Saturday, May 15, 2010
Something to keep in mind is that capital doesn’t have to just flow, it can also literally just evaporate. I think it’s extremely important to understand that with volatility moves can reverse course very quickly. All these events are driven by debt and the fundamental structure of our currency. Trying to guess government’s or market reactions from day to day or month to month in this environment is a fool’s game. The bottom line is that significant events are continuing to come, they are unfolding faster and with more force. No western country will be spared, and these events will continue to unfold until structural changes to the debt money system are in place.
Friday, May 14, 2010
Equity futures are down this morning with the dollar up and Euro down. The dollar has risen above its up channel while the Euro broke beneath its bottom trendline but immediately bounced back just above it – the Euro currently sits in the 1.25 area. Below is a daily chart of the dollar on the left and Euro on the right:
Bonds are rising, oil is down and very close to breaking support while gold continues on to reach a new higher high, now just a couple of dimes beneath $1,250 an ounce.
Driving those moves, of course, is DEBT. The entire world is permeated with it, Europe is definitely in crisis and the latest bailout has not worked because it has not changed the underlying structure of debt saturation. Spain just announced a second dip into negative price inflation, a deflation that is trying to re-exert itself. There is more talk of a possible Euro breakup and rumors are circulating that Germany may return to the Deutschmark. Currency changes are something that I’ve been saying are coming for several years. How did I know? Simple… the math of the underlying debt puts strains on the system – debts are growing faster than income’s ability to service them, changes ARE coming and not just to Europe.
Back here in America, Retail Sales were just released as climbing .4% month over month for April. This follows March’s 1.6% rise but is above the forecast which called for .2%. Guess what? I put NO CREDENCE in the official Retail Sales report – are you surprised? This report suffers from survivor bias, measuring sales only at stores that are still in existence. This data does not square with overall tax collections.
For those who have wondered, here’s how the Retail Sales numbers are generated:
The retail sales report is released by the U.S. Census Bureau every month on the 13th day, or on the nearest date if the 13th is a holiday. The report covers the previous month’s developments, and is anticipated eagerly by both economists and traders.
The data included in the release is calculated from the dollar-value of merchandise sold by a sampling of point-of-sale businesses, and other non-store retailers such mail catalogues and vending machines. The Census Bureau sends out questionnaires to approximately 5000 firms across the U.S. in order to measure the retail sales volume which corresponds to about 65 percent of the total sales estimate. The data is not adjusted for those firms which do not respond to the questionnaire. Also, due to the small sampling size, there is a significant sampling error involved in the numbers released with the report.
This is a very inaccurate way to measure overall sales, and it should be taken in more of a context of being “surviving store sales.” A way more meaningful macro statistic is sales tax receipts, something that unfortunately is not reported in a timely fashion. That’s a shame because it would be very easy to do quickly in this day and age. The fact that it’s not leaves one to assume that leaving the public less than fully informed is what the power structure desires.
Industrial Production and Consumer Sentiment are to be released shortly.
I find this fact interesting… the day before yesterday the Puget Sound Business Journal reported that the Seattle area had the nation’s “best economy:”
Study: Seattle has nation’s best economy
According to Policom Corp., an independent economic research firm that specializes in analyzing local and state economies, out of the nation’s 366 metropolitan statistical areas, Seattle-Tacoma Bellevue rates No. 1, moving up from last year’s No. 12 ranking. In 2006, Seattle-Tacoma-Bellevue ranked No. 51 in the country. The company uses 23 different economic factors to create its rankings.
According to Policom, the highest-ranked areas have had rapid, consistent growth in both size and quality for an extended period of time. The lowest ranked areas have been in volatile decline for an extended period of time and Policom has created economic strength rankings since 1996.
Note that their study is based upon “rapid, consistent growth…”
Then yesterday the Business Journal publishes a separate report:
Seattle: No. 1 in U.S. for consumer debt
According to data from information services firm Experian, Seattle has the highest level of average personal consumer debt at $26,646. Right behind are Dallas ($26,599) and Denver ($26,428).
The study calculated debt using all credit cards, auto loans and personal loans. It did not include mortgages.
Rounding out the top 10 are Atlanta ($26,063), Phoenix ($26,035), Houston ($25,790), Washington, D.C. ($25,702), Tampa ($25,603), Philadelphia ($25,544), and Orlando, Fla., ($25,316). Los Angeles had the lowest debt ($24,009).
My, that’s interesting. “Best performing city” and “No. 1 for Consumer debt.” Hmmm. What to make of that?
I won’t try to guess which drives what as there are other factors involved like incomes. However, I would say that in general it says that growth in the area is on the back of debt. Are there incomes to support that debt moving forward? Since I live here I can tell you this; there are a lot of expensive homes in the Puget Sound area that ran up to very high bubble prices and this is the center of where WaMu (remember them?) ran amok with Option-Arm home loans. Those resets are coming quickly and it will be interesting to see if incomes and assets are going to remain able to support all that consumer debt. My bet is that there is pain coming.
BP has been saying the gulf leak is 5,000 barrels a day… now a Purdue University scientist says he can measure the flow and it’s really 70,000 barrels a day, +/- 20%. Yowzaa, that’s a serious difference.
I must admit, however, that after hearing him allow Anderson Cooper to sucker him into talking gallons instead of barrels, I have less faith, but I’m sure that his estimate is probably a lot closer than BP’s. Another thing they didn’t address is that this is just one of two leaks…
Currency moves and fears are driving the market at this stage. If the Euro breaks down in earnest below that channel line, all heck is going to break out and we could see large moves happen quickly. The fact that the market is down to the 1,150 area is bearish, but breaking below 1,140 means that a move to 1,100 is probably in the cards. Be careful going into the weekend, who knows what could happen in Europe. Keep in mind WHO is in control of the markets and play carefully!
