Fantasy Zone Fryday- Dr. Deficit Admits to Defeat, Fiat Printing Plan Has Failed; Five Simple Steps to Getting Things Turned Around; DOW Priced in Gold Shows an 11 Year Bear Market, No Bull Here; Inflation Re-examined as Food Prices Skyrocket; Weather Plays Huge Part in Economy; Greece In Upset, More Protests Coming; Girl in China Sells Her Virginity For iPhone4; Much More

Updates
Update 1: Super bullish news for "the markets" - Ft. Calhoun nuke plant now 3 feet from 500-year flood levels. We're 100% Bernanke certain that they've got everything under control.

Update 2: We told you so - Residents 40km from Fukushima are already measured with 3 mSv of radiation. It's only going to get worse from here.

Update 3: Why on earth would they have a radiation release map for the Ft. Calhoun all ready to go? Does someone have a crystal ball? This is bizarre.

Main Article
Two days ago, Dr. Deficit finally admitted to defeat not understanding why his Harvard endorsed fiat printing plan was not working. "We don't have a precise read on why this slower pace of growth is persisting," he said. In Fed speak, that means, "we're clueless why there is no recovery." More interesting was his comment that this "soft patch" was not as "transitory" as they first thought. Act surprised, if you can.

As we have explained in great detail, the bearer of a Harvard PhD usually does not have the capacity to think on his own. There is an inverse correlation to the higher degree one possesses to their ability to use common sense. Those who have been indoctrinated by poison Ivy League academia, are all cut from the same cookie cutter mold - which can be especially problematic in the real world, as life and all that it encompasses is dynamic and changing. The book, "Print Your Way To Wealth," which happens to be required reading for all poison Ivy League students, is obviously outmoded. Worse, we think Dr. Deficit was not only a prodigy of the original authors, he became a co-author of the updated 2008 edition of the book - just in time for the new round of grads with PhD's to come online.

Therefore, we highly recommend that all those who read that book please clear their minds and start fresh with some very basic information that is obviously no longer taught in poison Ivy League schools, but obviously is still appreciated in Europe. We present to you a simple 5 step process that would right the wrongs of the bad good Doctor.

1) During the worst economic depression recession the world has ever seen, the effective tax rate of the top 10% of the wealthiest was only 17% tax. Cutting taxes for the rich, which is somehow supposed to stimulate the economy as we were taught in finishing school, is never a good move when the nation is deep in debt and needs revenues more than ever. One thing about the wealthy is they can never have enough money. Which means that money goes nowhere but their pockets.

2) Jobs in this country have vanished (as can been seen by the 23% real unemployment rate). Nearly all manufacturing is done offshore. Nearly all tech support, computer programming and IT has been also exported offshore. We are left with hamburger flippers and Home Depot clerks. Servicing one another does not make for a strong economy. Bring the manufacturing jobs back. Penalize all corporations that manufacture  offshore. Increase their tax rates and especially increase taxes on executive stock options to 80%.

3)  We need clean, renewable and affordable energy and a strong manufacturing base that supports that. All new clean energy projects should be engineered and built here in the U.S. with skilled American workers. Find new ways to make coal cleaner while we make the transition over to renewable energy, and in order to keep the price of electricity low.

4) Invest in education. Budget cuts to education is the worst sacrifice anyone can make. Education is key to the success and future of a strong economy. Education empowers and benefits all. College these days is simply, not worth the expense. Vocational schools today provide better skills that will be needed to build a new economy.

5) ZIRP interest rates at zero hurt savers, and encourages reckless spending and debt. And debt is never good for the people - only the banksters benefit from more debt and that is why they love you to have more and more.

Of course, these are just a few of the very basic, fundamental steps that should have been implemented long ago. Other steps include changing the accounting rules for big corporations that allow them to offshore their profits, and ending once and for all "Too Big To Fail." Once anything becomes "Too Big To Fail," it's already too dangerous. Further, "creative accounting" should never be tolerated.

