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Low Recruiting Means Draft Pressure This story has its roots in couple of places and several sources that have been kind enough to share a bit of detail that is beyond what you might pick up from convention "corporate" media. For example, one of our sources checks in from Syria:
As for the "public headline" story, it's that the US Army has slipped further behind in its recruiting goals. Like Vietnam, the news coverage of a war over a protracted period of time tends to make for lower enrollments. It's one thing when a country is attacked or has a long history of national service, but in the US, the draft has been an on again, off again, kind of thing since the Civil War - when, if we recall correctly, there were lots of anti-draft riots in the North because the Civil War like most others had a couple of agendas. The one in the history books being to liberate slaves, but the larger Lincolnian version was the attack on State's Rights.
Is there a pressure building? But it's a complicated matrix that involves the US need to project power, the faltering of the Euro which means the US dollar has momentary strength but amidst a falling confidence level in paper currency generally, and the needs of energy and the requirements to keep order at home. Nevertheless, we sense at some point the draft will be reinstated because at the macro level we need permanent war to make permanent economic recovery with the debt monster blowing up.
Mexico For Example We read now and then about the potential for trouble along the leaking border with Mexico - and in fact, how it may become necessary for the US at some point to actual position military rather than just Border Patrol agents in the area. But, absent the work of the Minutemen, there has been little real pressure on the administration to change anything. After all, change is bad, and grease is good. And the grease I refer to is that which flows around the halls of CONgress buying votes and positions from the lawmakers who have made a living out of selling their conscience for a money or votes in the next election. Still, we'd like to draw your attention to the formal warnings about travel inside of Mexico which the US State Department issued in late April, but which have received little media attention:
Elaine told me that she seems to recall seeing this as a one-time crawler on one of the news channels, but she also points out that a lot of the real news goes on the crawler, but never gets mentioned by the talking heads - they're too busy doing things like the Jackson trial... I, for one, wasn't aware of it until it popped up again this week in the data stream from the web bot runs and Cliff happened to mention it to me.
We have also picked up scattered, unconfirmed reports, and they only be rumors, that the US military has been doing battlefield planning along the southern border out up to 200-300 miles, but nothing official is showing up - yet. Still, border tensions seem to be stable to growing on the southern front.
Time to Outsource Defense? The idea isn't so far-fetched in the eyes of one reader who makes the suggestion:
And if we can pay for it all with continual watered down paper, hey, why not? Go in for 10 and you become an automatic citizen maybe...
Summing Up Greenspan Great analysis from a reader who watched the joint economic committee and St. Al this week:
Another Worthy Note From John Riley at Cornerstone Investments - and another one of those "fled the Street" to stay honest kinda guys...
Not So Humorous - or is it? From my Steak Dinner Bet colleague - this surprisingly candidate bit of humor:
Is you 401(k) Safe? Depends what you mean by "safe" - we get into that topic this week on www.Peoplenomics.com - and if you're not a subscriber, it's only $30. Subscription info...
Friday Deficit Woes Not that that it will have too much impact of the market, the Dow and other indices having long ago grown tired of being tied to anything that even remotely could be called reality - but the trade deficit is up again for the latest reporting month as we keep spending more than we're making. The mere fact that Intel has raised its foreign for 2Q revenues a bit should be all it takes to help the market post a gain in the face of what should be very sobering economic realities. More details from the official news release.
As we contemplate some of the other headlines of the morning, such as Citigroup paying $2 billion to settle its part of Enron, we are beset by mind warping questions from readers. Here's one example: A reader reread through all of the Fed comments from Thursday (duly reported below) and wants to know "What is non-financial debt?" His point being that debt is always financial, so how can you have non-financial debt? The poor confused reader doesn't understand that in Fed Speak you have to call things the opposite of what they are. Our Dictionary for a New Economics explains a few of them, but the 19-second refresher is this: non-financial debt is financial debt, Consumer Credit is consumer debt, and there is an Easter Bunny.
