If This Ain’t a Depression…

Complexity is a grand and glorious thing:  It enables people to hide the truth right in front of themselves and even go so far as to deny its reality. Against that backdrop, please consider:

  • If you had purchased an item in 1999 that cost $100 (back then) the same thing today would (using Fed figures) cost $140.17.

  • Some things cost more, housing is less:  The uneven serial sectoral; inflations mask the underlying dynamics of the Second Depression.

  • Similarly, more than 6,000 bank  branches have been closed since the IndyMac failure. How soon we forget!

  • However, again, this is “masking” in that a few branches were acquired by other banks and some portion of the shuttered branch business had already migrated to the Internet.  It won’t be back.

  • The Dow Jones Industrials are touted as hitting “all time highs” by the me-too financial press.  Yet this figure is mentioned in the absence of an honest long-term inflation context.

  • The Dow so far this year has hit 15,589.4 yet when one uses the Minneapolis Fed inflation calculator, we see that the January 14, 2000 high of 11,722.98 should be 15,897.07. Not counting another half year’s worth of inflation, I might add.

  • Which means on an inflation-adjusted basis we need another 307 points to match the purchasing power of the Dow in January of 2000. 

  • But absent those last few points, any technical analyst worth their salt would step back aghast and exclaim: “OMG A massive Super Cycle Double Top!” Yep.

  • Meanwhile, big sub-units of government are failing – including most notably Detroit’s filing for bankruptcy now.

  • Yet the mass media coverage (scary headlines, lack of context) continues to minimize that the current wave of municipal failures which hasn’t been seen since the 1930’s. Look at the map over here.

  • Detroit officials are demanding a federal bailout.

I am not arguing that government should do anything differently – stepping hard on the gas pedal at the printing presses is the only non-war policy option they have.  Trying to out-print the rotting core as capital seizes up and the velocity of money collapses leaves it the only choice they have.


So they print.


How much?  Presently M1, basically a measure of cash in the economy is being increased at a 9.6% annualized rate according to the Fed’s own H.6 Money Stocks report update last night.  And broader measures (like M2, cash plus some time deposits) is being goosed as well: up 5.3%.


A number of readers directed our attention in alarmist ways toward reports this week that the government was orchestrating tests to see how the financial system would react to a mega-cyber attack.


But a long-term cynic, with an appreciation of some of the broader contexts of financial history, might look at the same exercise and worry less that it could “go live” as some nefarious conspiracy.  Rather, logic and common sense suggest that there’s another (meta-) name for “mega-cyber attacks” which could cause similar problems and which might actually do so sometime in the near future which would then demand a similar policy response to cyber terror:


Bank runs.


Sometimes, the best place to hide the truth is right in plain sight.

Yesterday’s market action was right in keeping with our trading model (which is served for informational purposes only, not investment advice).  It was a run-up of indices  so that when the markets decline later on today, there will be some nice spreads locked in by the commercials.


Next week?  I have actually gone against my own model now.  I think with oil over $108 that inflation may be out there and when the bonds market figures that out, we could get a 10% (or greater) pullback on the equity side.


Plus we’re only 7-8 trading days from what’s become a somewhat predictable beat-down in precious metals prices monthly…


Jimmy Gets It Right

A lot of people think former President Jimmy Carter was a “failed” president…an assessment with which I disagree.  I think he was painted that way because he was on the losing side as the corporate coup was well underway and he ended up under the (captive media) bus.  I tend to think very highly of former nuclear submarine skippers, regardless of the media paint slopped on their character.


Notwithstanding, when a former President tells us (of the Snowden/NSA spycraft revelations) that “American Has No Functioning Democracy” seems to me we all ought to be paying close attention to what Jimmy says.


Carter’s got this one nailed.  So look for all kinds of mainstream discussion which will try to repaint Carter’s performance in office in a negative way to minimalize the risk of  people waking up with the surveillance state only part-built.


You might want to rethink Carter, too:  To me it looks like he gave it his best shot… about the best that could be done mid-coup.



More After This…




ODA: Observations, Departments, and Analysis

Whip That Media!

As noted previously, with summer sweeps not over until next Wednesday, the mainstream media are going rull-tilt boogie  even now over the George Zimmerman trial.  Now that it’s over, CNN ratings are down.


Jesse Jackson is calling for a boycott of Florida, which should make for shorter lines at Disney World if succuessful.  I’ll be the guy tracking Disney stock….


Then there’s the Justice Dept. which is telling Florida authorities to preserve evidence, no giving Zimmerman his gun back, as they’re itching to file something.


Oh, and Florida’s (republicorp) governor Rick Scott won’t revisit the ‘stand your ground” laws there.


You’ll notice that our lead story this morning is about the Second Depression.  You won’t hear about that in the mainstream media.  Classic bait and switch, as I see it.  Infotainment or a tragic sort.


Meanwhile, and way off in the distance, too few have read about “Occupy Love” over at Nation of Change.


Perhaps because monetizing hate is easy to do:  Guns, ammo, wars, and such.  Monetizing Love?  In a sad way, it’s a losing business model.


West Bank Talks

SecState Kerry is off to the Middle East trying to recrank the Israeli-Palestinian peace talks.


Off in the background, it looks like momentum has shifted in favor of Syria‘s Assad government so we assume there is something of a carrot and stick in play here.  Cozy up to the Palestinians to free up resource to stir anti-Assad moves in Syria….just thinking out loud, of course.


On the Radar

Reporting a speeding governor is not the thing to do in Iowa.


Marx of the Beast

That school district here in Texas which gained national attention, DoS attacks, and won a lawsuit over it, has decided to scrap plans to RFID students.  Seems there’s not enough payoff for all the cost and effort.


What frightens me is that such a conclusion should have been self-evident from the get-go and where did the decisionmakers in this get their degrees?  Battle Creek, Michigan?


Bail Out Hollywood?

Since bailouts are one of the major topics of economic thought lately, we can’t help but look at the recent string of turkeys flying out of Hollywood (and stories like like “Hollywood facing summer crisis with multiple big budget flops“) and wonder how long before the idea of “bailing out Hollywood” starts to make the rounds in Washington?


Naturally, such a thing could never take place overtly.  It would need to be done with special tax credits and such.


But given the massively codependent relationship between the “lead the people” and the “bleed the sheeple” it seems to me we should keep an eye out for it.  Gotta save them mansioneers.


More after this….