Jimmy Buffett – Volcano:
Thursday, May 13, 2010
The Money 5!4!10
In this paper he picks up on some of my themes regarding velocity and debt. He clearly explains the difference between what I call real velocity and the velocity created by a loss of confidence. To me they are two different things entirely.
Equity futures are roughly flat this morning prior to the open. The dollar is up significantly and the Euro has broken down below the 1.26 level, now at 1.257. Bonds are slightly higher, oil has broken down further, and gold is slightly higher.
Any further deterioration in the Euro represents a hazard to equities. I would like to point out the recent change in market character regarding the relationship of currencies to gold and equities. Typically a stronger dollar has meant lower equities and lower gold. Since the crash last week and the subsequent intervention, stocks have been higher and gold has also risen despite no change in direction for the movement of currencies. The truth is that the $trillion bailout should not have strengthened the Euro, it should have crashed it (further), and that could still play out. This is exactly what gold is saying. It is a potential setup to the nightmare scenario where gold is the only thing left rising. We’ll see, but the fact that the Euro has failed to even make a half-hearted attempt to rally to the top of its channel is a screaming warning.
Know what else is a screaming warning? According to Jonathan Weil in his current Bloomberg article, Rigged-Market Theory Scores a Perfect Quarter, “It turns out Morgan Stanley posted net trading gains every day during the second quarter of 2007, right before the credit crisis began to hit full-steam.”
My, that’s interesting… is there a lesson there? I’m sure there is, although I think it won’t be clear until viewed through the lens of history.
What’s pretty clear to me right now is that the markets are completely controlled by very few entities – they have been captured. And let’s think about the implications of this, because to me it plays like some James Bond (ridiculous) or Austin Powers (funny) movie, you know there’s always the evil villain in the background whose mission is to RULE THE WORLD, ba, ha, ha! Let’s just say it’s not a coincidence they called him “Goldfinger.”
Well guess what? It’s happened – only sadly this is no movie, it’s for real.
And just think about this. Those four banks that had perfect records are so powerful that should any of the managers of those companies simply turn off their trading computers, the removal of that liquidity would set off a chain of events that could literally collapse the markets of the entire world – just like the taste we got last Thursday but was quickly reversed.
Is this not nearly the power the President of the United States has? We have allowed the power to concentrate into so few hands that we have in effect given them the power to devastate the globe in nearly an instance. The people running these firms did not go through a public vetting process and they do not work on behalf of the people. Think about that – it never should have been allowed to happen and now that it has, we absolutely need to take action.
And PIMCO’s El-Erian reiterated the “new normal” in another Bloomberg interview, ‘“What is happening in Europe is a vivid illustration of an underlying theme of the new normal,” Mohamed El-Erian, the chief executive officer of Pimco, said in an interview. There are “structural forces overwhelming traditional cyclical ones.”’
In other words, the world is saturated with debt and while the cyclical pattern tries to exert itself, the anchor of debt precludes growth from resuming. That is exactly what is depicted on the diminishing productivity of debt chart.
But that still has not sunk into the very closed brains of people like Larry Summers who in response to El-Erian’s new normal comments says he would be, “very reluctant to accept the idea” of an extended period of slow growth for the U.S. economy.
No kidding, he’s very reluctant to accept anything based in reality, and boy has he made reality a mess.
How ugly has he helped to make reality? This ugly:
U.S. posts 19th straight monthly budget deficit
(Reuters) - The United States posted an $82.69 billion deficit in April, nearly four times the $20.91 billion shortfall registered in April 2009 and the largest on record for that month, the Treasury Department said on Wednesday.
It was more than twice the $40-billion deficit that Wall Street economists surveyed by Reuters had forecast and was striking since April marks the filing deadline for individual income taxes that are the main source of government revenue.
Department officials said that in prior years, there was a surplus during April in 43 out of the past 56 years.
The government has now posted 19 consecutive monthly budget deficits, the longest string of shortfalls on record.
For the first seven months of fiscal 2010, which ends September 30, the cumulative budget deficit totals $799.68 billion, down slightly from $802.3 billion in the comparable period of fiscal 2009.
Outlays during April rose to $327.96 billion from $218.75 billion in March and were up from $287.11 billion in April 2009. It was a record level of outlays for an April.
Department officials noted there were five Fridays in April this year, which helped account for higher outlays since most tax refunds are issued on that day.
But for the first seven months of the fiscal year, outlays fell to $1.99 trillion from $2.06 trillion in the comparable period of fiscal 2009, partly because of repayments by banks of bailout funds they received during the financial crisis.
Receipts in April -- mostly from income taxes -- were $245.27 billion, up from $153.36 billion in March but lower than the $266.21 billion taken in during April 2009.
Receipts from individuals, who faced an April 15 filing deadline for paying 2009 taxes, fell to $107.31 billion from $137.67 billion in April 2009.
The U.S. full-year deficit this year is projected at $1.5 trillion on top of a $1.4 trillion shortfall last year.
White House budget director Peter Orszag told Reuters Insider in an interview on Wednesday that the United States must tackle its deficits quickly to avoid the kind of debt crisis that hit Greece.
Too late to avoid looking like Greece… the truth is that we are in much WORSE shape than Greece. How can I say that? Because we are hiding massive amounts of debt, both as a government and in our financial system. Just look at the debt we are responsible for in the GSEs but is kept off balance sheet.
And talk about destroying confidence, this monthly budget report is simply more lies and more false accounting. The true monthly deficit is twice the reported $82.69 billion, it’s actually $175.6 billion! All you have to do to see this is to take a look at the debt numbers reported each month by the Treasury. In the month of April our debts grew by $175.6 billion, that’s an annualized rate of $2.1 Trillion!
