Jobs Act Removes Limits To Hedge Fund Marketing Put In Place In 1933

Republicans have just introduced another bill gutting a regulation set up in 1933 .  This now means private investment firms, aka hedge funds, will now be allowed to market their products to the mainstream investor. 

This development is consistent with two long term theses we have held on here.  One, that the hedge fund industry will go the way of the Dodo Bird as this cycle ends and two, the investor class will be obliterated.  What better way to help create that dynamic than by allowing investors to place their assets in schemes that rely on methods unproven beyond the rise of Frankenstein finance.  Ahem.  There is a reason the hedge fund bubble is a recent phenomenon.  And why similar previous schemes ended unfavorably.  We have crucified Wall Street’s voodoo incarnations endlessly on here. 

A fool and his money soon part ways.   Investors and society as a whole oftentimes need to be protected from their own ignorance.  Private betting schemes will now be marketed to the investor class unencumbered by protections.  (Marketing in today’s world is fancy word for outrageous claims and propaganda in most industries.)

UPDATE:  Hedge Funds Review pulled the link to the story.  Updated is a working link.

Title link here.

Better Together….

How about a break from the monotony?  Life is often a struggle but it makes the inspiring moments that much richer.  The ability of the human body and the human mind to heal itself is truly amazing.  And, having someone who believes in us oftentimes is all that is needed for us to believe anything is possible.   Our minds have the ability to make our dreams a reality.  If we can dream it, it is possible.   Dreams and thoughts are the basis of all human invention and achievement.  Does that mean our minds have the power to heal both emotional and physical trauma and illness?  I think the answer is quite obvious.  We simply haven’t learned how to harness that ability or unlock the keys with regularity.

“They Use Women As Men And Use Men As Animals” In Foxconn’s Apple Factories

You have to live in a bubble (outsourcing your thinking to politicians who tell you how wonderful your life is and how fortunate you are, or consumed with your own narcissistic selfishness) to not question or be concerned over the conditions that people toil under in communist China and other slave labor pools for American corporate capitalism.   But, then it’s easy for the self to make everything the responsibility of someone else.  The self loves to outsource its responsibilities;  part of the self’s endless rationalizations and self-deceit about its very existence.  It’s not my problem. 

Let’s see.  You work in an Foxconn Apple factory.  You have to work when they tell you to.  Even on a moments notice.  You work on average ten hours a day.  That includes oftentimes awoken in the middle of the night to head over to the factory for an  urgent rush for Steve Jobs.  Well, now for Tim Cook.  You live in corporate-owned housing.  You buy most of your food at the corporate cafeteria.  If you say anything to anyone about your working conditions, you are told that you will be criminally-liable.  And you make less than $1 an hour that the company takes back through your daily needs of sustenance.  Even if you could keep your earnings, it would take you half a year of earnings to buy a mid-priced iPad.  

That sounds like the effing bomb!  Sign me up to work for the proletariat state and one of its greatest success stories, Apple.  What if this was your daughter?  Is this the kind of world you want for her?

Some say this isn’t capitalism.  Well, is surely isn’t capitalism in the way that most people including myself would like to define it.  But, make no mistake, it is capitalism.   Throughout capitalism’s history, this has been the rule rather than the exception.  Because throughout most of history, democracy and human rights were never to be toiled over or worried about in its construction.  Even in the United States.  Ahem.  Correction.  Especially in the United States.  Capitalism’s basis premise of concern first for the self is flawed as a democratic economic model.   Especially when applied to corporate capitalism.  This construct therefore  needs to be regulated.  There are very easy fixes for this.  Painful for the status quo.  But very easy.  We could take thousands and thousands of pages of red tape out of the regulatory code and replace it with ten lines of code.

Capitalism’s roots and most of its history are, in fact, in slave labor and economic predation.   Today, politicians call that a Right to Work state and free trade.   Obviously Right to Work and free trade are cleansed political propaganda that goes down much easier than you have no rights at work.  Or, even you have no economic rights.  Democracy in capitalism?  Pshaw! 

The world doesn’t need to be this way.  And neither does a merit and market-based economy.  It’s that way because we allow a very few to define it that way.   Oftentimes we fight to defend it to be this way as propaganda encourages us to believe any other way would ruin that cozy little world we exist in. 

Story and video interview here.

Americans Elect 2012

Over the past few years I have written a few times that I expect both political parties in this country to either collapse or splinter.  It’s just a matter of whether I am a tad too early or if it will be in 2014 or 2016.  I’ll be posting more on that topic in coming months in two posts of why and how.  One will be on America’s second civil war, which we are currently witnessing the early stages of, and the other will be based on a game theory construct of potential party collapse.   (Update:  I thought I should clarify this statement.  I don’t expect a war per se.  This is a war for the mindshare of the nation divided between those who mouth democracy but whose actions tell a different story, and those who actually believe in democracy.)  Today, we have a false choice of a fascist political party that generally wants to use big government to loot from society and a fascist political party that generally wants to destroy democracy to loot from society.  Both are anti-democratic, anti-rule of law, anti-Constitution, unreasoned, immoral and unjust. 

We could easily see party politics veer into the ditch before the 2012 elections.   At this time in 2008, the world was quite calm.  It all changed in a month.  That potential exists again this year. 

There is an organization out there titled Americans Elect.  I support this process through donations and involvement.  I plan to participate in the direct nomination of a presidential candidate other than the dumb and dumber choices of Obama, Santorum and Romney.  I would suppose most people are at least familiar with Americans Elect.  But, if you aren’t, I would encourage you to go to their site and take a look around.

Is The Commodities Bubble About To Pop? Again?

Even though the Nasdaq and S&P are making new highs off of the 2011 mini crash, we have talked about how the Nasdaq and Dow Transports have not. If we look at the behemoth copper, gold and minerals miner Freeport McMoran, we see that it isn't anywhere near making a new high. In fact, it is moving the opposite direction.  Exxon, the U.S.'s largest oil producer, hasn't made a new high in about a year and a half even though oil keeps running higher. Newmont Mining, North America's largest gold producer the last time I looked, hasn't made a new high in seven calendar years.  Yet, commodities are still levitating at very high levels thanks to Wall Street manipulation.  For now.

If fundamental demand for gold, as an example, remains robust, why aren't Freeport and Newmont moving higher?   Well, fundamental demand for gold isn't robust as we wrote on here some time ago.  Additionally, there simply isn't enough liquidity to drive all of these assets into bubble territory.  But, leverage is being used to replace the liquidity shortcoming in financial markets.  Leverage that is on Wall Street balance sheets.   Leverage courtesy of free taxpayer money given to financial criminals courtesy of the Federal Reserve.   Unfortunately, leverage in the underlying economy, credit, cannot be replicated if there is not enough fundamental demand.  Hence, the divergence between financial markets and the economy.

It's been many years since I have made this statement, but smart money knows that equities lead base commodities in directional price movements.  Equity price movements anticipate production demand based on increased liquidity and, therefore, increased economic activity that results.  And stocks always lead the economy in expansions and contractions for the same reasons.  But, we are no longer in a working economy and we are never going back to that world.  Ever.  That Goldman Sachs just said this is the best time in a generation to buy stocks says what?  It says they are still living in the bubble of incompetence.  That's all it says.  It is no reflection of the real world or anything happening in the real world.

The main reason I put this chart up is to get an appreciation of the massive speculation we have seen in commodities-based equities. Up until a decade ago, Freeport never traded more than 30 million shares in any given month as shown by the lower horizontal line. Look at me now. 500 million and even one billion shares in a single month. Commodities derivatives (leverage) have seen an even larger explosion.  But, volume in the overall market, and as shown in Freeport below, is waning as liquidity again dries up in the global economy.  The only dynamic levitating financial assets is leverage (derivatives).  And, who is levered?   It is Wall Street.  It is the financial system.  Again.

What happens when financial demand for commodities outstrips end market demand?  It's a dynamic we have discussed no less than a dozen times on here.  Pull up a chair as we witness the glory of mutually assured destruction or MAD; the perfect acronym to describe the financial beast before us.

Click on graphic for a larger view

Bering Sea Shows Second Highest Ice Extent In Recorded Satellite History

Just released over at NASA.  Apparently, global warming causes an increase in ice formation.  20-30% higher than the average for the last 30 years.  

Hey Al, give back the Nobel Prize.   Hey, Nobel Prize committee. you need to get politics out of your selection process.  Giving Al Gore the Nobel Peace Prize has made a mockery of your organization. 

