Warren Buffett: I could end the deficit in 5 minutes.

Warren Buffett: "I could end the deficit in 5 minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection."

Why is StochRSI so Volatile and What does it Measure?

StochRSI is volatile because it is an indicator of an indicator. Most indicators are derived directly from price. StochRSI is derived directly from RSI values, which are derived from price. This means StochRSI is two steps removed from the actual price. This is also known as the second derivative. Using the Nasdaq 100 ETF (QQQ) as an example, 14-day StochRSI would be 14-day Slow Stochastics applied to 14-day RSI for QQQ.

Click this image for a live chart.

Developed by Tushard Chande and Stanley Kroll, StochRSI was designed to increase sensitivity and signals from RSI. And it does. The chart above shows RSI fluctuating between 30 and 70 the last five months. There was one brief blip above 70 in mid February. StochRSI, on the other hand, gyrates between zero and one on a regular basis. A move to 1 indicates that RSI is at a 14-day high, while a move to 0 indicates that RSI is at a 14-day low. StochRSI is used to anticipate breakouts and surges in RSI, which in turn is used to anticipate turns in QQQ. You can read more on StochRSI in our ChartSchool.

Weekend Open Thread...

Apple now has more cash than the U.S. government

Countdown FryDay

A Note From The Editor:

Dear readers,

I will be away from 7/29/11-8/9/11 attending a business conference so there are no scheduled articles during this time, but we will do one or more recaps during this time just to catch up on things and keep you, our loyal readers updated.

These are truly momentous times in which we live and I urge all to stay awake to the developments. Next week should bring about some very interesting developments and it is always prudent to be prepared for the worst. If things "speed up" during this period, we will be sure to publish an update remotely, and update on Twitter, so check back often if things heat up.

Additionally, we recommend to our readers who have joined recently to read through some of the older articles during this time. We have covered a tremendous amount of information since March and it would be wise to catch up on the terms and acronyms we use and help you connect the dots. Also read our daily read list, which includes ZeroHedge and EconomicEdge.

Once we return, we will have a lot of information to share with you (particularly on housing) so join our growing list of Twitter followers for updates and such. When we return next week, gold might be $2000/oz as the economy falls off a cliff more fiat is required to keep the hungry banksters bonus pool satisfied as the world loses faith in all paper currency.

Regards to all and happy trading,
Fiat's Fire

Morning Update/ Market Thread 7/29 - Productivity Not Edition...

Good Morning,

100% fraud, 100% of the time. That’s what happens when all the money you produce is backed by debt and the proceeds go to a few greedy narcissists instead of to the good of all the people. The GDP report this morning is simply more fraud that counts the creation of debt as productivity and yet still has to fudge reports to manipulate the people from who the narcissists are robbing.

Equities are lower still, the dollar is also lower, bonds are higher, oil is lower, gold & silver continue to shine against the turd colored backdrop, and food commodities are falling for today.

The Q2 GDP report stunk up the joint, coming in at a supposed +1.3% versus the 1.9% that was expected. Worse, this is the report where they correct the prior year and from that we learn that Q1’s reported 1.9% growth was really only .4%. Feel manipulated now? Did you buy into the BS growth story? Again, why would any American support this paradigm? The markets are false, the data is false, our money system is false. Again, my advice is to GET REAL when it comes to your “investing.”

Here’s Econohopeondope:
It's official but it's worse than believed. The soft patch continued into the second quarter as GDP growth for posted at a very sluggish 1.3 percent annualized rise, following a downwardly revised increase of 0.4 percent in the first quarter. Analysts had forecast a 1.9 percent boost for the latest quarter and the first quarter was previously estimated at 1.9 percent. Today's report includes standard annual revisions going back three years for most series.

Demand numbers improved but barely. Final sales of domestic product improved to up an annualized 1.1 percent from 0.0 percent (unchanged) in the first quarter (previously 0.6 percent). Final sales to domestic purchasers also nudged up, rising 0.5 percent from 0.4 percent in the prior period (previously 0.4 percent).

Most of the anemia in the second quarter came from the consumer sector which came to a screeching halt with a 0.1 annualized percent uptick in the first quarter, following a 2.1 percent rise the prior quarter. Government purchases declined modestly while gains were seen in net exports, business investment in structures and equipment, and even residential investment. Inventories nudged up.

Economy-wide inflation according to the GDP price index only incremental change in momentum, rising 2.3 percent, following an increase of 2.5 percent in the first quarter. Analysts expected a 2.0 percent gain.

High but still underreported inflation, and little to no real productivity.

The Employment Cost Index rose, not due to higher pay mind you, but due to inflation in the cost of benefits provided. Inflation is inflation, and especially in healthcare where you are being robbed blind by the “insurance” industry, the cost of doing business is far outstripping real revenue earnings (not the trumped-up earnings touted by accounting fraudsters):
Increasing acceleration in benefit costs fed an outsized 0.7 percent second-quarter increase in the employment cost index, the largest increase of the recovery. Benefits, which make up 30 percent of the index, rose 1.3 percent on top of the first-quarter's 1.1 percent jump with wages & salaries, which make up the remaining 70 percent, showing no acceleration at plus 0.4 percent.

When stripping out government workers and looking at just the private sector, benefits rose a quarterly 1.6 percent vs 1.2 percent in the first quarter with wages & salaries showing incremental acceleration at plus 0.5 percent. Add these two together and total compensation in the private sector -- and this is a special sign of increasing pressure -- rose 0.8 percent vs 0.5 percent gains in the prior two quarters.

Year-on-year rates tell the same story with benefits up 3.6 percent vs 3.0 percent in the first quarter and wages & salaries unchanged at plus 1.6 percent. These readings are for both government and private workers combined. Total year-on-year compensation is up 2.2 percent from 2.0 percent in the first quarter. A look at just the private sector shows an outsized three tenths increase in the year-on-year rate to plus 2.3 percent.

