Saturday, October 8, 2011

Weekend Open Thread...

Friday, October 7, 2011

Progress Requires Smashing False Assumptions…

“Constant development is the law of life, and a man who always tries to maintain his dogmas in order to appear consistent drives himself into a false position.”
-Mohandas Gandhi

Hang on – we’re about to embark on a strange, yet fascinating, journey across the fields of physics, economics, and then boating!  Yes boating.  What on Earth do these things have in common?  They all must operate within the one true physical reality that is our universe, and progress in all these fields is held back by hanging onto false assumptions. 

Splash!  Goes the casting off of beliefs that are not true!

The world is flat, remember, and so exploring across the horizon carries the risk of falling off the edge.  And we’re at the center of the universe, why just look at the stars and planets that obviously revolve around me!
Galileo Galilei

Giordano Bruno was burned at the stake in the year 1600 for smashing that self-centered assumption.  In the mid 1600s, following the Roman Inquisition, Galileo was famously jailed and held under house arrest for his heliocentric beliefs. 

Now those are some serious barriers to the progression of knowledge!

At the dawn of the twentieth century, the consensus was that man could never break the speed of sound.  It was considered a physical impossibility.  Then on October 14th, 1947, Chuck Yeager broke it, smashing that false assumption.  Today the speed of sound is routinely exceeded in flight; even I have done it and can tell you that were it not for my airspeed indicator would not have perceived the difference. 

Chuck Yeager
In the year 1905, a 26 year old named Albert Einstein postulated in his paper on Special Relativity that E=MC², and that nothing with mass can attain or surpass the speed of light (186,282 miles per second – 11.2 billion MPH). This past week scientists at CERN made the claim that neutrinos measured in Italy, which are extremely small but do have mass, repeatedly exceeded lightspeed by their measurements! 

Cautiously, they spent the last two years ensuring that they are measuring correctly, that they have accounted for all factors such as the rotation of the planet, and yet they are confident they have a margin of error that is less than 8 inches measured over a course longer than 400 miles! 

CERN Neutrino course
Of course their experiment needs to be reproduced and confirmed elsewhere, and in the mean time mainstream scientists are cautious.  Several have gone so far as to insinuate that it is blasphemous to think that Einstein could be even partially wrong!  The claim has been openly criticized by many, including Dr John Costella, an Australian-based physicist, who accused the researchers of making an "embarrassing gaffe" in their calculations; "Any physicist worth even a fraction of their weight in neutrinos will be shaking their head, knowing intuitively that the OPERA result is simply wrong," he wrote in a paper published online.

…Just like people intuitively used to think that the speed of sound could not be exceeded.  The result goes against what he “knows” to be true, and thus his mind is closed to other possibilities.

Albert Einstein
This is an extremely important discovery, the smashing of this particular assumption will force physicists to stop resting on Einstein’s laurels, and to reach further in understanding the true nature of the universe.  Einstein himself died knowing that big questions remained unanswered.  He never could reconcile the fact that his own Special Relativity breaks down in the quantum world of the very small.  Thus he, and others, spent a great deal of time looking for the Unified Theory which would possess no contradictions.  While we know that both Relativity and Quantum mechanics accurately describe their respective worlds, both big and small, we also know that neither accurately describes the entire universe and thus they are either wrong or incomplete.  Perhaps neutrinos exist in the realm between quantum and relativity?

This is the progression of science if one looks back in time.  Newton, for example, was right in his descriptions of orbital mechanics and laws of motion, but only to a point – they were incomplete.  And every experiment over the past century, until now, has proven that Einstein was right with his explosive equation Energy equals Mass times lightspeed squared (E=MC²). 

While looking at the negative implications of that simple equation, it is easy to forget that what’s true on one side of the equation is also true on the other.  On one side is Energy – but on the other is Matter (in motion).  Catch that?  Energy = Matter.  Equations are interchangeable across that equals sign, and therefore Matter = Energy. 

Let that sink in, it is profound and far more important than the way we usually think about that equation.  Energy therefore, has to be everywhere; it is the basis of every thing.  Energy is the very fabric of rocks, of space, of time, of you.

Every day you witness and participate in matter turning into energy – fuel is burned in your car’s engine.  Food you consume is matter turning into energy within your body.  The burning logs in your fireplace are matter releasing their energy.  This is entropy in motion, you can see it.  It is the principal of entropy that underlies the completely accepted as fact Second Law of Thermodynamics, which states in many ways that over time organized systems tend to wash out and will become unorganized. 

While we can back up the Second Law with experiment after experiment, we fail to adequately address the fact that our physical universe in fact does exist, is organized, contains extreme temperature variations, and especially that Energy not only equals mass, but that some of that mass has the ability to reason and even has consciousness – life!  Even the former tree that is burning in your fireplace (entropy) at one time was nothing but soil and water with the seed that passed on the information to make matter (a tree) grow from the energy within the soil and water (an organized system).  Does not life, then, fly in the face of the second law of thermodynamics?  Or is it just also incomplete in its description?  Perhaps it is correct, except when information/ instructions are given that create the organization of matter from energy?

Question?  If man can give the instructions to turn energy into matter, or even more profound, if man can give instructions to organic matter to assemble into another previously nonexistent life form, does that make man a god (to that life form)?  Did you know that this has already been done by Craig Venter?

I like to think that I don’t have to have a label on everything, some things are simply not knowable, at least during my life time they are not.  By not placing a label on the big questions, we keep our minds open to at least examine the possibilities.  Once convinced that something is a particular way, then we begin to move down a path that may, or may not, be correct.

