Congressman Alan Grayson Explains the Foreclosure Fraud Crisis…

Must watch video explaining rampant fraud against the citizens of the United States. Had enough?

Morning Update/ Market Thread 9/30

Good Morning,

Here we are, the end of September and the market has done the opposite of its seasonal pattern, thus drawing in almost no one real, and that’s because it isn’t real, it has been accomplished solely by creating fake digits and using those fake digits to create a fake market. Besides the outright admission of market pumping POMOs, we know it’s fake because the dollar has lost 5.7% over the past month, gold has risen $73 an ounce (5.5%), volumes are down dramatically, and there have been phony gaps in the charts all the way up.

This morning the market is higher on the back of more massaged data – as it all has become. The dollar is lower some more, bonds are higher some more – no wait, lower, oil is making another run at the economy killing $80 mark, while gold soars onto new all-time highs once again. Nice.

The final revision of Q2 GDP was monkied up to 1.7% from 1.6% (quarterly number annualized). Unfortunately for those buying into this number, the rise was based primarily on increasing inventories. That is not a good thing, it is yet another sign of low demand. Here’s Econoday:
Highlights
GDP for the second quarter was revised up incrementally – but the added growth was not where you really wanted it. Second quarter GDP growth was revised up to 1.7 percent annualized from 1.6 percent in the second revision. The third estimate for the second quarter came in just above the market forecast for 1.6 percent.

The upward revision was primarily due to a moderately higher estimate for inventories. This added boost was relatively minor, however. Partially offsetting were downward revisions mainly to net exports and government purchases. Other revisions were marginal.

Real final sales to domestic purchasers were unrevised at up 4.3 percent from the prior estimate while final sales of domestic product (adds in net exports) were tapped down to 0.9 percent annualized from the second estimate of 1.0 percent.

On the inflation front, the GDP price index was unrevised at up 1.9 percent annualized. Analysts had projected 1.9 percent for the third estimate.

Just as a reminder, the GDP number is as real as the digits on the Fed balance sheet – in other words it’s not real. Its “growth” is based on financial engineering and on playing with the way inflation is measured – GDP is grossly overstated. The trend for GDP the past three quarters is down, and quarter 2 is now ancient history. Now that the third quarter is over, I believe we’re currently close to negative. Of course when we get the first Q3 report it won’t reflect that, but revisions will I believe.

Jobless Claims for the prior week came in at a still shamefull 453,000. The prior week was 465,000 (revised up to 469k) and the consensus was looking for 459,000. Like we haven’t been here before, Econoday shamelessly calls a 453k print “recovering:”
Highlights
You wouldn't know it from consumer confidence readings, but the labor market appears to be recovering, not sinking. Initial jobless claims fell for the fourth straight week, down 16,000 in the September 25 week to 453,000 (prior week revised to 469,000). The four-week average is down for a fifth straight week, at 458,000 which is down a convincing 30,000 from a month ago.

Continuing claims have been no better than steady. Continuing claims fell 83,000 in data for the September 18 week to 4.457 million. The four-week average of 4.527 million is slightly higher than the month-ago reading. The unemployment rate for insured workers edged one tenth lower to 3.5 percent.

The dip in initial claims points to improvement for monthly employment data. This report will offer strength for the day's financial markets.



I love the game of revise the number higher, then compare it to the next trumped up number in the series and say that it improved for the 5th straight week! No, actually we’ve been in the 450k to 500k range for the entire year, take a look at the chart. This is so far from job creation or “recovery” that it’s not even funny, it’s certainly no joke for the millions who are out of work or who are losing their homes. Where’s the jobs creation? It’s not in this report, that’s for certain.

The Chicago PMI is released at 9:45 Eastern this morning.

Europe is a complete disaster. Like the U.S. it’s a dyke that’s springing leaks all over creation. Spain was downgraded by Moody’s this morning, while Ireland steps into rescue two of its failing (ed) banks with money from who knows where, since they claim they don’t need outside help to do it. Sure, a bankrupt country bails out its own bankrupt banks, its party time, spreads are coming in!

Japan spent 4.6 trillion Yen to force the value of the Yen lower. It lasted for a little more than a week and now it's almost entirely gone. Talk of more has had zero effect. Talk about the theatre of the absurd and the obscene, it’s a comedy and a tragedy all in one play:



The news flow of bizarre happenings in our own administration and suggestions to deal with our own economic problems seems surreal. Trade wars starting up, currency wars in progress, POMOs out the whazzoo, QE2, rats bailing on the administration, a government that owns 90% of it’s mortgages - it’s a bizarre freak show, and I have yet to spot any sign of REAL economic life or of an adult leader.

The markets meanwhile continue to do their dollar beat-down drift-up. Yesterday produced a small change in the McClelland Oscillator, so the spring is wound to expect a large move today which appears to be up.

Yesterday the DOW finished at the bottom of a rising wedge. McHugh believes it needs one thrust higher from there, we are certainly getting that this morning. The wedge is now well defined as you can see in the 10 minute chart of the DOW below, however, in the SPX it looks a little bit more like a flat topped triangle which can be read bullishly:





Obviously the market had not sucked in enough money or people, the bears have been too eager to pounce. Yet the VIX continued to rise yesterday as it moved up the wick of the previous day’s inverted hammer:



Today is yet another Bradley Model turn date – will it mark a top, or will it have no effect? If the DOW’s rising wedge is valid, and it may not be, then today could be it. But but we’ve been here before shakin' the bears, haven’t we?

Morning Update/ Market Thread 9/29

Good Morning,

Equity futures are slightly lower before the open this morning. Bonds are higher, the dollar is down, the Yen and Euro are stronger, oil is up, while gold touched $1,315 an ounce overnight as it nears its $1,325 target.

The still worthless MBA Purchase Applications index rose 2.4% over the prior week, but the Refinance Index fell 1.6% leading to an overall decline in the index of .8%. Here’s Econoday:

Highlights
MBA Purchase Applications rose 2.4 percent in the September 24 week to end two prior weeks of decline in what has been an up-and-down month. The gain is centered in a 4.5 percent rise in government purchase applications vs. a 0.8 percent rise for conventional applications.

Yet the great bulk of mortgage applications, 81% in the latest week, is for refinancing where the index slipped 1.6 percent. MBA's composite index fell 0.8 percent. Rates are extremely low, at 4.38 percent for 30-year loans, down six basis points in the week and a new low for the series.

Here’s the deal – the private bankers who own the Fed have managed to buy off all the politicians to get their financial engineering (derivatives) and false accounting put into place. This has saturated everyone and every level of government with debt. The GSE’s have been used as a conduit to push off THEIR bad debts onto the American public and we’ve been far too passive and have let them. Since the entire economy is saturated with debt they are looking for any way possible to continue their schemes.

The latest trial balloon that’s beginning to get traction involves a new House Bill that would allow anyone with a FNM or FRE backed loan (30 million households – 90% of loans) to recast their loan at a low rate of interest (approximately 4%) REGARDLESS of the creditworthiness of the borrower or the value of the property!

Make no mistake that should this occur it is a bailout of the BANKS, not of the people. And this would have a very large effect, and it is possible that it happens due to the desperateness of the coming mortgage crisis. It would take the Option-Arm reset chart I’ve been showing and it would immediately flatten the curve:



It would also be used to shed the broken mortgage paper trail, thus killing two birds with one stone. You can bet, however, that any such reset program would turn any loan that wasn’t a recourse loan into a full recourse debt.

