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The Usual Saturday Tout This being the weekend, fresh content is for subscribers to our premium service, www.peoplenomics.com. Our focus this weekend is on why the job recovery seems strangely absent and why government, to a certain extent dictated by real economics (that no one talks about) may be forced into a greater and greater socialistic role. Just one problems: The expansion of the Nanny State eventually becomes little more than an updated version of the old economics problem of 'the shopkeeper economy'. We call it "The synthetic Jobs Problem".
Friday June 11, 2010 Special Update FAA Closure in GOM Looks like the FAA is closing down the Gulf of Mexico to 'unauthorized' aircraft...This coming as a Notice to Airmen (NOTAM) issued late Wednesday night that just popped up in my flying emails this morning:
Far be it from me to second-guess the FAA but this may cut down on the number of spill pictures and videos coming out from private pilots in the area... Map with closure area in red here. Eyes wide shut?
To Hunch, or Not to Hunch You might recall our recent chat about whether to sell covered call options on a certain inverse financial stock that seemed like a good idea at the time. Well, if I had done as I contemplated I would now be up some double-digit percentage on that trade and I'd be counting my money.
If you've forgotten, the idea was that I would sell several covered option contracts when this (inverse) stock was up, then when the price came down this week going into options expiration a week from now, I would have covered and simply pocked something like $100 of option price differential for each underlying 100 shares of stock, which would have effectively lowered my entry cost by a buck, or I would have taken Elaine out to dinner.
That's to say I would have played the Big Rally we've been in these past few days and made money on it while continuing to hold a downside position via the underlying inverse ETF shares.
Could have, should have, would have, but it gets us around to hunches and how & when to play them. This morning, for example, my hunch is that while the market may rally and get some follow-through into next week, this might not be the time to commit 'widow & orphan money' (or kid's college funds) to very long-term positions, but then again, the usual disclaimer applies that I don't do financial advice...I just write about what I've done or am in the process of doing.
One reason for my longer term pessimism if the latest note from Robin Landry to his colleagues in the professional money manager world:
If you're having a hard time with the eyes, that trend channel on the right side corresponds to a target range of 10,200-10,350.
And judging by the retail sales figures just out, the market's early strength before the numbers may be in trouble. This graph sums it up:
The news release than came along with it said:
Of course, the last year's figures were awful. But if you want a meaningful comparison roll back to the May 2008 figures before the economic collapse foreshocks began. There, we find that retail sales were $377,272,000,000 versus the $362,517,000,000 just reported today.
Which means that unadjusted for price inflation, we are down 3.9% for the two year period...and the happy talk about up from last year (when the disposal was still on) are meaningless. Hell, even 2007 had higher retail for May...retail was $372,224,000,000 in '07!
Now, toss in 5% a year for deflation and we're down probably somewhere in the area of 15% on a real life experience basis.
Like you hadn't noticed, huh?
Big China in Little Trouble There are two problems with China that need resolution...maybe three.
The first is that China's internal inflation rate has risen to a 19-month high and this is something their leadership is watching. One reason the internal inflation is so key is that the Yuan/Renminbi could rise which might quench some of the external / overseas / USA demand for Chinese goods.
Besides the monetary issues, however, there's the matter of labor unrest & strikes which China may be forced to deal with brutishly because any breakdown in manufacturing would run contrary to China's apparent plan to build its middle class so it's large enough for the internal economy to become self-sufficient without a high reliance on external trade via exports.
Think of yourself as China. If your government lets the Yuan/Renminbi rise too quickly, the external price of Chinese-made goods could go up quickly and that might shut down some external demand. Worse, since the US is your key trading (consumer) partner for a lot of goods, raising the Yuan too fast could set off inflation in the USA and that in turn would prompt price inflation in the US on more costly imports, which could force the Fed toward raising rates and what that really means is printing more dollars.
All of which then leads to more dollars actually being printed which reduces the value of the US denominated bonds which you bought several years ago when the US wasn't printing so much.
Remember, the US M1 currently is up 6.78 percent over the past year, and while the broader M3 was collapsing, perhaps because of the slowing velocity in Depression 2.0 (but no one would ever admit it, of course) you'd have to look at the situation not simply as a "what's good for China internally right now" but a zoomed out "What does this do to our past investments?"
You'd wait a while longer, of course, but it keeps the financial press full of speculation since financial writers need to fill their columns up. The real decision-point for the Chinese may be some hidden variable like the annualized rate of increase in the US M3 accelerating beyond the internal growth rate of the Chinese economy. When that happens, then the marketplace will be making the decision anyway, so making the Yuan rise 'official' becomes an inconsequential move. In short, China may just be waiting.
In the very short term, as long as US M3 is flat or down, it's all just a variant of the old game of 'call the bottom' except it will be in FOREX, instead of down on the Wall Street.
On the other hand, what's ahead for the market next week - and beyond - is a little more obvious in the headlines.
What's Chaos? I love it when scary headlines come along like "Chaos, Anarchy to Reign if Paterson Shuts Down NY". Why would I love such a headline? Because that's the kind of headline that makes Wall Street nervous and so my hunch is that next week, Paterson will start cauterizing state spending and that might throw cold water on the bull's rutting season evident the past few days.
The few times I've been to New York, the place seemed like chaos anyway, so I'm not sure what would really have to change...
GlobalRev Hot now in Kyrgyzstan where 23 have been killed and more than 300 wounded.
That Sinking Feeling Remember that sinkhole in Guatemala a while back? Now they're popping up (or is that down?) in China.
Repeat after me... "This is not a beam weapon, this is not X37b connected."
Busted Some 2,266 people as the Department of Justice goes after Mexican Drug cartel operatives...
Offshore Risk That (second) teenage woman sailing around the world has been found safe after being dismasted.
Gotta be some proud parents, don'tcha know...any 'kid' to take on the Southern Ocean is not a 'kid' after that...
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Coping: Greasy Mess/Dead Oceans Another day, another headline about the Gulf...this time president Obama meeting with the chairman of BP.
Several readers have asked why I'm not giving more ink to the rampant speculation about imminent evacuations and rumors of forced relocations and so forth that are going around the net.
Got a simple answer: I try not to get sucked into fear & drama. True, the Gulf is a big oily mess and it's going to be a bitch to clean up, but consider it may be Christmas (and maybe not of this year before the oil stops flowing. I could speculate that oil flowing into the Atlantic would start to change the balance point of the earth and that in turn could lead to massive earthquakes in the Southern US and might even set off the whole planet shifting its axis.
Or, I could speculate about 'foreign troops' and all kinds of other stuff.
But here's the deal breaker: It's obvious to me that if someone really thought there was a chance of mass evacuations they would be buying up all the cheap/foreclosed property they could in places like suburban Detroit.
I hear that homes which were once in the $5-million class can be had for as low as 1-10th that ($500k if you're asleep) lately in placed like Bloomfield Hills in Oakland County.
Consequently, the question to ask if you live anywhere in the South is: Should I start considering up country property? Elaine & I have actually looked since any long term government action would likely be in the area within 50-100 miles of the coast, so we might be able to sell this property and move somep0lace further north (and maybe a bigger place) since this place is well built-out and nearly self-sufficient in a pinch.
Anyway, it's something to think about. A summer place on the upper Michigan Peninsula picked up on foreclosure could be a winning lotto ticket...but I don't see many people in the Southern states bidding yet. You might want to spend some time house-surfing and farm-surfing if you really think large-scale dislocations will result. I know some accomplished folks who love the area...and who can blame 'em? No fire ants...
Still readers want to know:
My sense is that most people are not reacting rationally because their thinking is bounded. They tend to be risk-averse.
