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Madness on Bordering Department: No Use Rushin'

Despite some of the alarmist jitters around the 'net, last time I looked, we had made it through another week without blowing the world up in a nuclear confrontation over events in Georgia.  The Russian forces that went into Georgia are still there, but Russia insists that they have a deadline of tonight to withdraw to a 'buffer zone" area. But, they are not exactly rushing to tell anyone where that might be.

 

So, in the meantime, the non-radioactive type fallout continues:..  Investors are reported pulling money out of Russia, according to the BBC.  On the other side of it, oil has edged back under $121 today as the dollar has gained and war jitters have eased a bit.

 

Since everything in the financial universe is linked (or hedged, or leveraged) to everything else, these basic events mean that when you see headline like "Stock point higher on prospect of Lehman buyout" and subtitled "Stock futures up before Bernanke speech..."

 

Gold, which was up yesterday, has fallen back today.  You have to remember than gold-bugs are usually quite pleased with the effects of war on gold prices, and distain the impacts of peace on long positions.  While the Russian withdrawal is still being touted, the price of gold has dropped more than $10 in the early trading today (subject to change at a moment's notice).

 

Can gold fall further?  Why, sure!  But to zero?  To even $600?  Doubtful.  Especially when the L.A. Times posted on Thursday that "As demand jumps, Mint runs out of one-ounce gold coins." 

 

"Not Admitting Guilt"

Speaking of the L.A. Times biz-section, I trust you saw that the "Auction-rate probe expands to nearly 40 brokerages"?

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There's a curious thing going on in American jurisprudence lately that sticks in my craw (whatever a craw is...):  It's the reports of all these huge settlements of late which all carefully not that whoever is writing the check doesn't admit wrongdoing. 

 

How frigging stoopid (sic) do lawyers thing humans are?  Some big finance outfit writes a bazillion dollar check because they are protecting their reputation?  Gag me with a spoon.  Oh, and then they insist on the phrase "without admitting wrongdoing".  Notice they have stopped using the term "guilt" because that's pejorative?

 

I don't know about you, but to me when a check for millions or billions in paybacks for screwing the public is negotiated, the right thing for regulators to do would be extract an admission of guilt!  They usually are, right?"  Why not force them to admit it?   I mean or they wouldn't write fat-*ss check, if innocent, would they? 

 

But it's all how the corpgov club, complete with 'captive regulators' works.  Ya'll aren't supposed to get justice.  Nossir.  Just your money back...and then, only if you're lucky.

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The MainStreamMedia, being neutered by corporate ownership mostly, won't raise these points, but that's why the Internet's going to end up being taxed, or licensed, or both, at some point.  Can't have people wandering around shattering the illusions so carefully crafted to keep the public dumbed-down and docile.  More fluoride in the water, please. Why, if they weren't, we might actually have two political parties that stood for something, besides corporate contributions, socializing losses of crooked bankers, and privatization of profits.

 

But what's the use?.

 

Great (Fire) Wall of China

Now that the Olympic stories are about toast, we can get back to the usual stories about China.  Like this one:  "China blocks iTunes over all-star Tibet album free download."

 

Last time I heard, which was a couple of weeks back, UrbanSurvival was still available in China.  But, in a rather surprising move, we hear that our friends at www.halfpasthuman.com have been blocked.  Perhaps because their future-predictive software scans discussion groups in multi-languages, or maybe it's because they have an official government program working on predictive linguistics ("Ting" or 'the cauldron') which uses larger (multiple page) data samples than our garage-based enterprise's 2048-bit samples.

 

Transplants: Face Time

Oh, here's good news if you've thought about yourself as really, really ugly:  "Surgeons prepare for world's first full-face transplant."

 

The Political Correctness Police have asked me to post a reminder "Do not engage in mean-spirited forwarding of this message to employees or others from your corporate workstation as it may trigger an over-reaction by your HR department..."   I do expect a best seller about this.  Hey!  Maybe they'll title it the "Face Book"?

 

The Spies Among Us

Seems there are some new "guidelines" that would give the FBI broader powers of surveillance than already exist.  So broad are the powers, says the NY Times, that they'll now be allowed ..."to open a national security or criminal investigation against someone without any clear basis for suspicion, Democratic lawmakers briefed on the details said Wednesday.".    Who would have ever thought that we'd need more 'guidelines'.  I thought we already had a near-perfect set of them (Hint: The Constitution).  But right to privacy?  Haha...you got to be kidding, whatzzat?

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Fortunately, I long-ago concluded that if you're willing to live a simplified lifestyle, label yourself a nutjob, and renounce the debt monster and such, it is still possible to live an honest / truth-telling life.  But, even that is getting more difficult.

 

Weight-based Insurance

"Extra pounds mean extra insurance fees for Alabama workers..."   Say, I don't suppose the state is negotiating a lower dental plan price? Since folks may be eating less, there'd be less wear on their chompers, and that would lower dental work...

 

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Coping: IOUSA Worth Seeing

Although you probably have a pretty good idea how the financial world works if you read UrbanSurvival and the subscriber-based companion Peoplenomics.com sites, there's a new movie out which will jump-start your knowledge/awareness building if you are a recent convert to the 'Complete Reality School of Economics".  A reader in Chicago sends this review of last night's opener:

"The movie was good, David Walker (former comptroller of the US Govt'), was spectacular.  Not only does he get it, but he's a  fantastic communicator and should be the running for the white house.  

 

You'll need to catch his Q&A comments on YouTube once they become available, they're Ron Paul-esque.  The movie covers about 45% of everything that you remind your readers of on a daily basis, the remaining 55% of the movie is composed of silly interviews with teens & clueless adults and colorful graphs.

 

Being that the movie was about debt, there was great discussion about the origin of it, its pros / cons and what we can to do eliminate it before our future generation's quality of life is impacted.  Funny side note about social security and the public's terror that it won't be around in 15 years or so; SS is not and should not be our biggest concern, it needs to healthcare and prescription drug programs- they constitute a much greater % of our deficit that SS.  All said, it was a well put together documentary with the real value being the Q&A afterwards.

 

By the way, I've always viewed Warren Buffet as a realist, but seeing and listening to him with his more critical peers, my opinion of him has changed, he's an idealist who suffers from a "we'll always find a solution / don't worry about America / we are too great a   country to fail (we've heard that one before, haven't we?)" hypnosis.  

 

At the end of the day, we (you, me and most of your readers) are not the target audience for this movie, we've all already been informed of the current state of things via various resources- this movie was produced to open the eyes of those who have feared to look into the ugliness that has become our fiscal reality- you do a excellent job of reminding us of this everyday..."

Yup.  Definitely on the 'must watch' list.

 

Government's "6-Inches"

In the inbox from a reader was this update on how various cities around the country are coming down hard on people with lawns that don't pass muster:

Ha! HaHa! your 1st report on vegetation height violations (vhv) was amusing to me (as it relates to my current situation), but the 2nd vhv report prompted me to let you know how lucky those people should feel. I live in the city of Phoenix AZ (most of the time), and the vhv is 6 INCHES. That's right, the incredibly, ridiculously, I-have-to-use-a-ruler to determine that amount has been effect for awhile. This can be verified on phoenix.gov/NSD (neighborhood service (surveillance?) dept) website. During the past year, my husband & I have prioritized our alternate (read: survival) property, so our city property mtc. occasionally gets behind. We have a very lonely & bored widow on the block watch committee, who reports us EVERY TIME a few blades approach the 7 inch range (OMG, THAT must be the reason real estate values are falling!). The offense is always been taken care of before the city checks out the complaint, but it's gotten to the point where we now treat it as a game (the yard needs mowing; oh, let's wait till 6.25"!). Also, the city employee lady who comes out is really friendly & we always have a nice little chat. And I'm sure she's grateful to us for helping out with her job security, in these city budget sensitive times.

On another note, I've been committed to the idea of a write-in candidate for prez for some time now (haven't yet decided who). I'd really like to see a national movement for that idea - any thoughts on how to seed the current language for that? I know it won't get a write-in in office, but a big enough chunk of alternative voters would rattle the PTB a bit.

It's a good thing that I don't live the mainstream corporate sales & marketing life anymore.  Otherwise, I'd do up a big presentation on how the lawn-care industry could make billions by passing 'anti-weed legislation". 

 

Here's the pitch in a nutshell:  Cities would simply make it 100% illegal to have a lawn inside city limits with any weeds in it.  That way, everyone would have to 'round up' a bag or two of weed killer every year in order to comply with the zero-tolerance for dandelions laws.

