Tuesday, August 31, 2010

Dying Industry Tries To Regulate Itself Back Into Our Lives - More Of Congress Selling Out Our Government For Their Crony Lobbyists Buddies

This is beyond asinine. Washington bureaucrats make a mockery of democracy.

Title link also here.
posted by TimingLogic at 11:21 AM links to this post

CBS News' Ratings Imposion - Society's Repudiation Of A Mindless For-Profit Corporatocracy Press

Is it any wonder CBS News' ratings are at a 20 year low? Where is the press seeking accountability of government, the objective reporting of substantive issues and investigative journalism of massive corruption in our government? Watching Katie Couric is a mind-numbing drag.

Title link also here.
posted by TimingLogic at 10:59 AM links to this post

The Cycle Of Volatility Continues: Dormant Mount Sinabung Erupts After 410 Years Of Silence

Just a quick remark on a related topic. For those who may have a deeper understanding of cycles, something we will not be discussing on here, I want to make a clarification to the passing of an event of a life time (or many life times) that happened in August; the Cardinal Cross. This event was talked about with some vigor in financial circles. Almost all of the talk missed the significance of the event. Most were looking to that particular date for some possible cataclysmic event but the date came and went. For those who think with their eyes, ie the event passed and it is now out of site and therefore out of mind, this would be incorrect. Cardinal Crosses are beginning events. In other words, the beginning of a new cycle of sorts. It's the cycle after that event which may be significant. In other words, the passing of that event may mean the resumption of the global economic storm.

Title link also here.
posted by TimingLogic at 5:55 AM links to this post

Monday, August 30, 2010

Will Rising Nationalism Doom The European Union

Haha. We've been talking about a coming period of rising nationalism since starting this blog. That was at a time when we were in the glory of Pax Globalia. No one on Wall Street would have considered such a position as valid regardless of whether they were bulls or bears.

Politicians love the game of power and control. In other words, tensions in Europe could become enormous as politicians and the state do what they do best in coming years - criticizing, blaming, deflecting and threatening.

Title link also here.
posted by TimingLogic at 9:21 AM links to this post

No Economic Double Dipping In Britain? BAAAHHAAA!!!!

One of the major posts we wrote on this blog years ago highlighted how and why money flowed through an economy. Money just doesn't arbitrarily flow wherever and whenever. In other words, as an example, money didn't just flow into real estate because interest rates were low. That is the uninformed view mostly perpetuated by Wall Street, economists and the mindless mainstream media. This is similar to the GDP ruse we have written about. Most economists, Wall Streeters and the media remark that consumption is 70% of the American economy. No, it is 70% of GDP. As we have remarked before, total trade in the American economy dwarfs consumption by a factor of four. And to understand what is wrong the our economy, one needs to understand both of these dynamics and more.

What if we had a public banking system where interest rates were always low? In other words, rather than the interest charged on loans being profit-driven for a private banking system, banks and loans would be used as a force for human development. You remember that concept? It's called democracy. In such a dynamic, interest rates would always be low because society would have no incentive to maximize the profit-driven banking tax on its development but rather would have the incentive to maximize development itself. Does that mean we would have a perpetual housing bubble with perpetually-low interest rates? That's ridiculous. The argument that the Fed caused the housing bubble because it lowered interest rates is one of the most asinine and economically-ignorant arguments in society today. It's a feint. And no one is more guilty of this than the Nobel Prize-winning economics community generally blaming low rates for the housing mess and our current economic malaise.

As we have said a thousand times, this crisis is not a banking crisis, it's not a housing crisis, it's not a debt crisis, it's not a crisis created because the government shouldn't be offering Social Security or Medicare as political idiots like "Dick" Armey would have us believe, and it's not a crisis that monetary policy will fix. Take out all of those dynamics and who is talking about anything else? How can you fix any problem if you have an improper diagnosis? The patient has terminal brain cancer and the doctor is treating the symptoms of a headache.

That the Telegraph is reporting British construction sales are skyrocketing once again and the economy is now humming along, means what? It means the Telegraph doesn't know its arse from a hole in the ground. It means quantitative easing has had the Marching Moron effect in Britain. ie, A bunch of incompetent bureaucrats are enabling more and more bad investment and unsound economic behavior into the economy and creating an ultimately larger mess. ie, People who have no idea what they are doing are making policy decisions so that other people who have no idea what they are doing can go back to doing what they were doing before. That is, doing more of what they didn't know what they were doing in the first place that created this mess. In other words, Britain is the poster child for bureaucrat-directed Orwellian make-work as was so popular in the Soviet Union.

The quantity of money idiots, aka the Chicago School we have said will prove to be a failure, are now destroying Britain. The Bank of England is now in unchartered territory for the first time in over three hundred years. They are Marching Morons running a nuclear power plant without an instruction manual.

Britain's economy is in serious trouble. As we have said since this nonsense about a double dip started, there is no double dip. Britain is simply laying the seeds for an even larger continuation of this single dip. They areadding to the negative outcomes associated with the continuation of the same crisis.

Remember, we have identified Britain as our candidate for a major country possibly experiencing a hyperinflationary bust. We outlined why that dynamic is more than likely not possible in the U.S. or Japan as the necessary dynamics needed to possibly create hyperinflation do not exist in these two economies. Britain, on the other hands, fits the hyperinflationary profile as a distinct possibility.

No economic double dipping? That's right. Not two flavors, just more of a massive single dip flavor still in progress.

Title link here.
posted by TimingLogic at 5:55 AM links to this post

Friday, August 27, 2010

ProPublica: The Fallacy Of Wall Street's View Of The Greater Fool Theory. Wall Street Is Still Holding The Bag. Is This Racketeering?

As I have commented on here over the years, since ProPublica's formation, I have been a big supporter. I give them as much press as possible. And this article is an incredibly damning blow to Wall Street and an example of excellent journalism. (By the way, PBS Frontline just aired a TV special with ProPublica on the post-Katrina lawlessness of some law enforcement. It's available to watch online at the Frontline web site.)

It has been a while since we have remarked of this dynamic, but we have commented numerous times that Wall Street has become the economy - something you can easily understand after reading our last post as well. A few people realize this but the vast majority clearly don't. Wall Street most definitely doesn't and neither does Washington. ProPublica points out that when the economy started imploding back in 2006, Wall Street started buying its own toxic trash when no buyers would step forward. This was done to keep the Ponzi scheme going. In other words, Wall Street's embrace of the Greater Fool Theory collapsed and they were left holding the bag. (2006 mid-year was the peak in American economic activity even though financial markets pushed higher for another year. At that time we guesstimated the economy had peaked but it has since been validated by economic data. Now, courtesy of ProPublica, we have some indication why financial markets kept rising into a collapsing economy. Wall Street was engaged in self-dealing.)

This is a very important dynamic to understand. Because it is in some ways the very foundation of quantitative finance, including Wall Street's activity in equity and commodity markets. This self-dealing is the exact same dynamic we have been writing about for nearly 18 months regarding equities. In other words, our posts remarking that as fundamentals continue to develop, Wall Street will eventually be left batting shares back and forth as more and more counterparties are forced to leave equity markets. And that Wall Street will eventually be left holding the bag with overvalued equities. This is another example of an outcome associated with the failure of the Greater Fool Theory. This dynamic developed because Wall Street has become the economy. Today there is no one left to buy their inventory of equities (or commodities) and Wall Street will eventually be buried by these markets. It's the exact same dynamic which led to the implosion of the housing derivatives and financial products that Wall Street created. No one was left to buy.

What Wall Street really needs is for the Federal Reserve to step in and become its counterparty as happened with the mortgaged-backed securities. In other words, if the Federal Reserve announces it is going to start buying equities and-or commodities, we know the Federal Reserve has truly become the most corrupt enabler of crimes of treason that this country has ever seen. Because it will be doing so to once again bail out a fraudulent Wall Street.

I believe the ProPublica story exposes much concern that Wall Street could be viewed as a criminal racket as defined by the RICO Act. Personally, I believe there is ample evidence for the government to go after Wall Street using RICO. The question is why aren't they? I think you know why. ProPublica's article provides validation of possible criminal racketeering. Only the Justice Department can actually make that determination. But.... Now that ProPublica has exposed this dynamic to the main stream population, let's see how long it takes for someone in the legal or investigative journalism community to bring the question of racketeering to light. I can almost assure you, someone will. All in due time.

Title link also here.
posted by TimingLogic at 9:29 AM links to this post

Wednesday, August 25, 2010

It's Time For A Rant. Marching Morons Or The Rise Of The Bureaucrat: Quant Hedge Funds Struggle To Survive As Fundamentals Expose Their Stupidity.

Cyril Kornbluth's Marching Morons is a favorite short story of mine. The meaning behind the story seems misinterpreted by many people but the title pretty much sums up the story's characterization of elitism, herd behavior and human nature. The story was published more than a half century ago and is very hard to find in print and expensive to buy. That's unfortunate because it has so many analogies to today. I'm not sure what the copyright laws are on the book, but I just Googled it and the book appears to be available in PDF form on the net. Do your own diligence.

