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Published Monday through Friday about 8 AM Central Time Except Holidays

 

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Party Till Black Monday?

Say, not to be a bummer here, but the action on Friday, although down (sure, sure), was nowhere near enough of a downer for us to be looking to it as a 'bottom' although the TV financial/pimp channels had no shortage of "bottom pickers" on proclaiming this and that.  Strange contortions as some of 'em did that, too.

 

For one thing, my friend Robin Landry reminded me of a little 'common sense' which although it should be reported by the 'bottom pickers' isn't, generally.  A real bottom in most major bear markets ends with a huge blow-off volume day.  In addition, if there's going to be any meaningful gains appearing anytime soon, the advance/decline line has to turn around and get positive. 

 

"George, any time you've got a rally and the advance decline line is seriously negative it's just not the bottom in most cases," said Landry.

 

Being 'old school' I always liked Joe Granville's on-balance volume approach, to..  So when the up volume is 224.5 million shares and the down volume is 1.4-billion I figure "Nope, keep your money in cash, bonds, or treasuries..."

 

So, I take the gut-level "feel" of the market, throw in Landry's advance/decline line, my own guestimate of Granvillian (is that a word?) On-Balance-Volume and a side of MACD and presto!  I get two sleepless nights waiting for Monday's action.  Couldn't have anything to do with all the coffee I drink, could it?

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Why Monday?  Last Mondays in October are not a particularly good time for stocks.  I'll be whipping out the 79-candles on the sausage, eggs, and hash browns Monday morning to mark the anniversary of the previous  all-time decline in the Dow - Black Monday of 1929.  Elaine will be standing by with a fire extinguisher.

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I hope you appreciate how close we are to that kind of performance this year?  If we get down to 7800 on the Dow we will (by my calcs) have actually be into a worse patch than '29 and the Great Depression that followed.

 

All of which should have you expecting the same kind of dynamics as last time around:  Huge foreclosures (like you ain't seen nothing yet, kind) and on top of that layoffs of nearly half the workforce at some time over the coming 4-5 years and Oh!  Did I mention?  Social unrest in a country which is much better armed than it was generall at the end of the Roaring Twenties?

 

Good as Gold?

More than a few readers have asked me my opinion on gold.  Let me be absolutely clear on something here...I try to have as few opinions as possible, preferring instead to have some calculations with which to compare matters.

 

But if you insist, let's go on a data quest.

 

Let's see how gold and the Dow looked at the all-time high of the Dow on October 9, 2007 when the Dow was at 14,165 and gold was at $736.  The Gold to Dow ratio was  19.2459 ounces of gold to make up One Dow.

 

Then, let's look at the all time high of gold on March 17, 2008 when it touched $1012 and the Dow was at 11,972.  Here, the gold to Dow ratio was 11.8300; in other words only 11.83 ounces of gold were needed to 'buy the Dow.

 

So, how did yesterday fair?  On a closing Dow of 8,379 and gold back at $735 to pick a place between the bid and ask, the gold ratio was 11.4

 

Bottom Line:  Gold is down, sure.  But, not as much as the Dow and it's gradually taking less gold to "buy the Dow."    If you're a babe-in-the-woods in long wave economics, this is what we call a 'trend.'

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OK, being amped on 2-strong cups of coffee, and not wanting to go outside and work on a fence project here at the ranch because a) it's dark and b) its only 44 degrees outside, let's indulge my sense of curiosity for one more look at something historical.

 

How low could this Dow to Gold ratio go?  The answer lies back in 1980 which was the previous time that gold scaled the ultimate heights of ratio to the Dow.  In fact on January 21st, 1980, gold closed at $850 an ounce.  Yahoo shows that the Dow closed at 872.78 on that day. The ratio means that it only took an amazing 1.026 ounces of gold to buy the Dow!

 

Holy smokes!  Could things go that extreme again?

 

Well, duh,  of course!  Try Dow 770.

 

As I explained in a recent issue of my subscriber newsletter "Peoplenomics" (the marketer in me makes me say "Just $40 a year, click here..") even with the recent declines in the Dow, the Price/Earnings ratio of the Dow is still well into double digits.  And that means the Dow has a long ways down to go because the 'hot money' is finding returns over on the fixed income side of things (bonds and what have you's) in the 20-25% yield range.  Which means that the Dow P/E ratio needs to fall to about 5 in order to compete with those 20% yields from the bond boys.

 

Yes, the Dow is down, but so's the earnings outlook...which is why the technical level of 770 is (yah ain't gonna like this here word:) viable in the foreseeable future. 

 

I know what you're thinking:  "But wait!  That would imply that the Dow could fall to less than half it's current value and still only be fairly priced...is that what you're saying?"

 

Good morning, Sunshine.  Welcome to my mat.

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Of course when we get there, the whole known world will have changed and our definitions of money and what's important in life will have gone through a tremendous change.  But that's why I've been workin g on a report for Peoplenomics readers this weekend on "The World Without Money" - what Cliff calls a paradigm collapse.  Ain't we cheerful?

 

Now to put it in sailing terms, 'cause I loving sailing....Think of it as civilization drags anchor in a terrible financial storm and gets heaped up on the rocks of adversity of the foot of the mountains of history.  Damn, that sounds literate. Worse: It's accurate.

 

A little melodramatic?  Hah!  You ain't got a time machine.  Not that you need one with stories like this one...read on....

Oh-Oh Department: China's Pissed...

Watch the dollar Monday.  "U.S. has plundered world wealth with dollar: China paper."  Inscrutably stated, the obvious.

 

If a dollar collapses in an economic lockdown, does anyone hear?

 

Which means what in the Tao of Finance?  We're screwed, maybe?  We won't be able to pawn off much in the way of debt-backed paper to the waking hordes....  Can you say "Ooops!"

 

Got Insurance?

If you think China's pissed, wait till you start talking to taxpayers of America about buying out AIG wild-eyed gambling addiction.  Latest: They may need even more dough than Treasury has ,handed out.

 

And for what?  Save an over-leveraged insurance company from blowing up at the expense of higher taxes for non AIG customers like me?  Give me a friggin break.  Or free car insurance...something of value besides the spa bill, please!

 

What Huckster Hank and Bennie the Printer aren't getting is that they are IMHO squandering money that should be saved to rebuild America's infrastructure and feed people in soup lines along the way. So we can get back in the game with American jobs!

 

What's not clear about history?  Think the Grim Reaper of Finance is going to pass over America because we're such 'nice' people?  Hello?  Anyone there?  I mean "Anyone there who's not on a banker's teat somewhere in the back room?"

 

Look...if you want more headlines, drop back Monday...there's just too damn much to do around the ranch and to write what will hopefully be a good article for subscribers on living in a land without "money" as we know it as things slide along...

 

But, before I get out and fight fencing, here's a letter for a fellow dirt-scratcher in our...

 

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Coping: Smart Like a Farmer...

Perfect letter than sums it up better than I ever could.  Me?  Ask me what time it is and I will build you a watch.  Tell you that in the last Depression, there was a migration from farms to the big city because that's where folks thought the jobs were.  In this Depression, the migration will likely go the other way because why?  The countryside is where the food is. 

 

Nope, my farmer-reader is much more plain speaking than that...

"Good evening, George. This is letter 2 from our relatively well-prepared farm in the beautiful PNW, awaiting the big bang (or would that more appropriately be called the Dull Thud? The Whiney Whimper? Best not get me started......). I must say this dumb farmer has been getting quite the education on your website, about all sorts of big city issues like credit default swaps, circuit breaker collar trigger levels, and fifth wave troughs. Around here, if a pig defaults on credit, no problem. Our freezer has room for those kinds of events. The circuit breaker has a nice big old grounding rod to absorb excess juice, and I clean the trough out once a week whether there's a fifth wave in there or not. But I guess the education has been important, seeing as how we were warned to pay off the little debt we still had, buy in a month of feed in advance, and tell our high-falutin' city friends that if they show up at our doorstep wanting a meal, to bring their work gloves. So thank you for helping us dumb dirt farmers understand this new bottom line. Recent events sorta bring a nice new meaning to that term, don't they?

I got a macabre chuckle out of the news tonight, that everyone on Wall Street was so relieved this afternoon when trading didn't "get bad enough" to trigger a halt. These are the same folks who keep thinking things will get better? Yep, live it up this weekend, go play some golf, and then back to the salt mines with the lot of you come Monday. I'll just keep building fence. I doubt that, when next Friday afternoon rolls around, traders will look back with anything close to relief. I, on the other hand, will have accomplished something useful.

I do have a question. I was trying to explain to our dairy cows about the possibility of online purchases being suspended soon. Being the hi-tech outfit that we are, most of those cows have PayPal accounts, online banking access, and/or various credit or debit cards. I guess I'm paying them too much, because the ladies are quite active in between milking sessions, bidding on various eBay collectibles, el cheapo electronic gadgetry and Lord only knows what else. You should see some of the crap that UPS delivers to that barn. Ol' Bessie, though, apparently only has a debit card, conservative soul that she is. She asked if she'd be prevented from getting her bag balm online through some cut-rate pharmacy. She's one of those cows that didn't follow the herd and kept her lines of credit nice and clean. Living well within her retirement income and all. I wasn't sure what to tell her so I said I'd ask. Will Ol' Bessie still be able to use her debit card for that online bag balm retailer, when the other cows' PayPal accounts have been frozen? Or will we have to start rubbing her parts with beeswax? Either way, a little more detail about how ACH transactions work, and why that might change, would be nice. Inquiring cows want to know.

In all seriousness, all of us here do appreciate the time it must take for you to shovel the poo, after you've already done all the ranch work. That's a lot of effort, especially considering the amount of poo involved. We hope that a lot of folks read your column and take it to heart. Enough, anyway, to somehow reduce the deer-in-the-headlights reaction when the train wreck actually finally comes to a rest. After all, we can't feed the whole country when the time comes. We're generous folk but even we have our limits. On the other hand, maybe then we'd finally get through our to-do list and be able to take a day off. Now there's a notion. But please let the Time Monks know that, seeing as how we're neighbors and all, if push came to shove, they can go right to the head of the line at our door. We'll even have pie ready. Or would that be pi?   (*Actually, they're more phi/sql/viseca piscis fellows - G)

Thanks in advance for your future words of wisdom. Don't forget to get some sleep. If it's just going to be us dumb farmers left when the dust settles, we'll have a whole new to-do list rebuilding everything. Sleep now while you can. From the looks of things we'll soon be in the empire building business.

PS - We'll sign up for your Peoplenomics subscription just as soon as we can. Do you take piglets as payment? Think about it. After all, why should the pork stay within the Beltway?

We'll pass on the piglets...say, need a goat?  Other than PayPal or a check in the mail, an equivalent amount of silver (4 ounces now, which is great from where I sit) is fine.

 

But seriously, we've had the same question raised by the goats here: Will their PayPal accounts still work and will our prize Boer buck, who's a damn busy polygamist with 10-wives so to speak, be still be able to rent porn videos using his debit card.  Like your operation, we try to keep our herd up to snuff, too.  So that's the topic of Peoplenomics this weekend - What's the next Money?  PayPal, Script or Piglets....?

 

By the way, since the Feds are so busy hyping the National Animal Information System (NAIS) little Goatalina Doelene, one of the youngest females (with pouty lips, I might add), suggested that we farmers should band together and let our animals self-register online.  I think it's a grand idea, but I'm worried that our goats will will use this as an excuse to get another wireless access point put in down on the far aside of the property where there are some dead spots.  (They couldn't get the Belkin Wireless Range Extender to work with the auto-config option, so they sent it back to Amazon.)  Wonder if you have the same kind of problems with your herd?

