- Friday about 8 AM Central Time Except Holidays....many major
typos are fixed by 8:30 daily
April 18, 2009
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Yes! Cliff and I are on Scott Stevens' show "Amerika Now"
at 9 PM Central/7 Pacific and 10 PM Eastern tonight.
Details here: http://gcnlive.com/
or on the show's site:
Sure Signs of Spring
So here it is, 1.75 inches of rain and one day later, and I'm
certain of it now...Spring is slowly but surely arriving here in
East Texas. Admittedly, it's being a tad more lethargic up
Colorado where a late season snow storm has shut down road,
and as far up as Wyoming. We only had a passing smattering
of small pea-sized hail in this part of East Texas, but
elsewhere there was plenty, not to mention really needed
The closest 'official' weather station is up in Tyler, Texas,
just up the road 11 hoops, 12 hollers, and a stretch of freeway
There, 1.16" fell on Friday, but we get a fair variance from
place to place.
Much as these items might prompt me to mention the arrival of
Spring, they are not the real cause. Nossir, what prompts my observation
is that I woke up this morning with a bug bite causing the left
part of my jaw to swell up, and a second one just down from my
lip. That's all the evidence I really needed to
conclude Spring is here. Well, Benadryl and coffee and the
swelling will go down. But does Universe let it go at that?
As I was taking my first sip of coffee this morning, I noticed
something was out of place...yes...yes...that's it...Aha!
Coffee doesn't usually have such texture to it, whereupon
I graced my trash can with a half mouthful of coffee which
contained a large bug who had gone swimming in my coffee,
drowning apparently. I've asked Zeus the Cat to make
funeral arraignments and eat his next of kin for me.
Elaine's also pretty sure that Spring in here. She had a
near-miss with a Copperhead this week. Not a great
big one. Just about 18" worth of the best
camouflaged viper you ever didn't see while she was working on
the fence line out west of the house. I recently invested
in some tiny Cobra family radio service radios for just such
events as an 'in case'. Also bought a pair for the
neighbors so that we can keep in touch no matter what.
While the two-meter (ham) radios are. much better for range,
this little two-ways are smaller than a pack of Pall Malls, if
you're old enough to remember...maybe a bit taller than a pack
Even the inbox is starting to remind me that Spring is here.
A West Marine ad showed up promising me that "4-Day Bonus Buys
Are Back". Over the 10-years I lived on my sailboat, I
must have hit some marketing threshold, a sort of "boy, this is
a hot one..." kinda thing. Almost makes me want to buy a
bilge pump, or a head rebuild kit, and then have Elaine put me
in the trunk of the car with them and all but the right
wrenches, so I can remember why I moved off the boat in the
first place. The six-figure job on the other coast had
little to do with the decision; well, a little maybe.
In case you hadn't noticed, the three most powerful product
phrases around today are "MIL-SPEC", "marine grade" and
"organic". Best I can tell, each adds between 5 and 50% to
the price of whatever underlying product they happen to be
Bank Failure Scorecard
As we've come to expect, FDIC's bank closure announcements came
out late Friday after financial markets closed.
This time around, two banks were closed, so if you were in the
office "How Many Banks will Close This Week Pool" pay up
Great Basin Bank of Elko, Nevada was shot-gun married to Nevada
State Bank. And,
American Sterling Bank of Sugar Creek, Missouri was marched up
to the alter with Metcalf Bank of Lee's Summit, Missouri.
whole list is now 25-banks closed/married off this year.
Why, couple all these bank failures (I'm thinking 1.8/week for
Q1) and the biggest real estate bankruptcy in US history this
week, and my assertion that we're ALREADY IN THE SECOND
DEPRESSION seems less lunacy and more like reality, doesn't it?
Or to make it a little more clear: We've had as many banks
fail this year in the first 4½
months as were closed in all of 2008. And in
2007 only three banks failed. none in 2006.
Repeat after me: "trend."
Ahead of Schedule?
Reports that "Israel
stands ready to bomb Iran's nuclear sites" are making the
rounds again today, although by the linguistics, that shouldn't
be happening (in a large-scale way) until October. But,
another way to read it is that Israel goes early and the late
October/early November period refers to a coordinated Arab
response and attack on Israel. We'll see.
The recent comments of SecDef Robert Gates cautioning against
action (that I mentioned earlier this week) are one of the
factors driving stories like "Obama's
stance worries Israelis."
Israel apparently will not cooperate with a UN Gaza war crimes
inquiry. Quick: look surprised.
tossed a journalist accused of being a spy for the US in the
clink for eight. I'm betting she'll be out long before
that, however. Good trading card, more'n likely.
New and Improved
Speaking of nuking things, did you catch the
article in Pravda this week about 'minimum nuclear deterrence'?
Seems the Ruskies have figured that the US if more vulnerable to
attack than Russia nowadays. But the main point?
Seems the best use of force would be through an attack on the
banking system, which in case you have been living under a rock,
is doing a fine job of self-destructing lately.
A "Craigslist killer"?
The Boston Herald.com site has an interesting story about how
killer may have struck again..." Dangerous, there
personals ads, seems.
German advertising, like the rest of Europe's, is a whole level
up from the typical American fare that lately has mostly zilch
in the way of creative and seems to invariable include the
phrase "Tell your doctor..." So when an
ad includes a sperm-cell likeness of Mao Zedong, and when people
get upset about the story headlined "Mao sperm ad angers Chinese"
I find myself asking "Is this a marketing boner (ahem, so to
speak) or is this another instance of "anything for viral?"
Bad Week for Pirates
All in all, the last week has been a bummer for folks of the
Pirate stripe. No, I'm just not talking about The Pirate
Bay founders getting jail time for file sharing, or the latest
rewrites of how the SEALS freed that containership captain.
referring to the BBC report that "Dutch Forces free Pirate
Captives." 20 freed by Dutch commandos?
Well, off to work on this week's Peoplenomics report.... see you
Guest Perspective: Stephen
Swaim's Longwave Economic Model
Although it may be easy to pass off my
particular 'take' on the economy as a marketing man gone over-the-edge
at times, it may surprise you to learn that there's a low key group of
folks who have been working on the problem of long wave economic
collapse since the mid 1990's when a bunch of us who 'live 10-minutes in
the future' held serious discussions about it on a list server run by
the University of Colorado. It was a great crowd: My deflationist
friend Jas Jain was there, TheBondDube, and a few dozen others that
contributed on a regular basis. One poster in particular, whose
posts always made sense (i.e. I agreed with most of his positions), was
a fellow by the name of Stephen Swaim. His 'day job', if you will,
is he is an Ohio attorney specializing in tax litigation with an
emphasis on real property tax issues. His undergrad work was at
Miami University, then Washington & Lee ('78) for the law degree, and
then his CPA certification in '82. I often refer to him as my
'consigliore' as his advice is almost always spot on. This week,
I'm pleased to have convinced him to publicly reveal some of what we
have spent hours and hours talking about: A long wave economic
perspective that incorporates not just the formulaic approach of
conventional economystics, but the practical view that "Ooops!
Maybe cycles are real, too..." It's with some satisfaction I offer you
Do Me a Favor?
Send an email to everyone in your email contacts and tell them
about this site.
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"Live on $10,000" Updated
What? You haven't ordered the ebook "How to Live on
$10,000 a year -- or less"? Suit yourself. We're all
going to live it shortly, anyway. I just thought you might
like a heads up by reading about how to do it before you get
pink-slipped. But, suit yourself OR visit
www.liveontenthousand.com or, click one of the following
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.
week's report is here. For
back issues of this site, click here. (Goes back to
Friday April 17, 2009
Warming Up To Cuba
Castro signals Thaw in US-Cuba relationship" is not really
surprising. There's just too much money to be made on both
sides by normalizing relationships. In case you hadn't
noticed, capitalism is running out of new markets to expand
into, and while Cuba isn't that big, it'd still be like adding a
new state if we thaw things out enough. About 11.45 million
people, it's population is about the size of Houston plus Dallas
and whatever lies between 'em. Another way to look at it
is geographical size: About half the size of Kansas.
Cuba has been in the US' 'penalty box' since the Cuban Missile
crisis of 1961. As the CIA World Fact Book notes (in
Fidel CASTRO led a rebel army to victory in 1959; his
iron rule held the subsequent regime together for nearly
five decades. He stepped down as president in February 2008
in favor of his younger brother Raul CASTRO. Cuba's
Communist revolution, with Soviet support, was exported
throughout Latin America and Africa during the 1960s, 1970s,
and 1980s. The country faced a severe economic downturn in
1990, following the withdrawal of former Soviet subsidies,
worth $4 billion to $6 billion annually. Cuba portrays its
difficulties as the result of the US embargo in place since
1961. Illicit migration to the US - using homemade rafts,
alien smugglers, air flights, or via the southwest border -
is a continuing problem. The US Coast Guard intercepted
2,656 individuals attempting to cross the Straits of Florida
in fiscal year 2007.
So, it's a dandy opportunity for a little economic
shot-in-the-arm. And "USA
charter firms expect rise in Cuba travel traffic" which
means hotels, perhaps casino's (again) car rental outfits, and
the like won't be far behind.
What's more significant to the caffeine-enhanced cynical
observer, though, is how the ideological differences
between Washington and Havana have morphed over the years.
Although here lately, I reckon Cuba has been a little more
forthright in disclosure of its socialist leanings.
an anti-Thaksin Thai leader was shot up in an assassination
attempt overnight, we have to wonder about the long-term
stability of Thailand.
