Something’s going on with the US dollar and it’s not good — it’s worrisome.

My first clue was when it was reported:

This week, in an unusual move, the Bush administration is sending virtually the entire economic “A-team” to visit China for a “strategic economic dialogue” in Beijing Dec. 14 and 15.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are leading the delegation, along with five other cabinet-level officials, including Secretary of Commerce Carlos Gutierrez. Also in the delegation will be Labor Secretary Elaine Chao, Health and Human Services Secretary Mike Leavitt, Energy Secretary Sam Bodman, and U.S. Trade Representative Susan Schwab.

Also:

China today now is holding a historically unprecedented $1 trillion in foreign exchange reserves. During the Thanksgiving holiday, an announcement by China that their central bank planned to diversify foreign-exchange holding away from the dollar caused the dollar to drop in value on international currency markets. Since then, the dollar has hit a 20-month low against the euro.

The Euro is stronger. What will happen when the first Chinese bank embraces the Euro and drops the dollar?

Moreover, how can this be?

The Drudge Report features a headline this hour reading: HOLIDAY HIGH, DOW SURPASSES 12,400:

NEW YORK (Reuters) – U.S. stocks climbed on Thursday, boosted by surprisingly high earnings from investment bank Bear Stearns Co. Inc. and economists’ bullish estimates for stock indexes performance next year.

CNN Money reports today:

Investors also considered a report that showed a surprisingly large drop in the number of Americans filing new claims for unemployment last week.

Also a factor: the possibility of the Democrats losing control of the Senate amid news that a senator from South Dakota was in critical condition after suffering a brain hemorrhage. (Full story)

U.S. light crude oil for January delivery gained $1.14 to $62.51 a barrel on the New York Mercantile Exchange after OPEC said it would cut production by 500,000 barrels per day starting Feb. 1.

Treasury prices fell, with the yield on the benchmark 10-year note rising to 4.60 percent from 4.58 percent late Wednesday. Bond prices and yields move in opposite
directions. In currency trading, the dollar rose against the yen and euro.

COMEX February gold slipped $1.50 to settle at $630.90 an ounce.

Even the White House is saying: “USA Today/Gallup Poll Estimated Consumers Plan To Spend More Than $800 On Gifts This Season. The estimate is the “highest early November reading Gallup has seen since 2000,” suggesting a “strong holiday season” for retailers.

But John Williams, author of The Shadow Government Statistics blog believes:

There will be a central bank, most probably in Asia, who will start the move away from the dollar and when it happens, you’re going to see other central bankers covertly trying to follow. The move will magnify very quickly and it could become a full-fledged panic and a dollar collapse.”

The Fed is struggling right now to contain inflation and stimulate economic growth. All the Fed is doing right now with all their grand policy shifts is using a lot of propaganda and market massaging to try to prevent a financial panic.”

Jerome Corsi of the WorldNetDaily writes:

A report scheduled to be released by the Treasury Department tomorrow is expected to show the true deficit in the Bush administration’s 2006 federal budget to be an astounding $3.5 trillion in the red, not $248.2 billion as previously reported.

The United States is bankrupt,” Williams insisted. “With less than one-tenth of the actual deficit being reported each year, a cumulative negative net worth exceeding $50 trillion has built up in stealth to where the total obligations of the U.S. government are now more than four times our annual gross domestic product.

Indeed the unfolding fiscal nightmare likely will entail a U.S. hyperinflation and a resulting collapse in the value of the world’s primary reserve currency, the dollar. When this starts to unravel it will unravel fast. I don’t know whether it will be the dominant issue in the 2008 presidential election, but I believe it will be by 2012.”

Are our “giveaway” federal fiscal policies finally, finally beginning to catch up with us? And will the government and the media be complicit in hiding this information from citizens?

You realize, of course, that’s how the USSR was defeated: the US simply outspent the USSR defensively, to the point where we bankrupted the entire union.

So, despite a record DOW and unemployment claims trending down, WHY are Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, Secretary of Commerce Carlos Gutierrez, Labor Secretary Elaine Chao, Health and Human Services Secretary Mike Leavitt, Energy Secretary Sam Bodman and U.S. Trade Representative Susan Schwab on a junket to Beijing today and tomorrow?

The new dialogue was announced in September during a trip to Beijing by Paulson, who hailed the forum as a way of tackling the longer-term challenges to the world economy thrown up by China’s headlong growth.