Let's take a similar path to Kornbluth's award-winning short story with our own very short look at a Marching Morons dynamic in the field of quantitative finance and private for-profit banking.

We live in a society where money and power have almost exclusively determined the fate of our economy for the past few decades. This dynamic has developed because of undue influence over the rules to the game of economics. Put another way, money has bought and paid for the dismantling of our society. As we have said many times, Albert Einstein didn't die a billionaire and neither did most who sought truth and reason. In other words, truth and reason are not seekers of power and control over society. These two personality types are seldom contained in the same person. Power and control are the dominion of the a personality type I would classify as the bureaucrat or in extreme cases the psychopathic or narcissistic bureaucrat. These are the same personality types who rise to the top of the communist party in China, the Soviet Union, past fascist states like Germany and the like.

bureaucrat [byoor-uh-krat] - an official who works by fixed routine without exercising intelligent judgment.

Undue influence and power over the economy by CEOs, Wall Street bankers and politicians creates a perfect storm of personalities who seek power and control over truth and reason impacting our economy. Remember, all of these positions are ones which live off of the productive assets of society. They are not makers, inventors or creators of anything. They most definitely are not the creators or inventors of society's capital stock. They don't build cars. They don't teach our children. They don't grow our food. They don't create our expressions of art. They don't fix our air conditioning systems. They don't build houses. They don't create new forms of medical treatment. They don't nurse people back to health. They don't engineer the next iPhone. They don't invent green technology. They don't build bridges. They truly rely on others for their economic success. As it pertains to the economy, they are in fact economic neofeudalists who usurp their authority and wealth from serfs; the productive assets in society. That would be us. That they have gained so much power is telling.

The dynamic created by the comingling of like-minded bureaucrats seeking the same goals of power and control is a very esoteric topic that has been missed in the creation of this crisis but we could easily classify this intertwined relationship that has destroyed our economy and democracy as the rise of the bureaucrat. Bureaucrats have a common psychological profile - they have primary intent to control the world around them. (The human mind has only one of two intents in every interaction we undertake. The intent to seek truth and the intent to control. Intent to control is associated with an unhealthy ego and is a major inhibitor to an emotional and productive self. It generally manifests itself in a dysfunctional interaction with the world around those who exhibit such destructive characteristics. It's also a major reason why most bureaucrats are horrible leaders, why most bureaucrat-led companies are unpleasant places to work and why concentrated power always results in evil. It's why we have a belligerent foreign policy and on and on.) People who exhibit this psychological profile are not the purveyors of democracy or free speech or facilitators of free thought or individual rights, but, in fact perpetuate the intertwined and twisted of control via fascism or corporatism we see today. These are the people our founding fathers crafted a written constitution to protect us against. Yet these are the people who are currently making decisions about our economic future and the future of democracy. Government was given limited power and checks on that power for a reason. The collaboration of CEOs, bankers and the state is an end-run on the balance of power framework the United States Constitution was supposed to protect us against. There would be plenty enough to fill the pages of a provocative book on this topic. But in summary, our economic policy has little to do with the search for truth and a lot to do with megalomania, power and control and those who seek to dominate their fellow man.

Small and mid-sized business creators and owners are entrepreneurs, risk takers and architects of the American dream. They generally want a fair market to compete and then want government to get out of the way. Community banks are protective of business, investment and families in their community where they have a vested personal interest. This comingling dynamic could never develop between the personalities of small business, community banks and Washington politicians. But CEOs and Wall Street bankers rise to positions of authority through their intent to control rather than their creativity, imagination or inventiveness. And because they seek power, ie tilting the economic game in their favor, they generally care little about community or the local impact of their policies. Ditto for politicians in far-off Washington. We more often seem bureaucrats such as Mitt Romney who will do almost anything to gain positions of authority including buying their way into politics. The same dynamic drives the bureaucrat to become CEO. The lack of enforcement of anti-trust regulation allowed Wall Street and big business CEOs to gain unimaginable power and influence which they used in conjunction with Washington power elites to dismantle our rule of law and the concept of We the People. A More Perfect Union is indeed the characterization of community that bureaucrats have destroyed. With all three personality types operating under the intent to control, the comingling of the three creates a perfect storm of fascist or corporatist policy.

So using Marching Morons as a framework, let's take a look at how this dynamic perpetuates itself within the quantitative hedge fund and financial industry within the United States.

Under the control of the bureaucrat, the U.S. economy has developed a dynamic where one person who has no idea what they are doing hires another person. The hired person has no idea what they are doing but they are doing what they are told to do it by the person who hired them. When you multiply this across the entire financial system of the United States, you have an entire industry of people who have no idea what they are doing. But having a job gives them purpose and they are working as hard as hell to do what they don't know what they are doing. It's the herd mentality of humanity multiplied across millions of jobs. And then because these people, who have no idea what they are doing, control our money, they lobbying government using our savings to make wholesale changes that impact our entire economy. Government, which really has no idea what it is doing, then makes these economic changes on behalf of people who have no idea what they are doing. Then they both use the mainstream media to extol the virtues of said new policies, when in actuality, they have no idea what they have done. That is, other than to line their own pockets with campaign money or in exchange for future economic favor.

Now we see a whole new dynamic develop because of this. It's called quantitative finance. And a massive new industry springs forth around it. One that has no idea what it is doing because its very invention was that of people who had no idea what they were doing. Before you know it, people in the far reaches of the United States, in jobs that have nothing to do with finance or banking, are being negatively impacted and losing their jobs because of policies "invented" by people who don't know what they are doing with the backing of rules changes by politicians who never know what they are doing.

So, what do people in the far reaches of the United States do when they lose their productive jobs outside of finance and banking? Well, of course, they go back to be educated, in some form, to do what those who don't know what they are doing because those are the types of jobs available and they need to provide for their family. It's simple supply and demand. And the mainstream media, universities and retraining organizations fuel this dynamic by using their infinite wisdom to divine what the great jobs of the future are. (While they are at it, maybe they could give me the winning lottery number since they are so go at divining the future.) The next thing you know, we have an entire economy consisting of people who don't have any idea what they are doing but they are economically invested in doing what they don't know what they are doing because it provides economic livelihood for their family. Now we have a dynamic where people who don't know what they are doing are literally willing to fight to defend what they are doing because to not do what they are doing impacts their survival.

When this ridiculousness starts to implode, economists, who don't know what they are doing and politicians who really don't know what they are doing and bankers who are the top of this Ponzi scheme of having no idea what they are doing, try to throw more money at the economic system of people who don't know what they are doing in order to save all of the jobs of people who don't know what they are doing. Political morons and Wall Street con men soon tell us the economy is mending. We hear rhetoric that they are optimistic because America always reinvents itself and the American economy will return because that is the way America is. (It is the way America is as soon as we push these Marching Morons out of the way.) The end result is that for some period of time, everyone who doesn't know what they are doing gets to remain doing what they don't know what they are doing because politicians, who have no idea what they are doing, have given them other people's money to keep doing what they don't know what they are doing. Eventually, all of this not knowing what we are doing or why ends in chaos aka volatility - one of our main themes - as the system crumbles.


Nothing more pointedly represents this dynamic than the financialization of our economy of which quantitative finance and associated hedge funds and Wall Street trading desks are a part. It doesn't matter whether that is accountants, real estate agents, financial advisors, MBAs, CFAs, quantitative finance or any of the other careers that have become "hot" through this dynamic; all of which we wrote years ago are in a bubble. The massive shift into these careers was driven by Marching Morons. The bureaucrat is nothing if not prolific when there is no check on their authority. We can use this same dynamic to explain the incredible growth of financial derivatives, why federal government Orwellian spying now employs 1 in 300 Americans and on and on. It also manifests itself in other manner that precipitates a race to the bottom of the barrel economic model we call neoliberalism. Or you can call it Reaganomics, Clintonomics, Obamanomics or Bushonomics. Their administrations all subscribed to the Marching Moron mentality created by elitist bureaucrats.

How does the financialization of our economy in any way increase the capital stock of society? Finance is a consumer of capital not a creator of it. All of these excess financial jobs are a burden to society. They are effectively killing our economy. Wall Street is killing our economy. Washington remains its dysfunctional enabler. That is an economic fact. It is a mathematical fact. It is not an opinion for the editorial section of the Wall Street journal where Marching Morons often use their positions of power to opine their ideology.

The entire financial industry is built on a false positive - that finance creates wealth. It doesn't. It is pushing around paper. It is a tax. It shifts wealth. I giggled when I saw a sarcastic remark from an eloquent writer who said our economy consists of doing each other's laundry. That's all it really is. We have an economy where we pay quantitative hedge funds and financial mobsters hundreds of millions of dollars a year to do other people's laundry. And then these said bureaucrats say they have to pay these wages because the market demands it. That's right. For destroying our economy, they argue the market demands high wages. For God's sake, I'm Taylor on The Planet of the Apes. I'm Neo in The Matrix. I'm Winston Smith in 1984. It is the elites who are the Marching Morons. Seekers of truth and reason they are not. Power and control and its associated corruption is indeed the order of the day.

