Life Truth header
New editorials

Editorial news 10th Nov.09

Hi Folks,
Yes Mr Chicken Little has finally got it right!  The sky is falling.  The financial sky that is, and maybe a few others if we are not careful and a bit lucky.

I think we should be interested in what some financial tipsters are saying right now and though these are not always right they are right far more often than public authorities.  Their main problem is that they tend to believe, along with everyone else, that our culture is basically honest – that those we elect are the government.  As you will see, with some, this (Tricked-up) faith is starting to crumble.  

Posted Sunday 8th.Nov. (Australia time)

Overpriced US treasuries for a bit longer yet

We warned last week of the risk that falling treasury values posed to US bank balance sheets. The banks have loaded up on Treasuries to replace their toxic mortgage debts, and to also make the most of the low fed funds rate. Having bought $750 billion of bonds so far this year, the Fed is now winding down its support to the bond market. The risk is that as it stops its Treasury purchases, prices fall and banks balance sheets get taken out with it.

But it looks like another punter will fill the gap and keep bond prices bubbly. The UK's Financial Services Authority (FSA), whose board is picked by the Treasury, has passed regulation that requires banks to own more "high quality" liquid assets. But there's a catch.

Only government bonds satisfy FSA's requirements. So, in theory (and perhaps in practice) the US and UK governments will have many more captive customers to peddle their debt off to. This could keep bond prices elevated for now, although we still maintain that the party has to stop some time.

The fact that the pound has been trading in an un-natural band between $1.60 and $1.65 against the US dollar for the last four months has been suspicious. But the FSA coming to the US bond market's rescue makes it clear some behind the scenes collaboration is going on.

The scary thing is that the wheels fall off this plan completely if the ratings agencies such as Moody's, Fitch, or S&P downgrade the credit ratings for either country. This could trigger another capital crisis for British and American banks.

S&P has reserved judgement on the UK's credit rating until next year's national election. In the meantime, it warned that the UK may face a downgrade unless the government gets its finances under control.

As for Uncle Sam's rating, it probably should have already been downgraded, but the agencies may not have the guts to do it. A former senior vice president left Moody's a year ago after getting hacked off with the shonky standards. He wrote to the SEC about Moody's carrying out "virtually no surveillance on public finance securities, the debt issued by states, counties and towns".

Eric Kolchinsky, a former Moody's analyst reported to the House Oversight and Reform Committee that Moody's broke securities laws by issuing credit ratings that it knew were inaccurate. With this sort of thing going on behind the scenes, there's not much chance that the US rating is changing anytime soon.

So the FSA has forced the UK banks to buy UK treasuries that might fall in value if the country's rating is taken down. And overpriced US Treasuries may depend on a rigged ratings system and Fed buying to avoid falling in price.

Perfect! With management like this, no wonder the pound and the US dollar are in so much trouble. But with the Fed telling us this week that US rates would stay low for an 'extended' period of time, the bond bubble could last longer than the dollar fundamentals would otherwise indicate.
It's a mad old world.

Yes Readers, the sky is falling and like a rubber balloon it can be pushed in here and there but always bulges out somewhere.  Eventually, with too many pushing it bursts and that will be when the financial sky really hits old terra-firma at high speed.  Now a report, different reporter, a few days earlier; Quote:

A Stock Market Report
            Uncommon Wisdom

Is This Exciting or What?
by Larry Edelson

Is this exciting or what? Gold has blasted above the important $1,035 level ... the price of copper has almost doubled since April ... platinum and palladium prices are soaring ... and the price of oil has now reached back above $80 a barrel, up more than 77% since February.

This is the next phase of the natural resource price boom that I've been telling you about. It's here. It's happening NOW. And despite the occasional pullback, like the one that's occurring now, the rally is going to last for years.

And unlike past bull markets in natural resources, this one has two powerful forces converging behind it, the combined strength of which I have never seen before in my 32 years in the markets ...

Force #1: The Dollar's Worst Bear Market, Ever.

We've had bear markets in the dollar before, but none as wicked as the current one. The dollar has now lost more than 40% of its value since 2001 — and is likely to lose as much as another 50%, before it's ultimately replaced as the world's reserve currency.

