Saturday, February 12, 2011

Weekend Open Thread... Congratulations Egyptian People!

Congratulations to the PEOPLE of Egypt!

Now that you have secured your freedom, make sure you maintain it. That means that you must NOT let global bankers into your country to indebt your people, thus moving from despot enslavement to debt peonage.

THE MOST IMPORTANT thing the people of Egypt can do is to produce your own money, but be sure to create transparency and checks and balances to keep the quantity of money under control.

Best of luck, the rest of the world is watching and needs the positive role model!

I hope that everyone understand how significant an event this is. Egyptian people have not been under self rule since the time of the Pharos!

It is possible for the people of any nation to be free, but that freedom must be taken by the people. The people of America are not free as long private banks control the issuance of our money and give us false choices at the ballot box.

Friday, February 11, 2011

Morning Update/ Market Thread 2/11

Good Morning,

Equity futures are lower this morning following yesterday’s very non-generic looking activity (Transports) that produced another very small movement in the McClellan Oscillator – thus expect a very large directional move today or tomorrow. The dollar is higher, bonds are higher, oil is lower, gold is down slightly, and food commodities are close to even after corn set another new high yesterday.

In the currency world, it is the Yen that has begun to move, breaking upwards on the chart below denotes a weakening of the Yen and has recently correlated to weak equities:

Mubarak’s tease yesterday was typical despot deception, his speech filled with meaningless words meant to confuse while he holds out hope the people won’t storm the Presidential Palace. Unfortunately, it looks like that’s what it’s going to take to get the U.S. backed despots (including the V.P.) out of Egypt. Of course if Americans were smart, we’d be storming the “Fed” building and throwing out the central bankers who are the puppet masters using debt as their strings.

But while Americans sit on their asses and view Egypt as a spectator sport – you know, something that happens way over there – the central bankers who have anointed themselves to be the world’s bankers (with no vote by any people on the planet) are making plans to control the world’s money supply!

Sound like a conspiracy? It is, and the American public had better wake up. Keep in mind as you read the following that the largest power behind the IMF is the American bankers:
IMF calls for dollar alternative

NEW YORK (CNNMoney) -- The International Monetary Fund issued a report Thursday on a possible replacement for the dollar as the world's reserve currency.

The IMF said Special Drawing Rights, or SDRs, could help stabilize the global financial system.

SDRs represent potential claims on the currencies of IMF members. They were created by the IMF in 1969 and can be converted into whatever currency a borrower requires at exchange rates based on a weighted basket of international currencies. The IMF typically lends countries funds denominated in SDRs.

While they are not a tangible currency, some economists argue that SDRs could be used as a less volatile alternative to the U.S. dollar.

Dominique Strauss-Kahn, managing director of the IMF, acknowledged there are some "technical hurdles" involved with SDRs, but he believes they could help correct global imbalances and shore up the global financial system.

"Over time, there may also be a role for the SDR to contribute to a more stable international monetary system," he said.

The goal is to have a reserve asset for central banks that better reflects the global economy since the dollar is vulnerable to swings in the domestic economy and changes in U.S. policy.

In addition to serving as a reserve currency, the IMF also proposed creating SDR-denominated bonds, which could reduce central banks' dependence on U.S. Treasuries. The Fund also suggested that certain assets, such as oil and gold, which are traded in U.S. dollars, could be priced using SDRs.

Oil prices usually go up when the dollar depreciates. Supporters say using SDRs to price oil on the global market could help prevent spikes in energy prices that often occur when the dollar weakens significantly.

The dollar alternatives
Fred Bergsten, director of the Peterson Institute for International Economics, said at a conference in Washington that IMF member nations should agree to create $2 trillion worth of SDRs over the next few years.

Do you get to vote on that? How important to the future of the United States and the world is that?

Here’s the outcome the way I see it: It would give the global banking cartel even more power to issue more debt around the world. Thus they would gain power and control, which is exactly what those narcissists seek. Thus it would diminish the people’s power, freedom, and control of natural resources. It would cause global inflation and it would starve those furthest from the creation of that inflation – those who spend the greatest percentage of their income on food. It would flood the world with their hot money and create completely artificial markets around the globe with them in control. VERY DANGEROUS, it is the opposite of true democracy.