If I lived in Florida, I would be papering everything north of the Mason-Dixon with resumes. But people at some primordial level are not much different from the goats out back. They don't take the big bold steps to get ahead of the curve.
As much as we enjoy the East Texas Outback - and since it is far enough for the coast to be safe for a while, Elaine and I have been tossing darts are places like St. George Utah, Michigan and other places as possible sites for our 'next adventure'.
My bother-in-law (Panama Bates) made a very good point when we were kicking this around a few weeks ago. "In South America, officials say 'Don't build your home there because the land will slide if it rains hard'. Then it rains, land slides kill people, and yet as soon as the rain is over, people move right back to the same places with the same risks."
Yup humans really are nuts. Same thing is true with the oil situation. A friend of mine (PhD. level kinda guy) called me from Miami and asked "When do I need to move?"
"I don't know if you will ever need to go," I told him, "But if you need to then it will be too late and all the good options will be closed to you. You have to stay ahead of life."
I keep thinking that people are smarter than they are: When Diaspora popped out of the HPH linguistics, a long time back I would have thought "People will see the risks and begin to plan and then act..." But, no, that doesn't happen very often, I guess.
I'm not a footloose kinda guy - I like to go somewhere and stay. But, events in life have caused me to live in Seattle, remote parts of Alaska, San Francisco, San Diego, Boca Raton, and now East Texas. Every time we move, it seems to be good for us. Meeting new people, going new places, seeing new sights...it's the kind of ongoing adventure life is supposed to be. Riding a wave.
If you look historically at freedom it seems to have some connection with mobility. People got mobile and left Europe over the issue. Palestinians and Israelis are at odds over being penned in...that kinda thing.
The hardest parts of life are to see it for what it really is, and then act in a Big Ki way to face it head on. If I had a place on the Oil Coast, or within 25-50 miles of it, I'd have sent out (by now) several hundred resumes to places up north.
An d I'd keep sending them until I had a job or until the oil was capped.
My main thought is "Are you a leader or a victim?" Your behavior will show the truth - regardless of your talk - to the aware observer. Those who embrace change and are early adopters intuitively seem to have better odds, but that's just because I tend to think - and do - the audacious.
Headlines like "Scientist awed by size, density of undersea oil plume in Gulf" should be driving you to www.Monster.com if nothing else.
Quake Time? Reader writes:
Ask me on the 17th. If my crystal ball has been shaken off the table and been broken by a quake, the answer may be 'yes'.
Not My Zeus! Lookie here: This "Zeus Trojan infiltrates Bank Security Firm" has nothing to do with Zeus the Cat using the computer here at the ranch.
He's a useless animal...even has problems with rudimentary 8088 assembler code. Just worthless, I tell yah...eight-bit floating point? Total beyond him...
Wryrony Strikes Goatherd! Wryrony: Acts by Universe/the Universal that when you catch them really show that Universe has a fine sense of irony and is 'just playing with us'.
Example: As I whined about yesterday about my seriously twisted left knee, as I was sitting at my overflowing inbox, a small packed from a nice local person named Gayla Lacy floated up to the top. It was a package our artist friend Rebecca Price had asked her to send me a week or so back with a sample of something called "Ultimate Healing Creme".
So I went to the web site to read up on this stuff and found:
The package had arrived the day before my misadventure goating.
All of which goes to once again prove my contention that the Universe is always in some way, or other, pulling our leg, if we just know where to look.
The combination of the healing creme, sleeping with an Egyptian cubit on the knee, a 400 mg dose of ibuprofen, and an adult beverage to help sleep show up seems to have worked its magic. I can walk again, thanks to all these steps and a lot of good will of readers...thank you.
I can't say the leg 'feels good' yet - no expectations there. But when Universe decides to pull my leg, it's always a good one.
Send your comments to george@ure.net Shop Till You Drop Department: Peoplenomics This Week Life Through Meta Set Glasses Many times, our Sunday report will feature a single article that we pursue 'in depth' but occasionally, I feel compelled to line up a whole series of seemingly unconnected data points to see where they will lead. Remember those TV shows where the trick-shot pool player lines up the balls just before making an 'impossible' shot? Well, think of it that way, except the balls being used are yours & mine. Just as the future of the trick-shot is determined by the placement of the balls, so too our collective future is determined by what pops up in meta data set we all create on the fly. Which would be our cue to see what has been popping from the dream Collection over at our free to the public National Dream Center project...following that, some discussion of trends in FDIC data...
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Dream A Little Dream... If you have an especially vivid dream that seems to have something to do with the future, please write it down so others can look it over for possible future/predictive values. Simple go to www.nationaldreamcenter.com and click over to the DreamBase.
Cookie Video The folks at Maxa Research have put together a short video (sound track by guess who?) that shows the Maxa Cookie Manager. You can see it here.
I don't usually get all whipped up about software, but this is one of those dandy tools that just simply works great. First thing I put on my new computer when I got it was Avira Anti-virus and Maxa Cookie Manager (MCM). Either follow the on-screen download instructions of simply click:
Once you try it out, to upgrade to the fully functioning version, just click the upgrade button (!) on the upper right hand side for the $35 unlock to get it to remove even those nasty and highly intrusive 'non-browser specific' cookies. Bonus: You computer may run faster.
"Live on $10,000" A Year Having a hard time making ends meet? (Like who isn't, right?) A good starting point to better match up income with outgo is our $10 e-book "How to Live on #10,000 a Year...or less!"
It's an automatic download. It's written in an information dense style: The whole thing runs about 65 pages, but it gives you a vision of how to not only live on the cheap, but also how to migrate up the economic foodchain if you have a little hustle left. A bonus section called "How to Build Anything" should instill confidence if you've never taken on a home improvement/home creation project before, too..... Click here for the index and details.
MyGroPonics My commodity broker JB Slear and I have written a simple book to get you started on high density hydroponics. It's an example of how someone with a little creativity, access to a few 'dollar stores' and willing to try out some new farming techniques can grow an amazing amount of produce sin a very small space - like even an apartment balcony (if it gets some sunlight). Sound interesting? It's just $10 bucks here...
Pass It On A different take on things - that's what you'll find here most mornings. If you know of anyone who might also like our content, simply click here and send a link to them. Or, if you hated what you read, send the link to all your 'worst enemies'. Like they say in Burbank, "Ain't no such thing as bad press..." ---- Last week's report is always here.
Thursday June 10, 2010 Balance of Trade Up We could start off this morning with the Balance of Trade report fresh off the government's PR desk:
The bottom line: We are still living on borrowed money used to pay for the BOT deficit to the tune of about $½- trillion a year. Got beer?
Who to Believe? Word this morning that BP shares are in the crapper is being painted (at least in the pre-opening talk) as being more than made up for by Ben Bernanke's pronouncements on Wednesday. But when I read his remarks, the part that jumped out at me was:
I'm not sure how the hell this is supposed to be taken as reassuring - since the expectation that budget deficits returning to lower levels would be based on...since he goes on in (para 2) to admit the current path is unsustainable and by para. 3 he tumbles to the underlying issue which, as I see it is: "...the number of persons expected to be working and paying taxes into various programs is rising more slowly than the number of persons projected to receive benefits...."
The fourth paragraph from this extract sounds like cheerleading, but at the same time when there's cautionary advice about removing stimulus, I scratch my head and wonder WTF are headline writers thinking when they paint this as optimism?
The "death of the dollar" meme has been in predictive linguistics for years meaning that when it shows up it will be a monster of an event and the number of people who are 'getting it' that the whole Depression 2.0 phenomena may be a decades long process is near zero.
I say near zero because I had a delightful note from an adjunct professor of economics at a very good school who offers this...