Should this occur, you will not want to be short the equity markets, especially bank stocks! Any pop received, however, would be short lived as the dollar would suffer and Americans would find that their cost of living will increase a commensurate amount. There is no free lunch – all debts get repaid with interest in one way or the other. A falling dollar, like what’s been occurring recently on QE rumors, is the other.

A mortgage reset scheme will simply further saturate America with debt, but it will kick the can down the road just a little further. If they do it at 4%, we will find that the kick wears off in 6 months or a year and then they will be forced to do it again at 3%, then 2%! But interest rates that low would also remove any profit from the banks in terms of arbitraging interest rates. The ending destination is thus the same, it would simply create a wild ride in-between. For now this is just a trial balloon, but remember that wild animals, and wild bankers, will do anything when they are backed into a corner.

Yesterday’s read on Consumer Confidence was awful and reflects the fact that an artificially rising stock market does exactly nothing for the majority of people who are still wallowing in debt saturation. It does nothing to Investor Confidence as it too is collapsing despite ultra-bullish sentiment readings in the market:



For now the market is still stuck between SPX 1130 and 1150. The action in bonds and in the Yen say that the break when it comes will be lower. McHugh is pointing to a potential ending diagonal on the DOW, but I don’t think it’s very well formed so I won’t show it. Tomorrow we have a bunch of important data and that could be impetus to move the market off the fence.

Yesterday’s action produced many hammer candlesticks in the indices, the RUT is a good example below. Those are potential reversal indicators, however most are inside the previous day’s candle and they need confirmation with today’s action below yesterday’s high:



The NDX produced a Hung-Man candle. You can see that the red uptrend line was broken and that the man is “hanging there” with no floor beneath him. Again, potentially bearish we will need confirmation:



Many of the NDX momo stocks faltered yesterday with AAPL stumbling on not one, but two mini flash-crashes. That’s got to make the average investor very nervous. Many other stocks are showing signs of rolling over as the rotation trade appears to be reaching exhaustion.

The VIX yesterday rose dramatically and then fell. That action produced a large black inverted hammer. That is also a potential clue, I would expect the VIX to rise up that stem and negatively impact equity prices. Again, when dealing with candle shapes we need confirmation:



On the plus side, the McClelland Oscillator did return to positive yesterday, but it’s close enough to the zero mark that a small decline will turn it negative again. All the divergences I’ve been pointing out have been growing. These WILL get resolved – the longer they go on and the bigger they get, the worse it will be. For example, yesterday I showed you how the bond market and stock market are divergent. Yes, most of it is due to the government buying up their own debt, but to put that divergence into perspective, the last time bonds were at this same level, the SPX was 300 points lower (more than 3,000 points lower on the DOW)! This will be resolved, and when it is we’re likely to see a lot of people looking a whiter shade of pale!

Morning Update/ Market Thread 9/28

Good Morning,

Equity futures swooned overnight but miraculously recovered with a straight up pump this morning into the green. The dollar is down slightly, bonds continue higher, the Yen is strengthening again, oil is down, and gold has fallen back below $1,300 an ounce.

Today is yet another POMO day. The correlation between POMO days and up days in equities seems to be quite high, and we need to watch that correlation progress. Look, as frustrating as it is, I can guarantee you that it WILL come to an end. Why? It’s simple. Because the PD’s and only a handful of other players have accumulated nearly ALL the stock already! Once they own the entire market, which won’t take long at the rate of $20 billion per week, then what? Then we have 10 or 20 firms trading almost all the stock? How’s that going to work out? It’s not, that’s how – once again our knuckleheaded leadership is getting us into a battle which they do not understand and one for which they have no exit strategy.

Can you say Iraq or Afghanistan? That’s what our stock markets resemble - the same exact type of flawed “thinking,” that is really only just a profit center for a few in disguise. They don’t care as they know it’s just a short term profit opportunity for them, they will leave behind a decimated populace with no effect on their narcissistic conscious whatsoever. I’m telling you that the POMO fueled stock market correlation is going to end, and it’s going to end badly as all attempts to manipulate price always do.

The Case-Schiller Home Price Index came in with a July 10 city seasonally adjust price increase of ZERO.ZERO% – nada. This is down from June’s supposed .3% increase. All the numbers reported were weaker. Keep in mind that this is a trailing report and that closing prices for July were not yet free of influence from our nutty government’s interventions. This summer’s selling season was DECIMATED because they simply pulled forward what little demand there was, and now the traditional selling season is over. In my neck of the woods (Puget Sound area of Washington State) prices are still far above rents and above what average incomes can support. That alone tells me that price correction is not over.

Yesterday Brazil admitted that there is a currency war occurring with countries competing to devalue their money. That’s definitely true. Now there’s also trade wars firing up. We accuse China of undervaluing the Yuan, they retaliated by sticking tariffs on chicken imported from America. Yesterday America responded:
US sets duties on copper pipe from China, Mexico

WASHINGTON, Sept 27 (Reuters) - The United States on Monday set final duties ranging up to 61 percent on hundreds of millions of dollars of copper pipe from China in one of several disputes causing friction between the two countries.

The U.S. Commerce Department announcement came one day after Beijing slapped final duties ranging from 50.3 percent to 105.4 percent on chicken parts from the United States.

Action in both cases came as the House of Representatives is considering a bill this week that would treat China's "undervalued" currency as an export subsidy under U.S. trade law, opening the door for more U.S. duties on Chinese goods.

Trade wars are not going to end well for anyone.

Consumer Confidence will be released at 10 Eastern this morning. These low confidence reports have been largely ignored by the markets so far.

The SPX 1150/1160 area is an import level, and it has held so far. Divergences continue to grow, they are all over the place. Here's a huge one - bonds versus stocks:



Another BIG red flag appeared yesterday when the McClelland Oscillator closed back below zero. This is one of the prime ingredients to look for when there is a Hindenburg Omen on the clock as there is now. As long as that oscillator remained above zero the odds of large declines was small, but below zero it picks back up dramatically.

The market has been leaving huge gaps in the chart all the way up from the bottom. Gaps get filled. Below is a 30 minute chart of the NDX, there are 5 open gaps just on this latest parabolic ramp, there is yet another even below that. Note the RSI divergence against price here – that divergence is even larger on the 60 minute chart. The longer the time frame of the divergence, the larger the coming correction:



The red line on that chart above is your clue point. The NDX is being fueled by the action on a narrowing number of momentum stocks. Those stocks are showing signs of tiring, and there are fewer of them now participating in the momo rotation. This is the same type of activity seen before at major tops. POMO fueled ramps will work until they don’t.