The point here is, we never hear anything from Dr. Deficit and Co. about any such measures. Instead all we hear is how they are keeping inflation low (which is not even close to low - try 11% or more) and will implement more POMO (aka, more money printing) and how good of a job they are doing, and that everything will get better tomorrow.

Which reminds us of the "perpetual bonds" that Greece issued a few months ago. They are called "perpetual bonds" because they usually mature in 50-100 years (a lot can happen in 50-100 years, making them worthless) and usually, the current payments are made with the issuance of yet more bonds, in an endless cycle. Sort of like the handouts bailouts Greece is getting.

Speaking of handouts money printing, let's be clear here - just because the money is not actually printed on physical paper does not mean that they are not "printing" as we have highlighted many times here. "Printing" comes in many forms. Their favorite method is digital dollars in the form of zeros; soon, zeros will be the only thing they have.

We can already see the real results of fiat printing when looking at the DOW index priced in gold. In all reality, the bull... bullish market you think you have experienced in your stock portfolio is merely an illusion as the DOW priced in gold has been in a bear market for the past 11 years. The jokes on you.

With all of the drama being pumped out of the MSM about Weiner's weiner or Arnold's love child or Justin Bieber's new cologne, most sheeple forgot to realize or take notice that inflation is all around us. Coffee has jumped 40% in the past year alone. Sugar is up 70%. And meats? Forgetaboutit! Some who see the real non-manipulated data are saying the real plague is inflation. Others, like Dr. Deficit are still saying, "inflation? what inflation..." and cut scene.

And here's a piece of news that should wake up those with a PhD in BS - weather plays a huge part in the economy of the U.S. (Well, well, well. Where have we said that before?) Which is why we here at Fiat's Fire pay attention to what the earth is doing. If the earth's weather was stable everyday and presented no major weather related threats, the global economy would still be a disaster. Just look at the comedy show in Greece where the weather is stable. Now, insert the most unpredictable and powerful variable called "weather," and a whole new dimension in global financial forecasting emerges. And to the talking heads on CNBS that said Fukushima was a "bullish event," we suggest you take an early retirement.

Finally, we report the continued moral breakdown of society (a key symptom and consequence of the gangrened world in which we live) and present to you this story from China where a young girl is offering her virginity to anyone who will buy her an iPhone4. We offer her the same advice as we did to the boy in China who sold his kidney for an iPad2 - wake up from your consumerism induced coma before it is too late. Contrary to what big business wants you to believe, happiness in life does not result from the things one possesses.

Morning Update/ Market Thread 6/24 – Still No Adults Edition…

Good Morning,

Equities are close to even this morning after being down earlier. The dollar is higher, with oil falling to just above $91 a barrel, gold and silver fading too, and most food commodities rising slightly.

The dollar is approaching key down slopping overhead resistance again. Yesterday it rose right into it and retreated right on queue:



The Yen is getting close to breaking out of its sideways move and also needs to be watched closely.

As I watch the actions of the United States, the central bankers, the Japanese, and the Europeans I am left to just shake my head and wonder if there are any adults left in this world whatsoever? It seems to me that the globe is being run by a bunch of precocious teens who know absolutely nothing about reality – certainly they never learned even the most basic math.

Release oil out of the strategic reserve into record high levels of inventory and falling demand. Okay, boy, am I impressed. I could go on and on about how that is only 16 hours of world consumption, but I see through their games. That’s why I prefer to view such immature actions simply as manipulation to drive the markets in their preferred direction, and to make a political statement so as to look like the clowns are actually “doing something.”

Then we get version 1,238 of the same old play, this one is definitely a Greek tragedy. Again, no adults, just immature narcissists fighting over how they will split up and rob the productive efforts of the people. Sickening.

As far as I can see, no one in a position of power is willing to even admit reality… Well, there is one, unfortunately Mr. Farage doesn’t reside in America:



Note the reaction of others when confronted openly about reality. Nothing. It’ just like talking to a stone wall.