All of which makes perfect sense, since if production is the driver, then what I've been jumping up and down (nearly screaming about) for the past 14+ years of writing this site is that Kondratiev was right when he explained that the boom and bust is built into the Western economic system. Production is rewarded with profits, production is overbuilt. Itr then collapses and starts over, each time raising the general standard of living, hopefully.
The Keynesians, ain't buying it. Their solution is for government to overspend, not realizing that it's the type of overspending that matters, dear, not just if you push money into the economy.
Before you read this adjunct professor's paper, it helps to have at least some clue what the term 'katallactic' means. To borrow from an article on "Adam Smith's Katallactic Model of Gambling: Approbation from the Spectator", where he explains neatly that instead of thinking about economics as starting from Robinson Crusoe on the beach with a dollar somewhere, the kattallactic model of economic participants takes the relationship away from basic man-on-beach and supposes it's more like theater in that depending on which side of the trade you look at, one agent in an exchange is like an actor while the other(s) are like an audience.
Not surprisingly, the adjunct professor's paper cites Levy's paradigm and offers that:
I like to think of production, consumption, and finance as being like three 'little theaters', too. The reason the US recovered from the Great Depression at all, was the a huge 'audience' was pulled into the 'production theater' first by the massive public works projects of the 1930's (WPA, CCC, et all) and this massive infrastructure production was then rolled right into war production. Which not only led to high levels of utilization by the mid to late 1930's, but made production the 'dinner theater' with the most interesting play.
The consumption theater started off with a flag-waving rah-rah first act, and then a sis-boom-bang follow-on call Total War shortly after.
The 'dinner theater' which was scorned continued to be finance, and when people left this dinner theater, disgusted with the finance outcomes of the great depression, they scorned going back in for another showing until a fair time after the war (WWII).
Not to ramble on endlessly about this, but the currently ruling paradigm (e.g. 'the quants') seem to miss not only the katallactic model in general, but they also (wrongly in my view) attempt to assign numeric values to emotional responses to markets which, while it may work now and then (enough to get one a PhD in advanced bean counting) misses the whole longer term emotional tones and undercurrents Levy's (and our contributor) capture using a less numerically intense method which takes in a much larger behavioral range.
In other words, probabilistic economics (quant land) only works when probabilities are stable enough to be useful. Toss in socioeconomic disruptions of any magnitude and the probabilities go out the window and everyone's left wondering "What happened? Hey! We're out of range on this here variable..." Which is why a big Redmond s/w company gets calls from quants... "How comes the numbers didn't work? You come fix?"
If there's a single reason for my longer term skepticism about recovery it is that mock-production or pseudo production is no substitute for genuine production.
The fundamental problem is that what was once a high investment physical machine - which caused the employment of potentially thousands of people has been replaced with what I call pseudo production which might involved a C++ or C# library which is essentially free and thus the new production is virtualized, yet adherents of the 'old/quant' model maintain that it is of comparable value.
I'd propose it is not and I expect our Adjunct dude would agree. The unfortunate thing is that eventually as the cost of pseudo production continues to drop, the larger the pricing gap becomes until the whole economic system implodes, such that just as the general economy is operating in the unsustainable mode, so too, the underlying economic premise of production (increasingly made up of pseudo production) will not support irrational valuations and collapse becomes inevitable.
But, you probably figured all this out already, so on to our next story.
Defending from What? Two sides to every story - and often times three, or more, as any reporter knows. The report from NORTHCOM that "Units make history with Air Forces first homeland defense operational readiness inspection" has got a tremendous buzz going among conspiracy-minded types who think the greatest enemies of America are the ones who paid for bin Laden's training and such when the Russians were in Afghanistan. "Blowback" is a pisser, for sure, but regardless of who writes the checks, the practical is that if the unthinkable happens, times will be awful and the question is do you trust your (well armed) countrymen to treat you any better than the military if the SHTF?
Something to ponder, since few people tend to really think through what conditions 'on the other side' could be like.
Interlocking Director Department Scratching your head how it was Goldman was able to make such deft trading decisions on BP? Read the ZeroHedge piece under the headline "Chairman of Goldman Sachs International Was - Until Last Year - Also Chairman of BP" and see if the dots connect...
Web Breach Leaves 114,000 iPad users exposed according to a report.
Wonder why I'm a cache-clearing, cookie wary (rabid) Maxa Cookie Manager,. Zone Alarm, and more user? The web is about as safe as trolling around a third world barrio with hundred dollar bills hanging out of your pocket is why...
Tweet This Twitter's role in helping to get the mass protests underway in Iran last year was exaggerated says an editor in the Middle East. Oh? I doubt it...this is where 4gen warfare happens these days...
Madness on Bordering Department Mexico is upset with the shooting of a 14 year old by US Border Patrol. We note that Goliath was brought down by stones, so they do qualify as deadly force even without a sling to launch them. --- Elsewhere, illegals are reported leaving Arizona with their new tough immigration laws about to go active says a USA Today report.
Trading Futures are up again today, and there was a sharp job in jobless filings in the latest reporting week:
Standby for round 2 of 'running of the shorts'...and no, I didn't sell my call options, damn, damn, damn... oh well, WTF...
==== snip and save section ==== Coping: Why NOT to Have Goats "Hey Bubba, jail break..."
Oh-oh...it was my neighbor Cale about 2 PM Wednesday sticking his head into my office to advise me that "You got about a dozen, or more, goats headed up the road....you want me to help you round 'em up?"
With Cale riding picking truck and me saddled up on the Kubota, we managed to get the runaway goats back onto the property and heading up toward the feeding area. Since it was starting to rain, I thought my problems would be over since it was starting to rain and the goats tend to stay in their shelter being four-legged wimps.
So by 2:30 I was back to work and at 3:30, Elaine popped her head in the office to announce "Dan [another neighbor] just dropped by to say the goats are now across the road..."
Sure enough, grabbing the pick-up this time, Dick Chinney the leader of the goat gang. had led a harem of about 14 females onto the unfenced property across the street on the low side of the property. Figuring that the animals would come to food, I returned to the house, got Elaine, a big bucket of feed and a feed scoop and returned to the scene of this latest 'jail break'.
A little enticing and I was all set. 15 goats were following me down the property line in the wet grass and mud, I was tossing out the odd small pile of feed for the goats to argue over and then I'd move on another 200-feet, or so, and throw out some additional feed, leading them toward the feeding area.
All fine until I got to the 'Goatly Gulch'. This is where the trail along the fence dips down about 30-feet (at a 30% grade, suitable for 4X4 tractors, dirt bikes, but not something you would take a car near) and crosses over a creek which is running nicely thanks to 2.74 inches rain in the past 24-hours according to the Oregon Scientific digital flood victim.
It's here, about 1,100 feet from the nearest outpost of civilization in any direction that the goats made a charge for the feed bucket being held over my head, and while turning to look at the approaching hoard, I managed to come down on my left knee in such a way as to give it a serious sprain.
A flick of another scoop and the would-be tacklers were diverted, but now I was sliding down a muddy slope, cursing myself for not learning to skateboard which I'm sure would have tuned-up my sense of balance for such occasions.
The instant of the sprain was one of those events that I literally felt the tearing as the leg twisted. Nossir, no fun now. But out in the wild you have to suck-it-up and keep going...no options.
Limping real badly I made it up the other side of Goatly Gulch, and with Elaine's help (she'd driving the 1/2 mile from the jail break site over to the feeding area and was calling whoever would answer to come get some real chow.