Surviving the Depression: Americans’ Entrepreneurial Spirit Will Never Be Destroyed

From the Lew Rockwell Site. http://www.lewrockwell.com/slavo/slavo13.1.html

by Mac SlavoSHTF Plan by Mac SlavoRecently by Mac Slavo: Going Out With a Bang: Americans Using Credit Cards They Can’t Pay Back[Image]

When times get tough, those who don’t believe in just giving up start turning their skills and knowledge into income generators. Home restaurants, which are common-place in places like Mexico, are now popping around the U.S.:As the unemployed and jobless become desperate in California many begin turning their homes into income generators. One house in particular caught my eye recently by turning their living room into a restaurant. In a sign that America is slowly becoming more like a third world country houses become weekend stores, restaurants, Medical Marijuana Collectives, day care centers and beyond. The street is telling the story of the unfolding economic collapse better than any article I can read. Unemployment and Food stamps and Welfare seem to be the lynch pins in our society on the west coast. Once government runs out of funds to support these entitlements, I fear for my children’s future.

source: inflationUS (View the Video Below)If you have skills like machining, welding, sewing, gardening/farming, ranching, child care, child education, self-defense, gun-smithing or something else, consider turning these into marketable businesses. Perhaps you are employed today, but if you lose your job or the SHTF, then you will need to generate income somehow. Do it using the skills you’ve learned over your lifetime. Not only will this pay some of your essentials bills, but you may find fulfillment and satisfaction, as well.
My children joined a local Karate Dojo at the beginning of summer. There are several around our area, at least ten that I know of because I checked them all out prior to choosing the one where the kids currently train. Most of them are located off of main roadways, so in addition to the traffic congestion during drop off times (around 5:30 PM during weekdays), they have to charge quite a high price just to stay in business and service their monthly rent payments. To accomplish this, most of the dojos in the area have to offer classes with large amounts of children per class, and generally, the training is more or less a chop shop – get ‘em in, get ‘em out and move on to the next class.

Instead of going with a chop shop dojo, I spent a couple days contacting different karate professionals in the area. The time spent was most certainly worth it. We were able to locate a newly founded Karate dojo with a young instructor in his early thirties who was trying to get his practice off the ground. The dojo is located away from the main roadways in a somewhat rural part of town, which saves the owner a ton of money in rent. Since he is relatively unknown in the area, the school is rather small and offers 4-to-1 instruction, because in addition to the Sensei (main instructor) there are several Sempei’s (older, higher belt level students) who are involved in training the younger kids during every class. Incidentally, the Sensei offers significant discounts to the Sempei’s on their adult training classes in order to assist with the kids – essentially bartering time and energy for time and energy. The training is held in a steel building modified to be a gym and the Sensei sub-leases time from a MMA fighting school for his specific time slots – so he is not responsible for covering a full months rent for 30 days, because he only uses six hours a week for training.

As a side note, the MMA fighting school is actually operated by the instructor who owns the steel building, which sits on his property, directly next to his house and was originally used as a storage building, but has now been converted for use as a gym.As parents we are happy to go with this particular school due to a significant price discount and what we consider to be much better training. The Sensei, who works a full-time job, is able to grow his Karate school, find fulfillment in his daily work, train in his own gym facility so he can avoid expensive gym fees somewhere else, and generate additional supplemental income for his family. It’s a win-win for everyone.We’ll begin to see more of this as this depression deepens.

No matter how hard our government tries to destroy the middle class and the entrepreneurial spirit that made America what it is, enterprising business people will continue to find ways to stay afloat and even prosper. That may mean working for a little bit less than they’re used to, but generating income nonetheless. Or, it may mean taking Federal Reserve Notes completely out of the picture and directly exchanging the yield from their labor (time + energy) for what someone else’s time and energy yields.

Morning Update/ Market Thread 9/27

Good Morning,

Yet another Monday morning which means that the debt pushers are hard at work building a false façade in the markets for maximum psychological effect… they must really like the democrats to be pushing so hard against what’s normally a negative election and seasonal cycle. Just wait until the debt pushers are not getting their way, then we will be right back to blackmail the economy via the markets again, a lesson we just haven’t seemed to learn despite being beat about the Head & Shoulders repeatedly throughout our history.

The dollar continues its plunge this morning, bonds are higher however, oil is also higher, and gold is setting yet another all-time high (although looking somewhat tired).

This latest run in stocks has been nothing but a government sponsored run on the back of billions and billions of YOUR money/ indebtedness. Just last week alone the Fed provided more than $20 billion in POMO activity. This and the expectation of some QE2 program are sinking the dollar, and sinking America’s future right along with it. In other words, the rise in stocks you see is false, what is really occurring is the torpedoing of the dollar, a move which is confirmed by gold.

Taking another look at the dollar chart, you can see that we have broken convincingly through the important 80 level, and we have confirmed the H&S target of 71/72ish by breaking below the neckline. This structure is inside of a larger triangle or pennant, the bottom boundary of which is currently just above 76. Should that 76 level be broken, that pennant says that America is in for some interesting and very difficult times:



Japan, of course, has been experiencing interesting and difficult times for the past three decades! Remember their recent attempt to stop the rise in the value of the Yen? It more than half melted away already, so this weekend they announced the following:
Japan Said to Consider Stimulus of as Much as 4.6 Trillion Yen

Sept. 27 (Bloomberg) -- Japan’s government is considering compiling an economic stimulus package totaling as much as 4.6 trillion yen that will be funded with existing revenue, a government official said.

That’s only $54.6 Billion in U.S. Dollars… sure, sure, it will “be funded with existing revenue.” Riiiigggght. Just like the last 10 trillion injection and the 10 trillion injection before that. Note this press release is nothing more than lip service, an attempt to scare traders into covering their positions. In other words, it’s blatant market manipulation… but we all know that by now, don’t we? Does it work? The chart says NO, not even a wiggle. This is the SAME exact thing that happened in Zimbabwe… the amounts got bigger and bigger, but they had less and less effect. This is also occurring in the United States, we’re just a little bit behind Japan. We are now deep into competitive devaluing of our currency. If it continues, it is going to completely destroy our economy.

That said, those are some pretty bearish dollar comments, and I know that we are flirting with record levels of dollar bearishness, that makes a reversal likely in the not too distant future, at least temporarily. However, from a technical perspective I just don’t see any meaningful support until we reach that 76 level.

There are no economic releases today, but this week is fairly busy with Case-Schiller home prices and Consumer Confidence tomorrow, the final revision of Q2 GDP on Thursday (consensus expecting no change at 1.6% - I think this is high), Chicago PMI, and several other reports come throughout the week.

The count in the market still looks like we are close to ending wave c of wave 2. SPX 1150 is an important level, and actually the market closed just above the 1146 pivot point on Friday. The next higher pivot is at 1168, however, 1160 is approximately where wave c equals wave a. The next lower pivot is located at 1136.



Friday’s run up was absolutely insane – again very artificial looking. There are massive gaps all the way up the charts. There are divergences all over the place, the number of 52 week highs is an important new one, there is also a developing divergence in the Advance/Decline line to go along with all the previous divergences and severe overbought market condition. Additionally, several of the sentiment indicators are at record levels of bullishness.

Again, the climb upwards has been an artificial illusion. It is not based upon climbing some mythical “wall of worry,” it is based upon $20 billion POMOs that fuel Fed sponsored HFT activity designed to knock down the value of the dollar while the American people are robbed. People who are robbed of all their productive efforts will eventually stop being productive. They will have less and less money that they can use to be “consumers.” As the consumer well runs dry, corporate profits will continue to collapse as they already have. Sometimes it’s real, sometimes it’s not – it’s our job to know the difference. Right now we’re 8 miles high…

Still Bombarded by Gold Bugs - Here’s the Other Side of the Coin

I still receive many comments and emails from gold bugs who believe that hyperinflation is coming/ has begun and that ultimately the solution is that we must return to some sort of gold as/ behind money construct.

