Saturday, January 30, 2010

Many Members Of The Commentariat Are Trying To Anticipate A Stock Market Rally. Fools And Their Money.... Er, Fools And Other People's Money....

There really isn't any type of shorter term support until we drop another 40-70 S&P points. That would amount to a 12-14% correction. Maybe then we will see a rally from those levels.

Many have been covering short positions in anticipation of a rally over the last few days yet there remain absolutely no buyers. There are way too many market participants trying to anticipate market direction rather than listening to what the market is telling us - we see this dynamic all of the time and it is a sign of horrible money management in my estimation. This was what happened was on the reverse side when people started resetting their shorts after the March bottom and were repeatedly blown out of them. And the same dynamic that led the buy-the-dippers to get slaughtered in 2008. Right now, as of the close on Friday, the market isn't telling us anything that would portend a retest of this rally's highs. Big traders might come in and jam the market the first trading day of February, as is common the first day of any month, or any other day but until I see this short term algorithm turn positive, there is no reason to even consider that possibility. This same algorithm kept me out of the market as it was collapsing in 2008 and early 2009 as many pundits called bottom after bottom after bottom and were repeatedly slaughtered. I respect the market and never try to get too far ahead of myself with anything that the market doesn't tell me.

The behavior of this market has been incredibly odd for about four months - almost floating on an intraday basis. That is what the market looked like as we were peaking in 2008. It's an eery dynamic that makes me sit up and take notice.

Next week we will look at what the market is telling us on a longer term basis using a rather unique algorithm I highlighted on here in the past. What it and by conclusion, the market is telling us at this point in time may be rather surprising to many on Wall Street. We shall see.

posted by TimingLogic at 5:38 AM links to this post

Friday, January 29, 2010

Supreme Court Decision On Corporate Lobbying Is Misguided At Best And Fraudulent At Worst

I don't have any time for at least a few weeks to talk about this recent decision but we have hammered corporate personhood as a fraud on here many times. This most recent decision is in large part based on a Supreme Court case which I believe could very well have originally been based on fraud back in the 1800s. I have done a lot of investigation into this issue and will be discussing it in the future. As I am with a few Congresspersons. But, the President reprimanded the Supreme Court in his SOTU address. I believe the President was more than right to attack the competency of the Supreme Court in this case. But he didn't go far enough.

Most people incorrectly assume the Supreme Court determines the law of the land. That is false. Our Supreme Court has stepped up to place itself as the ultimate decider of what is legal and what is illegal. Arguments against judicial activism started as far back as Thomas Jefferson. Our Constitution and our form of government does NOT necessarily defer legality to the Supreme Court. Were that to be the case, we would not have three equal branches of government to counteract each other. Judicial activism can and has been challenged legally as our system of laws allows for via a defined process of Constitutional Review. It's simply not done that often. It's now time to reject corporate personhood via Constitutional Review, an amendment to the Constitution or via new laws.

We will talk more about this in the future. But until then, the Supreme Court has stepped well beyond its role on this recent decision. A completely ridiculous ruling of ideology and a repudiation of common sense. The Supreme Court has no legal or moral authority in this case in my estimation and has stepped way beyond its powers. And while I am not a Constitutional scholar, I have relied on many who are and my own education on this issue to believe I say this with a fair amount of authority that this decision was one of learned idiots. And that it can and should be overturned by our Congress. and the President.

If they don't seek to overturn or ameliorate the situation, we know they are perpetuating a fraud driven by personal gain and greed.

posted by TimingLogic at 12:13 PM links to this post

Thursday, January 28, 2010

Marcy Kaptur Thumps Tim Geithner

A little grandstanding to inform the American people is sometimes appropriate. Marcy Kaptur is one tough character. President Kaptur? Haha. This interview video from yesterday is quite amusing and enlightening. Geithner must go.

I'm going to update this post with a few comments. Geithner remarks that Kaptur's innuendo is those involved in managing this crisis did not have the public interest at heart. Something he vehemently denies. Maybe Geithner is actually stupid enough to believe what he is saying but I want you to think about something. Geithner is completely wrong on this point. Keeping the banking system from collapsing is in the public interest. But, how is a private banking system, created through bribery of our government and opposed by our founding fathers, in the best interest of Americans? What has Geithner or Goldman Sachs done to help the underprivileged kid in East Los Angeles or Detroit or Kaptur's home town of Toledo? How does a private banking system help you achieve a self-determined life in a democracy? You personally? How does giving monopoly access to capital to a bunch of good old boys with the best connections help Americans lead a self-determined life?

Our banking system is based on fraud. I could care less about fractional reserve banking, ending the Federal Reserve, having a monetary system based on gold or any of the other ideological positions out there. A banking system could easily be created which doesn't deal with any of these issues but is indeed very sound. Actually better than a gold standard or a private banking system. The greatest fraud is a private banking system in a democracy. One that perpetuates racism and underprivilege when a handful of completely incompetent, well-connected bureaucrats become masters of the universe and do absolutely nothing to help further the concept of investing in our democracy. In our human capital. But instead have the effect of treating our human capital like dogs.

We need a public banking system. One managed substantially at the point of delivery. That is, the state and community level.
posted by TimingLogic at 9:32 AM links to this post

Wednesday, January 27, 2010

Let's Take Back The Microphone From The Crooks And Liars - The Repeal Of The Glass-Steagall Act WAS AND IS A Major Contributor To This Crisis.

It seems since the President came out last week and talked about restraining the activity of Wall Street that many are remarking Glass-Steagall would not have kept this crisis from happening. That the repeal of Glass-Steagall had no impact on what we see on Wall Street today. The day of the President's remarks last week the CFO of Goldman Sachs stated that Glass Steagall was irrelevant since Bear Stearns and Lehman were not regulated banks. Well, the CFO of Goldman Sachs has no idea what caused this crisis since he had his head so far up his ass (Doing God's work) before the collapse that he had no idea what was going on. And he still doesn't. This is one of the most incompetent financial officers in the United States today for witnessing Goldman Sachs lever itself up more than 40:1 - something we wrote of before the global economy imploded. Were he to reap what he sowed, he would be searching for grubs in the gutter with the rest of us as opposed to living the life of a millionaire off of the back of unemployed Americans and your grandmother's Social Security, formerly used to pay her heating bill and put food on her table. Americans who owe their unemployment in large part to his complete incompetence. Excuse my French but I tire of listening to learned idiots (who also happen to be assholes) responsible for this mess telling us what we should be doing with our country and our financial system.

