Saturday, April 23, 2011

Weekend Open Thread...



Friday, April 22, 2011

Morning Update/ Market Thread 4/22 - Dear Mr. President, YOU are the Oil Speculator...

Good Morning,

Markets are closed today, and there are no economic releases. Next week will bring a lot of data including Q1 GDP which is forecast to have risen 2.0%, down from 3.1% in Q4, 2010. Wednesday will also bring more lip flapping from the “Fed’s” FOMC, and oh boy, we get a historic first in that Bernanke will hold a press conference after the announcement. What a placating joke.

Once again President Obama says that the evil speculators are running up the price of oil and that he’s really going to crack down on them! This time he means it. Of course he said basically the same exact thing back in 2009, and then again in 2010, and how’s that worked out so far? Oh yeah, and here’s what he said when he was running for President, showing just how knowledgeable our President is on the subject:



Well, here’s a tip, Mr. President. Take a look at the following chart and see if you can spot the correlation:



Okay, so WHO is in charge of the monetary base, Mr. President? Yes, that’s right, the same PRIVATE bankers who pretend to be a government agency and are the largest donators to your campaign. The same bankers who you promised time and again to crack down on, but never did. If and when you get serious about controlling speculation in the oil markets, then please write and I’ll fill you in on how to actually accomplish that – just make sure you surround yourself with your most trusted security force first!

And Mr. President, just so that you’re not confused on where the fuel for the speculation is coming from, let’s discuss that aspect because it seems that many people are being fooled by the “Fed’s” mechanics of “Quantitative Easing.” The trail they have built for America is one based upon deception.

But to fully understand this deception, we must first understand that there are three types of money:

1. Credit Money – this is money that is borrowed under contract, must be repaid within a specified timeframe, and bears interest. Prior to QE, 100% of our traceable money was credit money – new money came into existence through private loans, and if the government needed more money than they received in taxes, then they could barrow more in the form of bonds – usually bought by the private banks. In this way, ALL money is created by the PRIVATE banks, is someone’s obligation, and bears interest.

2. Sovereign Money – This is money created by the government without debt. Our government does not produce sovereign money any longer.

3. Other Money – Other money is created by instruments that act like money, but are neither sovereign produced, nor bear interest. This is BY FAR the largest type of money in existence. It includes all derivative instruments, trading on margin, futures (which are just another form of derivative), and any thing else that acts like money generally to create leverage (which is the act of effectively multiplying money).

Now we need to talk about Inflation and Deflation. For overall MONETARY inflation to occur, the total supply of all three forms of money must rise. For monetary deflation to occur, the total of all three forms of money must decline.

Monetary inflation/ deflation is not necessarily the same as overall PRICE inflation/ deflation. It is possible to have the money supply growing, for example, but to have overall PRICE deflation occur if the population size is growing faster than the total supply of money – and visa versa.

Let’s examine the “Roaring Twenties.” At the time, there was a mix of sovereign money (supposedly “gold backed”), privately created credit money, and then massive amounts of margin was used to buy up stock which inflated the price of equities. The aggregate of all three dramatically outstripped the growth in population and overall price inflation broke out, especially in equities where margin was rampant. This created a bubble which was not supported by income and thus the bubble burst in the year 1929 – note that having gold backed sovereign money DID NOT stop the bubble from being created! This is because private credit and margin were not kept under control. And that is because we allowed the private bankers to be in control, and it was in their interest to let it get out of control – the very same thing that is happening today.

Here’s what most “economists” either don’t know or don’t admit. Credit dollar creation is inflationary up until the point of debt saturation which is when income can no longer support it. Once debt saturation is reached, then credit creation becomes deflationary!!! This is why we had the wave of deflation that began in 2007 and roared into 2009.

During the Great Depression, margin money and credit money were allowed to contract. That allowed debt to fall to the point that income could support it, and then REAL growth resumed.

Today we have failed to let derivatives, margin, and credit money contract. Our income still cannot support more debt, and thus we are still debt saturated.

