Jim Kunstler - A Real Freakout

by James Howard Kunstler, published on his webpage, Clusterfuck, 3/17/08:

Things are getting very weird very fast -- and will probably get even weirder, faster, as the the train wreck of bad debt meets the Saint Paddy's Day Parade of bacchanalian excess at the grade-crossing of destiny. The train is carrying America's financial system, but the engine driving it is peak oil, because declining energy resources necessarily means declining capital wealth -- and declining value of all the institutions, instruments, and markers that denote that wealth or hope to profit by trading in it. The fiasco leads straight to the necessary reinvention of American life on other terms and by other means.

I've maintained for a long time that, even among those who recognize we have a big problem, there are many impediments to imagining a credible outcome. One thing I've noticed is that in any given public meeting (or lecture hall) you can divide participants into two groups: those who believe we will 'high-tech' our way out of this predicament; and those who believe we'll organize our way out.

I don't subscribe to either point of view, strictly speaking. Both POV's assume that there will be an orderly transition between where we're at now and where we're headed. They're tainted by the kindergarten ethos of entitled happy endings and outcomes, which has been the chief operating system for the Baby Boomers, a therapeutic bias for placing 'good feelings' ahead of reality -- which also has obliterated the tragic sense of life that acts as the only brake on humanity's inherent hubris.

Ultimately, in my view, the issue of what happens next will be settled not by the fantasies of the algae-biodiesel geeks or the wishful thinking of the sustainable futures organizers, but by the natural, self-organizing properties of a society responding 'emergently' to new circumstances. One of the implications of destiny-as-emergence is the probability that we will try any damn fool thing besides the right things to keep the old game going for a while -- even in the face of obvious failure.

I'm sure our political leaders will mount a campaign to rescue the futureless infrastructure of suburbia. It will necessarily be an exercise in futility. But it has already started. That's what the swindle of ethanol has been all about. And the touting of hybrid cars, and the flimflam of "energy independence." Even the "environmental" crowd" squanders most of its attention these days on how to keep all the cars running on something other than gasoline. They don't question the assumption that we will remain a car-dependent society.

As much as I loathe the suburbs in their grotesque late-stage efflorescence, I can understand why those stuck in them would wish to defend their misinvestments. I just hate to think of the political consequences when their disappointment catches up to the reality that the suburbs will not be rescued. And by that I mean not just the houses but the way-of-life associated with them and all its accessories, furnishings, and activities. Bewilderment will soon turn to rage out in the highway-strip-and-cul-de-sac empire.

Now, apparently, we'll also opt for a bail-out of all those who tried to become rich by getting something for nothing at both ends of the Ponzi scheme called the housing bubble -- the "little guys" who signed mortgage contracts they could never hope to pay off, and the Wall Street playerz who bundled these hopeless contracts into fraudulent securities (and their enablers in the ratings agencies, plus the hedge fund smoothies who tried to cash in by using recondite algorithms to dissolve the risk associated with imprudent lending.) The bail-out is likely to accomplish nothing except the more rapid bankruptcy of government at all levels and a second Great Depression at ground level (worse than the first one).

Over the weekend, the Federal Reserve engineered a $30-billion dollar Saint Paddy's day present for the JP Morgan bank by handing them the corpse of Bear Stearns. The object of the game is to prevent the "assets" of Bear Stearns from going to the auction block, on which they would be discovered to be nearly worthless, which would instantly render all similar assets held by the other big banks to be similarly worthless, and would result in a universal margin call that would pretty much unwind the hallucinated "wealth" acquired the past ten years.

Despite the heroics around the fate of Bear Stearns, it looks like the financial system is tottering anyway. Perhaps the last trick left in the rescue bag will be the 100-basis-point drop in the Fed rate rumored to be announced tomorrow. It won't help any of the big banks, since their problem is holding liabilities in excess of assets. Almost certainly it would crater the US Dollar.

