One Third Gone

No sooner had I done the article on the third party (see below) than I received word that Karl Schwarz has pulled out of the race. That said, I did save a copy of the American Patriot Party's Platform because it seems to make so much sense.

Abramoff Stink Spreading

One reasons we're so disappointed in the departure of Schwarz from the presidential fray is that it now appears that 60 (or more) members of CONgress may be implicated in the Ambramoff/Scanlon affair.  If this isn't a reason to vote for "none of the above" I don't know what is.

"Event" Day

This being December 3rd, we've arrived at one of the two big "hot dates" in the month predicted by the future predictive technology pioneered by www.halfpasthuman.com.  (And imitated by some pretenders, I would note.).  The problem is, what's it going to be? What's the news event that will happen now and might later be seen to presage something BIG around December 14th?

• Topping the "most worrisome" list is a report that 60-pounds of plutonium is missing. Now, I'm not expert on such things, but anyone who has watched TV knows that about 3-pounds is all you need to make a bomb - so that pencils out to 20 nightmares.

• Second "it doesn't make sense to me" story is about loosening of air travel rules. Now that pocket knives are off planes, does this mean box cutters can fly?  Is someone nuts here?

• Will there be something prescient about the explosion in Iraq that killed 10 this morning?

• On, on the more positive side of the WOT, is there something else coming connected with the death of a senior al Qaida official in Pakistan?

• Maybe it will be a long-rumored Israeli attack on Iran, perhaps triggered by Russia's sale this week of a billion dollars worth of missiles to Iran.

Then again, it may be none of the above.  The problem with "seeing" events in the future is that even though we're in a period when something "big" is going to happen (at least so says the technology), there's no way to insure that it will be visible to the public today.  For example, if Osama bin Laden were killed somewhere in the Middle East today, that would be a big story.  But the administration might hold off on the announcement until later - that kind of thing.

At this point, it doesn't appear to be an "earth changes" although the web bots have made reference to the sun.  Perhaps a huge blast from sunspot 826 would qualify.  But again, whatever it is seems to shade toward political/economic with what happens on December 14th (thereabout) will have a ripple extending into late February 2006.  That doesn't sound like an Osama death or other single event.  It's like something which will have repercussions.  Oh well, time will tell.  Always does.

Was that a Raise?

A reader asks a very simple question today:

Hi George

Is there a general percentage I can use to determine if an increase in income is more or less than the decrease in purchasing power? In other words how far ahead does a 3% raise get me? I'm not even a fledgling economist but guessing it leaves me still in the hole but by how much?

Answer: You may not like this:  A 3% raise doesn’t event keep you even.  Let me put on my People's Economist hat for a moment.

For the year to date, in figures available from the US Department of Labor, we can see that the monthly CPI is running 3.9 percent. Thus, if you have a 3% wage increase for the period (10 months of the year, mind you) that means you are down 0.9% in purchasing power, unless the increase pushes you into a higher tax bracket, in which case you lose a bit more.

I expect the year will end around 4.3% - 4.5% actual inflation, so if you have any pull with the boss, explain to them that 3% means that your purchasing power for the year will have dropped 1.3 to 1.5%.

Employers will typically use every trick in the book to keep employee costs low.  Thus, if your employer is trying to hold you down, they might point at calendar 2004 when the inflation rate was closer to 3%.  So watch for that: employers using an old base period.  What usually happens is employers will try to drift back and forth, using an old base year, or the current year.  If, for example inflation this year was running a mere 1%, your employer would be inclined to use the current year data.  From the employer standpoint, the name of the game is skimming some of the profit of your work so for ever dollar you give, they get.

Hype Gone

Despite the 107 point rally in the Dow this week, the market put in a slight decline as measured by our Aggregate Index. This equally weighted summation index of the Dow, S&P and Nasdaq 100 dropped from 9033.63 last week to 9022.75 at the Friday close - meaning that despite all the smoke and mirrors, the market lost a little ground this week and is sitting quite close to our upper trend line.  We don't offer financial advice, but our long term expectations about gold and silver are being met quite nicely.  The gold we acquired in the $265 range 4-years ago popped up through $500 this week as expected.  And the silver we brought earlier this year (and we mentioned before it dropped to $6.94) has returned on our dollar cost average in basis, a gain of 20+%, not bad for 6-months.  Certainly better than most "expert" advice.

Peoplenomics: Annual Forecast

Tomorrow I round up as many facts as I can and roll them into a single document for my www.peoplenomics.com subscribers called the Annual Forecast.  It's a personal planning document that outlines what I expect in the seven major areas of UrbanSurvival, namely food, shelter, communications, transportation, energy, environment, and finance.  If you'd like to subscribe, it's only $30 a year.  Click here to think outside the box for a little while every week.

Invite a Friend

Go ahead, pass on a link to the site to some of your friends.  Click Here.

At the Peoplenomics Bookstore

Our perpetual best-selling continues to be "How to Live on $10,000 a year or less"

Friday Dec 2, 2006

Up and Running

The American Patriot Party has formed up and is running hard.  Calling itself an independent third party, one of the fine eye-openers is their list of who's doing what in CONgress.  A fine list worth reading over coffee. I have to admit, some of the platform sounds like excerpts of past columns here.  For instance, how many times have you heard me rant on this one:

"The American people are currently being punished by a system of confiscatory and commercially abusive lending practices, such as credit cards and high-interest loans."

Yep.  (If you're a Northerner, that means "Yup.") Here's another part that resonates around here:

"Our banking system is staffed by predators at every level.  At the core of understanding how money, banking, and credit work in America is an understanding of the true nature of the Federal Reserve Bank (FED).  Americans are misled to believe that the FED is part of the government.  Nothing could be further from the truth.  The FED is neither federal, nor is it a reserve, nor is it a bank.  The Federal Reserve is a private corporation, which is owned by the money center banks, and acts in their best interests even when adverse to the interests of the United States citizens at large.  Additionally most Americans do not realize or understand that the Federal Reserve Bank is controlled by an elitist group of insiders that are both American and foreign (emphasis added - GU), and collectively protect their self-interests of greed over the interests of American citizens on a daily basis."