In comes the “Fed” to try something “different” because we don’t want to repeat the Great Depression: So instead of letting the debt properly default, and let investors deleverage their margin, the “Fed” instead began transferring the private debt and leverage onto itself with a guarantee by the American taxpayer. This is exactly what “QE” is – it is a shift of debt from private banks onto the general population. Doing so IS MONEY “PRINTING,” but it is simply indirect instead of direct. By taking debt instruments off the private banks, they are thus allowing the total money (all three types) to expand where otherwise it could not have!

Understand? In this way the mechanics of QE are designed to fool you. They get to claim that at some point they will be repaid, but that is simply a game, because in the mean time the banks are allowed to generate even more, and thus the total supply of money skyrockets. That’s the fuel that creates the speculation.

My contention is that the total supply of the three types of money is unknowable because derivatives and margin are so out of control. Banks are effectively being allowed to “fractional reserve” to infinity, and thus producing nearly infinite leverage. This, of course, is NOT supported by income – and thus is GUARANTEED to fail.

It is the creation of too much credit, and too much of the “other money” type that is the problem. It became a problem because we allowed private individuals to control its production. Think about it – any individual, and even any politician who is given the power to create money will find ways to create more of it. Give me that power, and I’ll show you how!

But it is possible to create a system that works – that is sustainable over time, allows prosperity, but also allows contraction without collapse. Such a system should, in my opinion, be a mix of private credit money, and sovereign money with NO “other money.” If your goal is truly to reign in speculation in oil, food, or anything else, that is the only proper direction to head.

WHO controls the production of our money, Mr. President, WHO.

Still more radiation is being found in feeding mother’s breast milk in Japan. Of the nine mothers tested so far, half have radioactive iodine contamination, and the most contaminated mother lives 150 miles away. According to one nuclear expert, the currently reported levels of radioactive iodine at the Fukushima plant absolutely mean that nuclear fission is taking place both in the reactors and in the cooling pools – Expert who worked at Sandia Labs: “TEPCO data suggest that fission is ongoing… This is bad news” — “Truly scary” that nobody in Japan seems to know basics of reactor accident progression. And thus radiation continues to pour out of the plant, across the ocean, and into our food and water supply where they are continuing to find increasing levels of radiation in our water, milk, and soil.

Yet according to the FDA, not to worry, it’s all safe… Well here’s a conversation that Arnie Gunderson had with Dr. Steven Wing regarding radiation exposure. No, there’s no “safe” level of radiation. And what Dr. Wing pointed out is that even though the radiation is spread very widely, the total number of cancers does not decrease because of the dispersion! In other words, the more radiation that comes out, the more cancers there are regardless of how widely it disperses.

Epidemiologist, Dr. Steven Wing, Discusses Global Radiation Exposures and Consequences with Gundersen

While I wholeheartedly support what Dr. Wing is saying regarding acting collectively to ensure safety, I strongly disagree that there’s nothing you can do to protect yourself individually. You can strive to eat food and drink water that was produced prior to the spread of radiation. You can avoid milk and creamy dairy products. You can install a reverse osmosis filter for your home’s water. And if you want to get even more creative, there are many other things you can do as well. The young, in particular, should be protected.

And our government absolutely needs to get far more proactive, but again, they have been completely captured by special interests and thus will fail again in that regard.

Thursday, April 21, 2011

Morning Update/ Market Thread 4/21

Good Morning,

Equity futures are up slightly following yesterday’s wild gap. The dollar is down some more, falling below the 2009 lows showing that this is a higher level wave lower. Of course as the dollar falls in value, the cost of oil goes up, and WTI is now $111 and change. Gold and silver are both higher still, with rumors now floating that someone/ some group/ some nation is working to corner the silver market. Personally doubt that the heavy buying is an attempt to “corner the market,” rather it is a statement about the value of the dollar – I say that because silver is catching up to gold which is also setting records. Of course most food commodities are also higher.