 

Growing dandelions for wine-making or to throw in a really healthy salad?  (Assuming you're not allergic, of course...).  Nossir, the cities could save you from such a fate by simply outlawing dandelions.

 

New more revenue streams in those ag chemical corporate reports?  Let's outlaw crabgrass and throw people in jail for mandatory two-year minimums without trial for repeat violations.  Like: the second one.  That way we could grow the prison population, too - which would what?  Create more employment!.

 

Not enough revenue yet?  Well, we all know the dangers of coastal Bermuda, right?  Therefore, and in order to protect the visual quality of our neighborhoods and revolve the design issue of inconsistent grass colors and textures, "We hereby resolve that coastal Bermuda is illegal and must be replaced with one of the two following color-matched fescues..."

 

OMG, think it can't happen in America?  Of course not!  Sad reality bite here:  That America has been replaced with a Constitutionally-deficient, overly intrusive sham masquerading as a democracy while in reality it has been co-opted by major corporations.  But then you knew that, down as some level of which you dare not speak, I 'spect...

 

Nuts & Bolts & Wars

A reader note brings up an interesting question -- first the note:

"I read somewhere that part of the reason "we" won WW2 was that so many of our GIs were good old corn-fed Midwestern farm boys who knew how to keep the jeeps and tanks running. Supposedly the Germans were brilliant scientists and engineers but they were somewhat lacking in practical mechanical knowledge.

It's food for thought."

There're a lot of us who have looked at various strategic issues facing our military in the future and this is one of them.  I can just see a future battle front where a platoon leader calls "Time out!  Everyone put new batteries in your Land Warrior gear now!"

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While adding whole new dimensions to the concept "blue screens of death" (BSOD)  it also reminds me that if you want to read up on an American here and "advanced" war gaming, go read the history of "Millennium Challenge 2002" and the 'low-tech can kick your butt if you get too enamored with technology lesson taught the Blue side by  Red commander Marine Corp Lt. General Paul K. Van Riper.

 

But that would probably get me started on why Georgia is, in my view, defending the wrong border...there's one bordering Texas, New Mexico, Aridzona, and California that we should give equal attention to.  And what about defending the Washington DC borders from the lobbyist insurgences who have seized it?

 

Rural Government Growth

Boy, glad that all of my home construction projects here at the ranch are underway.  Why?  Because, speaking of government "piling on" the regulation game, we received a reader note that home inspections of new construction are ab out to get underway here in Texas starting September 1st. 

 

The Texas rules don't seem to apply to the private owner (just builder/remodelers if I read it right) but give 'em time.  Just any old excuse to add staff and expand government, huh?

 

'We're Cool'

The Farmer's Almanac says a really cold winter is ahead.  Not much in the way of stocking up to do here, but then again, our annual heating bill is measured in low hundreds, not thousands like up north.

 

No, I'm not going to talk about my woolly worm, thanks.  This is a family-oriented web site. But, how is your Pyrrharctia isabella, doing?

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Send snip and save items to george@ure.net

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Around the Ranch: The Motorized Bike Community

Last weekend, one of the items in the Peoplenomics report was about minimizing gasoline costs with a small gas-powered bike kit (complete with a couple of pictures).  Then, after my commodities broker told me he had picked up small gas bike motor kit on eBay for about $120 (plus $50 shipping) I figured I would have to get onboard.  So, I ordered one.

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I've made an interesting observation:  More and more, seems like the internet is spawning 'communities' around a new or rediscovered technology.  I see it once in a while when a micropreneur builds a new part for this hobby or that at www.emachineshop.com.  Another case is where a Chicago client turns me on to the whole 'community' that has sprung up on the web around the Hobby Zone Super Cub electric airplanes.

 

It's also starting to appear around the small gas engine conversion for bicycles, too. For example, a couple of guys up in the Seattle area have launched http://www.sickbikeparts.com/ to provide add-on parts (and improved upon parts) for the bike motor conversion kits.

 

My list of parts (before I even get the kit in hand) included a 'mountain' gear, a spark plug, gas cap gasket, new clutch cable, and so forth.

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I can't tell you how many times I've said to a friend "Have you seen this (group name) web site?  Too cool, huh?"  I feel like a cross being Einstein and Columbus when I discover one of these new gems.  I remember passing on "American Antigravity" as while back, for example.

 

But it's not just about new technology:  It's about applying new technology to old technologies - like steam power - to come up with new 'best of breed' solutions.

 

If you're thinking about developing a microprenuerial enterprise around one of your hobbies, consider this:   The ones that seem to grow best have fairly low entry price points.  The Super Cub and the bike motor basic products are right around $200 as a 'get-started' price.  And, they don't take a lot of time or energy to get going.  Plus, there are a zillion ways to develop add-ons.

 

Although different than vworld communities, like www.stardoll.com or www.secondlife.com, there seems to be a growth pattern developing here.

 

It may be that the core staple of global entertainment is losing its luster.  Televisions Holy Grail - time spent viewing - has been decreasing as people have been spending more and more time on the internet.

 

But, once on the 'net, what are you going to talk about?  As the net has evolved, we've seen non-text content evolve first as pictures (MySpace) to all kinds of video (YouTube), to umpteen special interest groups at Yahoo Groups.

 

I guess what catches my attention is the possibility of a 'design pattern' emerging as virtual groups arise, focus on a hobby or activity, actively share knowledge and then improve on the art.  So whether it's something as simple as finding a replacement drive belt for the tuning section of a retro Heathkit SB-400 ham radio transmitter, or finding a geared shifter for a motorized bike conversion, we seem to be 'getting there'.

 

The 'design pattern' feels like an aspect of the singularity meme; where all that can be invented are being invented right now, and knowledge is doubling every x-days.  Not sure if there's anything specifically actionable about it, but it sure is doggone interesting to notice.

 

Just as the Renaissance changed the world in the 14th through 17th centuries, it seems that a new Renaissance is coming along based on hugely improved people-to-people communications.  To me it feels less like a 'singularity' and more like a "Technosance".  A 'singularity' sounds a lot like a black hole, but a Technosance sounds like a springboard for future greatness, just as one could argue the Renaissance was several hundreds of years back.

 

Somewhere, among the free energy discussion groups, the home gardening, the bike conversions, and electric airplanes, there's a vision of the future that hasn't been fully articulated yet.  Couple it with the developing decline of excessive debt and the bringing to heel of finance paper asset abstractions, and you have a much different world ahead.

 

Oh, and speaking of which, there's this perspective from (if I recall right) a prodigious EE type::

"Enjoyed your bit this morning about Worlds In Collision.

20 years ago, Whole Earth Review ran an article... .If we can keep a severed head alive.

Could be the answer to overpopulation, food shortages, energy shortages, pollution, war etc. For example, if you allocated 5 ft. sq. each for head and life support system, then... according to my calculations... you could easily fit 6 billion heads in the state of Rhode Island without even having to stack them mausoleum style... although geographic dispersal would make more sense.

The heads could be nurtured by a hydroponic-like system and wired in to servers for education, communication, virtual living, etc.... and the whole works supported and maintained by self-repairing robots. People could enjoy virtual travel, romance, family life, adventure, government, drama, war, whatever... without the messiness of actual experience. It would tie in quite nicely with VHEMT (Voluntary Human Extinction Movement) .... which would give the planet an opportunity to recover from the most invasive species on earth.

Just thinking a-head.

Perhaps.  But the optimistic view is that we'll all be so busy gardening and playing with our group-oriented pastimes that we just won't have time to keep over-populating the planet.

 

Ure's Theorem for the Week is simple:  To end overpopulation, buy everyone on earth a computer.  There won't be time for anything other than keeping up on email and reading the group posts.

 

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How to Cope with Rationing

While the strong hands (industry pros) have been busily selling their stock shares to the weak hands (the retail investors) as quick as they can (more in this week's ChartPack), I've become much less concerned with the day-to-day market moves, and much more worried about something that the HPH folks have had crop up in modelspace between now and perhaps year's end: rationing.  This week, therefore, we'll outline a scenario which could lead to rationing, and then explore some of the ways rationing arises, operates, and is then ultimately resolved.  Since we've always had a fair ration of foresight, we'll start by outlining a scenario that could lead to gas lines (and much worse) before St. Nick flies

 

 

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Review of this week's report:

"Greetings from France George where I am summering and returning Oct 2nd (hopefully in time). Sundays #363 was not one of your best...it was by far your very best. Scary but c`est la vie. My suggestion to you would be at a latter date (next month) to share all or part of it with your regular readers. Its that good and important. Best regards....(name withheld) "

Nice report card, eh?  No, I am not related to this person...  Gosh, what do you think I am, a stock analyst or something?

