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"Standup Economics" This economy is a what? |
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Panic Next Week? In spite of the headlines that the "Market Steadies" and "Stocks End Mixed after Raucous Week" my money is still on the downside going into next week. As I explained yesterday, the reason is the other shoe has yet to drop - when someone besides me (and a few executives in the banking world) gets wind of all the other places besides hedge funds where the 'toxic waste' that masquerades as investment grade paper has landed, it won't be pretty. You're not yet hearing about the write-downs in financial positions that will come as pension funds and college endowments are forced to "fess up" to their vastly overstated holdings.. --- Of course, they won't be alone. The SEC is launching an inquiry into the mess, but what they're likely to find is just what I described on the Steve Quayle radio show last night: A game of "hot potato" with plenty of blame for everyone:
This questionable paper was then sold to investors all over the world. And you wonder why Hank Paulson has been going to China on bended knee begging them to buy our paper? The reason is that if the world's investment community doesn't buy our paper, then the party is over for US financial markets and we will pick up with a Dow of 7,500 which is where we were in late 2002-early 2003 when house flipping and refinancings because the "New Bubble" helped by then Fed Chair Alan Greenspan pimping 'the highest rates of home ownership in history" - a mantra parroted by the Bush administration with no thought as to whether it would be sustainable. Well, guess what? It's not.
So, does the People's Economist believe the crawlers on TB reassure that the Bernanke crew has things "contained"? You had a drug test lately?
Sorry to say, this is late-stage capitalism eating its own offspring. The under-funded pension funds who were looking for the easy way out of their obligations are part and parcel of how the 300 richest families in America plus maybe the top 100,000 wealthiest players in this crooked game of financial fraud are systematically stealing the life savings of a whole generation by using greed, pure and simple, ramped up to unbelievable heights.
About two years back I told a then-colleague that I didn't think refinancing his home to put into a new business venture would be a good idea. "You mark my words," I told this fellow, "This will all end very badly and you'll wake up one morning to a phone call from a bank wanting you to pay down your loan so that the bank isn't 'upside down' on your note. "Oh, that won't happen," he assured me. Wanna bet?
The reason that a "conventional" real estate loan with a 20% minimum down payment got to be called "conventional" was because time and experience had shown that people won't walk away from a home where they have a lot of "skin in the game" in the form of personal equity. But now, as the housing crisis deepens, few in the mainstream financial media are laying it all out as clearly as they should because the news isn't just bitter -- It has the potential to herald the onset of Depression II in America.
With that will likely come social pressures like you've never seen, along with retribalization as affinity groups get together and reconnect to work on common goals. The Illuminati and their Wall Street proxies have no idea how wrong they've judged things. Yet.
My new personal strategic plan to ensure success and survival in the turbulent times ahead boils down to equal amounts of ammunition, ounces of silver, cash on hand, and pounds of stored foods plus consumables like toilet paper and paper towels. 5,000 of each would be a dandy position to aim for. But, there's no point worrying about it. Panic won't be showing up in newspaper headlines for a few days.
When up to a third of a trillion dollars being dumped into financial market's in 36-hours doesn't stem the tide, even the financially ignorant can sense something has changed. That's pouring money into the financial system at a rate equivalent to all of Canada's Annual GDP every four days. And what did we get? A 31-point Dow loss anyway!
Bread and Circuses! HDTV and Debates! It's always the same distractions at the end of empire.
Immigration Firings Lots of employers are whining about new rules that will hold employers liable for hiring undocumented workers. Well, is is a felony to be in the USA illegally. Or, am I the only one who remembers that?
Oil Rush Now we read how Denmark is running to map out their piece of the polar region. You'll remember about a week back, Russia started exploratory diving at the North Pole looking for oil or anything else in the way of resources.
Food Riots This is really an important story because we're likely to see a lot more of this kind of thing in the coming yet if the predictive linguistics boyz are right. The short term story is headlined "Flood victims class with police in India - 30 hurt". But the real story is what happens to people when Terra intrudes, as it has with the flood victims in Asia - and government doesn't effectively provide for its people.
Wheat Forecast Lowered Meantime, the predictions in the linguistics that there would be food problems/shortage ahead here in the USA move another step closer with Winter Wheat production estimates being lowered. And no, I wasn't kidding when I said on Steve Quayle's show last night that Oklahoma farmers were scrambling to find seed wheat because of low head weights on their crops this year.
Gas Station Closures Say, any chance that Big Oil knows what's coming for the economy? This email from Ireland this morning has me wondering:
Yeah, damn interesting question... Comments? Don't forget, the US is on the verge of energy panic now because of shrinking output from teh Mexican giant Cantarell field. Can you say "Restrictions on travel"? Draft Trial Ballooned Of course, with all our loyal youngest and brightest off in Iraq and Afghanistan, the Bush administration may run out of manpower. Especially if civil disorder comes a calling in our homeland. So what to do? Trial balloon the return of the draft. Don't rethink the assumptions, just keep going down the wrong road father...
Peoplenomics: Collapse Kit, Anyone? It's been called the 'derivatives bomb" and everyone is hoping that it won't be going off any time soon. But, with the collapsing in the mortgage obligations market, one can never be too certain of what's ahead. The choices are basically shelter or ride things out in place, or go before the crowd. This week, a short excursion through the media hype to rethink our philosophy of being "ready for anything" with some updated options for bugging out. More for Subscribers Subscription Information
"No Incumbents in 2008" Bumper Sticker To get your "No Incumbents in 2008" click here. They're just $5. And no, that would not keep Ron Paul from running for the White House - he is not an incumbent there - having never held that job before, got it?
Viral Marketing Reality is contagious - at least I hope so - so please tell all your friends that you read UrbanSurvival or Independence Journal, or even our Peoplenomics newsletter. That way, more people will become aware of what's going on in the economy, and with more smarts, maybe we can wake up America. Click here to shake them from their sleep.
Lower Your Cost of Living Order our handy ebook "How to Live on $10,000 a year or less - and learn to live like a Third World person now. It's coming anyway, with big job layoffs this summer - and by ordering now, you can beat the rush...You may have more time to read this fall if the economy falls apart as I expect...
Friday August 10, 2007 Update: Fed Gives Panic Money If you read this morning's report, I explained that the reason I have my gold call position is that it's like setting a trap line for the herd. Quite predictably, the Fed this morning announced that they were opening the discount window - a move which I'd label and analogous to printing free money for the bankers to keep up appearances that "it's all good"...
As the web bots are presently warning in the data: "Don't Panic". Seems the Fed isn't paying attention to the advice. And, of course, as they do this, the price of gold pops up... Yup, right according to plan.
Source: Pension Funds, College Endowments Next? Let me start out this morning's review of the markets - which appear on the cusp of entering the second big leg down of Depression II because of the evolving question over valuations of collateralized debt obligations of all sorts - with reports from two sources which are pretty credible reporting that college endowment funds and pension fund exposure to the subprime market will likely surface next. This is extremely important in the context of our long-held belief that if the government says "Don't worry" - what a sane investor would do is worry like hell and stock up on Tums. And that's pretty much what happened yesterday when a rather weary looking George Bush tried to assure the global markets that 'it's all good.' Well, it's not.
First, the email from a well-placed confidential industry source who offers this (I've added emphasis to some key points):
OK, here's the opinion part: We know from the predictive linguistics of www.halfpasthuman.com that what we have seen in the markets this week is not even the start of it. I don't usually front-run the web bot reports, but the last of the ALTA 308 run may be posted late today or Saturday, but Cliff was kind enough to let me share part of an email this week.
In a telephone conversation, Cliff lets on that we might see some 'leading edge' of whatever arrives next Monday-Tuesday appearing in the headlines/media this weekend, so my bet is that someone besides me is going to figure out that yes, some college endowments and under funded pension funds have some unreported exposures and when people begin to get sense of how really big this mess is, the concern being expressed by the markets this week will be heading for panic in coming weeks. But, don't say we didn't warn you - and in more detail than most about the sequencing of things. --- A side note: The next web bot run - which I've explained to people is sort of like a time machine/time viewer that uses language shifts on the internet to predict future developments based on some highly evolved concepts that Cliff worked out in his days as a SQL guru - will be getting underway next week. So that means the next actual data run should have its first posting (likely ALTA 0508 (meaning the data focus will be out to May 2008) will likely be two weeks from now for Part Zero - which will be the review of ending model space for 0308 and the ground/foundation layering for 0508 and then Pat One of the next series a week after that. Subscription information is available on the project site, www.halfpasthuman.com but first time participation is $200 for a series of six or seven reports over a 6-8 week period. We specifically don't want people subscribing who have incomes less than $100,000/year and substantial assets to protect and Cliff has been kind enough to let me post pertinent highlights of 'things coming" that will impact normal/regular/not rich humans - such as all our talk about the flood meme, secrets revealed, and now "Don't Panic - more's to come" about the markets. --- This weekend, subscribers to my www.peoplenomics.com reports ($40/year) will get more pointers on how to weather this financial storm which appears to be still in its early stages. You might recall a few weeks back I started a little subscriber project called IMP - the Instant Millionaire Program - where the idea was to run a small amount of money (a thousand bucks in a commodity account and about the same in a stock account) and see how even these 'terrible times in the markets' could be profitable if a person was willing to take high risks.
I also reported to you that I had bailed out of WAGHI (Walgreen 45 calls for August) as a small $100 loss ($10 each contract on 10 contracts) so that I could roll into a short position on the S&P on Wednesday. Not that exiting WAGHI was a good decision, though: you'll see that the option traded as high as $270 yesterday (in options, you multiply the quote price times 100 because the quote is per share and the option represents 100 shares, so a $2.70 option costs $270, get it?). But, I'm all about risk - and while my 10 WAGHI options would have been worth up to $2,700 intraday Thursday (on an initial $900 speculation for 10 contracts at $90 each contract), I wanted something with a broader base than a single stock, hence my move into the S&P put.
That said, I can't really complain too loudly about how the strategy has played out since I entered the S&P put on Wednesday. My one-day return looks like this:
In other words, my speculation of $920 was up to $2,140.00 in market value as we go into this morning's session - and if we have another down day for the markets - which I'm expecting - then the value of this option should pop up another few hundred dollars.
Again, Peoplenomics subscribers will get to look at the chart, but this decline so far seems to be tracking the course of 1929 and 1987, so no reason not to expect a close today in the Dow 12,900-13,100 range. But, if the linguistics are right, next week will get even more brutal, so having peeked into the 'time machine' I won't be pulling out trying to snag profits until probably late next week, unless I hit one of my technical triggers.
Why share all this? I suppose it's a challenge to other economists/economics/business writers to show us your trades. I'm probably one of the few nut jobs who's publicly posting actual trade information from my personal account through this period.
IF the predictive linguistics are anywhere near right, the really pessimistic outlook would be that we have a 1987 or 1929 type decline into mid September, and if that became the case, the upside potential of this single option might be in excessive of $20,000. Or even $30,000. But, don't try to parallel trade me! This position will probably lose money! I only play options because I'm too lazy to go over to Boozier City, LA, or Las Vegas, NV.
THIS IS NOT ADVICE TO BUY OR SELL A PARTICULAR SECURITY. READ THIS SITE'S DISCLAIMER AND SEEK PROFESSIONAL ADVICE BEFORE YOU INVEST. INVESTING IN BOTH THE STOCK AND COMMODITY OPTIONS I PLAY DOES INVOLVE SUBSTANTIAL RISK AND THIS APPROACH IS ALWAYS AT RISK OF LOSING ALL, OR PART, OF THE INITIAL INVESTMENT.
I don't mind showing you that there are ways to make money, even if the gates of hell are opening in the financial world, though.
Someone asked me about gold - and why I have October $750 calls on the commodity side. Answer: I'm patient. First I'm betting on a stock decline, then panic, then flight to quality. Sort of like a trap line for a stampeding herd.
I'll be on Steve Quayle's radio show tonight talking about the market action this week and what might be ahead. If the market drops 12,900-13,100 weekly close range today, we'll be on a very dangerous parallel track to previous major declines. And my projected bottom - if the track continues - would be about where the web bots have been saying - September 18-19 kind of range.
Hell's Other Gate To look ahead, and see the potential for another massive decline next week doesn't set us up with much for September. The question which comes up next is "Once it's generally realized that some college endowments and pension funds may have some exposure to the 'rotten loan bundles' and [panic] may visit, what is going to drive down shares in September so much? Maybe there's a hint of the dynamic in this email received from another reader:
This is precisely the kind of behind-the-scenes development I would expect as a presently invisible 'employment crash' starts working its way to the surface. I expect the unemployment rates will be soaring - which is why I send a hundred bucks to the local food bank when I can. (You?)
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