Stephen Hawking, for example, makes the assertion right in the beginning of his book A Brief History of Time, that time before the “Big Bang” is “irrelevant.” 

Wow, that’s a major league assumption!  One that can hold back the progression of knowledge because it leads to a circular argument, and that excludes other possibilities. 

The term “Big Bang, conjures up that supposed tiny, but spectacularly dense, spot of matter.  According to Hawking, and others who now firmly believe in that theory, we’re supposed to believe that because all matter was perfectly still in a tiny dense spec that time did therefore not matter or even exist prior to the spontaneous explosion that expanded matter which created what we now think of as “space.” 

Okay.  Then what surrounded that infinitesimally heavy spec of matter before it exploded?  And in what space did it expand into to create our new space?  And why, exactly, if the matter was perfectly still did it spontaneously explode?

That’s quite the yarn if you really apply a little common sense.  You know, I don’t pretend to have the answers to those questions, but I know that assumptions are being made at the expense of what is probably true.  Heck, science still can’t tell you how water is formed or how it got on this planet to begin with.  And I can’t help but think about E=MC², and that everything is comprised of, and surrounded in, a field of energy.  I’m thinking there’s a lot more going on within that energy field than we can even imagine at this juncture in history.

E=MC² not only unlocked the atom (along with its negative connotations), but it is profound in describing the physical universe which places real limits upon human engineered enterprises – like economics.  Economics, and “money,” while human constructs, must still operate inside of the real physical world.  Should it conflict with the real physical world, guess which one wins?  False beliefs are not a cool thing to hang onto.

People are self-interest driven creatures, just like all creatures on the planet are.  Ultimately we are in a struggle for survival with and against the physical forces which we struggle to understand.  Those who understand them best are most likely to succeed, while those who don’t go the way of the dinosaur.  Some of us realize that to survive into perpetuity, we must learn how to live in harmony with nature – sometimes, though, our self-interest begins to think of the short run while ignoring the long run, and that’s when we get into trouble.

Most people don’t give the importance of sound economics the proper credence to the way in which humanity progresses.  Behind all the important events of history is found important economic turning points – we are at such a point in history now. 

Nikolai Kondratiev
Unlike physics, we still imprison people for economic heresy.  Back in 1930 Nikolai Kondratiev was imprisoned in Russia for his large cycle beliefs (Kondratiev wave, aka K-Winter), and later was retried on his “crimes” and then executed by firing squad!  He simply observed the same cycles later refined by Martin Armstrong who was just recently released from prison after 11 years, one of the longest people ever imprisoned for “contempt of court.”  He was tortured in prison and allowed to be beaten nearly to death by placing a homicidal inmate in his cell, then refusing to stop the beating until the guards thought he was dead.  That happened right here in modern day America – and there is no doubt that he was held to silence his beliefs as his ideology represented a threat to the powers that control the production of money and markets.

Now those are some serious barriers to the progression of knowledge!

We are all living a big lie, economically, and have done so our entire lives not knowing what exists outside of the box presented to us.  In the year 1913 the “Federal Reserve Act” gave the power to control the production of money to the “Federal Reserve Banks” which are not Federal, they possess no reserves, and they are not even a bank.  What they are is private corporations owned by private banks, who in turn are owned by private individuals. 

This is not only an outright lie in name, but it is clearly a conflict of self-interest.  Giving a few private individuals the right to control the production of money inevitably leads to them producing money and using it to buy the political system they desire – one that benefits them.  Their benefit is at the expense of others, the further away from the production of money you are, the more it damages you. 

There is a natural way of being in regards to money – money is simply an agreed medium of exchange.  Its production should never benefit individuals, it absolutely can be created and controlled in such a way that its production benefits everyone equally.  There is no need, for example, for a nation to have a national debt.  A sovereign nation can simply produce money and spend it into existence instead of borrowing it into being as we do now.  Take a look at the money in your wallet, you see that it says “Federal Reserve Note” on top.  The term ‘note’ means debt.  That debt carries interest paid mostly to the private banks who hold the majority of our nation’s debt.

That debt is their power base.  They wield their power to control the government, to control the markets, to control the media, to control our defense industry, to control the medical industry, the nuclear industry, our higher institutions of learning, etc.  The production of money is all about control – those who produce it are in control, those who do not are not.  If you covet a truly representative government, one that represents YOU, then you must work to return the money creation power to the people as is meant to be the case and as has been the case before in this nation.

So, we’ve been living a central banking lie that has placed us all into a false paradigm – a box with walls that are false.  Within that box is found impossible math.  There is simply no way that incomes can ever come close to servicing all the debt, and that has led to Macroeconomic Debt Saturation which I can prove has occurred in about five different ways.

Diminishing Productivity of Debt
A fundamental false belief economically is to compartmentalize our debts.  When applying for a car loan, for example, the bank will look at your personal debt levels and compare that to your income.  But you are not only responsible for your own personal debt, you are also responsible for your town’s debts, your county’s debts, your state’s debts, your nation’s debts, as well as your share of the corporate debt!  It amounts to well over $300,000 per person or $1.2 million for every family of four – conservatively, and reality is probably much worse than that.  Compare that amount to the average income and it quickly becomes clear that the math is indeed impossible.

Once debt saturation occurs, then “stimulating” the economy with more debt money only works to drag the economy down and to create higher unemployment.  This build up of debt must be cleared in order for the economy to create real productive growth.  Unfortunately the math of debt has gone exponential – yet another fact that is ignored leading to still more false beliefs.