Technical Difficulties If this morning's column is a bit disjointed, its because I have been up way past my normal bedtime working on reloading everything on my computer. Whether coincidence or not, after running SystemWorks on Thursday morning, all of my drivers for everything disappeared along with Device Manager and would not recover with a restore point. A Symantec rep promised my money back, but only if I could produce a receipt for 6-mnonths ago for $50 involved (slight chance in hell) and what about the 18-hours of hell [and counting] reloading my computer? So yes, I'm cranky....grrrrr.... Turning lemons into lemonade, I am moving from Office XP to Office 2003. I've been watching Elaine's Outlook 2003 preview panel which is nicer than XP and apparently a later software rev. Still....grrrrr....
Tropical Storming No sooner had my friends in the oil services business sent me my own tracking map of the Caribbean than I started to notice there's a named storm to track which should be in the Gulf shortly. Arlene doesn't sound too threatening, except for the 5-10 inches of rain she's bringing along.
Red Tide in Morning, Fishers heed Warning Massachusetts has declared the red tide in the region a disaster. With good reason - it's proof again of what we have ranted about for a long time - global warming. We've already seen developing "dead zones" in the Gulf of Mexico and the Atlantic - so the red tide while a bother - is just part of a larger problem. The Gulf "dead zone" is the size of new Jersey, say experts. We won't make the snipe comments about it how New jersey resembles....no, we won't go there.
We also picked up on the story that a new kind of fungus has been developed which could kill mosquitoes. It's a mixed blessing though. While yes, it promises to control malaria in some parts of the world, the down side is that there are lots of animals and birds which eat mosquitoes and if we start "playing God" with the balance of nature, it's likely to turn around and bite us on the butt - again.
Who's a Patriot? George Bush was busy on Thursday promoting the Patriot Act - with some discussion from Senator Feinstein and others about whether it was really a danger that so many of us who have taken the time to read large parts of it see it as. I don't see the sense in it - as we have much larger security threats that can be dealt with in other ways: The Mexico border leaks 5,000+ people per day who just "walk in" and we haven't been able to find Osama bin laden...so help me understand if we can't find Osama and can't close our borders, how is finding that I check out a copy of the Anarchist's Cookbook going to make the world any safer?
Bolivia Up for Grabs While the head of their Supreme Court has been tapped to be president of the country, our read of the situation in Bolivia is that it's still somewhat up for grabs - and the corporatist energy interests are still maneuvering to hold sway over the country's resources, which the people are ready to violently oppose.
The Five Year Steak Dinner Bet Forget about the Housing Bubble and Euro wars for a minute. Let's talk about things we can change and look at a fundamental policy question facing all workers who are also investors. If you organize your life to expose yourself and your loved ones to minimum risk, is it better to doggedly pursue maximal gain, or should a person take the three-legged milk stool approach to financial planning? Precisely this question came up this week when a colleague in a venture asked me why I spend so much time hedging my bets.... (More for subscribers) Subscription Info
"How to Live on less than $10,000 a year" continues to sell well. Link on the left up there. Or at our bookstore.
Please spread the word about this site. Click here to tell someone you know...
Thursday Fed SHOCK While Allan Greenspan was up talking to CONgress, the PR Department at the missnamed "Federal" Rese4rve - which we all know is owned by banks, not the government, issued its report "Flow of Funds of the United States". Check it out at http://www.federalreserve.gov/releases/z1/current/z1r-1.pdf
Shocker:
Detail: http://www.federalreserve.gov/releases/z1/current/z1.pdf "Domestic nonfinancial debt rose at a seasonally adjusted annual rate of 10 percent in the first quarter of 2005. Debt growth in the first quarter was above the fourth-quarter pace, reflecting faster growth of federal government and state and local government debt. On a seasonally adjusted basis, federal government debt increased at an annual rate of 13-3/4 percent in the first quarter, the fastest quarterly pace in almost two years. Meanwhile, state and local government debt expanded at an annual rate of 16-1/4 percent in the first quarter, as a significant volume of municipal bonds were issued for advance refunding of existing debt. In the first quarter, household debt rose at a seasonally adjusted annual rate of 9-1/4 percent, about the same as in the previous quarter. Mortgage debt expanded at an annual rate of 10-1/2 percent in the first quarter, while consumer credit increased at a 4-1/2 percent pace. In the first quarter, nonfinancial business debt increased at an annual rate of 7-1/2 percent, similar to the fourth-quarter pace. The mix of business borrowing shifted somewhat in the first quarter, as net issuance of corporate bonds and net borrowing from banks decreased from the fourth-quarter pace, while net issuance of commercial paper, mortgage borrowing, and borrowing from other intermediaries increased. At the end of the first quarter of 2005, the seasonally adjusted level of domestic nonfinancial debt outstanding was about $24.8 trillion. Debt of the nonfederal sectors was a little more than $20.2 trillion and federal debt held by the public was just over $4.5 trillion."
