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Special Update: Gold too 'Golden"? OK, the web bot guys told me to look for a change in the 'public attitude toward gold & silver around the 13th of the month" but I wasn't looking very hard. Then a reader sent in a link today that the US Mint has suspended the sale of some new 2007 Gold American Eagles because of the soaring price of gold! Make of it what you will...
Our question: Will they be repriced and available late this month, or is this the leading edge of a new run to gold?
Peoplenomics: War over Taiwan: You Might Not See It Coming While the majority of the headlines that came on while I was nuking my coffee this morning (3:45 minutes worth) mostly seemed to focus on OJ Simpson's alleged role in, and his reported counter claims that he was recovering personal effects from a Las Vegas hotel (other headlines use the term 'robbery') we are much more concerned with events later today which involve demonstration in support of Taiwan independence. Tomorrow, our in-depth weekly report to subscribers will update Taiwan and assess the impact of the demonstrations which are planned in a coordinated way, worldwide, by the Taiwanese. But, even if you don't subscribe, you might want to noodle that there's an escalation path that could turn out very, very badly for the whole world on this one. And, you might not see it coming. But China is not amused.
Booleans, Bread, Circuses, and Oil The predominantly Sunni al Qaeda has claimed responsibility for killing of a major tribal figure in Iraq - just one more story that makes the place a mess. --- This latest killing refocuses me on the tribal/religious aspect of the war. Folks have tried to tell me that Iran has been supporting Iraq, but is that so? Partly. The CIA world fact book reports that Iraq is 32-37% Sunni, and 60-65% Shi'a. Iran, on the other hand, is 89% Shi'a, says the Fact Book, but then I find myself asking: IF al Qaeda is largely Sunni, and Iran is largely Shi'a, don't the US and al Qaeda share a common enemy, in a sense?
If you do a little digging, you find reports that al Qaeda is profoundly Sunni because, as one article puts it in part, "the extremist Sunnis who make up al Qaeda consider all Shiites to be heretics."
So, I'm sitting here with my coffee (a few minutes after 6 AM) and wondering "If Iran is supporting the Shi'a in Iraq, and the US is fighting al Qaeda, what's the solution - or is there one?" As usual, it comes back to the gray area between simple answers:
The US is likely under pressure behind the scenes from Sunni-sympathetic Middle Eastern countries with oil and quite strangely, the CIA World Fact Book doesn't give the religious breakdown of Saudi Arabia, (the point of origin for the 9/11 hijackers). Its listing under "Saudi Arabia>Religion": simply says "Muslim 100%". Pick another country with oil that is firmly in the US/corporate camp and you find, in the case of Qatar, for example, that the specifics are again missing. We read only that Qatar, for example is 77.5% Muslim, but the breakdown is not given (at least to civvies like us) what the underlying sect distribution is.
Outside the CIA Fact Book (which lacks a key fact, here and there) we can find elsewhere that the 'vast majority of Saudis are Sunni Muslim and only about 15% are Shi'a.' So that leaves means, if I get this right, that about 85% of Saudis being Sunni.
Is the mess solvable? I find myself planning a simple Boolean truth table and I start to line up the facts:
We can now see (with stark Boolean clarity) why the US is in the region for a very long time: it's the unsolvable equation that goes something like this:
See the futility of it? The non sequitor is that D (US) is not allied with A* to counter B which is arming 3/5 C. We can't - due to the WOT -- D is trying to conflict A*, but not to the level of disturbing A, so D is preemptively conflicting B (every way we can) to keep B from overrunning C to the detriment of A without providing a de facto win to A*, which would then claim a victory and step up their activities against D (and presumably B at some level), but this is muddied by the regional 'enemy of my enemy is my friend' kind of thinking.
The reason D - the US - is forced into delicately conflicting A* is because A has gobs and oodles of oil. So, as long at A* it self, and not the underlying Sunni population of C is not injured/attacked, then US corpgov can lean on A to increase oil production quotas, to help pressure down oil prices a bit. And - thanks to a weather break, too - it seems to have worked this week.