 

P.S. How much a month do you give your pigs for their Skype allowance? I've giving our goats $10 a month of Skype credit each, but they're pressing for more claiming calls to long-lost relatives in South Africa are pricey...do you use Skype or an unlimited LD plan for your pig's calls back to Iowa?  Thanks. 

 

PPS: Remember when farming and ranching was simple?  Shovel, shotgun, seeds and barbed wire?  Now its Kubota/New Holland, assault riffles, CCW permits, land surveys, electric wire, controllers, rented terminator seeds, GPS planters, access points, satellite dishes and a sauna for the animals...Did I mention the designer red-dyed diesel by permit only?   Fer cryin' out load...who'da thought?

 

PPPS: Sounds like the Tet Offensive outside down at our place this morning - with hunting season only a week or two off, everyone is out at first light sighting in their canons.  I've had to take to wearing a Kevlar jacket with a level 3 chest plate (and helmet, too) while working fences.

 

PPPPS: Hey, do you milk your sows?  And can you make cheese from 'em?  Anything for a new niche market these days, huh?  Maybe I could build a milking machine for 'em out in my shop...we could split the IP royalties 50-50...Do a ramp up and sell it off to John Deere, Purina, or Tractor Supply?

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3 Futures: "Normal", Micro-Factory, and Anarchy

This week's report started off to build the case for the rapid reindustrialization of America, but by the time the week was over, some research on declining West Coast containerized shipping traffic, reading the latest web bot run, and the generally abysmal performance of the stock market forced a mid-stream reexamination of the concept I was setting out to proposed, namely the 'reinventing of America'.  Oh sure, it's still there, but it's the lower probability outcome when compared to either the new 'normal' (however you want to describe the creeping blend of socialism and fascism that's taking over the world) or the growing possibility that we'll reach what I refer to as a Tainter Tipping Point and from there descending directly into anarchy.  While I desperately wanted to find a use case for the Micro-Factory/reinventing of America, an honest read of the tea leaves puts the odds at damn slim.  Here's why...

 

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Review of this week's report:

"Dear George, Inspired by today's bulletin, I looked at the business section of the NY Times, and read on page 6 Why the Bear Is Alive and Well. The writer, Paul J. Lim, talked about P/E ratios, and I felt very smug, having been made hip to them by your writing. The reporter seems to confirm what you've been saying, which shouldn't come in as a surprise. It's just interesting to see something about what I just read from you."

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"Live on $10,000" Updated

What?  You haven't ordered the ebook "How to Live on $10,000 a year -- or 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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Friday October 24, 2008

Welcome to Face Plant Friday

Benchmark:  A close in the next few weeks below 7,853 will make this decline worse than the October 1929 collapse.  Just in case you're keeping score like me...

 

Reference Materials:

NYSE Announces Fourth-Quarter 2008 Circuit-Breaker Levels

NEW YORK , September 30, 2008 -- The New York Stock Exchange will implement new circuit-breaker collar trigger levels for fourth-quarter 2008 effective Wednesday, October 1, 2008. Circuit-breaker points represent the thresholds at which trading is halted marketwide for single-day declines in the Dow Jones Industrial Average (DJIA). Circuit-breaker levels are set quarterly as 10, 20 and 30-percent of the DJIA average closing values of the previous month, rounded to the nearest 50 points.

In fourth-quarter 2008, the 10, 20 and 30-percent decline levels, respectively, in the DJIA will be as follows:

Level 1 Halt A 1,100-point drop in the DJIA before 2 p.m. will halt trading for one hour; for 30 minutes if between 2 p.m. and 2:30 p.m.; and have no effect if at 2:30 p.m. or later unless there is a level 2 halt.

Level 2 Halt A 2,200-point drop in the DJIA before 1:00 p.m. will halt trading for two hours; for one hour if between 1:00 p.m. and 2:00 p.m.; and for the remainder of the day if at 2:00 p.m. or later.

Level 3 Halt A 3,350-point drop will halt trading for the remainder of the day regardless of when the decline occurs.

Background: Circuit-breakers are calculated quarterly. The percentage levels were first implemented in April 1998 and are adjusted on the first trading day of each quarter. In 2008, those dates are Jan. 2, April 1, July 1 and Oct. 1.

I posted this two weeks ago knowing it was coming, but you probably thought "Oh, that damn George...it'll never happen..."  Yeah, well, we're about to see, huh? 

OK, If you were a little disappointed that Robin Landry's ":immediate decline" and Ure's "EPIC decline didn't get underway on Thursday, just relax and stand by for what shapes up as "Face Plant Friday."    Overnight trading has taken the Dow, NASDAQ, and S&P Futures are all stuck at 'limit down'.  "Face Plant!"    (Yes, I will post a Saturday report to cover ex post planto gory details...)

 

If you were thinking yesterday "Gee, does that mean the market might really 'fall on its face this week?" I'd give you a wink & a nod, apologize for being one day early but call it good.  Better a day early than a day late around here. 

 

Have another round and up & down cocktail (coffee and Prozac) - You're gonna need it today - and have several slices of pie for breakfast...that may help, too.

 

But yes, if you listen closely today, you should be able to hear the doors of Economic Hell creaking open today another notch; sorta like the first jarring open that happened in our scheduled October 6-8 timeframe with Iceland's face plant October 7-9th being the highlight there.

 

What seems to be driving things today are a combination of CDS concerns, falling earnings (duh), falling employment prospects (duh too) and the admission from a lot of company earnings reports that they don't see a turnaround in this mess until 2010.  Sounds like everyone's coming down with Ure's Disease...the onset of sudden sobriety and and realization that there really may be nowhere to hide:

 

 

The 'good news' (such as it is, and in these conditions we're flailing about trying to find something 'good' to report, so go with me on this...) The 'lockdown/ in the predictive linguistics that we've been eyeing in modelspace as occurring now and then between here and mid November is now most probably going to be 'lockdown' of the markets.

 

You mean like Russia a couple of weeks back?  Or Argentina's?  Or Mexico's?

 

Yeeeuuup...that's the ticket.

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While I wait for "Der Decider", Printer Ben, and Yank Hank to roll with the updated rendition of "Good Times are Just Ahead" - a popular dementia of leaders in the early going in last Great Depression.

 

A teaser article in the Financial Times says "Swap spread turn negative..."  This is the kind of thing that's supposed to be a mathematical impossibility - so I'll be calling my pal The Bond Dude today to ask him the obvious "WTF???"

 

Regardless of his answer ('market discontinuities due to unintended consequences of irresponsible fiscal decision-making' would be a fine plug & play here) I'll simply reiterate from past rants my contention that Treasury and the Fed have focused too much on bailing out Bankers and not putting enough emphasis into soup kitchens and saving both surviving homeowners.  But hey! All it's going to take now will be a fresh wave of layoffs and the 'offishul' unemployment rate (which understates reality by maybe half anyway) and we'll be In Great Depression territory there, too.

 

"World markets sink; dollar at 13-year low vs. yen" reports an AP/Yahoo story.

 

Just like I expected, the OPEC'ers have cut production by 1.5 million barrels a day - in order to hold up global consumers so they can pay for all that opulence built on sand with borrowed money.

 

If you're wondering why oil is trading below $65 a barrel anyway, it's because this is how depressions begin, my friend.  Demand collapses, price collapses; repeat as often as necessary until you're in a soup line.

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Our Kind of Writing Award:  To Jim Sinclair of www.jsmineset.com for the email subject line: "What happens in Iceland Doesn't Always Stay in Iceland..."

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Alan Greenspan was up on the Hill Thursday where under some intense questioning, he admitted that there was perhaps a flaw in the runaway, leveraged to the hilt and beyond, market ideology he and the other paper-pushers promoted. 

 

Back in 1964 (or thereabouts) Greenspan actually understood what sound money and the role of gold was.  The sincerity of "discovering a flaw' as the entire world lapsed into financial calamity of epic proportions seems an insufficient apology for running the country onto the rocks, but that's just my feeling.  How about all his book money to fund homeless programs?  A little 'share the pain' gesture would be nice...

 

No Terror - Yet

The headline that there's "No signs of Qaeda election threat - U.S." sounds to me like either taunting or conditioning.  Maybe it's my coffee, but who needs al Qaida when you've got Wall Street?

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But meantime, here's a rather disturbing email:

"George:

I have been an avid reader of yours for the past year, along with the HPH boys. I work in ***********, ** with our state government for the last ** years, in a regulatory agency that does (as a side) emergency response. My area of expertise is radioactive materials.

Yesterday something very strange happened. Our staff of emergency responders were called into the Supers office and were issued “badges”. We had to sign an affidavit of loyalty and integrity when issued these pieces of metal. In the past our ID’s were good and proper for any work we did, even got us admission into our nuclear power plants.

WE were told to carry these on our person “at all times”. In my ** years of service to this country and state, I have NEVER been issued a badge and told to carry it. Call me conspiratorial if you like, or maybe I am not seeing a bigger picture unfolding before my eyes. Just thought you would like to know what is going on in the Heartland.

AS always your friend, in service...(name withheld)

Your guess is as good as mine...I it's just someone misunderstood when Warren Buffett said something to the effect that "If options are dynamite, derivatives are thermonuclear devices" or something to that effect... Sure hope so...Just in case: I'll pick up fresh batteries for my field survey meter.

 

Don't have one?   See http://www.ki4u.com/  or move to the most prepared county in America: Madison County Alabama...

 

The Runs: Poll-ish

Here's a good AP story on why the presidential polls are miles apart. 

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Speculation that Barack Obama would be ruled ineligible to run because of a nagging citizenship question are still floating about - a reader sent this:

"This story about Obama's birth place got some big traction Thursday when Savage had Berg on for 90 minutes. Could this be the big event that causes the election results to be delayed by months? Speculation McCain will pull this out next week-interesting constitutional crisis. Thanks......".

Indeed...but it would be more than a Constitutional crisis, I'm afraid...

 

NSS Department

(If you're not a heavy texter, click here to find out what NSS means, def. 1)

"Interview: U.S. to miss deadline on Mexico border fence."  Gee, golly, imagine that?  Who'd a thunk that a fence which could impede the flow of cheap/illegal labor for workers in poultry, meat processing, agriculture and construction industries which pour oodles of money into political coffers would miss a deadline?  Hmmm...let me think....no hints....

 

Geniuses of the Day Department

This headline just stumps me:  "Air Force creates new pilot programs for drones." 

 

Ure's solution:  Buy copies of Microsoft Flight simulator for $37 at Amazon.  Buy a bunch of cheap quad core computers at Tiger Direct, or CDW, and start the class off with the 'design your own plane' option - cobble up something close to a drone and Presto!  Save bazillions.

 

No missile launching capability?  Put a big red button next to the joystick....I'm just saying...

 

Adventures in the Checkbook Republic

Mayor Mike (a bazillionaire) has been blessed to run for a third time in NYC.  Not that he's a bad guy, but this is the kind of checkbook disregard for tradition that starts small and leads to undermining the foundations of democracy. 

 

What's that? Oh?  Too late?  Already undermined?  America already bought out?  sold to the highest bidding lobby groups? Oh well....I tried....

