Debt downgrade, then mystery missiles

I don’t know about you, but I don’t find this combination of events to be particularly lifting of the animal spirits.


Acquaman notwithstanding, it seems unlikely that it was just a jet contrail… rising from the ocean. I have the impression that the Official Story tellers in Washington are having a rough time coming up with their usual fiction. I tend to think their best bet is to blame the private space consortium with which Richard Garriott is involved, give them a chewing-out for failing to properly alert the appropriate authorities, then quietly pay them to publicly support the story.

Stratfor concludes that “everything points to a missile launched by the United States”, but they find it inexplicable that no reason for launching the missile has been given yet.

A shot across the bow

And the much-expected monetary war begins… the Market Ticker reports that China has downgraded US debt:

Chinese rating agency Dagong Global Credit downgrades US credit rating due to QE program

– Cut long term US sovereign rating one notch to A+ from AA, with a negative outlook.

– “The serious defects in the U.S. economy will lead to long-term recession and fundamentally lower the national solvency. The credit crisis is far from over in the United States and the U.S. economy will be in a long-term recession. In essence, the U.S. government’s move to devalue the dollar indicates its solvency is on the brink of collapse”

The status of the U.S. dollar as the dominant international reserve currency determines that its depreciation gives an inevitable impact to the interests of all creditors. In addition to the shrinking of creditors’ assets, the utter chaos in the international currency system triggered by the depreciation of the U.S. dollar will definitely damage the interests of all the creditors in the world at various levels. Together with the possibility of inflation in the future, the wealth of creditors will be plundered once again by the malicious act of currency devaluation conducted by the U.S. government after it suffered the losses during the financial crisis since 2007.

The value fluctuation of the world’s major currencies caused by the continuous devaluation of the U.S. dollar will push the adjustment in world interest pattern through the value comparison of the monetary system. The essence is to transfer the interests of the creditors to the debtor free of charge, and that will fundamentally destroy the international credit system and global economic system comprised of the creditor system and debtor system, resulting in an overall crisis around the world.

Translation: you’re not going to rescue the big banks on our dime, Ben. By the way, notice that USD has been moving higher since the initial dive following the QE2 announcement. It’s not always as obvious as it looks. Anyhow, this could end up marking a historic moment in the struggle for 21st century supremacy. And if the pattern of history holds true, the real winner will be a third party that doesn’t get involved until throwing its weight in will close the deal.

In other words, bet on India.

Science commits suicide

This news strikes me as something that could lead to the exposure and eventual defunding of a great deal of the chicanery involved in the “climate science” scam. Only a group of intellectually isolated individuals who highly overrate their ability to influence the public would be so foolish as to transform themselves into political activists this way:

Faced with rising political attacks, hundreds of climate scientists are joining a broad campaign to push back against congressional conservatives who have threatened prominent researchers with investigations and vowed to kill regulations to rein in man-made greenhouse gas emissions.

The still-evolving efforts reveal a shift among climate scientists, many of whom have traditionally stayed out of politics and avoided the news media. Many now say they are willing to go toe-to-toe with their critics, some of whom gained new power after the Republicans won control of the House in Tuesday’s election.

The ineptness of their strategy is visible in their choice to not only abandon their home turf, but attack the very individuals who are presently providing them with most of their funding. I’m delighted to see it, of course, because it is obvous that their so-called science isn’t actually scientific and this attempt to is only going to lead to more scrutiny and less funding of the global warming gravy train.

Moreover, it will likely lead to a long-overdue diminishing of the public’s respect for science and scientists as the latter reveal their total ignorance of matters they consider to be insignificant such as economics, democracy, and human liberty. Scientists are technocratic totalitarians dependent upon government for the most part; note that both the National Socialists and the Soviet Communists historically enjoyed a good deal of support in the scientific community and few scientists had any qualms about working for such evil masters. [Science fetishists are encouraged to make their usual argument about Lysenko here.] Scientists have their uses, but only a madman or a fool would want to allow them any significant influence in government.

Speaking of climate change and economics, the market has spoken:

Global warming-inspired cap and trade has been one of the most stridently debated public policy controversies of the past 15 years. But it is dying a quiet death. In a little reported move, the Chicago Climate Exchange (CCX) announced on Oct. 21 that it will be ending carbon trading — the only purpose for which it was founded — this year.

Good riddance indeed. As if the global economy isn’t already facing a dauntingly high degree of difficulty.

Palin vs Bernanke

Now this is unexpected: the Wall Street Journal praises Sarah Palin’s economic acumen:

It would be hard to find two more unlikely intellectual comrades than Robert Zoellick, the World Bank technocrat, and Sarah Palin, the populist conservative politician. But in separate interventions yesterday, the pair roiled the global monetary debate in complementary and timely fashion.

The former Alaskan Governor showed sound political and economic instincts by inveighing forcefully against the Federal Reserve’s latest round of quantitative easing. According to the prepared text of remarks that she released to National Review online, Mrs. Palin also exhibited a more sophisticated knowledge of monetary policy than any major Republican this side of Wisconsin Representative Paul Ryan.

Stressing the risks of Fed “pump priming,” Mrs. Palin zeroed in on the connection between a “weak dollar—a direct result of the Fed’s decision to dump more dollars onto the market”—and rising oil and food prices. She also noted the rising world alarm about the Fed’s actions, which by now includes blunt comments by Germany, Brazil, China and most of Asia, among many others.

“We don’t want temporary, artificial economic growth brought at the expense of permanently higher inflation which will erode the value of our incomes and our savings,” the former GOP Vice Presidential nominee said. “We want a stable dollar combined with real economic reform. It’s the only way we can get our economy back on the right track.”

Of course, the Wall Street Journal doesn’t consider Ron Paul a “major Republican”, but he’s the only national politician in either party, with the possible exception of his son, who fully groks what is at stake here. Still, it’s interesting to see that Palin clearly has some reasonably astute advisors on her staff. And it is downright astonishing to see a major player in global banking come right out and endorse “the barbarous relic”.

Bernanke must be sweating bullets these days. What people tend to forget to take into account when they imagine there are no limits to quantatitive easing is that in order for the Federal Reserve to monetize the debt, the Treasury has to issue it. So, it increasingly looks as if there may be an epic clash between the Fed and the Republican House majority in the works and it’s a little surprising to see Sarah Palin stake out a position against the bank.

On a related note, Business Insider has a good article explaining how the Fed’s debt-monetizing has pumped up the stock market and why that is going to make the next downturn a sizable crash. It’s interesting to see how much it looks like my Limits of Demand chart.