Putting on my marketing consultant hat here, I can't help but
notice that the "Thai
cabinet puts tourism promotion atop national agenda."
Here's my new - free - positioning statement for the new ad
campaign: "Thailand. Just say
Phuket." Yeah, data's da one....we have a winner!
Welcome to my 'perception is reality' practice...
Them Other Pirates
Couldn't help but notice that the founders of The Pirate Bay, a
high profile file-sharing site, have been
to jail by Sweden for a year for breaking copyright laws.
Saying that the trial was just media play,
The Pirate Bay site is still
up and going strong as of byte time today. Got to
admit the quip about legal decisions being leaked in advance,
like just movies used to be, was pretty good.
Markets: Stressed Out?
Wondering who's going to be the Big Loser in the federal
government's banking stress tests coming out soon? The NY
Post's Mark DeCambre's story this morning nominates Citigroup as
"Stress Test Dud."
But wait! It's not all 'hell-served-for-breakfast' for the
PR team at Citi:
The company just turned in its best quarter since early 2007.
Don't you feel good underwriting a loss of only 18-cents?
Makes me want to send even more money to Washington, LOL.
Hell yeah! Let's buy more banks!
Oh sure the futures were about flat when I first looked, but
turned up a tad. I expect a rousing end to the week.
Now that Easter & Passover are past, we can get on with puffin'
this baby up some more...
Around 10 AM (Eastern, or as East Coasties figure it "Center of
the Universe" time) the new consumer sentiment numbers will come
out. Retailers are praying that the consumer mindset
returns because things are looking really bad for their ilk.
You saw where the largest
U.S. real estate bankruptcy in history has gone down this week
with second-largest US mall operator General Growth filing?
Nary a peep from MainStreamMedia, which mostly rehashing
banker-driven hypnOsis that 'good times are just ahead,
brother.' Well, sure they are, if you want to go on
a diet. Or go on a permanent camping trip.
I much be touched thinking the largest-ever US real estate
bankruptcy might indicate something a little more
sinister...like the SECOND DEPRESSION IS HERE. Wonder if
the Mogambo Guruy will share some of his meds with me...it is
Friday, after all....and I'm still thinking Thailand...
OH! Speaking of Friday: Be sure and click here after
the markets close today to see how many more banks get closed
this week. It's the FDIC
web site and a fine subject for a little betting pool in the
office... Last week's number was 2, although I get
confused whether that's a winning number or a losing number.
I'm reminded of the economic consequences of making a plant
illegal again as I read how
16 people were killed in a firefight outside Acapulco between
Mexican authorities and druggies. This was just ahead
of president Obama's visit to the country.
Not to keep harping on the same old refrain, but you know if
everyone could just grow their own high (weed and
booze/beer/wine) most of the drug cartel's cash would dry
up. Or, am I the only one to figure that out? And
about the argument that marijuana leads to harder drugs, I'd
counter, no, it leads to things like the war in Afghanistan over
the harder stuff...
Crime, you see, is an economic system of its own. I was
discussing this just yesterday with one of Elaine's boys who's
visiting. "Back in the time of king Richard, the hunting
of wild game was made illegal for the commoners, but was
unobstructed for the ruling class," he noted. "And it was
from that series of wardens of game that the police powers of
the monarchy took root and grew.." or words to that effect.
Still is growing, too.
Ah, but how times have improved, what with modern technology and
all. With hardly any game left, and way too many to poach
so we have moved on to taxes, which get to the same thing: Power
for the elites, eh?
And speaking of taxes, good article to read over at WebCPA about
how the "DOJ
cracks down on tax-evading merchants."
Bad Sandwiches....I mean,
earthquake activity in the Sandwich Islands region seems
pretty decent the past couple of weeks.
Likely a couple of dozen dead from
quakes this morning in eastern Afghanistan, too.
A report from the DekbaFile headlines that
Robert Gates is totally opposed to a strike on Iran.
So, I've got October 26th (plus or minus a week-10-days) circles
based on the predictive linguistics of
Figure it will take that long for Israel to come up with
compelling evidence and around then they will strike with, or
without, US backing.
Driven To Drink?
sues Powerade for false advertising" headlines Ad Age.
Public Comment on Revised Proposed Rule Prohibiting Petroleum
Market Manipulation." Key part: "The revised proposed
rule would prohibit anyone from engaging in fraud or deceit in
wholesale petroleum markets, or misleading any person by
omitting important information from statements that might
distort petroleum markets because of the omission."
Have we gone so over-the-top in granting access to industry
groups that something like this needs comment? Who're they
protecting in this?
There's a good short note in the Economist this week about
the change/evolution of "K" words in Japanese-style management.
If you're in one of those long-drawn-out (is it over yet?)
conference room meetings today and someone says 'kaizen' write
them off as hopelessly behind the curve and suggest
If you knew that Shinchi Kakushin was a Zen master who helped
establish kōan's as a tool on the road to enlightenment, award
yourself a green star for the day.
On the other hand, if you immediately thought "No, George, you
meant satori, not 'enlightenment' you get a gold star for
If, however, you've actually achieved satori,
you'll be laughing your ass off about here, since handing out
the stars is the joke on the inept adept wannabe's.....
--- snip and save section ---
Coping: With Reader's
Oh boy, is the inbox overflowing from this week's reports...
"You say: In the bigger
scheme of things, this is all such a charade; the right
versus left retooled with new issues all the while behind
the scenes, the folks with the money are pulling the strings
to make sure their have versus have-not's games continue
unobstructed. Change? My butt.
My take on the Tea Party issue
is that many participants, myself included, are taking aim
at both parties. You might have noticed that some events
excluded speakers from either party and insisted that this
is the time for politicians to listen to the people. At the
event I attended there were a few GOP speakers trying to
attach themselves to the movement but they were not received
as well as you might expect. I'm angry at both parties for
their roll in increasing the growth in government and it's
oppression of the people.
I think you are right to suggest
that the power brokers want to continue to present straw men
to keep the masses fighting each other while they continue
to fleece us. I simply want to suggest that there is a
growing body of the population who are catching on and
realizing that both parties are to blame and the answer goes
beyond allegiance to party.
Look, no offense to the good-hearted patriots who take part in
things like the tea parties...all well and good. But
lookie here: Whenever there is a movement of people that
becomes popular, you can bet your sweet bippy that someone is
lurking in the background trying to usurp either the main
intention of the activity, or they will be trying to twist or
mold it to their own (usually corrupt) designs. Take the
USA's backdoor handling of Venezuela. Wonder how much tax dough
has gone down that rat hole trying to 'incite' similar
well-meaning patriots to spontaneously revolt and throw off the
chains of...er....oil field ownership... Other places,
other objectives. Like those juicy natural gas fields in
Bolivia. All an expansion of 'royalty' and 'manifest
destiny' which, by the way, brings me to this:
Still Looking For
A reader has further thoughts on the 'vision' that we need to
get out of the current economic mess...but it isn't what you
"So when you assess economic
woes as a lack of leadership, I tend to think in terms of a
lack of overt leadership. Whoever the PTB are, I believe
they have a vision. I would expect to find the rank of the
power elite full of people who understand the vision thing
in their personal life and have the motivation to work to
build it. Power wants to be used, not sit idly by waiting
for something else to happen. So the question is, what is
that vision? "
... george, that vision is
called "manifest destiny", where-in the TPTB believe that
they are inherently superior to the masses of peoples and
that they destined by the will of God to rule over the
masses and that the masses of peoples are too stupid and
dumb and violent to rule their selves ... this is how my
wealthy classmates at Yale described it to me "
Yeah, manifest destiny has been sorely abused as to intent.
Been mostly used as an excuse to steal land, kill native/first
peoples and such...and since it makes fine exploitive capitalism
jingo, it'd frankly have been more surprising if you hadn't
heard such pap from the beasts in training you hung with.
The Patriot Come-Lately
Another reader wonders about why Texgov Rick Perry wasn't so
gung ho on things like the border and state's rights when ol'
George was hanging his ten-gallon in Washington:
You are correct about Perry, or "Bilderberg Rick" as he is
known by the aware observers. Somebody asked me why TPTB
would have one of their chosen say the purely Jeffersonian
things Perry said and I summed it up in two words:
"Professional wrestling." No further discussion was
required. Educating the masses that their politicians are
the equivalent of professional wrestlers, all working
together for an invisible organization, and all as fake as
a$100 dollar bill, may be easier than you think. The analogy
seems to be easily accessible to most people I talk to.
Analogy? Corpgov just wrestled five-figures of taxes out
of my possession....what do you mean 'analogy' to wrestling?
It's the real deal this week...
Seeds of Sorrow
You see the headline over at Digital Journal that "Monsanto
GM-corn harvest fails massively in South Africa"?
Repeat after me: The reason to plant ONLY heritage seeds
is what? Answer: Ma Nature has had hundreds of thousands
of years to work out the details for a huge range of climate
extreme and isn't driving patent law & foreign policy...
Look Out Clear Channel
NOAA Weather Radio rolling out a news talk format!
Another reader writes:
"Your cartoon today reminded me
of an old Bertold Brecht quote:
What is the crime of robbing a
bank compared with the crime of founding one?
I very much enjoy your site!
No, THANK YOU! Gosh, I wish I had said that
Send snip and save items to
--- end snip and save section ---
Thursday April 16, 2009
Independence of Texas?
