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Friday December 31, 2010    07:55  AM CST   
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It's a Wrap

Wall Street is opening on schedule to wrap-up the 2010 trading year and it will do so with a decent return for the year.  The S&P 500 closed out 2009 at 1,115.10  so unless the whole market steps in front of a bus before the close, the broader market will close up around 12.8% for the year.

 

Not bad.  Just not as good as gold or silver, although depending on entry points and tax rates, your results may differ, this is not a recommendation to buy or sell securities, and yada, yada, yada.  Operators are standing bye, this is a free call.

 

I used to think of the Dow as the 'fluff number' but this year the Dow looks to head into 2011 after posting a gain of about 10.95% - well below the broader market.  Unless, like I say, the Dow were to get pushed in front of a bus.

 

Looking ahead, things are going to be very interesting over the coming few weeks.  Robin Landry sent our a note to his colleagues in the investment community on Thursday and he sees it, too:

The market is due for a correction starting sometime in January and it is my opinion that it will answer the most important question the market faces for the next couple years.

Will Deflation be the outcome due to the continuing problems with real estate and the debt problems worldwide or will the Federal Reserve be able to continue to print money as they have since the low in August thus resulting in Inflation?

It has been this buying of bonds, in my opinion, that has been the primary reason the stock market has been able to continue to rally despite the dismal economic conditions.

The election of a new Congress that says they are intent on reducing spending, if true, will mean the pressure will be on for all government entities to start cutting expenses and result in a reduction of services. This will not be without pain and my concern is will Congress be able to do what needs to be done to get us back on the road to financial stability.

If the correction breaks the July low around 9600 in the Dow, then the market is likely to retest the March ’09 low around 6500.

With the continuing problems in real estate, the mortgage mess, and the developing crises in State and Local governments facing revenue shortfalls, I believe the Deflation argument is the most likely outcome.

Recently the Congressional Budget Office issued a brief telling State and Local governments the options available to them due to the economic conditions and budgetary challenges they are facing. They outline the options available to them which include Default and Filing Bankruptcy. You can read it for yourself at this link. http://www.cbo.gov/doc.cfm?index=12005 

This brief leads me to believe the Federal Government is saying to the State and Local governments “We don’t have the money to bail you out.” The recent comments by a leading analyst regarding her view that at least 100 municipalities will have to file bankruptcy in the coming months is just the tip of the iceberg.

As the state and local governments come to the conclusion that the only way to get back to a stable financial footing is to declare bankruptcy, I expect we will begin to see demonstrations in the streets and hope they are peaceful but when people feel desperate they don’t always use reason and can become violent.

When pensions and benefits are cut, families will have to make major cuts in their own spending. This screams Deflation to me.

The last few weeks we have seen interest rates rise even though the Federal Reserve has been buying Bonds in order to keep rates low and stimulate the economy. It has not been working. The market continues to rise on low holiday volume.

Today (Thursday) we reached my lower target of 11,612, which is where wave 5 is .618 of wave 1 in this rally off the July 2010 low.

If the market continues to rally in the new year the next target is the 12,100 area where wave 5 equals wave 1. While I don’t expect the higher target of 12,100 to be reached, it is possible.

With bullish sentiment now at levels where major tops have happened in the past, I expect, at least, a small correction starting early in the new year.

Once the correction begins, we should see rallies in government bonds as people start to exit equities and run to the safety of bonds. Then it is just a matter of watching the support levels to determine if higher prices are coming or if P3 has started.

The chart below shows the levels that I am watching to determine the degree of the correction and thus the longer term direction of the market.

The first level to watch is the 10,900 level, which is the 4th wave bottom as shown on the chart.

If this level is broken the next level to watch is the wave I top at the 10,730 area.

If this level is broken then the next very important level is the July 2010 low at the 9600 area.

If this level is broken then the probability that P3 down has begun rises dramatically.

I would like to end the last update of 2010 with Best Wishes for a Happy and Prosperous New Year!  rlandry@allegiance.tv

If you are a Peoplenomics subscriber, this is exactly the P3b turning to P3c that we talked about in last Sunday's report, so you can follow along.

 

As Robin noted, in a conversation we had yesterday, the last time sentiment levels were this extreme was 1987.  I've got a big red circle around January 7th  & 11th due to the predictive linguistics of www.halfpasthuman.com as well as my own simplistic 'when does it cross the trend line" analysis which in turn leads to a mass recognition point.

 

GlobalRev and 2011

There's a good article out in this week's online report from Foreign Policy in which they list 16 wars to watch in 2011.

 

So here's our first ponder of the morning:  How many wars - in how many places and killing how many people - does it take to be considered a World War?
 

The homeland hype about terrorism sure seems to have the same 'feel' of a nation on a war footing, and thus the question:  Are we in some kind of next-to-invisible "world war" and the media's just not packaging it that way in the 2-minute stand-up packages from the various hot spots?

 

Skiing Rome

No, the tour guides are not skiing to work in Rome yet- while we await the arrival of skiing the seven hills as an important temporal marker.  But, just as weird is the snowfall in Phoenix on Thursday.

 

Not a lot - mostly mixed flakes in Scottsdale, but up in the hills just north of town it's awful today.  I called my commodity broker (JB Slear) to ask him why he didn't mention the snow in his daily write-up of markets (here).

 

He tells me in Prescott this morning they've got an honest foot of snow and the temperature drop yesterday was like the worst of Chicago, nasty wind and all.  Near phoenix?  ViseGrips, please.  Feeling the need for a pinch coming along.

 

Lows at night this coming week in Rome oughta be around freezing by late in the week.

---

Down in Oztralia, there's an area larger the the country of France which is flooded now and 200-thousand people are stranded.

 

Who - & On What?

Someone sent me a note that I should check out the Salon article "Ashton Kutcher schools us on the coming apocalypse" and said I should read it.

 

I sent 'em a note back that it would be a ways down the list however, since I'm really quite busy trying to transform myself into the human pork rind until I put new batteries in the digital scale and that's not on my list till well after New Years.

 

Flu Deaths

Interesting story floating along over at recombinoics about the rash of deaths from H1N1 that are popping up in the UK.

 

The one thing that caught my eye was their mention that...

"The latest report also describes an increase in Tamiflu resistance, which will also increase the number of severe cases and deaths, which will create additional concerns. "

You damn sure bet'cha that raises concerns, alright:  Like how is it that H1N1 develops a Tamiflu resistance without a little death-lab help?

 

Tabasco Story

This is hot:  I won't give away the details, but you have to read the story at The Smoking Gun about the "Flier blames Tabasco spill for lewd act" on an airplane this week.    So much for flying security,...

 

Passings: The "We Can Do It!" Gal

Geraldine Hoff Doyle has passed on, according to the LA Times obit section.

 

A lot of people think the "We Can Do It!" poster which was based on Doyle working at a Michigan factory during WW II was where "Rosie the Riveter" came from.  But that's not the case.  A couple of paragraphs from Wikipedia to set things straight:

"Rosie the Riveter is a cultural icon of the United States, representing the American women who worked in factories during World War II, many of whom worked in the manufacturing plants that produced munitions and war supplies. These women sometimes took entirely new jobs replacing the male workers who were in the military. The character is considered a feminist icon in the US.

---

The image most iconically associated with Rosie is J. Howard Miller's famous poster for Westinghouse, titled We Can Do It!, which was modeled on the middle Michigan factory worker Geraldine Doyle in 1942, but this image was not actually intended to be Rosie the Riveter. Rosie the Riveter is a fictional character.

Harks back to a time when we really could do it.  Here lately, I begin to wonder.

 

Unresolved

Last, but certainly the Maraschino cherry on this morning's report is the report in the UK's Mail Online that "New Year's resolutions 'barely last longer than a week."

 

As I sit around looking at stories that didn't make it into today's report, like he various war stories and what have you - I find it remarkable the amount New Years resolution and politic promises have in common.

 

They all seem to expire nearly as soon as made.  A fact that should be 'transparent' to those waiting for troops to come home from the sandbox or from guard duty in Cuba.

---

The fine thing about a year like the one winding up today is:  Just about anything we do in 2011 is bound to be an improvement.  Or so we sincerely hope.

 

(continues below ad)

 

Coping:  Annual Reviews Time

Working on an in-depth investigation of how it is that people accomplish really useful lives - in some cases - but really wasted lives - in others - as a Peoplenomics report for Sunday.  Working title of the piece is "Planning, Prayer, or Something Else?" and it springs from a whole pile of reading with more to come today and tomorrow...anyway that's coming up Sunday for subscribers.

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This is the time of the year when a lot of companies go through the motions of HR reviews so they can have something other than a W-9 form and a photocopy of the drivers license to show the labor lawyers when you finally get around to suing your company for the one thing that might actually stick in today's world:  Stupidity.

---

Seems to be the time, though, that people go into "plan, pray, or something else mode" either as the final hours of this year, or the first couple of days of next, get trotted by on the calendar which seems to be moving at an ever-faster rate.

 

The reason for this is simple:  When a child is five years old, the preceding yet represents 20 percent of their lifetime.

 

When you get to be an old fart (OF) like me, a year is down to 1.63% of a lifetime and by the time someone gets to be 100, it's down to one percent. 

 

I figure this explains why people are always trying to do more, bigger, and better, the older they get.

 

And, as much as people bitch & moan about aging, the way I figure: It beats the alternative.

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I've always taken this 'falling proportion' math as something of a challenge.  My biggest accomplishment - at age 8 - was nearly setting a nearby church on fire when a fire in an underground camp a lifelong friend and I had built nearly caught an overgrown field on fire.

 

This year's biggest accomplishments including an addition onto the office building, a modest increase in net worth, and the loss compared with last year of about 2½ pounds, which might get up to 3-pounds if I don't eat or drink anything until dinner time. 

 

Fat chance of that, however. New Year's Eve dinners are designed to end one year on a happy note - and if you've got the table muscle for it - start the next year off on a pleasantly plumped note, too.

---

I got a kind of wild hair up my...well...so I started penciling up a couple of 'dream projects' for around the ranch in 2011.  While we are likely to get the rest of the horrible economic news splashing across the headlines in January as we're tipping into them (and have been since November). we've done about all that a reasonable person can be expected to do, other than put in an underground storm shelter' which could be used for either tornado or fallout.

 

So the construction this coming year will involve useful square footage like a guest room, a "music" room, and maybe putting in another deck.  I get the urge to build a large deck every so often and I've put in three of them so far, but there are plans for at least three more, and at least one of them will have living additional enclosed living space on it.

 

As much as we'd like to move back to the Northwest to be closer to the kids, there's been a noticeable lack of people lined up with $400K cash and despite housing prices coming down in the Northwest, it'd be hard (or downright dumb) to sell a home which has an annual tax rate under $1,000 and move back to a nice citified home and pay the typical $6,000 to $7,000 per year in a nice area public officials demand as protection money in such realms.