The next 45-minutes was spent yelling from feeding area to fence repairs trying to get repair the fence and get some small goats who had by now wandered out, back into the inside of the fence; just the thing to attract all 30-odd goats who were intensively curious who that cussing, swearing, blasphemer was that was throwing around nylon tie-wraps since he didn't have his baling wire handy and limping like he'd lost a leg in a motorcycle accident, or something. --- Next scene, a fine dinner, a glass of wine, a couple of ibuprofens, and off to bed with the leg bound up with an ice pack wondering how Thursday morning would turn out. --- By 4:45 AM, Elaine had managed to figure out how to help me get my left sock on by tickling my foot (ok, I'm ticklish on the bottom of my feet, wanna make something of it?) which resulted in an extremely interesting cross being laughter from the tickle, more than offset by the now softball-sized knee.
In a true demonstration of devotion, we managed to get out to my office where I'm sitting in absolute fear of the time when I'll have to rush off to the 'throne room' for the matutinal visit.
All of which is my first painful point of today's report: While goats may seem like the perfect ag machines, there are times they are not. The old saying "If you know someone with no worries, buy them a goat" is absolutely true.
If you're a doctor, encourage your patients to buy goats, as it should provide a fine income stream into the future. Similarly, you may wish to invest in companies that make hydrocodone for idiots who raise goats. Goat fence manufacturers might be another fine long-term investment, as would be makers of instant ice packs, elastic bandages, and ibuprofen.
There may be times you think to yourself "Gee, George & Elaine sure have a neat life out in the wilds..." Which it is, from time to time. But given the choice, at least this morning, I'd rather hand over a wallet to a stick-up artist on some city street, than face the muddy gulch while being run down by 1,900 pounds of horned snorting demons. Stick-up artists are much more reasonable in comparison, so maybe there is something to Big City Life to be appreciated, after all.
Pieces of Eight Emails continue:
No, but they may be seriously attention-deficit. More abuse?
Naw, they're just natural born optimists.
Limiting Loan Size Remember the other day I mentioned that government must have some complicity with the loan/highwaymen who regularly gouge consumers while government orchestrates the whole thing having been paid off with votes, campaign contributions, and whatever?
Which really was my point. --- Speaking of cheap vehicles, my son the EMT up in Seattle was going to buy a 150cc scooter to flit from here to there. Went into a scooter emporium and negotiated a good deal on a new one - about $3,500. (I told him due to their low center of gravity, he'd be much safer on something like a 350cc Honda, since you can throw a bike around better, if you need to...).
Once upon a time I tried my hand at flat-track bike riding. Got so I could get the iron shoe on, get the bike 'crossed up' coming out of corners, but that was back in a different era.
Having at least some sense, he went back home to think about it and happened to be surfing Craig'slist. Found an identical unit with only 400 miles on it for $2,200.
Mucho better, brings a cash deal into range and promises to help him remain solvent...and it goes to show what the discounts are like in the real world compared to the showroom. Your mileage may vary.
Wednesday June 9, 2010 Gold's Record Although Gold has hit a new record, it was trading down about a buck or three earlier this morning.
Something you might want to keep an eye on are what the big dealers are actually paying for gold, relative to its quoted price. A check of Kitco's buying side, for example, showed that if I were to sell a .999 Gold Maple this morning, it would fetch 1,229.90 which is only a $5.70 discount to their posted spot and the selling price to them.
On the other hand, if you were buying at these levels, the quote this morning was $1,321.66 which is an $86.06 premium to spot at the same moment. What this says to me is that the published spot is very close to what existing gold could be sold for, but to buy back a position would cost a lot more. --- A number of readers have asked "How could Robin Landry think that Gold could drop to the $700's?" The answer is simple: It could, but takes a minute to think through the meaning.
Suppose, for a minute, that we are presently in and go through the development of a 1930's type deflationary economic collapse. What would happen? Availability of money simply dries up. Therefore, when there's not as much money out there, you'd see falling prices for many things and in the extreme case, say a 90% collapse of prices, what cost you $100 at the grocery store could drop to $10.
Right now, an ounce of gold could take you on about 12- $100 trips to the store for groceries. In a deflationary collapse, gold might drop to something like $750, but instead of buying you 12 trips to the store, gold would now buy 75 trips.
So when you're pondering what kind of assets to put your hard-earned dough into, ask yourself "How will my investment do in a highly inflationary environment? And then ask, how would it do in a deflation?
Either way, seems to me that gold will be a better holder of value than this 3 by 5 card and Bic roller ball pen I'm holding, since that's what paper money is: a kind of IOU which is supposed to store value over time.
However, the truth of the matter is that even including the deflation of Depression 1.0, the purchasing power of paper money has been watered down by - on average - 2.3% per year using the Fed's own numbers.
This is where modern-day economics doesn't do a very good job of educating people. A central bank that's in the money management business can do either a very good job of creating money of lasting value OR it can focus on creating a stable economy. The problem is, it's not a choice of both, since solid money (e.g. gold) severely limits the money-creation powers which might - arguably - be needed for government to overspend its income in order to fight a severe economic downturn...like about now.
Worth reading, while the market continues up - at least for the early going today - Gordon T. Long's piece about markets under the headline "Extend & Pretend: Confirming the Flash Crash Omen".
A higher open seems in the cards, but is it the start of a long term bull market? Nope, just the strong hands selling to the weak...
Then There's... Brazil with an economy growing 9%. Gee, just think what we could do if self-sufficiency became a real agenda item here...but not while Washington's in effectively up for bid by the special interests... --- By contrast there's Evercore Partner's Anthony Fry with this juicy snip from CNBC: “I don’t want to scare anyone but I am considering investing in barbed wire and guns, things are not looking good and rates are heading higher,” he said.
Along in here somewhere, I dutifully say "Quick, look surprised!"
Marketing War Department How's this for a shocker headline? "Taliban using HIV bombs".
If that's not enough to start accumulating defence stocks, how about "UN is Set to Vote on Iran Sanctions"?
"Militants attack NOTA convoy in Pakistan; 7 killed."
The big picture stuff continues to build tensions as "Turkey condemns Israel despite declaration veto".
Paper Soldiers? Buried at the end of an NPR story on Tuesday... "The White House says National Guard soldiers may be deployed to help people fill out the paperwork BP is demanding. " And that brings us in this morning's 'news rotation' to....
Blue Flue/Murdered Oceans Interior Secretary Ken Salazar will be on the hot seat as Senate hearings into the Gulf Disaster in development continue.
Having the Senate look into the mess is about as useful as putting me on Dancing with the Stars...what should IMHO be happening is the DoJ impounding BP dividends and starting action to seize the company for damages....and finding out why all those odd transactions just before events...
Terra Bites The BBC report "Snakes in mysterious global decline" really has a simple explanation in my book: All the reptiles have gone to Washington and other global power centers...
Speaking of which...buried at the end of an NPR story on the Gulf: "The White House says National Guard soldiers may be deployed to help people fill out the paperwork BP is demanding."
Election Returns.... 12 states held primaries on Tuesday. Not as much "vote 'em all out' as I expected/hoped for, but everyone knows votes are for sale, like everything else. Just takes the bigger media budget and better creative...
In my afternoon martini moment I often ask those meaningful questions about democracy - like "Would George Washington buy cable, or would he do a second mass mailer with a lapper asking for contributions?"
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Coping: When It's a Depression The headline over on the Yahoo - Tech Ticker above a Henry Blodget story "REMEMBER: In 1930, They Didn't Know It Was 'The Great Depression' Yet" brings to mind the ugly fact that most people have little to no - clue about where their country, world, or even family, for that matter, sits when it comes to economic cycles.
Long the bane of "serious" (number-crunching quants) of finance most academics in the field disavow the reality of cycles
When the market broke from the September high in 1929, it would be several years before economic reality dawned on most people. And, even in the heights of the Great Depression, the general unemployment rate was under 25%.
What made the depression of the 1930's was a mix of events: First, there was the collapse of the stock market, then there was the repossession of homes and farms, a generalized shortening of food, and the unavailability of credit.
