As we awaken from another restful night of slumber (waking to the economic nightmare unfolding on this side of the dream boundary in real life) we see that China is now expressing concerns about being stiffed on their $1.3-trillion of US denominated assets. So what else is new?

The truth is, China may talk tough, but there’s little they can do.  Oh sure, the US could have its debt rating fall as a result (and who knows how far) but that, paradoxically, would maybe be just the right medicine to force an incoming Fed boss (due to replace Ben Bernanke) into levering a rise in short-term interest rates here in the US.

I’ll outline the whole scenario in tomorrow’s Peoplenomics report (which may be posted early after markets close today).  But the short version is that a return to the 2009 economics lows and a Dow of 5,000 could result in the short term, but the long-term outcome from raising rates might actually save the country.  Remember: Nixon closed the gold window in 1971 and in cyclical economics, it’s time for a new world (monetary) order…and countries are likely to hammer gold prices in order to suck up enough yellow metal to buy into a new global SDR scheme.

Meantime, the 83% federal government has enough horsepower to ensure the arrest US Veterans at the NYC which is about as disgusting as you can get.  I was talking with my local freight delivery guy last night and he summed it up about as well as any comments I’ve heard so far:  ”These old boys took the Pacific back from Japan…and now they can’t gather at their own monument?  They ain’t gonna put up with that, for damn sure…”   Amen.

Meantime, there seems to be enough money to buy a $47,174 mechanical bull, reports CNS.

We can reliably report that government now owns both types, huh?

And as if that’s not enough, here comes a report that the Treasury has just “made up” $8.3 trillion in debt to replace $7.5 trillion worth being retired for a net increase of  $0.77-trillion.  Don’t ask me how that works in light of the supposed budget ceiling because I can’t explain it (or the Easter bunny) either.

The BIG RESET is Coming…

This is ugly, but pay attention here.  The phone range about 6 AM and it a my well-connected Wall St. Source (who must remain unnamed).

“You know what’s going on here, right?  Everyone with two-cents worth of actuarial brains knows America needs a huge actuarial reset and there’s only going to be one way to get there.  We need to default, have a crisis, wipe out 50-80% of the market value, force money out of dead pools in bonds and get things rolling again…”

Discussions with this source are at the core of tomorrow’s Peoplenomics report, but he continued on this morning’s point…

“Meredith Whitney was right…and about the only mistake she made was that in the “heat of the sound bite moment, she didn’t correct a couple of her numbers and her critics creamed her for it….”

“But you’re saying she’ll be right?”

“The numbers may be different, but the kinds of effects she was talking about?  Sure,…different timeline of course…”

“What about all your fellow wealth managers who are screaming dollar collapse and touting gold?”

“Look, everyone needs the crash and reset.  The German Constitutional Court is going to come back with their ruling that the OMTs (outright monetary transactions with German EU money)) are illegal, and that’s going to bury the Euro.  Everyone in the world is going to have to get into a new partially gold-backed systems of SDR’s and it’s out there in IMF working papers from 2010.

the budget impasse isn’t going to be solved, and you know why?  Obama is aligned with the tea party right now…the administration knows that not only the whole country but lots of state and local governments are on the actuarial skids and are about to blow up anyway…but the Four Horsemen (Pelosi, Reid, McConnell and Boehner) are all in denial mode and don’t see the actuarial reality.

But you go down this morning to your local Wal-Mart parking lot and ask people this morning “Is America’s economy in a sustainable position?” and I bet you 80-85% of people will admit it’s not.  We can’t have all these people in retirement making more than working people today…it just doesn’t make economic sense and it needs to be sorted out and it’s going to hurt…

That’s the Big Reset… and the people who think we’re going to roll right into hyperinflation are going to get killed…what can I say?  Every time a bunch of Americans get on one side of an economic issue they are almost inevitably wrong…why would that change now?”

In addition, my insider was pleased with the increase in volatility in yesterday’s trading action.  And even more interesting?  His outlook at the S&P could blow off more than 200 points between now and Christmas.