 

Our continuing objective is to build as near as we can to a self-sustaining living space which will have - as near as possible - zero operating cost.  $82 a month for taxes and maybe another $100 for water & power once I finish the second solar panel array.

 

Been working on another chapter for my ebook "How to Live on $10,000 a year, or less...." which I update periodically as I discover this, or that.

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So here's hoping your weekend goes well and that you set aside a little time to make plans for 2011 that will meet your needs. Our criteria comes down to a very short list:  If something doesn't increase our health, wealth, or happiness, it won't be on the 2011 list, and it's a simple metric you're welcome to borrow as you weed through your dreams for 2011.

 

The challenge, as always, is how to do that while the world around us continues to deteriorate.

 

SKN

The first item on the agenda for New Years is to participate in ham radio's

Straight Key Night.  I will likely be on 80 meters tonight and 20 meters tomorrow working on my old Nye-Viking hand key.

 

Even though Morse code is not required to get a ham radio ticket these days, it's still an art form and as a member of the International Morse Preservation Society (member #13106).

 

I hold that someone who can copy 30- words per minute or higher - in their head without paper or pencil likely has a decent IQ.

 

There are just certain hobbies where warmer than room temperature IQ seem to congregate:  Flying, ham radio, and competitive sailing are a few that come to mind.  We don't mention things like hacking, but......

 

Thankful Readers

My explanation this week of why I pay my income taxes regularly as clockwork and don't complain much, apparently didn't sink in.  Since I'm not willing to lead a tax revolution, I suppose that makes me something less than respectable in the eyes of some readers.  Like this fellow for example:

"You’re a pussy-plain & simple. You are the type of spineless individual that allowed America to get into this mess in the first place, along with all the other spineless Americans who don’t deserve the freedom the constitution grants them. Sorry, had to get that off my chest. Fact is fact!!

That sit back and let someone else do it attitude will not get us anywhere, not even a non-violent revolution."

I was going to write back a long note explaining that I didn't "allow America to get into this mess in the first place."

 

I  simply got outbid, that's all.  And so did you.

 

As so often happens, a few emails further into the inbox, a different reader sent along this dandy note which sums up my outlook better than any 20-pages of writing I could do:

"I am reminded of a rather poignant quote I once read on a bathroom wall of a sleazy coffee shop in the college area of Cincinnati:

 

"Do not speak of revolution unless you are willing to eat rats."

The Dental Dodge

Speaking of taxes - which I'm loathe to do because it always lead from one thing to another - but a reader says he's found and 'honest' way to avoid the 28% gains rate on 'collectible' gold...see what you think:

"It's easy. Just go down to the county house and get a business license and voila! Hammer out a few odd loking things and call it jewelry. No matter if no one likes it enough to buy it.

Now you have a legitimate business reason for buying and sending back to the refiner for profit or credit when prices rise. I own a dental lab and have no tax issues other than ordinary income when I send in my scrap to the refiner. If I don't open the packages on new stuff I purchase I can return them at a latter date and they will pay the full current price with no restocking fee. For my scrap, I just have it applied to my account as a credit. On top of that I only have to pay about ten percent instead of the exorbitant fees the advertised gold buyers charge. "

Hmmm... problem is that without real sales, the IRS would almost certainly disallow such a thing.  On the other hand, sticking a chain on a $20 gold piece is something even I might be able to do.  But, then again, I'm not looking to sell either of our gold coins in the foreseeable future, so I'll skip ordering the book of jewelry-making.

 

Reading List: Speed-reading the Mahabharata

My friendly retired .mil war-gamer sent a follow-up note to our discussion of how ancient Indian literature may actually be a 'look-ahead' to what's coming:

I found the 'epic' rather complex and difficult to read at first, I think mainly due to the culturally different names of people, places and things.

Before you dive in, I highly recommend you review a few 'Cliff Notes' type sites for various summaries to help you grasp the details as you scan the full truly 'epic' story:

I like the above summary, since it is from a site dedicated to exploring Hinduism and leaves out the 'new agey' interpretations. Plus it is short and sweet, great for busy folks with much to do. That all said, the 'Divine Weapons' summary at the bottom of the above link will likley send some chills down your spine.

This next one is a bit longer, but mentions the 'terrible celestial weapons' employed in the war with horrific effect. Also of interest is the 'planning' cited for the nakedly premeditated war (sounds sorta familiar, eh!)

They say that history is often the best teacher. If that is true, and we can't learn from ancient sources like this, then I fear for the many lives soon to be lost.

Finally, I find it ironic that the Hindu and Pakistani people, like the Jews and the Arabs, are genetic 'family' -- much like those detailed in the Mahabharata. Another fine lesson that appears to be lost among today's key players "planning for war."

There was a related email from a reader who claimed that the use of psychedelics is too recent a phenomena for the notion that the book is a look-ahead. 

 

All I can say is "Dude:  you obviously haven't read the science or Hancock's book.  Humans have been doing drugs since day one!  Why do you think the Power Elite struggles to make them illegal and/or make piles of money off them?  Good grief....that's the whole point of power:  control the population and turning off the activation of DMT is necessary to support the ruling paradigm.

 

One more 'connected' email?

Hi George Well, happy New Year (almost).

In light of your comments today re ancient texts perhaps recording a vision of the future (which may equate to our present) you may be interested in a fascinating Arthur C. Clarke novel “Childhood’s End” (written in 1953). I know your time is limited so check out the synopsis on Wikipedia.

Interestingly, the Overlords resemble the traditional human folk image of demons – large bipeds with leathery wings, horns and tails. Karellen (the Overlord’s supervisor) reveals that there has been no prior contact with humans. These images arose from humanity’s premonition of this future meeting. They were a record of the future, not of the past.

Yes, I know it is a novel but Arthur C. Clarke’s works seem quite prescient, at least to me. Just for the record I too received a “download” of software code streaming from R to L during a deep but lucid sleep in the middle of the day December 20 2008. Hmmm…right on the solstice. Seems that the sun often, but not always, transmits packages of unexpected energy around the solstice and equinoxes. Haven’t noticed any major changes in my life since then but am wondering what happens when the .exe command is activated.

Let us know.... [CR/LF]  (Hmmm...Nothing seems to be changing...)

 

Going "Socialist"

A couple of readers have actually discovered there is an urbansurvival Facebook page.  OK,  so I'm a late adopter on social media; but it makes denying being a 'socialist' easy enough.  Use the UrbanSurvival FB page for feedback if you care...

 

Useful Lingo Dept.

Gotta hand it to the Urban Dictionary people for coming up with the perfectly timed peach:

New Year's Heaves

Speaking of clever writing, several readers have sent me a note about another site's "Writing Contest" and suggested I submit an article to them.

 

I sent a polite note back, gently declining, on the basis that to enter a writing contest I'd actually have to learn to write and I have enough going on in my life without having to remember that the punctuation goes inside the quote marks and proper rules of capitalization, and all that. 

 

Worse, I'd have to write 1,500 words and that might conceivably involve three or more coherent thoughts in a row.  That's asking far too much!

 

So, no, I won't upset the delicate balance in Universe in pursuit of such foolishness, but thanks for thinking of me.

 

I'm much too busy anyway.  Although right after breakfast, I'm taking the rest of the year off.

 

 

Send your comments to  george@ure.net  

 

Last week's report is always here.

 

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Thursday December 30, 2010

Stand Up Thursday

Seeing as so many people will be taking tomorrow off, it struck me we should try and be (best we can) a warm-up act for tomorrow night's celebrations.  So we'll report today's events in 'fluff first' fashion and then work up to the most serious stuff.  this way, you can click out as soon as you're adequately depressed, which is a fine way of doing things; it'll allow you to scale your own wailing.

 

Friday will not be a day off for Wall Street.  The NYSE's website explains that:

"New Years' Day (January 1) in 2011 falls on a Saturday. The rules of the applicable exchanges state that when a holiday falls on a Saturday, we observe the preceding Friday unless the Friday is the end of a monthly or yearly accounting period. In this case, Friday, December 31, 2010 is the end of both a monthly and yearly accounting period; therefore the exchanges will be open that day and the following Monday.

On the other hand, we notice that the Federal government will be taking the day off tomorrow, so if you were going to send something by mail and expect it to be postmarked this year, time to toddle off to the mailbox this morning. 

 

Why this means tomorrow Wall Street will be even less supervised than usual, LOL.

 

Various States and Municipalities will be up to their usual 'parking meter roulette' - where you live matters.  Unless you go right to the mall, which millions will, in order to pick off year-end deals.

 

Leave It To Richardson

Word that Billy the Kid may get a gubernatorial pardon some 130-years after his exploits hits me wrong, not so much because of the 'facts' so much as it's another example of the Nanny State promoting the notion down at the archetype level that everybody gets "do-overs", regardless of the crime.

 

I ask myself, why would a fellow consider a pardon for Billy?  The reason is in the story, but I get to thinking:  Is it Richardson's fascination with the Wild West, a desire to make governor's promises mean something, or is it just a ploy to keep his name out in the public eye?

 

Maybe, since he's leaving office, this is resume-building.   

 

Or, maybe - just maybe - it's a coded message to the sheeple that we really can trust government, although said help may arrive 130-years after it matters.

 

LiFi Coming

Word that some engineers have cooked up a way to stream lambda-speed data from light fixtures certainly puts a whole new spin on the internet's direction.

 

I guess this means that in the future, those without the Internet really will be in the dark?  (rimshot)

 

OK, so much for the light-hearted stuff.  Grab the tranks and read slow as they take effect so your blood level concentration of 'em can come up a bit.  Ready?

 

IP Phone Troubles

You may notice the Skype is back working, but not until after a couple of difficult days for users and the company is looking at ways to keep the problem from happening again.

 

Snap!  Presto!!  Solution!!!

 

Make VoIP illegal...how's that?  Who would do that?  Not doable, you say? 

 

Think again:  The People's Daily reports that Skype is now illegal in China and that unless the voice services come from China Telecom of China Unicom, they are illegal.  No word of enforcement timing, so call us from Beijing and let us know if it's still working.

 

Disposable People & Gold

Interesting Bloomberg story about the relationship between sick miners and China's big pop in gold production, which may drive $1,600 gold shortly.

 

Weekly Job Number

The last weekly jobs report of 2010 is out...

In the week ending Dec. 25, the advance figure for seasonally adjusted initial claims was 388,000, a decrease of 34,000 from the previous week's revised figure of 422,000. The 4-week moving average was 414,000, a decrease of 12,500 from the previous week's revised average of 426,500.

The advance seasonally adjusted insured unemployment rate was 3.3 percent for the week ending Dec. 18, an increase of 0.1 percentage point from the prior week's unrevised rate of 3.2 percent.