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"Live on $10,000" Updated

What?  You haven't ordered the ebook "How to Live on $10,000 a year -- olr less"?  Suit yourself.  We're all going to live it shortly, anyway.  I just thought you might like a heads up by reading about how to do it before you get pink-slipped.  But, suit yourself OR visit www.liveontenthousand.com.  Yep - still possible.  I also took a bit of additional material that was pertinent from recent issues of Peoplenomics and included them.  The whole thing runs about 65 pages, but it gives you a vision of how to not only live on the aforementioned dollar amount, but also how to migrate up the economic foodchain if you make a little more than that and do some active savings...  Click here for the page with more details on it.

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Last week's report is here.    For back issues of this site, click here.  (Goes back to 1997!)

 

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Thursday August 21, 2008

Worlds In Collision

It's been a while since I have put any brain cells to work on the blurring line between physical here and now reality and the 'virtual realities' that are popping up around the 'net.  But, if you're an investor, there's something to be gleaned from the following email from my friend Dr. Pete Markiewicz...

"Hi George:

Loved your morning report about leverage, and the resulting physical/virtual disconnect. I have to note that the key to inflating financials is that, in the electronic medium, they can be copied endlessly at a very low cost of creation (electricity).

This also applies to virtual products.  (He means besides derivations and other financial abstractions! - g)

Case in point, stardoll.com, a virtual "paper doll" vworld with about 20 million members worldwide - almost all 9-year old girls. On Stardoll you can buy "local" vproducts - but you can also shell out significant $$ (in the range of 20 dollars US) for copies of clothing from major fashion catalogs. There is no physical value, only the value of the brand (e.g. DNKY). The kids visiting these sites use the virtual clothing to dress up their virtual dolls.

If this was the end of it, nothing new. But now the kids use their vdolls to interact with each other - instead of interacting directly. Instead of a virtual toy, the stardolls are stand-in personas. One of the main things the kids do is vote on each other's coolness. Those that make it get put into a virtual magazine on the site as the day/week "cover girl". Of course, it is their virtual copy (dressed in expensively branded vproducts) that actually goes into the v-magazine (I'm running out of ways to use "v" here).

Could it be that virtual product prices will someday determine the price of real ones? In terms of products, Stardoll's leverage is near-infinite. All it takes is a small number of adults wearing the real clothes to leverage a huge number of virtual copies - and the vclothing versions could end up making more money than the real ones.

So, could a long-term plan be to make people want vproducts, ultimately replacing the real things? Imagine a promotion that touted the virtues of a v-car. No pollution, global warming, exploitation of workers in distant lands, awesome performance, shared with your friends on myspace. The already addictive game driving experience (more x-treme and safer than real-life driving) replaces everyday transit.

If people are doing their daily work  in virtual worlds (many predict that email will be replaced by vworld interactions) this makes sense for adults as well as kids. Many companies (Sun, IBM) are already working on virtual world workspaces to replace their current intranets. So, the accountants will don warrior armor and "shoot" their data, which is virtual financial stuff anyways. The current financial system already tries to provide "recharges", game-like, at no cost to the "consumer" of this virtual money.

All you need is one real product - a computer with a really large, high-contrast, high-resolution computer monitor, possibly curved so it wraps around the viewer. We don't need a complete holodeck-like VR to bring on the brave new world of vproducts. If jobs are mostly virtual in the future (many, like web design and animation already are) moving your "lifestyle" will make sense. Also, people can get fat and ugly and nobody will know or care. It might become very bad taste to wonder what somebody really looks like!

The beauty of this is that if even a small number of our real products are replaced by virtual ones, said vproducts now have the same advantages that creative financial instruments do today.  -- Pete  ( pindiespace@gmail.com) "

I dunno.  VR worlds coming along to save us sounds good. But can it really work?

 

The ugly secret of corporate capitalism is that there may not be a happy ending.  The system is all predicated on continual growth of profits, and these in turn drive a requirement for higher sales, or lower input costs, not the least of which is what workers are paid. So along come vworlds.

 

In fact, it's such a subtle shift you probably missed it: I'd  propose that humans are being ever-s-slowly transitioned into 'the Matrix'. 

 

Think about it. Radio first capturing our ears, then television capturing our eyes.  And those in turn, have captured our tastes and then along comes the computer and captures our arms.  God help me if I get arthritis in my 'clicking finger'.

 

My ongoing search for a VR display to interface my $200 UAV  (Just a Super Cub with ultra lightweight video camera) to track hunters on the ranch, resulted in product overload.  The resolutions just keep getting better.

 

Can digi-dollars and a transition to virtual world really happen?  If you think not, maybe you need to do a little more reading about derivatives and financial abstractions.  I reckon we're about halfway down that road, or better, already.  But, not far enough to keep the Dow north of 10,000 through December, of course.

 

Another Market Bummer Today...

Futures point guess which way?  Yes, this is called a bear market.  But just wait till October.  This is just a 'cub'.

 

The Runs: The "Troop Exit" Scam

With John McCain in either a statistical tie - or by some accounts  ahead a bit  - the republicorp brand of corpgov is trying its best to drum up another four-years for the oil party.  How to do that?  Why, by praying on the cognitive dissonance of voters, or course.  That's where you're told one thing ("The sky is green") and your eyes or ears tell you something else ("The sky sure looks blue... I must be screwed up...maybe I need a pill...maybe counseling.")

 

The way the move plays is thus:  We have who-knows-how-many U.S. troops occupying 143 countries, give or take a drug producer?  And then come up with a headline like "Rice in Iraq to Spur Accord that may lead to pullout."  Yeah, American's will buy that, for sure.

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That Russian plans to stay in Georgia, amidst reports that they're installing long-term checkpoints  - should really be no surprise.  I read it as just further evidence that the late-stage corporate cannibalism is well underway, but still invisible to the unawares. 

 

Realizing this (or maybe they don't)  I see the Bush administration's foreign policy of keeping the economy afloat by building more military deployments being a similar lynch pin of McCain's plans.  And, come October and a possible 'terrorist' attack, an expansion of warring.  And since the Pelosicrats haven't done anything substantive, care to bet on what we're headed for four more years of?

 

Pakistan's Revolution

Think the resignation of president Musharraf was the end of troubles in Pakistan?  What are you on?  "Suicide attack kills at least 20 at Pakistan arms factory" is likely just the start of the battle for control.

 

Blame Oil?

"Oil partly to blame for 'New Age of Authoritarianism' says FT editor" sounds interesting, but also a little one-sided, if you watch the video....very pro Western corpgov view.  Points out some of the risks of investing in Russia...but doesn't mention our various occupations and frauds (wink, wink, nod, nod) in US financial abstractions.  No, we don't do authoritarianism, do we?

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Besides, even if we did, a tiny bit of authoritarianism ourselves, it would be OK, wouldn't it?  I mean aren't we the rulers of the Universe and global police department?  besides, if we didn't have these war things going, we might be working on alternative energy, infrastructure rebuilding, defending our borders...OMG what am I saying?  Where's my coffee...

 

Silver?  Where?

We've been talking about the availability of silver lately - and a must-read is the latest Jason Hommel article headlined "Silver has Run Out, Now!"  No, I didn't get my December $17.50 commodity call options, at $500 each, darn it.  Oh well...maybe one more pullback?

 

Them Floods

Tropical Storm Fay is the nation's biggest wet spot.  Reports are than more than 30-inches of rain has been dumped as the storm has mauled the Port St. Lucie area up north of Palm Beach.  Pretty country up there.  Or, at least was.

 

Technology Geniuses

When I see a headline like this one, I really wonder how smart folks are:  "Intel, Yahoo to offer software for Web Access on TV".  Gee, here all this time with that's what the HDMI out from the video card did.  Silly me...but isn't that what the multiple monitors and 4 GB of RAM and a Quad Core was all about?

 

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Coping:  Psst! Want to Buy a Gold Mine?

Remember the fellow who used to run our Houston Bureau?  He left the oil-services field and went traipsing off to Indonesia to seek his fortune.  And, seems like here's found some.  He's been sending me pictures now and then of how he's cobbled up a gold mining operation in the hills and today shares this:

"Know anybody wanting to buy gold or invest in a mine? We have several hectare of prime mining, but the work is all done by hand and with hi-pressure water. If I can get a crusher and some dynamite, I can ramp up production to the tune of several ounces a week, with agreements in place to buy all production from the mines down the hill. We are fetching about $250/ounce for 18k. With some refining tools, we can get that within a hair's breadth of 24k. Also, semi-precious stones that we rough polish in one of the tumblers. Should have photos and samples tomorrow.