Whether he’ll be right, remains to be seen.  But with what’s ahead, his call about Don Kohn as a great Fed choice to replace Ben Bernanke is looking pretty interesting, given Kohn’s experience managing in crisis.  As to timing?  Let the markets drop some more, let Wall St.

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Noting beats a second cup of coffee (*still spiked with some Kona roast from Hawaii eyes Hank K who’s been mysteriously quiet lately) than a fine Wujo report like this one from reader Tim:

George,

Recent wujo for your files.

Last week I participated in an annual fall festival at our hometown. The normally dry festival received lots of rain and was basically washed out until mid-afternoon.

While setting up our booth in the pre-dawn rain, I placed a single key (with its distinctive PURPLE tag) inside the pocket of my rain jacket (a nifty Gear brand I picked up in the PNW). I zipped up the pocket to ensure the key would not get lost.

After the day’s event, the key disappeared. We looked everywhere for it.

Checked all pockets of all clothing, backpacks, foldable awning bags, etc… The key absolutely disappeared. Checked shelves, jewelry boxes, sidewalks leading to the house, multiple cars and trucks.

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Yes, this morning we’ve about to pick up the scent of something – and it ain’t Everclear – in the big punch bowl of markets.  This as the Chinese market dropped 0.71% overnight, Japan was down  1.22% (a glowing performance, huh?) while in Europe this morning, the free lunchers are down 1% in France, 1.11% in Germany, and 0.86% in the Unemployed Kingdom.

As I outlined in my wild-ass trade report for Peoplenomics readers last week, this could all get whipped up since today is when our 148-day (+/- 2 days) “murder” cycle hits, so don’t get all worked up if some kind of public outrage pops later today, too.

The good news, such as any of this is, might be that we have see a way ahead which could declaw the corporate tigers, return the world to something approaching financial  sanity, as well as allow the US a graceful exit from debt burdens.  The bad news is that it’s going to hurt – a lot – and the average lifestyle in America will suffer a bit…oh, a lot then, but at least there is a way forward which will be outlined Wednesday for Peoplenomics readers.

For now, my wild trade is looking less wild, and with every hour of downtime for the Obamacare online systems, confidence in the ability of government to do things right is waning.

Which means an “attention-shifter” would be just what the doctor ordered, so expect that to wander along and take center stage any old time now. 

Governments, as a rule, don’t like it when large numbers of people starting pointing and yelling things about the Emperor’s clothes, as such, and so – just to remind us who’s in charge – we need some drama to come in and make that point, again, and again.  So it’s now due.

Showtime in Libya, Mideast

Indeed, government does claim it’s getting things right, now and then, as might be posited to have been the case this weekend as a Libyan al Qaeda perp was busted out of country and renditioned by US Special Forces.

Of course, down in the fine print we read how this fellow, Nazih Abdul-Hamed al-Ruqai, is wanted for his alleged involvement in embassy attacks in Tanzania and Kenya that date back to 1998 which happened (check me on this, it’s early) 15-freaking years ago.

The little matter of sending US forces into Libya, a country with whom we are not presently at war, has SecState John Kerry preemptively saying it’s all right and legal and such, which – as you’d expect – Libya ain’t swallowing.

Then there’s the tarnish of SEAL Team Six street creds with a raid gone badly in Somalia.

Meantime, once-upon-a-time tourism destination Egypt is back in the blender this morning (on frappé by the look of it) as more than 50-people are reported dead amid rival demonstrations.

Laughably, the headline “Russia, U.S. Push Forward on Syria Meeting” sounds oddly hollow…like everyone who matters hasn’t heard the reports that a “Saudi black op team behind Damascus chem weapons attack – diplomatic sources…”

Like the government pseudo-shutdown in the US, the global geopolitick this morning is just more theater.  Not good theater, mind you…just theater that seems to be trying to present the longest play in world history.  It’s already outrun the 30-Years War.  We’re at 46-years, if we start the performance from the 1967 war…

Somewhere along in here, you’re no doubt wondering “Gee, G, how come you didn’t lead with the latest on the government shutdown crap that’s all over the MSM this morning?”