When I watched the Bush-Gore debates in 2000, I was incredibly disturbed by Gore’s grunting, huffing and sighs while Bush would talk; the disturbing actions of a prima donna without any ability to regulate his behavior.  Al Gore is the poster child for unbridled corporate state capitalism and its consequences.  He helped gut regulation of capitalism and helped create massive poverty and pollution of our planet by pushing for massively corrupt trade agreements that destroyed wages, benefits, social safety nets, economic determinism, environmental protections and democracy.  Al Gore, Mitt Romney’s reflection, is a poster child for the predator state; an unstable manifested self that seeks power, authority, fame and money (control) to appease his inner demons.   Bush-Cheney by comparison should be awarded sainthood by the Vatican.

Hey, we all have a cross to bear as part of the human condition but society shouldn’t be bearing the crosses of our leaders.  That is the world we now live in.  We, in fact, do bear those crosses of the disturbed minds of those who seek control and dominion over their fellow man.   That is what happens when a nation ruled by laws becomes a nation ruled by men.  The leaderless society manifested by the unstable self.  Our economy and our society reflects the instability of the minds that created the challenges we now face.   That would primarily be politicians.  Politicians are the problem, not the solution. 

Supreme Court Questions Health Care’s Constitutionality

Today isn’t turning out to be such a good day for Obama’s Obamination of health care, ObamaCare. 

Few people in politics truly entertain this issue on grounds of constitutionality or any benchmark of truth or morality.  You are either for it or against it based purely on what political team you belong to.  Pure political ideology.  Fall in line as a member of the Democratic or Republican Party.  Support the party or else.   Freedom of ideas or dissent won’t be tolerated.  Just like communist China.  Both party’s positions are nonsense perpetuated by the illegitimate political class. 

I believe affordable health care for all Americans is a basic human right.  It is all a matter of perspective.  What kind of world do you want to create?  An inclusive world that embraces human dignity or a world where luck and circumstance determine your ability to either watch your child die of cancer or get the best treatment our society has at its disposal?    We are all worthy.

I didn’t say health care should be free.  Every person should have to participate to the best of their ability.  That means being personally-responsible.  But, regardless of anyone’s ability to pay, they should be granted equal access to health care.   Wealth should not determine access to health care.  That is a position based solely on immorality that is so prevalent with the status quo.  That said, as I wrote at the time of its passage, this horrible bill ultimately would become an issue decided before the courts and that I believed it would be struck down as unconstitutional.  We will see soon enough.  Regardless, this is a massively corrupt piece of political legislation that was ramrodded by politicians for political expediency.  There was no national debate on what a transformed health care system should look like.   No benchmarking as I encouraged at the time.  No open ability for experts to provide testimony or help craft legislation that would best serve society.  This is purely a smarmy political bill that was written under the duress of lobbyist bribery.   This bill lines the pockets of the status quo.

Title link here.

Criminal Looting Pays - Federal Prosecution Of Financial Fraud Falls To 20 Year Low

"Sometimes the law defends plunder and participates in it. Thus the beneficiaries are spared the shame and danger that their acts would otherwise involve. But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them and gives it to the other persons to whom it doesn't belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime." -- Frederic Bastiat

HAHAHAHAHAHA.  This country’s political and legal system is a cesspool of rot as bad or worse than any country on earth.   Shakespeare was right.   Okay, figuratively right since I am opposed to any type of violence.  What better way to dismantle the rule of law than to become the law?   A nation of laws has been destroyed primarily by lawyers.   Lawyers who are responsible for defending the rule of law have, in fact, dismantled the rule of law for their own personal greed, avarice and corruption.  Secret government.  Now we are a nation of men aka political parties and political lobbyists and not of laws.  A nation of men who rule this country are in fact political parties and political lobbyists comprised primarily of lawyers.   And, now those said lawyers refuse to prosecute the most fraudulent acts of treason, corruption and looting in our country’s history.  And, they are able to refuse prosecution on the grounds that Wall Street has broken no laws….. because the laws have been destroyed.  Of course, again for reasons of personal greed, avarice and corruption.   How do we know what laws have or haven’t been broken?  Both political parties refuse to fund investigations into wrongdoing.

Has Harvard or Yale or Princeton or Columbia’s law schools done anything to address this type of behavior over the decades?  No.  In fact, they are the primary enablers of this elitist corruption perpetuated by the ruling class.  They benefit for their own reasons of self-interest. 

For every action, there is an opposite but equal reaction.  And, given this destruction of law and the associated looting has been going on for at least thirty years, the reaction, which will most certainly be compressed into some handful of years, is going to be intense.

As we have discussed numerous times, appeasement of evil is in fact complicity.  The blood is on anyone’s hands who appeases evil.  Change you can believe in.     

The Proletariat State’s Attempted Destruction Of Human Expression And The Arts

In Europe, Where Art Is Life, Ax Falls On Public Financing.  I want to highlight this article and the greater dynamic we see around the world because it is tied to the tyranny of the proletariat state that has been created by toady politicians and their corporate masters.   Yes, the U.S. is a proletariat state.  And bankers around the world wish to perpetuate that dynamic globally. 

This dynamic of repressing art and self-expression is part of the timeless dynamic of figurative “book burning” and intellectual or class cleansing of control-based societies.   Arts and human expression are dynamics identified with people who are capable of free thought.  Critical thought.  Criticism of the proletariat and fascist state.  Dissent.   Additionally, the arts plays a crucial and irreplacable role in community and humanity well beyond anything I could ever give justice to in a blog post.   Communist China embraced the cleansing.   The Soviet Union did it.  Nazi Germany did it.  And so did/do many other tyrannical control-based societies.  And, it is happening today in both the United States and Europe as fascist-proletariat elements attempt to cleanse society of dissent and artistic expression. (This is a big driver behind modern day Republican Party dynamics in the U.S. including those embraced by Ron Paul and his nonsensical free market lingo.  Let me count the ways….  not enough time but I will eventually show you how this twisted free market nonsense is tied into proletarianism and the tyranny of free markets.)  

I wish I had the time to write more about this today but it isn’t a priority right now.  This is the second New York Times article in the last few months that I have wanted to write a detailed post about regarding sociological factors involving the self.  The other was involving gated communities of the rich.  The concept of the gated community, similar to book burning, which clearly are manifestations of the self or ego’s desire to separate itself from community, human expression and the cycle of life are key contributing factors to the self’s disconnectedness from their core humanity or their divinity.  That separateness of the self creates a dynamic that ultimately manifests itself through a desire to seek control, including control over humanity,  in order to appease the self’s inner demons. 

Some time this year I will try to tackle both of these topics in detailed posts. 

The Brain On Love

Personally, I believe the meaning of life is very simple.  I have no proof and it is nothing more than my personal belief, but I suspect we are placed on this earth to learn how to love and to be loved.  How much love for humanity or our living planet do you see in corporate boardrooms or in politics today?  Well, except for Goldman Sachs who is doing God’s work.  Oh, and all politicians who can’t wait to tell us how God, and by inference, morality and virtue, drives their life.  Obviously, so they can get elected for reasons of selfish greed, power and control.  

The Brain On Love. Loving relationships alter the brain most significantly.  I’m surprised at how the world often defines love.  Generally, our definition is anything but.  Especially how we define romantic love.  Love is acceptance and respect without judgement or condition.   It is selflessness.   If I am the manifested self, then what is selflessness?  It is a manifestation of our own divinity.  You may choose to call it God or our higher power or our own divinity or whatever you are comfortable with.  But, given the human condition, oftentimes, we must employ emotional boundaries to protect the divinity or love we have for ourselves and for others.  There is an endless supply of people who have no appreciation for healthy emotional boundaries and would like nothing better than to outsource their own emotional healthiness and responsibilities onto others in forms of dysfunction, destructiveness and negative energy.  Love is also not that special feeling you get in your britches that attracts you to another person.  It is not “chemistry” which is very often just the ego’s narcissism manifested through another person’s successful mirroring or validation of who we are.  Hey, drug addicts are great at mirroring or validating each other.  Because many traits of who we are, as part of the universal human condition, most assuredly  shouldn’t be validated. 

Goldman Sachs: Does Doing God’s Work Seal Its Future Fate?’

What do Jon Corzine, Hank Paulson and Lloyd Blankfein have in common?  None of the three had the financial business competence to fight their way out of a paper bag even if they were armed with a Ginsu knife.  And, all three nearly ran Goldman Sachs into the ground with that massive incompetence.  Corzine then went on to be a failed politician and ultimately caused the collapse of MF Global with his personal incompetence.  Paulson went on to head the Treasury after leveraging Goldman to the hilt.  As Treasury Secretary he presided over most expensive Wall Street collapse in our history.  A collapse he helped create as head of Goldman.  According to a Nomi Prins link we put up last December, without another covert Federal Reserve bailout of bad bets, Blankfein might have finally succeeded in taking the company under.   Today the firm remains massively and incompetently leveraged to systemic risk with 537 times as many derivatives as assets.  That’s just one of many measures of Goldman’s leverage to systemic risk.  (Thank you President Obama, Timmy Geithner, Congress, the CFTC, the SEC and the Federal Reserve for doing your jobs.)