So far this calendar year we have run up $637.4 billion in debt, that’s in just 4 months! Annualized, that number is $1.91 Trillion! Talk about exponential growth, wow. Again, compared to what our government takes in, $2.4 trillion (and falling), we are now spending nearly TWICE what we take in. To those who think that’s okay and that because we are the “reserve” currency that we can get away with it indefinitely, I say that you are simply delusional. That’s the polite version.
By the way, did you note personal tax receipts? Down 21%!!
Weekly jobless claims came in at 444,000 on the week, the consensus was expecting 440,000. These numbers are still waaaaay above historic norms – here’s Econoday:
Initial jobless claims show improvement but only mild improvement for the labor market. Initial claims in the May 8 week slipped 4,000 to 444,000, a dip offset by a 4,000 upward revision to the prior week. But the four-week average is improving, down 9,000 to 450,500 for the lowest level since late March and the second healthiest level of the recovery.
Continuing claims for the May 1 week rose slightly to 4.627 million while the four-week average also rose slightly to 4.640 million. The jobless rate for insured workers is unchanged at 3.6 percent.
Though claims at these levels have been consistent with sizable payroll growth in recent months, the lack of significant improvement will limit confidence that payroll growth in May will also prove sizable.
Whatever – the monthly reports are still net negative growth despite throwing so many trillions at the financial system that we have now bankrupted ourselves. Completely delusional, and completely controlled.
Now let’s look at import and export prices which were just released. Import prices up 11.1% year over year? Export prices up 5.7% year over year? Wow. True, these are over a very low period of time, but wow!
Import prices for industrial inputs are on the rise as are export prices for finished goods. Import prices jumped a very steep 0.9 percent in April, inflated by a 3.3 percent rise in petroleum prices. But import prices are up even excluding petroleum, up 0.3 percent and reflecting a 1.1 percent jump in non-petroleum industrial supplies. But a bigger key is that domestic buyers aren't paying more for finished goods with prices of imported consumer goods unchanged and prices of imported capital goods up only 0.1 percent following two months of declines.
The lack of foreign pricing power for finished goods reflects in part the strength in the dollar which gives domestic buyers more purchasing power. The dollar's strength conversely makes domestic goods more expensive to foreign buyers, reflected in this report by sizable gains for finished goods prices: up 0.4 percent for capital goods and up 0.9 percent of consumer goods. Export prices overall jumped 1.2 percent despite a 0.7 percent price decline for agricultural exports. April's overall gain is the largest in nearly two years.
The strengthening dollar should help keep import prices down and will likely increase demand for lower priced foreign goods. Today's data point to pressure for next week's producer price report but, given the benign readings for imported finished goods, no pressure for the key consumer price report.
Large moves in currencies absolutely will affect the flow of capital and goods around the globe. It’s a volatile environment, one that is volatile because of debt saturation.
I haven't updated the Baltic Dry Index in a while, here's the latest chart that puts global shipping into perspective:
Meanwhile oil continues to spew unabated into the gulf, here are the first pictures of the leak itself:
If that makes you feel good, try this:
The government paying down your loan if you are underwater or unemployed? Wow. Anything to keep the game going for the banks – including bankrupting our nation. Moral hazard? The real moral hazard isn’t just how unfair it is to homeowners and people who have done the right thing, the fact that it is squarely to the benefit of the banks makes it a nation ending type of hazard – all to protect those people who have the power to crash the planet at the flick of an HFT switch.
Sadly, there’s more than just one hole in the world…
Eagles – Hole in the World:
Wednesday, May 12, 2010
Amen to that.
It’s been a wild couple of weeks—increasing unemployment, Greek debt crisis, yet another ridiculous bailout, pressure on Goldman Sachs, accusations of commodities manipulation by JP Morgan Chase, and new freakish levels of market volatility that might be signaling the next phase of market collapse. The many day-to-day issues can leave us dazed and confused, so most people ignore them. Huge mistake.
The Coming Crash: Usury and the Irrelevant Church
By Damon VrabelPlease, let us stop this usury!- Nehemiah 5:10
They are all related to the most powerful force on earth that controls our lives because it is the very foundation of our society—usury. We are ruled not by governments anymore but by financial powers that use interest-bearing debt to exert control over governments, corporations, and people. Almost all other political issues with which we concern ourselves are secondary symptoms of or purposeful distractions from this larger narrative that is never reported by the Wall-Street-funded media. Sadly the church has remained silent as well.
Explaining the details can be extremely complicated, but the basic core to understand is that the US government issues no money. Instead all money comes from private banking institutions with interest attached. At times in the past the US government issued real money for people to use—US notes and coins. But today all money comes from the Federal Reserve’s private banking system by putting the US government, i.e. 308,000,000 Americans, in debt. If the US government were not in debt to the banking system, the American people would have no money.
More technically, the Fed and its Wall Street cartel banks like JP Morgan Chase and Goldman Sachs make billions by doing nothing but controlling our money. They have the monopoly license to create the core money in our system from holding US Treasury bonds on their balance sheets. These bonds represent the debt of the United States. Thanks to interest, the bonds pull a large portion of our wages to the banks. The primary purpose of the IRS is to take your wages to pay the interest back to the banks. In effect, Wall Street owns a good bit of your labor. And the more bonds they hold, i.e. the more debt the population is in, the more money they make thanks to the interest flows and the profits from gambling on your debt. The system is very much one of “us vs. them.” Such is the nature of monopoly power and usury.