Well, Iron Butterfly, or Grasslicker, or whatever you call yourself, the real story of the day is likely that the whole Mideast brouhaha is heading toward a MuBro grab of the Suez Canal if you look closely.  When you start to read stories on Al Jazeera like “Sinai on the brink “
Can stability be brought to the volatile region that is home to one of the world’s most important waterways?”  — we already know what the answer is:

No.

The West has a nappy-habit of seriously misreading and underestimating our enemies going back to Yamamoto.

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A couple of interesting case reports to ponder as we look at how the oddities in Life roll past us.  Although, whether these are mere statistical improbabilities or outright WuJo events is something I’ll leave to your discernment:

George – longtime lurker – thx for the continuing insights and thought-provoking conversations.  I must comment on the found toys mentioned in your Friday column.

A couple of decades ago, Life dumped me out in the middle of the Mohave Desert.  I was in fact entering a time of my life I semi-jokingly refer to as my “convent years” but the Universe was setting me up for quantum spiritual expansion.  Some of my only friends out there were a pair of Ravens, and we began one of the most fascinating relationships I’d ever experienced.  I have stories about them that could fill volumes, but the reason I am writing is to tell you what happened when my precious 33 year old horse finally had to be put down.  I had him buried on my property and errected a simple monument to the great old soul that he was.  In working through my grief, I talked to my two Ravens about “Big Red the Wonder Horse”. 

The next time I walked out to the grave of Big Red, two objects were sitting on the fresh earth.  Two little well-worn toys.  One was a carousel horse with a little teddy-bear astride his back.  The other was a small matchbox-type semi-tractor….bright red. This was a remote area, no chance of children or anyone else coming to my property.   I have always believed these items were placed on Big Red’s grave by my Raven friends.  It gave me great comfort, and still does.

God Bless,

GoldilocksArizona

To my way of thinking is the a likely Wujo event…. next? 

This isn’t Wujo, but it’s near and nice to read about pleasant experiences now and then…

Hi, George,
I had a good experience today.
A few weeks ago, I noticed that I had lost my silver ring.  It meant something to me as I had purchased it at a gift shop at the Grand Canyon last October while I was on a 3100 mile round trip motorcycle trip with my husband.  Yes, I rode my own motorcycle all that way, so the ring was a reminder of that incredible experience, so I noticed the angst from losing it, but didn’t really know where to start looking as it had fallen off my finger and that was that.  I did not expect to ever find it again.
My husband and I have honored our Father, we have taken care of my dear Dad now for over 8 years and with working and commuting, some of our own chores get behind.  Today, I had a chance to get some housework done.  I had let laundry pile up on my guest room bed so today I was folding it all to put it all away.
As I was folding and organizing, there at the bottom of the pile was my ring!  Wow!  That was a big NICE surprise.  I was kinda shocked.  I thanked God and kept folding.
Then, as I was sorting some papers from my car that had also landed on the bed, a white bank envelope revealed itself….and there was $41.00 in it!
Wow!  A second grateful thank God came out of my mouth and I was so excited to share these 2 finds with my husband.
I don’t know if it is wujo, but I think it is an excellent sign of a reminder to me, that as small as my concerns are, I have not been forgotten!
Sincerely,
Giselle (Austin)

Computer!  Send a note to Giselle and Hubby that they should consider their next ride was the Iron Butt Association ride.  The Big Tex Rally comes up on the 18th and 19th but registration for that is already closed…but maybe next time…I assume you know about the national motorcycle events calendar over here?

I’ll Stick with Data

Madison Avenue Mike has passed along a real gem here – an online test by the NY Times that let’s you see how well you can sense people’s emotions by “reading their eyes…”

Naturally, I took the test, imagining as I did, what the rest of the person’s face would look like to go with the eyes and then guessing from there…

I scored a (lousy) 18 out of 38 which means I ought to have a hard time understanding a person’s mental state via facing clues.  But that’s OK, since I tend to make up for it by having fairly acute hearing/auditory skills and understand externalities that drive people.

Given a glance into someone’s eyes, I’ll take their bank balance, age, and other data, rather than just let the “eyes have it” thanks.

