Saturday, September 12, 2009

Davos on the Edge

  • Ticker Guy on Dennis Kneale and Geithner
  • Federal deficit hits $1.38T through August
  • 40 Year Real Change in Income Limites (2008 dollars, Chart)
  • Eviction Patrol Overloaded with Flood of Foreclosures
  • Banksters to Main Street: "I.B.G."
  • Protectionism: U.S. to Impose Tariff on Tires From China
  • Up to two million march to US Capitol to protest against Obama's spending in 'tea-party' demonstration
  • Throwing Caution to the Wind

    Economy

    Ticker Guy on Dennis Kneale and Geithner

    Federal deficit hits $1.38T through August

    The Obama administration last month trimmed its forecast for this year's deficit to $1.58 trillion, from an earlier $1.84 trillion. The recovery of the banking system led to the reduced estimate as it meant the administration did not need to get an additional $250 billion in bailout support for banks.

    40 Year Real Change in Income Limites (2008 dollars, Chart)

    Eviction Patrol Overloaded with Flood of Foreclosures

    It's home to Disneyland — "the happiest place on earth" — but deputies enforcing home evictions in Anaheim find mold, backed-up plumbing, marijuana crops, abandoned grandparents and the occasional suicide.

    Peter Schiff (H/T iDoctor)

    Banksters to Main Street: "I.B.G."

    Both Bloomberg and NYT are running articles about the dim chances of financial reform, such as procedures for closing "too big to fail" institutions. "Bailout first, reform later" is exactly analogous to the queen crying "verdict first, trial later" in Alice in Wonderland. Or "let horse escape, then close barn door," if you will. Beyond the dysfunctional political system on display, the issue lurks of a larger-scale replay. From the Times article:

    Protectionism: U.S. to Impose Tariff on Tires From China

    In one of his first major decisions on trade policy, President Obama opted Friday to impose a tariff on tires from China, a move that fulfills his campaign promise to "crack down" on imports that unfairly undermine American workers but risks angering the nation's second-largest trading partner.

    The decision is intended to bolster the ailing U.S. tire industry, in which more than 5,000 jobs have been lost over the past five years as the volume of Chinese tires in the market has tripled.

    Up to two million march to US Capitol to protest against Obama's spending in 'tea-party' demonstration

    Tens of thousands of people converged on Capitol Hill on Saturday to protest against government spending

    Throwing Caution to the Wind

    Friday, September 11, 2009, 2:16 pm, by cmartenson

    The number of articles out there in the mainstream press that are designed to create the impression that all is well practically constitute a deluge at this point.

    One thing I like to do, especially when an article comes out in a reputable paper like the NYT, is to check their facts to see if they square up with the tenor and tone of their "it's safe to get back in the pool" articles.

    Here's a perfectly fine example from today:



  • Trip Time...

    All packed and ready to blast.



    You're in good hands with Davos, he's going to keep you up to date and post a market thread for you! Thanks Davos!

    You all take care and I'll post econimic observations here on occasion, you can follow my adventures on the Twisted Edge!

    Take care, stay sharp if you're playing the markets - my guess the top of wave B comes pretty soon, as in the next few weeks, highest probability with large bearish divergences already in place.

    Ken & Barbie - The New American Nightmare

    Catfish, The New Economic Indicator

    Catsifh clean algae-ridden pools (WPTV)
    Pointing out one example Mitchell said, "It has an unsanitary, abandoned swimming pool, stagnant swimming pool. There's no electricity running at this location."

    The code compliance department was paying nearly 7,000 dollars a year to dump chemicals into the pools to treat the scummy buildup.

    That's when Mitchell and some of her colleagues came up with an environmentally-friendly idea to get rid of the green. An idea with a much lower price tag of just 700 dollars.

    "Some of us got clever and decided to try the fish-eating...er algae eating fish," she said.

    At a typical home that needed help Mitchell revealed, "We have dumped 15 pleco algae-eating fish in here to take care of the algae situation."

    Mitchell believes that cleaner more sanitary pools will make the houses more attractive to buyers, as will the lower fees for upkeep.

    Once the houses are sold, the new owner can either recycle the fish, or take them back to the lake where they came from.

    Of course, you could always leave them in the pool and fish to your heart's content.

    Chart of the Day

    Dow / Gold

    Where We Are Right Now? And Where We Didn't Go...

    H/T GregRoberts

    Where We Went - Eight Thousand Five Hundred Million in Stimulus For....

    Instead of putting the stimulus to work on creativity and or manufacturing 8.5 billion was handed over to Acorn, which is now economically endowed to give advice to prostitutes, and pimps, even if it pertains to underage child sex slave trafficking.



    Friday, September 11, 2009

    Max Keiser...

    Martin Armstrong – Cycle Theory & the Sixth Dimension - Part II

    Martin dives into his cycle theory and how it came about. This is part II and it dives deeper into his theories with emphasis on how the cycles interact.




