Thursday, December 11, 2008

// // 19 comments

How Yishmael Caused the World Economic Collapse

by Reb Akiva at Mystical Paths

In 2006, most of the Western world was leverages to the hilt. It was boom times and things were looking good. Property prices had been rising steadily for a decade or more, everyone that could - and almost half could - had been upgrading their homes, cars, and possessions. Good times.

While leverage, meaning loan levels, were high, and the steady rise of real estate prices couldn't go on forever, there wasn't some magical line that was crossed where it all just went bad. Rather, one specific event changed the balance and started it all unraveling. What was it?

Interest rates.

Interest rates had been low from 1992 until the year 2000. With the .Com stock market bubble burst, rates were raised briefly, and dropped again in 2001 until late 2005. A way of life started in 1992 and continued (except for the brief 2000 exception) until the end of 2005. For 13 years money was cheap. Companies got used to not needing to keep cash on hand, instead a credit line served that purpose with only a small expense. A few years later, the same way of living moved to most peoples pockets.

Interest rates don't move on their own, it's controlled by central banks, in this case the US Federal Reserve (the Fed). Why did the Fed raise rates in 2005?

For the main reason they always do, to fight inflation. The Fed felt that prices were getting out of control. Transportation costs were inching higher, food prices were starting to jump. Energy prices were jumping in a major way. In other words...

Oil.

From 1986 until 2003, oil prices hovered around $25 per barrel on average. In the year 2000, OPEC (the Oil nations working together) started CUTTING oil production. From the time of that cut, oil prices started rising WITHOUT STOPPING until a month ago. It was gradual at first, but with China, India and other parts of the 3rd world growing up and out from the increased world economy, demand went up AND SUPPLY WENT DOWN. Intentionally, to raise the price. Arab oil greed.

It worked. The price jumped from $25 to $30 a barrel in 2000. Oh, it dropped back to $27 after 9/11 (2001). But the climb started again in 2002. By 2003 it was back to $30 a barrel. We started to hear news reports about "world oil peak", "world supplies and capacity at it's limit". In 2004, price was now $40 a barrel, and in 2005 up to $50. The Arab oil producers were rolling in the money, they were now receiving double what they were getting just 5 years ago. They were also so much more important now - both as the caretakers of huge piles of cash and as the precious energy of the world was threatened by war and regional instability, and was about to run out!!!!! (in another 50 years, but that's besides the point)

Our dolls come from China, our cars from Korea or Japan or Canada. Our winter fruits from Chile, our apples from Washington (state). Our oil from Saudi Arabia, the refined gas from Texas. The TV from Tawain, the jeans from Indonesia.

As energy costs doubled, the global economy started to work against us. Prices of every type of transported good - which is almost everything - rose.

The US Federal Reserve acts against rising prices - aka INFLATION - by raising interest rates to curb demand. Supply and demand, lower demand lower sales, lower sales lower prices.

Except this time the prices had nothing to do with supply and demand. The supply of oil was being artificially curtailed by OPEC - the Arab producers - to artificially inflate the price. A campaign of disinformation reporting growing shortage conditions was attached to it, to make the curtailed demand much more effective - driving speculation and resource hording. It worked beyond their wildest dreams, in 2005 prices rose to just below $60 a barrel.

Prices of every good that used oil (plastics) as a base component skyrocketed. Energy intensive products jumped. Products transported long distances (practically everything) had their transportation costs triple, raising prices at least 30%.

The Fed saw serious inflation forming and acted to stop it. They rose interest rates again and again, but it didn't work. They figured they must be raising them too slow, so they raised them faster...

...and suddenly, with a combination of higher energy costs, higher food costs, higher transportation costs, suddenly in the short space of a year people saw their housing cost DOUBLE. Those in weaker financial positions couldn't handle the new combined load of increasing living costs and increasing housing costs when their adjustable rate mortgages reset to the new higher rate and their payment doubled.

And all of that leverage began to collapse.

Oil prices peaked at ~$135 per barrel in March, 2008. Then, as the financial collapse EXPLODED, demand fell through the floor and even the best of OPEC production cuts (they tried several more since then) didn't help. Oil is down to $43 a barrel today, and still falling. (That's down to the 2004 price.)

And that is how the greed of the sheiks and the dictators and the mullahs to finance their opulence and armies and revolutions (never to actually grow their economies, educate their populace and develop future potential) collapsed the Western economic world. Oh, to be fair the US Federal Reserve made some very stupid moves, completely misunderstanding the situation. And the West had leveraged itself to a very risky level. But it was the greed of the sheiks who knocked it all down.

19 comments:

Nightghost said...

Best explanation I have read as to why. Makes sense. Seems as if they thought it was going to continue forever, what with the building up and extravagance of Dubai.

Izzy said...

I completely agree, best explanation I've read about all this fiasco.