But the debt cannot be cleared when the political system is controlled by those who produce the debt and got us into this situation to begin with.  And this highlights the fact that allowing private individuals to control the production of money goes against the very nature of nature.  Math is a part of nature after all, it just is, and there are limits imposed by it.

The impossible math that has taken root around the world is entangling all who get near it.  Below is a video called Battling Bad Science by Ben Goldacre who describes many of the ridiculous false beliefs that get propagated in the health industry by the media which is driven by special interest groups’ self-interest:

This same type of twisted self-interest is happening all over the fields of medicine, food production, what we formerly thought of as free markets, the military industrial complex, and really all facets of modern day life.  We are living in a central banker backed special interest box. 

This box is not good for society.  It creates all sorts of false economic beliefs.  It is much closer to voodoo than it is to science, because keeping humanity in the dark is profitable to those controlling the population. 

There are no solutions to the impossible math that work as long as we continue to live inside of their false box.  Tear down the walls to their box, however, and true solutions are immediately clear.  Just such a solution can be found within the framework of Freedom’s Vision.

So you see, economics is rooted in and intertwined with science, there is a natural order to the universe with real boundaries that cannot be exceeded.

The proper foundation to a well functioning economy is found in a rule of law that keeps itself well-centered within the natural limits imposed on it. From that proper rule of law the next step is to form a monetary system that benefits everyone equally.  Then you can begin to develop human and natural resources to create jobs, wealth, and prosperity.

That wealth pyramid exists within and is surrounded by nature.  But before a proper rule of law is established, empathy and communication must exist!  Any and all relationships exist because people first communicate with one another, and because all parties involved feel that being in the relationship is beneficial (there’s that self-interest again)!  It’s like a good marriage – when you’re in one you know it.  You recognize that you are better off as a team, not just an individual, and like all good things it is self-perpetuating when both parties feel good about themselves and their relationship(s).  But when you’re in a bad relationship you riot – and just look at the world today.

Right now people are not feeling good about their relationship with their money, they are finally beginning to get focused on the root of the money problem – WHO it is that controls its production (central banks).  This is why we are seeing the current set of “Occupy Wall Street” riots – note that each set of riots is getting closer to the root of who controls the production of money. 

And so the money and political environment is about to change, but unless we smash a few false assumptions what we wind up with may not be a whole lot better than what we have now.

All industries must operate within the confines of both the physical world, and the economic world that mankind has created.  All industries have their false beliefs, and the boating world is no different – I recently wrote about one when discussing Two Engines or One

Being a life-long boater and economic writer, naturally I realize that the boating industry is in poor economic condition.  However, until starting Gateway Yachts and participating in boat shows, I did not fully realize just how anchored the industry is.

My observation is that there are far fewer boats in the shows to go along with fewer attendees.  After discussions with those inside the industry, it is clear to me that the boating industry is still living inside of a bubble that is very similar to the housing bubble – with all the same mistakes and more.  Boats have become massively expensive on the back of the overall credit bubble.  Today boats are financed for far too long of a timeframe, up to 20 years!  People simply don’t own boats that long, nor do they hold up their serviceable condition that long without large investments in keeping them that way.  Interest rates too, are artificially low – thus people who really can’t afford them own them. 

Since the banks “securitize” the debt created from boat loans, they no longer have a vested interest in assuring that the boat remains “above water.”  The result, then, is that most boat purchases immediately go underwater because the financial institutions require too little money down and finance them for far too long a term.  In fact, most boat owners who have purchased in recent years are now underwater on their loans, meaning that they owe the bank more than they can sell their boat for – same thing that happened with houses.

And just like the housing industry, the boat industry has seen people simply walk away from their boats and their loans.  Now even the boat “short sale” is becoming vogue but requires the bank to play along, taking the commensurate write-off.  And just like the housing industry, inventories of used boats are high while sales of new boats are stagnant.  This is a very slow and painful process, one that promises to keep the industry anchored for years to come.

While I’ve enjoyed boating for a large portion of my lifetime as an industry outsider, it is a different view when looking at the industry with fresh insider eyes. 

As I gaze down the rows of stainless towers, flags astern, flybridges up high, antennae, and other expensive appendages piled high, I see a lot of very large, very heavy, and very fuel inefficient boats.  Money pits and maintenance nightmares lined up at the docks with their brokers and listings in tow, I can’t help but see dinosaurs sinking deeper into the tar pits of time.

The docks are largely empty, brokers excluded. The economist in me recognizes that there is a part of the economic upheaval that is good.  It has a cleansing action that removes the weak and infirm, thus giving rise to another cycle of innovation and less bureaucratic, more nimble companies.

But wait, look over yonder!  Behold the light and the pocket of people on the docks!  There, behind the one with moniker ASPEN on her transom, people are flocking and squawking like gulls over a school of herring.  What I see there is electric – remember, matter = energy.  Rows of empty docks, and yet look over there!

What I see over there is innovation rising from the depths of a sunken industry.  Innovation that considers both the physical reality that is our universe AND the economic reality in which we all live. You see, Larry had a better idea.

Larry Graf
Aspen Founder and boat designer, Larry Graf, owned Glacier Bay Power Catamaran Company for more than two decades, selling more than 3,000 boats before leaving to found Aspen.   He knew that a catamaran’s twin hulls were inherently more stable and much more efficient than the typical V-hull, but he also saw the reality of high fuel and operating costs.  Typically a power catamaran requires two engines to remain symmetrical; it took Larry’s artistic eye to innovate through the symmetrical realm into the efficiencies possible with just a single engine powering a two hull design.