The weekly Jobless Claims number came in above 400K again. At 403,000, this is well above the consensus that was looking for 390k, and once again last week’s number was revised higher. Here’s Econohope:
Highlights
Fewer workers filed for initial unemployment benefits in the latest week but the data nevertheless point to risk for the April-to-March comparison. Initial claims fell 13,000 in the April 16 week to 403,000, not quite as low as expected and compared with 416,000 in the prior week (revised 4,000 higher). The latest improvement was too modest to keep the four-week average from rising for the fourth time in five weeks, up 2,250 to 399,000. A look back at this time last month shows the average at 391,000.

The Labor Department cited no special items in the latest week and once again made no mention of a possible Japanese effect. Before the ongoing bump, jobless claims had been showing two years of steady improvement. Stocks edged off highs in initial reaction to today's results.



The Philly Fed, Home Price Index, and “Leading Indicators” are released at 10 Eastern and will be reported inside of the daily thread comments below this post.

Why is the market and commodities zooming? Could billions per day in hot money have anything to do with it? Let’s take a look at a chart I built this morning showing the cost of oil versus the monetary base:



Hmmm… there’s a pretty big story there I think, and it pretty much puts the blame squarely where it belongs. You can blame demand (falling), or mid-east wars (American manipulation), or even speculators for the cost of oil, but it is the constant flow of hot money, including billions of dollars per day, that is really behind rising prices. The “Fed” is out of control with the production of money.

This week the housing data was touted in the mainstream as “flexing muscle.” [insert major eye roll here] Below are the freshly updated charts of Housing Starts and Permits, you decide how bright the future looks based on these:

STARTS:


PERMITS:


I’ll simply note that a REAL economic recovery has never occurred without the housing industry leading the way. If you look at all the info in the charts above what is it that’s leading the way? Oh yeah, money printing. Extraordinary money printing. Of course there needs to be sufficient money or the economy will suffer, but when you overdo it, the economy also suffers. These wild swings are brought to you because of the “Fed” controlled system. It doesn’t work to have private individuals manage the nation’s money – period.

Now there are rumors that the “Fed” may be selling put options on Treasury Bonds in order to drive down yields. While I don’t know if they are doing this for a fact, it wouldn’t surprise me as I know that desperate people do desperate things. The “Fed” is desperate to keep “growth” going at any cost, and they are taking actions that only desperate men would take. Manipulation is everywhere and because there is a complete lack of transparency in the markets, it is impossible to know everything that those doing the manipulating are up to. Here’s a clear explanation of what might be happening in this regard:



Fraud is what it amounts to – and fraud is rampant.

Updating the nuclear situation, forecasts are showing a large amount of radiation crossing the Pacific and reaching the United States – again crickets from our mainstream and our politicians. Meanwhile tests by Berkeley University are showing increasing levels of radiation in milk (San Francisco) and in the soil at the base of the Sierra Nevada Mountains. Radiation is also now turning up in breast milk tested in Japan. Still, the radiation pours out of Fukushima and no serious action to contain the radiation is occurring.

Yesterday’s ramp in the market managed to push the DOW Industrials to new highs, but the Transports and SPX failed to confirm that, thus there is a potential non-confirmation now in place. But as long as the money pumping continues, we can expect higher prices for everything – and that’s the catch. They can’t force the hot money to go only where they want it. And they’re not willing to pass it on to the people so that they can keep up with inflation, and thus their pump money strategy is clearly limited – we are at or near those limits now.

Wednesday, April 20, 2011

Morning Update/ Market Thread 4/20

Good Morning,

Equity futures continue to ramp overnight on the back of a broken dollar which is plummeting to new short term lows, bonds are roughly flat, WTI oil is climbing again and now just beneath $110 a barrel, gold is setting new all-time records of course - now well above $1,500 an ounce, silver is moving straight up and is now pushing $45 an ounce, and food commodities are shooting the moon today as well.