Among the many 'tea parties' that were held on Tax Day, April
15th this year, the one here in Texas that had republicorp
governor Rick Perry seems to be the one garnering the most
attention. Sporting headlines like "Perry
fires up anti-tax crowd" the coverage seems to me to be a
major distraction from the country's immediate problems at hand
which are largely economic and environmental in nature; not to
mention the need to figure out how to build a sustainable
economic not just from the balance sheet perspective, but also
to live within limits of resources.
Fanned by headlines coming from outfits like Fox News ( "Governor
Says Texans May Want to Secede From Union But Probably Won't")
the reports would seem to suggest that Texas is really planning
to demand accountability from the Obama administration,
especially when it comes to federal spending.
But wait! Something doesn't quite feel right about such
stories. I think I might know why: This has all the
appearances of good 'street theatre'.
Wonder why I think that?
In case you hadn't noticed, the Johnny-coming-lately 'patriotic
fervor' which has supposedly driven Texas government to threaten
to send troops to the Mexican Border, and now this latest
independence talk, seems to have arrived concurrently with
president Obama's election to the White House. But where
were Rick Perry and his cohorts during the Bush reign?
I didn't hear about Rick Perry mobilizing state resources to
build a border fence then....
I also seem to remember the Perry folks were supporting the
Trans-Texas Corridor, which has WorldNetDaily headlined back in
2006 at "Trans-Texas
Corridor paved with campaign contributions?" This is a
mirage project: When too much reporting and
opposition pops up, it's shelved, only to be reincarnated under
different names within a month or two...quite amusing, actually.
For another, Texas has been busily selling off lucrative
Texas tollway operations
to private contractors under the guise of small government.
Yeah, I know, "How does that work? Taxpayers foot the bill
for highways to get built and then the state sells off operating
rights to private outfits?" And when talk surfaces in Washington
about legislation that would bar private operation of any
highway built with federal dollars, state boyz seem to get all
worked up...well of course!
Fine questions all...but here's the simple point of this
morning's first item: When I see folks out whipping up the
'tea party' sentiment, I ask myself "Is this part of a sincere,
ongoing effort that was spawned before the Bushco republicorps
lost first sitting at the teat of lobbyists? Or, has it
arisen more recently?
Pardon my pointing this out, but seems to me that it's more bluster
and braggadocio...Why weren't Perry et all defending our border
and not selling off roads when you-know-who was in DC?
Couldn't be that this is just more hype and BS designed to keep
folks from thinking about the real issues? I mean
like "Follow the money" or government by high bidders now, could
Meantime, all this frenzy whipping has folks wondering if Rick
Perry maybe doesn't have higher aspirations politically.
Stories like "Rick
Perry: Tea party darling" hint in that direction.
In the bigger scheme of things, this is all such a charade; the
right versus left retooled with new issues all the while behind
the scenes, the folks with the money are pulling the strings to
make sure their have versus have-not's games continue
unobstructed. Change? My butt.
The hell of it is - it seems to be working. I'll just let
ya'll get sucked into the partisan game...have fun.
The Federal Reserve released its 'Beige Book' report on
Wednesday and among it's 52-odd pages was this sober assessment
of manufacturing in the USA:
activity continued to decline in most Districts and across a
wide range of industries. Several reports, however,
noted that the pace of decline had slowed or that factory
activity had stabilized. The Boston, Philadelphia, Richmond,
Atlanta, St. Louis, Minneapolis, and San Francisco Districts
cited decreases in production. The Chicago and Kansas City
Districts said declines in production had slowed. The
Cleveland District noted some leveling off in declines in
new orders, and the New York and Dallas Districts noted that
demand was beginning to bottom out following steep declines.
Orders and shipments of capital goods, autos, paper, and
construction-related equipment and products such as metals,
wood products, lumber and electrical machinery remained
mostly sluggish and below year-ago levels, with the Chicago
District noting an increase in order cancellations and
deferral requests. Aircraft makers in the Chicago District
noted declines in demand, while aerospace manufacturers in
the San Francisco District reported that a drop in airline
passenger traffic and cargo capacity had spurred order
cancellations and delivery deferrals."
The other interesting development for Fed watchers was the
speech by chairman Ben Bernanke in which he outlined why the Fed
bailed out AIG but let Lehman implode:
much more important, the disorderly failure of AIG would
have put at risk not only the company's own customers and
creditors but the entire global financial system.
Historical experience shows that, once begun, a financial
panic can spread rapidly and unpredictably; indeed, the
failure of Lehman Brothers a day earlier, which the Fed and
the Treasury unsuccessfully tried to prevent, resulted in
the freezing up of a wide range of credit markets, with
extremely serious consequences for the world economy. The
financial and economic risks posed by a collapse of AIG
would have been at least as great as those created by the
demise of Lehman. In the case of AIG, financial market
participants were keenly aware that many major financial
institutions around the world were insured by or had lent
funds to the company. The company's failure would thus
likely have led to a further sharp decline in confidence in
the global banking system and possibly to the collapse of
other major financial institutions. At best, the
consequences of AIG's failure would have been a significant
intensification of an already severe financial crisis and a
further worsening of economic conditions. Conceivably, its
failure could have triggered a 1930s-style global financial
and economic meltdown, with catastrophic implications for
production, incomes, and jobs. "
They key thing to know - which most media don't both to explain,
perhaps thinking you can remember an obscure economics story
from 35 years ago, when you and I can't remember what we ate for
dinner last week - is that the world's first brush with global
economic collapse came back in 1974 when Germany's Herstatt Bank
also ended globalism:
Bank was a privately owned bank in the German city of
Cologne. It went bankrupt on 26 June 1974 in a famous
incident illustrating settlement risk in international
On June 26, 1974, German
regulators forced the troubled Bank Herstatt into
liquidation. That day, a number of banks had released
payment of DEM to Herstatt in Frankfurt in exchange for USD
that was to be delivered in New York. Because of time-zone
differences, Herstatt ceased operations between the times of
the respective payments. The counterparty banks did not
receive their USD payments.
Responding to the
cross-jurisdictional implications of the Herstatt debacle,
the G-10 countries (the G-10 is actually eleven countries:
Belgium, Canada, France, Germany, Italy, Japan, the
Netherlands, Sweden, Switzerland, the United Kingdom and the
United States) and Luxembourg formed a standing committee
under the auspices of the Bank for International Settlements
(BIS). Called the Basel Committee on Banking Supervision,
the committee comprises representatives from central banks
and regulatory authorities. This type of settlement risk, in
which one party in a foreign exchange trade pays out the
currency it sold but does not receive the currency it
bought, is sometimes called Herstatt risk.
The failure of Bank Herstatt was
one factor that led to the creation of the continuous linked
settlement platform (CLS), which launched almost 30 years
later in 2002. This payment versus payment (PVP) process
enables member banks to trade foreign currencies without
assuming the settlement risk associated with the process,
whereby a counterparty could fail before delivering their
leg of the transaction.
I spent several hours back in the late 1970's talking about the
implications of a Herstatt-type failure with Dr. Paul Erdman, a
one-time Swiss Banker turned financial novel writer. One
thing I got out of the conversation was that Herstatt would not
likely be the first bank failure, and sure enough if you plot
out the number of 'near misses' (including the recent AIG and
Icelandic problems) one could argue that these are coming with
increasing frequency and larger impacts. LTCM ('94), Uruguay
('02), and the list goes on and feels like it's accelerating....
On a simple histogram basis, seems to be a building trend, which
continues to lead me to my very pessimistic outlook going into
this coming fall and winter.
The Fed's release of
industrial production numbers, showing a 12.8% decline,
year-on-year (YoY) is certainly no cause for optimism.
Banks and Robbers
I must have taken a double-doze of cynical pills this morning.
I just can't understand why stories like the "13-year-old
boy accused of robbing Illinois bank" is newsworthy.
Why, when a bunch of 50-something execs rob the taxpayer's bank
kitty, it doesn't seem to be as big a deal; I'm left pondering.
Our cartoonist, Rebecca Price of
has gotten one thing figured out: What bankers mean by
By the way, the
www.toon-republic.com caption contest this week
features renaming various States of the Union.
And speaking of banks,
Chase is out with better than expected earings.
Was that with, or without, Taxpayer money? I lose track...
15 dead and 40-odd wounded as a suicide bomber hit an Iraqi army
--- snip and save section ---
"Leadership Option" Feedback
A number of emails on yesterday's piece about the "Leadership
"I do think "We will require
that every company selling manufactured goods in America
demonstrate that all its workers, whether overseas, or in
the US, are paid at least the applicable US minimum wage"
would be considered an act of war by every country that
sells stuff to us, which would have the effect of reducing
our exports significantly and dumping the economy, but,
given the isolationist mood, putting us back to 1910 would
probably be acceptable to 95% of the population.
The population would drop to
fit. AlGore would be pleased, from a distance, probably the
But we don't need to go through
such draconian political strife to get there. If you want to
see what a country with our debt level looks like over time,
look at Haiti."
I carefully read your Leadership
Option section today. Its positive message is greatly
appreciated, but it also left me feeling confused.
I have avoided “conspiracy
theory” (Con’s Piracy?) mostly because it seems to me to
often be a case of oversimplified thinking or understanding
clouded by bias – the truth is always more complex. But I
have been watching and listening and thinking, and a picture
is forming of forces that are working against the welfare of
us, the non-elite. You yourself have spoken of the
PowersThatBe, the Bilderberg Group, the Chemtrails and
HAARP, and of course there is 9/11 and the “War on Terra.”