To accomplish this, Larry developed a proa hull, which means that one of the two hulls is larger than the other.  In this case, the starboard hull is 35% larger than port!  The single engine is located in the larger starboard hull – normally this arrangement would produce a constant left turning tendency due to the asymmetric thrust, but that was mitigated via a slight curve, like an airplane’s wing, built into the boat’s hull.  The result, after painstaking testing, is an international patent on the technology and a boat that goes straight as an arrow while burning far less fuel than any other boat with a similar displacement.  An Aspen is an artistic act of balance, form, and function that equals efficiency.
The hull of the Aspen is a displacement hull, meaning that it does not plane up on top of the water, it cuts through it like a knife, and thus it does not pound on top of the waves, its’ ride is smooth and stable while it slices through the waves.  In doing so it produces almost no wake, an indication of just how little drag is present.

We’re talking about a boat that is extraordinarily safe, stable, comfortable, and yet for a nearly 10,000 pound boat burns only a little more than four gallons per hour at a normal cruise speed of about 17 mph.  And if you pull it back to trawler speeds, less than about 9 mph, you will sip a miserly 1.2 gallons per hour!  Do the math, you are going places in a boat while talking fuel burns measured in miles per gallon, while most of the dinosaurs are measuring their fuel burns in gallons per mile!

And the Aspen is loaded with good engineering, quality hardware, and many other innovative features such as solar panels capable of powering much of the boat’s electrical needs.  When you see a product that blends with the physical world, efficiently, you know it – it has the same ring of truth behind it as does the term debt saturation.

Those who know me or have followed my writing for any length of time know that I simply do not say or get involved in things that I don’t believe in, so please don’t just take my word for it, view other testimonials, and see for yourself how the Aspen glides through the water. 

I sincerely believe in this design and I believe in Larry.  I can’t say enough good about them, that is why I chose the boat for Gateway’s Fractional Ownership Program – it is simply the future of boating.  Aspen is currently building the 28’ C90 Aspen, and has plans to build fantastic 36’ C110 and 54’ C150 versions of this boat, and I can’t personally wait to see them on the water.   

Of course building new boats is very expensive. Larry takes the extra step to turn his drawings into a mockup, and then invites potential customers to tour the mockup and provide feedback.  This is invaluable in developing a product that people actually want.  Investment money is needed for these larger vessels, again Larry has done this many times before and knows how to produce returns that are as exciting as his machines (like 50% returns on investment).  If you’re interested in backing a real product, an innovative product made here in America, you can contact me and I’ll put you in touch.

While his product is terrific and almost anyone can actually afford to operate it, he still must buy his parts, products, and labor from the central banker bubblishish world, and that means the boat is not inexpensive to acquire – none are.  And this is where my own creative mind works in concert with Larry’s by blending in the fractional ownership concept.

To combat the rough economic seas created by private central banking, the Gateway Program sells shares in the Aspen and other (less efficient) boats in 1/8 increments, each bringing with it 5 weeks, or about 35 days, of use each year.  This drastically reduces the ownership costs, and in fact is less than 1/8th the cost when financing is considered, all while providing a better ownership experience because the work of cleaning and maintaining the boat is taken care of by us. 

The best part is that we are matching private investors, the old fashioned conservative way, to customers who wish to finance their share, thus bypassing the aforementioned central banker box.

And that is how we blend the topics of boating and economics into the physical world.

My cast off to humanity?  Be aware that you, everyone, and everything else are all a part of the same field of energy that permeates and surrounds us all.  Each one of your actions casts waves into that field of energy - we are all a part of the same fabric – the waves you cast are the information/ instructions of the future.  The waves you cast will ripple throughout time.  And so when you cast out assumptions, make sure they’re good ones like Larry’s!

Morning Update/ Market Thread 10/7 - Real Change Doesn’t Come from a Teleprompter Edition…

Good Morning,

Equity futures are zooming on the news that the Employment Situation Report wasn’t a complete disaster as reported with 103,000 supposed Nonfarm jobs “created,” and a trumped up overall rate that remains at 9.1%. The dollar is down, bonds are down, oil is higher, gold & silver are higher, and food commodities are mostly lower.

Here’s Econospin’s report on the Employment situation to start us off:
Job growth improved more than expected in September although the gain was held back by contraction in the government sector. Payroll jobs advanced 103,000 in September, following a revised 57,000 rise in August (originally flat) and revised 127,000 increase in July (previously 85,000). Analysts forecast for a 65,000 increase for September. Revisions for July and August were up net 99,000. Private nonfarm payrolls were somewhat stronger than the total, gaining 137,000 in September, following a 42,000 increase in August and 173,000 boost in July. The September number topped the market expectation for a 95,000 increase. A return of striking telecommunications workers added about 45,000 to the payroll total.

In the private sector, goods-producing jobs rebounded modestly while service-providing jobs posted a notable gain. Goods-producing jobs rebounded 18,000 after a 9,000 decrease in August. Manufacturing jobs fell 13,000 after a 4,000 dip the month before. Motor vehicle industry jobs were flat in September. Construction rebounded a sizeable 26,000, following a 7,000 decline in August. Mining grew 5,000, following an 3,000 gain the prior month.

Private service-providing jobs jumped 119,000 in September, following a 51,000 gain the prior month. The August gain was led by professional & business services (up 48,000) and health care (up 44,000). Employment in information was up by 34,000 over the month due to the return of about 45,000 telecommunications workers to payrolls after an August strike.

The public sector shrank as government employment fell 34,000, following a 15,000 rise in August. August would have declined other that due to a return of 22,000 Minnesota government workers from a partial government shutdown.

