Friday, March 4, 2005 07:15 a PST
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The Hidden Story of the Week: Bankruptcy Reform
You might think, if you just dropped in on planet Earth from somewhere else in the galaxy, that there were really three big stories on Thursday: Martha's freedom, Michael's trial, and the wild chimpanzees of Kern County. But, of course, you'd be wrong. That's just pabulum for the masses of non-thinkers.
The real story today is about grease - and specifically the banking industry's attempts to make declaring bankruptcy event harder for average Americans while preserving the loopholes for the fat cats. STORY.
Watching the discussions and vote on C-SPAN 2 Thursday, while nursing my gout attack, I learned that most bankruptcies are caused by medical problems and that banks have enough grease and horsepower to roll over the democrats who suggested limiting maximum interest charges to 30%. The attempt to leave senior citizens with a homestead exemption of $150,000 (so an elderly person would still have a place to live following a major medical crisis) was also thrown out.
So, the next time someone tells you what a great party the Republicans are, go over and read the record at places like THIS and notice that the GOP voted against all the common sense and decent suggestions. Instead, they voted like the lackeys of corporatist banksters and put the screws to the average folks again.
Gold Manipulation Real - Study
This is an interesting goodie for those of us who have been buying gold as funds allow:
Job Report Hype
Another example of finding the wrong things to celebrate by the rearview economists of Wall Street was the jobs report for February out today. Here's part of the official news release:
The bad news, which is being ignored by the market include:
Texas Versus Wireless
Apparently, Elaine and I have been gone from Texas long enough for the Republic's occupation government to start backsliding. Specifically, in Houston, we find evidence of a "down on wireless" movement: DETAILS. Yep, can't have wireless access everywhere - just think how easy that would make communicating! This is just foreplay for the major attack we expect to see on the 'net which will no doubt be blamed for the world's next economic tempest.
There are reports today that Iran is putting in tunnels to keep some of its nuclear materials safe. LINK. The rumor that Iran will be attacked in June continues to swarm around the net.
This week's Inside Report focuses on an interesting concept I've come up with:
Our e-book "How to live on $10,000 a year" is offered at our BOOKSTORE.
Back to Watching Oil
A reader asked yesterday how it could be that oil prices were going up, when there were increases in the price of distillates and some slowdown in the demand on the basis of less transportation and refining. "It seems like if there was refining problem," he wrote, "the prices of oil itself would come down." Not exactly. The reason? When there are outages, the normal mix of product gets screwed up and because less of one thing is made, total demand goes up. Which in turn drives price. I mention this because we seem to be back to watching oil today prior to the market open: STORY.
More Rearview Economics
Because most market "experts" don't have the common sense God gave chickens, there's a bit hype in the pre-open today about how February retailing numbers will hold center stage. All of which is fine, STORY except that when you see the market looking at last month's numbers, it blow the Holy heck out of the theories that the market discounts events 6, 12 and even 18-months out. No, the market is a paranoid, hair-trigger place where a bunch of Deadwood characters are only looking as far as the next Greater Fool to buy up that turkey of a stock with a good "story" behind it.
Say what you will about the Indian press, they make the National Inquirer look like a bastion of self restraint and understatement. And example in the story today about how a coming pole reversal could end life in 2012. LINK We find the fascination with 2012 directly attributable to an interpretation of the Mayan Calendar long count. But, it's not the only one. There are versions of it that have the end of the long count as early as 2006 - 2008. Plus, with the increase in earthquake activity, there's no reason why civilization as we know it couldn't end at 4 PM this afternoon!
Another reason why the much ballyhooed pole reversal might not wait: Another batch of dolphins has beached in Florida causing some people (like me) to wonder if this doesn't presage another massive earthquake between now and the 15th of this month with highest odds around the 8-9th when hyper dimensional maths suggest angular momentums will be highest and most stressful; STORY.
CIA: More Yalie-speak
We couldn't help but notice the comments of CIA Director Porter Goss on his workload, or his wonder at his relationship with John Negroponte. DETAILS What really jumped out was they are both Yalies and leaving us wondering whether either (or both) is a Skull and Bones agent. About Negroponte but Goss apparently was not. For a country without royalty, we seem to do a phenomenal job of putting Yale grads into high office.
More stone-throwing in the war of words over whether Iran should be allowed by the world police agency (read: The U.S.) to build nukes. STORY. I can't figure out why we aren't taking them away from Pakistan, but who am I to ask such impertinence. We should see the anti-Iran rhetoric ratchet up through June or July before a "surgical strike" again the Iranian nuclear facilities which could then bring Russia eye to eye with us.