Happy Al So How does Al sound so happy today? beats hell outa us! What we can almost bet is that you won't hear the Flow of funds on corp media which has their collective you know what buried deeper than an imaginary Saudi oil field!
Bad News Bear OK, the market failed yesterday in its efforts to scratch through the 10,604 line on the chart that I've been watching as an indicator of whether the hopes of Bubble Boss Greenspan are anything more than delusions. The answer came in the form of a single line email from Robin Landry (405-275-6162) yesterday:
While that may not seem like a biggie you, it is a huge indicator to me that the fears about us being in a Second Great Depression are well-founded. Robin is one of a handful of honest brokers who have broken ranks with Wall Street groupthink and have gone off to the hinterlands where they can trade based on fundamental convictions about debt levels, falling manufacturing, and the host of other problems which we chronicle here on a daily basis. To be sure, there are others - such as John Riley at Cornerstone Investments, who sounds as bearish as me from time to time.
The point I want to drive home is that we have the Chairman this week essentially whistling in the graveyard in his comments about the inverted yield curve not necessarily foretelling a recession or worse. Yet we don't see anything in the way of a new consumer industry that will push spending on much of anything but debt an energy at the required 4-5% per year in order to keep America solvent over time.
As I scan the headlines every morning, I group the news into things that a) drive or deny the long-term trend, the b) daily market news of little consequence -day news - call it, and c) non-news infotainment crap that TV networks use to fill the public with pabulum so we won't ask the really hard questions and demand real answers from the nation's leadership. The window where a run at 10,604 may have closed, and with it, any chance of a major upside breakout for a long while to come.
Type A News Readers spot this stuff all the time for me. One of our oil sources reports this one:
Matt Simmons' new book is dynamite - and darned hard to refute because he's got more facts than a generation of political types. Thanks to a quick read of Simmons last night, I now have a pretty good idea why Iran hasn't been attacked by the West - because I read in Simmons that "Almost all of Iran's giant fields peaked long ago." [P. 298] Jim Kunstler - and a few "return to the farm" nutjobs like me - have seen the end of the "old way" for a long time. The only difference is we have started doing something about it. Like preparing for exurban living. A number of readers sent along the report that the Saudis are saying that they have lots of oil, but we find matt Simmons work compelling - and besides, what else would the Saudis say, "We're not going to be able to do this forever?" No way! - that would bring apocalypse now. Russian Type A Here we have Type A news of a different flavor - as in Hepatitis Type A which has forced more than 300 people to seek hospital assistance in Russia. The concern is official circles around the Kremlin is that this may be part of some kind of biological attack. Of course pandemics will be part of our future whether we like it or not, but whenever we see something like this, we think "Oh, oh, here's another little shove in that direction that someone who means us harm could use as a data point in plotting our downfall.
Couple this report with word that the bird flu is now making an appearance in Northwestern China and we have all the makings of a move in the trend line.
Type B News Type B news is the stuff that seems to drive the markets on a daily basis. For instance, this morning we see that the price of oil is up a bit based on refinery concerns. So when the market drops a bit, it will be blamed on oil rising, or the latest resignation news from AIG. Or, you can read about how the Bush administration has handed a HUGE bonus to the death merchants of the tobacco business by cutting their proposed penalties to about 1/10th of what had been proposed.
There are some stories in the day's run which will fall somewhere between Type A trend news and Type B daily drivers. For instance, what about this morning's report on the future of pension funds? Short term it has an impact of companies, especially the handful that still have pension obligations that they haven't offloaded or subverted through mergers and acquisitions. But the long term vision is that the disappearance of pension funds is like the long term disappearance of retirement funding in general as we boomers bumble toward retirement thinking a "squander today, tomorrow we'll play" kind of mentality.