For the record, I currently see price deflation in things that most consider to be “Assets,” while at the same time I recognize price inflation in things that people need. Overall I believe that “asset” deflation is far larger and that it is caused at the root by an overall deflation in the total quantity of money – today that is base money, debt (other “deposits), AND derivatives. I believe that all currencies constructed to date have/ will fail due to their flawed construct. They all die for the same exact reason – that is a loss of confidence (which usually leads to massive increases in money quantity).

Yes, our dollar is dying in the same manner as all other currencies throughout history, regardless of what backs them. I believe the sequence of events will include another round of very significant asset deflation, and that the reaction to it may be the trigger for a loss of confidence event/s. Timing of those events is not clear, but as I say, I do not believe this is a problem that will be passed onto our grandkids, nor our children, it is this generation that will be forced to live through the transition to whatever is next.

This morning I received an email from someone who at first glance was just another gold bug… but at second glance, he is really a free money advocate believing that gold should be free to perform a savings (store of wealth) function, alongside of a fiat trading medium that is not generally considered a store of wealth. This concept is labeled the “Free Gold” concept, and many detailed articles can be found at the FOFOA blog.

I HIGHLY recommend reading this blog and have marked it in my blog roll for you. So, in the past two days I have posted an article about complexity, another about a man who also sees deflation then hyperinflation, and today I am linking you to that blog with many articles by someone who sees hyperinflation as the destination and is very good at spelling out the reasons why he sees that. What I appreciate about the FOFOA blog is that he is NOT proposing that gold be our next money system, but instead believes that it is a store of wealth alongside of our next money system. In fact, that is exactly what I recommended in Freedom’s Vision when I say that gold must be FREE to trade without manipulation.

However, because I’m still bombarded by hardcore gold bugs, here is my response to those who profess their undying admiration of gold’s utility as money itself. No, I’m not much fun at a gold bug’s or a debt pusher’s party, those two paradigms are not the only answer, they both belong to a false and failed framework of a box that is as failed as the Republican/Democrat box in which we live. Things are not either this or that… real answers to things that have failed EXCLUDE the very “this” and “that” of the past!

While my perspective is “out there” relative to traditional (BS) theory, here’s my overall perspective and response to gold bugs for what it’s worth:

While I appreciate the gold bug’s sentiment, gold is simply the other side of the same old coin. There is only ONE REAL WEALTH, and that is people, not gold. All gold standards have failed throughout history in the very same manner as have “fiat” currencies – history is through the eye of the beholder’s bias, I encourage everyone to view both sides of monetary history for what it is – all monies have failed, do we simply repeat a multiple human failure? Isn’t that the definition of insanity?

Recall the specter of the roaring twenties… Who owned the gold? How did credit dollars get so out of control that the Great Depression followed? Were we not on a gold standard then? How many times during periods of gold standards do politicians (in bed with bankers) recast the ratio of gold to paper and why? Has the gold bug myth of mining more gold from the earth as prices rise really worked to control inflation and deflation? Who has it worked for?

Economies are built upon people, not gold… empathy and communications lead to the rule of law, which includes a shared means of exchange. That exchange allows the coming together of monetary, natural, and human capital that then build the infrastructure that support people, not gold. It is people who BUILD wealth, wealth does not just simply exist on its own. What is far more important than WHAT backs money (ultimately only people can) is WHO controls its production and its quantity! This is the realization that civilization is working towards… if we must go through another gold standard on the way to that destination of understanding, then it will bring nothing but pain to all but those who control it – and that is NOT you, nor is it I.

There is only ONE currency that will survive the test of time, and that is a currency based upon MATH and the rule of law that the people uphold via transparency and checks and balances. The math MUST target ZERO PRICE inflation/deflation, and then, and only then, will a stable system be made that can last.

The real store of wealth is the intellect of the human mind, not an arbitrary rare earth element. ENERGY is far more important than minerals and is the ONLY INTRINSIC thing in nature. In fact, modern science (not the crap you and I learned in school and is still be perpetuated) is rapidly finding that all minerals, all matter, literally springs forth from energy. The universe is comprised of ENERGY, everything, all matter including gold, oil, water, and people are energy… we are all simply waves upon the fabric of the universe and we are all connected by it. Gold is simply one state of energy, as is soil, rock, the sun, you, me and everything else. This is the truth that people are on collision course with, all roads lead to the truth.

Again, if humanity must suffer through yet another gold standard, we will have been miserable failures to yet another generation that will have to learn that WHO controls the money is FAR, FAR more important than what backs it. Gold and debt are both controlled by the very same people… control is the key word, they use BOTH gold and debt to control the masses. Ultimately the only real money is backed by the masses, their energy, their creativity, and their imaginations. That is the long-term path that humanity is on.

You, me, and everyone else, should be free to trade gold unrestricted from the manipulations that are occurring now and have occurred throughout history. Gold is THE most manipulated substance on the planet, and has been for as long as it has been used as “a store of wealth.”

All that said, I realize that current perceptions are everything in the short term, and thus I own small quantities of precious metals and recommend that others do too. However, it should be noted that I began recommending that ownership at $300 an ounce, not $1,300… not that it can’t and won’t go higher, it can and probably will as the speculative 3rd phase of its parabolic rise probably has yet to occur.



As the velocity of debt has come to a screeching halt (debt saturation), the PRIVATE central bankers dependent upon never ending growth have been throwing greater quantities of money to make up for the lack of velocity. That has failed, and will fail as long as debt saturation remains. Meanwhile we walk down a dark hallway of events that are leading us to our currency’s final destination. Failure to recognize current problems and history for what they are will doom another generation to a repeat of the same mistakes. We must continue on our evolutionary path, and to do that we must regain control of our rule of law and our monetary system.

Once the people have done that, then humankind will advance our knowledge of the universe, and in turn secure the survival of our species.

Again, let me connect the dots for you… communication → empathyrule-of-law → monetary system → capital formation → natural resources → human resources → wealth → scientific understanding → long term SURVIVAL of the species!

Note that each is built upon the last – we cannot accomplish the upper level functions as quickly or as efficiently without a solid foundation. It is our non-nature-conforming rule-of-law and monetary systems that are our present drag to understanding the true nature of the universe.

Yes, I know this sounds fanciful, but matter can be created from energy! Our experience is limited to the opposite! That is we can and do readily convert matter into energy, but we are still infants in our ability to do the opposite. As we wise up to the way the universe really works (forget the “Big Bang” and all other such world is flat nonsense) we will discover the processes through which water (how did it get on our planet?), oil, gold, and other matter came into being. We will learn that we are quite literally swimming in energy, and we will learn to use it to our advantage. But first we must make sure that we progress forward and not step backwards in terms of our rule of law and in terms of our monetary system.

Janet Tavakoli




Endnote: Goldman CEO Lloyd Blankfein's quip that he is doing "God's work," is put in its proper perspective by this apt quote at Jesse's Cafe Americain :

"There will be hard times in the last days. People will love only themselves and money. They will brag and be proud, tearing others down. They will be without love, gratitude, respect, or forgiveness. They will tell lies and be out of control. They will despise what is good and betray friends. They will believe they are better than others, and will love only what pleases them. They will say they are serving God, but their actions will show they are not." 2 Timothy 3:1-5


Janet's new book is located on this Amazon link.
http://www.amazon.com/gp/product/047040678X?ie=UTF8&tag=tavakostructf-20&linkCode=xm2&camp=1789&creativeASIN=047040678X

A free look at chapter 10
http://g-ecx.images-amazon.com/images/G/01/wiley-ems/DearMrBuffet_Chap10.pdf

Mike Maloney Schools Bankers on Deflation…

Obviously from a gold background, Mike Maloney does a good job presenting to a group of Russian bankers what they probably don’t want to hear. Indeed, our currency is on a collision course with math that simply doesn’t work. Our bankers do have choices – they can either let deflation run and allow another future debt cycle, or they can continue to attempt to stimulate in which case our dollar eventually becomes worthless.

