<table class="header-part1" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr><td>Subject: [Arktwo] Tuesday the Terrible</td></tr><tr><td>From: "Bruce Beach" <language@webpal.org></td></tr><tr><td>Date: Mon, 21 Jan 2008 12:26:38 -0500</td></tr></tbody></table><table class="header-part2" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr><td>To: <ArkTwo@deuce.pairowoodies.com></td></tr></tbody></table> Monday being a US Holiday - (Martin Luther King Day) the time table therefore targets terrible Tuesday. Nothing is for sure - but I feel sure Tuesday will come - (although perhaps not for you or I specifically). Whether or not Tuesday will be terrible is less certain - but the event itself is one of those many situations in life that are certain even if the timing of the event is not. I am of course talking about the eventual collapse of the Dow. In October, the Dow closed at an all time high of 14164. On Christmas Eve, it closed at 13550, just 614 points below that high. On Friday the Dow closed at 12099, 2065 points or 14.6 percent below the high. All other major stock markets in the world also have fallen. I think we could almost say - followed and fell, usually between 8 - 12 percent. The world watches the Dow. The world watches the Dollar. Whither go the dollar and the Dow - so goes the world. The Dow is determined by the US economy. The Dollar is determined by the world economy. The reason for the latter is that the US has positioned the US dollar as the world 'reserve' currency. By that it is meant that all countries kept US dollars in reserve to settle their international debts. Since the US printed the US dollar - it was able to print as many as it liked to settle its debts. Mainly debts for conducting wars in other countries. This did not please some of the other countries - that they were paying for the US wars - so they started to diversify into other major currencies and the US dollar has fallen to HALF its value against an average of those main currencies. (At one time the dollar was valued at 140 against them and today it is 76.) The “bottom” (the lowest point that the dollar has EVER reached) was its close of 74.86 on November 26. I pointed out in my previous newsletter - the massive intervention last week to bring it back up when it headed that way again. These massive interventions by the US Treasury, the Federal Reserve, the PPT (Plunge Protection Team) other concerned central banks and other concerned foreign holders of massive US debt and investments either in stock or currencies will not continue to be successful - as the requirements for intervention become greater and greater. So the dollar is desperate - but so is the Dow, because the US economy is dying. One of my economic gurus tells me that the US economy is basically sound. Those are also the almost exact words of President Bush. While there is not unanimity about my position - I can tell you that I am not alone in it. Why might I say that the US economy is dying? Well, for one thing - in the past year, US goods producing industries lost 374,000 jobs. US manufacturing employment fell to 13.91 million in 2007. The last time US manufacturing employment was below 14 million was in 1950! There are a lot more people in the US now than there were in 1950 - but fewer jobs. Tell me that unemployment is as low as reported. I think that unemployment figures are a pack of lies. During WW2 everyone could get a job. Even Rosie the Riveter. Later in university I was told that was 'over employment'. I was unemployed in 1958. As I watched the unemployment rate climb - I hoped for it to go over 10%, because I thought the government would then do something. It did. And they did. They redefined unemployment. Before then - the unemployed were those able and willing to work. Then the unemployed were those able and willing and looking for work. (That is to say they hadn't become discouraged.) Next it became those who had gone on unemployment benefits - and now it is those whose unemployment benefits haven't run out. In some black ghettos forty percent of the males didn't have a job - but that didn't count - then or now. Neither do the people that we institutionalize. The US has the largest population percentage in prison in the world. Lots of kids are in college - because they can't find a job. The gigantic military forces are full of people who couldn't find a civilian job. And then there in underemployment. People with college degrees flipping hamburgers. But - I digress. My source says that Financial services have lost 7,000. Now I wonder how that could be when I hear of Citigroup alone - laying off 20,000. Maybe the numbers are running behind. Construction also lost 49,000 jobs. Again - I could point out many ways that is undercounting. Where have the jobs gone? Like where does the dark go - when the sun rises. Many people say - overseas. That need not be - because there is never a shortage of work. Oh, well - I won't try to explain that. But for those who worry about such things - the imbalance in US trade grew 9.3 percent in December alone to $US 63.12 Billion. While for 2007 household debt achieved a record 133 percent of disposable personal income. In 2000, it was about 60 percent. By that measure Americans doubled their private debt in seven years. The theory is that debt, like housing, entertainment, other categories of expenditures, should generally not exceed a certain percentage of income. But - Americans have been going into debt - for their consumer lifestyle. For awhile many Americans thought they were doing well on a net basis because the value of their homes was going up. But in