That said, the concept of a global currency is not the problem! The problem is WHO is in control of its production!! If such a currency was under the control of the people for the benefit of the people, with proper checks and balances to keep the quantity of money under control, then I would fully support it.

WHO is the problem, and don’t be fooled by the IMF and World Bank smoke screen. These are the same exact people who are behind the Fed – private bankers who seek profits for themselves at your expense. And they are the ones who finance the military industrial complex and who prop up despot regimes around the world as they manipulate people and resources at their behest.

No one voted for the IMF or World Bank – they are self anointed bankers to the world. The “Fed” feeds them your money, they then leverage that money, creating more paper to indebt other nations. And then they require other countries to repay these paper loans with gold. That is how the IMF became the world’s third largest holder of gold. And the “Fed,” who no one voted for, uses this nation’s gold in “swaps” with other bankers around the globe! Who authorized that? Who gave the private bankers in the private corporation called the “Fed” permission to use OUR nation’s gold?

When Americans are going hungry, then maybe we’ll get off our lazy spectator asses and do something real besides falling for the false choices offered up by “Republicans” and “Democrats.” Until then it’s just a spectator sport, watching others do our bidding around the globe.

Oh yay, little Timmy Geithner presents a plan to Congress that has three choices on how to unwind the GSE’s (and replace it with a new one, lol):
Obama Administration Calls for Winding Down Fannie, Freddie
With the decline of private investment in home loans since the credit crisis, the two companies, along with the Federal Housing Administration, have come to own or insure almost 97 percent of mortgage bonds.

The options suggest differing degrees of government involvement in the system. The most dramatic would involve a “privatized” system of housing finance, with a government role to help “narrowly targeted” low-income and veteran buyers.

A middle ground would replace Fannie and Freddie with a system that helps low-income and veteran buyers in normal times and also provides an expanded guarantee that the government could ramp up in a crisis. The paper suggests using high-priced guarantee fees or restricted amounts of public insurance to achieve this goal.

A third option has the biggest government role and would hew closest to the current system. It would impose more regulation and give the government a role in “catastrophic reinsurance behind significant private capital,” so as to provide a backstop in times of crisis.

Winding down FNM and FRE is the right thing to do. Replacing them with more government guarantees is the wrong thing to do.

You see the game here, don’t you? When your last entity implodes, you simply shove the losses on the taxpayers and then start all over again with a different shell entity with a different name. It’s called the shell game, it is illegal, yet it has become the banker deception du jour.

And a big part of Timmy’s plan is to give private junk insurers like MGIC more power to insure loans; “We will encourage Fannie Mae and Freddie Mac to pursue additional credit-loss protection from private insurers.” Gee, that’s nice, and MGIC has jumped nearly 7% in before hours trading. This is the exact same model that failed, these companies went completely bankrupt, and now we get to do it all over again with the exact same companies who never should have been allowed to remain in the first place. A business is not a business if it’s not allowed to eat its losses and to fail.

Reports have come out as I’ve been typing that Mubarak has left Egypt. I hope so, but I also hope that the people are smart enough to get his crony regime out as well. The markets may react positively to this, but the truth is that the people will continue to starve at a faster pace the higher the markets go, and the faster the world's bankers pump hot money into the commodities necessary to sustain life.

Thursday, February 10, 2011

Morning Update/ Market Thread 2/10

Good Morning,

Equity futures are significantly lower this morning, the dollar is up, bonds are lower, oil and gold are lower, while most food commodities are roughly flat near yesterday’s highs. Rubber and cotton are both setting new record highs.

Weekly Jobless Claims fell significantly in the past week to 383,000. This is down from 415k (revised up to 419k), and is much lower than the 412k consensus. Comments by Econday lead me to believe that the DOL is making adjustments due to weather, however their official release does not allow enough transparency to know. I am always suspicious of large moves in statistical data:
Maybe the job market is kicking in now. That's the subtext of a very positive jobless claims report for the February 5 week that shows a steep 36,000 decline in initial claims to 383,000 for the lowest total in 2-1/2 years (prior week revised 4,000 higher to 419,000). The Labor Department said weather effects, which delay the filing and processing of claims, are unwinding in a comment that suggests the latest level may be free of distortion. The four-week average, which helps even out weekly distortions, fell a very substantial 16,000 to 415,500, a level however that is little changed from month-ago readings.