Anonymous said...

Let's put another twist to it. People have been buying with money that's not theirs (aka credit). With the collapse of the credit industry people have less money, if not none of their own to buy. Consumerism is the machine of the west. A great film about the entire process is the 1927 silent film Metropolis. Although it's set in the industrial age, it's still true today. Another movie that really gets to the heart of all this is the Matrix. The information has been out there all along, but we've all been caught up in the entire machine world, the matrix. The illusion that buying things make us happy, content, powerful, does nothing more than hide the truth that we've neglected Hashem. The ONLY reason that we are alive is Tikkun HaNefesh (our soul correction).

Anonymous said...

You write the article as if the economy, the way it was, is the way it is supposed to be and we can blame Ishmael for knocking down our straw house. Oh that big bad wolf.

Let's look at it this way, by putting Hashem into the equation. Hashem allowed the collapse to draw attention to Him and away from the idols of Materialism, Capitalism, Money, you name it.

Let's put Hashem in his place Akiva and stop trying to blame others for our problems. It's our faul. Now let's live up to the truth and stop white washing our sin.

miriam said...

I don't know about dumping it all on Ishmael. I think they saw how tight people were getting and decided to "get them" by changing the oil money to Euros. But other than that, according to what I've been reading, it seems that this was in the making for a while. Ever since fiat money became the norm.

Aaron said...

I have no idea if this explanation is true or not... but I like it! Please keep up the good work sticking it to the Arabs.

Anonymous said...

Yehudim! I can't believe what I'm reading. It's as if we've all forgotten that we live in mida kenegid mida world(a turn for a turn), i.e. a cause and effect world, which means that if we are effected by the economy than we caused it. Why are people looking outside themselves when things happen to them? We are the cause of our own problems. Hashem wants us to look inward and make tsuvah. He wants us to leave the idols of materialism, capitalism, etc. and return to Him. He is the source of all things. He is THE ONLY source. How many pogroms, how many hallocausts, how many life boats does Hashem need to send us to save us? Why are you so concerned what Ishmael does? If your emunah is great enough to see that Hashem is in control, then you wouldn't be concerned about anything outside. Look within yourselves for the cause and then look to Hashem to return.

Yonatan said...

Yasher koach anonymous! Hashem sends us "help" each and every day. We just lack the ability to recognize it as such in most instances. It really is time for us to wake up, lets get on with it.

Anonymous said...

Amos Chapter 4

1 Hear this word, ye kine of Bashan, that are in the mountain of Samaria, that oppress the poor, that crush the needy, that say unto their lords: 'Bring, that we may feast.' 2 The Lord GOD hath sworn by His holiness: Lo, surely the days shall come upon you, that ye shall be taken away with hooks, and your residue with fish-hooks. 3 And ye shall go out at the breaches, every one straight before her; and ye shall be cast into Harmon, saith the LORD. 4 Come to Beth-el, and transgress, to Gilgal, and multiply transgression; and bring your sacrifices in the morning, and your tithes after three days; 5 And offer a sacrifice of thanksgiving of that which is leavened, and proclaim freewill-offerings and publish them; for so ye love to do, O ye children of Israel, saith the Lord GOD. 6 And I also have given you cleanness of teeth in all your cities, and want of bread in all your places; yet have ye not returned unto Me, saith the LORD. 7 And I also have withholden the rain from you, when there were yet three months to the harvest; and I caused it to rain upon one city, and caused it not to rain upon another city; one piece was rained upon, and the piece whereupon it rained not withered. 8 So two or three cities wandered unto one city to drink water, and were not satisfied; yet have ye not returned unto Me, saith the LORD. 9 I have smitten you with blasting and mildew; the multitude of your gardens and your vineyards and your fig-trees and your olive-trees hath the palmer-worm devoured; yet have ye not returned unto Me, saith the LORD. {S} 10 I have sent among you the pestilence in the way of Egypt; your young men have I slain with the sword, and have carried away your horses; and I have made the stench of your camp to come up even into your nostrils; yet have ye not returned unto Me, saith the LORD. 11 I have overthrown some of you, as God overthrew Sodom and Gomorrah, and ye were as a brand plucked out of the burning; yet have ye not returned unto Me, saith the LORD. 12 Therefore thus will I do unto thee, O Israel; because I will do this unto thee, prepare to meet thy God, O Israel. 13 For, lo, He that formeth the mountains, and createth the wind, and declareth unto man what is his thought, that maketh the morning darkness, and treadeth upon the high places of the earth; the LORD, the God of hosts, is His name.

Anonymous said...

Anonymous - chaval that you and I are too timid to be putting our names to these posts - but needless to say you speak the truth and there are those that are listening.