We have a very important election at hand. Changing out politicians will likely result in the inability to stimulate as easily as they have in the past couple of years – that is the foundation of wave C down, it represents a psychological shift because the stimulus that created wave B (the dead cat bounce) has FAILED. Maloney’s market analysis is good. His money analysis is also good, but don’t be fooled, there is currently NO real banking reserves of any kind. Derivatives and the swapping of worthless debt to the Fed have pushed the real overall reserves to zero, thus fractional ability is infinite! (ht Mr. Guest)

Mike Maloney Schools Bankers on Deflation – Part I (15 minutes):


Mike Maloney Schools Bankers on Deflation – Part II (11 minutes):


Those who truly understand charts, and the math that creates them, will see a parabolic rise, and collapse. Yes, there is a clear Head & Shoulders pattern forming. Note, however, that if the right shoulder is symmetrical time wise with the left, that we may be range bound for some time (a large descending range) as the left shoulder required approximately 3 years to complete, not that they must be exactly proportional…

Multitudinous Self-Perpetuating Spirals of Complexity…



Complexity, it’s an ironic enigma cloaked in politics.

If you think that opening line’s hard to follow, you can get your head on straight by reading some terrific articles published by Ashvin Pandurangi on his new Simple Planet Blog mockingly located at www.peakcomplexity.blogspot.com.

The irony struck me about 30 minutes into Ash’s latest piece, A Complexity Manifesto, that it's taking entirely too long to comprehend this wonderful piece on complexity discussing how the world is overly complex but yet it's quite possible that the solutions are really very simple.

And I let Ash know that it’s NOT his fault! His articles are well written, substantive, and well… long. And further more, he’s right! Yet, I found myself running short on time and skimming/ glossing over his solutions to get to the end. I’m sure you’ve been there yourself, perhaps it was the first time you tried to read Freedom’s Vision? Snore, head nod, chin bounces from chest…

This is the exact same problem I (and everyone else) have in presenting SIMPLE solutions to the complex problems confronting our nation and economy. The solutions don’t seem so simple, not that the solution is complex, but that to address an overly complex system you must describe how you’re going to solve that complexity, and it’s NOT simple! Are your eyes glossing over yet?

In fact, the biggest critique of Freedom’s Vision is that it doesn’t fit into a 15 second sound bite! A valid critique, one for which I have not yet found the answer – can anyone help? [Please submit your proposal in triplicate, not to exceed 78 pages, in .pdf form to any of the following four email addresses, thank you!]

Here’s just a portion of the response Ash gave to my blatantly over-simplified critique:
“The system itself is designed to make increasing complexity the least path of resistance. I recently wrote a short piece called "Tweaks at the Margin", where I just focused on the fact that our leaders want to keep making small tweaks here or there to our existing systems, because its politically and economically convenient in the short term. The bush tax cuts debate, financial reform, HC reform, stimulus, monteary policy, etc. are all examples of that mentality. Ironically, adding on more complexity becomes the simplest thing to do.”

And with that one simple paragraph, Ashvin really has summarized a big part of the complexity paradigm. Yet paradoxically, I wonder which was it that came first, the chicken or the egg? Could it be that I was wrong in thinking the root cause of over complexity was the never ending growth mantra created by the central banker debt-backed money paradigm that created all the complexity in the first place! Not to mention the obscure ownership trail of the completely private "Federal Reserve" where all dollars lead back to only a few private individuals! But perhaps I’m over-thinking it?

Remember article after article about the Math of DEBT, Death by Numbers, Debt Saturation, the Diminishing Productivity of Debt, and how the math simply doesn’t work? Well, it turns out that I was using far too many facts, figures, graphs, simple arithmetic (like addition), and words mostly not comprehended by the masses. This was thoroughly too complex, as effective cerebral cortex metabolic absorption transfer rates are entirely blocked, it turns out, by having too much corn syrup in a person’s diet.

What I discovered today by reading Mark McHugh’s blog, Across the Street, is that I should have been using Sesame Street characters with my charts! It’s true! This one simple chart eloquently captures exactly what I’ve been trying to say all along – that incomes cannot support debts! But I know you probably didn’t read that, and most of us have far too many histamine producing, free-floating, vascular inflaming corn based particles in our bloodstream to comprehend it, so take a look at the chart and it will all make perfect sense!



Ahhhhh… what a great chart, and a great article for the masses! So simple, so short, so un-complex-like! And here I was about to resort to pictures of half-clad beauties carrying assault rifles just to get the masses’ attention. But I’ll leave that for our political candidates and those with Presidential aspirations. Me and Ash can now rest easy knowing that simple solutions are soon going to be flooding our inboxes, mine can be found at www.economicedge.blogspot.com, or www.swarmusa.com, or time4changenow@comcast.net, or nmartin@swarmusa.com, and Ash can be found at www.simpleearth.blogspot.com (his Peak Complexity blog), OR, you can go to “My Blog List” at my blog, www.economicedge.blogspot.com, and scroll down 3.6 pages (depending on screen size and resolution), looking in the right hand margin and you’ll find it there – that is if you can still remember what “it” is that you’re looking for. Glad we could simplify the situation for you.

PS - I hear that insuline can help. Thank you for supporting our corporate sponsors and don’t forget to send the .pdf in triplicate, thanks!

A lighter Side of Life for a Saturday

Technology in 10 years and the first one I sent...to make a funish sort of day for readers! Seems site is getting grim! Shaza




As Cirque De Soleil says...’humans are amazing creatures’:

Technology in 10 years:

Monty Python - Arguement Clinic


Will the market crash in October?

I have been hearing this a lot as if it is predetermined. I don’t remember the market crashing in October of 2009? As a matter of fact after March 2009 we experienced one of the biggest rallies we may see in our lifetimes. So why all the gloom and doom about an October Surprise? I continue to invest and take profits. I am not a long investor and sometimes that has worked to my disadvantage as I bought SLW in January 2009 at 6.50 a share. I owned HL in the 3.45 range. Do I have regrets? I would be lying if I didn’t, but I was just learning.

So let’s assume that the jobs are not coming back and the Bankster’s will continue to rape and pillage the land. The truth is that they are not whole either. They are sitting on a time bomb of CMBS, MBS and underwater homes. They have reserves due to TARP and other government cheese handouts, but they cannot lend, because no one is borrowing. By failing to foreclose on all the deadbeats they have now created a moral hazard as squatters take advantage of living rent free. Obama’s new home buyer credit ended so did sales of existing homes. After the Cash for clunkers debacle people stopped buying cars.

So once again the government gave away money (that they did not have) in the guise of stimulating the economy and for what? Empty promises of economic recovery that quickly faded away like a mirage in the desert. All the smartest guys in the room turned out to be not so damn smart. So what will they do for an encore? QE2 is their next gambit. Once that is over and the Tea party nuts are hopping mad, nothing will have changed except maybe the faces in Congress. Republican or Democrats they will fall in line and the lobbyists will rule.

