Treasury Secretary Henry Paulson and the Chairman of the Fed, Ben Bernanke, may not want to talk about it on December 15th and 16th in Beijing, but the Fed, the Treasury and the Chinese all know that the dollar has held its value on world markets because compared to the euro, yen or yuan, America has the highest interest rates. Carry traders borrow yen at ½% interest and invest in foreign assets, most of which goes into US markets creating artificial financial demand. While these two elements have helped keep the party going the US has turned a blind eye to the manipulation of currencies by those countries that export to the US. The artificially low interest rates, causes excess consumption. The artificially low currency values rob America of its factories and jobs. Both the US and foreign nations have knowingly set the stage for a dollar collapse that will cost foreigners 50% of their buying power. These problems are just over the horizon so any of you who are long in the stock market had best consider cashing out.
In 1981 it took $1.42 of additional credit to generate each dollar of additional notional income in the US, today it takes $4.00.
Stock sales by corporate American chieftains exceeded purchases last month by the widest margin since 1987, suggesting they do not share the confidence of investors who sent the S&P 500 Index to a six-year high.
Microsoft’s Bill Gates, Google’s Eric Schmidt and Kohl’s William Kellogg, in aggregate sold $63.18 of shares for every $1.00 they bought in November. They did this as they told all who would listen that the economy was strong and headed higher.
One in seven Mexican workers have left their country and are working in the US. That is a minimum of seven million workers and the figures could be as high as 14 million. 9.4% of all persons born in Mexico live in the US. They make up 1/3 of all foreign workers in the US. That is more than 5% of the total workforce.
The biggest tax scam in the world is called transfer prices, abuse of transfer prices is a key tool multinational corporations use to deceive the US and other top jurisdictions to think that they have virtually no profit; hence, they shouldn’t pay any taxes. Recently, after 17 years, the IRS collected $3.4 billion from UK firm Glaxo Smith Kline. Merck faces four separate tax disputes with the US and Canada with potential liabilities of $5.6 billion. These and many other companies are using offshore subsidiaries to transfer blockbuster patents too. First they over charge us for drugs by 200% to 300% and then don’t pay taxes. Most transnational corporations keep two sets of books. One for tax authorities and another real set. Behind this price fixing is the big foundations - the Rockefellers and Rothschilds.
As we predicted, the Iraq Study Group, Baker-Hamilton findings, are a withdrawal from Iraq over the next two years and a turnover to the Iraqi Army. Over the next year 25% of US troops should leave, with another 50% leaving in 2008. If the Iraqi Army can handle the situation the other 25% will leave in 2009.
Canada’s top police officer was made to swear on a bible, accused of perjury by an MP, and put on notice by the PM for changing his testimony in the Arar case. This sets a great example of the corruption within law enforcement when the RCMP interacts with US policing agencies.