 

On Speed

A supersonic car is targeting 1,000 miles per hour.  Why a car that fast would be able to keep up with traffic on the 280 (up the West side of Silicon Valley) in the old 4PM Grand Prix back in the day...

 

Paper Problems

The NY Times and other big newzies are continuing to get hammered by the upstart New Media outlets.  Profits cut to less than half at the NY Times on sliding ad sales.

 

The problem, maybe missed by the media strategic planners is that there are really two problems, not just one.  The obvious is that new media competition is getting some ad money.  That's a given.  But the other is that we're also at the end of a huge economic expansion and as consumers pull in their horns, advertising is going to have a falling / failing ROI.  So ad sales fall and new media gains competitive advantage.  Oh well...life in cannibal corporatism.

 

Student Loan Crisis

We've been warning (based on predictive linguistics) that you shouldn't close up the kid's room just because they've gone to college - and that there's been a good chance of them coming back to the nest as student loans dry up.

 

A couple of headlines as that vision of the future comes rushing towards us:  In Russia "Frozen student loans stir fears on Campuses" and Sallie Mae here in the US - a huge student lender - reports a major operating loss.  Meanwhile headlines like "Turmoil threatens student loans" keep popping up more or less on schedule.

 

If the kids don't come home, they may become "Student Loan Fugitives" - a good backgrounder here.

 

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Coping:  Credit Card Collapse

I don't mean to bring this up at an inopportune time (Face Plant Friday and all) but we need to have us a short conversation about the question "How will you live without credit cards for a while?"

 

The reason for brining this up is that in the www.halfpasthuman.com modelspace, we continue to read language which goes to the idea of 'sliding now' and lockup of something more than circuit breakers by mid November.'

 

That has me wondering about how safe any kind of financial instrument will be.  For example, if banks get on with credit card limit drops, the first obvious thing that will happen is people who are presently at or very near to their limits may find they have n o purchasing power left as credit card limits are lowered (!!!).

 

Obviously, this can't be allowed to go on very long, because if it does, it will collapse most of the businesses that rely on the Internet for revenue. 

 

Ask yourself for a moment "How would Amazon work if there were a sudden and precipitous drop in credit card use?  How would the Amazon business model work?"

 

The answer is it wouldn't.  Companies like Amazon (and anyone else who depends on the internet would be doomed in an instant.  Without some kind of online credit card processing facility, the whole economic system as we've known it will implode.

 

What happens, if, for example, at the same time there's a problem with clearing via the ACH or the FedWire?  What happens to America if the financial system fails?

 

This is not a purely hypothetical question.  It just happens two weeks ago in Iceland.

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Countries around the world are rethinking their investments in US debt instruments.  Little headlines like "FSC Clarifies rule changes on US agency MBS" in Taiwan. I may not be the brightest guy in the world, but when the Financial Supervisory Commission on Taiwan starts turning its nose up at US mortgage-backed securities, I have to ask myself "Is this more of the music ending and the scramble is now on for chairs?"

 

What will like be like in the "Post 'Economic; Economy?"  That's on tap for Peoplenomics.com subscribers this weekend.  But I want to put the thought problem out so the strategic planners in online reliant companies like Amazon and eBay can work out how to keep goods flowing.

 

My long term bet?  I'd put money on a merger between Amazon and eBay at some point.  Why?  because Amazon might need eBay's PayPal business unit - that seems to be one way that the online merchants could survive - a sort of captive online script...just thinking out loud here.

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Emails like this one are coming in:

"Why have real estate agents and mortgage lenders stopped looking out of the window in the morning? Because that would leave them with nothing to do in the afternoon. "

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"How do you know that this crisis is really bad? Even president Bush knows about it."

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"What's the best way to get and run a small business in today's economic climate? Buy a big one and wait."

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"What's the capital of Iceland?   About $27.53"

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"What's the worst-hit sector for employment in Iceland? Bank robbers."

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"Who is the model of optimism during this crisis? Any banker who still irons 5 shirts on a Sunday."

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Thursday October 23, 2008

The EPIC Decline Starts When?

If there's one thing I hope to have conveyed to readers of UrbanSurvival (and the mirror site, www.independencejournal.com )  it's that I think we're in a period when the whole focus of personal investments should be balanced, as best possible, in such a way as to spread risks and rewards evenly such that no matter what the outcome of a particular economic skirmish is, you'll still be relatively intact and ready for whatever comes next.

 

Suppose, for example, you had put all of your holdings into gold.  In which case, since gold popped up to a little over a thousand dollars earlier this year, and it's just over $700 this morning, your investment there would have declined about 30%.  No doubt the dollar has been in a several months long countertrend rally, but there may be signs of that changing; at least that's one implicate from the headline "Dollar hits 7-month low vs. yen on risk aversion."  In other words, how well gold does on a dollar-denominated basis will likely depend on how fast the rest of the world wakes up to our massive printing of paper. Fine times till it happens...

 

Although having money in bonds hasn't been a bad move (which is why we've advised a few relatives to slide a little dough into a TreasuryDirect account here and there, which we've done ourselves), there's no outright guarantee that bonds will always do well.  For example, in Argentina (which may be a 'rest of world prototype' we note that "Argentine bonds, stocks, tumble on pension takeover plan."  

 

Credit where due: My deflationist pal Jas Jain, who's been extolling the virtues of bonds for about a year (maybe longer...) has done damn fine in preserving capital with his approach.  And it's still working as "Bonds rally on economic gloom, sinking stocks."

 

Salting money way in real estate has been mostly a disaster, with one key exception: agricultural land.  In our personal portfolio, despite the declines in big cities, particularly those with Nuevo Rich McMansions, ag real estate has continued to hold (and in many cases increase) its values.

 

What's more, you can see people waking up to this trend as I caught an ad on one of the financial channels this week for 40-acres parcels for homesteading at Wild Horse Ranch in Wyoming.  Rural homesteading parcels on financial channels?  Mentioning under $2,000 an acre? Who (besides us) would have thought?

 

With the rural/homestead/survivable housing aside, there sure aren't too many places where a person can keep money these days. 

 

It's made worse by the fact that at some point all fiat currencies fail and are 'redone' in some manner.  Stories about how police departments around the country are prepping for possible violence in the wake of the November election are just a tad bothersome.  So is the Joe Biden/ Colin Powell commentary about an early crisis ahead for the presumed new Obama administration.

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Then there's the possibility of a 'terrorist event' of some kind prior to the election.  It popped up as a meme in the Slate article Wednesday "Why Do Terrorists Love To Strike Around Elections?"

 

And if not 'terrorism' then something else.  Two of the best minds on the planet, Nicholas Taleb and Benoit Mandelbrot told NPR this week that this is the toughest period in America's history not since the Depression, but since the Revolutionary War.  turns out I'm a damned optimist!

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Meantime, the job cuts are rolling up.  Circuit City cutting 150 stores.  Goldman Sachs ready to Sach 3,250 say reports. And the list goes on..and on...and on....

 

So much so, that it's readily visible in the Mass Layoff numbers are out from the Bureau of Labor Statistics - one of those back of the envelop charts I look at now and then...

 

 

Here's the key thing about this chart:  The end of the Clinton-Bush era may be marked with the hand-off of the worst economy in decades to an incoming administration.  What planning, huh?

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Despite D.C. hyperbole and NYC crack head economics,  the latest numbers out of RealtyTrac, as reported by the AP, shows that foreclosure filings surged 71% in the third quarter compared with year-ago numbers as the mortgage crisis continues to worsen. NSS.

 

This is all bakes as a big pie the HalfPastHuman predictive linguistics have been labeling the new 'duality'.  Once you know what to look for, it'll smack you upside the head everywhere you look.

 

I don't mean in the obvious -- - like the expectations that a stock market can rally in the midst of serious layoffs and foreclosures and bankster bailouts.  Oh no, it's more fundamental than that.

 

Go look at the Price of Gold.  Yes, it seems to be trading down into the low $700's today, but if you try to actually buy it at the 'paper prices' reported for the "markets"  lotsa luck!

 

Same for an ounce of silver -- going 'offishully' for $9.38 at press time - which by extension implies you & I ought to be able to buy silver 100-ounce bars around that price, right?  But on EBay you can find 1 ounce silver bars going for $23.00.  Click here to see what real life pricing is like at the moment.  Quite a hefty premium over 'spot'.

 

Some might argue that the one ounce Canadian Maples on EBay are somehow special, but check out their prices.  Anywhere near the spot approaching $700?  Nope.  Closer to $1,000 is the asking.

 

That's 'duality' for you...a bifurcations/cleaving/slicing of conditions depending on what your needs are.  If you want to order gold for $700 an ounce, you might be able to get away with it for now, but if you do there's likely a loooooooooong wait for it , and that brings up 'delivery risk'.  All it takes is a force majeure in a market and all the orders committed go 'poof!"  Moderating prices quoted by a lot of metals dealers seem typically not for immediate delivery.  I've heard 12 and 13-weeks for some products.

 

I know, I know:  How can you have this kind of pricing discontinuity?  I dunno.  Supply and demand says it shouldn't be there, but there it is - right 'in-your-face.'  Just set up a mental 'bit bucket'  and go with it - such is the nature/speed of change going on in the world right now.

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Spin & Win Department:  John Crudele in the NY Post today bemoans "Free-spending AIG Hires High-Priced P.R. Firm.  So, how much does it cost to make Americans forget that spa bill?

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Does the market drop further from here?  Well duh... 

 

"Wall Street plunges on grim corporate outlook" begins a story in the Financial Times about yesterday's little market hiccup.

 

I talked to Robin Landry after the close on Wednesday and he's of the opinion that there's about a 10% chance that the market will avoid going in the you-know-whater.  But mostly, he's expecting things to pick up steam to the downside. 

 

So I figure we'll both be sitting watching with popcorn and sodas as the afternoon (and tomorrow) comes along.  Since we're getting into the period when linguistics are charts are starting to line up again...stocks seems not a pretty place to be.

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What's ahead?  Linguistically there's some talk about a lockdown - maybe another set of restrictions on short-selling, or maybe 'the word' being passed that no one can write/speak ill of the market on MSM media; just hard telling what 'lockdown' means. 

 

Worst case? I picture a scenario where the market drops another 500 (or more) points today or tomorrow, and the government policy response quickly jumps from "hands off, free markets" to "OMG we have to stop short selling."  Like that'll help.  But, you know what they say about desperate people in desperate times, huh?

 

And even were that to appear, it won't really stop the dynamics of collapse...we've done set off that particular trip wire. 

 

About the time the PowersThatBe get hold of a way to slow the slide in the markets, about then the banksters will be turning off credit for all but the most "worthy" - and that should lead, before the end of November, to the long awaited dénouement where we get discussion of what happens when ATM's won't dispense money and when online credit card transaction fail and people are at least momentarily reduced to running on cash.  Say, Got enough to last even one week?

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Because it's getting on toward the 'season to be jolly' (unless you're among the soon to be axed at ML or GS) should mention (again) that Christmas is shaping up as the all-time bummer this year, unless of course you're a seriously lazy-ass reindeer, in which case this will be the best year ever for the lazy-ass reindeer collective bargaining unit...there will be so little to do.

 

Not like I'm the Lone Grinch.'  Check out this press release out today:

"Is 2008 the year that the last-minute Christmas rush will never materialise?

Release Date: 23 October 2008

Abingdon, Oxford, UK – 23 October 2008 -- Huw Thomas, COO at retail systems experts PMC believes that Christmas 2008 is shaping up to be a retail shocker. Although ‘doom and gloom’ messages have often haunted retailers’ festivities (so that’s nothing new) this one looks set to be the real ‘nightmare before Christmas’.

