Saturday, October 31, 2009
Steve Rattner On The Auto Bailouts
Galleon Paid Hundreds Of Millions Annually For Information
Friday, October 30, 2009
Key China Box Index Drops First Time Since June12:18 PM links to this post
Why Do We Need A Central Bank?
The United States profited handsomely by extending credit to European countries during WWI so they could pound each other into oblivion. None to ironically, there were substantial problems with mass desertions in WWI. It's easier to sell a war when you are able to make your enemy out to be evil or if they actually are evil such as Hitler was. WWI had relatives and neighbors killing each other for no good reason other than some fat ass sitting on a throne told people it was necessary. Not generally a motivating factor to encourage voluntary assignment to die. War is an old man's game where young men die. I have a better idea. Let's let those who start wars lead us into battle. The majority of conflict would be eradicated given most old men are better at killing other people's children than facing death themselves.
The U.S. extension of credit to Europe had multiple beneficial effects. One, American businesses profited by selling the Europeans armaments and supplies. This made American businessmen rich and provided American jobs. Two, by the Europeans blowing each other to smithereens, that left economic domination exclusively to the United States as the economy of these countries was left in shambles. And thirdly, we could manipulate the Europeans because they were indebted to us at the end of the war. All of this had an effect of continuing our economic and political domination. And, of course, allowing the U.S. to rise to become the global military superpower. I'm sure none of this ever crossed the mind of any political leaders. Rather war is always a matter of good vanquishing evil.
Of course, look what Wall Street will do for a few billion dollars. Imagine what impact on the human psyche a few trillion dollars has. In today's world it is unsustainable military spending that is bankrupting the U.S.
..........War is the common harvest of all those who participate in the division and expenditure of public money, in all countries. It is the art of conquering at home; the object of it is an increase of revenue; and as revenue cannot be increased without taxes, a pretense must be made for expenditure. In reviewing the history of the English Government, its wars and its taxes, a bystander, not blinded by prejudice nor warped by interest, would declare that taxes were not raised to carry on wars, but that wars were raised to carry on taxes..........
.............Every war terminates with an addition of taxes, and consequently with an addition of revenue; and in any event of war, in the manner they are now commenced and concluded, the power and interest of Governments are increased. War, therefore, from its productiveness, as it easily furnishes the pretense of necessity for taxes and appointments to places and offices, becomes a principal part of the system of old Governments; and to establish any mode to abolish war, however advantageous it might be to Nations, would be to take from such Government the most lucrative of its branches................
As many great minds have noted, war is the health of the state. War on drugs, War on terror, War on crime, War on poverty ...... Curiously, where is the war on the tyranny of wars? On the suffering of innocent people? And where is the war on unemployment in the U.S.? It seems the military contractors and banksters won that war long ago. Apparently the unemployed in the U.S. is the enemy combatant in that war.
Anyway, this was just a mini rant leading into an interesting article at public broadcasting. I would argue that many of the points made in this article are really begging the question of why do we need private banking? Localized public banking would serve the community, local development and employment. And it would not only be capitalistic but unlike private banking, it would be democratic. And because it would be public, its operation would be completely controlled by a democratic society. Isn't it time we marry all of capitalism with democratic principals? Oh the horror of such a concept. It would mean elitists would be held accountable to democratic ideals instead of their often feudalistic tyranny imposed on society by many sociopathic CEOs and Wall Streeters.
As a final note, as I've said before, I'm not so much against a central bank as I am against the source of government spending and our national banking system being private. It should be public. If private financial institutions want to compete with a public banking system, that's fine by me. That happens in countless countries throughout the world.
Thursday, October 29, 2009
New American Economic Winds Of Change Are Growing - President Obama Sees Worst Approval Rating Drop In 50 Years
A President with high unemployment numbers doesn't have any other problem. Period. And I think we can be assured that even higher unemployment is around the corner. Possibly substantially higher. Counting those who have already been marginalized or who are just scraping by and you have a very substantial amount of the American population that is very unsettled. And very unhappy with the status quo. Some studies show more than one out of three people either are underemployed or unemployed or have a close relative who is. Watching Washington dither is not an option for most Americans. (Let me insert a remark here. I chose dither last week while outlining this post before Dick Cheney accused President Obama of dither. And while I personally have a high disdain for Dick, I am not changing my use of dither to accommodate him.) And dithering is the normal in Washington. Anyone attracted to politics for power or acceptance, as are many, are almost always psychologically predisposed to never make a decision. Why? Any decision threatens a potential constituency, their re-election and ultimately the emotional acceptance they so crave by seeking public office in the first place. Ah, but a leader understands times such as this and that making bold decisions actually leads to acceptance.