The advance number for seasonally adjusted insured unemployment during the week ending Dec.18 was 4,128,000, an increase of 57,000 from the preceding week's revised level of 4,071,000. The 4-week moving average was 4,120,000, a decrease of 37,250 from the preceding week's revised average of 4,157,250.

Still, the Unemployment rate in December of 2009 was  10.0 and we will get the December rate for this year next Friday.  But to go through all the work we collectively - as a country - did this year and to face the prospect of an unemployment rate that's essentially unchanged, sure seems like the jobjackers and 'free traders' are having their way with us.

 

Like we're not supposed to notice the declining standard of living?  Moving to a better homeless shelter is not what I'd call progress.

 

Quakes Over New Years...

4.2 in Indiana of all places overnight?

 

Our consulting earthquake sensitive sends this:

"yes George its me again Sensors are Picking up a 7 hitting someplace Around new years or After a few days. Im praying as of Now No God no please Let me be wrong . george i was Outside 3 days ago sweeping my carpet and a 7.9 Quake flashed in my mind for 2 seconds. WHAT.? I wasnt going to email you this cause You think i Need the Nuthouse. I think i am nuts to tell you this.No More said. I see the sun is going to do some Crazy stuff in 2011 if so this earth is going to pop off some Big mommy Quakes like 8s. "

If we get a 7.7 or larger between now and Tuesday, then I'll have to issue another gold star.

 

Some people are just sensitive to such things.  I've noticed that a day ahead of the only big quakes I've been through that the day or two ahead of time I feel horribly lethargic - almost like time gets that syrupy quality to it.  Day of the quakes I feel fine - and quite rested.

 

That said, I keep looking at the USGS website and found the quake on what I guess to be the northern rise leading south to the Himalayas in western Xizang China to be pretty interesting.  Bonin Islands, Aleutians, and Vanuatu being somewhat passé after some much recent activity.

 

We'll watch over New Years, but if you get the shakes while waiting, think back to the previous night's liquid intakes first.

 

A 2011 Look Ahead:

Nuclear Poker

I wasn't going to strain the brain, at least too much, this morning because so many people are in a holiday-building mood.  But as I look at all the talk about what's ahead for 2011, there's a topic which keeps floating around the email inbox which deserves some serious discussion, so make sure the coffee is warm for this because this is almost news-magazine length here.

 

We start with an informational note from a well-placed, but retired military source, who sends along some interesting background about the direction and possible outcomes for nuclear weapons use in southwest Asia. 

"George,

Since 'at least' 1990 the DoD has been worried about a nuke showdown between India and Pakistan. I participated in a major war game, and was in the Nuclear, Biological and Chemical (aka 'nukes, bugs and gas) 'white cell.' An exercise 'white cell' provides factual guidance (in our case, things like weapon effects in densely populated areas, local/global dispersal patterns, etc.) to the 'players' of the exercise in their respective areas of expertise.

First, it quickly became apparent (with 'real' former U.S. state department officials and then current U.S. DoD seniors playing) that US meddling in such a conflict could easily worsen the situation. The underlying religious animosity between the two nations almost necessitated that each not back down in order to 'save face.'

Making matters worse, if America tried to intervene, Russia and China would resent our exercising an unwelcomed influence in 'their hemisphere.' So superpower intervention could rapidly escalate a regional conflict into a global one. This prevented the US from preemptively 'taking out' either side's nukes with non-nuke strikes for all the obvious reasons. If the conflict ever reached a serious stage, it was likely that tactical nukes would first enter into the fray.

Keeping superpowers out of this mess was the tricky part.

Some of the key take-aways from a 'limited' India-Pakistan tactical WMD exchange (less than a dozen or so total low yield weapons):

- A nuke exchange would likely start in or around the Kashmir region. Without external pressure, the conflict would likely smolder out after each side exchanged sufficient blows in a relatively unoccupied area to 'save face.' Kashmir was viewed as the most obvious such place for military units to face off.

- The Himalayas would largely contain any resultant fallout, but trade winds (depending upon the time of year) could push airborne radioactivity south toward the equatorial jet stream or even back to the west and the Middle East. If the fallout in fact reached the equator, it could easily be 'pumped' across the globe via the equatorial wind patterns -- not good for surface water, livestock and crops, not to mention people.

- N. Korea was seen as regionally destabilizing and continuously 'posturing' (like a rooster approaching a hen house), but not insanely dangerous to the point of invading the South (they did not have nukes back then, but the games were set in 1997-8, when nukes were seen as 'possible' for the Communist state).

This 'game' ultimately resulted in my picking up an English translation of the the ancient Indian Mahabharata. Many have postulated that this ancient scriptural accounting in fact describes a nuclear war using manned flying machines. But here's the rub -- did one or more mightier minds of that long ago time write down something that 'had' actually occurred, or (much like our very own Time Monks) were they able to somehow divine events 'yet to come,' writing down what today's scientific minds view as culturally steeped mythology but which they back then intended as a prophetic warning to those of us willing to listen)?

All of which would make a mighty fine "ponder with adequate scotch" until we come along to the headline on the Debka site this morning.  This is where the news edges over toward scary:

"Pakistan makes two nuclear weapons available to Saudi Arabia."

Gather round the poker table, we need to talk about this latest hand that's been dealt.

 

One line of thinking might be that one of the root causes for the war in the 'eastern' sandbox' (now playing in a 'Stan' near them)  has been to set up a war within Pakistan (remember, Benazir Bhutto was killed by assassins in 2007 perhaps partly for outing the murder of Osama bin Laden as reported, and perhaps as destabilizing effort).  Properly choreographed, this would set up the West seizing the Pakistani nuclear arsenal.  "For your own good" in Nanny State-ese.

 

Fast forward to today's headline from Debka:  Their article reports that the actual weapons promised the Saudis "...are most probably held in Pakistan's nuclear air base at Kamra in the northern district of Attock. Pakistan has already sent the desert kingdom its latest version of the Ghauri-II missile after extending its range to 2,300 kilometers. "

 

My point being that although the weapons are promised they are held in Pakistan. 

 

I think what may be in play here is that the Pakistanis, by promising the Saudis a couple of nukes - have in a sense taken out an 'insurance policy' which would make it very difficult for the US/West to go in and seize the Pakistani nuclear arsenal as things on the ground deteriorate in the region.

 

Where up until this latest move was revealed, the US might have been able to mount force and take nukes away from the Pakistanis, but to do so now - with this latest deal - would be viewed by the Saudis (read: big oil source) as a move to disarm them and since they have oil, they have leverage.

----

Let me jump around for a moment now:

 

SpaceWeather.com is reporting only two sunspots this morning.  If we're worried about 2012 - kill shots from the sun as one fellow postulated - and all that, we're going to need to see Solar Cycle 24 'grow some balls really quick' or we're not going to be in the position where the peak probability of solar ejecta would be likely until 2013-2014.  So maybe we can set that aside.

 

Another possibility is that looking at the earthquake data, maybe the large amount of activity we're seeing around the Pacific Plate won't break it unleashing  a horrible sequence of oceanic disaster.

 

But, what IF much of the 2012 speculation now building has been misread and may actually be warnings from our drug-using ancestors who had a much higher proficiency in use of psychedelics than current major societies allow because they enable large numbers of people to slip out of the "control" mode and go slipping around 'the Stream" , do out of body experiences and the like.  (Ref: Supernatural: Meetings with the Ancient Teachers of Mankind, Graham Hancock) 

 

That's mighty dangerous stuff to let loose and so the "controller" groups under the banner of religion, politics, and "idealism of government" may be selling their own prepackaged version laying things out as they'd like to see. 

 

Which gets us to a rather startling thought:  That those Mayan calendars  and ancient writings from India may not be about some random thing coming in from space like the Niburu warnings and what have you.

 

Maybe there's a whole past part of human culture that has done drugs, surfed the Stream and written down the future for us in Jules Verne-like fashion.

 

So its with some seriousness that I've put The Mahabharata (Penguin Classics) on my reading list.  But I'll be reading it for hints toward present times.

 

Because what IF the story wasn't about a mythical conflict "back when" and is instead a Leary-like tale about an future that's "almost now?"

 

Coping: What I Don't Talk Taxes

The short version of this morning's report:  The long-term capital gains rate on gold appears to be 28% not the 15% referred to in yesterday's column.  IRS Publication 550.  A CPA (one of several who issued the corrections to my thinking) sent in this thumbnail which - I have to toss in - is NOT TAX ADVICE! - GET SOME REAL TAX ADVICE AND DON'T RELY ON ANYTHING ON THE WEB!  These are his thoughts and you may have a different CPA with a different read, but here's the deal:

“Collectibles gain or loss.   This is gain or loss from the sale or trade of a work of art, rug, antique, metal (such as gold, silver, and platinum bullion), gem, stamp, coin, or alcoholic beverage held more than 1 year.”

 

What I found was that the definition of collectibles for purposes of requiring the 28 percent rate refers to a definition of investments not permitted to be owned by IRAs.  Generally, IRAs are not permitted to own collectibles as described in IRC Section 408(m)(2).  That code section defines collectibles to include “any metal or gem” and “any stamp or coin”.  However, Section 408(m)(3) loosens the IRA requirements somewhat to allow the ownership of gold, silver, platinum, or palladium bullion, as well as bullion type coins, such as gold and silver Eagles.  Evidently, the thought was that a retirement vehicle should not be allowed to speculate in the ownership of rare coins, but bullion and bullion type coins should be permitted.  Thus, these types of coins are excluded from the definition of a prohibited “collectible” for IRA ownership purposes.

 

One would think then that bullion and bullion type coins would not be considered a collectible for purposes of the 28 percent tax on gains.  However, going back to the collectible definition for tax rate purposes, it says that collectibles are defined generally with reference to the IRA rules, but WITHOUT the loosening for bullion and bullion type coins.   So this leaves us with a collectible definition for the 28 percent rate purpose which encompasses “any metal or gem” and “any stamp or coin”.

 

In other words, we are screwed.  My reading is that the 28 percent rate does apply to gains from the sale of bullion and bullion type coins, as well as true collectible coins.  

 

I know this is not the answer you were hoping for, but hope it provides some clarity. "

I say the 'short' version because there are a lot of opinions floating around - and a pending bill in congress, too, which would change that (I knew I'd seen it somewhere, but it's stuck in 'we need the money land) - and besides, anyone who would sell gold at these prices is not a fool; just a damned idiot.

 

I haven't looked at the tax on selling gold because I acquired that lone gold coin of ours back in 2001 and I wasn't looking to sell it then, now, and maybe never. 

 

Still, point learned, of should I say relearned: Don't take on tax matters like this because the government hates competition.

---

There are times when something like this comes up, when I just sit back and survey the social landscape.  The dominant feature seems to be government hates competition in the value-setting department. Which is why there's even a business called counterfeiting.