The next thing in store for America, in my opinion, will be a rather new surprise: oil-and-gasoline shortages. While frightened money pours into the oil futures markets, driving the price up, strange behavior will start brewing in the actual physical allocation process. Imports of oil and gas to the US may not be as reliable as it had been when America seemed to be a solvent nation. The exporters may be changing their terms of doing business with us -- and that's nearly two-thirds of all the oil we need. The public would probably suck up oil price increases indefinitely, but shortages are going to be something else. A real freak out.

Sibelgate: Frank Giustra pimps Bill Clinton

Growth Stocks Weekly
Publisher: Diversified Financial Solutions, Inc. ~ Since: May, 1995 ~ Editor: Richard Reinhard ~ E-Mail: rreinhard@shaw.ca
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Performance: Year ended April 1996 116.9%; 1997 28.1%; 1998 36.4%; 1999 39.4%; 2000 180.9%; 2001 -50.5%; 2002 18.7%; 2003 28.8%; 2004 166.7%; 2005 28.2%; 2006 153.3%; 2007 8.8%
Junior Gold and Natural Resource Sector Report
June 25, 2007
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Giving Back Big Time
(A New Age for Socially Responsible Mining)
Vancouver’s Wunderkind
Investors in the resource markets will likely know the name Frank Giustra, a Vancouver based mining financier. Many wish
they had his uncanny ability to call tops and bottoms in the resource market – and create billions of dollars of wealth for himself
and investors.
Purposefully low profile, Giustra vaulted to centre stage in North American media earlier this month when he announced he was
personally pledging US$100 million plus half of his future earnings from his resource investments to help launch the Clinton-
Giustra Sustainable Growth Initiative (CGSGI). His donation to the initiative is being matched by a $100-million
commitment from Carlos Slim, a Mexican telecom billionaire, and rumoured to be the second richest man on earth.
The focus of this initiative is on alleviating poverty in the developing world, to build on the Clinton Foundation's successful
track record of scaling-up development initiatives, and to bring together key stakeholders from the mining sector in a unified
front to help people benefit long term in mining regions.
What This Means about the Resource Investment Climate
Before I tell you more about Giustra and his Endeavours (pardon the pun, you’ll see), I want to impart what this tells me about
the resource market. One is that Giustra has obviously made an unbelievable amount of money in this sector. He has a gift, and
he is committed to using it. We have followed most if not all of his companies since Wheaton River Minerals in 2001, and my
subscribers are much wealthier for it. So we will continue to follow his products – whether they are publicly traded shell
companies that we may have to be patient with or if they are fully producing mines.
The second thing this announcement says – is that Giustra believes this bull market in commodities will last for many more
years. He is committing half his future earnings from the resource sector for the rest of his life. Giustra is only 49 years old.
He generates wealth from the mining and resource sector, not the tech sector or manufacturing sector.
And mining creates huge wealth for communities as well. Giustra’s initiative will work to see that prosperity can become self
sustaining. Guistra brings to the table his vast network of contacts with over 20 resource, finance and supporting companies
endorsing or signing on as partners to the initiative already.
What This Means for Mining
This initiative will also improve the image of the entire mining sector. They are now working together as a force for world
improvement by setting out to develop a focused, measurable, strategic plan. While overcoming global poverty seems a
gargantuan task, the unified, sectoral approach proposed through this initiative offers a much-needed facelift to a muchmaligned
and wrongly tarnished industry.
In Guistra’s own words, Clinton has become a “worldwide brand, he can do things and ask for things that no one else can.”
Clinton’s lobbying efforts will make it hard for the green groups to continue to spread falsities, organize anti-mining rallies, and
generally disturb the good business that Canadian mining companies have been attempting to advance in various countries.
Mining companies have suffered relentless aggravation at the hands of anti-mining groups with little if any technical
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knowledge, out to destroy the possibility of prosperity in impoverished areas. Unfortunately, the mining community has failed
to respond effectively until now. Giustra and Clinton bring sweeping vision, moral suasion and influential charisma to the
effort.
Bringing together many of the elements and drivers so instrumental to his past success, Guistra again sets the stage for ultimate
success in this next venture – using his clout in the mining world to promote development in the Third World.
How Giustra Built his Billion
He is known for exiting the market in everything resource related 6 months before the Bre-Ex scandal walking away with
millions and subsequently created Lions Gate Entertainment in 1996 which became one of the largest independent film
companies in the world generating $1 billion a year in revenues.
In 2001, sensing the bottom of the gold price and start of a US-dollar decline, Giustra returned to the mining finance business,
becoming Chairman and majority shareholder of Endeavour Financial, a private merchant banking company.
Endeavour shortly after became a mining finance powerhouse and launched a number of mining companies starting with
Wheaton River Minerals. With gold at US$255, Wheaton started acquiring gold mines, and became the sixth largest and lowest
cost gold producer in the world in three short years. Wheaton became a US$7 billion market cap company with US$480 million
of cash reserves after merging with GoldCorp.
Bema Gold, Northern Orion, Oriel Resources, Silver Wheaton, Eastern Platinum, Bolivar Goldfields are just a few examples of
wildly successful companies Endeavour has created. Urasia Energy was the latest phenomenon which recently merged with
SXR Uranium valuing Urasia at $3.5B. Not a bad return on investment in 16 months!
Factors for Long Term Success
The value of the Guistra life annuity to the Clinton-Giustra Sustainable Growth Initiative will surely amount to several times his
up-front contribution, and could amount to billions.
The formula for wealth creation so perfected by Giustra and his colleagues helped make billions of dollars for investors
(including my subscribers!) in six short years. It’s a formula that will now continue to provide a means to give something back
to a greater cause, with relative success largely dictated by the market’s appetite for new product and the continued secular
resource bull market.
And straight from the man who’s called these secular bottoms and tops, Mr. Giustra believes the resource market has ““has
many years left, at least another decade”.
We tip our hats to a good man with big vision making a difference in the world.
Your Source for High-Potential Early-Stage Growth Stocks Since 1995
www.growthstocksweekly.com