This drop in the President's approval rating was easily anticipated - earlier this year the President's approval rating dropped from about sixty percent to the mid thirties in a few of the Midwestern states. An unprecedented drop in such a short period of time. This drop isn't about health care reform, right wing radicals planting lies about the President or racially driven as some would have us believe. That's preposterous. A racist does not approve of a President then six months later determine they don't approve of his leadership. The press and supporters of this administration are having a field day attempting to marginalize dissent. Dissent that is so necessary to a functioning democracy. There may be radical or racially-motivated elements out there, and there may be many of them, but comparatively they are a very small measurement of the electorate. To label those who are concerned about the obvious Washington corruption, the loss of jobs, our national sovereignty and a government that doesn't serve the will of the people serves only the purpose of the elite and those wishing to maintain political power. This political finger pointing and labeling is utterly offensive on every level. It denigrates the intelligence and virtues of most Americans. Americans of all walks of life, race, creed and beliefs share similar virtues and concerns. People who want economic opportunity, want corruption cleaned up and want a government reflecting core human virtues. And they don't want to hear excuses about why a President who has been in office for close to a year hasn't done a thing to address any major issues but instead is perpetuating the same behavior. If this President were to embrace a virtuous populist agenda, his approval ratings would soar.
This dynamic adds more validation to post earlier this year comparing President Obama to President Hoover. Intellectually brilliant men but failed leaders who don't grasp the concept that great Presidents empower society to do great things and provide the enablement for this to happen. Both men are beholden to the status quo in economic ideology, the entrenched political stooges and failed policy. Given my voluminous posts on empowerment, I obviously don't believe we need government-run jobs programs. Or that the government must step in and spend because the private sector won't. These are lies. And we'll flatten them like a pancake in the future.
Finally, even if government wants to play a larger role in the economy, big business should be excluded from any economic stimulus. That is, unless it represents systemic risks. And even then involvement of the people should be limited and protected by government. To date, all stimulus has gone to big business. All of it. Large corporations employ many people but they have been a net destroyer of jobs for forty years. Why would they change that forty year trend and start hiring Americans after receiving our money as stimulus? An absurdity. Additionally, allowing them to run roughshod over the economy kills new business investment and innovation. And it kills debate in Washington where they spend money to marginalize dissent or new ideas of governance. Big business kills the proper functioning of a democracy. Purchasing favors from politicians is killing our economy and our democracy.
Wednesday, October 28, 2009
Marc Faber - Invest In Emerging Markets Because The Dollar Is Going To Zero
Frankenstein Lives - Global Synchronized Boom
If this doesn't concern you, well .........
Just as we said before the 2008 collapse, all financial markets and assets would sell off simultaneously. The concept of asset diversification was and remains a ruse. And those remarks were justly accurate. The same dynamic exists today.
Before the collapse in 2008 we wrote about Wall Street and hedge fund comparatives to 1929 stock pools and the associated effects of manipulation, momentum trading and piling on to create equity and commodity bubbles, we wrote of the fact that program trading accounted for massive volume on the exchanges and the still unreported fact that on foreign exchanges much of the trading is from outside of the country, ie American and European hedge funds and banks. Now much of these remarks are finally being reported in the press. And rightly so. The only problem is that they are being written as a post mortem. And they will most certainly be reported again after the next post mortem. These dynamics and more are contributing to perfectly correlated global markets.
Anyone trying to reason this market with comments about the "market" anticipating an economic recovery, or the market is fairly valued at a certain price or the market is anticipating a future earnings projection is missing the entire forest through the trees. Entire.
The only thing world financial markets are telling us is that the horror of Frankenstein lives. Absolutely nothing has changed. Risks are higher than at any time in my life. The new global synchronized boom will again be followed by another global synchronized bust.
Tuesday, October 27, 2009
Timothy Geithner, His Replacement At The New York Fed, Goldman Sachs And The Seamy World Of Opacity
Geithner is the perfect political stooge. I wonder where a poll would put his approval ratings? Somewhere close to King George I would suppose.
Another Look At The Nasdaq Transports And Dow Theory
Except for a minor breakout which has now failed, at least for now, the NTI has done nothing for six months. NTI firms are not highly liquid and don't have large derivatives markets associated with them, ie Wall Street and hedge funds won't seek them out as a trade => They are far less prone to manipulation by Frankenstein finance and Wall Street mobsters.
These are firms whose stock results more appropriately reflect the reality of fundamentals and are drive more by the underlying economy and long term investors seeking value or investment sustainability. Huh? I know those terms mean nothing anymore but eventually they will mean everything.
On a final note, I'm a big believer in three wave counts for corrections. (As highlighted below) Whether they are usable as an investment tool is highly dubious but I do believe there is a recurring pattern of a correction's initial pulse, followed by a countertrend move then a final pulse. Notice I said three wave counts for a correction. By correction I mean a move counter to the prevailing trend. In other words, in a bear market, a rally such as we have seen in the last eight months, is a correction - common sense but counterintuitive. That is, unless you believe we are in a bull market.
Our Annual Repost Of The Top 41 Untruths Perpetuated By Wall Street
All of these untruths have proven to be accurate or there are seeds still building in their development. Since we are far from out of this crisis, none of my perspectives on these issues have changed. And many are still considered to be crackpot views.
If nothing else, this is a reminder of the constant lies and media manipulation that are so easily forgotten. As an example, it's pretty hard to remember the incessant babble on CNBC about how much global liquidity existed. And how bullish that was for the future. Even though we were writing of coming liquidity shocks.