Economics and Morality
Controlling others and living off their backs by forcing them to borrow with interest in order to have any money is called usury (this does not include standard, self-liquidating bank loans to businesses to fund production). It is a system that ensures everything we do, whether in the public or private sector, feeds Wall Street and the controllers above it. It creates a two-tiered societal pyramid of money pushers on top vs. money users on bottom. The power differential is huge. Everyone is hostage. In doing something as simple as buying food to survive, we contribute to usury because we only have usury-based money, not real money. Like the slaves who built the Egyptian pyramids, today we are stuck building an invisible pyramid of monetary power.
In such a system there is never enough money to pay back all the interest to the money pushers. The only solution is for the money users—government, corporations, individuals—to borrow more. This is the reason our debt continues skyrocketing to increasingly insane levels. It isn’t about politics, but the fundamental exponential math underlying the system—the users must borrow more and more to pay back interest and keep the system afloat. Such math is guaranteed to fail. Iceland and Greece have reached the point of failure. The rest of the Europe and the US will experience failure as well. Then we will see money and assets vacuumed up the pyramid by the money pushers—the banking establishment that owns the collateral and can take your property.
The exponential math not only creates exponential debt growth, but also exponentially increasing:
- Scale – government and businesses keep getting bigger; we get smaller and local communities lose their meaning
- Velocity – the hamster wheel keeps spinning faster; human life suffers
- Consumption – we buy more and more things that break more quickly
- Production – we make more and more things that break more quickly
- Inflation – the dollar buys less and less; we can’t seem to make progress
None of these things have to happen in an economic system. They only happen in ours because of debt-based money, usury, that greatly benefits the top of the pyramid while everyone else suffers to a certain degree depending on their level in the pyramid.
So this system is guaranteed to fail due to not only the impossible math, but also the fundamental immorality. Taken together those five issues paint a horrible picture. Republicans blame Democrats and vice-versa. Nope. It’s all a very simple result of a system based on usury, which used to be considered profoundly immoral. It was a fundamental violation of every major religion. It still is for Islam, but Christianity succumbed long ago. They thought a free market economic system would be beneficial, but got snookered into thinking that usury had to be part of that system. On the contrary, monolithic usury kills the free market.
Our monetary system is a top-down controlling machine, not a free market. It is run not by government, but by the most powerful financial interests in the world. Some people feel in their guts that someone must be stealing from them because they just can’t get ahead no matter how hard they work. Well that’s because it’s true—someone is legally stealing from them. The simple math of usury pulls money from people on the bottom of the pyramid who create real value toward those at the top who create no value. MBAs and others serving the system must reckon with this truth rather than remaining blind. Farmers understand it well, having lost their property over the years to the bankers. Families feel it in the fact that it’s difficult to get enough money to feed the kids compared to 50 years ago when one parent could work a standard week and feed a family of five. Everyone in the system will feel it once the debt system collapses as it is doing in Greece.
Living off the backs of others was called feudalism 300 years ago. It was slavery 100 years ago. Today it’s called the “free market” thanks to the propaganda and fraud of neoclassical economics. It completely ignores the truth of our monetary system, the math behind it, and the eventual collapse that will result from it. Greece is giving us a glimpse, but it is only a mild pre-game warmup compared to what’s coming. The world will rue the day it was ever seduced into accepting usury and the illusion of prosperity driven by nothing but debt.
The Irrelevant Church
On this issue of monolithic usury, the issue from which many of our other problems spawn, the church seems to have no voice. Recently, an older church leader told me, “Keep it up, this needs to be addressed, but you have more guts than me, I don’t want to be killed.” Sobering comment, to be sure, but in the shadow of Gandhi, Dietrich Bonhoeffer, Oscar Romero, and Martin Luther King, is the church now impotent? Are its leaders now too afraid to speak truth to power, to stand against darkness? Or is the problem that the church is, like most of us, fooled by the myth that we live in a free market so we don’t realize we are immersed in an immoral system of controlling usury?
Lower class Greek citizens are now learning the painful truth about the mythical free market. A few of them have died as the police brutally repress them to enforce the usury system for the rich bankers like Goldman Sachs. Where is the voice of Bishop Romero? “I order you, stop the repression!” Iceland learned the lesson a few months ago. Several other populations have learned the lesson in the past as the controlling debt peddlers punished, conquered, and restructured their countries (Indonesia, Malaysia, Thailand, India, Argentina, Chile, Mexico, England, etc.). The same lesson is coming to the rest of Europe and the United States. But again, the church seems to be oblivious. It failed to heed Martin Luther King’s warning, “One of the great liabilities of history is that all too many people fail to remain awake…today our very survival depends on our ability to stay awake.” The church has fallen asleep.
The Dialectic of Left vs. Right
A possible reason is that the church has been co-opted by the manipulative left vs. right civil war created by the corporate media. In fact, Protestant denominations have split into conservative vs. liberal camps so they war against each other—Wall Street is brilliant at divide and conquer. Some sermons in conservative denominations sound like speeches from conservative politicians. Liberal Christian magazines sometimes seem to be just liberal political magazines with an added dash of Jesus.
Postmodernism should inform us that the left vs. right narrative is contrived to keep people from noticing the real power structure behind Wall Street that controls our lives. As long as the church submits to the false framework, church leaders will be “safe.” But that means they will also be irrelevant because they are not speaking to the primary narrative in our world that has always caused problems and is getting ready to unleash far more pain and poverty in the near future—the issue of monolithic usury and debt servitude. By not speaking against usury, the church has become a pawn of it. So the church has largely been conquered by the same concocted civil war that has divided society.
Another reason the church may be silent is the simple fact that it depends on money just like everything else does. Since all money in our system comes from usury, it is difficult to even notice it. And what authority would the church have to speak against it since it is itself complicit in it? Anybody or any organization that uses a Federal Reserve Note or a credit/debit card, which everyone must do, is unknowingly participating in usury because, again, all of that money comes from the bonds held by Wall Street. But knowingly or not, how could the church or any organization speak against the very thing that fuels its own existence?