We have written incessantly about Glass-Steagall since starting this blog. Anyone who foresaw the instability in our banking system understands the role dismantling our regulations, including Glass-Steagall, played in the collapse of Wall Street. Wall Street didn't spend $300 million (In today's dollar terms, likely more than $1 billion) bribing Washington politicians to overturn Glass-Steagall if its impacts were irrelevant.

Byron Dorgan, a populist Congressman, foretold of this crisis ten years before it came to pass when he argued on the Senate floor against Bill Clinton's fraudulent repeal of Glass-Steagall. To watch Dorgan's remarks in the video below is a chilling experience. To watch the specificity with which he accurately describes an environment ten years into the future is frightening. Forecasting may be folly as Barry Ritholtz often writes, but foretelling the future is not if one understands the past. Glass-Steagall is not the end all to this economic crisis, because it is an economic crisis, not a financial crisis, but it would have spared the United States the worst of what has happened over the last ten years including the massive fraud and political bribery we now see to prevalent in Washington and Wall Street. This video is a must watch for everyone.

"I think we will, in ten years time, look back and say we should not have done that because we forgot the lessons of the past." -- Byron Dorgan, November 1999

Only crooks, liars and uninformed ideologues would ever argue that the dismantling of regulations and Glass-Steagall was not a prime determinant of the collapse of our financial system. As Dorgan states, those who cannot remember the past are condemned to repeat it. And, in fact, we are repeating the collapse of our financial system just as happened in the Great Depression. And the reasons are exactly the same - fraud and corruption. And, as we have said many times, the world is in the early phases of a depression. There is no recovery without a new economic model.

In the mean time, I would encourage you to write your Congressperson and the White House to demand support for Maria Cantwell's effort to bring back the Glass-Steagall Act. All of it. Not what the President selectively chooses to support. That includes not just what was there in 1999 but all of the components dismantled up until that point.

Bill Clinton repeatedly made decision after decision during his Presidency which has contributed to this crisis. Bill Clinton did more to create this economic collapse than any President. Substantially more than George Bush. Bill Clinton is quite possibly the worst President in American history. Yet many Americans believe Clinton was a great President because they associate economic correlation with his time in office. Contrarily, what we see today is Bill Clinton's work. And now all of his cronies surround President Obama. This is contributing to the continuation of this crisis. Frankly, I believe the President should excuse his entire economic team and all of the former Clinton advisors and start anew.
posted by TimingLogic at 11:23 AM links to this post

Tuesday, January 26, 2010

All This Time We Thought Adolph Hitler Was Dead

posted by TimingLogic at 11:00 AM links to this post

It's That Time Of Year - The Neoliberal Idiots Have Started Their Annual Pilgrimage To Davos

I can't help myself. It's that time of year and I have to take my obligatory shots at Davos. I must have a compulsive streak because every time I hear the word Davos, I cannot stop laughing. Conspiracy theorists would call Davos part of the New World Order. I would call Davos the timeless attempt by political idiots and bureaucrats to control the lives of people born free. People born with a right to self-determination. Rights not granted by the state or neoliberal idiots but by our creator.

There is no group of clowns more removed from reality than those who make the pilgrimage to Davos. They were completely clueless to the building crisis before the world imploded and they still have no idea what the world has in store for them. In a leaderless world this is simply another attempt by neoliberals to plot the course of societies outside of the scope of our government and the will of the people. What's new? This is the timeless struggle against corruption and tyranny.

By the way, neoliberal is not a partisan statement. Some may associate the word liberal with Democrats. I view the terms progressive and conservative as reasonably accurate views on valid forms of democratic governance. There are no heavyweight populist (progressive) Jeffersons battling Federalist (conservative) Adams in Washington. Instead, what we see is more like Rocky versus Bullwinkle or more appropriately, Rocky and Bullwinkle laced with Enron-style fraud. We have bred, for lack of a better word, bureaucrats over the last few generations who somehow believe it is their manifest destiny to tell the rest of us how the world is going to be and how we we fit into it. Then to mutter under some pretense that this is democracy. That includes the vast majority of Republicans and Democrats in Washington. To all of the neoliberal idiots, come back and see me in ten years and tell me how that worked out for you. (I prefer to be a house servant in lieu of the back-breaking servile positions down at the barn. At least that way I might have some chance at learning to read and write and live beyond the age of 40.)
posted by TimingLogic at 5:32 AM links to this post

Monday, January 25, 2010

How To Think Critically? How About Banning Harvard Business School!

Seriously, for years we have been all over the brainwashing perpetuated in business schools. It's almost an oxymoron to have a Harvard business school professor give advice on how to think critically. Business schools teach very little of value. In fact, our economy did just fine before we started sending anyone interested in management to MBA programs. Management has always gone to school but instead of theory and paper-pushing bullshit taught at Harvard, they went to the school of hard knocks. They worked the line on a production floor and learned the real business. Or they worked their way up a sales organization. Or some other experience-based learning process. Our educational system played a large role in the incredibly failed economic model we have seen gain traction over the last thirty years. And the corruption associated with it.

I am a firm believer in critical thinking. But these are skills you need to teach yourself. Inquisitiveness cannot be taught in business school. That is preposterous. With a demanding workload of often rote school work, where is the time to think critically? Critical thinking is not a homework assignment. Additionally, people attracted to business school are not typically the most inquisitive in society. Instead it is the artist, the writer, the musician, the inventor, the tinkerer and the scientist. It is the very people who eschew the mindless rote babble of business school. When choice enters into the equation, people very often choose a career or college curriculum because it fits their persona. Unfortunately for society, many don't have that choice. If you want to control the world and make a lot of money, you are more likely to go to business school. If you want to find the cure to HIV, you embrace the discovery process so necessary to critical thinking.

It's no coincidence very few MBAs on Wall Street had any idea what hit them in 2008. It's no coincidence that the vast majority of these same people believe they have robbed society blind and got away with it. That they believe this crisis has passed and they have survived.