    *To PRINT, click "more" then "save document" to open in YOUR .pdf viewer where you can either save or print. Printing directly from the Sbribd menu may not produce good results.

    Martin Armstrong – Cycle Theory, Part I...

    Martin dives into his cycle theory and how it came about. This is part I of two parts...




    *To PRINT, click "more" then "save document" to open in YOUR .pdf viewer where you can either save or print. Printing directly from the Sbribd menu may not produce good results.

    Martin Armstrong’s Reply to the S.E.C.

    Martin Armstrong was first jailed in January of the year 2000. He has spent nearly ten years in captivity now. The first 7 years he was held “in contempt” for not producing money and/or records that he claims did not exist. After being TORTURED for nearly 7 years in near isolation and being beat nearly to death, Armstrong “confessed” for the purpose of obtaining a release date from prison as he had no idea how long his isolation could continue.

    There is a legal precedent regarding contempt charges that basically state that if a person is held for an extended time period without compliance and there no longer is any reasonable chance that further incarceration will produce the desired result, then the person being held on contempt is to be released. That never happened in Armstrong’s case because he was being held on behalf of the members of the “club.”

    He subsequently sued the prison system for negligence for locking a known homicidal maniac in the same cell with him. The result? This is what recently happened after promises were made during Martin’s “confession” that they would not seek restitution.

    NEW YORK FEDERAL COURT ORDERS MARTIN ARMSTRONG, PRINCETON GLOBAL MANAGEMENT AND PRINCETON ECONOMICS INTERNATIONAL TO PAY MORE THAN $27 MILLION IN REMAINING RESTITUTION IN CFTC ANTI-FRAUD ACTION

    The following information was released by the Commodities Futures Trading Commission:

    The U.S. Commodity Futures Trading Commission (CFTC) announced today that it obtained more than $27 million in remaining restitution and permanent injunctions in consent orders that settle its fraud charges against Martin Armstrong of Maple Shade, N.J., and his investment firms Princeton Global Management Ltd. (PGM) and Princeton Economics International Ltd. (PEI). In addition to the restitution awards, the consent orders bar Armstrong, PEI and PGM from trading, applying for registration, engaging in any activity requiring registration or acting as a principal of any registered entity or person.

    The Honorable Kevin P. Castel of the U.S. District Court for the Southern District of New York entered the consent orders of permanent injunction on June 24, 2008, and July 31, 2009.

    Armstrong is currently serving a five-year sentence at the Federal Correctional Institution at Fort Dix, N.J. On August 7, 2006, Armstrong pled guilty in a related criminal action brought by the Office of the U.S. Attorney for the Southern District of New York (USAO). Armstrong was sentenced pursuant to the April 10, 2007, order of the Honorable John F. Keenan of the U.S. District Court for the Southern District of New York.

    The consent orders arise from a CFTC complaint filed on September 13, 1999, against Armstrong, and PGM and PEI, the corporations he directed as chairman (see CFTC Press Release 4312-99, September 14, 1999). The complaint alleged that from approximately November, 1997, to September, 1999, Armstrong, PEI and PGM defrauded customers by operating and managing a commodity pool that concealed substantial trading losses incurred as the result of commodity futures trading. The complaint further charged Armstrong, PEI and PGM with issuing reports to customers that fraudulently represented the net asset value of their interests in the commodity pool. A related civil action was filed by the Securities and Exchange Commission.

    This Order against Armstrong, PEI and PGM entirely resolves the CFTC's charges.

    Order Follows Previous CFTC Settlements with Participants in the Fraudulent Scheme.

    In July, 2004, the CFTC entered an order against Harold Ludwig, former co-director, with Martin Armstrong, of PGM, which required Ludwig to pay $4.9 million in restitution and a $2 million civil monetary penalty for his role in fraudulently allocating profitable trades to benefit himself rather than the Princeton customers. Also in July, 2004, the CFTC entered an order against William Rogers and Maria Toczylowski, the former President and Vice President, respectively, of the commodity futures division of Republic New York Securities, Corp. (Republic). The order required them to pay $6 million and $400,000 in restitution and $2 million and $240,000 in civil monetary penalties, respectively, for their roles in executing net asset value letters that intentionally misrepresented the true values of the Princeton accounts and for assisting in fraudulently allocating trades to the detriment of Princeton customers (See CFTC Press Release 4952-04, July 13, 2004).

    In December, 2001, the CFTC entered an order against Republic, a futures commission merchant through which the trading was conducted, that imposed a $5 million civil monetary penalty against Republic for its role in assisting Armstrong, PGM and PEI in hiding significant trading losses and in operating a Ponzi scheme. (See CFTC Press Release 4590-01, December 17, 2001).

    Former Customers Injured by the Scheme Have Received More Than $600 Million in Return for Their Losses.