But speaking in London earlier Tuesday, Paulson acknowledged that “the need for greater currency flexibility” on the Chinese yuan was a short-term headache facing US-China relations. The United States and other nations argue the yuan is made artificially weak, giving the Asian giant an unfair advantage in global trade.

The US trade deficit with China in September reached a record 23 billion dollars, one-third of the total US trade gap.

Paulson, addressing the Confederation of British Industry’s annual conference, said US relations with China had suffered from “a fair amount of tension” over perceptions that their bilateral trade is unfairly skewed.

I detect an even greater amount of concern than publically portrayed. Any economists out there with thoughts?

BZ

Due to a series of circumstances beyond my control, some personal issues, some seasonal issues, I’ve not been able to consistently post this week. I surmise this consistent inconsistency may continue for the rest of the month. Please excuse my spotty posting and know that I have no intention of going away — it’s the season and a few other concomitant reasons. Thanks to all.

It appears that Saudi Arabia wants us to stay in Iraq; from the Washington Post:

Just a few months ago it was unthinkable that President Bush would prematurely withdraw a significant number of American troops from Iraq. But it seems possible today, and therefore the Saudi leadership is preparing to substantially revise its Iraq policy. Options now include providing Sunni military leaders (primarily ex-Baathist members of the former Iraqi officer corps, who make up the backbone of the insurgency) with the same types of assistance — funding, arms and logistical support — that Iran has been giving to Shiite armed groups for years.

But here’s the real reason: Saudi Arabia is used to playing both ends against the middle and winning at the polar opposites with polar cultures.

As I described in my previous post, Saudi Arabia’s power structure consists of Sunnis who happen to more openly embrace some portions of Western culture — those portions dealing with, ahem, cash and comfort — two very important concepts in current Saudi culture.

The Saudis are fully cognizant that, now, if America choppers, planes and troop-ships out of Iraq, the violent f*!&!#* crazy Shiites will descend like sand fleas and make life just a tad bit more difficult for the royal house of Saud.

From the Post:

What’s clear is that the Iraqi government won’t be able to protect the Sunnis from Iranian-backed militias if American troops leave. Its army and police cannot be relied on to do so, as tens of thousands of Shiite militiamen have infiltrated their ranks. Worse, Iraq’s prime minister, Nouri al-Maliki, cannot do anything about this, because he depends on the backing of two major leaders of Shiite forces.

The Saudis also said they will “sharply boost oil production” in order to combat Iran:

Finally, Abdullah may decide to strangle Iranian funding of the militias through oil policy. If Saudi Arabia boosted production and cut the price of oil in half, the kingdom could still finance its current spending. But it would be devastating to Iran, which is facing economic difficulties even with today’s high prices. The result would be to limit Tehran’s ability to continue funneling hundreds of millions each year to Shiite militias in Iraq and elsewhere.

You know, I’m just kinda throwing this leaf of a thought around in my fetid brain housing group: is leaving Iraq beginning to look like a good thing?

BZ

Early this morning I awakened and heard the sound of rain drilling off my metal roof and falling to the deck. I reawakened some six hours later and was met with complete silence. At my house, high in the Sierra Nevada mountains, silence in winter means one of two things: the total cessation of rain or . . .

Snow. My first snowfall of the season.

I looked outside to witness the largest snowflakes I’d seen in 14 years. These were not your average flakes; oh no. These were Hollywood Flakes of the first magnitude. The kind of flakes you’d envision if you were to write a book about Christmas. They were light, fluffy, Genetic Mutant kinds of flakes, ranging from an inch to almost three inches in size and girth. They were not Danny Devito flakes, they were Yao Ming flakes.

It looked to me as though people were having a massive pillow fight many hundreds of feet above my house with the resulting stuffing wafting slowly, so slowly down.

It was absolutely gorgeous.

Sometimes I feel so isolated up here and that is precisely my goal at times. I can do what I choose when I choose. I can ignore the trappings of modern society because the house is surrounded by pines and a few scattered houses. At the top of my street, for example, the owners there have two horses in a corral. In the summer, with windows open, I could hear them give the occasional distant whinny — mixed with the occasional nighttime horns from passing high elevation trains.