So with that, it becomes clear to me: There is no 'makes everyone happy" solution, except to either impose a "Berlin Wall' through Iraq - Sunnis on one side and Shi'a on the other, or simply occupy the whole playing field and hope sentiments and traditional conflicts evaporate. But do walls work? Ask the Israelis and Palestinians (Or the US Border Patrol's front line agents.)
The hope-based strategy of D seems to be "offer people democracy and they will put aside their religious differences." Not, as I read it, especially when religious differences have a 500-head start on democracy. Hope-based decision-making in foreign policy seems a rather poor option, but that's what the neocons seem to do quite well. No math, just piles of assumptions to sell a viewpoint.
My conclusion is the quicker we Berlin Wall Iraq, the quicker the shooting stops. Partition or withdrawal, but with Iraq full of oil, that leaves only partition of some flavor as an option. But hey, I'm just an economic wag. Still, it would be useful, I think, if leaders would use and share the Booleans around major policies like this (if they even think that way - another issue) because when simmered and reduced, truth tables are useful analytic tools. They can put the conflicted/log jam issue into perspective.
But, that's not necessarily desirable from the corpgov standpoint, either, because meantime, the Boston Globe says "Iraq War to be defining issue in (the presidential) races."
So here's how you get controlled: CorpGov builds an unsolvable equation (above) and then gets people whipped up to choose up sides based on an emotional reaction to the unsolvable.
ruly, we lack inspiration at the top. If you find yourself getting sucked into strong opinions about the War, go back to the Boolean view and figure out how your solution/candidate solves the equation/table, huh? Game on!
Good article in the Daily Mail about the religion dimension to the war - in a sense, it's about religions and corpgov conflicting, too... --- In Pakistan, more violence is reported - don't have time to do the truth table on that, but it's a good one for you to cut your teeth on. Just write down one line per faction/country/interest group and line them up against solutions.
Bank Run - Next? A few weeks back, Peoplenomics detailed what could happen if large numbers of financial institutions all started to look shaky at the same time. Worry about preemptive intervention by the Central Banksters and Bank Holidays that would come ex ante (before the fact) seems to be one thread of thinking detailed in academic papers (2007 works) in the field.
Thought question: How many bank runs need to occur in what period of time before The Powers That Be (e.g. authorities) either impose bank holidays, or change out currencies? Stick around: Although the dollar rallied Friday, the trend line is down, and opening the repo window at the Fed just prolongs the agony and keep musical chairs going for another verse...
Quake Following Earthquake #2 (the quakes in Sumatra this week) have villagers returning home. Linguistically, the third big quake (bigger than the others in the series) is supposed to come after people have returned, but let's hope that my recall of the linguistics is off on this and that #3 is still a few days or weeks off...but wait, that's not going to be good either. Picture me throwing my hands up in frustration, sloshing coffee all over my office, and you've got the sense of frustration...
Fireball
How many of these would it take to hit the web bot's "energies from space" flare up?
Truck Wars "Congress working to deny Mexican trucks access to US roads" headlines the Murfreesboro Post. --- Immigration raid in Iowa nets 51. --- But the most interesting headline is "Mexican truckers want to suspend pilot program in US, Mexico.
Contexting I got two very interesting emails - within seconds of one another yesterday: One from a reader who said an engineer friend of his questioned my report on cryotreating, writing in part "It's interesting that company George Ure found gets $90 for "cryotreating" a wheel's worth of parts when it's such a cheap process." He then went on to say "Oh well, George also put high priced surge suppressors on his car to protect it from EMP (they won't help a bit), I guess he'll buy anything (or more likely gets kickbacks on these products). It really detracts from his articles."
Well, to set the record straight a couple of points: First: In business, the cost of liquid nitrogen is not the sole expense in doing cryotreating. There's the shop for equipment, the spendy equipment itself, the costs of labor, rent, and so forth. In manufacturing, many businesses take the cost of materials and multiply times somewhere between 2 and 4 times to cover the costs of doing business. So $90 an axle for brakes and pads seems reasonable to me...No, I have no 'deal' with anyone on cryotreating.
