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The Stupidity - of the intellectually superior man who looks down upon others, w orse has contempt for

the common man - will eventually reveal itself through the course of his own life provided he has some sense left to percieve it - Kannor The modern urban metropolis is a peculiarly attenuated form of community, in whi ch people live together but have very little in common. "The great enemy of the truth is very often not the lie - deliberate, contrived and dishonest - but the myth - persistent, persuasive and unrealistic." ~ John F . Kennedy Mark Twain said it better than both of us: "It ain't what you don't know that gets you into trouble. It's what you know for sure and just ain't so!" "The public and majority of investors are always wrong." Watch out when the necessities of life become investment oppurtunities - Kannor America, like all great powers in decline, has become complacent and apathetic w ith an unjustified sense of entitlement. Over the next few years we will have inflation in the things we NEED and USE. Th ese are the items we buy and consume every week, the items we buy and not financ e, and the items we need ready and recurring cash for. Food, energy, consumables , and basic services are examples. We will have deflation in the things we WANT and OWN. These are the items we strive for that we perceive will move our lives to an even higher standard of living. They are primarily assets like: housing, real estate, financial instruments, boats, exotic cars, art, collectibles, etc. - often the items we finance. For the first time, Asia s contribution to a global recovery is outstripping that of other regions. Rather than being dependent on a narrow export-driven recovery , domestic demand particularly household consumption is reinforcing Asian growth . Asia also cleansed its weak banking system and regulated prudently. By rejecting so-called sophisticated financial practices and despite U.S. criticism for that decision Asia saved itself a lot of grief. Problem for the U.S. is that a large chunk of U.S. GDP and the jobs, incomes, an d careers associated with it, have been moved offshore and given to Chinese, Ind ians, and others with low wage rates. Profits have soared on Wall Street, while job prospects for the middle class have been eliminated. No-think economists, such as the ones engaged in the debate over fiscal stimulus , who mistakenly associated globalism with free trade instead of with its antith esis--the pursuit of lowest factor cost abroad or absolute advantage, the opposi te of comparative advantage, which is the basis for free trade theory. The U.S., with all its huffed up power and importance, depends on the U.S. dolla r as reserve currency. It is this role of the dollar that allows America to pay for its imports in its own currency. For a country whose trade is as unbalanced as America s, this privilege is what keeps the country afloat. The U.S. is so depe ndent on the dollar as reserve currency that it must have as its main policy goa l to preserve that role. Otherwise, the U.S., an import-dependent country, will be unable to pay for its excess of imports over its exports. Fiscal consolidation , the new term for austerity, could save the dollar. What we have in front of us is an unaware economics profession. There may be som e initial period of deflation as stock and housing prices decline with the econo

my, which is headed down and not up. The deflation will be short lived, because as the government s deficit rises with the declining economy, the prospect of fina ncing a $2 trillion annual deficit evaporates once individual investors have com pleted their flight from the stock market into safe government bonds, once the hyp ed Greek, Spanish, and Irish crises have driven investors out of euros into doll ars, and once the banks excess reserves created by the bailout have been used up in the purchase of Treasuries. Then what finances the deficit? Don t look for an answer from either side of The Great Stimulus Debate. They haven t a clue despite the fact that the answer is obvious. The Federal Reserve will monetize the fede ral government deficit. The result will be high inflation, possibly hyper-inflat ion and high unemployment simultaneously. The no-think economics establishment has no policy response for economic armageddon, assuming they are even capable o f recognizing it. Economists who have spent their professional lives rationaliz ing globalism as good for America have no idea of the disaster that they have wrou ght. Finally, one more reason why we may not have to wait overly tate becomes at least a rational investment. And that reason lot of money on the sidelines just now, both in the U.S. and t money is in cash, and much is in bonds a disaster in the long before real es is that there is a abroad. Much of tha making.