Wages rebounded 0.2 percent in September after dipping 0.2 percent the prior month. Analysts had projected a 0.2 percent increase. The average workweek for all workers in September ticked up to 34.3 hours from 34.2 hours in August. The median forecast was for 34.3 hours.

From the household survey, the unemployment rate held steady at 9.1 percent. The consensus expected a rise to 9.2 percent.

Today's report indicates that the labor market is not quite as sluggish as earlier believed. Importantly, the services sector may be gaining mild momentum. Looking ahead, today's numbers point to a healthy wages & salaries component in the upcoming personal income report. However, industrial production for September is likely to be soft outside of autos.

Interesting that the revisions for the previous months are higher, here’s the entire report from the BLS for your reading pleasure:
Employment September 2011

There is very little to be gleaned from reading the BLS’s positively biased narrative. They are intentionally vague and generally categorize big number changes as being negligible, such as the Employment Population Ratio which is going lower and lower making the rate look better than it actually is:

It’s very interesting when you look at the annual change in Household Credit and compare it to the Employment Population Ratio. Here you find that as credit built up prior to the Debt Saturation point that Employment followed. But credit went exponential, and that created the saturated condition. Credit then collapsed (year over year) right along with employment – this chart is further proof of Macroeconomic Debt Saturation:

Also very interesting in the Debt Saturation proof department is comparing the rise of the Employment Participation Rate along with the rise in Government Debt – that is right up until the Debt Saturation point, when the Employment Participation Rate plunges yet governmental debt rises exponentially:

Obviously the rise in both Consumer Credit and Governmental credit came on the back of central bank engineering. There is absolutely no need for government debt whatsoever, that is the scam of the millennium.

When looking at the “Alternate” Table, we find that U-6 unemployment, that most closely resembling how it used to be tracked, fell from 16.1% to 15.7% unadjusted, but rose from 16.2% to 16.5% with the BLS’s seasonal adjustments included:

The phony “Birth/ Death” model actually was used to subtract jobs this month as September is typically one of months that seasonally losses jobs under their model. Amazingly, this year’s subtraction is larger than last year’s at -43,000:

Of course what puts the lie to all the statistic gymnastics is not only the Employment Population Ratio, but also the Mean Duration of Unemployment that continues to rise unabated into the stratosphere of historic numbers:

Again, look at how the Mean Duration of Unemployment tracks the injection of Base Money. While it would not be scientific to say that one causes the other, I believe that both are the symptom and reaction to the macroeconomic debt saturation condition, and this will not change until the debt saturation is cleared, although it must level off at some point:

Of course John Williams at tracks the numbers and isn’t fooled. His Unemployment numbers are still rising and still pushing 23%.

Remember, you can fool some of the people, but not all of them…

The unemployment numbers aren’t the only thing rigged, and in that respect they share a common theme with the root cause of our economic problems. They are rigged because those who produce and control the production of money have their way with everything – unfortunately that includes the nuclear industry, and here’s Arnie Gunderson doing yet another great job of telling you exactly how special interest money and influence have created a dangerous situation inside of the nuclear industry:

Turning back to the “Occupy Wall Street” riots, it seems to me that many people still don’t understand what’s happening – not just the protestors, but also those on the outside commenting on them. While the protestors may not be perfectly on target, that’s not the point – the point is that they are disenfranchised, just as the “Tea Party” “conservatives” have been disenfranchised economically. Both groups are troubled, but they just have different flavors in reaction.

And with both sets of riots, there are attempts to discredit them – now with OWS there are accusations of people buying protestors to show up. What nonsense, there will be accusations and bizarre stuff whenever large groups get together. It’s the big picture points that matter – the people of the United States are rioting. You can marginalize that all you want, but you won’t change that fact – they are old, young, left, and right, and they come in a variety of flavors. It doesn’t matter what your flavor is, it is macroeconomic debt saturation that is at the root of your disenfranchised pain – and at the root of that are private bankers who were wrongly given control over the production of this nation’s money.

So, expect rioting to continue and to get worse. It doesn’t matter the flavor, the root cause is the same, and these riots are just one part of the “other events” that I’ve been telling you to expect all along. There will be more “other events,” and they will be much more serious before it’s over. These other events are what is going to bring the REAL CHANGE. It won’t be pretty, in fact it will be very ugly. That’s because real change doesn’t come at you from a $2,000 empty suit standing in front of a teleprompter!

I’ll be publishing a lengthy article later this afternoon about the importance of smashing false assumptions – I hope you come back and give it a read this weekend.

Thursday, October 6, 2011

Morning Update/ Market Thread 10/6 - Life on the Jobless Plateau Edition…

Futures are close to even after being higher overnight. The dollar, however, is substantially higher - a yellow light to those chasing the rally following the VIX buy signal. On the other hand, bonds are lower, oil is higher, gold & silver are higher, and food commodities are less palatable as they bounce off of support.

Weekly Jobless Claims came in right on the Jobless Plateau at 401,000 where the statistics have lived for well over a year now. Of course there are real people behind those numbers which are evidence that no real job growth has occurred for many years. The only job growth you will find is on paper and coming from the lips of elected officials trying to take credit for the jobs that “would have been lost” had they not stimulated (ruined) the economy. Here’s Econoplicit, note the revision higher to last week’s data, you knew that was coming – but somehow they didn’t:
Jobless claims are pointing to little September-to-August change in the labor market. Initial claims for the October 1 week total 401,000 vs the Econoday consensus of 410,000. Cutting into this difference is a 4,000 upward revision to the prior week to 395,000. The four-week average is 414,000 which is slightly lower than the month-ago comparison, but this indication is clouded by a nearly 20,000 increase in the direct September-to-August comparison of the Labor Department's mid-month survey week.