 

Printing up money out of thin air is only done by the government itself - and large Wall Street firms.

 

So, making the best of it, and without trying to start a revolutionary movement, I've decided to play along with the 'authorities' on this.  But a number of readers think we should all 'rise up' and cast off the chains of taxes.  Her'es a typical note which calls me out on this:

"This tax yammering is getting out of hand. What people detest, and is prohibited, is taxation without representation. When people feel like they are getting their money's worth from their taxes, there is peace in the world.

And also the constitution prohibits direct taxation by the federal government, which the income tax is, but the courts fail to rule on it. The Supreme court has stated that the 16th amendment did not give the federal government any new powers of taxation.

The federal income tax is a direct tax, plain and simple, no bullshit. Any seventh grader can figure that one out. Besides, the 16th amendment was never properly ratified by the states, so right up front in the income tax argument, a person has to decide if they are in favor of the constitution or not, because either you ratify it legally, or you just drop the whole constitution, its not a pick and choose situation.

The federal government was allowed to tax only tobacco, alcohol and firearms by the constitution, and to levy tariffs. The census was designed to determine how much tax each state was required to pay in for its share of the cost of the federal government, not to determine how much federal money each state gets back.

When the direct election of senators amendment was passed, #17, the entire system broke down. Senators were originally appointed by the state legislators, and could not be a member of that state legislative body. That senator was part of the group that determined the federal budget, that is why the constitution says all financial bills shall originate in the senate. The state legislators then had to figure out how they were going to come up with the money, from their constituency, the senator they appointed voted for. That senator had to spend most of his time in the state living a normal life among the population, where they were subject to feedback. Its a whole different world when politicians, like on the state level, have to spend most of their time with people in their face saying WTF are you doing.

When It became possible to buy both houses of the congress, the game was over, plain and simple. What happened after that was inevitable. That and (lack of) a president who fails to rally the people behind him when the Jurists fail to follow the letter of the constitution. Its pretty damned hard to bribe an entire state legislature, much less 26 of them.

But the ultimate decider in the constitutional world is the juror, who can simply vote to acquit if they feel that the law the person is charged with violating is unjust. A little mob action against even one judge that does not allow this into the jury instructions would change more in the USA quicker than any other single action. Because Jurors, if given the chance, will not convict for a crime where there has been no harm, like possession of marijuana, for example. Or not having a license on your car. OR NOT PAYING A TAX FOR WHICH THERE IS NO LAW REQUIRING IT!!!!!

Solutions to these things are quite simple. It will be a long time before humanity can put together a better system than the founding fathers of the USA created.

Your opining on this tax crap has now easily exceeded the entire verbiage of the entire constitution. Not exactly what I would call brilliant in my world.

I know you need to create copy, but lets have something a little more intelligent that this. Become a constitutionalist, and the sheeple will consider you a brilliant man. Most of them have not read it, and they don't teach it in school. Just stop some high school kids, and ask them if they have ever read the constitution. Or anyone under 35 for that matter.

Is it a crime to tell a county sheriff, we will kill you if you or your deputies violate the constitution of the united states in the performance of your duties? Is that, or is that not treason?

Yes!  On this last point, yes, actually, in today's world, it is. 

 

If you want to take off down that road, have fun, but without me since I'm not going there with you.  I'm a Constitutionalist in hopes of peaceful change at the ballot box.  Write from jail, though, and I'll pass along your PO Box info.

---

So where did I get the idea of 15% gains tax from in the first place?  Well, that came from my confusing the bill which was introduced into the 111th Congress called the Fair Treatment for Precious Metals Investors Act, which is what?

"A BILL To amend the Internal Revenue Code of 1986 to treat gold, silver, platinum, and palladium, in either coin or bar form, in the same manner as equities and mutual funds for purposes of the maximum capital gains rate for individuals. "

All of which seemed simple enough.

 

Except it was referred to the Senate Finance Committee where...if I follow the bill history right...it's in the process of dying.

 

I suppose we could all pick up the phone and call said committee members,  and demand some action be taken, but near as I can figure, everyone in Washington has serious hearing impairment since the public outrage over bailouts for 'too big to fail' institutions was so easily over-ridden. 

 

No reason to expect the financial lobby to cut any quarter to people who want to invest in non-paper assets;  the finance lobby having more power over our future than the very government itself.  And why people aren't hounding such lobbyists out of Washington escapes me.  It's largely due to their efforts that pay-day loans have such high interest charges and the credit card reforms haven't really changed much for the average Joe (or Josette).

 

Wait, forget I said any of this:  Let's just pretend that this morning's column was all about stocking up on anesthetic (champagne and such) with which to welcome another tax year.

 

Free Checking Out?

Seems so, at least for SurvivalWoman. 

 

Last time I checked, a mattress didn't come with a monthly service charge.  Depending who's on it, I suppose, LOL

 

---

Wednesday December 29, 2010 

Running Correction:

A couple of readers have pointed out the long-term gain on gold is 28% since IRS calls it a collectible, not 15% as noted in the column earlier today.  Remember - I don't do tax advice, I'm not selling my gold coin, so it's a non-issue for me - but 28% is what to keep in mind if you do have sales.  Got a couple of CPA/readers coming up with the rhyme & verse on this so drop by tomorrow.
 

The Return of Housing Jitters

Yesterday's release of the Case-Shiller/S&P Home Price Index got me to thinking once again about just how precariously perched the US economy is.  On the one hand, we have seen the Fed pressing on the gas pedal through creation of, what passes in this economy for, easy money.  Last week's H.6 Federal Reserve H.6 Report (Money Stocks) not only showed that the broader M2 rate was climbing at a three-months-annualized rate of 7.2%, but even more 'transparent' was the note that the M1 (cash & equivalents) was screaming up at a 20.5% annualized rate.

 

Meantime, the most recent Labor Department report on Consumer Prices showed a 12-month increase of 1.1% (unadjusted, CPI-U) and 1.3% (unadjusted, CPI-W).

 

The way I figure what's going on goes like this:

• Suppose I had started a year ago with $100 and I wanted to figure out what the $100 would buy me this month.  Then:

• I'd first discount the $100 of purchasing power 1.1%, which would reduce my effective purchasing power to $98.90.

• Then I'd adjust for the obvious deflation at a 7.2% annual rate (from M2) which would then push my 98.90 up to $106.02 of 2010/2011 buying power.

Naturally, this is a dangerously misleading calculation, since that's the natural inclination of a number-cruncher to think about such things.

 

It would likely be more accurate is I used M3, but since Alan Greenspan took that off the table at the Fed (as they were playing hide the sausage as housing collapsed) not too many people would have found Trader Bart's M3b Reconstructed page.

 

It shows most recently that M3b is going up somewhere around 14% annualized on a reconstructed basis with his methodology for the reconstruction over here.

 

The ugly part of the M3b calculation is the when applied to my hypothetical $98.90 I come up with purchasing power of around $112.85.

 

Now toss in yesterday's Case-Shiller/S&P Housing Price Index

The chart above shows the index levels for the 10-City and 20-City Composite Indices. As of October 2010, average home prices across the United States are back to the levels where they were in mid 2003. Measured from June/July 2006 through October 2010, the peak-to-current declines for the 10-City Composite and 20-City Composite are -29.7% and -29.6%, respectively. The improvements from their April 2009 trough are +5.7% and +4.4%, respectively.

With both the S-H/S&P  indices (10 city and 20 city) back to mid 2003 levels, we'd expect that interesting in buy a home would be dropping as the bubble appears to be continuing its deflation and may (if Elliott Wave theories are applicable to housing, be head down for another halving of present prices which could take the 10-city numbers from the president 150 range down to the 1991-1998 basing period level which was between (eyeballing this) 75-80.

 

If you've had enough caffeine to hold all this in your head, just one more item to toss on the discussion this morning and that would be the just-out weekly Mortgage Bankers Association activity report:

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending December 17, 2010. The Market Composite Index, a measure of mortgage loan application volume, decreased 18.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 20.0 percent compared with the previous week.

 

The Refinance Index decreased 24.6 percent from the previous week. The Refinance Index has declined six straight weeks and is at its lowest level since the week ending April 30, 2010. The seasonally adjusted Purchase Index decreased 2.5 percent from one week earlier. The unadjusted Purchase Index decreased 4.9 percent compared with the previous week and was 8.4 percent lower than the same week one year ago.

A couple of weeks back in a Peoplenomics report I speculated as to when might be a good time to buy a rental home or two.  I think the data is starting to tilt seriously in the 'Hold off - don't do anything hasty" direction.

 

Toss in Tuesday word from The Conference Board on consumer confidence, too, why don't we?

The Conference Board Consumer Confidence Index®, which had improved in November, decreased slightly in December. The Index now stands at 52.5 (1985=100), down from 54.3 in November. The Present Situation Index declined to 23.5 from 25.4. The Expectations Index decreased to 71.9 from 73.6 last month.

And somewhere in here I should mention that there's more legal maneuvering going on with regard to leftovers of the Housing Bubble: You saw yesterday where Allstate has filed suit against Countrywide  and parent BofA over so-called toxic investments?

 

It's either me coming down from too many chocolate-covered cherries, or its something else:  A return of the Housing Jitters.

 

Earth Jitters

If the worries about housing aren't enough to shake you awake today, perhaps all the earthquakes down in the Vanuatu region will do something for you.  The biggest, as of press time, was a 6.6 overnight which fuels our concerns about the long-term integrity of the Pacific Tectonic Plate and its surrounding "ring of fire."

 

It was while reading up on this that a situation report popped in from Bernard Grover, our Indonesia Bureau Chief:

Thought you might like a quick update on the party poppers around the Archipelago.

Anak Kerakatau is reported to be increasing in activity. According to the report put out by Antara (Indo official news), the volcano's monitoring device was damaged and the carrier signal lost sometime yesterday afternoon. Up to that point, they had recorded 4 deep quakes, 35 shallow ones and 158 explosions on the mountain. Fishermen have not been able to go in the local waters due to flying ash and debris. So far, easterly winds have kept the ash cloud away from major cities, but local villages are getting well dusted.

In East Java, Bromo outside Malang, continues to increase in activity. Major ash clouds and other material have been blanketing the area. My friends report as much as 1 cm to 2 cm accumulated on the ground within a couple of kilometers of the mountain. The local mayor is reporting that no flights have been affected yet, and he hopes to keep it that way, at least through the coming holiday. Local tourism has dropped significantly (go figure) and is causing economic problems in the region. Aid is already being distributed to villages near the mountain, as work has pretty much ground to a halt there.

Meanwhile, Yogyakarta is being inundated with 'cold lava.' The volcanic ash from Merapi is combining with heavy rains to create heavy flows of slurry over the entire affected area. The rivers are grey and thick mud flows cover large areas with what will eventually become a kind of natural concrete when the whole mess dries up.