The church’s tax-exempt status may be another reason for the silence. Tax exemption is one of the powerful ways the financial empire system influences and controls other entities. If the wrong person says the wrong thing, the IRS has the ability to suddenly remove the exemption, which doubles the cost of running that organization. The church never should have submitted to such tyranny over what may or may not be said.
Comfort of the Middle Class Bubble
Finally, it seems the comfort provided by the monetary system for the great mass in the middle, which is a key part of the church, keeps us from wanting to really think about it. The illusion of peace and prosperity that has lasted for so long has been nice. Some of us even thought we had that comfort because we were better people, so God blessed us. Reckoning with the truth will be painful for those who believe this. The fact is that our perceived comfort today is a result of the darkness of usury. The middle can only exist because there is a bottom that keeps our system afloat. They are the only reason the middle class exists. Moreover, the comfort is currently an illusion because most in the middle class don’t realize how indebted they are. Total unfunded liabilities currently hidden on the government’s financials put each American in an extra $300,000+ in debt that they currently aren’t aware of. That debt comes from the fact that, again, our money comes from usury.
Since the bubble was built on usury, its very existence is immoral, and everyone who participates in it becomes infected. It is also flimsy because usury means the bubble is sustained by debt. Many are already aware of the hollowness of the bubble since it has destroyed the fabric of our communities and a sense of deeper meaning in life. But others are able to ignore that and focus on the material comfort. What will happen to them once the material comfort itself crashes? It will soon. Some market forecasters predict the final collapse of our debt system will be worse than the Great Depression. The math is clear—it will be worse. Just like Greece, we will then see Wall Street paying the government to crackdown on the people, cancel social programs, and take their assets from them to hand them over to the upper class behind the banks. That is the end result of usury—using debt to control others and take their assets so they have no equity. At that point it will be too late for the church to save the lower and middle classes from violent repression and the upper class from their narcissistic detachment from the horror.
“Silence is Betrayal”
So is there a wing of the church that has not yet sold its soul? Is there a remaining Christian voice against usury, or are Muslims the only people in the world who stand against it? The church must wake up to the truth of our system and become relevant again. This is the civil rights issue of the 21st century, only this time it is not black vs. white but a few money pushers vs. the great mass of users. The power of the bond market is getting ready to wreak havoc. We’re all in it together this time. As Martin Luther King said, “There comes a time when silence is betrayal….That time has come for us today.” Will the real church please speak up?
Damon added the following commentary, “We are heading toward a very dark future, unless we fix it, because our system is built on a fundamental evil--usury. This force has taken over not just our economic system, but our governments, our lives, and everything else from schools, to nonprofits, to families, and even the church. I hope the word gets out on this one. And if you attend a church, regardless of religion or denomination, I think the leadership needs to be informed about this.”
Read the full report here, it is easy to follow and has many good charts:
Milliman Medical Index 2010
Their study adds up the total medical spending costs for the average family – more than $18,000.
Medical costs have increased $4,692 per year over the past 5 years, an increase of 35%! This 35% annual increase since 2006 compares to a 4.9% growth in household income. Sustainable? I think not, it sounds more like bubble dynamics to me.
It gets even worse when viewed over longer time periods. Going back and reviewing Milliman’s report for 2006, we find the following chart going back to the year 2002 when growth rates were running above 10%.
Although 2010’s percentage rise is not as high, the dollar figure is growing exponentially.
Here are the annual cost figures going back to 2002:
Since 2002 family medical costs have risen 96%! Have incomes kept up with that? Certainly not! Incomes and medical expenses are on two different curves, just as are income and debt. It’s certainly no coincident that debt has also grown over the same time period – that is exactly how and why increases in medical costs, housing costs, automobile costs, etc. came about, it was financed. And now here we are, incomes in the same place, expenses soaring, debt saturated.
This year’s $18,000 total annual medical spending compares to the median household income, according to the Census Bureau, of $52,175. That equals a staggering 34% of median household income.
However, of that $18,000+ that is spent, employers pay for 59% of it and following three consecutive years of individuals paying an increasing share of the expense, 2010 actually saw the employer’s share increase slightly.
The 41% of the cost paid by employees equals $7,330 per year, or “only” 14% of household income. In 2006 employee share was 38% of the total.
Here's how the percentage of the national average breaks out by region, sorry Floridians:
Universal health care going to keep costs down? Please. It’s more like the mandatory Gestapo Insurance Vampire Economics (GIVE) program. Insurance company bonuses, bubbles for everyone!
Oh, you’re not in the financial or insurance industries? Sorry, GIVE is not for you. You, my friend, are a part of the Tax And Keep Economy (TAKE).
Equity futures are higher this morning following yesterday’s mixed close. The RUT led the advance yesterday and is showing relative strength again with the so called “risk trade.” The dollar is down slightly and the Euro is roughly flat. Below is a daily chart of the dollar on the left and the Euro on the right. Note how the Euro has failed to recover despite the Trillion dollars/euros that were just tossed at it:
Should the Euro break beneath the 1.26 level, look out.
Bonds are down, oil is up only slightly and is still resting on support, gold has broken out to new highs and just touched a stunning $1,245 an ounce. The move in gold is very steep, the Point & Figure chart for gold is looking for a price target of $1,310 an ounce:
The worthless MBA Purchase Applications index did a 180 from the week prior with the refi index rising a completely unbelievable 14.8% for the week, and the purchase index falling 9.5%! Why do we not laugh these clowns off the planet? Here’s Econoday:
The end of second-round housing stimulus made for a 9.5 percent drop in purchase applications according to Mortgage Bankers' data for the May 7 week. The drop reverses a run of increases in late April including a 13.0 percent jump in the April 30 week as buyers rushed to get a contract in place before month-end.