Akiva and Nati - you started out with good intentions but somewhere along the way you've been sidetracked and blinded. I think some real introspection - and learning is needed right now. You seem to think that what you see is what is - when it's NOT. Hashem's ways are NOT our ways. It's all a cover, a screen - only a reflection of our own actions.

GET WITH THE PROGRAM ALREADY!

Anonymous said...

Shalom to all.
I have to agree with the previous anonymous.
Ishmael is not responsible for credit deferred swaps (an estimated and unregulated $50-60 trillion), the globalization of all free trade, the inculcation of Chicago-School economics (read Naomi Klein's "The Shock Doctrine: the Rise of Disaster Capitalism," and the corruption in ALL world governments and financial systems.

Ishmael is not responsible when we (notice how I used the word "we," now?) buy products manufactured in the PRC (China) by slave labor. Credit? Ishmael never forced anyone to sign for home loans they could not afford.
Greed. Greed is what fueled all of this.
Greed, and inhumanity practiced by human beings: conduct that is an affront to the eyes of the Living G-D. When we wish to see the "culprit" in the way the world is? We need look no further than the mirror above our bathroom sink.

If any nation stumbled upon an infinite amount of oil below their soil, they would exploit it. Read Matt Savinar's works (his site), on how the U.S. oil companies deliberately refrain from drilling new sites to prop up the prices of domestic crude.
While the developed world bickers pointlessly about economies that are not based on true production, 3/4 of the world is starving and at war. Sorry: "Ishmael" never forced anyone to buy half a million dollar homes they couldn't afford. Blaming "Ishmael" for such things caused by greed does not hold credibility.
Yesha Galluzzo

josh said...

Ishmael and Esav know that they are here to enjoy this world.

Ishmael knows that the world economy is an illusion.

It is a brillant analysis though, but the conclusions could use some refinement.

And later, we will also talk about the Jewish assistance to all this and I'm referring to internal issues not 'Jews control the world' stuff. How did the Jews contribute to this? Not enough tzedakah, too many high-society 'dinners' from causes, etc...

Anonymous said...

I like what the other anonymous's here are saying but I have to disagree with anon # 7's last statement,"If your emuna is great enough to see that Hash-m is in control then you wouldn't be concerned about anything outside".
I disagree with that last part. I believe that Torah is life and life is Torah and that we should read life the way we read Torah-carefully but always looking within as well in order to make teshuvah and cleave to Hash-m. I think it's fine to identify "Ishmael's" hand but I agree that blaming him is counterproductive. We need to point the finger at ourselves and correct our own wrongs as individuals and as a klal.
Maybe this happened because too many Jewish people have been trusting in the money and goodwill of "Esau".

Isaac said...

[i]Akiva and Nati - you started out with good intentions but somewhere along the way you've been sidetracked and blinded. I think some real introspection - and learning is needed right now. You seem to think that what you see is what is - when it's NOT. Hashem's ways are NOT our ways. It's all a cover, a screen - only a reflection of our own actions.[/i]
[b]SO TRUE![/b]

Isaac said...

Akiva and Nati - you started out with good intentions but somewhere along the way you've been sidetracked and blinded. I think some real introspection - and learning is needed right now. You seem to think that what you see is what is - when it's NOT. Hashem's ways are NOT our ways. It's all a cover, a screen - only a reflection of our own actions.
SO TRUE!

Gandalin said...

The producers don't have the power to set prices. No matter how much "greed" they have, their "greed" can't make oil go up to $130 a barrel, much less make it go back down.

If anyone contributed to the oil bubble over the summer, it was speculators.

You should think of someone like George Soros, who makes money by distorting markets, and who had an interest in promoting the candidacy of his puppet, Barack Hussein Obama.

miriam said...

Don't know what happened to my last comment,but ...

I don't know about dumping the financial mess on the Arabs. I heard that its an inevitable result of using fiat money.

jos boersema said...

I don`t think so Akiva.

a) Arab oil greed ? It is their oil, if they want to charge 2.000,- a barrel, that is their right. They have no moral obligation to keep that price low, on the contrary. The more expensive the oil, the fewer pollution of nature, the more choked off the corrupt and decadent west will have to be. This is actually very good for the west and what it desperately needs ("eretz israel" is also "the west").

b) You listed where the goods are manufactured. That list should be a major concern for you: why aren`t these products produced in your own country, giving you a more stable local economy ? Far away countries function as slave plantations at a distance, the local leaders corrupted by USA foreign policies of varies kinds to keep that going.