Let’s put it this way… for stocks to double again, oil, gold, and food would also likely double again. Is that going to happen? Only if our money flat out crashes in value, Zimbabwe style. Perhaps that’s what President Obama meant when he repeatedly stated that we are going to “double our exports in five years?” Can you imagine the impact that would have on the economy and on your personal habits? Devastating – because I will personally guarantee you that your income won’t do the same.

Wonder why oil and the price of everything is rising so dramatically? Look no further than shear panic on the part of the “Fed” who is ramping monetary base literally straight up:



Gold appears to me to have put in a reverse Head & Shoulders pattern that is targeting roughly $1,560 an ounce. Should it make it there, I would then look for a pullback to the multi-year rising trendline that will by then be well above $1,400 an ounce:



Silver is moving in a much more dramatic vertical fashion… this is a dangerous play as there is no telling how high it will go before it gives in. All parabolic moves eventually collapse, but this could be – repeat could be – signaling a rapid devaluation of our money.

The run up in food commodities, of course, will continue to pressure people the world over who are living on the margins. More atrocities are occurring daily – these are sponsored by our own “Fed” who breeds trouble the world over.

The completely conflicted Mortgage Banker’s Association released their phony Purchase Index claiming that it raised – get this – 10.0% in just one week! They really expect me to believe that sales are so volatile that they can rise 10% in one week? Do they think we all have rocks in our heads? Or are they the ones with rocks between the ears? You decide:
Highlights
A scheduled increase in FHA insurance premiums tripped a 10.0 percent surge in purchase applications in the April 15 week, according to the weekly Mortgage Bankers Association report. The refinance index, boosted by a 15 basis point fall in the average 30-year mortgage to 4.83 percent, rose 2.7 percent. The purchase index improved in March pointing to strength for today's 10:00 a.m. ET release of existing homes data.

(cough, cough, bullshit)

Existing Home Sales is released at 10 Eastern. Keep in mind that it is spring time (duh), and that home sales will increase (duh), but keep the numbers in perspective with the depression that we are in. Also keep the following Option-ARM reset chart in mind:



Very telling for me in the markets, NYSE margin debt increased to its second highest reading of all-time, just behind February of 2008. This should concern anyone long the market as extreme leveraging absolutely creates bubble peaks – think 1929 and 2007/ 2008.

Following the crisis in Fukushima, Japan raised the annual limit that nuclear workers could be exposed to from 100 milli-sievert/year, to 250. Now they are raising it again to 500 – that’s a 500% increase in allowable radiation – a level that is far beyond what any rational person would consider safe. Even the Soviet Union approached the problem way differently – they brought in literally hundreds of thousands of workers in order to limit their expose. Here they are simply dooming a fewer number. But their actions to date are falling far short as yet another day without containment passes.

Huge gaps in the charts again, the NDX just leaped in one overnight session from the bottom Bollinger to the top Bollinger:



Not a market, this is something not recognizable. Price leaps like that are far more frightening to me than stock market declines. That’s because I know why this is occurring, and it is devastating to the vast majority of the population.

Tuesday, April 19, 2011

Morning Update/ Market Thread 4/19 - Can’t Quit Cold Turkey Edition…

Good Morning,

Stocks are continuing to bounce mildly after yesterday’s “Negative Watch” meltdown. The dollar is significantly lower, bonds are higher again (and against higher equities), oil is down slightly, gold pushed into a new high at $1,500 but is hovering just below that resistance level, and most food commodities are higher.

Yesterday’s action pushed the NDX into its lower Bollinger band, and the XLF closed below its lower band:



Whenever you see prices push these bands in today’s HFT computer controlled holographic world, it’s usually safe to assume that the market will at least pause there, and that’s what we’re seeing. Yesterday was a 90%+ panic selling down day that did cement a double-top looking ‘m’ formation. We’ll see.

Bloomberg is reporting, and others are guessing, that Bernanke may not be able to quit printing cold turkey! No duh, the impossible math dictates that cannot happen unless he’s willing to let the air out of the overinflated balloon:
Bernanke May Avoid ‘Cold Turkey’ End to Record Stimulus

April 19 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke may keep reinvesting maturing debt into Treasuries to maintain record stimulus even after making good on a pledge to complete $600 billion in bond purchases by the end of June.

