Published Monday through Friday about 8 AM Central Time Except Holidays Depending on my mood...

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A Week Going Sideways/Hooked on Paper

Have you ever had one of those weeks when not much seems to get done?  This may have been one of them.  Despite the GW feller throwing $18-billion (plus or minus a bottle of el Don) at the automakers, not too much joy from the markets on Friday - a slight 25-point decline by the Dow.  Ford had the good sense to say "No thanks..." which definitely increased the odds of there being a Ford in my future.

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Stepping back from the trading fracas, the Dow lost a few points for the week, down from 8,629.68 a week ago to a close this week of 8,579.11 according to the figures posted on the Yahoo Finance site.

 

Vice president-elect Joe Biden has looked at the numbers and has concluded that without a second economic stimulus bill, of perhaps another $700-billion or so, the economy is in danger of 'absolutely tanking.'

 

The problem with economic stimulus bills, in a nutshell, is this:  Just like advertising pulls future demand into the present, so too economic stimulus measures pull future spending into the present (although we're going to pass on the next one, having done our tax planning now and seeing that it just gets tacked on taxes in April.)

 

So if 'advertising' is the financial equivalent of a heroin habit for corporations (spending ever more to buy future consumption), so too government seems to be getting 'hooked' on stimuli in order to keep the economy going.  Ergo, larger and larger stimuli will be needed until someone figures out that there's no end to the habit except going cold turkey.

 

Because going cold turkey would bring about huge socioeconomic change in America - we call it the 'revolution meme' and the emergent 'bogslife' to come (beyond organizational/government systems) - the PowersThatBe - the folks defending the old mass consumption model - are not about to give up without a fight.

 

Close as I can figure, this is about as close to a guarantee of deflation turning to inflation or hyperinflation as you'll ever see.  For now, the happy-talk is that the dollar's decline this week was too large to be 'sustainable' but give it time.  Gold made some nice gains this week .

 

While our gold coin has picked up a little, our 'investment-grade diesel stocks on the ranch haven't fared as well.  Oil prices continued to slide this week despite the OPEC'ers reducing production.

 

Still, going into the New Year, I expect that oil prices will bottom maybe in Q1/Q2 and will then begin a much longer term bull run and we intend to have several years worth of tractoring in 55-gallon drums with preservative by then.  And, diesel prices have lagged behind gasoline coming down.

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This morning's report is short (I wasn't going to even do a report, but I have got such a habit of writing these things, no point stopping). 

 

Here at the ranch, I was out 'tractoring' on the west end of the property until almost dark last night getting ready to put in another 600' feet of fencing.  This is the time of the year to be working the thick East Texas brush:  You can see through most of it well enough to work a brush hog through and put in a good fence line.  A little more coffee and some vittles and I'll be mounting up that mighty iron steed (atta boy, Kubota) and heading down into the lower 12.  I'll see if I can't bring a camera along so as to illustrate the thickness of the brush - it really is inspiring.

 

This weekend, for Peoplenomics subscribers, we'll unveil our 2009 outlook.  You thought Joe Biden was Scrooge?

 

Peoplenomics.com 

How to Become an Economist: Slicing Your Own P.I.E.

Every now and then a friend of acquaintance will ask "How did you become an economist?"  I tend to look at them with the evil eye and explain that I'm not really an economist - in the academic sense of the term - just a practical sort of fellow who works quite diligently at observing what's in front of his own nose.  The odds of me making it into the history books for 'the' breakthrough economic insight are pretty damn slim, if zero is slim.  But, on the other hand, if I can do a Darwinian job of classifying evidence of the Second Depression, sorting it out, and trying to make sense of it, maybe a minor book on the subject some day would be useful.  The plot line of such a book?  Personal Indicators - Economic.  P.I.E. for short; learning to see things as they are ... where it matters - in your own back yard.

 

        More For Subscribers        Subscription Information

 

What is better than a Christmas Card?

Why, sending an email to everyone in your 'contact' file and tell them about  www.urbansurvival.com of course!

 

"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 December 19, 2008

End of the Free Internet? 

Global 'News Control' Starting?

Not to begin your day with a bummer, but I've been expecting this for a long time - and today I'm worried that global/corporate/government news control may have arrived in a subtle way.

 

Before I get to the specifics, first the 'big picture' stuff:  You may be aware that our friends with the predictive linguistics project have been seeing out some ways into the future, perhaps mid  2009, we will all slowly lose our ability to communicate freely and openly at the 'global' (hive?) level as corporations and governments begin to lock down the internet.  Might be on a phony 'terror' prevention pretext or a 'copyright' red herring, or whatever.

 

If you've been thinking that this was just a pipe dream, here's this morning's development:

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I have ran into this headline which I wanted to read (which I assume came from an RSS feed) over at the Google news search engine:

 

90% netbooks sold with XP Scenta.co.uk, UK - 27 minutes ago Asus has revealed that the sales of Eee PC models pre-loaded with Linux have fallen dramatically following the availability of Windows XP versions. ...

 

Yet, when I clicked on the link this morning, I got this curious message:

"This website is temporarily only available for UK residents. If you are a UK resident but still cannot access the site, or are a non-UK resident with a specific reason or need to access the site, please contact admin@scenta.co.uk  (ensuring that you do not change the subject of the email). If you do not click the above link then please quote the following reference in your email: 213892869. Your access request will be processed as soon as possible and you will receive a response by email."

Hmmm...curious, I thought, so I sent them a polite inquiry asking - in effect - "What gives?"

"Hi

I run a financial news oriented website and I would like to know why this site is only available to UK residents?

I have written much about the coming ‘restrictions on access” that will be used as a tool of government and corporate control and wonder what has driven www.scenta.co.uk  to impose access restrictions such that American readers are not able to click on what appears to be your RSS feeds and get content which has been ‘broadcast’ via RSS?

Thank you in advance on behalf of our readers.

George Ure www.urbansurvival.com 

I'll let you know what they say...(if I get an answer, that is...)

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I don't think I have to tell you what my fear is?  That this could be the leading edge of something much, much larger.  First China, North Korea and......but then content restrictions from the UK?  There goes the 'net'?  Inch by inch....

 

"News' Versus Ratings

Most of the 'news drone' continues pretty much unimpeded today.  Not to be overly insensitive to the continued rumors that GM & Chrysler might go marching down the aisle, or the latest on the investigation of a missing child where foul play is suspected, but these are the kinds of stories that while 'attention grabbing' don't hold out much in the way of personal planning/hedging opportunities for everyday folks (like me and probably you).

 

Back in the 1970's when I was a young radio news director in major market radio, there was a study done (best I can recall here) done by Frank Magid & Associates for the Associated Press.   Like I said, this was close to 30-odd years ago. so my recall may not be perfect.  

 

But, when it came down to what news was most 'popular', this report reached an interest conclusion:  After 'the weather', the most popular stories among news readers/viewers/listeners seemed to drop into the 'health', 'heart', and 'pocketbook' categories.  Then along came 'personality news'.  It was an excellent study and it gave me a chance to start developing my own system of 'framing' the news.

 

Yes, that explains why there is so much focus on the weather.  It gets cold, snowy, and icy every winter - which is why it's called that, I suppose - but it turns into a media frenzy because it's a highly rated story that draws in lots of viewers/readers.  So much so, in fact, that the story category has its own channel and website: www.weather.com and the Weather Channel.

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Based on how much content of headlining news operations seems based on crime & suspected murder at the moment, and most of the rest seems devoted to 'heart' kinds of stories (how many Christmas trees can we put in a house?) kinds of stories, I'm waiting for some news programming guru to unveil "The Crime Channel" and "The Heart Channel".  It's got to be just a matter of time.  How many lawyering-segments are replacing headlining hours, you can observe for yourself.

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As it turned out, the best explanation about how programming, including news, works in American media was given to me by a once program director (PD) of KFRC in San Francisco, back in the legend-days of Top-40 (which sounded more like Top-10) Rock & Roll AM - back when Dr. Don Rose was doing mornings in the golden days of the "Super 610"  when I was thinking about moving from Seattle to SF to work news. '72 or '73.

 

"In programming, you can't give the people what they want - because they have no idea what they want," began the explanation.  "Nor can you give the people what they think they want - same reason.  No, instead you have to give the people what they think they're getting."  (Was it Dave Cook or someone else?  Age is a bitch, but you see the point I hope.)

 

Anyway. it was a life-changer for me; got me to looking at contexting and framing.  The Magid study and then the Zen-like insight of the KFRC PD made it all perfectly clear. 

 

Ever since then I've figured the American public's taste in media has been something akin to a radio transmitter looking at the ionosphere's F-2 layer at night.  It reflects alright, but the reflection is fluttery, jittery, and there's enough distortion of things that you never get exactly what you think you should.  (I would have used the 'trying to see your reflection in a pond that you've just thrown a rock into, but that would make the analogy far too simple, low-tech, and comprehensible. Definite no-no when talking news philosophies.)

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Some deep down behind the headlines, the real world-changers are usually percolating along,  often they're just out of sight/reach because of the curious ratings-driven decision-making processes in newsrooms.  Which, I suppose, is why this site (nominally focused on the pocketbook side of things) exists.

 

I don't want to be poor and heaven knows, I don't want you to be poor either.  Unfortunately, the ways to avoid poor are often buried in the everyday 'news flow' by stories that get higher marks from a ratings standpoint because the public usually doesn't slow down long enough to differentiate between "What do I think is interesting?" and the deeper "What can I learn from current events that will improve my lot in life going forward?"

 

Ratings are largely based on 'what's interesting' while your IRS-1040 should reflect whether you're really paying attention to the "improve my lot in life" question.  The latter, of course, could require real work - which is why so many people develop a comfort zone and hang with the 'interesting' question instead.  It's why average people are....well...average.

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About now, you ought to have pieced together why all those inane 'news teasers' exist, too.  Teasers like "Murder or snow-driven rage?  That story just ahead on (fill-in-theblanks) NewRadio (fill-in-a-number). 

 

Teasers drive TSL's and QH's.  That's 'time spent listening'  (related to 'cumes' in mediaese) and 'quarter-hours' which is how many 15-minute segments they can drag you through.

