Crash Planned for Late October

Say, isn’t this a fun way to wake up after the alarm doesn’t go off?  Rereading a weekend email from reader Todd who quotes a lot of rhyme and verse in this YouTube video over here which explains why the last week in October – and most likely November1st – could be see a major collapse – to be followed by a US bail-in – of most of the world’s financial system.

Todd, like me, was already looking for the Pandora’s box of of economic wasps to be opened around then when he noted this wasn’t a big change from his earlier estimates:

“Deadline was revised due to Fannie withholding a $30 billion payment to the U.S. gov’t…please share this video with as many people as possible so folks will have ample resources on hand by the end of October.

From a note this morning by economists at Barclays:
The US federal budget deficit has been improving at a dramatic pace in recent months. As a percent of GDP, the deficit peaked at 10.2% of GDP in the four quarters ending in Q4 09; over the past four quarters, it has totaled 4.2% of GDP, down from 7.7% one year earlier.”

Not that he’s wrong, mind you, but I expect we will need some “out of left field event” in the preceding week or three before that so that Wall St. will be able to maintain “plausible deniability.”  You know, like the post-Internet Bubble collapse has been buried by effectively having the “pain and suffering sectors” of your brain’s hard drive overwritten by the events of 9/11..

In fact, following that brain and hard drive analogy, maybe it was more than a simple file re-write…maybe it was a whole low-level reformat!  Everything is terrorists, terrorism, War on Terror and that (other than the Housing Bubble) has really taken America’s eye off making money and other old-fashioned American ideals.

China was up more than 2% overnight, Japan down 3/4’s of a percent, or so,  And in the early going in Europe, France, German, and the UK were all down earlier, so a short, coordinated dive off the low board is about all we can expect this morning when markets open.

Todd’s guess as the real diving action (off the high board) will be along in 11-weeks, or so, which means you still have plenty of time to prepare.  Or, if you’re not inclined to do that, at least you have time to invent some creative denials.

The Week Ahead

The Treasury Budget out this afternoon is expected to show the US ran a –96 billion deficit this month.  More amusing should be the accounting to prove we haven’t really blown through the budget ceiling…and we know the answer to that one:  Off-books accounting!  Plus short-term transfers from Peter to pay Paul… 

Accounting is a very precise science, but if airliners were designed with this level of integrity, we’d be surrounded by crashes because in aeronautical engineering reality isn’t so easily papered over.

Tomorrow we see retail sales, which I expect will continue to show the Auto Industry as the only sector doing better than inflation dollar-wise.

Producer prices Wednesday will be another one worth watching…since it may be something of a barometer on how much of the Fed’s noodle pushing has actually strengthened prices.  My guess is not much.

The week’s “biggy” will be Consumer Prices and a rise of 2-10th’s of a percent for the month which means about 2 1/2-2.6  percent annualized is the consensus view.

Which means, with the Fed printing and QE’ing M2 at a 5.3%, the implied deflation rate is likely in the 2.7% range which  (considering all the jobs which corporatists have moved to Mexico and Asia (that includes China and India, right?) is not totally bad.  But close enough for home use.

More after this…

Madness on Bordering Dept.

As you might expect, as grim as the US economic outlook may be, there are many countries were things are much worse and so, as a result, lots of people want to move to America.  Well, as it turns out, it’s a lot easier to ‘talk your way in’ if you know the right key words to lay on the border folks…

Bordering on Madness Dept.

Is it really news when the presidential pooch going bye-bye for vaycay is a headline?  How many first families have done the same?

Unable to pass a budget?  Stuck in sequester?  Pernicious unemployment papered over?  Forget the pooch, let’s get on to the presidential golf outing for the rest of the week’s “news.”

If I were Vlad Putin, meantime, I’d be smoldering pissed:  Stiffed on a summit and yet time for golf?  What was the Nobel Committee thinking?  (If at all…)

Holder’s Latest Non-Answer

I don’t like “tolerance policies” – I went through a lot of that as a 21-year old radio news beat reporter when I started my news-chasing addiction back in 1970.  I watched development in Seattle and King County (Washington) and after a series of corruption cases, concluded that “tolerance policies were a bad idea.

So later on this morning attorney general Eric Holder will unveil what amounts to a tolerance policy for certain kinds of non-gang related low level drug offenses. In telling his US attorneys to come up with local guidelines, it will be effectively a tolerance policy left to individual regions.

But, as I see it, this is the wrong policy and just another cluster-mawhozit instead of doing the right thing.  The right thing is to tell the booze lobby that “Time’s up…no more penalties for home grown and home use of marijuana…ya’ll have had 50-years of profits and now you’re going to have to deal with a drug that seems to fight cancer and certainly is better on the liver.”