- We will get a healthy and much needed 10% correction and restart the second phase of a multi-year bull market
- Buy this dip because because earnings were great
- There is too much global liquidity for the markets to go down
- Interest rates must go up to kill the commodity run, inflation and the global equity markets
- China is an economic miracle
- The 21st century is the Asian century
- The U.S. (and I guess by implication all democracies) has lost its economic leadership
- The stock market is cheap
- Risk management.....Well, need I say more
- Continued globalization is a foregone conclusion
- Emerging markets and (Brazil, Russia, India, China) are a safe havens while the U.S. economy and dollar craters
- American manufacturers cannot compete and offshoring or doom is inevitable
- The dollar is doomed because America is a land of spend happy dunces
- Capital equipment spending will rise from the ashes and drive us to a new bull run
- The Federal Reserve will save the economy and by implication the stock market when they cut rates
- Financials are defensive stocks because they pay a dividend
- Defensive stocks are a great investment in any coming market decline
- Inflation is out of control and interest rates must go higher
- This has been the best global growth story ever and it's unstoppable
- The American consumer and the housing market are the major concerns behind a recession. (They are symptoms.)
- Oil is at a permanently high plateau
- Commodities are in a twenty year bull market (Maybe many years of yo-yo action)
- The rest of the world will pull the global economy through US weakness
- Global companies get more than half of their earnings overseas and that makes them a great investment
- There is always a bull market somewhere. (Yeah, and it will likely be in the U.S. dollar comparatively)
- Sentiment is too bearish for the market to sell off
- The U.S. doesn't drive the global economy any more
- Markets must exhibit mania and blow off to have a peak (That's double speak for people who don't know what's going on and they need a sign from God to see a market topping)
- The Federal Reserve is printing money (Total baloney)
- Alan Greenspan caused all of this (Although he didn't help)
- Goldman Sachs is a great investment
- This can't be a top because Goldman is levered to the hilt
- Wall Street is smart money
- It is different this time
- The real estate slow down will be contained
- The US is a service economy and manufacturing doesn't matter anymore
- The consumer loves high gasoline prices (or more eloquently spoken by Wall Street as high oil prices haven't hurt the consumer)
- Unemployment is at 4.5% and by implication the economy is great
- Apple and Google are the next great thing and deserve their stratospheric valuations (As I said before, I'd rather own all of the equities in Thailand than Google for the same sum of money.)
- The Fed equity valuation model tells us the market is very undervalued
- This final one is for emphasis and has actually been discussed above: the dollar will crater if the Fed cuts rates.
Monday, October 26, 2009
Teddy Forstmann On This Crisis
Teddy Forstmann is one of those names within the financial community. He corroborates everything we have talked about on here for years from government complicity to the extreme risk-taking that will bring down Wall Street and our banking system again. This is a good interview even if Wall Street pumper Charlie Gasparino is giving it. (It's hilarious that Gasparino criticized bloggers writing of coming crises as idiots and ran down bearish guests on CNBC as know-nothings while he pumped the brilliance of Wall Street charlatans. Then he turned around after the crisis had already happened and wrote a book condemning Wall Street. The reality is Gasparino was a cheerleader who didn't see any of this coming but now we are supposed to buy his book telling us how this crisis happened? Typical CNBC.)
Dow Goes Dumpster Diving - Drops 200 Points In One Hour
The U.S. Government's Debt Shell Game
We have written about this quite a few times in the last year. I believe the first time was around last December when we wrote that the government was bailing out insolvent banks and these banks were turning around and bailing out an insolvent government. Most recently we remarked that this dynamic was probably a major contributor to why big banks are not being broken up. That the government needs these big banks to keep buying their debt.
Allan's remarks aren't getting a lot of mainstream traction but this is nothing more than a shell game. In fact, he really doesn't go far enough in explaining the dynamic and its consequences. The mega banks were insolvent and needed a bailout from the government, then the government is insolvent and needs the bailed out financial firms to buy its massive new issuances of debt to fund its wars, stimulus, global meddling, etc. Ha ha ha. (That's a nervous laugh not a jovial laugh.) I think we used to call this a pyramid scheme.
Mega banks serve the needs of the state. Community banks serve the needs of the people and a functioning society. If I draw this as a Venn diagram or write it as Boolean equations, we can logically conclude the state is not serving the needs of a functioning society. What a surprise.
It's good to be the king. Not much longer though.
Sandy Weill, The Godfather Of Glass Steagal's Destruction, Gives Watered Down Plan To Overhaul Financial System
After 12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $300 million worth of lobbying efforts. Supporters hail the change as the long-overdue demise of a Depression-era relic...............
On Oct. 22, (1999) Weill and John Reed issue a statement congratulating Congress and President Clinton, including 19 administration officials and lawmakers by name. The House and Senate approve a final version of the bill on Nov. 4, and Clinton signs it into law later that month.
Just days after the administration (including the Treasury Department) agrees to support the repeal, Treasury Secretary Robert Rubin, the former co-chairman of a major Wall Street investment bank, Goldman Sachs, raises eyebrows by accepting a top job at Citigroup as Weill's chief lieutenant...............