While there are other parts of the platform that will be controversial, I admire the statement as it relates to the Department of Homeland Security, FEMA, and the Patriot Acts:

"The American people are not al Qaeda, and yet the true purpose of these policies is to protect our government from us (emphasis added - GU), not foreign terrorists and not foreign powers."

:Although it's early, and I have a lot more reading to do of the complete platform, here's a third party effort that has the right spin on contemporary events in the main. While we don't think the American Patriot Party will get much in the way of campaign contributions from the vested interests of the banking business, they are at least willing to stand up an be counted on behalf of the "little people" and they've successfully, as far as we can tell, been "unplugged" from the system to the degree that they "tell it like it is."

---

But here's the prediction for you to write down somewhere:  As soon as the polls start to show that common sense politics like these make sense, we will endure some kind of "event" or something will "just happen" that will keep the political duopoly in place and maintain the status quo.

Corporate corruption of government is a long established fact, going back as far as Ike's famous 1961 warning about the military-industrial complex. Eisenhower was the kind of Republican that made sense, stood for the Constitution and was progressive on rights.

With the exception of Congressman Ron Paul, I don't see very many that are holding the Light of Freedom very high.

The Illusions of Progress

Yes, Thursday's financial headlines were glorious - the Dow was up more than 107 points!  But wait - the Texas econogeek has some bad news for you. The market closed last week at 10,931.6 and so opening from 10,912.57 this morning, the market is actually down a tad for the week.  But that screaming rally of yesterday sure made it feel like everything is skooum.

On a similar note, we see that the November jobs report was released this morning by the US Department of Labor's Bureau of Labor Statistics.

Nonfarm payroll employment grew by 215,000 in November, and the unemployment rate was unchanged at 5.0 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Over the month, job growth was widespread, with large gains in construction and food services.

Unemployment (Household Survey Data)

The unemployment rate was unchanged in November at 5.0 percent. The jobless rate has ranged between 4.9 and 5.1 percent since May. The number of unemployed persons, 7.6 million, was essentially unchanged in November. The unemployment rates for adult men (4.3 percent), adult women (4.6 percent), teenagers (17.2 percent), whites (4.3 percent), and Hispanics or Latinos (6.0 percent) showed little or no change in November. The jobless rates for blacks (10.6 percent) and, specifically, for adult black women (9.1 percent), rose over the month. In November, the unemployment rate for Asians was 3.6 percent, not seasonally adjusted. (See tables A-1, A-2, and A-3.)

Total Employment and the Labor Force (Household Survey Data)

Total employment, 142.6 million, and the civilian labor force, 150.2 million, were little changed in November. The employment-population ratio also was little changed over the month at 62.8 percent, and the labor force participation rate held at 66.1 percent.

But it's not all backslaps and glee at BLS.  Buried in the U-6 report (Alternative Measures of Labor Underutilization) we see that the unemployed plus marginally attached workers (and the MBA's flipping burgers) increased from 8.1% of the workforce to 8.4% in November. That's a tad over 1.26 million not following their calling, and that's not counting people who have fallen off the statistics because they have run out of benefits. We reckon honest unemployment is somewhere north of 10%.

1,000 Dead

America has now executed 1,000 inmates since capital punishment was reinstated in 1976. I'm still arguing this one with myself: Eye for eye, or Thou shalt not kill?

2,000+ Dead

American forces has a new major operation underway in Iraq.

You may remember earlier this week, I mentioned the White House was getting some flack for "buying" favorable press articles about the conduct of the war.  Today, it seems the White House is not amused with the disclosure of the propaganda apparatchik.  Oh well, daylight democracy. Deal with it.

58,000+ Dead

Although the parallels to Vietnam (9-years and 58,000 dead) are distained by the Bush crowd, there's an analysis of the Vietnam War which has resurfaced, that maintains the Gulf of Tonkin incident which was LBJ's "justification" in 1964 was faked.  As we told you...and it's hard to argue with an NSA historian's view.

What will be the Iraq War's analog to the Gulf of Tonkin incident?

Energy Outlook

I think it says something about how much America will have a tough time ending its long love affair with the freedom offered by automobiles - energy concerns or not - when we build monuments to cars.  Take for example one of the offers in an email this morning from Northern Tool::  a collection of three V-8 engine Christmas Tree ornaments.  Where's the rice burners? 

Better yet, or more socially aware, would be ornaments in the shape of Stirling engines, sailboats, and in place of tinsel, how about using insulation?  - Just kidding on this last point, but you got the idea, right? We become the imagery we surround ourselves with.

People are susceptible to low level hypnosis in society way below the perception threshold. If you want to change anything about your life, such as "Gee, I have no money!" it's best to start with the flip side of the coin "What do I need money for?"

---

I'm sure my oldest daughter would like something more "stylin' and profilin'" than her moped to get to work at her broadband sales job in the Seattle area.  A new Miata would cool.  But she's a realist who is working through the "getting unhypnotized" part of life and figuring out how to get from where she is to where she wants to be. One thing I've noticed in talking to her, she doesn't seem to have much time for TV.  A fine thing, and there are millions like her, unplugging from Cyclops' wasteland..

---

That said, it's also interesting to note that passenger cars seem to be making a comeback.  SUV's down, passenger cars up. Hmmm...high gas prices, smaller vehicles.  What a breakthrough in thinking!

Dreaming of an...

...incoming ICBM?  A reader sends along this:

I just woke up from the following dream--

I could see two ICBM's being launched from the Mid-West targeting areas just north of Las Vegas.  When I realized they were the real McCoy, I remembered what day it was thinking how close it was to Cliff's early December date.  In somewhat of a panic I immediately began looking for a phone to buy gold and silver.  Upon finding a pay-phone, I reached into my pocket for coins to pay for the call.  All the coins were quite old and valuable....

