Replaying 1929: Business, Financial, and earth change news

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Ben, Hank, and Super Glue: IndyMac Fails

Looks like the failure of IndyMac Bank - the second largest US bank failure in history, fulfills the linguistic expectation of a major bankruptcy this summer.  OK, the 'release period' July 3-8 was a disappointment - although the release of Ingrid Betancourt was noticeable.  The 'big earthquake' didn't appear in the release period, but that's still on for the western US between now and September 21/fall equinox.  But the 'big stuff' will likely come later in the year from October 7 (or thereabouts) on and in mid December with another quake around then. And a market collapse into 2009 - at least linguistically.

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Not that the IndyMac seizure is the biggest story of the week - there's a lot more going on, including $147+ oil.  While George Bush is asking for quick action on expanded drilling in the Alaska Wildlife Refuge, the Russians are gearing up to grab what they can in the Arctic.

 

The Dow lost 128 points on Friday, after earlier in the session weakly dropping below Robin Landry's line-in-the-sand at 10,984 before rallying back to a less grim close.  The ending at 11,100.54 compares with the week ago close of 11,288.53, although that's only 188 points, and on a percentage basis, the real damage to your retirement account was done earlier in the year, anyway.

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The BIG story that came out after the close (at least I didn't hear about it during trading) was that federal regulators have shut down mortgage lender IndyMac.; and the Office of Thrift Supervision has stepped in along with the FDIC to try and keep depositors near whole.

 

Earlier in the day's session, there had been rumors that the Fed was going to allow Fannie and Freddie to amble up to the Fed's discount window and borrow freely.  Which, of course, they denied  although it sure sounds like a rumor/denial move to help in 'maintaining financial stability' regardless of the issue we've pointed out here - Isn't this price fixing/ rigging markets?

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When you look at the facts, however, there may be some good news for the hard-hit 401(k) holder in all this.  Robin Landry noted late Friday that his short-term indicators have turned positive, and barring another round of mortgage market meltdown mania, we might now be set up for a decent rally next week, which could get us into a late summer bounce several hundred points (or more) higher than here.

 

It will all boil down to the matter of the weekend meetings which are almost certainly going on this weekend between various regulator-types and the Freddie and Fannie management.  I doubt many of the upper echelon there will be out on the golf course this weekend.

 

The best outcome would be a replay of the Bear Stearns situation.  What that would imply would be a lot of hard work over the weekend, and then a "surprise" announcement on Monday that an answer to the crisis is at hand, and then a fine rally of the markets next week.

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Underlying all this is the issue of whether the GSE's in question are solvent, or not.  Although former St. Louis Fed President William Poole is repeating the mainstream mantra about to big to fail, earlier in the week he was reportedly questioning their solvency.

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The way I've got it figured, if we don't get the "surprise" on Monday with a report that the financial super glue has been found and it's dried the requisite 10-seconds to hold things together for another month or three, the market could easily drop another 500 points.  Surprise in the works?  (Bear with us)  I'd almost bet on it. 

 

Is the present situation being used by the Fed and Treasury to expand and enhance their power-grab to remove independent regulator agencies from their grandiose "financial stability at all costs" direction?  Headlines like "Will Bernanke doom the SEC" are floating about, so at least I'm not the only one raising the issue.

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America, former the Land of the Free, is presently America, the Land of the Indebted.  And we're exporting that as best we can: Don't know if you've heard, but some big American companies have set up Big Business in the Green Zone in Iraq where they sell everything from cars on down to load debts onto our troops, a practice that I'd have to file under predatory retailing.

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The headline today that the "Fed to Bar Loan Penalties that Deter Refinancing, Person Says" goes to the idea that the Fed and Treasury are not looking at the problem from the Main Street perspective yet.  Instead of ending the underlying practice of selling people larger and more expensive homes than they can afford, the banksters are just trying to do their damnedest to make they are kept whole. 

 

Record foreclosure rate?  Oh well...  Ure's Axio9m?

"You're not to big to fail.  Only Banks are.  You lose."

Well, you're only one voter, anyway.  Banks give more money to CONgress than almost anyone, although the battle for 1st place with real estate interests, pharmaceutical companies and such is close and played out constantly by the 'K Street" gang & lobbyists.