Sunday, October 25, 2009
Lawrence Summers Sticks Foot Squarely In His Mouth And Simultaneously Up The Average American's Derriere
China's Economic Growth Is Smoking Hot
Friday, October 23, 2009
Are Our FDIC Deposits Safe And Will The FDIC Run Out Of Money?
The concern about the FDIC reminds me of a scene in one of the Indiana Jones movies. Indiana is met in the street by a formidable adversary who draws a sword and goes about impressing onlookers with his tremendous display of swordsmanship. It appears as though Indiana is completely doomed and about to lose his life or limb. But then what happens? All of a sudden Indiana pulls out a gun and without expression nonchalantly shoots his adversary dead. Almost as if it were an afterthought. He shrugs it off and continues about his merry way. And that is what we are going to do today. After all of the debates and intellectually-reasoned arguments of why we should fear the fate of the FDIC, we're going to pull out a gun and shoot the arguments for what they are - lots of hype without merit just like the swordsman.
I have had this discussion with more than a few people offline over the last year or so. People are concerned that they will lose their money if the government is insolvent and cannot replenish the FDIC. Well, the government is in serious straights and most certainly will have a funding crisis. The ability of the government to fund its empire of global meddling is bankrupting the country but FDIC insured deposits are a separate issue.
Typically, the FDIC uses bank fees to fund their insurance pool for insured accounts. This approach should be a constant reminder to banks that their mistakes have a price. That pool is running low because of a reasonably large number of bank failures. (Obviously no where near the Great Depression levels. At least not yet.)
If the FDIC is ever in a position where it cannot raise enough fees from banks to keep their insurance fund solvent, I'm not sure what they will do but I can tell you exactly what they can do. It involves some very complex mathematical formulas, lots of time consuming calculations and countless hours of detailed analysis by a roomful of analysts of the intellectual caliber of Albert Einstein. Okay are you ready? They should print it. And you should write Sheila Bair, Ben Bernanke, President Obama and even that toady Timothy Geithner to tell them to print it. In fact, it would be criminal were the FDIC to ever borrow money from the private market, ie issue new government debt, were its funds ever depleted. New debt to replace money that already exists? Lunacy. Were we to see a terrible banking calamity, all the government would need to do is print the replacement money. It's simply replacing existing savings. Because a bank fails doesn't mean FDIC insured savings must disappear. Even if the FDIC funds are spent.
So, what would the Great Depression have been like were the Federal Reserve to have guaranteed people's savings and printed their lost savings as banks failed? Who knows. I don't have the statistics of how much of society's savings was lost. That time would have been horrible regardless but we do know it that were much of society's savings not lost, it would have made some constructive impact on the crisis comparative to sitting back and letting the world collapse. There's some great merit to many concepts in Austrian economics. But there are a lot of fools who have no idea what they are talking about espousing radical interpretations that are pure nonsense.
Thursday, October 22, 2009
White House Says Economic Stimulus Has Already Had Biggest Impact
I have no confidence that Christina Romer could tell me which way north is anyway. She's a little like Paul Krugman telling us government's massive debt is saving us from another depression. Government could save us from a depression but not by racking up more debt for wars and banker bailouts.
By the way, what exactly has $194 billion done for you? I didn't get any of it. It hasn't kept people in their homes. Did it go to underprivileged families to pay for rent or meals or health care? I think what it did was allow state and local governments to keep from prudently assigning dollars to necessary government services and cutting unnecessary services and expenses like the rest of us have had to.
Need A Credit Card? How About 79.9% Interest Rates?
The Rigged Health Insurance Game Is Over
This brings up a point a friend and I were discussing the other day. Companies are not good or bad. We don't assign human qualities to them. They are just companies. They simply do whatever the laws allow them to do in the name of conducting business. It is government's responsibility to make sure society benefits from the laws created to regulate business. So the tyranny of health insurance companies we see today is the sole responsibility of government which created the laws and allows such tyranny. If government feels as though the only way to enforce morality on insurance company executives is by providing a public health insurance option, well, that's ridiculous. If the United States ends up with a public health insurance option, there could be worse solutions. Like nothing being done. But to enforce morality of the insurance company executives, all they need to do is change the rules to the game.
The U.S. Government Used Psychological Operations On The American Public
Our government seems unwilling to tell the truth about anything. We have a government that uses national security as a reason to classify documents which should be available under the Freedom of Information Act- because they don't want the public to know what dirty little games they play. A government that believes it is above the law and above the sovereign for whom they work. A government that is not accountable to the people who elect them.
Washington is morally bankrupt. And it is not just as it pertains to this economic crisis. If you aren't already, it's time to get active in politics. Write your Congressional representatives. Vote. Be an agent for change. For a government that serves the people of this country in a completely transparent manner. People often feel helpless but that is ridiculous. We have the power of revolution at the voting booth. Our future is what we make of it.
Declassified talking points for paid military analysts here.