I have said this a hundred times in one form or another on here but the Marching Morons are still defending this false positive. They are doing so because they are economically invested in a complete lie built on propaganda. A lie perpetuated by economists and financial professors at Harvard and Yale and political idiots in Washington and dolts at the Federal Reserve and crooked psychopaths on Wall Street. The ruling class needs to go find something else to do and let the rest of us fix their mess. Maybe they could go do their own laundry.

I wrote on here at the height of Frankenstein finance's hubris I had a meeting with the top model builder and economist at one of the top hedge funds here in the U.S. And that, in a pleasant discussion, I told them their work was going to blow up. And the factors they were using to build their models were based on jello. Every single thing I said would happen from China to oil to commodities to their models to the American economy to the quantitative hedge fund business has either or is either in the process of coming to pass. All of these dynamics have already had substantial and negative consequences for the hedge fund industry. Not a single person in that firm had any idea what was about to hit them. Yet they looked at me like I was Butthead from Beavis & Butthead fame. And with a few of the quantitative experts, there was tremendous arrogance in their denial of reality. They were all good people so I have no reason to remark of who it was or anything of the sort. That's completely missing the point. My point is that they were Marching Morons. Not morons per se but they deluded themselves with this mindless herd mentality created by Wall Street's undue influence and the chain of people who don't know what they are doing perpetuating itself into a mania of idiocy.

Almost everything everyone believes is some form of social conditioning, brainwashing, unsubstantiated beliefs, pseudo-science or theoretical nonsense. That includes much of what we learn in college and almost everything reported in the mainstream media or accepted on Wall Street or by Washington politicians. There is no place that this dynamic is more prevalent than the science community whether it is the quants hired on Wall Street or in the bowels of universities. (As I have said before, science is a beautiful invention of humanity's effort to make sense of the the sensory world. But that doesn't mean much of what we confuse for science is beautiful in any sense of the word. We often delude ourselves that something is incontrovertible science with the same mentality as we discussed above.)

There is an enormous difference between scientific theory and scientific fact. There is very little fact in this world. Even less scientific fact. Most scientific theory is very questionable and will almost certainly be proven wrong but future genius or by new discovery or will never become anything more than it is today without some evolution of human consciousness. Hiring thousands upon thousands of physicists, engineers or math majors and spending hundreds of billions of society's dollars to develop financial models based on unsubstantiated theories is a house of cards that gives the illusion of knowledge and intelligence but in actuality is utter nonsense. Quantitative finance as we know it is doomed. All of the money in the world won't buy models that can tame financial markets or the world around us. Factor in a magnitude of incompetence when you realize the wonders of Wall Street scientists are used by bureaucrats to take enormous positions of risk and you have the perfect storm of idiocy. It's an illusion and an outright lie perpetuated by Marching Morons.

This behavior is part of the human condition and there is no way to ever stop it. We all succumb to it at one time or another. Or in some cases, we are always falling for it. So we should seek to contain its impact. And how do we do that? We should never allow concentrated decision-making over the economy to develop. In other words, protect us from the dynamics of neofeudalism and those who wish to be our rulers. We should never allow any economic interest to become large enough to create the Marching Moron dynamic. That includes government hijacked by special interests. There are many esoteric ways to accomplish this. But a good start might be to enforce the existing rule of law. Enforce the Sherman anti-trust act across all business. Reinvigorate State's Rights against federalism run amok. Break up the big banks aka make banking local. Bring back Glass-Steagall. Ban national political parties which perpetuate Gestapo-enforced political policy group think, have a written economic constitution and so forth. All are strong themes we have hammered on incessantly.

Those who lived before us did what they did for a reason. We had a rule of law for a reason. We had limited power of the government for a reason. We had regulations for a reason. To protect us from elitist Marching Morons and aberrant outcomes of giving them concentrated power. We have met the enemy and he is us. Five years ago on here we wrote that some believed monopoly created the Great Depression and we wrote about the dynamics surrounding that. Few people probably paid any attention because the world appeared in unprecedented peace and prosperity. But I suspect they will listen today because most people think with their eyes and the realization of what this dynamic creates is now clearly visible. What we are really witnessing today the repudiation of "big" or the fall of the bureaucrat.

Loving your spouse or your kids or your friends is about as factual as it gets. And the ironic thing is there is no scientific way to prove it. And what does that mean? The metaphysical world and the world of the unknown is far more powerful than Marching Morons and deserves much more respect than it is given. For we as humans literally know next to nothing about the world around us. You should question everything anyone tells you. It's almost always a belief or propaganda. To place all of society's savings and the economic welfare of a society in the hands of Marching Morons who believe they have the answers is at best a joke. At worst, it is a criminal travesty that will result in eventual disaster. That is why we have a constitution to prevent this from happening. Never again should society allow a handful of power-seeking bureaucrats the ability to make such massive decisions about our livelihood and our country in the secrecy of smarmy money-driven back-room meetings in a far off land called Washington DC.

The hedge fund business is a bubble. One we have talked about since starting this blog. Ironically, they have now entered the phase of the cycle where hedge funds must prey upon each other to survive. Effectively, the remaining finance industry must eat its own to survive. With investment and the money bubble hitting a peak in the United States and because our economic model doesn't allow investment to be replenished at a fast enough rate, Wall Street and its quantitative miracle ends up being forced to prey on each. Terrorists are not our greatest threat. The system is imploding from within.

As we have written, much of what we believe is genius is really an aberration created by macro factors outside of the control of the individual or the organization. The hedge fund business most assuredly fits this dynamic. At the height of Wall Street's multi-decades bubble there was endless money available to private equity, investment banking, hedge funds and other destructive forces in the economy. Their existence, when taken in the context of fundamentals, created the economy's ultimate demise. Yet most Americans were and continue to choke on their own vomit because there was no money available for them. In other words, a handful of Wall Street bureaucrats decided that ideas which were worthless and even destructive uses of money (quantitative hedge funds, private equity and investment banking) could have endless access to it while the productive people of society were often denied any of it. Most financial firms involved in quantitative finance will be consumed by loss and simply disappear.

None of this would ever have developed with a public banking system with a goal of democratically applying the one-citizen, one-vote access to society's shared resources. Criminal and incompetent Wall Street has already proven they are incapable of making democratic or competent decisions for our banking system. Wall Street needs to be terminated forever.

Every single major problem in America from poverty to lack of economic opportunity to overstaffed and bloated government to unemployment to racial tensions to crumbling infrastructure to underfunded pensions to Social Security shortfalls is a function of a private banking system. Every single one. It doesn't matter if the system is or isn't fractional reserve, it doesn't matter if our currency is or isn't backed by gold or or any other lipstick you want to put on the pig. The dynamic will always be the same; private for-profit banking should not be the backbone of a democracy. A democratic banking system by definition should be owned by society just as our government is owned by society; not by private for-profit bureaucrats. It's time for Wall Street to be dismantled by We the People and replaced with a democratic financial system.

title link also here.
posted by TimingLogic at 5:55 AM links to this post

Tuesday, August 24, 2010

Russia In Color A Century Ago

"With images from southern and central Russia in the news lately due to extensive wildfires, I thought it would be interesting to look back in time with this extraordinary collection of color photographs taken between 1909 and 1912. In those years, photographer Sergei Mikhailovich Prokudin-Gorskii (1863-1944) undertook a photographic survey of the Russian Empire with the support of Tsar Nicholas II. He used a specialized camera to capture three black and white images in fairly quick succession, using red, green and blue filters, allowing them to later be recombined and projected with filtered lanterns to show near true color images. The high quality of the images, combined with the bright colors, make it difficult for viewers to believe that they are looking 100 years back in time."

title link also here
posted by TimingLogic at 4:50 PM links to this post

Blackstone Invests In Chinese Real Estate - Crazy Like A Fox. A Crazy Fox That Is.

I remember when CNBC was sycophantically fawning all over these clowns at the height of their arrogant foolishness. Schemes from the private equity industry will likely cost Americans untold hundreds of billions to possibly even trillions in economic damage.

Now Blackstone is investing in Chinese real estate. Hey, you have to hand it to them. They are consistent. Once a fool, always an fool.

title link also here. (You need a free login to access the story.)
posted by TimingLogic at 11:59 AM links to this post

Home Sales Literally Implode - Worst Drop In History

posted by TimingLogic at 10:30 AM links to this post

Toxic Legacy Of U.S. Assault On Fallujah 'Worse Than Hiroshima' - 38 Fold Increase In Leukemia

As I remarked on here years ago, I am probably as close to a pacifist as there is without actually being one. And I have no problem whatsoever publicly acknowledging that position. The endless propaganda glorifying war and the war machine by modern states is reprehensible. As we have written on here, war is man's most evil invention. That a few people, usually megalomaniacal men, can induce whole societies into killing their fellow man is not a testament to an enlightened human condition. Fifty million people in World War II alone lost their lives. and the entire world was nearly destroyed.

