Archives: 2007 September

Friday was a day that the American Dollar really got pounded on foreign exchange markets. The US Dollar Index closed at 77.69, a new all time low.

Vice President “deficits don’t matter” Dick Cheney seems to once again be very wrong. But what would you expect from a man who reportedly wants the US to attack Iran after achieving such stunning “successes” in Iraq and Afghanistan? However, one does have to give the man credit for being consistent with his views and pronouncements. Not one has yet to match up with the facts.

The world foreign exchange trading community, the one that really matters when it comes to currency exchange rates, seems to think that deficits without end, reckless spending, constant expensive warfare, and the creation of money from thin air do matter.

Foreign exchange traders are being as democratic as one could ever hope for in expressing their opinions about American policies by voting with their currencies.  Votes are cast by selling Dollars and buying Euros, Swiss Francs, Yen, Canadian Dollars, Australian Dollars, and even Thai Baht and Brazilian Reals. Then there is gold and silver.

All of the above are in major up trends while the poor USD is getting clobbered. Ever since the USD broke 80 on the USD Index the downtrend has accelerated. While not yet quite a collapse the threat of a destabilizing Dollar collapse is real and perhaps not far away.

As an American why does a weak Dollar matter to you? For one important thing a collapsing USD would lose its status as the world’s premier reserve currency. The privileged status that the Dollar has enjoyed since WW II has made it easy for the US to finance vast amounts of debt. This ability to constantly pump up the money supply has most certainly contributed to the growth of the American economy.

“Mobs, Messiahs, and Markets” by William Bonner and Lila Rajiva. Surviving the Public Spectacle in Finance and Politics.

William “Bill” Bonner is the President and CEO of Agora, Inc. , a leading financial newsletter publisher. One of the better known financial newsletter publications in the world is “The Daily Reckoning” and is published by Agora. Bill frequently shows off his considerable writing skills by writing feature articles for The Daily Reckoning.

Lila Rajiva is an author and political journalist who wrote “The Language of Empire” , which analyzes the media coverage of the US in Iraq Abu Ghraib prison scandal.

In “Mobs, Messiahs, and Markets”,  Bill and Lila use their rare and skillful writing talents to corroborate on a book which examines the way that humans act in crowds and are influenced by the actions of groups and voices of authority. One of the conclusions is that  individuals in crowds often lose their ability to think independently and will engage in actions, at times even violent and foolish ones, that they would never undertake on their own.

This adaptation of a crowd or mob mentality spills over into almost all that we do and is especially evident in the world of politics, financial matters, and public opinion. People will believe the craziest things if they are presented as being a popular and accepted belief.

Mobs, Messiahs, and Markets is a good entertaining read that explores serious minded material in a way that will often make you laugh out loud. However, the result of reading the book is far more useful.

After a thoughtful read you will be better able to defend yourself against the nonsense put forth daily by market shills, talking heads, media outlets, and sadly your own government. The spin masters know how people’s thinking can be manipulated and used to their advantage. Mobs, Messiahs, and Markets provides you with the tools to think for yourself.

Blackwater is a well connected US security and personal protection company that has trained the world’s largest private military mercenary force. The Blackwater mercenaries have gained enormous power and influence during the Bush administration’s invasion and rule of Iraq.

Blackwater has received contracts from the US Department of State totaling over 600 million dollars to provide security to US VIPs in Iraq and has reportedly recently signed additional contracts to provide security worth several hundred additional million.

Founded in 1997 by a former US Navy Seal Blackwater has attracted top notch highly trained former military special forces, Navy Seals, and Delta Force types, as it pays very well for those with highly developed military combat skills. A Blackwater employee can make five to ten times the pay rate of US military personal for performing basically the same duties. As far as I know Blackwater has not lost a single VIP while that VIP was under their protection.

While this is an outstanding record in such a dangerous environment as Iraq and Afghanistan, Blackwater has been involved in several incidents in which they have been accused of being trigger happy and of using excessive force.

Blackwater executives point out that earning a high income by serving with Blackwater is not without risk. Blackwater has had over 30 of their security personal killed in Iraq, which indicates that at times they have little choice but to shoot it out against insurgent forces.

Blackwater has been in the Iraqi and world news lately for allegedly gunning down anywhere from 11 to 28 Iraqi civilians, the reports vary widely, in a shoot out last Sunday at a Baghdad intersection. The North Carolina-based company, which has been hired by the US State Department to guard American diplomatic staff in Iraq, as well as to provide security to visiting VIPs such as visiting Congressmen, has said its employees acted in self-defence.

Alan Greenspan, the former Chairman of the Federal Reserve Board and architect of the United States present housing bubble bust along with a few others, is busy these days on the talk show circuit promoting his new book, The Age of Turbulence.

In this interview Jon Stewart, of Comedy Central, asks quite a few insightful questions. As usual Greenspan tries as hard as humanly possible to seem like he is answering the questions without actually ever saying anything that makes any sense.

However, after receiving a reported cool eight million Dollars as an advance for his book I suppose that Alan Greenspan feels that he should live up to his end of the deal and try to sell at least a few copies.

The interview is well worth watching for Jon Stewards questions about free markets. Greenspan doesn’t seem too comfortable with that hot potato dropped in his lap.

The “Maestro” and his decisions as Federal Reserve Chairman don’t look as masterful now that we all have to live with the consequences of many of those decisions.  Greenspan needs to cash in on his book as soon as he can.  I have a feeling that within a year or two the American public is going to be blaming Alan Greenspan as one of the chief architects of a wide range of financial problems that will take us decades to resolve.

One area of General Petraeus’s testimony in Washington that was widely overlooked by the media last week was the General’s confirmation that billions of Dollars in weapons deals are on the table for Iraq.

“Iraq is becoming one of the United States’ larger foreign military sales customers,” Petraeus told the Senate Armed Services Committee on Sept. 11, noting that Iraq has inked deals to buy $1.6 billion in arms from the U.S., with the “possibility of up to $1.8 billion more.”

Some arms experts see much larger amounts of arms deals moving forward and wonder if they are in the long term interests of the US.

Petraeus himself presided over an arms debacle in Iraq in 2004 and 2005 in which nearly 200,000 weapons went missing. U.S. arms might help the Iraqi security forces “stand up” in the short term but experts warn that the U.S. military could easily lose control over what may follow. Some fear a war zone flooded with weapons that could be turned on U.S. soldiers, or supply huge firepower for a full-blown civil war.

Most of the new arms deals are going to the Sunni tribes in Anbar province and are being used to arm Sunni only military units. While the Sunni tribal leaders have agreed to work with the US , at least for now, in chasing down al-Qaeda types, one should not forget that in the not very distance past these tribes were inflicting the greatest losses on US forces in Anbar and remain opposed to the Iraqi government in Baghdad.

Those who know Iraq well fear that in the future the US armed and trained Sunni forces may turn against the Iraqi government in a full blown civil war that the US would be right in the middle of.