We also have regular runs of coal going all over Asia, so we can move things rather quietly around in coconuts painted black with trusted associates."

I haven't had much experience refining gold (read: any), but seems to me that if they're able to pull out 18 karat now that they could do very well, indeed.   No warranties expressed or implied.  You're on your own, but Bernard has been a reliable correspondent and it's not every day that a piece of a gold mining operation comes across the desk. If you want to contact him, the email address to use is tharsis98@yahoo.com.

 

Angry Cities

Our note the other day about how a city up north was putting in a law to make it illegal to have a lawn more than 12-inches high got the attention of a reader here in the Republic (of Texas).

Hi George,

I just wanted to let you know that up the road from you in good old Hurst Texas (near DFW) the weed and grass limit is 8 inches. If the violation has not been corrected in 5 days "The City of Hurst will retain a contractor to remedy the violation and assess the cost thereof against the property with collection being enforced by the filing of a lien thereon." I received my notice 2 day's after our Texas heat wave broke. The Official had to step over a pile of pulled weeds from the day before to put it on my door. It turned out that my mowed and edged lawn was not the offender, but a flower bed. I had to call down town to find out the problem. When I tried to explain that I had put 3 flats of ground cover in the bed, so I had to hand weed, I was told the City of Hurst would mow it down in 5 days if it was not done. So while you were storing up for the coming emergency I was pulling weed with a ruler beside me. WTSHTF the city could become dangerous because of some of the silly rules and limited thinking ability of officials. Will a water barrel have curb appeal? What about solar panels?"

Yeah, those big ugly solar panels, aren't they an offense to the eye.  But, I'm sure if you come up with enough dosh (or lolly) I'm sure the good city fathers of Shakeurwallet, Texas could find an answer.   I mean find an applicable user fee and then issue a permit - all nice 'n proper-like. Or, our option - get the heck outside of city limits and away from what a Castaneda reader might think of as 'our petty demons.'

 

Readers Writes

Say, here's a makes-it-worth-getting up at this ungodly hour note:

"I want to say "thanks"..I appreciate your time and efforts in looking out for the rest of us. I really enjoy reading your daily reports while drinking my own cup of coffee. This link is one I ran across today. It shed some light on my understanding of the Market Place. Here lately I have been feeling like Neo, contemplating the red or the blue pill.

I too live here in East Texas...had enough rain the last few days? Geez. They say it will be back in the mid-90's the rest of the week. My wife and I are simple folk, drink a beer once in awhile and stay out of trouble. I work the Oilfield and she looks after the four daughters while I'm gone.

The net is the only place to get a feel for what's going on nowadays. It is sad when you read a news article on Friday about Russians invading a US "Ally" and see nothing on msm til Sunday night. Again, George, Thanks for the work you do

Well, on the Gold and Silver front, like I said earlier:  When Elaine starts talking to me about "Should we sell some gold and silver; prices are falling..." I figure the bottom is real close at hand.  The Producer Price Index out earlier this week, which is running just a little north of 15% annualized sure makes the case that we're in a 'new and improved' version of stagflation.  Things you own going down in value (read: house and SUV, huh?) while things you need to buy (food and energy) are gong through the roof. 

 

Just pinch yourself every so often and remind yourself that this is not the Matrix.  Why?  Because Neo had a choice between the red and the blue pill.  We don't.  I mean look at the two blue pills running for President, and tell me I'm wrong.  Where's the choice?

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Send snip and save items to george@ure.net

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Around the Ranch: Cheaper to Have Lunch

Before having a crown put on by the dentist on Wednesday, I had been contemplating going to lunch at the local bistro which makes a near-perfect chicken-fried steak.  But, exercising a little judgment, and having weighed myself, I got to thinking "No, you don't really need the calories and besides, who in their right mind would wake to work on a mouth recently visited by a bunch of food?"

 

Hmmm.. .  "I got it!  Instead of going out for lunch, I'll just go to the hardware store and spend a little time shopping, instead..."  You can see where this is going, right?

 

When I walked in, I had maybe $50 worth of wood on the shopping list - finishing trim for Elaine's latest pass through the kitchen.  ("I want to have it all done before Panama [Bates] get back here on the 11th..."  Bates having expressed doubt before heading for adventures in Panama that the kitchen would be done, done, done, before his return.]

 

Well, one thing led to another, but there were so many bargains - mostly in the seasonal close-outs, that I just lost control.

 

For example, the Tiki Torches were being closed out for $2.74 each.  Heck, Elaine's been shopping for bamboo and you almost can't buy the pole for that.  Into the cart they went.  But wait!  Can't have a Tiki Torch without some fuel.  Citronella-laced fuel on sale, too.  h boy, this was fun.

 

Over in another obscure aisle, I could these interesting little LED lights designed to snap onto a patio umbrella  for just $2.22 each.  Eight LED's - they seemed to put out a little light, so yep, they went into the cart, too.  The justification here: "Well, if there's a burn ban on in the county, then we could at least sit outside and  have some light from there..."

 

There were resin deck chairs for about $3...but I showed amazing restraint.  In all, it was much like going through Aircraft Equipment and Salvage with Pappy back when I was a kid.  So many cool things which led to projects on top of projects.  I just know I'll need two of these...er...whatever they ares.

 

Eventually, I made it out of the store, but not before going about $117 over budget. 

 

Like I was saying, the $8.95 for the chicken-fried would have been a much cheaper decision.  Maybe the time monks are right - one of George's demons to be dealt with may be "things".  I'll have to go read up on that.  But I can't!  Amazon is even more dangerous than Lowes at sale time.

 

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Wednesday August 20, 2008

Bouncing Toward October 7th

The big data pipes up at www.halfpasthuman.com are open today as the next web bot/ predictive linguistic run is about to get underway.  (Subscription info: $280 for first time subscribers, subsequent runs $70 each).

 

This run is focused on events as far out as July 2009, which for labeling purposes in modelspace is called the "Summer of Hell" for reasons that you'll be able to catch up with in Part Zero which is expected to be posted around September 5th, and the time monks offer this:

"Our internal review process (bitching at each other over pie and coffee) has brought us to the conclusion that we will 'tune the lexicon' this run, but will not adjust the contexts as they are seemingly pretty skookum and prescient. Sorry about missing the Pakistan regime change by a day. We will endeavor to increase the accuracy of our entertainment as we go forward."

If you're thinking about subscribing, this ought to be one of the best-timed runs yet, because it should be active as we get to the October 7 (7:10 UTC) release date.  That doesn't mean you will wake up to CNN doing some kind of 'event' coverage that morning (although it's possible).  It just means that we shift over into 'release language' which will be propelled by events that will have the same emotional 'fell' of the September 2001 events, except instead of six days of heavy emotional impact, this will be 5-months plus of that kind of thing.

 

Don't subscribe if it willk place a financial hardship on you and remember this is only  done as 'entertainment' and for our own amusement.  The fact that certain aspects of what's forecast seem to come true seem to occur on regular basis on a higher than chance basis is no doubt a long-lasting string of coincidences that have be strung along by Universe since we first posited publicly

in July of 2001 that the world was about to change within 90 days or less and along came the Twin Towers.  And the 'attack on house or assembly' before the anthrax attack, or the aspects of the DC sniper case, or the Northeast power Outage, and so on, right up through the regime change in Pakistan a few days back.

 

We will continue to post free warnings  here when of widespread public importance, such as the "Wedding Quake" warning two days before the huge quake in China in May of this year.

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Predictive linguistics is not a science that's been written up in book form yet.  Although we know that China has been doing massive internet sweeps for years (using much larger data samples than ours), this is still a garage and servers in the closet kind of operation.  Because there is no government funding, the project continues in its intended 'clean form' which is to say that the reports don't mince words for the sake of political correctness.  Inst4ead, the focus is on getting the feel of events right and far enough in advance so that a prudent person could hedge a few things if so inclined.

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Don't let my buying up solar panels in anticipation of a serious power shortage bother you none.  The libretto seems to be Big changes around October 7th, response around dark of the moon in late October, a bump or two around Thanksgiving, and then a mess of large proportion around December 10-12.

 

If we just happen to see a market decline to the 9740 range in early October and a terrorist attack or all out market crash  (or something of that emotional flavor) it'll just be a coincidence.  Again. 

