Trah-lah-lah-lah-lah…. lah lah lah lah….This ain’t hard to figure: Gold is down, so the dollar is up, so the number of dollars to buy the market should be down, so the futures should be weak.
But wait! The Dow is likely to pop up 60 and the NASDAQ and S&P also look like they’re set to gain a third of a percent, or better. What gives?
Well, for one thing, we know the market is impacted by seasonality. Out comes the eggnog and up go the markets. Even more on point (for a while) is that oil prices were down almost a buck and a half a barrel on prospects for Middle East resolution of a few issues like Iran. You’re not supposed to notice the raw sewage in Gaza…which might have something to do with why people toss missiles about. Ignore the bad! More nose candy for traders.
Rain is falling in a good chuck of the southwest this morning, bring a possible end to drought conditions. We ought to see some lower food input cost there. And there have been the usual shill calls for better earnings to come.
One of the biggies to set the tone this week will be HP’s Q4 due out after the close tomorrow. For today, holiday cheer should rule whether it makes sense, or not.
Coming For Your Money
Although we continue to give kudos to Ben Bernanke and the Federal Reserve for keeping the obviousness of this long wave economic depression fairly-well hidden from sight or most sheep in the herd, every so often a story comes out which “outs the truth” about where we are.
Which is: Depression, massive money debasement, and deflation.
The tip-off today is that the collapsing interest rates are now giving banks so little margin that they may have to charge you to keep money in a bank.
This what what happens in periods of severe deflation. No one has pricing power, and that means in order to turn a profit, banks have to gin up all kinds of fees and such. Coming soon to a bank near you.
Even our super high rated little local bank is charging an “account activity fee” is money moves in the account.
Nor is this a US-only phernom, either: In Norway home price deflation is so bad that they’re thinking about going back to “easy money” in order to suck some more buyers out of the woodwork.
And, almost as though they are blind to history (they are, but that’s another point) the ECB bosses are saying that rates can go even lower than they are now, if that’s what’s needed to get people spending and businesses borrowing again.
Oh, and if you happened to think the banking crisis was over, think again: We’ve had 23- different banks fail this year. This is another sign that thing’s are not happy out there in bankster land.
Here’s the obvious which no one seems to be in a hurry to reveal: Banks fail because they run out of money. Theory holds that banks ought to be able to borrow at a low interest rate, lend out higher, and pocket the spread. The problem? When people aren’t buying (much of anything) the banks don’t make many loans.
When banks aren’t making loans, there’s no turnover and the velocity of money collapses. On point here is the latest Velocity of Money chart from the St. Louis Fed’s data service:
What it means is simply that despite the drop in interest rates, the turnover of money has continues to drop, such that it’s not generating new economic activity.
Look, I’m no war hawk here, but the last time we had a serious long wave economic depression (1930’s) the only way for the world to work its way out of it was to put up a dictator in Europe (Hitler) and against him, the whole Allied world rallied its factories and got things rolling again.
From a long wave econ perspective, peace in the Middle East might make nice feel-good news, but it’s not going to work out as a cure-all for the economy because we actually need some jobs and government jobs, service jobs, and the “new industries” (security state, LBGT niches, global warmingism, and so forth) aren’t going to produce enough new REAL jobs to keep this puppy afloat much longer. Enjoy it while you can.
What policymakers are glossing over is this little talked about chart called purchasing power parity converted to Gross Domestic Income. What it says, in so many squiggles, is that the standard of living in the US has taken its biggest nosedive since the Great Depression.
If you feel as though cognitive dissonance is setting in, it’s not. You’ve just not looking at the right data. With the watering down of money’s purchasing power, offset by massive printing, we feel like things are on the mend. But when you try to convert it to loaves of bread and new bass boats?
Ha! The truth is in what you can buy. All the yellin’ to the contrary don’t change facts.
Oh, and did I mention the bankers are coming for your money? And in the case of one bank, a home too…but it’s a mistake, you understand…
Did I mention banks are now starting to crack down on bitcoins, too?
More after this…
Waiting for Israel’s Response
Now that the “big deal in Geneva” is under us, with reports that there will be easing of some Iran sanctions in December, it’s not a very long wait to get a sense of how Israel feels about this.
Well-connected Debka.com points out there there are “Seven loopholes favor a nuclear Iran in deal signed by world powers.”
Dark of the moon is here and I don’t think Israel will be restrained much longer, but I doin’t always guess things right. And I go through Tums like crazy.
One reason is contained in a note from our resident war gamer:
Obama could find himself unexpectedly experiencing bi-partisan democratic obstruction similar to that which President Wilson suffered when a still very isolationist U.S. Senate refused to ratify his prized diplomatic achievement, the League of Nations agreement, at the end of WWII.
“Senator weigh additional sanctions amid Iran nuclear deal.
Me thinks a veto proof bi-partisan Senate rejection would magnificently tork-off (in order) the Persians, Russia, Obama and Secretary of State Kerry while greatlhy pumping up the spirits of the Israelis and Saudis.
~warhammer
Something else to ponder: Does this mean a nuclear Saudi Arabia is next? How one but now ALL?
Distracting the People
If I didn’t have a wife who was writing a book about how conflict people are on the subject of pet ownership, I may not have been so curious about the Hollywood Reporter story “No animals were harmed” which is out this morning.
This is a story which dominates the Drudge Report this morning and we wonder, with the possibility of nuclear war close, the budget about to blow up at the end of the month, a major winter storm here before winter, collapse of the economy in slow motion, yada yah, if the animal issues of Hollywood is really that important?
I love animals and all, but when I see emotional hot buttons of people being poked, I wonder “Hmmm…WTF is going on in background that we’re missing and why is this being sold as important?”
Zeus the cat, our editor, is suspicious as well.
Quakes, sun, Weather
6.7 down the the Falkland Islands area…
Pay attention to the quakes near the Antarctic. Could they trigger a breakup of the southern ice cap? Oh, and a 9.3 quake prediction from over on the GLP website here.
I could mention the article “Calm solar cycle prompts questions about impact on Earth” but judging by the major winter storm (a month early, eh?) I suppose you can figure some of them out without help?
Major fall storm indeed – and just ahead of over the river and through the burbs… and here at the ranch 36 with mixed rain and ice pellets.
Yah got Al Gore’s number? I could be the Inconvenient Ure.