The Fed chief’s top two lieutenants said this month the economy and inflation are too weak to warrant the start of a monetary-policy reversal. Investors and economists including David Kelly at JPMorgan Funds see that as a signal the Fed will keep its balance sheet at current levels by replacing about $17 billion a month in maturing mortgage debt with Treasuries.

Ending the reinvestment policy and the $600 billion program at the same time would be like quitting stimulus “cold turkey,” said Kelly, who is based in New York and helps oversee $400 billion as chief market strategist at JPMorgan. “It does make sense to reinvest for a while,” he said. “Then they could watch how bond yields react to that.”
What they are suggesting here is to “reinvest maturing debt.” This talk is nothing but code/ disinformation language designed to confuse and confound the average person. They are simply saying that as debt matures that they will replace that debt with more debt in an equal number, versus the current equal number replacement PLUS. It’s still “QE,” and it’s still nothing but outright money printing in laymen terms.

No, it doesn’t matter what they call it, they cannot actually stop doing it without markets and the economy falling off the cliff which they created (to their own benefit).

This morning Housing Starts came in higher for March than in February as is what happens every spring. The number came in at 549,000 new starts, up from 479,000. Sounds great until you realize that these are all-time low depression era readings, that it is expected that the numbers go up in the spring, that housing completions set another new all-time low reading, and that apartment building is responsible for the majority of the starts (to house formerly middle-class Americans). Here’s Econoshill, having trouble spinning this one – yet I note the headline in CNN reads “Housing market shows some muscle.” To that I say sick and twisted, we are going to get fully what we deserve for being so full of fluff:
Highlights
Housing construction may be returning to normalcy after recently volatile winter months. Starts are up but still at a depressed pace. Housing starts in March rebounded 7.2 percent, following a monthly 18.5 percent drop in February. The March annualized pace of 0.549 million units came in higher than analysts' estimate for 0.525 million units and is down 13.4 percent on a year-ago basis. The improvement in March was led by a monthly 7.7 percent boost in single-family starts, following an 8.8 percent decrease in February. The multifamily component made a 5.8 percent partial comeback after plunging 39.4 percent in February. Overall starts for February were revised up to 0.512 million units annualized from the original estimate of 0.479 million.

By region, the rebound in starts in was led by a 32.3 percent jump in the Midwest. Also improving were the West, up 27.6 percent, and the Northeast, up 5.4 percent. The South slipped 3.3 percent.

There may be modest improvement ahead for housing starts. Housing permits gained 11.2 percent in March after decreasing 5.2 percent the prior month. Overall permits came in at an annualized rate of 0.534 million units and are down 13.3 percent on a year-ago basis.

Today's report is modest good news for a sector where expectations have been running low. Activity is still at a depressed level but now there is hope that housing is not back on a downtrend. Despite the favorable numbers, it is good that they were not much better. Supply is still high and too much of a boost in starts would simply mean pullback later until demand is more robust.

The March housing starts reports provided small lift to equity futures which earlier had been boosted by favorable earnings reports.
Hey, it’s hard to go lower once you’ve fallen off a cliff. And any bounce off a cliff-dive looks big percentage wise to those who don’t ‘do’ math. So, let’s turn to a graphic for the math challenged to clearly illustrate my point:

STARTS:


COMPLETIONS:


Think you’ll find a picture like that in the mainstream? Why not? Nope, just “Housing market shows some muscle.” Delusional/ Economic Mass Psychosis comes to mind. While disinformation is nothing new, the scope and extent of it certainly is.
"If you don't read the newspaper you are uninformed, if you do read the newspaper you are misinformed."
- Mark Twain
Did Bill Gross do the opposite of his book and go long bonds? Say it isn’t so. Why gee, I’ve been pointing out how all this talk of him selling everything came well after the fact and at a time that bonds were very close to major long term support. Since this time bonds have proceeded almost straight up, and today finally it’s being reported that maybe he went long again. Duh.