No offense, George, but I have to wonder what this dream is telling me.  I'm going to have to take a vacation from reading your site; let's hope nothing extreme happens.

As you may know, there are two "hot dates" in the ALTA 106 web bot run: December 3 and December 14th.  The third is the lesser of the concerns, but whatever is the 14th may have impacts through the end of February, although the linguistic flavor goes to financial/political.  Still, I'd suggest that at least this reader pick a different state than Nevada to vacation in, if the dream was too intense.

The dream brings up an interesting thought to noodle around:  Osama and company have been very quiet at the command level and last I heard, we were stopping down the boonies of Afghanistan and Pakistan looking for them. I wonder what the administration's security plan says about beefing up the Russian ICBM sites?  Are all of them empty?  (Likely not).  Are all of them able to repulse a highly motivated, well-rehearsed team?  (I hope so...)

We will be watching the news closely and posting our weekend edition tomorrow morning as Dec 3 and Dec 14 are web bot hot dates.  Whatever happens may, or may not, be visible, but we sure expect big things in here.  Katrina-sized event or larger on the 14th or so.

Thursday Dec 01, 2005

Day? 

OK, yeah I got it - the date on today's update wasn't changed - but the content was all new as of 9 AM Eastern...Sometimes I get busy and forget to change date even though everything is current.  Thanks for the emails reminding me... George...ah...what's my name again?

Ahead or Behind?

Personal income and expenditures are out from the Bureau of Economic Analysis today.

Personal income increased $42.5 billion, or 0.4 percent, and disposable personal income (DPI) increased $26.4 billion, or 0.3 percent, in October, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $15.1 billion, or 0.2 percent. In September, personal income rebounded from the effects of Hurricane Katrina and increased $174.8 billion, or 1.7 percent, DPI increased $172.0 billion, or 1.9 percent, and PCE increased $46.8 billion, or 0.5 percent, based on revised estimates.

 

The October, September, and August estimates of personal income reflect the effects of Hurricanes Wilma, Rita and Katrina. Rental income of persons and proprietors' income together were reduced by about $10 billion (at an annual rate) in October, by about $5 billion in September, and by about $240 billion in August to reflect the uninsured losses of residential and business property. "Other current transfer receipts from business (net)" was boosted by about $13 billion (at an annual rate) in October, by about $7 billion in September, and by about $120 billion in August to reflect insurance benefits payments to persons. Excluding these effects, which are discussed more fully below, personal income increased $42.1 billion, or 0.4 percent, in October, after increasing $52.1 billion, or 0.5 percent, in September, and $19.8 billion, or 0.2 percent, in August. Because other effects of the hurricanes were embedded in BEA's source data and could not be separately identified, BEA did not attempt to quantify their impact.

 

Private wage and salary disbursements increased $32.9 billion in October, compared with an increase of $15.2 billion in September. Goods-producing industries' payrolls increased $12.6 billion, in contrast to a decrease of $1.9 billion; manufacturing payrolls increased $10.2 billion, in contrast to a decrease of $3.0 billion. Services-producing industries' payrolls increased $20.3 billion, compared with an increase of $17.1 billion. Government wage and salary disbursements increased $1.5 billion, compared with an increase of $4.3 billion.

Now, when we take the Personal Income number and click over to compare this with the Consumer Price Index for the same period, we see that we actually got a little bit ahead for the month.  Not a lot (try 0.2% or 0.1% if you look at disposable income for the month), but heck, any port in a storm. Maybe this will push gold over $500 and the market past the 11,000 Dow "sticking point." 

Let me see: After tax $3,000, that .1% gain on CPI less DPI means a whopping $3 bucks. Remind me not to spend it all in one place.

In our constant efforts to reduce economics to Peoplenomics© we offer this easy to remember formula:

DPI - CPI = x MGD

 

Where DPI is disposable personal income

CPI is consumer price index

and MGD is a Miller Beer brand

See? Economics is important!

War, Continued

Depends who you listen to on a daily basis:  On the one hand, we hear George Bush making the case for the war and on the other, we hear the insurgents are launching their own offensives while US forces are pursuing theirs.

Off in the background, we're watching some of the real drivers of the conflict - not just in Iraq, but in other places around the world.  In Iran, for example, oil output has been slowed by domestic politics of the oil minister's office.  Nick Barisheff's "article of the  day" at HoweStreet.com goes into the "Greenspan Warnings" and among these is an oblique reference to Iranian plans to start an oil trading bourse in something other than US dollars.  If you were out looking for a single predictive metric about future US actions in the Middle East, this is the one to watch.

Metrics, Other

We have, over the past few weeks, pointed to other metrics that are likely to drive corporate behavior, the price of gold, and perhaps even future terrorist events.  Among that list, we find drivers such as the health of the Housing Bubble, the plans of Dubai to open a gold exchange, and others.  With this is mind, we'd offer the notion that George Bush's popularity is likely to be a good metric to watch.  As MTV reports, he's managed to bring down his popularity by 50-some points.

We look at "America will not run" as crass jingoism, coined by the same crowd that declared "victory" in the conflict a couple of years back.  A more honest admissions would be "America can't change course because I said so..."  I'd go so far as to offer that the recent Zogby polls on what drove republican defeats (bad Bush karma) is probably spot on.

News, Paid

Then we have the report in the Detroit Free Press today about how the administration paid to get favorable press coverage of the war.  We have to wonder what other issues they are paying to promote?

News, Censored

Great coverage in the Ithaca Times today about the 10-biggest news stories of the year that were pretty much buried by mainstream media, which as we have pointed out many times have leashes pulled by corporations that are trying to maintain an economic paradigm and a worldview that is not consistent with available resources.  Some of the stories:

• Bush Administration moves to end "open government."

• US media fails to cover Iraq War details such as: Close to 100,000 have died in Iraq fighting, mostly non-combatants

• Distorted election coverage

• Surveillance society is moving full steam ahead.