Dark Pools To Be Regulated
Florida's Unemployed Hits Record
During the mid 90's I spent much of my time in Miami. In 2006 a friend sent me the real estate listings of a few condos they were looking at. Coincidentally, one was in the same building as one I was considering a decade before. The asking price had increased almost 400%. Anyone who has been to Miami in recent years knows that the new high-rise condos, hotels and land redevelopment has been nothing short of astonishing. Truly the greatest land boom in its history. Much greater than the one in the 1920s before the Great Depression. Yes, we have seen this game before. As my link in the Columbus Day post cited, history is indeed a weapon. Politicians and Wall Street can line up their lies but I can find substantial historical comparatives to everything we see today. They were lying then as well. A timeless characteristic of a politician is to realize every time their lips move, something dubious is happening. Most likely spin.
At one time I saw a statistic that 17 years of condo supply were either in the process of being built or were planned to be built in the Miami area. I have no idea how this statistic resolved itself with actual units built but I do know many new high-rise buildings are near empty. A friend told me just a few weeks ago that when they look out their window at night some of the new high-rise's on Brickell, a stretch of beautiful high-rise condo buildings has three or four lights on. It's a 50 story building.
"With over twenty-five Brickell condo towers currently completed and ten more planned or under construction, Brickell Avenue has reached a "tipping point" or critical mass to become the most desirable residential neighborhood in Miami."
Miami Beach in particular has gone through boom and bust cycles before. In fact, less than twenty years ago, the city of Miami Beach was falling apart. The Fountainbleu (Where they shot the Bond movie Goldfinger, Eden Roc and others fell into disrepair. Miami Beach's South Beach area had more boarded up store fronts than it did stores. In fact, driving through the area, it looked more like an art deco tenement until revitalization started in the early 1990s.
Miami's real estate market became a magnet for Europeans and South Americans looking to play the weak dollar trade and purchase vacation homes this past cycle. That party is over. Now what? Well, cycles of boom are followed by cycles of bust. Will we get to the point where South Beach properties are again boarded up and the U.S.'s premiere warm weather playground again looks like a tenement? Well, that's really up to the economic policy decided in Washington. But, I wouldn't want to be betting on the Florida economy or sweeping in to buy distressed real estate only to find out there is no recovery. And, there is a lot of big money purchasing distressed real estate right now. They are likely to be punished mercilessly. We wrote on here three or four years ago that real estate isn't likely to recover for a few decades. A fool and his money soon part ways................
As I said on here four years ago, were I to buy real estate anywhere in the world, it would be downtown Detroit, Michigan. End of the world pricing is built into that economy and the skyline is battered. And while it may seem completely hopeless today with neighborhoods crumbling, rampant crime and houses selling for less than $20,000, I believe Detroit is far from dead. But for now, Michigan's unemployed just hit a record as well.
Wednesday, October 21, 2009
Diet And Depression - Maintaining Balance During Stressful Times
Anyway, in today's environment there are tremendous stresses on our emotional well-being from worries over work to the economy and the demands a challenging environment place on our families. I would encourage you to read Mark's most recent post on Diet and Depression. We are finding out more and more how some processed foods and the modern convenience-diet is impacting our physical and emotional health.
Paul Volcker Is Spot On. Ban Derivatives And Risky Schemes From Institutions Entrusted With Protecting Society's Savings
We rambled and ranted incessantly on here about the conflicts of interest and the coming doom of our banking system before this crisis developed. Since then, we have stated explicitly that derivatives and gambling with society's money need to be banned from our banking system. Period. Mr. Volcker is spot on. The only reason these reforms are not being considered is because of corruption. That's it. It's not about morality or virtue or democracy or concern for the common good. You remember the common good? It's explicitly stated in our Constitution.
How Big Business And Big Government Steal Your Money
The reality is all people in the United States, regardless of political affiliations, values or beliefs have a common interest in this topic. I will say that the speaker in this video highly underestimates the cost of this dynamic. The cost is not so much consumer prices as it is lost trillions of dollars in economic vibrancy and loss of economic opportunity for millions upon millions of Americans.
People have started repudiating partisan politics and started thinking for themselves. And that means there is a commonality in virtues and ideals. For whatever our differences as a diverse people, we all generally share the same virtues. Corruption is corruption. Fair is fair.
It's Time To Marginalize The U.S. Chamber Of Commerce For Marginalizing America With Its Corporate Personhood Supported Activism
Finally Some Honesty
I didn't see this live so I can only image the TV host's remarks at the end. I suppose he's one of the savants who believes the world is just fine.
Unprecedented Corruption Through Usury And Tyranny Continues Unabated
This is far and away the greatest crisis in American history. We need public banking. And maybe even more importantly, we need to break up the political party monopoly run by corrupt stooges. Stooges have have encouraged this economic terrorism in our economy.
It's interesting to see that the President is on a fundraiser on Wall Street asking for more political money at the time we are supposed to be reforming the financial system and hopefully corporate governance. How much fundraising money would you suppose the President could raise were he to drive home tough financial reform? How about none.
Change you can believe in? Ha ha ha.
