"Where's that Crash?"

A look at a 5-day chart  shows some (to me) surprising strength in the market, except as I explained in yesterday's column, the market is likely valued more like a tenement building than a financial asset.

I'll remind anyone still interested, that I don't trade stocks or options anymore.  I bought gold and silver and with the dollar taking out 2-year lows this week, that's been a sweet decision.  Note that last Friday, Kitco reports gold at $673.80 and at the close of business Friday of this week, it was $684.80.

For the math impaired, or those waiting for the coffee to kick in, that's a 1.6% gain for the week.

Fair being fair, and all, the Dow closed this week at 12,612.13, while the previous week closed at 12,560.83.  Hmmm... A 4/10th's of one percent gain (Dow) or a 1.6% gain (gold). 

Golly, this is a tough investment decision, huh?  My point was - and continues to be - that if the Dow can't pop over the barrier at 12,786.64 soon (and start marching smartly upward from there) then we are in technical failure land and look out below.  But, again, I don't trade this stuff anymore.  That was 10-years ago's boat and it's done sailed.

On an inflation-adjusted basis, the Dow is still waaaaaaaay behind its purchasing power peak posted in early 2000.

At least one person is dead and the damage estimates continue to climb as that big spring storm continues to work its way into the Midwest from the Plains today.  And from there, the Northeast and deep South tomorrow.

OK, the weather's bad - and the economic consequences are what?

Well, we note that there is already "Heavy crop losses reported in Southeast" - and the additional crapola heading up the Ohio Valley later today is likely to be quite hard on the grain - corn in particular - and as we reported earlier this week - the strategic question for farmers becomes one of "will there be enough seed, regardless of price, to get the country to anywhere near the kind of harvest levels that a high fructose corn syrup hooked chemical food supply needs, not to mention the heavily pimped (by the politicos) switcheroo to ethanol?  Ha!  Nope likely, as I read it.

Meantime, North Carolina's governor Mike Easley wants the US Farm Service Agency to get rolling and get damage reports out faster, and I suspect that when they do come out, and the outlooks for harvests are dramatically reduced, you'll see something approaching panic in the market.

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I look back at the situation in America in the 1920's and 1930's.  We had a very plentiful harvest in the late 1920's, but when the country rolled into what could have maybe been just a severe recession, it was kicked over, as my friend Robin Landry notes, into a Depression because of the Dust Bowl and crop failures of the 1930's.  To sum up: A recession turns into a Depression when you get a serious drought. 

We may have a chance to extend that economic lesson a bit further as this year may well prove to be the one where we'll have a series of floods.

Say what you will about the www.halfpasthuman.com reports, just go back and read what we reported from the future-predictive linguistics web bot forecast about floods this Spring that I reported some time back.  How far back, you're wondering?  In January, well ahead of current (and yet to come) events I hinted at what was coming:

"As events would have it, one of our readers, who also subscribes to the web bot reports at www.halfpasthuman.com , which has been warning of Red River/ Mississippi flooding in early 2007 for some time (with linguistics that go to seriously ugly events like a wall of water and mud - suggestive of a dam break, or some such yet to arrive), sent us an email saying thanks for letting him know what was coming a month + in advance:"

I won't beat this to death (a green death, by the way), but maybe we should revisit the topic on Monday or next week when other people catch up with the crop damage - higher prices for food are gonna kill us when they show up with the $4-$5 gas this summer - meme.  As one reader notes:

"Hi, George.

I thought I would send a quick note after reading the section on higher prices relative to the scarcity of seed corn. I have a number of friends who are farmers and what I'm hearing from them is that many of the people they know are reconsidering whether or not to plant corn because of all the late snow and cold weather. Some who would have planted corn are shifting to soybeans because of the shorter maturity date. It's been hard this Spring to get out in the fields.

The cost of fertilizer and other chemicals isn't helping any, either."

A reader notes that "You're being less than honest on the seed corn issue! It never cost five dollars a bag, but since you won't tell your readers this, you are implying that the stuff is now up over thirty times. Preposterous."  .

No, I don't think 30 times, but there's no doubt about prices to the farmer for feed.  My local price for cracked corn that I have paid for the chickens has gone from $6.50 to $8.75 - but that's feed corn, not human quality seed.  And that's (34%) in 4 1/2 months, so a doubling to me as a producer might easily be seen about doubling in a year.

I don't think I have to tell you that doubles the cost of meat, right?

Another says not only are there spot shortages but gas stations closing, too:

"George, I haven't traveled too far from home lately, but in the suburbs of Chicago, I see about a third of our gas stations closing. Major brands as well as small mom and pop. I think a lot of this is due to the high expense of continually updating their stations. The fact they can't make enough money to continue. My point is, there is a lot less gas stations open around here and a lot less inventory in the ground. I keep asking many people if they notice and most don't. I think any kind of delivery problem with gas and the Chicago area would be out in a day or two. Has anyone seen this in other parts of the country, and is anyone else concerned."