If the economy were in a solid growth mode these results would definitely be a concern for Federal Reserve policy makers who keep a close eye on compensation and often comment in detail about benefit costs. But the economy, based if nothing else on this morning's accompanying release of GDP data, isn't in a solid growth mode, making these early signs of compensation inflation a distant secondary concern.

“Solid Growth?” Give us a break for crying out loud. The production of debt has never been, nor will it ever be "productivity."

The Chicago PMI and Consumer Sentiment come out just prior to 10 Eastern… for those who enjoy the masochistic manipulation of the “Fed” – can’t wait.

Hark! Is that the ring of truth I’m hearing from a man who’s been mostly telling the truth for years?

Ron looks tired – don’t blame him as I watch the dollar plummet on the open. Gold’s running into another record, too bad Paul believes in gold backing money – that part of the manipulation he doesn’t get. But he does get the WHO it is that’s at the root of the problem, and that makes him the closest politician out there.

The VIX remained above the upper Bollinger yesterday, no signal yet:

100% fraud all the time – the markets are not real, the data is not real. When it comes to investing the fruits of your hard labor, you need to GET REAL.

Rest in Peace Dan Peek of America…

Special report: Goldman's new money machine: warehouses

By Pratima Desai, Clare Baldwin, Susan Thomas and Melanie Burton | Reuters 

LONDON/DETROIT (Reuters) - In a rundown patch of Detroit, enclosed by a cyclone fence and barbed wire, stands an unremarkable warehouse that investment bank Goldman Sachs has transformed into a money-making machine.
The derelict neighborhood off Michigan Avenue is a sharp contrast to Goldman's bustling skyscraper headquarters near Wall Street, but the two operations share one important element: management by the bank's savvy financial professionals.
A string of warehouses in Detroit, most of them operated by Goldman, has stockpiled more than a million tonnes of the industrial metal aluminum, about a quarter of global reported inventories.
Simply storing all that metal generates tens of millions of dollars in rental revenues for Goldman every year.
There's just one problem: only a trickle of the aluminum is leaving the depots, creating a supply pinch for manufacturers of everything from soft drink cans to aircraft.
The resulting spike in prices has sparked a clash between companies forced to pay more for their aluminum and wait months for it to be delivered, Goldman, which is keen to keep its cash machines humming and the London Metal Exchange (LME), the world's benchmark industrial metals market, which critics accuse of lax oversight.
Analysts question why London's metals market allows big financial players like Goldman to own the warehouses which store huge quantities of metal even as they trade the commodity.
Robin Bhar, a veteran metals analyst at Credit Agricole in London says the conflict of interest is so acute he wants U.S. and European anti-trust regulators to weigh in.
"I think it makes a mockery of the market. It's a shame," Bhar said. "This is an anti-competitive situation. It puts (some) companies at an advantage, and clearly the rest of the market at a disadvantage. It's a real, genuine concern. And I think the regulators have to look at it."
Goldman said its warehouse subsidiary Metro International Trade Services has done nothing illegal, and abides by the LME's warehousing rules. "Producers have chosen to store metal in Detroit with Metro," a Goldman spokeswoman said. "We follow the LME requirements in terms of storing and releasing metals from our warehouses."
The London Metal Exchange defends its rules. "There is a perception that consumers have not been able to get to their metal when the reality is that it is big banks, financing companies and warehouses that are not able to get to their huge tonnages of metal fast enough," said LME business development manager Chris Evans.
For more follow the link:

from Shaza
I keep saying that you can not rely on the Baltic Dry Index to assess the commodity climate in China. I have said that major Commodity countries and companies  own their own shipping fleets. 

This article backs up my reasoning of why the BDI fell when the commodity boom roared on. 

IT had more than a few defaltionists scuppered. But ask yourself...If you are BHP, Rio TINTO or Vale, would you really rely on ship hire! NOPE....I think not! 


Breadth is running out of steam

There is a bearish divergence on the NAZ…not volume per se, but number of stocks holding up the market is falling and diverging. See Chart:

Less Jobs Thursday- Jobless Claims Are About to be Revised Upward; HSBC Cutting 10,000 Jobs; Boston Scientific Cutting 1,400 Jobs, Guess What the CEO Takes Home?; Third World Problems Strike Boston as Child Hunger Rates Soar; It's "Official." CEO of Siemens Says "Global 'Recovery' is Over"; Tricks From Malls To Keep You Shopping; Fukushima Updates Astound; Much More

Today is Thursday and that means it's time for another round of "Guess That Unemployment Number!" Jobless Claims come in at 398,000, just below the magical 400,000 figure to get the MSM all excited with phony headlines. But, a quick glance at every Jobless Claims number that has been released since who knows when, shows the data is always revised up at least a few thousand (for reference, last week's number saw an upwardly revised number of 422,000 from 418,000) which means we can almost guarantee 100% that next week, this number will be revised upward to 402,000. And that makes today's MSM headlines utterly and entirely moot.

We've been tracking the growing trend of mass layoffs across the country (and the globe) and we can already speculate 500,000 will be the new black this season. In addition to the growing list of TBTF&TCTS banks that announced big layoffs this week, just today we learn that HSBC will be cutting 10,000 jobs. Of course, we expect that number to grow over the coming months. And it seems the layoff disease is not contained to just the bankster industry - Boston Scientific announced 1,400 job cuts today, which will save them $225 Million annually. Of course, we don't buy it. If they really wanted to cut costs they should begin at the top. It's particularly interesting that they are cutting 1,400 slaves jobs to save only $225 million when Boston Scientific paid its CEO $34 Million in base salary in 2010 - that's not even including his millions in deferred stock. Why pay American employees $60k/year when you can move the work to China and pay a slave worker $2k/year? Don't worry though - what you see taking place is part of the death spiral that is helping to crash the global economy.

Speaking of Boston, here's an article that sounds as if it came from some poor third world nation in Africa - "Ranks of Hungry Children Swell, Worrying Doctors." It turns out, this is not some poor African nation, but instead, right here in Boston. Another sign of the times - while the banksters continue to build larger and larger 50 room mega mansions, children go hungry.

