Cheney's Beef

The Daily Reckoning PRESENTS: On the front page of an issue of International Herald Tribune last week was a headline that read, “Cheney rebukes Russians.” What exactly is his problem? The Mogambo promises that once he explains, you will have a good laugh. Read on…

by The Mogambo Guru

Judging by the tone of the panicky e-mails I have been getting recently, people other than I think that things are getting weird and inexplicable. Relatively predictable ratios are not making sense anymore, open interest is behaving weirdly, share prices and fundamentals are diverging, etc. etc. etc. This is resulting in more sense of unease, trending to frantic panic, and these poor, deluded people think that an idiot like me could possibly supply some explanation.

Well, it is my Tremendous Mogambo Pleasure (TMP) to announce that I actually do have an answer for all of this current weirdness! And the reason I am so happy is that the answer is simplicity itself: The Federal Reserve is on record as saying that they will happily intervene in any market, at any time, with any level of participation. They also that they have the legal authority to do it by virtue an Executive Order of the President of the United States! So, the answer is easy, my Darling Mogambo Grasshoppers (DMG): the Federal Reserve (in cooperation with all the other central banks of the world who are in this thing up to their eyeballs) is doing exactly what they said they would do!

And why are they doing this? Because our creditors have us right where they want us, which is when they can dictate terms to us, because they have the power to destroy our economy with the flick of a finger. Yes, they would suffer, too. But they will not die, unlike our stupid, malignant economy composed primarily of the twin idiocies of financial services and massive government spending.

With that kind of pure power, they can get otherwise-unattainable items, such as modern, up-to-the minute weapons and war technology that we paranoid, gold-bug, gun-nuts can’t get from the Army-Navy Surplus store. And when we insist on Second Amendment grounds, they almost break their fingers dialing the FBI to “report” me.

This is not to mention, of course, their new ability to extort us to use our military muscle as hired goons, doing the dirty-work of some Asian Big Bosses (ABBs), primarily the Japanese and Chinese, who hold our economy in their hands by holding our debt in their hands.

If you don’t think that such slimy business is not being commonly done, more and more all the time, then let the Mocking And Scornful Laugh Of The Mogambo (MASLOTM) ring in your ears, my optimistic young ones! Hahahaha!

Even Bill Bonner at seems to have has his finger on this pulse of rampant corruption when he writes, ” ‘Cheney rebukes Russians,’ the front page of today’s International Herald Tribune tells us. We had to a laugh. What’s his beef with the Russians? Get this. They’re using oil and gas as ‘tools of intimidation and blackmail.’ In other words, they’re using their resources to get what they want, just as America does with its trade policies and foreign aid.” Hahaha! Exactly!

But to show you how out of touch Cheney is, it is not just Russia, but Venezuela, Bolivia, Cuba, Iran, North Korea, China, Russia and others who are forming anti-bully, anti-American alliances, and they are using oil to hurt us back.

Now, let’s also be sure and understand why Cheney uses the word “blackmail,” which I assume he used correctly, as blackmail involves somebody knowing something nasty about something Cheney has illegally done, and now they are using it to extort money and cooperation.

Since we are talking about extortion by blackmail, let’s not forget the warehouses full of incriminating evidence of felonious misdeeds of our politicians. And if you don’t think that there is a lot of that going on in the world, then I am glad to meet you! This proves that you are one of the few people in the world (it seems) who are not blackmailing the poor, beleaguered Mogambo with copies of those embarrassing photos, showing him standing there with that stupid towel wrapped around him in the locker room while the Danish cheerleading squad is laughing and mocking him, which is, as I have previously explained, not the reaction I had expected, according to the graffiti I read on the men’s room wall. So, who’s the real victim here?

The Federal Reserve is intervening in the markets. One of the ways to do that is to buy stock futures, and for them to then to tell the Wall Street houses, which is the other side of this trade, to buy stocks to cover their short position in futures, and for the Fed to buy some bond futures, and for them to then tell the Wall Street houses, which is the other side of this trade, to buy bonds to cover their short position in bond futures, too. This will keep stock prices high, keep bond prices high (and thus interest rates low), allow the Asian Big Bosses to make some more money on their hoard of American money, stocks and bonds, and let Wall Street make a nice pile of cash in the process, too.

