Saturday, April 9, 2011

A review

Yes...cutting 1% of the budget was very painful...the rhetoric is just starting as one would the campaigning is officially beginning. I am a little surprised that they did not force a little more fever pitch drama by trying some other rediculous antics into the weekend..."Painful" cuts with "very hard choices" ...indeed!

Friday, April 8, 2011

Politics and the debt ceiling game

There is just no way to connect a politician with debt and not results in theatrics. The reality is that politicians love debt because they use it, as many people do, to help create the illusion of capability, effectiveness and power. Having access to capital is usually considered and achievement and results in a significant amount of power. The reality is that whether you portray that image with capital you borrowed or capital you actually earned is not entirely obvious to the superficial perception.

Now, our illustrious politicians have the debt ceiling issue, and of course, they can not resist the dramatics required to use it as an element of their campaign rhetoric for later this year. From a cursory point of view, I would imagine that the best thing for a politician who needs campaign material, is to let the government shutdown. But more than anything, with the chaos going on within the infrastructure of the western economic systems, we need distractions so that people attribute coming financial calamities as something other than what they really are. Sarkosy tried this with he recent Libya exercise at home and it failed as his popularity is now at the lowest in history - but anything to distract for these politicians is a good thing apparently.

I can not help but wonder how much this type of thinking and concept belies the policies of our government - especially at this time. Certainly, if you were to ask a voter who now has a job, but who will be using food stamps by the time he is voting next year, to what he should attribute his condition, Ben Bernanke, Tim Geithner, Barrack Obama and a host of others would be much happier to have that person associate his predicament with an event such as a government shutdown or a close call because of someone else, becuase they certainly were not a part of the problem, rather than the intentional manipulative policies that have lead to the financial crises that eliminated his job.

So, what to expect? Well, if I was one of those guys avoiding confronting the results of my policies and actions, I would encourage the cover of a shutdown for a few days as a great opportunity to deflect and effect responsibility. Certainly would make campaigning easier, wouldn't it? But any way you cut it...they will drag this thing on in minutae to try to wring out as much drama as possible.

Therefore, I will not be surprised with a brief government shutdown or dramatic last minute theatrics based on the least little things worth .01% of the budget. After a few days of inconvenience then they can figure out if Big Bird actually gets sunflower seeds or has to attend to his own needs and then get the things rolling again. But, between the imperial interventions, budget issues and government shutdown hoopla, all who need cover will have plenty of room to play it up, while pretending for posterity that they are doing a great job and did so for the right reasons.

The election campaigns are officially beginning and it looks like this debt ceiling BS to kick-off the campaign trail.

The charade continues: Bureaucrats want more as everyone else is asked to make do with less...much less

Apparently, these guys have been taking lessons from Charlie Munger and from Warren Buffett who both seem never met a bailout of companies in their portfolio that they did not like.

Remember, we should be grateful for this and be happy to eat less and lower our standard of living so that others may prosper.

Sure...Lockhart - there is no inflation and things are just bullish, bullish, bullish

"As I've said before, my expectation is that commodity price increases that are now translating into accelerating headline inflation will be transitory. In support of this claim, I'll make three points. First, these increases have been driven by global pressures in markets for food commodities, energy, and other commodities. These pressures are largely the result of supply-and-demand factors, some of which are one-off in nature. Second, inflation indices are made up of a wide spectrum of goods and services that don't uniformly have these commodities as inputs. Roughly two-thirds of consumer spending is on services, which are not materials-intensive. And, third, to the extent that some goods and services have these commodity inputs, the pass-through to ultimate consumer prices is limited." - Atlanta Fed President Lockhart
Apparently, the leaders of our fearless Fed are living in an alternate universe and in addition are just a nother shining example of academic failure. Academia has much less validity than experience. Moreover, pure BS like Lockhart's quote "some of which are one-off in nature" are beyond assinine. Yes, I only want to buy cotton and rice on a one off basis because I was extra cold and hungry that day. I am willing to bet than none of these Fed guys could trade, manage or run a business on their own...yet they are pontificating and playing with 300 million American lives and quite a few non-american lives, as we can see in the middle east and North Africa.

Transports have been down for the last five days in a row...despite a lot of effort by the bullish set to push the major indexes higher.

