But on the other side of the coin, foreigners continue to soak up tons and tons of our debt, which they will probably spell "tonnes and tonnes of debt of the world's biggest idiots who think that they can make an economy out of borrowing and spending money for imported consumer items and having their governments borrow more and more money to spend more and more money on more and more people!", and last week the official holdings of these foreigners at the Federal Reserve exploded by another $16 billion. In one week! I don't know if this is a new weekly record or not, and I don't care, because if I did care, then I would have to do actual work to answer the question, but you know how I feel about work, and if you don't, then ask me to do some and see what happens. The only thing that matters is that it is a lot of money, and the humongous sum total of American government they have stashed at the Fed IS a new record, $1.572 trillion!

If I looked it up correctly, in 1995 the banks' reserves were about $60 billion, insuring against $206 billion in loans and leases, and $87 billion in savings. M3 was $4.3 trillion.
Now, in 2006, notice the amazing difference! Today, required reserves are only a measly $41 billion (down almost 33%!) as a cushion against a whopping $5,540 billion in loans and leases (2,700 percent bigger than in 1995) and an astonishing $5,150 billion in savings (5,900 percent bigger)! M3 is now $10.3 trillion.

As of 2004, Social Security was a $10 trillion off-balance-sheet liability. Medicare is a $64 trillion liability. The Social Security fund will begin to run in the red around 2015. The Medicare fund is already operating in the red, a situation that started in 1992. The combined $74 trillion off-balance sheet IOU to Americans is more money than is available in all the stock and bond markets of the world. This means life or death will be determined by your wallet, not your doctor.

Originally posted by Regenmacher

The thesis is simply wrong for many reasons, not least that war on Iran has been in planning since the 1990s as an integral part of the United States' Greater Middle East strategy.

www.atimes.com...]

Launch of Iranian oil trading hits wall
Oil exchange unlikely to begin till at least midyear

Despite repeated reports over the past 18 months or so that the planned bourse would finally open for business on March 20, 2006 -- and go head to head with the New York Mercantile Exchange and the ICE Futures Exchange in London -- the start date has been postponed by at least several months and maybe more than a year.

"In the middle of 2006, we are able to start the bourse," Mohammad Asemipur, special adviser on the project to Iran's Oil Minister, said when reached in Tehran. The plan is to trade petrochemical products first, with a crude oil contract coming last, a rollout that likely will take three years, he said.

"Oh, crikey, it's at a much earlier stage than people would think," said British consultant Chris Cook, who claims credit for coming up with the idea for the exchange in the first place and is a member of the consortium headed by the Tehran Stock Exchange that is charged with bringing the project to life.

"You can rest assured, there will not be a crude oil contract, Gulf-based, in my opinion, within a year -- and that would be really pushing it," Mr. Cook, a former director of ICE's predecessor, the International Petroleum Exchange, said when reached in Scotland.

Read the rest here: www.theglobeandmail.com...

Getting Serious about the Twin Deficits

Twenty years ago, the United States was the world’s largest creditor nation, unsurpassed in its ownership of assets outside of its borders, even after deducting what foreigners owned inside its borders. Yet over the past two decades, America has been transformed into the world’s largest debtor nation.

“A striking cautionary note regarding America ’s current path is provided by Britain ’s loss of military and political primacy in the twentieth century; that development followed a shift from creditor to debtor status. Similarly, a prolonged decline in the dollar’s value and increasing indebtedness will erode America ’s dominance in political and security spheres. These trends threaten the dollar’s role as the global currency that facilitates international trade and finance, something the United States has gained immeasurably from over the years. A weaker dollar also reduces American leverage in international financial institutions such as the World Bank and International Monetary Fund (IMF). Finally, a diminished U.S. currency means that each dollar’s worth of military and development assistance has less impact at precisely the time when the nation faces the greatest challenges. Those threats we ignore at our own peril.”

The Second Great Depression: Starting 2007, Ending 2020
Warren Brussee, Author

The Second Great Depression is a frightening book. It shows how massive consumer debt will trigger the next depression, starting about the year 2007. Most of the logic used to support this premise is based on the government's own published data.

With interest rates increasing, savings rates near zero, and debt at its maximum; many people will be pushed over their debt limit, having homes foreclosed by the banks or going into bankruptcy. Others will heed the warnings and reduce spending, causing a dramatic slowing of the economy.

In this depression, the United States will be brought to its knees. But not unlike the mythical bird Phoenix that dies in flames and is then reborn out of its own ashes, the United States will also be reborn. However, it will be a poorer and less arrogant country that emerges from its own ashes.

The Attack on the U.S. Dollar and Energy Needs -The Conservative Voice

It’s bad enough that the Middle East has us over a barrel of oil thanks to our continued dependency on access to its huge reservoirs of crude, but largely unknown to most Americans, the Organization of Islamic Conference (OIC) and the Islamic Development Bank have a long-term goal of replacing the U.S. dollar as the reserve currency for world trade.

In March the Iranians will open an Iran Oil Bourse that will trade oil and products in the Euro, not the dollar. They will not be alone in pegging their nation’s currency to the Euro. Syria already does and Venezuela, another major oil producer, has announced plans to do so as well.

This is extremely bad news for the United States and for the West in general. While Americans focus on the shooting war in Iraq, we are in an even more serious economic war with an axis that spreads from South America to the Middle East. Bear in mind that many South American nations have been electing Socialist governments and that some Middle Eastern nations have flirted with socialism for decades. The Baathist Party in Saddam’s Iraq is an example of this.

Please visit the link provided for the complete story.

Carry trade liquidation contagion: Petrodollar fuelled Arab stock markets plunge


Stock markets in Saudi Arabia, Dubai, Kuwait and other Arab countries plunged in unison this week as investors hit the exits simultaneously. US investors are barely aware that these markets market even exist let alone bothered by this panic. However a look at a chart of the Saudi Arabian Tadawul index will make them envious for the kinds of returns these markets have delivered for their investors. On average markets in the Middle East have appreciated by 500% over the last 3 years. At its peak, the aforementioned Tadawul index had appreciated by almost 800% during the same period. These outsized returns and a wholly unscientific survey of the fundamentals (40 Price/Earnings, 20X Price/Sales and 10X Price/Book ratios) of some Arab stocks on Gulfbase.com suggests that these markets could see additional convulsions before disillusion and despair bring about a wrenching bottom.

These days its global markets that attract words like zenith as many routinely mark new all time high levels, the way the US markets did in 1990s. Saudi Arabia, Brazil, Turkey, India and South African are just a few of the markets that have hit all-time new highs. However, these bull markets have been running at full pace for three years. Is the panic in Arab markets a harbinger of what is to come for other high flyers? More importantly for US investors, are we about to revert to another period of US market primacy?

Please visit the link provided for the complete story.