 

Here's a dirty little secret from my broadcasting past:  I once wrote up a completely fictitious (but believable sounding) news tease and ran it for an entire morning drive segment and never reported the story!.  No one asked, no one questioned....and to this day I laugh about it.  April fools day, too....LOL.

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As a one-time news director, it always bothered me, this lack of public acuity.  And, it's why I hung up my news-directoring boots at the country station in Seattle back in mid 1983.  Might have had something to do with covering the Wah Mee massacre a few days before my birthday that year.

 

If you get an image of good reporters being smart, cynical, brazen, mostly hard-drinking, and protecting their hearts with a bullet proof vest (with a level 3 chest impact plate), there's a good reason.  The grit from the street is hard to wash off.

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It's probably also why I have been attracted to the predictive linguistics project of www.halftpasthuman.com down at a core level.   Wouldn't it be nice - I mean really grand -  if we could see just enough of the future coming that its worst impacts could be avoided? 

 

And sometimes, we get it right.  Early - and off by sometimes a week or three - but often right in the end.

 

I don't trot out the minor web bot hits, but here's one to gnaw on; not my assessment but one from a reader:

"Hi George,

I subscribe to your sight and HPH. I noticed that the paragraph below from part one of alta 909 sounds like the Madoff scandal. What do you think? I think that there is a lot more to this Madoff thing than is being admitted. It seems like the regulators knew what was happening and did nothing. What we haven't heard is where all the money went, it couldn't have all been paid out to early investors. Did Madoff use the money to fund his lavish life style like most Ponzi schemesters do or was the money funneled elsewhere like the Enron money laundering scheme. This could be the scandal that blows the lid off all the other schemes out there like the gold suppression. I know Bill Murphy from GATA met with the CFCT about the gold suppression and the CFCT may not want to look like a bunch of idiots like the SEC does and may make a move before a scandal outs the gold suppression scheme.

have a great day,

[name withheld]

(I hope its OK to copy and paste this.)

Populace/USofA - Enron Redux, Small World after all, CofA As the Winter settles in after the December 21 solstice, what had been a state of [unfinished/not yet complete understanding] about the [abysmal] condition of the US and planetary [economy] becomes [sure and certain knowledge]. This [change of mental state] comes after the [terrible (shopping) holidays]. The [personal perceptions] of the [economy] as well as the [visceral reactions (bad digestions)] created by the [lies from officialdom] in late December set up conditions for the rising aspect/attribute set of [decay] in January and through the rest of Winter. In large part the [lies] of [government] *are* [recognized (as) delusional propaganda]. This [recognition] of [lies from officialdom] will find some very [high levels] of [visibility] as some [televised propagandists] are [taken/shaken] from their [routine] by [on-air confrontation] with [raging citizens]. The descriptors in support of this lexical set are indicating that more than a single instance of [confrontations] will be [visible] as several such [incendiary incidents] occur over the course of about [6/six days]. During these [incidents of visible rage/frustration], the [secrets revealed] meme will become very [active] as an [on video personality] lets loose with [uncommon/unknown truth] in the midst of a [storm of epithets/curses]. Along with the [raging propagandists], there is also some indication that [theft (by) stealth] will [bring out/make public] some [hidden (operational) commands] from the [core of the propagandists]. This last is indicated to [create fires] of [rage] within both the [deceived], as well as the [gatekeepers (of the) secrets]. The descriptor sets suggest that what becomes available is perhaps a video or audio with a hint of the [enron style] conversations in which the [cruelty (of the) guilty] came out in [callous words].

Ah, sure, I guess:  Yes, the Madoff case sure seems to fit a large chunk of the expected language. 

 

When the next data-collecting run begins (looking out to November of 2009 [ALTA 1109]) it'll be extremely interesting to see what accrues in that 'summer from hell' linguistic set in the Pop US part of the model.  I don't expect it till mid January though, since the time monks are planning to do some linguistic tuning, having had a data stream up to capture a junior 'tipping' point over the first week of October when the global bankruptcies/global collapse got seriously underway as you n o doubt recall.

 

And, while the 'twin quakes' have not resulted in isolation of a bunch of folks (yet), the twin quakes of 6.3 and 6.0 off the coast of Chile certainly could presage a North American event(s) given that one of the icosahedron overlays (you're into the heavy math of hyperdimensional physics, right?)  could hit western North America?

 

Another reader notes there's a temporal marker of people using schools as storm shelters that needs to come first.  If you're still worried about a quake, you might not want to read the details behind this headline, then:  "Hundred seek shelter during storm".  You'd never guess where they sheltered.

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All of which takes us full-circle back to this morning's first cup of coffee and trying to sort out the 'urgent' from the 'important'.

 

That Highly Ranked Weather Story

...is chewing up all kinds of bandwidth on the teevee and 'net.  Thank God for predictable stories "It's winter!  Everyone cower and fear!!!!"  Gimme a break.  It's winter (or close enough).

 

I know, ratings, ratings, ratings....

 

Back At the Global Revolution

Besides what I call the "National Layoff Festival" coming in 2009 as the economy cools down, we have the continued rioting in places like Greece to be concerned with.  Another day and more violence there.

 

But rioting and riot control are not limited by borders.  We see "Migrants riot at Turkish detention center" and in the Middle East its "No faking as Israeli police practise riot control".

 

"Hold it," you're thinking.  "How many police were hurt in that riot control practice?"  54 says one report.

 

Number of the Day: 54

I'm always fascinated by how a number pops up in the news with some frequency.  Besides 54 being the number of police injured in the riot training, we read how a "Request for new trial rject in ex-judges Pants Lawsuit"  He was asking what?  $54-million.

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And 54-million is what?  "More than 54 million disabled in U.S., census says".

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'Pal Joey' opened at Studio 54 last night.

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What's 54 have to do with the headline "Ohio Senate OK's requiring booster seats for children?"  ""In fact, in states that have a booster seat law, parents are 54 percent more likely to use them (according to a study by AAA)."

 

Newsmerology?  You decide...

 

Easy Money Day?

Oh sure, Secretary of Free Money Hank says an "orderly bankruptcy" may be considered for the automakers.  Sure, the market may fall early today, but have you noticed that the last month or so, Friday's pop up for feel-goods over the weekend so the market doesn't completely implode?

 

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Coping: Pie Time

A great article on what "We're gonna need more pie" from "Sharon Astyk’s Ruminations on an Ambiguous Future"

 

Gargle with Oil?

Here's a curious (and friendly-like) email:

"Hi George, just wanted to say hi and thanks for your colorful reports, coming from an ex-Nacadoches gal (my son was born there). I did a stint in the piney woods back in the late 80's, I was the weather girl at KTRE in Lufkin. Had breakfast with a bud that is high up in Oracle, seems they get a mandated vacation soon and lay-offs to begin in January ( how do unemployed computer geeks stage revolts?)

 

Noticed the litty-bitty activity in Tennessee and New Madrid area (bad for me, I live in Asheville, NC) and the 3.6 in Charleston? hummmmm. It's all in the:32-37 range. Nice of those friendly banksters to reign in their naughty interest and charges' issues (in 18 months) I guess they are reading the default tea leaves, hoping to stem their upcoming problems and toss beleaguered chargers a lifeline. Oh and how convenient for the busheisters to contemplate "bankruptcy" for the autolanders-that ofcourse means union-agreements and wages get tossed in re-structuring. I

 

last note here, a few years ago I read about work being done in India, by doctors to find some magic bullet to get rid of bad human bacteria, it seems it causes bad germs in the mouth that lead to tooth decay, cancer and heart disease-it's cold pressed sesame or sunflower oil, yep, they call it "oil-pulling" gargle with it a few times a week and it removes bacteria from your mouth (so you wont need anymore root canals) and from your bloodstream to prevent heart disease. I have been using it ever since and swear by it. later...

Say, that gargling with oil would be (hold on, it's been a tough week) 'gargoyle' would it?  Seriously - or nearly so - if you have any knowledge of this, please let me know...

 

Which Shortwave Radio?

A reader asked an interesting question about shortwave radios on Thursday - and since messing about with radio geqar is far more fun than the root canael I sent him an answer worth sharing...

"Hi George, I wanted to get started listening to shortwave broadcasts and my crank up analog am/fm sw portable is not measuring up. The stations fade in and out constantly. Can you recommend either the Grundig G5 Globe traveller or the Sony ICF-SW7600GR over one or the other? Enjoy your site immensely,"

My answer?

"Hi

The Grundig is a fair radio - but you get nearly  the same thing in a Kaito 1103 for $50 less - see notes on it here: http://www.radiointel.com/review-etone5.htm 

The ham radio crowd is happy with the Sony, except that the wall wart/power supply can introduce hum. The synchronous detector is likely better at dealing with selective fading on distant stations at night http://www.eham.net/reviews/detail/1534 

--- The Sony is more money - I would probably get the Kaito for $85 on eBay

Look here.

Then take the $100 that would have been spent on the Sony and spend $10 on wire and insulators for a really kick-ass antenna and then $10 for a bottle of wine and put $80 toward getting a ham radio like the Yaesu vx-7r (about $299 on sale) which includes shortwave, broadcast, FM, television, public service/fire/police bands plus it's a hell of a vhf/uhf ham radio - and small and rechargeable -

But that's just me...

73"

Renting a 'Cherry Picker'?

Say...if you're a serious ham radio type (like me) and you're thinking abour renting a cherry picker to put up antennas, here's a tip:

"Don't let them know what you are renting it for. They won't rent for any tree trimming. You are mounting a light is a good answer. Have fun! "

I don't suppose I need to give you the 10-miles long disclaimer about if you do it I am not responsible in any way, shape, or form, do I?    If you're in East Texas, the right answer for renting a cherry picker is more likely "Puttin' up our deer stand way high up in the trees this year..."

 

Treasury Direct

A reader asks:

I've come into the game late, am a bit confused and bewildered in all of this. I'm reading but it's not registering. You mention a Treasury Direct Account. What is this, I've never heard of it before. Can you direct me to a link that explains it?