• US use of the SE Asia tsunami for military positioning

• Sitting on the Iraq oil-for-food scandal.

• Real journalists getting killed

• Iran's oil bourse (see previous story) threatens US hegemony in Middle East

• National Coal's strip mining plans near Knoxville

While we agree with the selections, there are plenty more.  Coverage of global warming has been less than stunning.  Manipulation of financial markets is a non-story (I don't know how many times I've heard the "naked short selling" story is about to pop, yet somehow it doesn't.  Then there's the SEC's operations.  How long before Ken Lay's trial?  And a bunch of others, but at least Project Censored is tracking it.  And we do our little bit when we can, focusing on FTM (Follow the money).

Rates, Up

We read this morning that a key EuroZone rate is now up to 2.25%.  What's driving this is developing inflation fears as governments around the world try to keep their respective economies moving, but mindful at the same time that too much growth is just as bad as too little. 

This is one of those ugly problems that comes as the planet approaches (or is aguably past) carrying capacity.  See Daily and Erlich, circa 1992 for a little background on the concept of "carrying capacity."  (And thanks to Jay Hanson for the work of www.dieoff.org!)

The problem in a nutshell is that if economies grow too quickly, we run out of energy.  If they grow negatively, bankers lose money.  Ergo, the only course to fly to reduce risk for the current power structure (or powers that be - PTB) is to keep the status quo.

This will no doubt translate to the US Fed upping rates by at least another .25% when it meets a week from next Tuesday, unless there's some kind of paradigm threatening event around December 3 that the web bot project forecasts. Depending on what the December 3rd event is (and whether it percolates into mainstream media) the Fed might go higher, their actions "cloaked" by an overhanging news event which could be blamed instead of fiscal policy.

The fact that the economy grew at a reported 4.3% annual rate in the third quarter may look right on paper, but with all the impacts of hurricanes and such, there's a slight odor about the report.  We had Florida power out, in some cases for weeks, 1.3 million displaced, and we still wonder how the oil and gas picture will look if we get a cold snap.  The latest shut-in production numbers from the Minerals Management Service show cumulative shut in figures for the year are just one more reason that we wonder about the growth report.

Today’s shut-in oil production is 547,223 BOPD. This shut-in oil production is equivalent to 36.48% of the daily oil production in the GOM, which is currently approximately 1.5 million BOPD.

Today’s shut-in gas production is 2.965 BCFPD. This shut-in gas production is equivalent to 29.65% of the daily gas production in the GOM, which is currently approximately 10 BCFPD.

The cumulative shut-in oil production for the period 8/26/05-11/30/05 is 95,878,528 bbls, which is equivalent to 17.512% of the yearly production of oil in the GOM (approximately 547.5 million barrels).

The cumulative shut-in gas production 8/26/05-11/30/05 is 495.336 BCF, which is equivalent to 13.571 % of the yearly production of gas in the GOM (approximately 3.65 TCF).

Gulf Stream, Going

I don't know if you have read Robert Felix' book "Not by Fire but by Ice" but if you haven't, you might want to visit his web site and invest a little time in looking over things. Damn fine book, great research, and a really scary possibility to ponder:  Could we easily "flip" from what seems like global warming now into a massive sudden Ice Age?  Felix makes a convincing case that just such things are possible based on his extensive research.

Now to the reason for bringing this up today:  A report out (in Nature) that says there is a noticeable slowing of the Gulf Stream once past US shores - and that could put Europe into something akin to an Ice Age if true.

Now, it's not like this is a "chicken little" situation that is just popping out today.  My friend Jeffrey Brown, the oil & gas geologist up in Addison (TX) sends this today:

George,

There is a very good discussion of this on the The Oil Drum this morning. Following is my posting on the subject. It's possible, and probably likely, that our drought in North Texas, the increased warming in the tropics (and increased hurricanes) and the cooling in the UK and Northern Europe are all related. If those Gulf of Mexico platforms keep getting hit year after year, how long will it be before they stop putting billion dollar plus platforms in the path of Cat 5 hurricanes?

Jeffrey Brown

My posting on www.theoildrum.com: 

Information on 2004 article in Fortune Magazine: http://www.fortune.com/fortune/print/0,15935,582584,00.html 

CLIMATE COLLAPSE The Pentagon's Weather Nightmare The climate could change radically, and fast. That would be the mother of all national security issues. By David Stipp

Summary from Union of Concerned Scientists:

http://www.ucsusa.org/global_warming/science/abrupt-climate-change-faq.html  "Two high-profile events are putting the issue of "abrupt climate change" squarely in the public eye. The first is a February 2004 Fortune Magazine article that broke the news of a report prepared for the Pentagon on abrupt climate change and its implications for U.S. national security. The Pentagon report describes a scenario in which human-caused global warming leads to a near-term collapse of the ocean's thermohaline circulation, which brings warm surface waters from the tropics to the North Atlantic, warming parts of Western Europe. The authors propose dramatic impacts, including rapid cooling in Europe, greatly diminished rainfall in many important agricultural and urban centers and consequent disruptions in food supply and water supply with enormous geopolitical and security implications."

All of this gets us to tipping point theory and gets us to asking (as have other articles recently) how will we know when a tipping point arrives?  Answer: You either either be dying of cold, or dying of heat.  Either way, it's a messy subject and because of the long term trends involved, it's one that government should have been putting more money into long ago.  With atmospheric dynamics changed over decades, by the time we see a global response, the tipping point will be passed.  Oh well.

Remote Viewing, Maybe

A reader insisted by I put up a link to his favorite source of remote viewing information.  Normally, I'd toss out such things, but the fellow seems quite sincere and claims he used remote viewing to help him win a lottery (didn't mention the size, though). Hmmmm...I wonder if I could use the technique for close to the money options played close in? 