And over here, we have our "site of the week" - the Mortgage Lender Implode-O-Meter".  56 lenders gone as of today since late 2006.

Oh that...yeah, that.  The Denver Post summarizes the Bush administration's flagrant atytempts to hide the truth from the public record by using the republicorps' in-house email system, not the one you and I paid for them to use as taxpayers.  I guess anyone can misplace 5-millioni emails, huh?  Specially given that they really belong to the public... Am I the only one feeling "sleaze factor"?

This is the same sized "hide the sausage" as the fed cutting out it's M-3 reports, may they RIP 2006.

Speaking of which, Bart over at www.nowandfutures.com has just posted the latest M-3b (.999 correlated to the M3 which the fed hides for fear of the truth leaking).  It shows inflation is running at a a whopping 12% now!  See why we hold gold?  Duh...

The Guardian report picked up in the Taipei Times says it all: "Marine predators are on the verge of extinction, yet the fishing industry is ripping the environment to shreds - and with impunity".

---

And when someone from Iraq wants to come to the US and lecture about the soaring cancer rates there (think depleted uranium for starters) he's persona no grata and going to Canada instead.

Looks like a "gunpoint upgrade" as Windows XP is being retired in 2008.  This sort of forces me to a decision I've been reluctant to make - next computer I get will be Linux/open Source and OpenOffice.  Besides that, there's the virus issues and such, too...  PC World says "Early 2008"  Which I guess means I better hurry up and 179 my Office 2007 upgrade, huh?

Update: Readers Slumbering On...

Slumlord Economics

The analog in macro economics to the apartment owners association is, of course, the G7 which meets this weekend as (and I hinted at that earlier this week) the row over Paul Wolfowar, er, I mean Wolfowitz,  at World Bank continues to deepen.

The outlook for the rest of our hypothetical apartment owners association meeting - and the sadly none to hypothetical G7 meeting this weekend, is that it all continues as a battle of words, with an occasional "free one month rent" sign (or a competitive change in currency exchange rates to encourage more investment here or there) punctuating events.

Until, that is, the Fire Marshal shows up at your building one day and says "Oh, by the way, this is a death trap of a building and you're going to have to clean up your act.  The role of Fire Marshal is played by China, and that's why helicopter Ben and Hank Paulson have been going to China lately - to ply the Fire Marshal with good will.  Clintonistas, in a previous time gave the Fire Marshal outright 'gifts' like American supercomputer technology to be nice to us when the building was already looking shabby.

The Fire Marshal has been getting complaints about the tenement and the power and influence of the Fire Department is growing.  Check the headline that China is now the world's number 2 exporter, making the US #3 if you're as caffeine jittered as me this morning.  Is it the coffee or fear that quakes you?  Let's see how good the Balance of Trade can be spun this morning, shall we?  Maybe the Fire Marshal won't show up this spring and declare the US economy to be a tenement and we can keep raking in the high standard of living, by just printing money when we feel like it, a while longer.

Alan Stang figures it this way: A collapse of purchasing power will drive us into the arms of the Powers That Be planned North American Union - which would tear down the borders with Mexico and Canada. And bring in the America that Jerome Corsi has been writing about.  Gee, how convenience, huh? Especially if you've bought up a retirement home in South America lately.   

Strangely, isn't it, how China playing Fire Marshal to Washington's financial slumlords might be a good thing for patriots.  Tre bizzarre. I would have never believed it.

(That's BOT as in balance of trade, not 'bot' as in future predicting linguistic shift from the web bot project at www.halfpasthuman.com, although as their unofficial pimp, I should note that subscription to the next linguistic run are open,...but I digress)

OK, here's one of the stories which will make the G7-meisters twitch or smile, depending on how each reads it:

"Goods and Services

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total February exports of $124.0 billion and imports of $182.4 billion resulted in a goods and services deficit of $58.4 billion, compared with $58.9 billion in January, revised. February exports were $2.8 billion less than January exports of $126.8 billion. February imports were $3.2 billion less than January imports of $185.7 billion.

In February, the goods deficit decreased $0.7 billion from January to $64.5 billion, and the services surplus decreased $0.3 billion to $6.0 billion. Exports of goods decreased $2.6 billion to $88.4 billion, and imports of goods decreased $3.3 billion to $152.9 billion. Exports of services decreased $0.2 billion to $35.6 billion, and imports of services increased $0.1 billion to $29.5 billion.

In February, the goods and services deficit was down $4.5 billion from February 2006. Exports were up $10.5 billion, or 9.3 percent, and imports were up $6.1 billion, or 3.4 percent.

Goods

The January to February change in exports of goods reflected decreases in capital goods ($2.2 billion); industrial supplies and materials ($0.6 billion); consumer goods ($0.3 billion); and other goods ($0.1 billion). An increase occurred in automotive vehicles, parts, and engines ($0.3 billion). Foods, feeds, and beverages were virtually unchanged.