Yet I realize psychopaths and the state only understand one thing - power. So deterrence is a necessary evil and a reality. Those men and women who serve our country are almost all honorable and virtuous. They make a great sacrifice with limited economic value and even less respect from many in society. But the politicians who wage war in any country are often of dubious virtue and honor. The state is the source of endless war. It is without conscience. As Randolph Bourne wrote a century ago, war is the health of the state.

One of the most egregious acts against the truth is the refusal of the mainstream media to report the tragedies of using depleted uranium weapons in Iraq and Afghanistan. There was a documentary released some years ago about the outcomes of using depleted uranium in Iraq. Obviously, it was not released in the U.S. but was on web video sources. The radioactivity of depleted uranium is thousands to millions of years and the U.S. military has used thousands of tons of it. Thus, effectively making these countries permanent death zones for the innocent people who live there. That the United States government knew of depleted uranium's effects before this war yet thousands of tons of the munitions were still used means what?

The long term effects on American soldiers and innocent populations in these countries is a great horror of permanent disease and death.

Preemptive war is not the policy of democracy. It is not the policy of the reasoned mind. It is the will of the state. And the state's endless desire to subvert democratic self-rule. The use of depleted uranium weapons while understanding their consequences ......... well, you be the judge.

title link also here.
posted by TimingLogic at 9:39 AM links to this post

Top Scientist For NOAA - Report Claiming Gulf Oil Had Disappeared Was Released By Politicians. Most Oil Remains

Gotta love those politicians. We have elections coming up and lying, manipulation & deceit is their core competency.
posted by TimingLogic at 9:35 AM links to this post

Sunday, August 22, 2010

The Great Hoodwink Isn't Working - Most Americans Correctly Believe The Economy Has Gotten Worse Or Stayed The Same Under President Obama's Watch

If one takes out the political class in the polling results and corrects for the fact that most polls have a wide margin of sampling error, (especially a poll such as this where the economically-marginalized are seldom sampled at an appropriate rate) the reality is most people realize the political class and mainstream media are conning us when they tell us the economy is getting better. Remember in March of 2009 when Bernanke's term 'green shoots' was rolling off the tongue of every major newspaper, radio and television station in the country? Ain't heard that brainwashing bulloney in a while.

The disaster that is the American economy, the corruption in Washington and our belligerent foreign policy is not President Obama's fault. He wasn't even born when many of the seeds that set this dynamic into motion came to pass. But, he wanted to be our President. This is now his disaster. He knows of the fraud and abuses in our banking system and our government and has done nothing to substantially impact that dynamic. The same macro factors exist regardless of the massive and fraudulent lobbyist-driven bills which were passed. One could argue he has even perpetuated this environment. And he has literally done absolutely nothing to fix this economic crisis. Instead he has increased most American's dependency on a corrupt Washington polity that ultimately enriches itself at our expense. The key point is at our expense. This is not government of the people.

We don't grade Presidents on a curve because they inherited a mess from Bill Clinton, George Bush I & II and Ronald Reagan. Franklin Roosevelt didn't get a pass because he inherited Herbert Hoover and Calvin Coolidge's mess. Abraham Lincoln didn't get a pass because he inherited slavery. Teddy Roosevelt didn't get a pass because he inherited corruption and robber barons. The Presidency isn't a feel-good exercise to build the self-esteem of second graders. This is the real world and it's a brutal one at that. The Presidency is a job for big boys and girls and you've either got the mettle to be the new sheriff (leader) in town or the crooks (Wall Street, lobbyists and Congress) are going to take you down with them.

The only thing worse than the Clinton-Gore or the Bush-Cheney administrations is the Obama-Biden administration. That may sound harsh given President Obama had nothing to do with this crisis but I'll tell you why I draw that conclusion. Because Obama-Biden clearly understood the substantial crises involving fraud, injustice and outright evil before us yet they have done nothing to fix them. If there is one thing I have learned in my life it is that there is no greater act of complicity than turning a blind eye to fraud, injustice and evil. Or as we have written numerous times, appeasement is a policy of complicity.

The magical and mystical nature of Camelot is a state of consciousness. It is a beacon of virtue, justice and moral clarity that resides in the mind. Regardless of our shortcomings as individuals or our failings as a nation, that is still the image most Americans have of our country. A moral beacon of the world which ultimately does the right thing. A corporatist Washington does not reflect these ideals in the least. Anyone who appeases the endless corruption in Washington and on Wall Street might as well themselves be the perpetrator of the corruption, fraud and misery we now see on such a massive scale.

A wise man once said, "I tell you the truth, whatever you did not do for one of the least of these, you did not do for me.".

Who speaks for the least of us in Washington? Who speaks for those without a voice? Who speaks for those unable to feed themselves without government assistance? Who speaks for those who are being decimated by a fraudulent health care system? Who speaks for the tens of thousands of military veterans dealing with emotional or physical trauma? Frankly, who speaks for democracy?

The leadership vacuum in Washington continues.

title link also here.
posted by TimingLogic at 9:09 AM links to this post

The Soviet United States Union. The Government Is Spending 64% Of National Income In 2010. The Rest Goes To Service Wall Street's Debt Bubble.

A staggering statistic of an Orwellian world run amok. Without looking, I doubt this was even the case during World War II. The war machine and economic stoogery in Washington marches on while Americans rot. Rome is burning while Washington dithers.

link here.
posted by TimingLogic at 5:55 AM links to this post

Friday, August 20, 2010

You Just Had To Know It. Goldman Sachs Is Behind The Government's Big Nuclear Energy Push.

What is a financial firm doing delivering uranium? I'll tell you what they are doing. They are inserting themselves into the supply chain for commodities to tax consumption and to manipulate prices. It is a massive and unnecessary tax on society. The commodities corruption is one of the most underreported problems in the U.S. today. Something we have been writing about since starting this blog. Something that never seems to gain any traction.

We should ban financial firms from any involvement in the commodities business without exception. That includes their ability to offer hedging services to nonfinancial firms. Additionally, we don't need nuclear energy. The industry has a dubious safety record and the unintended consequences and risks cannot be quantified. There is no other energy source in the world where, if there is a human-initiated disaster, and there always will be in any endeavor, the outcome could be millions of deaths and an area the size of a state that is unproductive for thousands of years. If nuclear energy is going to be a party of our future, it should be after we have developed future generations of the technology. This effort is currently in process within U.S. government labs.

Title link also here.
posted by TimingLogic at 12:31 PM links to this post

The Incredulity Of An Illegitimate Treasury Secretary

“I believe there is no credible argument to be made that the purpose of government is to borrow from future generations of Americans to finance an extension of tax cuts for the top 2 percent,” Mr. Geithner said in a recent speech.

But I guess he has a credible argument of why future generations were burdened to bail out Wall Street crooks and to pay them massive bonuses. Or he has a credible argument why future generations should be saddled with massive spending on American empire and undemocratic preemptive war. Or why future generations are saddled with debts accumulated by spying on American citizens or ordering government hits on Americans. Or I guess he has a credible argument why we spent his stimulus bill on big business crony bailouts and for special interests while record Americans are on food stamps.

The linked to article states that people erroneously believe Timmy Geithner worked for Goldman Sachs. Where is the error? He did work for Goldman Sachs. He was the head of the New York Fed. He was approved for that position by Wall Street - an act of massive corruption in itself. He spent more untold time on the phone with Goldman Sachs crafting their bailout in secrecy than he did alerting the American people to what he was doing. And we still don't know what he was talking about. But we do know it involved giving taxpayer money to Wall Street so they could pay themselves massive amounts of money for destroying our economy. And he works for a President who received substantial donations from Goldman Sachs. What's so hard to understand? Timmy Geithner works for Goldman Sachs.
posted by TimingLogic at 11:23 AM links to this post

Former U.S. Treasury Secretary & Wall Street Journal Editor Paul Craig Roberts: Without A Revolution, Americans Are History. So It Shall Be.

Paul Craig Robert's commentary is generally available at CounterPunch, which is in our link list on the right of the blog. Most often the status quo tries to marginalize such remarks by pigeonholing such commentary as crackpots and radicals. Roberts is a former Treasury Secretary of the United States and the editor of the Wall Street Journal. His credentials include that of being the status quo. Reagan's administration dismantled many of the controls of our economy and started the destruction of the middle class. It's pretty hard for the status quo to marginalize Robert's remarks.

If you have followed us for any period of time, you know I believe we are already in the midst of a revolution. A revolution of enlightenment. Roberts believes we need a revolution. I believe we are in the midst of a revolution.

The fraudulent status quo will use any form of manipulation it can including engaging useful idiots in society for ad hominem attacks on our President's religious preferences, questioning his nationality, believing George Bush planned 9/11 and other endlessly idiotic diversions to deflect attention from the real crisis. That is, the real crisis is that Democratic and Republican elitists in Washington and on Wall Street have thieved our country and are robbing us blind. And they want to keep doing it.