There are countless ways to teach yourself how to think critically. If you embrace critical thinking, you'll possibly realize the world might possibly be a better place without Harvard Business School. An MBA from Harvard is great to play the political game but don't expect to become the next great critical thinker. Instead, you will be qualified to be a bureaucrat. A manager. A CEO. Someone who, more often than not, stifles the innovation and creativity of society.
posted by TimingLogic at 10:45 AM links to this post

Friday, January 22, 2010

Did The Market Sell Off On President Obama's Bank Regulation Remarks?

I always have to giggle when I read the headlines. The Wall Street Journal and others reported yesterday that the markets sold off on new regulations. Maybe but I doubt it. The reality is that liquidity in this market has been waning for months. We highlighted that market behavior changed substantially four months ago. As of today, the market has officially not moved one S&P point in that period of time. The price discovery intraday has even been spotty at times within the S&P. Something I have only seen a few times. Ever.

The reality is 1150-60 is a huge resistance point. And guess what? Traders marched the S&P right up to 1150 and promptly dumped the market. As you can see on the graphic above, one of my main trading algorithms primarily based on the depth of the market has been on a sell for two weeks.

Did the President's remarks dump the market? HIGHLY unlikely. But then traders love to dupe the public......And the media. That includes the Wall Street Journal.
posted by TimingLogic at 11:43 AM links to this post

Is Greece About To Get Greased? The Euro Drops To A Six Month Low Against The Dollar.

Euro versus dollar chart

We were writing of the coming strains of the Euro when the entire world was writing of the demise of the dollar. And, of course, we were writing of the dollar as one of our two favorite investments to be held during the coming storm. The other being the yen. At that time, Peter Schiff, Jim Rogers, Marc Faber and many others were talking of an imminent collapse of the dollar. Faber even when so far as to call the Euro a legitimate or hard currency as opposed to the profligate dollar. Now, I have little regard for Schiff or Roger's investment or economic abilities (they both got one thing right in a world of countless crises and supposedly lost enormous sums of money for their clients in the process.) but Faber is another story. I have great admiration for Marc Faber but as we have shown through countless posts, his views of the world are quite inaccurate in many regards. That also includes the yuan which we have obviously been bearish on for ages. We were again a first to remark that the yuan would be devalued not rise in value. A position that was the lone contrary voice in the forest at the time. Still a lonely position but a few savvy voices are now chiming in with a similar perspective. All in due time. First we have have to let political idiots and their partners in crime, central banksters play their hands of pissing away the people's money and more economic lunacy before much of this plays out.

"Policy does not allow a choice between depression and no depression, but between depression now and a worse depression later: inflation pushed far enough would undoubtedly turn depression into the sham prosperity so familiar from European postwar experience, and would, in the end, lead to a collapse worse than the one it was called in to remedy." -- Joseph Schumpeter, one of the greatest economists to ever grace the profession

Greece's finance minister remarked this week that it won't leave the European Union. I think we know what that means. That means just about the same thing as what Iceland's political idiots remarks meant before their currency imploded. Politicians talk a lot, know very little and have even less control of situations like this. I don't care if you are magna cum laude from Harvard Law School. Contrarily, often actually because you are magna cum laude from Harvard Law School. The only way out of this crisis is for a politician to acknowledge their inability to solve the crisis and return the economy to the people. Something we have talked about before. Something Alan Mulally at Ford understands. Something very accomplished and egotistical people have a very, very hard time understanding let alone doing.

Once a single country leaves the Euro, it's more than likely all over. Spain and Ireland should have left long ago. As should any or all of the eastern European countries. Portugal and Italy as well. The EU is an ill-thought, ill-planned union cobbled together by political idiots outside of the direct voting and control of the citizens of European countries. Citizens voted for EU approval because they believed the political bullshit fed to them by their own political idiots. When will humanity ever learn that politicians are nothing more than bureaucrats who seek adoration and power to feed their personal ego? Only when we see the infrequent leader in a political role is there an exception. The European Union was never meant to empower the people of Europe. It was meant to transfer sovereignty to those who seek to dominate our lives - political idiots.

The European Union remains in very, very serious trouble in my estimation. Will it completely fail? We shall see. But any talk of a single currency across the globe is absolutely preposterous. How many times have we heard this put forth by conspiracy theorists? Can you imagine the people of the United States allowing such a dynamic to be implemented? Baahaaa! We are a savage lot with a great love of guns, individualism, a general distrust of authority and a predisposition to believe in conspiracies. Good luck with that one.
posted by TimingLogic at 10:00 AM links to this post

Harley Davidson Loss Margin - 30%

Harley Davidson dominates the large displacement motorcycle segment in the United States with a 50% share and a 30% share globally. It is also one of the best managed companies in America. They did have a slight problem of Harley Davidson Finance providing too many easy loans and ramping up production in the biggest bubble in history. This environment spares no one. Their loss margin this quarter came close to 30%. Unit shipments were down over 50%. Their cash burn rate is incredible. Unlike the gambling idiots on Wall Street who are using unlimited free money given by you and me to fund their lunacy, cash remains king in the underlying economy. That dynamic is going to get worse as we have mentioned repeatedly over the years. Don't be fooled by the blabbering idiots, dollars are in very high demand.

The world is not in recovery. Instead, politicians are busy making the crisis worse.

posted by TimingLogic at 9:24 AM links to this post

Thursday, January 21, 2010

Is The President's Proposal To Ban Trading Actually What It Appears? We Don't Yet Know.

Well, first of all, we know that this is a politically-motivated move. Were the President's announcement genuine, he would have proposed these legislative changes long ago. But seeing Dummycrats dismantled at the polls by the American people in November and again earlier this week is forcing a political reality upon the President. That is, even though he is personally popular, his policies are wildly unpopular.

If his remarks today are indeed followed through with, and not rhetoric which allows bank holding companies to do whatever they want while the banks themselves supposedly are separated, no federally chartered banks will be allowed to trade for personal profit. Something we have railed against for the life of this blog. I remain dubious. Let's let the facts roll out over coming months.

I want you to remember something. Goldman Sachs is down 13 points today. We have uniquely written numerous times that Goldman could very well not survive. That their business model is unsustainable. Were the government to restore prior regulation and/or enforce existing regulation across a wide swath of the economy, Goldman Sachs would either need to tranform itself or fail. Karma is indeed a bitch.