 

Just remember that if by reading this site you sometimes get the impression that our coverage of events is prescient, remember it's not because of anything I do, other than read the predictive linguistics reports, and then try to back-fill the news stories that would be likely to get us to that particular flavor of the future.  So far, it's been a useful news coverage selector tool.

 

Border Security Perspective

"Russia isolating itself over Georgia: Rice"

"Russia is actually doing something about border security: Ure".

 

"Pentagon: No significant Russian withdrawal from Georgia"

"Ure: No significant Mexican withdrawal from Texas, Arizona, New Mexico, or California, either.  Your point?"

 

Headlines aside, you can click here to see Condi signing us up for more defense spending.

 

Ever get the feeling the boys in the District of Corruption don't get it and the world really is crazy?

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"Some Democrats urge delay in building U.S. missile system in Eastern Europe." 

 

Hmmm...I wonder...campaign fund raising a little light this year?

 

Conundrum

What happens when a commercial airline pilot ends up on the No Fly List?  Click here for the story.

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Come on, did a TSA inspector really damage nine planes at O'Hare???

 

The Runs: The "Who?"

Lemme see:  Ralph Nader thinks Obama will pick what's-her-name for Veep.  Personally, I think Obama could o a lot better, but that's just me - the guy holding up the "End the Clinton-Bush Aristocracy" sign. 

 

Kansas gov. Kathleen Sebelius is a possibility along with Joe Biden, Evan Bayh, and Virginia gov Tim Kaine.  You could maybe start a small betting pool at the water cooler between now and tomorrow when this is supposed to clarify.

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As the Washington Times is reading the numbers at the moment, the contest for the WH is about a tie at the moment. 

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Word that Joe Lieberman is being considered as a running mate for John McCain has me wondering "Where did I put that bottle of Jack?"

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But don't worry.  The UrbanSurvival creative department has just come up with a great new McCain bumper sticker:  "Give War a Chance...."

 

Peace Pays - Eventually

You did hear that "NYC to pay $2-million to arrested war protesters" in a case that steps from a 2003 confrontation outside the Carlyle Group's NY HQ?  After attorney fees, I figure about $25,000 each...  Oh...the City doesn't admit liability.  LOL

 

AARP Sued...

...for age discrimination?  OMG, What next?

 

Next War

Things seem to be heating up in the Philippines.

 

Rumors....

We're hearing how a major NYC environs mortgage package is threatening to go 'toes up' in the next month or so.  If true it could stick the debt market for another $225-mil.  So much for pro forma revenue projections, huh?  But maybe the rumor is just that.  With all the market jitters about, what a fine way to leverage a little renegotiation of deal terms...time will tell.

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Speaking of which, Peoplenomics for this weekend has the working title "George's College of Crooked Finance."  Not that I'd ever do any of the things outlined, but no doubt there are people who will...

 

Hand Me the Calculator Department

The NY Post's Mark DeCambre has a story out this morning that for just $100-billion, Fannie and Freddie could be made whole.  All of which would be dandy if it were coming out of the fat-cat slush funds inside the Beltway, but you know who's writing the check ultimately, right?  (Hint: looked in a mirror yet today?)

 

Two Can Play This Game Department

We can't help but notice the headline that "Russia considers nuclear missiles for Syria, Mediterranean, Baltic" which seems to come on the heels of the US/NATO putting aan anti-missile system into Poland and pressuring other former Soviet proxies to 'get on board' with Western corpornomics.  Yes, that's the socioeconomic system based on excessive mass consumption, funded by creative debt, and taking special care to prop up defense contractors...

 

That Three-Timer Fay

Looks like our tropical storm Fay coverage will drag on a little longer as Fay is still meandering around off the west coast of Florida dumping 10-inches of rain in Brevard County. Third time a charm, anyone?

 

School Punishment

The headline this morning "US: End beating of children in public schools" has me scratching my head.  But that's probably easily explained by my "Spare the rod and spoil the country" mentality.

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Let's all get together and abandon strict parenting and a swat on the butt (on rare occasion) all at once, so we can increase our lead as the country with the highest inmate populations in the world. 

I'm just saying a swat on the butt worked wonders for me and it's a hell of a lot cheaper than housing an inmate for x number of years.  

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To make matters even more absurd, I'm reading headlines like "Students, school officials continue drinking age debate"

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Hell, as long as we're at it, let's completely abandon any restrictions on kids.  Make it illegal not just to administer a swat on the butt when they try to burn down the house, but let's also ban parents from even speaking harshly to them about it.  And, as long as we're at it, let's lower the drinking age to 10,; shall we?  Yeah, that'll fix up everything and insure that prisons will continue to be a growth industry!  And remember, for every good criminal case, there are at least three attorneys with their hands out for dough (prosecutor, defense, and judge) plus umpteen zillion guards and counselors...why, I could build a great economy if I just had some more laws...

 

New Laws Department

"New law lets Ontario seize cars of repeat drunk drivers."

 

"New LA anti-tagging law targets parents"

 

"Murderer argues new law not for him..."  (Imagine that!)

 

And in Omaha, having your yard sprouting anything over 12 inches is about to become illegal.  Good luck trying to find a reliable kid to do yard work...

 

Did They Mean It?

"Small SUV's improve in crash tests".  Gee, I thought that would destroy them...but if you say so...

 

Hot Tunes

"Customers waned after iPods catch fire in Japan."

 

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Coping: Metals

Seems we continue to see two sides to the silver/gold story.  Here's one:

"Hi George,

Just thought you would be interested to know that my business ( i do crown and bridge work for different dentists) uses precious metals every day. After reading all the hysterics on the 'Net' yesterday about shortages I decided to call my supplier to see if they were having any problems. Nick at **** said he had not even heard a whisper about a problem. They also sell various types of gold coins and bullion. There is no shortage in these either.

Seems to me that someone is stirring up rumors. Gold should bottom around the $690-$750 area as near as I can tell. No need for panic."

One other reader says maybe the 'apparent' shortage of retail gold and silver coins is because dealers who bought at higher prices are loathe to sell at current levels.  Could be...

 

New Word

Reader email:

"Dear George,

Since I just renewed my subscription to Peoplenomics I thought I should write a note thanking you for restoring my ability to utilize common sense. I appreciate the wisdom of your insight and advice each week. I take pride in the fact that I am the person friends and coworkers come to for technical advice or how to save a few dollars on a purchase. You should be proud to know that you are the person I would seek advice from.

As for my descriptor word for the Power Parasites; "CORPORUPTION"

This word is an original thought. I can state with a clear conscience that I do not recall ever hearing or reading this word. If you have already encountered this word I apologize for wasting your time. If this is the first time you have seen it, feel free to use it in a sentence."

First time I've seen it, too.

 

Cash Becoming King?

The headline "M3 Contraction - the future is Now" is worth reading...As is the chart at Trader bart's Now and Futures site.

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Yeah, bonds may not pay much, but we're quickly coming to the time when making "gains" in any kind of investment will be subordinate to the safety and surety of getting your principal back intact.

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Tuesday August 19, 2008

Laws of Economics Repealed

So, you were under the impression that economics obeyed something called the Law of Supply and Demand?  You know the one - it used to mean that when something was in short supply, the price went up.  You know - efficient markets and all that. 

 

But today, I'm pleased to report that this cornerstone of economics has been repealed because despite the lack of availability, the price of the precious metals is not going through the roof - and what's more, going through $800 is tough for gold while there's an ugly skirmish going on for $13 silver.

 

As we explore this brave - and crazy - new world, our first stop is my commodity broker JB of www.fortwealth.com.  He called a couple of his contacts on Monday and tried to buy 100-ounce bars.

 

No go.

 

Another reader shared this:

"George, re today's comments on metal availability: Early this afternoon I called my usual guy at Miles Franklin, where I've bought for years with no problem. Tried to fix a friend up with $20K in gold eagles. No go on gold or silver eagles, no earthly idea when they would have more, and tight supply in other bullion coins. I was told it looked like someone was driving the paper market metals down with one hand while they scooped up the physical with the other.

I wound up finding four at Royal Coin in Houston @ $855 per, which sounds like a bargain compared to the mint's online price.

I think this whole gold sell-off had a funny feel to it. Too much, too fast, in an environment that reeks with fear of financial calamities all around. I wonder how much truth there is in the above take on big players pulling out large amounts of the physical..."