    At the outset of this matter, at the CFTC's request, the U.S. District Court froze Armstrong's, PGM's and PEI's assets and appointed a receiver to recover and distribute assets to defrauded investors. The receiver has thus far distributed more than $50 million in restitution as part of an interim distribution ordered by the court (see CFTC Press Release 5054-05, March 14, 2005). An additional $569 million as part of a related proceeding filed by the USAO against Republic (see CFTC Press Release 4590-01, December 17, 2001) has also been distributed to the defrauded investors.

    The CFTC appreciates the assistance and coordination of the Office of the U.S. Attorney for the Southern District of New York and the Securities and Exchange Commission in this matter. The CFTC also thanks the Court appointed Receiver, his staff and legal counsel for their efforts in successfully recovering and distributing assets to the defrauded investors.

    The following CFTC Division of Enforcement staff were responsible for this case: Stephen J. Obie, Vincent A. McGonagle, Lenel Hickson, Jr., Steven Ringer and Sheila Marhamati.


    This action was taken in direct retaliation for Martin suing the prison system, plain and simple.

    The SEC had earlier agreed to review his case but have denied him any relief. Below is Martin’s latest argument to the SEC.


    Morning Update/ Market Thread 9/11/09

    Good Morning,

    Can you believe it’s been 8 years since the World Trade Centers collapsed? I remember I got up early that morning and was watching it a little on the television but had to drive to Seattle for a flight simulator training mission and listened on the radio as the towers collapsed. I remember standing in the simulator building talking to the pilots and mentioned that I guaranteed them that they would see bullet proof cockpit doors as a result. Besides a bunch of “look good” airport security BS, that was about the only change of substance besides bankrupting ourselves with our inappropriate reactions. Sad for those involved and they have my sympathy, even more sad what we have done to ourselves.

    At any rate, this will be my last daily update until I return as I’ll be heading out this Sunday. You will be in good hands with Davos providing the updates, please give him a warm welcome by providing your usual good observations and links. I’m sure he’ll post up a lot of the links you provide, so keep him informed!

    The equity futures this morning are up:



    The dollar has fallen beneath that descending wedge. Everyone should hope it’s just a throw under, because if it’s not, the dollar descending further will be much less fun in the end than having the stock market descend.

    Gold is back up over $1,000 as a result. Below is a chart of the dollar futures on the left, the red line is the bottom of that wedge. There was a small H&S on the dollar and it is now confirmed with a break down below support. Gold futures are on the right:



    Import and export PRICES were released this morning. The month over month change into August was higher than into July. Import prices rose 2.0% and export prices rose .7% in August. Year over year, import prices fell 15%, and export prices fell 6.1%. That is still a historic collapse in prices. Pretty soon the year over year comparisons start to get easier, but I would not discount the power of that collapse and I would not be fooled into believing it’s over – nothing moves in a straight line. However, crude has for now not resumed its price decline and its rise over the past few months is pressuring price data. That could begin to show up in year over year inflation data soon, the price action of crude is very important in that regard. Here’s Econoday’s take:
    Highlights
    Import prices rose 2.0 percent in August reflecting a 10.5 percent jump in prices for imported petroleum products mostly crude. Excluding petroleum products, imported prices rose a sharp 0.4 percent in what will pressure next week's core data on producer and consumer prices. Prices of imported manufactured goods rose a steep 0.6 percent from both industrialized and non-industrialized countries. Prices of all imports from China rose 0.2 percent which is a sizable rise for this category.

    Export prices rose 0.7 percent and were boosted by a month-to-month swing higher in agricultural prices which rose 0.2 percent vs. a 4.9 percent decline in July. Export prices for non-agricultural goods jumped an unusually high 0.8 percent.

    Though there are steep readings in today's report, import and export prices for finished capital and consumer goods showed very little change indicating that the month's pressure was centered in raw materials, indications backed up by the surprisingly high readings in the ISM prices paid indexes for August. Price pressures are brewing for commodities including oil and base metals, the result of Chinese stockpiling and also forward buying and investment buying on expectations of stronger demand in the future. There was little initial reaction to today's report though gold did pop several dollars higher to $1,004.



    Consumer Sentiment is released at 9:55 AM.

    Yesterday the trade figures were released and this morning I have the Fed’s updated charts. Below is a chart showing the balance of trade. Note that we have experienced a major change of trend. There will be movement within, but the trend has definitely changed from a widening trade deficit to a narrowing one – that’s a good thing in the long run for our economy, but the bobblehead politicians and economists don’t look at it that way – and all I can say is that their brains are fried – must be something in the water at Haaavard. Here’s the chart:



    Below is the mostly raw data chart of Imported goods:



    And this is Imports expressed in yoy percent change:



    Here is Exported goods:



    And this is Exports expressed in yoy percent change:



    Stunning charts, they paint a much truer picture of the economy than the spun and manipulated figures such as GDP, and they put into perspective the size of the “bounce” we have been experiencing. Is a 50% rise in the stock markets commensurate with what you see here? NO? Well then, perhaps there’s a reason that insiders are selling again at a record pace?