The January to February change in imports of goods reflected decreases in industrial supplies and materials ($3.9 billion); capital goods ($0.4 billion); and automotive vehicles, parts, and engines ($0.1 billion). An increase occurred in consumer goods ($1.1 billion). Foods, feeds, and beverages and other goods were virtually unchanged.

The February 2006 to February 2007 change in exports of goods reflected increases in industrial supplies and materials ($2.8 billion); capital goods ($1.7 billion); consumer goods ($1.4 billion); foods, feeds, and beverages ($1.2 billion); other goods ($0.7 billion); and automotive vehicles, parts, and engines ($0.3 billion).

The February 2006 to February 2007 change in imports of goods reflected increases in consumer goods ($5.3 billion); capital goods ($3.8 billion); foods, feeds, and beverages ($0.7 billion); and other goods ($0.4 billion). Decreases occurred in industrial supplies and materials ($5.6 billion) and automotive vehicles, parts, and engines ($0.2 billion).

Services

Services exports decreased $0.2 billion from January to February. The decrease was mostly accounted for by decreases in travel and other transportation (which includes freight and port services). Changes in other categories of services exports were small and nearly offsetting.

Services imports increased $0.1 billion from January to February. An increase in other private services (which includes items such as business, professional, and technical services, insurance services, and financial services), and small increases in several other categories, were partly offset by a decrease in other transportation.

From February 2006 to February 2007, services exports increased $2.6 billion. The largest increases were in other private services ($1.7 billion), travel ($0.5 billion), and royalties and license fees ($0.4 billion).

From February 2006 to February 2007, services imports increased $1.8 billion. The largest increases were in other private services ($1.3 billion) and travel ($0.5 billion).

Goods and Services Moving Average

For the three months ending in February, exports of goods and services averaged $125.4 billion, while imports of goods and services averaged $184.9 billion, resulting in an average trade deficit of $59.6 billion. For the three months ending in January, the average trade deficit was $59.5 billion, reflecting average exports of $125.6 billion and average imports of $185.1 billion.

How will the headlines spin this? "Trade Deficit Falls for a Second Month" headlines the AP this morning. 

Such happy-talk defies logic. The fact is that there were 31 days in January, and so the "daily burn rate" which is how I look at things, being a refugee corporate operations guy, is $1.9 billion per day for January.  The month of February was how many days?  28 Did you say?  Then that makes the daily burn rate $2,085,714,285,72 a day.

Anyone who can't think this through without help from the People's Economist should go back to "reality" TV and not be disturbed.  Just keep buying things and pretend things like screaming food price increases and gasoline nearly $5 coming this summer - extrapolating recent events - are just a figment of my overly active imagination.  Not.

Despite the oh fishy - I mean offishal word on the balance of trade, I did not steer you wrong about where grain prices are going based on the green death from the big Midwest storm a week or so back.  This reader note attests to my momentary encounter with financial sanity:

George,

I work for a large Farm Mutual Reinsurance company in the MidWest. It intrigued me to hear the prices that farmers are saying they have to pay for corn seed and other items. So, being the type of person that checks facts and figures, I decided while visiting a farm mutual in South East Iowa to see what the farmers there were saying...

First off, the gentleman who wrote in and stated that 50 pound bags of corn were going for around $150. was right on the money. The second statement he made stating that if farmers didn't already have their corn seed or at least have it ordered, probably wouldn't get it, was right on the money as well. My sources tell me that some farmers who already have it ordered may not get there's as well. Prices of corn commodities will start to climb this fall.

To make matters worse, with little corn seed to go around, that is less feed for the cattle and other livestock to eat.

Which brings us to my next point. With the Winter storm that swept the Upper Midwest on April 11th of this year (Yesterday for those who don't watch the news), most of the Alfalfa crop is lost, along with most of the fruit trees for the upper Midwest. That alfalfa is used as hay, to feed cattle and other livestock.

So, we will not only have a shortage of hay and corn, (there is your 'shortage' coming up again), it will drive the market cost on beef, pork and chicken to where some people will not be able to afford it. Which in turn will probably lead to rioting in some places.

Just a thought to cheer you up for planning ahead.

Please, if you reprint this and use my name, just use James.

I love your site, by the way.

Me too, except on days when I oversleep.

Reader 'Rick' is wondering what's happening to the world when teddy bears are wearing T-shirts saying "Nappy-Headed Ho".  Gee, let me think.  H,,,, Could is be that the world has lost its frigging collective subconscious mind?  Yah think?

Thursday April 12, 2007

Market Fundamentals

So, while Americans are about to be bent over at the gas pumps (again), we've got distracting stories like the Imus flap holding the public's attention.  Two people have just died in a protest to turn a third of Uganda's Mabira forest into a sugar plantation. And Americans are reading about Imus and the politicos (Hillary, Obama, Edwards, et all) are piling on.  Wiping out forests?  Killing protesters? Not a peep from 'em today on that.  I'm still mulling Arnold Schwarzenegger's "guiltless green" speech.  There's that color meme again!