"In recent years the lead up to the Christmas period has started off slowly and despite early dire predictions, sales have rallied at the last gasp. In the end, last-minute shopping usually makes December tolerable for retailers and some even show some year-on-year growth."

What about expectations of a last minute rush?

This year those expectations could be more like forlorn hope. The banking crisis, credit crunch, recession; whichever you want to blame, will have a far greater impact than usual. In previous years, the Christmas rush kicked-in during the last two weeks of shopping. Often much of that rush was driven by discounting, but will customers respond this time?

With customers' finances under more pressure than ever, Christmas 2008 will be much tougher. We’re mid October and already discounts of 60/ 70% are not uncommon in the high street. The closer it comes to Christmas the more retailers will have nowhere left to go.

Thomas states: "Before we all batten down the hatches, hope to ride out the storm and wait for the return of the good times, it’s important to understand that there will be winners as well as losers. Those retailers that get their strategies right should do well. When hard pressed clients no longer feel the urge to drag themselves down the recession-hit desert of the high street the lure of online shopping still exists. The trouble is that despite the rise and rise of multichannel retailing too many retailers fail to make their online offer attractive, easy to use and 100% reliable – now is not the time to find your online offer is not up to scratch."

One retail rule is always ‘to have a distinctive offer’

So why do many retailers imitate a herd of zebra? They all take the same action in the face of problems. Too many stand around in groups hoping that those closest to the edge will be the unlucky ones. They all look alike and only they can really tell one from another. The answer is to differentiate – on the high street and online. Rather than join the herd and offer larger and larger discounts make promise delivery your differentiator. "

Ah, nothing like a little Christmas cheer, eh?

 

Wanna meet another Grinch?  Sure, the story doesn't pertain directly in so many words to Christmas, but it does.  Meet Ron Widdows, head of Neptune Orient Lines - a big container shipping outfit.  He's telling "Lloyd's List" that the worst is yet to come in the 'box trades' - industry-speak for containerized cargo operations.  Sound like something I've mentioned here?

 

Lazy reindeer are obsolete, containers are in, and we're so screwed...tralla la la la, la la la la....

 

Hand me that bottle of Jack, would yah?  So this is how an EPIC collapse gets rolling, huh? 

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I've got to remember to write all this down in my "UrbanSurvival Economic Grimoire" to share with the grand kids, should any of my kids ever produce any. 

 

Say...  Did I mention how it's pretty well documented that birth rates drop leading into and during periods of great economic suckiness?  Here: 19 pages outlining the "Fertility Decline in the Transition Economies, 1989-1998: Economic and Social Factors Revisited"  Sample:

 

 

Which I reckon is why between Elaine and I there are nowhere near enough grandkids to keep even 50% of the population around in 50-years.... Maybe young folks are smarter and more sensitive than adults give 'em credit for?

 

Naw...let's go back to watching 'adults' screw things up...market opens in a half hour....Don't know whether to stock up on Depends or whipping cream in (NO2 powered) spray cans for this one...

 

Global Something

A reader in NSW sends along this note about the weather down under and says if the sunspots hold off for another year, then the global warming true believers might be outed.  Yeah, yeah...it's like Mark Twain (I think it was) said "Everyone talks about global warming, but no one does anything about it"  Except sets up another paper trading game based on it.

 

War Watch: Pick a War,  Any War

Georgia claims Russia has 7,000 troops in South Ossetia. 

 

"Suspected US strike kills 11 in Pakistan: Officials"  I figure they use terms like "suspected" because there might be someone else flying drones over their territory blasting missiles down on 'em...

 

And the US says Baghdad must expect 'dramatic consequences' if they don't line up behind US plans for their country.  But wait!  Aren't they supposed to be ...you know...free now?  Say, you don't suppose this is all a sham, do you...

 

The REAL Story of the Day

The "HandleBar in Pensacola Florida is offering free beer to voters.  Inspirational marketing, isn't it?  Making voting make sense...after about the third or fourth...

 

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Coping: Those UFO Files

Apparently I'm not the only one taking some time reading through all those British UFO files released on Monday that I told you about.  Somewhere in there is a report that a U.S. pilot was ordered to shoot down a UFO in May of 1957.

 

Worthy Critic

Here's an email that landed in my National Correct George Day - Thursday basket:

"hiya, again George.

just saw some more "National Correct George Day" material, & thought you'd wanna' know. That 'inquiring mind' & all.

1ST up: ThePowersThatBe yeah, I'm reasonably sure that 'they' exist, but I'm not such a narcissistic paranoid that I'm gonna' play that 'secret group' of unknown Illuminati Masons w/ the Elders of Zion protocols are try'n to take over the world crap.

Hey, I ain't the sharpest knife in the draw, but dodderin' old senile fool don't quite fit, at least not yet. [gimme' another 5-6 yrs]

So here's the bottom line—the Canadian PM's speech writer is supposed to have PLAGIARISED the Australian PM's speech.

Yeah, its not nearly as juicy as your Texas version, but it seems to fit; at least that's what was in the 'net news about 9/30/08.

See these two; < http://www.cnn.com/2008/WORLD/americas/09/30/canada.election.ap/  > < http://www.digitaljournal.com/article/260529  >

Ahnd next up; I never heard that G. Gordon Liddy EVER killed anybody, George. Unlike your pal Bill Ayers, who maybe's responsible for a couple a cops gettin' offed by the Weatherman(men?) Underground, which accord'n to some sources (some guy named Ayers?) was a " Revolutionary communist" group.

Hey, I'm still not the brightest crayon in the box, but I just don't see how you can EQUATE political 'dirty tricks' w/ murder, Georgie ole' boy.  (Don't get me started on the number of 'suicides' around the Bush and Clinton outfits...-G)

Maybe there's a book in there, somewhere, for some 'radical far left' college professor, or MAYBE, a college pres., huh?

But, credit where due, old man; (unlike those lending institutions, you know, the ones that won't lend?)

The reality of the political scam is not too far from where you've been casting, maybe just a little farther out, just past that old stump, & a little to the LEFT, huh?

Really, if its a sports metaphor, I like the one about a high football team scrimmage; they go out, knock the ball around a little, nobody keeps score, no wins, no draws, & no loses.

If you likes money, howz about a counterfeit bill; it don't matter which side you're look'n at, its still worthless.

Just like the political parties, the Democans & the Repulicrats, or whatever their names are this week.

But to the good side of the page, the info 'bout shipping containers may be some of the best yet. Thanks much. Again.

I listened to NPR again today; they had the Economics Nobel Prize winner on there; he said that things are going to get "substantially worse," before they get better; he's not the only one, either.

So; thanks for the 'heads up.' Again.

Oh, & George? Don't plan on the government letting you keep any of that money you made, okay? At least, not as long as the socialists win the next election. (& that's not a reflection on either party; more likely on BOTH of them!)

& that will bring "global change that could dwarf all other events in history." (Just not COULD; WILL!)

Yeah, cooking oil is great, so's salt, believe it or not. Right now I'm buyin' salt & toilet tissue.

You say "the systemic nature of collapse" is on your mind?

As far as "tipping points" go, this is going to be far more than most folks can even imagine.

Its not just the end of an economic era; its really TEOTWAWKI.

You think "starting over is hard to do"?

Try it when there's only 'bout 7 million people left on the PLANET!

Yeah, some say that only about .001% of the present world population will survive.

That wouldn't leave much but time.

Oh, & I can't get over that solar system you put in; $14K?

Hey, I'm only plan'n on 'bout $1.6K—a glorified solar battery charger, a wind-powered version of the same, & several deep-cycle batteries.

OH, I almost forgot; I want to convert a 10-foot fiberglass satellite disk into a solar stove; oughta' boil a gallon of water in 15 minutes. [On a GOOD day, of course.]

Thanks for all the FISH!

I would have put in a wind-powered system here, but contrary to the Boone Pickens' ad, this part of Texas is in one of the lowest wind parts of the country there is.  Maybe we're not close enough to /Crawford & Austin...

 

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Wednesday October 22, 2008

Another Special Update

Crash In the Works?

Latest from Robin Landry is if we break this morning's low - might be a good strategy to assume the crash is underway right now;  Here's his update...

The decline this am was, I believe, wave d in the triangle and now we are in the wave e rally, the target is between 8868 and 8944 before wave five down to my 5800 target for the DJIA begins. A break below the low this morning will mean the wave 5 decline has begun. As I have said many times before, the 5th wave is usually the crash wave ever since people became aware of the Elliott wave and when a new low is set they realize the wave patern is not an ABC but a fifth to new lows and the panic selling begins. I will update as conditions warrant and time permits. Do not believe the talking heads that are saying the low is in and try to catch a falling knife. The turmoil is worldwide and is just now spreading. I pray that I am wrong but each day the market seems to verify my count.

So....if we break the lows of earlier today in the next day or two of trading, might want to issue rum rations to all hands...

 

Special Update

If They Only Knew Department...

...How close the Truth is in this ad campaign...spied this morning on some DC buses by a sharp-eyed UrbanSurvival  tipster...

 

 

Friggin' genius!!!  I wonder if they know how this could catch on?  Bumper stickers anyone? Bet I could give away hundreds even here in East Texas...

 

Our 2008 "Accidental Truth in Advertising Campaign Award" winners for sure: The District of Columbia Departments of Health and the Environment!

 

The Case for Dow 770

That the present period is starting to have the 'feel' of the Great Depression will likely build a bit more for the balance of this week as the market seems set up for further index declines - a topic which we'll get to in a moment.  But a few words about the 'feel' and how what was 'old' is going around to become 'new' again.

 

Take for example, this publication called "The golden Days" which landed in my mailbox this week.  Published by Chester Lapp and some folks up in Pennsylvania (Golden Days, 420 Weaver Road, Millersburg, PA, 17061-9509), this tabloid running 36 pages (including cover) plans to publish 10 complete books a year.  The ones in my sample issue included "Fame & Fortune" by Horatio Alger, Jr., "The Bell-Ringer at Brinsley" by Wilton Burton, and "Jack Peter's Adventures in Africa" by Walter A. Morris".

 

OK, so what's so special about "Golden Days"?  For one thing, I didn't see any web site for the publication.  Goog'ed it, of course, but nothing.  Even more interesting:  Not so much as an email address on it.  Even the advertising doesn't have web addresses!

 

Now why would I bring this to your attention?  Because I've been waiting for the modern-day equivalent to the "Everyman's Library Series" to re-emerge as the country spirals deeper into an economic decline.  Lapp's fine publication seems to fill a niche: thoughtful content, very limited advertising, and something that even a person who's living in a car might be able to squeak into the budget because once you're living in a car and the hypnosis of modern media fades away, there's not nearly so much to buy once you've got the basics like food and a few toiletries covered.

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Not common I make ad hominem comments, but am I the only one to catch the striking resemblance between Daddy Warbucks in the Annie comics (or the musical)  back when to Treasury Secretary Hank Paulson?

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A third and more pertinent point that makes me wonder how close the Second Depression is came as a phone call to a long-time reader Tuesday...

"George,

 

You may or may not remember me from the Colorado Longwaves site, where you, I, Robin Landry, and MANY other people came together to discuss market and economic situations.

 

I come to your website daily and have read about the predictive linguistics’ forecast for a stunning event.  I think the word EPIC was used. And I think in one of your recent daily updates you said people would be stunned or in shock for several months.