As interest rates start moving up, and the fiat currencies start to come down, i nvestors will become fairly desperate to get out of bonds and into pretty much a nything with a discernable heartbeat. Once housing prices have fallen by another 20%, 30%, real estate will be again considered a safe asset to own, and some pe rcentage of money will certainly begin to flow back into it. So, personally, I would hold off buying real estate for the time being. At least in the post-bubble markets where the debt still really hasn t been addressed (muc h of it now sits on the books of the Fed, and Fannie and Freddie), and where des perate governments will take advantage of the fact that you can t pick up and move your house to raise your property taxes. Demand is for metallurgical, or coking, coal. This is what China and India reall y need good-quality metallurgical coal, something that North America has in plen ty. And this demand is not going away anytime soon. For a strong economy, one needs strong infrastructure. For strong infrastructure , one needs steel. Steel is the backbone of an economy, and it is metallurgical coal that is used to produce the heat in 90% of the world s steel production proce ss. And for as long as the economy continues to blaze, it is metallurgical coal imports that will be stoking the furnace. The U.S. overthrew Iran s government in 1953, installed a dictator and taught his goons how to torture. The U.S. backed Saddam and his ilk from the late 50s throu gh the 1980s. The U.S. engineered the Soviet invasion of Afghanistan in 1979 and continued to meddle in that country, radicalizing Islamist fighters and helping to create the modern fanaticism there. In the 1980s, the U.S. government bombed Libya and encouraged Saddam to invade Iran, even as President Reagan secretly s ent weapons to Iran. In 1990, the U.S. government started a war with Iraq that h as essentially continued to this day. Clinton bombed Iraq and Afghanistan. In th e decades leading to 9/11, it is fair to say that the U.S. government directly o r indirectly murdered millions of innocent people in its interventions in the Mi ddle East and Central Asia. Every president from Eisenhower through Clinton shar es some of the blame. How much longer will we deal with increasing humiliations at the airports, the r apid militarization of our police, the economy-crushing Pentagon that seems to d ouble in size every few years, the demonization of Muslims that has become so co mmonplace? Will the U.S. be occupying Afghanistan nine years from now?

And it goes without saying that the U.S. government hasn't even caught Osama bin Laden. Not that his capture would vindicate the million killed, the trillions s quandered and the liberties smashed in this war. This would be obvious to people in a normal country. But the madness will end, eventually. The bad dream that is post-9/11 America st at last give way to something else. If the people don t get sick of it and nd that it end, or military defeat doesn t do it, the U.S. empire will simply out of money. Its days are numbered. It's just tragic and sickening that many re will die before that happens. mu dema run mo

US consumer is and will be absent on a permanent basis since his insolvency cont inues and even gets worse (10) for the one American in five without work who no longer have a job, no longer have a house, no longer have any savings, are wonde ring how they will survive in the years to come. Americans have deserted the stock market. Each month, an increasing number of sm all investors leave Wall Street and the financial markets If one keeps in mind the traditional image that the stock exchange is today s temp le of modern capitalism, then we are witnessing a phenomenon of loss of faith co mparable to people s disaffection with official demonstrations experienced by the communist system before its fall. The US consumer has become ears, has gradually become with more than 70% of U.S. nsolvency of US households insolvent, the consumer who, during the last thirty y the central economic player of this financial heart ( growth dependant on household spending). It is this i that has broken the Fed s efforts.

Ben Bernanke s speech full of veiled threats to his central banker colleagues: in ambiguous terms, he passed the following message: We will try everything and any thing to avoid an economic and financial collapse and you will continue to finan ce this everything and anything , otherwise we let inflation loose and thus deval ue the Dollar whilst US Treasury Bonds will no longer be worth much. When a cent ral banker expresses himself like a common cash extortionist, there is danger in the house. As the historian Niall Ferguson points out "the sun can suddenly set on a superp ower when debt bites". The Japanese government has spent two decades squandering the wealth of its citi zens. Japan's rural areas have been paved over and filled in with roads, dams an d other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. Japan's large foreign exchange reserves, although la rge compared to those of most other countries, are only a small fraction of its liabilities and could not alone eliminate refinancing risk at a time of severe s tress. There has been only one reason that investors have accepted virtually no interest income on Japanese bonds. The relentless strength of the Japanese Yen has made up for the lack of interest. The Yen has appreciated 100% versus the US D since 1995. The Yen has stayed strong despite a weak economy because Japan has run a massive trade surplus for decades. That unsustainable trend is also comin g to an end. China, Vietnam, Indonesia, and other developing Asian countries can produce the crap that Americans desire much cheaper than Japan. The Japanese tr ade surplus has begun to plummet. Devalueing the Yen can help and it requires J apan to print more and more yen, ultimately easing monetary policy even further. A weakening Yen combined with a demographic nightmare would reduce demand for bonds paying 1.0%. This isn't a positive development when you are running $600 billion annual deficits and desperately need investors to buy your debt.

When you import from a country you would welcome the devaluation of its currency or appreciation of your currency. When you export to a country you would welcom e the revaluation of its currency or depreciation of your currency. The United States asserts that China deliberately keeps its currency undervalued to boost exports cheaper by making them cheaper for overseas buyers. The lesson of the 1930s is that surplus countries with structurally weak domesti c demand come off worst in a trade war (where bans, sanctions etc. are imposed o n import/export). "It's true that the dollar would fall if China decided to dump some American hol dings," Paul Krugman said."But this would actually help the U.S economy, making our exports more competitive. Ask the Japanese, who want China to stop buying th eir bonds because those purchases are driving up the yen." Some analysts and Japanese policymakers had theorized that China was attemp ting to hamper Japan 's recovery by keeping the yen excessively strong. A Country's Appreciating Currency is Bad for its Exports.