I reckon it's only a matter of time till some portion of the sheeple (the sleeple?) wake up to the idea that if they are investing in 401-K plans with a planned withdrawal date anything much past the end of this week, they are taking on a huge - and undisclosed - systemic risk. Why? Because my friend, if the best pension brains in the world can't keep a fund solvent, why should the part time investor relying on a commission-based system expect to beat the rest of the pack? Yeah, I know, the mantra is "Buy and hold"." But the odds seem to lengthen daily that you'll have to hold till you've been dead another lifetime before the markets will come back after what we see on the horizon.
Naturally, not everyone has my pessimistic take on things. One astute reader suggests:
All of which is true in a medium term where nothing goes off the rails. However, the fundamental assumption is that when a 401-K participant wants to trade some investment paper for spendable FeRN's (federal reserve notes) they will get something of greater value than what they put in. If the Dow shoots up, and inflation is modest, it might be a winning bet. But consider how a 401-K would have performed if you had continued to contribute through the mid 1920's and through the crash of 1929. How would you get your investment back in 1933? Especially if a big portion were contributed to the plan at 1928 - 1929 prices. Hence, there's systemic risk beyond the control of the individual investor, as I see it. The market could be squarely on its backside. But the point is well taken.
Markets are all about growth. With resources destroyed or consumed, and the value of "information" in an "information economy" predicated on people having money to spend, it becomes clear that at some point along the road to debt saturation, the house of cards will blow over. Speaking of which, our resident fractal whiz offers this line of thinking:
I'm trying to talk Lammert into writing a lay introduction to fractal market analysis with lots of charts and such. It's a really cool "other way" to look at things, and when taken with an aspirin, Elliott Wave and candlestick charts, is just another forecasting tool for those who want to play "catch falling knives" in the last days of the Street. A few other items: German court reject al Qaeda terror claim. And in Kenya, four men accused of al Qaeda connections in a hotel bombing have been acquitted. Gee, no wonder there is such a push for extra-legal handling of such charges - they seem not to be standing up in court. Say, you don't think some of this is manufactured to stir up fear and embed compliance in the population, do you? Our greatest fear continues to be that when a combination of falling confidence ratings in government, an obvious cliff for the financial interests, and a dead-end economy all add up, at some point, there's an actual incentive for the reigning powers to either allow or create an event of some horrific magnitude to prove that our freedoms must be stolen. That's not paranoia, that's strategic planning by people desperate to seize and hold power illegally. Or have you forgotten the vote count stories so soon? It doesn't matter - we've built our fortress, thanks. Ya'll just have fun when the oil runs out - and food and energy go with it. You do realize that oil doesn't have to run out, all it will take is a failure to increase and the system is toast.. Type C News This is the pabulum stuff that makes up perhaps 70% of the average American's news diet. Weather and such is another 15-20%.
So for another day, at some personal risk to reputation, your local nutjob offers this finely honed bit of advice: "Have a nice day and if you can't be short, be out...."
Wednesday 10,604 Barrier Today? Although the economic picture is fundamentally little different than last week, the guidance this morning from Texas Instruments may be enough to whip the market into enough froth to tackle the significant resistance at 10,604 today. When we see disorganized comments from the Fed and too much money pumped into the system like yesterday's action, we're reminded - as with a sledge hammer - that the market started the year at 10,783.75 on the Dow so anything short of that (plus something for inflation/purchasing power theft through inflation) is a loss. Still, for the Main Stream Media (MSM) it's a one bullet talking point that I expect will hype the NASDAQ at the open. Doesn't talk about the 25,000 being axed at GM, but you saw in yesterday's action the fact that Wall Street doesn't care about workers - it cares about fat - as in fat director/manager compensation and fat profits even if it runs counter to the interests of the US worker.
I was drop jawed by the comments of Mr. Bubbles yesterday when he talked about having an inverted yield curve with no ill effects. Nevertheless, those real economists at the Royal Bank of Scotland are a little less gleeful today in their outlook for consumer spending - and we admire their intellectual honesty.
Forsake Science for Spin So how is it the Bush administration can get global warming so terribly wrong? Answer: Tweak the science to fit the policy, instead of the other way around reports the Washington Post in this morning's editions.