In a side note, the Sultan of Yogyakarta, one of three remaining royal dynasties in the country, was under attack by the federal government in a classic case of kick 'em while they're down. However, widespread support across the nation, as well as overwhelming re-election numbers have staved off the attack, for now.

Also, the previous spiritual guardian of Merapi was killed the first day of the eruption, and has yet to be replaced. Locals are getting concerned that the mountain will get REALLY angry if someone doesn't step up to the job soon. Any volunteers?

Sampai jumpa, B

No fair suggesting members of our congress be 'volunteered'. 

 

Southwest Asia Arms Race?

With the US almost assuredly holding plans to help subdue any use of nuclear weapons by Pakistan, we find it interesting to see the report that India and Russia have signed a big arms deal.

 

Putting aside the count of high tech aircraft and nuclear reactors - all interesting stuff - the real question I have is unanswered:  What currency was used as the basis of the deal?

 

Leading Edge of Hunger

You may have missed the Greely Colorado Tribune story this weekend, but worth a ponder:  "Lack of moisture threatens winter wheat crop." 

 

All of which gets us to wondering "If this is going to be an especially bad winter, will that mean an especially bad spring and will that in turn ruin crop production and set us on the road to famine in 2011?"

 

Hungary For Media Control

Hungary looks to be the first country in the EU to pass laws which will effective censor the media if it covers things in a way that's not according to how the ruling paradigm's PowersThatBe sees things.  No problem if small media keep $120,000 Euros in the legal kitty, of course.

 

By summer the sound of jackboots on the net should be globally obvious.

 

This is what we'd call foreplay.  The screwing follows shortly thereafter.

 

Resistance if Futile

I trust you're watching the case of a man who could face up to five years in prison for reading his wife's email.  At least, she was at the time, says the Detroit Free Press coverage. Seems she's now divorced him...but with all the cost of government, soaring costs of housing, and so on, don't we have better things to do?

 

Besides, I'm confident that DHS and other three-letter agencies had already read that email if it had any 'trigger words' (or phrases)  before he got to it; or is that the point of having a monopoly on email spying?

 

And the Good New Is?

A reader who signs off "Fighting poverty by working" sent along this fine observation:

Next year, both Groundhog Day and the State of the Union address occur on the same day, February 2nd.

 

As Air America Radio pointed out, "It is an ironic juxtaposition of events: one involves a meaningless ritual in which we look to a creature of little intelligence for prognostication while the other involves a groundhog."

Not sure if the SOU will really be on February 2nd, or not, but this has been kicking around the 'net for several weeks now.

 

One that hasn't gotten much traction is my observation that Punxsutawney Phil is a republican. 

 

My logic?  He'll come out just long enough to see democrats back in the house and will immediately retreat back into his tax shelter.

 

Traveler's Kidneys

Gotta wonder how dyed-in-the-wool coffee slurpers managed to sit on the airport runways up in the northeast for upwards of 7-hours at times the past few days.  Airlines are still playing catch-up today.

 

Several long-time Northeasters are miffed at people making such a big deal about the snow:  One writing....

"I do want to respond to the person who noted that this blizzard is not a normal New England event. Obviously he hasn't lived here much. I grew up in New England and live there still. As Mark Twain said, "if you don't like the weather here, wait a minute."

 

I can remember many storms in child hood with 12 to 20 inches of snow. There was a blizzard in '78 that dumped 4 feet on Boston. A couple of years ago there were parts of NH and VT that got 120 inches of snow. Blizzards are not abnormal, though not every year. What is interesting is that the past few years the snow line has moved to the mid Atlantic states and northern New England is bereft.

 

That article you mention from the Times gives a fairly cogent explanation that would encompass this effect. It was the same last year. And,... after some real cold in the winter, the Spring happened all at once. It was so immediately warm that everything that normally blooms in April and May all bloomed in April.

 

The air conditioners went on in the Boston area in mid May and ran straight till September. More like North Carolina than New England. This year seems to be shaping up the same way. Maybe its sun spots. Maybe it is just new patterns in the jet stream. But believe me, big snows are not rare in New England, no matter what your other readers may state.

There are times in the summer when weeks of 95-100º heat in East Texas sounds just terrible.  But the payoff is 61º and 71º tomorrow.  Think I'll go work in the greenhouse a bit today and try to remember what snow is....

 

Coping: A Few More Tax Notes

The swarm of emails with comments on my end-o9f-year tax planning notes is all I needed to remind me why I don't try and cover too many tax items in detail: There are simply too many ways to be wrong.

 

Some readers were fairly gentle in their notes. like this one:

I got so wrapped up in the "tax fairness" issue, that I forgot to tell you that you are wrong about year end stock selling due to the settlement date. You wrote, "Still, since a lot of stock transaction are three days to settlement I figure today and tomorrow could be interesting, to see if we get any spiking in volume in stocks, and similarly, since options are one-day settlement, on up through Thursday in options."

The only day that counts is the trade date, not the settlement date for securities traded on an established securities market. So you can sell and take a loss up until the last trading day of the year. From the IRS:

"Securities traded on established market. For securities traded on an established securities market, your holding period begins the day after the trade date you bought the securities, and ends on the trade date you sold them.

Do not confuse the trade date with the settlement date, which is the date by which the stock must be delivered and payment must be made.

Example.

You are a cash method, calendar year taxpayer. You sold stock at a gain on December 29, 2010. According to the rules of the stock exchange, the sale was closed by delivery of the stock 3 trading days after the sale, on January 4, 2011. You received payment of the sales price on that same day. Report your gain on your 2010 return, even though you received the payment in 2011. The gain is long term or short term depending on whether you held the stock more than 1 year. Your holding period ended on December 29. If you had sold the stock at a loss, you would also report it on your 2010 return. "

http://www.irs.gov/publications/p17/ch14.html 

This seems to be a common misconception, because I've had this discussion with other people before. Keep up the good work."

OK, fine, I can deal with that, although I will continue to doggedly hold to my current position until it's been reduced to half its initial value which may not be long unless the market gets sober and turns down in January - February.

 

Other readers were not quite so subtle in their remarks on my tax remarks:

"In today's comments regarding taxes you made the comment that capital gains taxes are 'ridiculously low' . I am sorry, but capital gains taxes are among the most immoral and outrageous thefts of all taxes . It has been understood for hundreds of years that capital gains taxes punish those that invest in the growth of an economy. Just because my asset appreciates , relative to some fraudulent currency upon its sale, does not entitle the government to part of the appreciation.

[Note: Actually, it does - G]

 Many times capital gains taxes are the result of inflation ( the destruction of the value of currency) and therefore increases in the price of an asset at sale is an illusion resulting from the devaluation of the currency. Hence the government robs your purchasing power and then taxes your hedge -- ingenious slavery.

Comments like yours need be tempered with good judgment . It is true that income taxes are immoral and like capital gains, indicate a people are not free - they are slaves allowed to keep some portion, large or small, of their labor , including intellectual labor. To say that income taxes are high compared to the 'ridiculously low' capital gains taxes is a statement based in envy. "If I have to be a slave , so should everyone in equal or greater proportion." Slavery is slavery whether through income taxes or capital gains taxes. It is not income, but capital investment that makes possible the growth of civilization . The satanic cult of ruling families that controls your life and mine care not for investment or labor -- since stealing is a much more lucrative way to earn a living .

Rather than suggest changes to the prison we as a people work and live in ( by lowering this tax and raising another) - lets tear down the prison. No income taxes ( and no money as debt ) , no capital gains taxes -- and No more property taxes - as property taxes represent the confiscation of property . Many people believe that property taxes make sense because government protects property , I say that is a lie . Government has never protected property , they protect their income streams. Insurance protects property .

Nothing government does is done by any member of the elected government. In fact it is usually the least capable people of society that have the desire and time to be in government .. The real work of government is ALL done by private industry and contractors hired by or contracted by government to solve problems that were never within the power of government to solve in the first place.

Thus the additional middle man called "Government " is an added cost and an egregious security risk for fraud and embezzlement under the best conditions. Under the most likely condition , government is a front for ruling wealth-and-power that has ALWAYS taken control and enslaved mankind .. think [church name redacted-g]  to illuminati ..

What must have to happen to free humans from disguised slavery is the abolition of a central organization with authority to increase its own powers using schemes that historically empowered government ( entitlement schemes, tax and transfer rackets, crisis , fear , fiat -- etc )

All matters including 'national' defense must be competitive and provided by the free market. The only way the market can be free is the total abolition of recognized and organized authority with the power to act on behalf of all those within a geographical area ... This means no flags , no central government , no public property , no public authority .. Only private property , only private, accountable authority.

Government is a made up fiction to allow the socially acceptable control and slavery of the populace within their jurisdiction.

People around the world have been duped, using fear and self righteous authoritarian pretensions, into thinking they cannot be self responsible. Government asks that you delegate authority over your life to a shifting body of nameless personality types with no connections to the outcome of your life. When you delegate your self responsibility to others you are a child. When you are a child you become a ward of those you delegate authority to.. the state , the church the NWO ..

When we pretend that a group of people can better manage and care for our own lives better then individuals acting as responsible adults watching their own affairs - we invite slavery into our lives ..

Taxes are just one of the many links in the chains of enslavement. Pay as you go and for what you use can be accomplished. A new paradigm of freedom is possible , it only takes waking up and understanding our current condition.

I got all riled up and was on the verge of marching on the Anderson County courthouse to demand an end to taxation of property in the county.  And then I remembered that the sheriffs come when called, the volunteer fire department gets some aid on its budget from the county, and the roads while not 10-lane marvels get patched up regular-like.

 

And then I got to thinking about how a private system of roads could possibly work without a governmental unit; where would the easements come from to even set up roads?  And who at the concrete plant would turn out batch mix on spec?

 

No, government, I figure, does have a proper role; orchestrating some of the common needs for basics like fire, police, sewers, fresh water, and much of the rest.  Private enterprise - nice as the notion is - usually benefits most from the government investment in major infrastructure whether you're talking Grand Coulee Dam and the TVA of the last Depression, or the reconstruction of the Internet into a fiber platform of near unlimited capacity which might be a good public action for this Depression.

 

There's a balance here:  Yes, the balance has likely swung too far in certain social aspects, but not far enough in others; like fiscal responsibility, is one where we need to go further to balance the books and then take back money control to Congress where it should be, and not in the hands of the Federal Reserve which is neither and doesn't operate for the public benefit, so much as for the preservation of a very profitable banking enterprise as clearly delineated in G. Edward Griffin's classic The Creature from Jekyll Island: A Second Look at the Federal Reserve.

 

Would I personally mind paying an additional 5% on my long-term gains when I cash them in?  No problem.  My gains are only the profits and if government really wanted to do things right, they would index capital gains to the inflation rate and after making that adjustment they'd tax at 20%.