No intrusive, orbiting police helicopters with NightSun lights, no sirens, no thump trucks or thump cars from First, Second and Third World hiphop dipshits. No police pursuits; no fire trucks responding. No burnouts from various Rice Rockets of the two and four-wheeled variety. No public transit buses passing. No public transit whatsoever. No passing traffic. No arguments and fights from the apartment complex next door. No apartment complex within 30 miles of me. No series of continuously-barking dogs from all my next door neighbors. Only one dog nearby, and I know him. He and my local feral cat friends, of whom I am slowly winning over — along with my own “inside” cat named Mose. Not to mention my irascible raccoonie buddies.

Just total and complete silence.

Silence.

What a new and unique concept.

So I can either tune into The World via the standard http://www quotient or radio waves or, when I choose, I can simply ignore whatever I wish. Sometimes I get no choice; my DirecTV “tunes out” when the rain or the snow becomes too thick. Hence my large library of DVDs.

Today, I chose to ignore The World.

Because, for me, the falling snowflakes were miracle enough.

I guess you could call this an Escape.

Do you have an “escape?”

BZ

Besides Pearl Harbor, the Japanese also attacked other portions of sovereign American soil during World War II. Anyone hear of Operation Land Crab? Engineer Hill?

Following December 7th, 1941, on June 3rd of 1942, Japanese bombers attacked Dutch Harbor on Unalaska Island. In crappy weather, only half the planes found the target and little damage was done. Unalaska Island comprises only one (roughly mid-point) of a large number of islands in Alaska’s “beard chain” of islands — and is clearly SOVEREIGN United States soil.

For reference, Dutch Harbor is the port from which many boats issue when you choose to watch the Discovery Channel’s series The Deadliest Catch about current-day crab fishermen.

Three days later, Japanese then invaded the Island of Kiska on June 6, 1942 and the Island of Attu the next day. Of the 42 inhabitants who remained on Attu, all were taken to a prison camp near Otaru, Hokkaido. There, sixteen of them died.

Kiska and Attu were on soverign United States soil.

The Battle of the Aleutian Islands lasted from June 3rd, 1942 to August 15th, 1943.

In all, the United States deployed 144,000 personnel; the Japanese deployed 8,500.

The US lost 1,481 dead (2,500 wounded, sick or frostbitten) ; Japan lost 2,351 dead.

The re-capture of Attu produced some of the bloodiest fighting in the Pacific theatre, similar to the battles of Iwo Jima and Okinawa.

There were 3,929 U.S. casualties:

• 549 were killed,
• 1148 were injured,
• 1200 had severe cold injuries,
• 614 succumbed to disease, and
• 318 died of miscellaneous causes, largely Japanese booby traps and friendly fire.

This all occurred on United States soil.

Did you ever hear of it?

BZ

The United States was “blindsided” twice; first on December 7th, 1941 and then on September 11th, 2001.

To honor today, 65 years later, on 12-07-41:

On Sunday, December 7th, 1941 the Japanese blindsided U.S. Forces stationed at Pearl Harbor, Hawaii.

By planning his attack on a Sunday the Japanese commander, Admiral Nagumo, hoped to catch the entire fleet in port. As luck would have it, the aircraft carriers and one of the battleships were not in port (The USS Enterprise was returning from Wake Island , where it had just delivered some aircraft. The USS Lexington was ferrying aircraft to Midway, and the USS Saratoga and USS Colorado were undergoing repairs in the United States).

In spite of the latest intelligence reports about the missing aircraft carriers (his most important targets), Admiral Nagumo decided to continue the attack with his force of six carriers and 423 aircraft.

At a range of 230 miles north of Oahu, he launched the first wave of a two-wave attack.

Beginning at 0600 hours, Nagumo’s first wave consisted of 183 fighters and torpedo bombers which struck at the fleet in Pearl Harbor and the airfields in Hickam, Kaneohe, and Ewa.

The second strike, launched at 0715 hours, consisted of 167 aircraft, which again struck at the same targets.

At 0753 hours the first wave, consisting of 40 Nakajima B5N2 “Kate” torpedo bombers, 51 Aichi D3A1 “Val” dive bombers, 50 high-altitude bombers and 43 Zeros, struck airfields and Pearl Harbor within the next hour.

The second wave arrived and continued the attack.

The United States lost 2,403 persons in that attack.

Fewer than died on 9-11-2001.

And we went to official war over this incident.

Please, take a moment to remember and honor those lost on this day, lo, those 65 years ago and also to honor those who became The Greatest Generation — the generation of my father and mother — those who fought and died and sacrificed so that we can enjoy the freedoms of today.

NEVER FORGET WHEN ONE IS BLINDSIDED.

BZ