 

So far the market decline has been brutal, but NOT a crash.  The reason I say that is that I believe, from my own Elliott Wave interpretation, that the current decline is of Supercycle or maybe even Grand Supercycle wave degree.  If Supercycle, then the correction that is underway will correct the rally from 1932 all the way to the ATH last year.   That projects to a Dow low at the previous 4th wave which was either the 1974 or 1982 low depending on how its labeled, at a minimum Dow 770, SPX 100

 

The following is a post that I made to a small forum group that I participate in, about a dozen traders.  I also attached a chart from one of them showing the time geometry coming up this week.

 (chart posted with permission of Kevin W. Murphy, kwmurphy@bellsouth.net )

Thanks for the wonderful site that you maintain, and for your efforts to help people prepare for the catastrophe that is coming.

 

Most people are looking for SPX in the 600’s this coming week for the low. I have posted 602 for weeks.   A very few have lower (much lower) price possibilities:

 

• October 22nd is 377 days from the Oct 11th, 2007 ATH in SPX, 377 is a Fibonacci number

• SPX 377 on October 22nd is a perfect square of price and time, and it happened in 2002, where the high on Sept 1, 2000 (many call the “orthodox high”) to the low on Oct 10, 2002 @768 was 768 days

• October 22nd is 55 days from the  closing high on August 28th

• There is a cardinal panic moon on October 24th

 

• The number 5 is a key number for Fibonacci and Biblical sequences, and is a key universe number (5 senses, 5 body extensions, 5 fingers, 5 toes, etc)

• Square root of 5 is 2.236, a key number in geometry of the markets

• .236 is another key geometry number from the Fibonacci ratios

 

So,

• ATCH = 1576,  1576 x .236 = 372

• 2.236 x 100 = 223.6 x 3 (another Fib and Bible number) = 670

• Tuesday’s rally high @ 1044 was either wave 2 or wave 4.  if wave  2, this exercise is more plausible. 1044 – 670 = 374

 

A range of 372 to 377 for a crash low would be an EPIC crash which leaves people walking around stunned and in shock for many months.

 

Sincerely,

C.S. Atlanta

I'm not expecting the Dow to get to 777 right away.  More to my liking (and yours, I expect) would be the decline to the 5,800 Dow range by the end of February and then a good strong 6-months rally.  But that's not necessarily in the linguistics or the fractals, so we shall just have to wait and see.

 

Whatever your expectation, we can set most all of them aside once the market opens today because in the end, all the charting and hypothecating in the world doesn't matter as long at the markets are open, the PPT is intervening, and funds caught out short are trying to raise cash to cover counterparty obligations due in a couple of days.

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By the Way, C.S. living in the North Atlanta area reports one of his kids works for a real estate outfit that in the heyday of the real estate bubble was doing 200+ closes a month.  She's reporting that last week, or so, there were only 5 closings schedule for October and none were schedule for November yet. 

 

With any luck, that's changed, but you got the picture:  Remember that with many of the statistics about mortgage applications (just to pick one metric) it's hard to sort the wheat from the chaff as lots of couples are putting in 5 to 10 applications because money is so tight right now.  It may look like applications are up, but more'n likely it has to do with the reduced flow of money. 

 

Velocity of Money is a concept you need to be at least somewhat familiar with because it's having such a huge impact on our lives right now although not many in the mainstream is talking about it.  An exception is the Forbes article "Velocity and the V-shaped Recovery" which at least addresses the issue in part, although it seems possible to me to have high velocity in what I'd call "useless money" (derivatives) and still have a dearth of loan money for regular biped humans trying to keep their homes.  Stuff better left in the academic discussions, perhaps.

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On my latest trip over to the house for coffee, and to help the cats who were having problems with one of the HDMI plugs on their big screen, I noticed the futures had continued to deteriorate and the Dow looks like it would drop about 200 at the open.  I scolded the cats for watching financial porn when they should be out mousing, but they simply meowed me away; the feline equivalent of 'shut up we're doing some FOREX trading here.'  "The buy your own damn cat food and cough up your share of the satellite bill, huh?"

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If the Bulls (and cats) get really lucky the fractal outlook will be dead wrong.  I wouldn't put money you couldn't afford to lose on it, however.  Don't quit your day job, and if you're a cat, remember your core value is mousing of the field, not ETrade kind.

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Speaking of mousing.....you did hear that Yahoo is laying off 1,500 workers as their profits are falling?

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Against the backdrop of recollapsing markets (is that a word? My bad for making it up, but it fits...) John Crudele of the NY Post has a posed a dandy challenge this week: "Let's see if we can have a stimulating stimulus plan..."   Before we're all dead or bankrupt would be nice, fer sure...

 

Say How Much!!!???

"Fed may provide up to $540 billion to aid money funds" reports Bloomberg.  (Gloomberg?) 

 

Say, don't look now kids, but I think duh government's already spent that 'hurry up and approve it money'.  Seen anyone's house saved yet?

 

Speaking of Housing...

My deflationist pla Jas Jain sends this:

"The Bay Area Is NOW the Undisputed Champion of Collapsing Home Prices

Early leaders in sharp declines in home prices were FL, San Diego & Sacramento; followed by Las Vegas, Phoenix and L.A. Now the sharpest price declines are taking place in the two NorCal metros. So far the declines are concentrated in rural/peripheral parts of SF and SJ metros, but soon the hammer will fall on Cupertino, Los Altos, Palo Alto, etc., once the local tech Scams, especially **PL, **OG & **Q, give up all their gains of the past 4 years. I fully expect my forecast of 50-80% decline in Los Altos 94022 to materialize before 2010 is out.

I don’t recall 101 SFH listings for Palo Alto that I saw yesterday. Inventory in high-priced areas is rising fast. The median listing price for Moron Hills (south of San Jose where lot of morons paid 0.5-1.5M for ordinary homes over the past 5 years) is still $800K with 15-20 months worth of inventory on the market. The prices, at $300 PPSF, are still too high even after falling 30-40%. Very few zip codes in the US will support prices more than $200 PPSF during the depression that is coming to California in 2009 and the US in 2010. The whole of Bay Area will see price declines of 50-80% (depending upon the zip codes) from the peak. 80% decline from the peak for Palo Alto is a good target. Other than fraud and Scams the Bay Area is not special. It has too many people with mental attitude problems due to Scam money having flooded the area.

Bay Area median is down 39.8% from the peak of $665K in July & August of 2007.

Jas

Link to source: "Bay Area home sales up 45% over '07; median price falls to $400K"

Does the headline imply the bottom is in?  Won't see me taking that bet yet...

 

Ah...Gassed

"Russia, Iran, Qatar talk of a Gas OPEC" being formed to firm up prices and work to get the maximum amount from the world's pocketbook.

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Meantime, those OPEC'ers (another Ureism - on the house) may be cutting prdouction by a million barrels a day reports the Boston Globe.

 

Wrong Tipping Point

There's an op-ed piece in the Wall Street Journal this morning that discusses "Obama and the Tax Tipping Point".

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This is another one of those fine examples of what I have the luxury (living in the East Texas outback) of questioning.  You see, to my simple-minded way of looking at it, any discussion of 'income tax burden' that doesn't include so much as a passing mention of the huge republicorp increases in self-employment taxes is wholly specious! 

 

What I sense is a flim-flam going on in Washington on this whole 'income tax' issue.  If you look at total tax burden what do you see?  Not much change.  Less from one pocket, more from the other.  Wrong Tipping Point.

 

What they oughta be worried about is the Tipping Point encased in "How many unemployed and dispossessed people does it take before some firebrand starts marching on Washington demanding accountability to The People?"

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I suppose holding out hope for a thorough MSM review of how the corpgov machine did the Bailout would be asking too much.  Look, facts is facts: In the end, taxes are driven by spending and if the Bushco family under spends and leaves a whole crap-pile of problems in the country, and spending is the only way to fix it, it seems to my pea-sized brain that more taxes are coming.

 

But the root cause is what?  Huge wars and Banker bailouts, and delayed payments --- then sticking the next guy with the check. 

 

Fine...whatever.  Ain't politics sweet in the Checkbook Republic/Land of the Sheep?

 

More rational?  "Analyst: Obama plan isn't "socialism," it's traditional progressive taxation" reports the Seattle Times.

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Drudge Report notes that evening news viewership is dropping.  Oh! Gee, golly, imagine that...

 

Rich Getting Richer

In OECD countries, rich people in the US have 16 times more wealth than the poor...(video)  "The people who do best out of growth are those who were rich already..."  "Children and young adults have seen poverty rates going up quite steadily over the last two decades."

 

Mooned

While most of the emphasis of the soon-to-be-lame duck Bush administration has been on holding the economy at the edge of the abyss, so it can be handed off to someone else, the space race has been continuing with folks like India launchingd a mapping mission of some two-years duration.

 

With any luck, there will be a little more learned and if may silence some of the rampant speculation on the 'net that there are 'crystalline structure/giant buildings' on the backside of the moon.  That is, if India is any more forthcoming with their data than NASA, which the conspiracy theorists claim has censored much of the photographic evidence coming back.  I'

ll just continue my 'show me' attitude toward the discussion, realizing that even if real, there'd be so much dis-info out there as to make your head spin.

 

Aloof is a good thing in matters economic and 'up in the sky' about now.  I'm still congratulating myself on all the money I saved by not going to Alabama to see the UFO appearance on the 14th that didn't happen.  A couple of readers suggested it was an early off-season tourism promotion, anyway...

 

Guess the point of this morning's item is just to say with business in the West slowing, you'd think Indians leadership would have higher priorities.  Butt no: "India's out to launch..."

 

Geese and Gander

The headline that "San Francisco weight decriminalizing prostitution" has me laughing at the absurdity of it all.  We elect leaders who go to Washington and ignore the clear Will of the People on things like the Bankster Bailout Bill - bought off by lobby groups and influence peddlers, yet folks get worked up where only one (OK, sometimes two or three, so I've heard) get screwed - not a whole nation.  Go figure.

 

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Coping:  Biker Name Infringement?

Here's one that's got me scratching me head.  The story starts off about the federal arrest of Mongol Motorcycle Club members in the L.A. area...but then goes into how the U.S. Attorney in the case may try to take control of the gang's trademarked name. 

 

Who'd have thought IP (intellectual property) law practice would involve bikers?

 

Sure as hell:  Here's the Trademark file: 

Word Mark	MONGOLS
Goods and Services	IC 035. US 100 101 102. G & S: ASSOCIATION SERVICES, NAMELY, PROMOTING THE INTERESTS OF PERSONS INTERESTED IN THE RECREATION OF RIDING MOTORCYCLES. FIRST USE: 19690120. FIRST USE IN COMMERCE: 19690120
Mark Drawing Code	(1) TYPED DRAWING
Serial Number	76532713

Are they alone?  Nope:

Word Mark	HELLS ANGELS
Goods and Services	IC 014. US 002 027 028 050. G & S: Jewellery, goods in precious metal, clocks and watches, earrings, key rings, badges, chains, pins IC 016. US 002 005 022 023 029 037 038 050. G & S: Printed matter, newspapers, periodical publications, books, photographs, stationery and adhesive materials (stationery); paper, cardboard, paper articles and cardboard articles, book-binding material, artists' materials, paint brushes, ordinary playing cards; printers' type and cliches (stereotype); all included in this class IC 025. US 022 039. G & S: Articles of clothing, footwear and headwear, including coats, jackets, trousers, overalls, shirts, pullovers, sweaters, hats, vests, waistcoats, cardigans and belts (for wear) IC 026. US 037 039 040 042 050. G & S: Badges, belt clasps, lace and embroidery, buttons, headwear ornaments, patches for repairing textile articles, pins and needles IC 041. US 100 101 107. G & S: Entertainment services; sporting and cultural services including wrestling and boxing, educational and training services, concert and discotheque services, organisation of exhibitions especially relating to motorcycles for educational and cultural purposes
Mark Drawing Code	(4) STANDARD CHARACTER MARK
Serial Number	79056456

Have I , or have I not, told you that we live in a brand conscious world?