Let me help the uninitiated… The markets, all of them, are rigged. The exchanges are owned by the big banks who also create money from nothing. They own HFT computers and fuel their trading with their freshly printed money. There are NO regulators – forget that quaint notion. The politicians not only do not care, they are in on it and promote it. Ordinary citizens who try to play in their casino will lose – just like a casino, you will win just enough to keep you coming back as long as you still believe in their illusion. It’s a sick and twisted situation that is nothing but outright theft in my opinion – at least a casino is honest and you know the odds going in. In the ‘markets,’ not only do you not really know the odds, you are told nothing but lies and disinformation regarding the odds. The insiders manipulate everything – all of it. There are super-insiders who reside at the Primary Dealers (they OWN the “Fed” literally), and then there are ancillary insiders, like Bill Gross, who are given access to the real inside story as long as they do the bidding for the higher ups and promote their games.

Of course then there are various levels of insiders below the ancillary level, most of these people are unaware patsies who are tossed bones as long as they support the games. All the real insiders realize that there are no regulators – and that they are safe from having bought off the politicians. The only people ever prosecuted are the patsies who have either failed to support the game properly, or who have been made a sacrificial lamb for the real insiders – Bernie Madoff comes to mind in this regard – as the big boys knew his scam and only allowed regulators to get him when the pressure was on to feed a lamb to the sharks following the turmoil they created.

So, that’s the way the real world works – “invest” at your own risk within that context. Good luck, you’ll need it.

Let’s turn to the Fukushima nuclear situation again… no, I won’t let it go – it’s the most important event still occurring on the planet. Here’s Arnie Gunderson with his latest update. This one gets a little bit technical, so you may want to replay it to follow along – I note that when he puts up the temperature charts that the first digit is not in view, so the very bottom of the temperature graph is Zero, then 50 degrees Celsius, 100, 150, 200, etcetera.


Gundersen Discusses Current Condition of Reactors, TEPCO Claim of "No Fission" in Fuel Pool, and Lack of Radiation Monitoring in

I will note that unlike what Arnie said about pressures, it’s NOT good to have ZERO pressure in a nuclear reactor – that means the containment is compromised. Some pressure would be expected, but too high of pressure is not good either. The bottom line is that these reactors and cooling pools are all sick, and the situation is worse than the Japanese are letting on. Another example is the fact that robots couldn’t get into reactor number two as the steam was too thick and fogged over the camera lenses. At the doorway radiation levels were sky high – and so how do you get workers in? You don’t because you can’t.



TEPCO couldn't get enough data on the radiation level in the Reactor 2 building. Two remote-controlled robots went through the door to the Reactor 2 building on April 2. But after measuring 4.1 milli-sievert/hr near the door, the camera lens quickly became foggy due to high humidity (94 to 99%) and couldn't record the radiation level.



Meanwhile we still don’t discuss how to really contain it on site, and all the while radiation continues to pour into the environment. The latest? Fallout is now being found in the Southern Hemisphere, meaning there’s no place on the planet that’s unaffected. Our own FDA refuses to test Pacific fish? Heck yes, do as Arnie says and write your politicians, that is totally unacceptable.

Here’s a link to see the latest Xenon dispersion cloud… note that by the 23rd a very large and dense band will be aimed right at the west coast with levels similar to those passing over Japan. While on this site, you can also see the dispersion of cesium and how it’s making its way all across the United States: North America Xenon dispersion forecast from Fukushima through 4/23

Monday, April 18, 2011

Morning Update/ Market Thread 4/18 - Confidence Waning, Outlook Negative Edition…

And you thought it couldn’t get this surreal…

Just prior to the open this morning, Standard & Poor’s put the United States on “outlook negative.” Stocks are falling, the dollar is falling (but bouncing mechanically later), bonds are falling, gold & silver are setting new records, oil is falling, and most food commodities are slightly lower.

From S&P:
Because the U.S. has, relative to its 'AAA' peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable.