So when you assess economic woes
as a lack of leadership, I tend to think in terms of a lack
of overt leadership. Whoever the PTB are, I believe they
have a vision. I would expect to find the rank of the power
elite full of people who understand the vision thing in
their personal life and have the motivation to work to build
it. Power wants to be used, not sit idly by waiting for
something else to happen.
So the question is, what is that
vision? And if it differs from some collective American
vision, how do we replace their vision with ours? Which is
to say, I suppose, how do we take back global power and
control when so much of it is hidden and denied.
I believe in the power of
vision. I have watched it work in my own life time and
again. To whatever extent I have not been successful in my
goals, it is directly correlated to not daring to vision
large enough, or believe in the vision strong enough to do
the follow-through work. (“We have met the enemy and he is
us!”) That’s how it works on the personal level.
So here’s my confusion: How does
it work at the collective level? How does it work in a world
of multinational power, covert visions, covert operations,
secrets and mistrust? How does it work when mind control is
practiced in many constant-pressure but
concealed-in-plain-sight ways such as television and media
telling us what to think, “education” systems training us to
not think, chemical pollution eroding our ability to think
(manufactured chemicals and compounds in our air, food and
water – some by design?).
Is the power elite a highly
coherent and coordinated force, or a haphazard and
conflicted influence? If we can now so readily feel the
effects and see the patterns, perhaps there indeed is
organization and planning. If there is a vision of the power
elite – “The New World Order?” – it likely is backed by a
lot of work and decades or centuries of planning and
foundation building. So is democracy still real or possible?
Or is it a controlled, distracting illusion? Are the
president and congress in control of our national
government? Or is it the Corptocracy control “mission
accomplished?” How do we assess what is real in such an
I can still hope. I can hope
that I still have control of my own life and my own visions
– responsible for my life (retaining as best I can the
ability to respond to whatever comes). I can hope that the
power elite can and will be defeated by their own hubris –
meddling with powers and forces they cannot ultimately
control. And hope that such defeat does not destroy the best
of human civilization and our lovely planet.
I find that I now sometimes envy
those who remain ignorant of the PTB, whatever the PTB are,
and of their effects on our civilization and society. And I
wonder, are hope and personal power easier for the unaware
But I do hold to my hope. I
sometimes remind myself that in a sense, I chose to be alive
at this time – witness to a powerful period of change when
an era is dying and something new is struggling to be born.
That may be a very difficult change for the world of man
(and it’s clearly not so great for the rest of the biosphere
either), but with the proper “framing” – a more distant
perspective – perhaps we can find inner peace in the
maelstrom of transformation around us.
Thank you for your willingness
to explore the vast arena of possibilities and to share them
with all of us. And thank you today for sharing your hope."
A fine point is raised here about whether there really is a
There's a wonderful book that you should consider reading before
making up your mind on the PTB question: How We Know What Isn't So: The Fallibility of Human Reason in Everyday Life.
Essentially, the book makes the point that humans by their
nature are pattern seekers. In other words, the PTB
may be nothing more than a bunch of humans taking a
huge Rorschach ink blot test and 'seeing' something that may
not be there. Can you look at this and see a butterfly?
Some kind of bug? Face? Well, you get the picture,
So it goes with the PowersThatBe. Sometimes when you look,
you say Aha! There! That group over there writing
out checks to lobbyists who in turn write checks to political
types...that's an arm of the PowersThatBe at work. Yet, on
the other hand, there's the argument that no, this is just
chaotic activity within the larger realm of human behavior and
the apparent randomness really is random.
To put it into one of my "framing references" it might look like
this drawn out schematically:
| <-- All Chaos -------------- how things really work
In other words, a group of highly connected people, acting when
events really are at a tipping point, say like a certain
fraternity at Yale, could exert influence at just the right
moment on what might otherwise be 'chaotic' events to make
things fall this way, or that.
Is there are Illuminati? Oh sure. Is it perfectly
orchestrated in some Bohemian way? Well, no, but
sort of.... It's really more complicated, because
on the one hand you've got Shakespeare telling us "There
is a tide in the affairs of men...." on the one hand, and on
the other pretty distinct proof that certain rich and powerful
people write checks to push this cause or Rockeworld this way or
People see PTB's everywhere. Take Shakespeare, for
Was Shakespeare a master Mason? And even if so, so what?
Is there some group of 300 families? Maybe. A
consortium of old oil money with an agenda? Almost
undoubtedly. Those fraternity boyz with skulls? Oh,
sure, throw them in, too.
Razor I use is "quid
pro quo." If there is a discernable money source, or
benefit to money, then I don't mind using the PTB label.
If, on the other hand, an event looks more or less random
with not money trail, then odds are fair that it's a chaotic
I won't pretend to offer which subgroup is holding hands with
which other subgroups, but just to take our present banking
crisis as an example, events make unlikely allies and
when enough allies - in this case bankers- start working
together they form a transient node of 'PowersThatBe'.
While it may be disappointing that I don't subscribe to one
conspiracy theory uber alles, that doesn't mean I don't
dismiss any groups from contributing members/participants as the
topography of events changes. Instead, I'll be looking for
the money and follow that back to whoever seems to benefit most
and then focus on their motivation.
It may not be as much fun being a financial theorist
compared to being a conspiracy theorist but I've got, at latest
check, about 14-trillion reasons to keep watching over in that
direction. Besides, there being a 'tide of men' in
investments, I want to avoid the losing side whenever possible.
Want a good shorthand for the PowersThatBe? If your
net worth is under $100-million, you ain't them.
Send snip and save items and thousand dollar bills to
--- end snip and save section ---
Around the Ranch:
Since one of Elaine's boys is visiting us, we decided to
entertain him with a round of golf - I mean what better thing to
do on Tax Day than go play golf? OK, fishing would have
been OK, too. But we chose golf.
This is the first round of golf I've played since moving to
Texas in early 2003. To say I was rusty doesn't even begin
to describe it. I was a WD-40 salesman's dream.
We played Pine Dunes (http://www.pinedunes.com/)
which, with a rented set of clubs set us back $200 for the three
of us, but it was a special event.
The best I did on one hole was par, but most of the rest ran
into trouble. I mean trouble like getting out of one sand
trap and going directly into the next sand trap. There are
a couple of holes on the course which seem like they are more
sand than grass.
The visiting son did extremely well in comparison, and Elaine
birdied one hole. Both E and me ended somewhere well north
of 100 (I gave up counting about 9 holes into it).
My game was so bad that I've decided to put the clubs away for
another seven years. When I'm 67, I'll try again.
Some things get better with age, you know, like wine.
Maybe golf will, too. But based on how I feel this morning, I'm
not in any kind of hurry to find out.
April 15, 2009
Here's the Consumer Price Index report from the Labor Department
"The Consumer Price Index for
All Urban Consumers (CPI-U) increased 0.2 percent in March,
before seasonal adjustment, the Bureau of Labor Statistics
of the U.S. Department of Labor reported today. The index
has decreased 0.4 percent over the last year, the first 12
month decline since August 1955.
On a seasonally adjusted basis,
the CPI-U decreased 0.1 percent in March after rising 0.4
percent in February. The decrease was due to a downturn in
the energy index, which declined 3.0 percent in March after
rising 3.3 percent the previous month. All the energy
indexes decreased, particularly the indexes for fuel oil,
natural gas, and motor fuel. The food index declined 0.1
percent for the second straight month to virtually the same
level as October 2008. The food at home index declined 0.4
percent, the second straight such decrease, as the index for
dairy and related products continued to decline.
The index for all items less
food and energy increased 0.2 percent for the third month in
a row. An 11.0 percent increase in the index for tobacco and
smoking products accounted for over sixty percent of the
March rise, with a 0.6 percent increase in the new vehicles
index also contributing. In contrast, the indexes for
lodging away from home, used cars and trucks, and airline
fares continued to decline. The index for all items less
food and energy has risen 1.8 percent over the past year.
Just looking at these numbers, the only thing that is keeping a
restart of inflation from popping looks to be energy and
transportation. Therefore, when oil starts to pop back up
to the $70-$100 range, which I'd expect sooner than later,
that's when we could see inflation appearing. The OPEC'ers
aren't amused calling the current market a
I've been talking to a few farming sources and the price of
milk, just to pick an example, has been down around $10 per
hundredweight...so a lot of dairy operations are headed for the
brink...and once operators start cutting back their
production/herd sizes? Well, enjoy that $4/gallon milk
while you can. That's the kind of thing that could double
Capacity utilization and industrial production due out from the
Fed within the hour.
When I looked, the stock market futures were flat to down a bit,
not much change in the metals, either.
As promised, I got my taxes out before the deadline this year.
ABC's got a good summary of "Outrageous
Loopholes, Tax Tips for You." Sniffing around
you'll find a
link to the part on 'creative deductions' here.
Although many of the 'tea party' protests may have been
initially seeded by republicorp operatives, they have continued
to 'get traction' and in most states, like
Washington, there are plenty of 'tea parties' being planned.
I'll be looking to the Obama administration in a week, or so, to
see if they really are going to live up to their promise of
'transparency' by reporting how many tea bags arrive at the
White House. Don't suppose there's even a point to asking
folks in Congress, but I will call my Congressman's office next
week, just to see.