Welding, Follow-up

Thanks for all the replies.  Consensus is that 0.025 flux core mild steel welding wire is rare as hen's teeth and may not exist..  Majority of UrbanSurvival welders suggested I break down and buy the CO2-Argon bottle and use solid core. (I'm cheap, but the arguments are good that this is a penny wise, pound foolish question.)   Better welds on thin metal, I'm told.  Depending on how good (or bad) it is, I may put up a picture of my generator muffler repair next week...it's on the "do list" for this weekend.

Wednesday, Nov 30, 2006

Why Gold Went Down

A number of readers have asked me why the price of gold went from over $500 to under $492 at one point today.  The answer is apparent when you read this note from my gold trader friend in LA:

Howdy George,

Just a quick note for you and your peoples. Last night the COMEX gods gave a small notice of margins being raised in our precious metals. Margins as of tonight will be 33% higher in gold.

• From $1,350 to $2,025.

• Silver will be raised to $2,363 from $2,025.

Whenever this happens, the markets for the precious metals correct (go down). For the conspiracy theorist (me & you), it's the only way the big boys can slow down the demand. I know you don't give advice but being a stock and commodities broker for 15 years, this little tidbit is a money saver. Get ready to buy physical gold and silver at discount prices from today's price. As for me, my clients are cleared and our orders to buy at the lower trends are in place.

--Your friendly neighborhood paranoid of earthquakes Californian gold trader

GDP Figures

Out from the Department of Labor's Bureau of Labor Statistics:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 4.3 percent in the third quarter of 2005, according to preliminary estimates released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.3 percent.

The GDP estimates released today are based on more complete source data than were available for the advance estimates issued last month. In the advance estimates, the increase in real GDP was 3.8 percent (see "Revisions" on page 3).

The major contributors to the increase in real GDP in the third quarter were personal consumption expenditures (PCE), equipment and software, federal government spending, and residential fixed investment. The contributions of these components were partly offset by a negative contribution from private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP growth in the third quarter primarily reflected a smaller decrease in private inventory investment and accelerations in PCE and in federal government spending that were partly offset by a deceleration in exports, an upturn in imports, and a deceleration in state and local government spending.

Final sales of computers contributed 0.17 percentage point to the third-quarter growth in real GDP after contributing 0.32 percentage point to the second-quarter growth. Motor vehicle output contributed 0.56 percentage point to the third-quarter growth in real GDP after subtracting 0.01 percentage point from the second-quarter growth. "

If our CPI expectations come true, we will see a year that is about a push - increase in GDP being about equal to inflation.  On the other hand, we also note that without the War in Iraq, the economy would not be doing nearly as well:

"Real federal government consumption expenditures and gross investment increased 8.1 percent in the third quarter, compared with an increase of 2.4 percent in the second. National defense increased 10.3 percent, compared with an increase of 3.7 percent. Nondefense increased 3.6 percent, in contrast to a decrease of 0.2 percent. Real state and local government consumption expenditures and gross investment increased 0.4 percent, compared with an increase of 2.6 percent."

But: So Far, So Good

There was good news and bad in the Tuesday housing figures released by the Commerce Department.  On the one hand, sales were much brisker than normal, yet on the other, and somewhat buried in the data, the median price of a home was up to $231,300, up a scant 0.9% from year ago levels.  Now, in case your double Americano tall hasn't soaked into the bloodstream yet, the problem is that with inflation running 4% for the year to date, that means that in purchasing power terms (which is the only thing that matters to us) the home prices have dipped about 3% year on year (YoY). 

Add to that the report that consumer confidence was up substantially (and a bit unexpectedly, I'll admit) driven by lower gasoline prices, and word that online e-tailing is alive and well, and you get something akin to what the NY Times paints as an optimistic outlook.

Next week, as the Federal Reserve meets (if we get that far unscathed), the Fed is likely to raise rates another quarter point, encouraged to do so by the global(ist) Organization for Economic Cooperation and Development, which figures the Fed should increase rates another 75-basis points; 3/4's of a percent if you're not a bankster.

This is where I start to run into concerns because a 3/4% increase in the Fed rates would likely spell the end of the housing bubble, for good.  This flies straight in the face of the policy of the Fed which is to protection of any asset which could be used (as in refinanced) to keep the economy afloat just a bit longer.

It's a lot like a physics problem: unstoppable force (pressure to raise interest rates) meets immovable object (protection of an asset class to prevent an instant Depression).  There are only a few possible outcomes:  Our expectation is that rates will go up.

Also something to ponder would be the timing about now of any Huge Exogenous Event (HEE).  What ever it is, it would need to come from outside the market and be of sufficient magnitude to take the blame for whatever happens next in the markets.  In other words, if you were going to be forced by global economics to raise rates more than the expected 25-basis points, wouldn't it be convenient to have some big event take place which could be blamed instead of the rate move for an unexpected lurch in the markets?

What the web bot runs (from www.halfpasthuman.com ) have forecast for around this window we're now in is something that would be roughly two to three times the size of the hurricane disasters and would focus American attention on  something other than moves that are out of the ordinary.  Surveying the current round of terrorism warnings, we don't see anything of that magnitude, but there are plenty of alarms going off:

• Indonesia has recently aired terrorism warnings.

• The U.S. is worried about possible terrorist attacks on its proxies in China.

• France is battling domestic violence/terrorism.

• India is trying to cut terrorists off at the wallet.

• An Iranian resistance group is protesting being labeled a terrorist organization.

• Religious extremists are blames for a bombing that killed 22 in Bangladesh.

• ...and the list goes on...

But overall, there's nothing in the immediate preconscious that says "this might be it."  nevertheless, we will be especially anxious until after the Fed meeting and suspicious of anything big or more specifically any HEE that might take place between now and then.  The bots have been wrong in the past, but they do have an uncanny ability to spot big things in advance, so with something bigger than hurricanes expected, we are scanning headlines with some trepidation.

Still, as we said in the headline, so far, so good...and that's a fine thing.

---

For those interested, another web bot run is pending (click here for details of run 406) but the sense of the current period is summed up in the 106 run. 