Sure!  www.savingbonds.gov.   Write down your answers to the questions, though.  You will need them when you get your access card in the mail...  (No, don't ask me how I know, OK?  Just let's let it go at "George knows...")

 

Posse What-a-tatus?

A reader in Kalifornia sends this:

"Hi George,

Heard on the news today that the Marines out of 29 Palms are taking part in drunk driving checkpoints (getting us used to getting checked out check points) in the Yucca Valley area. The base and local news service got a flood of calls protesting the Marines taking part in civilian police duties. A spokesman for the Marines stated that they were only there for training purposes. Like as if they are going to Afghanistan to stop drunk driving? Funny that I happened to hear a news report on the radio before it was censored out, didn't hear about it the rest of the day."

Sure - simple reason why the story 'disappeared" - not popular.  Part of being MSM is burying stories on command, LOL.  Which is why the damn truth-seeking, bullshit calling 'net is so damn dangerous.

 

Looking for Truth?

A reader offers this search tip:

"Hi George, I just did a Google news search for "Bushvilles" and had 2 hits, been awhile since I had low numbers in a search. "Tent city" had 2905 hits."

OK.  Look up "Hoover II" while you're at it...

 

Man Manly Man Department

Got a special carnivore in your life?  Burger King launches a beef-scented body spray.  Now if you look like a hamburger, you can smell like one, too...

--

Did I, or did I not tell you that the world was running out of new products to pull us out of the Global Depression II? 

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Send Snip and Save items to george@ure.net

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Thursday December 18, 2008

The Airplane Crash To Come?

Time for some plane speaking about the economy: I heard an interesting rumor out of Seattle Wednesday that a certain large aerospace company may be announcing a 10% (+/-) cut in its workforce right after their holiday break.  But that's not hitting the wires yet - and may not till after the first of the year, MSM doing press release 'rip & read news" and all....but it makes sense.

 

Having had a hand in buying some airplanes earlier in life, I can tell you first hand that one of the key ingredients in fleet replacement strategies is projected future increases in fuel prices.  I'm sure you noticed that even with a 2.2 million barrel cut, OPEC hasn't yet pushed the price of oil back to the $75-$85/barrel target range?  Near 4 1/2 -year lows.  Not good, especially if the main feature of plane-selling has been fuel efficiency.

 

Now, we flip forward to the press release from the Bureau of Economic Analysis out Wednesday:

"U.S. Travel and Tourism Satellite Accounts: Third Quarter 2008

SHARP DOWNTURN IN TOURISM SPENDING IN THIRD QUARTER 2008

Real spending on travel and tourism (spending adjusted for price changes) turned down sharply in 2008:3, decreasing at an annual rate of 8.1 percent—the largest decline since 2001:4. In 2008:2, real spending grew 2.8 percent (revised). By comparison, real gross domestic product (GDP) declined at an annual rate of 0.5 percent (preliminary) in 2008:3 after growing 2.8 percent in 2008:2.

Passenger air transportation led the downturn—decreasing 20.4 percent in 2008:3 after decreasing 18.7 percent (revised) in 2008:2. Real spending on international flights fell sharply after two quarters of strong demand; spending on domestic flights declined for the fourth consecutive quarter. Spending on accommodations turned down, decreasing 3.0 percent in 2008:3 after a strong 19.5 percent increase in 2008:2. Hotel occupancy fell and room rates rose as hotels eliminated discounts intended to boost demand. Retail shopping by travelers dropped for only the second time in the past 3½ years, decreasing 6.9 percent in 2008:3 after increasing 4.7 percent (revised) in 2008:2.

Remember my word "Crashcade"?  Unfortunately, most people will look at this and figure "Oh, travel is headed down 8.1% annualized.  Not nice, but manageable..."

 

Well, no, it's not and here's why:  The BEA report is based on revenue in the chart.  What this means is that since airline tickets have on many city-pairs already doubled, the real physical number of people traveling is likely down over 20%.  You can see that leaking through when you read into the number of passengers.

 

Let's put on our thinking caps for a minute:  What will have to happen to hotel prices if the number of travelers goes down at an annual rate north of 20%?  Answer:  Rates go up or hotels get foreclosed, since in most cases, they are already owned & loaned to the hilt on (LOL, get it?) the premise of economic efficiency.

 

This is like watching one of those 'rooms full of ping pong balls on mouse traps that demonstrate how a chain-reaction works' except that this one happens like molasses.  Seems like about one data point per quarter:

• Q2 08:  Oil goes way up.

• Q3 08:  Passenger travel falls

• Q4 08:  Fall accelerates

• Q1 09:  Airplane makers likely to cut production rates, lay off humans.

• Q2 09:  Hotel/rental car consolidations/failures ought to make headlines

• Q3 09:  Another round of airline consolidations

• Q4 09:  More travel fall off....

 

And that's how a Depression looks.  It becomes circular at some point and since we already have 'free money' for the corporate geniuses, then it all comes back on consumers.

 

But wait!  Where the hell are we going to get money to go traveling?  Things are snowballing and the MSM and corpgov aren't shooting straight with us!  (More for Peoplenomics subscribers in this week's report and annual forecast for 2009).

 

I know, I know..." George you're a gloomer/bummer/crap-head for printing this stuff!"

 

Maybe, but it's already snowballing in other parts of the eCONomy, and I'm just trying to give you a heads up so that if you work in aircraft manufacturing you exercise a little self-restraint in Christmas spending just in case the ol' Texas outback nutjob is right...(again).

 

Headlines like "New Jobless claims drop more than expected" require a little caffeine:  The 'drop' was only 4,000 jobs which I figure is noise when you're talking about 554,000 jobs...but hey, any happy talk in a storm, right?

 

Auto Go Round

The place where the Death Spiral of Economics is already underway is Detroit with word out that Chrysler will be shutting down production for a whole month: Half paid by the company and the rest to come from unemployment benefits.  I can hardly wait to see how the number-slingers wash this one out of the unemployment figures next year, LOL.  That oughta be a real sight to behold.

 

Oh, THAT Index

A reader wants to know:

"Hi George -

Something that doesn't seem to be mentioned anywhere - even when you talked about shipping last month, is the Baltic Dry Index falling 93% in november. In October, when it fell 2.3%, that was the lowest in two years. What does this really mean??? Are the doomsayers correct in their assessments that BDI (which isn't a tradable index, so can't be manipulated) shows us that worldwide demand for raw goods shipping is coming to a halt??? or even worse, that the US is going to be isolated?

Wouldn't this mean instant depression???? "

Well, of course, it does.  Although the index was up a bit this week, over the longer term, the Index paints a picture of the economy laid waste to historic levels.   True, the Index is up a little bit this week, prompting headlines like "Baltic Capsize Index Surges: A Step Towards Industrial Recovery?"  But a few days does not a trend make.

 

If you look at the chart from InvestmentTools.com, one can make an argument that global trade is/has crashed and that all we need to do is wait for the Depression to come calling.

 

MainStreamMadness

I don't know about you, but I was incensed yesterday while channel surfing to catch a headline that some European billionaire had lost $14-million in the Madoff case. 

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Talk about fanning the flames of class warfare, is the MSM crazy???  Yeah, sorry about the loss and all, but you know what?  That's a 1.5% loss on a billion dollars, so spare me the tears.  meantime, where the hell are the MSM reporters going out under the freeway overpasses and the Bushvilles and talking to people who have lost 100% of their life's savings?  Or, don't they weigh as much in the 'cult of personality-driven' media joke? 

 

And they wonder why the 'net has become an increasingly important source of 'news'?  Does the world 'reality' mean anything?  OMFG...who are these people?

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Some kid in Texas gets years in prison for a lid's worth of weed while the bought-out corporatized, paradigm sucking  MSM doesn't seem to have any problem with the American JUST US system which puts a $50-billion+++ con suspect under house freaking arrest in a $7-millioni apartment? 

 

Hello?  Anyone there?  Is someone trying to start a revolution against the aristocratic crap going on?

 

Who was it said:  In America, everyone's equal, just some are a little more equal than others..."  And then there's this one...

 

The American Aristocracy, Redux

Not to beat my 'out the royalists/blue-bloods/American aristocracy'  drum (at least too much more, since it's pointless) but Drudge is reporting that Caroline Kennedy is Hillary's replacement.

 

Depends What You Mean By Freedom Department

With all the purple finger-wagging in Iraq, here's an interesting headline:  "Up to 25 Iraq government officials accused in plot..."

 

Plot to do what?  Revive the Baath Party?  Wait!  Didn't I send my tax dollars there so people could exercise 'free choice' in Iraq?  Don't get me wrong - I'm no fan of the 'makes the mafia look like nice guys' brutality of the Baath party in the past, but where's the line crossed?  Can't people have something other than one official point of view in Iraq?  I'm confused and watching...

 

 

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Coping: Teeth, Antennas, and Hobbies

About the time you've made it through this morning's report (and the deciphering of whatever it was I meant to spell here and there), I'll be on my way to Tyler, Texas for a nice relaxing morning of dental surgery.

 

My regular dentist, an amiable guy -- at least to the extent that someone coming at you with needles and sharp instruments can be viewed as amiable -- informed me Monday that I have a nerve going dead in one of my upper back teeth that would be best treated by a 'root canal specialist'.  He put me on pain for drugs, but the most notable side effect of that has been putting aside the usual rum (or El Don) rations before the evening meal.  I expect to be back to whatever passes for 'normal' around here next week one all the poking, prodding and prescribing passes.

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Since it's the time of year when consulting lightens up, I've had time to fly a new ham radio antenna.  I picked up one of the new dual-band (80 meter/ 40 meter) CCD antennas made by Dave Kelly, AI7R and sold at www.ccdantennas.com.

 

If you're afflicted with ham radio disease, you'll find my note to Dave extremely interesting.  If, on the other hand, you've avoided the ham radio disease, you'll be excused from finding my note to Dave ever so boring...

"I wanted to pass along a couple of installation note, because it may help others.

The first has to do with proximity effects around LARGE metal objects. I know the installation guide says once you get about 4-feet from things like metal gutters, the proximity effects of metal generally disappear. There’s a big BUT here – and that is what happens when you run over HUGE metal objects – like the 40 foot by 40 foot metal roof over my shop, office, and ham shack. Oh boy. Try 10-12 feet – or more.