The key thing that separated the Great Depression from other periods was the change in public attitudes toward money. There had been market breaks previously, include the infamous break from 1919 to 1921 that took 46.6% off the Dow. Looking back over the data, I'm planning to do an update on the decade-plus view of things.
One thing is clear in the Aggregate Index chart, which I've been posting for years, is that if you look at an equally weighted index (equal dollars in the Dow, S&P, and the NASDAQ Composite since 1999, there's this sneaking suspicion that future history writers will be comparing the internet bubble burst of 2000-2001 with the collapse of the 1919-1921 period.
In rhyming fashion, the decline of the Dow in 2000 when the weekly high closed at 11,722.98 in January 14, 2000 to the weekly close of 7,528.4 the week of October 4, 2002 was a crash of 35.8%, but we may get a little clearer picture by looking at the S&P 500, since it's a broader measure than the Dow.
Here, we see an S&P high of 1,527.46 the week ending March 24, 2000 and a bottom of 800.58 the week ending October 4, 2002. T%^his decline of 47.58% of the S&P not only sure starts to look like the 1919 market break, but in addition it may explain where more than half your retirement went.
The decline in tech stocks as measured by the NASDAQ was from a giddy 5,048.62 the week ending March 10 of 2000 to a lousy 1,139.9 the week of October 4, 2002. That's a 77.4% decline.
On a high-to-high basis, the Dow peaked before the 1919 to 1922 decline at 119.62 in about June of 1919. We also know that the Dow peaked in the first week or September of 1929 (9/2/29 at 376.29). Call it 10 years and a couple of months.
Since we know that the Dow peaked in early 2000, when we add 10-years to it, we see 2010 (mid summer) as a possible peak when stocks might run up one last time.
Does that make me a bull? No, absolutely not. Cycles are general timing clues only and each cycle has a different flavor than all preceding events.
Still, since we have a little data to look at, we could observe that the decline from all-time levels in 1929 to the depths of the Great Depression came out to 148 weeks. Since the market peak in October of 2007 (14,093 and change) 148 weeks is something to look at...and for what it's worth, 148 weeks brings us to July 9th, right around our July 11th change period in Clif's work.
I guess the takeaway is that some researchers (non-quants) look at the Great Depression as really a two-part affair: The early bubble and the greater bubble. It's even in a proposed American History curriculum (Essays in American History by Richard Bernstein) which begins its Boom & Bust 1921-1933 section with this observation:
Thus, if you've been reading writings on the coming Greater Depression/Depression 2.0 and have been asking yourself "Where's the real bloodshed financially?" the answer is simply stick around for a while.
There's a pretty good chance that the 'double bubble' and the following double trouble is manifesting and with any luck, the tipping point in the linguistics out in November will only be a global financial collapse since recovery from that, while painful, would be much less so than a world war.
We can only hope, huh?
What would a global monetary collapse be like? I'm working on that for Peoplenomics this weekend. But the headline that the federal debt will rise to $19.6 trillion, and will be way past GDP (in the $12-$13 T range) certainly indicates that this might be a minimal kind of change/tipping point expectation for this fall.
Not to grind your face into what may be coming, but two stories you should be able to connect the dots are these:
The analyst offering the advice is Mark Steele who works where? BMO Capital Markets.
The Indenture's Life - Modern Feudalism Slavery was officially abolished in the US back in the Civil War era; or was it? To my way of thinking, any time a man or woman is placed in a position of impossible debt, that's the functional equivalent of slavery. Or, as one of my friends calls it cheerfully, "the new Corporate Feudalism".
A couple of definitions of feudalism to roll around. One is that it's "the social system that developed in Europe in the 8th century; vassals were protected by lords who they had to serve in war" while another offers that "Feudalism is a decentralized sociopolitical structure in which a weak monarchy attempts to control the lands of the realm through reciprocal agreements with regional leaders. ..."
Since we live in a world of corpgov warfare (which is what all those wars in the sandbox are really about) and since reciprocal agreements with regional leaders is what the EU zone, the Asian trading blocks, OPEC, and the infamous New World Order are analogs, seems feudalism is a good fit.
Wasn't trying to do anything revolutionary in my remarks about indentures to government debts for things like student loans yesterday, but apparently that resonates at some level:
As I said, not trying to be revolutionary here, but if the FTC was really protecting people, they could be thinking of anti-screw-job legislation to regulate payday loans (another reason I am voting against my incumbent congressman this fall - he's on the wrong side of that one) and in addition, there should maybe be federal guidelines that would prohibit a lender from loaning a person more than one year's worth of after-tax income to buy a car. Or, no more than 4-times annual household income after tax to buy a home...and so forth.
Radical talk? Not really. The government already makes recommendations about food and nutrition with the RDA (recommended daily allowances) for vitamins (which they undershoot on some key ones, but that's another rant), so why not debt? It's a lot more dangerous to your long term health (stress, etc.).
My point is "Where has been the quid pro quo (something in return for) participation in the debt system as an indenture? Think back on how much junk you bought and were still - thanks to easy credit - still paying for when it stopped working.
Yet governments worldwide seem ready to shirk this responsibility to curb cannibal corporatism's predatory product quality/lending mess. instead, they focus on the tasks of feudal management: making up wars to fight and cutting deals with foreign interests often to the detriment of its subjects.
Time to Leave Louisiana? Reader email:
Reminds me of joke (or is it really?) about the rural family caught in flood that was offered three chances to leave by passing rescue boat crews. Finally, after all the rescue workers had left, up to his ankles in water at the very peak of what was once a roof, but was rapidly going under too, the father of the family screams to the sky "Father, why as thou forsaken me?"
The skies instantly part and a huge booming voice from everywhere and nowhere says "What do you mean? I sent three boats for you..."
Not sure I'd be waiting around for a third boat if we lived closer than the 450-miles away in what Texans laughably called 'mountains'.
Them Crazy Rights Another story about putting 8's in your wallet for our growing collection of WuJo material on the topic:
Personal story: After I put three eights in a pyramid arrangement in my wallet, I discovered a check for $1,000 that I had overlooked. Unfortunately, the check had been shoved behind credit cards and such and is way past expired. universe trying to tell me something about working too hard, spreading myself too thin, and not keeping my wallet cleaned out.
I'll check the lottery tickets I found later on this week. Who knows, might win $8 or something...
Tuesday June 8, 2010 Bin Laden in Iran? Not that we really need the distraction of a major war in the Middle East, but events are really starting to pile up in a way that certainly fits in with the predictive linguistic possibility of WW3 coming along about November 8-12 this year.
As if Iran's threat to play guard around Gaza protest ships and sending some Red Crescent Society boats, too, but now well-connected news & intelligence site Debka.com is reporting in this must-read article that "Osama bin Laden and top aides are hiding in Sabzevar, Iran."
If you're thinking "Where the hell is that?" The answer may be found on this Google map which puts it maybe 300+ miles east of Tehran, a hundred odd miles from the Turkmenistan border and maybe 200 from Afghanistan. Close enough to call in plays from the sidelines to al Qaida types in Afghanistan.
You might recall that "Officials in Iran, fearing protests, plan state memorial" in Sabzevar back in May to mark the passing of Imam Khomeini.
Other things percolating in the region include the Iranians saying they will not swap a nuclear scientist that the West nabbed for three US hikers who are being held.
Then, while Israel continues to avoid signing the nuclear nonproliferation treaty, the IAEA is calling for more cooperation from Iran on nuclear issues, which judging by how pressures are building, won't be showing up any time soon, since Iran's likely to claim something like "You can inspect more when Israel opens up their Dimona facility to inspections" where, as you'd guess, there are probably 300+ nukes ranging from suitcase-sized to way big glass-over-a-city sized.
