And here is some more news about the US that should be putting people's teeth on edge....

Get into the bunker and make sure you have lots of supplies! And at the same time I am reading stories that based on Cheney's recent visit there, the Saudi's are starting to do nuclear fallout exercises.

Even South Korea, the bastion of support for all things American, is keeping out of the US this time around. According to the Financial Times one of the biggest pension funds there has declined to purchase more American debt:

This is exactly what happens in the classic downward spiral that is described in the article I blogged about below. This has got a long way to go before it fully plays out. And as the vortex grows it will start to pull in a lot more people, and cause a lot more pain. Witness the closing of Melbourne based stockbroker Opes Prime last Friday... I wonder how many people lost their shirts while just playing it straight.... ?

Here is a very easy to understand analysis of why the financial system is going to hell in a handbasket.

It is long so here is a snippet:

For example, a bank with an initial capital of $5 billion could support $100 billion in outstanding loans and investments, based on the requirement that its capital be at least 5 percent of the credit it has granted. But if its capital falls to $4 billion, it must reduce its outstanding loans and investments to $80 billion to be in compliance with that requirement. In other words, a $1 billion reduction in bank capital can cause a $20 billion reduction in outstanding bank credit.

Such announcements as that recently made by Citibank, that it would reduce its holdings of home loans by 20 percent, are entirely consistent with this phenomenon, as are the recent failures of banks and brokers to make bids in markets for so-called auction-rate notes. (These are credit instruments whose interest rates are set periodically on the basis of auctions and that until recently were billed as the equivalent of cash. Bidding for them would have placed banks at risk of acquiring additional assets and indebtedness when they urgently needed to reduce their assets and indebtedness.)

First it was the war in Iraq. Then it was global warming. Then it was subprime.

Now there is a forecast that sunspot activity is intensifying and within the next four years could be significant enough to knock out a lot of our digital devices.

Here is the forecast:

Detours
Clumps of ions in the atmosphere could interfere with GPS. Satellite signals are slowed by bumping into particles, meaning your trusty navigator may lose its way. Remember those colorful paper things called maps?

Falling Satellites
Increased solar energy heats Earth's atmosphere, causing it to expand. That's a drag on low-flying satellites and can even knock them out of orbit. A solar storm in 1979 deposited Skylab on Australia.

Layovers in Alaska
Particles are drawn to Earth's magnetic poles, right through popular flight paths. Electrons absorb the energy in shortwave signals, causing radio blackouts — and unscheduled stops in Anchorage.

Light Shows
Auroras occur when waves of charged particles light up gases in the upper atmosphere. As more particles stream in, the so-called aurora oval grows, bringing the "northern lights" as far south as Key West.

Not surprising to see that Hilary Clinton's polling numbers went down after it was revealed that her story about running under sniper fire in Bosnia was a fabrication.

People with high public profiles are the first people to really suffer from being Tubed. There is enough archival news footage out there to hoist them by their own petards.

As the internet becomes more pervasive in society at what point will the rhetoric that the media feeds the public come back to bite big media?

What I mean is this: Big media acts as a megaphone for so much of the political machinery in society. At what point will the audience want to hold newspapers/TV stations for their journalistic responsibilities? You can forgive a blogger for holding forth about whatever he or she believes in. Shouldn't we be holding big media to a higher standard? If we did would it have been possible to get the public (in the English speaking world anyway) to support the war in Iraq?

And why doesn't big media report on the build up of supplies and weapons by the US in the Gulf? You can read about this stuff on web sites, but hardly a sniff in the major newspapers...

We are heading into very uncertain times. It may be hard to connect why the failure of Bear Stearns is important to the mere mortals who aren't huge investors, but it is. The entire financial world as we know it is teetering on a knife edge. Economic analysts and pundits have been either in denial or beating the gong about this period for several years.

As this commentator says, there are two worlds: the one that they tell you exists if you watch TV and the one that really does:

"Fascism is capitalism in decay." That's what he calls the problem in the article. If the shoe fits, wear it.

Then there is this story that talks about the imminent collapse of the dollar. It might be thought of as the ranting of some conspiracy theorist except it is the thoughts of one of the leading economists in the world, Peter Schiff.

The place that I am glad not to be in right now is the US. Here is what someone in Canada has to say. Its about the high food prices that are following right on the heels of the increased fuel prices.

And of course you have to also look at the timing of some stories too, don't you. Fallon resigns and Spitzer gets outed. Amazing how the trash story gets the headlines and the important story gets moved on and moved out. Could it be that there was a reason for that? This blogger thinks so.... and ok, he thinks that there is the hand of Mossad behind it... so what. It doesn't make me a conspiracy theorist for thinking that he may be right!

Washington has been beating the drums of war for some time.... first it was Afghanistan, then Iraq, and more recently Iran... But all looked ok while Admiral Fallon was in charge....

Recently he resigned. That and a number of other things seem to be pointing to war. One can only hope that sanity prevails.

There seems to be an argument in the US about whether there is a recession or not.

Read this story in The Nation to get a sense of what is really happening in the US. Its about consumer confidence. We may be technically in a recession, but what we are really seeing is the beginning of a depression.

The fact is that when people are reading about other people having their houses repossessed and are seeing the price of consumer items like food and petrol going up to beyond their capacity to pay for those things as well as pay for the lease on the car they reach a point where they curl up into a ball and stop. That is what appears to be happening in America now. The media is ensuring that the ordinary man is demotivated to spend, while at the same time the Pres exhorts people to get more retail therapy and denies that there is a recession and pushes more tax breaks while spending more money on the military.

Is it any wonder that people are depressed or that there is a depression?

When the news is bad can it get any worse?

Supply chain efficiency has led to wheat stocks going from 3 months or more to no  more than several days. Now we read that there is a famine coming...

"Who is this guy Margin that keeps calling me?)

(hat tip to Calculated Risk)