c) USA has attempted to maintain sales in oil in dollars, which creates an artificial demand world wide for dollars, which is why it got somewhat of a global currency states. If Saudi is forced by USA foreign policy to sell oil in dollars to all countries because USA corrupted the Saudi government into a vicious dictatorship, then any country who wants Saudi oil first got to trade with USA to get dollars. For example (don`t know if it is actually accurate, but as an example of the principle): China wants to buy Saudi oil and offers the yen. Saudi Government refuses because that`s what its USA handlers tell them on threat of removing Saudi family from power. Then China sells dolls to USA cheap because it wants to get dollars that desperately. Unfortunately I am not an expert in these things, but this kind of thing is widely reported to have happened. Iraq wanted to switch to the Euro shortly before it got attacked. You can imagine that if everyone wants dollars to get oil, USA will be able to afford a greatly more expensive lifestyle then its industry otherwise could muster from real trade. With this money maker in the USA empire system, the USA can in turn fund the worst army in the world, and oppress/threaten the world some more.

d) The USA is one of those governments that instead of taxation only for revenue, it takes loans. The next year they pay for old loans but still want to get new budget from loaned money and so they effectively pay down old debt with new debt. This is a pyramid game (in more ways then one). It will eventually formally bankrupt the USA, at which point you are looking at either a tremendous inflationary drive to print the money to satisfy all the outstanding loans, or a crushing period of hightened taxation to pay for the debt. This can get so bad that at some point you have to pay all government taxation revenue to debt payment for 4 years. During those 4 years all government operations will have to be suspended, including police and justice, only that will pay down the debt after 4 years. Needless to say after such 4 years the USA would be destroyed. I calculated that the USA would enter bankruptcy from lending somewhere in the next 5 to say 15 years. This is now maybe earlier because of Bush policies.

Something to remember though: sovereign bankruptcy is not your ordinary bankruptcy. An ordinary bankrupt person can for instance not issue a brand new currency and default on all debt. However, a sovereign bankruptcy of some magnitude would still be an economic shock of some kind.

Since this was coming with mathematical certainty, especially knowing Bush is a "destroyer" of whatever he touches, it makes perfect sense from a criminal/corrupt standpoint to blow up the housing mortgage system in order to provide media cover for the lending problem. Maybe cover for other things as well, at least the public will remain unaware of the danger that government lending poses to a nation. That means after all this is over, they can go back to lending from the rich instead of taxing them, and the great con game can continue ... until the next collapse.

Why do they like these collapses: these are opportunities for them to install martial law and dictatorship. It is also a way to make the rich richer and avoid taxation costs. Lending to government instead of paying taxes is of course cheaper, since for some time the Government is paying the debt down plus interest, without the public realizing the scam.

The whole economy is one great con game. Only the Torah lists laws for a proper economy that does not have these extremely dangerous ills.

It is all pretty complicated and so on, USA especially since it got its tentacles in so many places.

I really don`t see how Ishmael (the muslem world) is to blame in this. Islam is even keeping the laws against rent seeking, which explains why the western money masters have launched their wars against them.

These problems are not directly the result of "fiat money."

I agree that the real culprits in all of this are actually such people like Soros and worse the Rockefellers, Rothshilds, the CFR club, Bilderberg networks, and so on and so forth, the "great" international banking/industry network of the west. That network is the result of "selling money for profit" which is against Torah law. Who sponsored Hitler: the German iron industrial, working together with upstart family Bush. It is a very dangerous network, and although they are not all dangerous, there seems to be a very dangerous kernel there in it, connected with money/industry/media power. Corruption if not stopped tends to spread.

I think we need to go back to the Torah economy (non-profit finance), then this network will fall like a house of cards as if it never even existed. By the way: research 9/11, it really was done by elements in the USA government and probably part(s) of mentioned shadowy network. Compare: buring of Rome, burning of the Reichstag, staged attack from Poland on nazi Germany, burning of Pearl Harbor fleet. In its day, such "conspiracy theory" was harshly denouced as redicilous, only to come back as the most likely historical facts. I have reviewed 9/11 documentaries extensively, and I am sure it was a fraud. To put all the evidence in 1 movie that it was a fraud would probably result in an 8 hour movie.

They do these things because they know people can`t handle the truth if it scares them enough. It is scary to be a USA citizen, and know you have this kind of Government. Not all conspiracies are necessarily true, but not all conspiracy theories are necessarily untrue either ...

(What usually happens after a great State sponsored terrorist attack on its own state buildings: war & oppression.)

Nightghost said...

jos boersema has some good points. I am not letting Islam off the hook. Both West and east have their problems, but I wouldn't want to live in an Islamic country, no way, no how. But, to the points, yes I believe the Arab oil prices are controlled by certain people in the west. Alex Jones interviewed Lindsay Williams and you can listen to the first of a multi-part interview with him here: http://www.youtube.com/watch?v=Hr5ncJqnk1A
Very fascinating and shows that those in the oil companies have a lot more to do with the price than even the arabs. I believe though that it is all about control, hence the attacks in India, especially on TaTa motors assets. You can read my little theory on that here: http://nightghost.ws/2008/11/30/attack-in-india---is-japan-next.aspx
Sorry to ramble on and if this comment is too long.
Nightghost

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