Admittedly, Holder’s got a tough one here:  Oh, sure, a tolerance policy would allow some rebranding of “criminals” from Mexico who aren’t gang-related and yes, it might play in the Colorado region.  But is it even application of law, equal enforcement?  Or, is it just another stupid “special class” and a further abandonment of equality?

More chasing around of their tales…but if that’s what it takes to balance prison over-crowding against booze lobby fund raising, I get that’s how complexity in End Times works.  Fair laws, evenly administered?  Gone are the days, gone is the foundation that made American jurisprudence exceptional.  Tolerance policies and the erosion of contract law…

More Jailhouse Rocks

An al Qaeda boss vows to free more jailed AQ members on the Arabian Peninsula.

Bathroom Bill or…?

Ah, the delights of following mis/dis info around the net.  I bet you’ve heard by now that a bill sitting on Calgov Jerry Brown’s desk would be a “bathroom bill” which would allow males to use girl’s bathrooms in school IF they felt gender-leaning.

Well, there’s another take on which over at Media Matters which says this isn’t what the bill does:  It merely reaffirms current law….

But wait!  Cynical George wants to know if that all it does, who are the idiots in Scrotomento who pass laws that don’t actually do something new?  (This might be why California’s in bad financial conditioned and the most over-regulated state in ‘Merica…) Or are both sides of this story….oh, you know:  MARKETING!

From the Compounding Economic Pharmacist:

I’ve counted well over 6,000 bank branches having been closed as I meticulously did whenever the FDIC filed a bank closure report.  I did this going back to IndyMac before finally giving up at about 6,300 branches.  There seemed little point to it.

Fast-forward to this morning and here’s report on Russia Today (RT) that “20,000 bank outlets closed in EU since start of downturn.”

We need to talk seriously here about economic prescriptions.  Here, let me slip into appropriate professional wear so I can at least look the part, OK?  Hand me my lab coat, would you?

The whole/Big Picture Truth of what’s going on in Bank Land is complicated.  But if I were an old-fashioned compounding economic pharmacist, I would mix up:

  • Seven parts bankus disrectus au finance for balance sheet collapse.
  • Nine parts consumus todeathtus for transitioning out of paper on into all plastic.
  • 21 parts connectus onlineus since digi-dollars don’t need a roof or staff time and last but not least
  • 12-parts automatus tellus which has the financial alchemical symbol “ATM”.

Mix in a mortar, crush with the pestle of regulatory reform, and package as troches.  Avoid taking before elections, may cause systemic reactions including monetary diarrhea.


6.2 quake this morning off the northern coast of Peru.  If you are expecting the global tsunami when the southern part of the Pacific Plate breaks off on a line from Polynesia to South America, this is more dust-bunny sniffing news, for sure, since there was also a 6.0 along the Kermadec Islands 500 miles Northeast of New Zealand….  The black line would be the plate crack and the black circle is the Peru quake…

What about the 6.3 in Indonesia?

Earthquake charts of the long-term view tomorrow morning!  Oh, and reader Hank out in Hawaii sent this Sunday morning:

Big Island had a 4.8 earthquake at 6am local time this morning.  Not huge, but worrisome is the location.   It was on the southern cliffs of the volcano where the massive ‘crack’ in the south flank is located.  Someday that chunk is gonna slide into the sea…  ala-Canary Islands… and we will have about 20 minutes before the wave inundates Honolulu.

Yes, there are several undersea landslide run-outs from Hawaii undersea slide that send 50-100 foot tsunamis into the US West Coast in historical times.  Float us some Kona Roast and Macadamias on a long board when it happens…I’ll wander out to Phoenix to pick ‘em up!

Eyes on South Americas

This from our Winnipeg news analyst is interesting…

Dear Mr. Ure,
The American journalist in Brazil has been quoted in front of a Brazilian senator of the people that further revelations from Edward the confessor should be out by this friday. Said senator has reputedly forged a new chapter in life with a journalistic partner while his former spouse’s linkage with a gentleman of the same profession did not yield a “Germinal” result. One pauses when siblings both change their names for a cause?  
Is the Sino-Venezuelan contingent requesting adjustments to any 5 year Plan following the second major interruption in a year at the Puerto La Cruz refinery complex, along with alleged declining foreign exchange reserves in Caracas?

But how could that be?  What about all the gold Hugo repatriated before he kicked it?  Hmmm..

Say, if America is such a desirable place, how come Mexico hasn’t just applied for statehood, speaking of foreign affairs?  Or Canada, for that matter?  Where’s my coffee…