Goldman’s core competency is rigging the financial game in their favor by getting former employees into political appointments, hiring former government officials and lobbying to have the economic rules bent in their favor to essentially guarantee their success.  They have proven time and again to not be competent at economics,  finance, managing risk or client satisfaction.  

The aura of Goldman Sachs’ brilliance is all propaganda.  A con.  That massive incompetence is now in the open for all to see.  We saw how absolutely feeble-minded. bumbling  and incompetent their executives were in their Congressional testimony that matches their endless incompetence in the market. 

If I was allowed to use 537x leverage, was given free taxpayer money through the Federal Reserve, was bailed out for all of my mistakes and most importantly knew the secret rules to the game in advance because I paid to set them and no one else had that advantage, I could easily be as invincible as Goldman is perceived.  And so could you.

Goldman’s systemic incompetence is sealing its own fate.  Yes that incompetence is shared with JP Morgan, Morgan Stanley, Bank of America and other members of the financial racket but Goldman has a unique business model that exposes them substantially to risk far and above those other firms.  Remember, we have been saying for quite a few years now that Goldman does not have a sustainable business model and could very well go under before this cycle ends.  At the time we first posited this statement, such a notion was preposterous.  It still is for many.  You’ll gain a greater appreciation for this in a few upcoming April posts.  But it is amazing how just a few years ago they were considered invincible.  The smartest guys in the room.   Yes, both firms’ executives were the smartest guys in the room because they both rigged the game.

Let’s look at the headlines in the news today regarding Goldman Sachs.  They all tell a very disturbing story that lends support to my position.   Goldman Sachs is a firm in crisis and there is no light at the end of the tunnel.  To the contrary, the grim reaper, the return of global volatility, is hiding just around the corner.

Goldman Sachs tells clients that this is the best time to buy stocks in a generation.

Goldman Sachs states that stocks to begin a steady upward trajectory.

Goldman Sachs tells clients we prefer stocks to bonds.  (What did I just say a handful of days ago?  Just a few days later Goldman makes an announcement confirming what we discussed.  Money is rotating out of sovereign bonds and into stocks.  The supposed bond king, Gross, is again wrong about why bond rates were moving.) 

Barclays joins Goldman in shunning bonds.  (The financial herd is moving into the perceived safety of stocks.)

Goldman in trouble again.

Goldman Sachs and JP Morgan employees are top Obama donors.

Bernie Sanders and other senators send letter to Top Commodity Trading Regulator and former Goldman Sachs executive to obey and enforce the law and stop oil speculators.

The opposite of Goldman Sachs is Silicon Valley?

Goldman Sachs laying off more employees.

High frequency trading distorts commodities.

Captured SEC regulator sides with Goldman Sachs over God.

Former Goldman employees form union in Japan.

Goldman Sachs loses bid to end risky debt sale lawsuit.

Goldman Sachs’ crackdown on using the term Muppets to describe its clients. 

S&P 500 Cash

60 minute view since the October bottom. Really quite amazing that buyers have been able to run this thing so far in such a very, very, very low volatility regression band.

Click on graphic for a larger view

Bill Moyers: How Big Banks Are Rewriting The Rules Of Our Economy

I mentioned not too long ago that Moyers was back on TV.  I love Bill Moyers.  I mean I really love Bill Moyers.  How much differently would our world be if we had public servants and corporate executives who were true leaders.  Who were  driven by the authenticity of kindness, compassion and a concern beyond the needs of the self.  He is far and away my favorite journalist.   As we have noted on here, he also produced a program 25 years ago that presciently predicted the mess we are in today.  There are plenty of wise old Cassandras out there.  William Greider is another we have noted.  I trust Moyers completely to be able to rise above the human condition and whatever shortcomings any of us may have to deliver journalism that has an  intent of integrity, truth, morality, reason and virtue.  Take a look around his site.  You’ll find quite a few recent program videos that are excellent.  This recent program contains an in depth interview with the former head of Citigroup, John Reed, who readily admits he was completely wrong in lobbying our government to overturn Glass Steagall and deregulate Wall Street.  And how, since, Wall Street has corrupted our world.  It takes a person of great integrity to admit their mistakes and failures.  John Reed does so in spades and with great remorse.   How much different a man is he than the sociopathic CEOs running Wall Street firms today who mock integrity, truth, morality , reason and virtue.    The video also contains an in depth interview with Senator Byron Dorgan whose Senate floor speech in 1999 presciently foretold of impending financial catastrophe due to the complicit corruption of elites and government in the repeal of regulation that President William Clinton and Senator Phil Gramm rammed through our government.  Both of whom have gone on to cumulatively make hundreds of millions of dollars collecting on their political favors. 

Bernanke: Gold-Backed Money Is Not The Answer. He’s Right.

I have defended Bernanke on here before for not allowing the system to collapse and causing massive chaos in our society.  But I also said that after these corrupt Wall Street firms were saved, they should be broken up.  These “free market” (mythical) nut jobs who criticize Bernanke for saving us from complete chaos believe we need to let society collapse and pick up the pieces to absolve ourselves of the excesses in our economy, are completely wrong.   They generally seem to read an Austrian economics book and become a ideological bigot without actually understanding what they are talking about.  Letting the system implode was the prevailing economic view at the start of the Great Depression.  So, policy makers and the Federal Reserve sat back and watched society collapse.  Literally.   Thousands of banks failed and the deposits of millions of innocent people in those banks disappeared like a fart in the wind.   The Federal Reserve did nothing as recompense for those businesses and individuals who lost all of their savings.  This twisted perspective of wishing for collapse is held today by plenty of bloggers and radical fringe elements who are challenged to actually understand what they are talking about.

One of those with such a twisted view is seemingly Ron Paul and his religious followers who are generally quite economically-illiterate.   I suspect the exact same chaotic collapse would happen today were it up to Paul.  ie, Based on Paul’s comments, he would let the system collapse and anyone who was taken down with it was shit-outa-luck.  We already have an example of the auto industry where bad debts can be liquefied without letting the system collapse.  To the contrary, the American auto industry is in better operational shape than it has been in thirty years.  Unfortunately, these firms are still going to be left to suffer the coming crises created by politicians and Wall Street as the rest of us are.  And, I don’t appreciate the favoritism that certain corporations including the auto industry, GE, Wall Street  and others received during this crisis while Americans were left to rot.  But my point is that the system needn’t collapse in order for it to be saved and if you question that, the auto industry is a simple example if you need one to visualize it.   The same policies applied to Wall Street and the auto industry could also be applied to We The People as we noted in a solution to this housing mess years ago.  

It is the people who are the victims of predatory corporations.  It is the people who built this country.  It is the people who politicians should be concerned about helping.  

People who believe debt collapse is imminent are divining the future based on how the system is constructed today and was constructed nearly one hundred years ago.  That is not going to be the future.  That is why I have never, not once, written of a coming debt collapse as many others have.  A debt collapse would be a conscious decision on behalf of policy makers.  Deflation?  Yes.  Deflationary debt collapse?  No one can clearly make that call.  It is not an outcome that is guaranteed even if it appears likely.  Now, I have said the U.S. might default on its foreign debts, specifically to China, but that would be an act of belligerence rather than a necessity.  Looking in the rear view mirror,  debt collapse is most certainly a guaranteed outcome.  But, debt is a myth and the collapse allowed by the Federal Reserve during the Great Depression was a conscious act.  Using the past to divine the future or driving forward looking in your rear view mirror is a tricky proposition.  It is the very reason Wall Street is failing.  They are applying mathematics to the past to define the future.  History can be a very useful guide but rather than repeating, it usually just rhymes.   Debt collapse, especially in the U.S. where we still have sovereign money, is not a foregone conclusion.   But it is a conclusion if systemic incompetence prevails.

In addition to supporting Bernanke, I have also criticized him more times than not for not speaking out for reform of a massively corrupt banking system that uses the Federal Reserve to loot and prey on democracy, its citizens and society.  And, for having his head placed squarely where it shouldn’t be as it pertains to his views that I would often classify as dipshit economics.  As Thoreau noted in Civil Disobedience, "Others--as most legislators, politicians, lawyers, ministers, and office-holders--serve the state chiefly with their heads; and, as they rarely make any moral distinctions, they are as likely to serve the devil, without intending it, as God.”.  If Bernanke is guilty of anything, it is of serving a system without any moral distinction.   Of serving the devil without intending it.