Passing

More Bombs

Snootiness

Brainfood

Updated Links

So, what do Devvy Kidd, Stan and Holly Deyo, and End Times Report have in common?  I finally got around to updating my links page yesterday and these are just some of the fine sites that have be kind enough to mention and link to UrbanSurvival.

 

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Wednesday April 11, 2007

How Bad Can It Get?

While we're not sure how bad the situation can get in Iraq, the Red Cross out of Geneva has issued a report that essentially says thing are (and will) continue to worsen.  As if to underscore that, a female suicide bomber has killed 19 at an Iraqi police station overnight.

 

Next door, Iran's claims that it is now enriching uranium have not toned down the religious/civil strike in the simmering warfare between the Shiites and Sunnis - with analysts saying that Iran's approach to national "pr" is just fueling tensions all the more.

---

Off in the background, of course, the neocons (with the emphasis on "Cons") are still pimping around the idea of bombing Iran, claiming that if the US (our Israel) doesn't make a move soon, the whole region will turn into a strategic nightmare for America.  As the Global Research folks ask in a headline this week, "Can Neoconservative belligerent dogmatism be haled by the Empire's Realists?"

 

Frankly, we wouldn't bet on it - and it's with a lot of anticipation that we're looking forward to the next web bot series (the future predictive linguistics from www.halfpasthuman.com ) so we can get a clearer bead on how all this is supposed to roll out on the telly over the coming months.

---

And speaking of neocons, we read that early war promoter (and advocate of preemptive strikes)  turned World Bank boss Paul "Wolfowitz accepts heat in flap over friend's job".

 

Also of interest is one of federal prosecutor Patrick Fitzgerald's projects where "Mistrial motions denied at Conrad Black trial."

---

The whole Middle East situation continues to revolve around oil.  The academic argument of preemption from Wolfowitz and his thought-minions (which we view as something akin to street thug justification of ungentlemanly conduct), continues to reap a bloody reward which seems likely (linguistically) to be headed for an even larger meltdown immediately ahead.

 

It's already melting down at the gas pumps and Crude is holding over $60 as US gasoline inventories have are expected to drop for a 9th week running.  Elaine came home from a hard day of shopping Tuesday to divulge that filling up the car took $47.53 and that mid-grade gas was running $2.80 a gallon.

 

One other oil note:  Remember about 3-years ago when investors were "Shell shocked" to learn Shell's reserves of oil had been largely overstated?  A settlement with shareholders of $352.6 million has been reached in that case.

---

Bombings in Algiers today underscore the point that by becoming "preemptive" in our foreign policy, we're just pulling future events faster into the present.  So of like advertising pulls future demand forward...

---

Clearly, the fellow in the White House has not gotten the straight scoop from his advisors since before day one - and many of the advisors had clear Middle East bias from PNAC - and the spinning/Niger Uranium, and false WMD claims - plus seizing on the 9/11 events to stampede America into a neocon preemptive disaster - it's all a national nightmare in slow motion.  Yet, despite the death tols (which includes our national financial solvency) the same bad actors are telling the Boss that "things are getting better"  - so the Boss parrots that to the cameras.  "Iraq reinforcements working" declares the Chicago Trib this morning.

 

We'll just file the whole pile of reports today under "building cognitive dissonance" and move on to other items...such as the pending "Terra Intrudes" meme which our time guides forecast.

 

Globalist Dreams

Still, before we move on, an absolutely a first-rate read very much on point: Jerome Corsi's piece "Globalists envision another 9/11 crisis as great for creating climate for North American Union. 

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With so much about corporatist agendas making the headlines now, we're expecting to see more of a crackdown on the internet in the future.  Specifically, watch the phrase "citizen journalists" because the mainstream/establishment/corpmedia will try to maintain their own primacy in the field of reporting.  You can see the groundwork being laid for journalism licensing or blog licensing already if you are tuned in to it.

 

"But what about the Constitution and the First Amendment?" you're asking yourself.

 

Oh, you mean the part that says:

'Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."

Are you nuts?  We can't afford that kind of genuine FREEDOM being passed around on the Internet, for heaven's sake.  There's a Global War on Terror going, don'tcha know and if you're not with us, you're against us, and we have mislabeled Patriot Acts to keep you in line if you get too vocal about things. License those journalists!  Put critics on no-fly lists! 

 

Vee vill hff order, jah?

 

While the debate is likely to be on citizen journalists, the real switcheroo is that the transition from citizen lawmakers is already complete.  Why isn't someone talking about licensing politicians (as in 'to steal') which is what many do once in office, anyway?

 

Volcano Now, Flooding to Come

We've been watching the massive volcano on Reunion Island with some interest.  Several reasons: 1) It's HUGE and 2) it's being buried by the mainstream media.  Not enough live video from the scene, I'd imagine.  Yup.  The world could be ending, but if the news drones can't get their live feeds going, the event's going nowhere.