As an armchair tactician, the Israel's have now got two reasons to go into Iran...fears of someone else getting nukes and bin Laden's alleged presence. Toss in reason #3 shortly in a possible Iran/Israel standoff at sea and you've got the makings of the five months of saw-tooth release language in Clif's modelspace which lead us to...well, don't want to ruin your day...but you know...November 8-12'ish.
Muddled Markets, Landry's Clarity Another late-session drop came calling on the market in the US yesterday. Even though the futures are called "mixed" in some reports, I wouldn't be too surprised to see things continue down today. For one thing, the Euro markets are down by amounts suggestive of another 50-75 points off the Dow - or more.
Then, there's the latest from Robin Landry to consider in a note to his investment colleagues last night:
This is not investment advice - see this site's disclaimer! On the other hand, when you look as some of the comments about tactical trading in this morning's "coping" section, you might be able to infer when I will activate my next tactical move...
Financial Suicide You notice that "Leader Capital Markets CEO commits suicide"? --- Or, of another sort in the article "Banking System Collapse: Wake up America Your Banks Are Dying."
The Higher Ed Bubble There's another financial bubble you might want to keep an eye on that was written up in the Washington Examiner Sunday: "Glenn Reynolds: Higher education's bubble is about to burst"...
Having spent some time in one of the leading software companies providing higher education management software, I'm relatively familiar with the dynamics of higher ed, especially the student aid part.
Stories about the higher ed. bubble get me to thinking, how long before students who are unable to find jobs for which they went to school file a class action lawsuit challenging their indenture (which includes having IRS tax refunds withheld) if the government turns out to have been seriously wrong about the type of jobs that the government represented would be available when students made a good-faith decision to go out and put themselves in hock for an education?
Think of it this way: What if we rolled back the clock to the fall of 2002 and looked at the Labor Department's Occupational Outlook and cited it as the basis of a decision to go to college or a tech school? Just for fun, sport, and amusement, I bought a copy of the 2002-2003 Occupational Outlook on Amazon for $5.17 and it will be a topic of a future Peoplenomics report....a short analysis of what the government represented as likely to be available, versus what actually came along.
This is a personal issue for me, since I helped put one of my daughters through school so she could become a chef - she won a few awards, in fact. But since highly qualified chefs aren't in super demand (or demand as forecast when she was looking into it) she's now working in an office job in an unrelated field. Except, of course, she has this huge student loan debt.
Won't go off on government's potential liability until I go through the data, but just seems to me that this could be one of the all-time monster class action suits for those who took the government's projects, spent tons of money, and then got to the finish line only to find there were no jobs there.
Should the student (who's given four years of life to school) additionally be held to indenture to a student loan based on government missing its marks?
Just something to think about. More research to come...the $5 worth for the 2002-2003 OL book seems like a worthy research expense.
Better Late Than Never Department I noticed that the "White House is directing agencies to cut their budgets" which likely won't stop this financial Titanic from sinking, but it might give the crew one more chorus from the band to rearrange the deck chairs.
Space Weather Interesting forum called "Space Weather Enterprise forum 2010" which is coming up at the National Press Club today. Why, if I had some way to get to Washington, I'd ante up the $50 to attend a few sessions, since space weather could be a major/huge/calamity on the backside of solar Cycle 24, out in the 2013 range...
Terra Check Every month, reader Anthony Ring plugs his excel macros into the USGS earthquake database and gives us a check on how trends are doing just underfoot. Not getting much press elsewhere, but I noticed the moon was into its final phases last night and since there may be some correlation between earthquakes and full moons...
Anyway, without getting into a big discussion of this (now) here's the latest chart of how things are going:
No, I have no idea why else isn't finding this seeming upward trend in 6.0+ quakes since about 2007 is curious (if not downright worrying) but there it is....some real data to ponder. Especially if you've read about 2012 expectations... Oh, and by the way, you don't think this might be a contributor to the BP accident (or was it?) do you? Seems to imply earth has a flaky crust...some clever wording which ought to drive Clif and Igor off to make pies in a hurry while we still can.
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Coping: ATactical Trading Discussion Not to overwork my discussions with my friend Howard Hill, but the whole purpose of the UrbanSurvival and Peoplenomics.com websites has been to help people make it through one of the most difficult periods in American financial history...which, in case I forgot to mention it.... is going to get even worse as the year goes on.
Most of our assets are split in a seemingly paradoxical way: Some in physical gold and silver and a good chunk in cash & inflation-indexed treasuries. The reason this works for us is that in the event that huge inflation comes along, as it may later this year when supply chain increases telegraphed by the Producer Price Index upward moves actually start to show up in stores.
For the most part, I will be looking for these to be of the food and staples variety, but even some electronics are bound to go up in price, although as a slower rate - because they are not strictly necessary for personal survival, no matter how "hooked" a person gets on the sparklies, glitterati, and aps for your ?Phone.
We may be getting close to time for me to lock in some profits and ,walk away from the table for a while in the stock market. But, how to do that?
A particular financial stock I've got a few shares of gives a fine (and to me very real) example of how to exit gracefully.
Say that on Friday, May 28, I bought a particular (financial inverse stock which goes up when the general market goes down) stock for $14.23.
Assume that I'm telling you the truth that this stock closed yesterday between $17.35 and $17.40. Yes, that's a 22% increase in seven trading days - which is a reasonably good return for less than two weeks in the position.
Now comes the problem, however: How do I lock in the profits and minimize my non-participation risk while at the same time making an even better return?
Non-participation risk is a term you're not likely to hear from your broker or money manager. Maybe because it's a 'Ureism" that means the risk of being out of a market when it's about to make a BIG move which could be profited from if you already know or sense which way the move will be.
None of the following is financial advice - this is purely and educational discussion of a theoretical way to make money - see this site's disclaimer if you want an extra helping of disclaiming to go along with this.
My planned exit strategy is simple: I will likely sell some covered call options against the stock for July. As of yesterday's close, for each 100-shares of stock I owned, I could sell a covered call option (meaning I really own the underlying stock).
Let's see what happens if the stock closes above $18 in July and I had written an $18 covered call: What I would (in effect) be doing with the call is selling the stock on option expiration day in July at $20 per share. That's $18 in July and $2.00 for the option or right to buy at $18 exercisable July 16th.
I'd get some of the money when I wrote the covered call option. (About $200 if I did it at yesterday's prices...) The rest would come in July around the 21st when the agreed upon sale closes at $18 and I would be paid $1,800 for each block of 100 shares that I'd written covered call options against.
Now consider what happens if the stock doesn't hit $18 which is the option price. Yes, I might still be able to sell that right (call option) at $2.00 to net me $200 for each 100-shares I'd written covered calls against.
Except that in this case (with the stock at $17 now, remember) the option would never be exercised so I'd still own the underlying stock. It's just that I'd have to suffer through having the extra $200 in my account for each option written at the $2.00 level.
There are a couple of whats to think about the $2 +$17 price. I could look at it as making my effective price should I sell the stock $19, or more traditionally, it would simply lower my cost basis for the stock from $14.23 to $12.23
The difference in returns is nice, too: Without writing the covered option, the simple buy / sell gain would be $17/$14.23 or about 19.5%.
However by writing the covered call, if I sold at $17 after writing the covered calls that effectively lower my cost basis, the gain fattens up to 39%...which now has my interest.
So, what to do about 'non-participation risk' when the market could go lower?
OK, if I wait for Landry's expected drop to the 9,500 range, I might be able to sell July 20's and once we get near options expiration for this month (a week from Friday, or so) then I might be able to cover with 18's...timing in does matter in this stuff, but the idea this morning is to at least put the tactic out for consideration.