Enlightenment and revolution are not an event. They are a process. People have wandered years on their path to wisdom and knowledge. We are well into the process that is similar to the period we now call the Age of Enlightenment. It was a complete repudiation of the morally-bankrupt status quo. The political idiots and elitists of today are still living in their bubble. This always is the case with the status quo. Always. That's why they never anticipated the mess we are in. They are deluded by their own false beliefs, their incredibly arrogant egos, endless hubris and timeless stupidity.

This transformation will substantially change global economics of the future. I believe we are extremely unique on here in that all of our long term economic theses we have written about for the past five-plus years are based on this very fact. In other words, it's part of our forecast and included in our countless posts an anticipated outcomes and volatility. No one else in the economics community has come anywhere close to what we are talking about. If you understand true economics, you know it is more about sociology, anthropology and psychology than it is about hard science. The human mind and psychology are enormous blind spots in the economics community and the megalomaniacal status quo. In other words, as I wrote on here years ago, were economics actually taught as a social phenomenon, few, if any of the current economists would be qualifed. That very fact is why most of them are completely clueless about the future. Never in the history of the profession has the preponderance of the economics community ever gotten any major turning point right. Ever.

I was having this discussion about revolution with a friend and he wondered why there was not more outright rebellion and social breakdown in the U.S. Do we need to murder and thieve and commit heinous and often outright evil acts as the status quo does in order to achieve change? Do we need to see fighting in the streets for revolution to occur? Must we stoop to the level of the status quo and use the power tactics of thugs and goons? Can we not achieve revolution through enlightenment, dignity, reason and moral clarity? Is not real revolution in fact a state of consciousness? The mind, and by extension the pen, is much mightier than any sword. Peaceful education and understanding is the greatest threat to the status quo. For truth and reason cannot be defeated with the tools of rhetoric, terror, fear and ignorance employed by morally-bankrupt elites.

Violence is the domain of brutish and unreasoned manipulations of the power elites and bureaucrats. It is the weapon they use to employ the useful idiots and ideologues in society who wantonly due their will through manipulation of the mainstream media. (Useful idiots and ideologues outsourced their own thinking capacity long ago and are perfect tools for manipulation.) This is the game of power which defines and enriches the state in lieu of democracy. Violence is not the method of a reasoned and enlightened mind or of democracy. Nor is it the method of an informed society. I believe as a society we must strive for civil disobedience based in reason. The key word being civil as in civility. If there is any violence, it will most likely be because the elites are successful in their fear and terror tactics to incite useful idiots. ie, The mob. It will be very hard for the status quo to achieve any modicum of violence on an outward and sustained level simply because society is now becoming aware of their illegitimacy. It's a pure numbers game. Instead, violence will be more insidious and passive.

Bureaucrats, aka the status quo, have one major weapon. It is control by deceit and rhetoric. The Big Lie as we have written about. Political mud slinging and ad hominem attacks are distractions meant to steer the discussions away from substance to rhetoric; an insubtantial tactic of bureaucrats and politicians who live in indefensible illegitimate glass houses. In other words, the bureaucrats and power elite realize they cannot win a reasoned debate with society for they are morally-bankrupt and without reason. Nor can they win a game of numbers because the evildoers are in the substantial minority. Given their small numbers, they must us manipulation and passive violence. Examples of this subversive and passive violence of the status quo we see today are:
  • -Planting lies of various sorts in the mainstream media to stir up the mob with unreasoned and irrelevant distractions about generally meaningless issues.
  • -Using misinformation to cause panics to people who are often economically desperate.
  • -Attempting to turn society against teachers, as an example, for making a living wage.
  • -Blaming public servants for having a decent retirement which allows some level of dignity that we should all enjoy.
  • -Spying on citizens and subverting the rule of law.
  • -Attempting to turn black on white or white on hispanic or any combination of race baiting.
  • -State-sponsored killing citizens without due process.
  • -Perpetuating the lie that the housing debacle was caused by poor (and often by intimation, minorities aka race baiting) who had no right owning a home because they were too poor or too stupid.
  • -Attempting to turn Muslim against Christian against Hindu against Jew.
  • -Manipulating the mainstream media to deliver the message that regulation destroys the free markets.
  • -Holding citizens against their will without due process.
  • -Perpetuating the deceit that all government is bad government when in actuality they have turned our government inside out and destroyed the rule of law to steal from society. All hijacked government is bad government.
The list is endless as are the times throughout history these tactics have been used. These tactics of bureaucrats and political idiots are the same whether they are communists in China, Nazis sixty years ago or the status quo right here and now in the United States. They all play to hate, fear, terror and other banal features of the human condition. This is the game of deflection which the status quo uses in an attempt to divide society and maintain or gain control over it. These are the manipulative tools available to maintain illegitimate control over substantially large populations of society.

The revolution is indeed in full force. It is being waged as I type this. The war is for your mind. The war is for control. The revolution now exists between the opposing forces of reason and virtue against indoctrination, power and hate. It truly is the endless fight of good versus evil. The endless fight against those who would be kings were they to gain the authority to be so.

Revolution of the reasoned mind was best put forth by one of the true great humanists ever to grace our planet, Mahatma Gandhi.

"Be the change you wish to see in this world" -- Mahatma Gandhi

We don't seek violence but instead we seek reason and a restoration of the rule of law and with it the return of democracy, equal rights and economic opportunity for all Americans. Every single one.

title link also here.
posted by TimingLogic at 5:58 AM links to this post

Thursday, August 19, 2010

An Economic Lesson For Our Times - Pushed Far Enough, The Hunted Can Become The Hunter.

posted by TimingLogic at 10:46 AM links to this post

Robert Reich On Mitt Romney's Neoliberal Economic Plan Meant To Perpetuate The Status Quo. Its Primary Element? More Risk-Shifting Crony Corporatism.

Mitt Romney proves he doesn't know any more about economics than the neoliberal Clinton, Bush or Obama administrations. Cutting corporate taxes is such a mindless and idiotic bloviating bunch of bullshit. As Reich points out, corporations have record cash and they aren't spending it. What will giving them more cash through lower tax rates accomplish?

Romney and others outright lie about our corporate tax statistics to push a neoliberal cronysim agenda. While the tax rate for American corporations is one of the highest in the developed world, the actual taxes paid are one of the lowest. Factor in the offshore profits of American firms that accounting shenanigans shield and the taxes collected on the largest corporations in the United States are far and away the lowest in the world. A data firm I used to subscribe to collects some of these statistics but my subscription expired so you'll have to do your own G2 but I can assure you, Romney and other neoliberals are outright lying.

On this blog we are anti-corporatist. We are not pro-business. Which is effectively that we are against the dysfunctional corporate welfare that kills jobs, kills competition, kills innovation and kills wages. Regardless of what comes out of his mouth, Mitt Romney is a corporatist as defined by his economic ideology.

We are pro-markets. That's it. Working markets create jobs, rising wages, wealth and innovation. Washington's pro-business or corporatism kills jobs. It shifts the burdens of corporate welfare onto the backs of citizens. That is what we have today. More of it is just a pit stop on the highway to hell.

How did Romney ever make all of that money to fund his endless obsession with gaining the power of the Presidency? Oh yeah. He was in private equity. Private equity in its current form should be banned without exception. It is simply a tax on society that uses our money to raid and pilfer from the productive people and productive assets in society. It's cronyism defined. I, for one, don't want that type of dynamic as the President of our country.

title link also here.
posted by TimingLogic at 10:14 AM links to this post

Wednesday, August 18, 2010

Kaboom! Overnight Borrowing From ECB Hits Record As European Banks Remain Under Stress. Who Is Holding The Bag?

All of this just makes me laugh at the finger pointing out of Europe when the U.S. system imploded. There were even remarks out of Germany that such a dynamic could never happen there. Hubris has a funny way of manifesting itself. Then came the ridiculous bank tests giving us an all clear both in the U.S. and the Euro zone. Re our remarks a few posts ago, this is akin to the appointment of a Blue Ribbon Commission. ie, These political bank tests are an attempt by the status quo to hoodwink society and cover up a corrupt and bankrupt financial system. How about a Department of Justice FBI-led criminal test of the financial system? That I might believe.

title link also here
posted by TimingLogic at 9:08 AM links to this post

Satyajit Das: The Japanese And Grecian Derivatives Con Games Coming To A United States Near You.

I think we are the only source anywhere who has called for the ban of derivatives within our banking system. Period. Hedging does not mean risk goes away. Hedging within the context of a financial system where a handful of firms are involved in 90% of all derivatives activity is a bad joke. Under this dynamic risk is not contained one iota. In the case of Wall Street, the great risk shift is always onto grandma and people on food stamps while criminally-culpable con artists walk off with society's money. Now these same con artists write about "solutions" such as the need to cut Social Security in order to maintain that criminal risk-shifting. Financial engineering as taught in the world's greatest universities is worse than lipstick on a pig. It is nothing more than bat shit wrapped in a $250,000 education and topped off with a bow.

