Fear Factors

You might think, based on what's getting big play on the news channels today (like the rescue of a lost whale, for example) that things are going on "pretty much normal" around the world.  If you persist in believing the mainstream media (MSM) that's fine, and a personal decision.  But, around here, we're seeing convincing signs that our long predicted economic melt down is beginning and that it will be a sort of slow motion, gathering steam, like a snowball rolling down a steep mountain that gradually turns into an avalanche.

• With all due respects to whale lovers, the biggest story out this week, which will likely prove a driver for all other international events in short order, is the revelation that Kuwait's oil reserves are not even near what they were supposed to be and that Peak Oil is a real problem - right now, now 10 or 20 years off in some hypothetical future somewhere.  That's why the price of oil was up again this week, coupled of course, with the problems afoot in places like the Ivory Coast and Nigeria.

• A Bella Ciao article (specifically point #3)  today alleges that U.S. banks are receiving instructions from the Department of Homeland Security that in event of an economic collapse, bank officials may be told not to allow people to remove gold (and we assume silver) from their safe deposit boxes.  Now, this is only an allegation, but it's something to ask yourself: If there were a breakdown of civil order, how would you fare?  Ask your bank next time you go in there.

• Part of the reason why the US Dow Industrials blew off more than 200-points in the Friday frenzy was the word that Iran is moving virtually all of its financial assets to Asia, a move that is synonymous with throwing in with China/Russia as we postulated earlier in the week.

• We also speculated that Iran and Syria almost certainly have a secret (or not so secret now) mutual defense pact in place. Stories about that are starting to percolate up through the media fog today.

So, while most people are asking themselves if they should pop for another $100 to see some pay-per-view deal on TV, we're checking out things like multi-fuel lights (that will run on gas, diesel, lamp oil, or whatever is handy) and stocking up on necessities like toilet paper and 7.62 ammo.  Enjoy the whale rescue.  Circuses and bread.

Our friends with the event predictive software are still seeing (besides more mine disasters in early February) a big event before the end of March that will go into a sort of hibernation until the end of August and then bloom as massive war most likely in September.  The outlook is not lost on us.

Russia: Chillin'

More than 70-deaths are now attributed to the great freeze of '06 which has settled over Russia.  It'd be a tough sell to convince someone in Moscow about global warming for the next few weeks.  Better: Talk about Robert Felix's book "Not by Fire, but by Ice."  Concept: Rapid climate change is (historically) more likely to tip into a new Ice Age.

Bye Bye Pension

This week, our subscription service Peoplenomics.com looks at the latest entry on the endangered species list: Companies that have solid pension plans.  This week, we'll discuss what you can do about retirement planning in an era of looted pension funds.  Subscription Information ($30/year).

Purchasing Power

You can live cheaper than you think.  Click here for our ebook "How to Live on $10,000 a year or less." 

Spam Your Friends

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Friday January 20, 2006

France: Further Thoughts

A couple of well placed sources have advised me that the US is escalating military security measures today on the report about France.  Some sources tell us that the French threat to nuke terrorist states is not directed at the general Muslim world, but may have been directed at the U.S.  That would explained the heightened military posture by the US today.  Here's an interesting background open source link to read up on.    This certainly would tie in with the US moving ships and marines out over the past few weeks that we reported on earlier.

The escalations apparently triggered (in part) by the OBL tape from yesterday. Gold is saying "Something's up" too.  So could it be that the US is the terror state that France refers to obliquely in today's headlines?  And, if so, what [secret] pacts might France have with China and Russia over Iran?

My expectation is that this may be the leading edge of what may become public between now and the end of day March.  At that time, the future predict technology hints at a stand down period through August 31. We'll use that for stocking up on survival goods. Then the crap hits the fan.

France: We'll Nuke Terrorist States

If France is attacked by terrorists, the French have the option of using nuclear weapons of mass destruction on the country supporting them.  So says French president Chirac today. 

This one leaves me scratching my head:  the recent rioting in France by largely immigrant and largely Muslim militants, is not something that seems like it would trace back to a single country.  Rather, it seems to be a more general case of folks immigrating to France, discovering that they're at the bottom of the food chain there, and then organizing somewhat spontaneously in riots, no doubt with some outside orchestration. But from where?

Israel's secret hit team approach seems a lot more reasoned to us than France's threatening whole countries with city-sized puddles of molten glass. But, not being French, maybe I am missing something - I didn't go through riots last month.

Terror Tape

Meantime, al-Jazeera has received an audio tape from Osama bin Laden which promises attacks on the US if his offer of a truce is not accepted.  It won't be, says the US.  And, yes, it is Osama's voice on the tape says the CIA.

Spelling or Branding?

I curiously noted yesterday while channel surfing the news, that Fox News spelled Osama "Usama."  Naturally, this got me to wondering if this was Fox's branding department at work, or if the spelling "Usama" is correct. Answer: Depends where you look.  A quick check of the web shows that the "Usama" spelling is used by folks like Fox News and the FBI while Google shows 368,000 references to "Usama."  Hmmm...that could be  a subtle "U.S.A. ma." 

On the other hand, the US State Department spells it "Osama." So does the Department of Homeland Security.  Google shows 10,800,000 references to the "Osama" bin Laden spelling.

While Fox, the FBI, and plenty of others are spelling it "Usama" we note that they're outnumbered about 29 to 1.  For the sake of consistency, we'll keep spelling it "Osama." Somewhere, in the back of my mind, I wonder if DHS and the FBI couldn't come to agreement at least on how to spell the terrorist's name the same.  Would that be asking too much of inter-departmental cooperation?

Spell it as you will, it looks like the latest tape won't be enough to change the present DHS security level from Yellow.

Iraq Election Results Due

Seems like a long time to count votes, but Baghdad is all but sealed off this morning after four bomb blasts as election results are due soon.  Looks like the Shiites will have 128 seats, 10-short of a majority.  Italy says it is planning to pull its forces out of Iraq this year.