The outlook for the housing sector is uncertain but has improved in the last few weeks as mortgage rates have moved unexpectedly lower, the result of Europe's sovereign debt troubles and the resulting flight to safety, specifically flight to U.S. Treasuries. Home owners are taking advantage of the move and are refinancing their mortgages as the refinance index jumped 14.8 percent in the week. Mortgage rates fell in the week led by a 6 basis point decline in 30-year fixed loans to an average 4.96 percent. Next data on the housing sector will be the housing market index on Monday.
Riiiigggt, a 6 basis point rate move causes a 14.8% rise in just one week… pleeeaase, just how gullible do they think we are?
Oh, that’s right.
“Data” like that is exactly why you should have no confidence and is yet another reason gold is hitting all time highs.
Good thing the trade imbalance widened to a one year high or otherwise we’d really be in trouble. Coming in at “only” -$40.4 Billion, that is, after all, a third less than the $60 Billion monthly deficits we used to run:
The March trade gap widened to $40.4 billion from a slightly revised deficit of $39.4 billion in February. Imports and exports jumped 3.1 percent and 3.2 percent respectively. The trade gap, which was smaller than the expected $41.0 billion was due in part to sharp increases in both the price and quantity of energy imports. Trade deficits with most major trading partners widened including those with China, Japan and the European Union.
The petroleum goods gap widened to $24.8 billion from $23.0 billion in February. However, the nonpetroleum gap narrowed thanks to the large export increase. And combined with a larger services surplus it suggests that excluding petroleum, the overall gap would have narrowed. Other imports categories posted solid gains, particularly auto imports. At the same time, exports of industrial supplies, which include some energy products, and consumer goods posted solid gains.
The unadjusted crude oil barrel price rose to $74.32 which is the highest since October 2008, while the volume of crude oil imports rose to 299.5 million.
Did someone mention oil? In a scene that looks like a precursor to the movie Mad Max here’s some amateur video of the Gulf oil slick taken five days ago:
This spill is certainly historic in nature and will indeed impact the economy going forward. It may even turn out to be a turning point in making energy more expensive to obtain. If we were collectively intelligent (we're not), we would be racing for REAL energy solutions, but sadly we are too preoccupied with a collapsing economy due to the decay of the rule of law.
Think back over the first three months of 2010… remember the massive up days on Mondays that turned into a 90% probability? Remember how the majority of the move occurred in the premarket giving the little investor NO opportunity to enter unless they jumped in the Friday before? And then remember how the Monday ramp morphed into the late Friday ramp in order to get in front of the “sure thing” bet? Now think back to the three options expirations weeks and the gyrations in the market leading up to them…
Now tell me what the odds are that any individual investor could have made money on every single trading day of that quarter… being struck by lightning, twice, would be way better odds I’m sure. Yet our big banks are so good that FOUR of them were able to earn money and not lose a single penny each and every single day:
‘Perfect Quarter’ at Four U.S. Banks Shows Fed-Fueled Revival
May 12 (Bloomberg) -- Four of the largest U.S. banks, including Citigroup Inc., racked up perfect quarters in their trading businesses between January and March, underscoring how government support and less competition is fueling Wall Street’s revival.
Bank of America Corp., JPMorgan Chase & Co. and Goldman Sachs Group Inc., the first, second and fifth-biggest U.S. banks by assets, all said in regulatory filings that they had zero days of trading losses in the first quarter. Citigroup Inc., the third-largest, doesn’t break out its daily trading revenue by quarter. It recorded a profit on each trading day, two people with knowledge of the results said.
“The trading profits of the Street is just another way of measuring the subsidy the Fed is giving to the banks,” said Christopher Whalen, managing director of Torrance, California- based Institutional Risk Analytics. “It’s a transfer from savers to banks.”
The trading results, which helped the banks report higher quarterly profit than analysts estimated even as unemployment stagnated at a 27-year high, came with a big assist from the Federal Reserve. The U.S. central bank helped lenders by holding short-term borrowing costs near zero, giving them a chance to profit by carrying even 10-year government notes that yielded an average of 3.70 percent last quarter.
‘Implausible’ Proprietary Model
Wells Fargo & Co., the No. 4 U.S. bank, doesn’t disclose how many days it had trading gains or losses, said John Shrewsberry, head of the bank’s securities and investment group. Bank of America declined to comment beyond its filing, according to spokesman Jerry Dubrowski. JPMorgan also wouldn’t comment, spokesman Joseph Evangelisti said. Fed spokesman David Skidmore didn’t reply to an e-mail left after regular office hours yesterday.
At Goldman Sachs, which is contesting a fraud lawsuit from the Securities and Exchange Commission tied to the sale of a mortgage-linked security in 2007, net revenue was $25 million or higher on each of the days it traded. The New York-based firm said it made more than $100 million on 35 of those days, or more than half the time.
The company’s fixed-income, currencies and commodities businesses and equities unit generate those returns by making markets for clients rather than betting the firm’s own money, Chief Operating Officer Gary Cohn said yesterday at a financial services conference in New York.
“There is often speculation that proprietary trading revenues drive our outperformance in these businesses,” Cohn said. “Over the last 12 months, we have only recorded 11 loss days. It is implausible that a proprietary-driven business model could be right 96 percent of the time.”
“Implausible” is right.
Hate to break the news, but skimming 3% off the yield curve isn’t going to produce $100 million DAYS. This fact is THE most illuminating tell on what’s occurring with the markets. They have been completely subverted – they have been destroyed and are now nothing but a controlled simulation.
Since the “banks” obviously now have authority to print cash from the market, you would think that would make them the buy of the century. I mean how could that possibly go wrong?
Don’t worry; the punch line will be obvious when it comes.
