Monday, November 7, 2011

Morning Update/ Market Thread 11/7 - Amazon of Answers Flow Outside the Walls Edition…

Good Morning,

Equities are slightly lower this morning, but regaining losses incurred over the weekend. The dollar is slightly higher, bonds are a little higher, oil is pushing the ridiculous and economy destroying $95 level, gold is racing back towards the unbelievable level of $1,800, silver is higher, and food commodities refuse to break down to reasonable levels due to the obvious speculation and money explosion where people look for anything real, even if doing so literally chokes the life out of people.

No economic releases today and a very light week for economic disinformation – it’ll be nice to take a break from the lies.

Just got my home’s tax assessment in the mail, according to the county, my house lost about 10% of its value since I bought this one last year – yippee! That’s exactly what I told the real estate agents, and the person I bought it from, would happen and steadfastly refused to buy anywhere near asking price knowing that I needed to buy at a price a year or two down the road – had I not gotten that price, I was serious in that I would not have purchased. King County just reported home prices down 15% year over year. No, it’s not over, but the downward pressure should begin to ease over time now that we’re past the peak in Option-ARM resets.

The really terrible aspect of property taxes is that even though home values go down 10% across the county, the county still collects the same amount of taxes (or more)! This is because they manipulate the rate of tax by working backwards from their bloated budgets to calculate how much they need to collect. The only thing your property value does is to apportion the tax relative to all the other property! This is sick as it fails to limit growth in government and during waves of property deflation further pressures the 99%.

Of course what we have now is the worst of both worlds – deflation in the things we hold as “investments,” and rampant inflation in the things we need. The deflation is caused by the debt as money scheme foisted on us by the bankers, and the inflation is caused by the money explosion that only benefits the bankers who create it and then use it to speculate commodity prices higher. Everyone else is caught in the middle, with very few safe places to hide.

Gold has certainly been the place to be for the past decade, below is a one year daily chart of gold where you can see that the first up sloping trendline held and now prices are zooming again:

There’s been a lot of speculation about how the failure of MF Global will impact the markets. I liken it to the failure in 2006 of New Century Financial, the first subprime lender to go under. At the time I mentioned that it probably marked the beginning of the end for the housing bubble, and boy, was I right. Of course it took well over a year for the stock market to get it, but get it it did.

Now I think the same thing about the derivatives bubble – the failure of MF Global probably marks the beginning of the end for that bubble. I liken derivatives to margin – while neither are considered money by most, they act like money because they allow people to have more of an underlying asset than they would otherwise, and that equals leverage. This is why I say that derivatives are “moneyness,” that add to the overall amount of money in existence.

Of course a derivative is anything the maker says it is – it is a complete fantasy construct of the imagination. In my opinion there are very few legitimate uses of derivatives, they are nothing but both a form of gambling and they give the creator the effective ability to make money(ness) from nothing.

To those who believe derivatives should be allowed to act as a “hedge,” my response is that a hedge is nothing but a form of insurance, right? So, if you need insurance, then there is a regulated insurance industry just for that purpose. And it should be regulated, because if you don’t, then people like Warren Buffett will turn their “insurance” into the same game as derivatives which leads to “moneyness,” which again is something that individuals should only possess under strict license, a privilege issued to them by the people – a privilege that can be easily revoked should it be abused.

And I don’t buy the airline/oil hedge argument either – here’s why. Because the way an airline hedges the cost of fuel is to buy oil futures. What does buying oil futures (moneyness) do to the price of oil? Uh huh, and there you have it, they don’t even realize that their gambling in the markets is making the very thing they are “hedging” against happen.

One particularly damaging form of derivative I want to address again is the explosion of ETFs. An ETF is a derivative – one that is being sold to common people as a good way to “invest.” BEWARE, ETFs are designed to take your money and to enrich those who produce this form of “moneyness!” They fail to track the underlying derived item and slippage makes long term holding of these theft devises a guaranteed lose proposition for those who buy them – DO NOT BUY ETFs, THEY ARE A DERIVATIVE DESIGNED TO TRANSFER YOUR MONEY TO THOSE WHO MAKE THEM.

Because derivates are a form of moneyness, they absolutely should be heavily regulated by government – again, producing our money and controlling the quantity thereof is THE most important responsibility of government, of your representative. A nation’s money must be sovereign, that is to carry no debt to anyone, and it must be created in a way that favors no one. A responsibility Congress unbelievably relented to private individuals with the creation of the phony and traitorous “Federal Reserve Act.”

On that day, our nation surrendered our sovereignty and ceded control to the “1%.” And ever since that day they have used the power of money creation to capture laws and our political system for their gain.

I participated in the local “Occupy” demonstration again this weekend where again I attempted to keep people focused on this key issue because I know that all the other issues revolve around WHO it is that produces our money. The people are pissed – and they want to take action. But the truth is that they are so easily pulled off target that it’s obvious we are a long way from taking the appropriate action.

Many people want to pick a key issue or two and work on that – for example one nice lady got really focused on the fact that our judicial system and government now treat corporations like people – she feels that fixing that is the key.

No, that is a symptom – it is but one of many symptoms that to me are like spokes on a wheel… all those spokes emanate from the hub. The hub is WHO controls the production of money! Fix that, and then the issues that emanate from it can be fixed. Fail to address the hub, and you will forever be chasing the symptoms.

Another in the crowd spoke strongly that the Occupy movement should ally ourselves with one of the two major political parties! After all, he reasoned, we stand no real chance of creating change if we don’t get one of the parties to back our cause! Of course I spoke out strongly against this thinking, reminding everyone that both parties are corrupted by the key issue and therefore real change will not occur from the inside in that manner. Just look at what happened to the Tea Party to see what happens when you sell out the primary issue. If that happens to Occupy, then the movement will die and it will be up to the next movement to get closer to the target.

My feeling is that while a lot of people get what I’m saying, those who have not gone through the learning process for themselves have a difficult time being catapulted to the root problem. I think it’s like anything else – it’s a process. The beginning of the process is to recognize and acknowledge that something isn’t right. That recognition then opens your mind to begin to look for answers and solutions. But it’s a journey, one where you must cast aside a lifetime of walls built to box your mind in, those walls are built upon lies and meant to control you. You must free your mind to step outside the walls; there you will find a river of answers.