Continuing claims are clearly coming down in what is probably a positive indication of labor market strength though some of the decline undoubtedly reflects the expiration of benefits as the unemployed fall out of the insured pool. Continuing claims, in data for the January 29 week, fell 47,000 to a two-year low of 3.888 million. The unemployment rate for insured workers is unchanged at 3.1 percent. In unadjusted data for the January 22 week, the total number of claims rose more than 106,000 to 9.406 million.

Markets aren't reacting much to this report, at least initially though the dollar is firming. One week's data is only one week's data and improvement will have to continue before meaningful gains can be expected for February payrolls.

It’s difficult to see through the noise of this report, the big picture is that this number needs to be legitimately below 350k for it to indicate that jobs are being created. That said, this is the lowest number reported by the DOL in the past 2.5 years.

Wholesale Trade is released at 10 Eastern this morning, the “Fed’s” balance sheet and money supply stats will be released late this afternoon.

Rates on credit default swaps across Europe are rising again this morning showing underlying debt stress across Europe. Ireland and Portugal are moving the most this morning.

The MSCI Emerging Markets Index got pounded overnight for 1.8%, producing their sixth loss in a row. Emerging markets often lead global markets as they are a “risk on” trade, in the same manner as small caps. Below is a nine month chart of EEM, the Emerging Markets ETF… note the lower lows, a clearly broken uptrend, and price that is now below the lower Bollinger band:

Transports are another index that are failing to make new highs. This is a major non-confirmation of higher prices in the DOW Industrials and SPX large caps. These types of non-confirmations are almost always found near tops of long term significance. Note how the Transports have failed to get back above the 50 day moving average:

Contrast those charts to this chart of the SPX below. Note the waning momentum in the oscillators and lower peaks in RSI despite rising price:

The markets look very sick to me on a technical basis, but we must always consider the fundamental landscape along with the technical picture. While we are a debt saturated nation, we are also a POMO nation where the private banks who call themselves the “Fed” are attempting to paint a money façade on the economy and markets. Everywhere I look I see monetary expansion masquerading as apparent “growth.”

Meanwhile Egyptian workers are heading out on strike demanding more pay so that they can afford to eat. Guess what, spiking food commodity prices have yet to make it all the way through to the final food product and they are still rising.

Back in the U.S., our infrastructure continues to fall apart, 6 killed in their homes when a natural gas line explodes. What maintenance wasn’t being done there?

And a married Congressman from New York is forced to resign after posting the following pictures on Craigslist along with an ad where he is fishing for women.

Gee, that’s nice. No breakdown in morals there, nice example there Congressman.

And to think that I used to be waiting for Congress to do the right thing for the people and take back the power of money creation… how admittedly naïve that wish was. No, Congress won’t do the right thing until the people force them to. Events are rapidly approaching that will shake Americans out of their slumber.

Wednesday, February 9, 2011

Morning Update/ Market Thread 2/9 - Who Controls the Production of Your Money?

Good Morning,

Equity futures are lower this morning, the dollar is lower, bonds are higher, oil and gold are flat, while food commodities are mostly higher, wheat is putting in new highs.

The hypocritical Mortgage Banker’s Association released their rotten Purchase Applications Index, it fell 1.4% in the prior week with the Refinance Index falling 7.7%. Here’s Econopray:

The Spring home-buying season is off to a slow start according to the Mortgage Bankers Association whose index measuring the volume of purchase applications fell 1.4 percent in the February 4 week. A jump in rates, in reaction to a run of stronger-than-expected economic data, is holding down both purchasing activity and refinancing activity. The average rate on 30-year mortgages really jumped in the latest week, up 22 basis points to 5.13 percent. MBA's refinancing index fell 7.7 percent as, the report says, fewer homeowners with equity have any incentive to refinance. The economy is accelerating despite weakness in the housing market, one of the unique aspects of this recovery.

What is that saying about a blind squirrel? Well, the only nut Econoday is going to find with that analysis is the person writing it.

Their comments tell the entire story of this economy. The data is bad and getting worse, but the spin is on to try to justify why the economy is “growing.” “The economy is accelerating despite weakness…” even a blind man could figure out that what’s accelerating is the quantity of money and not the real economy. Yes, it’s unique all right – but not when viewed through the lens of history. Many idiots have managed to destroy their money, Bernanke is certainly not the first.