 

Called by the Taipei Times "eruption of the century" we're anxiously awaiting the Western Media's discovery that something bigger than St. Helens (if I read the foreign reports right) is going on.

 

Picking up our convenient time libretto, we're reminds that about the time the plume of the big April volcano circles the earth completely (about any time now) the region where the massive flooding is to come this spring should be starting to feel rain which will lead to more rain and then to the flooding and displacement of people..

 

Although there has been some flooding in Manitoba around Selkirk, and yes, there's a Red River up there (one of the time monk's geographical markers), we continue to await flooding of the Mississippi and Red River in the US as those were the hints from the language shift some months back.

 

So we will continue eyeing the national precipitation maps from NOAA and wonder "Is the rain in the Midwest today the beginning of the big rain that goes on longer than the Energizer Bunny?" It would be nice of the time monks would be wrong on some of their Big Picture stuff, but they seem to rarely be.  Still, the volcano0 was early (was supposed to be more in the middle of April, not the beginning) so if we see a big volcano (with live feeds) develop in the next week or so (closer to this weekend) then you'd want to get the umbrella and maybe lifeboats ready.

 

Housing Crash

Housing crash?  Oh, you mean that sequence of events that just lead D.R. Horton to report sales in its second quarter dropped 37 percent nationally led by bigger declines in California and the Southwest?

 

Tisk, tisk. Where have you been?  This is the Second Depression, so you'd better be saying "Good Times are Just Ahead" - even though the International Monetary Fund says er...uh...subprime woes may spread and the dollar fall (more).  I think it's illegal under the Patriot Act (one of them) to say anything bad about the economy.  Naturally, I assiduously avoid doing so, and I persist in my wild optimism about the economy and report it daily.

 

It's a trader's paradise of shorting opportunities.  There.  Positive enough?

 

For sure, you don't want to read "Doomsday for the Greenback" by Michael Whitney, if you're a dyed-in-the-wool "Dow's going to 40,000" true believer o f the corpgov mantra.  There's that cognitive dissonance again.

 

My friend (although unrepentant deflationist) Jas Jain sends this:

“Moreover, bankers may, at some times and in some countries, fail to be up to the mark comparatively [emphasized]: that is to say, tradition and standards may be absent to such a degree that practically anyone, however lacking in aptitude and training, can drift into the banking business, find customers, and deal with them according to his own ideas.” – Joseph Schumpeter in Business Cycles

FWC: Risky loans - alive and well

And why not! When one has the authority to make risky loans with no risk to himself, or herself, what else is to be expected? This would prove to be the undoing of the American financial system.

Jas

-x-x-x-x-x-x-x-x-x-x-x-

http://money.cnn.com/2007/04/10/real_estate/alta_alive.moneymag/ 

"Risky loans - alive and well Despite the subprime meltdown, many lenders are still finding a place for exotic mortgages."

How on earth can anyone be surprised by what's going on in the housing bubble aftermath wonders Dr. Irwin Kellner over at MarketWatch this week.  Certainly not readers of this site.  Or, as one of my colleagues notes, anyone who has seen a graph of the history of housing prices which was published last summer in the NY Times.

 

No Mo Mogambo

Sad email came in yesterday:

April 10, 2002

Dear erstwhile recipients of the Mogambo Guru newsletter,

DailyReckoning.com has informed me that "we're changing our syndication publishing format."

Thus and henceforth, I regret to tell you that I will not be sending the regrettable Mogambo Guru newsletter to you anymore.

But if you are still interested in posting it because your publishing standards are so low, or you just feel sorry for me, or some other reason that I can only wonder about and recoil in horror, you will still be able to "pick it up" from an "RSS feed", whatever in the hell that is, from, I assume DailyReckoning.com.

It's a big change! And I want to thank you all very, very much for the years of deeming the MoGu as worthy of your kind attention by allowing me to send it directly to you, however demeaning and humiliating it ultimately was for you, although you just don't realize it yet.

See you at an RSS feed!

-Mogambo

On the Brighter Side

My son, busily proving that 'the nut doesn't fall far from the tree' has come up with a new way to sell goods on eBay:  Sexy models. "Dad!  There's a business model in here somewhere, I just know it!"

 

I'll agree when Playboy does a "girls of eBay ads" spread.

 

He also advised me to go to Google Maps and click on driving directions and then put in New York, New York to Paris, France.

 

":Read line 23, you'll LYAO," he offered.  Ok, let me see....

"22.  Turn right at Long Wharf.  ("hmmm...")

 23. Swim across the Atlantic Ocean 3,462 miles"

Love Google.

 

---

Tuesday April 10, 2007

Gold Popping, Buck Dropping

Tomorrow, we get another dose of The Mogambo Guru's WAFD ("we're all freakin' doomed') outlook for people who have acquired more debt that gold.  And, no doubt, he will gleefully point out (as we've long predicted, too) that as the US dollar fades into the muck and mire, gold will comparatively remain one of the best investments in the world.  Note it is wandering back UP to the $700 kind of range while the dollar today is hovering weakly at the 0.745 Euro area.  Our own adventure into silver at about the $7 level some 19 months back has rewarded us with an intraday price just over $14 according to Kitco.