Good picture series at this LINK if you have high bandwidth. Otherwise, the learning point is that Europe, thanks to global warming screwing up weather patterns is having an unusual cold snap and associated snow. There were places in Germany with -21 (C) yesterday according to our source.
Single Women of Russia
Sounds like the headline for a Playboy photo spread, doesn't it. Well, it seems that young women in Russia are not marrying off very quickly, causing consternation from demographers who are worried about Russia's declining population. STORY.
Natural Versus Pills
I've been sucking down black cherry juice extract like there was no tomorrow, and supplementing that with pantothenic acid (B-5) pills in an effort to get the gout to disappear "naturally." Although it has honestly improved a tiny bit overnight, I will still be taking today off to let it mend to where I can put full weight on the bothersome left foot. Plus, a colleague is FedEx'ing me some colchicine pills, which ought to do the trick. It's like the old joke: "My gout is acting up so I won't be able to play soccer today..." Not mentioning, of course, that I couldn't play any other day, either.
The New Paradigm Emerging
We are really beginning to see the emergence of a new paradigm in the world - a new set of trend directions and a general outline of the future which will likely rule at least the next 10-years of human existence. What's interesting is that the New Paradigm (or framework which determines how we think of things) is not a single "thing," but rather a collection of two or three major trends which will work together to force a massive rethinking of "how the world works" for most people. I think it's visible in "outline form" now, but it will be several more years before it really comes into view as an actionable set of moves for most people and families.
We might begin describing the New Paradigm as an acronym - something that will be easy to remember and address by its initials. The drivers of the paradigm (SWEED) are:
My thought this morning is that if you envision a world where these five forces are all pushing at once, in uncooperative ways, you will have a very good start on building a logically consistent worldview for the next five to 10-years. Along the way, you will be able to assess where we are and at what point systemic discontinuities occur that are of sufficient magnitude to demand a personal reaction from you in order to sustain your life and the lives of your loved ones.
Weimar Meets New Deal
Let's start with the notion of nationalist - supranationalism alliance. DEFINITION. We're already a good part of the way down that road, because like it or not, the Western paradigm of democracy has become super-nationalist in that we are now exporting it to countries like Afghanistan (drug money) and Iraq (oil money). Our view of "democracy" is what we're selling, and we're running into opposition from groups, such as the various majahideen DEFINITION that envision themselves as strugglers against the Western way of doing things. This part of the paradigm shift has been going on for about 10-years, perhaps longer, with the first (and unsuccessful attempt) on the World Trade Center, the USS Cole attack, and so forth as the opening rounds.
Thus, the first letter of the acronym explains a lot of today's news. For example, as we mentioned yesterday, it would explain why it is so important to the supranationalists that someone like Paul Wolfowitz be installed as head of the World Bank, why Bill Clinton is being paraded about to succeed Kofi Annan as Secretary-General of the U.N. Today, it puts into a new context the knighting of Bill Gates by the Queen of England, joining such other luminaries as Alan Greenspan, the head of the Banker's Reserve, and also a subject of the Crown, if we read the full implications of knighthood correctly.
In terms of economic dynamics, what we have might be viewed as a marriage of the Weimar Republic (post WW I Germany with its inflationary economic woes) and the free spending "government can solve it" attitude of the Roosevelt New Deal. You can see the spending when you look at the George Bush budget plans, and you can see the inflation occurring around the world. The Royal Bank of Australia this morning raised rates to 5.5% DETAILS which signifies to us that the pressure will continue on the Federal (Banker's really) Reserve to continuing raising domestic rates in the US in order to have an acceptable yield on U.S. debt instruments so that someone will buy them at auction and thus keep the U.S. from going broke as the Weimar did.
Deflating the Housing Bubble
One of the big stories out this morning, and one which will likely push the market higher at today's open, will be the news that housing prices appreciated markedly last year. up more than 11 percent nationally according to the REPORT. That might be considered good news, except for the fact that the definition of what's an acceptable level of mortgage debt has been changing quickly both due to predatory lending - screwing the little folks with high interest rates and penalties for early payoff of a mortgage, which effectively prevents them from refinancing when rates become more favorable. Secondarily, but really top-of-mind in the backroom of the Fed, is the fact that swelling the housing market has the salutary effect of enabling the Fed to lend more money into existence, which in turn allows homeowners to refinance easily to fund things like SUV purchases, and this inter continues the illusion of prosperity. no one dares mention this emperor has no clothes. It's a good game for now.