The markets have generally been stopped by the 50 day moving average. However, the RUT and the Transports are back over it today. While guessing the direction of the computer simulation by a mear mortal is obviously a fool's game, I continue to believe that this market looks sick. The Euro is not responding to the electro-shock paddles, the coronary continues, confidence continues to erode.
Statistics like the MBA Purchase Index don’t help to inspire my confidence, nor do government statistics like the supposedly 290K jobs that were massaged into being. If you ask me if I think they would lie to you, honey, well…
Eurythmics - Would I Lie To You:
Tuesday, May 11, 2010
Equity futures are down substantially overnight, but are possibly still inside of a potential bullish flag, so caution is advised especially with the lunatics out to defend (destroy) their currencies. The dollar is higher despite the trillion just thrown at the Euro which is already not too far from the crash low. Below is a daily chart showing the dollar on the left and Euro on the right, both are coming back to their channel boundaries.
Bonds were higher overnight but are correcting back to near even as we head into the open. Oil is lower and gold is very close to its all time high at $1,227, now at $1,222. Gold certainly looks headed to new highs, deservedly so with the sociopaths running the money of the world and pushing debt as if it were candy – the world’s most profitable candy that is.
The Shanghai Composite Index sank another 1.9%, pushing its losses since the November high to 21%, that makes it officially another (continued) bear market for China. Below is an updated chart of the Shanghai market (color) with the SPX in the background (black) that I showed a few days ago, in fact I showed it just prior to last week’s crash. When these two markets diverge in recent times, they eventually move back together:
There is again no meaningful data released today, it’s a light week. Wholesale trade is released at 10 Eastern today with International trade numbers released tomorrow.
Yesterday’s short covering rally into the face of sociopaths hell bent on committing fiscal suicide, was on lower volume although not light volume. Once again, ALL the move occurred after hours, eliminating any non-insider from being able to enter the “market” (the word “market” is in quotes as it is now assumed to be dead and only a simulated/ manipulated game played by the sociopaths). Folks, to have companies who never have a losing day throughout an entire quarter is a CERTAIN sign that the markets have been completely co-opted. It is a sign… a very negative and very ominous sign. The “markets” are obviously built upon computer trading and hot money controlled by a very few. That is a sign that the end of the “market” is near. I have not been so bearish on events before, but this is end of empire type of stuff, history books will be written about it and future generations will ask how we could have been so blind, and why did we not take control of the situation.
It almost makes talking technicals pointless, but I’ll do it anyway. From a technical standpoint, what’s important now is whether or not there is follow through from yesterday’s move. It was a 90%+ up day so if we have another one in the next few days it would be confirmation. On the other hand, we have had 4 recent 90%+ down days in the past two weeks. This is showing extreme volatility, something that often occurs at major tops.
The NDX gapped higher yesterday and this morning’s action puts prices below yesterday’s candle in the gap. Prices need to get back inside that candle or it’s bearish for the NDX. All the major indices, except for the RUT, retraced 61.8% of their declines and were stopped there. The RUT was weaker, retracing only 50%. Usually a bullish pattern has the small caps outperforming, this is a sign of relative weakness.
Yesterday's ramp did bring the VIX down significantly and it is back inside the range of the Bollinger bands. This is a market buy signal, but that does not mean that more selling cannot occur, this signal is usually a few days early:
So now that the Europeans, the IMF, and U.S. taxpayers are tossing another Trillion at Europe (much of it is debt), people’s minds once again run to the inflation over deflation debate. Make no mistake, it is the forces of deflation that is forcing their psychopathic hands. They have always had choices to make. Letting deflation run its course is the path of continuation – debts clear and that allows another cycle to eventually continue. Choosing massive intervention is exactly what causes a LOSS OF CONFIDENCE in the underlying structure of money and economy. Simply look at gold about to reach an all time high just two days following their actions.
Debt works to keep velocity down. Once debt saturated, adding debt upon debt simply kills velocity, that’s what that diminishing productivity chart is all about. This is why there is an inflation/ deflation conundrum. Here’s my take – hands off, deflation will run. Inject more trillions and inflation in the sense of the quantity of money being out of control is not really the issue as much as it is that loss of confidence that is the issue. Confidence erodes slowly, gathers steam, and then one day you will wake up and there will be a phase transition where confidence is completely gone.
What happens when confidence is gone? Do you want to hold money that you have no confidence in? NO. So what do you do? You get rid of it by buying things that you do have confidence in. Once that cascade begins, an ARTIFICIAL VELOCITY ramps where money is treated like a hot potato. That is the end.
That day is coming – whether deflation is allowed to express itself or not. If deflation is not allowed to express itself, the end is coming SOONER. This is why this weekend’s actions were an accelerating event.
The markets are false, they are simulated, I have no confidence, they have died and they are now meaningless except as a marker of what occurs very near the end.
Doors – This is the End:
Monday, May 10, 2010
Which markets am I referring to? Why only the Equity market AND the bond markets – that’s all.
The equity markets? Forget about it, they died a long time ago. The convulsions of the past week are simply after death reflexes. Thursday’s rout occurred when the selling volume triggered a stop in high frequency traders’ machines – there were no bids left and the market simply disappeared in a flash. What does this tell you? That the only participants in the market were the high frequency machines – they have displaced real people almost entirely.
Regardless of what stopped the machines, bids where no longer present. Now take a look at the events in hindsight… Greece on the verge, threats of action against the banks – BANG – machines turn off, no bids. Over the following weekend ANOTHER TRILLION in bailouts largely benefiting the banks! Anyone see a pattern here? Is this not EXACTLY what happened before and has happened repeatedly throughout history when the banks blackmail the economy?