 

Let me run through an example:

 

Say I bought an ounce of gold in 2001 for $275.

 

And say that I sold it yesterday for $1,400.

 

My gain under current laws would be 15% on the $1,125 gain.  The current 15% long term capital gains tax would be $168.75.

 

Now suppose, instead, we were to back out inflation.  Using 2.0 percent for 2010 inflation YTD, we would calculate that the actual gain (after backing out the debasing of currency) would be about 78.5% of the $1,125 gain.  This means the tax owed - using my 20% rate - $176.625.  That's an increase of 4.66% over current tax rates.

 

The neat thing about this kind of a tax regimen would be that it would put the public and government on more 'equal' footing.

 

In other words, right now, government is, in effect, lying about money by not overtly stating that they are watering down the purchasing power by something like 2.3% per year, which has been going on since 1913 when you work it backwards.

 

The thing I'd feel better about is IF government were being honest about its watering down of money, I'd feel less inclined to be a tax-chiseler - which I'm not, but that's because I don't step on Tails of Beasts, not that I'm not a revolutionary change thinker.

 

Second thing this would do?  It would put a penalty on the short term bond and option flippers.

 

I can almost see the emails flooding in now, but the key thing to consider is that if government expects its citizens to be honest about their money, then it should be more forthright in explaining its own actions.  To argue that "all that's rolled into the tax rate" is like getting a lumber bill with just a total on it, not line items for the 2x4's the 2X12's, and so forth.

 

Even better would be a consumption tax, in lieu of income taxes - since that would really encourage thrift but I may be the last man on earth to remember the word and live well below my income -  but the reality is that when an organization is as large as the combined size of all the nation's CPA firms and the IRS, not to mention probably hundreds of other legislative types and foundations raising money on different tax causes, you can quickly see that only a gradual change would make sense, because to institute a huge tax regimen change would beggar a lot of good people and leave them adding to the nation's woes.

 

Sound silly?  I don't think so.

 

Oh, and I'm debating whether to send the roused up reader a note: 

"Want me to come visit when you land in jail should you actually start acting the way you propose?"

Yeah, sure, life may be a prison, but I'm got a 29 acre day room and the company's good.

 

You Boss is Tough?

I see where "Russians space officials fired over satellite crash."   I'm not sure how over-fueling a rocket causes a crash....I thought a little more fuel if the rocket was headed up, would just add to an orbit.  What can I say?

 

The "What?"

Dandy quote from Roll Call's coverage of former speaker Nancy doing fundraising to "protect the progress we have made"...whatever that is.

"Instead, Pelosi asks donors to “chip in $10” to combat “shadowy special interest front groups [that] are already up on radio and television with shameful attack ads aimed at reversing the progress we’ve made.”

Wonder how much money from 'shadowy special interest front groups' she's taken over the years?

 

Reminds me of the old saying:  An enemy is someone who doesn't agree with my view.   Can we have the keys to the 757 now?  I expect to see everyone in congress in the same TSA lines with the rest of us.

 

---

Tuesday December 28, 2010

Just What We Feared...

Case-Shiller/S&P Housing Data

The last time (late November) when the Case Shiller/S&P 20-city housing index came out, I expressed a fear that housing would slip down toward, and perhaps through the breakeven line after a recovery from the late 2008 into 2009 lows.  Turns out, that fear was well-founded:

New York, December 28, 2010 – Data through October 2010, released today by Standard & Poor’s for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, show a deceleration in the annual growth rates in 18 of the 20 MSAs and the 10- and 20-City Composites in October compared to what was reported for September 2010. The 10-City Composite was up only 0.2% and the 20-City Composite fell 0.8% from their levels in October 2009. Home prices decreased in all 20 MSAs and both Composites in October from their September levels. In October, only the 10-City Composite and four MSAs – Los Angeles, San Diego, San Francisco and Washington DC – showed year-over-year gains. While the composite housing prices are still above their spring 2009 lows, six markets – Atlanta, Charlotte, Miami, Portland (OR), Seattle and Tampa – hit their lowest levels since home prices started to fall in 2006 and 2007, meaning that average home prices in those markets have fallen beyond the recent lows seen in most other markets in the spring of 2009.

The chart above depicts the annual returns of the 10-City and the 20-City Composite Home Price Indices. In October 2010, the 10-City and 20-City Composites recorded annual returns of +0.2% and -0.8%, respectively. October was the fifth consecutive month where the annual growth rates moderated from their prior month’s pace, confirming a clear deceleration in home price returns. The 10-City Composite posted a +0.2% annual growth rate in October, versus the +5.4% reported five months prior in May, and the 20-City Composite has now reentered negative territory, down 0.8% in October versus its +4.6% May print.

All of which boils down to one thing, in my view:  The odds of the stock market putting on a major rally for at least the first half of 2011 has just fallen.  And the other thing?  Deflation is back on the front burner for the Fed, so look for even more QE's to come as they try to pump the market hard enough to hide the stealth Depression in plain sight.

 

Data Day, Golden Year

As one who lives, data-day, be sure to check back in half hour to an hour by which time I should have the new Case Shiller/S&P 20-city real estate figures sorted out.  They should be out any minute.

 

A little later on in the morning, the consumer confidence numbers from The Conference Board are due, but a quick check of the precious metals is what caught my eye first thing today.

 

We note that Gold seems likely to close the year very close to $1,400 per ounce, and a check of the charts over at www.kitco.com reveals that 2009 gold closed about $1,090 an ounce.

 

The Boyz down on Wall Street can throw rocks at us all day, but that little goin coin of ours was up 28.4 percent (plus or minus a couple of days of trading left) for the year.

 

We also note that our few ounces of silver did pretty well, compared to Wall Street.  The silver which closed out 2009 at $17 will likely setting around $29.50 plus or minus the balance of the week.

 

I apologize if you only made 73.5%, but what can we say?

 

The longer term return has been to run from $7 which I told you in July 2005 that we were buying some silver to present is only 421 percent, but that's a whole 5½ years.

 

Oh, and for the sake of balance, our savings bonds still return roughly the same purchasing power, too, so overall it hasn't been a bad year for our net worth and we sincerely hope you've done even better.

---

With stock futures pointing higher, it's only fair to point out how the Dow and the S&P have done.

 

The Dow closed last year out at 10,428.05, and so a close at 11,600 this year would put Dow gains around 11.24 percent, less than half of what gold turned in.

 

And the S&P 500 closed 2009 at  1,115.1, and if the average can close out this week in the 1,260 range, then it would be up for the year just about 13 percent, outdoing the Dow.

 

For the wild West gambler types, the NASDAQ (composite) closed 2009 at 2,269.5 and may end the week around 2,670 (?) which would be a 17.65 percent gain, roughly.

 

Citizen Reporters/You Be the Reporter

Trouble of Florida

Have this interesting reader report - an 'eyes on' it report that I'm sure someone could debunk. but try these observations on for size...

"Just returned last week from visiting my former home of 30+ yrs - the NW FL coast along the Gulf of Mexico, where I was a news director, business owner, and retired after 20 years as a SpecOps flyer. I visited the waterfront three times at three different locations - the results were always the same. No life was visible in the clear waters along the shoreline or even looking down into the waters from piers. No baitfish, no medium or larger fish, no crabs, no live seaweed or other water plants. I saw no shorebirds (sandpipers, etc), one pelican, two heron, and only a handful of gulls. Weather was not a factor (sunny and 60's & 70's), nor was water temperature, as the life I found missing is normally present year-round. Also of interest - I only counted the tracks of two raccoons; seems even those garbage guts have disappeared in large numbers. A curious coincidence? Doubtful - much as another coincidence of alot of US Navy P-3 flights reported over the northern Gulf of late, along w/the closure of 4200+ square miles of prime fishing waters in the northern Gulf. BTW - the P-3, while a popular anti-submarine warfare and SIGINT platform, is also prized by the US Forestry Service for it's ability to dump and spray fire retardant and other chemicals on burning forest fires. And did I mention the near-no-notice FEMA conference held quietly in Ft Walton Beach two weeks before Christmas? While no mention of the conference can be found on FEMA's website, hotel staff at [named hotel] confirmed the FEMA conference took place, altho details were unknown. I'll let you & your readers do the math.  - A Concerned Observer"

Comments from readers in the Fort Walton beach area would be appreciated...

 

Orwell Does Climate

Fine article over at Robert Felix "Ice Age Now" website under the heading "A Blizzard of Lies in the New York Times" which I think I pointed to the other day:  "Bundle Up, It's Global Warming".  Not saying the Times lied, but it sure is an interesting debate.

 

Obviously, we need to apply caffeine liberally:  First, the NY Times piece is an op-ed, not an article, per se.  Secondly, the author of the article is described as the ",,,director of seasonal forecasting at an atmospheric and environmental research firm...."  He's got skin in the game, as it were.

 

But the two views force us to return to the climate debate (will it ever end?) and look at the data.  Yes, it's likely that (on average) the year 2010 will be among the top three hottest in the past ten years.  Score one for the NY Times piece.

 

On the other hand, if you're only looking at 10-years, statistically speaking five years would have to be 'above average', wouldn't they?

 

And then, we have to award points to the Ice Age Now site for noticing that "It’s Orwellian when cold is declared warmth." 

 

Orwell's sister is all over the place, including supermarket checkout stands, so why not?

---

Back to substance (although it's a lot more boring that bloviating): This morning, we notice that SpaceWeather is trumpeting the arrival of sunspot 1138.

 

Since CO2 on earth hasn't driven the climate changes on Mars, Saturn, or Jupiter, I'm just guessing that events on the Sun will do more to earth's climate over the next 20-years than all the COP2 sources of the world combined.

 

If we enter a new Dalton or worse, a new Maunder minimum, the climate debate ought to subside. 

 

Seems to me, either way it goes, the winning hand to play will be the home gardening plans, since the world running short of food because it's too hoyt, or too cold, is not something I'm particularly anxious to participate in.

 

Oh, and it may have something to do with the big push to get a "food safety" bill passed.  Government control of food, eh?

---

A reader offers this:

Hi Mr Ure, I don't know if you are already familiar with this. I got a book, 'The Electric Universe', for Christmas. A couple of passages caught my eye as touching on things you have written about. Thought you might find them interesting.

 

‘The simplest model for the 22 year magnetic sunspot cycle involves modulation of the electrical power input from the galaxy. The galactic power is direct current and the solar cycle is due to a varying DC power supply to the Sun. The solar circuitry seems to behave like a secondary winding on a transformer, which responds to the varying DC current to produce a magnetic field which switches polarity.’

Sheesh!  Don't mention that around our local ham radio club, because that might get a debate going whether sunspots cause good DX conditions, or maybe it's something more subtle; a background condition change to which sunspots are coincidental not necessarily causative of the changes in RF propagations in the HF spectrum just under the MUF. 