22 Facts you should know....

This morning the press is ranting about "Economic Optimism and Fuel Surcharges" as the basis for the bullish moves in commodities and stock prices overnight. Please see the charts that I published last night for the patterns that seems to be being tested here this morning. The Russell 2000 and other indexes that lead the move up are NOT responding in kind...and the press/media and fed officials apparently think that rising commodity prices and fuel surcharges are productive contributors to the economy...What ever they are drinking and smoking, I would like to know...

Here, however, are 22 facts that present a slightly different view than Steve LEISman on CNBS were published on the site:

The 22 facts that you are about to read are all real, although admittedly they are hard to believe. The sad truth is that millions of middle class families in the United States today are being savagely crushed by this economy. Most American families would like to be saving money, paying the mortgage and living the American Dream, but with each passing month those things are becoming more difficult. Rapidly rising prices for basic necessities such as food and gas are absolutely crippling the finances of millions of middle class American families right now. How is a family even supposed to make a budget when the average price of gasoline goes up 42 cents a gallon in a single month? What are we all supposed to do when we walk into our supermarkets and find that the old "regular prices" have become the new "sale prices"? Should we all not be deeply concerned that the price of food in the United States went up at the fastest rate in 36 years last month? How are we all supposed to keep our families above the poverty line when the number of good paying jobs keeps shrinking? In America today, being a member of the middle class is like playing a game of musical chairs. You know that they are going to keep pulling chairs out of the game, and you just hope that it is not going to be your turn next.

Sadly, large numbers of Americans do keep falling out of the middle class. The number of Americans on food stamps just keeps increasing every single month. The number of Americans on Medicaid just keeps increasing every single month. The number of American children living in poverty just keeps increasing every single month.

If the U.S. economy is actually getting "better", then why does the middle class keep on shrinking? Everywhere you turn there are families in deep economic pain. Unemployment is rampant and even those families that do have jobs are really struggling to make ends meet as prices rise rapidly.

Unfortunately, the global economy looks like it is going to get even worse. The recent crisis in Japan is going to have a ripple effect across the entire globe. The chaos in the Middle East is certainly not helping things either. It certainly appears that we could be on the verge of another major economic downturn.

And that would not be good news for the U.S. middle class. The truth is that the U.S. middle class has already been hurt enough.

The following are 22 facts that prove that middle class families across America are being savagely crushed by this economy....

#1 Last month food prices in the United States rose at the fastest rate in 36 years.

#2 The average price of a gallon of gasoline in the United States is now $3.55. That represents an increase of 42 cents a gallon in just one month.

#3 According to the Oil Price Information Service, U.S. drivers spent an average of $347 on gasoline during the month of February, which was 30 percent more than a year earlier.

#4 According to the U.S. Energy Department, the average U.S. household will spend approximately $700 more on gasoline in 2011 than it did during 2010.

#5 According to the U.S. Labor Department, the cost of living in the United States is higher than it ever has been before. The "Chained Consumer Price Index" hit a new all-time high during the month of February.

#6 During this most recent economic downturn, employee compensation in the United States has been the lowest that it has been relative to gross domestic product in over 50 years.

#7 When you adjust wages for inflation, middle class workers in the United States make less money today than they did back in 1971.

#8 For most middle class American families, their homes are their most valuable financial assets. Since the real estate peak, U.S. home values have fallen by a staggering 6.3 trillion dollars.

#9 In 2010, for the first time ever more than a million U.S. families lost their homes to foreclosure, and that number is expected to go even higher in 2011.

#10 Two years ago, the average U.S. homeowner that was being foreclosed upon had not made a mortgage payment in 11 months. Today, the average U.S. homeowner that is being foreclosed upon has not made a mortgage payment in 17 months.

#11 Approximately half of all American workers make $25,000 a year or less.

#12 Approximately one-third of all Americans have no savings and no retirement funds.

#13 As 2007 began, only about 26 million Americans were on food stamps, but today over 44 million Americans are now on food stamps.

#14 Back in 1965, only one out of every 50 Americans was on Medicaid. Today, one out of every 6 Americans is on Medicaid.

#15 Only 47 percent of working-age Americans have a full-time job at this point.

#16 Many American families would love to be saving money, but the reality is that a huge percentage of them are drowning in credit card debt. Total U.S. credit card debt is more than 8 times larger than it was just 30 years ago.