Continuing claims likewise show no conclusive change. Data for the September 24 week show a 52,000 decrease to 3.700 million but the four-week average of 3.739 million is virtually unchanged with the month-ago comparison. Yet the unemployment rate for insured workers did tick lower, down to 2.9 percent following seven straight weeks at 3.0 percent.

Despite quarter-end issues, the Labor Department says there are no special factors whatsoever affecting today's report. Demand for the safety of Treasuries is easing in a move that suggests today's data may be improving expectations for tomorrow's monthly employment report.

If you want to see some of the actual faces behind those statistics, all you have to do now is turn on the television and there you will see many of them out on the streets in New York and across the nation, many of them now being arrested.

This Occupy Wall Street deal is starting to look a lot like the beginning of the protests in Egypt. Is this the real deal? I think it is, but I also know that it’s going to have to turn ugly, real ugly, in order to affect the type of change that those marching on the streets are looking for. They themselves don’t seem to really know how that change is going to occur, or what would be best for the nation as a whole. It’s a dangerous game, one in which I would not be surprised to see some sort of real nasty other event occur that shifts attention. Of course that will only stir the bee’s nest, so be careful if you are participating in these protests.

And if, by chance, they are successful in driving out the current power structure, then you must be careful, real careful, what you ask for in the wake of your actions. Job number one, it seems to me, is to restore the rightful rule of law. To do that you must hold those who are breaking the law to account, you must have a vehicle to legally and equitably clear out the debt saturated condition, and then you must set about putting in place a monetary and banking system that benefits all the people equally while separating special interest influence from government (look at Freedom’s Vision). Easy, no (LOL)? Here’s the place to start - Step 1 is to appoint William K. Black to begin special prosecutions.

Yes, life on the jobless plateau would be a lot easier to take if you knew Bulldog Bill Black was on the prowl.

Tomorrow comes the trumped up Employment numbers – somewhere on the to-do list in the post takedown phase comes the righting of all economic statistics, for that I nominate John Williams. Oh yeah, time to turn the page, Bill Still for President!

Wednesday, October 5, 2011

Morning Update/ Market Thread 10/5 - Shell Game Fantasy Edition…

Good Morning,

Yesterday afternoon’s ramp just prior to the close was all rumor based once again that the Europeans may have a “solution.” Once again, that is simply false, and it was nothing but another manipulate the markets rumor. The fact the market moves like that is all you need to know about the quality of “investment” we’re talking about here. Let me put it another way – it’s no place for retirement money to reside.

Still, based on even more potential shell games the equity markets are slightly higher this morning, the dollar is slightly lower, bonds are slightly lower, oil is lower, gold & silver are lower, and food commodities are mixed.

As I mentioned yesterday, the VIX did close back inside of the Bollinger Bands, thus it did trigger a market buy signal. Not that I am playing in these criminal markets and I hope you don’t either, but if I were, I would be very careful with that as it is based upon nothing that is real, of course all the markets are no longer based upon anything real – they are a hollowed out fluff of central criminal games:

Here’s the type of ridiculous shell game that is transpiring in Europe right now:
Dexia May Be Left as ‘Bad Bank’ by Governments

Dexia SA (DEXB) may be left with the lender’s worst assets under plans that would allow the French and Belgian governments to avoid injecting more capital into the bank, two people with knowledge of the talks said.

Under the option most favored by the French, the two governments would guarantee Dexia’s borrowings before splitting up the lender, said the people, who declined to be identified because the talks are private. Belgium may then assume Dexia’s assets in that country, while France’s state-owned La Banque Postale and Caisse des Depots et Consignations would buy Dexia’s French municipal-lending unit, leaving Dexia as the “bad bank,” the people said.

That would avoid an immediate recapitalization of Dexia, which would then sell its legacy assets over time, the people said. If the lender transferred its bad assets to a new company, the bank would need additional capital because a sale would crystallize what are at the moment paper losses for Dexia, one of the people said.

A final decision is yet to be made and the negotiations are still fluid, the people said. The governments pledged yesterday they would take “all necessary measures” to protect clients and will guarantee all Dexia’s loans.

France will announce more details about Dexia’s rescue tomorrow, French Finance Minister Francois Baroin told RTL radio today. Deposits with Dexia are backed by state guarantees which won’t increase French state debt, he said.

Belgian Finance Minister Didier Reynders said guarantees that will be provided will be “inferior” to the ones granted in 2008, when Belgium’s share exceeded 90 billion euros. He also said that Belgium has “no intention” of chalking up losses, adding that it will collect a fee in return for the guarantees. Dexia paid 489 million euros last year for use of guarantees, according to company filings.

You catch that? Here is an admission that the bank is full of “assets” which are “bad.” But no one wants to take any losses, so they will simply split the company up and use it as a “bad bank” to hold the rotten assets until they can be sold, but somehow, by some mysterious means no one will have to take losses! Oh, and it’s a “rescue!” Or wait, is it a “ringfence?” Because you know they must build a “fence” around the banks prior to letting Greece default so as to not shock the markets, LOL.

I’m thinking the Euro Yahoos have been taking lessons from Penn & Teller:

Oh yeah, Italy was downgraded 3 steps yesterday just after the close.

No, none of these types of shell games are going to work – the rot must be cleared out, it cannot be allowed to fester under the carpet. These games are the breakdown of the rule-of-law in progress! Schemes such as these are completely illegal in all countries – yet they somehow have become the standard of today’s central criminals and their politician puppets.