the last three months that value - based on an annual rate - has been tumbling in many markets. Las Vegas, 18.9 percent San Diego, 20.3 percent Miami, 22 percent And so goes the house prices and net worth of Americans over much of the country. Also so go the homes - with a forest of 'for sale' signs in some neighbourhoods. And a new term called - "Jingle Mail" as they drop their keys in the mailbox - and walk away. Yesterday - a report from my son - than some in anger - are trashing the homes before they leave. Living high in recent years - they have spent 130 percent of their earned incomes. In November they raised their credit card debt at an 11.3 percent annual rate following an 8.5 percent rise in October. But now, for many million Americans much of their pay check is eaten up by servicing charges on debt. Millions of Americans are in the position where they cannot service (let alone pay) their existing debts without running up even more debt on their credit cards. And many of those have maxed out their credit cards. Money, interest, taxes - are all a chimera. But never mind - the government has a solution, just as it does for unemployment. Change the numbers. Lower taxes for those who have none. (Also lower taxes for the wealthy.) It is not just an American problem. Inflation, debt, unemployment, are mounting around the world. The US Government debt is about to go over $10 Trillion Dollars. You can say it. But can you understand it? I can't understand that number. A billion is a thousand million. Okay - I can maybe wrap around that. But - a million million. Nope - no way. During my days of economic training - we maybe heard of a trillion stars - or a trillion atoms - but never of a trillion dollars. In 1958 when I was unemployed - and looking for a job - with unemployment at 10% - the US population was 175 million. Now it is 300 million. Back then US Treasury debt was about $US 260 Billion or $1,485 per person - less than THREE PERCENT of today’s total of $US 9,200 Billion or $30,670 per person. That means that you, your wife - and each of the children in your home, theoretically all owe over $30,000 each - besides what you owe on your credit cards, loans, mortgage - and so forth. Pay up! Even if they cash out everything - most people can't do it. China's (one fifth of the world population) whole economy in 2006 was US 2.67 TRILLION, less than one third of the money - owed by the US Treasury. So - Down goes the US. Down goes the dollar. Down goes the Dow. But why Tuesday? Well, when the forest is dry - lightening can strike anytime. And lightening may have struck last week. The government / courts got after rating companies for doing phoney ratings on stock companies and bonds. So the rating companies have started changing their ratings. Some big banks and other financial institutions are in trouble. One particular group got the rug pulled out from under them - last week. The bond insurers. There ratings of the insurers themselves were changed and in three days, shares in Ambac plunged 71 percent. In four days, shares in MBIA Inc plunged 47 percent. Since the start of this year, Ambac and MBIA Inc shares are down 93 and 88 percent respectively. These were the key companies that insured the bonds (of big companies, States, and cities). When stocks were weak - investors fled to bonds - and now - the bonds are gone - and maybe also the Dow. Oh, things are bad - except for big government contractors, like Brown and Root, and Blackwater, and the oil companies, and the Arab Royalty in its Golden Palaces. But the men who built the house of cards did okay. They took the crown jewels with them - as they left. Dynegy's outgoing CEO, Charles Watson, walked away with a $33 million exit payment -- Tyco's Dennis Kozlowski, although indicted for tax evasion, is slated to receive a handsome exit package. $135 million, plus $3.4 million per year for a 30-day-per-year consulting contract for the rest of his life. K-Mart former CEO Charles Conaway got more than $20 million in salary bonuses and severance payments after less than two years. (The company is closing 283 stores and laying off 22,000 employees. They won't be getting bonuses). Loser Countrywide Financial's chief executive, Angelo R. Mozilo, is getting $115M in severance bonus. Merrill Lynch's Stan O'Neal, after a string of billion dollar write-downs, left with a $161 million payoff. The list just goes on and on. Citigroup is of course my favourite. Still, never mind. The house that greed built - is falling down - but the rats have left the ship. I could continue, but space does not permit. Tuesday, Tomorrow, sometime soon. Very possibly it may drag on for weeks. Some think until never. But not you - and not I - which is why you read this newsletter. Peace and love, Bruce DawnSayer@webpal.org </pre>
Greenspan, Mozzilo, and countless others should be shot, Enron looks like the boy scouts compared to these guys. Im a natural optimist, and have a econ degree but one thing i do know is something doesnt add up, I just cant believe that the powers at be would just allow this to happen without some sort of agenda, there is no way this outcome could not easily have been seen. Whats sad is that the public is in denial, go talk to random people about whats going on and you will be amazed at what they dont know, or brush off with a sheepish mentality over this issue. Its just a matter of time now, watching it in slow motion is surreal, I am a moderate on most issues and it is wierd having people looking at you like a nut job when they ask me my opinion(im a mortgage guy) but i dont want to lie, which is rare in my line of work