Even nonfinancial firms using derivatives to hedge has turned into a con game. Let me give you two examples. An airline has to use financial hedging to manage its risks against rising oil prices. This additional expense is needed because financial firms speculating in the oil markets have become the largest single variable behind supply-and-demand driving the price of crude oil. So, Wall Street's involvement in the oil derivatives market necessitates the demand of financial derivatives by nonfinancial firms such as airlines. The same is true with the grain markets where more and more farmers must hedge in the futures markets to ensure their harvest prices are protected because Wall Street is manipulating the price of grains. All of this lines Wall Street's pockets. The whole system is a massive fraud. More and more companies require greater and greater use of financial hedging products (a massive tax levied by a corrupt financial system) when the reality is the only reason this is necessary is because of the underlying fraud of financial firms. A perfect analogy to this dynamic is the old joke about one's head hurting. ie, One day someone says their head hurts. His friend asks why. The person whose head hurts states that he keeps hitting himself in the head, to which his friend replies, well quit it. We need to quit hitting ourselves in the head. ie, We need to get financial firms out of the commodities and derivatives markets to stop the con game. But in order to do that we need a government that isn't in the back pocket of Wall Street's bribes.

Das goes a step further and states that the Japanese financial mess was allowed to continue because of the great con game using derivatives to hide unrecognized risk. One can obviously conclude the parallels to the fraud we now see in the U.S. financial system. We've already seen Wall Street firms using these repo 105s meant to con regulators and investors just as Japanese banks did. Where does the rot end? No one really knows because our government is complicit so it seeks to sweep the entire fraud under the rug in lieu of transparency. Transparency is necessary for any type of functioning democracy to return to this country.

Das has recently updated his book with a new release this year that focuses on this particular topic. Reference to the book is mentioned at the end of his post. I would highly recommend it for those seeking a deeper understanding. (Btw, Das's article is hosted on Wilmott.com which is some great irony. We have also railed on Paul Wilmott, a driver and proponent of the financial Frankenstein we see before us, as confusing his industry's perceived brilliance with the mask of an ever increasing financial bubble as we have written about since starting this blog. Endless money for crooked and criminal activity does a wonderful job of masking the lies of Wall Street and their beholden political stooges. That includes the fantasy that the Frankenstein finance we see before us actually is of value or even remotely works. Without the backstopping by the Federal Reserve, we would have 30-50% unemployment. In other words, we now see the entire financial system and Wall Street's brilliant mathematical models they spent hundreds of billions of dollars creating is a house of cards. Not only is it a house of cards but it is a house of cards that is a massive tax killing the American economy.

None of this would have happened with a transparent public banking system whose goal was the development of democracy instead of the goals created by a handful of con artists criminally stealing society's wealth.
)

Derivatives did not make our country the economic envy of the world. Derivatives participated in the destruction of it. Ban derivatives from our banking system. While we are at it, dismantle the endlessly corrupt Wall Street and replace it with a public banking system. In fact, I could actually envision a democratic, capitalistic financial system where we don't have mutual funds or investments of any sort. That means the hundreds of billions of dollars of taxes we pay annually to Wall Street investment houses to underperform the market could be put to productive use in society. That means we would could finally get rid of the likes of Bill Gross, Mohamed El-Erian and Pimco. Then Neel Kashkari wouldn't be able to live off of the productive people in society, which allows said bureaucrat the free time to write op-eds about why we need to trash Social Security. Obviously this is so the government can afford to borrow more money from Wall Street and line Pimco's pockets in the process.

title link also here.
posted by TimingLogic at 8:55 AM links to this post

President's Job Approval Rating With The Country's Largest Political Constituency, Independents, Sinks To New Low.

The only problem for Republicans is their party approval ratings remain at the lowest approval rating in history. This is not a Republican versus Democrat dynamic. It's an anti-establishment movement driven by fraud and corruption of our government.
posted by TimingLogic at 8:09 AM links to this post

Tuesday, August 17, 2010

Big Brother Gives All-Clear With Gulf Seafood Says No Test Necessary For BP's Use Of Banned Chemical Dispersants

In addition to the story in the title link, the EPA has given the all-clear to the safety of BP's dispersants, which are banned in its home country of Britain. I'm sure it's banned just because it was too nourishing. You know. Like Arsenic. Oh, but I kid. Let's see. What did Propublica report about BP's dispersant in the link above? As we've reported, Corexit was also used after the Exxon Valdez disaster and was later linked with human health problems including respiratory, nervous system, liver, kidney and blood disorders. One of the two Corexit products also contains a compound that, in high doses, is associated with headaches, vomiting and reproductive problems.

Of course the biggest man made disaster in American history had no negative consequences. Hell, I sprinkle gasoline on my Kashi cereal every morning. It gives me that jolt I need to make it through the day.

Excuse me if this all-clear sounds like the political "all-clear" of our last man made disaster in the United States, Three Mile Island. Our good President Jimmy Carter appointed a POLITICAL commission which effectively misled or outright lied to the American people about the extent of the disaster. (Government commissions are often coverups for major mistakes. That's why we don't have any real investigation into Wall Street's endless frauds. Now we have a new catch phrase in lieu of President's Commission. It is the infamous Blue Ribbon Commission. Orwell would have really loved that one. You might consider reading this link if you already haven't. This from a qualified person who basically predicted Three Mile Island's disaster.)

Honestly, I have no idea how safe the Gulf seafood is. I don't run the tests and don't have the parameters to set the appropriate tests. But apparently neither does the FDA if they aren't even testing for Corexit. Or the EPA if they give the thumbs up to the dispersant Corexit. That said, it might be a show of great leadership if Gulf seafood was on the table of Congress every day since they are telling us the largest man made disaster in American history is of no environmental or food safety consequence.

title link here as well.

Unfurl the banners. Look at the screen.

posted by TimingLogic at 10:05 AM links to this post

Monday, August 16, 2010

Contrary To The Remarks Of Seemingly Every Media Outlet, We Have Not Had A Hindenburg Omen

No one is more bearish on the valuation of stocks and their ultimate demise than we are. That said, everywhere I turned this past weekend I see a Hindenburg Omen call. It's even on The Huffington Post, which has the financial acumen of Dr. Seuss.

The Hindenburg Omen was not triggered this past week. As we wrote in the last post, the NYSE new high list has been dominated by bonds. As an example, out of the 147 NYSE new highs on unlucky Friday the 13th, all but 7 were either bonds, convertibles or bond funds which all trade on the NYSE. In other words, only 7 stocks hit new highs. This is far from triggering such an event. The Hindenburg Omen is an arbitrary measurement coined not too many years ago which is meant to give some indication of internal stock market deterioration as weighted indices continue to show strength. The Hindenburg Omen was pegged as such as an arbitrary measurement for stocks and not for bonds trading on the NYSE. In other words, the NYSE listing makeup has changed substantially over the years as it has become more Frankenstein-ized.

We have not had a Hindenburg Omen event unless one uses bonds and considers the aberration created in bonds by the actions of the Federal Reserve buying bonds. Yet doing so is garbage in, garbage out analysis.

What we have had is a mad rush into bonds as quantitative easing has appeared to have been fraudulently leaked to insiders and finally announced this past Tuesday. The real news is that bonds have been running weeks before the announcement that the Treasury would buy bonds. Weeks before the Bullard paper was published. In other words, the real news is that Wall Street and the Federal Reserve should be investigated for insider trading. This is the most crooked cabal in the history of the United States and just like last March, the market started rallying well before quantitative easing was announced because Wall Street knew before anyone else. But then that's small potatoes compared to the massive and endless fraud on Wall Street.

The Hindenburg Omen is meant to show continued exuberance as buyers run the market off of a cliff, forcing some large number of new stocks to new highs as the market continues to deteriorate. This is not what is happening. There are no major stocks hitting new highs. Instead, the market dynamic that is unfolding is exactly the one we have been writing about for well over a year of less and less market players batting the same shares back and forth using the same algorithms. A Hindenburg Omen is almost impossible given the underlying fundamentals.
posted by TimingLogic at 5:55 AM links to this post

Thursday, August 12, 2010

Quantitative Easing 2.0 - The Fed Will Keep Its Balance Sheet At $2 Trillion. What Does It All Mean? Is The Fed Unknowingly Seeding Its Own Demise?

Let's start this post off with a speech given by Bernanke regarding aggressive monetary policy aka quantitative easing, almost ten years ago. I think Ben told us what he really thinks of quantitative easing in this environment. It's bat shit. But we're going to play the game anyway.

First, as you know, Japan's economy faces some significant barriers to growth besides deflation, including massive financial problems in the banking and corporate sectors and a large overhang of government debt. Plausibly, private-sector financial problems have muted the effects of the monetary policies that have been tried in Japan, even as the heavy overhang of government debt has made Japanese policymakers more reluctant to use aggressive fiscal policies (for evidence see, for example, Posen, 1998). Fortunately, the U.S. economy does not share these problems, at least not to anything like the same degree, suggesting that anti-deflationary monetary and fiscal policies would be more potent here than they have been in Japan.