People marching in the streets? Yep, more and worse is deserved and coming. The rule of law will be reestablished, but it will be a long and painful process. Sad. None of it had to happen, the root of the problem is WHO it was that was allowed to control the production of money. No nation should have a national debt owed to any private individuals – period. It is completely possible and appropriate for nations to spend their own sovereign money into existence without debt. In fact, as long as they don’t they are not really a sovereign nation – they are a slave nation.

The morally bankrupt criminals running the MBA report that Purchase Applications for the prior week fell .8%, and that Refinancing activity fell by 5.2%. Hey, at least they aren’t posting those ridiculous and unbelievable double-digit one week moves – here’s econogullible:
Purchase applications fell 0.8 percent in the September 30 week in a soft ending to a solid month. Mortgage rates, the lowest since the 1940s, are a positive for housing demand as they are for refinancing demand. The refinance index, though down 5.2 percent in the latest week, has been rising sharply. The report notes that many refinance borrowers are deleveraging by moving to 15-year terms with the maturity making up 27 percent of the week's refinancing volume for the highest share on record. The average 15-year rate is 3.49 percent, up three basis points in the week.

Nothing good about the Challenger Job-Cut Report, massive increase in mass layoff notices, AND hiring intentions are far below those of last year:
A planned 50,000 troop reduction in the army and a 30,000 layoff announcement at Bank of America made for a swollen 115,730 total for Challenger's September layoff count, the largest total since the recession days of April 2009. Excluding the army and Bank of America, layoffs would have come in under 40,000 which is on the low end of trend. Still, today's results could be signaling increases ahead for jobless claims.

Challenger also offers data on hiring intentions which total 76,551, much weaker than 123,076 in September last year. Retailers including Halloween City, Party City and Toys "R" Us announced large hiring plans in the month but the retail sector's monthly total of 70,912 doesn't compare well with the 114,000 of last September.

How are those shell games working out for the economy? Every single one of those people should be out marching in the streets.

The ADP report is nothing but a chance for the market to be manipulated again prior to Friday's government version of manipulation Employment Report. This month ADP is basically holding steady on last month’s guess which was once again way off the base of what the BLS reported:
ADP estimates private payrolls rose 91,000 in September, little changed from its revised 89,000 estimate for August. Markets are showing little immediate reaction to the results.

Shell games and the breakdown of the rule-of-law mean an economy that is going nowhere fast…

Tuesday, October 4, 2011

Morning Update/ Market Thread 10/4

Good Morning,

Equity futures are lower again this morning after key support was broken yesterday and a new closing low was made on most major averages. This morning the dollar is slightly higher, bonds are slightly higher, oil is lower, gold & silver are slightly lower, and most food commodities are continuing lower as well.

No economic data out so far this morning, but Factory Orders are released at 10:00 Eastern.

The breakdown in oil I pointed out yesterday is significant. There is support in the $70 area now, but below that the H&S target is $45. That price level would be good for the economy here, but bad for the oil producing nations who are as addicted to dollars as we are to their oil. Again I note that every single excursion in the price of oil above $80 results in a turn down in our economy. Combine that effect with macroeconomic debt saturation and you are going no place fast.

Below is a 3 month daily chart of the SPX. You can see that a new low below the August lows was made yesterday. The trend obviously remains down, and this break is targeting the 1,000ish area on the SPX:

The DOW Industrials also made a new closing low yesterday – not an intraday low, but a closing low, and that’s the one that matters. This morning it is making new intraday lows on the open:

This new low on the Industrials confirms the new lows made earlier on the Transports thus it is a minor degree DOW Theory sell confirmation that wipes away the potential non-confirmation had the Industrials failed to make that new low.

Instead, DOW Theory is working on a MAJOR degree upside non-confirmation which is often in place at major market tops – and one is in place now. This happened because the Transports recently made a new all-time high, but the Industrials did not even get close. Below is a 5 year chart of the Transports showing the recent all-time high in the circle – barely:

Below is a 5 year chart of the DOW Industrials. For the DOW to now confirm the Transports upside new high, it would have to travel almost 4,000 points up from here – not going to happen anytime soon, and this is a major degree DOW Theory non-confirmation:

Now let’s talk about why the Transports hit that new high in the first place. Fundamentally what was the reason? Was energy so cheap that the transports deserved that valuation? No, oil was shooting the moon at the same time. What was happening is that QE2 was pushing billions of paper fluff into the markets where the HFT private bank speculators were fluffing up, pumping up everything and anything they could – all the way to ridiculous valuations in the “Fed’s” attempt to create inflation. Not only that but the accounting standards that produced those earnings have never been looser, and corporate “profits” in general are vastly overstated due to the mark-to-fantasy world which has been allowed to propagate.

Just yesterday rumors were flying about American Airlines being on the verge of bankruptcy! How can that be with the Transports still so close to an all-time high!? It can’t be – it simply doesn’t add up. But of the two, AMR bankrupt or Trannies at all-time highs, I would tend to believe that AMR is bankrupt. And the cost for AMR to access capital is shooting higher, just like Greece when investors began to finally come to grips with the impossible math.

In short, the Transports at all-time highs was nothing but fluff, and like the marshmallow it was, is now melting when a little heat is applied – ditto for the broader market in general. But this DOW Theory non-confirmation is major league and should not be ignored.