Another reader contributes this:

"All is as you say. I’m an ebay powerseller and sell lots of silver… supplies are tight. Now, here in NYC, I can walk across 6th ave and find the stuff, but go upstate to dealers and it’s not to be found unless you want the hassle of buying 1 oz mini bars. Yikes. I took advantage of the recent drop in price and fulfilled orders by going to a dealer upstate Ny (where I reside) and all he could give me were retail 1 troy ounce rounds.. no 10 oz bars. He’s holding a 100oz Engelhard for me.. and I’ve got another 100 oz Engelhard with a dealer here in NYC.. so I’m going to snap them up this week. "

You want to know where George's Monday went?  Instead of client time (or setting up a new Peoplenomics subscriber's access) I got buried in reading the prospectus for a silver-based Exchange Traded Fund (ETF).  The reason I did this was that a reader asked me a while back if he didn't own a silver position because he bought into this particular ETF based on silver.

 

The answer is "Yes, and no...".  On the one hand, it turns out that the ETF trades at a price that reflects the spot price of silver, but in terms of convertibility?  Nope.  That's just a paper trade.  Unless you happen to own 50,000 shares of this particular ETF, there's a right to convert to a 'basket' which in turn can convert, but that's only for 'authorized' players.  And you and I aren't big enough to play.  If we were...

"Baskets may be created or redeemed only by Authorized Participants. Each Authorized Participant must be a registered broker-dealer, a participant in DTC, have entered into an agreement with the trustee (the Authorized Participant Agreement) and be in a position to transfer silver to, and take delivery of silver from, the custodian through one or more silver accounts. The Authorized Participant Agreement provides the procedures for the creation and redemption of Baskets and for the delivery of silver in connection with such creations or redemptions. A list of the current Authorized Participants can be obtained from the trustee or the sponsor."

So now I have yet another task to add to my miles-long to-do list:  read the participant agreement and see if there's anything other than physical metal involved...like I don't have enough to do already.

 

What's interesting to me is that a few readers seem to be under the impression that shares in this particular precious metals ETF are somehow 'backed' by convertibility to physical metal for the small retail investor.  Seems no, at least I couldn't find it. If you do, let me know.

 

I'll just go back to scratching my head trying to figure out what this means in the Custodian Agreement:

"2.7  Substitution of Silver: With your prior approval (in consultation with the Sponsor), we may substitute other Bullion for Bullion held in the Allocated Account, provided that there is no change in the total number of troy ounces of Silver held in the Allocated Account. "

Huh? Wonder what the "other silver" would be? I must be exceptionally dense, as I have no idea what that means.  Hey!  I'm just trying to figure out how these precious metals ETF's work and I'd encourage anyone to put some serious time on reading all the underlying documents for any investment.

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A call to my commodities broker this morning informed me that in all the US warehouses there are 138,237,682 ounces of silver this morning (in both regulated and eligible holdings) according to the Dow Jones COMEX gold and silver warehouse stocks report.

 

I pencil that out, at $12.91 (September spot) as $1,785,339,663.03

 

But wait, how can this be?  The net assets of the iShares Silver Trust reported on the Yahoo Finance page is $3.53 billion - so I can only assume means that somewhere in the UK, there's a vault with twice as much silver as in all of the United States, right?

 

How come the MainStreamMedia financial reporters aren't asking these questions instead of a financial nutjob in the East Texas piney woods?

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So, how far can the price of silver drop, anyway?

 

I called my friend who manages a whole pile of money expecting him to have some keen insight - the kind that comes from pushing 9-places left of the decimal point around.  His answer - which I'll paraphrase loosely - went something like this:

"What's happening is that the price of the metal at retail has little to do with the exchange prices of silver because the physical is such a small part of the market.

 

In other words, the physical price is being swamped by the financial price.  Sure, you can see shortages of physical, but that's such a tiny piece of the LEVERAGE game that it's almost insignificant."

Oh, oh.  I'm starting to 'get it'.  As long as there's enough paper in play, we can have a complete disconnect from physical prices. 

 

Now that I think about it, I can see why.  If a tracking fund has no convertibility for the small players, it becomes almost like walking up to a craps game in progress on the sidewalk where the stakes are physical silver, and then starting to trade shares based on valuation of the stakes in the craps game, and then to top it off, you convince yourself that you own silver, even though in order to get into the convertibility part of the game, you need 50,000 shares, to be authorized by the players, be a registered broker-dealer, participate in DTC and be able to deliver or accept silver in a London vault.

 

If you think that's crazy, perhaps you haven't been watching metals prices.

 

Watch 'Em Spin This One

The producer price index for finished goods is up at an annualized rate of  What?

15.38%!

"The Producer Price Index for Finished Goods advanced 1.2 percent in July, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This increase followed a 1.8-percent jump in June and a 1.4-percent rise in May. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved up 2.7 percent in July compared with a 2.1-percent gain in the prior month, and the index for crude materials for further processing climbed 4.2 percent subsequent to a 3.7-percent increase in June.

Among prices for finished goods, the index for energy goods rose 3.1 percent in July following a 6.0-percent jump in June. Price increases for finished consumer foods also slowed, from 1.5 percent in June to 0.3 percent in July. By contrast, partially offsetting the deceleration in finished goods prices, the index for finished goods other than foods and energy advanced 0.7 percent after edging up 0.2 percent in June.

Before seasonal adjustment, the Producer Price Index for Finished Goods moved up 1.4 percent in July to 185.0 (1982 = 100). From July 2007 to July 2008, the finished goods index advanced 9.8 percent. Over the same period, prices for finished energy goods jumped 28.0 percent, the index for finished goods other than foods and energy increased 3.5 percent, and prices for finished consumer foods rose 8.7 percent. For the 12-month period ended in July, the index for intermediate goods advanced 16.6 percent, and prices received by crude goods producers surged 51.2 percent.

Finished goods

The finished energy goods index increased 3.1 percent in July compared with a 6.0- percent advance in June. Home heating oil prices moved up 3.7 percent in July following a 12.4- percent jump in the previous month, and the gasoline index turned down 0.2 percent after rising 9.0 percent in June. Prices for diesel fuel increased less than they had a month earlier. Conversely, slightly counteracting the deceleration in finished energy goods prices, the index for residential electric power climbed 2.0 percent subsequent to a 0.8-percent gain in June. Prices for residential natural gas, asphalt, liquefied petroleum gas, and lubricating and similar oils also rose more than in the prior month. (See table 2.)

The index for finished consumer foods edged up 0.3 percent in July after jumping 1.5 percent in June. Higher prices for beef and veal, fluid milk products, soft drinks, bakery products, and boxed meat outweighed lower prices for fresh vegetables (except potatoes), eggs for fresh use, fresh fruits and melons, natural cheese (except cottage cheese), and frozen juices and ades.

See?  Makes economic sense to favor large ripe melons...  (sound of a rim shot from the band, please?)

IMF'ed

The former chief economist of the IMF says not just mid-sized banks are on the brink of failing as the fall gets around.  Nope...expect a whopper he saays...

 

Gee, I wonder who's going to pay for that, huh?

 

Withdrawal?

There's a report today that a few Russian tanks are starting to withdraw from Gori in the contested area of Ossetia.  Withdrawal?  Maybe just a vodka run....

 

Fayn't

No more hurricane jitters as Fay failed to hit hurricane strength.  No tears, now.

 

The Runs: Mating Game

Speculation continues as rumors abound that Obama has picked a running mate.  When the big names on Wall Street stop writing checks to both sides, is when I will believe there's really any difference between candidates.  It's just two brands of corpgov, in the meantime.  I'm going to write in someone.  Ya'll have fun with the illusion, though. 

 

Something to Pray About

The headline "Nukes unlikely to be affected by Musharraf leaving..."  Say, how big is the gap between "unlikely" and "one point safe"?

 

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Coping: Rationing Follow-up

Our latest Peoplenomics.com report on rationing this week (additional info below) yielded a very informative note from someone with good knowledge of the energy market:

"Hi George,
I read your subscriber report for this past weekend and was surprised to see an energy CEO actually talking about the upcoming electricity rationing. As a nuclear engineer for the last 30 years, it is painfully obvious that Americans have forgotten that electricity (and other utilities) do not magically appear everyday, but require significant engineering and investment to ensure they exist. Prior to the free market system, engineers kept a reserve of 35% in the system to allow for outages and other issues. Now, it is closer to 10% if even that. Thanks to Ralph Nader's deregulation of everything (by idiot public servants who don't differentiate between phones that no one cares if they don't work for a week vs power that needs to be available all of the time), Americans will have to come to accept blackouts due to their shortsightedness. Expect this between 2010 and 2015 to start being a regular event. And just like oil shortages finally are changing oil drilling prohibitions in place for the last 30 years of surplus oil, nuclear and coal plants will be built more quickly once the blackouts and rising kwhr prices show up. I hope to see you write someday about how Americans have lost in the last 30 years any comprehension of the infrastructure system that makes life easy. With today's NIMBY attitude, the interstate system wouldn't even be built."