    That disconnect is not going to end well, Nate says, as the /ES pushes higher still right into the 1,041 pivot. The next higher pivot is at 1,061, support is at 1,018 until prices get over the 1,041 pivot and turn it into support.

    McHugh’s count has been more accurate than other EW callers that I follow. He is tracking this rising wedge that I have outlined in blue:



    He believes that we have some more of 3 up of c up of B up to go (with some minor correction), then we’ll have more consolidation and a final push higher to complete wave c up of B up and that will complete the B wave. Timing at the pace of movement would maybe put the end of B towards the end of this month or sometime next month – that would coincide with what this rising wedge is saying. That’s the best I can say from what I see right now, so keep that wedge in mind over the next few weeks.

    When the levee finally does break, it’s going to produce a flood that you don’t want to be caught in, that’s for sure…

    Led Zeppelin & Neil Young — WhenThe Levee Breaks:

    Thursday, September 10, 2009

    Gerald Celente’s Latest Thoughts…

    Interview 5/09/2009 Part I (10 minutes):


    Interview 5/09/2009 Part I (10 minutes):

    Morning Update/ Market Thread 9/10

    Good Morning,

    Equity futures are down slightly, but came back from a deeper hole following the latest weekly employment report:



    We’re to the point that something is going to have to give – it’s either sacrifice the dollar by sending stocks higher, or let stocks slide to save the dollar. The dollar is sitting right on the bottom boundary of that descending wedge as it has been for the past 3 days. It’s been climbing out, but then diving back. The longer it stays down near that 77 range, the more likely it is to eventually break down. Bonds are slightly higher, moving the opposite direction of what is the normal relationship with the morning move higher in equities, move lower in the dollar. Gold is making a pretty clear down channel and is about $991 right now.

    The trade data came out with a wider than forecast trade deficit. Both exports and imports gained a little, but when you look at the year over year figures, the monthly move is just noise, it is still a collapse of historic proportions with imports down more than 30%, and exports down more than 20%. Note Econoday does not talk about those figures, they only talk about the month over month noise because it was “positive” if you like being indebted to the rest of the world:
    Highlights
    The U.S. trade deficit in July worsened significantly and oil had little to do with it. Businesses appear to be gambling on recovery actually happening as nonoil imports spiked. The overall U.S. trade gap worsened to $32.0 billion from a revised $27.5 billion gap in June. The latest deficit was notably more negative than the consensus estimate for $28.0 billion in red ink. The good news is that exports posted a gain of 2.2 percent after a 2.1 percent increase in June. However, imports jumped 4.7 percent after a 2.5 percent rise in June. The worsening in the trade deficit was due to a wider nonpetroleum goods deficit which grew to $23.5 billion from $19.8 billion the previous month. Import gains were widespread but led by autos and consumer goods. The jump in auto imports likely was related to the cash-for-clunkers program. The petroleum gap grew to $17.9 billion from $17.3 billion the previous month.

    Today's trade report showed a spike in the trade deficit partly due to cash-for-clunks but businesses still anticipant demand to be up for consumer goods excluding autos and for capital equipment. And manufacturing is getting a boost from exports. Overall, the trade sector is warming up a bit and that is good news.





    Jobless claims came in at a NASTY 550,000. That is a drop of 26k from the week prior. Econoday notes that continuing claims are down, but they fail to mention that it is solely due to people losing benefits and falling off the unemployment roles. People can’t continue to file when their benefits run out and they are not counted.
    Highlights
    First-time jobless claims fell a substantial 26,000 in the Sept. 5 week to a lower-than-expected level of 550,000 (prior week revised from 570,000). Aside from adjustment-related volatility during the summer auto shutdowns, the latest level is the lowest since the very beginning of the year. But one week isn't enough to pull the four-week average down much, at 570,000 vs. 572,750 in the prior week.

    Fewer are also drawing continuing benefits with continuing claims down a sizable 159,000 to 6.088 million in data for the Aug. 29 week and the lowest level since April. The unemployment rate for insured workers fell 1 tenth to 4.6 percent.

    Equities and commodities both popped higher in immediate reaction to today's 8:30 ET data that included trade data which show strength in U.S. exports. The jobless claims report certainly indicates improvement and points to continued month-to-month easing in payroll losses.



    As the Fed updates the trade data I’ll dig out their charts and present them.

    The 60 minute stochastics are just rolling over from overbought, I would not be surprised by a pullback in here, watch the pivot points, 1,018 is support, 1,041 is the pivot above but the 1,030 area is heavy resistance. The dollar is on the verge, a break below 77 could be violent, but it could also be a fake in today’s pushbutton Goldman controlled markets.