Meanwhile our completely trumped up statistics show a .1% improvement in GDP from 1.8% to 1.9% supposed “growth.” This is the third revision for Q1, 2.0 was the consensus of idiots. Complete baloney, the only thing that’s actually growing is the supply of digital money and the private “Fed’s” balance sheet. Here’s Econoday for anyone who still cares to read the spin:

Highlights
The economy in the first quarter was marginally stronger than previously believed as the Commerce Department's third estimate for GDP growth was nudged up to 1.9 percent annualized from the prior estimate of 1.8 percent. The consensus called for 1.9 percent growth.

Final sales of domestic product were unrevised at an annualized 0.6 percent. Final sales to domestic purchasers were revised down to 0.4 percent from the earlier estimate of 0.7 percent annualized. The lower estimate for final sales to domestic purchasers was from lower numbers for investment in equipment & software and government purchases. PCEs growth was unrevised overall.

Economy-wide inflation was incrementally higher with the GDP price index rising 2.0 percent, compared to the earlier estimate of 1.9 percent. Analysts expected 1.9 percent.

What irrelevant bull.

The Durable Goods report came in plus 1.9% in May, most of which was aircraft orders which is about the only thing of value still made in America – although I note that at the Paris airshow that EADS (Airbus) is outselling Boeing by about 4 to 1 this year. Again, money printing equals higher costs, those higher costs translate into “higher sales,” and thus apparent growth is created. Of course the problem with apparent growth is that wages don’t keep up, and thus eventually only the wealthy have the money to fly or even to eat. Here’s the spin the way the narcissists see it:

Highlights
Manufacturing may not be as weak as suggested by recent manufacturing surveys. New factory orders for durables in May rebounded 1.9 percent, following a revised 2.7 percent decline the month before (previously estimated at down 3.6 percent). May's figure came in higher than analysts' projection for a 1.5 percent gain. New durables orders excluding transportation also made a comeback, increasing 0.6 percent after a 0.4 percent drop in April.

For the latest month, gains were broad-based by industry. Transportation led the way with a monthly 5.8 percent jump, following a 9.4 percent drop in April. The swing in both months was largely nondefense aircraft (Boeing) which surged 36.5 percent in May after a 29.0 percent fall the month before. Defense aircraft rebounded 5.5 percent after a 0.4 percent dip. However, the auto industry appears to still be suffering from supply shortages. Motor vehicles edged up only 0.6 percent, following a 5.3 percent fall in April.

Also seeing gains in May were primary metals, up 1.8 percent; machinery, up 1.2 percent; computers & electronics, up 0.4 percent; and electrical equipment, up 3.2 percent. Fabricated metals were flat while "other durables" slipped 0.8 percent.

Business investment is improving in coming months as new orders for nondefense capital goods excluding aircraft also rebounded, by 1.6 percent after dipping 0.8 percent in April. Shipments for this series rose 1.4 percent, following a 1.5 percent decline the month before.

Today's report is good news for manufacturing and the economy. Yes, durables orders are volatile but the gains were widespread and were not dependent on a rebound in autos. Once supply disruptions are addressed, autos will add to underlying strength in coming months.

Sorry, but this same old tripe is just getting old.

Table of Chinese Reverse Mergers on U.S. Exchanges

Sent in by Shaza and just what GAW was talking about on Thursday. Don't forget to buy SLW :-)

(Corrects story published June 22 to remove Biostar Pharmaceuticals,China CGame, China Distance Education Holdings, China Finance Online, China Gerui Advanced Materials Group, China Mass Media, Dehaier Medical Systems, Fuwei Films Holdings, Jinpan International, Tianli Agritech, UTStarcom, Yingli Green Energy Holding, Youku.com and Zuoan Fashion.)