Until we allow the bond holders to take a haircut and the banks holding bad debt to fail nothing will recover. We have to flush it all out of the system or there is no hope for recovery. We now live in the land of unemployment checks and food stamps. Ergo the previous thread of people in line at Walmart’s at the end of the month. I don’t know where the leadership will come from, but that is what we need. Someone who will stand up to the status quo and make choices that will not be popular, but will be honest. We need to restore integrity both in politics and in our personal lives. We need once again to become the "land of the free and the home of the brave." Right now we are the "land of the debt enslaved and home of cowards"(excluding our troops overseas). It’s time to take our medicine, as bitter as that pill may be to swallow. We all need to take the red pill and wake up from an American Nightmare come true.

QueenBee

Morning Update/ Market Thread 9/24

Good Morning,

Equity futures were ramped upwards all night long and spiked higher on the Durable Goods report this morning despite it being overall worse than expected. Bonds are sharply lower, the dollar is sharply lower, oil is higher, and gold set a new record, this time breaking the $1,300 mark.

Once SPX 1130 was broken again, more short covering fueled this morning’s spike. While there is obviously record amounts of bullish sentiment in the markets, there are also a large number of non-believers, like myself, who are ready to short weakness. That was obvious as we first broke 1130 yesterday and the put/call ratio zoomed to more than 1.50! That was an indication that too many were shorting 1130, and thus the market promptly reversed. The bears were forced to cover, but then as that pressure subsided, the market eased back down to close below that level. This morning’s spike may be indicative of funny business as the FX markets look very volatile. The Yen, for example had a huge spike overnight that then rapidly came off, as in all of it. This Yen strength is despite massive intervention by the Japanese to force Yen weakness (down on this chart is Yen strength):



Yesterday the dollar bounced and tested its break down from the neckline of its H&S pattern. Today it has broken down to new lows. This pattern is confirmed and valid, it has a target of 71/72ish which can set off a chain reaction of even lower targets as I discussed previously. A falling dollar is not good for Americans, and no, the markets will not appreciate the knock-on affects as corporate earnings will eventually suffer dramatically for it:



Durable Goods came in at -1.3%, this is down from positive .3 the month before and it is below expectations of -1.0%. However, ex-transportation, new orders rose 2.0% and that is what the bulls are using as today’s excuse to use their POMO money in their HFT machines. Yes aircraft orders are volatile, but it’s about the only thing we can still make in America (and actually very large portions of our aircraft are made overseas with those parts only assembled here in America). When the sale is made, that sales figure in dollars counts as if the whole thing were made here and it is most certainly not. And here’s another news flash, the aircraft manufacturers have greatly overestimated future global demand as demographics, overall rising energy costs, debt saturation, and less purchasing power are dragging potential customers into the abyss. Here’s Econospin:
Highlights
Today's headline number for durables disappointed a bit but ex-transportation showed broad-based strength. New factory orders for durable goods in August dipped 1.3 percent, following a 0.7 percent rebound in July. The August decline was somewhat more negative than analysts' projection for a 1.0 percent decrease. July's figure was an upward revision from the prior estimate of a 0.4 percent increase. Excluding transportation, new durables orders gained 2.0 percent, following a 2.8 percent drop in July.

The reversal in overall orders in August was led down by the transportation component which dropped 10.3 percent, following an 11.6 percent boost in July. Nondefense aircraft plunged a monthly 40.2 percent after surging 69.1 percent the month before. Defense aircraft orders slipped 2.7 percent in August while motor vehicles declined 4.4 percent.

Other components generally posted healthy gains. Primary metals were up 2.4 percent; fabricated metals, up 1.0 percent; machinery, up 3.9 percent; computers & electronics, up 3.8 percent; electrical equipment, up 0.5 percent; and "other," up 0.1 percent.

Business investment in equipment is on a volatile uptrend. Nondefense capital goods orders excluding aircraft in August rebounded 4.1 percent, following a 5.3 percent fall in July. Shipments for this series advanced 1.6 percent in August after edging up 0.1 percent the month before.

Year-on-year, overall new orders for durable goods in August improved to up 11.2 percent from 9.7 percent in July. Excluding transportation, new durables orders came in at up 12.9 percent, compared to 10.6 percent the previous month.

The good news is that today's durables report shows manufacturing gaining strength outside of transportation-and businesses still investing in equipment. On the release, equity futures nudged up but essentially were little changed. But stock futures then gained traction after taking time to digest the numbers.

Once they fully digest this report, they will realize that orders are adding to inventory at exactly the wrong time. Managers who bought into the “recovery” are only going to be met with consumers who still cannot buy and who still do not have nor want more access to the debt pusher’s credit. Buying into an overall negative and worse number than expected is simply dangerous.

New Home Sales data is released at 10 Eastern this morning, last report was a depression print of only 276k, and the consensus is expecting a rise to 290k. That may happen, when you are dealing with numbers that are only a quarter to a third of the prior numbers, a bounce off the bottom a little is not difficult, but that won’t mean the market has turned around. Just as a reminder of where we are in the Option-Arm reset debacle, we are sitting on a peak just prior to a short term valley which will accelerate into early 2012:



Meanwhile, the NDX is pressing on to new highs as I type. This is the exact same type of rotation trade nonsense that pushed the indices to insane levels just prior to the ’07 top. The momo tech stocks, like Apple, are being used to run a thinner and thinner segment of the market higher. Breadth is narrowing as this occurs, the number of new 52 week highs has been contracting as a sign that few stocks are participating.

Over the past few days, the XLF and the Transports have been relatively weak. The market will not continue to climb without them. Below is a daily chart of the XLF, note that it closed below both the 50 and 200 dma’s. Also note the rising volume on the decline:



If we go onto make new highs here, it will not change my thinking one iota. The markets are very dangerous, I see a lot of wave C psychology from politicians and the political ads are all slamming incumbents for their support of bailouts and wild spending ways (immoral actions bringing deserved karma payback). Budgets are far from balanced and pressure is mounting to knock off the nonsense. Behind the scenes Bernanke and his private banking bosses are pouring dirty money into the stock market using very unscrupulous manners in so doing. They will lose the battle in the long run, of that I have absolutely no doubt.

Keep in mind that today is Friday and that the now Pavlovian routine is to ramp the markets in advance of the Monday morning ramp.

Forget a Recession, The Empire is Crumbling


This was sent to my by VA-Bear from Nathan's Economic Edge.
Written by Graham Summers
I look around me and I see an Empire in Decline.

The US economy is clearly in a depression… not a recession, not a recovery, but a DEPRESSION of a moral, social, and financial nature.

More than 40 million Americans (12%) are on Food stamps. Nearly one in five of us are unemployed of underemployed. Folks go to Wal-Mart at 11PM waiting for their government checks to clear at midnight so they can buy baby formula, milk and other necessities.

Three out of every five Americans are overweight. One in five are obese. Indeed, there are only two areas (one state, Colorado, and Washington DC) where obesity rates are under 20%.

Nearly three in four of us don’t get enough sleep. Almost one third of us report having trouble falling asleep EVERY night. And almost half of us report that day-time sleepiness interferes with normal activities including work.

Half of marriages end in divorce. One out of ten married couples report sleeping alone. The average American watches 28 hours of TV a week (enough to qualify for a part-time job). Two thirds of us eat dinner while watching TV, preferring the fake, sensationalized lives of others to engaging with our own families.