To be clear again, here's the relationship between our sites and the HalfPastHuman site:

• HalfPastHuman: Subscription (6-weeks of data plus summaries).  Linguistic analysis that might indicate a period or tendency of the sky to fall.

• Peoplenomics: Subscription (1-year of weekly reports) Structuring your life for falling sky.

• UrbanSurvival: Free.  See sky, see sky falling?

• Independence Journal: Free.  How to live after sky falls.

The Long War

George Bush today will outline some of his plans for the Iraq War.  He's giving many speeches to that effect lately.  We don't expect any moderation of the debate, at least any time soon, unless, as expected above, we get a HEE which would stifle debate and perhaps give the Bush crowd something that could be morphed into an excuse to invade Iran.

Regardless of the underlying agendas, perhaps Peak Oil among them, we note that US forces have now be engaged in Iraq I and Iraq II almost as long as WW II. Sure looking like it may catch up with the nine year duration of Vietnam - a parallel the administration hates having mentioned.

Bordering On....

...(You fill in your own description here.)  George Bush talking about "border security " in El Paso on Tuesday. 

Tensions in Petrostan

Russia is blaming the West for increasing tensions in Central Asia, a land we refer to as Petrostan.  As we approach the limits of capitalism, where the economics run out of resources, we can only repeat the profit driven motive is likely "have oil, will fight."  Not that it's a bad motto; we're not up for walking 13-miles to get groceries.  But global pressurization of public opinion is either on the rise because of increased communications (read: the internet), or because resources are growing slower than demand which is our favored scenario.

FTM

If you believe in FTM theory ("follow the money") then you'd be living in either Connecticut or New Jersey according to Census figures..

FCC

The FCC may be backing away from its previous position on cable TV packaging.  Not that it will change overnight, but change is in the wind...you might soon be able to get cable channels ala carte instead of monster packages.

Firefox Update

Version 1.5 is out if you haven't already downloaded and updated.  Word from the software forest is that Microsoft will be buttoning up the primary feature set for Windows Vista in December.  Launch will be next year. Don't ask about Longhorn.  Office 12 (thank heaven their are getting away from year-dated branding!) is due out Q2 '06. 

Welding Question

Does anyone know if mild steel .025 flux core wire is available? I've found 0.030, which might do the trick as I try to fix the muffler outlet on our backup diesel generator.  (I'll add some gussets to make the original design better so the problem won't recur.)  Also, if you're into welding, has Lincoln ever published an 0.030 and 0.025 flux core wire guide for the SP-135?  Click to be a welding whiz.

.

Tuesday, Nov 29, 2005

$500 for Moments

Depending on where you look, the price of gold has been up to $501.90 today, but this morning the profit taking has set in a bit.  Still, the idea of $500 gold by Christmas has been validated.  The next level I'm half looking for is $550 gold, perhaps by the end of January, and if I read the tea leaves right (a rare occurrence, to be sure) we might see $9 silver in about that same period.

Of Corporatists and Peak Oil

If you want to see the beginnings of the end of Cheap Oil, and assess its impacts, you have only to watch the developments in the UK lately and be able to do simple arithmetic.  Let me explain.

We see that Greenpeace is having its usual fun taunting Tony Blair.  As the local point man for the neocons, TB is busying himself (when he's not defending the Iraq War) selling nuclear power projects to the British public. The problem with the latest nuke plant plan is that it's going toward Scotland. 

Now, let's ignore the fact that the new nuclear plants are being built very close to sea level, something which anyone who has read 10-minutes worth of global warming reports would question because with glaciers melting, it's only a matter of time until sea level pops up ultimately over 200 feet.  As long as the earth's wobble doesn't get out of hand too quickly, and the big glaciers of the Antarctic don't slide off land into the water, the scheme could technically work - but only for a while.

No, the real story is this: "Natural Gas Prices in UK hit $29.30 per MMBTU." says the local petroleum exploration expert up in Addison (TX).  Check out this article  he suggests. Not only are the Brits running off the Peak Gas production from the North Sea, they have rising demand..  Our watchful friends in the petroleum business are understandably alarmed when they read how the more real the Peak is becoming, the slower humans are responding, not only in Britain, but elsewhere as well.

This brings us back to the point of this morning's mini-report: The problem for corporations which are always trying to make a buck (3's better) and even put a couple of pennies on the bottom line in order to justify huge bonuses, is this:  From the corporatist perspective, nuclear power makes great financial sense.  I mean, if you ignore Chernobyl and a few lesser incidents, the nuclear power business is not bad.  Darn graphite reactors, anyway.  (See: Riding through Chernobyl).

The real beauty of nukes (terrorists and graphite aside) is that they provide a marvelous concentration of capital, and as any long-time reader knows, concentration of capital is the Holy Grail of corporate organizations. The alternative, which the Greenpeace types and the few of us that recognize Pogo was right: ("We have seen the enemy and the enemy is us") realize is that conservation and a revamped sustainable lifestyle are the sustainable answer.

Such things are local, to be sure.  And, they are not very costly.  For example, we painted the house last year a few shades off pure while (Behr paints calls it parchment).  The house didn't need repainting, but compared to the former dark blue/gray color, it offers far less heat absorption in the summertime.  $50 investment and likely saved that on power bills last year alone.

As I'm working on my revised shop area, the south-facing sidewall will be 2X6 to provide for R-25 or better, and built out of recycled wood from a lumber crib that used to be in the shop.  A new roof will go on the house in 2006 and will be as close to pure white as I can find - because again, it will reduce the heat load.  Throw in some other low cost/recycled building materials, and we'll have a thermosyphon to draw air in from the cool north side and suck it out the hot south end, -- you get the picture.

While such efforts are fun (I love to build things) they don't do much for capital formation and profits.  The projects I'm describing are relatively low cost, individually actionable, and require little maintenance compared with the nuclear option.  After all, with enough nuke plant output to break down water, even the mythical hydrogen economy can be made to pencil out.