There are many solutions that don’t involve watching the world collapse.   But both Washington politicians and these “free market” dunces are so blinded by their jihads that they can’t see beyond the end of their nose.  (Okay, so I used an Islamic term because the word had a greater effect than those that may have been termed by radical Christians; of which there are plenty.  You know, because some of the political and fundamentalist Christian radicals are so Islamophobic.  So these terms now have a special place of fear in our minds.  Fear put their by fear-driven, power-mad religious and political haters who derive illegitimate authority through messages creating divisiveness.    Personally, I don’t distinguish between hate derived in the name of an omniscient intelligence be it Islam, Christianity or any other religion; a view manifested completely within the unintelligible, unintelligent, fear-driven self and not of any form of omniscient intelligence.  Hey, what would a post on here be without some type of sidetracked rant?)

Bernanke is on a public relations tour for the Federal Reserve.  There’s a paradox for you.  Rather than accept responsibility for the enablement of corruption and seeking substantial reform, we see the Federal Reserve attempting to rationalize and perpetuate a financial system of putrified rot and fraud.   By the way, one created by politicians, not by Bernanke.   Bernanke is simply the enabler of corruption.  Anyway, Bernanke rightly remarks during his tour that gold-backed money solves nothing.    Gold solves zero issues we are facing today.  Contrarily, as we have written, a return to the gold standard now would send us into a depression as far as the eye can see; showing us how little those advocating its return actually understand about money.  A return to the gold standard would serve no one better than the status quo to lock in their thieved gains stolen from society over the decades while denying democracy any semblance of opportunity to create democratic money that would drive human development, society’s needs and democratic institutions.   The flip side of that coin that Bernanke didn’t tell us is that the system as it is set up today, with centrally-planned interest rate moves used to control money supply, artificially limits economic opportunity and creates artificial unemployment.  It too puts control of our money in the hands of a few while denying democracy.  So, our system as it is constructed isn’t any great shakes either.  He is also correct that the Federal Reserve didn’t act as lender of last resort and that led to a massive loss of money that was completely unnecessary and made the Great Depression substantially worse.  

Bernanke serves a failed ideology on countless topics including free trade, trickle down economics, the Federal Reserve in its current form, saving a failed and corrupt monetary system, keeping capital markets in the hands of Wall Street, etc.    Bernanke is most assuredly more “book smart” than any of his critics.  The question is what did a failed pseudoscience of economics teach him in those books?  (While I am not a big fan of standardized tests, he essentially received a perfect SAT score and followed that up with excellence in his education.  The question is did he actually learn anything other than nontruths perpetuated by junk economics?  Are his test scores indicative of an ability to absorb what others believe rather than an ability to determine his own reality?)    So too might many gold money backers be book smart.  But, they too really don’t understand anything about democratic capitalism or how to create a monetary system that serves human development and a democratic society.  I will give Bernanke some benefit that he  knows more about money than most of his detractors.   Or, at least money as defined within the system we currently operate.  Although it seems he may have a few blind spots…. we all do.   But, we need someone who is more than supposedly book smart leading our monetary system.  We need someone willing to make the moral distinction that Thoreau so aptly identifies.   We need leaders willing to stand in the face of corruption and evil to fight the good fight on behalf of our nation and humanity.  And, most importantly, those who have no voice because they have been marginalized by corruption and evil.  

I have commented before on here that I support having a lender of last resort.  But that the Federal Reserve should be a part of the Treasury granted under constitutional authority rather than being this fascist comingling of half government, half private banking beast that it is.  Or even worse, an all private banking system as most gold money advocates desire.  Ignorantly desire, might I add.  And under that newly created role, we could create a much more granular monetary system and capital market structure that pushes some capital and monetary controls outward thus creating the concept of more of a “local” or more democratized money.   (The debate between the gold money advocates and the status quo is a little like the debate between Democrats and Republicans.  It’s a false choice and neither side is addressing the issues. ) 

I still haven’t put up an overall plan as a basis to redesign our money and our banking system to serve democracy and a democratic, merit-based economy but I have spoken of many components and dynamics.  It most assuredly would not be a tyrannical money as is today or would be if backed by gold which grants power to a very few while denying it to democracy.  I’ll get there in due time but I will say we are NOT going back to a gold standard.  That is exactly what many in the status quo wants; granting control and power over money to the very few who own all of the gold.    The status quo is far and away the biggest buyer of gold today.  What do they know that you don’t?  That gold money has been used as a weapon to defeat democracy and enable concentrated power and its corruption.   That is the history of gold money.  As I have said before, I wouldn’t be surprised to see the status quo attempt to re-institute gold money but, if so, they will almost certainly and ultimately fail.

Chinese Lawyers Chafe At Hitler-esque Oath To The Communist Party

The manifested self or ego is so predictable.  Remember, the human mind has only two intents in everything it does:  the intent to control, driven the the manifested self or ego,  or the intent to discover truth as driven by our higher power of reasoning or human consciousness.  In other words, that which separates us from dogs and cats and dirt and stone.  Although I find dogs and cats and dirt and stone a much greater source of truth than people who sign oaths of control.  That includes anyone who would sign or pledge an oath to the Democratic or Republican Party.  Don’t worry, as I have remarked and will again in the future, I believe the odds are quite good both political parties in this country are going away.   

Not a lot of truth in either of the pledges below; either the Chinese Communist Party pledge or the pledge to the Fuehrer.  Both clearly are not pledges of honor or morality or justice (truth) such as the Hippocratic Oath taken by health care professionals or the oath to defend the Constitution (truth - the rule of law)  taken by men and women serving in our military.  The oaths below are simply a pledge of indoctrination meant to guarantee the future control of the Chinese Communist Party or Hitler and his fascist party.  Sounds a little like the Republican Party’s fascist oath of control over truth. 

Support the Chinese Communist Party or…  else.

Fuehrer oath for comparison.

China Coup Rumors Run Wild

Were this to have any merit, it would most certainly be very bad and unexpected news for the global economy.  A coup by the military would likely quicken a return to hard line policies. 

Interestingly, we said this dynamic was likely to happen as China’s economy hit the skids.  And, we wrote it years ago in the belly of the beast of Wall Street’s propaganda that China was invincible.   How about that?   lol.

We have been eerily accurate on a multitude of anticipated outcomes on here that no one else has ever written about.  And there are dozens more still in play.  In other words, these aren’t recycled perspectives as is so frequent with the never-ending pilfering and plagiarism of many bloggers.  I had a friend tell me four or five years ago that I scared her because so many things I told her was going to happen, happened exactly as I said they would.    If I told you some of my methods, you might be uncomfortable; I see things in my mind.  You know, like pizza, chocolate chip cookies and vacations in the south of France.  Okay, I am just going to come right out and reveal my true identity.  I am the reincarnation of Edgar Cayce.  Baaahaaa! 

China Quietly Relaxes Controls On Foreign Capital

There is a fair amount of nonsensical bullshit in this article as there often is in any mainstream reporting.  Like the comment that Chinese communist central-planners deliberately engineered a drop in real estate prices.  Baaahhhaaa.    I guess that’s why there are unsubstantiated reports of people jumping out of windows due to the “deliberately engineered drop”.  Or maybe the author means like the U.S. guvmint has engineered house price drops here along with the financial collapse that cost our society trillions of dollars?    Please.  Wake up.  Politicians didn’t engineer anything.   What really happened in China is the bubble that the central-planning, baby girl-killing,  ethnic butchering, class rank cleansing, murdering, corrupt communists created has popped and now they are scared shitless about the coming internal social unrest we wrote would happen when the bubble popped.  So, now they are willing to allow more freedom of capital movement in some semblance of saving their own asses.  Clear enough? 

But, all mockery aside, the point for linking to this article is that China has tried to deregulate capital even further in some attempt to attract fleeing money back to the country.    It was deregulated capital which helped create China’s massively bubblicious economy in the first place.  Somehow deregulating it further in some hopes of stopping the collapse is what is called insanity in my world.  Game’s over.   Time for a new game;  The blame game and Russian Roulette between Washington and Shanghai.   Rising nationalism dead ahead; another one of our anticipated outcomes from a half dozen years ago. 

The article also quotes our Treasury Secretary who says the yuan has further to rise against the dollar; a view he shares with his equally incompetent boss.   (We hire politicians as administrators to manage the paperwork required to keep the country running while people in the real world do the real work necessary to actually keep the country running. Not because they are economic or financial genius.  They are most certainly and consistently just the opposite.  And we are going to learn that lesson the hard way.  Frankly, from my experience, hard lessons seem to be the only ones worth learning.)  Timmy is going to look pretty dull when the yuan falls or is devalued in order to maintain production and employment, as we have said would happen many years ago.   When we first wrote that the yuan would either fall or be devalued by the communist party as this cycle started crumbling, it was a very, very, very, very lonely position.  It was a lonely position only because the mainstream economics, political and financial community are systemically-incompetent freeloaders who created this global mess.   I hate to tell Geithner, but a communist currency, make that a collapsing economy’s communist currency isn’t going to rise against anything.  What might a lower-valued yuan do to American corporate investments in China and American competitiveness with a further devalued yuan?  Or to the desire to make future investment of those who end up losing their asses?  Well, we talked about that long ago as well.   Say bye bye. 