The TV and media are filled with foul, ungodly images of sex, violence, and hate. The most watched shows of the last decade all feature ordinary folks becoming superstars in lottery-esque competitions (American Idol, Survivor, Who Wants to be a Millionaire, etc) OR crime sagas detailing the most sordid and disgusting elements of society (CSI, Law and Order, etc) OR amoral social dramas in which notions of personal responsibility, fidelity, and common decency are unknown (Desperate Housewives, the Bachelorette, etc).

Today, brain dead, vapid human beings who have contributed nothing to society are idolized and followed as though they invented the wheel. We’ve actually got two industries devoted to presenting the illusion and reality of celebrity: Hollywood shows the photo-shopped, CGI-enhanced, scripted version, while the paparazzi and weekly glossies reveal the drug-addicted, affair-crazed, family breaking, soul-less emptiness.

Sex or violence are plastered on virtually every flat surface available. Even the check-out lines at the grocery store feature endless images of barely clothed women along with headlines sensationalizing gruesome behavior, right out in the open for children to see. And if the kid can actually read the headlines… God only knows what ideas this stuff is putting into their heads.

Financially, we’re all pretty much bust or going bust (except those on Wall Street).

New home sales in July were a RECORD low. Not record as in for the year, but the lowest since 1963. The talking heads are high fiving because sales improved in August, but failed to note that they were still DOWN 19% from August 2009 levels.

Americans two primary assets for retirement (stocks and their homes) have both been absolute disasters. Home prices are down 30%, stocks haven’t produced gains in over a decade. Every moron on TV talks about the Dow 10,000 like it’s a miracle. But when you adjust the Dow for inflation, (using the BLS’ ridiculous CPI measure) the Dow is SUB-500 in terms of purchasing power.


Our money system is controlled by an elite banking oligarchy fronted by academics who have never run a business, invented anything, or had any interaction with commerce aside from vying for tenure. Our currency is now worth less than 1/20th of what it was a century ago. And we are ALL in debt up to our eyeballs on a personal, corporate, local, state, and federal level.

Heck, even USA TODAY (not exactly the cutting edge in financial research) notes that in order to pay off our current liabilities, every US family would have to pay $31,000 a year… for 75 YEARS!!!

And we’re talking about an economic recovery?

According to David Rosenberg of Gluskin Sheff:

Wages & salaries are still down 3.7% from the prior peak;
Corporate profits are still down 20% from the peak;
Real GDP is still down 1.3% from the peak;
Industrial production is still down 7.2% from the peak;
Employment is still down 5.5% from the peak;
Retail sales are still down 4.5% from the peak;
Manufacturing orders are still down 22.1% from the peak;
Manufacturing shipments are still down 12.5% from the peak;
Exports are still down 9.2% from the peak;
Housing starts are still down 63.5% from the peak;
New home sales are still down 68.9% from the peak;
Existing home sales are still down 41.2% from the peak;
Non-residential construction is still down 35.7% from the peak.

The American Psychological Association reports that 73% of Americans cite money as a source of significant stress. Personal bankruptcies have fallen 8% month over month from July to August. However, August 2010 bankruptcies are up 6% from August 2009… so much for the recovery.

And yet, despite all of this, assumedly intelligent people write op-ed articles and appear on TV claiming that things are swell in the US, that we’re actually OK and that the recession is over. Some of these people even have advanced degrees or have won international prizes for economics.

Let’s be honest. Forget recessions, forget even Depressions, the US is an empire in decline.

You can literally see it crumbling right in front of you. Just start looking at how people live, eat, and act on a day to day basis. Look at how our Government runs itself, how it manages our affairs, how it spends our tax Dollars. Look at how our justice system works, who it protects and who it punishes.

It’s all out there, right in the open for you to see. You don’t need an expert degree or some kind of advanced education. It’s OBVIOUS to anyone who bothers looking around.

The fact we don’t admit it doesn’t mean it’s not true.

Best Regards,

Graham Summers

Graham I couldn't agree with you more. QB

Graham Summers - Forget a Recession, The Empire is Crumbling

This is pretty negative sounding from Graham, but don't let the truth get in the way...

Forget a Recession, The Empire is Crumbling

Written by Graham Summers

I look around me and I see an Empire in Decline.

The US economy is clearly in a depression… not a recession, not a recovery, but a DEPRESSION of a moral, social, and financial nature.

More than 40 million Americans (12%) are on Food stamps. Nearly one in five of us are unemployed of underemployed. Folks go to Wal-Mart at 11PM waiting for their government checks to clear at midnight so they can buy baby formula, milk and other necessities.

Three out of every five Americans are overweight. One in five are obese. Indeed, there are only two areas (one state, Colorado, and Washington DC) where obesity rates are under 20%.

Nearly three in four of us don’t get enough sleep. Almost one third of us report having trouble falling asleep EVERY night. And almost half of us report that day-time sleepiness interferes with normal activities including work.

Half of marriages end in divorce. One out of ten married couples report sleeping alone. The average American watches 28 hours of TV a week (enough to qualify for a part-time job). Two thirds of us eat dinner while watching TV, preferring the fake, sensationalized lives of others to engaging with our own families.

The TV and media are filled with foul, ungodly images of sex, violence, and hate. The most watched shows of the last decade all feature ordinary folks becoming superstars in lottery-esque competitions (American Idol, Survivor, Who Wants to be a Millionaire, etc) OR crime sagas detailing the most sordid and disgusting elements of society (CSI, Law and Order, etc) OR amoral social dramas in which notions of personal responsibility, fidelity, and common decency are unknown (Desperate Housewives, the Bachelorette, etc).

Today, brain dead, vapid human beings who have contributed nothing to society are idolized and followed as though they invented the wheel. We’ve actually got two industries devoted to presenting the illusion and reality of celebrity: Hollywood shows the photo-shopped, CGI-enhanced, scripted version, while the paparazzi and weekly glossies reveal the drug-addicted, affair-crazed, family breaking, soul-less emptiness.

Sex or violence are plastered on virtually every flat surface available. Even the check-out lines at the grocery store feature endless images of barely clothed women along with headlines sensationalizing gruesome behavior, right out in the open for children to see. And if the kid can actually read the headlines… God only knows what ideas this stuff is putting into their heads.

Financially, we’re all pretty much bust or going bust (except those on Wall Street).

New home sales in July were a RECORD low. Not record as in for the year, but the lowest since 1963. The talking heads are high fiving because sales improved in August, but failed to note that they were still DOWN 19% from August 2009 levels.

Americans two primary assets for retirement (stocks and their homes) have both been absolute disasters. Home prices are down 30%, stocks haven’t produced gains in over a decade. Every moron on TV talks about the Dow 10,000 like it’s a miracle. But when you adjust the Dow for inflation, (using the BLS’ ridiculous CPI measure) the Dow is SUB-500 in terms of purchasing power.



Our money system is controlled by an elite banking oligarchy fronted by academics who have never run a business, invented anything, or had any interaction with commerce aside from vying for tenure. Our currency is now worth less than 1/20th of what it was a century ago. And we are ALL in debt up to our eyeballs on a personal, corporate, local, state, and federal level.

Heck, even USA TODAY (not exactly the cutting edge in financial research) notes that in order to pay off our current liabilities, every US family would have to pay $31,000 a year… for 75 YEARS!!!

And we’re talking about an economic recovery?