---

Several readers have asked me to explain why the stock market has been going up - not down - in the face of the currency weakness.  The answer is that the market, in my view, is being buoyed up by the same force that make income producing real estate climb when inflation is running rampant.

 

If you have an apartment house that is paying for itself, and you have say 20 percent inflation come along, the value of the income producing property can appreciate nicely because it's paying its own way in some measure.  The same thinking holds for the Dow and the other US averages.  The "price" gets bid up, even though on an inflation-adjusted basis the purchasing power is either barely holding or losing slightly.

 

Bart - over at www.nowandfutures.com has penciled real (reconstructed 5-9's correlated) M-3 at around 11.6% inflation currently.  Look what that will do to a couple of numbers is you run them out a year: The Dow should go to 14,027, gold to $749, and the price of milk will go up about 35¢.  Your house value will go up, but because we're going to have to pay people overseas more to buy this flood of paper, interest rates will have to go up at least a half point, and maybe as much as 1.5% from current rates.

 

All of which will kick more of the subprime borrowers when they're down and leave us in a condition my little sister sums up neatly with "If all is not lost, where is it?" thinking.

 

Off on the sidelines, the US is filing a trade case against China over piracy, while apparently US firms McDonalds and KFC have been cleared of anti-union charges in China.

 

But the real action is "US Dollar Declines" or, as the time monks at www.halfpasthuman.com  remind me, another form of the 'green death' meme.

 

Criticize and Walk

While it has become almost vogue to criticize the administration using terms like Nazis and fascists, especially since facts and truth around 9/11 (and the "pulling of WTC 7") are in short supply,  we've been much more calm about the levels of rhetoric surrounding the war and view it not so much as the "all time power grab" by corporate/government interests (which admittedly, it does look like) but more as a collision of conflicted interests which result from globalization reaching its limits about the same time that we're running out of resources, corporations are desperate and will do anything to keep their failing bottom lines alive, while at the same time the key resource - energy - seems to be falling behind. All kinds of interests are trying to "buy" their vision of the future, and the spineless wonders in CONgress have managed to sandbag real lobbying reform as the bids go up.

 

Nevertheless, a report that a "Professor who criticized Bush told 'added to terrorist 'no-fly' list" has given us cause to rethink our moderate views.  When a top Constitutional scholar from Princeton, let alone one who served as a Korea-era Marine and then 19-years of Reserves, can't board an aircraft, it's a reminder that no, there's are more SFU* at DHS than we thought.  (*The 'S" means seriously and you oughta be able to figure out the rest.)

 

Corporate Labor Program for Mexicans

Meantime, we read about George Bush going to the Arizona border with Mexico yesterday to try and "sell" his ideas on immigration reform.  The cornerstone of the plan is, according to one report:

"The plan would grant work visas to undocumented immigrants but require them to return home and pay hefty fines to become legal U.S. residents. They could apply for three-year work visas, dubbed "Z" visas, which would be renewable indefinitely but cost $3,500 each time. "

Trying to look at the situation through "money-tinted glasses" it's clear that the US has a high reliance on the 12-million Mexicans who have come here looking for work that they can't find in their own country - and the reasons for that are a book-length topic.  In a symbiotic way, the illegals are keeping a lot of American agriculture working, as well as lots of meat processing plants and such, so anything that would really crack down on illegals would wreak havoc with the status quo including and especially the cost of living (always entertaining numbers) and industry's need for cheap labor.  As one reader reports:

Hi George, Today's Arizona Minute Man report stated: in 7 days of operations we have spotted 606 illegals...out of this the border patrol were able to detain 191. the Arizona Minute Men are working 35 to 38 miles INSIDE the border....with certain units of the National Guard and the Border Patrol between them and the border....and still they are seeing this amount of illegals...

It gives you an idea of just how great the flood of people coming across the border is......

There is more to the report but cannot send it on because of security precautions.... The numbers are enough to get you riled up....."

Indeed they do.  Seems to me that one of the fundamental responsibilities of the federal/central government under the Constitution is to protect our borders.  Sure, there was lots of "show time" in Yuma yesterday, but if more than 600 are spotted by Minutemen, I would have to put the "leakage" at about 4,000 per day along the whole of the border - or more - and with many "Other than Mexicans"  [OTM's] coming in, we have to wonder what kind of terrorist weaponry is coming in, besides?