Around the Ranch: 

Dealing With “Design” Matters

Elaine and I had a most interesting discussion on Sunday and it’s symptomatic of something which has been bothering me for a long time – namely the role of design versus the role of function when it comes to building things.

The conversation started when I remarked about the wood order that I’d be picking up, this week or next, to frame in, finish roofing, then wire, insulate, sheetrock, and finish the deck at the north end of our old mobile home (modular, if you insist) out here in the woods of East Texas.

I figured I’d need about 47 eight food two-by-fours and 10-sheets of roofing metal to make it weather-tight and some windows (which I’ve been scanning Craigslist for, but we may have to resort to Lowes on).

Somewhere along the way – about the discussion of the metal roofing – Elaine postulated that there may be some reason for modern roofing to be flat with ridges every 6-10 inches, instead of the old corrugated roofing which was simply a bend or roll every 3 inches, or so.

Carrying the thought further, she began wondering if the design change had something to do with how water is controlled coming off the roof and she mused a bit about how there must be some design aspect to the roofing metal that was non-apparent.

“Marketing, is what it is all about, dear…” I explained.   I then extolled my viewpoint for a few minutes about how by having a particular design with ribs in the metal x inches and flat valleys, a big retailer like Lowes  would have a reason to stick with one brand of roofing metal over time…so that people like me who buy part of a project, and then come along later to finish it off, will still have access to the same material.

“Another factor is likely building codes,” I proffered.   “By having the ridges in the metal every x inches, the metal would tell any idiot-level installer (I noticed the kitchen mirror) how to space out fasteners to meet building codes.”

Another idea I tossed out was that in the old days, corrugated was made one way, and flat & valley was rolled another…as machinery and dies to roll metal have advanced from the invention of “corrugated galvanized iron” which goes back nearly 200 years according to Wikipedia:

“Corrugated galvanised iron (colloquially corrugated iron or pailing (in Caribbean English), occasionally abbreviated CGI) is a building material composed of sheets of hot-dip galvanised mild steel, cold-rolled to produce a linear corrugated pattern in them. The corrugations increase the bending strength of the sheet in the direction perpendicular to the corrugations, but not parallel to them. Normally each sheet is manufactured longer in its strong direction.

CGI is lightweight and easily transported. It was and still is widely used especially in rural and military buildings such as sheds and water tanks. Its unique properties were used in the development of countries like Australia from the 1840s, and it is still helping developing countries today.

CGI was invented in the 1820s in Britain by Henry Palmer, architect and engineer to the London Dock Company.

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We start off with an email from Peoplenomics subscriber Greg:

Hey George, what the heck is this about? Website was only registered a couple of days ago in Panama. Now instead of November the 13^th, they’re going to divulge something on the sixth of October?

http://www.rememberthe13th.com/

Hmmm… don’t quite know what to make of it. 

It does have an  element of count down to it.

Which reminds me, I forgot to put up the last video in the “How to Pronounce” series that was going on YouTube and apparently culminated in this one.   Which got somewhere north of 800,000 views on YouTube. 

And, near as I can figure, it points to watching the video over here….It’s pretty amusing and a fine time sink…

But as to that revelation coming on the 6th….hmmm….Can I answer in Monday’s column?

Super-Brain Interfaces Come into View

With our discussion of digital assistants in existing hardware as a starting point, along comes an email from reader Randy who reminds us that although it’s a 2011 video,  grab 9-minutes of think-time and go watch the YouTube video over here titled “Superhuman intelligence through magnetic stimulation…”

Using trans cranial magnetic stimulation to stimulate certain areas of the brain and suppress others, temporarily turns one into a ‘savant’.

Test subjects score “three” times better on math and problem solving tests.

They also have greater artistic ability.

This ‘effect’ lasts for about one hour, before it is forgotten (and/or, hidden again)

Some more ‘take-aways’ from the video:

1. He (Sydney University professor, Allan Snyder), takes normal people and runs them through a series of tests.

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We start this morning with a quick glance at how the online implementation of the Affordable Care Act (Obamacare) is doing.  Specifically, the AP headline “Online Delays Signal Strong Demand for Healthcare” stuck me as un-AP-like since it conveys a subtle form of paradigm pandering.