And how much money are we talking about? Well, from ‘Nihon Keizai,’ which is supposed to be Japan’s leading economic newspaper, we learn that “Brazil, Russia, India and China, referred to as BRIC group that currently manifests the world’s highest economic growth rate, have surpassed G7 countries in their forex /gold holdings for the first time in history.

“As of the end of March, the aggregate holdings of BRIC amounted to $1,292,200 million, according to estimates. As compared with the state of affairs in this respect as of the end of 2004, the forex/gold holdings of BRIC went up by 40 per cent.

“At the same time, the forex /gold reserves of G7 countries (Britain, Germany, Italy, Canada, the United States, France, and Japan) amounted to $1,253,900 million.”

So, relax – maybe take a little time away from yelling at your hateful, brain-damaged children, and get some more gold and silver, or maybe add another comforting layer of protective armor to your own version of the Mogambo Bunker Of Screaming Panic (MBOSP). Perhaps you could hold a few Mogambo Family Emergency Response (MFER) drills, which actually boils down to making sure that they get to the bunker before I do, what with that unfortunate “Shoot first and ask questions later” policy, which I have been meaning to change, but never did. But, man, on the other hand, you should see them hustle their little fannies now!

This meddling in the markets by the Federal Reserve has not gone unnoticed in the cosmos. You puny Earthlings don’t know it, but most of the UFOs visiting Earth these days have bumper stickers that say “Glorb blaanga Earth!” This is difficult to translate into English, but is, surprisingly, a literal translation from an ancient Germanic-Nordic phrase “Grosse bigga dum auf dem Stupum kopfen glob glob globber,” which means, again literally, “Big stupid mistake, diggers of mushrooms!”

Until next we meet,

The Mogambo Guru
for The Daily Reckoning

****Mogambo sez: It’s not just you and me buying gold. I saw a report that Chinese economists are urging that China quadruple its gold reserves from 600 tonnes to 2500 tonnes. This is equivalent to about a year’s worth of mine output. How’s that for shifting the supply/demand dynamic to Mogambo Mega Bullish (MMB)?

But if the Chinese were as smart as they think they are, they would be accumulating silver, which is poised for explosive price rises in the coming years, perhaps even surpassing the price of gold! Buying silver now is your chance to show that you are smarter than 1.3 billion Chinese!

Editor’s Note: Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter – an avocational exercise to heap disrespect on those who desperately deserve it.

Back in November, you may recall that we sent copies of Empire of Debt to all of the U.S. Senators and Members of the House, along with a letter urging them to take a long, hard look at the amount of debt our country is racking up. Even though all we received back from this mass mailing were largely form letters, it seems that one Senator shares in our views.

Senator George Voinovich, a Republican from Ohio spoke out to the Senate on May 3, 2006, on the very same subjects we covered in Empire of Debt – and that we cover in each issue of The Daily Reckoning. He warned of our soaring national debt, the impending retirement of the baby boomers and “leveling with the American people about the fiscally shaky ground we are on.”

Do you find it odd, dear reader, that you’ve heard nothing of Voinovich’s speech? It went basically unreported by the press and apparently drew little comment from his fellow Senators.

David S. Broder, Washington Post writer, did pen a column on Voinovich’s stand, noting that while it is near impossible for any D.C. reporter to distinguish between the mindless drivel that politicians constantly spurt out, and a “real” story, he felt that Voinovich’s message was an important one.

Here are the juiciest tidbits from his speech:

Voinovich began by pointing out that when he came to the Senate in 1999, “the national debt stood at $5.6 trillion. Today…the national debt stands at $8.4 trillion …an increase in the national debt of about 50 percent.”

Bad as that is, he said, worse is to come. “The retirement of the baby boom generation will put unprecedented strains on the federal government…According to the reports from Medicare and Social Security trustees, the trust funds for these programs will be exhausted even earlier than previously thought…If we leave reform of entitlement programs for future Congresses to solve, as well as a mountain of debt to pay off, it will have devastating consequences on the economy and on our children and grandchildren.”

Voinovich also touched on something that we try to stress the importance of: preparing our country for the future. Instead of letting these bills and obligations pile up for our children and grandchildren to take care of, shouldn’t we be cleaning up our own messes?

In closing, Voinovich said, “Anyone in the know who is watching us has to wonder about our character, our intellectual honesty, our concern about our national security, our nation’s competitiveness in the global marketplace now and in the future, and, last but not least, our don’t-give-a-darn attitude about the standard of living and quality of life of our children and grandchildren.