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In the big economic equation of life, if consumers only have x number of dollars to spend, and as natural resources and energy take a bigger bite, the only way for standards of living to go is which way?  Down!  Short-term we read about McDonalds putting a penny-a-pound premium on Florida tomatoes to raise the living standards of migrant workers,

 

The McDonald's gesture is quite PC and all, but we have to wonder how much of that penny-a-pound will actually make it into the migrant worker's hands and how much will be skimmed off on the way down the financial foodchain by middlepersons?  We're all going there - declining lifestyles - and the farm workers just got there first - followed by the outsourcing victims in IT departments and such. And shortly Teamsters who will be displaced by Mexican semi drivers, no doubt. 

 

This oughta do marvels for US "productivity" numbers, huh? In the corporate dream land, productivity is 100% - and so is unemployment.  Except for shareholders, CEO's and boards of directors - who are busily backdating their options.

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Recognizing the Big Economic Equation in life, there is one other way to play this "World runs out of resources" game - and that's been exemplified by the latest play by the Sage of Omaha.  We see Warren Buffett is buying a big stake in Burlington Northern Santa Fe.
 

I expect what's going on in the mind of the Great Sage is that trains are something that can't be duplicated because there is sooooo much real estate involved - and more important - they have about the lowest cost per ton/mile of anything.  Aircraft are ridiculously inefficient compared with trains on an ton miles per gallon basis

 

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Monday April 9, 2007

One Week Till Tax Time

I love Monday's - especially when I am well rested, semi-alert, and facing many exciting projects - not the least of which is income taxes due in a week.  Things appear extremely clear today - possibly because I cleaned my glasses and have had more caffeine that usual - so I look at oncoming events with a Zen-like awareness punctuated by "Aha!" moments every so often. Some examples:

1. "Aha!"  You really can buy a house in Detroit cheaper than a pimped out new car.  Such has been the impact of the housing/subprime mortgage collapse on folks in the Motor City.

2. "Aha!" Hard to sell "global warming -we must all make sacrifices" when baseball games in the Midwest are being called by (of all things) snow.

3. "Aha!" There are publications that are beginning to sniff around the edges of the Bureau of Labor Statistics' cost of living numbers.  The Martha's Vineyard Gazette reports the local cost of living is running about 60% above the national average. Big outfits like Microsoft are expanding in places like Fargo North Dakota because of its lower cost of living.

Of course the snow this weekend (a trace here, too) means that food prices will almost certainly go up faster-than-expected later this year, and as this morning's Wall St. Journal online headlines it: "Crop Prices Soar, Pushing up Cost of Food Globally".  This, of course, comes as no surprise to readers of UrbanSurvival, who send in anecdotal reports like this one - based on the heads up we've been giving about "encounters with scarcity" to come this year based on the linguistic forecasts of HalfPastHuman.com...

"I was talking with my uncle last evening about the loss of the young corn crops that was mentioned on your site on Friday.

Uncle, who has been farming for 75 years, was telling me that a 50 lb. bag of seed corn is currently selling for $100 to $140.

This is a massive increase.

Last year, I bought a 50 lb. bag for $5.

Not only has the price skyrocketed, Uncle said that he was at the feed store on Wednesday and the owner told him "If you don't already have it ordered, you won't get any corn seed this year."

Also, Uncle tells me, fertilizer has jumped to $350 to $400 per ton.

Just thought I would pass along the information."

Naturally, this won't show up any time soon in "offishall" numbers because it's not what government does (we'll get started on that in a minute).

 

Speaking of the linguistics fellows - known as the time monks - they have announced plans for a new data gathering run which got underway yesterday - because of the really choppy conditions coming through the balance of the year.  As we reported recently, the release of the British sailors by Iran likely represented the "emotional release" around the Iran/US conflict, but there's more coming there, was well as a ton of news about flooding in coming weeks, and in particular, the displacement of people part where up to 700,000 due to flooding.  Knowing that the handling of decimal points is problematic in modelspace, we read that as 70-thousand on the low side and 7-million on the high, but no matter how we cut it, the big dislocation from flooding should be major headlines when it arrives.

 

Still, it's what happens a bit further out that holds our attention because between now and the target date of the new data run [Winter/Spring 2008], we expect to see a large number of humans get off this train, to put it gently.  Remember in earlier runs, we had Bird Flu going "headline" in January '08.

 

While it's true that the inspections of the H5N2 (lower pathogen version) of the flu outbreak in West Virginia have not turned up new cases for now, new ways of tracking disease spread among birds in India is being reported, and Vietnam is being shown as a 'model' of how to handle such outbreaks, says the WHO.  The point is that bird flu has not disappeared, although you might think so given the lack of coverage by mainstream media.  There was one death from the disease in Indonesia last week, which makes it 74 in that country alone who have succumbed to the disease.

 

Not to have a disproportionate interest on the future (a function of and overly active 'monkey mind' the time monks admonish me), but if a person is to walk the UrbanSurvival path between wild optimism on the one hand, and abject despair on the other, it requires knowing where the data outliers are on both sides, which is why I read web bot runs so closely on the one hand and ante up for Microsoft Office 2007 on the other.  On this last point, I wish I had read the MSNBC article about Office '07 before sending off a couple of hundred bucks, but then again, in my real life as a consultant, I need to have interoperability so I can bury it as an expense.  The install waits till after Tax Day - I can't afford the downtime if something goes wrong.