Update 1:25PM. The White House has released a remark that the President's announcement is not a return to Glass Steagall. What this likely means is that the President's speech this morning was nothing more than rhetoric. That Wall Street holding companies will still be able to do whatever they want but that the actual bank itself will not be allowed to trade. Well, that's pretty much what we have today. If indeed this is true, the President has just dug himself an even bigger hole because as the details leak out, he will lose even more credibility with voters.
posted by TimingLogic at 11:45 AM links to this post

Propublica's Look At Rapidly Deteriorating State Unemployment Coffers

posted by TimingLogic at 9:43 AM links to this post

Populist Senator From Massachusetts Does The Impossible - The Winds Of Change Are Reaching Hurricane Level. We The People Are Back In The Game.

The world, it is a changing. And it is a changing exactly the way we have said it would. Just a little over a year ago President Obama won Massachusetts by 26 percentage points. Now a populist running on the Republikaaner ticket wins a Senate seat held by the Dummycrats for half a century. And, how did he accomplish this? He won the populist vote - 51% of registered voters in Massachusetts are independents and they voted heavily for Brown.

It's interesting to watch the post election dynamics unfold. Democrats are generally in denial as to what this election means. It means exactly what the media mental midgets or democratic consultants on television say it doesn't mean. It is a vote against the unprecedented fraud and corruption perpetuated by Dummycrats and by the President. And the Republikaaners somehow believe this is a mandate for their resurgence. Hardly. Polls clearly show most Americans have an even higher disdain for the fraud and corruption perpetuated by Republicans. Scott Brown ran as a populist and during his acceptance speech clearly articulated his position as an independent. As someone embracing virtue and a desire to serve his constituents with no other master of fraud, party politics or lobbyist bribes. How is this a political party issue? It's an issue of morality.

Eventually we will see a political awakening that those beholden to the fraud of the anti-democratic Republikaaner and Dummycrat party stooges, who use power and control to jam unpopular agendas through for personal gain, are in very serious trouble. Americans are voting on substance, not stooge ideology. The parties can no longer hand pick candidates, often idiots, who will fall into line and tow the party ideology. Americans want free thinkers who are beholden to we the people. Ironically, populism was the driving force behind President Obama's 2008 elections. As we have written, it was not the Democratic party that elected President Obama. It was the independents that now comprise the largest voting block in America by a wide margin. Even registered Republicans and Democrats are often voting on substance rather than the party line.

As we have noted, President Obama could not be re-elected today. A substantial number of Scott Brown supporters were also Barack Obama supporters. The President ran on a platform of change the same as Brown. To date he has been a complete failure when measured by substance and not rhetoric. The only change we see in the last year is even more corruption, more back room deals, more banking fraud, more lack of transparency, more political lunacy and more party stooges attempting to control the national agenda. What we see is more of Bill Clinton and George Bush with a much more refined pitch.

The status quo still doesn't get it. They may have won recent battles by stealing more of our money and paying themselves for failure, perpetuating fraud and corruption in Washington and Wall Street and utter incompetence in managing the economy, but they have lost the war to the American people. The top is in on Washington's stupidity. They just don't realize the ramifications of that fact. Yet.

One point I really find ironic is the vitriolic personal hatred for Sarah Palin by the ideological Dummycrats. I didn't vote for Sarah Palin but it is amazing how much of her views parallel those of the presidential candidate Obama. Views that are often very mainstream as it pertains to what Americans want from Washington. But power brokers with the microphone always attempt to marginalize dissent by personal attacks. That's how we know their attacks have no merit. Rather than addressing issues of substance through debate and peer review, they instead level personal attacks. We see it time and again. It's the same attacks used against Martin Luther King. Attempts to label him as a threat to national security, a philanderer and a communist. Personal attacks meant to divert attention from the true power struggle he unleashed - the reality of racism, hatred, bigotry and zero regard for rights to a self-determined life guaranteed by the Constitution. This is all part of the same power struggle we see today between the state and populists supporting our personal freedoms including economic freedoms, which have been completed hijacked from many people.

As we have remarked, the future of the economy will not be decided by banksters or political stooges. It will be determined by the American people. By a populist movement. One where conservatives and progressives share the ideals of honesty, virtue, serving the American people and most of all, true leadership. Values we all share.

President Obama had every dynamic in place to become one of the greatest Presidents. He personally blew it. And so did the Dummycrats. Will he recover? This is either a wake up call or effectively the end of his Presidency. Because if he doesn't, there will be a massive revolt in the 2010 elections. And that is exactly what we have been writing about throughout all of 2009.

The political bubble in Washington is popping thanks to the people of this country. Not to politicians or the most powerful and corrupt unions in the history of America - political parties.

Welcome to the new world order. One where politicians are held to account by their masters. That would be you.
posted by TimingLogic at 8:53 AM links to this post

Monday, January 18, 2010

Today We Celebrate The Life Of One Of The World's Greatest Leaders. Ever. A Man Who Gave His Life In The Fight Against Hatred, Bigotry And Evil.

posted by TimingLogic at 2:49 PM links to this post

Friday, January 15, 2010

The Fallacy Of A Consumer-Led Recession And The Converse Fallacy Of A Consumer-Led Recovery. Seemingly, The Entire World Is Wrong.

This is the holiday present I promised. This post is somewhat of a puzzle as are many of my other posts. I don't always share specifics about my models or everything I am thinking. I am here to encourage free thought and people thinking for themselves. Therefore, I'm not going to throw all of the marbles on the table here as it pertains to sharing specific data behind this post but I'll share enough to expose the fallacies surrounding one of the greatest dupes in modern times - consumer-led recessions and recoveries. And to give people enough to either do their own research or draw some of their own preliminary conclusions. When you are finished reading this, hopefully you will gain a new appreciation for how substantial the scope of this crisis is.

We have written countless times over the last five years that there is no such thing as a consumer-led recession. Yet I really haven't provided an indepth explanation beyond some of my early remarks early in the life of the blog. I really had no intention of ever putting up this post but with the entire world completely duped by faulty analysis of this crisis, as a contrarian I can't resist. Every financial blogger, all of the financial media, seemingly all economists, all of Wall Street and all politicians around the world are focused on the mythological consumer-led recession. Bulls eagerly await consumer data to find nuggets to validate a recovery. Bears point to consumer debt loads as validation of a tapped out consumer. Basically, everything that has been supposed over the last four or five years by both bulls and bears is either completely wrong or at best, very incomplete.