ESSENTIAL reading. and I mean that: Henry Liu

The Complete Henry C K Liu

Nov 25, 2007

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Henry C K Liu was born in Hong Kong and educated at Harvard University, US, in architecture and urban design. His interest in economics and international relations started when he participated in interdisciplinary work on urban and regional development as a professor at the University of California Los Angeles, Harvard and Columbia. He is currently chairman of a New York-based private investment group.

SUPER CAPITALISM, SUPER IMPERIALISM
PART 2: Deregulation: Global war on labor
It is time for all countries to seek solutions to problems created by the exploitative terms of world trade, by focusing on fundamental issues of domestic development before the prodigal global trading system collapses from its own contradictions and brings forth global depression. Unless and until an equitable international trading system is negotiated, economic nationalism is a proper response to neo-imperialism. (Oct 12, '07)
This is the final part of a two-part

SUPER CAPITALISM, SUPER IMPERIALISM
PART I: A Structural Link
The processes of globalization have always been the result of active state policy and action, as opposed to the mere passive surrender of state sovereignty to market forces. Market forces cannot operate in a vacuum. They are governed by man-made rules. Globalized markets require the acceptance by local authorities of established rules of the dominant economy. Currency monopoly, of course, is the most fundamental trade restraint by one single dominant government. (Oct 11, '07)

Either way, it could be an unkind cut
Whether the Fed lowers the Fed Funds rate depends on whether it sees 6% unemployment on the horizon. Yet a cut in short-term rates may do more harm than good by not helping to sustain a liquidity boom, yet fueling accelerated inflation; not to mention leading to a loss of confidence on the part of the market in the Fed's ability to manage a monetary and financial crisis. (Sep 17, '07)