NYSE Euronext (NYX) and Nasdaq OMX Group Inc. (NDAQ), the two biggest operators of U.S. equity markets, say the following companies are based in China and gained listings on U.S. exchanges after conducting reverse mergers, in which a publicly traded shell corporation is purchased. Stocks that have been delisted from the Nasdaq Stock Market, NYSE Amex or New York Stock Exchange have been omitted.

The Securities and Exchange Commission cautioned investors on June 9 about buying stakes in Chinese-based companies when they gain listings through reverse mergers, avoiding the regulatory and investor scrutiny of initial public offerings. The list of companies is on the link below.

http://www.bloomberg.com/news/2011-06-22/table-of-chinese-reverse-merger-companies-listed-on-u-s-stock-exchanges.html

Fire Sale Thursday- Insolvent USPS Halts Funding of Pensions as Workers Report Chaos; AIB Has Fire Sale, Sells $310 Million Investment for $140k; TEPCO Stock Price More Important to TEPCO Than Life, Sound Familiar?; Ft. Calhoun NPP Underwater, Floods Grow; New Models Show 80% of North America Covered in Nuclear Fukushima Dust; SAAB Can't Pay Workers, Insolvent; IEA Releases Oil Reserves, Oil Plummets; Debt Ceiling Talks Break Down; Much More

Updates
Update 1: Reactor 4 SFP only 8 degrees from boiling. Are they preparing to cook rice?

Update 2: Get ready Iowans. Cooper NPP situation has worsened.

Main Article
fire sale 
–noun
1.a special sale of merchandise actually or supposedly damagedby fire.
2.a sale, as of assets, at reduced prices, in order to raise money quickly.

We begin today with the definition of "fire sale" because as the global economies implode, we will certainly see many more "fire sales." A fire sale is usually a desperate attempt to keep the lights on for one more day, as we have seen in Greece. As we have been reporting since the start of this site, the USPS is insolvent. Although it has been denying this fact, they are now coming to the realization of this fact as we reported yesterday in Update 1. Already, the backlash is becoming evident as workers are reporting "sheer chaos" on the news that the funding of their pension has been halted. The USPS says the move will save $800 million this year, but as with every attempt to save a penny at any insolvent organization, all it does is buy another day. See: Greece. See: Allied Irish Banks.

As with all insolvent organizations, fire sales are always a major warning sign that their end is imminent. Case in point: AIB. We learn that Allied Irish Bank, the gov't owned and insolvent bank of Ireland that we reported last week that defaulted on their bond payments, today has sold their $310 million investment in a Bulgarian bank for a mere $140k. Desperate times call for desperate measures and nothing is more desperate than a fire sale.

Speaking of radioactive fire sales, TEPCO stock which has been burnt to a crisp and is now worth less than a roll or two of toilet paper, has announced that necessary work to stop the radiation from seeping into the ground water "will cost too much and hurt their stock." Pay no attention to your thyroid cancer - at least you have TEPCO stock.

If Japan's global catastrophe was super bullish for the global economy, here is some news that should send the markets into the stratosphere. Ft. Calhoun's NPP is underwater and the situation is spiraling out of control. Authorities say everything is ok. No fly zone has been implemented over the area since the fire first broke out. The flooding in the midwest is growing. The Cooper NPP is now at risk of losing control. Authorities say everything is ok. Authorities say everything is ok. Authorities say everything is ok. So, everything must be ok. Right? Remember, Fukushima is not as bad as Chernobyl, authorities said. In fact, it's not even as bad as Three Mile Island. From Reuters:

"The Japanese Nuclear Safety Agency on Saturday rated the nuclear accident at Tokyo Electric Power Co's (TEPCO) Fukushima Daiichi plant inJapan at a four on a scale of one to seven, which is not quite as bad as the Three Mile Island accident in the United States in 1979, which was rated a five."

Who has been warning that Fukushima is exponentially greater since day 2? Our readers know the answer.