Here’s a summary of SWR’s using the CCA mounted 5-6 feet above the metal roof, and then rehung putting it 15 feet above:

Freq.> Low Height>  High Height

3990:           5.1             2.8

3800            3.2             1.7

3650            2.6             2.2

3505             2.2             3.8

As you can see, the proximity to the large metal roof seemed to detune the antenna 150-200 KHz lower.

On 40 meters the comparison was:

Freq.> Low Height>  High Height

 7005         5.2                1.3

7150          5.0                1.2

7290          5.2                 2.2

In both cases, the feed line was LMR-400 and using an Icom 746 measuring SWR with a Drake MN-2700

The second item has to do with troubleshooting.

A group of old-timers I was chatting with on 75 today (>150-miles on 50 watts AM output midday on 75, I might add – thank you) reminded me that if someone ever runs into trouble with a CCD and needs to identify which of the caps has gone bad, should that ever occur, just grab a standard 4-foot fluorescent light and lower the antenna. Have someone key the transmitter at about 20-40 watts of CW and move the light bulb (not connected to anything) along the antenna. As you start from the middle and work outward, the last capacitor you go over before the light goes out is the problem.

Handy troubleshooting tip for the CCA users should we get heavy icing this winter.

Very happy with the antenna. Quieter than a 1-wavelngth 80 meter loop with a 40-meter decoupling stub which I compare it with, and the CCD is a half to full S unit better than the loop on most QSO’s. Which means people who are stuck in dipole or G5RV land will just have to chill out while I bag the DX first, thank you.

If I were putting together an all-time list of favor wire antennas now, my list would put the G5RV type down toward the bottom of the list.  The full-size resonant or trap dipole type one notch up.  From there, we go to the  one wave length loops (mounted vertically) and at the top of the list is the CCD.

 

Signal reports on 75/80 last night were phenomenal - and while most stations out 500-1,000 miles could hear me S9 to 15 over barefoot (running just 100 watts from the Icom 746) with the linear on (an SB-221 that I've restored & tweaked to run nears the legal limit) the signal reports were 20-30 over S-9 about everywhere.

 

Two areas of further research:   I've got the parts, just waiting on time and inclination, to fly a 570-foot diameter two wave length loop on 75 meters.  Due to terrain (and being too cheap to rent a cherry picker and scalping off the southern pines up to 40-foot, which is how they're supposed to be trimmer for good antenna use, the loop may only make it up 20-30 feet.

 

Still, using the EZNEC antenna modeling software, it appears that the multiple wave length loop will have significant gain on the high bands out toward the horizon.  In one of the modeling runs, it looked to be 6-8 dbi at a 23-degree takeoff angle on the 20-meter band which would be nothing short of spectacular.

 

3 db means gain equal to doubling transmitter power, so 9 db would be like taking a 100-watt transmitter to 200-watts (3 db) then 400-watts (6 db) and then 800-watts (9 db) - see?  If I told you the little 'i' stood for isotropic (looking top-down at an antenna pattern referenced to a standard 0 dB gain omnidirectional antenna) and the dB is an abbreviation for decibel, you'd be well on your way to a General Class ham ticket.

 

At least two of us in the Palestine (TX) ham radio club love BIG loop antennas because they can operate over a wide range of frequencies and exhibit some awesome gain; wire being cheaper than electricity and equipment.  While the CCD antenna is great, it's either a monobander (e.g. one band) or a dual bander, so it lacks the frequency agility of the big loops.

 

If you've managed to read this far, then might I suggest you consider something like a modest shortwave receiver as a 'toy' to play with over the holidays?  There's a certain joy of talking to people in other countries or hearing news from afar without the usual 'mainstream media' filtering that seems to occur.

 

About a year ago, I think it was on Steve Quayle's radio program, I did something called "A Gentle intro to Radio Communications" and it's still up here if you want more info.

 

The recommended starting point in ham radio would be the American Radio Relay League's site, www.arrl.org.   No, Morse code is no longer required to get a license to talk anywhere in the world, and I've started to nag Elaine to move from her Technician Class license up to General Class which requires a little more technical study and a test, but in return for that, you get global capabilities provided you figure out how antennas work.

 

Even without an interest in ham radio, though, I'm of the opinion that every family ought to have at least a decent shortwave radio and a crank-style NOAA weather radio for emergencies.  If you live in Tornado Alley and you don't have a weather alert radio, it's almost like playing Russian Roulette voluntarily.  With NOAA radios under $50 (under $25 now and then) it's one of the cheapest investments in personal/family safety there is. 

 

A visit to C. Crane's store is a delightful way to spend a while if things are slow at work and you're just 'nibbling' at the hobby.  A good shortwave radio and a copy of Passport to World Band Radio, 2009 Edition from Amazon and you're on your way.

 

A bit of advice first,  before you roll out some long green from that flash roll of hundreds you keep in your pocket? 

 

If you live in a 'big city', get a cheap AM radio and tune if off to the 'high side' of the AM band.  If you hear horrible noise there, your shortwave experience might be anywhere from suboptimal to horrible.  In theory the FCC is supposed to 'keep a lid on noise' but as a practical matter, there's enough noise from some TV's, computers, neo signs, bad power lines, (and the list goes on) that a few minutes with an AM radio should let you know if the hobby is 'workable' in your present location. 

 

If you can hear weak/distant AM stations at night, then the odds are good shortwave reception will be workable to some level.  But, if all you can get on a fair AM radio is the 50-kilowatt clear channel station down the street, then maybe you oughta take up something else.

 

Having been a ham for (OMG) 46-years now  (first licensed at age 13...), I can tell you that ham radio is sort of like sailboats, flying and driving a Porsche.  Once you've got any of these diseases, they can only be controlled; you never really get rid of them. 

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Times, budgets, and circumstance will occasionally put even the most worthwhile and robust of hobbies into remission.  But come the holidays, time off, or a recession and the dreaded pink slip, a good hobby doesn't have to cost an arm and a leg. 

 

A few gardening tools and a hand-cranked shortwave setup - which anyone ought to be able to do for under $100 with a little creativity - will build your self-sufficiency, self confidence, and keep you well ahead of the pack when it comes to 'whatever's next.'

 

Bogslife and Tribing

A Lakota friend sends an interesting note, BTW, speaking of coping with the Year of Transformation which starts in about 13-days now...

"Hi George;

Some of my ancestors are Sioux, Lakota. I have to wonder why the gov. is creating a 'National Reservation' out of a once financially prosperous 'American' culture. (?) That's not exactly what my other ancestors (The Scottish, the Irish and the Dutch) came to America from so far away, for.

But, look at the 'Tent Cities' and compare the sight to Tee Pees. "Say, that looks like a Tribe over there kids!" - Next thing ya know, they'll be making and selling jewelry by the roadside. (Survival's a bitch, sometimes.)

What were once happy homes with picket fences, are now just empty wooden boxes with invisible fencing. Those houses will decay and dissolve away in time ... but what of that invisible gov. fence? What is to become of that ? - "Please, keep off the grass."

My, how tables turn.

Indians only took what they needed. Millions of Buffalo were the proof of that. - Today, with millions and millions of people, we'll be lucky if one bird survives the hunger pangs of the American people. - OK then, somebody has got to go. But who? Go where? WTF? ... being Tribal, ain't easy.

Gee, I hope people don't go to Aztec, and start cutting the hearts out of virgins to appease the gods for the bad Karma left by the (once) PTB. ah, but that's a ways away, eh?

Wonder if we'll all get nice warm blankets with the influenza virus on it, like in the old days? - "Hey kids, get your Flu shots." Actually, I think those in the know, have gone a little more high tech since WWII. - "Who farted? I smell gas!"

BTW, when do we get those Arrow Stocks from the 700 Billion Dollar Bailout Show? Thought those were our consolation Prize?

Yeah George, somebody threw in OUR towel. Oh hell, they never played fair to begin with. They came here, chased and killed off the Natives and put up For Sale signs. - Sound familiar? I wonder if there will be a Museum of America Culture, some day ... or at least a Wing dedicated to America. Who knows, we might become a Legend, like Atlantis.

When this is all said and done ... Last one to the Arctic Seed Vault is a rotten egg!

Keep your eyes peeled because the 'retribing' process is already underway.  You see it under the freeway overpasses and well back on public lands where the overseers don't get to often.

Something to keep an ear out for?  The balladeers of the experience.  The kind that Woody Guthrie represented as he was called the Dustbowl Troubadour in the First Depression, packing around a guitar that displayed the slogan "This machine kills fascists" on it.  We're sure to have a similar voice (or voices) for this one.

If you're a documentary film maker, and you're looking to 'catch the wave' of change, you might want to spend some time listening and taping out in the Bushvilles.  The discussions are a murmur now, songs not yet loud, but the pitch seems likely to build as the pink slip presses jam into high gear once we get past "Christmas." 

The "New Year' it ain't.  It's one we've been through before and through a previous 'New' Deal.   Like Guthrie said, "This Land is your land...".  Least it was, once upon a time... Have you got something written on your machine yet?

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Wednesday December 17, 2008

The Second Depression's Second Arrival

It's redundant I suppose to say that this is the 'second coming' of the Second Depression, because I've made that point ever since 9/11; namely that the arrival of the new war on terrorism industry was certainly 'fortuitously timed' to pump up America's failing economy which had lost trillions in the second half of 2000 and 2001 when the internet bubble collapsed and the 'vulture capitalists' were on the ropes as financial disaster threatened due to the failure of the tech bubble.

 

We can thank the wars in the sand box, the new belief that anyone who could fill out an application was entitled to a home loan, and the roll-out of the 'security industry' for giving the second chance at avoid Depression Two time to work.  And work it has:  U.S. military spending, the house-flipping binge and a host of come-alongs (such as the extreme rate of job creation in the non-essential services sector) served to give the Bush administration a chance to survive not one but two terms in office.

 

But all things must end, and as soon as it became clear that the Obama administration was going to Washington, in a series of statements between November 11-13 that 'confused markets', Treasury Secretary Hank Paulson seemed to undergo a personal transformation from being a mortgage bailout friend to a 'Save the bankers!' kind of guy.  Politics is as politics does.