 

There's not enough beer in Anderson County, Texas, to resolve that one!

 

Chilling

Then we have the story out of the NY Daily News this morning that "Blizzard cleanup is high priority despite budget crisis, mayor Bloomberg says."

 

A cynical reader (been taking lessons, somewhere?) writes:

"I can see this easily being spun as an excuse to raise taxes for snow removal in spite of the number of years when snow fall was mild."

That's smacks a bit of "Don't pay the lifeguards unless they actually save someone" thanks.  Overtime is overtime and all we have to bargain with in this lifetime is our time and our brains.  Everything else, we need to trade for.

 

A few readers have corrected my thinking about this week's snows:

"If you think this is winter in New England you are way, way wrong! I lived in NE for many, many years and certainly it gets cold and it snows but a storm of this present magnitude is very rare. Snow and a blizzard are far from the same thing. This storm is historical and not to be considered anything average for a NE winter.

The nearest thing to this storm I have seen in recent years was actually here in Southern PA in 1995 - certainly not the usual winter here either."

I sit corrected, with plenty of hot coffee...

 

Terra Bites

Is there something going on with the Pacific tectonic plate that might be getting ready to, oh, you know...crack it?

 

More quakes down under (the equator) and now we read about the latest 6.3 quake down in Fiji.  Is the mid-Pacific rise about to give rise to more than just the normal growth of the Pacific plate?  That's in the area (great circle-wise) from the Bonin Islands of Japan down to Chile, right?

 

Or, to put the question in simpler form:  How big can the Pacific Plate get before it breaks of its own internally generated stresses?  I bet a magnitude 10 quake would really be something to tell the grandkids about - if there were any after such a thing.

 

Oh, and the California and Alaska shake maps continue active with lots of small quakes...

 

 

Interesting data to watch develop.

 

Net Controls

The first private online magazine in China has been shut down, with talk about the FCC having net control being the reason this is getting so much play.

 

Speaking of China

They are reported by the Washington Times to be fielding a new kind of carrier-killer naval weapon, so, says the FT, the US may move a bit farther offshore on exercises...

 

High Kids

If you think the people are being conditioned into a kind of stuypor by too many drugs, check out the WSJ online piece about how 25% of kids and tends are taking prescription pills. 

 

Hell, I thought I was a risk-taker sneaking a smoke on the 3-mile walk home from Jr. High back in the day.

 

Tranks a lot...

 

Coping:  A Somewhat Angry Tax Note

My publishing a note from a reader who suggested a little different tax regimen than the one currently in place - as a means to equalize income distributions a bit in light of the amazing concentration of financial wealth in the hands of the very few - managed to garner some mail, some of which was skeptical of the reader position.  Two especially; this one:

"George,

Read your comments in today’s blog from you and a reader commenting that there should be a correlation between the percentage of income earned and percentage of total income taxes paid. The comments inferred (rather directly) that the top earners pay a disproportionately lower percentage of total income tax relative to lower earners.

That is a common misconception.

The top earners actually pay a disproportionately larger percentage of the total income tax paid relative to their percentage of total income earned. Here is a link to an article that summarizes it more concisely than I have the time to.

http://www.taxfoundation.org/news/show/250.html 

It seems we should actually be thanking the higher income earners. If you really want to discuss income inequalities, here is what people do not understand: the people with large accumulations of wealth, where their income is dependent upon that wealth accumulation are the ones getting a good deal. Dividends and capital gains taxed at a top rate of 20% and investments in tax-free muni bonds and you have discretion over timing when to recognize income. Oh, did I mention you can also borrow against your accumulated wealth? Hmmm, seems borrowing isn’t taxable income. Sweet. Really no need for all that offshore stuff if you know how to position a portfolio. While the earned income earners are taxed at top rates of 35% (and up with AMT, etc.). It’s good to have money versus having to earn money. "

The second next email cited the same source:

It sounds like you and the reader that sent that "thoughtful email" think that those nasty rich folks aren't paying enough taxes; e.g., the top 1% should pay 25% of the total tax, and the top 10% should pay 40%.

I'm guessing that those rich folks wish that you and he were writing the tax codes, because now (at least in 2007) they are paying 40% and 71%, respectively.

Link

And if the median income is $32,140, and the bottom 50% pay 3% of the taxes, people earning $30K or less ain't paying a hell of a lot.

All of which has some nice graphics to it, but (sadly) I find myself resigned to doing my own research based on available data to see what the condition of things really is.

 

This begins with a trip to the IRS Tax Stats website and this (the latest) 2008 filing season data located here: http://www.irs.gov/pub/irs-soi/08in11si.xls

 

From Table 1.1 (Selected Income and Tax Items by Size and... I then pulled out the columns of interest.  Notice that I have added a column "Inferred Tax Rate" which is simply the average tax paid, divided by the average AGI for the income level.

 

Table 1.1  Selected Income and Tax Items, by Size and Accumulated Size of Adjusted Gross Income, Tax Year 2008
(All figures are estimates based on samples—money amounts are in thousands of dollars except as indicated)
Size and accumulated size of adjusted gross income
	AGI	Total income tax
		Amount	Average total income tax (dollars)	Inferred Tax Rate
	Average (dollars)
	(5)	(16)	(20)	( Ure #)
Size of Adjusted Gross Income
All returns	58,005	1,031,580,923	11,379	19.62%
No adjusted gross income	-65,769	69,278	19,822	-30.14%
$1 under $5,000	2,626	76,716	153	5.83%
$5,000 under $10,000	7,484	521,105	200	2.67%
$10,000 under $15,000	12,509	1,559,617	368	2.94%
$15,000 under $20,000	17,468	3,518,545	665	3.81%
$20,000 under $25,000	22,464	6,331,242	1,166	5.19%
$25,000 under $30,000	27,439	9,108,355	1,710	6.23%
$30,000 under $40,000	34,774	25,551,837	2,376	6.83%
$40,000 under $50,000	44,817	31,401,659	3,373	7.53%
$50,000 under $75,000	61,470	92,652,392	5,246	8.53%
$75,000 under $100,000	86,421	91,901,542	8,037	9.30%
$100,000 under $200,000	133,208	232,270,420	16,903	12.69%
$200,000 under $500,000	285,735	193,699,168	55,984	19.59%
$500,000 under $1,000,000	679,576	93,899,363	163,513	24.06%
$1,000,000 under $1,500,000	1,207,751	41,880,236	299,480	24.80%
$1,500,000 under $2,000,000	1,722,125	25,385,118	429,877	24.96%
$2,000,000 under $5,000,000	2,982,594	63,390,518	739,377	24.79%
$5,000,000 under $10,000,000	6,841,677	34,805,598	1,638,990	23.96%
$10,000,000 or more	29,671,274	83,558,216	6,247,810	21.06%

 

The two highlighted numbers (again, this is IRS' data) show that the majority of the income tax is pulled out of the people who fall in the $100-$200K income range, those where the AGI was $133,208 and the taxes paid was 12.69%.

 

Last year, my rate (falling into this bracket) was actually higher: about 28.5%.

 

Normally, I don't get upset about such things, and I'm not, but just as a reality check if you look at the bottom line, you'll see that I'm paying much more rate-wise than the $10-million plus income types, who on average, paid barely over 21% in 2008.

 

Oh, and the way they do that?  It's easy.  If you have lots of money, you put it into things like stocks (or options) which you hold for a year and then take as income at the ridiculously low long-term capital gains rate.

 

Sweet, huh?  That's how the rich manage to pay (with good structuring) 15% income tax while the sheeple/sheeplic pay half again as much.

 

Oh, the gnashing of teeth it would cause, but to my simple way of thinking, the long-term capital gains tax ought to be 20%, not 15%. 

 

All this is subject to change however, since when I win the lottery, I'll have it all paid offshore as stock options which, I'd argue have no present value until exercise day...but that's another tax topic for another day...but if options have no value until exercise, how can the receipt of options be a taxable event prior to their maturity?  LOL, more coffee, Mrs. Olson!

---

One of the readers I've been passing this information back and forth with said "My takeaway is we all need to get into that $10-million plus income group..."

 

Amen, brother!  TARP me, TARP me!

 

The 2012 Piece

Taxes may be an issue in 2011, and maybe 2012, but will they be pertinent in, oh 2013?  A reader who's been doing a bit of TV watching on the /net sets this:

Not sure if you've caught any of the Conspiracy Theory with Jesse Ventura series. It is a bit shocking that he goes head on after the biggest conspiracies without flinching. He has even gone straight to the government folks in charge of some of these things and he's a) not dead yet and b) got a 2nd series out.The url above is from the first series about what the government knows and how they are preparing for what is coming in 2012.If it wasn't so late, I'd go outside, get my shovel and start digging my own hole.

 

 

(If there's a big empty spot above, it's because you can't see previews with your current browser settings...)

 

Well, no, I hadn't seen this one, so I guess there goes 45-minutes worth of the day.

 

The Answer Man

...knows all, sees all, and is willing to share. People want to know what's ahead in the New Year (how the hell do I know?) and they ask...

"WHATEVER happened to the disturbing homer simpson video and the nuke??? Red herring? Maybe it was pointing to a different date……….. turn it upside down (metaphorically). Clif might give us a bit on all the “patterns” he saw in there and another look might reveal more than initially thought."

Simple answer:  May or June of 2011 is when the 'terrorist' attack might take place, because by then, there will be widespread concern about a Second Depression, after the spring market tumble, so someone has to take the fall to give government a reason to 'get hard' on dissent of any kind.

 

Another reader says we should all give thanks to Benazir Bhutto for her 2007 outing that Osama bin Laden was murdered, although it [apparently] cost her life to do do...sure you remember that video, right?

 

 

 

But, of course, people forget.  

 

The Answer Man isn't a solo act.  He gets emails with plenty of hints in them, like this one:

"News media are now announcing the arrests of nine people in the UK of the twelve who were detained in the days prior to Christmas. An accusation includes "...engaging in conduct in preparation for acts of terrorism...".  
 
In this time of austerity, The Interception Modernization Programme, with a projected cost in the billions, is being promoted with the intent of placing a "live tap on every electronic communication in Britain".
 
It is eyeopening to read that UK spy planes are monitering the skies for specific voice signatures. Perhaps its more shocking to be told there are European residents who spend part of their year fighting as expats in Afghanistan for the Taliban cause. These are traitors indeed."

So, we can all enjoy the New Year - until May, or so...

---

Not too much planned here at the ranch for New Years.  Maybe change out my tinfoil hat, have a bonfire and maybe do a Dutch Oven beef stew...something along those lines....

 

---

Monday December 27, 2010

Year-End Selling This Week?