The managed inflation scenario is the one which has made the market very unpredictable of late, and I doubt that the last word has been spoken by either side. There's not doubt a good case to be made that Ford and GM are having their collective assess kicked by imports. Sales are DOWN of domestics but we notice that SUV fever has started to catch on in India, where a 1960's economic boom is well underway STORY although admittedly at the expense of jobs in America that were outsourced overseas.
As the housing bubble's expansion slows, we can anticipate a further slowing in auto sales as people return to normalcy. The land mine for the economy is whether prices can be held during the declining rate of increase. If they can not, then the danger is that as prices come down, people will delay major purchases even more, expecting additional decreases. This well describes the "circular reference" that results in a deflationary depression. It can't be ruled out yet. On the other hand, expecting U.S. dollars to drop in value, foreign suppliers are already holding up US companies for huge increases in prices of raw materials. STEEL STORY
The variances of weather from historical ranges is actually a building trend, causing heartland newspapers like the Wausau Daily Herald to note that the weather is "all over the place" LINK. Whether it's the record rains in Los Angeles, the record dry spell in the Pacific Northwest, the sudden freeze in Europe today, or those 200 km winds in Northern Scandinavia a month or two back, the weather is clearly making major shifts due to circulatory changes brought on by global warming.
Earth Changes Accelerate
Unfortunately, it appears our unscientific view, that earthquakes are making a major increase at the moment, and there's a good possibility that the changes will grow at such a level as to cause major economic disruptions globally. Take the past day, for example:
We had a shallow 4.6 quake in Arizona THIS MORNING.
There was a 7.1 in the Banda Sea which was strongly felt in Darwin Australia REPORT
And worrisome to us: there is continued activity south of California and north of California and even a couple in California itself, which causes us to be extremely cautious about keeping the gas tank full and a good supply of food and water at hand. LIST
What's causing the quakes? I expect the pole reversal of the sun a few years ago. In 2001 the sun's poles reversed in what I figure will induce the core/mantle of the earth to do something in kind. DETAILS I think this might be one of the most ignored stories of the century, but we'll see in the fullness of time.
Despite what the rabid right says on talk shows, there is no continuing "forever" supply of oil. Even the experts in the field are becoming outspoken in their concern. For example, Matthew Simmons, a long-time expert and friend of the White House is about to publish a book (in May) called "Twilight in the Desert" which deals specifically with the highly speculative nature of forecasting energy reserves.
I received an email from the die-off newsgroup which contained the follow comments attributed to Simmons:
The John Wiley web site summarizes the book, in part, this way:
We couldn't agree more. One of our best sources in the oil patch advises:
Have a look at this story – shortages and higher prices could easily devolve into “gasoline stills” here in the future, but for now it’s another place.
Flu in the Air
The last macro threat to touch on today is the threat of an international pandemic of some strain of a new killer virus. I have read "Control of Communication Disease in Man" and find the book is exceptional in its breadth and approach to understanding not only propagation of disease, but it also underscores how simple prophylaxis can be so effective. If you want to be informed about how diseases operate, this is the single best sourcebook I've found, short of going back to school to become an epidemiologist.
My Point? Well, we have never done an environmental impact statement on the health risks associated with globalism. An outbreak of small pox or other killer disease could now be spread around the world in a matter of 12-hours or less. It's why when I see stories like the one this morning about Britain preparing for a possible FLU PANDEMIC.
It doesn't take a rocket scientist to figure out that the risk of international spread of contagious diseases - and a whole route for terrorists - is simply getting on an airplane and traveling between continents. Although it was slow motion, this is precisely how AIDS arrived in North America.
At some point, people may be forced, by a new and more deadly disease, not to mention soaring energy prices on the backside of the Hubbert depletion curve, to rethink the value and the need to fly internationally without quarantine periods.
I apologize if this morning's report is a bit on the long side (heck, it's almost like an Inside Report article) but my foot with gout is acting up, so rather than lay in bed for a couple of hours, I thought I would get up and do something. I hope this helps you keep today's news events in a useful arrangement: just remember the acronym SWEED. It's not about taking sides on anything, except maybe being prepared for a super quake in Southern California. It's about framing events in a manner that you can anticipate in advance so that you won't have to run with the herd if they aren't going in a logical direction.
Steve Quayle sent along this link - sort of a backgrounder for our conversation on his radio show this afternoon at 4 PM (I will hopefully be awake for it...) LINK.