Many in the blogosphere have done a great service by writing about issues with housing, commercial real estate, derivatives, debt, etc., Financial bloggers have almost completely replaced the financial press as the source of truth. Be that editorializing or the creation of original content and even investigative journalism. Not really a surprise. But they have miss the forest through the trees. These are symptoms of the underlying economic root causes of this crisis not the crisis itself. Something we have written of ad nauseam on here. If one truly understands economics and can connect the dots of what we see before us, one easily understands my remarks. Why is this so important? Well, three main reasons. The main reason is if we are going to find solutions to this crisis, we must first identify its causes. Secondly, so that we don't make the same mistakes in the future. Thirdly, if one understands the economic drivers of this crisis then one can more accurately anticipate its outcome and accordingly protect ones self more effectively. I am talking about economic root causes. Not causes of profligate politicians being the source of this crisis. Yes indeed they are. But trying to fix many of the issues cited above is having little effect because the doctors are treating the patient's symptoms rather than the ailment. Keynesians have been almost completely wrong in their interpretation of his views on this type of crises, Monetarists are going to be completely debunked as we have written quite often and Austrians have been right about credit but they still don't understand the underlying cause of the crisis. And, in fact, I really haven't seen very many who actually understand economics beyond credit. Therefore their views on solving it are typically very inaccurate. In fact, most argue for this mathematically-challenged notion that you let a complex system fail and somehow the world will pick up the pieces and we'll all live happily every after - an ungodly anti-scientific answer that will almost certainly result in a total bust. I would call this the religious doctrine of economics - one that eschews all science in favor of ideology. Ideology never proven but read in a book somewhere.

Everywhere I turn I read the consumer this, the consumer that, the consumer-driven Anglo-Saxon culture. The economy won't recover while the consumer is paying down debt. The economy will muddle through until the consumer reduces their debt level. Bulls and bears alike participate in this babble. The politicians and economists in the last and current White House economic teams are equally guilty. First Bush's stimulus package encouraging the consumer to spend then Obama's team follows up with the same psycho babble. When Christina Romer, White House economic misinformation officer, remarked on a Sunday political show six months ago that it was a good time to buy a car, I knew any hope of a new administration effectively dealing with this crisis was completely dashed. Dashed by the reality of President Obama surrounding himself with advisors embracing the same lack of sound economic training that has gotten us into this mess. Because of that fact, the world is missing the scale and scope of this crisis, they are mistakenly calling an end to this crisis and they are formulating incorrect policy for a recovery. The crisis instead is worsening not only for the messes created to date but because of economic ideology and associated policy decisions that continue around the world. Especially foolish are the policies of the two gorillas dancing the waltz - China and the United States. No surprise since both countries are run by fascists. China by the communist party. The United States by fascist bankers paying off our leaders which leads to a continuation of failed ideology. And, in fact Wall Street's involvement in our government is indeed fascist. Read a book if you question my use of the term.

It matters not if you are a Nobel Prize winning economist (and there are many who believe), if you believe we are witnessing a consumer-led recession, you really don't understand economics. I don't know why we have economists so utterly unfamiliar with economics. Maybe they don't teach this fact in modern economics curriculum or maybe most economists simply didn't pay attention to their professors or maybe the distribution of economists is defined by Pareto's Principal (in other words most are incompetent) or maybe it is because most people commenting on the economy don't really understand economics, but it is scientifically impossible to have a consumer-led recession. Great minds in economics have known this fact for hundreds of years. To deny this is to question if the sky is blue. And if someone can't explain why it is a fact, then they fall victim to the foolish notions advocated by nearly every media outlet, economist, politician, bankster and most financial bloggers. And that is exactly what has happened. It is like a chain letter. One person starts the consumer-led recession myth and every single source of information piles on without clearly understanding what they are talking about. In other words:

"An error does not become truth by error of multiplied propagation, nor does truth become error because nobody will see it" -- Mahatma Ghandi

On that note, this argument that we cannot continue with 60% to 70% of GDP as consumer demand is another related myth. There is absolutely no truth to it. The U.S. consumer has been approximately 60-70% of GDP since statistics have been collected. When the U.S economy was the envy of the world, it was 60-70% of GDP. And when it collapsed, it was 60-70% of GDP. At volatile extremes, it has been even higher. The data goes back one hundred years and has never wavered. I know because I have the data. Now we may see consumption drop to 64% or 65% from 69% or some other marginally insignificant change in data but those pointing to overconsumption as a cause of this crisis, and there are many, are ideologically driven. Because of that, they don't understand the macro factors driving this environment, the major and permanent changes that are taking place in the underlying global economy or how to get out of this mess. Frankly, if everyone understood the historical context of consumption data they wouldn't be pointing to these statistics as an unsustainable dynamic or concern. This misinformation sucks in both bulls and bears and, in fact, has been a primary argument for the majority of bears. This is loosely tied to these remarks now building that the U.S. is becoming a nation of savers. Another myth. Our savings aren't increasing for the vast majority of people. The reality is our consumption is dropping because we are insolvent as a society. And because remaining income is now being allocated to paying down debt. Those who survive this crisis might have a higher savings rate but that won't be because we have an unsustainable amount of GDP based in consumption. It is because of other dynamics that will develop. That goes well beyond a behavioral change driven by fear of reliving this environment.

One might also consider the reason we have such a high consumption rate is a basic tenet of why the Revolutionary War was fought. The very reason why America became the greatest nation ever to grace this earth. And why immigrants have poured into our nation by the tens of millions from every country on earth for hundreds of years. These basic human rights surrounding consumption are part of our Constitution. It's called self-determination and the rights of individuals to own their own means of consumption or more commonly called property rights - a substantial theme of our Constitution and Declaration of Independence. I mean that on a much higher level than a wage to buy a television set. I mean in the spirit of inalienable human rights of self-determination. That my body and my mind are my property as was meant by our founding fathers.