 

About now, you should be having an "Aha!" moment - realizing that even the People's Economist is given to some US Consumer Mindset "spend now, think later" behaviors.  Without impulse spending, the whole system would already be bankrupt by now - and the refi bubble wouldn't have happened either, so go easy on me.  If you refi'ed, you're deeper in the mindset than me.

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So, with Tax Day a week off, what are we getting for our "contributions"?

• A report up in Kansas City - not exactly a financial revolution hot spot - they've figured out that "Military Spending Gets Forty Percent of Every Income Tax Dollar."   And where is that money going?

• You may recall about a year ago I warned you to buy ammunition now because a worldwide shortage was pending.  Well, son of a gun (sick caffeine induced pun intended) if it's not here.  "War soaks up bullets; Police feel shortage" reports the San Jose Mercury News.   Hmmm..wonder if the California gangs would sell them some...? 

• Meanwhile, off in the Sudan, they have so much ammunition that when an explosion at an ammo dump occurs, it closes the airport in Khartoum.  No worries about peace breaking out there any time soon, huh?

• Overall, if you put the word "peace" into Google's new search engine, you get 69,991 hits. That's as of our press time.  If you put in the word "war" you get 141,946.  So, war leads peace this morning by better than a 2:1 margin.  No Golden Age this week, I reckon.

Notice I didn't even have to drag out the Iran/hostage release/will they get rich off the ordeal stories like this one. Nor did I mention the 10 additional US soldiers who have paid the ultimate price.  Nope - I just did a news search look-up and quick as Bob's your uncle, the ugly facts emerge.

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Taxes are serious business. They're the finance world's version of cancer.  Folks in Florida are starting to see this first-hand as the housing bubble cooling has resulted in talk about a state income tax there.  Given the number of 'grays' that migrate to Florida after lifetimes in the Northeast, and given the state constitution's ban on such things, you'd think the "big government" pushers would lighten up/come to their senses.  But hardly.  No Golden Age this week, got it?

 

If there's some good news about illegal immigrants, it's that some are filing income taxes and that makes them a new "emerging market" for tax prep firms. 

 

In many ways, the idea of paying taxes is "sold" to the American public much as cigarettes were sold in the "old days".  The parallel continues in that both are bad for you in the long run. The myth of "taxes are low" is pimped so that big government can have highly paid politicos to tell us how to live our own lives. This is just one of the "10 myths about the Bush Tax Cuts" busted by the Pasadena Star: "Fact: Revenues in 2006 were 18.4 percent of the nation's gross domestic product, which is actually above the post-war historical average."

 

Going a step further, the Houston Chronicle reports that "State and local taxes took the highest percentage of U.S. income in at least 37 years as personal and corporate incomes grew, according to a research group that favors tax simplification."  No doubt because the bracket creeps keep getting re-elected.

 

This morning's "Ponder Point" is this:   If you really believe "My Country right or wrong" or "My President right or wrong" - how often do either/both have to be wrong before you/we wise up and get a real government by the people and for the people like the Framers of the Constitution intended?

 

WI deeply admire the few brave people like Peter Hendrickson (www.losthorizons.com) who have the courage to step up and remind IRS that a direct capitation by the federal government is illegal, but it takes him a whole book to explain how to avoid getting bitch-slapped or ground up by the government machine if you don't go about things exactly right.

 

Fine folks and American heroes, those who fight the good fight (which has its roots in Boston Tea).  Still, in the end, I report all my income and take every legal deduction I can, buying TurboTax and using QuickBooks plus whatever other tools I can.. Unlike some Americans, I have an agenda of building self reliance and self sufficiency.  Any time that goes into fighting taxes takes time off task from my priority list of more important matters.  Besides, given the condition of America's currency (weak and getting weaker thanks to the spending geniuses in the District of Corruption), it's only paper anyway.

 

I hear the call of those who would urge the modern version of "Aux barricades mon ami !" ("To the barricades my friend!") echoing the French Revolution.

 

Let's be really clear about this: federal income tax system is a crooked and convoluted mess woven by special interests (mostly lawyers) and CPA's which is why I call the Tax Code the Full Employment for CPA's and Lawyers Law.  But, oh so sorry. I plan to eat, have power, avoid no-fly lists in case I need to travel, and not be hunted down by some rabid tax bureaucrat during the coming troubles ahead, so although yeah, my sympathies are with the Constitutional Cause, let me know when a winnable conflict shows up.. 

 

I know, you're thinking "Aha! The People's Economist is not a tax revolutionary."   Exactly.

 

After all is said and done, and absent real look-you-in-the-eye imminent death knocking on your front door, government is a protection racket, so I'll be ready for the bag man's day a week from now, and I expect you will be too.  If you're not

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George Ure, The People's Economist

 

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