#17 The CredAbility Consumer Distress Index, which measures the average financial condition of U.S. households, declined in every single quarter in 2010.

#18 Average household debt in the United States has now reached a level of 136% of average household income. In China, average household debt is only 17% of average household income.

#19 There are currently more than 4 million Americans that have been unemployed for more than a year.

#20 The U.S. economy now has 10 percent fewer "middle class jobs" than it did just ten years ago.

#21 The average CEO now makes approximately 185 times more money than the average American worker.

#22 According to the U.S. Census, the number of children living in poverty has gone up by about 2 million in just the past 2 years.

Do you need any more evidence that the middle class in the United States is being ripped apart?

The days of wine and roses are over. The foolish economic policies of the last several decades are now starting to catch up with us and that is going to mean even more economic pain for the middle class.

If you are still part of the middle class, you should be very thankful, because more middle class Americans are falling into poverty every single day.

So what do all of you think about what is happening to the middle class in America? Please feel free to leave a comment with your opinion below....

Wednesday, April 6, 2011

Some Charts...

The Nikkei has failed resistance and is in the middle of some rather bearish patterns. If the US markets want to push this shake out any further, which is less than a certainty, it will not be by much or last long by the looks of things. It looks like my SP500 system may want to get one more entry into this short if that were to happen. This would also, look well for the TWM chart shown in this post which looks like it is in a shake out move and may want another test of the lower trend line. Regardless, my systems are currently short which means I am - and market looks setup for a powerful down move.

Liquidity trap is set...

What is funny is how nearly all of the funding trades end up as facilitated by the central banking cartel - busted. Nearly every trading desk that participates in carry trades needs to use excessive leverage and rely on market intervention when they are threatened with blowing up. What is interesting is that one would willingly go into such highly leveraged trades with risk that is absolutely not balanced versus the reward, unless of course you believe in the infinite exponential curve. This is a pattern that has occurred often in the arb and convertible arb world and is now spreading to many other markets where people are simply ignoring the relationship entirely. Risk and reward are not compatible when you most need them to be. The reason again, is the same one that enables banks and amature professionals  in most cases - bonuses and incentives are paid on past performance not future performance. Therefore, when  the position blows up, as in the Dollar/Yen (among others) carry trade, the big bank trading desks go crying to uncle central bank, who is only all to happy to transfer the burden to someone else for them.

The reality for me is clear, there is no easy way to make money, you get paid for taking risk not attempting to evade it...and that is why some of my aggressive allocations are up hundreds of percent in the last 7 months since I started trading them. The reality is that despite having friends like BURNanke, G-HEISTner and tRICHet...nothing is ever really free. Concepts like these carry trades are designed to capitalize on a theoretical way to make lots of money while simultaneously avoiding risk...and that's why these guys are net losers in the longer-term. And just like the nuclear energy issue, inconvenient truths are thrown out for someone else to deal with.

The irony about this situation is that the Fed has setup a few carry trades in its time for its buddies...none of them have ended well. And now we have another liquidity trap that is set to blow up, the Q/E (quantitative easing) trade. At this point the markets like bad news because there is hope of infinite new liquidity to drive higher prices and they hate good news because that liquidity may not be provided. The reality is that with each machination, people are letting capital stick to the markets in the hope that Q/E continue indefinitely...and while incompetence such as BURNanke's can continue for much longer than imaginable...our global situation is a direct reflection of that incompetence, just as G-HEISTner's letter to congress regarding the debt ceiling. These, idiots are now on a short leash. That leash will be sporting a choke collar with spike and electric shock capability when the real markets decide enough is enough. Till then, the bailout brethren will continue, heads in the clouds, with the confidence that anything that happens that is inconvenient will be cleaned up by a few good men in Washington. I strongly advise against that kind of assumption and believe that the next flash crash - which is imminent btw, will occur in large part with fuel provided by this misallocation of funds, malinvestment and convenient assumptions.

Keep in mind that this liquidity is now likely trapped and in a VERY unsafe place. The question will liquidity be called? And, if so, will the anticipated intervention show up in time or at all?

The irony, is the one who will be left holding the bag in the end will, as always, end up being the taxpayers of the world. Forever funding the foibles of the Central Banker engineered and coordinated scams.

Russell 2000...