Consumer Scramble There must not be much on television that appeals to the people of Johns Island, South Carolina, as we read a report about a brawl over a single package of cigarettes. This is an amazing tale because of what we see coming later on this year on a couple of fronts. Let me explain.
Amazon sent me a note last night that my copy of Matt Simmons' new book, Twilight in the Desert, which explains how the world oil situation is about to blow up, has finally been shipped. Most consumers seem pretty complacent about oil prices now (and we will top off our propane tank at the ranch shortly) because the SPR (Strategic Petroleum Reserve) is back to about full and gas is $2.50 here in L.A.
But it's not likely to last very long - in fact, word I have gotten from two loyal readers who are well connected in the Louisiana and Texas Oil Patch tell me the big crunch will come with the fall heating oil season. And that, of course, assumes a normal summer and no weather problems in the Gulf which is still going through clean up from last year's named storms. This year the official expectation is for 12-15 named storms and the web bots keep talking about massive destruction of the US food supply by flooding of some time later this year.
Now couple this less than rosy view with the word out in the past couple of days that the Australian Drought of 2005 is killing grain production in Oz. Down a whopping 29%.
The main oil pipeline in the north of Iraq has been bombed again - bringing back to mind the question "What are we fighting for again?" in that zone.
Now back to the cigarette story: If people will brawl in semi-rural Johns Island SC for a pack of smokes, tell me what the major inner city portion of America will look like in a year, or less, as food heads skywards along with energy prices as the reality of Peak Oil jitters through the marketplace.
Bolivia Turmoil You will find a number of references in our recent works about the problems of Bolivia. Here's a country with some natural gas resources and going through all kinds of turmoil as the congress there attempts to pick a new president. Essentially, the people who live there want the country to nationalize its natural energy resources, while the corporatists in the region can hardly wait to get their hands on it at cut rate prices and without compensating the locals for their fair share.
This is all part of what I've labeled the Manufacturer's Resource Wars which is as good a general term as I could figure for wars between the have and the "have not" countries over resources which include mostly oil, but which will cover food, too, in the not-to-distant future.
Brazil, meantime, is a bit of a mixed case. We see a president in trouble there, but wonder how much of the battling is over alleged corruption or the reported planned release of UFO documents and such - not to mention all that farm land being burned out of the Amazon. (The one that's not a dotcom, silly!)
Global Weather Things have been about perfect here in Burbank lately, mid 70's and lows in the high 50's/ We are seeing the odd anomaly here and there, however. For example, we don't know how often we get June frost warnings in Northeast California and south central Oregon. And you saw the first-EVER snow reported in Somalia last week, right? With the weather operating in such a strange way, we don't like to think about the web bot forecasts of major flooding in the Midwest this summer, but the climate bomb is doing more than just ticking, it appears.
It's not just Oz crops at risk, so we continue our slow accumulation of food stores.
The Beauty of Politics Check out who's looking at running for Russia's Upper House: A former Miss Universe. And we get Hillary? (fill in your own comment here...)
Tuesday The Big Whack at GM: 25,000 to get Axed GM is trying every way it can to cut expenses, stay in business, and turn out a good product. One solution they floated at today's shareholder meeting: They are planning to lay off 25,000 people over the next three years. While this is a "biggie" today - and it doesn't do anything for the White House hype about job creation which you probably already see through - it's a natural outcome of Peak Oil - and we'll go so far as to say this will only be the tip of the iceberg.
The US is in the midst of what will turn into a horrible and gut wrenching experience for millions of people as economic laws are played out destroying pensions, wiping out whole classes of manufacturing, and causing ruin for families. All because in our view, we entered a Second Great Depression in the US when the dotcom bubble burst - and we have been putting off paying the piper by reducing debt - and so as it all unfolds now it will be 10-times (or more) worse than it would have had to be. Thank the Big Lie corporatists with their talk of free trade (without purchasing power wage parity) and the easy money gang at the Fed. Speaking of which...
Greenspan Suspends Laws of Economics Just because we see an inverted yield curve coming, doesn't mean we should expect a slowdown. At least that's what's going through Allan Greenspan's thinking. OK, let me put it to you this way: This means one of two possibilities: Either a) Greenspan has suspended some of the basic principals of economics or b) He can say that because the markets are so jiggered by interventions! Either way, it stinks.