 

Thus, when the Fed statement came out Tuesday, for the astute observer, the larger plan crystallized in public view. With the economy continuing to crater, corpgov decided on a target Fed funds rate of just zero to a whopping one-quarter of one percent.  The inflationary path through the crisis is now in play and already, the metals are showing it.

 

In other words, the best Ben Bernanke and crew can do is 'Go Japan' and pray.

 

What do I mean by 'going Japan?"  If you click over here and see what happened when the Nikkei 225 in the late 19080's and early 1990's - the Japanese equivalent of the Dow 30 - began its meltdown in early 1990 from a (corrected) high of 38.920 (intraday, Dec 28, 1989) the N-225 then proceeded to drop to under 8,000 in 2003, and by the look of the recent action there, things could retest even those lows in very short order.

 

I'd suggest you look at how the Japanese central bank was dealing with their 1990's meltdown, which amounted to markets losses of nearly 80% on the N-225:  The Japanese solution? They lowered rates.

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So how has Japan be able to survive what could still become  a country-ending economic collapse?  Well, they had a number of things going for them which we won't have here.

 

The most significant is that Japanese industry - carmakers and electronics in particular, have had a 'free ride' in the American market.  

 

The Japanese automakers were able to exploit the American market because a combination of oil industry influence and lagging auto industry R&D dynamics that made the US companies less competitive and less able to adapt to the mid-size compact car (with decent mileage and fine build quality)  demanded by US consumers. 

 

Even though the headlines from overnight suggest the Japanese stock market bounced a bit on the Fed decision to promote 'free money' the bigger picture is that "Japanese carmakers head for the exit" because there's falling demand like crazy in the US market.  The only open question is whether this 'recession' will turn to 'depression', but it's only a question for a fool.  The answer should be apparent.

 

The 'slop over' from the US auto decline is also hitting other, more or less innocent, bystander countries:  GM to temporarily idle three Mexico assembly plants, for example.

 

Can we expect the same kind of outcome now that we're following Japanese rate cutting binge?  Unfortunately no. 

 

In fact, not only is it becoming doubtful that all three US automakers will survive, and as those industries contract they will simply add to what I predict will be the National Unemployment Festival which will become obvious over Q1/Q2 2009.

 

The second most significant point: Japanese currency was in demand because it funded the Yen-Gold 'carry trade.' 

 

The way this worked was this:  (Hedge & Investment) Funds would borrow money from Japanese banks at essentially zero percent interest.  Does that sound familiar?  That's what's in the Fed statement of Tuesday.

 

Next, these funds would go out and buy things in countries which would benefit from inflation or commodities where there was/is nominal inflation.  Gold, for example, from 2003 rose from $270 an ounce (when we bought our coin) to over $1000 earlier this year, and even in the beat-down of the paper markets, with gold back around $850 today, it's been a much sounder choice that most paper assets.  So the funds were able to take the yen/gold spread and lay it on thick.

 

A reasonable observer might ask, especially in light of the Madoff scandal, whether there really is physical gold to back up all the paper gold trades supposedly based on physical, but let's set that aside for now.  Although there's likely not, just based on how gold is trading miles from where you can really buy physical right now.

 

Back on point, we need to ask:  Is anyone going to be beating a path to major US banks to being a dollar-gold carry trade?  I doubt it for the simple reason that because of our 'field position'  would you trust the Fed and U.S. Treasury not to devalue the dollar at some point to kick inflation into high gear? 

 

Look what's happening this morning with the Russian ruble - they're going through presactly the process right now  devaluing because of falling oil prices which is crunching the Russian economy.

 

Quick:  Tell me what it is that America exports that is gong up in price!  Otherwise, we're in a world of hurt.

 

Moreover, the OPEC'ers are likely to axe 2-million barrels a day of output, but even that may not boost prices much past $60 or $70, given the whole world seems sliding into Depression 2, Round 2 and we know what happens to energy consumption in a Depression, right?  Well, as Matt Simmons hinted a year or three back, maybe this will buy us some time from Peak Oil impacts. 

 

The rally we're seeing in gold, therefore, is not yet based on speculation of a dollar-gold carry trade based on next-to-free dollars.  It's based on the more obvious and dependable dynamic; the hollowing out of the dollar's value which will ultimately, I think, lead us back to the land of double-digit inflation in the US in 2009.  Oh, and $2,000+ gold (some figure $5,000 and up) when the chickens come home to roost brining their paper assets with 'em.

 

The third area where Japan's experience differed from the US's likely outcome, at least as far as I see it, is that Japanese banks were never forced to 'get real' about their real estate valuations. 

 

In other words, many Japanese banks are even today, I understand, carrying real estate on their books/loan portfolios from those heady days in the late 1980's when a block of downtown Tokyo was worth more than most counties in California.  I wouldn't trust a Japanese bank's balance sheet unless I could personally audit portfolio valuations of REO to market, sorry to say.  I hear stories of people renting $1-million condos in Tokyo for $500/month.  My sniffer detects something odd...

 

The experience of the Japanese - hiding from real transparency and 'mark-to-market' of their real estate portfolios is just what the Fed and Treasury seem to be trying to pull off here.  That's why the Fed is making headlines on the one hand that "Fed may buy lower-rated assets to ease credit crunch" but on the other, the 'transparency hype' of the Fed Boss and Treasury Secretary rings hollow as the Digital Journal headlines: "Freedom Of Information - Unless you’re Bloomberg asking about $2 trillion in Fed loans."

 

What's nice is that now we can see that the reason the Fed doesn't want to 'fess up' on where's the dough is really quite simple: They don't want to have banks starting a massive mark-to-market festival in any paper asset class in a manic market-wide way.  That's why they have more or less signaled "Bring us most anything to clear it off your books and we'll give you money for it..."

 

Bloomberg had James Grant of "Grants Interest Rate Observer" on this morning and he warned of much the same thing, namely that it appears that the Fed is trying to "reintroduce inflation."

 

Well, of course they are!  If they don't pump like hell now (and it's already starting to be much like pushing on a wet noodle) then deflation will swamp the system in short order and we'll all be spending our days at the barricades or the bread lines, or both.

 

The time during which to implement a personal 'opt out' strategy seems to be drawing short, but still there's maybe six-months left in which to adopt the bogslife approach; Beyond organizational and government systems.  The Fed statement Tuesday really points the intended government path - inflation at any cost because if that fails, we have a deflationary collapse and in Depression One, that ended with a massive World War. 

 

Of course, hyperinflation also leads to war over time, as the case of the Weimar argues but along the way there's a good chance of corporate-government control (fascism).  Ooops!  Are we there already?

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Not like I'm being the only doom & gloomer about.  Even the prime minister of Canuckland says "Depression Possible".  Who was it, Trudeau or some other Hockeylander who said "When you live next door to an elephant and the elephant decides to roll over..." or words that that effect...

 

[If you're a Canadian, don't take offense.  One of my sisters lives in Saudi Alberta, eh?]

 

Taxing the Checkbook Republic

It's against the grim backdrop of a failing US consumer economy that NY governor David Paterson is unveiling a new state budget that takes off after lots of new revenue sources.  Care for an iPod tax?  How long before 'Tax Freedom Day' in NYC is in December? 

 

Free lunches cost dough - yet people bitch if they pay taxes but then they'll turn around and bitch if they don't have services.  I suppose that politicians end up crazy may be excusable on these grounds.

 

Hello? Duh... Department

"SEC chairman says agency failed to probe Madoff".  Gee, NSS?  Chatter about JPM seems to be on the increase, meanwhile.

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Meantime, I'm watching the spin-up of the grand spin meisters as headlines hit that "Charities worldwide hit by Madoff collapse..."  Which means I expect that there will be a cry to come for 'charities' to be made whole...while the rest of us try to get mortgage relief and where's the relief on your 401(k) losses?

 

Damn, Rahm!

Seems like president-elect Obama's right-hand man is on tape 21-times in the bid (pun intended) to replace Obama in the senate says a Chicago Sun Times columnist.  Could this turn into an EndRahm scandal?

 

Quake Watch

Could that 3.6 quake in South Carolina this week be the first of the 'twin quakes'?  Yes in terms of getting ink and filling language, but not big enough, unless the masked second quake or 'twin' is far bigger and comes along real soon.

 

Notwithstanding, Cliff of www.halfpasthuman.com will be spending the holidays retuning the lexicon.  This is the first run where an actual tipping point (of sorts) was captured, so there's likely much to be learned from it.

 

Can We Trust Government?

Does government always tell the truth?  (You really need to ask?)  Turns out that despite claims made by the British and American governments at the time, the ocean liner Lusitania was sunk carrying a concealed cargo of ammunition bound for WW I in Europe.

 

Not to say that the practice of lying by governments has continued to this day, but....

 

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Coping: Looking Up In Wonder

A "Giant Breach in Earth's Magnetic Field" has been discovered by NASA and they're busily trying to figure out how it all works and why.

 

Wake Up and Smell the Gasoline?

You need to catch the piece in the NYT this week about how diesel can be made from coffee grounds.  Wonder if this means Starbucks will get into the energy business?

 

Dollar Detrending

A reader sent this chart along with the note that he was only trying to be a good Urenaut.  A little hard to read (the chart, not the Urenaut part).  But seems like a trend break to me:

 

Maybe the chart means the dollar is still 'in the black?  I dunno...but not for long based on the free money plans...

 

Those 'Opt-Out' Plans

Excessive preparedness?  Who, us?  Well, like we need another reason to get serious about working on personal self-sufficiency, try on this headline:  "Army 'Strategic Shock' Report Says Troops May Be Needed To Quell U.S. Civil Unrest "Purposeful domestic resistance" would require military to "rapidly determine the parameters defining the legitimate use of military force inside the United States."

 

You can click here to read the abstract - and over on the right side of this page is a download button to get the whole .PDF which is now on my reading list.

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Tuesday December 16, 2008

Special Update

Deflation Spiral Fear: Fed Cuts Big

Results of the Federal Reserve Open Market Committee have just been released:

"For immediate release

The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent.