Without looking, I believe the last time we really talked about Treasuries in any detail was when Julian Robertson remarked that federal government borrowing costs were going to explode higher and we then remarked that his premise was wrong but we expected borrowing costs to rise as countries around the world could no longer afford to buy U.S. debt. At the time, I'm sure that seemed hilarious as globalization was in full swing. But the cracks are indeed starting to mount. We're not there yet but eventually there won't be enough money in the world for every government and company to continue to float endless debt. Additionally, if you believe governments are going to inflate their way out of this, you might reconsider. As we have said before, governments are not going to inflate away $300 trillion of global debt. That would be preposterous. It's also preposterous to think that governments are going to just sit back and watch their economies collapse under deflation either. Governments may wipe out debt but they won't print their way out of it. At least the United States won't.

Many people have cited historical evidence from the Great Depression to support a thesis that bond rates could remain low for decades. This shows a clear misunderstanding of why we had a Great Depression and how this environment is substantially different. Contrary to mainstream opinion, the Great Depression was not the result of a debt bubble. We did have a debt bubble leading into 1929 but everyone confuses correlation with causation. These are generally held beliefs that are inaccurate. What really caused the Great Depression is much more esoteric and not well understood by almost anyone. In other words, as usual the mainstream view is wrong.

Additionally, in the Great Depression the United States was the world's source of productive capital. We could fund our deficits internally practically forever. Not that this dynamic would guarantee a strong economy, because it didn't. In today's beggar thy neighbor neoliberal view of economics, one perpetuated by crooks and idiots, the United States is the world's greatest consumer of capital. In other words, we have given away our self-sufficiency and instead rely on outside sources to produce much of what we need (at slave labor rates) and to fund our government - a completely asinine and unnecessary dynamic created by corrupt political idiots from both parties. And as those funding sources dry up due to the demise of globalization, something we have said will happen for years, the United States is left with a funding problem unless it adopts a new economic and-or monetary model. As we have said before, this is not a repeat of the Great Depression for the United States. The dynamics are much different. It's something much more fun. In other words, using the Great Depression to divine future U.S. bond rates shows a clear lack of even basic economic knowledge of today or then.

Of course, there are many sound ways to ameliorate that crisis or even outright resolve it. We haven't explicitly provided our roadmap of these solutions yet, but there are a multitude of solutions to this environment. And as substantial and rapid a turnaround our solutions would have, I am sure if we opened up an idea factory to society, (ie, the democratic process of public discourse) our solutions would either be refined or even better ones would be nominated. If you have been with me since the start of this blog, it's quite easy to put the pieces together of what needs to happen. It's just how to develop sound economic and monetary policy to support it. We'll get there some day. Frankly, I would have already posted a concise step-by-step roadmap if I knew it was just inquisitive people reading this blog. But, in fact, I know a lot of Wall Streeters and bloggers read what we write and plagiarizing is a most favorite tactic of both. So, we are going to let them continue to stick their foot even deeper in their mouth before we get to a very specific roadmap and action plan to put the economy back on track. Because most of them are going to be eating a lot of misinformation, ideology, inaccurate economic beliefs, misunderstanding about monetary policy and lies they have been feeding people. Since I find nothing more annoying than ideology, I'm going to enjoy that moment.

Some weeks before Tuesday's Fed policy meeting, one of the Federal Reserve Presidents, James Bullard, came out with a research paper (very loosely termed) that wasn't really covered in any detail in the mainstream media. But I can assure you that Wall Street was listening. In fact, I suspect Wall Street helped craft the paper through feedback to the Federal Reserve given its incestuous relationship with its primary regulator. ie, Wall Street helps pick the Fed Presidents, sits on the board of the New York Fed and really self-regulates itself through participation with the Fed. The Fed's relationship with the banks is much like the conflict of interest at the FAA (but worse) who has a mandate of providing flight safety while at the same time having a mandate to increase the profitability of airlines. For God's sake, I don't want to get going on the FAA or no one may ever fly again. Air travel is a mess and safety is horrendous courtesy of the FAA. Every federal corporate oversight agency seems to have become a corrupt cesspool of bribery perpetuated by corporate personhood and a willing and morally-bankrupt political machine in Washington.

Let's make one incontrovertible point on here as it pertains to Federal Reserve actions and Washington economic policy. They are both making all of this shit up as they go along. Period. (Hence my loosely termed remark re Bullard's research paper.) What the Fed is doing is mostly a lot of subjective bat shit fueled by Wall Street and Washington's desire to save themselves. No policy has any real foundations of fixing the economy. None. Neither are working on behalf of We the People. There is almost no body of evidence or proven research steeped in the scientific method which supports anything the Federal Reserve or the political idiots are doing. That includes Bullard's dullard paper of what the Fed should do next. Bullard's paper makes a mockery of the scientific method and uses garbage-in, garbage-out math to accomplish it. But the pictures are pretty.

We have outsourced our economic future to a group of unelected and unaccountable bureaucrats at the Federal Reserve. And because they are running from crisis to crisis without an overall published roadmap or sound scientific strategy which, by the way would also have an effect of opening them up to peer review and scrutiny of how corrupt they are, they are flipping coins to determine our future. Of course, we blathered about this when they first started flipping coins as this crisis unfolded as we begged for a reasoned and documented monetary policy plan instead of pell-mell squirting money into every orifice like a Hollywood colonics clinic.

We have now gained full societal exposure on how absolutely ludicrous the economics community and the Federal Reserve truly are. In other words, now we know why our economy is a mess. Incompetent Wall Street bribes our politicians, supported by equally incompetent economic bat shit ideas by the Federal Reserve as they then testify before Congress in support of Wall Street bribes. A virtuous circle of the political whorehouse develops as bought-and-paid-for politicians do the economic will of financial morons.

The fact that the Federal Reserve is flipping coins means there is great potential for unintended consequences. Flying by the seat of your pants in a complex system with millions of moving parts, usually means shit happens. That's why good engineering and science begs for a repeatable, vetted, documented plan or rigorous and repeatable scientific methods. Would you run a nuclear power plant by the seat of your pants? Well that's what the Federal Reserve and Washington politicians are doing but it's not just a nuclear power plant, it's a $14 trillion U.S. economy and our livelihood. Most of these unintended outcomes aren't what its enablers would expect or wish because they didn't apply the scientific method's de rigueur or vet their plan. Secrecy is a wonderful thing. At least if you are a communist or a moron. It seems the Federal Reserve has embraced the best of both. They are communist morons - they rule in secrecy using bat shit ideas.

I'm not going to go to write a long dissertation on the mechanics of Bullard's conclusion that we need a new round of quantitative easing (QE) or what QE actually is. We did that early last year as the Fed ramped up its first efforts. You can look through the old posts or Google it if you are still uncertain as to what QE is or does. But briefly, a central bank and private member banks trade bonds and cash back and forth to expand or contract the availability of credit and, therefore, hopefully, money creation in the economy. Nothing new. That has happened since the day the Federal Reserve came into existence. QE is actually this act on steroids. It's an attempt to stuff member banks with massive sums of money to stop a crisis, encourage confidence and encourage lending and money creation. The theory is that banking crises and deflation are caused by a lack of confidence or a lack of money in the economy. The first point is inaccurate but the latter is basically true. In other words, contrary to the endless pablum puke from Federal Reserve officials and the President, the last thing forty million people on food stamps need is a phucking lesson on confidence. (Excuse the French but I've waited almost six years to use that word and this is a most appropriate time.) That said, the reasons why Bernanke and Bullard believe there isn't enough money in the economy are ludicrous. And it's not the fact that we have a lack of money in the economy. It's a lack of a specific type of money in the economy. As we have said many times, this crisis is not one of confidence or because we are overloaded with debt. This crisis has morphed into a debt crisis because corruption in Washington and the Federal Reserve's complicity has allowed it. The primary cause of this crisis is not monetary and, therefore, cannot be fixed by the Federal Reserve with monetary policy. Again, something we have said repeatedly.

On Tuesday the Federal Reserve publicly stated its intent to buy Treasuries and corporate bonds as Bullard's paper remarked. They are doing this for a few basic reasons. Secondarily, the Fed may be seeking to impact refinancing of debt at lower rates. But there are two primary reasons that I really don't see anyone talking about. One, the Fed wants to drive down rates on Treasuries and corporate bonds so that banks won't just sit on the carry trade to rebuild their balance sheets. ie, The Fed would like to see banks do more than line up for the risk free return of borrowing free money from the Fed and buying Treasuries for a guaranteed 3-4% return. The Fed wants them to lend into the economy and is trying to incent them to do so be reducing the interest rate return of parking money in Treasuries as their primary form of profit. So the Fed's intent is to increase the money in circulation by increased lending, which will in theory kick start economic activity. But the Fed buying Treasuries and corporates from banks also has an added benefit that I think everyone has completely missed. It is the most critical point of this post and the most critical change in policy since this crisis started. Buying Treasuries and corporates starts the process of clearing bank balance sheets to buy more Treasuries and corporates. This policy has not been announced on a large scale yet but I think it will in due time. I suspect increased Fed Treasury purchases, possibly very substantial purchases, will be announced in the future if the economy does not turn around, which it won't. ie, Buying government bonds artificially changes the market's supply and demand characteristics and allows greater supply of government bonds to be absorbed by banks. This will allow the U.S. government to run deficits while removing some of the uncertainty as to whether foreign countries will be able to absorb Treasuries as globalization implodes. In other words, it allows the U.S. government to self-fund itself in the event that waning global demand for Treasuries develops. (This is what we said would happen in our Julian Robertson post years ago and I think the Federal Reserve sees this coming and is attempting to ameliorate this anticipated dynamic.) This is a huge change in policy that has the potential to keep the lid on Treasury rates for some extended period of time if, and I repeat if, the program is expanded. Maybe a lot longer than anyone could imagine. We shall see how it develops over time.