Data Boner Oh yeah, this time it is Citigroup which says that 3.9 million customer data files may be compromised. It all depends on whether the tapes containing the personal information are found. Story. Basically, tapes with customer recordings including social security numbers and payment histories were sent via UPS and they somehow got lost in shipping. Let's see: Citigroup, Choicepoint, Bank of America, Wachovia...who's next?
The Not so High Court The big decision that came from the US Supreme Court on Monday was a decision hat basically allows the feds to but people for pot, even if it is for a major illness and their use is legal under state laws. The problem is about feds doing a power grab from states - and California's attorney general says not to worry - yet. So for now, people with marijuana relieved illnesses will likely continue to use the medication of choice - and sadly, we all know that what's behind this is the off track war on drugs teamed up with the pharmaceutical industry, no doubt egged on by the boozeries, who want their respective turf enforced. Even at some considerable cost in human suffering.
Potty Parity - or Reverse Discrimination? new York has become one of America's holiest cities with the passage of Mayor Bloomberg's plan to require two toilets for women for every one afforded men. While we applaud the action to install more women's facilities, we have to wonder about the underlying issue as even in places where women have more facilities than men, I've seen women disappear for what seems like hours when there are no lines.... (I'm sure that'll flush out some comments.)
Crime Stats We read this morning how the FBI is reporting that violent crime has been falling, murder rates and such. Then we read about actor Russell Crowe being busted for allegedly hitting a hotel employee with a phone. We assume he'll show up in next year's stats.
CO2 Worries More talk about carbon dioxide levels rising from scientists, yet certain politicians, like you-know-who, say they are not sure about whether the concerns are justified.
Unless We Rally Strongly We see a possibility of equities running into serious trouble this fall, if not sooner than that - like over the summer. But it's not just equities. Fractalist G. Lammert offers some points to ponder:
Blow Whistle
Monday It's a Good Police State Over the weekend I must have received two dozen copies of the year-old story about Julian Robertson's interview with Ron Insana of CNBC: http://www.conspiracyplanet.com/ I got to thinking about Robertson's losses at Tiger - which had been one of the best of the hedge funds until Robertson's final year. He reportedly left trading saying he felt like he didn't understand the markets much any more.
Now, scene change to George playing options while working for a software company three years ago and having his behind handed to him when the markets suddenly stopped making sense to me, too.
None of this would be particularly bothersome had I not received a confidential letter from a very astute investment advisor down in Florida who says he has never been so deep in cash before.
Admittedly three people does not a trend make. (Robertson, me, and advisor in Florida if you haven't hit Starbucks this morning.) Yet when you look at the longer term picture as we do over on our www.peoplenomics.com weekly report, there's one haunting graph that is updated every so often including this weekend and it demands your attention. It's the one that shows whether the public or the machine-drive program trades are where market churn is coming from:
A part of me says "Be very afraid when the government can appropriate your home away from your ownership without compensation as they can under the Patriot Act." But another part of me says "Hey. the economy has been held together - just because you lost a few dollars George (Is $50K a few??) because the options market was severely impacted by the manipulations, it has allowed the country to generally keep on keeping on - so in that sense, it's a GOOD police state, right?"
Part of me thinks the intent of those who intervene in markets is benevolent - or is a high practice of economic warfare with an unseen enemy who we will defeat if we just keep on spending and don't notice how the volatility index (^VIX) has gone about as close to flat line as a week dead corpse. Didn't the intervention seem to get really serious after 9/11? Nevertheless, we wonder deep down inside if a Dow on cruise control is an investment so much as keeping up appearances.
Lest you think the term "police state" too harsh, go reread the provisions of House Resolution 1528 again. If you're not keeping track, Patriot 1 brought us undisclosed detention in places like Cuba, Patriot 2 got rid of judicial overview of what surveillance, search, and seizure, and now with 1528 a good part of the "tips" program without the public backlash. So no, the term may be frightening, but it is not misused here.
Life Insurance Not to Write With this kind of mindset, I am still have dreams of returning to the ranch and opening up an insurance business. Should this pipe dream ever threaten to become real, I've been keeping a list of people NOT to write life insurance policies for. Let me share it with you: |
Saturday, June 11, 2005 06:25
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