We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer 'AAA' sovereigns.

Outlook

The negative outlook on our rating on the U.S. sovereign signals that we believe there is at least a one-in-three likelihood that we could lower our long-term rating on the U.S. within two years. The outlook reflects our view of the increased risk that the political negotiations over when and how to address both the medium- and long-term fiscal challenges will persist until at least after national elections in 2012.

Some compromise that achieves agreement on a comprehensive budgetary consolidation program--containing deficit reduction measures in amounts near those recently proposed, and combined with meaningful steps toward implementation by 2013--is our baseline assumption and could lead us to revise the outlook back to stable. Alternatively, the lack of such an agreement or a significant further fiscal deterioration for any reason could lead us to lower the rating.
What we have here is two things; one is a large step towards admission of our impossible math, and two is political pressure to act. That pressure to act is exactly the type of pressure that can lead to another wave of deflation as austerity measures are “the cure” when operating inside of the central banker debt money box. My take is that any deflation, while potentially significant, will be overrun with the impossible math and thus a complete “restructuring” of our debt and money systems is going to occur.

I’ve been saying that for quite some time, and that’s exactly the way it’s heading, this admission/ veiled threat by S&P is a major step along the way. Keep in mind that the rating agencies aren’t going to do anything rash, their livelihood depends upon it. S&P is owned by McGraw Hill (MHP) which in turn is owned by some of the largest funds in the world. I’m certain that those fund holders want to reel in what they see as an unsustainable path. Of course as is usual for the rating agencies, they will only pronounce that the horse is in trouble AFTER the barn has burned down. Look for things to heat up over the debt ceiling debate and for progress to be made there and on next year’s fantasy budget where they will be touting how much they “saved” while continuing to feed the impossible math.

The Housing Market Index will be released at 10 Eastern this morning, while this light release week brings more housing data, and “Leading Indicators” later in the week.

Meanwhile interest rates continue to blow out on European debt, as the Fins vote out those in favor of a Portugal bailout, and the Greeks seek to restructure their debts into something longer term in order to fend off outright default.

Bizarre enough world for you? Thank a central banker. Oh yeah, it gets even more weird…
Gov. Scott Walker Reportedly Planning Financial Martial Law In Wisconsin

Following the lead of Michigan GOP Governor Rick Snyder, Walker is said to be preparing a plan that would allow him to force local governments to submit to a financial stress test with an eye towards permitting the governor to take over municipalities that fail to meet with Walker’s approval.

According to the reports, should a locality’s financial position come up short, the Walker legislation would empower the governor to insert a financial manager of his choosing into local government with the ability to cancel union contracts, push aside duly elected local government officials and school board members and take control of Wisconsin cities and towns whenever he sees fit to do so.

Such a law would additionally give Walker unchallenged power to end municipal services of which he disapproves, including safety net assistance to those in need.
Sieg Heil, Mein Fuhrer! …as if national level Czars weren’t bizarre enough, the financial chaos is breeding mini Hitlers who feel their bizarre actions are justified by the impossible math they are forced to deal with.

Oh yeah, as nuts as Czars are, our glorious exalted grand leader decided to take matters into his own hands (handler hands, of course) by flat out ignoring the direction of Congress who had passed a law that included provisions to defund many of the Presidential appointed “Czars.” Obama is flat out ignoring those provisions via adding in a Presidential “Signing Statement” which says surreptitiously that he is going to ignore that part of the law. In this manner he is CIRCUMVENTING THE RULE OF LAW. In other words, he is circumventing the checks and balances set for in this nation’s Constitution. He is overpowering the legislative branch and the legislative process.

Of course he is not the first to do so, that title goes to the former central banker Puppet-in-Chief. Note, however, this is yet another act on his part where he says one thing and then does the other – something for which I’m sure he must be on track to hold the political record. Surreal.

Did I say surreal? Oh yeah, it gets better. This weekend we learned that the University of Texas converted all their endowment’s paper gold holdings into physical gold – as in 664,300 ounces! Worth is nearly a billion dollars at today’s $1,500 an ounce, but that billion dollars represents only 5% of the University’s Endowment.