Google on Privacy

Google is under pressure from the federal government to turn over vast amounts of search data - as the government tries to defend the constitutionality of a child pornography law.  While cracking down on child porn on the web is a fine thing in my view, I'd have to go along with the prestigious San Jose Mercury News editorial this morning that a) Google wasn't a party to the present lawsuit over child porn and b) the government's just "going fishing" on the taxpayer's dime.

Beef Ban Back?

Japan is considering reinstallation of a ban on US beef if tests confirm that material considered at risk for Mad Cow disease was included in a recent shipment from the US.  Not to make you completely paranoid, but if the tests from Japan come in positive, we have to wonder about the quality of oversight provided by the USDA on this matter.  As you are likely aware, the USDA doesn't inspect every cow - they rely on statistical sampling methodology.  Fine, as long as you don't get the statistical outlier...

When Sprott Speaks

OK, it's Friday, and you may not be paying attention to the headlines like we do, but there's a new report out from Sprott Asset Management "Road To Ruin, Part Two" and it reads like the "log version" of the kind of outlook we hold to about here.  The latest Sprott report anticipates a high probability of a recession this year, with the chance that it will morph into a depression, perhaps due in part to the continuing runaway trade deficit.  Definitely a must read.

As an aside, I often talk to Cliff up at www.halfpasthuman.com (web bot run 605 is in the planning stages now) and he takes great pains to explain frequently that the ALTA runs don't try to go to the question of "Why?" because that would be looking for intent behind events.  Instead of speculation into the "why" questions, they just look for the facts likely to emerge based on emotional impact.

In the same way, the Sprott report is good because it doesn't get into the dynamics of "Why" this or that is going on - it simply looks at what's measurably going on and then looks at brick walls at the end of trend. 

Actions speak louder than words - and the Sprott report does a fine job, as I read it, of stacking up facts in a logically consistent manner to arrive at a conclusion that would be similar to my own, had I not read the ALTA reports warnings which include things like major war probable in September area.

Buy or Hold?

First, I'd like to thank the hundreds of people who wrote in responding to my question yesterday seeking public comment on Elaine and I considering the purchase of land adjacent to ours.  For now, we're going to hold off.  Putting aside the web bot runs (which imply we should be buying a 4 by 4 and making plans to abandon even the relative safety of the Texas homestead due to sudden global climate catastrophe), a letter from a real estate professional summed up my concerns:

I am a Certified Public Accountant here in Central Florida and also work as Financial Reporting Manager for one of the largest timeshare developers in the country. Thanks to the nature of my work and from talking with colleagues and professional contacts, I feel I have a pretty decent understanding of the economic pulse in the Orlando / Central Florida area.

Back in Sept 2004 my wife and I decided to sell our house of five years. We felt that the housing bubble in the area was pretty much at its peak and knew it was time to bail out and pocket some decent profits. We have been renting since then and we don’t have plans to buy real estate until prices come back to earth and then some more.

Interestingly enough here in Central Florida we can hear the hissing sound of the bubble deflating…a few months ago the builders were having lotteries for just the “privilege” of getting a first shot at buying these new houses. Well George, the lotteries are no more…also, you can see builders now offering perks, discounts, and incentives to move their inventory of houses. Real estate agents are genuinely worried and pushing their services on cut throat competition to secure a dwindling pool of willing (and able) buyers.

This is most likely the beginning of a process that will escalate, feed on itself and drive prices well below what most people would think possible.

Also, my wife and I have been informally tracking farm / ranch property prices at various states using the United Country site and other net resources. Although it is very subtle, we believe there is a discernable trend of an increase in the number of properties listed, combined with a flattening (or slightly downward) move in property prices. This is the slight trend we see in what most people would consider rural properties. On the other hand we have no doubt that these trends are more marked and well on their way in our local Orlando / Central Florida market and most other urban / suburban parts of the country.

George, looking at what we expect to be a deflationary trend in real estate / property prices nationwide, my wife and I would not be buyers at this time. We expect within the frame of 3-5 years to have an opportunity to acquire our dream ranch at what might be cents on the dollar. In the meantime we will keep monitoring the real estate market locally and elsewhere and holding on to our modest positions in bullion, cash, and oil / energy stocks.

Keep up the good work.

Earlier this week, I spoke with a woman who works for another Florida outfit.  She reports that from her office building window she can still see plenty of blue tarp roofs - and the recovery from the hurricanes has been less than complete.  Hundreds of thousands in Florida have long ago said "good bye" to what had passed un-noticed as a kind of Golden Age in South Florida.

In the course of exploring financing options, we discovered that Hibernia bank would loan 65% of the land's appraised value while Bank of America would only go 50%. (Disclaimer: Your results may vary!) There may be others, but I'm losing interest in buying today as events coming in the February-April period and this walk stuff showing up in September make me want to be conservative and portable.

Ownership of property is a fine thing in a very stable society where the police come when called, the fire department will put out fires, and the medics can rescue you from most life-threatening conditions.  However, as a society we haven't done much in the way of building "exit plans" for the possible time when such assumptions as public services might break down.  Highways might be impassable (blockaded), fuel might be unavailable, food scarce, and governance at gunpoint.

Historically, an ounce of gold would buy five acres of land, or an acre with a house and a few animals.  The price of the 16 acre parcel today would be something over 50-ounces of gold.  That's a bit rich.  With gold going up lately, about doubling in two years, in six years at present rates, the number of ounces of gold could be down to less than 10-ounces, in which case the transaction would be more reasonable.

I've been tromping around and discovered that the land that has the creek is fed by a spring which is on our existing property, so if push comes to shove, we have a modest source of water already. Not much, maybe 2 or 3-gallons per hour, but enough even in the drought to keep three or four of us going.

Thursday, Jan 19, 2006

Semi-Normal Thursday

This morning promises to be somewhat of a "normal" day, at least in the early going.  Oh sure, there's a lot of stuff percolating in the background, but this morning with some of the brokerage firms turning in good earnings, we are looking for an UP open for the US market. 