And you thought my dire outlook on rationing as ranting of the old farmer in the woods of East Texas?

 

National Solar Tour

Click here, check your state, and find out where the American Solar Energy Society has tour stops - learn something about investing in RE - renewable energy.

 

Normal?  Whatzzat?

Talking to Chief Time Monk Cliff at HalfPastHuman, I am constantly interrupted with laughter, dispensed for intellectual clarity,  whenever I slip up and use the word "normally".  The laughter makes the point that there is nothing normal anymore.

 

And, the idea that normal is a ship that sailed some time back is popping up all over the place.  Just this morning I've been struck (or slapped upside the head) as Universe reminds me of this emerging disconnect by inserting little phrases at the end of folk's emails.

 

A couple of email 'tag line' examples.  A ham radio friend up north ends his emails with:

" In the 60's, people took acid to make the world weird. Now the world is weird and people take Prozac to make it normal."

Another email this morning offer this tag line:

"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane. -- Marcus Aurelius"

Strange as it seems, life promises to get a LOT stranger this fall.  Although it's not mainstream, this is one of those 'just below the perception threshold' items that pops out of the linguistics work.  Apparently, this is a barely visible 'leading edge' to high strangeness coming this fall, and another order or magnitude (that's time 10) increase in strangeness next year and maybe another order of magnitude by next fall.

 

You might want to keep any eye out for it.  The ugly realization that wants to peek out from somewhere down around the bottom of the second cup of coffee is not just this morning's headline reporting "Laws of Economics Repealed" but the laws of everything are in the process of being repealed.

 

Maybe Kurzweil's singularity contains a hidden implicate: When change goes seriously non-linear, laws that have provided the illusion of an orderly world ALL get repealed.

 

A new - and profoundly lawless period - is dawning.  Ask the silver dealers, the Georgians, the Iraqis, the folks who want to do their own home remodeling - it's a huge swath of lawlessness which involves something I'm labeling the "re-lawing" of the world.  Sets up to be a non-stop process.

 

You ready for it?

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Monday August 18, 2008

Metals Markets Splitting?

Gold and silver are up a little bit today, but not enough to explain some reader reports. Readers have been sending in all kinds of notes about the "odd behavior" of the precious metals.  Here's one..

"George,

Unexpected consequences?

It's very interesting to witness supply-demand dueling with market price in the metals complex. Friday, I decided enough was enough, and went to the local dealer, intending to buy some bullion. Where in past I'd buy silver bars, now, I generally buy rounds, thinking it'd be easier to exchange for value when the spam hits the air-circulation device.

As I walked in the door, the fella was literally pulling boxes of silver out of his display cases. The place was otherwise pretty empty. We made some small talk about how clever he must have been to reduce stock at the recent high. Later it came out he, and other dealers in his network, just weren't going to sell at the depressed levels!

I have been trying to buy 2008 silver eagles (for gifts) since spot was at $18. He, the dealer, further explained if someone wanted to buy so the dealer was "right side up" trades might happen, otherwise no. I reminded about wanting the eagles for gifts, and would pay what was needed to get them. No joy.

Out of curiosity I checked eBay, same-same, no eagles. Non numismatics are also being pulled. When I saw the red announcement on Kitco the scene cleared. No one is selling. Sure, Kitco needs to keep taking orders, but metals dealers, like a gas station owner who filled tanks when oil was 147, won't sell at prices that lose money.

So, what's an ounce of silver worth? Is it $12? $13? Or, is it whatever it takes to get someone to sell? Might metals markets freeze up like credit markets? In past I'd have said no. Right now, evidence says yes.

What do you make of it ... and might this apply equally to other commodities?

A click over to the Kitco website this morning brings up this curious note at the top of their page:"

IMPORTANT NEW NOTICE: Due to market volatility and higher demand in the entire industry, we are anticipating delays in supply of all bullion products. Please note that you can continue to place orders and prices will be guaranteed; however, cancellation fees will still be applicable regardless of the length of the delay. Consequently once inventory is received there may also be delays in processing and shipping by our vaults. "

But wait!  How can this all be?

 

Here's what I think is going on.

 

You know those gold and silver ETF's?  What if - and this is only an if - they really don't have all the hard physical assets that their pieces of paper might attest to?  What if they just have some actual physical and the rest is paper promising future deliveries?  And further supposed this market is hedged six ways to Sunday.

 

Would that account for a momentary distortion where supply is heading toward unavailable and yet at the same time, price has also be collapsing?  This flies right in the fact of economic reality.  Something is truly amiss here.

 

And then there's the report last week that the US Mint was suspending sales of Gold American Eagles.  

 

Now here's the curious thing:  I went to the US Mint site this morning and wanted to see if they would sell a one ounce Gold Eagle.  Yup, they will.  But the price for an uncirculated 2008 Gold Eagle is not anywhere near spot ($790).  They are asking $1,119.95 for a one ounce coin.

 

A few other savvy financial writers are onto this - and I would draw your attention to Jason Hommel's piece posted over at Gold Eagle titled "Why Paper Silver is not as good as Physical Silver" as a fine example.

 

My "best guess" is that we are seeing a bifurcated market develop where on the one hand we're seeing a physical market develop  and the almost separate paper market for silver & gold related instruments.  The predictive linguistics team doesn't think it will pop for a while yet, but what happens when the public realizes that the gold and silver ETF's are shown to be paper-trading exercises and not backed by physical?  And investors figure that what they thought was actually backed by physical is just another paper abstraction and like so many others, is being hedged/disconnected from reality of the marketplace?

 

Monday and Madness Prevails

A note in the Financial Times about the "Surge for the dollar as global fears rise" resulted in a reader asking me "Why?"

 

Remember our conversation last week about how the "Great De-Levering" is underway?  This surge for the Dollar is not exactly a big deal, but it likely has something to do with the De-Levering. 

 

Here's what I think the mechanics of it are:  Most of the world's financial instruments, including the notional values and most of the 'toxic waste' are denominated in what?  Dollars.

 

Now, if we are seeing hedge funds have to come out of their dollarized positions a fair bit (and they've been whacked with margin calls in serial fashion of late) that would have the impact of what?  Reducing the amount of total dollarized debt out there in the financial universe.

 

This, in turn, could be construed as bullish for the dollar.  In other words, with the US producing so much of global GDP, and there being ever so slightly less trash clamoring after it - the dollar is bound to bounce around a bit.

 

But the key thing to think about is that it's just a bit and a small one at that.

 

Relative to the Euro, the dollar has risen maybe a percent or two since early summer.  But is this meaningful in the great scheme of things?  Heck now.  Try to remember that the Dollar has fell more than 33% from its once parity with the Euro.  In fact, if you go look up the history of the dollar to Euro you'll see that on January 15th of 2000 it took only 98.6-cents American to buy one Euro.  So the swing has been on the order of 35%.

 

So, do I get all worked up over a short term, Beijing Olympics induced period of "happy talk"?  Are you kidding?

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No, the world doesn't end until the late summer period of 'it's alrightness' that was mentioned a few months back in the predictive linguistics come to an end.  Likely not till mid September. The headlines this morning are that the market will be heading for a higher open.

Now, let's see:

• Musharraf has announced his resignation in Pakistan - right on schedule.

• We've got a tropical stomr about to hit Florida 9or north) as a hurricane.

• Russia is putting down roots in parts of Georgia despite the Bushco warnings.

 

And that's before we get into the housing foreclosures and layoffs to come.  Nope, I expect the buck's rally in here will be a short-term event.

 

Significant Anniversary

The Civilian Conservation Corp - that make-work project of the Great Depression that created so much of the nation's infrastructure, including dams and highways, started up operations 75-years ago.

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As I've pointed out many times to you, curious how we had the conveniently timed arrival of the War on Terror just as the Internet Bubble was bursting, don't you think?  Or, how with the fall ahead, how another 'terrorist' attack seems possible just as the bad news starts to erode confidence in the bankstering system...all a coincidence, I'm sure...

 

Putin Us On

Although there's a shaky cease-fire in Georgia, the Russians are not moving yet to back out.  Gee, looks like I collect on another bet.