    Wednesday, September 9, 2009

    Carlyle Group = Military Industrial Complex = Bankrupt Nation

    It is my contention that America is operating under a form of Economic Mass Psychosis. We have forgotten the concept of FREEDOM and how it interacts with SECURITY. We have been pursuing SECURITY on behalf of special interests and we have BANKRUPTED OURSELVES in so doing, thus sacrificing our FREEDOM as well as sacrificing our TRUE SECURITY.

    Those who seek FREEDOM will find SECURITY, that’s the way the invisible hand of economics works. It’s a balance, the spending on security must be sustainable by the underpinnings of a REAL ECONOMY or it will not last.

    Ever wonder how our spending on our military grew to the INSANE point that the U.S. spends nearly as much as the rest of the world combined?

    Let’s warm up on the concept of a military industrial complex with a review by Chalmers Johnson in one of my all time favorite videos. When the entire “defense complex” is included, our spending exceeds that of the rest of the world combined:




    Reference: The FY 2009 Pentagon Spending Request - Global Military Spending

    How important is this issue to our overall budget? Here is a chart showing the 2009 budget and the portion that can be attributed to “national defense:”


    Reference: Where Your Income Tax Money Really Goes…

    Now we can go on to view a 48 minute documentary done on the Carlyle Group… the first 1 minute 45 seconds is in Dutch as it was first broadcast on VPRO Netherlands TV. You can follow the following link for a translation, but you will get it all by simply beginning to watch from that point:



    Speaking of the Bin Laden family… my first eye opening experience to the way the real world works was when I was in the military and they implemented the AVIP (anthrax vaccine program). It turns out that then retired former Chairman of the Joint Chief of Staff, Admiral Crowe (note what he did AFTER retirement), was hired by a European man of middle-eastern descent with the last name of Bin Laden. Yes, a member of the Bin Laden family. He was hired by Bin Laden’s latest acquisition, a company called Bioport, Inc. of Lansing, Michigan.

    Bioport was the only producer of the Anthrax vaccine that was first made during the WWII timeframe (and not tested under anything like modern test standards – although the military represented it as such and stated that is was in common use by veterinarians – one quick call to the largest vet school in the nation ended that farce – one of many).

    Admiral Crowe was given 13% of Bioport stock and a seat on the Board of Directors in exchange for going to the Pentagon to lobby for its mandatory use. He was successful, many people in the military were harmed by the series of six shots that was sold to them as safe and necessary to fight a significant threat, one that if “only they knew what we knew” then they wouldn’t hesitate to take it. This despite the fact that no one in the military throughout the entire history of the world had ever had anthrax used against them – EVER. The shots were given to 90 pound females the same as 220 pound males, and they suffered disproportionately.

    This was occurring at the same time that anthrax powder was sent through the mail and wound up at Senator Daschle’s office and killed 5 people, wounding 17 others.

    You connect the dots, remember to follow the money.

    The misinformation and scare tactics were outrageous and I was highly ashamed and embarrassed for those in the military, in particular the flight surgeons in the Air Force, who did NOTHING to stand up to protect the people who were clearly being injured by those shots. Over a quarter of the officers in my flying reserve unit resigned over that issue, I was one and gave up 15 years towards retirement, but I never took that shot.

    By the way, that vaccine is the first time in the history of the world that soldiers were vaccinated against a supposed weapon.

    That story may not sound connected to why America is bankrupt and why you may have lost your job, but they ARE ALL CONNECTED as we have let the money of corporations corrupt our political system to the point that we have bankrupted ourselves.

    Corporations and their money have no business in politics and no business influencing the policies of our government. Hopefully my eye-opening experience can help shed some light on the way our government really works and why we are in the mess we are.

    Styx – Suite Madame Blue (America):

    Debtor's Revolt?

    Simply reporting on what I see here - neither condoning nor condemning. I'll give her one thing, she understands what's happened to her. Even if she gets the names wrong, she is targeting the right SOBs. Yes, she will face consequences for her actions, but when enough people have had enough, then the banks will finally face consequences for their actions too, and that is truly long overdue.

    Morning Update/ Market Thread 9/9/09

    That’s a lot of nines. Did you know that 9/9/1929 represented the top in the market that was not exceeded until 1955? Of course there’s nothing to worry about here because this is 2009 and there’s one less nine, lol! Oh, don’t worry that consumer credit is contracting at the fastest pace in history, just remember that they said subprime melting down wouldn’t affect the consumer either.

    And on queue, overnight the markets ramped in a near vertical ascent, leaping off the 1,018 pivot that held yesterday and ran right up to 1,028, an area of resistance that has held so far (1,041 next higher pivot):



    The dollar is roughly flat, having held just above the bottom of that descending wedge I showed yesterday. Bonds are lower, oil is racing back higher (up to $72 again), and gold made several attempts to stay over the $1,000 mark but is hanging out just below (check out the performance of silver).