Which is ironic because the CEO of Siemens said today that the "global recovery" is over. That would be true, if the global recovery actually existed to begin with. Welcome to the Greatest Depression the world has ever seen. In the meantime, Apple will release the newest iPhone 5, 6 and 7 in short order to keep you occupied and distracted from reality and lure you in with trickery and cunning.

Again, the drama that is Washington is not going to solve anything. As we pointed out time and time again since this circus began, raising the debt ceiling or not raising the debt ceiling is of little consequence in the long term. If the latter occurs, the inevitable will come early; the Titanic is taking on water at a rate that gives it 2 months top. If the previous occurs, the inevitable will come later; the bilge pumps get turned on but are not able to keep up with the flood at a rate that buys 6 months. And by "inevitable" we mean total global economic collapse, which is mathematically guaranteed now. Gold and silver are on the one-way ride to infinity, and conversely all fiat currencies are on the one-way ride to being used as toilet paper. You can figure out the rest.

Now, the spark that started it all - Fukushima.

From our friends at EX-SKF, we learn about the giant propaganda machine and the brainwashing that the Japanese gov't tried and failed. A must read.

From Energy News, we learn that so far 154 U.S. servicemen have elevated radiation levels. But this is
where the story gets juicy - The military declines to release radioactivity levels where personnel worked. You fill in the blanks.

Finally, from Bloomberg we learn about a teacher who was "muzzled" against speaking about the dangers of radiation. In one word - sick.

The events of Fukushima should open your eyes to many things - the most important lesson is when disaster strikes, it's every man for himself and never believe anything "official."

Morning Update/ Market Thread 7/28 – Kabuki Theatre of the Absurd Edition…

Good Morning,

Equity futures turned slightly positive this morning following a Weekly Jobless Claims Report at 398,000, a dip slightly below the psychological 400k mark. The dollar is higher, bonds are higher, oil is higher, gold & silver are flat, while food commodities rise enough to make one choke.

The Department of Labor reported that Weekly Jobless Claims fell to 398,000 from the prior 418,000 – which was revised higher of course. Econospin has no problem making this sound as good as possible, but even if it were believable, which it’s not, it’s still a jobs losing proposition. If this raises employment expectation, then prepare to be disappointed (again) as mass layoff announcements have been steady over the past couple of weeks. Here’s Econoshill:
Initial jobless claims dropped a very sharp 24,000 in the July 23 week to 398,000 for the first sub-400,000 reading since early April (in a partial offset the prior week was revised 4,000 higher to 422,000). The four-week average of 413,750 is down a steep 8,500 in the week for a nearly 15,000 improvement from the month-ago reading, a comparison that points to improvement for the monthly jobs report.

Continuing claims have also been coming down, down 17,000 in the July 16 week to 3.703 million. The unemployment rate for insured workers is down one tenth to 2.9 percent.

One factor that may cloud today's report is uncertainty about retooling in the auto sector, a factor where timing is always hard to gauge and where uncertainty is even greater this year due to ongoing production cutbacks tied to Japan. Minnesota, where the government is shut down, is also a special factor though the state did not provide any related details this week. Yet given that the Labor Department isn't citing any special factors, today's report offers badly needed good news for the stock market.

Oh, then there’s this not reported unadjusted gem from the DOL, “The total number of people claiming benefits in all programs for the week ending July 9 was 7,645,601, an increase of 320,152 from the previous week.” Oh yeah, go long the phony stock market based upon phony data – that’s a winner of an “investment.”

Pending Home Sales are released at 10 Eastern. Tomorrow brings the first guess at Q2 GDP. A whopping 1.9% is the group of clown’s guess. I say that real GDP is very negative and has been for more than a decade now.

Yesterday the VIX shot up and closed over the top of the upper Bollinger Band, that sets up a potential market buy signal once we have a close back inside the bands:

The major indices are all getting close to the bottom Bollinger, with the Transports closing beneath it yesterday.

If there’s one positive about this debt ceiling Kabuki, it’s that it’s giving the debt much needed attention. If only that attention was based in reality… sigh. The involvement of the rating agencies is putrid. That group of clowns is as conflicted as the day is long. If they were even close to honest they would admit that America is already in default, that is exactly what Quantitative Easing is. Our “rating” certainly would not be triple-A. Thus the rating agencies are complicit in allowing the government to run a shell/Ponzi game – had they taken action to downgrade our debt long ago, then perhaps the math would have never become so impossible. Everyone was silent for far too long, that’s because the system depends upon their complicity. Calling this “debate” Kabuki is an insult to the Asian art – let’s face it, we’re talking about the theatre of the absurd.

Back to doing and investing in something REAL.

Historic Move in Gold Stocks Is Directly Ahead

By Jordan Roy-Byrne Jul 25, 2011 3:00 pm

Gold stocks are ready for a massive, potentially historic breakout at a time when the sector is underowned, undervalued, and a tiny fraction of the overall market.

A variety of factors are lining up that lead my firm to believe we are on the cusp of a major move higher in the gold stocks. We've been saying this for a while, but the reality is we are moving closer and closer to that moment. The fundamentals couldn’t be more obvious and being in the 11th year of a bull market means the timing is ripe. We think you will find the facts and conclusions extracted from the technicals, sentiment, and valuations very compelling.

First let's look at the technical aspect with the Barron's Gold Mining Index. Gold Stocks basically consolidated from about 1937 to 1961. The breakout really began in 1964. The consolidation ranged from about 17 to 50. The breakout took the market from 50 to about 220 and in only four years. Today we are on the cusp of a similar breakout. The market made a marginal high in 2008 and another marginal high earlier this year. A sustained move to new highs will qualify as a major multi-decade breakout. 