I'll just go work on my retooling of an old cowboy song..."Mommas, don't let your children grow up to be lawyers..."

Free Lunch Department

A "Woman Jailed over a $7.45 bill" at the local Waffle House reports Channel 6 from Fort Pierce Florida.  Wonder if she got a second meal in the slammer?

 

How many times have I told you to expect not only an increase in crimes against persons as the depression dawns, but also expect to see crimes committed to people can get food and shelter.

 

Knock, knock...what here?

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Tuesday October 21, 2008

Special Update

First Banks, Now Money Markets

Like bailing out banksters isn't enough, the pool now includes money markets...

"Release Date: October 21, 2008

For release at 9:00 a.m. EDT

The Federal Reserve Board on Tuesday announced the creation of the Money Market Investor Funding Facility (MMIFF), which will support a private-sector initiative designed to provide liquidity to U.S. money market investors.

Under the MMIFF, authorized by the Board under Section 13(3) of the Federal Reserve Act, the Federal Reserve Bank of New York (FRBNY) will provide senior secured funding to a series of special purpose vehicles to facilitate an industry-supported private-sector initiative to finance the purchase of eligible assets from eligible investors. Eligible assets will include U.S. dollar-denominated certificates of deposit and commercial paper issued by highly rated financial institutions and having remaining maturities of 90 days or less. Eligible investors will include U.S. money market mutual funds and over time may include other U.S. money market investors.

The short-term debt markets have been under considerable strain in recent weeks as money market mutual funds and other investors have had difficulty selling assets to satisfy redemption requests and meet portfolio rebalancing needs. By facilitating the sales of money market instruments in the secondary market, the MMIFF should improve the liquidity position of money market investors, thus increasing their ability to meet any further redemption requests and their willingness to invest in money market instruments. Improved money market conditions will enhance the ability of banks and other financial intermediaries to accommodate the credit needs of businesses and households.

The attached term sheet describes the basic terms and operational details of the facility.

The MMIFF complements the previously announced Commercial Paper Funding Facility (CPFF), which on October 27, 2008 will begin funding purchases of highly rated, U.S.-dollar denominated, three-month, unsecured and asset-backed commercial paper issued by U.S. issuers, as well as the Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), announced on September 19, 2008, which extends loans to banking organizations to purchase asset backed commercial paper from money market mutual funds. The AMLF, CPFF, and MMIFF are all intended to improve liquidity in short-term debt markets and thereby increase the availability of credit. "

Say, am I the only one that notices how when the printing presses are being turned up the price of gold (which can't be printed) gets slammed?  Coincidence, I'm sure...

 

Proof of the PowersThatBe?

A video that is getting a lot of traction on the internet these days implies strongly that yes, there really are PowersThatBe.  Although the example uses video that about five years old, it's clear that someone was calling in the speeches to a couple of politicians - one in Canada and one in Australia, and they were just doing what they were told to do.  The result is a fascinating video called "Dueling Puppets"... (Click here for the video).

 

Something people might be asking is "Who the hell was sending out these scripts to political leadership of two countries?  I've got my suspicions, starting with conservative newspaper owners, followed by shadow government spinsters,  but first thing to draw your attention to as we start Tuesday is that although the idea of 'PowersThatBe'  pulling the strings behind the scene is not a popular one, the evidence is clear and convincing if you know where to look.  The video "Dueling Puppets" is a clear and present 'gotcha.'

 

Whipping Up Emotions In the Checkbook Republic

That there are PowersThatBe, and that they do pull the strings of the 'normal' people by keeping them whipped up in counterproductive emotions is also beyond doubt. 

 

Yesterday, I explained how getting whipped up about William Ayers relationship with Barack Obama was seriously pointless. 

 

Instead I suggested people keep their eye on the ball and remember that both the republicorps and democorps work together as slaves of the corporate checkbook to get the world this screwed up and falling into financial disaster. 

 

Yet plenty of people don't get it, including this reader who said...

"The way I've got it figured, if Ayers had committed a crime of some sort, he'd be locked up somewhere...but no, he's a free man and a serious academic at that." That is the most ignorant statement I have ever heard in my life. You obviously don't know squat about this guy and the bombings and terror he and his wife conducted in the past. They are both free because of government misconduct concerning their prosecution. Right after 911 he said he wasn't sorry for the past bombings, and wished he had done more. Wow, George, your love of this guy and Hugo Chavez clearly shows your far left leanings. I will not be reading your column anymore, ever! "

Whew.  Good thing.  Because I'm not sure how this reader would react to discovering that John McCain has the same kind of skeletons in his closet; namely his relationship with Watergate Plumber G. Gordon Liddy, which the right-wing seem to overlook... 

 

Have you noticed the "turnabout is fair play" items on the 'net like "Liddy the Plumber: Why is John McCain defending an Unrepentant Terrorist?"

 

My point is?  One your emotions take over, your logical decision-making processes are toast.

 

Second point: You've seen the "Obama using hidden hypnosis techniques" report floating around the 'net, right?

 

Try to stay on the same page, my friend (except for the guy who's not reading this column anymore..):  The PTB's game is to keep America Divided...because if too many of the villagers catch on, it will be necktie parties and pitchforks for those who stole our freedoms, retirement money and all the rest.

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Related: See the NY Post piece this morning about how the FCC's (so-called) Fairness Doctrine" may be brought back to muzzle right-wing radio. See: "Dems get set to muzzle the right."

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Maybe related?  A woman TV reporter in Little Rock, AR has been severely beaten.  She had a small part in Oliver Stone's new flick "W"...

 

Better Than Cake

But, in the meantime, the PTB are cobbling up their backup plan, figuring that enough money for (another) house payment or another big screen will keep America under their thumb.  Modern version of 'Let them eat cake...'

 

So, it's with that in mind that we assess the headlines that report the Fed head has issued his formal blessings under "Fed chairman backs second dose of stimulus."

 

We pay taxes, give the money back to ourselves watered down and Lo and Behold!  We've been saved!  (Say WTF?  huh?)
 

What the hell, as long as the print presses are papering over disaster, might as well hand some out to us 'little people," right?

 

Where's a shot of Jack - it's one of those mornings.

 

The Question Is What?

The UK's Telegraph has a great Ambrose Evans-Pritchard piece in today's editions: "Do our rulers know enough to avoid a 1930's replay?" 

 

Hint: Likely not.

 

Missing: Transparency

Meanwhile, the Treasury Department has been cutting 'special deals' with banksters in the bailout.  But wait!  What about all that promised 'transparency' that Hank Paulson mouthed?

 

"Treasury blacks out key parts of private bailout contracts..."    What were you expecting from these guys? Full disclosure?

 

Attack on the Bankers Meme

Although it's a little early, as I( wasn't expecting people to take out their anger on banks and banksters this early on, we nevertheless have to note that "At least five Chase banks hit with letter threats."  Some kind of letter with white powder and people being sent to hospitals to be checked out.

 

Linguistically, the actual physical attacks on bankster/persons of perceived power who failed the public trust isn't due till  next year...so this goes into the notes more as a 'prequel to sequel' event.

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If you find that kind of assessment alarmist, don't click here to read Bob Moriarty's "The Panic of 2008" which figures rioting will start within 18-0hours of a bank holiday being declared...

 

You see?  I'm really an optimist when you start researching economics...

 

More (Bummer) Shipping Stats

Yup....picking up where we started for Peoplenomics readers last week, and in yesterday's report, Mish's Global Economic Trend Analysis has more today on West Coast shipping stats... edging toward mainstream. 

 

Watch how when it gets to mainstream there will be all this hand-wringing over the 'sudden arrival' of events, LOL... 

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Say, maybe this should be Jack & water Tuesday...yeah...fine idea.  Moonshine Monday, Jack & Water Tuesday, Wine Wednesday, Long Island Thursday, Firewater Friday....yup, makes more sense than Fed policy so far...Sour Mash Saturday and Scotch Sunday.  Yeah...I knew I'd find some use for the Outlook Calendar function...

 

Landry's Latest:  Yes, 7,200 or 5800...

My friend Robin Landry is out with his latest update to his managed clients.  Landry, you'll recall, is one of those rare stock brokers who got most of his managed accounts out of stocks and into cash about 4,000 points back 'up hill' from here.  In fact, most of them had short positions to one degree, or another.   So here's his latest outlook:

Today's  (Monday's early action - G)  action raises the probability that the rally seen late Friday till early Tuesday was all of wave 4 of 3 and we are headed to at least the 7200 area +- 200 pts to complete wave 3 down.

 

However, now that we are in an environment where no one trusts the government, the banks, or any other financial institution, much less the politicians, an extended decline to the 5800 area +- 200 points is likely.

 

Once that is done a rally to at least the high seen Tuesday morning is probable before another decline starts to form wave 4 which may be a more complex rally but I will cover that after the current wave three decline is complete.

 

The positive side of this market is those who are aware of the wave structure and able to act on it are making more money in a few weeks than most people are able to make in a lifetime. When oil bottoms somewhere between 50-70- dollars a barrel, I intend to put 50% of my money in select oil and gas stocks and forget about them for at least 5 yrs.

 

What a time to be alive if you are out of debt and sitting on cash.

 

The buy and hold mantra will cause so much misery and pain for people close to retirement that it will become the cuss words of the future.

 

I pray that those of you who receive these updates have heeded them to at least a small extent and thus not in much financial pain.

 

The good news is, it is not to late. Once this bottom is in, the rally that follows will be a swift wave B rally lasting about 5 months in which much money can be made.

 

Then the final decline to lows undreamed of will begin, and once again will be very profitable.

 

I will comment on levels as they become appropriate. Comments and questions are welcome and will be answered as time permits. Do not listen to the talking heads on TV. They will lead you to poverty.

Robin may be contacted at rlandry@allegiance.tv.

 

Should be interesting to see who is more right over the next few months, Landry or George Bush especially after "Bush says Americans' Concern over Financial Crisis Now Easing."  My money is on Landry, of course...

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Speaking of personalities and trading, try on this headline: "So long suckers, Million hedge fund boss thanks 'idiot' traders and retires at 37."

 

Key quote from Andrew Lahde's reported farewell letter:

"The low-hanging fruit, ie idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking," he wrote. "These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government," he said.

"All of this behaviour supporting the aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America."

At least someone is honest about being 'in it for the money.'  Refreshing candor, eh?

 

How Many Jobs?

The UN figures the global impact of this 'fair-to-middlin'' imitation of economic collapse will cost 20-million people their jobs.

 

Since about 2.5 billion are already living on $2 a day or less, you might not notice.  Or that something approaching 1.5 billion humans live on $1 a day or less...naw...just forget them...

 

Of course, within a year when another 2-billion join the 'Under $2/day" ranks, that may set the stage for violent global change that could dwarf all other events in history, don't let that keep you up nights.  The predictive linguistics tend to err on the most dire side.  Might only be 4-billionliving on less than $2 a day...