It’s pretty bad when the masters of the universe are made to look like chimps by a some poor white-trash hick blogging in his underwear in his spare time.   There’s a pony in there somewhere. --->>> Stop outsourcing your beliefs and thinking  to demagogues and political idiots and start listening to yourself.   The only skills they have are manipulating you into believing they know what is best for you for reasons of self-interest and power.   Politicians should be doing what We The People tell them to do and not the other way around.   Appointed public servants should have an agenda to serve the people not tell us how our lives should be managed by a bunch of power-mad political clowns.  For God’s sake, listening to them has fucked up the entire world.   We’ve had just about enough of that nonsense.   Or, at least I have.  If they had any modicum of self-respect, they would all resign.  Everywhere not just in the U.S.   Don’t rule that out as a possible outcome at some point.   We already saw that in Iceland, Ireland and Greece.

The world continues to unfold exactly as we said it would.  Albeit it in slow motion.  For now. 

Morgan Keegan and Goldman Sachs Up Apple Price Target To The Value Of All Publicly-Traded Companies In Russia.

Italy was simply too little, too late.  Russia’s publicly- traded companies have a value of a little less than $1 trillion.  With this upgrade Apple would be closing in on the value of all publicly-traded companies in Russia; a country with a population of 150 million people.   That would include all of the publicly-trade oil, natural gas and mineral reserves of the largest energy-producing nation on earth.  Hahahaha.   The iPad is a an effing flat screen with a wireless chip in it.   It’s not the cure for cancer.  The Wall Street carnival barkers never learn. 

With this we are reminded that not only are the Wall Street masters of the universe a criminal racket but they also share the podium of the most systemically-incompetent bureaucracies along with the Democratic-Republican parties and the Federal Reserve; Larry, Curly and Moe.    

Let’s celebrate Soviet American economics with a singing of the Soviet Union’s national anthem.

Corporations And The State Are Emboldened In Their Efforts Of Dehumanization And Exploitation

The great violation of freedom is no longer property as it was in 1776.  It is now privacy.  Privacy is the new property.  It is everywhere you look.  Age discrimination has been rampant for decades.  Many employers won’t hire anyone who is unemployed.  Corporations continue to exploit labor without limits.  Corporate executives have raided pension funds for decades.   The government does nothing to stop any such efforts.  The government is bought and paid for by corporations.  That doesn’t even touch on the endless violations of privacy undertaken by the state.  We now live in a capitalism (and a corrupt fascist one at that) and not a democracy. 

This story is ludicrous.  And, that government agencies in addition to corporations are often the violators is even more ludicrous.    These are clearly dehumanizing violations of ones privacy.  How humiliating one must feel to be in an interview and to have someone tell you that in order to be employed by that firm or government agency, that you have to subject yourself to violations against your person and your most intimate thoughts and expressions.  And possibly even incriminate yourself.  

Rising Treasury Rates A Sign Of Improving Economy? Baaahaaa!

What’s up with the uptick in longer term rates last week?  Bill Gross was quoted last week that he thinks its inflation and QE3.  And that the thirty year run in Treasuries is coming to an end.  This view is shared by many in the financial community.  Everyone I am aware of in the mainstream economics and financial community missed this crisis including Gross.  I happen to know there is a very substantial herding element on Wall Street.  They all read each other’s commentaries to form their own conclusions; which by simple understanding of the human condition, happens to the the same conclusions.   Essentially, everyone on Wall Street does what everyone else on Wall Street does.  That’s what happens when you live off of the Federal Reserve’s dole.  The prevailing views of self-importance are never weeded out in favor of reality.  ie, Sheltered views written in a bubble aren’t reflective of reality and the future is going to do what it wants.  I have nothing personal against anyone in our financial community but that Gross keeps coming out and making public proclamation that we are going to see coming inflation and higher rates is based on what?  It should be based on supply and demand but it obviously isn’t.   The last time he attempted to predict the future of bonds, we wrote on here that his perspective was completely inaccurate.  Subsequently the the bond market did exactly the opposite of what he said it would.  I thought Pimco was the world’s leading authority on bonds?   You know, like Goldman Sachs is the leading investment bank.  Or JP Morgan is the leading authority on derivatives. 

What I suspect is happening with the back up in rates last week is that many investors are moving out of sovereign bonds and into stocks.   (Supply and demand)  This because of what is happening in Greece and the perception that sovereign bonds at incredibly low rates simply aren’t sustainable at best and bond holders will have to take massive haircuts at worst.  So, instead the equity markets with perceived low price-earnings multiples and perceived tremendous value offers a safer investment.  So money is rotating out of bonds and into equities.  Pigs are being led to the slaughter.  As we have said countless times over the last seven years, this stock market is substantially more expensive than it was in 1929 before it dropped 95%.  We’ll talk more of that in my Buffett-IBM post. 

By the way, just as a matter of perspective, in the 1970s a bond trader made about as much as a good paying factory worker’s job.  Seriously.  That’s it.  Today, because we now live in a Ponzi world driven by financial gambling and financial “innovation”, ie pushing around paper, we grant Wall Street’s mob lordship as masters of the universe.  We therefore assume they actually know more than the rest of us because they are exalted by the state and pay themselves tens of millions of dollars to push paper around in the Ponzi economy.    Money is allocated in our economy based on the aberration of the financial bubble rather than any kind of merit-based economic system.  This perverse effect is even felt in sports and entertainment, which I have said is going to see a major collapse in earnings when this bubble pops.  This belief system that Wall Street is full of masters of the universe will be punished mercilessly and therefore, will disappear soon enough.   The only true believers that remain are the politicians and Wall Street themselves.   Everyone else has already awoken from that pipe dream. 

What would the average Wall Streeter be doing if we had a distributed public monetary and banking system rather than a  debt-based monetary system concentrated on Wall Street?  Because we are most certainly witnessing the end of this form of tyrannical money.    Well, they would likely be a loan officer at a community bank or a manager at the local Hooter’s or something similar.  A very few might actually be the president of a local bank or a public banking branch.  Are you sure they are in fact masters of the universe?  Or masters of convincing you they are masters of the universe?  … Which, by the way, grants them the ability to pay themselves tens of millions of dollars and the ego’s perceived self-importance that comes with it through television interviews, hobnobbing with politicians, buying mansions, etc.   The self is the great deceiver.

One thing I am quite certain of is if you work in finance, be it corporate finance or Wall Street, somewhere between one in three or two in three of you will no longer be working in finance when the bubble pops.   That most certainly includes at least half of all financial advisors.  And, salaries will never again return to these levels as a post-bubble economy allocates capital more efficiently based on need and merit in lieu of Ponzi economics.  The haircut is going to be as massive as the bubble is.   Personally, I’d start hoarding cash and looking into a backup career because these jobs will never come back.   I find that statement rather ironic given  people in the financial community have been telling people who used to make things in this country that same line for decades.   Karma is indeed a bitch.    

One More Look At The Monstrosity Of Wall Street - Apple's Stock

The perfect linear regression of its stock price from the 2009 lows is a sign of algorithmic trading controlling the stock.  The near vertical rise over the last handful of weeks is most certainly a sign of a contrived blow off top.  When hedge funds are able to move a price to new highs, they are often capable of catapulting the stock because there are no sellers.  In other words, all trades are buyers; a perfect opportunity to mint massive returns very rapidly with blow off price movements.  The volume in Apple over some days in the last few weeks has been massive.  Oftentimes more volume than is typically traded in a week.  There are likely quite a few shenanigans involved including substantial manipulations in the options market.

I said Apple's stock was a bubble back before the 2008 collapse.  What exactly is it now?  I'll tell you what it is.  It's a representation of the scope of the criminality in the financial racket we call Wall Street.  I believe it was back in 2007 that I wrote Apple's fair value was in the $35 range.  It started heading that direction in the 2008 collapse but now has morphed into a bubble that would make even Bernie Madoff blush with envy.  As we noted at that time, bubble economics are are also artificially inflating its business results as happened with Microsoft and other IT and consulting businesses in the late 1990s.  Factor in the cash hoard Apple has built and maybe the shares are worth $70-$100.  But that is only until the cash hoard is payed to shareholders or is ultimately needed to fund operations or whatever else happens with the money.   I tend to think that money might be spent hiring a private army to protect its Asian supply chain when China collapses.  That's a joke... about hiring an army, but the global supply chain shocks we wrote about half a dozen years ago are most certainly on their way.  Apple won't be immune.  The fundamentals could easily develop where Apple cannot even get product to sell.  (Update:  This was written over the weekend and auto posted this morning.  Since, Apple has announced a dividend and a $10 billion share buyback.  The share buyback is NOT for the shareholders.  It is for the executives as the announcement highlights.  ie, It is to make sure the shares aren't diluted in future share grants to company executives.  This is simply more of the systemic looting of the publicly-funded capital markets by private interests at public companies.  In other words, privatized gains and socialized losses.)  