One of the reasons why the US will likely rally today is that the several days long panic in Japan has sort of settled out - for now - and their market posted a 355 point gain overnight.  Come to study it, every other market in Asia and (at least while I'm writing) every market in Europe is up too.

Iran Around

Only a couple of things to note on this front:  First is that the president of Iran is off to Syria to visit - no doubt their mutual defense discussions will be at the fore, with the US armstronging other countries to pressure Iran to give up on its enrichment plans. China's back talking about "restraint."  A number of people have sent me Krassimir Petrov's article on the coming Iranian oil bourse. But little there we didn't already cover.

Troubles of Empire

On the other hand, it is interesting to note that things are seeming to get out of hand in Africa - especially in the Ivory Coast where UN troops have fired on rioters, and in Nigeria, where several oil companies are withdrawing personnel because of deteriorating conditions. Four oil workers are being held hostage by militants there.  The world's interest is not humanitarian - this is all about oil at some level.

Rinehart's Review

Dr. Stephen Rinehart sent me an interesting email yesterday, with his latest outlook for what's ahead.  I don't normally post such long pieces, but his analysis is interesting, charts and all...

Background:
This report will look at a possible dominant trend in an Index, Equity or Commodity and some possible long-term (monthly/yearly) trends which could emerge from the dominant cycle(s) (the datasets will be either daily, weekly or monthly).  Report # 18 revisits the weekly closing prices of the (late) great Dow Jones Index (DJIA) from 1918 through Dec 2005 (see also Report # 4, June 2005 as well as earlier DJIA predictions on Magnificent Seven).

The primary seven weekly cycles in the DJIA Index are at periods of 52, 69, 109, 176, 233, 334 (or 354) and 1900 (37 Year K-Cycle) weeks (looks almost identical to S&P 500/NYSE Weekly Index). A prediction of the DJIA Weekly was made in July 2004 (see FSU Archives Rinehart on Magnificent Seven). As we have noted in the past, the amplitude of the long-term cycles in these major market Indices correlate very strongly with similar cycles in M3 and Bond Markets (for decades). In Report # 4, it was noted the 354 week cycle (shifts by 20+-weeks depending upon M3 pumping) was peaking in July 2005 which has contributed to this large broad top. The real effects of this cycle will come into play in 2006 as it starts to accelerate downward (in unison with other large cycles).

The 176-week and 354-week cycles have been around in the DJIA (carry over from Bond Markets) for decades. By way of review, Chart 1 shows how these large cycles came together in phase in 1929 to contribute in a major way to the Stock Market Crash of 1929 (and every other market crash). It may be possible to phase large financial cycles if you control the fiat money supply of a country. My what big eyes the Fed has – why the better to see the long-wave cycles, my dear!

The largest cycle in the DJIA Index weekly closings (the 334 to 354 -week cycle) is shown in Chart 2 from 1980 thru 2005. This major cycle has formed a top (max predicted peak in July 2005) and will start taking the DJIA down with it for 2006 (possibly already started). There is no long term bull market in the DJIA Weekly Index again until this cycle bottoms in Sept 2008! Is everybody all excited by the start of a “bull market” for Jan 2006 in the DJIA? What’s wrong with this picture?

Chart 3 shows the prediction for two large cycles (233, 334 week cycles) in the DJIA Weekly Index from Jan 2006 thru 2012. The DJIA is predicted to drop significantly after June 2006 and these cycles do not bottom until mid-2008!? These large cycles will be reaching the maximum downward acceleration in Oct 2006 – so where is the beef for the DJIA rally or linear growth in 2006?

Chart 4 shows the participation of the 18-week cycle from 1918 thru 1939. This cycle formed an increasing amplitude into the “crashes” of 1929 and 1937. In other words, based on reviewing/predicting other crashes in the DJIA since 1918, it is the 18-week cycle that shapes the approaching wavefront of a crash and produces the sharp “drop”. This could be an early warning indicator for an approaching cold front. Yes, this method predicted the coming crash of 1937 if we truncate the data in 1935 (because of the large cycles such 176,233, and 354 week were going down together) but it was the “growth” in the 18-week cycle which sharply defined the 1937 crash wavefront and that happen in the last 18-week cycle before the crash.

Chart 5 shows the participation of the 18-week cycle in 1987. This cycle started increasing in amplitude but one only had “one full cycle” (or less) of warning before the market crashed. In other words, in some cases we may have only 18 weeks or less warning until a crash occurs after the amplitude in the 18-week cycle starts growing.

Chart 6 shows the current 18-week cycle in DJIA from 2004 thru 2005. This cycle has started increasing in amplitude! We do not know (on just the basis of this cycle) which top will be involved in the “crash” but it is flagging a potential incoming storm. The 18-week cycle is currently heading down with maximum downward acceleration in late January with bottom in Feb 2006.

Chart 7 shows the predicted tops in the 18-week cycle in DJIA for 2006 thru 2007. My favorite candidate is April 05, 2006 since this date is close to Iranian Oil Bourse and Fed needs to pump against this cycle top to keep its head above water. Watch for some neat coming volatility. What interesting times we live in!?

Chart 8 shows the prediction DJIA for 2006 and after a final top in April 2006, it is heading downward. This prediction does not include the 1900-week cycle (which is also heading down). The DJIA will close at (or below) 9071 on Dec 24, 2006. If we include the 1900-week cycle it could be below 9000. The beach sands (of M3) are eroding away for the Fed against the incoming waves. There are no redeeming features to this formation for 2006/2007 and I have not liked the DJIA since Oct 2005 (since earlier Report # 4).