Then today we learn this about Goldman Sachs, one of the largest HFT players (Goldman Sachs Says It Expects More Lawsuits Over CDOs):
Goldman Sachs, which makes more money from trading than any other Wall Street firm, also disclosed that its traders generated $100 million or more on 35 days during the first quarter and lost money on no days. The firm set a record when it made $100 million or more on 46 days in the second quarter.
Not a single losing day in 3 months? How is that possible? There is only ONE WAY that’s possible, and that’s for you to control the market – period. There is no other way, they ARE THE MARKET! In other words, a “market” no longer exists, it is dead.
Let that sink in – and then reevaluate everything you thought you knew about the current “markets” and how you “invest.”
Why in the world did we allow the banks to take total control of our money and of our markets? More importantly, now that you know who’s who and what’s what, why would we not take them back?
My take? EVERYONE should immediately withdraw all funding from the equity markets, all of it. Oh wait, you already have! The current market is simply a shell, a façade, a money printing operation for the investment banks who obviously have corned the globe.
Now let’s talk about bonds. D-E-A-D – dead! This market is so dead that to call it a zombie would be the highest of compliments. Truth is that there is absolutely NO WAY POSSIBLE, not even close, that incomes can EVER repay the bond debt that is out there. There is far more debt than money, and if it could be repaid, there would be no money.
This is why our “Federal” reserve resorted to quantitative easing – if they could have sold more debt at their artificially low rate they would have. They couldn’t and so they resorted to PIECEMEAL DEFAULT. That’s right, the USofA has begun default and now the ECB is doing the same. Instead of letting Greece and the other PIIGS default on their debt and clear it out, they have chosen to let the debt remain and to simply piecemeal default for everyone. Everyone in the Eurozone, and AMERICANS are paying for it. Americans are paying for it through our contributions to the IMF (same central banks and bankers) and through illegal swap lines in which our “Fed” provides DOLLARS (your money) to foreign banks.
The bond market is a JOKE, it is dead. Bond debts can no more be paid than you can leap to a landing on the moon – the assets and the incomes are simply not there to support them. The only support is paper and electronic, that support will crumble in time as confidence further erodes.
That’s right, these “markets” are dead. Now if only we could give them a proper burial.
With equity futures up 400 points overnight, somebody obviously must have “fat fingered” a BUY order this morning? Perhaps we need a full scale investigation and new laws to prevent this type of disorderly market? Actually I would call what the ECB and our Fed did as completely insane, obviously sick psychopaths and TERRORISTS who are hell bent on destroying the world’s financial system. That’s the serious part, they need to be locked up.
According to CNN:
The European rescue package, valued at more than $1 trillion, has three main components. The biggest provision will use nearly $570 billion to create government-backed loans meant to shore up confidence in shaky credit markets.
"Europe has taken its playbook from the [U.S.] Fed[eral Reserve]," Boockvar said. "It's chosen to inflate its way out of the debt problem rather than really deal with it."
$1 Trillion dollars of debt, quantitative easing, and guarantees, oh boy. Is that the rule of law that was in place? I think not. Debt to cure debt? All the debt that was the trouble is still there, plus new debt. As if debt levels weren’t high enough. This instills confidence? It instills all kinds of confidence in me… that is that the world is headed towards disaster. Of course we knew that already, but this is like standing on the accelerator as you race towards a brick wall, the end results are going to be spectacular. How long before the markets figure it out? Who knows, it took 14 months before the market finally woke up over here.
Central bankers put the deal together, and what stocks are the highest flyers this morning? The banks! Sick and demented. What’s even more sick is that our own Fed is in on the action by reinstating dollar swap lines into the European banks. Did you authorize that? Did Congress? No rule of law, no confidence.
Of course this occurred with the markets on the brink of correction – they want and are trying to clear out the debt and the misallocation. Below is a daily chart showing the dollar on the left and the Euro on the right. Obviously they were right up against their channel boundaries, not surprising that the action was taken there:
Actually, looking around, the move in the currencies is not commensurate with the scale of the move in equities.
Bonds are down, oil is up a little, and gold is down a little. The moves in these markets are not commensurate with equities either. We’re just going to have to watch the market for signs.
Speaking of signs, there were warnings that intervention could occur in a couple of measurements I follow. One is the total CBOE put/call ratio that reached above 1.2. Take a look at the other two times it exceeded that level in the past year and what followed with stocks:
We formed a sideways triangle on Friday, since it formed above the bottom and broke upwards, that triangle was a wave b. That means that this wave higher is likely wave c. Again, we’ll have to watch and see how the market reacts to such extreme intervention. It reminds me of a dying heart attack patient, lying in the emergency room after his heart stops – CLEAR! Out come the paddles for another jolt. “Doctor, we’re losing him!” CLEAR! JOLT!
Guess what? This patient is terminal. The math didn't work before and it certainly doesn't work now. No, this move will not instill confidence, it will do the opposite. Give it time, the patient is in the throws of death now – this does not buy time, it is another accelerating event.
Of course the pundits think that it buys time, this is because they don't see the brick wall that they are racing towards.
Yet their lack of vision has them fooled in the short term - again. On the open the VIX is plunging, down 33% already. This will produce a market buy signal with a close beneath the upper Bollinger:
The XLF is up 6%, LOL! Sweet justice for the group that bankrupted the globe, eh? Once again watch Goldman, they still cannot seem to break that $150 mark.
The people of the world don’t yet realize just how deeply they are getting rammed. The criminals are clearly still in charge and they are robbing you and me blind, if not directly then through our purchasing power. We will all work longer and harder to feed the banks, this is truly another sad day in the history of mankind – yet it moves us closer to the end. You’ll know that it’s over when the central banks are no longer in charge of creating and controlling our money. Until then, everything and every action is about them.
The Allman Brothers Band - Stormy Monday: