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Here in The Great Derailing

No, this is not a Saturday update, which I wasn't going to do anymore, so I could get more done around the ranch on weekends.  Nope - this is...er....a hallucination.  Not unlike the markets, come to think of it.  Step over to the white board, and let me show you what's going on at a macro level:

 

 

OK, pencil ready?  Here come the lecture notes, line by line.

 

"We begin with the 'red line' - which you can think of as the street value of your home.  Unless you have been one of the lucky few who had the foresight to buy rural property which could support itself in 2002 or earlier (...ahem, I told you I was doing that, right?  And you remember we live in the outback on a ranch, right?) your home's actual value has probably dropped (hand me a dart?) 20%, or so, in the past couple of years."

"Next line is the 'green line' and this represents the total amount of fiction dollars which the government has been printing up to keep everything afloat lately.  It has been increasing of late, and although there's been a little waffling on whether the automakers should be 'saved' (which is why the line flattens out - because so few "leaders" 'get it' - in short order the problem self-solves because of the magic of compound interest....and the amount of money (printed and notional/digital) will begin to rise dramatically."

 

"The black line is therefore the aggregate of deflationary forces (falling asset prices for things like houses and used cars) combined with the inflationary forces of things like wildly unjustified bailouts of anyone with a strong lobbyist/law firm that can pass out the favors on the Hill."

 

"When the price of gold jumps $57 in a single day, as it did Friday, that may indicate to the aware observer that we are approaching some kind of 'turn' in the overall Deflation/Inflation Aggregate, but we're not totally sure yet."

This is, in simplest form, about as eloquently as I can do at this hour on a Saturday morning.  That high mountain Nicaraguan fair-trade freshly ground high octane stuff hasn't quite kicked in yet.

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The 'Art of Politics' deserves a little focus in here, because most folks look to leaders/saviors to come along, and like a spritz of Bactine on a boo-boo, they'll make things all better.

 

The truth, well disguised on occasion, is that the real workings of politics are thus:  The politicians take money from the workers of the world, ruminate on how to spend it so it benefits their buddies most, and then make us feel grateful when we see some small bit of it returned.

 

Pardon my early morning cynicism, therefore when I read how the president-elect is working on a grand, "bold" the headlines call it, 'economic stimulus package'.  Some of the people, some of the time, eh?

 

Don't get me wrong - I'll be grateful for whatever of our contributions to this country-wide money laundering deal, I can get.  But could we drop the pretenses and just get on to calling things what they are?  The current economic meltdown really is the Second Depression, and it's going to get worse before it gets better, mostly because markets always overshoot in one direction, or the other.

 

In terms of how to make a buck - or hold on to purchasing power - seems the things to be investing in shortly will be traditional inflation hedges (gold and silver come to mind) as well as 'liquid gold' - something which even the dumbest pirates off the new Barbary Coast (Somalia) have figured out; they've pulled in $150-million dollar so far this year says Kenya's foreign minister. 

 

Before you start to asking "Got a boat I can borrow?" be advised that an Islamic group in Somalia is now on the trail of pirates, too.

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When I read headlines today like "Gold surges to top $800 on safe-haven buying" I have to marvel at what the term safe-haven means.  Does it portend a grand new Depression-Era-Rerun social program that will mimic the Civilian Conservation Corps of the 1930's?  Probably.

 

"Obama Targets 2.5 Million New Jobs in 2-Year Economic Stimulus".  Yup, sure sounds New Deal-ish to me.

 

Not risking too much change, the Obama crowd has still been beating the 'security' drum a little loudly for my tastes, and like the Jacksonville Patriot website, I'm wondering "Why does Obama want national security force?"  I could get behind a national infrastructure redevelopment plan that would put many lambdas of fiber on my desk, but 'security'?  Makes me nervous...sounds oh, kinda like an East German Stasi plan....You spy on me, I spy on you, and time now for a strip search...oops!

 

No, thanks:  I'll take infrastructure rebuild and whatever's behind curtain #3, please...

 

WHAT?  Another bank behind curtain #3?  OMG when does it end?  Not yet...

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Next at the trough for more of our tax money could be Citigroup, say reports after the stock was halved this week.  Lemme see: they have two trillion dollars of assets and can't squeak by?  Anyone talk to them about selling some ASSets? Jiminy-Christmas:  Average American family facing foreclosure (and this is before January's National Layoff Festival shows up) gets tossed out on their ear.  Citigroup with a couple of trillion gets saved.  Who loves yah?  Who doesn't oughta be pretty clear...

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Oil meantime, dropped 13% for the week after ending a little higher on Friday.  Does this mean that the precious metals may outperform oil?  Perhaps in the early going on the right side of my white board scribblings, but maybe by next spring, the amount of inflation sloshing through the system will turn around those assets which are presently in decline.

 

I reckon at some point, inflation will begin to press up the price of oil. Whether it's demand, or the pending collapse of the US dollar, makes little difference to me.  The one 'good' thing about the current economic mess we're in is that it has slowed the pace of Peak Oil...paradoxically buying humanity a little more time to come up with workable solutions. 

 

No, doesn't mean the world will escape famine - that comes along with Depressions.  Like the great Ukrainian famine of 1932-33 which cost about 3.5-million lives.

 

You can click over to Google's Trend Lab, put in the word "famine" and see how it has been fading from the public mind since hitting a peak in 2004.

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We can all look forward to Monday, I suppose - which is when the new administration will roll out its economic team, and as reported in part by Alan Greenspan's wife, Andrea Mitchell, over at the MSNBC website, that's likely to be New York Fed president Tim Geithner.

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Of course, you probably don't have enough horsepower to hire a top-notch Washington law firm which is really a front in some cases for a lobbying business.  Worth reading: Lobbyists in Transition in the Washington Post this week.

 

Am  I kidding about how Washington law firms are just 'fronts'?  Gee, I dunno.  Did you read the piece in the AmLaw Daily "The Law Firm Lobbyists Behind the Big Three"?  You tell me.

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Nice to wake up on Saturday morning to discover that no, the world has not suddenly sobered up, renounced unsupportable debt, adopted sound money universally, or announced plans to improve the lot of every human on the planet with a combination new infrastructure, free education, a replacement for bogus economics, and something instead of a developing Depression.

 

Good thing, too.  Otherwise, I wouldn't have much to write about next week, and you wouldn't be trying to figure out how to put food on the table and hang onto the house at the same time. 

 

The National Layoff Festival

Lots going on in the preliminary rounds:  "Associated Press to cut 10 pct jobs in '09: Sources".

 

Forbes has started up a "Layoff Tracker" page and so far this month 90,078 have been laid off at America's 500-largest companies.

 

And if a picture's worth a thousand words, here's another thousand on topic:

 

Perpetual War Department

The US is planning to pull out of Iraq by 2011, but seems not everyone is Iraq is happy about that.

 

Biggest problem:  How to create jobs for all those who could be impacted.  Doing what?

 

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Coping: How Smart Are Pets?

I couldn't help but notice a page headlined "Safe Gerbil Toys: Providing Mental and Physical Exercise for Your Gerbil."  Seems to me they're already smarter than us, by some fair distance.

 

Think about this:  They usually get a couple of meals a day, unconditional love provided they don't mess in the house and a few other easy to learn rules.  They get free healthcare, have chauffeurs, occasionally go to the beauty shop. 

 

They also don't worry about things like style - nature has provided them a warm coat which changes a bit by the seasons.

 

More in line with the focus of this site, pets don't have a monetary system, elections, or disagreements over religion.  Most dogs belong to the Bone religion, while cats belong to the Mouse religion.  The cats are happily into drugs (like catnip) without fear of imprisonment.  Birds have already beaten humans to Superman status - they can fly.

 

Moreover, I was noticing this morning that our largish, all black cat Zeus (a kind of panther lite fellow) doesn't seem to watch the updates on CNBC or Bloomberg with the same enthusiasm I do.  Try though I may to explain that paper with zeroes is as good as a mouse, for us humans anyway, he continues to counter that "Dumb human: you can't eat paper, but I can eat mice" and other select caticisms.

 

With their humans more often home Saturday & Sunday, pets have pretty much mastered the 2-day work week, too.

 

Next time you take an IQ or aptitude test, no matter how high your score, I'd venture most animals are way smarter than humans.

 

Nice to Have Friends

A reader, realizing that I would probably prefer to sit on my butt and write instead of doing real work sent this:

"Hello Mr. Ure,

Get the solar panels done this weekend!"

Tell that to the project manager!  She's got me loaded up with kitchen remodeling details this weekend!

 

We have company coming for Thanksgiving - flying in from up North.  As a result, Elaine is in a "We must get the kitchen cabinets built and the new floor in this weekend, and I'm getting new carpet in Tuesday...so you've got to get the cabinets finished Saturday..."  Yada, yada...

 

The really important projects, like the solar panels, inverter, the ham radio wire antenna launcher kit and that new ultra efficient wire antenna?  Ha!  Not gonna happen, dammit...

 

Ham Radio Challenge: Antenna Contest

Say, if you're an electrical engineer, here's a challenge for you:  If youi had sometime approaching infinite space and should mount a huge wire antenna about 30'  off the ground over all of it, what would that antenna be?

 

Best one I can come up with for wide ranging (160-10 meters) antenna would be a 570-foot loop mounted horizontally (the vertical supports would be too expensive, LOL), feed with a 6:1 balun near ground level feeding a 33' section of twin lead to the middle of a leg feedpoint.

 

Got any better ideas?  This penciled out to about 10.6 dbi gain at a 35 degree takeoff angle (toward the horizon) on 20-meters.

 

Open to suggestions, though... 160, 80, 40, and 20 are my favorites, broad banded is best...send the EZNEC files if you can, too...

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"Live on $10,000" Updated

What?  You haven't ordered the ebook "How to Live on $10,000 a year -- or less"?  Suit yourself.  We're all going to live it shortly, anyway.  I just thought you might like a heads up by reading about how to do it before you get pink-slipped.  But, suit yourself OR visit www.liveontenthousand.com or, click one of the following button:

 

 

 

Yep - still possible.  I also took a bit of additional material that was pertinent from recent issues of Peoplenomics and included them.  The whole thing runs about 65 pages, but it gives you a vision of how to not only live on the aforementioned dollar amount, but also how to migrate up the economic foodchain if you make a little more than that and do some active savings...  Click here for the page with more details on it.

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 Last week's report is here.    For back issues of this site, click here.  (Goes back to 1997!)

 

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Friday November 21, 2008

Two Quakes in Three Weeks...

I had a chance to talk with my colleague Cliff of www.halfpasthuman.com about the major earthquakes that show up in his predictive linguistics work for the window around December 10-12 for a first major earthquake and then a couple of days later, perhaps as late at the 15th for a second large quake.

 

I know, I know, you come here for the insightful commentary on the financial markets, so what is this earthquake stuff all about?  Well, Cliff's built a rickety time machine - that works by sampling huge numbers of posts on the internet, and then looking at the change in language which seems to have pretty good predictive powers in terms of spotting what's coming.

 

I wanted to scribble down (in public, no less), as much as I could because earthquakes are an area of archetypes that are pretty darned clear in the language-shift work.  Not only did we pick up the Banda Aceh quake five months before-the-fact, but more recently, earlier this year, we had very good insight into the Chinese earthquake (7.8-8.1, depending on which source you cite). 

And, when I say 'good insight" I'm not kidding.  Just go back at read the posts that we put up  three days before that event by clicking here.

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The 'details' on this kind of thing are always sketchy; sorry we can't get down to the specific city. At the moment, however, it looks like at least one of the two quakes will be inside the band 32 to 36-degrees latitude and that one of the quakes will be noticed as having 5 pretty distinct/large aftershocks of some consequence.

 

Moreover, one of the quakes (the first?) will be associated with fertile plains where things are grow, while the second will be associated with "dancing mountains" although not sure (again, this is a new science) which of these will come first.  Seems Pacific Ring of Fire, in one case, too.

 

One of the quakes will also be noted for causing "isolation" to the point that other countries will be sending aid - and it's possible that the quake with the isolation could be U.S. centered.

 

There are several competing scenarios that seem to fall out of interpretation of modelspace.  The main feature is that first one quake, then the other within a few days later.  There's also something of a hyperdimensional physics relationship.  Such that wherever the first quake is, the second one will happen in antipodal fashion, but not necessarily antipodal in a strict plain/ball geometry kind of way; rather it seems to be the kind that advance hyperdimensional physics would lay out.

 

If you click over to a short explanation of Icosahedrons in geometry, look at the drawing, and picture sticking the round earth inside of it, it's like the antipodal quake is likely two happen near one of the vertices nearest antipodal, but it may not be the precise singular antepod, it could be one of the other nearest it.

 

Now, some of the possibilities, just to give you a sense of how it could play out...

Could be something in North America, Hawaii, or Alaska for #1 (with a lesser chance of the Pacific Northwest)  In this case, the antipode might be India/Pakistan. Less chance: Back to China for another big one.

 

Another possibility would be the first quake being in Indonesia, in which case antipodes of California,  (or in the band Texas over to New Madrid's southern reaches) Mexico, or Ecuador might fit.

 

Or, it might be something like Chile for one, then China. Or, it might be China first, then in one of the 'Stans.

Sorry, until we get to within 3-days, the quakes are still in the 'firming up' in modelspace mode for now.  Sometimes, once we get inside 3-days, things get much firmer, so please drop by around December 8-9-10, and let's see if the resolution gets better.

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Meantime, we found it perhaps significant that the US Government's FEMA folks are waning of a potentially catastrophic earthquake over a similar kind of range (!).  Called the "NMSZ" - for New Madrid Seismic Zone" the timing, because of proximity to Cliff's work, is a little worrisome to say the least.  Here's the FEMA press release out Thursday:

"Areas nearest NMSZ would experience widespread and catastrophic physical damage, negative social impacts and economic losses; states include Alabama, Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.

WASHINGTON, D.C. -- The Department of Homeland Security's Federal Emergency Management Agency (FEMA) today released a report, Impact of Earthquakes on the Central USA, which presents the findings of a two-year study on the impact of a 7.7 magnitude earthquake on states in the New Madrid Seismic Zone (NMSZ). The study was conducted for FEMA by the Mid-America Earthquake (MAE) Center at the University of Illinois in partnership with the Central United States Earthquake Consortium (CUSEC), the U.S. Geological Survey (USGS), the U.S. Army Corps of Engineers (USACE), and George Washington University's Institute for Crisis, Disaster and Risk Management.

The study, the first of its kind to be conducted on such a large scale, is part of FEMA's NMSZ Catastrophic Earthquake Disaster Response Planning Initiative. It is primarily intended to provide scientific data upon which to base response and recovery planning for the devastating earthquakes that have long been predicted for the New Madrid region, which includes areas of Alabama, Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee. The study is available for download at www.mae.ce.uiuc.edu,  click on the second small screen on the left or wait for and click on the headline "New Comprehensive Report on Earthquakes in the Central USA."

According to the study, areas within the NMSZ would experience widespread and catastrophic physical damage, negative social impacts, and economic losses. Three different earthquake events were considered, one for each segment of the New Madrid Fault - northeast, central and southwest. For example, an earthquake event that occurs in the southwestern part of the seismic zone would cause significant damage in northeast Arkansas, northwest Mississippi, western Tennessee and portions of western Kentucky, and is likely to cause damage to the greatest number of homes and affect the largest number of people. The study notes that the total economic impact of a series of NMSZ earthquakes is likely to constitute the highest economic losses due to a natural disaster in the United States.

The report provides state-specific information, including damage levels specific to building and occupancy type; essential facilities; highway bridges; electric power, potable water, waste water and communications facilities; and pipeline damage where appropriate. It also identifies the counties that could be expected to sustain the most damage in each state and provides information on potential interruptions of utility services and impacts on essential facilities, such as hospitals, schools, emergency operations centers, and police and fire stations.

The assessments provided in the study have been used to facilitate earthquake response operations planning sessions in 30 FEMA-supported workshops, conducted with the 747 counties and the eight states in the NMSZ. The workshops were designed to support the development of integrated state and local plans for response and recovery operations following a catastrophic earthquake. Participants included more than 3,800 representatives of federal, state, tribal, local and county emergency management and responder organizations, as well as the private sector.

We find it quite curious that while the linguistics have been pointing at the Dec 10-12 window for almost a year, that FEMA's issuing impact studies. 

 

Oh yeah: Two other items. Double-check your food/water plans so that you have at least a month of supplies.  Apparently, wherever at least one of these things pops, there will be foreign aid - and even hints in the data that the area where the isolation is greatest seems to be inside the USA and that we (the US) will be receiving offers of aid from other countries.

 

The other thing to do is to read up on the so-called "Triangle of Life" debate.  Click over to the "American Rescue Team International" web site and you can find out more about it.  A little history of ARTI here - seeing as it was formed by Doug Copp in the aftermath of the Mexico City quake in 1985.

 

Since, linguistically anyway, something that big (or damaging) is in the cards for next month, a little review seems in order.

 

Not everyone agrees with the "triangle of life" including apparently the USGS which asserts on its site that:

 "Drop, cover, and hold under a table or desk is still the best recommendation, according to the American Red Cross. "

Which side do I take in this?  Well, after about 5-minutes with some 2-by 4's in the shop, I'm a triangles guy.  Four-sided 'boxes' were not as stable as a triangle when you throw a lot of weight on top of them.  My opinion, so don't send me 8-gazillion emails on this, please!

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Oh and we do hope to be completely wrong on this!

 

Slope of Dopes

Since this website has, since the mid 1990's been writing about how the Kondratieff Longwave of economics is about to swallow the whole world and land us in a New Depression, I know it has been easy to get distracted into the serial distractions designed to keep that from becoming apparent.

 

It was clear to most level-headed people that in the wake of the Internet Bubble collapse of 2000 into 2001 that we were on the slippery slopes of disaster.  But, turn on a couple of wars, have a whole new industry invented overnight based on 9/11, then serial bubbles in markets and housing, and presto!  No more Depression.

 

Except, not quite.  We are still getting one anyway, it's just coming at us a little differently than expected.  What we are getting this time around is deflation first and then inflation to follow.

 

Here's how the decline from the 1929 peak and the decline from our most recent market peak are comparing:

 

As you can see on this chart, a 'likely' track for the market might be something like a recovery today to maybe 7,853 or 7,927 to close the week, then a burst Monday to a new low and then a close next week around 8,262, if I were to put bets on it.  But the dynamics are changing and not for the better...

 

But it's not worth the worry, because we will not replay 1929 exactly so who knows.  Still, ugliness through the 24th, seems there.

 

I trust you saw the CNBC video of Peter Schiff, who called the collapse in 2006 - similar outlook to mine.  The video here.  "Capitulation - if we get it - is years away..."  Sounds familiar...

 

But, if you doubt Schiff's outlook, or mine, just read the National Intelligence Council's Global Trends 2025 report which reaches the same conclusions - just a little slower about it.

 

And while Kondratieff's long economic cycles work outlined where we are some 80-years back, the Pope apparently saw this coming in a 'prophesy' in 1985, or so it's claimed.

 

Sick Bay

U.S. Attorney General Michael Mukasey collapsed while giving a speech at a black-tie affair in Washington last night.

 

Adventures in the Checkbook Republic

I don't suppose you'd need to be told this, but it seems that some Hollywood types, in granting 'access' to pictures of themselves collect positive media coverage promises into the future.  Most recently, the story of "Angelina Jolie's Carefully Orchestrated Image" which lays out the way this works in the NY Time's Media and Advertising section...

 

Ransom, Arghhh.

"Thar be pirate, matey and they be askin' many doubloons for their ship..."  $25-mnillion now, it seems is the rate for their tanker of oil.

 

"Say, you see how high that thing is riding in the water?" asked my observant neighbor.  "Maybe stock footage?" suggested some quick research...

 

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Coping:  Flushing Out the Future

While Al Gore continues making apocalyptic statements about how the world may face a Mayan kind of collapse (Which I l take it to mean he's reading Joseph Tainter's work, often cited here), we read how flushing the john/loo/WC/crapper may go the way of buggy whips.

 

Seems yesterday, in addition to being the Great American Smokeout was also World Toilet Day, and event worse mentioning.  The idea goes to the use of all that water to move the you-know-what to a useful location. 

 

In the future, we may be seeing a lot more of toilets that separate the liquid from the solids, and turn the solids into something useful, like fertilizer.

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If you've lived in a house your whole life, you may have missed some of the different ways of eliminating body wastes.  The first unconventional toilet I can remember encountering was the separate tank mounted up near the ceiling at my late grandparent's house.  An intimidating beast, for sure. 

 

The, growing up, there was the usual assortment of pit toilets at various campgrounds around the Pacific Northwest and up into Canada where we did a lot of fly fishing. 

 

Next, living on a sailboat for 10-years, I had (unfortunately) way too many experiences taking apartment "marine heads" to replace/repair this or that.  And, for the first 6-years, taking the boat every couple of weeks to the marine holding tank pump-out station to empty the 'black water'.  It was a huge blessing when marine sanitation services cropped up to do that chore on a weekly basis for a small fee.

 

More recently, Elaine and I have been pondering what to do about my office.  It would be 'nice' to have a small kitchen area out here.  Someplace where I could throw on a pot of coffee, put in a small icemaker for my...ahem...water, and even put in a shower and a crapper, so a guest could stay out here.

 

Because the main septic system (associated with the house) is slightly uphill from the office, digging out a gravity fed system to tie into the house's septic system would be a lot of work.  Plus side:  I could buy a backhoe attachment for the tractor, something I've been thinking about anyway.

 

On the other hand, it might be easier to put in a composting toilet like the "Nature's Head" variety. Turns out some retailers are actually keeping up on trends here.  Home Depot has a number of alternatives listed on their site.  Curiously, a search for 'waterless toilet: on Lowe's website didn't get any results.  So, if you look at my Pony Express analogy to how some companies get ahead of paradigm shifts, while others don't get it till much later - as I outlined earlier this week - seems to me that Home Depot is getting ahead on recognizing and getting onboard with paradigm shift - which speaks volumes about the long-term future of the company, I expect.

 

Some of the manufacturers have gone so far as to develop 'central toilets' that are waterless, or very low water.  And example in this space would be Sun-Mar's offerings.

 

Since the weekend is upon us, and it's a time when folks get refocused on their own agendas, rather than the ones imposed on us by work, it seems like a worthy area to consider, especially given that  you may have been thinking about a model for your home and hadn't considered some of the alternatives out there.

 

I've heard from a number of friends who have composting toilets that yes, they do tend to send off more order than a normal flush-type john.  But, these was a number of years back and technology has no doubt improved.

 

So, if you have any first-hand experience with this kind of crap(per), please send a note along to our "Oh crap!" department. 

 

In the meantime, a couple of sacks of lime for an out house are on my list of 'things I should get around to, one of these first days..."   Who knows, maybe in time for next year's World Toilet Day?

 

Start Your Homeland Security File?

Don't know if you have been following the national "End The Fed" demonstrations planned for tomorrow around the country, but if you're not up on the events, please click here for details.

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Here's the interesting question:  Would going to a demonstration in favor of ending the death-grip the Federal (which it isn't) Reserve has on the economy be sufficient grounds to open your own file/database entry with the Department of Homeland Security or some other agency which looks for threats to the country?

 

I doubt that it would be enough to get you onto a no-fly list, but still, seems to me there's a alot of imprecision of thought about what constitutes a threat to democracy:  Supporting bombers is obvious, but is opposing a failing paradigm sufficient?

 

Here are 39 cities where you may be able to find out tomorrow:

"Boston, Philadelphia, New York City, Buffalo, Cleveland, Cincinnati, Pittsburgh, Richmond, Baltimore, Charlotte, Atlanta, Birmingham, Jacksonville, Miami, Nashville, New Orleans, Chicago, Detroit, St. Louis, Little Rock, Louisville, Memphis, Minneapolis, Helena, Kansas City, Denver, Oklahoma City, Omaha, Dallas, El Paso, Houston, San Antonio, San Francisco, Los Angeles, Phoenix, Portland, Salt Lake City, Seattle, Washington, D.C."

Me?  I wouldn't mind the Fed if they just would print money based on production of goods and services and not just whenever some pork dealer in Washington needed to hand out favors,.  And that would include sopping up excess when there was too much sloshing about the system.  I also want to believe in the Easter Bunny.

 

A reader sent in this astute note, speaking of the Fed:

"I was reading an article when a couple of points jumped out at me.

1. central banks in the last few months have created around 8 trillion new currency units, dollars, euros, etc.

2. these central banks utilize fractional banking. thus each dollar the banks have and lend out can create up to 8 to 10 or so additional currency units. that is basic money and banking 315.

3. thus over the next 12-18 months, we can expect a volume of money to be created in the neighborhood of up to 80 trillion new currency units. assume a 5% reserve requirement. and I have read that in some cases the banks are negative on reserves.

the case for hyperinflation seems pretty strong and as well for the debasement of currencies.

thus, collapse of the dollar and increase in gold price seems on a steady course. its a done deal.

your thoughts?"

How about  "If there are two things I am not planning to sell they are a) my gold coin and b) my Mossberg.  Howzzat fer clear?

 

Population of Cars

Don't know whether you've seen all the articles on the building glut of cars in the world, but they seem to be stacking up all over the place.  Of course, as a Christopher Laird piece suggests, it's not just cars: The world has probably built enough 'stuff" to last for a very long time and falling car sales is just part of the bigger picture.

 

Still, I've been looking for a modest sports car - and Cliff's work seems to suggest that the longer I sit on my wallet, the more bang I will get for my buck.  Some hints that car prices, especially for used cars, may fall to one fifth or even a tenth of what they are now.  And my sometime next year...

 

Head for the Hills?

A reader asks this rather pertinent question:

"Hi George - I remember awhile back you had put together a flowchart that showed the various stages of the future stock market and what to expect at each stage. I apologize for not remembering exactly when you had done this, but I do recall that when the market hit 7500 it was time to head for the hills, literally if you are in the city, or figuratively if you already have your own spread in the country. My question is, are we at that special point yet and if so, any change in game plan? Thanks for your heads up. (By the way, wouldn't it be nice if all "Ureaders" [Ure readers] could identify each other on the way out of town and help one another? Then again we might be the first ones rounded up for 'camps'. Oh well.)"

Let me answer with an email sent in from a different reader:

"A monk on his journey home came to the banks of a wide river. Staring hopelessly at the great obstacle in front of him, he pondered for hours on just how to cross such a wide barrier.

Just as he was about to give up his journey, he saw a great teacher on the other side of the river.

The monk yells over to the teacher. "Oh master, can you tell me how to get to the other side of this river?"

The teacher ponders for a moment, looks up and down the river and yells back. "You already are on the other side."

In other words: "You're not in the hills yet?"

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November 20, 2008

Save the Dow Day

Not looking pretty on the futures when I checked...Jobless claims jumped to a 16-year high.

 

Honestly, there's an old joke that has been playing over and over in my head: "When my ship came in, I was at the airport..." or something to that effect.  While I still hold hope that something dramatic will happen before the open of the markets today, my favorite chart of how to play the market to make some serious money in options won't come to pass unless there's an emergency rate cut by the Fed before noon today.  In case you were passed out from the flu, the Dow closed under 8,000 and Robin Landry's outcomes (Dow 7,200 or worse, 5,800) are starting to look like pretty good expectations. Me?  Ever the optimistic sort, I was looking for a bounce to the 9,500 level, but that scenario fades quickly below my key line-in-the-sand level of Dow 7,965.

 

Still, if you thought things were bad on the street before, if all the bears make the kind of dough they stand to with all those put options that expire Friday, I'd expect selling to accelerate next week because usually, options expirations work out so as to cause the maximum possible losses among the public (also called the 'weak hands') while pocketing as many house payments and bonus checks as possible for the market professions ('strong hands').  This could be one of those rare situations where everyone gets their hands slapped.

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The world situation is not exactly confidence inspiring.  Russia is out this morning saying it will not let the global economic mess scuttle its markets. Maybe there's just Putin us on, though. The world is so awash with debt that it could take down the whole planet, 'case you hadn't noticed.

 

One reader sent in a note on Wednesday asking "Where's that market collapse?' and pointing to my writings and the predictive linguistics from www.halfpasthuman.com.  I gently (as I could) told him that first, Cliff doesn't make market predictions.  His work called for an 'emotional release' period to start from about November 14th through mid December when the 'double quakes' come along sometime between the 10th and 15th.  The market expectations were mine.  Not turning from that.

 

Now, here's the point:  If you had sold at the intraday high on November 14th, when the Dow was over 8,900 some ways, you would be waaaay ahead of a 'buy and holder' who held the Dow through this period.  Sometime this morning, if the Fed doesn't come through with an emergency cut, or some other really good news shows up to save the day, November 14th will be evident as 1,000-points higher than today's market action.  I can't think of any other outlet on the 'net which was talking rather specifically about selling on November 14th to avoid what has been an approximately 12% decline over the past six days.  If you know of any, send 'em along.

 

Moreover, I can't think of anyplace else on the net that says "Look out for the two earthquakes in the December 10-15 window!", either.  And even if you find some pseudo-psychic who says "I see earthquakes in mid-December" or some other woo-woo,  how many are saying 'one oughta be South America' and one oughta be in the vicinity of 34 and 36-degrees latitude, with the note that geographical references are really hard to pull out of a rickety time machine, but the quakes in that window are, to my way of thinking based on experience reading the linguistics, sometime like a 75-percent likelihood.  Still, ain't nothing perfect in this here world.

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Elaine spent much of Thursday redoing the kitchen and listening to the automakers-on-parade in Washington.  "You know, I actually have sympathy for the workers," she said.  Correctly, too. But while GM is planning to invest a billion dollars in Brazil, they are also asking for a few George-bucks and frankly, since 'money doesn't know where it came from' I'm wondering how much of the US underwriting should actually be going through the State Department as foreign aid?

 

Much gnashing of teeth yesterday on the Hill, but when you read about those 'high wages' of the auto workers, remember that a lot of retired UAW workers are worried that the bankruptcies being floated could just be a way for the Big Three to slide out of their pension obligations.  To my way of thinking, a pension is a promise - that money put away for retirement will be there with expected purchasing power - when a worker gets to the ripe old age and is ready to enjoy it.  You know who oughta be in jail?  The bean-counters who under-funded pension obligations and got sucked in to the half-wit investments in levered investments floated by the crooks down on Wall Street.  Or, the ones who used to be there and are now living happily ever-after in Puerto Plata or George Town, Grand Cayman.

 

I'd tell anyone in Detroit, in automaker management to remember that there's a global revolution underway and it's not only directed at bad government policies; rather, it's directed at the corrupt and broken 'establishment' and that includes shenanigans played with folks' retirements.  The fatal stabbing this week of a Japanese pension official, which could renew a 'lost pension records' scandal there involving 30-million workers, should be a reminder from Universe that villagers still have pitchforks and torches and no amount of gun control can stop a motivated human with bare hands, or worse, a knife.

 

If private industry has been bad, under-funding pensions, or over-levering them in order to make up for deliberate under-funding, the government sector isn't doing much better.  Whip out this morning's copy of the Boston Globe and you'll find that the Massachusetts state "Pension fund sags 13.3% in October."  Then, as if to lessen the pain, the subtitle is "But Massachusetts'[ losses for year are in line with other states'.  Shot-darn, if that isn't reassuring, huh?

 

Headlines that "U.S. companies seek pension relief" should underscore the suggestions (not advice, of course) that I've been giving Peoplenomics.com subscribers for years.  It distills down to something like "Don't trust anyone or paper 'money' in particular when it comes to your retirement.  Own your own home outright, have a garden that can feed you half the year and can enough for the rest, raise a few animals, even chickens will do, and get into an area which can in the worst of times be self-supporting.  Going further, own your own source of power, which reminds me I have to finish the solar panel installation this week or next so it's in service this year.

 

To be sure, there are still people making the case that a pension is a better deal than a lump sum payment, but to my simple-minded way of looking at things, pensions still come down to trusting someone else to manage your money for you, and the very money itself is questionable, in case you forgot that ugly detail.  The U.S. is on its fourth or fifth currency now.  Try making a house payment in greenbacks, Continentals, and such, if you don't think we can go through currency failures here.  And that's before you take into account the impact of a house payment.  Through the 'magic of interest' if you have a conventional 30-year note, you can just about pay for your own home three times over.  Most folks don't run the numbers. 

 

"But, we pay our homes off with cheaper dollars!" is the usual rejoinder from the folks pimping house debt.  Being the wet dishcloth I am on such matters, I'd point out that few homes bought at the market peak in 1928/1929 held there value through the major deflation that accompanied the Great Depression, and if as I suspect, we're in a similar period today, a lump sum to ensure you have a roof over your head forever and getting it protected as homestead, well, those nights of sound sleep.  Stories like the trader trying to commit suicide on the floor of a Brazilian stock exchange may happen, just like the reports of Wall Street jumpers in the last Depression, but if you've got a house and no one trying to take it from you, you'll be better off than most.

 

Not to drive you to getting pre-wasted today, but best I can tell, the only friend your money has is you.  Everyone else is trying to get it away from you, one way or t'other.

 

Given that there's more debt than brains loose in the world, stories that "Recession fears send world markets down" shouldn't have much effect on you, so long as you've got a home that's paid for.  Provided you can scrape up property taxes, of course.

 

Spin City

Time for one of our periodic checks to see how the use of the happy-talk word 'rescue' is doing compared to the world 'bailout.'  "Detroit automakers' rescue stalls in Senate" brought this to mind.

 

You'll recall when we took our first 'snapshot' of how history was being redrafted right in front of your eyes, a couple of months back, the word 'rescue' was being used only 18% of the time compared to 'bailout'.

 

Today at www.news.google.com,  the search for 'bailout' brings 119,308 returns while 'rescue' returns 149,787.  That's a total of 269,095 references.

 

The math:  "Bailout" is down to 44.24% of the time, while the word "rescue" while the other 55% of the time, the word 'rescue' appears.  You getting this?  The soft-headed mainstream media, consciously or otherwise (and these are the kinds of verbal directives that aren't put in writing, but come down to editors from  'upstairs')  in an effort to sound 'fresh" and not 'overwork' the word 'bailout' are rewriting history and most folks are completely blind to it.

 

Except around here, and then only with coffee that is strong enough to be used to pour building foundations.

 

The Indicted Dick

New York Times reports "A Prosecutor indicts foes, and Cheney and Gonzales" down in Willacy County, Texas.  No problem for Cheney and Gonzales, as I see it.  No doubt the case won't go anywhere, and on the off chance it does, the Decider will likely issue 'get out of jail' cards to everyone who stood by him before his exit.

 

Iran's Latest "Bomb Here" Sign

The report in today's Financial Times that "Iran increases stockpile of uranium" has set off another round of war talk.  In the J-Post this morning the headline "Israeli Air Force chief: We are ready to deal with Iran" should be clear enough that you won't plan a Persian rug shopping trip to Isfahan over until after the inauguration.  Might want to pack a dosimeter if you go after that...

 

Pirates Plunder

If you're keeping a running count, I think it's now 9 ships that have been seized by pirates over the past 12-days in the waters east of Somalia.  Enough that the US Navy is instructing merchant ships on evasive maneuvers.  Which I'm guessing is likely to swell circulation of the Washington post among pirate bosses trying to stay ahead of the curve. 

 

I haven't figured out yet whether the headline writer at the LA times who came up with "World grapples with pirate problem" is incredibly hip to nautical boarding techniques (grappling hooks and all) or it was just a lucky choice of words.

 

Close Call Department

An Air Canada jet was in part landed by a flight attendant.  No, not part of Air Canada's training - the F.A. happened to have a commercial pilot's ticket.

 

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Coping: Butt, Butt, Butt...

The "Great American Smokeout" is going on today.  I'm reminded of that country-western classic "Cigarettes and Whiskey and Wild, Wild Women..."  ("They'll drive you crazy, they'll drive you insane..." - and turns out to be mostly accurate).  One line of the song in particular about cigarettes: "There's a fire on the one end and a fool on t'other..."  If you're going to smoke something, believe me, there are much better choices...not strictly legal, but better in just about all other ways...

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Cigarettes do have a place in American history, though.  For one, they're excellent evidence that government has absolutely no idea what it's doing.  While the Surgeon General was telling people smoking would kill them, the folks growing tobacco were getting government subsidies.

 

Not to put too fine a point on it, but do you realize that from 1995 to 2006, there were over half a billion of our tax dollars spent on tobacco subsidies?

 

Smoking is one of the best examples of mass brainwashing you'll find - that an the notion of putting a hazardous industrial waste product (fluoride) into your mouth. 

 

Fortunately, America is a land of great progress.  A lot of people have been able to cast off smoking, and instead have 'graduated" to more socially acceptable forms of addictive behavior such as the daily dose of doggie downers washed down with a triple strength latte.

 

One thing I'm pretty certain of:  The 'leadership' of the Checkbook Republic here doesn't have to be good...so long as the meds are being pumped into the voters.

 

For Everything Else There's,,,,

"Credit cards will be the Next Big Financial Blowup" figures John Crudele of the NY Post.

 

Got Gold?

"Gold's safe appeal attracts record interest" reports the Financial Times.  Say, you don't think that's because people globally are losing faith in the cannibal corporate planet-wreckers and the global paper-is-money flim-flam, do you?

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Send snip and save items to george@ure.net

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Wednesday November 19, 2008

Paradigm Riding: The Pony Express

For reasons that aren't clear to me, but must be to the Universe, conversations and emails over the past couple of days seem to be steering me toward a discussion of something I call "paradigm riding" and how to best go about it.

 

The idea is very simple at the highest level:  Paradigms - those ruling ways of looking at things - are always in a continuous state of change.  Either a paradigm is ascending - more people buying into it - or descending - in which case people are drifting away from it.  The third state, it goes without saying is the space between paradigms.  This last is where much of the planet is right now.  Ruling paradigms have come loose from their moorings.

 

"Why is that important, George, and why aren't we talking about profits and pirates and all that other stuff that's eating up air-time on the major MSM?" you're wondering. 

 

The answer is simple:  If you can identifying the 'ruling paradigms' of any situation, you can get a major 'leg up' on what the future is likely to bring along and drop in your lap.

 

Take the current market, for example.  (Please!).  One paradigm that may be emerging is that deflation in spades is coming down the road.  On the other, there's some good reporting that goes to the idea that no, deflation is a short-term cruel hoax, which in the end will catch a lot of people out.  Wouldn't it be nice to figure out which outcome is most likely?  Why, armed with such knowledge now, an investor could make spectacular comparative gains (properly positioned) and at a minimum would have a better chance of preserving what little savings haven't been taxed away or squandered already.

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Paradigm picking is important for another reason, too:  Once you become aware of them, they're an important 'thinking tool' that helps expand and then narrow, the number of possible outcomes you're likely to deal with.

 

With this in mind, I'd like to share my view of the current economic paradigm with you; I call it "The Pony Express."

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Almost everyone has seen an old black & white cowboy movie where there's a Pony Express rider.  The rider, often times, will be riding into a horse-changing depot, many times called a way station, and will slow down, jump off his now tired horse, grasping the pouch with the mail in it, and leap onto another horse that's been freshly watered and rested...then off he goes on his journey.  (About here, the bad guys sneak out of the corral where they've been hiding in many movies...)

 

I think of paradigm changes - like the massive financial changes we're in the midst of right now, as being akin to this 'changing of horses.'

 

While the astute investor is looking around for the 'next horse to ride' out of this mess, the old-timers are trying to figure out how to get the old horse that the Pony Express rider came in on, motivated somehow to the point where it might make it to the next town.  So in this regard, the old-timers (paradigm defenders, if your coffee hasn't kicked in yet) will be busy debating among themselves how best to motivate, cajole, beat, spur, whip, or whatever it takes in order to keep the old horse going just a little bit farther. 

 

If you step back from most of the economic news today, you can see investors who are part of the old paradigm (beating a [nearly] dead horse, as it were.  And, you can find investors who have caught sight of the next horse and are moving over onto it and about to head out on the next leg of life's journey, with their own bag of dreams, ambitions and desires, as symbolized by the contents.  Each of us 'has our own bag', so to speak.

 

Now let's see if we can leaf through some of the day's financial headlines and assign paradigm roles to some of the players, shall we?

 

"Detroit hit as car firms beg for bailout" reports the BBC.  Would it be unreasonable for the car-makers to be labeled 'old horse' supporters, having not kept their iron horses up to snuff compared to those off-shore Porsches, BMW's, Toyotas, and Nissans?  Seems to me that Detroit is stuck 'between horses' - they know that the old horse offers relative safety and familiarity, but also, lacking a clear vision of what their next horse might be, the city is stuck defending the old horse, even though they noticed that it has been running lame these past few miles.

 

Another group to watch would be the Government and Federal Reserve types.  They sold us Pony Express riders the horse we jumped on during the last paradigm back and they're trying to tell us that with just a tiny bit of free water and feed, it can be made to go on to at least one more town.  No, they don't want to necessarily get on a new horse, though, which explains why we're reading headlines like "Paulson resists Democrats' call to rescue homeowners."  Can change horses in mid-stream, so to speak.

 

Next, we look around and see who's gotten onto the 'fresh horse' and seems to be mounting up ready to ride into the future?

 

Paradoxically, hedge fund manager John Paulson, who 'generated a six-fold return last year' is now running around buying that debt-backed paper that I told you recently was, in many cases paying upwards of 20%.  With the 'old-horse' crowd waffling and jawboning, this Paulson is picking up a bag full of goodies and he's off!

 

Similarly, as I told you yesterday, Ricardo Salinas Pliego has optioned himself into a 28.5% stake in teetering Circuit City which is in Chapter 11.  He's obviously got something in mind that will convert this 'old horse' into a new one.

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How do you suppose other stories of the day might fit into this paradigm?

 

The hijacking this week of a super tanker off the coast of Somalia is a good example of how, against a background of global economic crisis, modern-day pirates have reverted to hijacking ships at sea; notably a super tanker loaded with crude oil.  Besides the crude tanker, an Iranian cargo ship filled with grain has also been hijacked.  Although India's navy has destroyed one pirate ship, there's still the matter of $10-million in ransom being demanded to be dealt with. 

 

Unfortunately, most of the world's leaders are not 'down on the waterfront' dealing with the 'pirates-a-re-back paradigm.  They're still mostly trying to figure out how to best beat that near-dead housing horse back at that Things Ain't Exactly OK Corral.  And when they're not working on the Pony Express paradigm, most U.S. leaders are rerunning either old John Wayne war flicks where the good guys win, not realizing that movie's over,  Depending on who you ask, the next flick might be Soylent Green.

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Most people aren't conscious of the patterning that has been placed in their head by various media, and as a result, they don't step back far enough from the noise inside their head to be asking the definitive questions of analytical thinking like "Where'd that pattern come from?"

 

Way off in the distance, there are some who see a 'New Horse' out there already.  Dr. Jack Lessinger, a retired University of Washington prof, is working on a new book "The Great Prosperity 2020-2050".  Unfortunately, before we get there, we have to work out way at a global level though an ultra-slow-motion change of economic paradigms, which is why his current book is titled "Transformation".

 

Coincidentally, the predictive linguistics work up at www.halfpasthuman.com also came up with the word "transformation" as the defining word that is likely to sum up the whole year 2009 following this year which was labeled the "year of emergence."  Yessir, all kinds of things have been emerging around here.  Near-dead horses being flogged by the PowersThatBe who insist on defending their old paradigms, blood-thirsty pirates down on the waterfront, and a fixation that amounts to rerunning old black and white war movies ad naseum thinking the pirates will leave and the horse will keep on running.

 

Say what you will about the Scientology crowd, the ideas that founder/sci-fi writer L. Ron Hubbard had about "engrams," was a pretty workable construct.  I think of the process more like 'decision-patterning" based on high-intensity inputs, but you ought to be able to get the idea.

 

Once grasped, the decision of chief time monk Cliff to deliberately not listen to music makes a lot more sense, because not only do things like movies imprint decision-patterning deeply within each of us, but so too music (especially vocals) do the same kind of thing with emotions.  It may be evocative of this, or that, or it may be something as simple as an emotional sequencing, such that even orchestral music patterns us to a certain response code.  Take, for example, the 'going to sea' music from "A Perfect Storm" (which I happen to like) as an example.

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If there's anything 'good' about losing one's job, it's that with some 'unprogrammed' time on your hands you can actually devote an hour or two per day to serious self-learning, introspection, or simply 'reprogramming' yourself so that you can be much better than what you've been doing up till now. Many folks won't do it, of course, having been programmed so deeply that they won't be able to 'bust out' of their own prisons imposed by society through patterned-thought imposition.

 

Paradigm ponders follow seamlessly if you do, though. And first thing you know, paradigms like the Pony Express way station exercise in Washington will start popping up all over.  It's then you stop needing constant inputs and you can comfortably 'go within' for hours at a time to seek answers like "What is the Universe trying to tell me here?"

 

Best I can figure so far today, it has something to do with 'beating dead horses' and maybe also has something to do with doubloons.

 

"Holding Gold?" Department

Speaking of doubloons:  The Global/Europe Anticipation Bulletin this week says that a "Breakdown of the Global Monetary System by Summer 2009" is in the works.

 

Shocking.  Well, not really.  Oh, OK, predictable, then.  'Specially when you consider numbers like these...

 

Price Deflation? Oh?

The latest numbers out today from the Labor Department seem to imply that prices of consumer goods actually came down in the latest reporting month.  Grab your bottle of nitrous, a shot of Jack,  and read on, or, if your boss might wander by and get suspicious about your hysterics, simply click here to skip ahead to my analysis:

The Consumer Price Index for All Urban Consumers (CPI-U) decreased 1.0 percent in October, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The October level of 216.573 (1982-84=100) was 3.7 percent higher than in October 2007.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) decreased 1.3 percent in October, prior to seasonal adjustment. The October level of 212.182 (1982-84=100) was 3.8 percent higher than in October 2007.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) decreased 0.8 percent in October on a not seasonally adjusted basis. The October level of 124.784 (December 1999=100) was 3.3 percent higher than in October 2007. Please note that the indexes for the post-2006 period are subject to revision.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U decreased 1.0 percent in October following very little change in September and August. The large October decline was the largest one month decrease since publication of seasonally adjusted changes began in February 1947. Compared to a year ago, the October index was up 3.7 percent. The energy index fell 8.6 percent in October following declines of 1.9 percent in September and 3.1 percent in August. Motor fuel prices continued to decline in October, with the gasoline index falling 14.2 percent. Despite the decline, gasoline prices remain 12.0 percent above their October 2007 level. The index for household energy items declined 0.9 percent following a 3.4 percent decrease in September. Petroleum based household fuel prices continued to decline, but the October decreases were moderated by an increase in the electricity index. The food index increased 0.3 percent in October, a smaller advance than the average monthly increase of 0.7 percent during the June through September period. Compared with a year earlier, the food index was up 6.3 percent. The index for all items less food and energy turned down in October declining 0.1 percent to a level 2.2 percent above October 2007. Contributing to the decrease in October were declines of 1.0 percent in the apparel index, 4.8 percent in the airline fare index, 1.6 percent in the index for lodging away from home, and 0.7 percent in the index for new and used motor vehicles.   (Say, that's some paragraph, folks... - G)

The food and beverages index rose 0.3 percent in October after a 0.6 percent increase in September. The index for food at home increased 0.1 percent in October after increasing at least 0.6 percent in each of the preceding four months. Five of the six grocery store food groups decelerated in October. The fruits and vegetables index declined 2.2 percent in October after a 0.5 percent decrease in September. The index for dairy and related products also registered a larger decline, falling 1.0 percent in October after a 0.6 percent decline in September. The indexes for cereals and bakery products, for meats, poultry, fish and eggs, and for other food at home all rose more slowly in October than September. All three indexes rose 0.6 percent in October after increases in September of 1.1, 1.0, and 1.1 percent, respectively. Nonalcoholic beverages and beverage materials was the only major grocery store food group to increase more rapidly in October, increasing 1.2 percent after a 0.7 percent increase in September. The other indexes in the food and beverages group, food away from home and alcoholic beverages, rose 0.5 percent and 0.4 percent in October, respectively.

The housing index was virtually unchanged in October after declining 0.1 percent in September. The shelter index, which rose 0.3 percent in September, was virtually unchanged in October. Within shelter, the index for rent of primary residence rose 0.4 percent in October after a 0.3 percent increase in September. The index for owners' equivalent rent, which increased 0.2 percent in September, rose 0.1 percent in October. The lodging away from home index turned down sharply in October, falling 1.6 percent after a 0.9 percent increase in September. (On a not seasonally adjusted basis, the index for lodging away from home fell 1.7 percent in October and was 1.4 percent below its October 2007 level). The household energy index declined 0.9 percent in October as declines in the fuel oil and natural gas indexes more than offset an increase in the electricity index. The index for household furnishings and operation was virtually unchanged in October after rising 0.5 percent in September.

The transportation index declined sharply in October, falling 5.4 percent as several major components of the index declined significantly. The motor fuels index fell 13.9 percent in October after declining 0.8 percent in September. (Prior to seasonal adjustment, motor fuel prices fell 14.8 percent in October but were 12.3 percent higher than in October 2007). The index for new and used motor vehicles declined for the third straight month, falling 0.7 percent in October. The new vehicles index declined 0.5 percent in October. (Prior to seasonal adjustment, new vehicle prices fell 0.1 percent and have declined 2.3 percent since October 2007.) The index for used cars and trucks declined 2.4 percent in October after a 1.8 percent decrease in September. The index for public transportation declined 3.3 percent in October as the airline fare index fell 4.8 percent. (Prior to seasonal adjustment, airline fares fell 4.4 percent but are 10.4 percent higher than in October 2007.)

The index for apparel fell 1.0 percent in October following a 0.1 percent decline in September. (Prior to seasonal adjustment, apparel prices rose 0.9 percent in October and were 0.3 percent higher than in October 2007.)

The medical care index rose 0.2 percent in October after rising 0.3 percent in September, and was 2.8 percent higher than a year ago. The index for medical care commodities--prescription drugs, nonprescription drugs, and medical supplies-and the index for medical care services each increased 0.2 percent in October. Within the latter group, the index for physicians' services rose 0.1 percent and the index for hospital and related services increased 0.4 percent.

The index for recreation advanced 0.1 percent in October, following a 0.2 percent increase in September. The index for video and audio declined 0.6 percent in October, while the index for photography declined 0.8 percent and the index for toys fell 0.5 percent. The indexes for pets and pet products and services and for sporting goods increased substantially in October, rising 0.9 percent and 1.5 percent, respectively.

The index for education and communication rose 0.2 percent in October after a 0.1 percent increase in September. The index for education rose 0.4 percent in October, the same increase as in September. The index for communication was virtually unchanged in October after declining 0.2 percent in September. Within communication, the index for telephone services rose 0.1 percent while the index for information technology, hardware and services declined 0.3 percent.

The index for other goods and services rose 0.3 percent in October following a 0.2 percent increase in September. The index for tobacco and smoking products rose 0.4 percent in October after being virtually unchanged in September, while the index for personal care, which rose 0.3 percent in September, advanced 0.2 percent in October.

Analysis:  Looks to me like the only thing that pushed the index down in a big way was the falling price of gas and cars (lumped as transportation) - both new and used prices are plummeting.  You have seen on the Cyclops that the price of a brand new Hummer H-3 is down to ("just") $27,000? 

Food's still going up at a 5.8% rate annualized over the past three months and it's up 6.3% compared with year-ago spending.  Housing got cheaper because home prices have collapsed.  And if gas got cheaper, the power bills haven't.

Am I the only one to notice that prices are quick to rise, slow to fall, and never come back to where they started from? 

And can someone at the Labor Department tell us where to shop so we can all get these kind of deals, or is that a matter of "national security"?

Bad for the market, this prices going down stuff.  Well, what goes around, comes around, Im guessing...

Calling Mr. Wurlitzer!

"Claudia Castillo gets windpipe tailor-made from her own stem cells" says the headline.  People are growing their own organs, huh?  Next, look for people to grow their own synthesizers...(rim shot)

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By the way, this is a dandy writing device, speaking of paradigms if you can remember that long ago:  Write about one paradigm (the medical progress horse seems to be running strong) while appealing to the deeply resonant music paradigm.  The non sequitors ('it does not follows') are infinitely amusing.  Depending on how much coffee you've had, of course.

 

Cuba's China Syndrome

With the local economy not doing well in Cuba thanks to multiple hurricanes and economic setbacks, we're keeping a close eye on how much dough Cuba is dumping into the island nation.  Latest round has only amounted to about $2.5-million, but folks remember those who 'help 'em when they're down.'  Compare China's modest but meaningful approach with our US Aid programs and ask yourself which gets more bang for the buck?

 

Falling Oil

Think gas is cheap now?  Not only do I expect to see $1.75 gas by the time we get to the middle of the "National Layoff Festival" coming late winter 08/09, but now there's talk that oil could drop to $40 a barrel.

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"You mean keeping that gas-hog SUV could turn out to be OK for a while longer?"

 

Don't know about that - thrift first is our motto around the ranch.  But, speaking of cars, did you know that the Kelly Blue Book best resale values are out?  Not a single US-based maker in this year's top 10.  Honda, Cooper, Scion/Toyota and VW own all ten spots for top resale value.

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Washington DC is closing down 23 used car operations and suspending 303 individual salesperson licenses.  What's curious is whether the dealerships were just storage for vehicles being sold elsewhere, or if they are legit dealerships. 

 

Death Dances

Recently, another round of rockets slammed into Israel, so in retaliation, the Gaza Strip has been shut down - Lights out, no heat, no food coming in, that kind of thing.  All of which prompts the "UN head fears over Gaza blockade."

 

Nope, no danger of peace breaking out there today.

 

Then we read that a "Suspect U.S. strike kills 5 in Pakistan."  They say 'suspected' just in case someone else is lobbing missiles and drones at Pakistan, I reckon.

 

Myth of 'Free Trade' Department

Reading how "Asia-Pacific leaders meet for free-trade appeal".  Seems the old-paradigm guys are meeting to explain how 'protectionism' is bad.  Of course, you're not supposed to know that 'free-trade' means that a job which used to pay $12 an hour in Ohio is now paying $1.12 an hour in India, or 63¢ an hour in Bangladesh, leaving enough left-overs to fatten a corporate bottom-line even after transportation costs. 

 

So please, don't think critically about this!  It will make you a danger to the corptocracy!   besides, from an economists perspective, just as soon as there's an unemployment rate  in any of the less developed countries, the wage-rate differential spread profits will disappear. 

 

As long as we're at it, also forget this: we're being out-screwed, and in turn out-populated  into oblivion by most of the Third World, so until the economic game blows up, there will be no unemployment problem in the Third Wold....

 

This paradigm plays until resources run out or the funny-money used to facilitate this horse puckey is figured for what it is.  

 

Say: You did see Congressman Ron Paul grilling Ben "the printer" Bernanke yesterday?  Video here - 5:15 worth.  My favorite part "Why do central banks still own 15% of all the gold ever minded throughout history?" (was a damn fine question).

 

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Coping: Getting Ready for Getting Bad

A reader sent in a note today reminding me to put up a link to a very good story - good thinking/journalism, bummer of a topic, and one you may not wish to read without some strong reinforcements at hand.  Either more coffee or (another) shot of Jack & nitrous.

"How about a real world view from you on Depression 2009 for your subscribers? Depression 2009: What would it look like? Lines at the ER, a television boom, emptying suburbs. A catastrophic economic downturn would feel nothing like the last one..."

Yes, the Drake Bennett piece in the Boston Globe is a keeper.  As you read it over, ask yourself what is likely the most important personal strategic planning question there is:  "What can I do to hedge?"  Answers like "OH Geez: as in grub, gun, garden, and gold.." come to mind...

 

Dragging On

Readers keep sending me emails about the web bot runs that mentioned the contentiousness of the presidential contest lasting into the new year.  And links continue popping up - like this one - that question whether Obama can hold the office.  I figure this means the linguistic set is being filled...

 

Cow Tax

No, this has not been getting much attention in the MainStreamMedia, but every so often we catch reports like this headline: "Cow tax proposal would threaten agricultural viability".

 

It all goes off to the EPA's purported plans to charge something for the methane gas and run-off that pigs and cows generate.  Not sure if they've penciled in an add-back for the fertlizer savings from not having to import that much energy if the poop is recycled, or not.  That may fall into some other paradigm floating around Washington.

 

Still, it's worth keeping an eye on.  Every time a cow farts, seems it releases hot air - in Washington.

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Send snip and save items to george@ure.net

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Tuesday November 18, 2008

Running Out of Options

As I expected yesterday, the market rallied back to about even for a few minutes, but my shopping around for options was to no avail.  I couldn't find anything that hadn't been driven up so much in price that even a drop to the 7,200 Dow area would make sense.  The way I look at these things is this:  If I am going to spend money on a speculation (what I do is NOT investing) then I want to make sure that I have a pretty good chance of being right. 

 

In other words, say I see an option where I can potentially double my money, but I figure the odds of getting to that payoff point is only 50-50.  What would I do?  Sit on my wallet, of course!  The kind of speculation I like is where I have at least a 50-50 chance of getting what I expect and then a payoff of 400% or more.  If I always hold to this rule, I may lose on some of my gambles, but for the ones that pay off, the returns are green enough to make up for the earlier bad moves.

 

To make a long story longer:  I spent about an hour yesterday looking at the options premiums and nothing looked more attractive than the DXD (the double Dow downside index) and the kind of returns possible there aren't even that glorious. A drop to 7,200 might make a return, but maybe only as little as 20-30% and that doesn't even begin to get me interested.  I may hang in for a few more days, waiting to see if we get a pop up, but it not, I will just wire my table stakes into my commodity account and wait for a nice low in gold toward the end of the year or early in January.  Might be a good time to buy oil, too.

---

Not much joy in Mudville today as the mighty Dow seems likely to take another good-size whack on the backside.  Citi cutting 53,000 jobs is only part of the reason.  Others include the stalemate which is threatening to kill a $25-billion further bailout for the auto industry.  That has GM going to the German government looking for dough.

 

The cost of the stock and credit markets mess is continuing to climb:  One report puts the cost of the crisis at (you're gonna love this) $4.28-trillion dollars.  Now, just for the sake of comparison, consider that the US Gross Domestic Product, last time I looked, was around $14.43-trillion.  Between a quarter  and a third of a year's worth of output for the whole country gone 'Poof!" and we ain't anywhere near done yet.

 

Remember, linguistically, we don't stop the 'emotional release' slide until March 09'ish and even that, it's not pretty because if I read the tea leaves right, that's when huge layoffs will be going on, inflation will be running amuck, and Wall Street may actually climb from the basement a bit on the theory that at some point the market will represent real value.  You bet.

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Hand me my calculator, would you?  US GDP Pencils out to .039534-trillion per day.  I mean assuming level workdays all year - don't be getting picky on me at this hour.

 

So we have cost-of-crisis at $4.28, divided by the daily GDP...hmmm...we all just worked 108.26 days....which would be....hmmm... 108 Days, 6-Hours, 15-Minutes to play "Save the Bankers."  Wonderful, huh?

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OK, but there is an alternative explanation for the market falling apart:  Word that Hillary Clinton will be nominated for, and will accept the job as secretary of state in the Obama administration.

 

So, you thought there would be change huh?  This is sounding more and more like the American Corptocracy are just putting the same old players in after a game of musical chairs.  Like I said before, an election with only two parties, no any-war and no balanced-budget candidate wasn't really much of a choice, and you can see it with picking Whats Her Name - if true.

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OK, onto the numbers...

 

PPI Falling

Latest Product Price Index figures are out - so let's jump into it - just what you'd expect in a serious recession:

"The Producer Price Index for Finished Goods fell 2.8 percent in October, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decrease followed a 0.4-percent decline in September and a 0.9-percent fall in August. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved down 3.9 percent in October after declining 1.2 percent in September, and the crude goods index dropped 18.6 percent subsequent to a 7.9-percent decrease in the previous month. (See table A.)

Among finished goods in October, prices for energy goods fell 12.8 percent compared with a 2.9-percent decline a month earlier. The index for consumer foods edged down 0.2 percent following a 0.2-percent increase in the prior month. Prices for goods other than foods and energy rose 0.4 percent for the second consecutive month. "

The drop is much larger than expected.  Key thing to watch is the discussion of finished goods - those are closest to your checkout stand:

"The index for finished energy goods moved down 12.8 percent in October following a 2.9-percent decline in September. Gasoline prices dropped 24.9 percent after falling 0.5 percent a month earlier. The indexes for liquefied petroleum gas, diesel fuel, and residential electric power also decreased more than in the prior month. Prices for asphalt and finished lubricants turned down in October. By contrast, partially offsetting the faster rate of decline in finished energy goods prices, the index for residential natural gas moved down 5.9 percent compared with an 8.2-percent decline in September. Prices for home heating oil also fell less than in the previous month. (See table 2.)