Bottom Line:
1. The predictions given in this study (and the other studies) do not predict “business as usual for the DJIA”. The DJIA is in major trouble and is headed down (watch out after June 2006). If you remove Exxon, Amex, AIG, etc (energy and financials) from this index, the industrials are in poor shape and declining. Exxon has been carrying the load for the past five years in the DJIA and some of the old guard are sadly on life-support (GM, Ford) and others are simply deceased (Sears, Eastman, Goodyear etc). The DJIA has more shifting components than “Carter has Liver Pills”.
2. This study does not predict any linear growth in the DJIA of 7% for FY2006 as predicted by 95%+ of the analysts or pundits for FY2006 (although a great run by Exxon in 2006 may yet keep the DJIA afloat and if we add Google or enough Internet fliers to the mix who knows - but you would want to get rid of GM, Ford, Alcoa, Intel and Hewlett-Packard ). The currently defined (as of Jan 2006) DJIA Index could end at 9071 (or below 9000 if you include the 1900-week cycle). It is predicting a drop on the order of 18% from a high of 11,070 for FY2006.
3. The downward trend will continue into FY2007 as we could be entering into a major recession worldwide. As soon as one “industrial” falls in this Index, it is replaced by another financial/energy entity to pump up the DJIA. It remains only to get rid of the Dogs of the Dow and add Google, Conocco and Chevron, etc to keep the game going. What a shell game for the DJIA!
4. If this were “Texas Hold ‘Em”, my two ideal hole cards would be Canadian “aces” (oil and natural gas) and “the flop” of gold, silver, Canadian currency (or basket of hard currencies against the USD) with the “turn card” of trust dividends and the “river card” would be “grains”. I am all in against any DJIA/S&P 500 Index “cards” beating my hand in FY2006. So what’s your river card for the DJIA hand – Google or AIG or JPM? As always, the “Big Blind” is the Fed.
5. The period from June 2006 thru July 2008 continues to be flagged as very dangerous for US equity markets with one bottom in 2007 and another in mid-2008. Please avoid the using the term “Secular Bear” out loud as we do not want to wake any other “sleeping analysts” in 2006 who do not believe in such mythical creatures.
6. The “early warning indicator” in the DJIA (and other indices) is the 18-week cycle. If this cycle begins growing in amplitude (due to the continuous feeding of M3 fiat money), it is one of the major warning sign to monitor. The 18-week cycle has started growing in amplitude in 2005. If a 600 to 800 point drops occurs in the next few weeks in the DJIA leading into April 2006, we have the initial conditions setting-up for a coming “crash” in the DJIA for 2006 or early 2007.
7. That foxhole you think you are standing in for the approaching Bear (or Rally?!) is really the large paw print of a Chinese Red Dragon as viewed from above. For after the Bear Cometh, the Red Dragon shall appear whose tail shall sweep…………………………………………

Hypotheses: Seven major cycles in virtually all the worlds’ indices/commodities determine our financial lives far into the future (and have for many decades). Hey, printing press #1600 sounds a bit “squeaky”, how about greasing the bearings and keep this puppy rollin’. So what is all this about an Iranian Oil Bourse? What are they trying to do – upset the USD!? Bartender, could we have another round of oil - my DJIA has just run dry? A recent study has shown it will take all the pine trees in Florida to print enough USD in the next five years – maybe we should just stick with electronic transfers so everything can be tracked by the NSA. No paper trails please.

-Dr. Stephen Rinehart (use with permission)

Driven to Drink

It was after receiving Rinehart's email that I got the following from my deflationist friend Jas Jain this morning, offering a "friendly wager" on the course of inflation/deflation:

Hello George,

As per our conversation a month or so ago, your position is that in the first half of 2006 we will have inflation and then a probable deflation in the second half. Correct?

How about we bet a fine bottle of wine on the following proposition: My claim is that the headline CPI, including everything, will not reach 205, which is 2.9% above the Oct'05 high in CPI of 199.2, any time in the first half of 2006 including the reading for Jun'06?

With the Iran situation looming, you can't ask for better odds in your favor. If the CPI closes at or below 200 in Jun’06 then I should get two and if it closes above 208 you will get two. Sounds like a deal?

Sincerely,

Jas

Here, it becomes definitional:  I know Jas is a fellow of substance - and for him a bottle of fine wine could easily be a bottle of Chateau Laffite.  For me, a bottle of fine wine is more likely Cribari Vino Bianco (4-liter bottle, thanks).  Still, if we can agree to a $20 cap, then yes, I will take Jas up on his offer.

The Land Bet

Even more important than Jas's wager in our personal life is that a piece of property adjoining mine is coming up for sale.  The owner wants a good price for it, but may settle for less.  All of my friends (Cliff, Igor, Jas, The Simple Country Attorney, and the Gold Trader) are suggesting a lot of caution.  "Keep your powder dry" is their admonition.  On the other side of the equation, though, the property in question, an unimproved 16-acres parcel with a small year round creek (yes, even in the drought) would not be likely to come up again for several years as property in rural areas doesn't turn over often.  If Elaine and I buy the land, I can get good terms, low payments, and there is some harvestable timber on it, which might offset up to 1/3rd of the purchase price.. 

More important, to my way of thinking, the acquisition would give us a hunk of land approximately 30-acres square measuring about 1,200 feet on a side.  That, my friend is lebensraum!.  I can here Jas and others screaming right now: "Deflation is coming! Wait!"  I, on the other hand, know that prices around here have gone from $1,500 and acres to over $2,000-$2,500 an acre in just 2-years. So I'm thinking $31-32,000 would be a good price.

Now to turn tables on you:  I'm soliciting comments on this possible land purchase.  It would not eat up all of our cash, we would use bank money and would not cash in our precious metals, and the taxes would be moderate as the land could be maintained as a "tree farm."  Click here to send along your comments.

I know, a fool and his gold are soon parted, but we wouldn't unload gold to do this one.  We have no other debt - and the small $250 a month cost would give us at least a small tax write off because it would be part of our "home."

One oil geologist I know points out 43% of first time home buyers last year put no money down.  That's a scary thought.

Wednesday Jan 18, 2006

Welcome to "Hell Day"?