Markets around the world are mixed this morning. In Shanghai was down 1.9% but the Hang Seng was off only 0.3% and the Nikkei was up about 3/4's of one percent.  Go figure. Same kind of confounding inputs out of Europe, too, where the French and German markets were down more than one percent and some have noticed that it almost looked like a mini flash crash.  But that was way early, so you might want to click here for some more recent data.

 

Of course some are bound to blame the Chinese rate hike over the weekend which seems to have rattled some markets, but I'm guessing seasonal selling may factor in, too.

---

This weekend, despite promises to myself to avoid obsessive-compulsive writing, I nevertheless cranked out Peoplenomics reports on Saturday and Sunday, too.

 

The main thing to think about is the relabeling of the long-term chart (which you can see here [bottom of this page]) and in it, you can see why there's a fair chance that as soon as the present rally falters (upper right small circle) which ought to happen when the gain is equal to the small lower circle, then we should be off to the races for some serious downside action.

 

More important, is that is my change in the numbering which shows P1 (primary wave one down) from the All Time Highs in 2000, dragging into 2003, and then P2 (the Housing Bubble Rally) lasting until 2007.  It's there we begin - if my thinking isn't cockeyed - P3 down and under this scenario, the collapse from 2007 down to the March 2009 lows was only the first act of what should be three, but more likely five, big movements down in coming months and years.

 

Such a thing wouldn't be out of place, and as I told subscribers, it would set up a late winter to summer 'false flag' event of some kind in order to social engineer the public away from realizing that this is the Depression all over again, and that all the warring in the sandbox is just the CCC and Works Progress Administration with a rifle in lieu of a shovel?

---

Admittedly, that sounds pretty 'out there' but if you look at the available evidence, the facts sure could be lined up that way. 

 

Not like it's just me, lining things up like this:  My friend Gonzalo Lira asks the same thing in a column he posted last week "Has American Military Spending Really Been a Form of Keynesian Stimulus?"

---

Back to point, this is the time of year when a lot of investors scramble to get hold of IRS Publication 550, Chapter 4, which is arguably one of the more important publications IRS puts out because it handles things like the Cost Basis of investments and even more to the point are the "wash sale" rules, laid out here.

 

Once upon a time - in the ancient history, people would sell a stock that was down for the year and time things so that the transaction settled before year end.  Then, having locked in a 'paper loss' they'd enter the same position again in the new year. 

 

IRS - long ago seeing this as a dodge - plugged that loophole with its wash sale rules.

 

On the other hand, if you were short a particular index (like I am) that happened to be a 'triple bear ETF' could you exit that trade and move to a 'double bear ETF' instead and claim a loss?  Not going to offer an opinion, because I don't do tax consulting, thank you.

 

Still, since a lot of stock transaction are three days to settlement I figure today and tomorrow could be interesting, to see if we get any spiking in volume in stocks, and similarly, since options are one-day settlement, on up through Thursday in options.

---

This isn't the item that will be driving the market.  The Case-Schiller/S&P 20-market real estate report comes out tomorrow morning - and it's one of the key data items I'll be watching for the week, since 'as goes housing' so goes much of America's confidence and spending.  Not to be confused with The Conference Board's Consumer Confidence numbers...they'll be out on Tuesday.

 

It's A LEI

Speaking of the Conference Board, they released their European Leading Economic Index this morning:

The Conference Board Leading Economic Index® (LEI) for the Euro Area increased 0.7 percent in November to 114.3 (2004 = 100), following a 0.3 percent increase in October and no change in September.

Long as we're on topic, their chart of EU LEI looks like this:

 

Which leaves me wondering this: If LEI-EU has been in such a glorious upswing, how come the rioters in (pick your favorites here) Italy, Greece, Belarus, Ireland, and who knows where else, aren't 'getting it'?

 

If you scrolled down to the US chart here, you'll also see that LEI (US) has been screaming ahead of both the Coincident Indicators and local economic reality, as well, so something's bound to catch up one of these days.

 

Blaming the Weather Reports

If you look at all the media coverage under the word "blizzard" in a Google News search this morning, you might be surprised. Almost 2,300 stories about the fact that it's snowing on the East Coast.

 

This is winter, right? 

 

Still, rather than blame layoffs, ending unemployment, missing house payments and the like for the last minute drop in retailing, you guessed it:  Blame the snow.

 

Warming Up Korea
China Daily is reporting that new South Korean marine drills of the live fire sort will be going on from today through year end near the North Korean border.

 

The interesting part of the article quotes the JoongAng Daily says the US has decided to send the carrier USS Ronald Reagan into the region.  The US Navy website shows only two carriers underway today and the Reagan is not among them.

 

Then there's president Lee Myung-bak who is promising 'relentless retaliation' if the North tries anything.  I can hear your thinking already: "Surely, another Nobel Laureate in the making."

 

Speaking of Laureates...

Debka reports president "Obama no longer backs Palestinian state within 1967 borders".  That's almost sure to touch off more violence in the region. Man of What?

 

Windy City Politics

Bill Clinton is planning to campaign for former Obama chief of staff Rahm Emanuel, who's running for mayor in Chicago  although his residency may questions persist with talk of an appeal of last week's decision allowing Rahm to run reportedly in the works...

 

Riot of the Day

Depending on report either 110 inmates, or 43. were involved in a riot at a private prison in Arizona.  That's about 60-70 (not very exciting) miles southeast of Phoenix.

 

See Spot?  NO???

Another items out of this weekend's Peoplenomics that you need to be aware of especially with all this weather stuff:

"...there was this note from a ham radio friend in yesterday's column:

"Hey George, 6 days in a row for no sunspots. Wonder how that will play out. More Global Warming I am sure."

That promoted a reader to send this:

George, I am sure you saw this but check this link.

The link will take you to the "Virtual Philosophy Club" and a post titled "Sunspots - Prediction of new "Dalton Minimum".   Space Weather reports only two small sunspots this morning, so things are getting quiet...

Toss in a few more volcanoes popping off and we could well be in a wholly different world than the one we're in now. Hope you've got food. Bring your own wooly mammoth.

Coping: Some Christmas, Huh?

This weekend on our premium content side, www.peoplenomics.com, one of the topics I remarked on the experience of a friend who had ridden a commuting van up in the Pacific Northwest a week, or so, back, and had been told by the driver about the number of former California families who are moving in with relatives up in the northwest.

 

A couple of readers followed up with notes like "Boy, bet that would make an eye opening statistic, if someone could just do the research on it..."

 

Unfortunately, seems unlikely that anyone will, since most of what gets done in serious economic studies is based on a business model because (repeating after me, please) "Everything is a business model."  Even the measurement of unemployment just sort of falls out of the business model defining taxation, contributions, federal matching, and state unemployment.

 

Still, there's this report called "The Working Poor Families Project" which has, nevertheless pulled together some interesting stats, one of which gets back to an old refrain of mine, under their "Key findings from 2009" which is reported in their Winter 2010-2011 Policy Brief:

"Income inequality continued to grow with the richest 20 percent of working families taking home 47 percent of all income and earning 10 times that of low-income working families."

Another statistic that set (for me) the tone of this season:

"Between 2007 and 2009, the share of working families who are low-income—earning less than 200 percent of the official poverty threshold—increased from 28 percent to 30 percent. This now means that nearly 1 in 3 working families in the United States, despite their hard work, are struggling to meet basic needs. The plight of these families now challenges a fundamental assumption that in America, work pays."

I mention this because of a thoughtful email from a reader, who's been thinking about how to 'right some wrongs' in America without upsetting the whole apple cart.  Here's his idea:

"George,

The extension of the Bush Tax Cuts got me to thinking about what might be a fair and rational plan for income tax, assuming its inevitability (LOL).

Since 1% of the people make about 25% of the income, shouldn’t they pay 25% of the total income tax the government takes in?

I don’t mean a 25% tax rate, I mean that 1% of income earners that make the 25% of income should pay 25% of the total income tax the government takes.

And if 10% of the people make 40% of the income then that next 9% down should make up, in aggregate, the additional 15% of tax revenues the government needs.

And so on, down the line.

Now I have no idea how the numbers would break down into tax rates for individuals, but it just seems to make sense to me that those high income earners should put into the tax system at the same percentage that the system has worked for them.

If you think this idea has any merit, feel free to use it. I’m nobody special, so nobody would listen to me. But people read you, and if this idea ends up seeming fair to others, then good on you.

It's actually a pretty good idea - since the people at the top of the food chain seem to cause an inordinate impact on the world, via the private jets, monster-mega-mansions, and all the rest of it.  So why not have a much more aggressive income tax which would scale in to a level of perhaps a 50% - 60% tax rate for all income earners over $1-million per year?

 

Oh, and drop the rate for people with $30,000 a year or less to zero.

 

Of course, the sad thing about our current level of societal complexity is that the really, really rich all operate out of a filing cabinet corporation outside the US with local nominees in tax havens 'officially' on the books.  They might be paid in stock options, but those transfer (or were issued) offshore, and when sold, there's no income tax since the whole thing takes place outside the specific tax jurisdiction of the USA.

 

And then there's the little matter of how would that money be taxed when brought back into the USA?  Oh, sure, anti-money laundering laws sound good, but as soon as they start to impact the high-end tax cheats (sorry, they call it legal minimization of taxes) then they scream bloody murder that the government's going "socialist" and so "We can't let those damn socialists run Washington."

 

Nope, instead, they write checks to keep themselves on top of the social order - we're talking the guys with the lobby firms and the smear campaigns against anyone, or any group, that would conceivably threaten the well-being of the power elite.

 

No, the world hasn't improved any over the holiday, near as I can tell.  Same place, same problems, same power structure, same check-writing for law passing as before.

 

(Leaves me wondering everyone missed the point that Mary & Joseph DBA Miracle Genetics, LLc. was trying to make....)

 

Anyway, the SurvivalWoman article "Are multiple family households a modern day Diaspora" give more details and sure seems to fit with some long-term linguistic values.

 

Around the Ranch:  Tractoring Through Christmas

Most of Christmas Day and Sunday was spent on the back of my tractor cleaning up the property and putting burn piles together.

 

A surprising amount of personal pain is being endured this morning as a result.

 

Nothing like a 30-foot high wall of fire to take the chill off a pasture area when it's 25 degrees outside.  Still smoldering this morning with a half dozen, or more, piles to go before spring springs. Thinking about renting a dozen for a week, just because a 25 HP diesel tractor will beat a fellow senseless knocking over brush.

 

Kindling

Speaking of which, I'm working on getting the kinks straightened out so the daily reports from UrbanSurvival can be delivered via Amazon Kindle.  Picked up the new version of Nuance OmniPage 17 which promises to build Kindle-friendly output, so then it will be 9with luck)  just a matter of figuring out how to get it down the delivery pipe smoothly.

 

Any hints would be appreciated.