 

Good News/Bad News Department: Solar Breakthrough

Here's one to keep an eye on: " A new solar cell material achievers almost 100% efficiency and could solve worldwide energy problems..."

 

Last time I checks, present-day solar products were in the 10% kind of range for cheaply available. 

 

The bad news? Of course, now that I've plopped down $14 kilobucks for solar gear, of course the breakthrough comes, right?

 

My Bad

I forgot to mention in Monday's column that Cliff of HalfPastHuman was going to be on Jeff Rense's radio show last night.  Oh well....you could subscribe to Jeff's audio service for $54.95 for a year's worth...

 

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Coping: How to be a CEO

An email from a reader brings me to one of my favorite topics this morning:  How should a well-intended CEO or CFO be operating in this kind of financial environment?

Well George, the economic recession has finally made its way to middle America. Here in Southeast Missouri, we had an all hands meeting where the coming layoffs in our labor force is coming next week.

Although not surprising to me as I have been following your daily column, I noticed that it did come as a surprise to some in the room. What struck me as really surprising is that the CEO. COO. and CFO said they did not see this coming. That just floored me !!!!! What the F are they doing all day ?? Do they not even browse the biased MSM at all ?? They definitely do not read George Ure's Urban Survival................................

CEO said and I quote "I do not have a crystal ball, but my best guess is that this may all change after the election. My guess is that it will not. I do think that things will start picking up in March of 2009" What planet is she living on? It is apparent to me that she is not reading all of the government economic reports and doing some common sense prognostication.

Here is a plan that they are going to implement that smacks of socialism and bailouts. The program is called "Work Share". If the company has only 3 days of work for you during a particular week, you will take the other 2 days off and be paid unemployment benefits for those 2 days !! I have never heard of that before !! I thought unemployment was for people who had no job at all !!

Is this something that Corpgov and CONgress included in the bailout ???

This is a prime example of a company with good solid, heads down (to the exclusion of life in general) kind of management. 

 

I've got a system of figuring out who should be a CEO and who should be in other positions that was passed on by a long time friend and it's based on how people worked together in ancient times when self organizing collective (or 'tribes') was the main social format.  It went something like this...

"George, the easiest way I've found as a CEO to put people into the right job is to remember that in pre-history there were only so many things humans could do.  Basically, you had farmers, fishermen, hunters, fire-tenders, and that was about it.

 

When you want to have growth in sales, make sure that the person you put in at the top sales spot is a hunter.  They'll go out and 'make a killing for you'

 

For the head of R&D, put in a farmer.  They will take a new idea and 'grow it for you..'

 

For most mundane kinds of positions, try to get a 'fire-tender.'  They will do what they are told, keep things going, but they won't necessarily create breakthroughs or much of anything else, but they will keep things rolling and 'keep things cooking.'

 

Last, but not least, make sure the CEO (or department heads)  is a fisherman.  The reason is that you want people in these positions to be able to 'fish out the biggest and best ideas' and then throw the smaller ones back.

 

You can start people off in any position, but you should always have in mind when you hire someone how they will fit into your 'tribe' and if they don't, either you - or they - will be sorely disappointed.  A hunter in a fire-tender role will quit out of pure frustration.  And fire-tenders can't do sales.  Simple as that."

Personally, I'm one of those hunter/fishermen types.  Which is how I have a lot of energy (hunter) and at the same time a fascination with lots of ideas - always sorting through the best I can find...like a what?  Fisherman.  (Think that has anything to do with why I lived on a sailboat for 10-years?)

 

Far be it from me to second guess, but I'd bet the CEO is not a fisherman...likely a farmer as a first guess...hence easily surprised by things springing from 'not in my field..."  Just a guess, mind you.  I don't usually practice management consulting at a distance, but it can be done I 'spose...

 

Flying While Flying Department

An airline pilot has been arrested on suspicion of being drunk while getting ready to tart a 5,300 mile long trip.  The good news is that the front end crew did the right thing...

 

Hello Oil, Goodbye to Milk

Two interesting long-range planning items popped out of conversations yesterday.  One, with chief time monk Cliff had to do with how long various cooking oils will store.  Seems Crisco oil may store for 10-years...will get back to you if that's wrong...

 

The point is, however, that cooking oil is incredibly important when times get bad...and so strange as it may seem, if you have been stocking up pints of booze as trading stock, and cartons of smokes, you might want to load up on cooking oil which has been highly prized in the past when Diaspora comes a knocking...

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The other conversation was with a friend (who also is a Peoplenomics subscriber) who called to chat about last weekend's report.  The conversation went something like this:

"George, I read the report must have been three or four times - complete paradigm shifter for me...had just never looked at what's coming that way before..."

"So I assume you've had the conversation with your brother about slicing off 10 acres from his dairy farm so you can get a cabin set up?"

"Well, I dunno.  His dairy farm may have 400 acres, but it's a factory farm.  In other words, if we don't get several semi's full of feed grains, and if there's not power for milking, that operation is going down..."

That just stopped me in my tracks.  I had not previously considered the 'Crashcading impacts' on the dairy industry when energy becomes unavailable, as it would if the U.S. dollar is renounced or even seriously devalued by oil countries..

 

I had already figured that if failures crash to a certain level that restarting would be difficult, but clearly there comes a 'tipping point' beyond which civilization as we know it doesn't just pop back like after a hurricane or earthquake when resources can be brought in from other areas.  The systemic nature of collapse is what keeps me up nights.

 

Great Preparedness Manual

The LDS (Mormon) 200+ page "Preparedness Manual" is available online free.  Fine information source on prepping for....whatever....

 

Living: From House to Car

Letters we like to get:

"You wrote:

"Another brutal reality you don't here too much in the mainstream media is the existence of the tent cities and cars where perhaps as many as a half million American citizens are now living. "

George, Had to write and say "right on"! I live in West Los Angeles (CA). In a very nice neighborhood where the homes are STILL selling for $700,000-$900,000. One weekend last month I counted 9 vehicles across the street from my house with people living in them.

P.S. I tried turning folks on to your website 18 months ago. Everybody laughed at me and said I was nuts. Of all my friends and co-workers only 2 paid any attention. One listened right away (my sister) and one listened but did nothing until 2 months ago -- that one is now a paid subscriber. I know it's mean but I had to send an "I told you so" email to everybody who called me crazy on October 10th! My highly paid lawyer boss who reads all the emails I send him with stuff from your website used to laugh and say "George seems so smart, too bad he's so nuts". He isn't laughing now let me tell you. My boss is a Harvard grad I've known for almost 40 years. Much as I love him he's a prime example that book learning doesn't give you common sense.

For sure...common sense....isn't!

Highway Despair

Another email worth reading:

Went shopping for can goods for the 50th time yesterday. Noticed the shelves in Wal-mart are starting to show, here and there. In particular, the Paper Products Isle was really getting vacant of paper towels, paper plates and the rest. I doubt people are having picnics in October ... even through winter, those shelves and displays have remained FULL, in the past. (Hmm, layoffs?)

Brother in law Details Semi Trucks in Arizona at one of those big Truck Stops. Norm reports that business is down there and his work week shortened and daily hours getting cut. It's not that the Truckers don't want their trucks cleaned, it's the fact that there aren't as many trucks on the road. - He's worried. Truckers tell sad tales of no business down the road.

This whole economic thing is a global monster. The chain that held everyone together didn't snap in one place, it's breaking at many links. Thus, it's like a cancer or silent killer that creeps up on people, individually.

Credit Cards? I once worked for *** *** *** National Bank. (Incoming Collections) - Remember walking past retail stores and being offered 10% off your purchase if you filled out a credit application? 99.9% of those who bit on that GOT a Card! There was no credit check with that ... I would look up Additional Accounts when these folks called in and by golly, there were two or more OTHER accounts with *** *** *** National Bank that were in default too ... SAME PERSON!

Why is the gov. Bailing Out Bankers and who ever else, without doing an AUDIT first? No, they Bail then investigate. (It Don't make sense.) - I think the gov. would find that these Entities brought this problem on themselves.

I guess we could ask questions all day but we're still headed for that financial cliff. (no pun intended) Personally, I think Bush should remain in Office ... the Captain should go down with the Titanic.

Ticket To Ride

Congrats to my eldest daughter Denise - proud owner of a new SmartCar.  Her review: "50 miles to the gallon, baby!!!!"  

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Around the Ranch: Fencing...

I promise to catch up on  overdue emails to folks today.  Yesterday I put in three fence gates and laid out the solar panel foundation...lots more to do, but I can hardly wait to get the 1,200 watts of solar 'spinning the meter backwards...'

 

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Monday October 20, 2008

The Runs: Obama Pulls Ahead

With the U.S. Presidential contest two weeks and a day from decision, it appears that Barack Obama is getting close to cinching up victory.  Not only has he managed to bring in a record $150-million in September, but formerly republicorp Secretary of State Colin Powell has given his backing - which has to line up as a double whammy to the John McCain camp.

 

Unable to come up with anything new to claim, about all the McCain crew's been able to muster is a replay of Sarah Plain's claims that Obama is 'palling around' with terrorists...something that is tired, out of date and arguably wrong.  Under fire for inviting him, there's a report the University of Nebraska has canceled a speech by one-time Weather Underground leader William Ayers.

 

What's curious to me is how the McCain camp has managed to turn Ayers into a no-good so-and-so, politically speaking.  The way I've got it figured, if Ayers had committed a crime of some sort, he'd be locked up somewhere...but no, he's a free man and a serious academic at that. 

 

But such is the nature of republicorp-democorp politics. Stir up the people with emotional frenzy driving hot buttons and pretend there's a difference.

 

Given the McCain record of voting for whatever George Bush wants 90% (+) of the time, I find it disappointing that Palin's playing the 'same old tune'.  The least the McCain camp could do would be to explain how many billions they plan to give to the rich banksters of the country while the economy implodes.  That would make things a little more clear.  But, I'm not holding my breath.

 

Both candidates voted pro war, so the only thing that seems at stake is the kind of socialism the one brings over the other.  Socialism for bankers, or socialism for a broader market.  Not much of a choice, but it's not supposed to be...which is why the PowersThatBe write such big checks to both sides. 

 

The only economic track the PTB have is to mix enough socialism into cannibalistic capitalism to keep it afloat and themselves at the top of the heap.  Have fun.

 

Housing Collapse Continues

Another brutal reality you don't here too much in the mainstream media is the existence of the tent cities and cars where perhaps as many as a half million American citizens are now living.  Again, if there was more coverage, the outcome of the election wouldn't be as 'close' as it is now.  The range of choice might be wider, too.

 

In the Pacific Northwest, where the Boeing strike drags on, people are doing their best to hang onto their homes, but with only limited success.  After promising more than a trillion dollars, all the Bush administration can say is something to the effect that they can't force banks to lend.  Gee, how comforting.  How about another  trillion for the banksters?

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The Boeing strike is starting to ripple out nationally.  Spirit AeroSystems in the Wichita area may be forced to shut down...the company is already on a three-day workweek.  Then there's the work reductions on the horizon at United Technologies and Honeywell.

 

The AP's Tim Klass (a damn fine reporter...remember him from back 'in the day' in Seattle newsing) reports the Boeing strike could run into November at least.  Not going to be a 'merry' holiday season around the Sound.