I won't gloat and yell "Dammit, I told you so!" (or, maybe I will) but here's the overnight picture:

• The Tokyo stock exchange closed in a panic apparently touched off by a reported investigation into LiveDoor.  The market was closed 20-minutes early by circuit breakers [market panic prevention trading limitation rules] being activated by selling which saw the market down more than 4% at one point.

• The price of gold is taking a hit, down to the US$ 545 level.

• Markets in Europe are taking it on the chin, as well and as I write this special early edition of today's report, Dow futures are down nearly 100 points.

• Other factors impacting trading later today: Intel is not as optimistic as expected.

• Oil is back near $67 a barrel.

On our watch list today:  How well the US Tech Sector will do (we expect poorly, but it will be an issue of magnitude) and the Global Hell Day is likely to visit Germany where a second real estate fund has barred the door to investors exiting. 

The German situation is, I think, far more significant to the investment mood than is the LiveDoor report in Japan.  Why?  Because if there's one thing that scares the daylights out of investors, it is the notion of being "locked in" to a declining investment.  Should the inherent lack of liquidity in many paper funds become evident to a large enough group of Baby Boomers who are watching their retirement nest eggs closely, then you would have the potential for a worldwide economic meltdown. 

To our way of looking at charts, this would simply be the resumption of the declines that began when the tech bubble burst in 2000.  The market at a very macro level has been in a huge "B" wave bounce since March of 2003.  It seems likely that the C wave Down is beginning in here, and if so, it could portend a Dow falling to the 6,000 area, and that would effectively steal up to 40% of Baby Boomer's retirement nest eggs.  Not that you couldn't have figured that out for yourself, of course.

Now, I won't say "told you so" BUT you will recall that the web bots had been talking about the financial meltdown to come in the January-March period.  Well, although it's early to be certain, this is probably the start of that sequence of events the future predictive software has been alluding to.  By the way, congratulations to both Cliff and Igor at www.halfpasthuman.com for getting this so right on.  Their primary commercial client has to be just ecstatic because they were perfectly positioned for this thanks to the private data runs.  Say, is this cool, or what?  Now I know why I awoke this morning at 4;00 AM uneasy and unable to sleep.

I have posted a couple of charts and some additional information about our immediate expectations for subscribers to our $30/year www.peoplenomics.com web site. Subscription info.

Suiciders Ready

The Taliban says it has hundreds of suicide ready volunteers to carry out further attacks in Afghanistan.

Plot on Tony's Kid

Britain's Tony Blair isn't saying much, nor are police, but apparently a father's rights group's alleged plan to kidnap Tony Blair's youngest son has been foiled.

One Less Tension

We're glad to hear that India and Pakistan are working on a joint statement on the Kashmir issue.  This is one border that's been a concern because both sides have nuclear weapons, and unlike the US-Soviet Union standoff during the Cold War, neither side has the luxury of much decision time should one side sense an attack.  At least one border situation is cooling down.

Same Old Antics

We're amused to read how the GOP is promising to "dry up lobbyist gift giving".  As we said yesterday, the fox will tell you anything sweet thing you want while offering to watch your hen house.  My view?  Anyone who took perks, gifts, or money in the Abramoff mess should be removed from CONgress and barred from holding office in the future.  But then hey, I'm a real republican - not part of the pretender crowd.  (I believe in civil liberties as set forth in the Constitution and Bill of Rights, States Rights, and small central government, balanced budgets, etc..  These are foreign concepts to the present gang of pretenders.)

Lott of Balls

I see that former senate republican leader Trent Lott is trying to run again.  Perhaps he thinks voters have forgotten his comments about segregation in 2002.  I doubt that Black voters in Mississippi have forgotten, though. 

Passports

Here's where we raise an eyebrow at bureaucratic thinking:  If you enter the US legally (that is, go through an official border entry point) the government is moving to require "passport cards" (a kind of passport Lite, if you will) in order to return.  Now, besides making things tough on merchants along the Canadian border, such moves are ludicrous with more than 4,000 people a day just walking in from Mexico.  Wall like Israel's anyone?

Abiotic Update

Although we are at Peak Oil, almost for a certainty, the proponents of Abiotic Oil (e.g. oil without breaking down vegetable matter) are getting a lift from a report about to be published saying that methane on one of Jupiter's moons is not biologic in origin.  Interesting, but one thing we know for sure about abiotic oil: it's not being made fast enough to keep up with global demand.

Email of the Day

A reader sends along this interesting data point:

"I'm a gun dealer and I've noticed that certain ammo is impossible to obtain now. The Russian manufactured Wolf & Bear ammo in 7.62x39 (for use in AK's, SKS's, & Ruger Mini-30's) which was dirt cheap for American shooters is now dried up. None is being imported and most distributors have been out for 3 months. I was told by distributors that Russia has taken the manufacturing plants back over and is now manufacturing for 'their' own use. This is strange as Russian military has been using an AKM in 5.56x39 for many years now (likely they have many in 7.62x39 in storage but it is not front line use). More then likely all this ammo is being shipped to Iran, Syria, and other Arab states as the AK's in 7.62x39 are what their military and other forces use there. Just another little indicator that things with Iran are heating up big time." 

I just bought a 20 round box of SKS ammo and the local gunsmith held me up for $7.95 for the box.  Time to get the Cabelas and Cheaper than Dirt books out.

Say, speaking of outdoors and the like, at least in this part of Texas a lot of the woodsy types are outfitting their ATV's with "hush kits".  The idea is that they want to be able to romp around the woods and not make a lot of noise.  Look for ATV Stealth exhaust kits...

Tuesday Jan 17, 2006

War Ahead or Just Training?

Not to be an alarmist about such things, but we have one Reader who spends a lot of his time watching public information about the US military.  Today, he notes the following:

WOW ... almost everything that can carry a Marine is now at sea.  Enough stuff is now out to fully outfit an ADDITIONAL FIVE (5) Marine Expeditionary Strike Forces.