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The Senate has passed a Home Loan Aid Bill, but let me see.  The program is voluntary and no one is talking about what happened to the provisions buried in the earlier versions of the bill that required reporting to the feds of virtually all personal financial financial transactions, such as your bankcard dealings, which we have to assume is because the press for digidollars is still on full steam ahead. 

 

Which in turn likely means...

 

Housing crisis, or not, the same tired solution is is in play - a devaluation of the dollar.  With pennies now worth more than its face value, the Cape May Herald reports "Farewell to the Penny" is likely just ahead.

 

What no one in the MainStreamMedia as the fortitude to report is that our currency has been systematically stripped of its purchasing power through a deliberate inflation policy, which has forced a couple of generations into the belief (based on economic fact) that the only way to really get ahead in inflationary times was to borrow and use leverage to maintain (or even build) personal wealth.  Instead, we get "strong dollar policy" coverage in its stead.

 

What no one bothered to say is that periodically, reduced inflation and a lack of a vital new industry of some sort, forces the economy into contraction.  We'd already be in a formal recession, except that the money-printers are going at it fast enough to make it appear that we're not in a recession. 

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Yes, we're the world leaders in financial products, but is manufacturing bundled debt a sustainable business model for a country?  LOL.  Tell me about the Weimar Republic, or more recently, Zimbabwe?  Just think how their 355,000 percent inflation would bail out the home values here, huh? 

 

Example:  If we 'go Zimbabwe', our little spread in East Texas would be worth...uh... $5.3 billion. "Course a gallon of gas would be $14,200, but who cares as long as the bank balance sheets don't go negative?  It's always the sheets for consumers, right?

 

This weekend, be scanning the television and sniff the air carefully.  I'm pretty sure you'll catch the occasional whiff of super glue.  A surprise in the pro-open hours of Monday and a barn burner rally would be just dandy.  Got change for a $200,000 bill?

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The report this week in the CSM about a "New Worker Perk: Help Buying a Home" pushes us ever so much closure to corporate feudalism.  "I owe my soul to the company store" said Tennessee Ernie Ford in the song "16 tons."  "Wipe that look off your face, corpserf!"

 

Near Miss 2

Sounds like 'roll the dice' flying into JFK this week - as a second near-miss/ almost midair collision has been reported.

 

Techie Troubles

I'd give the headline an 'A' for creativity:  "iPocalypse?  Snag turns iPhones into 'Bricks'.  Creativity! 

 

Tech Troubles, II

A computer has been human experts at poker.  So, what does a computer do with more chips, I wonder?

 

The Runs: The Non-Runner

The headline "Lieberman dismisses GOP Veep Speculation" prompts a cynical thought:  Who asked?

 

They Have a Dream?

"Civil rights leader's children battle each other over estates" says The Smoking Gun.

 

Pet Food

"Beijing takes dog of off the menu for Olympics."  So, how's the stir-fried rat today?

 

Passings:

"Greatest Surgeon of the 20th Century dies".

 

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Coping:  Balancing Checkbooks

A reader joked in passing this morning in an email that she enjoyed this site, but still had trouble balancing her checkbook.  "You do what?" I wondered?  Free advice followed:

"Say, on this checkbook matter, I used to spend hours and hours getting everything right to the gnat’s (pardon this) *ss every month.

But it ate time, and there was no real reason for it.

I figured, why should I go through all the pain and aggravation, right?

So I put a couple of hundred extra dollars in the checking account, and figured “to hell with it.”

About twice a week (or before I buy something big) I just look at my online balance – which you have to do weekly anyway to make sure you aren’t being screwed on charges -  and that’s it. The bank keeps the balance, and as long as the check amounts match, I figure I’m golden.

So what do I do for my business accounting?

About once every six months or so, I download the whole check registry into QuickBooks, put in notes – so I can allocate the income or expense to my various classes (accountingese for a group – like my farm-related, my web site related, my consulting client 1, consulting client 2, etc) and that’s it.

I got better things to do than go through all the hassle of finding a missing penny or two. In fact, in many banks and financial institutions, they don’t even care to balance to the penny – the time isn’t worth it. Close to a nickel or dime- paying someone (by the time you count everything) $13 an hour to chase a penny is nuts, yah? How many minutes does it take before the return on time spent becomes a negative value?