    Again, the action in the markets is not based on anything fundamental, it is based on hot money, on computer trading, and on government/Goldman (one in the same) intervention.

    Two worthless and misleading pieces of economic information are out this morning, the Goldman ICSC which I will not even report and the MBA purchase index which supposedly gained 9.5% for the week. Remember that they just stopped reporting any of the underlying numbers, so I consider this report to be nothing but propaganda, not that week to week numbers have much meaning to begin with, they don’t, especially when manipulative government programs are beginning and ending… Here’s Econoday’s spin:
    Highlights
    Mortgage applications jumped sharply in the Sept. 4 week in the latest indication of strength in the housing market. MBA's purchase application index, boosted by the approaching end of the government's first-time buyer credit, rose 9.5 percent for the biggest gain since April. The refinance index rose 22.5 percent for the biggest gain since March. Lower mortgage rates boosted demand for both purchase and refinance applications as the average 30-year loan dropped 13 basis points to 5.02 percent.

    Meanwhile, back in reality land, we find that my anecdotal story yesterday about the wealthy people from my old neighborhood is pretty widespread. How’s a 73% year over year jump in wealthy people’s bankruptcy filings grab you? Keep in mind that these are people who hire and put to work other people, and their homes were worth far more than several subprime homes:
    Wealthy Families Succumb to Bankruptcy as Real Estate Crashes

    Sept. 9 (Bloomberg) -- Wealthy individuals’ Chapter 11 bankruptcy filings jumped 73 percent in the second quarter from a year earlier, according to the National Bankruptcy Research Center, a research firm in Burlingame, California.

    More individuals or families with at least $1,010,650 in secured debt and $336,900 unsecured are using Chapter 11 of the U.S. bankruptcy code typically associated with business reorganizations. Falling U.S. home prices leaves them unable to refinance or sell their property when they drop below the value of their mortgage, said Chicago bankruptcy attorney Joseph Baldi.

    Chapter 11 is more expensive and time-consuming for debtors and creditors than a Chapter 7 liquidation of assets. Wealthier people filing for bankruptcy typically have large homes, two car payments and children in private schools, said Leslie Linfield, executive director of the Institute for Financial Literacy in Portland, Maine, a credit-counseling and research group.

    “You’re living on the edge, you’re juggling those financial balls,” Linfield said. “When one ball goes, they all fall down.”

    Listings of homes for sale worth $1 million or more increased 27.3 percent in July from October, according to Zillow.com, a Web site that tracks real-estate transactions. The number of homes sold with a value between $1 million and $2 million fell 23 percent in July from a year earlier, according to the Chicago-based National Association of Realtors. There was a 21-month supply, up from 16 months last year.

    I love that quote, “You’re living on the edge, you’re juggling those financial balls,” Linfield said. “When one ball goes, they all fall down.”

    That is exactly right, and that is exactly what the United States of America is doing right now. The balls are already falling down and the chain reaction is in progress, you must look through the trumped up stock market to see it, but it will continue to manifest itself until all the balls have landed.

    Back to the markets.

    McHugh is talking up the potential rising wedge in the markets as being a potential ending pattern for wave c up of B up. If this pattern is what’s in play, and it looks like it is, then we may get a good view of the end of the move prior to the next large wave down. Here’s a chart of the SPY that shows the wedge well, the top of the wedge is currently about the 1,055 area, just beneath the 1,061 pivot point. Keep in mind that these patterns can overthrow:



    Again, note the volume pattern on that chart, it is BEARISH.

    The dollar is now testing the 77 level again, that’s a key level! The long bond futures are on the right, down hard this morning…



    The NDX made a new high yesterday. That should not be ignored as it throws the EW count towards McHugh’s wave 3 of c of B. The rest of the indices could follow, and if that rising wedge is in play, then we should test the top of it fairly soon. As he points out, this is a good time to be raising cash.

    In the meantime ball juggling continues because the circus must go on…

    Three Dog Night – The Show Must Go On:

    Tuesday, September 8, 2009

    Consumer Credit Deflating…

    While the whole world of “economic experts” are talking about and bracing for inflation, consumer credit (credit being the largest part of the money supply) is CONTRACTING at a RECORD PACE.

    That’s what exponential curves do when they have peaked. The math does not allow anything to grow unabated year after year into infinity, that only occurs in the minds of idiot politicians and poorly trained economists who received their education in the land of fiat – America.

    Here’s the data according to Econoday... the experts consensus was for a contraction of $4.1 billion, actual contraction was $21.6 billion for July:
    Highlights
    Contraction in consumer credit reflects rising consumer caution as well as banking efforts to limit lending exposure. Consumer credit contracted $21.6 billion in July, a very severe reading and the largest on record. At $15.5 billion, June's contraction was also severe ($10.3 billion initially reported). July's contraction is the sixth in a row for the longest streak since the credit squeeze of 1991. Nonrevolving credit led the decline, at minus $15.4 billion in a surprise given cash-for-clunkers which kicked off late that month. It would be a big surprise if there was another deep contraction in non-revolving during August. Revolving credit in July fell $6.1 billion. The markets may ignore this report but policy makers won't as it works directly against their efforts to stimulate spending.