Now we get this, almost 4 months later. From WeatherTech: "Models Show That Radioactive Dust From Fukushima Plant Covered 80% of N. America." Must watch. And we can only hope you have been connecting the dots from day one. This has indeed become an "ELE."

In case you wanted to know why the coverage at the two nuclear power plants in the U.S. are getting no attention, notice this discovery from HawaiiNewsDaily:

"So who made the dry storage cask containers at Fort Calhoun? That would be Transnuclear, Inc.And who owns Transnuclear? Areva.And what else is Aveva doing?Selling water purification tanks and systems to TEPCO for Fukushima."

Any questions?

In other radioactive bullish for the global economy news, SAAB today announced it doesn't have enough money to pay its workers. One step forward, and five steps back. Add SAAB to the list of insolvent organizations and expect a huge fire sale.

Huge non-event news out today, that the IEA will release oil from the Strategic Oil Reserves. Oil prices tank, along with "the markets," as only Hedge Funds and HFT algos are left to cannibalize their flesh. Whoops! Dr. Deficit was last seen fleeing the country and headed to his underground bunker. 

The other "big news" for the day is from ZeroHedge, which is reporting the debt ceiling talks have just gone in the toilet. Of course, this is nothing more than theatrics meant to induce fear, which will be fixed by a Kenyan Knight in shining armor, riding in on a White Horse of the Apocalypse and who happens to be running for re-election. We always liked fairy tales - especially those with radioactive happy endings.

Morning Update/ Market Thread 6/23 - Paint it Red Edition…

Good Morning,

Well, Trichet says risk signals “Red” as crisis threatens banks, so that coupled with a significantly down market add up to our central banker manipulated market theme of the day. The dollar is screaming higher, Euro lower, bonds higher, oil down significantly to the $91 level, gold and silver are taking hits, as are most food commodities.

Trichet Says Risk Signals ‘Red’ as Crisis Threatens Banks

June 23 (Bloomberg) -- European Central Bank President Jean-Claude Trichet said risk signals for financial stability in the euro area are flashing “red” as the debt crisis threatens to infect banks.

“On a personal basis I would say ‘yes, it is red’,” Trichet said late yesterday in Frankfurt after a meeting of the European Systemic Risk Board, referring to the group’s planned “dashboard” to monitor risks. “The message of the board is that” the link between debt problems and banks “is the most serious threat to financial stability in the European Union.”

In other words, no hint of more stimulus from Bernanke yesterday and thus those who own the banks, and own the exchanges, and own the HFT machines are going to continue with the deflation trade until they get what they want – more drugs for the addicts. Of course the addicts are also the pushers – they broke the cardinal sin of pushers everywhere… don’t get addicted to the product!

Of course their debt saturated condition has created structural unemployment and the numbers out this morning for last week are just like Groundhog day… going on four years now of structural weakness and they still haven’t admitted that the only way to truly stimulate the economy is to do the exact opposite of what they are, and that means working to unsaturate. Of course that assumes they care which is probably a bad assumption. Here’s Econoday, take a look at the revision for last week, twice as large as usual:

Highlights
It's an uncertain jobless report for the June 18 week though the headline news isn't good showing a 9,000 rise in initial claims to a higher-than-expected 429,000. The Labor Department had to estimate results for six states, which is a sizable number, due to what it says are "technology issues" which must mean computer problems. Hopefully, the department erred to the high side and the total will come down with next week's revision. But revision is another negative in today's with the prior week revised 6,000 higher to 420,000.

A look at month-ago change, which offers a gauge for the monthly employment report, is also mixed. The 429,000 level is 15,000 higher than the May 14 week, a sampling comparison for the household survey which generates the unemployment rate. But a look at the four-week averages for the same weeks is a positive, showing a nearly 15,000 improvement to 426,250 in the latest week.

Among other data, there's little change in the June 11 count for continuing claims, at 3.710 million, and no change in the unemployment rate for insured workers, at 2.9 percent.