Dollar Falls to Record Low, Stocks Slide

By Stephen Kirkland and Nikolaj Gammeltoft - Jul 26, 2011 4:46 PM ET
The dollar slid to a record low versus the Swiss franc, stocks fell and the cost of insuring U.S. debt rose to a 17-month high as Democrats and Republicans continued to wrangle over competing plans to cut the deficit.
The dollar depreciated against all 16 major peers at 4 p.m. in New York and earlier dipped below 80 centimes versus the franc. The Standard & Poor’s 500 Index lost 0.4 percent to 1,331.94 and the Stoxx Europe 600 Index closed down 0.4 percent. Credit-default swaps on U.S. debt increased two basis point to 58 basis points. The S&P GSCI Index of 24 commodities climbed 0.6 percent, rebounding from a 0.7 percent drop, as zinc, cotton and copper added at least 1.7 percent.
The Obama administration threatened a presidential veto of House Speaker John Boehner’s two-step plan to raise the U.S. debt ceiling and cut $3 trillion in government spending. Stocks were also pressured after home prices fell the most in 18 months, 3M Co. (MMM) forecast earnings that trailed analyst estimates and United Parcel Service Inc. said the third quarter will be “fairly slow.”

Weather Forecast Wednesday- Stormy With a Chance of Economic Chaos; Durable Goods, Not So Durable; Delta Airlines Net Income Drops 58%, Goes to Plan F; Credit Suisse Cutting 2,000 More Jobs; Fed's Beige Book Turning Brown; Radiation is Not Healthy For You; More

And now, today's weather: stormy with a chance of economic chaos. High 14.294 Trillion. Low -127.89 Trillion. Ultra Violent index 9.7. People are urged to seek shelter in gold and silver.

The economic storm clouds have been gathering for some time now, but because they have been lingering for so long, people have grown accustomed to the sight of them. And that is where the danger rests.

Today's June Durable Goods Orders plummeted 2.1% while inventories increased 0.4% to the highest level ever recorded. Demand down, inventory up - this points to a clear contraction in 2Q GDP and might put the U.S. back "officially" in recession. Oops. Then again, in the real world, we've been living in an economic depression since 2008 and now are entering the second leg of that depression so "officially" what they report "officially" doesn't matter one way or another.

Delta Airlines announced further cuts in flights as net income dropped 58%, which was blamed on higher oil prices. Now, they are planning for sustained higher fuel costs which they will pass on to the passengers. Delta gets an "F" for Failing.

Speaking of failing, another TBTF&TCTS bank named Swiss Debt Credit Suisse, is looking to cut 2,000 more jobs - which should be announced this Thursday. Keep an eye on that. On top of another wave of job cuts from the banksters industry, which we predicted three months ago.

Being that today we got a very late start, we're able to incorporate the Fed's Beige Book of inactivity, which showed "the economy" (or whatever remains of it) slowed down, ahem, more than "expected." Eight out of 12 regions experienced contraction and all of it was blamed mostly on Japan. Well, that and floods and droughts. Oh and maybe some snow for good measure. Don't bother wasting your time reading the 40 pages of blah, blah, blah when we can summarize it for you in two words - crumbling economy. Next.

As the drama in Washington roars on, we see gold and silver going up, up and away. More and more people are catching on to the fact that fiat currency is worthless. Now, combine what we predicted three months ago when we said the Comex is dry on physical, and it's setting up to be a long hot summer for those holding fiat and no gold.

Finally, as the financial world continues to burn and crumble, we present to you a video that proves what we have always known - radiation is not healthy for you. Take that, Ann Coulter.

What the Debt Ceiling Means to You!

From Minyanville
By Todd Harrison Jul 27, 2011 10:15 am

In 2008, I offered that the crisis would cycle through the financial, economic, and social spheres. It now appears to have infected the political spectrum as well.

As European leaders navigate the most dangerous economic juncture in the history of the Eurozone, stateside policymakers have been on a mission all their own -- to arrive at a bipartisan agreement to raise the debt ceiling.

While this topic is confusing to many Americans, it is actually quite simple: The United States has been writing checks at such a feverish pace that its coffers are running dry. Unless the legal cap that the federal government is allowed to borrow -- the debt ceiling -- is raised, our country will run out of money.

Before you react to that scary fact, please remember that the debt ceiling has been raised 74 times since 1962 -- averaging roughly once per year -- and most of the current debate is predicated on political infighting, competing agendas, and shameless self-promotion. 


Morning Update/ Market Thread 7/27 – Is there Anybody Out There Edition…

Good Morning,

Equity futures are lower again this morning, but not nearly as low as they should be for the lunacy that goes on. The dollar is slightly higher, bonds lower, yen higher still, oil still being held beneath $100, gold running for the roses now at $1,630, silver higher, and food commodities mixed with rice continuing to rise.

Durable Goods Orders were a big miss coming in at -2.1% in June, this is down from +1.9% and well below the +1.0% consensus. Here’s Econoexcuse:
Headline durables disappoint and ex transportation is soft but the picture is more complex. New factory orders for durables in June fell 2.1 percent, following a rebound of 1.9 percent the prior month (previously up 2.1 percent from the factory orders report). The June advance came in below the median forecast for a 1.0 percent rise. Excluding transportation, durables edged up 0.1 percent after rebounding 0.7 percent in May.

Transportation was the weakest component, dropping a sharp 8.5 percent, following a 5.8 percent rebound in May. All major subcomponents of transportation were down. For June, motor vehicles slipped 1.4 percent, nondefense aircraft dropped 28.9 percent, and defense aircraft fell 205 percent. But Boeing is expected to boost nondefense aircraft soon and autos are expected to recover from supply shortages from Japan.

Ex-autos, weakness was in machinery, down sharply. All other industries in ex autos were up.

Within ex-autos, machinery dropped 2.3 percent in June. On the positive side, gains were seen in primary metals, up 1.0 percent; computers & electronics, up 0.2 percent; electrical equipment, up 0.4 percent; and "other," up 0.2 percent.

So, the real picture is a mostly positive June with isolated weakness in transportation and machinery.