Tuesday, April 5, 2011

Yes, Nuclear power is safer than ever...but that is not the question

Nuclear power safer than ever before
DARRELL ISSA — 49th District North County Times Sunday, March 29, 2009 12:00 am

Nuclear power is one of the safest, most efficient, and sadly underappreciated assets available to our nation. In 2008, nuclear power in the United States produced more than 800 billion kilowatt-hours, equal to 19 percent of our total electricity output -- representing nearly 75 percent of U.S. carbon-free electricity

click here to read full article
Just like always, people plan for what they think is most likely and then balance the unlikely risk against profit or greed or their agenda. The reality is that we do not even know how to deal with nuclear fuel waste. The same people who attempt to counterspeak and double speak about this fact look just like many of the academics and professors in their Inside Job interiews - troubled for words. We do not control nuclear energy or fuel it controls us. The irony is that there are other ways to create energy that are do not result in contaminating the world for thousands of years. The other reality is that the shock to the system in Fukushima was forseeable and while preventable is an example of what one should expect if there were another type of Black Swan event. War.

Now, lets just acknowledge that we live in a society where there will never be another large scale war. There will never be any military attack that touches US, Russian, Chinese or European soil. If you believe that then you are free to believe that nuclear energy is safer than ever before. Given all the war mongering and the incitement of the Lybian riots by the US government and our interest in imperialism in many places our interests should not be...we are doing a great job of laying the foundations for larger scale and longer-term conflicts. I have addressed this issue in many posts over the last years, and I think it is obvious that a defaulted debt money system breaksdown order, control and balance in the global power systems and governments. This easily facilitates unrest and lays the ground rules for aggression and large scale conflicts. Keep in mind for example that China has large investments in oil facilities in Northen Lybia...we are certainly on the radar there and perhaps the Chinese naval presence early on in this conflict should be looked at as a symbol of that.

The US play's an arrogant game. We engineer NATO which is our personal play toy and then use it for cover to indicate that there is a consenus and multinational underpinning for our imperialism. But nobody in their right mind would believe that...if we push this too question is how long it is before we find that a bunker buster missile is targeting nuclear facilities on US and European soil? Given the clear lack of controlability in dire siutations that nuclear fuel and reactors present, will we be able to stabilize a catastophic event at a nuclear plant or would we end up lying about it and causing massive humanitarian damage?

The reality is, as I have said before, our money system represents our collective spirit and attitude. Our attitude is one based on entitlement, optimistic minimsated risk assumptions, private adgenda's and short cuts. We need a value based society, one that asks bigger questions and demands better and healthier answers. The reason nuclear power is necessary in the way that currently exists is that we operate on the exponential curve that is required for compensate for a flawed and deceptive financial system that transfers control and assets from people to bankers by creating more debt than can ever be repaid. In order to accomplish this task we must grow everything at a rate that ultimately impoverishes the world and consumes all of our resources. So, is nuclear energy safe?

Time for a review: (please watch the entire series when you get a chance, this a much more important lecture than you might imagine.)

Monday, April 4, 2011


AAPL looks quite unwell, GOOG looks weak, BANKS look pretty nasty too, COPPER continues to be sold on every uptick, IBM looks toppy and the Transports are at the top of their expanding diagonal...dangerous.

The self-destruction of the Euro - an example of government via finance gone wrong

Imagine that your family sell their home under the belief family members will be killed by terrorists if a bribe is not paid. Of course, the family sells the house and pays the bribe. But then the terrorists announce, now that the family lives in a tent and winter is coming, that the they will be needing the tent and their clothes as well...despite the bribe being paid. This is nearly same kind of terrorism and greed practiced by the banking cartel. Oddly enough, its implemented by innocuous looking academics who have letters behind their names and nice looking universities on their CV.

The blasphemy of academic economics is that, no matter the angle the academic wants to believe - it can exist in a vacuum. In fact, most of the time economic academia lives in a vacuum in an alterante universe. And that is how we got here where we are in this day and this time. That is how idiots like Bernanke get to rule the world while they do not understand real economics or business. That is also how charlatans like Paul KRUDman get tenure and high profile positions with which to broadcast their hyperbole.