All this 'tea party' talk has spilled over into media. I
trust you saw the report this week that headlines "Fox
News takes ownership of tea parties, and, therefore, their
extremist rhetoric" over at the Media Matters for America
That Hal Turner story I told you about earlier this week - that
Homeland Security is worried about right wing extremism, has
gotten traction and is now showing up in headlines like "Federal
agency warns of radicals on right".
Or, as a Breitbart report headlines it: "US
recession, 1st black president, 'fuel extremism'."
States and municipalities have a looming problem:
sales tax revenues are falling at the fastest rate in years.
Overnight tonight, up to
700-million will be voting in India. Don't be
surprised if we hear about attacks on polling places and such in
tomorrow's headlines, but hopefully things will go calmly.
Remind me to ask customer service reps today if they have voted
Global Coastal Event
You see where
"Hong Kong Christens an Ark of Biblical Proportions"?
I guess linguistically I'd call this an ark-type?
ship has been attacked by pirates of Somalia, but they didn't
take the vessel.
eBay is planning an IPO to offload Skype to end 'marriage made
Gone to the Dogs
Obama family has a new dog....
The first Portuguese water dog I ever played with was one owned
by legendary yacht designer
Bob Perry. Great breed - wonderful temperament.
I may not agree with the administration on much, but I gotta
given 'em credit for good taste in dogs.
--- snip and save section ---
The Leadership Option
In yesterday's column I opined that what must happen to
get past the currently evolving depression is for
policymakers to decide - as was done in Germany's Weimar
Republic, to follow the course of hyperinflation instead of the
developing easier path into deflation. Why, I could have
kicked a hive of Africanized bees and gotten less stinging.
Here's a typical same email that came in under the heading "Has
your mind been captured?"
"…and you didn’t even know it, George!
Let me quote you in
your column today:- “Now, here's what absolutely must
happen at a policy level in order to kick the country out of
Happily, the game is
really over; neither you, nor anyone or anything, will stop
this machine from self-destructing. That’s how rotten it
I often am astonished
at how the financial guys [‘banksters’, you call them] have
managed to fill the minds of every one on and off the street
that the worst possible thing in the world - ‘deflation’ –
might befall us.
Why do you think that
is what has happened, George-? Well, I guess I’ll tell you:-
Because that is the single-most dread that can hurt the
Let’s just look at it
simply, for a moment; let’s see what it really is….
Deflation, falling prices! OMG, No! We can’t let that
happen, can we-? So let’s get the cheerleaders together, and
don’t spare the PPT – we’ll need every bit of juice they can
muster. OK, now-? all together, let’s heave ho and get those
damn prices back up there where only those who got ….can
afford to buy ‘em…!
In the final
analysis, George, where are you in this …wondrous game-? It
really needs some long and hard reflection….
I’ll share a little
idea with you:- The game has been played by a collective
that is as perverse as can be construed; they are way beyond
the point of no return; there will be no redemption.
What happened-? It
seems everyone in the world is asking that question. Best to
get your ass out of that world in order to really see it-!
The trick was ….velocity. Why don’t you graph it out, like
you are eminently good at….? You’ll see it – it’s like a
airplane taking off after a long t/o run rotating at better
than V1 and then, once airborne [and tucking up], continuing
to rotate dizzily skyward until the graph is almost
vertical. What was done was that fatally flawed that it was
a fait accomplis from the ‘beginning’. 9/11 was really the
start of the countdown – it took seven years ….and then the
music really stopped [expanding exponentially]. And look
around at who was caught out….
‘instruments’ – created by the greedy devils, that had
roared into the ether and spinning like a mad tin soldier –
were now dead in the water. And the whole game lost its
wind, its power, its confidence and its ass!
No, they’ll never get
it back up again. It’s over, George. Maybe just brief
‘heroic’-? Attempts. You just cant put out a fire by pouring
the same gas on it that started it…!
That’s it. Got no
more to add.
With all due respect, I disagree. I happened to be a guest on a
radio show yesterday (talking about the economy on
Beyond the Ordinary)
and I suggested that the bottom of the current mess will be
easily seen when we get someone in a position of
leadership to do what they were elected to do, namely
"Leading" implies being in the lead...as in 'in front
of'...developing problems, rather than the current state of
affairs, always behind the eight-ball, reacting to this problem
or that, in a way that works out according to whatever haphazard
set of interests shows up and agrees on whatever the course of
least resistance is right then and there with no regard for the
While it's true - and frighteningly so - that America really
could blow 234 years of nationhood as early as next year, I hold
that hope remains IF we can just muster up a little
gumption; some real leadership.
What's missing in America is what I often tell consulting
clients who come to me and want to kick-start their companies:
Leadership begins at the top and it begins with a clearly
That's what I don't see: A clearly articulated,
equal opportunity description of the 'next economy' and a New
America that we can all get to work building right now.
Nope. Instead, we're going from bailout to bailout.
On this course, I agree that as long as we're in the reactive
mode, the future isn't just bleak...it really is over. "Toast
2010" would be a good label for it.
But there is a way out: I call it The Leadership
Wouldn't it be grand if had a national vision, meaning agreement
on some very simple, easily action steps that virtually all of
us could buy in to? Here are some thoughts, and while it's
by no means complete, it's a starting point and you can add, or
subtract, as you please:
America is going to be the first country to harvest the
benefits of information technology. We are setting as
our key objectives:
A 20-hour workweek (or)
A 40-hour workweek commanding a high enough wage such
that only one family member need work to support a
family of four.
We hold as a national objective the reinvention of the
family as a solution to health and social ills.
In addition, we will offer incentives to families that
care for aged relatives at home. We are going to
value family values in a meaningful way instead of lip
We will achieve massive energy reduction though three
Ending regulations that are keeping small highly
fuel efficient vehicles off our roads while in
places like Europe that have proven their value.
Insulation retrofitting of every home in the country
to reduce energy consumption by 50%.
Conversion of all lighting to energy efficient LED
and other technologies.
Government will offer every family that lives off
the grid for 30 days, or more, an income tax credit.
The more off-grid time, the larger the tax credit.
We will establish an organic food supply and will
achieve organic food independence again within five
These combined should reduce our dependence on foreign
oil by 30% - or more.
We will require that every company selling manufactured
goods in America demonstrate that all its workers,
whether overseas, or in the US, are paid at least the
applicable US minimum wage. Those companies which
can not do so will be taxed in the amount equal to their
exploitive labor practices and the revenue from that
tax, equal to the amount of foreign worker underpayment,
will fund unemployment and healthcare for American
workers. And more; so great is the exploitation of
developing country labor.
Further, we will require that any company doing business
in America document its revenues coming from America and
be taxed on those. Over the next ten years will
will phase in a program whereby if a company sells goods
in America, only expenses incurred in America will be
allowed to offset that revenue before a revenue tax is
We will reestablish sound money. We all know that
the purchasing power of the US dollar has declined from
$1 in 1913 to just 4.6-cents today. We are going
to hold that value, and in doing so, we will again
become a nation of savers. We will reinstitute
gold and silver convertibility.
As we return to sound money, and the value of savings is
restored, we will reinvest in American infrastructure.
Except now, instead of making assembly line jobs, we are
going to automate everything we can to harvest the
bounty of technology.
We will institute a national usury law of 18%.
This will apply to all companies, including and
especially credit card operators.
American-English is the only language of the country and
we will end all programs that are not part of a
migration to our single tongue. While we respect
differences of our cultural heritage, we must be able to
communicate with one another.
We will set up a web site (www.redreamamerica.gov?)
and we will find even more, better, and immediately
Finally, we will create and install a system of government
accountability with the following features:
We will strictly regulate lobbying with 100% disclosure
We will ensure that no more legislation is ever passed
that has not been read by each member of Congress voting
We will install a recall system to hold Congress
accountable and an online voting system, so that members
of Congress can see what their home district wants at
any time, and so that voters in the home district can
see how their wishes are being carried out by folks who
are supposed to represent them.
I call this the leadership option. It's not going
to be popular, but it's where I believe America needs to go -
and if you agree with some of these points, it's time we start
demanding, from the folks we elect, the one thing that we're not
getting right now:
Were there is no vision, all perish. And that's isn't the
America I dream of.
I've had employers and clients who really 'gotten' the visioning
process. They were (and are) the folks who understand that
the most important job of the CEO is not 'counting beans'
or coming up with sales plans; it's holding and articulating a
company vision and teaching/sharing actionable pieces
of the vision with everyone in the organization.
One company I was with - where I learned some of this firsthand,
had the vision sharing so damn right that the company
grew from 13-employees in 1985 to over $7-billion in annual
revenue. That's the power of this vision process.
I think it was Dr. Wayne Dyer who said "You'll see it when you
believe it." That's how visioning work. I
don't have a really nice life because I let it happen.
Things don't work that way. I spend about 10-minutes a day
You get a great life, good health, and emotional happiness,
and let's throw in love, too, by actively working on a
vision. If you don't have the kind of life you want -
right now - then either you a) don't have a vision, or b) you
aren't doing the work achieving your vision requires. It's easy
enough to spot the people who are bullshitting themselves on
visioning; an amazing number of people don't do the work.
Coming back to the point of this morning's note: I did a
lot of sailing during the 10-years I lived on
my favorite point of sail -- the 'which way are you going
relative to the wind' -- was going into the wind; it's called
beating or 'going to weather.'
A sailboat can't go directly into the wind. At
best, you can go upwind about 45-degrees to the true wind.