Let me explain: While it may be true that there is “strong demand for health care” as the article represents, there are a couple of other explanations which are entirely credible and which should have resulted in a more balanced headline like “Online Delays for Healthcare.”

You see, the “strong demand” part could easily have been driven by healthcare expenses – which in my personal case have gone from $267/287 in 2010 to $450 today and that’s after dropping dental in the process.  Americans shop like crazy and maybe this is just bargain hunting.

Or, to propose an alternative headline:  “Screwed over public anxious for cheaper healthcare” might also fit.

Higher probability?  Since government seems to be big on lowest priced bids to build-out this and that – it might also be a true headline if written “Online Delays signal poor computer code and implementation…”  Been there, done that, with failures and collisions on the COM layer.  And how do you load-balance a whole country on a server farm?

While we are sitting here five days from our next (high statistical probability) mass killing/public outrage which will spin public discussion off the government shutdown and Obamacare for a week, or two, it would be nice to see such reliable organizations as the AP pay a bit more attention to paradigm-selling headlines, although we’re mindful that the leash of access is easily tugged-on inside the beltway, to be sure.

Another Questionable Congressman

CNS News asked congressman Henry Waxman the other day whether he had read all 10,535 pages of Obamacare regulations which has been published in the Congressional Record. 

“Is it Important that I Read It?” came the petulant reply, along with labeling the inquiry as a “Propaganda question” according to the CNS report.

I’ve made a note to call my congressman’s office, to see if I can’t get UrbanSurvival read into the Congressional Record.  That way, even more people won’t read it.

Seriously, or nearly so, the Washington cult of illiteracy (don’t read bills, don’t read the C.R.) really ought to change. 

Virginia is for Lovers….Surveillance!

While such commentary as above is at least momentarily protected by free speech, we note that Virginia is now making up a master database to handle all records of people in the state.

More after this

Jobs and Economic Reality

Just out from Challenger this morning is the planned layoffs report for September:

CHICAGO, October 3, 2013 – Planned job cuts fell to their lowest level in three months, as U.S.-based employers announced plans to reduce payrolls by 40,289 in September. That was down 20 percent from August, when job cuts reached a six-month high of 50,462, according to the latest report on monthly job cuts released Wednesday by global outplacement consultancy
Challenger, Gray & Christmas, Inc.

The September total was 19 percent higher than the 33,816 planned job cuts announced the same month last year. This marks the fourth consecutive month that saw heavier job cutting than a year ago.

And no, this has nothing to do with the government (15%) shutdown.

As the shutdown continues, we notice the Daily Caller has a list of “Seven stupid things the gov’t spent money on during the shutdown…”  And in another outing, turns out the Obama administration ordered the park and monument closings.  Bad form.

But both sides are guilty of misrepresentations, near as I can figure it, and this morning the GOP moderates are trying to figure out where to go next.

Say, here’s an idea: Home.

Markets and Outlook

Indecisive as the Dow futures are down a tad, gold and silver are pulling back, and everyone seems to be waiting to see if the skies will part and solutions to our financial misdeeds will fall out of the sky.

In a word:  Nope.

There’s so much hope and denial about lately, you can almost shovel the stuff.

I wonder if hard reality will sink in tomorrow morning when the monthly unemployment rate confessional is due.  If it doesn’t come out, will that break the back of the market bubble?  Or, will the report showing up mean that the “shutdown” is not really the End of the World?

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There are two general schools of thought when it comes to markets:  One is that markets are perfect and that they reflect all known information at every instant, and thus, properly discount everything including the future down to a gnat’s behind.  Nice theory.

The second view is that markets are fundamentally irrational and that while some dribs and drabs about the future make be known, for the most part people are greedy, secretive, self-centered, ego maniacs who will do anything to make an additional nickel in markets including bankrupting companies, ripping out pension benefits, and coming up with incredibly complex algorithms in order to “front-run” trades by everyone they can.  The notion that individual market participants can in any way be considered rational is thus easily put to rest with a thoughtful read of financial headlines.