All 8 LSD's are out

6 of the 8 LPD's are out (1 was scheduled for retirement this spring and another 1 in Aug so I don't even know those two (2) are capable of going to sea)

4 of our 7 LHD's (new model mini carrier) and 3 of our 5 LHA (old model mini carrier) are out (enough for one for each real and each potential ESG).

The Marines are MOVING.

+++++++++++++++++++++++++++++++++

http://www.chinfo.navy.mil/navpalib/news/.www/status.html  as of January 17, 2006:

Carriers: USS Theodore Roosevelt (CVN 71) - Persian Gulf USS Abraham Lincoln (CVN 72) - Pacific Ocean USS Ronald Reagan (CVN 76) - Pacific Ocean

Command Ships: USS Mount Whitney (LCC 20) - Atlantic Ocean

Tarawa Expeditionary Strike Group (ESG) [13th Marine Expeditionary Unit (MEU) (SOC)] USS Tarawa (LHA 1) - Indian Ocean USS Cleveland (LPD 7) - Indian Ocean USS Pearl Harbor (LSD 52) - Indian Ocean

Nassau Expeditionary Strike Group (ESG) [22nd Marine Expeditionary Unit (MEU) (SOC)] USS Nassau (LHA 4) - Arabian Sea USS Austin (LPD 4) - Persian Gulf USS Carter Hall (LSD 50) - Arabian Sea

Amphibious Warfare Ships:

USS Peleliu (LHA 5) - Pacific Ocean USS Essex (LHD 2) - Pacific Ocean USS Boxer (LHD 4) - Pacific Ocean USS Bataan (LHD 5) - Atlantic Ocean USS Iwo Jima (LHD 7) - Atlantic Ocean USS Ogden (LPD 5) - Pacific Ocean USS Juneau (LPD 10) - East China Sea USS Nashville (LPD 13) - Atlantic Ocean USS San Antonio (LPD 17) - Gulf of Mexico USS Whidbey Island (LSD 41) - Atlantic Ocean USS Fort McHenry (LSD 43) - Pacific Ocean USS Comstock (LSD 45) - Pacific Ocean USS Harpers Ferry (LSD 49) - East China Sea USS Oak Hill (LSD 51) - Atlantic Ocean USS Germantown (LSD 42) - Pacific Ocean

Could Iran (or somewhere else) be about to "go hot?"  We're watching for the last few days of the month into first week of Feb in part because of the movement of forces, partly because of the dark of the moon then, and because the web bots say something unexpected is coming around then...  Now, place your bets: Is this a bluff?  You saw our reports of air units moving to the Middle East we reported last week, right?

At the same time, stories are floating around the 'net today about how terrorists are likely to use WMD's in the near future.

If I were wildly speculating, the sequence would go something like this: Proliferation of a lot of terrorist/WMD stories this week, an "event of some kind" around the end of next week, a purported "smoking gun" that would point to Iran or Syria, and a strike during the dark of the moon.  Just a possible sequence to watch for.

No doubt, China and Russia are watching this closely, too...

Industrial Production Figures

New from the Federal Reserve today - Industrial Production and Utilization which we see is up 2.8% Year on Year. 

The output of consumer goods rose 0.2 percent in December and was up 1.3 percent from its year-earlier level. In December, the index for consumer nondurables climbed 0.9 percent, and both the energy and the non-energy components of the index advanced. Among non-energy nondurables, the index for foods and tobacco rose 1.1 percent, and the production of clothing increased 1.9 percent; these gains more than offset a second consecutive monthly decline in the index for paper products. The output of consumer durables fell 1.6 percent, and declines occurred in the indexes for automotive products; appliances, furniture, and carpeting; and miscellaneous goods.

The production of business equipment increased 0.5 percent and was about 10 percent above its year-earlier level. The gains in this category were largely driven by an increase of 1.7 percent in the index for information processing equipment. The indexes for transit equipment and for industrial and other equipment were little changed. The production of defense and space equipment continued to rise, and reached a level 9.7 percent higher than it was a year earlier. The index for construction supplies, which had surged over the past few months, fell back. The output of business supplies moved up 0.5 percent to stand 2.9 percent above its year-earlier level.

The production of materials increased 1.2 percent in December. The index for energy materials climbed sharply in November and December as the energy sector’s recovery from the recent storms continued. In addition, relatively colder temperatures in December led to an increase in electricity generation. Within the durable materials component, a drop of 1.1 percent in the output of consumer parts partially offset gains in the production indexes for equipment parts and for other durable materials. Within the nondurable category, the output of both paper and textile materials decreased. However, the output of chemical materials continued to recover from the hurricanes and posted an increase of 2.4 percent.

Follow The Money Tuesday

Iran: The Money Issue

So, you want to understand international diplomacy, do you?  Well, start by looking at the money issues.  Both China and Russia are now pushing for a peaceful resolution of the "crisis" because both have made major investments in the country.  Of course, on the other side of the equation, the US is more anxious than ever to move on this latest fortress of evil.  Why?  Because, as one observer notes, they dare to speak the Great Heresy: They wish to sell Oil for Euros not Dollars.  Collision of economic proportions, no doubt about it.

Iran knows something is coming - and perhaps it will start with an "event" late this month or within the first week of February.  What are they doing to prepare for self defense?  For one thing, they're letting CNN back into the country...

Nigeria: The Money Issue

So, with the US trying to contain Iran from getting nukes, and keeping them from opening up an oil bourse, the other remaining oil in the world becomes progressively more important.  That's why Venezuela is in the news, reporting back taxes owed for oil,  and that's why we watch the situation in Nigeria, where locals are fighting for control of their natural resources so closely.

Afghanistan: The Money Issue

26 people dead in Afghanistan yesterday.  That's a country which has some importance in terms of energy (think pipelines) and drugs (think heroin).  Because of the attacks, the president of Afghanistan is urging the West to keep up the fight against "terror."