Tuesday, October 20, 2009
Frontline : The Warning
Many wouldn't be surprised that the seeds for this crisis have been building for a long time. Probably at least 20 years. Some dynamics such as the Nixon move to devalue the dollar by ditching the gold standard goes back 40 years. To believe this crisis is going to be over in six month, as most on Wall Street would have us believe, is preposterous and an outright lie on many levels. Yet were the truth to be told, there is a possibility this country would have a crisis in government with a collapse in confidence. So we play the happy game instead of being honest. Americans can take the truth. On many levels, they already know.
This Frontline documentary is supposedly going to take a look back at many destructive seeds planted by the Clinton administration. It is my perspective that Bill Clinton was most likely the worst President in American history for his many destructive economic policies passed in the early to mid 90s followed by the culmination of the repeal of Glass-Steagall in 1999. A far cry from the consensus of many liberals that Bill Clinton was a great President with minor character flaws.
Steel Production Capacity In China For 2009 To Grow By More Than Entire Production Capacity For 20 Of World's 40 Largest Steel Producing Countries
Signs Of Global Economic Recovery - Steel Production In World's Second Largest Producer Country Hits Forty Year Low
Global Finance - The Future Of Doom
The S&P's Low Volatility Ascent - It's An Illusion To Believe Markets Can Be Tamed
Some chart formations are more reliable than others. A rising wedge is a reasonably reliable formation for what it reveals is a low volatility, highly controlled ascent. This is reminiscent of the 2003-2007 bull market where Wall Street was able to control volatility temporarily. As we stated re the same dynamic before the 2008 collapse, volatility simply cannot be tamed. And Wall Street is employing the same failed strategies which ultimately led to the debacle last year.
We just hit a major Fibonacci turning point before the last minor correction and another very major turning point is almost upon us. Additionally, it was not a coincidence that we recently remarked one of my trading algorithms did not issue a new buy signal off of the last minor correction as it had after every minor correction off of the March low. In other words, market dynamics have changed. Will that be temporary?
I have another chart which goes with this one and I'll try to get it up this week but I have many posts that are already backed up so we'll just have to play it by ear.
Monday, October 19, 2009
This Morning Ben Bernanke Tells Us Asia Appears To Be Leading The Global Recovery
Friday, October 16, 2009
China's Auto Sales Rise 78% - The Doom Meter Is Pegged On Extreme Warning, Complete Failure Dead Ahead
But first we must cheer the continued incredible economic growth in China as proven by the auto sales report this week. People who focus on the American economy this cycle are missing the biggest global economic bubble in history. The future is going to be very different than almost anyone imagines. The U.S. can easily get out of their crisis in a relatively short period of time. It's only a matter of political will. We'll eventually tear down many walls built by many bears who have been heretofore correct on their assessment of the American economy. We have obviously been correct as well but too many bears have well too many blind spots in their understanding of this crisis and how to overcome it. Maybe I do as well but I can easily discount every single bearish argument for perpetual economic doom in the U.S. And do so with some very easy solutions. Unfortunately, those solutions will never be considered until doom is upon us. Already we see a political establishment who generally believes the economy is on the mend. That means most politicians are back to their favorite games of collecting lobbyist money with one hand and holding babies with the other.
Our premise remains that emerging markets are going to collapse and China remains the biggest crisis in the world. And while many people point to statistics like the one in the title of this post as proof of China's emergence and future economic dominance, it's simply more of the same learned idiots who generally know literally nothing about many words which pass their lips.
Anyone who understands basic economics knows when the capital goods sectors are in recession, money flows to the consumer sector - something we highlighted on within months of starting this blog. It's not very reassuring that nary a single economist has mentioned this dynamic regarding the economy in China. The vast majority of economists and financial wizards simply do not understand economics - an affirmation of Pareto's Principle and/or the Peter Principle, both of which we have written of on here over the years.
So.....Here's a real winner. While the mainstream media pumps this auto statistic and many other data points as proof of the coming Asian century and the strength of the Chinese economy, let's look at reality. The capital goods sectors in China have imploded. Over ten thousand factories have closed. Most likely thousands, if not tens of thousands more than that. It's impossible to get clean data out of a communist country. South Korean firms alone have shuttered over five thousand Chinese factories so reality is likely to be in the tens of thousands.
In order to keep it's economy from completely collapsing, China is extending never before seen credit growth into its consumer sector hence the absolutely surreal auto sales growth over the last half a year => autos are consumer goods. Let's put this another way. The enormous size of China's auto sales growth is in fact a validation of just how bad the Chinese economy really is. Huh? You read that right. In order to keep its economy from completely collapsing, China's very, very small consumer sector must run like gerbils in a cage at speeds never before seen to absorb the massive economic losses from the capital goods sectors. Never before seen. Ever. In the history of mankind. I am not exaggerating. China simply cannot ever balance this equation. Ever. We have talked about the dynamic of a nearly nonexistent consumer sector in China as a huge and growing problem for ages but it falls upon deaf ears as yammering sycophants from Goldman Sachs, McKinsey and others participating in the greater fool scheme blabber about the rise of China. Collapse is imminent.
You won't read any of this elsewhere. That's because the world of economics and finance is in a perpetual haze of lunacy. And as a commenter in our last dollar post noted, you surely won't be reading this from the hazy lunatics at HSBC. They were still pumping the Asian century just this last week.