And that, my friend is why it's so darned interesting to look at what's going on in the UK with the North Sea fields going down the same backside of the production curves that Texas went through in the 1970's.  No, Texas is not out of oil, in fact the local E&P company just put in another slant rig operation a half mile from the house.  That's two in two years. But the decline in output has been relentless.

The problem is that all the capital formation in the world won't solve some of our problems, a point driven home by folks like Jim "The Long Emergency" Kunstler and Matthew Simmons. 

"Think global, act local" seems to make more sense than anything, at least out here in the hinterlands up the street from Rig 438. The mere fact that Simmons' latest presentation was to the Houston Renewable Energy Network, should be a major hint, even to the skeptical.  "We missed China [demand]"  was a lame excuse for lazy analysis' notes Simmons on one slide.

Ask yourself what Tony Blair is missing right now, today.

Greenhouse Progress?

Not really, although that's the spin as the US is telling the UN. One  thing the Bush crew is pimping is the notion that under Bush, the greenhouse gas emissions in the US have declined by 0.8% (8-tenths of one percent).

Here's the problem's real dimension.  That small decrease is likely, as I read the figures, more likely to be due to the export of manufacturing jobs from the USA to places overseas.  Just think: we could cut emissions dramatically if we could all work at home, spending our leisure time exclusively with NetFlix and FoxNews...but the real world has other dimensions to it.

What's really going on, at the macro level, is that with a huge number of US manufacturing jobs now offshore, the latest rush by the corporate folks anxious to get more work from humans, so they can skim a bigger portion for themselves, has been to offshore services. 

With little fanfare, the Government Accountability Office issued a report to CONgress (corpgress) on the topic Monday. 

• Potential impacts on the average U.S. standard of living: Traditional economic theory on international trade predicts that in the long run, offshoring is likely to be beneficial for the average U.S. standard of living; however, some economists have argued that offshoring could harm U.S. living standards if it contributes to the erosion of important U.S. industries, undermines U.S. technological leadership, or leads to a decrease in average U.S. wages. Underlying this debate are different predictions about what new areas of comparative advantage the U.S. will develop as globalization intensifies—that is, what new goods and services will be developed that are produced most efficiently in the U.S.—and different assessments about whether offshoring is contributing to downward pressure on U.S. wages.

Saddam's Trial

It was a short day Monday - the trial of Saddam Hussein heard from only one witness, and today we have rights groups concerned about the fairness of his trial.

The email around here is quite skeptical that Saddam is even really there.  One reader, noticing the look of Saddam doesn't match past pictures sends this:

The guy there as Saddam Hussein in Baghdad, isn't.

Jay Leno might as well be on trial for the crimes of Saddam Hussein.

Oh Yes, the World's Ending

That's the take-away from the latest Lyndon LaRouche interview - this time in the People's Daily.

It's just a matter of timing.

Correction

From Stephen Swaim:

George I got a couple of letters that the Hot Link to the WND article didn't work. I went back out to verify and somehow two extra numbers got added to the end. The link needs the last two numbers stripped off of it.

(I could swear I linked onto it via my e-mail before I sent it and this AM from your site ... but I must have been mistaken).

The full correct link is: http://www.wnd.com/news/article.asp?ARTICLE_ID=23063

Monday Nov 28, 2005

Gold's Move

There it goes again today, the price of gold going up. As we put bytes to phosphors and keys to clicks it's just 70-cents short of the $500 mark.  Where will it stop?  For a starting guess, you could put $800 in 1980 into the Minneapolis Federal Reserve Bank's handy inflation calculator (link down the left blue column a ways).  What you come up with is $1,889.32.  That said, don't forget the inflation calculator figures 3% for 2005, and we all know that it's running 3.9% year-to-date, so closer to $1,900 is our guess.  Regardless of whether gold passes the mark today, tomorrow or next month, gold is not going up - not really.  The purchasing power of your paper money is going down - that's the ugly truth that most economists dare not speak of openly. "Prices don't go UP, the purchasing power of money goes DOWN."  Now you see why to keep the game going, economists just wink and nod at each other and talk about prices...

Here's a dandy something to think about: From Robert T. Ely's "Hard Times: The Way In, The Way Out" which is for my money one of the real gems of Depression era economic thinking:

"The American people certainly do not need to be told to spend.  They are free spenders and too often exceed their income.  One of the troubles now is that we have had this orgy of spending, including excessive installment buying.  It is one of the causes of over expansion in the past, bringing us our present distress.  Many who ought to be buying things are now using all available funds to pay for things that they bought when we had this orgy of spending."

Seems timely to mention this, today being cyber Monday and coming on the heels of shopping madness weekend.

More on Hiding M3

This weekend over on our subscription side, www.peoplenomics.com, we venture out on a limb showing rather precisely why the Federal Reserve is so busy trying to hide M3 (the broadest of the standard measures of the money supply).  The reason?  Look at the divergence of M3 (and to a lesser extent M2) since the early 1970's:

With M-3 now approaching8-times the size of M-1, I can certainly see why the Fed would want to bury the number as quickly as possible.  More to the point, we can ask "What was the watershed event that happened in financial markets that might be be responsible for such a crazy move?  Two answers spring to mind:  First is the creation of the Federal Financing Bank in 1973.  This all but hidden federal outfit hasn't even issued a set of financials since FY 2002 as far as we could see on their web site (they did put out press releases until 2004), earning them our "Murkier than the Fed" award.  The other big driver was the huge increase in credit card use.  Yup, invented by most accounts by Diners Club in 1950-1952, cards caught fire in the 1970's and I'd argue that they've been a driver of "money creation" which has more or less escaped the Fed's control.  There's more for our Peoplenomics subscribers, but that's the dime store version.  (Subscription info).

All of this is background to what popped out of the mail yesterday - some real gems...