“The question is, are we willing to be honest with ourselves and the American people and make these tough decisions?”

[Ed. Note: Every hour of every single day, the United States continues to rack up another $80 million of debt…which is why we feel that Empire of Debt could be the much-needed wake-up call – as well as a call to arms to every American. The Economist Magazine named it one of the top 10 must-read books of 2005-2006…and if you haven’t already purchased your own copy, you can get it right here:

The Most Feared Book in Washington

Now, over to the news according to our currency counselor…


Chuck Butler, reporting from the EverBank world currency trading desk in St. Louis:

“This dollar strength, overnight, has really knocked the stuffing out of not only the currencies but gold and silver, too! Overnight, gold backed off $27. Ugh! Well, it certainly gives buyers a better level to get in, doesn’t it?”

For the rest of this story, and for more currency market insights, see today’s issue of The Daily Pfennig


And back to more various thoughts and opinions from the DR team…

*** Do you remember that we said: “most of modern health care and modern education was a swindle?” We said it without any real evidence. It was just an observation, a prejudice and a guess.

Well, cometh a new book by an old friend, Randy Fitzgerald. In “The Hundred Year Lie,” Randy argues that most of modern medicine is a fraud:

“At the turn of the 20th century the average life span was about forty years of age in developed countries. By the beginning of the 21st century life spans were nearing eighty years on average.

“Of those 40 years of increased lifespan during the 20th century, no more than seven years can be credited to modern medicine, with even most of that due to advances in medical technology rather than drugs. That estimate comes from Dr. Dick Jackson, director of the Center for Environmental Health at the U.S. Centers for Disease Control and Prevention.

“Ninety percent of the reduction in the death rate occurred before the introduction of antibiotics or vaccines, adds Dr. Anthony Cortese, a former U.S. Public Health Service official. It was largely due to improved water, food, and milk sanitations; a reduction in physical crowding; the introduction of central heating, municipal sewer systems, and refrigeration; and the move away from highly toxic coal and wood burning to less toxic natural gas and oil.”

“The scientist who discovered the first two commercially manufactured antibiotics, the microbiologist Rene Dubos, admitted in his book The Mirage of Health: ‘The introduction of inexpensive cotton undergarments easy to launder and of transparent glass that brought light into the most humble dwelling, contributed more to the control of infection than did all the drugs and medical practices.'”

*** And here, if you think you have trouble. Our friend, Frank, reports on a recent trip to Haiti:

“Dear Bill,

“I didn’t stay long enough to be able to explain why Haiti, which used to be such a prosperous country with such a gay, alert and quite developed population, has dropped in to such misery. But I can give you an idea by describing a day with Père Fréchette.

“Père Richard Fréchette is an American priest whose family comes from Quebec. For 18 years, he has been living in Haiti where he created an orphanage. A few years later, after realizing how much the poor suffer from tuberculosis, aids and other illnesses, he went back to the United States to study medicine.

“After returning in Haiti with his degree, he started up the St. Damien hospital for children in a former hotel. This hospital has a very good reputation at Port au Prince. Then, he created schools and free clinics inside the big ghettos.

“Our organization helps Père Fréchette to fund his charities.

“Very early in the morning, the women come to St. Damien Hospital with their ill children. They arrive from surrounding suburbs, which are sometimes very far away, by kind of little bus called ‘tap tap,’ but most of the time by foot (because the tap tap is too expensive) and that means they’ve walked most of the night. They settle on benches outside the hospital to wait for the time of consultation.

“At the hospital’s entrance, you can see a poster with a gun overlaid by a cross. You can imagine the atmosphere: no firearms in hospital.

“At 7:00 am: service at the hospital’s chapel. Père does a short sermon in Creole. Not easy to understand even if this language is pretty close to French. You say ‘Dad’ for ‘God’ in Creole.

“After the service, a little funeral takes place for the children who died during the night at the hospital. The room is so tiny that we could barely stand with four people. At the table, against the wall, the small body lies. Very slowly, Père takes off the child’s clothes. The small head sways and the arm falls again.

“Then, with extreme respect and delicacy, Père cleans the body and puts an oil on.

“Prayer and song are in Creole as well. A few sticks of incense and the little soul is given to God.

“Père wraps the little body with a blue paper that he attaches with pieces of Scotch tape. The name is written with a marker. And hop! In the dump truck…

“It breaks your heart.”

[Ed. Note: More on this tomorrow…]