Since the Committee's last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.

Meanwhile, inflationary pressures have diminished appreciably. In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate further in coming quarters.

The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability. In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.

The focus of the Committee's policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve's balance sheet at a high level. As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant. The Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities. Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses. The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Richmond, Atlanta, Minneapolis, and San Francisco. The Board also established interest rates on required and excess reserve balances of 1/4 percent.

The initial market reaction was to the upside. It's not unusual for the market to make an initial move in the longer-term direction from the decision, then reverse so the 'big guys' can load up cheap, and then they sell/make money as the original reaction resumes after a bit of trading.  Whether that matters depends on if you've been to a day trading treatment center, although a 'cure' is readily available for millions via monthly mailed out statements.  Even non-day traders will get a whiff of the ammonia salts when the quarterly statements come out in January. 

 

When they did, remember who warned you:  There's danger in paper assets.  If you can't touch it, it's a paper asset...

 

The Limbo Fed

It's  grand day for Pavlovian Economics. 

 

"WTF George? How'zzat?  What'd you put in your coffee today?"

 

OK, this may sound a little obscure, but while the bean juice soaks in consider this...  I figure there's something like a bell-shaped probability curve that says there's a small chance of a 25-basis point cut by the Fed rate committee today, the peak of the curve is at 50-basis points, and the trailing edge on the 'far side' is 75-basis points.

 

This assumes you know that 25-basis points equals 0.25% and this is Banksterspeak in order to sound 'offishul' and 'knowledgeable".  Saying a "quarter to three-quarters of a point" sounds soooo pedestrian... This is from the same crowd that learned from Linguist St. Greenspan that economists make "judgments" and that it's only we pee-ons (sic) that make 'estimates' and 'guesses'.  Ure's 97th Axiom of Honest Economics: "A judgment is a wild-ass guess with a PhD tacked on."

 

Sometime this afternoon, the Fed (which isn't really, but that's well-trodden territory) will 'ring the bell', so to speak, and we will see how much salivating will happen on the Street as the prospect of money-for-nothing scrapes together just enough for one more throw of the dice.  All that's missing is someone yelling from off-stage right "Coming out!" at about 2:15 PM Eastern.

 

This is the Fed's last time at the pass/don't pass line until after the new administration takes office, and the way I have it figured, the January 27/28th meeting in January needs to be set up (as best they can) so that no move will be needed then such that the grand economic play (the one titled 'change') can get through its first act with no hangover from the previous play that ran eight-years longer than it should.

 

And this gets me to the first point of the day:  Come January, the Fed is in limbo.

 

There's a curious double entendre of the word limbo going to the idea of  "How low can you go?" 

 

The socioeconomic dance here (while breaking the backs of America's 'dancing with bankruptcy' class) is to see just how much of a steaming lump of doo-doo can be passed from the republicorps to the democorps since the GOP (which we reckon to mean 'greedy old politicians') didn't even score a first down with their McPalin special teams unit.  The Fed's delicate balance:  Be a friend to both sides so that their lock on monetizing everything in the Universe isn't faulted.

 

Or, like in the Greenspan era, they'll just pick up an assortment of financial papers today, tally up some kind of weighted decision matrix to estimate the consensus expectation, and do that, confident that there's enough Banksterspeak and Fedspeak floating around such that readers of the historical record will be convinced that the move was telegraphed to the market in advance, rather than face a more stark reality that the Fed really has no clue what it's doing, any more than Detroit, most hedge funds and virtually all politicians have clue one.

 

Chaos and liquid dispersion theory all heaped in the financial blender today.  Pass me the grenadine, wouldja?  Like a side order of CPI?

 

Humor: Cost of Living Numbers

Here's the 'offishul' CPI data for November:

The Consumer Price Index for All Urban Consumers (CPI-U) decreased 1.9 percent in November, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The November level of 212.425 (1982-84=100) was 1.1 percent higher than in November 2007.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) decreased 2.3 percent in November, prior to seasonal adjustment. The November level of 207.296 (1982-84=100) was 0.7 percent higher than in November 2007.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) decreased 2.0 percent in November on a not seasonally adjusted basis. The November level of 122.284 (December 1999=100) was 0.7 percent higher than in November 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 1.7 percent in November, the second consecutive record decrease. For the 12 month period ending in November the CPI was up 1.1 percent, compared to 5.6 percent for the twelve months ending July of this year. Falling energy prices, particularly gasoline, drove the decline in the overall index. Excluding energy, the index was virtually unchanged.

The energy index fell 17.0 percent in November. The decrease was about twice the October decline and energy prices are now 32.4 percent below the July peak earlier this year. The gasoline index fell 29.5 percent in November and gas prices are now 47.0 percent below their July peak. The natural gas index also

The Consumer Price Index for All Urban Consumers (CPI-U) decreased 1.9 percent in November, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The November level of 212.425 (1982-84=100) was 1.1 percent higher than in November 2007.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) decreased 2.3 percent in November, prior to seasonal adjustment. The November level of 207.296 (1982-84=100) was 0.7 percent higher than in November 2007.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) decreased 2.0 percent in November on a not seasonally adjusted basis. The November level of 122.284 (December 1999=100) was 0.7 percent higher than in November 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 1.7 percent in November, the second consecutive record decrease. For the 12 month period ending in November the CPI was up 1.1 percent, compared to 5.6 percent for the twelve months ending July of this year. Falling energy prices, particularly gasoline, drove the decline in the overall index. Excluding energy, the index was virtually unchanged.

The energy index fell 17.0 percent in November. The decrease was about twice the October decline and energy prices are now 32.4 percent below the July peak earlier this year. The gasoline index fell 29.5 percent in November and gas prices are now 47.0 percent below their July peak. The natural gas index also

If you take the three-month rate and run it out on an annualized basis, deflation is here at a 10.2% rate.  But wait!  Most of that is in the price of energy - which as anyone in the sand box will tell you has fallen to around $50 which is killing development in places like Dubai.

--

Or is it?  Did I mention the folks in Dubai are building the world's first refrigerated beach"?  Times must not be too bad.

----

The ONLY other thing getting cheaper here in the Checkbook Republic was transportation - everything else on the index over the past year has actually increased.  I figure the only reason transportation got cheaper was because of the automakers are slicing deals in order to move inventory.  That won't last forever.  Cost of housing up 2.7% despite the housing collapse.  Landlords must be doing OK, huh?

 

American Royals

With something like 300-million people in America, somewhere plain old statistics reassure me that there have got to be better thinkers than our current crop of politicians.  But, of course, that's not how things really work here in the Checkbook Republic.  No: Instead we have an aristocracy that has figured out how to dance with the MainStreamMedia just so - and as a result, we have evolved what seems to me to be our own set of 'royals' contrary to the ideas of the Founders. 

 

I notice that we didn't have serial presidents with the names like Lincoln, Washington, Eisenhower. and so forth.  It's historically a more recent development.

 

I am not so much amazed, of course, that "Caroline Kennedy to seek Hillary Clinton's Senate Seat".   It's more like I'm appalled at what appears to be evolution of an American Mediastocracy rolling along unnamed and unchallenged.

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Since I do sales/marketing/strategic planning for business in my 'real' life,  it makes sense at a sales/marketing/positioning kind of level:  Branding is expensive and once you have a 'winning brand' in the market, tuning up the packaging of the 'same old' is far cheaper & easier than introducing a whole new kind of product.  Even if that's what the consumers want - what do they know?

 

Just like Campbells is known for soup, American politics for nigh on 30-years has been a Clinton-Bush infested stew, where the latest roll-out 'new product' under the Clinton label is the Hillary brand with a migration path to the Chelsea brand down the road, as sure to come as day follows night.  And since the 1950's, the Kennedy name has held significant market share.

---

While I'm thinking about it, if America's political system is nominally a representative form of government, then why are 99% of national-level politicians lawyers?  Was there a constitutional change I missed toward the end of Ike's term that in order to hold High Office one needed to be a lawyer and have the right family name?  Does all of America need to pick up JD's?

 

Fortunately for the 'old paradigm', being a nutjob in the Texas outback  my two-cents worth won't matter a whit.  But the corporate mass-consumption paradigm is in serious trouble even if it's not abundantly clear from the breakdown of global economics. Not the first case of learning disabled management, I guess. I figure the American Royals oughta be held accountable, though, for messing up the works.  And new brooms sweep clean.  Except this decision isn't up to voters, eh?  Therefore the outcome is as certain as any other branding decision, which when you get down to it, is just what the pending Kennedy appointment is.

 

Bailing Out The Rich Department

Too bad about those suffering losses in the Bernie Madoff case, but that's why significant returns are supposed to have a linkage to significant risk.

 

But grab the Kleenex - we've got to protect the rich:  "Madoff investors may be protected by government:  Judge says those duped need aid under the Securities Investor protection act". 

 

Yeah, that's right.  You get screwed out of nearly half your 401(k) holdings due to the economic collapse that's underway as globalism collapses and what happens?  Tough crapsky.

 

But people with more money than you and I will see in a lifetime get taken in by a Ponzi scheme?  They seem able to get government (e.g. Taxpayer supported) compensation.

 

Like I mentioned in the previous story, America is only nominally a place of representative government.  There's supposed to be turnover at the top - it's supposed to be just another inventory turnover exercise:  Fat cats losing dough?  Too bad, but it creates a vacuum so that new blood can move into that space.  It keeps America 'fresh' - which is what inventory turnover does.

 

But no, not any more.  More evidence of American Royalty, eh?

 

Climate Bummer

Environmental groups in Australia have been protesting a new Oz plan to deal with climate change.

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I'm starting to get a little 'personal clarity' on climate change/global warming and it goes something like this:  Climate change/global warming - despite being real, or not - may be an interesting 'bridge route' to get the world from the 'all for money' paradigm into whatever comes next.

 

Where I see it most starkly is in the whole 'carbon credit trading' concept...which seems destined to allow 'rich' to keep playing their money game, while at the same time moving in some kind of responsible direction toward a smaller environmental footprint. 

 

What I think I see here is the PowersThatBe trying to co-opt the environmental movement so that the rich and remain rich and continue living off the sweat of others by 'taxing' the folks down the food chain.