People that are now coming out and stating that we consume too much are making dubious moral judgements founded in their personal beliefs of what is acceptable human behavior. Or based on a faulty analysis of this crisis. These are nothing more than opinions. Lies of the mind. Some of these might be appealing given our current consumption model leads to polluting the planet and destroying the environment (because we don't factor in costs including end of life management, packaging waste, etc into the product lifecycle equation - a major contributor to the poisoning of our planet and ultimately to humanity.) but we would be hard-pressed to find a morality-based consensus on consumption. The opinions would be as varied as the hundreds of millions of minds which make up this country because this is not a debate about universal morality. Beyond a basic rule of law, no one person is going to tell another how they should lead their lives in a society of choice. Who is the arbiter of what is acceptable? I'll tell you who the arbiter is. It's you. It's me. It's called personal choice. It's called freedom of mind. The consumer is not what is wrong with the American economy whether one morally agrees with current consumption dynamics is irrelevant. And neither is debt. They are symptoms. Statements that have come across this blog countless times while the world chatters incessantly about relatively meaningless topics. Or topics which would be meaningless were we to be addressing the causes of this crisis.

So, let's look at some further data. That being GDP. GDP is simply one method to measure economic metrics of a particular country's economy. It isn't the Bhagavad Gita or the Qur'an or the Bible. It is simply a measurement. One way I could measure myself is that I have brown eyes and hair. Or that I am wearing blue jeans and a t-shirt. Or that I wear glasses. Or all of the above. Including all of that data would give someone a marginal representation of me. Not a complete representation. GDP is simply one accumulated measurement of the American economy yielding a marginal representation. It isn't the only measurement and it isn't the most representative measurement either. That GDP's content is relatively meaningless but is accepted as the primary economic measurement by economists should tell you something if you are a contrarian. GDP can grow at whatever rate the government creates new debt beyond that of the private sector's growth throughout this crisis. Yet how relevant is that to a functioning economy? It doesn't matter if that spending is on pencils, Ferraris or movie tickets. Yet, none of these increase society's wealth or have any meaningful impact on employment. We have somewhere between one quarter and one third of all people underemployed or unemployed and GDP has not been and is not capturing the underlying dynamics of the economy.

Let's tie this in to another remark we have made on here. And do so by using a different measurement than GDP. Something you won't read anywhere else. And I do mean no where else. Not because it isn't fact but because the entire world is consumed (pun intended) with the wrong analysis of this crisis and a completely faulty understanding of economics. And I do literally mean completely faulty. Business trade in the U.S. economy is about four times the size of consumer spending. That is right. Four times. Business trade in the economy never has been nor could it ever be equaled by consumer demand. Consumer demand is driven by income and it is quite obvious income is a relatively small percentage of overall business trade. Yet we are told the consumer is 65% of the economy. Often by Nobel Prize-winning economists. Wrong! The consumer is 65% of a particular measurement of the economy. That being GDP. They are clearly not the same yet even this remark is used interchangeably.

If someone would take the time to apply common sense to the fact that consumer spending is some percentage of wages and wages are some relatively small percentage of business trade, we would be able to develop a reasoned reality on all of this mythological consumer-led recession and consumer-led recovery banter. Government spending too is a contributor to GDP but in actuality what is government spending? It is simply some apportioned amount of income and corporate profits. As we have highlighted, government spending was on track to account for 44% of GDP this past year. But how does government contribute to overall wealth creation when it is simply taking money from Peter to pay Paul? It doesn't. Yet it is a measurement of GDP. A substantial measurement in today's environment. Maybe a different way to consider government spending as it pertains to the fallacies of this post is to consider why government has needed to run ever-larger deficits for the last thirty years in order to sustain the perception of GDP growth. And what if they hadn't? Might we even possibly conclude that peak economic activity in the most impactful business sectors of the American economy occurred in the late 1970s? And that is why government has had to play a larger and larger role in the economy and run larger and larger deficits? Ridiculous you say? Hahaha.

If you consider the scope of business trade in the American economy, all of a sudden consumer spending pales in comparison to overall economic activity, now doesn't it? It should. And so should all of the incessant babble focused on a consumer recovery. It is not the consumer that drives the economy. If consumer spending would fall by a drastic ten percent, it would still be an almost insignificant dent in comparison to the overall trade in the American economy. In fact, it would be only two percent. We would absorb this behavioral change like an after dinner mint with all other things being equal. Yet the economy hasn't absorbed this drop like an after dinner mint. Therefore, might you conclude all other things are not equal? That the underlying problem is not the consumer?

The American consumer is not the cause of this crisis. In fact, the American consumer has nothing to do with the root cause of this crisis. Until this very fact is recognized, we will journey down the path of destruction. And, at this point I frankly don't expect this fact to be recognized until we see a major economic crisis forcing the status quo to re-evaluate the fundamental changes in the global economy that are taking place as I type this. The fact that banksters and their beholden politicians are making decisions about how to fix this economy is almost laughable. They both created it. Because we are listening to a terrible bunch of idiots, we are going to see idiotic policy decisions out of Washington.

There is a tremendous amount of information in this post. Information that an inquisitive mind would easily piece together. Or might eventually come to understand. Or maybe already understands. A major reason why the economy is not coming back and why all of the focus on when consumer spending will pick up again or when will the consumer pay off his or her debts is anecdotally interesting but as it pertains to what matters in this crisis or the future of the global economy, it's pretty much irrelevant.

Just as in 1929, many bears were initially right to be concerned about a growing crisis. Then before the final and most horrific collapse, many of the bears turned bullish and re-entered financial markets in 1930 - comparative to 2009. All because they misunderstood the dynamics driving the crisis. Caught in the economic tsunami they didn't see before them. It was there. It was building. They simply didn't understand it. That same dynamic is at work today as many bears are either publicly remarking the worst of this global crisis has passed or are turning outright bullish. They are doing so because they don't really understand the magnitude of the dynamics driving this crisis. Just like 1929. Back in 2006 when the world was basking in its economic glory and Wall Street was hailed as brilliant savants, we wrote that it wouldn't be surprising to see all global wealth created since 2000 to be destroyed. By the time the world awakens to the horror before it, that dynamic will have already played out on some level. The status quo cannot fix this problem. We need a new economic model as we have so incessantly ranted.