So, thanks for bringing it up – I will be sure and include the in this morning’s report in the ‘snip and save’ section – because while it may be rewarding to balance to the penny every time, I got a lot more important things than chasing pennies around on my LOSTD (list of stuff to do, LOL).

Which reminds me - today's report is short & to the point - so I can go mow the yard, unload a pickup full of glass for the greenhouse before it gets too hot..99 in today's forecast here...so check in Monday morning...

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send snip and save items to george@ure.net

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Around the Ranch: 5-Watt Miracle

Not that you care about the Morse Preservation Society's Summer Sprint series, if you're not a ham radio operator, but there's a tremendous amount of  personal satisfaction in challenging yourself if you're a ham to see how really good / efficient you can be.

 

So in three hours of operating in the contest last night, I managed to have contact with four different countries.

 

"What's so special about that?" you're wondering.  US and Canada are 'givens'.

 

Well, I did it with 5-watts of transmitter output.  To give you an idea of how little power that is, think of it in terms of one Christmas tree light (big one, not small) or a multi-cell MagLite flashlight and being able to get a conversation going far away with that kind of power is sport..

 

People with CB radios like to work 'skip' and brag about making across the country on 5-watts, but hams invented that art.  And with five watts a good operator with decent conditions can do very well.  Last night's contest was far from good conditions - the band was noisy, still...

 

The two contacts I'm most proud of at EU1DR (Minsk City region of Belarus) andYN4SU in Nicaragua.

 

Not bad for a flashlight's worth of power, huh? Amazing what Morse code can still do.  I mean besides being faster than texting, as was demonstrated on a Jay Leno show in 2006 LOL.

 

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UrbanSurvival has a very interesting business model - one that depends on growth.  This business model is a lot like capitalism in that growth is required, but of course we won't ever get to cutting down the rainforests. So even if you don't subscribe to our premium newsletter at www.peoplenomics.com, please tell everyone you know about this site.  The more this site grows, the more time and content will show up on the free site...  Click here to send 'em an invite...  Thank you!

 

"Live on $10,000" Updated

There's now a single-page website devoted to my little ebook "How to Live on $10,000 a year (or less) at www.liveontenthousand.com.  Yep - still possible.  I also took a bit of additional material that was pertinent from recent issues of Peoplenomics and included them.  The whole thing runs about 65 pages, but it gives you a vision of how to not only live on the aforementioned dollar amount, but also how to migrate up the economic foodchain if you make a little more than that and do some active savings...  Click here for the page with more details on it.

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Last week's report is here.    For back issues of this site, click here.  (Goes back to 1997!)

 

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Friday July 11, 2008

Special Update

' Line in the Sand' Breached By Dow 

The Dow has just had a momentary breach of Robin Landry's 'line in the sand at 10,984.  You can watch the chart through the day over at Yahoo Finance.  But, the bottom line is that if the penetration continues very long, then it sets up Landry's next targets: 10,700 and then a goal line fight at 10,000 and 9,700 before a trip to 7,400 shows up.  The breach was only momentary, but we will watch to see if 10,984 can be defended through the close.  I wouldn't bet on it.

 

Hegel Would Be Proud

Before we launch in to the delayed Balance of Trade report out this morning, there's something much larger to worry about - and I think you'll agree after reading that it's something which should be a huge concern to every American.

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If you are trying to figure out what has been going on this week, what with the market tanking, and then the Paulson & Bernanke Show on Capitol Hill this week, a short read of the influence of Georg Wilhelm Friedrich Hegel's life and works may prove instructive. His most famous contribution to the 'art of thinking' was to popularize the Hegelian Dialectic.  Although the Wikipedia entry notes that "This article may be too technical for a general audience", the fact that you're reading this site has already separated you from the sheep, so fear not.  You can handle it.

 

What's the point?   First, "The Hegelian dialectic means simply 'thesis, antithesis, and synthesis'; propose an answer, it's opposite, and combine for a better answer - that's the theory of it.  The second part of the axiom is that in public "People don't generally ask questions that they don't already have an answer for..."

 

Now let's apply this to the markets in trouble: "Oh what are we to do?" (thesis). And, "More control by the Fed and Treasury is needed" (antithesis), the answer presented in this morning's headlines is that "Fannie, Freddie are too big to fail, lawmakers say".