Housing Bubble Bets

For a long time, I've had the pleasure of corresponding now and then with Stephen Swaim, both an attorney and CPA, who I bumped into at the old University of Colorado Long Wave (Econ) discussion group in the mid 1990's.  With his kind permission, here's an excellent perspective on the housing bubble and what comes next:

George,

As you know it has long been my contention that the real estate cycle peaks and valleys are MUCH more important to the US economy than the stock market's behavior. Back in the days when the Colorado Long Waves list was very active, prior to the bubble bursting in 2000, I pushed this concept ... but as you may recall my theories were dismissed my most on that list since they were convinced that when the stock market bubble burst the US economy would drop like a rock tossed off Mt. Everest.

Well, here we are 5 years after that stock market bubble burst and SURPRISE (but not to me), the economy has NOT tanked (yet). Instead it is acting just as I expected it to since my work indicated that we still had a number of years left before the real estate cycle was due for it's bubble burst.

Why do I now bring up this piece of ancient history (other than to gently remind those who disagreed with my work/conclusions back in those days LOL)? I bring it up because my work indicates that we are now approaching the day of reckoning for the Real Estate Bubble.

As I stated back in those good old days (1998-1999), my work has long indicated that the US economy should hit a multi decades peak sometime in the time window of 2006.25 to 2006.75 plus or minus a few months based upon my projected real estate cycle peak. Now I know that is different from the window indicated by Marty Armstrong's cycle work (which has been amazingly accurate for those who have bothered to follow it), but at the moment I see nothing to dissuade me from continuing forward with my own analysis even allowing for Mr. Armstrong's spectacular success in his cycle work. (it also differs somewhat from the pioneering work done by Edward Dewey of the Foundation for the Study of Cycles wrt to Real Estate, but the reasons for that are too long and complex to go into in this short letter).

As I was contemplating this projected economy peaking period over the Thanksgiving Holidays I did note a curious item as I was reviewing my notes. This second item may merely be coincidence, but even if that is the case it is still a coincidence that we should pay STRONG ATTENTION TO.

That Coincidence? Oil and the timing of many of the geo-political upheavals that surround it over the last 70 years are very very closely tied to the particular Real Estate Cycle that I follow.

Oil Troubles seem to have a striking similarity in timing to the Real Estate Cycle Peaks, being on nearly an identical timing schedule but mostly lagging the Real Estate Cycle Peak by about  .5 to .75 years (but with a somewhat wider spread from the exact predicted date than occurs with the Real Estate Cycle Peaks themselves).

Based upon my analysis of Real Estate ... IF Oil is again to have major problems (availability/pricing) the ideal center point for that to SUDDENLY occur is late 2006 (2006.75) through mid 2007 (2007.50) give or take and extra .5 year.

While some people may wish an EXACT date for a projected problem to occur (ie: my spread is too wide for their tastes) unfortunately when dealing with multi decade cycles such exactitude is imo NOT possible. The normal spread for the oil problems to occur generally deviates from the ideal by .3 years as one goes from one cycle to the next, but depending upon how you measure the data over the last 70 years the deviation has possibly been as great as .9 years.

It is important imo to thus pay attention to this upcoming DOUBLE WHAMMY to the US economy since this should be the market manifestations of events that will push the US economy over the edge of the abyss for the longer term economic cycle that we are in.

Why do cycles work? That is something that has perplexed those who have studied them for decades. Without getting into that debate I will just note that they DO generally tend to work, and for my real estate cycles they work surprisingly well.

Since Oil apparently is going to be a key marker element in my projected transition for the US economy I have put three links below about Oil that everyone should read. Of the three Oil links the first one, which discusses of all things WW 2 and how Oil drove the Japanese to attack the US, is possibly the most important one for your readers since many people are totally unaware of the role that oil played in that war (and if you read it you will note it's current similarities and potential applicability to the current world situation).

I have also put at the end a link to a recent column by Gary North about what he believes is the upcoming Real Estate Bust and it's secondary ramifications. For those of you who are old enough to have watched real estate busts unfold in the past his secondary ramifications comments will ring accurate.

Best Wishes,

Stephen Swaim

A little history on how "Oil" was one of the principle driving forces in WW 2, both in driving the Japanese to attack the US and in driving the strategic plans and battles of it's various players.

http://www.wnd.com/news/article.asp?ARTICLE_ID=2306312 

History of the 1973 Oil Embargo

http://en.wikipedia.org/wiki/1973_oil_crisis 

Hubbert Oil Peak Theory

http://en.wikipedia.org/wiki/Hubbert_peak_theory 

Gary North's Comments on the upcoming Real Estate Bust

http://www.lewrockwell.com/north/north416.html

Crudele Unleashed

As president (and lone member) of the Texas Chapter of the John Crudele (NY Post) fan club, I'm pleased to report that NY Post has awakened to the fact that Crudele has a following.  He's now doing an advice column in the Sunday Post.  You can send your financial questions to him at Jcrudele@NYpost.com   Good move on the Post's part...

Saddam's Trial

First witness was heard from today - amidst very tight security both for Saddam and the lawyers in the case, a couple of which, as we mentioned before, had been assassinated.

Bordering On...

...ironic?  U.S. Border Patrol uniforms that are made in Mexico.

Global Warming: Faster and Slower

What's faster is the rate of global warming.  What's slower is the world's response to the obvious problem.

The drought continues to impact American farmers - with tree farmers getting hit hard. 

Here at the ranch, we're still in a drought. Although we had a few drops Saturday and Sunday, we're at 23.15 inches of rain compared to a normal 40.03...so 57.8% of normal is not much - and no more in sight till late next weekend again. Technically we're in a severe drought according to the drought monitor map.

News from Elliott Wave International

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I only put up one chart a week as my "freebie" site. There are several more weekly charts including our Global index, the Dow of today versus the Dow of the 1929-37 era, and how program trading is going.  To get these charts plus the very serious minded weekly analysis piece, please look at subscribing to http://www.peoplenomics.com/subscribe.htm for the low $30/year cost.

Write when you get rich,

George Ure, The People's Economist