Remember, it was just a decade ago that Microsoft rose to the stratosphere in Wall Street's criminal Internet bubble.  It too had $30-40 billion cash on hand and no place to spend it.   Before Microsoft decided to give it to shareholders, the stock still dropped 70%.  Apple's stock is a substantially larger bubble backed by the tens of trillions of dollars pissed into our economy over the last decade by bubble after bubble created by Wall Street, the Federal Reserve and Washington politicians   And, even today, still in the midst of a stock market bubble, Microsoft has again amassed even more cash yet the stock languishes 50% below its peak 12 years ago.   In other words, the mirage of a strong balance sheet is not going to save Apple's stock any more than it saved Microsoft.

Click on the graphic for a ginormous view

One More On Coke And BPA While I am At It

Coke denies the science behind BPA.  Science that is very hard to deny.  Even the largest canned products company, Campbell’s, who has been very resistant to change, has capitulated and is going to rid its packaging of BPA.   Between artificial sweeteners, fructose, artificial colors and BPA, packaged drinks have a major impact on our health.

Coca-Cola Removes Known Carcinogen to Avoid Cancer Warning Label

Yummy!.  Give me another Diet Coke with my pink-slime antibiotic burger…  on second thought make that a genetically-modified, pesticide, veggie, soybean burger and an order of hydrogenated vegetable oil, pesticide fries.

Intellectual Dishonesty & Rationalizations - Are Stephen Roach’s Comments About China His Irving Fisher Moment?

Before Roach became a shill for what clearly is rationalized intellectual-dishonesty, I commented on here often that I appreciated his surly views as a contrarian.   That said, Roach has never been shown to be an authority on money or the dynamics behind globalization and China’s role in those dynamics.    But, since Roach is no longer involved in economics day-to-day and now has the self-interests of both his employer and his own career as head of Morgan Stanley’s China business, his comments and beliefs seem to be better described as rationalizations and intellectual-dishonesty than any type of reality. 

As human beings we are all capable of tremendous self-deceit and intellectual-dishonesty.   There is simply no way to run from who we are as the duality of the manifested self and our core being or higher power.  As part of the human condition, we often rationalize our own world through interests on behalf of  ourselves.  This manifests itself in endless forms and is a major reason why those in a bubble are oftentimes the only ones who never realize the bubble exists.  Just ask Washington lobbyists, Wall Street criminals and politicians if they believe they are in a bubble.  The answer most certainly would be a resounding no.   They are consumed by the self and the rationalizations that they are doing God’s work or the work of democracy or the work of creating our economy or society.   

That Roach has bought the cooking of centrally-planned communism-fascism in this article and this video is truly staggering to me and shows how even someone who embraced often contrarian views can be consumed by the vested interest of the self and his position of Morgan Stanley’s Asian Chairman.  These rationalizations or lies of the mind have trumped the reality of human behavior, economics, human rights and the truth of what is actually going on in China.  

Never in the history of humankind has an illegitimate authority that has murdered upwards of sixty to one hundred million of its own citizens and rules by authoritative decree ever led to any type of sustainable truth; economically or otherwise.  And, never in this history of humankind has economic central planning ever created anything other than misery and economic slavery due to loss of humanity’s participation in economic determinism; a central tenant to inalienable rights, the human need for self-actualization and personal determinism and the human need for community.  

There is some substantial modicum of truth that when the state or anyone else thinks for me, I no longer need to think for myself.  And, more importantly, the human mind seems designed to be intellectually-lazy if it is allowed to be.   So, most people will no longer even give any consideration to thinking for themselves.  ie, I outsource my personal responsibilities to the parental state as our inner child continues to desire until we die.  I become institutionalized; a very, very, very common occurrence to the financial idiots, corporate bureaucrats, politicians, those who are active members of the Republican and Democratic parties, the military-industrial complex and the like who blindly serve the corporatocracy in the United States.   Outsourcing our lives and what we are capable of being responsible for, and more importantly outsourcing who we were meant to become, always leads to human misery as someone else or the state imposes their control upon our lives.  -->> Loss of our intellectual freedom and loss of our own identity and our own determinism without even realizing it.  In other words, centrally-planned economics in China and around the world is going to end in catastrophe.     

Roach believes a communist-fascist authority that limits freedom of expression, free thought, freedom of movement, freedom of invention and countless other human rights, as well as countless economic rights including property rights (property defined as intellectual property, tangible property, property of the person and his thoughts and expressions, etc as defined by our Constitution), is going to lead the future of humanity with a centrally-planned five year objective of becoming a self-sustaining consumer nation.  And he notes that the future five year plan of urbanization and creation of social safety nets is going to drive that dynamic.  Contrarily and almost unbelievably, we wrote on here many years ago the exact opposite statement.  That is, China’s urbanization (placing people now squarely reliant on capital and the communist-fascist state) without a social safety net was going to be a contributing factor to its demise.  There is no social safety net in China yet Roach believes one is magically going to appear.  Contrarily, we have written for half a dozen years that China is broke but simple doesn’t realize it yet. 

I find it interesting that capital flows through the global economy and in China are now painting a very stark picture of what is to come for the centrally-planned economy.   This exactly at the time that Roach is opining about a bullish future for the communist-fascist state.   

Is this Roach’s Irving Fisher moment? 

"There may be a recession in stock prices, but not anything in the nature of a crash." -- Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929

China, currently the biggest and most rapidly growing US export market, is well on its way to “create a consumption dynamic that will outstrip the growth of any consumer market in the world,”  -- Stephen Roach, leading U.S. economist, McKinsey interview, March 2012

Goldman Sachs Executive Criticizes Firm For Ripping Off Clients

These revelations are simply confirmation of what anyone willing to embrace reality already knew.  We have seen it in revelation after revelation of their smarmy activities or as Goldman’s CEO has stated, “Doing God’s work.”.     This dynamic has been building since Wall Street got its legs back underneath it in the Great Depression they were responsible for.  Once Wall Street was allowed to trade with its own money (our money backed by taxpayers and shareholders) who cares about making 2% off of clients?  Those people are captured and really don’t have a whole lot of choices worth leaving for.  So, then Wall Street could focus on making 50%, 100% and more by ripping off countries, schools, municipalities, corporate clients and finally society. 

Private, for-profit banking is a criminal enterprise that seeks to serve the purpose of a very few over the needs of a democracy.   It needs to go away.  Forever.  Especially the capital market functions provided by private banking.    And, by the time this cycle is over however many years from now,  I believe it will be gone.  Forever. 

Title link here.

New York Times Op-Ed By Goldman Executive -  “Why I Am Leaving Goldman Sachs”.

Apple’s Stock Now Worth More Than All The Publicly-Traded Companies In Italy

On a day where Apple’s stock is up another $16, I thought I would pay homage to the brilliant financial masters of the universe who have brilliantly valued Apple and other financial assets to perfection.   Did I mention how brilliant Wall Street is?  Just want to make sure I give them due credit for being brilliant.  Because brilliance is truly a hot commodity in the world of finance.  Those guys and gals got it going on.  I mean, Harvard and Yale degrees, millions in earnings, top floor penthouses in New York, yachts, Ferraris.  They sure are brilliant, those Wall Street savants.  Almost as brilliant as our Harvard-educated president.  You know, just like all of the Harvard-educated lawyers in Congress.  He is going to fix everything.  He’s just so damn smart.  That’s all we needed really.  To just get rid of dummies like George Bush and put some Harvard-educated people in the White House.  Just saying. 

I’m too lazy to look up the exact numbers but this will suffice to make a point.  Last time I looked the total market capitalization of all companies in Italy was a little more than 1% of total global market capitalization of around $55 trillion. 

Now, I may be off by a few billion here or there but Apple is now trading at a market capitalization higher than all of the stocks in Italy.  All of them, dog breath.  Mind you, Italy is a country with 60 million people and the 8th largest economy in the world.    Hey, me?  I’d rather own an entire country than the massive Apple bubble.  Just saying.  What do you do for a living?  Well, I own Italy.  And you?  I own Apple’s stock.  Meh. 