When you're sailing inland waters, at some point, you'll get
close enough to shore that you'll have to 'tack'...which means
turning the boat to the other 45 degrees off the true
wind, such that you sort of zigzag uphill into the wind; working
to weather it's called.
Now when the boat is 'tacking', or 'coming about', the wind
momentarily is head-on. Sails flap. Seems like no
progress is being made.
But if the tack is smartly done - if the captain has confidence
and a sure hand on the helm - the boat's forward momentum
carries it through the 'no wind in the sails' part of the tack
and the wind fills the sails on the opposite tack and the
journey upwind continues with only a few moments of disturbance
and only a small/momentary loss of speed.
There's a danger in tacking though - and it's analogous to the
danger in the economy. If the boat doesn't have good speed
when the tack begins, or if an inexperienced sailor tries to
tack too slowly, it's possible to get the boat 'stuck' midway
though the tack - the process is called "being in irons."
There's a way to recover, of course: The boat starts to go
backward, and as soon as it goes backward with enough speed, the
rudder is thrown hard over and the bow of the bow falls off the
wind, and the sails can fill again. The economic
equivalent is a depression. Things go backward just so far
and then a new consensus emerges.
Where America is right now is in the process of 'tacking.'
Except I don't hear anyone articulating it causing me to wonder
"Is anyone at the helm of this thing?"
I didn't hear a strong voice in the Bush administration saying
to all of us "Gonna be tacking soon, all hands ready about!"
If we'd had such a captain, we would have been able to do a
better job of anticipating the financial storm which is in
danger of locking us in irons. I didn't get a 'New America
vision' out of Bush.
Nor, do I hear the next move of the great ship of state being
articulated by the current captain. The danger was, and
is, that we will be locked in irons, go backwards, and further
So while this morning's email raises a fine question "has your
mind been captured?" I don't think so. I'm just
waiting for America to figure out what its next tack will be
amidst news reports hinting that the captain and the crew in
Washington don't seem to understand the concepts of tacking and
keeping boat speed up.
Nevertheless, I hold that there is always hope, because
leadership is still an option.
A User Note
A reader pointed out that I should be setting my page up so that
links, when clicked, open in a new tab. Done! had it
on for a while, somehow got turned off, but now, you won't have
to hit the 'back button'...
Tuesday April 14, 2009
Inflation as Policy
Just Became Unavoidable
You may recall last year that a number of pundits back in say,
oh, October, or around in there, we hyping the happy-talk that a
recovery would be getting up a head of steam in the second half
of 2009. Today, we've got to take a hard look at a couple
of reports that make me wonder again if there will be any
substantial recovery until 2010...if then.
The reason is that the economy depends heavily (almost entirely
if you back out wars) on people buying more than just the
necessities of life. More than food, more than sharing
rooms and renting out extra space in the home. So the
first bummer of the day is this from the Census folks:
U.S. Census Bureau announced today that advance estimates of
U.S. retail and food services sales for March, adjusted
for seasonal variation and holiday and trading-day
differences, but not for price changes, were $344.4 billion,
a decrease of 1.1 percent (±0.5%) from the previous month
and 9.4 percent (±0.7%) below March 2008. Total sales for
the January through March 2009 period were down 8.8 percent
(±0.5%) from the same period a year ago. The January 2009 to
February 2009 percent change was revised from -0.1 percent
(±0.5%)* to +0.3 percent (±0.3%)*.
Retail trade sales were down 1.1
percent (±0.7%) from February 2009 and 10.7 percent (±0.7%)
below last year. Gasoline stations sales were down 34.0
percent (±1.5%) from March 2008 and motor vehicle and parts
dealers sales were down 23.5 percent (±2.3%) from last year.
Next, we've got to look at the PPI numbers to see if there's any
sign of inflation - which we need to reverse the normal dynamic
of depressions, namely deflation. Oh boy, have we got a
deal on deflation going here:
Producer Price Index for Finished Goods decreased 1.2
percent in March, seasonally adjusted, the Bureau of
Labor Statistics of the U.S. Department of Labor reported
today. This decline followed a 0.1-percent advance in
February and a 0.8-percent increase in January. At the
earlier stages of processing, prices received by producers
of intermediate goods fell 1.5 percent after decreasing 0.9
percent a month earlier, and the crude goods index declined
0.3 percent following a 4.5-percent drop in February.
Now, here's what absolutely must happen at a policy level
in order to kick the country out of deflation - and this window
won't be open too long: A policy decision will be made at
the highest levels - and you may not even hear about it being
made - that what America needs to survive is a good dose of
inflation. Look at the PPI data trend - the last line
in the table and it should scare the hell out of you:
March finished goods dropping 1.2% means an annualized rate of
deflation of 15.4%.
Pop Quiz Time!
Name one large country whose government has just bet several
trillion dollars of future taxpayer generated revenue (and ask
what a 15.4% collapse in revenues will do to financial
stability/viability of said country): ____________
See how inflation is now the only option?
These Taxing Times
I'm looking for a bit of cheerleading in the
presidential speech on the economy today, but its slim
comfort since today I will be sending my tax return and checks
to the government in the annual ritual that's been around since
advent of income taxes in the US (in permanent form) back in
1913, which I'm sure you already know is 'coincidentally'
same year that the bankster cabal of the time
managed to grease their Federal Reserve Act through Congress.
Despite being right there in the history books, it seems
whenever commentator brings up this unfortunate 'coincidence',
i.e. bankers get control of the money supply and the imposition
of the income tax, it's popular amongst the PowersThatBe's
minions to brand such observations as either rantings or
unrelated and then proceed with personal attacks on whatever the
If you haven't yet read it, there's
given by Congressman Louis McFadden in remarks made in 1934
where the Fed is 'called out'. Seems during the first
depression, at least one fellow 'got it' and had the balls to
come out and call things like they are. McFadden wasn't
just any old Congressman of the day: He had started
working for the First National Bank of Canton (Ohio) in 1892 and
rose to its presidency where he served for almost a decade.
Once in Congress he was defeated in 1934, not so much for his
opposition to how the Federal Reserve operated, but more likely
because of what today would be labeled anti-Semitic remarks.
Once you get past the 'coincidence' of history - the Fed and the
Income Tax popping up the same year - there's really not much
opportunity to avoid taxes. "More
Americans wary of tax man this year" notes a Reuter's piece
Since the global tab for the current economic mess is now
several trillions of dollars ($9-trillion rings a bell here)
income taxes are especially important not only here in the US,
but in other jurisdictions as well. With reports coming
out that "Iceland
banking inquiry finds murky geysers run deep" we have to
wonder, as the articles asks, if there's not another Enron-like
situation at the core of this particular economic pimple.
The head of the IRS says that the agency will have 'compassion'
for struggling taxpayers' but I couldn't find a 'compassion'
entry in TurboTax or in the IRS forms directory.
Tax time underscores that most of my countrymen have
personalities that might best be described as "Good-natured
chiselers" who believe that since they are 'good people' they
should pull extra deductions.
The problem is, of course, that it's something akin to breaking
the law in other areas; if you want a life of looking over your
shoulder, have at it. But no matter how much I believe
that the country should be funded with a consumption tax
which would actually reward savers and tax consumption
which in turn increases capital formation, the law is the law
and promises of compassion, or not, I've made the personal
decision (as always) to report every dime and not stretch
deductions. While there's a chance that such
chiseling might work out, I've read enough history to
figure that I've only got so much time on this earth and
fighting the beast will come along soon enough, so no point in
kicking its tail. It's an uneasy truce at best, but I feed
the beast paper with zeroes on it and I get peace and quiet; a
Besides: Remember what happened to Al Capone in the end?
evasion. Government has unlimited resources; I don't.
It's just that simple. So until things change via the
ballot box (or via the barricades and mobs with pitchforks) I'll
just send in the balance due for 2008 and my Q1 '09.
Pappy used to say: "It isn't fun to pay, but at least
you've got something to report."
Slim comfort, that, but like another old saying goes: "He
who fights and runs away lives to fight another day."
Besides: It's only paper.
Speaking of stepping on tails and kicking sand in the wrong
face, I trust you've heard that
the Somali pirates have come back with three fresh hijackings?
It's almost as if there's an effort underway to goad us
in to attacking their onshore facilities. Back at the
Great Libretto from the rickety time machine, is this the
"battle won and war lost" shaping up? We'll see in due
Meantime an interesting note from my brother-in-law Panama Bates
on point, which I don't think he'd mind my sharing in part:
[the piracy story] "...reminds me of another situation .....
one resolved by my country in the face of European lack of
intestinal fortitude and indecision. Yes, George I am
referring to the Barbary Wars. (A
backgrounder on Wikipedia here)
We are losing the ability to act forthrightly, clogged with
legalese, international indecision, inability to think and
act without dreaming up all sorts of possible ramifications.
Perhaps the perception that a sovereign country has certain
immutable international rights no matter what is producing
loopholes for unrestrained behavior.
No country has a ¨right¨ to exist; every country exists by
its own efforts, not by permission, not by largess, not by
expediency. Nations rise and fall, there is no guarantee and
the emerging idea that somehow every country must be upheld,
carried or endured is a dangerous concept. Who makes the
decision? Every country decide what their interest is, if it
is similar to another country so be it, but if a country
must act on its own, that is a ¨right´ it has. Now, that
does not mean the international community should decide the
fate of every country, nevertheless it is done economically
every day every day. Who supports North Korea for example?