Focusing on investment, new orders for nondefense capital goods excluding aircraft have been volatile but slowly trending up. New orders for nondefense capital goods excluding aircraft slipped 0.4 percent in June, following a 1.7 percent gain the month before. Shipments for this series advanced 1.0 percent, following a 1.3 percent increase the month before.

Overall, the picture for durables manufacturing is mixed, though recovery from temporary weakness in nondefense aircraft and autos should bump up orders and production in durables manufacturing in coming months.

On the news, equity futures eased and Treasury rates nudged down.

What, the dog didn’t do it?

The completely conflicted and hypocritical Mortgage Banker’s Association reported that Purchase Applications fell 3.8% in the past week, and that Refinancing Activity fell 5.5% following their double-digit extreme nonsense the week prior. These people belong in prison, not creating unbelievable national economic statistics:
The purchase index fell 3.8 percent in the July 22 week to extend a run of weakness that points to trouble for July home sales. The refinance index, which spiked higher earlier this month, fell back 5.5 percent. Rates moved slightly higher in the week with 30-year mortgages averaging 4.57 percent.

Yesterday’s New Home Sales was also a miss, construction still at depression levels.

The VIX continues to rise into the debt and IQ abyss, Holly Cross now in the rearview mirror:

Notice how the political Kabuki has people angry at the politicians instead of the bankers? They are way off point, for it is the central bankers who are at the very root of the debt problem – they created a system of debt money that benefits them, the only reason to be mad at politicians is for giving them the power in the first place, and for not taking it away in the second place. No More National Debt!


Written and published by Richard Benson, www.sfgroup.org

When business slows down over the summer months, I finally have some time to reflect and do a little economic detective work and, yes, an occasional jig saw puzzle. Trying to figure out what is going on in the world these days is extraordinarily similar to putting the pieces of a puzzle together. Within the pile of pieces, you know there’s a picture somewhere but until you snap those last few pieces into place, the puzzle won’t be complete.

The latest puzzle I wanted to solve began when I went to the supermarket and picked up one of the few items my wife let’s me buy, which is a large jar of cashews. I seem to recall a few years ago they were $7, last year, they spiked to $11, and now, suddenly, they’re $15. Because my beloved nuts rose in price so much it has driven me nuts, and I had to understand why!

Numerous articles that I’ve read recently in the financial press and elsewhere about China have put some pieces of the puzzle into place. In one, the Chinese apparently have developed a real taste for cashews and are buying them up left and right, driving up the price. In another, an article titled “Pigs Fly” in the Wall Street Journal mentioned hog prices and raising the daily limit on China buying American pork. Now, just as the Chinese are buying massive amounts of American corn and other grains, front page news shows both a massive heat wave and long-term drought in the US gravely affecting agriculture. Higher demand and restricted supply are forcing food prices up.

The Chinese love pork which amounts to over half of the meat they consume. Needless to say, the price of this meat is up 38 percent since the beginning of this year, which is a national concern in China. Fearing food riots, the Chinese government has recently released a large quantity of frozen pork from their strategic pork reserves to keep up with demand.

While America and other countries have strategic oil reserves, only China has a strategic pork reserve which tells you how important the price of hogs (and other food items) is. Food prices in China have been rising about 13% in the past year.

Normally, I wouldn’t make much of a connection between pigs flying and the price of nuts, but China’s policy last year to double the wages of working Chinese by offering wage hikes of 20 percent, and another 20 percent this year, was intended to prevent food riots. As long as the government keeps their promise going forward to raise wages, workers can continue to buy their sacred pigs. Feeding pigs requires more corn. Indeed, higher wages in China wouldn’t be a big issue for America except for the fact that there are 1.3 billion Chinese, they’re hungry, and now they have cash to spend. Another key piece to the puzzle just snapped into place!

The Chinese government is also still running trade surpluses selling Americans manufactured doodads and toys, and has amassed over $3 trillion in foreign exchange reserves they can use to spend on hogs, cows, chickens, corn, wheat, soybeans, rice, nuts, and anything else they may need to eat. Indeed, China could buy every bushel of grain and every farm animal in America with the money we have given them, and hardly dent their foreign exchange holdings.

So, when I look at the last piece of this summer’s puzzle, the picture is pretty clear. If you’re an American, it’s not a pretty picture. Food prices are not going to be determined by Americans, whose wages and jobs are stagnant. Food prices are going to be determined by the Chinese who outnumber us four to one, and whose wages are soaring, and whose government has over $3 trillion in spare change to buy food for them. So, when you go to the supermarket because you want to get something to eat you might not be able to afford it. China will likely buy our food with our money, and just leave us the scraps. For the next few years, count on food prices continuing to go nuts!

Wormwood Tuesday- One Week Later and Already Greek Contagion is Spreading; PIIGS Bond Yields Remain Elevated; Great Quote From Obama for the History Books; Debt Ceiling Talks Continue; New Home Sales, Plunge Another 1% on Top of Last Year's Record Low; Fukushima Updates; Much More

Not one week ago, Greece was granted a final wish a new bailout worth $140 Billion (on top of last years $140 Billion bailout) which despite all of the drama, solved absolutely nothing. As we reported, this band-aid solution which hyped "the markets" into typical KoolAid hysteria, would eventually wear off and reality would once again come back to bite - ever harder, ever deeper. (Thank you WB7 of ZeroHedge for the Hitchcock graphic!)

Sure enough, one week later, nothing has changed. Italian and Spanish bonds remain at elevated levels not seen since the inception of the EU and these levels are to be closely watched as investors doubt the solvency of the entire EU. Spain's 10yr continues to float just above the 6% threshold as does Italy's 10yr. We'll continue to monitor this rate and see what it predicts for the EU. On the heals of yesterday's moot Greek downgrade, Moody's noted that the new bailout would make it easier for Greece (exactly what the last bailout was supposed to do) to reduce its debts but debt to GDP will remain "well in excess of 100 per cent of its GDP" for years. Again, as we have been highlighting since forever, ratings agencies are good for "after-the-fact" events, but as with the whole 2008 debacle, they failed to forewarn the whole world of the pending doom. That's why you have Fiat's Fire!