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The West seems bent on confronting the New Russia right on its own borders, which is an interesting move.  Clearly, Georgia is of strategic/oil importance and the West doesn't want Russia with any oil pipeline options.   At least options not under Western control.

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While the German online service Spiegel wonders about those "Serious Mistakes by the West" the longer view is this is a distraction and prequel to the sequel kind of thing.  If you're thinking "Aha!  This is the Western mistake in the HPH linguistics!"  I'd say no, stick around a couple of months because you ain't seen nothing yet.

 

Intercontinental Iran

While most Americans don't know that Iran has gasoline rationing, because the everyday living conditions there are not hot copy for war promoters, headlines like this one are almost sure get create a frenzy among America's "mindless right":  "Iranian defence minister hails satellite-carrier rocket launch".  Let the mongering begin!  OMG they could target North Dakota now!  Fear!  Run from the street!  Invade now!

 

Whaling: "Research Killings"

The story this morning is that "Japan seeks to arrest Sea Shepherd anti-whaling activists" but behind it, Japan continues to pursue whale killing under the thin guise of research.  I'm sorry, but what part of "If you harpoon a whale and chain saw it to pieces for sale for sale to sick pseudo-gourmets makes the whale dead" don't these folks understand?

 

Weak Planning

If you're wondering about economic numbers to smash into your Trade Station this week, consider PPI tomorrow.  That's about as exciting as the data numbers may get this week.  Which is fine, we have other things to do.  Period of quiescence in the markets due to continue through Labor Day, so if you're expecting a breakout one way or the other, just relax.  I'll be out in the shop working on projects or doing a client voiceover...

 

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Coping:  Cat Fishing and Adventures

We had a most unusual experience on Saturday night.  There we were, having our 'after chorses' toddy and doing a little cat fishing off the north deck and one of our cats (Pusscilla) did the strangest thing I have ever seen a cat do.  You have to understand that around here, 'cat fishing' is where you take a short 6-foot spinning rod and reel, tied a stuffed cat's toy mouse on it, rub with catnip, and then go casting it about the yard from the deck.  Helps the cats get some exercise, it's entertains to see how much "air" you can get a cat to grab, and it's something to do besides swill a cool drink.

 

Anyway, never seen this before - and it may have had something to do with Pusscilla not thinking she was getting enough "mouse time" compared with Zeus, the recently arrived still somewhat feral all black male cat.  (I think he's being standoffish because he knows that a trip up the road to Dr. Snippet is in order once he's tame enough to pick up without being clawed to the bone, but that's not the story line here. 

 

Toward the end of the 'cat and drugged u0p mouse' play time, Puscilla got the mouse and started yeowling.  I don't mean a little gentle cat noise like the combination growl/snap that Zeus makes when catching the mouse a foot and a half in the air.  Nope, this was the real deal cat fighting noise.  Never seen a cat driven to that kind of distraction before.

 

Zeus, upon hearing her make this yeowling noise, wandered over to where she was (pretending) to gut the mouse and carrying on something fierce.  He gave her the look of "Say...what's wrong?  Anything I can do?"  But, she'd have nothing of it and carried on this way for a couple of minutes.

 

I don't know if she was having a drug-overdose moment on the 'nip, or if she had gotten that whipped up at the prospect of gutting a pseudo-mouse.  But, whatever, the point is that if you have cats, a little cat fishing off the deck is a grand way to chill down after a full day of work.

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Now that the weather has turned here in East Texas toward something less unreasonable than the 103's we had over the Dog Days of summer, things are getting back to a frenzied level in the shop.  The two most interesting developments there are, we are starting on converting the interior of the house to something almost Disney-like.  Each room will be having its own 'set design'. 

 

The kitchen will be Asian, the dining room an African motif , and what has been the "garden room" will be turned into an old-time 1920's veranda, complete with rough wood walls, and a trumf loi painting off into the horizon, all backlit just so.  Should be an interesting project sequence and Elaine's hoping it'll be done in time to show off to our house guests coming in October.

 

That gets me to this reader email:

"George,

I am using a friends P.C while we are visiting here for a few days and we only want your opinion and nothing more. I know, like you, that you could be wrong and we won't hold you to it.

Do you think we would have time to build a small cabin on a secluded piece of property that we own before all hell breaks loose or, even if "hell" does break loose, would we have time to finish it before times get really tough. What would you and Elaine do?"

Hmmm...given her druthers, I think Elaine would go on a cruise with instructions for me to have everything done ("And pick up after yourself!") by the time she got back.... 

 

But, seriously. who knows?  Yes, I think there's a really good chance of the crap hitting the fan, but will I be disappointed if I just end up with this Disney-like/Universal Studio's kind of look to each interior room in the house?  Heck no!  I have all the parts I need to cobble in the solar panels and the like (right down to mounting hardware) so it's just a matter of getting done what you can in whatever time you have?

 

So far, I have been on a wild spending jag around here because as some point, many of the things we ,take for granted may not be available.  So we're buying everything we need or think we might need including cases of beans, paper products (think about the beans and ponder which paper products, OK?) and 2-by-4's for construction, fasteners and so forth.

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I juist ordered my last few tools  (I say that often, have you noticed?

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This time it's a large framing nail gun and a lifetime supply of nails.  With enough solar power and 150-feet of air hose (plus spares, yada, yada, I figure the nail gun which will let me zip through construction projects, will be a real plus.

 

The name of the game when it comes to construction/housing improvements is to go ahead and spend the money on the right tools for the job.

 

Sure, if I had infinite time, I could likely build something like the Coral Castle with a pocket knife, but I'm not likely to live  the requisite 1,500 years and have 300 disposable assistants to get it done.  So, whether it's computing, cooking, or construction, it pays to have the right tools for the job.

 

If you're talking about building a small cabin on a secluded piece of property and you have Mr. air tools and his brother-in-law, Panama "Chop Saw" Bates, I reckon we could frame up a decent little cabin (16 X 24) in a day or two.  Might be a day building the deck/foundation if we did post and pier. 

 

Roofing (hand me that other air tool, wouldja?) would be another day including decking.  Toss in R-23 or better in the ceiling (No, that air-powered staple shooter...")  that'd be a day.  I hate insulating - air mask and rubber gloves...yuck.  Three days to wire, two days to plumb, three  if there's a second bath, and four if you want copper supply lines,  two days to sheet rock, and a four days for tape and paint.. then a day for finishing carpentry except base shoes, two days for the kitchen, and have the flooring crew in on the next-to-final day.  Last day if for base shoe and punch list items.  Move in the day after.  yeah, you still have time.

 

However, whether you have a plan, helpers, air tools, building materials, a septic crew putting in the you know what and the water and electricity already  run, that can slow you down.  But the BIG SHOW STOPPER depending on where you live could be "permits".

 

One joy of living in rural East Texas is that if I wake up in the morning and decide to rip off the roof and change the whole look of what was once a modular home, and put a second story on it, there's no messing about with architects and the like.  Just sketch something up in Punch Super Home Suite, grab the nail gun and a pail full of 2 3/8th's and 3  1/2" loads, the chop saw and compressor and "Yee Haw!"

 

I told a colleague about this 'Wild West' ability to make one's home into whatever you feel like, including putting in your own septic system without a permit or messing about (if you have over 10 acres of land, and keep all parts of the system 100' from any property line) and as long as your neighbors don't complain, you're all good.  This, of course varies by state.

 

He was shocked, living as he does in a 'tightly governed' berg  in New Jersey.  It's darned near to the point there where if you want to change from wallpaper to tile on a wall you need 6-months of hearing and an environmental impact statement.

 

I don't mean to get off on the 'condo Nazi' mentality here, but home owner associations and covenants that restrict things as important as the raising of ham radio antennas, remind me that building departments that seem to have forgotten the concept of "A man's home is his castle".  It just sticks in my craw and ticks me off.  And it's not like they have rewritten their regulations to reflect reality - which would be "A man's home is his wife's castle" or anything so accurate.

 

Nossir, I believe that less government is good government.  Nothing wrong with having quality builders about, but if I have enough sense to size wires right and put a staple within 4" of the box, why shouldn't I be allowed to do my own work?  And on plumbing, if I can set a toilet, sweat copper and cut PVC, why can't I do my own plumbing?  Yeah, I know what friction losses are.

 

Hmmm... so do you have the time to put up your own something in the way of building a bug-out cabin?  I dunno.  Do you have to get a permit?  Do you even own a nail gun & compressor and and a chop saw?  Can you build something like a carport without a written plan?

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Send snip and save ideas to george@ure.net

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