The University of Texas possesses the nation’s second largest endowment at $19.9 billion. Harvard’s is over $25 billion (but was over $30).

So, what does this ACTION on their part say? It says to me that they are no longer CONFIDENT that their paper gold holdings possess real value. It says that they understand their money is being devalued by reckless bankers and politicians and that they want to protect their huge portfolio.

Now then, this is just one institution that is losing confidence. S&P stated they are losing confidence. What happens when ALL the endowments seek to convert paper gold into physical? Seems to me that this is a game of first come, first served. Could it ignite a run on the physical metal? You bet it could, it seems to me that’s already in progress. Is this a sign of a top? Let me know when most the endowments have done likewise – and just imagine what would happen if all the large investments funds did the same!

Oh, and I have another issue here. Why on earth does the University of Texas endowment fund possess so damn much money?! With the cost of education soaring, the Universities are sitting on billions and billions while they jack up the cost of tuition and force students to bury themselves in central banker DEBT. Currently on Wikipedia there are 58 university endowment funds with values above a billion dollars (Wikipedia – Endowments > $1 billon)!

So, effectively the universities are robbing Peter (students) to pay Paul (Endowment and its managers), while putting the taxpayer on the hook to guarantee it all through the student loan process (which is not dischargeable in the bankruptcy process by the way – thanks to central bankers writing these “laws”).

How much educating could the University of Texas endowment do? Go ahead and get out your Cray calculator and divide $20 billion by whatever you think it should cost to educate one of our youth through college – the number is HUGE, and that money is simply not being used as intended. Greed comes to mind.

To refocus the discussion – all of these events point to a loss of confidence, and just look at today’s market – equities down, bonds down, dollar down (then bouncing mechanically on deleveraging), gold up. Loss of confidence is in progress.

How do you invest for that? Seems like the University of Texas is onto something.

And if those events are not surreal enough for you, think about the violent breakdown occurring now in Mexico, and then try reading about the fallout of the impossible math right here in the good ol’ U.S. of A… Crime and police work in Flint, Michigan:
Riding Along With the Cops in Murdertown, U.S.A.

A sign taped to the entrance of police headquarters says it all: “Closed weekends and holidays.” Every weekday, the doors are locked at dusk.

It’s not that the cops here are scared; it’s just that they’re outmanned, outgunned and flat broke.

…“Sometimes, we don’t get to a call for two days,” he says. Last fall, an elderly couple called after being held up at gunpoint in their driveway. The police arrived on the scene five hours later.
Go ahead and give that one a read.

And I can’t pass a day without emphasizing the dire situation in Japan – do not forget that every day more and more radiation from Fukushima is spilling into the environment and is continuing to accumulate into our food chain. The “roadmap” presented this weekend by the Japanese is complete fantasy. You will find that progress as they are discussing will not happen as they will be unable to reestablish containment as they dream. Again, it is my opinion that the number one priority be containment on site. In this regard they are talking about building a giant concrete walled structure to enclose the reactors in, but that is a dream until they get the fission reaction to stop taking place – this is because the fission reaction produces hydrogen and they risk blowing up any ordinary walled structure they place over them. No, they should be burying the cores and the pools in sand and boron, and then entombing them – at least get rid of TEPCO and bring in some outside experts to brainstorm and take action on behalf of humanity!

Each new aftershock seems to stir the corium and produce another large release of particles that is promptly covered up by the Japanese removing the radiation data as if it did not happen. Again, this is the type of cover-up that occurs when special interests are in charge – it is the exact same type of cover-up practiced daily in our markets and with our economic data.

And that is exactly why the University of Texas is converting to physical gold, and why the S&P put the United States of America on watch Negative.

Sunday, April 17, 2011

RSA Animate - Language as a Window into Human Nature

Hmmm... I'm thinking the emperor has no clothes, what about you? Perhaps we all need to meet in the town square?