Again, these indices are near all-time historic lows and now we have rising interest rates… In an early, pre-debt saturation, cycle recovery the addition of stimulus works to add production and thus helps fuel the economy. As debt saturation is reached, however, adding stimulus works against the economy, destroying jobs and creating huge misallocations. The misread by most “experts” is that this “recovery” is for real. It is not, it is monetary only. Normally, rising interest rates would signal strength, but not in this case. Today, rising interest rates are signaling RISK due to completely unworkable math. And since individuals and government are completely saturated with debt, rising rates will promptly kill the housing market and any real economic progress. That’s why recent recoveries are “jobless.”

But if you don’t like the data, then just change it. And that is exactly what they have done with most of it, especially inflation and employment data.

Yesterday, Karl Denninger pointed out that the ten year (TNX) has risen 1.5% in the past 4 months, and that mortgage rates have risen a full percent. Fixed rate loans are generally tied to the ten year. The TNX rose from about 2.4% to 3.5% and then put in a consolidation pennant. I showed that pennant when it formed, well now it has clearly broken out. That formation is targeting roughly 4.5%, or about three-quarters of a percent higher than here:

That much of a gain in rates is deadly for the housing market. As Karl pointed out, a one percent rise in mortgage rates means that a person can finance 11% less house than one could at the lower rate. Another .75% rise in rates will translate into a 1.75% run in rates and will eventually translate into approximately a further 20% decline in home prices. This pushes more homeowners underwater, causes foreclosures to rise, and then pressures the banks even more, a negative spiral already in motion, this from this morning’s news:

30% of mortgages are underwater

NEW YORK (CNNMoney) -- Sometime, somehow, the foreclosure crisis will ease. But probably not anytime soon.

Home prices dropped 2.6% nationwide during the last three months of 2010, pushing more borrowers underwater, according to a quarterly real estate market survey from

Now 27% of homeowners with mortgages owe more than their homes are worth. That's up from 23.2% a quarter earlier.

That will surely lead to higher foreclosure rates soon. That's because being underwater is second only to unaffordable payments in leading to foreclosure, according to Zillow's chief economist, Stan Humphries.

And part of the rise in rates could be front-running this:

Fannie and Freddie phase-out plan due

NEW YORK (CNNMoney) -- The Obama administration will issue a proposal later this week recommending the gradual elimination of government-sponsored mortgage backers Fannie Mae and Freddie Mac, a White House official said Wednesday.

The highly-anticipated "white paper," which is expected to be released Friday, will include three different options for reducing the role government plays in the mortgage market, the official said.

While the paper would mark an important development in the debate over what to do with Fannie and Freddie, a final decision by Congress is not expected any time soon.

After being rescued by the government in 2008, Fannie and Freddie have presented a major conundrum for policymakers in Washington.

The problem is that phasing out the two publicly traded companies could raise borrowing costs for homeowners and jeopardize the fragile housing market.

At the same time, Fannie and Freddie represent a major liability for taxpayers, who are on the hook for about $150 billion in federal aid the two institutions have received.

The GSE’s are a complete mess and a disaster for our nation. Only on the hook for $150 billion is a complete lie. They hold trillions of bad debt that our government is NOT carrying on its books and which the government ultimately is responsible for. Should they begin accounting honestly, GSE debt would skyrocket our nation’s debt levels. Their debts are toxic and reside not only on America’s hidden balance sheet, but also in retirement plans and “investment” portfolios around the globe.

Ending the GSE’s is the right thing to do… However, doing so will be quite painful to the housing market. That pain will translate onto individual’s balance sheets, and then squarely hit the banks.

And here’s the problem with the way the Administration is handling this mess (on behalf of the banks, obviously)… Their untold method of handling the run off of this debt is to print more money. Many analysts see this as “monetizing the debt.”

Guess what? If they actually were monetizing the debt and making the debt go away, it would indeed be a good thing for the economy – with the caveat that doing so is only good when there is a transparent plan in place that keeps the quantity of money under control.

Clearing out the debts is exactly what must happen, but because the bankers are in control, they simply want to roll the debt to create ever increasing quantities of it. Clearing out the debts is not acceptable to them, but it keeps the people’s balance sheets saturated and terminally constrained – thus no REAL economic growth, no increase in real employment.