The stock market is the largest Ponzi scheme in our country.   It’s value is derived solely through massive, never before seen leverage and free Federal Reserve money granted by taxpayers to financial criminals to gamble with. 

The biggest financial bubble in the history of the world just got a little bit bigger today.  For that, we should give credit where credit is due; Federal Reserve chairman Ben Bernanke, President Obama, House Republicans and Senate Democrats.  They have embraced nobility and virtue by re-regulating our economy and our financial system and returning our nation to some semblance of sanity and sustainable finance and economics.  

Tell The FDA To Get BPA Out Of Our Food Packaging

I eat almost nothing out of a can.  Ever.  And I buy  nothing packaged in plastic unless it is frozen.  My leftovers usually are stored in glass containers or BPA free plastic containers.  Nothing is better than glass.  It’s inert.  I have already alerted the few food companies that I buy canned food products from that if they don’t change their packaging, my business is eventually going away as other options become available.  If you aren’t educated on the topic of chemicals in food packaging, I would recommend you spend some time on EWG’s web site becoming more informed. 

Sign EWG’s petition to the FDA.

70% Of U.S. Ground Beef Contains “Pink Slime”

Forty years ago we had literally thousands of meat processors in this country.  When we had family farms and meat was produced and sold locally, oftentimes grocery stores would butcher their own local meat.  There were even meat butchers who had their own retail establishments.  Kids used to go to trade school to learn the craft of butchering.   I’ve helped butcher farm animals and it most certainly is a craft.  There were untold numbers of families and small business that were able to raise their families as butchers and pay people living wages. 

Now we essentially have three massive meat processing corporations in this country.  Their operations are so tyrannical and so brutal that they have been documented using prison labor and undocumented workers because no one else will work under such brutal conditions for such low pay and no benefits.   And, in order to feed those massive operations, corporate meat processors require industrial farming methods of raising animals  in bulk.  That’s a whole separate topic. 

So, when 70% of ground beef contains some kind of industrial goo, it creates a systemic risk for our entire nation.  It does so because most meat comes from just a few factories.  When we had local economies, any issues were contained to very small crises.  

This dystopian society, created exclusively by pro-business (fascist) political parties effing over our society in secrecy for their own personal profit, is truly beyond description.   You have to laugh at the madness.   There is simply no way any of this is sustainable.

Title link here.

Diabetes Warning Required On Statin Medications

This is really shocking to me.   Not that diabetes is a possible side effect of taking statins.   Anyone who has looked into statins already knew that.  But, that a warning label actually is now required. 

I don’t want to go quoting statistics because I’m not sure how accurate they are.  But, do you know what many in the medical establishment believe is the number one cause of heart attacks?  Undiagnosed diabetes.   I have had three close relatives experience heart attacks in the last ten years.   All three had undiagnosed type 2 diabetes.  It killed one of them. 

Do you see any irony in taking a medication whose goal is it to reduce heart attacks having a side effect of causing an illness that many consider the number one cause of heart attacks? 

You know, at one time in my life I had excruciating head pain.   Aspirin provided some temporary relief but the pain kept coming back.  Finally, I had someone tell me I should quit hitting myself in the head with a hammer.   Guess what?  The pain went away.  Just saying.

Inside Japan’s Nuclear Meltdown

So much of the Fukushima disaster has been dehumanized by modern media.  But, this recently released documentary, now available to watch online, offers a very human and emotional view of the 9 days that followed the disaster and how behind the scenes men knowingly sacrificed their lives to save Japan and the world.  It provides a sobering view of what reality can possibly be when we speak of nuclear power.   No other form of power generation today represents a worst case scenario of massive death, obliteration of entire communities and the ability to render much of our planet as inhabitable.  Are these risks acceptable? 

There is no way to gain an appreciation of the wave after wave after wave of hundreds of thousands of “liquidators” who threw themselves directly at death in the horrific Chernobyl disaster.  (As many as 60,000 dead and 160,000 disabled and countless more who will eventually die of disease due to exposure.)  Don’t think it can’t happen here.  The Three Mile Island disaster came frighteningly close to a complete containment failure and meltdown that would have rendered much of the northeastern United States uninhabitable just as Chernobyl did.   Our citizens would have had to volunteer for their own death march into harms way in some attempt to permanently cover the melting core.  Would you be first in line?  If not, how can you possibly support nuclear power?  There is too much not-in-my-backyard in U.S. politics and little sense of community or serving the greater good.

I don’t know how I could support new nuclear power plants in this country until we have completely developed Generation IV technology or something even beyond.   At that point, the costs and benefits equation will change substantially and a re-evaluation would be appropriate.  But by then I expect we shall be able to provide many other alternative energy methods. 

As we noted some years ago, the cost of dismantling an end of life nuclear power plant is staggering.  In today’s dollars it could easily take $2-5 trillion and more than one hundred years to dismantle all of the U.S.’s nuclear plants when they come to end of life.   Corporations pushing nuclear power never tell us about that, now do they?   If we had honest, reasoned debates in this country, or what we call democracy, much of the deceit and lies that are shoveled down our throats would never stand.    If we had one person, one vote rather than corporate personhood, then corporations would never manipulate our government either.

Today’s nuclear power, when calculated as a true lifecycle cost, rather than a price per kilowatt hour, is staggering.   Factor in all risks and the costs are incomprehensible.  Nuclear power is only achievable with massive government subsidies to special interest corporations.   Then, as in all other forms of corporate welfare, society is left with the bill of cleanup, risk and potential ecological and human consequences.    At the minimum, the American people, not wealthy investors, should be getting the dividend checks from utilities running nuclear power plants.   And those dividends should be placed in a trust to pay for unexpected disasters and then the eventual dismantling of the plants.

I think we can find a better use of energy subsidies that benefit the people of this nation rather than corporate welfare.  But first we need is a government that works for the people and not politicians, political parties and their corporate masters.

Update On China’s Economic Miracle

China has been a central focus on here since starting this blog seven years ago.  To my knowledge we were the first in the financial community to write about the coming bust in China.    And, our focus is substantially different than those who in the last few years have started to recognize that a real estate crisis was brewing in the country.    Those are people who think with their eyes.  But, at least they are thinking.  As we have noted numerous times, China’s crisis is far more ominous than real estate.  They are experiencing a capital bubble. 

Over the years we have discussed some very worrisome issues and possible outcomes in China including that GDP could literally collapse by as much as 50%.  People who think with their eyes impatiently believe that the world must reveal itself immediately or your work isn’t accurate.   Time is an element that is nearly impossible to understand for anyone.  And, the status quo is doing anything and everything to stall the inevitable.  But, the train is still coming down the tracks.  All one can do is use their voodoo wands and try to estimate time dependency.   But, now, even the World Bank, a tool of U.S. financial manipulation and hegemony, has issued a stern warning to China to reform or collapse.   That warning is far too little, too late.  (More on the World Bank’s statement in a future post.)

I suppose most people have seen that the Chinese economy has started cracking substantially in the last few months.    Real estate is literally collapsing as are some measurements of industrial production.  While accurate data out of China is difficult to obtain, after the 2008 collapse we saw what was estimated by some data sources to be one hundred thousand factories, or possibly even hundreds of thousands of factories, close, the stock market collapse (we said it would just before it did)  and coinciding with those dynamics, the real estate bubble hit what I would classify as escape velocity.   That dynamic was no coincidence as we have noted numerous times.  We have written that the increased output in automobiles, housing and real estate was a sign that the capital bubble had collapsed.  And, that meant money creation would rotate into consumption items until that bubble was then pricked.   At which time the unraveling would begin.   In other words, as we noted numerous times, the frenzied housing and auto markets in China were key indicators that the economy was actually collapsing.  Not exactly how it has been reported in the mainstream economics or financial community.

With China’s wild downward swings in real estate, we can now most likely guess that 2012 will be the end of the world for China’s supposed miracle economy.  Some anecdotal evidence of this coming upon us very quickly is that warehouse copper stocks in China have increased from 50,000 metric tons to about 212,000 metric tons since December.  In other words, demand for copper is collapsing and supply is rising rapidly.  This as Wall Street has ramped copper prices back into the stratosphere again.  I wonder if JP Morgan is still hoarding physical copper?  -->  Life’s a bitch and then you die.  As part of our long time writings about the coming commodities bust, I anticipate copper is going to easily fall as much as 95% from its peak. 