 

While the Alabama Press Register figures the EPA's "...cow tax is just so much hot air" I'm not comfortable with that assessment yet.  Seems to me there's a dance going on here while the PTB try to figure out of a way to make money out of pillaging the planet.  Whether it's cow tax, surface water runoff, or carbon credit trading, the PTB just can't seem to 'get it' that the world is awash in consumer junk and we need a change in economics that will allow for the reformation of the nuclear family and meaningful lives which means time to enjoy the fruits of civilization.  Working harder to fatten wallets of the rich and bail them out from their blunders?  Ha...not for me, thanks.

 

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Coping:  Bankruptcy and Options

Good coverage in the Courier-Journal's online site (Kentucky) about the national bankruptcy picture.  In case you missed it, bankruptcy filings are up 30% in the past year.  And no wonder.

 

The Housing Starts report is out this morning (more in a sec) but even going into it, the New Mexico Business Weekly had the right overview as they headlined "Post banking bailout: No credit, no buyers, home builders depressed."

 

Masked beneath all the superficial headlines is the major sea-state change of your financial lifetime and most people aren't seeing it yet for what it is:  The globalist trade bubble was blown up as far as it could go and now the air is coming out of it because you can only live on future borrowings so long.  Then reality - and compound interest - catches up and someone has to pay or promised payments are renounced and we begin the reciprocal of the 'virtuous cycle' which is where we are today.

 

You could see it in yesterday's numbers from the Federal Reserve on industrial production.  (details here)  And you can count the for sale signs in your neighborhood as well as anyone.

 

You might want to pay particular attention in your news cruising to be looking for stories that go to the idea that people are almost being 'programmed' into giving up part of their life savings in order to keep their current lifestyle alive, even though my best guess on lifestyle is that you can voluntarily reduce it or wait for glacial certainty of the Second Depression to do it for you.

 

I'd draw your attention to headlines specifically like this one:  "401(k) withdrawal may be answer for hardships" 

 

I have received a large number of emails lately from folks asking me to address whether taking money from a 401(k) is a good idea, but in truth, there is no 'one size fits all' answer.  Like anything else, it's a complex guess.

 

The only way that I can figure to run it out is to roll up your sleeves and start three 'Ben Franklin lists'.  You know, the kind that are a sort of 'balancing scale'   Each one should have a column of positive results and another for negative results.  And the three sheets need to be titled "Inflationary blowup", "No change", and "Deflationary collapse."

 

I'll walk you through the beginnings of the thought process with the inflationary sheet.

 

Pros:  If you borrow money today and there is runaway inflation, then your home price and the prices paid for almost everything - will go up.  Borrowing now from whatever source to buy something which will appreciate in value would make sense.

 

Cons:  It is only meaningful if there are buyers around and you plan to sell.    It's also meaningful only if you have a solid job that will survive what I call the National Layoff Festival in 2009.  If you get this one wrong, you lose the house and you will have lost part of your 401(k).

---

That's why I don't offer direct/personal financial advice.  The right way to do this kind of penciling is to build a set of models of what you think future conditions will be like and then estimate - best you can - what your circumstances will be like.  It's hard work and frightfully boring.

 

The course I've been advocating (and living) since 2002 is the voluntary reduction so that under almost any conceivable combination of inflation/deflation you'll be able to maintain your current lifestyle.  Job loss?  With a low enough consumption profile it will be a minor consequence.  But, if you are tied to a McMansion payment, miss a few payments and you're out the door.

 

Once the economy really bottoms out, suburban home prices may take a small short-term bounce.  But, over time, they are probably not part of a sustainable lifestyle unless you're ready to get into suburban agriculture in a big way.  Few people are.  That being the case, being in a desirable small town which has some sustainability to it makes sense, or going rural and having those options makes sense.  Anywhere in the middle may be a bad choice. 

 

Remember, if the US dollar fails as the international reserve currency that oil could shoot to $500 a barrel and that could make commuting from the 'burbs impossible.

 

Now on those housing number?  Worse than expected.

 

Quake Watch

Still no BIG quake worth noting, but the time monks assure me that they do have the way to get the year right.

 

Numerous readers have pointed out the headlines that surround the Madoff case use a lot of 'earthquake' language.  And there are plenty of headlines about Madoff that use earthquake related terms like 'aftershocks'.  And even a pun: Madoff as in made-off with billions..." wrote on reader. 

 

And we have this:

"Good Morning George.

I'm wondering if Twin Quakes could also mean one whopper of a quake and another natural disaster. I'm writing from NH where we had over 300,000 homes without power due to the ice storm last week and as of this writing, at least over half that still without power 4 days later. In my very small town in the mountains, it looks like we'll be lucky if we have power back by Friday. I have no problem as I'm completely off the grid ( solar and with a good sized back-up diesel generator as well as a smaller portable gas one ( which I've lent out to a neighbor). I'm toasty warm with plenty to eat! The nearest grocery store is our small 'local grocer' who without power, has it's employees following each customer around with a notepad, writing down what they take. Otherwise people have to drive a half hour away to a supermarket with power.

From what I've seen from neighbors camping out at my house, there are a couple things I'd like to say to those who just can't get it together to REALLY prepare for a disaster like the above: coolers flashlights candles and matches full tank of gas plus a full spare gas can or 2 ( gas stations can't pump without power and portable gennys need gas ) camp type stove if you don't have a gas stove ( which can be started with a match) wood stove....which can also be used to cook really warm socks

Getting back to the twin quakes. Listening to the news this morning about the bad weather across the nation and the situation in CA where there are evacuations due to potential mudslides...it seems this is all pretty massive and a large quake on top of this would be serious indeed.

Thanks for your great site and all the work you put into it!"

You saw that 4.7 in Sweden? Not normal...but what is anymore?

 

Street Level Economics

Another reader mail:

"PLEEEEAAAAASSSEEE tell me you put that site reference (fed inflation calculator) on Urban Survival as "entertainment only" for us folks who are in reality. I typed in 2000 and 2008 and it told me 25 total percent inflation (that's only 3.12 percent a year). That's some damn fine entertainment.

In my world, it's been between 5 and 15 for a very long time....mid to late 90s I suppose.

Also, you reference Robert Magabe. I lived there (I was living in Gwelo at the time) when Rhodesia became The Peoples Republic of Zimbawbwe. You can thank Jimmy Carter (and Andrew Young) for that damn mess.

The FIRST year after Magabe was elected (I have photo's of crazy africans in the streets shooting off their AK'47s and celebrating), Willards Corn Flakes (their equivalent of Kellogg's...I guess) had went from about 35 cents Rhodesian to a buck thirty five. Remember, that's only the first year...I was gone after that. The SECOND YEAR, they had went from the bread boy coming around a few times every day,...to having to wait in line at 4 or 5 in the morning to get bread at all....otherwise make your own.

Mail was originally delivered a few times every day, I don't have to tell you any more but could go on and on and on.

But Magabe SORT_OF kept his campain promise:"you get your bosses wife, your bosses car, and your bosses house...if you vote me in. Actually, I guess he figured out that he could give them "your bosses farm" about 25 years later.

That moron Jimmy Carter thinks he has friends there????? If there are any people old enough to remember what it was like before him he should really try hard not to go near that place.

OK< Enough spouting, I found your site,. One of the few I tend to concurr with. We've been buying silver and gold lately. Looking all over the globe,...there is really no place to get it ANYWHERE NEAR spot price...so something fishy is going on there...but I have no idea what. We are buying anyway.

Smart dude, I figure.

 

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Monday December 15, 2008

Special Update

Falling Down Department: Industrial Production

From the Fed:

Industrial production decreased 0.6 percent in November with declines widespread across industries. The drop in output in September was revised down, and the rebound in October was revised up, in large part because both the decrease due to the September hurricanes and the subsequent partial recovery in October were larger than previously reported.

Manufacturing production dropped 1.4 percent in November despite the resumption of activity in the commercial aircraft industry after the resolution of a strike early in the month. The output of mines advanced 2.5 percent, primarily as a result of a further post-hurricane recovery in crude oil and natural gas operations in the Gulf of Mexico. Taken together, the rebounds after the strike and the hurricanes added almost 1 percentage point to the change in industrial production. The output of utilities rose 1.6 percent.

At 106.1 percent of its 2002 average, total industrial production in November was 5.5 percent below its level of a year earlier. The capacity utilization rate for total industry fell to 75.4 percent, a level 5.6 percentage points below its average level from 1972 to 2007.

Let's see the market rally on this 'good news'?

 

The $2-Trillions Monday

Funny how the Universe works, some days.  It's like reality finds something that ' it likes' and then starts popping it out all over the place.  My latest example is how this has turned into $2-trillion Monday.  Four pretty significant stories are floating around today, each of them centering in one way, or another, on the idea of $2-trillion dollars.

---

Working from the bottom up to the top of the list, we notice that the "Federal Reserve's assets now top[ $2-trillion, as use of facilities is brisk".  As the Fed is meeting this week, it's an important number to keep an eye on.  Why?  Because there are some who question the quality of assets being pledged by some of the banks and troubled institutions who are lining up at the Fed's printing press to pick up on some of that 'money for nothing'. 

 

No, they are not handing in laundry chits for hard cash, but close enough to it that some are wondering if the Fed itself is stable.

 

But quality of assets is not likely to be a big agenda item as the Fed meets this week on where to go next with interest rates.  Latest polls show that more as expecting the Fed to  cut it's main rate to  one-half of one percent.  Not 'money for nothing', unless of course, you've had enough coffee to figure out that when the interest rates due to the Fed likely undershoot inflation, that's when it really is 'money for nothing'.  With all of the inflation in the pipeline trying to counter incipient deflation in the housing market, when inflation comes back, it should be a fine si0tuatioin to watch.

 

Not that the US is in danger of going down the road of hyperinflation -- at least not yet.  Still, I noticed that Zimbabwe has rolled out a $500-million note and wonder if the inflation in the US as a result of the bailouts (I think of them more as 'print outs') will lead us in that direction in the future.