As we have said, the Fed has been in perpetual quantitative easing for thirty years. Last year's unintended consequences was a corrupt Wall Street paying itself record bonuses with taxpayer money and an upward price in commodities and stocks as Wall Street resumed playing Russian Roulette with our money. That shot prices higher which hurt underprivileged Americans. (We don't have any inflation regardless of what you read. Period. This concept of inflation and deflation happening at the same time as some remark is completely batty. Higher commodity and end user prices are driven by Wall Street speculation in commodities markets not an overabundance of money chasing limited goods. We have been writing this for years and many are still talking about it. My God. Quit it.)

Some of the outcomes, unexpected or otherwise, of additional QE are likely to be, one, the Fed has finally forced grandma into a homeless shelter as her savings returns are now zero. First it was interest on savings accounts. Now it is high quality bonds with almost no return. Now grandma is going to experience bankruptcy courtesy of the Fed's policies or she's going to start trading commodities. That is, if she already hasn't. Two, Wall Street is a corrupt monopoly that lives off of the insider information and front-running of Federal Reserve policy. So, over the last few weeks as this policy was likely leaked to the financial community, corporates and Treasuries are dominating the new high lists on the NYSE. In other words, both Wall Street and the investor class are now plowing into bonds at an unprecedented clip because, being they are socialists, they live off of the Federal Reserve's dole and want to be invested in what they believe Uncle Ben will guarantee. Three, QE 2.0 means the dollar could rally further; something the Fed clearly does not want as it attempts to steer the dollar lower in a neoliberal race to the bottom of the barrel. Four, or ten or whatever number this is, as the carry trade of taking free money from the Fed or the Bank of Japan or anyone else and buying Treasuries for a risk-free return of 3-4% deteriorates with the Fed standing on the bond market's chest. This and other fundamental factors means banking profits could start to implode rather rapidly. For the sake of profits, Wall Street really needs the government to issue more and more debt given the Fed is standing on bonds and fundamentals continue to deteriorate. It's almost a surety banking profits have already peaked or will this quarter which is why after a year long reprieve, we are now back to heckling the safety of the banking system again. Another unintended consequence is the possibility that it could hasten the collapse of equities as future monies continue to flow into bonds and equity demand continues to wane......... But the most important fact associated with this new quantitative easing is that it could allow government and major corporations to continue to spend willy nilly by providing greater demand for bonds. (Politicians haven't announced stimulus 2.0 to go with QE 2.0 for obvious political reasons. I'm sure they'd rather wait till after the November elections to start spending other people's money like the pigs they are.)

Without radical monetary, banking and economic transformation, the money supply will eventually implode when all of this easing ends. So it can't end. In other words, the economy is so broken that without more and more erotica or stimulus, it cannot sustain itself. Yet more and more stimulus requires higher and higher burdens on taxpayers so it's a self-defeating strategy of dullards like Bullard. That means any of these easing tools should only be used in a transitory period to a new economic, banking and monetary model. ie, These tools should only be used to keep the system afloat while we rebuild our economy and our monetary system with proven and better methods. That is not happening because Washington is a massive cesspool of corruption. All of this likely leaves the Fed with the eventuality of using the proverbial nuclear bomb. (See below.)

By the way, let's make something very clear. None of this involves printing money. I have written on here for over five years that the Fed is not printing money. The Fed has expanded its balance sheet to take on the toxic trash of a corrupt Wall Street but this has not led to money creation in the economy. The American economy is choking on its own vomit as it becomes sicker and sicker for the lack of much needed money. The Fed has effectively printed nothing. The vast majority of comments in the blogosphere, in the financial community and in the mainstream media are really mildly to completely erroneous when they write about monetary policy. And even if banks were to encourage lending, we wrote many times on here well before this crisis developed that there was no demand for capital in the American economy. A lonely and only position that we were talking about. And that clearly is not because of its high debt load. Something that literally no one understands for some bizarre reason. Actually because most economists and financial commenteurs don't know what they are talking about. Neither does the Fed. The Fed is trying to push a string up hill.

When the Federal Reserve places more money in private banks through some effort of easing, you need to understand what the banks are going to do to anticipate the outcomes. A private banking system is not going to do what's in the best interests of the economy or democracy but what's in the best interests of private banks. Last year the banks took all of our free money and speculated in the financial markets and paid themselves criminal wages rather than release it into the economy. The Fed is now trying to more precisely target that money for more productive use. But let's be clear, all of the Fed's actions are first and foremost meant to save the banks because there is a deluded view of Federal Reserve bureaucrats that if the banks are healthy the economy is healthy. The actuality is that if the economy is healthy, banks are healthy. Those statements aren't even close to intersecting and that is why quantitative easing has and will continue to fail.

So where are we going to end up with all of this? The ultimate unintended consequence? I believe it is probable the Federal Reserve is seeding its own demise and with it, the demise of Wall Street. There is a reasonable probability the Fed will be forced, through currently unforeseen circumstances, to eventually deploy the nuclear bomb. Whether they yet realize it is irrelevant. I think it is highly probable that the Fed is ultimately going to be forced to monetize or print away substantial debts in an effort at taming a strong dollar and reducing our enormous government debt burden. This will be their downfall for engaging in morally-bankrupt QE and taking the burden of a corrupt banking system onto their balance sheet. In other words, The Fed will be forced to wipe away its balance sheet after being directed by Washington politicians in a great act of carnival sword swallowing. Either the Congress will give the Fed the authority to forgive debts on its balance sheet or the Treasury will issue some amount of bonds, (trillions of dollars worth) the Fed will buy the bonds and deposit newly minted cash in the Treasury so Timmy Geithner can write a check to pay off some enormous portion of our financial burdens. At that point the debt simply disappears forever. This would be printing money. Not what we see today. And by the way, printing money is what we have said the Fed should do numerous times since this crisis began two years ago to ameliorate the situation. Although I can tell you there are many substantially more productive ways to do so to benefit We the People. This won't fix the economy but it will ameliorate the mess we are in. And it is marginally comparable to what the government did in the 1930s when it devalued the dollar against gold. Devaluing against gold has no relevance in today's world because the dollar is not tied to gold as it was then.

Obviously for the Fed to expose this ability will mean the world is going to be a very unpleasant place with no other options. That won't be the end of the world but it would be the end of foreigners buying our debt as their Treasury investments get crucified in the currency markets. But then, foreign buyers of U.S. debt are generally bankrupt anyway. They just don't know it yet. So who really cares what happens to foreign investors? Or at least that is how politicians think.

Ultimately, when the American people see that the government can perform magic at the drop of a hat, they are going to start wondering why we are paying private bankers $800 billion a year in interest for government loans that can be made to go away in the blink of an eye instead of giving cover to the Wall Street thugs like Kneal KashandCarry who advocate kicking grandma to the curb by killing Social Security to support the massively fraudulent banking system's profits instead. And I think it's this dynamic that is plausibly going to cause substantial monetary and banking reform when such lies are exposed. What I'm telling you is there is some serious major shit coming down the pike and everything going on in Washington right now is noise made by people good at making noise and doing little else. In other words, your conscience is going to be standing in a field of flowers listening to harps playing as we become enlightened to the status quo's incompetence and how much undue suffering they have been causing us. From that point forward, they'll be talking to the hand when they try to explain themselves. Remember, I have remarked on here that before this crisis has passed, that I think we could very well bring down the beast and kill Wall Street and the corrupt private banking system forever. Obviously metaphorically since we advocate nonviolence in lieu of hate-filled violence of emotional gorillas.

If I believed 2012 was the fulfillment of religious prophecy, I would have little doubt the anti-Christ is Wall Street. This completely anti-democratic cabal has done more to destroy our country, perpetuate racism and a lack of human dignity, endlessly steal our money, destroy our jobs, enslave a society, cause endless suffering and poverty, and reward corruption and cronyism more than any terrorist could ever even imagine accomplishing in a thousand years of attacks. In a democracy, banking should be a public utility primarily chartered with the development of human capital and production. Enlightenment is not a process the status quo is going to enjoy but I sure as hell am. Of course, since this blog is entertainment and imaginative narration, I joke. Ahem.

It's good to be the king. Not much longer though.

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posted by TimingLogic at 9:09 AM links to this post

What Have We Become That We Let Our Economy And The Suffering Of Our Citizens Get To This Point While Wall Street Gets Trillions In Bailouts?

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posted by TimingLogic at 8:52 AM links to this post