China’s stimulation of its own economy to replace the lost international demand for China’s goods after the 2008 collapse has done nothing other than create the largest run up in real estate prices the world has ever seen.   Now that this centrally-planned nonsense is collapsing it appears the communists want to extend even more credit to international customers.   But, as we have noted countless times over the last half dozen years, the yuan is worthless.  The communists just don’t realize it yet.  Neither does Jim Rogers who we mocked for moving to China just as their economy started its implosion.   (Rogers believes the U.S. is finished versus our long term thesis is the U.S. is going to rise again.  So, he moved to China so his kids could learn Mandarin.  Well, I wish I could speak Mandarin but not because the future of economics is going to be driven by communist central planners.  That is never going to happen.)   A fool and his money soon part ways.   That includes both China for extending more credit to international customers and Jim Rogers for being economically-illiterate.   China is repeating its past mistakes of extending international credit to fuel its bubble economy; the same mistake the U.S. made as one of the causational factors in the Great Depression.  (Remember, as we discussed a few years ago, I expect the U.S. could very well either monetize or default on its foreign debts in 2013.   As it pertains to China,  I think we can expect the national mood to be such that a default is quite possible.  How wonderful that will be for globalization.  But, as we have uniquely noted for the last five calendar years, globalization is dead.  Now we just wait for the status quo to run out of ideas on how to spend other people’s money to save it.)

This all reminds me of a discussion I had with a PhD (Piled Higher & Deeper)  in economics and top model builder at a leading U.S. hedge fund some years ago.   Nice enough man consumed by his own faulty belief system as we all are.  When I politely tried to intimate to him that everything he believed to be true about his models and economics was going to fail and that including the Chinese economy, the global economy, commodities and his financially-engineered juju, he essentially remarked that I had no idea what I was talking about.  That he had been doing this for twenty years.  And that China would effectively manage its economy essentially because the economics profession was full of brilliance unlike little old me.  We as human beings are capable of tremendous self-delusions and rationalizations.   Soon thereafter his world started to crumble.  Now we are going to put the finishing touches on his and countless others’ completely failed belief systems. 

The final spikes are soon to be nailed in the coffin before we lower it into the grave.  On the grave’s headstone will read “Here lies the failed belief systems and institutions of the ego that the fraudulent status quo once called the Chinese economic miracle, free markets, financial engineering, the investor class and globalization.  These beliefs, fortified by primary interests in and of the self, greed and narcissism led to the  global exaltation of the self and an associated mania.   As is always the case in the exaltation of the self, it was then followed by unprecedented misery, poverty, corruption and eventual collapse.”.  RIP.

Then……..  at some point we build a new world.   A better world.  That is, if we can keep the status quo from starting World War III as the final manifestation of the exaltation of the self;  the dehumanization of society’s values followed by the institutionalization of the murder of our fellow man.  As we have noted many times,  Joseph Schumpeter remarked that we need to rid ourselves of the status quo from positions of authority to move beyond the crises they create.  And, that is what we are seeing around the world today.  That dynamic is far from over.

All of the other outcomes regarding China we wrote about over the years are likely to start manifesting themselves to some degree in the coming year.  The communist party is already starting to crack down on freedoms as we said they would years ago.   This is obviously motivated by fear of loss of control as the economic monster they created starts to unravel.

The world continues to unfold exactly as we have said it would.  The cycle of volatility remains in full force. 

Nasdaq Transports Are Telling The Real Story - Is Massively Levered Market Demand Nearing A Tipping Point?

Actually, the Dow Transports as of Tuesday have a zero percent return for 2012.   And, the Nasdaq Transports aren't anywhere close to the 2008 top.  In fact, in the mini collapse last fall, the Nasdaq Transports actually hit price levels seen in May of 2009.  That would be two months after the collapse of 2008 bottomed.  In other words, the Nasdaq Transports as of last fall had made no gain in three calendar years and were closing in on the 2009 collapse lows.  Ahem.   Aren't transports supposed to confirm that what is being produced by a robust economy is actually being shipped?  Well, in a normal world, that would be true.  But this isn't normal.  The stock market reflects the underlying economy and that now that financial is the economy.   The actual price value of transports, or any stocks for that matter, really means nothing.  The Nasdaq Transports don't reflect any kind of reality except this one:  they are well below their 2008 highs because there isn't enough liquidity/demand in markets to ramp their prices as high as they were back in 2008.   Wall Street has been able to lift certain stock market averages and certain stocks using leveraged derivatives but liquidity without that leverage would have the major averages well lower than they are today.  Well lower.

Just a comment for new readers.  Our long time downside target for the S&P is 200-450.  We didn't hit that in 2008.  I see nothing in any of my work that points to us not hitting those values or something near to them at some point in coming years.  That valuation would represent some semblance of fair value.  Also, to pull another statement we have made on here before, market participants are becoming fat, dull and lazy again.  There is a perception after three years of free money to gamble that the Federal Reserve will always bail out the financial markets.  And, that means the investor class believe markets will quickly return to their favor and what they perceive as normal, just as happened post 2000 and post 2008.  Today's stock market is wildly more expensive than in 1929 and the lack of recognition of this fact shows how systemically-incompetent everyone on Wall Street truly is.  E-v-e-r-y-o-n-e.

So, if we have been writing for the last three years that the bailout of Wall Street had an unintended consequence of allowing Wall Street to trade counterparties out of financial markets, essentially by stealing all of their money because the game is rigged in their favor.  And this market is being levitated by record balance sheet leverage of hedge funds and Wall Street banks through the use of derivatives to manufacture artificial or levered financial market demand.  In other words, given the wild overvaluation of these assets and more importantly their worthless paper derivative contracts, that the financial community is once again holding highly leveraged toxic trash.  But, this time just like in 2008, they have no one to trade them to.  Because they traded counterparties out of financial markets.  Just a reaffirmation of what we have written numerous times.

So, on that note, just something to think about.  IBM has been responsible for just shy of 20% of the Dow's move in the last handful of months.  One stock.  Because of the way the Dow is calculated, IBM provides the largest moves in the Dow with the smallest percentage gain of any Dow stock.  Were the Dow an equally-weighted index, IBM would have provided 1% of the Dow's move.  So, has IBM been going up because of fundamentals or because the market averages are being manipulated higher by financial criminals?  And, there isn't enough liquidity or demand to trade the entire market higher so individual stocks with this highest return on the averages are being used to give the appearance of market strength?  Or is it  herd mentality of mutual fund managers and hedge funds that are buying IBM because Buffett did?  Regardless, I believe IBM is putting in a major top in the first half of this year.  Possibly the top of my life time.  Or, depending on how the future unfolds, it's ultimate top.  Forever.  There are many outcomes to this crisis where that is most than possible but even plausible.  We'll talk more of that in my upcoming Buffett-IBM post.

Okay, so how about another question?  What happens if derivatives leverage blows up in the hands of Wall Street banks?  You know, like LTCM or 2008's mortgage-levered products or possibly default swaps on Europe or commodities or something else?.  That means all of that leverage used to manufacture artificial demand in financial markets is going to unwind more quickly than you could can read this sentence.  We have written since starting this blog that markets will move well too fast for anyone to respond.  And, that is exactly what has happened ever since.  What if derivatives blow up, as we and many others have said they eventually will, and society finally recognizes that derivatives are truly weapons of mass destruction (Buffett is right) and they are banned from our banks as they should be?  At that point, where is the fundamental demand going to come from to resupply the lost demand of leverage and derivatives that was used to drive stock/commodity prices higher?  Hahaha.  I'll tell you where it will come from.  Nowhere.   You know what that means?  There may be no appreciable financial market recovery the next time we come crashing down.  A Wall Street bust is coming without a change in our economic model.  Wall Street has created their own fate through their endless corruption, greed and arrogance.  As we have written countless times in the last seven years, we are in the largest financial bubble the world has ever seen.  We'll eventually see a thinning of the herd as happened with real estate agents, Internet bubble companies, homebuilders and the like.  Except this time mammon will eat Wall Street itself.

Marc Faber and Warren Buffett have both come out recently to make bullish comments on equities.  Faber's rationale is that the Fed will keep printing money.  Well, first of all, that isn't really happening.  They are simply expanding their balance sheet as we have written time and again.  The Federal Reserve doesn't have the granted authority to print.  But, they will likely get it at some point from Congress to monetize certain debts.  At the same time Faber also expects the derivatives market to crash at some point.  Well, Faber clearly shows that he hasn't looked far enough onto the chess board.  Because a collapse in derivatives means a collapse in demand for stocks, gold and other financial markets.  And, it doesn't matter how much the Fed prints, without record leverage provided by derivatives, financial market prices will collapse because underlying economic demand has collapsed and has been replaced by financial leverage.  And Buffett?  Well, he must be getting senile is the only rationale I can figure for his bullishness.   As brilliant (and to a certain degree lucky or being in the right place at the right time as most far overachieving economic success is.)  as he has been at investing, he's too invested in status quo thinking.  There are countless historical examples of when heretofore perceived brilliance lost everything because they deluded themselves into the mind's endless rationalizations.

Click on image for larger view