    So, even with Cash for Clunkers the contraction was the largest on record! What will it be without?

    I’ve been warning that we are on the verge of a deflationary spiral, the data keeps coming in to support that view. Below are the latest graphs from the St. Louis Fed. Year over Year numbers below zero mean the supply of credit is shrinking:

    Total loans and leases at commercial banks – negative yoy, the most since 1976:



    Total Revolving credit outstanding – negative yoy, the most ever recorded by the modern Fed:



    Total Nonrevolving credit outstanding – negative yoy, the most since the early 90’s, I’m sure it would far surpass that if not for government loan programs provided by the likes of FNM, FRE, and the FHA:



    Total consumer credit is contracting, and the rate of contraction is accelerating:



    As far as derivatives of consumer debt… Securitized total consumer loans are falling at nearly a 10% pace year over year:



    Sure the government is going to create inflation, right up to the point that all confidence in our currency is lost. Today they auctioned off tens of billions more in public debt. The supposed bid to covers were high, but they were FAKE BIDS made by the Primary Dealers who are buying up the debt and then selling it right back to Uncle Sugar. The game is not enough, the money they create cannot go into the economy because the economy is saturated with debt and all new money simply goes to pay it down. It’s a game that is going to end in tears, and already has for millions of unemployed and their families.

    Today’s action took the dollar’s daily chart right to the bottom of a descending wedge formation:



    If that normally bullish formation breaks down, it’s likely to be violent and you can see that the next support can be found all the way back down in the 71 area on the weekly chart:



    Simply Red - Money Too tight to Mention:

    Outsourcing Unemployment - America to China...

    Good documentary regarding China, our mutual economies, and workers. Well worth the time, about a half-hour long. Sorry, but Youtube has figured out how to have commercials that you can't skip past (ht Backwardsevolution):



    Think things are better here in America? Try the worst ever Job outlook report! (ht comradewannabe)

    Job outlook hits worst-ever level

    Employers' hiring plans at lowest point in Manpower survey's history

    By Andrea Coombes, MarketWatch

    SAN FRANCISCO (MarketWatch) -- Employers' hiring plans for the upcoming fourth quarter dropped to their lowest level in the history of Manpower's Employment Outlook Survey, which started in 1962.

    A net -3% of employers said they'll hire in the fourth quarter, down from -2% in the third quarter, on a seasonally adjusted basis, according to the Milwaukee-based firm's survey of more than 28,000 employers. Before this year, the survey's previous low point was a net 1% hiring outlook for the third quarter of 1982.

    A year ago, a seasonally adjusted net 9% of firms said they would hire in the fourth quarter. The Manpower survey measures the percentage of firms planning to hire minus those intending layoffs. Manpower doesn't measure the number of jobs. The survey's margin of error is +/- 0.49%.

    There was one positive sign in the survey: 69% of employers said they planned no change in their hiring plans, up from 67% in the third quarter and 59% in the fourth quarter a year ago (those figures are not seasonally adjusted).

    That's "a very high number for our outlook survey," said Jonas Prising, president of the Americas for Manpower. That figure generally hovers at 55% or 56% in a strong economy, he said, noting that the higher figure currently signifies a high degree of stability, and "that is a precursor to growth, he said.

    "Employers really want to hold onto the work forces that they have if at all possible," Prising said. Still, "there will clearly be challenges for job seekers and employers into the fourth quarter."

    Separately, the U.S. Labor Department said the economy lost 216,000 jobs in August, the 20th consecutive monthly decline. The unemployment rate jumped to a 26-year high of 9.7%. Since the recession began in December 2007, unemployment has increased by 7.4 million to a total of 14.9 million.

    Industry outlook

    Looked at by industry, eight sectors showed a negative hiring outlook for the fourth quarter. In January, Manpower changed its industry classifications; because of that change, it currently can't provide seasonally adjusted figures by industry.

    Only one of the 13 industry categories surveyed showed an improvement from the third quarter: A net 2% of employers in the education and health-services category planned to hire, up from -4% in the previous quarter. Firms in the wholesale and retail trade category were the most optimistic, with a net 7% planning to hire. Still, that was a decline from a 9% outlook for that sector in the third quarter.

    And hiring plans for all of the industries are at much lower levels than are normal in a strong economy. "For any of these sectors in a good economy a net employment outlook would be around the low 20s," Prising said.

    For each industry, here are the figures for the net employment outlook for the fourth quarter, not seasonally adjusted, in order of most negative outlook first.