In the meantime, the drama across the pond in the U.S. continues, as Obama fights a Boehner over a debt ceiling increase. More theatrics, more smoke and mirrors, more bread and circuses for the masses. While you watch the continuing circus, we want you to keep this quote from a 2006 Obama in mind:

"The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. Government can not pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies. Increasing America's debt weakens us domestically and internationally. Leadership means that, "the buck stops here.' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better." - Senator Obama, March, 2006

What changed since 2006? Did debt all of a sudden in 2008 become necessary to keep the pyramid scheme going? Did Obama become privy to new information?

You know, he was 100% correct when he spelled it out in very plain terms then - raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. Government can not pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies. Increasing America's debt weakens us domestically and internationally

We couldn't have said it any better. Now, with that being said, let's check the price of oil and the profits for the top oil companies. Oh, what a surprise! Record profits for the oil companies - and for Wall Street. But no soup for you, Main Street USA. Instead, you'll have to fight over the fewer and fewer jobs that Wall Street chooses to keep here. Remember, there is no quicker way for a company to cut costs than to cut jobs. Going "green" is costly in the short term but cost effective long term, so in this economic depression recession, they chose not to make that investment. What else can they do if they are to keep bonuses? How else can they keep this rigged casino operating for another month? 

The bottom line - raising the debt ceiling or not is inconsequential in the long term. Period. Allow that to sink in. 

If an agreement was reached tonight for example, it would only postpone one of two inevitable outcomes: 1) a U.S. default or 2) hyperinflation. We firmly believe they will choose hyperinflation as that buys them time, versus defaulting which would spell immediate disaster for them. It's a mathematical certainty.

Also certain, is the current U.S. cash burn rate (which has increased exponentially) will now only buy 6-8 months if the proposed $1.6 Trillion increase is passed, at which point they will have to decide to raise it again or not. Which is why so many Wall Street banksters "experts" are calling for abolishing the debt ceiling altogether, because they know, come 6-9 months from now it will need to be raised again. So if this giant scam global economy is to continue, that ceiling has to be abolished. If it's not raised, Wall Street's free money comes to an end. They can't have that now, can they? 

Further, and this is the real kicker - any and all catastrophes (man made or naturally occurring) will be met with unprecedented fiat printing, which in turn equals more inflation for you and bigger bonuses for Wall Street. Which is certainly why immediately following the triple catastrophes of Japan in March, the talking bimbos on CNBS were celebrating this disaster. No joke. It was touted as "bullish for the economy," and one old filthy fleabag went as far as saying, "thank goodness the monetary toll is not as bad as the human loss." Remember that? Our blood is still boiling from that. 

We will say, another major disaster such as the one in Japan, might just push oil up to $150pb and jump "real time inflation" from the current 11% to 18% or more. It's coming. Given 2011's record earthquake activity, our anti-Goldman HF data mining supercomputer is putting the odds of another major quake in 3 months time at 80%. And we're already 1/4 the way on a Level 6 GEES. Things are speeding up. 

Fresh off the presses today is the New Home Sales data which, (surprise, surprise) "unexpectedly" dropped another 1% in June to a three month low, on top of last year's sales which were the worst recorded sales in over 50 years. Oops. June also now makes two consecutive months of "unexpected" drops. Of course, Fiat's Fire readers are not surprised and this news is not unexpected. Only Wall Street's finest found this "unexpected" as they awaken from their KoolAid induced comas. Then again, they also thought silver and gold were not monies, but traditions. We all know where gold and silver are today. 

Update 1: As if they couldn't see that the FHA was going to need a bailout. Oops. 

Update 2: Birmingham AL, readies for going bust. Who could have known?

Update 3: Crude oil, back over $100. Very bullish for the economy. Or not. Got gold? Got radioactive-free Milk?

Morning Update/ Market Thread 7/26 – Dirty Deeds Done Dirt Cheap Edition...

Good Morning,

Equity futures are flat this morning prior to the open. This despite a dollar drilling a hole deeper than the Horizon oil well, the Yen is rising higher into the danger zone, oil is trying to get above $100 a barrel but looks like that well’s been capped (via manipulation), gold is slightly lower but still well above a stunning $1,600 an ounce, silver keeps rising, and food commodities are looking like squishy canned mixed veggies – very expensive ones.

Consumer Confidence and New Home Sales are released at 10 Eastern this morning and will be reported inside of today’s daily thread. Case-Shiller Home Price Data comes out just prior to the open, it too will be reported inside of the Daily thread.

Sickening is the feeling I had as Obama and Boehner both interrupted the evening news by taking their drivel to the people. Neither one mentioned their real agendas which I won’t even discuss as their games are just revolting – hostage taking for political gain is just one part of this corrupt sickness. None of this should be happening; we needn’t have any national debt whatsoever.

The VIX is feeding off this idiocy and is going to produce a “holly cross” today when the 50dma crosses over the 200dma. There have been exactly three of these holly crosses on the VIX in the past 5 years, two were prior and during the large drop in 2007/2008. Of course this is all a part of kabuki theatre, none of it is real:

The dollar is sinking, it is winning the race to the bottom of the skank money producers/manipulators. Very close to an all-time low, from a technical perspective it looks to be headed there:

Yesterday I had a conversation with a friend who was upside down on his house and couldn’t sell it because it wouldn’t appraise for the amount he had sold it for – twice. He rented it out for awhile then sold it via a short sale. The bank refused to play along, so he intentionally got two payments behind (only partial hit to credit that way) to get their attention in an attempt to get the short sale agreement approved. They sent him letters every week threatening to foreclose if he got another payment behind and they called him constantly in an attempt to squeeze a couple more payments out of him.