The Question of Reserves
I don't often ask you to skip through all the day's other news and concentrate on a single bit of information, but today we have to recommend you click over to Simmons and Company's site and read the presentation "Proving Reserves are Proven: an Art Form or a Science?" DETAILS. Simmons makes the point that on March 11th, the UN and others will discuss world "energy transparency laws." He makes the point that about 94% of "new oil" has come from computer simulations and not backed up by test wells (6%). With this as background and with supplies tightening:
The oil companies are in an interesting - and tough - spot. Our sources in the oil industry tell us not to be outright alarmed at this point, noting that the industry has been in this position before. On the other hand, the utilization of some key resources is up against the stops. For example, in the Gulf of Mexico we hear it goes something like this....:
It doesn't mean run out and worry about Peak Oil (which may be here, but that's another issue). What it does mean is that it's definitely time to start cranking energy-efficiency back into your thinking while it's still affordable: Insulation, organic farming, higher mileage transportation and the like. As Simmons notes, a lot of the extended period of cheap oil was based on "paper discoveries" some portion of which will likely not work out and when that happens, you will want to be well down the road on personal energy consumption reductions. We might suggest that weighting stocks toward those with good energy awareness might also be a wise thing.
Wolfowitz Bank Post?
One of the leading neocons responsible for gun slinger diplomacy is up for a post at the World Bank. STORY.
Our view is that Paul Wolfowitz ought not be allowed to leave until he cleans up the mess in Iraq to the point where American troops are back in the U.S. Now watch closely, as right-wing radio hypes him for the position, ignoring the fact that we've got a 24-karat mess to sort out. If you liked Iraq, just think what he will be able to do with the full sanction and cash of the globalist banksters behind him. Wolfowitz if you hadn't figured it out is a kind of weapon of mass destruction in our view and if he leaves before being held to account for Iraq, it will should tell you volumes about the viability of the present course in the Middle East. You think that would give Wolfowitz a chance to bail out the US debt with World bank funding somehow?
Our resident fractilist is smiling today - not on the specifics of the news items, but about the general direction of things here at the hyper saturated tail end of the bull run...
He also went on to describe the decline in personal incomes for January LINK and along with that, spending was flat. You have how many vehicles versus how many drivers in your family? Beware the ides of March?
It's a sign of the times, I guess. This morning the local radio station (KFI) was still talking about the Oscars. I love a good Hollywood glitzer now and then, but when will it stop? Answer: Never. A socially aware reader observed that "There are more reporters covering the Michael Jackson story (More than 1,000 press passes issued) than all media from all countries covering Iraq." Yup, that about sums up international denial for you...
Stop that Concerto, You're under Arrest!
I love it when government gets efficient, at the strangest times times: Bust the concerto story. We'll have no "cheap shot" writing about the concert ending on a sour note, etc. After all, using workers without permits is a crime in Germany. Think anyone's going to bust illegals this blatantly in "go along to get along" land? Doubt it.
Cost in jobs of the Qwest-MCI deal? Try 15,000 jobs. Details.
IRS gets a big tax cheat - supposedly getting a fellow for hiding nearly half a billion dollars: DETAILS. I wonder why this kind of story comes out about the time we're all working on our taxes, huh?
Carnage in Iraq
If you thought the President's announcement of the "end of major hostilities" meant anything almost a year ago, you were wrong. Today, grisly evidence that the recent elections in Iraq will also not mean much -of anything - as more than 100 people have been killed by a suicide bomber: STORY. Other reports place the death toll at 115 and climbing. DETAILS. No doubt, this latest event will be trivialized by right wing media which is more intent on pimping the latest oil production figures from Iraq as "evidence" of success. While we don't take sides on the war, the susceptibility of the spoon-fed press to repeated misdirection has never been more obvious to us. That said, we're enjoying $2.43 a gallon while we can, however.
Here's the dynamic to watch as the world seems to be on the unrecognized backside of the Hubert Curve that defines peak Oil: Watch who is willing to pay a little more for oil. My fascination is not with the war, or the prices of gasoline in America, but rather the whole worldwide dynamic of "which humans will do without?" In Indonesia, there's no question about it - Indonesians will riot and scream not to pay more. LINK. Meantime, we would not be surprised at more trucker slowdowns in the U.S. this summer if prices advance too quickly for consumer tastes in the U.S.
The deaths in the "resource wars" aside, we're entertained by Steve Fossett's interest in high mileage performance - as he attempts to set a round-the-world-nonstop record for jet aircraft today: LINK.