Somebody does or it would have ceased to exist long ago.
And so my questions run along the same lines. Oh, and
speaking of NK, as in NuKe...
While there's been some rumblings that
the Obama administration may be dropping a key condition (or so)
in order to get talks going with Iran, a second trouble spot
worth watching is
North Korea planning to restart it's nuclear arms plant.
Of course, if that's not enough to keep you up nights, there's
always the report that
Pakistan is about to fall apart - as in 'collapse' -
Guilty, Murder 2.
Wonder which book company will pay how much for his book?
I mean, isn't that how the once Land of the Free operates
nowadays? Criminee sakes...
--- snip and save section ---
Time Monks Warn: Bad Honey
Although I haven't had time to talk with chief time monk Cliff
www.halfpasthuman.com specifically about general release of
something popping out of the web bots recently, I don't think
he'd mind the public posting of this note to ALTA subscribers:
FOR HONEY USERS: if you are not
aware of the issue, please be advised that very significant
amounts of [chinese honey] *ARE* being introduced into the
US food supply stream via stealth to avoid duties/charges.
There are very serious issues
with the 'honey' from china. Much of it is a mixture of HFCS
and 'other ingredients'. We need not go into the types of
potential issues here. Suffice it to say that this will be
the next 'chinese food problem'. (some hints in the data
about [peanut contamination via oil]....
Since honey users are frequently
also health conscious, it makes sense to do honey purchasing
from known producers, either locally or across the internet
to trusted sources.
Just a quick warning. (immediacy
data sets pointing to an [outbreak] due to [bad honey]...and
we don't think it means 'pissed off girlfriends'...
We've turned a Google news alert on for 'honey' + 'china'.
Another item mentioned here as popping up in the predictive
linguistics is this whole matter of the 'global coastal event'
(or GCE). You'll recall we got a 'temporal marker' on that
happening in the 90-120 day range when there was a prequel event
(scientific conference papers discussed) in March.
So while we're waiting for that story, like the tide, to come
in here's a reader observation to gnaw:
Hi george, I like your website, I visit every day....I'm not
a scientist or investigator. I've made some observations
lately that I would like to share with you. I grew up in
South Eastern Massachusetts in the area of Buzzards Bay. I
currently live in upstate NY. I visit my hometown area at
least a dozen times a year. My last two visits in March and
last week have sent my radar off. Water and lots of it, I
noticed large pools of standing water through out the area.
The area has shallow islands not much above sea level, when
I was growing up they never submerged during high tide. The
tides in my last two visits where frightening, the shallow
islands disappearing under water. They ocean was always
peaceful, and non-threatening, not anymore....my sister is
and other members of my family and friends are noticing the
tidal waters creeping in further and further inland. Like I
said I'm not a scientist. No news has been reported about
rising levels of water in the area.
Not to ruin your day completely, but since mine is ruined about
every time I talk to the time monks, here's a concept for you to
try and wrap your head around...although its still a few years
There's a reason that the peer-reviewed journals are a little
light on explaining all those underwater cities around the
Peoplenomics subscribers this weekend...
Common Denominator Programming Department
is planning to do a film on the 2008 election, according to
a report in Variety.
I love the HBO special project folks, but oh, my: I
didn't find the real deal very interesting, so I can't
imagine why anyone in their right mind would want to watch more
politics that is provided in daily news coverage.
Wait! Did I say right mind? With more than half the
country on puppy downers and the other half soaked in fluoride
to suppress higher order thinking, I think I have just answered
my own question.
A fair number of folks wrote in response to my note yesterday on
how certain banks (such as Chase) are changing terms via
super-fine print highly legalese unilateral notices with obscure
opt-out provisions. Here's a typical reader response:
"I got that letter from Chase. Additionally they reduced my
credit limit by 5,000 without telling me. But wait there is
more, they also did not decline the charges I made that put
me over my "new" limit. Because I was now unknowingly over
limit, they refused my written opt out letter. I called them
to point out the lunacy and they agreed to fix it. Of course
they did not, my next bill had the new high rate I did not
want to accept. The joke is on them of course. I will soon
join the ranks of the unemployed and am opting out. I don't
even know if I will bother to go bankrupt, but I doubt I
will make enough money to bother with again. Bogs life here
While you're waiting for me to report some action by various
states attorneys general who are looking in on such practices,
you might want to bookmark a Jim Dandy site called
which headlines "Deception is not a "business model".
Unfortunately, while they may have been right at some point, it
seems to me that those last few trillion we ponied up to bailout
the banksters and their minions is solid evidence that
deception really is a business model at this point in
Here, take two aspirin and get'cher lazy butt to work.
Along the way, don't get sucked into the right/republicorp
versus left/marxist democorp sideshow.
Life is mainly a power trip till a better model arises; a
top-down, up/down game where most of us are 'down' the corporate
foodchain far enough to be appetizers.
Monday April 13, 2009
break out a fresh white board marker - and no sniffing now, even
if this is Monday and no one feels like rolling out after
a long (for some) weekend and "hittin' & gittin' it" but it puts
chow on the table, so throw on that yoke of oppression and let's
get on with it - and in the meantime, I want to refresh you
memory on my favorite chart because it could become very
begins with the premise that you had $10,000 (or simply x
dollars) back in 1998 and you had may a decision to put one
third of your money into the Dow, one third into the broader S&P
500, and because in 1998 the Internet was the 'next big thing',
you put 1/3rd into the NASDAQ Composite.
what would have happened:
at this chart for a minute, a couple of things become
immediately apparent. The first of which is that in terms
of absolute values, while it's true that the Dow did not
hit 14,091 or so back in 2007, when you spread your money around
covering all three indices, you can see that something about the
way most folks view the market ain't quite honest if ol'
George's chart makes any sense. And since it's Monday and
all, I will tell you why it's missed: People are still -
to this very day - acting/pretending/putting on that the
Internet Bubble Collapse didn't happen.
have no idea why, but 99.9% of media will insist that the
markets peaked in 2007. Maybe it's just an artifact of
humans being in denial; I just don't know. Nor, do I
especially care. You know, it's one of those "Whatever!"
also something about Bubble Behavior to be inferred here; namely
that people mostly don't recognize manias when they slap 'em
upside the head, especially when the larger view (money spread
around, not concentrated in the Dow) yields a whole different
economic reality than the current ruling paradigm...one where
9/11 fits into a larger scheme of socioeconomic engineering.
question I've got about the future of the market is whether we
rally up toward the downward parallel price channel that defines
our 'large 3' where it could be turned back and give us 3e In
May (which would give us real crash potential & the
linguistics seem to fit this best) or whether the rally
continues on up to the 9,200-9,400 (or higher, but not to exceed
13,091) range before being turned back and then begins a big 5
down (the crash mode) this fall.
it doesn't matter to me one way or the other, since I'm over on
the commodity side of things presently looking for ways to
position myself to reap a few bucks on what I expect will be
inflation - and while it may seem paradoxical to be hoping
for inflation conditions will emerge, as my consigliore
pointed out in this weekend's first-ever guest Peoplenomics
article, that make it by far the better policy choice to pick
inflation over continued deflation.
that reasonable folks in Washington - if there are any, LOL -
would come to the same conclusion on the desirability of
inflation but maybe not for another month. So I will
just tune my bets a bit as I leg in.
say that I'll be right - and as ever, this is NOT investment
advice. But, I'm putting my money where my chart is for a
number of reasons.
First, It's an unconventional view and the market has a way
of making mincemeat of conventional.
Secondly, the Internet Bubble Collapse (and the dénouement
as 9/11 was circumstantially the mood-swinger get that
overlooked) really did happen and investment outfits have
been trying to figure out how to paper over the damage ever
since; bet me that wasn't on the minds of folks who were
inventing 'financial products on-the-fly ever since.
Thirdly, inflation seems like a shoo-in.
Fourth: Globalism has run out of new cheap markets with
resource to exploit for a while. Even Africa isn't
holding the promise it once did and the economies of Asia
have been bringing up their standard of living such that
China really is developing a Middle Class which could power
that country forward for a couple of decades.
fifth, we have the US currency crisis.
way of thinking, it's not so much a matter of "Will we
ultimately have to go much lower in the stock market?" The
answer to that one is "Duh, dude!" It's just "How far is
question is whether we run into the down price channel somewhere
between 8,600 and 8,800 and fall apart from there, which if the
linguistics prove out should come along before June with a
further dollar crisis, or whether the beliefs of most chartists
will come to pass in which case we would continue to rally up
quite some distance - even over 10,000 o0n the Dow - as we
complete this whatever-it-is formation. This is why the
both possible outcomes are shown on the chart.
Personally, I favor falling apart just over the top of the price
channel, but remember this may only be apparent in this chart
because (remember this!) it's a combination of three kinds of
indices. Quite possibly we could have a Dow rally to
the 10,000 level but have the S&P and NASDAQ lag, or whatever.
I explained this (and more) for subscribers this weekend's
ChartPack, but in the interest of 'eyes wide shut' it deserves
consideration by anyone foolish enough to think paper and ink
are real stores of value, LOL. Money of the 'burns easily'
sort can only be as strong as the underlying social contract.
Metals? That's you 'other kettle of fish.'
since we are on the topic of money, the New York Times editions
Sunday have spawned a rather tasty new phrase.. "surgical
bankruptcy" in their coverage of GM.