EU: The Money Issue

Over in the EU today, the European Parliament is set to turn down a ports bill which would encourage more competition.  That has been the subject of demonstrations and walk-outs, so rather than really eat the bitter pill of "free" trade, the EU is going to wuss out rather than allow competition.  Now, there's a lesson here:  If working people do get together, they actually can influence government to protect worker's rights.  But not in a crooked town like D.C. where the special interests "own" the government.  Say, that gets us to...

Abramoff: The Money Issue

The Cleveland Plain Dealer - a finest newspaper well regarded by most - says the ongoing scandal should spur reforms in how members of CONgress behave.  Fat chance, as I see it..

Here's the thing:  Asking CONgress to reform itself is a lot like asking the fox to write the rules governing access to hen houses.

Until I see a press conference where someone other than Ron Paul has the balls to say "This Special Interest group just offered me xx to do something against the People's Interest" I'll put lobbying reform in the same class as the Easter Bunny and Leprechauns. Entertaining myths on a good day.

Gore's Rant

It's nice to see someone stand up and tell it like it is on the Spygate scandal.  It's all quite simple to Al Gore: George Bush and his cronies broke the law by failing to follow procedures that were put in place to protect American's rights from pervasive government surveillance.

Democrat's chances of doing anything about it?  Zero.  As long as American's are fat, dumb, and happy living in debt, the guys in the White House will keep doing as they please.  Show me a major stock market decline, an honestly reported unemployment rate, or increase cable bills - then you'd have public support.  But for now, fat, dumb, and happy equals lazy.

That's why Justice is so sloooow for the Powers That Be.

Speaking of Slow Justice...

There's a new DVD coming out about the Enron case.  I might have to break down and buy that one.  Wanna place a side bet on a presidential pardon?

From Our News Tip Line

We have a news "tipster" feature (see Submit a News Tip near the top of the left menu) and once in a while we get a gem.  Like this one:

TIPTYPE: Politics T1: http://www.garynorth.com 

S1: Thought you might find this interesting. The Mark of the Beasts Is Almost Here! (No, This Is Not a Spoof.) Gary North  The United States Department of Agriculture is taking steps to set up a compulsory animal-tagging program. Every animal produced for commercial purpose on every American farm or ranch will have to be tagged with a computer chip. The chip will emit a radio signal. The Department of Agriculture will then be able to monitor the location of every beast. Here is the official statement: The National Animal Identification System (NAIS) is a national program intended to identify specific animals in the United States and record their movement over their lifespans. It is being developed by the U.S. Department of Agriculture (USDA) and State agencies -- in cooperation with industry -- to enable 48-hour traceback of the movements of any diseased or exposed animal. This will help to ensure rapid disease containment and maximum protection of America's animals. http://animalid.aphis.usda.gov/nais/index.shtml 

This is being done in the name of animal health. If any rancher thinks the IRS will not have access to this data base, he is terminally naive. This has been in the works for over a year. It has received little attention. If farmers do not organize immediately, this is a done deal. If Congress ignores it, this is a done deal. The government will soon know where the entire U.S. food supply is. The government is already using space-based satellites to measure the crops of any farm in the country. I hope the farm bloc is not asleep at the wheel on this one. I also hope this brief report of mine gets forwarded to every farmer in the country....

Security Suggestion

Every once in a while a subscriber to our www.peoplenomics.com site will ask me to remind them of their password.  It's their email address.  Then they ask "Why the email address?"  My answer is simple - but I thought I would pass it along:

We live in a cyber world where passwords are used all over the place.  Seeing this some time ago, I decided to set my own passwords up at several "levels"  The lowest level is the email address.  This I figure is fine for things like my subscription service.  The next layer is a little bit more secure, and as things get more important to me (PayPal account and banking) I have a reasonably complex randomly generated letter/number set that's quite long (10+). 

If you ever sign up for a subscription, your logon will be your email address for the simple reason that I want nothing to do with your own "high security" password - thus I can never be accused of anything improper.  That said, just as a suggestion, you might want to similarly compartmentalize passwords as I do - a small number of them, of increasing complexity - as their importance to sustaining your life increases.  Just a thought.

Monday Jan 16, 2006

How Scarce will "Scarcity" Be?

Our outlook for 2006 is hardly what you'd call inspirational.  The web bot project over at www.halfpasthuman.com has recently (and by this I mean the past several months) been talking about 2006 and our coming "encounter with scarcity."  A lot of folks have been asking why the web bots are such raving bummers - they never report anything "good" - just a litany of bad/bummer/evil/ugly things, most of which they get uncomfortably right.  Recent examples include this whole "secrets revealed" period we're in, the period of growing militancy, not to mention getting major aspects of the shuttle disaster, tsunami, and even 9/11 correct well in advance of actual events.

The reason that the bot critters are always so "negative" has to do with what they measure rather than any preconceived mission to pull bad news out of our collective future. By design, they capture future emotionally impacting events. What we think is going on is that the larger the emotional impact of an event, the more lead time we get.  Thus, while "secrets revealed" was seen several months in advance, the pending "rejection by all" of the US dollar has been popping out for more than a year, thus the inference is that from an emotional standpoint, the dollar's rejection will be far more impactful that Spygate/Abramoff ratting out CONgress, and many of the letter predictions along the way.

That said, as we look forward over the coming months of this year, we are struck by several markets which make the hair on the back of my neck perk up because they are the leading edge indicators of what's likely to come.  One email from this morning from a respect oil & gas geologist warns of food shortages to come - precisely the kind of "scarcity" inference that the web bots are drawing attention to:

1/23/06 Issue of Fortune: "Cloudy with a chance of chaos"

For some reason, Fortune Magazine doesn't appear to have this story (taken from a new book on rapid climate change) on their website, but it is in the hard copy of the magazine. A very big wild card for 2006 could be the weather. In the article, they discuss the tremendous effects that weather disasters are already having on insurance rates, e.g., insurance rates on offshore rigs are already up 400% or so. The article also noted that a lot of ocean front property, and near ocean front property may become effectively uninsurable as time goes on.