Second point: At one point in my life, I worked for a company which was acquired by Xantrex which makes the ZapStop alternator protector product, and having saved the alternator on my boat at least once when my kids moved the battery switch with the engine running, I have a more than casual relationship with the product. But no, I didn't get the product free: I bought them from West Marine - no kickback, spiff, bonus, or anything else. I paid full retail for the product, and having some engineering background (extra class ham ticket, general class commercial radio ticket, co-holder on four patents related to battery instrumentation technology, I made a decision that a ZapStop might help - and I put my money where my mouth is.
When I do own or buy something (corn call options, S&P puts, gold calls, silver calls, farm land, stored food and ammo) I tell you about it as a matter of course. I did receive a kilo of coffee from some folks in Ethiopia recently - most generous of them - and that was disclosed, as well.
My point in mentioning this is not to rant about the email, that would be pointless. Instead, I'd like to point out how synchronicity and change work.
Within minutes of getting the email skeptical of my report (saying it detracted) I received another email. This one was from a senior executive with a foreign automobile manufacturing startup company which is about to do a deal with a Chinese carmaker. Check this out:
Cool, huh? That's how an article that one person thinks "detracts from his articles" can at the same instance begin communications elsewhere which just might have an impact on the future.
I can't please everyone, all the time, and no doubt don't. But when Universe puts things before you, you're obligated to do the work. That's what we do around here, and by trying to harmonize with Universe, I find connections come easily, and the design pattern of it all is a marvel to behold.
Back to fencing...
Peoplenomics: History's Biggest "Ooops!"Although one faction of the "powers that be" (PTB) might seem to have pushed the USA past what was an emerging Second Depression when the 'terror' event of 9/11 occurred with such amazing convenience in late 2001, and launched the country on its "War on Terror" and "Wars for Freedom" gambit, which I characterize from an economics perspective as a modern-day equivalent to the Works Progress Administration and Civilian Conservation Corps equivalents from the 1930's, it turns out we will likely have a major world war about 10-years after the 2000 'slow crash' anyway because the WOT and OIF has not 'reset the clock for other factions in the global power structure. The outcome, as WOPR would say, is probably global thermonuclear war. Which, to my way of thinking, would qualify as a largish historical "Ooops!". This week, how we got there and where to next as we enter what could easily be a crash week.
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Cheap is Good Order our handy ebook "How to Live on $10,000 a year or less - and learn to live like a Third World person now. It's coming anyway, with big job layoffs this summer - and by ordering now, you can beat the rush...You may have more time to read this fall if the economy falls apart as I expect...
Friday September 14, 2007 Update on Fed Pressures: Chinese Rate Hike I forgot to mention this morning that the Chinese have increased their central bank rates for the fifth time this year after the latest data suggest that Chinese growth is roaring and inflation is running 11% or better.
Not to sound too Sino phobic here, but you don't suppose that with the Chinese raising rates that would put some pressure on the Fed to keep the returns up on US dollar denominated Treasuries, do you?
Now, ask yourself this: What would the market do if the Fed does not lower rates on the 18th as expected? The Fed decision is due within about 10-hours of the 'ideal' turning point becoming apparent, and a failure by the Fed to act as predicted would set off a chain-reaction nightmare.
Along the same lines, you better look at Jim Sinclair's site for more ruminations on the Chinese economy and what it means should we fumble that football.
Me? Still in a couple of October gold call options, some March 08 corn call options, a few S&P put options, and some Dec silver calls. It's shaping up a a potential 'turn' date, indeed...
THIS IS NOT FINANCIAL ADVICE - DO NOT TRY TO FOLLOW MY TRADES - YOU WILL LOSE MONEY MOST LIKELY. JUST WATCH WHAT HAPPENS BETWEEN NOW AND SAY THE 21ST.
Tripping Through the Release Period Linguistically, the predictive work of www.halfpasthuman.com has us in an emotional release period through the 19th of the month, at which time something will likely change to cause the world to enter into a building period of emotional tension that will last for 70 days, or so, and then we get another emotional release period going into December.
I have assumed that along in here, the stock market would be collapsing, as a large fraction of the sampled language shift goes to money/currency/economic concerns, but as Cliff warned back when "This is not stock market forecasting - it's emotional release..." And that is something we are getting plenty of.