 

I don't usually hold stories over that I post over the weekend, but the whole West Coast is  becoming the mineshaft and Saturday's overview summed it all up this way:   (Or, click here to skip to next items)

 

Long Beach Container Traffic Down 15.8%

The Shipping Collapse

This week has been quite a wild ride, hasn't it.  The Dow, which closed Friday at 8852.22 is up  401-points from last week's 8,451.19 close.  But is it really time to be wading back into stocks?  Not hardly...at least not for my account.  If you want to have fun, go for it. My outlook, based in part on the linguistics of www.halfpasthuman.com and partly on a read of the charts since 2000's high of the Dow, is for the Big Slide Down to get actually pick up speed as we head down toward what could be a panic low of 5,900 or so, before a modest bounce and then down even lower from there.

 

The PowersThatBe used this week to (here's a hip spin word for you:) 'recalibrate' expectations.  Not only was George Bush saying that results may take a little while, but the same came from Ben Bernanke and Hank Paulson as well...each starting to fess up to the notion that yeah, all that money for the Banksters might not work overnight.

 

Meantime, the AP reports that the "Fallout from financial crisis hammers housing" and Reuters says the fed's "Probe of Lehman collapse escalated: NYT"

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Despite the miserable performance of gold and silver this week, I tend to take such price movements as just what they are: Indications of paper prices. But not necessarily an indication of what's really going on in the marketplace now, or what is likely to happen in the immediate future.

 

For one thing, the Fed's plan with Treasury to flood liquidity into the system seems to be showing up in the latest M-1 money figures out with little notice on Thursday of this week.  If you flip over to the Fed's money stock measures report, H.6 it's called, and scroll down to Table 2, you can find that the four -week M-1 average has been  1,450-billion for the preliminary October 6 period - the most recent reported.

 

This compares with a four week average of 1,396.5-billion for the first full week in September.

 

That's a four week change of 3.83%...Why if that kind of thing were to keep up, we'd be staring at 57% inflation of the money supply.

 

It's here that I stop myself and wonder if that's not perhaps a bit misleading, because if true, that would mean there's massive inflation in the pipeline.  Is the change in 13-week averages a little more restrained?  Why, of course: 16% annualized.

 

I hope you see the point:  because the government is printing up paper like crazy (and $1.5-trillion plus or minus a burger is crazy) a rational person would expect to see huge discontinuities develop in the economy.

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The "GlobalEurope Anticipation Bulletin" which has a far better record of forecasting global economic conditions that say, the Fed, has issued a "Global systemic crisis Alert - Summer 2009:  U.S. government defaults on its debt."  Among the factors this report cites:

"• The recent upward trend of the US Dollar is a direct and temporary consequence of the collapse of stock markets

• Thanks to its recent « political baptism », the Euro becomes a credible « safe haven » value and therefore provides a « crisis » alternative to the US dollar

• The US public debt is now swelling uncontrollably

• The ongoing collapse of US real economy prevents from finding an alternative solution to the country's defaulting

• « Strong inflation or hyper-inflation in the US in 2009? », that is the only question. "

Unfortunately, my back-of-the-envelope on M-1 seems to support strong inflation in necessary goods while deflation of housing prices may continue to collapse.

 

The collapse of Iceland's economy has been a sort of junior case study in where the rest of the world seems likely to head.  Not only are shoppers there hoarding goods (like food) but the country's leadership is begging for financial assistance from countries like Denmark and Norway which have ponied up some bucks.

 

Although there was some talk earlier in the crisis that Russia would simply 'buy Iceland", in the intervening week or so, punctuated with Russian market halts, the Russians may have thought better of the idea such that this weekend we're reading how "Russia not yet ready to lend to Iceland."

 

We noted yesterday how "China Shipping Traffic may plunge as exports slow" but few people have likely figured out the personal  implications of this; the largest being the worst bummer of a Christmas ever as goods coming to the U.S. are starting to dry up.  A reader who's familiar with the docks in the Pacific Northwest reports anecdotally that most of the ships coming in from Asia in the past few weeks have been 'above their waterlines' - a far cry from what the boom in consumer goods has been like over the past few years.

 

No, this is not something I'm making up - it's NOT being widely reported in the MainStreamMedia, however, because about the worst thing that could happen to the economy would be for consumers to really (and I mean really) tighten down on spending. 

 

Fro example, the Port of Portland is out with September results and air freight is down 13.1 percent from year ago levels according to the Portland Business Journal.

 

No, I couldn't find a press release on the Port of Long Beach web site, which I guess explains why there's no MSM focus on it yet, but if you know where to go sniffing for the latest statistics, you'll see that loaded inbound Port of Long Beach container unit traffic is down 15.8% compared with year ago levels.

 

It doesn't take a rocket surgeon to figure out that if container traffi8c is down 15.8% that sales of foreign-made goods should decline by a proportionate amount and profits (remember those good days?) would likely drop farther and faster.

 

Given the economy, an even bigger year-on-year decline seems likely by the time October figures come out.

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Given the difficulties with letters of credit lately, odds seem good that you should be worried about the 'ultimate tipping point' in the U.S. economy.  Here's how it works:

 

Usually, in a 'normal recession' when you get an economic slowdown, prices come down, interest rates on new cars drop to zero (and maybe even a little cash back) and people begin to increase their spending.

 

The "tip" occurs when things get so bad that despite all the incentives out there in terms of zero percent loans and such, people just cut off all spending and try to save cash.  Once that happens, you've got a Global Depression.

 

I'm going to keep today's report short - I normally don't do a Saturday post, but the magnitude of this story is such that it should be on every MSM outlet in the country and, in case you haven't noticed, it's not.

 

No talking heads discussing the 'tipping point', no government policy to address it (other than give money to bankers and pray a lot).  So I'll just tell you that within the next week or two, as the market slide picks up speed to the downside, that maybe you'll see the stories forthcoming then about how global trade is collapsing.

 

Remember where you heard it first.  It's the only story worth reporting from an economic standpoint and I don't see anyone else putting the larger context on it.

 

The main investment decision I'm off pondering this weekend is "When's the right time to exit the few bucks in the Treasuries and get into something that will hold (or gain) value is the GEAB expectation of a U.S. dollar default firms up...

 

You Seen Santa?

After some serious volatility last week (mostly due to a) options expiration and b) hedge funds dumping whatever they could to raise money and c) the CDS monies coming due this week, this week may be the pinnacle of stability for a few days.  Today, leading economic indicators are due out at 10 AM Eastern, but that's hardly a state-changer:  Most of us have already figured out that Christmas is going to be a bummer, particularly when new credit card limits come down the pike over coming weeks.

 

The Gallup Organization is out with "A Bleak First Look at Christmas Spending" this morning and it's a bummer indeed.  35% of Americans will spend less this year on Christmas gift than last year, whereas only 9% will spend more...

 

Let's talk about commodity prices for a minute: Depending on where you are, the global slowdown in consumption will either be a good thing, or bad.  For example, if you're working in a copper mining operation, or making wire, it's a genuine bummer as "Tough Christmas for Copper as Demand Wanes: Chart of the Day" shows up on Bloomberg.

 

On the other hand, in the Philippines, the headlines spin falling commodity prices to "Happy Christmas as prices lower" and then they go on to extol falling prices for milk, bread, and processed meats.

 

Just to give you a little perspective on how glum the mood of the country has turned in the past few weeks, a new AP-Yahoo survey out today says the number of people who think the country is headed the right way on economic matters has dropped from 28% in September to just 15% in October. 

 

Gee Seven

The headline that George "Bush plans to host world powers at economic summit" isn't the crazy part of the story.  It's the part where Bush "...said that any reform of financial systems must not chip away at the foundations of democratic capitalism and free enterprise."

 

Was he talking about the part where the Will of the People was shat upon by CONgress on the Banker Bailout?  Or was it the part where the government started buying up parts of private banks?  Or, was it the part where a private insurance company....

 

We must not have enough fluoride or vodka in our water around here...this has got to make sense...somewhere...

 

Hacked

The president of France has had his bank account hacked.  Wonder if this will increase subscriptions to 2600 in France?

 

Screwed

The French head of the International Monetary Fund is reportedly involved in a sex scandal.  How about that?  A report of a banker screwing more than customers...Who'd have thought?

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We could talk about the different French banker who resigned today over bank trading losses...

 

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Coping: About Them Aliens...

After all kinds of hype on the internet over the past month or so, you may be aware that no, there wasn't a UFO appearance over the state of Alabama for 'three days' as forecast.

 

UFO's and the presumed 'not-from-heres' that inhabit them have are a curious social phenomena to observe for a number of reasons, not the least of which is they point out the curious tendency of some humans to choose up sides on an issue based only on a belief in something unsupported by facts.

 

It's almost like there's a segment of the population that has a need or some kind of internal wiring error that leads them to actually travel to places like Alabama and look up in the sky, trying to convince themselves that they're right about something.

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In the HPH modelspace there's a fair amount of 'stuff' that relates to UFO's and how they are gaining prominence.  But, it's not coming from the gatherings of people who want to belief in something off planet that's going to come save earthlings.

 

Nope.  It's in a portion of the work related to "Secrets Revealed" - the part of linguistics where we get some really interesting 'heads up' information about what to look for in future news events.

 

So while most of the blogosphere has been looking at Alabama, I've been scanning headlines waiting to find the 'secrets revealed' about UFO's...and sure enough, right on schedule, here's' another round.  The BBC today headlines it as an "Airline had near miss with UFO" near Lydd in Kent (England) in 1991.

 

This is all part of a growing "secrets revealed about UFO's" story that has huge (like biggest ever) implications about life on earth...so it's being carefully released to the public.  One has to wonder if stories like the Alabama 'they're coming to save us' meme isn't somehow a smokescreen on the backside of which new - and very convincing evidence is being released.

 

Here's a like to the newest - and hottest - UFO sightings release officially by the British government's National Archives.  http://ufos.nationalarchives.gov.uk/ 

 

This joins disclosures from other countries - France, Brazil, and so on.

 

Some of the files are HUGE - more than 200 MB of .PDF, so if you're planning to download these over a dial-up connection, you might want to do it overnight or over a weekend.  Even with our multi-core computer and 5 mb of bandwidth, the files take an impressive amount of time to download.

 

Still, more than worth the effort.  Although not all are as interesting as the airline sighting, the credibility of the witnesses is unimpeachable in some, like this one from 1987:

 

 

Because these files are being released in scanned image .PDF form, it's going to take a lot of time for the UFO study community to go through and convert significant portions of the document images to text -- much of it is not suitable for OCR's (computer optical character recognition).

 

Still, makes the point that yes, secrets about UFO's are coming out and even if they aren't showing up on 'scheduled' over Alabama, they are showing up with some regularity on the 'net.

 

Starting on Page 10 of the 281 page PDF here, is an interesting discussion of the possible sources of UFO's in a 1992 draft paper based on 'the UFO hypothesis" written by the late Lambros D. Callimahos, a senior NSA cryptologist."

 

"UFO Hypothesis and Survival Questions"  - a damn curious title - outlines a lot of possibilities:

1. All UFO's are hoaxes

2. All UFO's are hallucinations

3. All UFO's are natural phenomena

4. Some UFO's are secret earth projects

5. Some UFO's are related to extra-terrestrial intelligences

 

Following this fifth point (page 15) is a discussion of what that means - if there are such not-from-heres, there are some paradigm changers to think about.

 

 

Unless, of course, some of the PTB have already cut themselves a deal...but let's not go there. Yet.  Too much additional reading to do...

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