World's Most Cautious Bull
As the week opens, I'll be paying particular attention to the tone of the markets early in the week. As I explained to Inside Report subscribers, there is indeed some cause for optimism around the Dow, which looks to be breaking out to the upside. But, there are also two lingering concerns. One is about the fate of the tech stocks. On the one hand, the techs have been lagging, such that buying a few tech index call options at the money and a few months out would be an interesting gamble. (Example -remember an option is 100 times the display amount) But, we've got better things to do with our money than gamble. So in our own account, we're in gold and cash and biding away our time. We'll try to remember in June to look back on this period of cautious bullishness to see how it plays out.
As we put bytes to phosphors on Sunday night, the price of gold was up more than $2 an ounce, which drove home an interesting comment from my favorite market-playing uncle. "There's a lot of inflation coming in the next couple of years," he advised me. When people build a 7-figure account from scratch by being an expert "bottom fisher" I tend to pay a lot of attention. When told that I was forecasting 13% inflation this year, he didn't argue. The early Monday word is rates will edge up this week DETAILS meaning we're not alone looking at inflation.
As the longer term view shows, there continues to be an exodus by the public from the market. Below is my chart showing how the public has been dropping out of stocks since July 2002 when from a long term perspective the public influx by small traders came to an end:
(The apparent return of horizontal action on the right side of the chart is from repeating this week's levels two more weeks to you can see the data - the data don't flatten there...)
You can develop the same chart for yourself. Just take the widely available total NYSE volume in shares and grab the NYSE program trading stats for the weeks of interest over at www.nyse.com. To my jaundiced eye it looks like the public is wandering toward the exits again. One of Ure's axioms is that it's hard to make money in a market run by pro's. I also avoid the high roller tables in casinos.
The Longer View
I received this letter from a reader today, which begs for careful reading:
Well, I couldn't let it go by without a response:
Street Level Economics
From a reader in Ohio:
Another reader reports that Pittsburgh is the pits...
Global Climate Shift
While all kinds of conservative mouthpieces are spewing that "global warming is just hogwash" (or worse), we're sort of interested in the latest weather reports coming out of Greenland. The Chinese are reporting on it because they apparently are a little more hip to to the idea that a glacial slip into the Atlantic could cause all kinds of problems. STORY.
I received an email from Cliff at www.halfpasthuman.com advising me that another web bot run is being planned for March. Seems the big money players who bankrolled the last run were very impressed with the accuracy of some of the predictions.
For instance, in the first part of the current run, the following was noted on January 1, 2005:
The serious users of the data found the reference to the rains and tiger shooting reported in the LA area (see LINK ) is just too close to be a coincidence. The reports aren't for everyone, because when one looks into the future using software, the view is fuzzy at best, but the hits are often interesting. Subscriptions are handled at http://www.halfpasthuman.com/HPHALTA405firsttimers.htm and I don't have a financial interest in the technology. I just find it useful. If this is your first time reading about bots, click HERE for a background piece. The price is $70 for long term participants, and $100 for newcomers.
Regardless of your perceptions of the technology, if I read the late December/early January runs correctly, we should get one more round of serious rains and flooding here in the LA area. Want one more? Remember, this is a month-old look into the future: Look for big electrical problems this spring in China. The leading edge of that story is just now starting to percolate up to the public consciousness STORY. Buyt I'm looking for something on the order of a regional power outage - something like the Chinese version of our Northeast Power Outage.
For today, it looks like the bulk of weather problems will be on the right coast: http://www.wunderground.com/severe.asp
One other thing that has us a bit weirded out: Was that 2.9 earthquake Sunday here in the San Fernando Valley just a fluke? LINK The ham gear in the car was tested on Saturday, coincidentally, and the 2-meter rig was charged up...
Braver than Me
I see that Japan has completed the world's longest tunnel: DETAILS. With all the increase in general earth movement, the cave-ins in China's coal mines, would you want to drive into a tunnel that long? not me!
So Much for Jawboning
It's an open fact that one of George Bush's agenda items when he visited Moscow was to try and pressure Vlad the bad not to ink the nuclear fuel deal with Iran. Ploy didn't work Deal is DONE. As of Monday, Russia was busy DEFENDING the deal.
The idea of sending the internet around on power lines is not getting off to much of a start: DETAILS. Not to say we told you so, but remember the phrase: saturation economics...
News from Elliott Wave International
Write when you get rich,
George Ure, The People's Economist
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