other governments. And if they have lost confidence, private investors should do the same. The next step in this chain of reasoning is to assume a stampede (or at least a quick trot) by other central banks into holding the yellow metal. Gluskin Sheff, a Canadian asset-management firm, suggests that if China followed India’s lead, bullion could hit $1,400 an ounce.
Developed-country governments have attempted to control bond yields through quantitative easing and to support stockmarkets through ultra-low interest rates. But they cannot support their currencies as well without risking problems in the bond and equity markets. Gold’s surge may indicate that investors fear the next stage of the crisis will occur in the foreign-exchange markets.

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