So.....I wonder how long $2 trillion in currency reserves will last when China is making very high risk loans of truly "junk" quality at a $1.5 trillion dollar a year clip? With an honest GDP of probably $2 trillion. This on top of a decade of already bad loans festering within the Chinese banking system.
This is one area distinct area where I have highlighted differences in my perspective with those of Marc Faber. Marc is clearly not looking at the entirety of the data and interpreting it accurately. The Asian century is a fantasy made up by Wall Street pinheads and a pliant media. And so is the perceived safety of collective currency reserves held around the world. Something we wrote of regarding Russia in advance of its collapse and again as it pertains to China in countless posts. But, then none of this is new in any of our discussions. Just a rehash for new readers.
I can't wait to see the Fed trying to issue central bank liquidity swaps with the central bank of China as they did with other nations during the 2008 collapse. Ha ha ha. That act, were it attempted, would likely be the final nail in the coffin of the Federal Reserve or private banking in the U.S. or both courtesy of a populist mob. Seriously, I fully expect the U.S. and the Federal Reserve will clearly let China choke on its own vomit before this would ever happen. And choke they most likely will.
The world continues to become more and more interesting. And even though it may not appear so on the surface, all of our anticipated outcomes are working quite nicely towards their destination.
As we have repeated time and again over the last four years, the entire world will literally shudder and shake when this cycle ends.
But remember above all, the yuan is going to replace the dollar as the world's reserve currency. And China is going to inherit the economic mantle from the U.S. It's so completely obvious. As obvious as a collapse in the dollar. We highlighted price data confirming our anticipated deflation out of China right before its market again started its downward trend a few months ago. Wait till China panics and tries to produce its way out of this crisis using any forms of export subsidies and manipulation it can muster. It's nearing the time for another yuan devaluation. Just in time to reward foreign purchasers of newly minted China bonds. All of these dynamics will make global politics really interesting.
Maximum U.S. exposure to China? Wall Street and American multi-nationals - another substantial reason why anti-trust regulations should have been enforced. American multi-nationals are almost all monopolies as are all Wall Street banks. No American firm would be disproportionately exposed to China or any risk-laden market were anti-trust regulation enforced. We've seen Federal Reserve bailout after bailout of mega American banks involved in emerging market risky schemes over the decades. Never on a scale anywhere near that involving exposure to China.
Unlike others who believe the Fed can manufacture a devaluing of the dollar for benefit of "inflating" their way out of this crisis, contrarily I believe the Federal Reserve has lost complete control of the dollar and as any ability as lender of last resort to a global economy. Those who view monetary policy of the U.S. in a vacuum are missing a much larger impact placed on the dollar being the world's reserve currency. Because the world is focused on the U.S., the next crisis will catch everyone off guard if it comes from abroad or because of global dynamics. Being caught off guard includes Wall Street.
Party hard. The world is not as it seems. And it most definitely isn't as the media, politicians or Wall Street would have us believe.
China's auto sales up 78% story link here.
And the future of China's auto sales can be gleaned from this story here.
Thursday, October 15, 2009
Blood Sucking Lobbyists Converge On Washington To Shape Financial Reform
Administration Fights To Protect Secret Propaganda Budget
Foreclosures Hit Record In Third Quarter11:36 AM links to this post
The Goldman Sach's Steps To Billionaire Success
But first, Dylan Ratigan told us yesterday that Wall Street is expected to pay out $140 billion in compensation for playing Ponzinomics with our money and our economy. If we had a public banking system, none of this tax on capital would exist. And all of these profits are nothing more than a tax on capital. And as such, they are killing our economy. Were we to have a public banking system, any profits could be funneled into health care or to rebuild our country or into scientific research benefiting society or education our countless other beneficial endeavors.
A public banking system would be serving the purpose banking is meant to serve in a democratic society. That is, to increase the capital stock of society. That includes investment in underprivileged citizens who are completely marginalized by public banking. A dynamic which clearly perpetuates chronic poverty amongst a class of society while other undeserving taxes on capital like private equity squander our wealth on financial games and extort billions of dollars out of the economy in the process.
Public banking is the scourge of humanity. Anyone who believes our finances would be better served in the hands of private bankers in lieu of very strict Constitutional controls and substantial transparency of a well-designed public banking system, which democratically serves society, is perpetuating an ideology not backed by any sound reason. By the way, our calls for a public banking system are rather interesting given Marc Faber's comments that India's central bank may be the only competent central bank on earth. Guess what? India's banking system is generally a public one. Coincidence? I think not. This decision was made out of virtue not at the hand of a lobbyist toting billions of dollars. Maybe our politicians should read the Bhagavad Gita before contemplating financial reforms.
How can one not become more galvanized for transformational change by the sheer crookedness of how this crisis has been handled and by the magnitude of suffering we see because of it? Absolutely heinous examples of greed while a substantial number of people in the America are unable to provide shelter or basic services to their families. Wall Street is completely morally bankrupt. The fact that our politicians are relying on lobbyists from the financial sector to determine the future of financial regulation, trade, health care and a substantial other of self-serving issues, seems to me to be no less than treason. If not legally, then surely morally.