There are lots of other aspects of this release period, including release of prisoners for Ramadan. One such release is going on in Pakistan where president "Musharraf order the release of exiled rival's party workers" who have been held. In Iraq, the US/ multi-national forces (MNF) forces and Iraqi government are releasing 50 to 80 detainees (prisoners) per day during the holy month.
Meantime, the language is 'hot' with financial headlines as expected. One out of the UK tells us in no uncertain terms that the mortgage backed obligation worries (many of which were 'marked to [computer] models to establish a mythical valuation, which has little correlation to what goes on out here in the real world) are continuing to spread outside the US borders.
And you know things are bad when state and local governments start talking about layoffs, such as the decisions pending in Massachusetts. So, Countrywide is not alone in layoffs, although they have been lining up cash nicely.
A significant example of this comes as the UK's Northern Rock has gone to the Bank of England (their version of the Fed) seeking emergency funding. The understated headline "Mortgage borrowers told not to panic" sounds a lot to me like telling people in a theater being filled with smoke to ignore that smell - and ignore the few insiders who are heading for the exits.
While earlier this week, the US dollar sank to an all-time low against the Euro, the market basket chart (above) was bouncing a bit at press time for us today.
So while we're in a release period, and while headlines around everything from finance to earthquakes hint at a level of panic, I continue to hold some far-out-of-the-money S&P put options, which I will likely let them run all the way to expiration, just in case the release period holds still more surprises for us. For now, while I can see the "releasing" going on all over the place, and the high concentration on financial affairs, the lack of a precipitous decline (so far) has been a blessing for people who are not yet - and may never be - prepared in their portfolios and lives for a serious/unexpected downturn.
All eyes now seem to be turning to the Fed meeting, which although it happens right around the 'turn date' for the emotional state change, seems to be too early in the day to have the kind of sweeping implications implied by language shift. Nor is Apple's Sept. 18 iPhone Europe launch likely to be "it" - just not a big enough deal. Sometimes, we just have to watch.
The key thing Cliff and Igor note is that what comes on the 18th/19th is not a 'tipping point' in modelspace like the one the preceded 9/11 back in the summer of 2001; it's more like a turning point if you have enough spatial sense about 3d scatter charts to sense the difference.
Markets The price of gold is down a tad again this morning, as new 25% higher) margin requirements are in place for commodity traders. And the dollar bounced a bit. --- A couple of readers argue that I'm wrong on posting the repo numbers from the Fed. "You miss the point that they are replacements for repos that expire," wrote one. Yeah? Want to be a beer on whether all repos are repaid precisely on time - I mean every one? I'm not saying they're not, but I'd put up a two beer bet if you spring for the auditors... --- Review Economics: Retail sales for August are out from the Census folks:
Auto sales were stronger than I expected... Later on this morning, in fact in about 20 minutes from our posting time, capacity and utilization numbers are due from the Fed. I'll get it updated when I can, but I've got chickens and goats to feed here at the ranch.
Storming Can you name a city on a large river in the USA which seems to be attracting way more water for the past couple of years that it needs or wants? If you guessed New Orleans, or that part of the Gulf Coast, give yourself a green star. The headline "Flooding in the wake of tropical depression Humberto" is worthy of note because it's in the vicinity of refinery row.
The 'silver lining' to these clouds is that they mean rain for areas which have been hit by a distinct lack of rainfall, namely parts of Mississippi.
Next in the weather worries will be tropical storm Ingrid which seems to me like it will head to the middle or upper the east coast, but the storm is young and the track is earlier on. If you're planning to go camping the weekend after this one, you might want to keep an eye on it.
Rubber Stamping Russia parliament confirms Putin's pick. Duh...or is that dah?
War Plans George Bush outlined what is characterized as gradual troop cuts in Iraq. As I read it, this will or has turned into the second-longest running US overseas commitment ever - second only to Korea, the way it's going. Don't get me wrong - I'm all in favor of giving democracy a chance worldwide, but could we focus on places a little closer to home: Like Florida and Ohio?
