Tuesday, February 8, 2011

Morning Update/ Market Thread 2/8 – Usury is A-Okay Edition

Good Morning,

Equity futures are roughly flat this morning, bonds are slightly higher, the dollar slightly lower, oil is lower, gold higher, and food commodities are slightly lower in general.

The NFIB (National Federation of Independent Bussinesses) Small Business Index did improve slightly in this month’s release, rising from 92.6 to 94.1. This is still a negative number, here’s Econoday:
The NFIB small business optimism index rose 1-1/2 points to 94.1 in a small gain held back by continued reluctance to spend or hire. Respondents are not optimistic about the future and say weak sales continue to be the top problem.

My, that doesn’t sound anything like the optimistic B.S. pouring out of those in government and most of the “economic experts” whose livelihoods are the very definition of conflict-of-interest.

In fact, when you look at the actual NFIB report, it is one negative after the other. Things measured in this report have been negative for a historic amount of time. Take the Actual Earnings Table, for example:

Every single number on that table has been negative since 2006. Please go through the report for yourself and you’ll find that small businesses are not participating in the “recovery” in the way that the large bailout, mark-to-fantasy, fraud filled corporations are:

Small Business Economic Trends Feb 2010

China is raising interest rates for the third time since October, by another quarter point. They cite unexpectedly high inflation.

While our “Fed” buys down interest rates to zero for the benefit of hiding our nation’s interest expense and to help the very banks who OWN the “Fed,” completely immoral acts are occurring unchecked in this nation:
My credit card had a 79.9% APR

NEW YORK (CNNMoney) -- Toni Riss had a credit card with a 79.9% interest rate.

The 58-year-old woman from Texas thought she struck gold when she found the First Premier card, which is aimed specifically at consumers with poor credit.

"I had an accident on a motorcycle, went through bankruptcy to pay for medical expenses and my credit went to hell in a hand basket, so I was looking for credit cards for people with bad credit" Riss said.

They granted her a card with a $300 limit -- typical for new customers -- and a starting rate of 29.9%, which Riss said she considered decent given her credit score.

But about six months after opening the card -- at the end of 2009 -- she received an unwelcome surprise in the mail.

"I about had a heart attack when I got a disclosure notice saying that my starting rate of 29.9% was going up to 79.9%," said Riss. "It was ludicrous. Talk about a highway robbery."

At that same time, First Premier Bank launched a new credit card with the sky-high 79.9% rate.

The card proved popular with consumers, said First Premier Bankcard CEO Miles Beacom, but the performance was bad: "A lot of the people ran up the card, defaulted and went directly to charge off."

As a result, they dropped the rate to 59.9%. "We also tested it at 23%, 33%, 45%, but 59.9% is the one that shows the best performance and where the organization can market the product," he said.

Since then, nearly 700,000 people have signed up for the card -- and more than half of them carry a monthly balance.

And yes, that rate is completely legal. The Card Act, which was passed in late 2009 to protect consumers from predatory lenders, only prevents issuers from raising rates retroactively. Credit card issuers are free to charge whatever rate they want at the front end.

There’s a reason that usury is mentioned in the Bible as an immoral practice. That reason is that those who produce the money can use it UNFAIRLY to enslave those who borrow. This is the same exact moral construct as an employer pressuring an employee for sex. You cannot rightly use your power in that manner, yet our government under Paul Volcker’s rate raising campaign made usury legal. In most states usury was set as anything above 8%, but in a few states it was as high as 12%. Supposed “Free Market” entrepreneurs call the lack of usury rates the market place finding fair value… that is just total B.S..

When interest rates are allowed to get to usurious levels, the downtrodden stay that way and no longer can achieve economic mobility. High interest rates turn the exponential math of debt much worse, much sooner. Prices rise and thus honest non-debt bearing members of society also suffer because prices rise faster and their money is devalued faster as a result. Savers get punished.

Contrast the credit card rates in that story with this email I just received this morning from my Credit Union inviting me to “save:”
Special Offer for You
As a valued _____ Member Advantage accountholder, we have an exclusive offer for you. Enjoy these premium rates when you open a _____ CD or IRA CD with new money*:

12-month CD 1.21% APY**
24-month CD 1.56% APY**

Easy, Safe & Rewarding Way to Save

Looking for a hassle-free way to save for big purchases or special events? With a _____ CD, you can enjoy the security of a savings account with guaranteed returns at a higher rate. If you have accounts elsewhere earning less money, you might want to consider transferring your money to _____.

Oh Boy! Note the word “Save.”

No, actually those rates make you a net loser, big time, to inflation. This is the immoral dilemma made for people when they fail to keep the power of money production in the hands of the people. Those who can produce money always profit, and they always are the ones in control.

Our society is broken due to this, the immorality of usury ripples into other forms of immorality and unethical behavior. We will not be a fully functioning society again until usury laws are reinstated and until the power to create money is returned to the people where it belongs.

Yesterday the big indices advanced strongly while the Transports again refused to close over its 50 day moving average. The advance is tired, even with constant billions pouring in to prop it up. Prices also failed to close above the upper boundary of the rising wedge, as you can see in this 9 month view of the SPX below:

That is NOT a place to buy stocks.

Note again how each peak in the RSI is lower than the last, despite rising price. Momentum is not there, yet price continues to run. That’s because this “market” is not a market at all, it is a holographic image created by those who own the exchanges. Their HFT machines and funny money paint the tape to their complete advantage. It has become a marketing tool of the “Fed.” When the “Fed” can no longer get their way, any real participant in these markets is going to get run over flat.

Our markets lack checks and balances, they have been completely subverted. Our government is in reality no better than Egypts in most respects, in fact I can make an argument that we are far less ethical and wreak far more havoc on the globe. What we are supreme at is creating money, innovating fraud, and then covering it up with disinformation and marketing.

No, I am not an Anti-American, I am a proud American who thinks we need to restore the Republic and take back the subversive and usurious ability of the private banks to indebt America and lead us down the highly immoral path we are on. Our nation’s economy and politics will not heal until we, the people, rise up and provide the leadership necessary to regain control of our nation.