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It seems like only a few minutes ago (although it was years), that conservatives came to Washington promising to restore free market capitalism.  But since arriving, besides setting off record spending on defense, moving our sons and daughters into other people's countries, and reaping the resulting sky-high prices for their pals in the Oil Patch and cronies in the Defense Industries, there's been growing mass-marketing of the concept "Too Big To Fail" meme.

 

The Constitutionally impaired seem to have forgotten that laissez-faire capitalism means (pick your favorite here) 'let alone', 'let pass', or my favorite: 'hands off" - Just let the markets do what they will.  Interventionist/regulated market supporters seem well-intended at the start of interventions, but it's like pregnancy.  A little time goes by before you figure out how seriously you were screwed.

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The Federal Reserve has dropped any pretense of supporting 'free markets' (the honest capitalist thing to do) and is instead off promoting "financial stability'.  Knowing, of course, full well, that with your 401(k) account taking year-to-date that you'll wrap your arms around their "solution" which (look surprised here) is more power for them.

 

Bad companies?  Greedy managers?  Crooked deals?  Wink, wink, nod, nod.  It's OK - they're too big to fail - and you'll back them up if they whack your 401(k) then bait and switch you into surrendering your liberty along with your money.

 

Quite a script for a revolution by those in power, huh?

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We can thank Columbus for making the Western World big, and blame Boeing and Intel & Cisco for making it small again.  As it has shrunk, and the body count of inhabitants gone up -- thank the Green Revolution for the overpopulation issues of today -- humans have been confronted by trans-national problems. 

 

The price of oil today as gone back to near $146.  OPEC is stomping its feet and warning that the oil weapon will be used if the West picks a fight with Iran.  Trans-national problems are our addiction that holds us hostage.  To Iran for oil, to Afghanistan for smack. And then to India and China for most everything else.

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The somewhat direct control of government set out by the Framers in the Constitution is being systematically taken apart. A revolution, if you will.  I'm still wondering if that's a good thing, or bad, so I sit here in the outback of Eat Texas looking at the problem this way and that.

 

But the evidence of that a bureaucratic coup d'état is well underway continues to mount. Is this one side of the 'revolution' meme that keeps popping into predictive linguistic modelspace?

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I think it started in the 1960's really, and even before that, when the notion of 'administrative law' came into full bloom.  That set a cornerstone which acted as a foundational element.

 

Fast forward to present times and 'administrative law' set the dangerous precedent that was seized upon and expanded into "Executive Orders" - an extra-Constitutional concept that says the Executive Branch can blow off the Legislative and Judicial branches of the three-legged concept of checks and balances almost any time it wants, by declaring a 'national emergency'.

 

The growth of Executive Orders has been unchecked, and you'll note that in the Paulson remarks, there was reference to Executive Order as a reason to consolidate power. 

"In addition to these longer term restructuring plans, Paulson also spoke about near-term steps that need to be taken, including, “formalizing the current informal coordination among U.S. Financial regulators by amending and enhancing the Executive Order which created the President's Working Group on Financial Markets and, while retaining state- level regulation of mortgage origination practices, creating a new federal-level commission, the Mortgage Origination Commission to establish minimum standard for, among other things,, personal conduct and disciplinary history, minimum educational requirements, testing criteria and procedures, and appropriate licensing revocation standards.”

On the one hand, failure of bankrupt institutions probably would cause financial disruption, true that.  But, on the other, the very notion that some companies are too big to fail means a person would be a damn fool to invest in anything that didn't line up for one of these 'free pass' government guarantee programs.

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But it gets better - doesn't it always?

 

No doubt noticing that the President has managed to  either 'become a more effective leader' or has simply thrown out the Constitutional protections (and we thank heavens habeas corpus is back), governors are not lining up to use 'executive orders'.

 

In Massachusetts, for example "Governor Patrick signs 'New Americans' Executive order". Or, how about this one out of Pennsylvania?  "Governor Rendell Issues Executive Order regarding Pennsylvania Health Care Cost Containment Council"  How about this one?  In Maryland Governor

"O'Malley signed an executive order yesterday to establish a statewide communications system that will allow law enforcement a