---

The next '$2-trillion dollar' story up the list this morning fall out of the San Francisco Sentinel's website which is wonder "How to Keep Obama $2-trillion campaign promises".  The article (worth reading) goes to the idea that the Obama administration faces a really tough problem now that the "Change" slogan has worked and the voters in America expect something in the way of change:  He can either disappoint a whole bunch of people or he can opt for a major federal deficit.

 

But wait!  That brings us back to the credibility of the "Change" sloganeering.  The real question for the Latter Day New Dealers is whether this is will turn out any better than the early days of the last Depression.  Or, is this one going to somehow be different?

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Our runner-up top $2-trillion headline this morning is that Bloomberg is warming up their lawyers to head to court: because "Fed won't disclose who got the $2 trillion; Bloomberg sues."

 

As I've noted from time to time, if you have read a copy of G. Edward Griffin's classic The Creature from Jekyll Island: A Second Look at the Federal Reserve, you ought to know that the Federal Reserve is no more 'federal' than I'm a Martian.  The nominal 'federal' part comes from the government getting to approve the 'federal reserve chairman' but the real power behind the thrown (printing presses) is held by the bankers themselves and basically what happened with the Federal Reserve Act, passed in the dead of winter in 1913 is that the bankers grabbed the power of money making in the US and Congress abdicated its previous Constitutional role.  But then you remember all that, I assume.

 

Not trying to bore you with the history of the Act, but it could be central to what happens next in the Bloomberg v. Fed case and here's why:  The Fed, it could be argued, is not really a 'federal' agency and therefore shouldn't have to comply with an FOI demand.  Of course, the other side of it would be the Bloomberg position that "Oh yes you are, hand over the details..." 

 

Should be some good theater to watch.  If the Fed has to comply, then it would clarify one of life's great mysteries for me:  Why the Fed has a website address ending in ".gov" because up until only a few years ago, the Fed (more accurately if I read things right) had a website with a last name of ".org" which I'm sure most folks don't remember or care about.  But these little details are important.

 

You can bet your sweet bippy that that if I wanted to change the name of this website to www.urbansurvival.gov that I'd be laughed at.  Yet, if the 'fed' wants to play like they are a ".gov" they pulled if off.  Curious, no?

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Now we arrive at the top of our list of $2-trillion stories for the morning.  This is the one where Zillow reports "Home values to lose well over $2-trillion during 2008."

 

There are two numbers in particular that I'd draw your eyes to within the report.  One is that 'nearly 11.7 million American households now owing more on their mortgage than their homes are worth' should scare the hell out of anyone in a leadership position in Detroit, or any other big ticket manufacturer.

 

In a sense, this is prima facie evidence that the Debtberg really has started 'rolling over' and that we have entered that strange (shading to horrific) period when what was once the "virtuous cycle" in the economy begins to work 'upside down' - or as I've put it in earlier writings, we get to the 'reciprocal' of virtue.

 

Without going into a long economics lecture, in short the virtuous cycle goes something like this:  Say you creation 10-jobs in primary manufacturing".  Those 10-jobs will allow for the creation of some number of service jobs.  Estimates can be found for almost any number you choose, but the typical multiplier is that from two to four times as many service sector jobs will result.

 

Those 10-people are going to need cell phones, laundries, day care centers, oil change shops, and the list goes on.  So let's say it's a four-times multiplier effect.

 

That's when I report something like the Bank of America plans to reduce its workforce by 35,000 over the next couple of years, you should be thinking "OK, 5 times 35,000 is 175,000 rippling out into the economy..."

 

Since the economy is now heavily service sector the multiplier effect has likely increased, but you have the idea.

 

Now here's where the rubber meets the road:  With almost 12-million Americans 'upside down' to use a car lot phrase, who's going to be able to refinance their homes, pull money out, and buy all those new cars and SUV's that Detroit wants to make? 

 

Behind all the motor city salesmanship about the 'freedom of the American road' people really are driving less -- even with cheaper gas as notes the Salt Lake Tribune.  And that's only the first of the problems from the housing decline.

 

The second - and more subtle impact - is that the decline in home equity this year just about guarantees that the unemployment rate among young people will be going through the roof in 2009 and that will tend to feed into the 'global revolution' meme.  Or, what Robert Kaplan warned about in his book: The Coming Anarchy: Shattering the Dreams of the Post Cold War.  If you don't want to wait for it as a $12 stocking stuffer, the Atlantic Monthly has a condensed version online here.

 

So here's the chain reaction to be looking for:

• For millions of Americans, their home is their single biggest investment and retirement savings plan.

• When home values decline precipitously (think 'right now') the retirement plans of millions get pushed back.

• This means that older Americans will be working longer.

• That in turn means fewer job openings for young people to get into jobs and start working their way up the economic food chain.

• That in turns slows the family formations among the young, postpones having families of their own and coincidentally makes 'em angry.

 

This all conspires to undermine the American Dream.

---

If there is a common theme to these four $2-trillion stories about this Monday, it might well be that the American Dream has some tough sledding ahead in 2009.  And, since it takes time for a recession/depression to propagate throughout the whole economy, it likely means we should likely all be thinking of what a two, three, or even five-year periods of declining economy could mean.

 

Time to pull in horns, be thrifty?  Sure, that would make sense.  But, at the same time, we need to be mindful that the very behaviors that constitute a rational response to the recession/ depression are the very factors that reinforce the decline and ultimately seem destined to push the 'reciprocal of the virtuous cycle' to the same extreme on the downside that the 'virtuous cycle' did on the upside.

 

Weekly/Weakly Numbers

The Fed's industrial production numbers will be out in about 45 minutes.  Click over to www.federalreserve.gov and follow the links when the story comes out at 9:15 A Eastern.  I'd post an update, but this morning I'm going to the dentist - had a bear of a toothache this weekend under a recent root canal/crown.  Ugh.

 

Tomorrow we should see the new consumer price index numbers as the lead item.  Good news and bad here:  If prices go up, it means inflation, but if they go down it means deflation.  Too much of either one won't be fun for the market to digest.

 

Shoe & Ships

Not since Nikita Khrushchev pounded his shoe at the UN Security Council  (if you're under 50, look at October 12, 1960) has a presidential shoe event made as many headlines as the reporter throwing her shoes at George Bush who made a surprise farewell tour of Iraq this weekend.

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Speaking of historical contexts and Russia:  A group of Russian warships is heading for Cuba in a show of strength (in 'our pond' as some .mil types might notice).

 

Dare to Oppose Department

Meantime, back in the motherland: Somewhere north of 100 people have been arrested in an anti-Kremlin demonstration today in Moscow.

 

Anarchy Continues

The mess in Greece is into a second week.

 

One of the rallying points of this:  While Russia's economy continues to make sick gurgling noises, and the country has been hard-hit by falling petroleum prices, the government is planning to extend the length of the presidency from four years to six. 

 

Where's Our Quake?

Well, the December 10-12  major earthquake hasn't shown up yet (at least as of press time).  Possibilities?  1) The predictive linguistics could have gotten it wrong or 2) Could be off by a number of days (window continues into January) and 3)  - this is the one perplexing me - when there's a really big event, we don't have a reliable way to pick out years.  In other words, when something huge comes along ('death of the dollar' for example) we have been seeing that in the data for a couple of years now as a November event, but may not be until Nov. 2009 or 2010...

 

So we keep watching...but better too prepared than not enough.

 

Truth Leaks

A reader sent us a link to a YouTube video and a note:

"If ya pick it up at 3:50 Out of the mouth of Senator Jim DeMint he talks about very high inflation, states we are not on a sustainable course as a country, GM is in better financial situation then the country, we our debasing our currency, with the auto bailout we will have riots, if the people could get there hands on congress I think they ring there necks."

"The only difference is we can print money..."!!!!????   Yikes!!!  You thought I was a downer...

 

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Coping:  Done Crawling?

I noticed this morning while doing the first of my morning 'channel scans' that something had changed on CNN's Morning Express:  They seem to have axed the traditional 'news crawler' at the bottom of the screen and replaced it with a 'flipper'.

 

The flipper puts u p the headline, centered on the screen and you get to read something coherent.  Nice change.  Imagine:  Is TV done crawling and maybe on to flipping.

 

Environment Clock Ticking

"Obama left with little time to curb global warming" says an AP story.  Good quote: "We're out of time," Stanford University biologist Terry Root said. "Things are going extinct."

 

If there a silver lining to an economic depression?  You bet!  Less industry, less driving and that in turn could slow the pace of economic degradation. 

 

Bet that's going to be slim comfort when you get your Q4 401(k) numbers in January, but hey, keep up that positive outlook, 'K?

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Record cold in Denver today.

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Elaine spent part of Sunday hitting refresh on her computer so she could look at the freeway traffic on the Tacoma Narrows bridge in the Seattle area.  One of her sons has a condo near there and we've been watching the slow pile up in the Seattle area.  Cold and sunny in their forecast today, but more show due in starting tomorrow night.

 

If you haven't seen it, Washington has probably the best freeway camera system around and worth looking at. 

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In the Los Angeles area, a big winter storm is moving in and downpours and the usual mess is expected as a result.

 

'Contact Meme'?

"The Day the Earth Stood Still" was a big hit at the box office this weekend, pulling in something like $31-million.

 

Novel Thoughts Department

Don't know if you read the first two parts of Operation SERF by Chris Sullins, but Part Three is now posted.  If you missed them, part one is here, part two is here.  Apocalyptic fiction is sometimes worth reading for new concepts that pop out of it and which might give an idea how future events could work out.

 

In fact, was just discussing that very point with one of my ham radio friends Sunday - he suggested that except for the depiction of cell phones as something for the rich, the 1970's book "Lucifer's Hammer" still reads almost current in many regards.

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If nonfiction is your taste, you might flip over to read "Revealed: Desperate Final Hours of the World's Biggest Ever Financial Fraud."

 

Maybe fiction's a little easier to deal with?

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Next on my personal reading list: a collectible.  John T. Flynn's "As We Go Marching" - about the track of Germany, Italy, and the US from the Depression through WW II which sounds like a good thing to read about now...  Big file - 13 MB worth and 293 pages, but you don't have that much going on at work this week, do you?

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