There is no such thing as a consumer-led recession or a consumer-led recovery. There never has been. There never will be. Competent economists know this intrinsically by the very nature of their understanding of how the economy works. What ails the global economy is much more substantial in scope and scale than most anyone is talking about. Well, except for us and a few other voices in the wilderness. We predicted most everything that is happening on a major scale around the world today because of what I would classify as some of the strongest quantitative models in finance. And a deeper qualitative understanding of economics than anyone on Wall Street or in the mainstream media. At least anyone available for public consumption. People should be careful of what they choose to believe based on inaccurate ideology of faulty economists or financial bloggers or the media. There are blind spots in any analysis but there are enormous blind spots in ideology that doesn't understand the complexities of measurable and real economics and not the theory and ideology we hear so often.

Given humanity's natural herding behavior and natural tendency of people to mimic others, is it really that surprising the entire world is focused on the wrong analysis of this crisis? And they have been from the beginning?

To the contrary, as a contrarian I would ask how it could really be any other way.

The point I want to leave you with is that everyone should be more inclined to think for themselves or at least to always question authority with every decision that impacts your life. In the end the vast majority of expertise is anything but. No one is an expert in your life more than you. And indeed, if self-determination played a greater role in our society, ie questioning authority, we would never have allowed this environment to come to pass. An environment created by elitist neoliberal idiots - people who don't believe in democracy but instead in telling other people how the world should be. And how you should fit into it.
posted by TimingLogic at 5:32 AM links to this post

Wednesday, January 13, 2010

Our Government The Crack Addict - The White House Plans To Raise $120 Billion In Banking Fees

Our federal government is completely out of control. Who is going to pay for this tax? Well, that's quite simple. We are. If the government wants to tax anyone, tax the executives and high income earners at banks. Taxing the banks themselves will simply result in more usurious fees levied on people who cannot afford it. A completely regressive tax which will ultimately impact people who cannot afford higher taxes.

This is modern-day government-meddling politics at its best. The same meddling that has destroyed the economy. Rather than making risky gambling with our money illegal, the government comes up with a plan to allow banks to continue their fraudulent behavior. This solution perpetuates the growth of the state. The government can then tax the behavior in order to perpetuate itself regardless of the morality of the decision. Our government is an addict grasping for any new sources of crack.

If the President truly wants to ensure the American people are never on the hook again for Wall Street's profligacy, he should mandate true financial reform - prosecute theft and fraud, break up large banks, ban casino gambling with society’s money and return to community banking or public banking or both.

This attempted effort by the White House is akin to legalizing heroin, the most addictively destructive of drugs, then taxing it to pay for the treatment. All the while hoping to make a profit on the scheme.

posted by TimingLogic at 5:32 AM links to this post

Tuesday, January 12, 2010

Venezuela Joins Race To The Bottom Of The Barrel

posted by TimingLogic at 1:24 PM links to this post

Constitutional Crisis In Argentina? President At War With Central Bank.

Well, what a surprise. More rats in the emerging market closet. So I log in and see one of my feeds has this story out of Argentina involving central banksters and seizure of unconstitutional power. And the senior editor to the Buenos Aires Herald is writing an article defending the independence of central bankers. Defending ideology.

I have no idea what the root cause of Argentina's problem is, and really, at this point I don't care. But then isn't that really the general feeling of most everyone in developed countries? That we have our own problems to deal with and these countries are going to have to deal with their own crises? Exactly what we wrote would happen years ago when everyone, and I do mean everyone, was telling us how profligate the U.S. was and how emerging markets were currency and investment safe havens?

There are so many things I could write about on here if I had more time and were so inclined. But, let's use this situation as an example to make a quick point you likely won't read anywhere else. That is because the vast majority of the media is substantially undereducated in monetary policy as are the vast majority of financial professionals. And the vast majority of bears are ideologically-driven to believe banking should be in private hands because they ideologically view all government as incompetent.

So here's the deal. The Buenos Aires Herald editor is defending something he clearly knows nothing about. Not that I advocate the dynamics of what is happening in Argentina because I don't understand the dynamics. But he is defending a private monetary system which incents and perpetuates fraud and lack of access to capital for the vast majority of Argentinians. ie, The banking system is designed for the fortunate few.

The separation of central banking independence from Congress he refers to is a ruse as we have said time and time again. Let's go a step further than I have in my prior commentary of this topic and leak out a little more interesting information. Something I doubt you will read elsewhere. The independence of central banks is not to protect monetary policy from the government's profligate hands as is so often remarked. It is really to protect the bondholders of government debt from the people, the sovereign, ie government. To keep the people from monetizing the profligate debts benefiting the rich and ultimately held by the rich in the form of government bonds. To ensure the masses are forced to instead pay their enslaved debts to society's elite - the bondholders. The Herald editor unintentionally supports his master rather than a democratic institution by supporting private banking and the independence of its central bank. The rule of law has been hijacked by fraudulent elements through the incorporation of a private central bank in Argentina. To see it go would be a great victory for the sovereign of Argentina.

We need a new banking system. The problem is not the Federal Reserve - something most ideologues simply do not grasp. Public banking is the only true form of democratic banking. Private banking is the scourge of humanity. And that is why our founding fathers told us that private banking would destroy America and her ideals. And indeed it has. And in more ways than almost anyone could ever imagine from trade to economic development of underprivileged people to employment opportunities for all Americans to creating a chronic welfare environment for many to the perpetuation of racism to threatening Social Security to threatening our currency and on and on and on.

More volatility, especially in emerging markets, dead ahead.

posted by TimingLogic at 7:18 AM links to this post

Monday, January 11, 2010

New York Governor Considers Ultimate Fighting For New York

I think this is a great idea.

Most of us have to have some sort of skill to survive in this world. Maybe we build houses or we care for people or we build things or we teach children or we handle fire emergencies. Whatever. We all have to be good at something. What skill does a banker have other than to prey on society by levying usury? Rather than pass judgement, why not let the market decide?

How about a headline event of Rampage Jackson versus Lloyd Blankfein? Let's put Wall Street's mantra to the test. The market is the arbiter. I'd pay bookoo (beaucoup) bucks for a ticket to that event. Hahaha.

posted by TimingLogic at 3:29 PM links to this post

Two Of Wall Street's Finest Remark On The Coming Congressional Inquiry Into Wall Street

Baaahaaaa! Monday's are always good for a joke. A Wall Street boob buying $40,000 porta-potties for his office while heading one of the biggest corporate financial disasters in American history and a Wall Street lawyer not to be confused with the anti-Christ. Just a little Monday humor. I know both of these men are fine upstanding pillars of American ideals.