Remember back in 2009 when the financials were coming up off the bottom? Because they were so low, the rise in percentage terms sounded quite large and led many an idiot on CNBS to proclaim that they were the best performing sector. All the while I was pointing out that, no, they are the worst performing sector, even with all the trillions being pumped into them. Looking back in hindsight now at a 5 year chart, I am clearly once again proven correct – just look at the non-confirmation of the financials compared to the Transports in terms of getting close to making new highs, miles and miles away:

Remember, this XLF performance is with “record earnings,” quarter after quarter of perfect HFT trading, and we know that the market is not real, it is these same players who have made it not real – yet they are not buying each other’s stocks to the same heights… why do you suppose that is? Could it be that they know the rot is hiding under the carpet? Oh yeah. And this non-confirmation is critical, never have the major indices just climbed and climbed without the financials coming along for the ride.

While we’re looking at the big market picture, let’s examine a 20 year chart of the SPX. Here you have a major league double-top and collapse. Then we get a straight up bounce on the back of trillions in paper chasing and false accounting. Already the current decline has taken it back below the long term uptrend line, the dashed green line:

Now look at the dashed blue line that is down slopping – there you see the bottom of the potential channel, where if stocks continue on the present trajectory will arrive at that line somewhere around the 600ish (or slightly lower) level. Will it get there? Don’t know, but that’s probably real close to where it belongs with proper valuations and the fluff removed.

History proves that it is the second major wave of deflation that creates the real change necessary to rebuild and to start anew. If that holds, then this wave down is the actual buying opportunity of your lifetime, and probably of your children’s lifetimes. Yes, this is a monetary condition – one that is going to continue to produce hugely significant “other events.” But it is those very other events that will change the system and clear out the debt – it is coming.

If you’ve been following my advice, you got “real” a long time ago – you have shunned the markets except enterprises you know are real, and you hold cash, and some precious metals. At some point you are going to want to participate in the markets again once they have been washed clean of the criminal enterprise. I don’t think picking an exact moment is a good strategy, and I don’t think staying out forever is a good strategy – the system will change, but it may or may not change overnight, that change may be sneaky and incremental. And I propose that at some point the market gets so low that you have nothing to lose by participating – the reason being that if it continues into nothingness, then society would have broken down to the Mad Max level and your money will no longer be of any value regardless.

So, what I will say I plan to do is to continue to invest in my business that I know is real. And I will also begin to look for opportunity with income producing properties and also in the markets. One strategy for the markets will be to begin buying in incrementally once the SPX gets below the 1,000 level. Not all at once, perhaps 10% at 1,000, then another 10% at 925, then another 10% at 850, etc., so as to be fully invested with whatever you plan to have into the market by the time the SPX reaches say the 550 level (don’t give up all your PM). Again, if it goes below that level it really won’t matter. And regardless of what new money system comes along there will still be real businesses left.

One last thing… yesterday the VIX closed above the upper Bollinger band. This is the setup for a market buy signal that will be triggered once it closes back inside of the Bollinger band range. It may not happen for awhile, and I would consider any move higher just another wave to be sold, but it may be a wave that lasts a while as we now have 5 waves lower in the general markets.

Monday, October 3, 2011

Morning Update/ Market Thread 10/3

Good Morning,

Equity futures are sliding again over the weekend and this morning. Key support now is at 1101 on the SPX. The dollar is rising with the Euro falling, bonds are rising, oil is falling below what was support, gold is regaining some of its luster, silver is higher, and food commodities are breaking down beneath key support levels.

The Manufacturing ISM for September and Construction Spending for August are released this morning at 10:00 Eastern. The highlight of the week will be the Employment Situation report this Friday.

Last week produced the fifth month slide in a row on the S&P, the last time that happened was in 1981, it didn’t even happen during the 2007/2008 crisis.

Below is a chart of oil, at $77 it is well below the neckline of the obvious Head & Shoulder pattern. The target now for oil, without intervention of course, becomes $45 a barrel:

Gold bounced off the first area of uptrending support. Note again today we have equities lower, but gold higher:

Regardless of the deflationary wave, gold will, in my opinion, still outperform other paper investment including the dollar in the long run, although the dollar will benefit from deflation in the short term. Remember, the crux of the problems are MONETARY, it is all about WHO controls the production of money. As long as the impossible math still exists, gold is one good place to be. I would get cautious if $1,480 breaks to the downside, and I would change my outlook IF large scale debt defaults are allowed to take place. That is key, as when large debt defaults occur, it will make the impossible math less impossible and that will take the pressure off gold – but they need to be wide scale, not just Greece. So, look for that if you own gold – in this case I would not sell the rumor of default, I would wait to sell the actual news – don’t let the criminals shake you into a mistake.

Keep in mind that October is seasonally one of the worst months for equities. Yes, it’s a crash month, but then again we’ve already been sliding for the past five months. Crashes do happen from oversold conditions… it is definitely a time to be careful one way or the other. Of course my very best recommendation is not to play in the criminals’ “markets.” Doing so only feeds them with fees if not directly your capital.

Other events are playing out with people across the nation protesting the banks and large corporations – appropriately so, they are close to target, but not yet at critical mass. Critical mass is coming, and it will come all the sooner if the banks keep up with their “whoa is me” song and dance to justify idiocy such as sticking debit card users with a monthly fee. You want to see a run on a bank, that seems like a great way to start one, and it’s a great way to increase demand for actual dollars – hmmm, almost like a plan.

Banks in Europe are under severe pressure again. The prospect of defaults will send shock waves around the world and cross defaults. Those who are most in power will use it as an opportunity to consolidate their power. The “Fed” will remain involved and despite what they say will continue to provide swaps and liquidity into that situation, do not be fooled by their balance sheet, they only show what they want you to see.