Now…the topper on all this (and we may see it, at least at this morning’s open) is that the rational markets crowd believes that while yes, there may be a few rotten apples (like former presidential bundlers who can misplace a billion, or a trading commission which can’t find gold manipulation although they seem intent on aluminum, on average the markets are still rational.

This morning’s first framing question is, therefore, how many crazy people can you put into a room full of people before you can quantify the whole room as “A bunch of crazy [irrational] people?”

Not that the stock market participants stand alone, mind you.  We have the foreign exchange traders, the commodity players, the Fed…just about anyone whose hands touch money seem to come down with  a touch of insanity.  It’s as though touching money makes folks crazy.

Take the US House, for example, please.

The House last night voted to send the Senate a bill which would force the federal budget mess into conference committee.  This was talked about back in April, but now with Obamacare up, guess what?  Both parties are using every dirty trick in the book to blame one another and it’s just a fine debacle.

Worse (or at least more evidence of money also impairing the capacity for reasonable thought) while the democorps were whining about how the Statue of Liberty would close today, the republicorps were busily pointing out that the Obamacare program should at least treat all people the same, whether they happen to work for a small employers, or themselves, which really are being treated differently that participants who work for corporations, in which case there’s an additional year of grace before being mandated to take part in what Justice Roberts correctly reminds us is really a tax.

Since I was up half the night watching CSPAN coverage on this, it occurs to me this morning that the democorps lied, at least insofar as the government shutdown is not complete.  Oh, and yes, banks will still be open, so despite 800,000 federal employees sitting home twiddling theirs, the world will continue.

Even during the shutdown, those at the top of the personnel heap will get (look surprised, please?  Just pretend…) special treatment including overtime and comp pay.

The republicorps, on the other hand, are sticking by their guns, and so the likelihood is high that this could stretch out for a while.  The House conference move will be sent over to a Senate where Harry Reid says there will be no “negotiating with a gun at our head.”

Latest rabid headlines out this morning point out that members of Congress and their staffs, will be able to get abortion coverage, even though such costs are largely taxpayer sponsored.

And on this, the markets, which were somehow goosed into closing down only 128 on the Dow yesterday, are poised weakly rally today at the open.

Let me add this all up for you:

The House is crazy (Passing a continuing resolution which is a dead duck from the get-go.) 

The Senate is crazy, not agreeing to evenly apply the healthcare tax to ALL Americans, not making up arbitrary tax classes between Big Corporate employees (cattle/chattel/worker bees) and small-fry regular folks.

Wall St. is crazy for not being able to spot insanity, although this can, one supposes, be overlooked, since they already have contracts with the crazy House and Senate to look the other way on some things and favorable tax (like not at all) on others.

Out of the block, therefore, we have Obamacare online and available, the House and Senate being slipshod and political, and the stock market about to show us what a fine job of being irrational they can put on.

In short, it is with a nod to Stephen King’s Dreamcatcher, SSDD.  (Same shit, different day.)

More after this…

Sandbox and Oil Notes

If you think the current spectacle in Washington is something now, just drop by in about 10-years when the momentary respite from Peak Oil shows up, after getting furloughed by the current rash of oil and gas fracking projects which are causing most people to lose sight of the larger (resource constrained) picture.

To keep this part of the big picture in focus, we keep a very close eye on developments surrounding the kingdom of Saudi Arabia and  note that:

“Saudi cleric warns driving could damage woman’s ovaries” is getting huge play.  Still, women would like to be able to drive in the kingdom.

The Obama administration is, to put it bluntly, pissing off the Saudis by trying to jawbone rather than tire-iron the Iranians and the Syrians.

Then there’s this report about how tourism involves a million Saudis.

And, in what may be the oddest (or perhaps prescient) move of all: Young Saudi men are mounting their cars on piles of rocks in strange new art trend.”

New Flu Story

You ever get one of those “Hmmm…why are they doing THAT?” kind of feelings?  Here’s a press release from Health and Human Services under the headline “HHS boosts national capacity to produce pandemic flu vaccines.”

To boost the nation’s ability to manufacture influenza vaccine quickly in a pandemic, the U.S. Department of Health and Human Services today established a fill and finish manufacturing network, which will cover the final steps in the vaccine manufacturing process.

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