Now Trichet, who believes that he has a single mandate targeting inflation - certainly must believe that his mandate exists in a vacuum. He has determined that he needs to raise interest rates now and perhaps for the special benefit of the very countries that are being forced to now implement taxes, austerity and banking according to the great European Union mandates and banking cartel dictum. By rights Ireland should have said "...piss off", but their elected officials were either threatened or bribed to coalesce and capitulate to their constituents. They are implementing new taxes as we speak, implementing austerity controls and supporting banking according to the ponzi scheme economics dictated by the EU. Now, mind you, the objective of this body is essentially the same as the IMF and World Bank and most of the central banks around the world, to transfer all of the wealth to the banks and therefore implement a comprehensive governance not only of the people but of the governments. When the IMF bribes officials in Uganda, for example, to take loans or "aid packages" from them they demand collateral in the form of future tax receipts (in perpetuity) or sovereign assets. Using this time tested technique, they have succeeded in taking already impoverished countries, enriching the corrupt and elite and further impoverishing most of the other citizens by stealing their assets, their work or their time. The incentives are clear, blackmail a corrupt official who would do anything to get his hands on new money and offer him a deal that he can pay for on Tuesday with a hamburger from Monday. That way it never really gets the light of day and the official is now beholden in the scam to the IMF. And we wonder why financial terrorism as practiced by the banking cartel leads us down a path to war? Is it not rather curious that right at the time that the facade is likely to start cracking in the best laid plans of this faction that the world is going to war in so many places at once? Will there be conflicts on other places as people start to get pissed off that their assets are being confiscated via a scam and seek to get control of them?

The trouble is, that the European Council and the European Central Bank has very much the same aims...transfer the wealth and control the governments. At this very point, they believe that raising interest rates is necessary to deal with inflation that they (the EU, and other central bankers like the Fed) are responsible for. The result will be to very quickly add a multitude of new taxes and collateral calls to the Irish table. Obviously this will not sit well, but, in the margin call process the assets of the country will be confiscated. Thank god the Irish can be iltempered...and I hope they are this time. It will take force, probably revolutionary and armed force to get rid of these academics who use their academic status as a weapon and a shield to implement reckless policies that end up destroying lives and cultures.

Keep in mind that Trichet is an academic who believes the banking crisis of 2009 was due to an under-valuation of risk and short-termism within the global financial community. He has implemented his view by fostering the very thing he supposedly wished to eliminate - short-termisim, undervaluation of risk and mal-investment with ridiculously low interest rates and indiscriminate and prevalent leverage and credit.
The end game is that "IF" Trichet believes that the appropriate thing to do right after forcing long-term insolvency on many European states, is to raise interest rates on debt that they can not be repay - it will only intensify the problems. But not to worry, Trichet won Central Banker of the Year in 2008. In my view, however, the central bank actions will have the effect of forcing defaults and conflicts. Yes the very ones that these geniuses are marketing they are now avoiding. Defaults of course, in this case, are a better thing than the long-term theft that has been implemented as a matter of policy.

Assumptions regarding this cycle of interest rate increases, will mark the next great explosion for the Euro on its path to oblivion and self-destruction. While many may look for the EURO to show strength due to the strenghtening of rates...don't count on it...its going to be a long hard trip down.

Sunday, April 3, 2011

Capitalisim is not required...

Everyone's looking up - apparently the charts are looking somewhere else

The Nikkei is at major resistance in a clear counter trend bounce and looks set for a major reversal. Given the handling of the Fukushima and Tsunami crisis by the Japanese can see the attitiude they bring their financial policies. It does not inspire confidence and the Japanese people will likely be pretty close to having had enough.

Some of my systems are in the latter stages of building short positions - appropriately, just while the markets are showing unhealthy patterns and most people are looking up. The reality is that it seems many people who shorted what seemed like a logical short on the Japan and Lybia news had done so as they were gotting stopped out of a longs on significant margin and have once again been taken to the maximum pain on the new shorts. They must now handle likely being stopped out of those shorts now too. The markets are certainly continuing the patterns of confused and conflicted trading - moreover, breakout and momentum trading continues to produce failed trades trapping people in uncomfortable positions. I see, particularly in the NASDAQ and the Bank Index (among others), that a large new move is likely and not where most people are looking.

My observations last Friday stand exactly as they were state. It is time to REDUCE LONG RISK in this manipulated, extremely expensive and socialized market. The risk of a market meltdown is now much higher than most anyone expects and additionally the market is as over-priced as it ever been...with the eception of 2000. I now have nice sized short positions and look at these prices as a gift to close any open longs.
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