There's little initial reaction but this report won't be a positive for today's financial markets. And it's also a disappointment that initial claims aren't moving lower and seem stubbornly above 400,000, in fact they've been over 400,000 now for 11 straight weeks.

Not that 400k is anything but a psychological number… it’s been four years of over 350k, and that means that jobs have been continually shed during that time – there was never any “recovery,” there was only money printing that created apparent “growth” in their trumped up statistics.

While I’m on the subject of trumped up statistics, it is being suggested that they monkey with the inflation statistics again. This would be done for the same reasons it has been done in the past, in order to “save” money paid out in programs tied to inflation. This perversion causes a huge disconnect between almost all of the statistics and reality. The disconnect is already so large that it’s simply intolerable, the thought of making that disconnect larger still is simply revolting:

Change To Inflation Measurement On Table As Part Of Budget Talks -Aides

WASHINGTON -(Dow Jones)- Lawmakers are considering changing how the Consumer Price Index is calculated, a move that could save perhaps $220 billion and represent significant progress in the ongoing federal debt ceiling and deficit reduction talks.

According to congressional aides familiar with the discussions, the proposal would shift how the Consumer Price Index is calculated to reflect how people tend to change spending patterns when prices increase. For example, consumers tend to drive less when gas prices increase dramatically.

Such a move is widely seen by economists as resulting in a slower rise in inflation. That would impact an array of federal programs that are linked to CPI including the Social Security program and income tax brackets set by the federal government.

The proposal could lower federal spending by around $220 billion over the next decade, based on calculations by last year's White House deficit commission, which recommended the change as part of its final report.

According to two congressional aides familiar with the budget negotiations, the shift is being "seriously discussed" as part of the ongoing talks to strike a budget deal, that would be used to ease the passage of a required increase in the country's debt limit.

Those talks involve Democratic and Republican lawmakers from both chambers and are led by Vice President Joe Biden. The group held its latest meeting Tuesday as they strive to reach the broad outlines of a compromise on federal spending by the end of the month.

In a press conference that took place before the meeting, House Majority Leader Eric Cantor (R., Va.) declined to comment on the specific proposal, other than to say that "a lot of things are on the table." But asked whether the proposal would be interpreted as a tax increase and therefore a non-starter for Republicans, Cantor said it could be seen as both impacting tax rates and benefits paid out by the federal government.

In other words, the impossible math is “forcing” them to consider doing crazy things… anything but the right things. You know, things that would actually benefit the people they are supposed to represent. And that’s because they are representatives alright, they represent the special interests who get them elected, they certainly don’t represent you and me. And there’s your representative government for you.

The soon to be extinct middle-class meanwhile wallows in the aftermath of their conflicted actions. The private “Fed” of course set up this dynamic and politicians are completely unwilling to even discuss changing what really needs to be changed. The Chicago “Fed” numbers came in negative again this morning, once again highlighting the failure that is private central banking – negative .37 and note that the prior month was revised downward too:

Highlights
A positive swing in production-related indicators made for improvement in the Chicago Fed national activity index which comes in at minus 0.37 for May vs a revised minus 0.56 for April. Production, which brought down the April reading by 0.16, added 0.05 to May's headline.

But now the negatives. The drag from employment increased to minus 0.04 from minus 0.02 while consumption & housing subtracted 0.36, a heavy negative though a little less heavy than the minus 0.40 of the prior month.

The index's three-month average deepened to minus 0.19 from April's revised minus 0.15, which of course is a negative. A possible negative is the outlook for the June report where early indications on production are unusually negative and which point to an unwanted swing for what was May's biggest plus.

New Home Sales are released at 10 Eastern this morning.

The VIX is back over the 200 dma, and the market is clearly still inside of the downtrend that began in May. Those who believe that QE can end to no effect are simply high, or are shills distributing their dramatically overvalued shares to you. Don’t worry, it’s all just another manipulation designed to get the private central bankers what they want – more of your productive life energy.