Make no mistake about it. No one ever thought it would happen. But it's happening now and you can hear it in the cries of central banks all over the world: From Russia, India, Japan, the Arab Gulf States — and even from a slew of Latin American countries that are now banding together to devise a new Latin American trade currency.

All you have to do is take a look at the action in the U.S. Dollar Index ... the most accurate way to gauge the dollar's international value. The index has plunged from its high of 126.67 in 2001 to as low as 75.56 last week, where it lay a meager 4 points away — merely 5% — from plunging to a new record low.

As a result, savvy investors — including sovereign wealth funds from all over the world — are now seeking refuge in virtually any asset, and any country, that offers a hedge against the plunging value of the dollar ... a better balance sheet ... and assets, like gold and oil, that have tangible and real value.

But as powerful and as entrenched as the dollar's bear market is, it's only half the story, because of ...

Force #2: The Greatest Demand for Natural Resources, Ever.
Think demand for natural resources slumped since the financial crisis took hold?

Yes, it did. For about eight months. But it was nothing more than a knee-jerk reaction to the worst financial crisis of all time.

Global resources are being consumed at an unsustainable pace.
Global resources are being consumed at an unsustainable pace.

Meanwhile, the rise of Asia ... fully 50% of the world's population ... more than 3 billion new souls — continues, with more than 90 million new middle-class consumers joining the 21st century every year, and more than 2 billion new middle-class consumers expected by the year 2030, a short 20 years from now.

How will the world cope with such demand for natural resources, even if the dollar were stable, or rising in value?

The fact of the matter is, sadly, Mother Nature most likely won't be able to cope with the demand.

Indeed, according to a recent, international study by The Living Planet, the world is now heading for an "ecological credit crunch" far worse than the current financial crisis.

Why? It's simple: The world is now consuming nearly 30% more resources than the Earth can replenish each year, resulting in an "ecological debt" of at least $4 trillion EVERY YEAR — double the estimated losses made by the world's financial institutions as a result of the credit crisis.

End result: If nothing changes, by 2030, mankind will need two planet Earths to sustain the world's lifestyle.

If that's not enough to get your attention, then consider these cold, hard facts...

1. Fully three-quarters of the world's population now lives in countries which consume more than they can replenish.

2. By 2025, three billion people may not have access to clean potable water for bathing and drinking.

3. Malnutrition now affects 2 billion people today.

4. Consumption of raw materials from base metals to agriculture is expected to rise to 170% of the Earth's capacity by the year 2040 — leading to the end-life of some of the world's most important base resources needed to sustain economic growth.

Put another way, the world is running out of copper, tin, aluminum, lead, zinc, uranium, and more.

In as little as 13 years, we will be out of rare earth metals such as indium, antimony, hafnium, and tantalum.

Perhaps worst of all ...

5.*  The International Energy Agency (IEA) now officially acknowledges that oil production is likely to peak in about 10 years — at least a decade earlier than previously estimated.
*[Ed. "The International Energy Agency" is politically Globalist.  Meaning, in my opinion, artificially misleading by about 10 years; best opinion: its peaking now.]

According to the IEA, even if demand for oil remained steady — instead of climbing — the world would have to find the equivalent of four Saudi Arabias to maintain production.

Add in conservative projections for increased oil demand, and the
IEA has stated the world could reach a major "oil crunch" within the next five years.

Mark my words: The next major crisis will not be in real estate ... banking ... the stock markets ... or even in the plunging dollar.

It will be where the above two forces manifest themselves — in natural resources, whose prices are inversely related to the value of the dollar and directly related to the demand that is now being put on them, and Mother Earth.
From an environmental and social perspective, naturally, you should become acutely aware of the problems Mother Earth faces in the years ahead. That means being more respectful to the environment, more green, conserving and recycling what you can.

Each of us has to do our part. Not only to help Mother Earth, but to help those less fortunate than us and in desperate need of resources we take for granted.
End Quotes.

Well Folks, some people are starting to see the light!  When past civilizations have crashed people have finally accepted that they have been worshipping false gods; but too late.  If we are to save ourselves it will need a lot more of us seeing a lot further and then making progressive decisions rather than decisions of blind destructive rage..

Sincerely Editor.