In my opinion, this article has to be the most apocalyptic thing that I have ever seen in a U.S. business publication. I'm sure that there are similar articles in a lot of environmental magazines, but Fortune? They are basically presenting the possibility of mass starvation around the globe. They are posing the question that what if the recent good weather since the end of the Little Ice Age was just an interlude between violent weather extremes?

I believe that each of the Cat 5 Hurricanes--Katrina; Rita and Wilma--reached Cat 5 status faster as the season progressed. If multiple Cat 5 hurricanes are a regular occurrence going forward, how long before the oil industry effectively gives up on deep water exploration in the GOM? Also, will the industry rebuild even "moderately" priced production infrastructure that keeps getting hammered in Cat 5 hurricanes?

No question about it, global weather has changed.  Here in Texas, for example, winter wild fires are very rare, or at least they were until this year.  A reader over in Austin says he..

Was relieved by your link to the MSNBC article regarding the near-record spell of rainless days at Lubbock. I was born in Lubbock in 1952, the year it supposedly didn't rain. According to the article, the record there is actually 85 days set in 1922. I celebrated by taking a bath. Incidentally, with the exception of about .05 of melted precipitation from the ice and sleet in early December, we haven't had rain in our back yard in 50 days. Only three inches have fallen in the past five months.

We have a chance of rain this afternoon here south of Tyler, but nothing to write home about, for sure.

Gold is rallying again this morning for reasons that most pundits don't want to think about.  "Oh, it's just a replay of that rally in January of 1980 which pushed gold to $800 and change" goes the conventional thinking.  :"It will soon come down..."

I don't think so.  My present thinking is that the U.S. dollar will be in a "heap 'o trouble" later this year because we might well be coming to a period when the U.S. consumer will stop buying disposable/depreciating junk and will begin having to refinance assets in order to eat.

The problem, at some level, is the competition for fuel.  In places like Iowa, the question for farmers is whether to plant for food or plant for fuel as methanol demand grows. And, as we've pointed out previously, as energy costs have gone up, pressure is on farmers to hold down production costs by controlling fertilizer use.

Perhaps presciently, Time Magazine is asking whether natural gas supply constrictions (not to mention what's looking almost like a civil war in Nigeria and today we see fresh reports on oil infrastructure there, forcing Shell to shut down some operations) could bring about the "Next Energy Crisis."  Their point is not lost.

The net result of this is that oil prices are firm driven by Nigeria concerns and the possibility that Israel (or its neocon proxy the U.S.) might actually do something in the very near future about Iran's uranium enrichment plans. Pakistani reports quoting London papers make such an attack sound imminent.  A very good overview is available from Eric Margolis, who writes in the Toronto Sun this weekend that...

Iranians see themselves threatened by the U.S., Britain, Israel and Russia. Britain and the Soviets invaded Iran in 1941, a forgotten aggression as criminal as Hitler's invasion of Poland. The U.S. and Britain overthrew Iran's democratic government in 1952, imposing their puppet, Shah Pahlavi. In 1980, the U.S. and Britain engineered Saddam Hussein's invasion of Iran that inflicted nearly 1 million Iranian casualties. Ahmadinejad led volunteers in that war.

A "world is against us" mentality, hatred of Israel and fear the U.S. or Russia may seize Iran's oil, permeates the country. Iran insists it must have nuclear weapons for self-defence.

To be fair, war with Iran is not a foregone conclusion.  There are plenty of reason for all the major players to try and win a peaceful solution. 

Still, based on our best estimates, there are plenty of reasons to have a personal self sufficiency plan in place right now.  Such a plan would provide for modest stockpiling of food, water, medicines.  When we see things like toilet paper on sale, we're buying an extra package here and there.

All that remains is for an "event" to occur (or be staged) to stampede the "Coalition of the Willing" into attacking Iran on some anti nuclear pretext.  We note that India, Israel and Pakistan, to name just three countries, have not signed the nuclear non-proliferation treaty. 

We'll be watching for that "next event" because almost beyond a shadow of a doubt, the neocons will spin whatever happens into a pretext for striking Iran.  Superficially the issue will be nuclear material. Economically, the issue is control of oil and corporate/IMF control.  And the Power That Be know damn well that if you're hungry and sitting for hours in gas lines, you'll go along with anything offered as a solution.

All that's missing is an "event" - and one could wildly speculate that a "dirty bomb" attack on the US with a charge that the "materials were traced to Iran" would be just the kind of "event" to set folks to stampeding.

Roads Revolution In Texas

Speaking of globalism, mis-labeled "free trade" and such, keep an eye on what's going on with the Texas Toll Party - which likens itself to the Boston Tea Party.  This is an organization which is part of a growing national opposition to two main items:  Double Taxation of people to use roads and the FTAA-related "Trans Texas Corridor."

Their issue with toll roads is simple:  People in Texas (and many other states) are taxed once to pay for roads (motor vehicle fuel and excise taxes) and then, because of the double-dipping if not watched closely tendencies of state governments, they are taxed again ("tolls") to use certain roads.  Elitism for well-off drivers.

The Trans Texas Corridor all ties in to the FTAA plan to run huge foreign truck fleets in from Mexico bringing "cheaper goods" from Texas, Arizona, and New Mexico ports of entry all the way to Canada.  The CANAMEX Corridor (which will run through Arizona) is part of the same transportation "master plan."

Now, the Texas Toll Party is not waging its battle against CANAMEX.  Their focus is on the Texas plans for highway development.  Still, we see it as part and parcel of the same thing.  Although there's evidence that the world is at (near, or past) Peak Oil, the Highway Lobby is working like mad to get funding from the Feds and state government for huge highway projects.  The Texas Toll Party points out what they call the  Central Texas Looters who voted to toll roads that Texas Taxpayers have already paid for once.

Flush with Cash

China is rolling in the dough thanks to Box-Marts in America.  At $818.8 billion, that's enough to buy a lot of American assets should they choose to.

Markets Closed

Martin Luther King Day sees the stock, commodity, bond, and option markets are closed today.  International gold markets are open (chart at the top of this page).

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