Stocks never move in one direction all the time. So, what I could do is wait for a pullback in the market and buy a call option at a lower strike price, say a $16 call and with any luck at a lower cost than what I got for writing my $18 call option. Or if the market's going down more in the next few days, sell covered $20's and buy back $18's. Or $22's and 20's...all depends on how nuts things get.
Then comes July, I have 'upside' insurance in place. Say the underlying stock zooms up to $21. Now, instead of delivering the 100 shares of stock, I simply deliver by $16 call option and pocket a bit in the process. In the end, I'll still have the underlying stock, the exercised $16 calls cover the $18 call I'd written, and my non-participation risk has gone to zero if the stock zooms ahead.
If the stock doesn't pull back to where I can get a $16 July call on the cheap, then by writing the covered $18 call for $2, I'd effectively have sold at $20 which means a lousy 40% gain for 3½ weeks of exposure. Oh damn.
"What does all this after to do with Howard?"
Howard's got another fine example in his article "Legging into Verticals" (meaning vertical spreads between the covered call option written price against the common which is then covered by a cheaply acquired lower cost-basis call at a lower strike. Played well enough, long enough, you end up playing with house money. Neat, huh?
Not for casual market gamers, but since Elaine wants a four-place airplane if I get one at all, and since a buyer for "the red car" has materialized, something like a mid-priced/used Cessna 172 or maybe even a C-182 is looking like it's in the cards.
Since I could be loaded to the gills with income as a result of these fine trading strategies, that brings us to the question of IRS Section 179 depreciation on airplanes. Still checking on this, but near as I can figure it, an airplane used 100% for business could be written off in one tax year when used 100% for business up to the 179 limits....but like I said, still checking...
Given a fairly high tax bracket, the tax consequences effectively lower the cost of an aircraft if I have this all right) by 30% (or whatever your bracket is).
All of which gets us around to follow-on discussion of how the post Reagan era has led to what Howard thinks of as "asset stripping" by business owners. Can't argue that one, except to say that the tax code certainly seems to encourage 'creative' expenses and that things like business-use aircraft might be viewed as 'just playing the game' played by the PTB types several levels up the economic foodchain.
"With Liberty and Tax Breaks for all...."
Watch List Speaking of planes and such, if I had a C-172, I'd sure be tempted to fly up to Breckenridge, CO to catch the opening of Ray Kurzweil's documentary "The Singularity is Near" at the Breckenridge Film Festival.
Wonder how much will be given to the downside, namely that the Gulf may be an extinction-level event, and if that isn't, there are plenty of other life-ending threats out there, like WW3 in November, for example.
Wouldn't mind become air-dash capable....
Reading List "Bailout Lies Threaten your Savings" seems obvious, but in the rush of day-to-day living, the big stuff just gets overlooked, sometimes, I guess. Short read - you can deal with it - cowboy up...
Pieces of Eight Wow...set an alarm clock for 8 PM tonight if you're on the East Coast or even this morning at 8 if you're on ther West Coast and reading this before 8 AM... if you've been following our discussion of putting 8's in your wallet:
BST being British Standard Time...
Monday June 7, 2010 Special Update Consumer Credit (Debt) Flatlines! Yup: basically flat...
Which means if you've got a stock which is based on illusory consumer growth? Might wanna rethinking our (misplaced) optimism...
Oh - it's really a lot WORSE - damn, worse than you can imagine. Remember, this is measuring with constantly water-down dollars. So even with the money supply jacked up on an M1 basis, credit is flatlined.
Care to guess which way I think the market will go now?
Let me see: M1 up 6.7%, consumer borrowing up at 0.5% means, uh, something like 6.2% deflation is in the system?
Downside Follow-through? No, not at the open, but maybe later on today... What I love about this particular Monday morning is watching how the markets have behaved since the little nosebleed in the US markets on Friday.
Although the early reports hinted that the US stock futures were about even ahead of the open, I somehow sense this may be the PPT (Plunge Protection Team) working its magic since Japan was down 3.84% overnight and the Hang Seng was down a shade more than 2%.
Europe was also 'all down' before the open when I looked here, so even if the futures seem even-keeled, I wouldn't bet on it being that way for more than a few minutes. European numbers had a decidedly reddish cast to them, too.
The biggest number today will be the Fed's consumer debt figures. Drop back later on today and click on this link and then on to the June 7th report when it's posted.
The dynamics of the Consumer Debt num ber (errantly called the Consumer Credit Report, because from the bankster's perspective, they are extending credit but from the 'reg'lar human' standpoint, it's a report on how many sheep have put their heads how far into the consumer debt noose.
Once upon a time, having no debt and solid assets such as income producing farm land and a little gold and silver made sense. Up until the 1920's, or so. One of the functions of the Great Depression (the first one, not this one) was to bust the solid holdings paradigm and create debt dependence at all levels.\
Thus, the best news for the market would be a marked increase in consumer debt, since debt if the fuel, the grease, and the very shaft horsepower of the economy. It's also one of the main drivers of velocity of money.
The simplest way to express the impact of 'velocity' is to consider what happens if you own a single dollar at the beginning of the year and spend it only once at the last moment on December 31st, your money would have spent virtually a whole year at rest which means it wasn't very useful since it didn't create money to loan, didn't get relent and respent. it just sat there doing nothing.
On the other hand, if there were some magic mechanism where you could sned that single dollar a billion times in a year, then that lone dollar would fuel an amazing economic frenzy. That lone dollar would be creating jobs, funding industrial expansion, all kinds of holy economic outcomes.
In practice, the Consumer Debt report gives the largest single key insight into how the real economy is doing., If debt is up, economic activity is increasing which means more consumption, which means more jobs, which means more....you got the picture. Inflationary in general.
On the other hand, if the Consumer Debt Report falls significantly, that means less spending, fewer jobs and oh-oh: deflationary.
If you're a math head, you can click over here to refresh on how indirect measurement of the velocity of money works, or if you're like me, it will be just another day until an hour before the market close today.
A steady Consumer Debt report shouldn't push the market too much. An expansion of consumer debt may lead it higher, but a decline in consumer debt would likely mean a last-hour sell-off...at least that's my sense of it and the usual caveat burned into your forehead is "This is not investment advice...go find a pro if you don't have a clue what you're doing." --- Despite pre-market discussion of 'steady futures' the other 'Big Ugly' of the day is the Bloomberg report that the "U.S.'s $13 Trillion Debt Poised to Overtake GDP: Chart of the Day."
The Builder Bunch With the Eurogov in economic crisis, one of our well-informed readers offers some speculation as to what's going on...
Before you write this all off as conspiracy theory, consider this little extract from this Wikipedia page:
Well, yeah, now that you mention it...oh-oh...what's this?
Terra Bites
Gotta wonder if this is some variant/rogue fungus since there's still some unfilled linguistics from the 'fungus amongus' meme sitting out there...
Say, you don't think this is a bio-engineered attack, do you?
Rush to War Word that Iran may be providing an escort for the next Gaza-bound convoy sets up tensions for this week in the Middle East. Wonder if this will feed into July 11th events? Time will tell, as always...
Nothing like a good war, though, to get public attention off the Gulf and the Euro collapse and.....well, you get the picture. Orchestrated, or coincidence is the only question worth debating and the evidence is way beyond your pay grade or mine...
Wars Between the Business Models Dept. Disarming Texas, etc. Say, you see where the Austin Police Department is offering food vouchers to people who turn in guns?
You'll know it's really gotten bad when the government offers bloggers food for turning off government-critical web sites...speaking of which...
You see where the FTC is maneuvering to appoint itself lord & master of the net?
The idea is to levy some kind of charge on sites that simply list headlines (as in RSS reader feeds) and give this money to Olde Tyme Media - the newspapers - which oughta line up salivating for the dole. Expect this to generate miles of inky editorial page support...since the money would go right back to the cabal of rolled-up newspaper empire owners who want to feather their own nest.