Coast financial establishment and the PowersThatBe have a
toughie here: How to sell the GM funding fiasco to us
check-writing taxpayers. We've sunk $13.4 billion into GM
so far, and if they go under, I for one would be asking "What
did the money buy, except a little time for policymakers who
should have seen some of this coming?"
tax-payer, would I have enough skin in the game to maybe get a
'free bolt' in any new GM car, or something? Haven't seen
any discounts yet from AIG though you and I are what, 80% owners
when I thought there was enough in the way of 'financial
products' sloshing around the world - and like financial
products haven't caused enough damage already - along comes
Goldman with a $5.5 billion funds to buy secondary private
equity stakes. True, might be a hot product and all
but is that a gamer I'd play? Nope.
me that we could be entering a time when an asset denominated in
US dollars (as I assume this will be) might show a decent
return once the policy making decision arrives that inflation
is the only way out. But, would it return me something
on a purchasing power basis?
envision is a world where by this fall, where the dollar is
collapsing and inflation rages; what a chance to pick up bushel
baskets of paper, huh?
the dollar's coming slide emerges, inflation will be breaking
out like pimples on a teenager. Gold and silver should
pop. Oil, just about everything imported.
I can almost sense the 'hot money' asking "Hmmm...what countries
are going to do well in whatever lies ahead?" Headlines
markets rise on Japan stimulus, China lending" may be giving
some important hints to the aware.
something to ponder for you this week: What would happen
if the following three things occurred simultaneously?
US dollar declined 40% against the Yuan between now and
Chinese market dropped 5% in the same period
US market gained 15% to 10,000 on the Dow, or so.
would you want your money -- -invested in the US or Hong Kong?
how it works out:
bought the US market with say $1,000, then at the end of
whatever period this takes, the USA investment would be worth
let's say that you park your money in Hong Kong and your $1,000
drops 5% ($950) but remember this decline is in Yuan now.
So comes the time you exit the trade and bring your money home,
only to discover the dollar has only 60% of it's previous value,
so you would come home (after currency swing) with $1,583.33
which is a a damn sight better than $1,150 even if it's Monday
morning and no one is awake yet.
said at the top: This may be confusing but.... Say,.
did you catch the NY Times piece about China slowing purchasing
of US paper? What's that? Is that a clock
ticking I hear?
Vets a Right Wing Threat?
Turner's site is reporting on a not-for-release DHS document
that's called "Rightwing
Extremism: Current Economic and Political Climate Fueling
Resurgence in Radicalization and Recruitment" where
returning vets are cast as a potential threat... Haven't
confirmed the authenticity of the report, but sounds like a DHS
futures down a tad as reports come in about
oil demand falling from the IEA. Fall, baby, fall.
Come to papa's entry point on those....Yee Haw! At posting
time, Dow looked a bit soft...but I hold out hope of a rally
Drama Ends, But....
Seals 3, Pirates zero.
Policy discussions about going after the modern day pirate's
lair? And with so many former Somalis scattered around the
will their threats of revenge come to pass?
don't think this is the 'test' that the linguistics foresaw
where the president would be put in the position of 'winning the
battler, losing the war' do you?
a way to frame the 'pirate incidents' as more a case of
'corporatism runs out of resource' and while I don't justify or
excuse piracy, one could recall all the dumping off Somalia that
has destroyed traditional fishing grounds. And what
pollution hasn't wrecked, foreign long liners and such have.
So with no career options, piracy looks pretty good when you're
down, out, hungry, and ignored.
this is spun around back on the West, especially among
indigenous peoples who've been scattered by poverty throughout
the globe, I'm just saying don't be surprised.
Then there's the latest out of Thailand, which is descending
into chaos now...
sounds almost like an 'early bird gets the...' kind of thing,
but no, it's really "Twitter
Worm Attack Continues: Here’s How to Keep Safe" over at PC
Georgesop Fable's moral? How about: The early adopter gets
IT pros don't plan to upgrade to Windows 7 this year" says a
Oh, I'm still waiting on Vista 64 SP2's release to get class
compliant MIDI drivers. Call me when W7 SP1 is out.
now 97% of email traffic.
and save section ---
With Predatory Lending, Redux
Millions of people have received letters raising rates and
changing terms on our credit card accounts. It doesn't seem to
make any difference whether you've been a loyal customer for
decades, or whether you've ever been late on a payment, or
whether you're even using the card. You get these notices
in the mail with lawyerly mumbo-jumbo and are expected to make
sense of it without a call to your CPA or hiring your own
As a cynic, I'd suggest that this is
the natural result of overturning every state's right to protect
its citizens from usury and predatory lending. The
battle broke out in the 1960's and was promptly lost.
By taking the most
corporate-favorable possible interpretation of the Commerce
clause of the Constitution, banks were freed to set up their
credit card operations in a small state with no usury
protection, and stick the terms of that state's laws to account
holders in all other states. Interest rates above 12% or 15%
illegal in your state? How about 33%. No problem. It only
takes one state with no usury limits and all of us get bent
over. Nice racket, with Fed Funds at zero. Borrow at no cost,
and lend at 30%+.
Better yet, if the borrower is
driven into bankruptcy when all the banks gang up on them, they
can't have their credit card debts wiped out, thanks to the
“Bankruptcy Reform Act of 2005”, more correctly described as the
Slave Act of 2005” by economics blogger Mish Shedlock. If
the borrower ever gets back on their feet again, the banks can
still come after them for the balance due on their credit cards,
no doubt with compounded penalties and interest.
This morning I'd like to give a
prize to the crack legal team at JP Morgan Chase, for their new
definition of default:
“We may consider you in default
if we obtain information that causes us to believe
that you may be
unwilling or unable to pay your debts to us or others on
your account to be in default, we may close your account
without notice and
require you to pay your unpaid balance immediately.”
WTF? With friends like
this... To be in default, you don't even have to
default on anything. Just them believing that you
might not be willing or able to pay them or pay anyone else at
some point in the future is sufficient for them to demand
payment in full immediately!
Whiplash lives, and he's got more than Little Nell's
homestead in his sights. Obviously, The Inspector is out of town
and at this very moment, Dudley Do-right is...er...out
Now an interesting rumor: I've
heard that Chase also apparently decided to apply the new
(sky-high) interest rates and revised use policies even to
customers who had followed their instructions by opting out,
in writing, in the prescribed period of time. Check your latest
statements to your credit card company as done to you.
I'm wondering if anyone else got
this letter and change of terms from Chase? Did you “opt out”
yet still get charged a new, higher rate? I wouldn't be
surprised to see a class action arise if, for example, it
happened to former WAMU credit card customers who opted out.
Not to pick on Chase, but I'm
hearing rumbles that a couple of state Attorneys General,
the Senate Banking Committee and the Office of the Comptroller
of the Currency (OCC) are already investigating.
This also brings a very interesting
economic dynamic into focus: Seems that as the economy
continues sinking that credit card charge-off rates will
continue to climb. Ergo, the CC companies will claim the
need to raise rates ever higher on the rest of us. But now
let me put on my thinking cap and see where all this leads when
taken to its ultimate extreme: Credit card companies
charging remaining customers infinitely high interest because of
what will be portrayed as infinitely high costs of charge-offs.
But what no one seems to own up to
is that given the chance to preemptively raise rates without
cause - only belief - (and even if you opt out, that
might be overlooked), doesn't this damn everyone to be card
slaves forever? Maybe that's the point, yah think?
Like I said, the mob could take lessons from credit card
companies on how to run their loan sharking trade. Fine
print says right here we can break both your legs and an arm on
Thursdays kinda thing... Oh, and be sure to notice what state
your credit card statement comes from. Might want to throw
a couple of bucks into political campaigns of usury law
supporters there, or better:
Kick those states out of the Union.
Here's a sure sign that times are hard and getting harder:
My son is selling one of of his wall decorations...a 1969 framed
(museum type UV glass, too)
newspaper of "Man Walks On Moon".
I asked him why he was selling it and the answer? "Dad,
its just something to hang on the wall...and besides, I've got
bills to pay..."
I've got mixed feelings about this...even thought about buying
it myself. But, when I get to thinking about it, what
would I do with it? Put it on the wall of my office?
This gets me back around to the concept of 'decorating' since we
had our first sitting in the Polynesia room this weekend.
You walk in, see a grass mat look to the place - almost like
being in a 1950's Hawaiian or Polynesia-themed restaurant and
the room transports you to some other time and place.
I suppose I take 'decorating' to an extreme, but that's me.
Just something to 'hang on the wall?" Maybe. But
part of me recognizes that with hard times, people are giving up
bits of history to be able to pay bills and 'get light' on
A case of a parent learning from a child...
Once upon a time, a long while ago, I observed during my quest for
'truth' in economics, that the PowersThatBe, the talking heads on
the teeve, and the other information sources that actively engage in
the programming of humans not to think, had conveniently swept
several trillions of dollars that disappeared in the Internet
Bubble's bursting (since spring 2000) under the rug. Surely,
it wasn't unnoticed by the thousands of people who called brokers
and said "Where is my money?" "Gone, but hang in there as
you're a long term investor!" was about all they heard back.
So one of our
charts for Peoplenomics subscribers oughta be widely circulated - it
shows that if you line up the peak of the Dow in January 2000 with
the peak in early September of 1929, we're on a very very close
replay track. Much closer than even the chart shows if you
were to back out inflation, and put in the effects of 1929
deflation, but that'd be real work, and I'm sort of lazy if the
truth be told.