There is only one graceful way out of this mess, and that is along the lines of Freedom’s Vision. You must get outside of the banker’s debt money box and change WHO controls the production of money. Then real and meaningful solutions will suddenly appear abundant.

And just to make matters worse, the rise in interest rates is coming at the worst possible time for the masses of McMansion bag holders who financed with Option Arm loans. Right now we are at a trough in refinance activity, but beginning next month we begin to ramp up into a crescendo that will occur roughly this September, pressuring the financial system just as the vulnerable fall season arrives.

Only a debt imprisoned central banking simpleton would believe that piling more debt on top of debt would cure a debt saturated condition. But that is exactly what the world’s bankers and politicians would ask you to believe. Well, don’t be surprised when it fails, just as it is doing in Ireland right now:

It looks as though the Irish crisis is about to erupt again

While all eyes are on Merkel’s economically illiterate pact, the real crisis is taking another turn for the worse – in Ireland. We already reported of calculations – made by Karl Whelan in the Irish economy blog – that Ireland’s will need more money than envisaged to pull through until 2013. Yesterday, Alan Dukes, Anglo Irish Bank chairman and former finance minister, warned that Ireland will have to go to the IMF/EU for another €15bn -- on top of the €35bn already earmarked – merely to save the banking system, the Irish Independent reports. (We have not done the math on this, but it looks as though these two estimates may be separate, and thus possibly additive.) Duke also suggested €75bn would be needed to fund the existing NAMA operation and a so-called 'NAMA 2' to take more bad loans from the banks. His claims sparked a furious rejection from the finance department who said that the central bank had pinpointed a much lower figure.

His remarks come as the Anglo revealed the largest loss in Irish banking at €17.6bn last year. It also records central bank borrowings of €45bn, of which €28.1bn were borrowed under the Irish central bank's special liquidity facilities, according to Reuters. Dukes said that the default of an Irish bank or a sovereign default in Ireland would have serious repercussions for the euro zone."The ECB is now among the banks that would be adversely affected by such a default, as most of the Irish Government debt and government-guaranteed debt has ended up in the ECB and the Central Bank of Ireland as collateral via the Irish banks."

The Irish people still need to tell the bankers to pound sand and follow the example of Iceland. It’s coming for the banks regardless, don’t be surprised when they come at us offering their solution of gold backed money. Another false solution for sure, as they have ensured that they control the world’s supply of gold.

Tuesday, February 8, 2011

Did the Year 2000 Mark the Debt Saturation Point?

As I have repeatedly stated, when the “Fed” took over the power to create money in the year 1913, we began the transition from a sovereign money system to a credit (debt-backed) money system. In the beginning, the ratio of debt money to sovereign money was low. Today it has progressed to the point that 100% of our money is debt-backed.

When the ratio of debt money to sovereign money is low, then adding debt money to the system indeed stimulates growth, as postulated by Keynes and others.

However, when the ratio of debt money reaches the saturation point, then adding more debt into the system actually works to diminish real growth.

The Saturation Point is defined as the point at which aggregate incomes can no longer support an increase in debt.

Debt saturation is exactly why real employment has been falling despite massive attempts to stimulate the economy with more debt backed dollars. REAL GROWTH has not occurred since the year 2000 – it has only been monetary growth creating the illusion of growth.

By some studies, today it requires roughly 6 new debt dollars to create $1 of net GDP growth. This is due to the diminishing return on debt, again a concept that goes alongside debt saturation. As more debt is added to the system, then the cost to carry that debt increases and makes the system less and less efficient at being productive and creating jobs.

The velocity of money is a cousin to this concept. If an economy is saturated with debt, then new money creation does not move from one hand to another, instead it quickly returns back to the banks to service debt. This can be seen clearly in the Velocity chart below, note how MZM (currently the largest tracked measurement of "money") was on a descending path in the nineties, but made a sharp turn down beginning in the year 2000:

The following chart shows the Civilian Participation Rate versus our government’s Total Debt. Note that from the middle sixties until the year 2000 that debt was forming the base of a now parabolic curve, and that adding debt during that time frame resulted in a higher percentage of people working in the population:

Note, however, that from the peak in the year 2000 to today, that debt is growing exponentially, yet the ratio of people employed in the population is falling dramatically! While this chart may not show direct causation, I believe that there are many pieces of corroborating evidence that all point to this same conclusion, that debt saturation is indeed real.