The index for finished consumer foods edged down 0.2 percent in October after rising 0.2 percent in September. Leading this downturn, meat prices decreased 5.6 percent subsequent to a 0.6-percent fall a month earlier. Prices for mayonnaise, salad dressings, and sandwich spreads; unprocessed finfish; and canned fruits and juices turned down in October. By contrast, the processed young chickens index increased 5.9 percent following a 0.6-percent decline in September. Prices for natural cheese (except cottage cheese) and melons also turned up in October. The indexes for fresh vegetables (except potatoes) and for sugar and confectionary products advanced more than they had a month earlier."

More numbers, anyone?  Oh sure...got zillions of them...

 

Industrial Production Falling

The Fed's latest industrial production figures came out yesterday and amazingly, they climbed a bit in October - up 1.3%.  Still, the year-on-year numbers aren't pretty, no matter how much statistical lipstick this month put on: Year-on-Year down 4.1%.  If a picture is worth a thousand words, here's a further two thousand for you:

And yes, I'm expecting that we'll see the current downturn shaded with gray indicating a recession - no idea what color they'll use if it shades into depression, though.

 

YangGo

Yahoo co-boss Jerry Yang is stepping down.  Fallout apparently from the Microsoft bid being turned down. I didn't see what Yang was planning to do next, but I've got a few software ideas - including a really good one which will be rolled out for Peoplenomics subscribers this coming weekend...

 

Circuit's Circuit

Business Tactics Chalk Talk:  Don't know if you caught that Richard Salinas Pliego, a Mexican billionaire, has bought what's now up to a 13% stake in Circuit City.  A curious thing to do, considering that Circuit City is in bankruptcy, you're thinking.

 

Not really - actually, quite crafty I figure.  If you read up on the history of Grupo Salinas, you'll see that in 1952 or so, my friend Hugo Salinas Price became CEO of a company called Elektra which got into retail electronics stores in Mexico in a huge way.  Then, in 1987, Ricardo Salinas Pliego took over the CEO job at Elektra and the company has continued to grow its retail side - to the point where they've now got something like 1800 retail stores, mostly in Mexico but in a couple of other South and Central American countries.

 

My thinking on this?  Looks to me like Grupo Salinas/Elektra is getting ready to expand into the US marketplace, and with assets on the cheap here, I'd be looking for them to also make some kind of an investment in US Hispanic language television (if they don't already have such a stake). I figure Grupo Salinas which also owns TV Azteca, the second largest network in Mexico, facilitated some of their retail growth with that TV network ownership.  So why not move into the American market using the same combination play? 

 

Not only that, but I'd look at the size and timing of what I expect will be their further acquisitions as an indicator of how healthy the US market looks going forward...Think what you could do with group ownership of NBC and Circuit City helping each other along -  got the picture?

 

Gold Mystery Solved?

hats off to Jim Kingsland of FoxBusiness.com for his story "Why Gold is Down, But You Can't Get Your Hands on Any..."  What seems to be going on is a paper market for gold and a physical market for gold.  We'll just continue to laugh at the paper market, thanks. T'ain't real...

 

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Coping: National Correct George Day

Some days it's like people don't have anything to do but tell me that I've screwed up in one way or another.  Monday was no exception.

 

My comments about determining which things would be of value, for example.  One reader pointing out that I shouldn't have used the term "opposite sex" in my list:

"The word is "gender" George. As in "...an attractive member of the opposite gender."

At age 74, they're gettin' hard to come by. Hmm. Speaking of puns...."

Unlike some of my writings, I was able to explain to this readers that no, every once in a while George is actually right on something - and in this case, the word was not gender - it was sex as written:

"No, 'sex' is the right term, thanks to the changes in gay rights, the word really is 'sex' now...gender implies that two anatomically different types are required for sex and lately, all that's out the window...

And you thought color TV and microwave ovens were the big changes in our lifetimes!"

On the other hand, not all exchanges were so friendly/warm.  Here's one of those:

"George, you are nuts!

<Already, the Bush administration, if I recall right, stripped gun ownership rights from anyone who had mention of 'stress' on their military record; or at least they were angling that way.>

 

Take note of the 2 DEMOCRATS that introduced this bill. It's your "crap" reporting on un-truths that sicken me! This is not the Bush Admin., but a bunch of liberal Democrats admin. that will push this thru. And you voted for Obama! Get used to it! Or in your case, spin spin spin the truth!! P.S. Can you handle the truth? If so, print a retraction. Otherwise, your just another blog. "

A couple of other readers wondered where I got that idea, so I crawled into the WayBack machine and sent details of where my [faulty] recall came from (sent to a reader who didn't label me nuts):

"Think it was buried in hr 2640 signed into law by Bush et al in Jan of this year.

See definitions sec. 3 para 2

2) MENTAL HEALTH TERMS- The terms `adjudicated as a mental defective' and `committed to a mental institution' have the same meanings as in section 922(g)(4) of title 18, United States Code.

My understanding was that this left a lot of latitude in determining who was ‘mentally defective’ and that there was talk that simply being treated for stress while in the military might trigger this. Question is whether being found in need of combat stress would trigger under “adjudicated as a mental defective” – sorry, don’t know the answer to how that would play. Think those least able to hire lawyers would lose, though.

Also, don’t know if you realize it, but its also illegal for people with dishonorable discharges “…to ship or transport in interstate or foreign commerce, or possess in or affecting commerce, any firearm or ammunition; or to receive any firearm or ammunition which has been shipped or transported in interstate or foreign commerce. “

Under (g) (6)  (of title 18, USC, 922 (g))

The metal requirement is in (g) (4)

And no, aliens can’t have guns if in the country illegally – but that one’s not being aggressively enforced, near as I can figure..

So on this one, I stand corrected - at this moment, treatment for combat stress while in the military doesn't trigger a loss of gun ownership rights.  Figure the demoncrats will get around to that soon enough, though.  I'm waiting for assault slingshots to be banned next. And let's lock up David for running around with that sling, too, long as we're at it...

 

Hey!  Don't look at me that way or your go to prison for harassment...

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By the way, several readers sent background notes on how sporting goods that could become 'illegal' soon are flying out the doors of the big gun and hunting supply stores.  And not just because of this being hunting season many places. High capacity magazines and ammunition, not to mention the (likely to be expanded list) of 'assault' weapons.

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And speaking of which, someone sent me along the claims that since Australia changed its gun laws, crime is up dramatically in the country.  A little research on this (takes a bit of reading, but it is interesting, suggests something different than what's implied in the email.

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And yes, I enjoy shooting here at the ranch.  Doing a 5" groupings with my favorite 9 mm pistol on the 10-yard line; the goal is a 2" grouping.

 

Speaking of the Taxocrats

(And that's both factions of the Corpgov Party), here's a good email:

"George,

My son (college sophomore) called me today and asked what would happen to the money he has in the bank if the bank failed. I explained how the FDIC worked and he then asked what if the U.S. goes bankrupt. I told him that if the Country goes BK there will be much larger issues than the $750 he has in bank. He hung up not feeling too satisfied with my analysis. He called back this afternoon and told me of his contingency plan which is "I'm just going to make sure that I owe more in income taxes than what I have in the bank. That way if they can't cover a failed bank, I won't pay my taxes". I'm not sure if I'm getting my $20,000 per year's worth, but at least he's thinking."

His thinking may apply to someone who has very little in the way of seizable assets, but you might remind him that 'Uncle" always gets his due...  But I'm one of those people who can hardly wait for November 21st to show up.  Why?  That's when Amazon will start shipping this year's Turbo Tax version we need.  I want to make sure that I am all squared up with 'Uncle" before the financial system implodes.

 

See, the scenario that I wake up worrying about is this:  O gets inaugurated and the new administration declares a bank holiday.  Since you might owe some taxes, if the banks aren't running, you might have no way of paying, ergo, 'Uncle' could make a claim.  On the other hand, if I get my 2008 taxes done to the point of being able to send in my payment while the banks are still working, then I would (potentially) not have a liability which I couldn't pay.  Remaining 'free' and unencumbered is a real big deal to me.

 

Absurd!  Oh sure, but I have an overly active imagination and don't like having debts around when the banking system is as 'iffy' as it is lately...

 

That Strange Sense of Humor

Ah...some people still have a sense of humor - I mean for reasons beyond the financial system which is a....Anyway here's what I mean...

"Not confused, but simply too curious to not click on the link, after you made the non-value of paper money quite obvious, I literally laughed out loud. I loved that link. What a sense of humor! No wonder I like to read your daily news, even if it is pretty much an emotional downer. (You bliss robber!)"

Bliss robber?  Me?  I can help you're so uptight:  if you didn't find yesterday's link light-hearted, drop by here.

 

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Send comments (OK, and corrections, too, then...) to george@ure.net

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Monday November 17, 2008

Please Rally To My Entry Point

I'd like to begin this morning by thanking the G-20 nations for not doing anything this weekend other than laying out some ambitious sounding talk and agreeing to meet again in April.  Germany's idea for a Global Risk Map is, as I explained to Peoplenomics subscribers this weekend, evidence that Germans should stick to designing Porsches and let modeling the economic future go to folks who at least would model not map risk...but that's just me. 

 

In any event, the lack of action at the G-20 clears the way for the U.S. markets to rally - and so I'd expect sometime today or tomorrow a decent rally will get underway and propel us toward a reasonable entry point for the next leg down.  My funds transfer into my (legacy) eTrade account is finally in place, which leaves only the expected bounce to let me in.  Target entries were posted for subscribers, but as usual, not a recommendation - just flailings of a madman with too many charts and cycles in his head. 

 

Put another way, I expect Wall Street to do its dead-level best to turn every lemon of a headline out there into lemonade. 

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Take the L.A. fire story.  Horrible news, more than 25,000 evacuated (sound like Diaspora starting?)  but wait!  Will some sick puppy on Wall Street paint it as good news if it clears out some of that unsold/REO property off the books in the Golden (quickly turning Crispy) State?  That kind of thinking.  You know: Sick, capitalistic, dollars uber alles kind of thinking.