He had followed my writing about MERS and how unclean the paper trail is, so one day when he was sick of their inaction and games he demanded to see a copy of the original deed… Thud… Just like that the letters stopped, the phone calls stopped, and the short sale was approved a couple weeks later.

Knowledge is the key when dealing with shysters, the big banks are nothing but. The MERS mess and the way that is being dealt with is more sickening than the phony debt limit debate, yet it is garnering far less attention. All fraud all of the time…

China’s mountain of debt, explained

Debt is the economic scourge of our time.
First it buried American banks and mortgage holders. Then we learned that euro zone governments such as Greece, Portugal and Ireland were in hock over their heads. Japan’s debt is twice the size of its annual economy. And in Washington this month, Republicans and Democrats are engaged in brinksmanship over the American taxpayer's $14 trillion hole. 
Through it all, China has been seen as the stalwart of financial prudence. But we now know that the country faces its own challenges. 
As GlobalPost has reported in the past, China's banks have been engaging in risky “off balance sheet” lending somewhat reminiscent of Enron’s shenanigans. Last week, Beijing released a national audit revealing that local governments owe an estimated $1.65 trillion in outstanding loans. This week, Moody’s has indicated that the problem is significantly worse, by as much as $540 billion. And that's only local government debt. It doesn’t include the central government’s huge obligations, or those of banks that are essentially guaranteed by Beijing.
Even for a miracle economy like China's, that’s a lot of debt.
To put this in perspective, GlobalPost interviewed Victor Shih, an expert in China’s economy, who has been following the debt situation closely. Shih, an assistant professor of political science at Northwestern University, holds a Ph.D. in government from Harvard. (The interview has been condensed and edited by GlobalPost.)
GlobalPost: Put this in perspective for us: How much debt does China have?

Short & Sweet Monday- Add BlackBerry Maker RIM to List of Companies Making Big Job Cuts, 11% of Workforce; Add National Association of Realtors to that List as Well, 10% of NAR Workforce Cut as Jobless Recovery Swings Into High Gear; Greek Debt, Junked; Cesium Spreads Across Japan

As we have pointed out 14.249 Trillion a dozen or so times already (one of our very first articles was on this topic), it bares worth repeating that real, organic economic growth is long dead and has been officially since 2008. Currently, the only way for things to appear as normal is to pump endless amounts of fiat into the system - which happens to be exactly what the Central Banks of the world have been doing since that dark day in 2008, to "fill the gaps" as companies cut jobs, and close stores and factories, etc. What this creates, besides the obvious inflation, is a perpetual system of economic destruction. No wonder then, why gold and silver, exactly as we predicted, have been and will be going "to the moon, Alice!" in the coming weeks and months ahead. Daily fluctuations are inconsequential - what matters are the long term trends.

By now, you know that the MSM has coined the term "jobless recovery" and made it a household term, which was supposed to be used in a positive KoolAid induced sense. However, it's backfired terribly on them in part because it's obvious that this "jobless recovery" is a "recovery" for Wall Street and it's "jobless" for everyone else. However, we know the worst is yet to come; this "jobless recovery" is far from over so get ready for more "jobless" on your street and more "recovery" for Wall Street CEOs.

We begin this week with more bull...ish news, by adding BlackBerry's RIM with an 11% workforce reduction (2,000 jobs) and the National Association of Realtors (NAR) with a 10% reduction (somehow the NAR tried to spin this news into something positive despite giving numbers but we'll guess that 10% reduction equals 150-200 employees). We were hoping the spinmaster of horrific housing news, L. Yun, would be on that list, but we're sad to report that he will get a bigger bonus for his mastery of spinning. Looks like housing is about to drop off a cliff, again. This should be worth a few hundred points on the Dow(n) Jones. Like tomorrow's Case-Shiller/S&P Housing data.

Not that it matters, but Greek debt was downgraded again, this time to triple junk status; somehow we already knew Greek bonds were junk since 2009. Oops. The "markets" should rally on this news and the now 100% certain default. You have to like the way they eased you into this Greek default, though. Good job on the spin.

Just don't forget that Italian and Spanish bonds are looking ugly today, as once again, contagion is back. Over 6% on the 10yr for Italy. Clearly unsustainable. "Wwwwhat? I thought they fixed that problem last week!" says you. Nope. For some reason, band-aids on gangrene infested amputations never seem to work out too well for the patient. And just now we learn, courtesy of ZeroHedge, that Italy, in addition to Austria, has suspended August bond auctions. [insert Goofy voice] "Well gee! Who could have known?"

Like, who could have known that cesium-137 contamination would continue to spread across Japan? Japan has been so busy in a massive cover up forgot to provide standardized testing for radiation and now look what happens. It looks like Japan doesn't care much about its people, nor the people of the world as they are making it too obvious that their "thrown in the towel, the end is near" agenda has just gone full power.

Told you. Short and sweet and painless on this slow news day.

Morning Update/ Market Thread 7/25 - Threats, Hostage Taking, & Sovereign Money Edition

Good Morning,

Equity futures gapped down on the open yesterday and are still down a triple-digit amount as no “deal” has yet to be made on the debt limit. The dollar continues to sink while the Japanese Yen is in dangerous territory, oil is falling, yet gold has shot to another all-time high proving yet again that it’s a monetary root problem, silver is also higher, while most food commodities continue to choke real, living people with fake markets and fake money.

The threat’s been made – “economic Armageddon” will happen unless _______ party agrees to our (central banker box) solution. So, what happens if the threat’s been made but reality turns out different? Do the clowns and barkers wind up in prison? Out of office? Or do we continue to accept their inane manipulation into our economy and lives? Certainly if you were to make threats about their living you would wind up in prison in an instant.

The truth is that the national debt is a total embarrassment… not just because there’s so much of it, but because there should never be ANY of it in the first place! Why would the government of a collective people agree to pay private bankers interest in exchange for “borrowing money” that never existed in the first place? In other words, why would a sovereign government give a few private individuals the right to produce the nation’s money and charge it interest? These are the real questions that must be asked, not arguing about left/right or who’s giving up what! The only people who should be giving up anything is the private banks – and that would be the right to produce money at their will.