Corporate personhood absolutely must be revoked as an absolutely corrupt interpretation of our Constitution. It's time for a Constitutional review striking down this particular instance of judicial activism from the Supreme Court. Activism clearly not intended in the checks and balances of our system of governance.
Why Haven't We Seen Any Financial Reform? Maybe Because The Government Decision Makers Are All Former Bankers With An Allegiance To A Failed Ideology
Why not hire a Jesuit priest to or a Buddhist monk to run Treasury? Seriously, I would much rather have a kindergarten teacher running Treasury. Why? Because I know anyone who is a kindergarten teacher is almost assuredly not driven by greed and would most certainly have some virtuous qualities. Not to say Wall Street and virtue are mutually exclusive. But Wall Street executives are beholden to a failed system and I honestly don't believe the vast majority have any conscious realization that our system needs to be transformed. There are enough public servants in Treasury to assist anyone in making reasonably appropriate decisions if heads of Treasury departments were willing to listen to them. Instead our government policy makers continue to perpetuate an elitist class which is self-serving by handing jobs to friends and associates who are qualified. Wink, wink.
Wednesday, October 14, 2009
Robert Reich - The Audacity Of Greed : How Private Health Insurers Just Blew Their Cover
JP Morgan's Profits Are The Largest Theft In The History Of Mankind4:13 PM links to this post
SEC Dragging Its Feet But To Eventually To Look At High Frequency Trading After Banning Legalized Theft Of Flash Trading
Of course, one of the "experts" cited in the article thinks high frequency trading is just right. You know, like the porridge in Goldilocks and the Three Bears. So how many of you have access to the floor of the New York Stock Exchange where you are able to plunk down a computer capable of high frequency trading? Of course it's just right. Explain it to an average American and I'm sure all of them would know intuitively in their gut it was perfectly fair.
I wonder how many people have given thought to a particular dynamic driving all of this? The NYSE used to be a not-for-profit corporation. Then guess what? John Thain, yes that John Thain who used millions of shareholder dollars to remodel his Merrill Lynch office with extravagance reminiscent of the gilded age, became boss man of the NYSE when he left, you guessed it, Goldman Sachs. Mr. John, as we'll call him since he spent what? $35,000 on a commode for his office, then proceeded to make the NYSE a for-profit public corporation. Now with the insatiable desire for profits, the NYSE would be open to manipulation by large financial firms. Just like the manipulation of Congress in their desire for profits. So, I wonder who initiated these discussions of high frequency trading and flash trading? Possibly firms such as Goldman Sachs?
Interestingly, a newer article has come out since I tagged the first one for post. 36% of attendees to a Frankenstein finance event believe high frequency trading could present a risk to the stability of financial markets. The other 64% were asleep at their desks. And 70% of attendees believe the SEC is also sleeping at their desk in reference to high frequency trading. The other 30% are minting profits courtesy of the SEC's sleeping habits or are busy assisting Congress to ensure the SEC remains asleep at their desk.
Nuclear Battery With The Potential To Exceed One Million Times Power Density Of Existing Chemical Counterparts
How many great new ideas are out there stagnating because merit has been thrown out the window? How many people are labeled as lazy or unwilling to work by cronyism and corruption yet these people are really just marginalized because merit and hard work aren't valued by cronyism? How many heads of household are denied an ability to earn a decent wage because cronyism and corruption has decided their fate?
We don't need any more Harvard or Yale educated elites trying to manage the economy. It is exactly this very reason why we are in this crisis. The President and our elected servants are not our lords. They do not have magical powers of decision-making or superior intellect. Politicians aka servants should be seeking to restore the democracy they were elected to serve and defend. They should be seeking to unleash democratic merit onto the market by vanquishing corruption and cronyism in our government and in our economy. Instead they are perpetuating it at every turn. They'll look mighty stoic as they go down with the ship.
Tuesday, October 13, 2009
Letter From Congressman Grayson - Stop Bernanke's Reappointment Until We Know Where Our Money Went
Last week, Ron Paul and I sent a letter to the Senate Banking Committee about the Chairman of the Federal Reserve, Ben Bernanke.
Before he is confirmed for a second term, we think the Senate and American public should know who got the $2 trillion the Federal Reserve has lent out over the last two years. Only then will the Senate be able to judge whether he should keep his job.
It's important that the Senate hear from you. That's why we've launched UnmaskTheFed.com, an easy online tool to let you contact your Senators.
Visit UnmaskTheFed.com and ask your Senators to vote NO on Ben Bernanke's confirmation until the Federal Reserve comes clean on what it has done with OUR money.
It would simply be unreasonable for the Committee to confirm Bernanke to another term given how little is known about what he has actually done. Remember, Ben Bernanke didn't see the crisis coming and has added $1.2 trillion to the Fed's balance sheet through covert bailouts..................
....................It's the Senate's responsibility under the Constitution to properly question and debate any of the President's nominees. Without these documents, I don't see any way they can live up to that responsibility. Help me make sure they do.