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Another story which might appeal to the profits-at-all-costs kind of thinking on the Street:  A report that violent criminals who should have been deported to Mexico/South America were turned loose from the Harris County jail.  Would keep down farm labor costs and keep up sales of capital goods to law enforcement agencies.  Cruisers, Tasers, revolvers, body armor, computer systems, national database projects, trunking radio gear, oh the list goes on and on. New radar detectors, new jail projects, more private jailer contracts for private jail operators...  See how this all works, yet?  It's called "The System" because that's what it is.

 

Why a serious outbreak of sensible enforcement would bankrupt the anti-crime industry and we can't have that, now, can we?  Besides: If we had a meaningful border with Mexico, the hard working and highly motivated Mexican workers would probably be home developing their own country, instead of following the high dollar gigs (comparatively) onto the U.S. side.  Ain't no way the Obama administration will close the border.  If anything, I expect border traffic to become even more free-flowing.

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And speaking of which, another bit of "good" news which I figure will factor into the market is the Iraqi government approval for the U.S. to stay in their country for another three years.  Oughta ensure a nice transition period into a 'next war' for the Obama administration.  And, it'll be oh-so-easy now for them to say "They have asked us to stay and help them..." rather than do any real changing on that score.  "The System" set up the last election so there was no anti-war, pro sound money, any corporate choice on the ballot, so don't be so surprised by any of this.

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I don't want to sound overly cynical, or insensitive to the pain and suffering of real people, including a lot of friends in the L.A. area who are being smoked out.  But now that the weekend is over, we have to get back to the steely-eyed assessment of the world's current state of affairs.  We can't provide good analysis and project out into the future unless we're willing to see that for every story, there's someone with angle to make a buck on it.

 

Need an example?  "Panel finds widespread Gulf War illness"  This ought to keep legions of 'experts' busy for years.  Already, the Bush administration, if I recall right, stripped gun ownership rights from anyone who had mention of 'stress' on their military record; or at least they were angling that way.  And given the anti-self defense tool position of the 'change crowd' that's not likely to change.  Yet, at its core I'm willing to be Gulf War illnesses might have something to do with the various involuntary injections, depleted uranium, lack of body armor in the early going and complex rules of engagement.  Just to name a few.  But that would be simplistic.  We need more study.

 

Defend the paradigm, defend The System.  Make jobs, not progress!  Disarm the victims and open them borders.  And as soon as this kind of paper implodes, we'll print up something new.

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Meantime, the National Association of Business Economists says the US is in a recession and joblessness will likely peak at 7.5%.  But wait!  If they're so smart, all of them, how the hell did we get here?  And why didn't they tell us about all these companies blowing up before it happened so we could gotten ahead of the curve instead of being thrown under the bus? I'

m betting their 7.5% will be off by at least a couple of percentage points.  Why?

 

The National Layoff Festival

CNBC had a guest on this morning talking about how Citigroup might play off as many as 50,000.  Then, we have a source who says when the Post office gets around to starting its layoffs in January that the number may be almost double the public number of 40,000 - we've heard 70,000 talked about. And rumors that anyone with less than 3-years experience might be expendable.

 

Even though there's reason for the markets to rally behind some of the headlines, including lower oil prices this morning, it's certainly not a sure thing.   "S&P 'Armageddon' if lows don't hold: Chartist."

 

When do I begin to give up my hope for one more little run upward to enter short positions?  Well, look at the intraday low of the Dow last week over in Yahoo's historical data department.  See last Thursday's 7,947.74?  More than a few minutes below that level and I would get real nervous about entering the short side with cheap put options.  Thanks to the darned volatility index (VIX) being high, they're already more spendy than I'd like.  So we'll just watch and see.

 

A good ,capacity utilization number from the Fed this morning might spin things up, but the converse may be true as well. Tomorrow's Producer Prices could also spin things up - or down.

 

Word that president-elect Obama will do "Whatever it takes" to jumpstart the economy is at least a signal that inflationary programs are in the works.  Just pray he hasn't read those think tank reports on how much stimulus wars deliver to a sick economy.  Facing something that could go the route of the first Great Depression, a war to get out of it (as WW II did) could be a planet killer nowadays.  But hey!  We're doing that anyway, aren't we?  Just a little slower...

 

But the Really, Really Bad News...

...is found in this morning's Peter Lauria piece in the NY Post business section.  The economy, it turns out, has gotten so bad that "TV Land in Trouble: Development-dollar flow is slowing to a trickle."

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Say, you don't think that "Summer of Hell" that's in the www.halfpasthuman.com predictive linguistics has - as one factor - a lack of anything meaningful and new on television combined with the worst summer ever of reruns of lowest common denominator slop on the Cyclops, do youi?  Talk about driving the villagers to their pitchforks and torches...

 

But wait!  Maybe we can all watch the YouTube video on how bad the economy will be if the automakers don't get a hand out from the government, too!

 

Bonus Rounds

A couple of different takes on employee comp at places getting the big bucks in the Hank & Ben tax money giveaway programs.  On Friday there was the report that AIG paid millions to its top workers.  On the other side, "Goldman CEO, 6 others forgo 2008 bonuses."  I'm sure this will get them nominated for sainthood in Wall Street's Church of the Almighty Buck. 

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"Now if you'll all just turn your hymnals....I mean deal books to page..."

 

"Ooops!  Not the page titled "More Americans slipping into bankruptcy..."

 

"Ah, here's the page: A website launched to promote the idea of all religions getting along in peace and harmony.  Yes, this will do fine.  About time we found something positive to talk about."

 

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Coping: Cognitive Dissonance, Heavy Metal

Resource Investor had a really good article this weekend on what is turning into a major topic of buzz around the 'net.  Namely the great economic mystery where we have seen falling metals prices but at the same time a scarcity of deliverable product.  This is the kind of thing that can't happen in a truly free market, but if it's the over hedged, delevering kind, who knows?

 

But I recommend you read "Got Gold Report: Gold, Silver Premiums Highest in years."

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Meanwhile, it looks like Kitco has some gold coins back in stock, but I couldn't help but notice the selling premium is $50 over spot - and if you are selling them gold coins, they are paying within a few dollars of spot.  This kind of asymmetry is something I notice as a possible indicator of a long-term trend.  Higher, in this case, but no guarantees.

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Longer term?  I think that metals and energy will bottom in the first couple of months of 20098 and when they do, it's still my plan to 'load the boat' because at some point the inflationary impacts of all the government money-printing will come home to roost.  When it does, should be huge (albeit paper) profits to be made - and then spent quickly on something more valuable than paper with symbols and incantations on it.

 

Quake Planning

In our "sure seems timely" file: "Tucson Region: Major international drill based at D-M to focus on rescue skills, coordination" and it's built around what?  Possibility of a major earthquake in a foreign country, of course.

 

Don't tell them that the first of the Twin Quakes in Mid December will likely be South America with the North American one to follow a couple of days later.  We get to about December 7 or so, then I start worrying...

 

Mi Consigliore Writes...

...a fine email to ponder:

"George, you think you are a doomer .. read EJ over at iTulip.

I will send a few more thoughts later but just wanted to leave you with the thought ...

After spending in the $TRILLIONS$ to bail out the banker class and the financial end of the economy the Bush Administration doesn't want to spend money to assist the part of the economy that produces REAL products. Instead it appears to WANT that end of the economy TO LIQUIDATE and ship much of our remaining basic manufacturing overseas.

We all know the Big 3 have mismanaged themselves into a mess ... but that is a smaller mess than AIG alone!!! (as I said when AIG got it's first $85 Billion that was just a "down payment"), and the thing to keep in mind about much of the Big 3 mess is that it is caused NOT by current operations but by legacy costs that society is going to have to pay one way or another, either through a "tax" via the purchase price of each new car that Toyota, Honda, Hyundai, and Nissan buyers do not have to pay, OR via direct government payments and higher insurance payments that everybody else is going to pay anyway to hospitals, government entities, unemployment funds, etc. etc..

If one looks at actions not words the "PLAN" to DEindustrialize the US is what IS the cornerstone of the Republican Party's Economic Game Plan. It has been that way ever since Bush I became President, and it continues unabated.

Can the US remain a great country if it is DEindustrialized?

I personally doubt it because even if we can continue to convince people that selling Paper, Insurance, and Big Mac's makes for a great economy eventually those who do make REAL Stuff will either cease to sell it to us for more Paper, or will take their capability to make "Stuff" and use it to make War against us.

I scratch my head over the Republicans' rank and file near lock step belief that they are better off if we ship our manufacturing out of the country (part of the current Republican argument per the talking heads seems to be that since some of our industry is unionized we should just close that end of our manufacturing down and get rid of it - after all that will teach those union members that they are bad people)"

Well, I wasn't really a pinnacle of 'doom' until I did this week's report for Peoplenomics that included an analysis of "Peak Trade"...  reader feedback:

"I just read the report.

Both the international growth analysis and the hedge fund deconstruction are brilliant (yup, no hyperbole there)"

Still, the Eric Janszen post at iTulip is definitely worth reading.  The world at Peak Everything.  Except taxes & inflation - probably have to wait for 2009-2010 for that...

 

Beats Me Department

So the question keeps coming up:

"George, In an effort to keep some value while the dollar goes down, is there a best currency to exchange into IYO? I'm considering the Swiss franc for a chunk, but am not sure they won't let it fall right along with the rest. Ideas?"

Here's what I want you to do:  Get a small rubber mallet.  Place your left hand on the table.  Take the hammer in your right hand.  Every time you start to start to form the question "Is there a best currency..." I want you to smash your fingers nice and hard.  (Use a stunt double, I'm not paying for your medical bills if you're dumb enough to really do this...).

 

My point is to use pain to waken youi to the idea that we are living in a world where the ultimate scam has been pulled by people who combine two diametrically opposed words into a phrase and then drill it into your thinking.

 

The words are what?  "Paper" and "Assets"  - it's like 'military intelligence' or 'fighting for peace' - the concepts are contradictory at some basic level that has escaped you.

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You wash up on a desert island.  Nice place, sun, gorgeous beach, yada yada.  Now I hand you a list of items that you can pick from to have with you on the island.  See if you can find the least useful of the bunch.  Ready?

• An attractive member of the opposite sex.

• Water

• Food

• Clothing

• A library of good books

• A shortwave radio

• Flashlight

• Fishing gear

• Lobster trap

• Tree climbing gear

• A saw, hammer, and nails.

• A small pile of paper with various symbols, incantations and zeros on them.

 

Still confused?  Click here

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Send snip and save items to george@ure.net

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