A key demarcation point was reached when Obama was elected President and he came out “focused on the future,” stating that “we all need to put our past behind us.” While that optimistic speak has a nice sounding fa├žade, it was code for the rule of law will not be enforced and those who are robbing Americans not only will not go to prison for their crimes, but they will be allowed to continue to commit crimes (because they finance his election and he would not be there without it).

Make no mistake, the debt ceiling debate is meant to distract you… while the impossible math is clearly evident, raising the debt limit certainly is no solution to anything. Even if you fall into the central banker box of lies and deceit, common sense dictates that capping the debt is more beneficial for one’s credit than is unlimited ability to spend – thus the opposite of the threats is true. And as has been completely proven now over and over, we are macro-economically debt saturated and thus adding more debt will only result in further drag on the economy and higher structural unemployment.

No, what needs to happen is a complete revamp of our monetary system and WHO it is that is in control of producing our nation’s money. Below Bill Still advocates just such an on target solution, however, my caution, as it’s always been, is that while we must take back the power of money creation we must do so carefully with controls in place to limit the amount of money that gets produced – that is entirely possible as I spelled out in Freedom’s Vision. Also, the current debt must be cleared for prosperity to take root – again, Freedom’s Vision spells out just one method of how to accomplish that. Here’s Bill Still on point as usual:

This morning the Chicago “Fed’s” National Activity Index plummeted once again and prior readings were revised drastically lower… again. The prior month’s report was -.19, but it was revised downward to -.55, and thus the current report of -.46 could be headlined to read like it is an “improvement,” a favorite trick of the mainstream complicit pumpers. The 3 month moving average tanked to -.60, here’s Econononsense:
Growth in national business activity is below historical trend based on the Chicago Fed's index which comes in at minus 0.46 in June vs a downwardly revised minus 0.55 in May. At minus 0.60, the three-month average is at its lowest level since October 2009. The three-month average in May is revised lower to minus 0.31. Weakness in personal consumption & housing is weighing most heavily on the index followed by employment. Production & income is also a negative with sales, orders & inventories the only plus.

Of course any data from the “Fed” is suspect – period.

So, what will it be? Raise the limit, or not raise the limit? Does it matter? Are you tired of being manipulated yet? Are you tired of being threatened yet?

You know, my new mantra is simply to deny these criminals anything – no respect, no participation in their crimes, no money to fuel their Ponzi. Who to vote for in 2012? Who gives a rip as long as the central banks are financing both sides to create their central banker box? So, no vote from me, no money from me, just let me know when the people are ready to take back the power that is rightfully theirs.

You know all the bizarre violence over the weekend has got to leave you wondering… I believe the root of all that too is the impossible math and the pressure it creates on society. It is corrosive, it is the underlying cause of the decay in society’s moral fabric. This is why it’s very important not to feed this paradigm.

For debt crisis lessons, look back 225 years

By John Blake, CNN
July 24, 2011 -- Updated 1019 GMT (1819 HKT)

(CNN) -- America's political leaders are paralyzed. The government is reeling from debt. Corrupt bankers foreclose on people's homes as a brutal recession sweeps the land.
We're talking, of course, about the great debt standoff of 1786: Shays' Rebellion.
Nervous Americans glancing at the upcoming August 2 deadline for raising the debt ceiling are being told that the nation is entering uncharted territory. But historians say they've seen this movie before.
Many of the same issues driving this modern-day standoff -- disagreement on how to handle the national debt, ineffective government and a populist citizen's revolt -- drove the 18th-century uprising that's been called America's first civil war.
Historians say the lesson that can be drawn from Shays' Rebellion and other transformative events in U.S. history is this: Protracted political gridlock is seldom resolved through compromise. It comes when one political party finally beats the other down.
Many Americans, however, have told pollsters that they want the political parties to work together to solve the debt ceiling crisis. Yet political stability doesn't always come through give-and-take, some historians say.
"There are times when only the outright defeat of political enemies can bring about needed reform," says Richard Striner, a history professor at Washington College in Chestertown, Maryland.
"It was only by confronting and defeating the aggressive leadership of the slave states that Lincoln and the Civil War Republicans rid the nation of slavery."
The fight over 'big government'
Shays' Rebellion was such a crisis. Rooted in economic anxiety and political turmoil, it even involved a leader of a tea party.
The country had incurred massive debt during the Revolutionary War. But it couldn't pay it off because the Colonists, distrusting "big government," had created the Articles of Confederation to run the country, which weakened the authority of a central government.
The result was anarchy.
The federal government wasn't allowed to raise taxes to pay off war debts. Various states responded with crushing taxes. Shady bankers in states such as Massachusetts foreclosed on farmers' homes and threw people in debtors' prison. Some thought the country would dissolve.

Sunday (NOT SO) Fun: The Fictional Jobs Agenda

Clipped from the Disciplined Investor

In the editorial section of IBD this weekend, there was an excellent article that caught my eye. As all of the gamesmanship and immaturity has been focusing on the debt ceiling, the news coverage regarding the poorly execute jobs recovery plan has apparently been shifted – at least temporarily. With the recent display of political grandstanding and empty promises, does anyone still believe that his administration, along with Congress, has any idea on how to get the U.S. back to growth?
Promise were made that the enormous amount of stimulus would be used to bring down the unemployment rate and we now know how that has worked out. So, what have we been left with? A no-win situation where the choices will be to increase the debt-ceiling in order to pay the bill, increased taxes to pay back the money borrowed and a cut in the spending that was used to provide benefits during a time of a national economic emergency. In other words, the U.S. now has an inconceivably high tab to pay for the spending spree that didnothing more than buy us some more time.
Of course, if the government did not step in during the height of the financial crisis, we would have entered a prolonged depression with high unemployment and a series of institutional failures. At least that is what we have been told. So, Uncle Sam footed the bill for not only the U.S, but also  many foreign entities.