    Construction, -10%, down from 2% for the third quarter

    Mining, -9%, flat from -9%

    Transportation and utilities, -9%, down from -3%

    Government, -8%, down from -4%

    Manufacturing, durable goods, -8%, down from -6%

    Information, -5%, down from -4%

    Manufacturing, nondurable goods, -3%, down from 0%

    Other services, -1%, down from 0%

    Financial activities, 1%, down from 2%

    Morning Update/ Market Thread 9/8

    Good Morning,

    I hope everyone enjoyed their weekend. Equity futures are up strongly, here are the DOW and S&P futures:



    You can see that there is a strong up channel going and has been for the past three days.

    The dollar is down strongly and landed right on the bottom of its descending wedge. Watch this point, should the dollar break down out of that normally bullish formation, it could break down quite hard. Gold rose to a new high touching $1,009 before pulling back to about $1,006. Below is a chart showing dollar futures on the left (daily) and gold on the right (5 minute):



    Bonds are up slightly. I want to mention that TLT may be carving out a large head & shoulders pattern. If that’s true, the economy is going to see higher interest rates in the months ahead and that would not be a good thing for a debt riddled society. The right shoulder may have some room to go higher, but that’s what the formation looks like right now. Of course it’s unconfirmed until the neckline breaks down, but keep an eye on it while I’m gone. Big debt issuance this week again by the Treasury – I’m sure that’s not helping the dollar.

    Light week for economic news, you’ll get consumer credit numbers this afternoon, Consumer Sentiment on Friday, International Trade on Thursday, but the rest is the generic weekly data.

    The VIX has issued another market buy signal, it has done that twice now in the past month when it jumped above the upper Bollinger and then fell back beneath. I would not ignore that signal, but I’d still be a very cautious playing in there either way:



    McHugh has a turn date on 9/9/09 which is tomorrow. Then he has a large Fibonacci cluster that occurs the last week in September. He still believes we are in wave 3 up of c up of B up and that it has a ways to go. His count is becoming a little more obvious with the latest decline, so I don’t discount it. Perhaps the rise will be fueled by debt and a declining dollar, that will make it no rise in REAL terms, but will set up some pretty nasty stuff later on as the real economy and real people continue to face pressure.

    Speaking of real people, this weekend we went over to visit our old neighbors on the golf course where everyone used to believe they lived in million plus dollar homes. While we were there the people who bought our old house from us invited us over… they are very nice people and have done well in life, they are now in their seventies. He used to own a wholesale electrical supply company and then went into the restaurant/bar business. He still owns two fairly successful restaurants in Tacoma, but they turned into big time money losers for them in the past three months. These people are big spenders with a big family. They bought our home from us (the only home to sell in the community over a year and a half, and now there’s been one other), but they kept their old home only a mile away, they own a lakefront home in eastern Washington, they own another home in Cabo, Mexico, a large boat (can’t sell – been on the market forever), and an assortment of expensive cars. They haven’t been on their boat in 4 years and have not been in their Mexico house in more than three. They are suddenly very tight with their money and state that they saw a recession coming, but nothing like this. Their one bar is losing on the order of $10k per month!

    A long time ago I made a bet with some other old neighbors that homes would not bottom in that development until they had sales in the $600k range - getting close to that already. There’s a home across the street that’s in foreclosure and the yard is a mess. Get this… before moving out the foreclosed owners were selling trees out of their yard and light fixtures out of the house until my next door neighbor stopped them!

    Out of 100 homes, there are 5 that were just finished or close to being finished, huge & beautiful monsters, that are all in foreclosure. What a mess, the majority of homeowners are underwater except those that had a lot of equity like the neighbors we visited who actually have their home paid for. Being out of debt is a good thing, those levered up with a bunch of “things” are beginning to feel the pain. I look at those homes now and all I see is hours and hours of upkeep, more than a thousand dollars a month in property taxes, and huge utility bills. Have fun with that!

    The markets are very dangerous at these altitudes. You have idiots claiming that stocks are cheap based on forward earnings. They forget that the consumer is dead, they are still debt saturated and they do not have home equity to tap. The only reason the market is going up is because of freshly minted fiat and Goldman games… that’s it. It’s not real and it won’t last. But since our government is hell bent on destroying itself, gold is the current beneficiary. Bonds scare me. Stocks scare me.

    As I read story after story on the economy, it’s all sounding like a broken record to me. Willful ignorance of the underlying condition. A banking system that is riddled with way too much leverage and derivates, living only on mark-to-fantasy, penalties on the consumer, and government handouts (again courtesy of the consumer). Those who don’t see it, or who choose to ignore it, are going to get burned again.

    Roy Orbison – Crying:

    Sunday, September 6, 2009

    Uncle Jay Explains Socialism - Again!

    It's time once again, Boys & Girls, for Uncle Jay to Explain SOCIALISM... Maybe next time we can get him to explain FASCISM or CORPORATISM?

    Chart of the Day - Journey Into Deflation

    Remember what most economists are? WRONG!

    Bloomberg (3 minutes):