This investigative commission by the Congress will likely be a boondoggle. Mostly because we need an independent investigative commission which will also follow the Wall street money machine to Congress and Washington. We effectively have the fox leading the investigation into who ate the chickens. A most hilarious and pathetic reality.

We need an investigative commission which reports to no one. One which has no conflicts of interest. One with a search for truth and not a witch hunt. One which will report its findings directly to the American people. Not one tied to the fraudulent circus in Washington.

posted by TimingLogic at 1:29 PM links to this post

Sunday, January 10, 2010

America's Financial Terrorists

posted by TimingLogic at 7:10 AM links to this post

Saturday, January 09, 2010

Rudy Guliani - Idiot Of The Week

This has nothing to do with anything but I just couldn't pass this up. Wouldn't the world be a better place if we didn't have professional politicians? These people just can't seem to go away. They retire and become political consultants or aspiring politicians in the next election. I mean seriously. Where do all of these self-aggrandizing, megalomaniacal, attention-seeking political idiots come from? How much better off would our country be if we just had moms and dads serve a single term as representatives of our government then go home? There is something wrong with many in that generation. Maybe it was all of the drugs they took as kids. Or maybe they didn't wear a helmet while playing football.

posted by TimingLogic at 5:12 AM links to this post

Friday, January 08, 2010

Jim Chanos Joins The Land Of The Sane - China's Bubble

Still today most people are talking about a real estate bubble in China. China's bubble is NOT a real estate bubble. It is a depressionary capital bubble. We have been writing of the coming collapse in China for five years. And, have probably written more than any other media source on earth. I could have told you ten years ago that China was going to have a bubble were I blogging at that time. The China bubble is enormous and has been building for a long time. Everyone was duped. Almost every bear including Jim Rogers and Peter Schiff and, of course, every bull including countless mega companies who are now exposed to tremendous risks with their investments in China. That includes the banksters. Rogers is still in his own bubble and his ego won't allow him to acknowledge the crisis as quoted in the link below. We noted a few years ago that Rogers seemed the fool for moving to China at the peak of the biggest bubble in history. He has too much invested emotionally for his ego to allow him to admit he was completely wrong at the exact wrong time in history.

There is only doom in China's future. Once again, the U.S. will emerge from this crisis more dominant than at any time in our life. It's just a matter of when our leaders wake up and provide the right policy to create that recovery.

posted by TimingLogic at 10:49 AM links to this post

Timely Remarks On Employment And Bernanke's Refusal To Acknowledge Responsibility For The Housing Bubble

This isn't the post I have promised but that is coming. Probably this weekend or early next week.

First a few timely comments before we get on to the post. Payrolls continue to decline. In December, we can already see what may be a re-acceleration in job losses after the Christmas season/the end of many businesses fiscal year. I know some larger firms which are already planning another round of layoffs. One of the largest commercial real estate investment trusts I am aware of has already laid off people in the first few days of 2010. Those who argue for another round of debt-driven government spending to create jobs, such as Paul Krugman and Bill Gross, are literally clueless as to how to get out of this crisis. Mostly because they have no idea what caused it. And the answer is not to let the chips fall where they may as Peter Schiff, Ron Paul or other mathematically-challenged "free marketers" believe. (I like Schiff and Paul for their honesty, not for their grasp of reality.) That would lead to complete collapse. Nothing really new in these statements.

Additionally, the Bernanke bashers are out in force again. Bernanke caused the housing crisis is again on the table. This is because Bernanke recently remarked that the Fed was not responsible for the housing crisis. Technically, he is correct. We've already talked about this. Blaming the Federal Reserve shows a clear lack of understanding of economics and correspondingly, why credit flows to what sectors of the economy for what specific reasons. I don't care if you are a Nobel Prize-winning economist. If you believe this, you need to go back and understand basic economics and capital theory.

As we have said quite a few times, the Federal Reserve does the same thing cycle after cycle. They raise and lower rates to regulate credit. Why didn't we have a housing bubble ten years ago? Or fifty years ago? Or thirty years ago when the Fed was lowering rates? As we have written the Fed's rate policy simply follows three month Treasuries. Three month Treasuries imploded post 2000 and the Federal Reserve simply followed suit as it always does. ie, The market was telling the Federal Reserve what to do.

Think of credit as gasoline. You can buy a gallon of gasoline to run your car or lawnmower - productive use. Or you can buy a gallon of gasoline and burn your house down or as some nutcases have done, douse people and light them on fire - unproductive uses of gasoline. The Federal Reserve is simply a conduit for credit. You need to understand how and why it is used in particular ways in particular cycles. The answer is very, very, very clear if you understand economics. If you don't, you blame the Federal Reserve. It's noteworthy that every financial blogger, most every media outlet and most economists blame the Federal Reserve. As a contrarian we note this dynamic when it is substantiated by fact. The mob is seldom correct.

Bernanke is surely guilty of substantial failure. But his failure is not for causing the housing crisis but for not understanding what was happening to the American economy. And for standing up to tell Congress that the American economy was collapsing in 2000 and understanding what needed to be done to stop that collapse. Again a rehash of prior posts but a reminder while the howlers again come out in force. The reality is those blaming Bernanke for the housing crisis were often supporters of the economic policy that actually caused the housing crisis. Ironically, that policy had absolutely nothing to do with housing. That would not be Federal Reserve policy. The Fed simply responds to the market by raising and lowering rates. They don't have anything to do with economic policy. That is the domain of the Congress and our President and the idiotic economists they hire to advise them. And the corrupt lobbyists they listen to for policy decisions so that political parties can line their pockets with untold riches.
posted by TimingLogic at 9:23 AM links to this post

Monday, January 04, 2010

Limited Posting

There will be limited posting for some period of time. LOTS to cover in 2010. As promised around Christmas, I have a special post that will go up later this week. A holiday gift of sorts. Something that may reset your expectations for this crisis. Cheerio until then.
posted by TimingLogic at 10:14 AM links to this post