Rights for First Peoples The UN has done something that Canada, the US, Australia, and New Zealand governments were opposing: "UNGA adopts landmark resolution on rights of indigenous people" The reason for the opposition is simple: The opposing countries have large numbers of indigenous people who have (to put it nicely) been 'ripped off.'
What I find surprising is that Mexico wasn't on the bandwagon opposing along with most of Central and South America, because the Spanish from the conquistadors days also stripped indigenous people's of their lands, wealth, and culture, too. Or is that just a function of the lack of visibility that Mexico's first people have?
"I want One of Those" - Part Two In yesterday's report, I told you how the people in Great Britain were about to have first 'dibs' on the new Toyota mini car. While Elaine and I haven't decided on what car we will actually end up with, I did get briefed up yesterday on a whole new part of the automotive industry which (I'm ashamed to admit) I was totally in the dark about.
The briefing happened when I was talking to one of my consulting client's customers - CyroScience Technologies Wolf Creek Racing Division. Offering the details of what the company does was owner Todd Walrich, who explained that when metal (and other) car parts are chilled to 300 below zero in a controlled environment, some permanent changes to the molecular alignment of the materials takes place. The 'grain' of materials (and even metal has a grain to it) becomes aligned.
So, how does that relate to my car shopping? Walrich explained that while his firm doesn't do the US Post Office vehicles, but most of them have their brakes cryo-treated. "What happens is the rotors and pads usually last from twice to three times longer than untreated parts," he explained. "We do the brakes and pads for about $90 an axle."
The brakes get silky smooth and more predictable, besides lasting the life of the vehicle - if you can even get 150,000 miles out of it. A testimonial on his site claims 3=times the brake life under harsh SCCA racing conditions.
Now, being as I'm not a really aggressive drive (off track) and I can squeak 60,000 miles between rotor and pads, cryo-treating the next car's brakes pads and rotors makes all kinds of sense. You know what the next question was, right? "So, if you can get racing engines to have extended lives too (double and triple there, too) how comes Detroit and Tokyo aren't doing this for us and letting us buy cars that will last 300,000 miles and up?"
"What's their incentive to do that?"
Hmmm...good point. I guess I'll file the 300,000 miles gas engine at the back of the filing cabinet along with the 100+ MPG carburetors and engine mods that seem to exist, yet mysteriously, they never showed up in the dealerships. Back in the 1970's the carbs were suppressed and now you need a high tech machine shop and computer programming to access fuel injection tweaks, a whole auto subculture there in performance turning. And I read conspiracy boards about dead inventors. This, however, is genuinely cool technology. (You're awake enough to get the cryogenics pun, right?) --- I figure that the longer I put off buying a car, the better they will be (not to mention the better the value I will be buying...)
I assume you already know about Bruce Crower's six-cycle engine? In a nutshell, what he does is takes a four-cycle engine, and adds a water injection and steam exhaust stroke to it. Crower's design has the potential (and development work is continuing) to increase engine efficiency by 30-40% - and in the process, get rid of water pumps, radiators, and nuisances like that. Image a car with no radiator and no coolant hoses to mess with! Oh, and killer mileage and lower pollution. --- Now marry the two technologies: cryotreating and six-cycles. If you hear of an auto maker that can put the pieces together, I wouldn't mind paying a few more bucks for something with longer life (and less impact on the planet). Barring that, I figure I'll be sending Walrich rotors and pads to treat when we get a new car one of these days...one of the few breaks (or is that brakes?) for car owners. --- Oh, cryotreating of competition gun barrels is done, too. Not only do the guns shoot straighter (as barrel heat) but they also seem easier to clean as the process hardens and increases wear resistance. --- As if that was enough capabilities for the new technology, there's one more. Walrich will cryotreat golf balls for a buck apiece. Because cryotreating relieves internal stresses in material, cold balls seem to 'fly' better - adding between 8 and 15 yards on long drives. You know the obvious question here, I suppose: "Wouldn't that make a cryotreated ball illegal for tournament play?
"Who could tell?"
The cellophane on the box is problematic, but the cardboard survives the process. Hmmm...
Thursday September 13, 2007 Update: Open Window, Throw Money A few readers are wondering "Gee, George, why is the market rallying?"
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