According to David Rosenberg of Gluskin Sheff:

Wages & salaries are still down 3.7% from the prior peak;
Corporate profits are still down 20% from the peak;
Real GDP is still down 1.3% from the peak;
Industrial production is still down 7.2% from the peak;
Employment is still down 5.5% from the peak;
Retail sales are still down 4.5% from the peak;
Manufacturing orders are still down 22.1% from the peak;
Manufacturing shipments are still down 12.5% from the peak;
Exports are still down 9.2% from the peak;
Housing starts are still down 63.5% from the peak;
New home sales are still down 68.9% from the peak;
Existing home sales are still down 41.2% from the peak;
Non-residential construction is still down 35.7% from the peak.

The American Psychological Association reports that 73% of Americans cite money as a source of significant stress. Personal bankruptcies have fallen 8% month over month from July to August. However, August 2010 bankruptcies are up 6% from August 2009… so much for the recovery.

And yet, despite all of this, assumedly intelligent people write op-ed articles and appear on TV claiming that things are swell in the US, that we’re actually OK and that the recession is over. Some of these people even have advanced degrees or have won international prizes for economics.

Let’s be honest. Forget recessions, forget even Depressions, the US is an empire in decline.

You can literally see it crumbling right in front of you. Just start looking at how people live, eat, and act on a day to day basis. Look at how our Government runs itself, how it manages our affairs, how it spends our tax Dollars. Look at how our justice system works, who it protects and who it punishes.

It’s all out there, right in the open for you to see. You don’t need an expert degree or some kind of advanced education. It’s OBVIOUS to anyone who bothers looking around.

The fact we don’t admit it doesn’t mean it’s not true.

Best Regards,

Graham Summers

Morning Update/ Market Thread 9/23

Good Morning,

Equity futures are sharply lower this morning. Bonds are higher, the dollar is higher, the Yen is stronger, oil is down, and gold is slightly higher. While all the signs have been there, what I don’t like are all the gaps in the charts, today’s opening will be another.

The futures declined sharply overnight as sovereign debt issues continue to plague Europe. Ireland’s spreads have blown out to record highs. Germany lowered the amount of debt it’s willing to hold and told the IMF yesterday that it would not be participating in extending emergency debt beyond the year 2013. Hey, at least someone can at least pretend to be an adult. The IMF is nothing but a mobster gang who need to be disbanded at a minimum. The central debt pushers are far worse than drug pushers, they kill more people and do more economic damage by far.

I have to mention yesterday’s House Price Index report due to the fact that it showed a negative month to month price drop of .5%, and year over year price drop of 3.3%. Both figures are a sharp acceleration in price downwards. But what really gets me upset is the revision to the prior month which changed a -.3% print into a negative 1.2% month over month print – that’s a 400% revision! Again, all the data is always reported better than it actually is, and then it gets revised downwards. Revisions of this size are criminal as they cause huge distortions and are leading to a loss of confidence in our data and in our entire economic system.

Speaking of confidence, yesterday’s breakdown of the dollar was major. If that dollar weakness trend continues, Americans are in for BIG Trouble – note the capital T! The H&S pattern in play targets 71 on the dollar index, more than a 10% drop in purchasing power. Will your wage increase by an equal amount? Of course not, wages are falling. As a falling dollar produces higher costs for food, medical care, and most items that you NEED, it will rob Americans of their ability to pay for other items. It will most certainly NOT lead to economic prosperity. And if that 71 target is reached, there is an even larger pennant in play, as pointed out by Scott in our daily thread yesterday, that would target in the range of 29 to 50 on the dollar index. This is a very ominous pattern on the monthly chart, I hope our "leadership" is paying attention, however I know that people like Ben Bernanke are unprepared as their theories have not been sound, they have failed to account for exponential debt growth, debt saturation, and the loss of monetary confidence that follows their theories which have ALWAYS failed throughout history:



THAT would be a true disaster, no one would be unaffected, I hope to heck that does not happen, but I think we should all be prepared in case our leadership is dumb enough to make it happen – it may already be too late to change the outcome, but don’t expect those types of move to happen overnight, they will take a long time to play out. I know it’s possible to change the trend short term, all they have to do is stop propping up stocks and bring in some adults who start throwing the criminals in jail, running the HFT machines and dark pools into the history books, and in general simply stop the criminal behavior. That is step one. We must restore confidence and stop destroying it with phony reports and phony money.

As if sovereign debt problems weren’t enough, and as I suspected, our weekly Jobless Claims rose over the past week as we got beyond the Labor Day affected weeks. The report for last week came in at 465,000 initial claims, that’s up from the prior week’s 450k report and the consensus that was also calling for 450k. Of course the prior week’s number was revised higher once again, this time to 453k. Here’s Econospin:
Highlights
Labor Day caused a bump in the jobless claims series. Initial claims in the September 18 week, which doesn't include Labor Day, rose 12,000 to a higher-than-expected 465,000. The prior week, which includes Labor Day, was revised 3,000 higher to 453,000. Adjustments factor in a low level of filings for the shortened week and a high level in the following week as government offices catch up on the work. But the back-up this year exceeded the adjustments, making for the surprise gain and raising questions on how much initial claims are actually improving. The four-week average of 463,250 is down in the week and is down more than 10,000 from a month ago to point to month-to-month strength for the September employment report.

Continuing claims are down 48,000 in data for the September 11 week. Here the four-week average, at 4.520 million, is little changed from the month-ago comparison. The unemployment rate for insured workers did slip one tenth to 3.5 percent which however follows a tick higher in prior weeks.

Though Labor Day clouds the data, a 465,000 initial level compares favorably with summer levels. Stock futures edged lower in initial reaction to the report.



First of all, this week’s report is the first WITHOUT the Labor Day fun and games. Again, everything gets revised higher, not lower – thus you can count on this number being higher next week as well. If they are setting up expectations for a better monthly Employment Report, they are setting themselves up for disappointment. The September report, out October 8th, is very likely to disappoint due to the seasonal lack of Birth/ Death model additions. If they remain consistent, I am looking for a negative print that will surprise those not paying attention.

Existing Home Sales and Leading Indicators are released at 10 Eastern this morning…

Stocks are now below the key 1130 level. All the signs were there, now the question is how far does it go? Well, there are gaps all the way back down, so I believe that the odds favor the entire up move to come off. If we’re talking Elliott Wave, it is highly likely that wave 2 is now over and this could very well be the beginning of wave 3. If it is, we are going to see lower lows in the not too distant future – that is my thinking, it is the highest probability case. We hit far too many bullish extremes on this latest wave up. There were gaps left all over the place as the markets have turned into nothing but machine driven hype. We are all going to pay a very expensive price for such foolishness, our collective mentality seems to be lower than a narcissistic 12 year olds’… never put off to tomorrow what you can borrow or steal today.

Note that yesterday's action finally broke the NDX's ridiculous uptrend:



The Transports were relatively weak yesterday. The XLF has again failed to clear the 200dma, as you can see in the daily chart below - note the increasing volume on the decline. BANK is far weaker:



I want to point out that even though yesterday’s decline was relatively shallow, it combined with this morning’s action, does confirm the top looking candlesticks from Tuesday. Despite the fact that prices were still near their highs, we have sell signals all over the place, divergences all over the place, and the McClelland Oscillator fell all the way down to only positive 12 - it will likely turn negative today. A negative McClelland Oscillator combined with a valid Hindenburg cluster is a huge sign.