It requires only a simple mental exercise to illustrate the common sense behind this concept: If your personal income is $10,000 a year, but you owe $50,000 in debt lent at a simply interest rate of 10%, then your interest expense alone takes half of all the dollars you earn. Adding more debt at this point may temporarily increase spending, but it will diminish your ability to buy more things in the future as your future productive efforts go to servicing more interest on the debt. The only way adding debt makes your situation better is if it improves your ability to produce income.

In the United States, the addition of debt dollars has made us less productive due to the carrying costs of debt and the fact that capital is now fleeing to find non-saturated countries in which to work.

In fact, since the year 2000 total payrolls in the United States have actually declined!

That net employment decline over the past decade has occurred despite a GDP that has “grown” nearly 50% in size since that time, and a population that has grown by 30 million, or roughly 10.5%!!

In the beginning, the creation of debt lifts everyone as productive capacity is leveraged and thus enabled. In the end, however, DEBT cuts the other way, destroying productive capacity and employment.

Thus, our inflationary monetary system was doomed to fail from the moment it was conceived. In its current debt-backed form, the dollar is indeed wailing in the throws of death. There is but one mathematically sustainable system, that system must target Zero percent price inflation if it is to survive over the long haul. You will not create such a system as long as it remains in the hands of the bankers, and it is a myth that gold accomplishes this feat – it does not and never has throughout history. That’s because what’s most important is WHO produces the currency not what backs it!

Politicians also have incentives to inflate the supply of money. Thus the only chance we have at a prosperous and sustainable future is to place the money creation power into our representatives hands, but only with complete transparency for the people, with separation of special interest money from politics, and with proper checks and balances.

The power of money creation belongs in the hands of the people, not a few individuals.

Ten Years Gone

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.

Monday, February 7, 2011

Morning Update/ Market Thread 2/7

Good Morning,

Equity futures are still doing the Monday morning HFT/ POMO fueled ramp job, apparently the ramp is going to continue until the rocket fuel is expended. Surprisingly, though, the dollar is up again, but it is bonds that are falling and thus maybe providing some of the fuel of late. Oil is lower, gold is slightly higher, and food commodities are higher with corn putting in new famine highs.

There is no significant economic data this morning, however, Consumer Credit is reported this afternoon. It will be a very light week for data the rest of the week as well.

It will be interesting to watch the bond market this week as long term bonds are approaching their long term support areas. Will those areas break, sending interest rates higher? A lot of implications for the markets either way…

Below is a daily chart of the long bond futures, you can see that we are probably only a week of descent away from long term support:

Below is a 5 year weekly chart of TLT, the 20 year bond fund. Here you can see that we are just above long term support:

With the “Fed” injecting billions every single day into the markets, it’s hard to say what will occur at support. The delusional camp will blame higher rates on an improving economy, while the realists contend that we are printing so much money and indebting ourselves to such an extreme, that money is fleeing bonds despite the “Fed” pumping money into them.

As I’ve been noting time and again, the economy is “growing” only due to that money pumping – it is the supply of money that is growing. If the “Fed” continues to pump, commodities and food prices will very likely continue to go along for the ride, and if bonds break down, it will make that ride all the more speedy. If they do break down, then yes, it’s very possible to see further gains in the stock market, however, that would be the Zimbabwe type of advance and would be extremely dangerous in many ways.

Should bonds hold or bounce off support, then it’s possible that stocks may sell off as money flows back into bonds, but again the picture is complicated due to the POMO activity. Right now we have a serious DOW Theory non-confirmation between the Industrials and the Transports, with it being three weeks since the Transports have made a new high, and they are still greatly lagging the large cap stocks. Small caps also continue to underperform, this is normally a sign of an important developing top. Again, how much of the market can be bought by the “Fed” before external forces stop them? So far record food prices, starvation, and revolution haven’t phased them, so Zimbabwe looks more and more plausible every day.

But I know that just when everyone is convinced that one outcome is certain to prevail over another, that the other will produce a counter wave to shift people off their positions. In the long run, however, the math says our current money system is toast. It’s going to be a wild ride, food commodities and bonds are the things to watch this week as the “Fed” turns its back on the people of the planet.