Which, of course offers us a fine way to determine who is MSM and who is not since the pro-human newspapers would stand for the chilling effect of public discussion/free speech. Which is differing from the shilling effect on the other side...
Hinky, huh?
Of course this pales with "BP Damage Control Leaks Online" which was reported by ABC News. Seems BP is buying search redirects from Google & Yahoo...which...well, let me ask you this: "Do you think search engines are free, or are they just another business model?"
Hell of a Quote New York Magazine has always been a fine read. But their piece this weekend, "Bernie Madoff, Free at Last" is incredibly good... A taste?
A highly recommended read because it starkly reveals what some of the PTB types and minions are like. --- Money isn't inherently bad, until it turns into a variant of obsessive compulsive disorder when no matter how much you have, it's never enough.
Having already looked at the pre-open session half a dozen times, and with my eTrade "MarketCaster" live quotes about to light up in 30-minutes when the rest of the market goes live, I ask myself "How much is enough?" But the deeper question is really "What am I willing to do to get there? Am I in danger of crossing the OCD line?"
I think I'll go think about it...and wash my hands half a dozen times...
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Coping: Secret of the Eights When I am not writing something for this site, doing an update for Peoplenomics subscribers, consulting, chasing goats down, or trying to fix a broker server around here (more on this last part tomorrow), I like to spend a fair bit of time investigating how the "real world" operates just beyond our collective grasp. I do this in a particular corner of my office I call the WuJo - a kind of special chair where I think about the intersection of 'everyday reality' and "non-ordinary reality".
Even part of the
UrbanSurvival/Peoplenomics library is devoted to the writing of
WuJo. Everything from When the Impossible Happens: Adventures in Non-Ordinary Reality
To be sure, there is
the practical side of my library - stuck in the harsh reality of
everyday business. In this (much larger) part of the
library are books like
Essays on the Great Depression
In this serious part
of the library, you'll also find expensive grad school books like
Business Research Methods with Student DVD (The Mcgraw-Hill/Irwin Series / Operations and Decision Sciences)
It's in the study of major principles of Life that I spend most of my time. All of which winds a bit circuitously around to this morning's first topic, the experiment I mentioned last week where you write down the number "8" (which laid over on its side is the symbol for infinity ∞ ) with the idea that such an action has been alleged to improve a person's financial situation and is so powerful that we pointed to a telephone number being cancelled (0888) 888 - 888 as evidence that we have been seeing an 'attack' on the number 8 by the PowersThatBe. The 'attack on eights' being used by the general public isd very interesting to watch - as the number's negative associations are all over the place.
Take for example the headline "Eight found guilty in Bhopal case" or "Israel deports via Jordan eight Gaza-bound activists" and the list goes on.
To make the case, you might go to a news engine like Google and put in the spelled out version of other numbers and do a comparison: 'two' has 63,099 hits when I looked, while nearby 'seven' had 44,376 hits. 'Eight' had 48,890 while 'nine' had 46,390. Six had 47,998.
I'll let you dig out your book on statistics to figure out whether than more than one standard deviation in that little nump on 'eight', and no dbout if there's something to it, maybe itg's just because we're looking for it. No telling.
But back to this morning's first results from our Great Eight Experiment, consider the following two reports:
The standard disclaimer applies, we don't offer financial advice, but maybe things would have been worse had the '8' / ∞ been in your wallet? Maybe it takes three eights as I suggested last week because of that phone number story.
On the other side of out "eight(s) in the wallet" we have this amazing story from a long-time reader who plays a little poker...enough to be listed as a playah on some poker bio web sites:
I'd say he told it just fine... Which gets us around to the particularly interesting part of WuJo study that is of interest. Here we had one reader who was drawn to the three 'eights' approach, while another was called to the single 8 approach.
This brings me to a knowledge point and an action point.
The knowledge point is that Clif has an interest semi-theory about the possibility of directly manipulating reality by use of symbols. Specifically via the Graphic Language Application Substrate (GLAS) which goes to the idea that certain symbols either act directly on how Universe resolves into what we call 'reality/here & now' or the existence & application of these symbols somehow triggers intent at the preconscious level which somehow resolves as 'reality/ here & now condenses into the 'present' moment.
At the moment I am leaning toward intent. as the key (not to be confused with the ki/chi/qi, of course). And with intent foremost a couple of new experiments come to mind which as I do them, I'll pass along results.
One, however, might be to think if you can figure out a way to arrange three eights on a piece of paper so they form what Egpt's most famous landmark is...
Enemies of the State? One of the real highlights of the weekend for me was a conversation with my friend Howard Hill (bio) which got around, as part of a larger discussion about the virtues of several different call option-writing strategies, to Howard mentioning in passing that I (yours truly) might be considered an 'enemy of the state' because I am so skeptical of much that's done by government.
True, I am sometimes skeptical of government reports, but as Howard points out, I should take pains to point out once in a while when I cite source material who the sources work for in the PTB.
Fine point, that. But, then I flipped the conversation around and asked Howard about the other side of it: If I'm some kind of 'enemy of the state' for questioning authority a little too vigorously, might not he be considered an 'enemy of the state' because he quite regularly 'takes down the pants of Wall Street" and discusses how the little investor (one lacking sophistication) is regularly screwed?
Fun thing is, neither one of us is too sure who's more dangerous: The non-violent, Constitution-loving skeptical writer who points out things like the bullshit numbers first put out about the oil spill/ocean murder, for example, or the non-violent, Constitution-loving skeptical writer who lays out the trail of how financial genocide has been - and is being -orchestrated against regular folks.
Our Last Gulf Shrimp? Right around the time of the BP incident, Elaine went shopping on an important mission. Down at the local Kroger's she found a five-pound bag of frozen uncooked, very large shrimp on sale. Originally, this was a $67 bag of shrimp, but it had been marked down several times and by the time she got our Kroger's card discount and such, this five pound bag was down to something less than $13.
Sunday afternoon we had a fine shrimp-feed. Accompanied with some Alaska king crab (also picked up on sale).
Couple of hunks of Ciabatta and a few glasses of wine...well, life doesn't get much better.
Hope you had as good a culinary weekend. Man does not live on paper alone, neither do women. Although I understand your confusion.
(That's my feeble Monday attempt at humor, deal with it.)
Before the chart, a little background: Once upon a time, a long while ago, I observed during my quest for 'truth' in economics, that the PowersThatBe, the talking heads on the teeve, and the other information sources that actively engage in the programming of humans not to think, had conveniently swept several trillions of dollars that disappeared in the Internet Bubble's bursting (since spring 2000) under the rug. Surely, it wasn't unnoticed by the thousands of people who called brokers and said "Where is my money?" "Gone, but hang in there as you're a long term investor!" was about all they heard back.
So one of our charts for Peoplenomics subscribers oughta be widely circulated - it shows that if you line up the peak of the Dow in January 2000 with the peak in early September of 1929, we're on a very very close replay track. Much closer than even the chart shows if you were to back out inflation, and put in the effects of 1929 deflation, but that'd be real work, and I'm sort of lazy if the truth be told.
No, it's not a perfect replay of 1929, but history doesn't repeat exactly, it only rhymes. So think of this as the rhymes and the crimes chart:
"George, that's only a coincidence!" your monkey-mind will protest.
Why sure it is...you bet. A 9½ year long coincidence...yessir....just a coincidence, I'm sure...
Write when you get rich,
George Ure, The People's Economist
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to the inner workings of martial arts ki/chi/qi energy that may
be discerned from books like
.
by Fed chair Ben Bernanke.
although my version was before DVD's, but the principles a
mostly ageless.
