Wall Street 'snaps' two-day losing streak...

Greetings good citizen,

For most of the day it appeared the markets were going to close lower again today…but NO, at the end of the trading day the markets shot back into positive territory to snap a 2 day losing streak (on what must have been downright anemic volume.)

Honestly good citizen, only a psychopath would trade in these hugely manipulated markets and only paid shills would advise you to do likewise.

Our first offering of the evening has had it’s headline modified to indicate the market’s ‘success’ at breaking the losing streak, such as it was. Tonight’s second offering has ‘disappeared’ from today’s line up.

Wall Street Tries to End 2-Day Losing Streak

By REUTERS
Published: December 9, 2009

Wall Street shares were little changed on Wednesday as an unexpected rise in October wholesale inventories was offset by continued concerns on foreign debt and a weak outlook in the technology sector.

Gains were limited by concerns over the credit ratings of Greece and Spain and an outlook from Texas Instruments, as chip makers are generally considered one of the first sectors to recover from recession. [Some chips are still made here, missing from this picture is the items the chips are used in, there isn’t a single domestic computer manufacturer so it should shock no one that there are no jobs here in the US.]

America’s total wholesale inventories rose 0.3 percent in October, according to data from the Commerce Department, reversing a 12-month declining trend. Analysts were expecting inventories to fall 0.5 percent. [Did you catch that good citizen? There’s that ‘America’ blanket statement again…Mexico and Canada are ‘in America’ too so where the hell are these idiots pointing to?]

Added to Friday’s above-consensus jobs report, the inventory figure “shows surprising resilience as we work to recover,” said Thomas Nyheim, portfolio manager at Christiana Bank & Trust Company in Greenville, Del. [Um, here we go again with the ‘who is this and why should I give a shit what they think’ commentary. That’s besides the fact that the statement can be interpreted any way you want…what’s this ‘resiliency’ he’s talking about? Inventories being resilient is seldom a good thing when sales are down by record proportions.]

January crude futures initially rose but later fell back about 0.4 percent to $72.34 a barrel after data showed an unexpected drawdown in crude inventories, a positive sign for potential demand. [Uh, there is another story on today’s wires claiming the exact opposite is true!]

All three major exchanges were flat in early afternoon trading. [I did hold off a while before collecting these news items today…]

Gold and oil rose as the dollar weakened.

The Nasdaq was pressured a day after Texas Instruments gave a fourth-quarter earnings view that disappointed some investors who had hoped for a stronger outlook on signs of improving demand. The stock fell 2.6 percent to $25.65. [Is this just the beginning or is it the end for domestic semiconductor stocks?]

“People didn’t love the T-I news, especially since that company is such a barometer of what’s going on,” said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. [Now that’s hillarious, the cheeky bastards named their financial services company with the ‘pet name’ for a penis.]

Stocks were also buffeted by concerns about the global recovery after ratings agency Standard & Poor’s revised its outlook on Spain to negative, one day after Fitch Ratings downgraded Greece’s debt rating. [Which is pretty surprising considering that NONE of these asshole ratings agencies got it right! Were I an investor the ratings agencies would serve as ‘contrary’ indicators!]

The move also comes after a potential debt default in Dubai raised concerns about the prospects for another global economic crisis. [Understand that the real problem facing investors is the crisis ‘SHOULD BE’ over but it isn’t (because nobody wants to accept any losses so nothing’s been ‘fixed’.) Leaving the ‘real economy’ to struggle along the best it can.]

Exchanges in Europe ended the day lower on those concerns. In London, the FTSE 100 was down 0.37 percent; the DAX in Frankfurt fell 0.72 percent; and the CAC-40 in Paris declined 0.74 percent.

In Asia, both the Nikkei in Tokyo and the Hang Seng in Hong Kong were down more than 1.3 percent after the Japan said its economy grew more slowly than estimated.

It’s that last bit I’d like to spend an additional moment on if I may…the entire run up to 10,000 points on the Dow has been based on the idea that the ‘global recovery’ was underway. While we encounter this new report telling us what we already know (That the Japanese economy is (and has remained) in the Tank, there is another post on the NY Times Business page crowing about the ‘robust’ recovery China is enjoying…

And you know that’s bullshit too! There isn’t a domestic market for the expendable crap we buy from them…there’s no ‘there, there!’ Which might be to say that Chinese ‘government statistics’ aren’t any more ‘reliable’ than the home grown ones…and there was another series of ‘exposes’ on the net regarding the most recent (incredible) unemployment figures….but this speaks to a much more disturbing dynamic at play, far more serious than the lies themselves.

Thank you for indulging me, we shall now proceed to tonight’s second offering

U.S. Wholesale Inventories Rise Unexpectedly

[Note how both of tonight’s offerings are ‘orphans’…]

By THE ASSOCIATED PRESS
Published: December 9, 2009

WASHINGTON (AP) — Businesses unexpectedly added to inventories at the wholesale level in October, breaking a string of 13 consecutive declines. It was a hopeful sign that companies will begin restocking depleted store shelves, helping to bolster the fragile economic recovery.

Wholesale inventories rose 0.3 percent in October, the Commerce Department said in a statement Wednesday, easily beating economists’ expectations of a 0.5 percent decline. Inventories dropped 0.8 percent in September. [Understand what you’re being told here good citizen, inventories climbed while unemployment remained at record levels…so this definitely isn’t a ‘good thing’…but there’s another ‘factor’ at work here. Since we make next to nothing ourselves…if inventories ‘rose’ it means they were ‘replenished’ by an off-shore source! And this has zero to do with domestic productivity! So this article tells us what, exactly?]

Sales at the wholesale level rose 1.2 percent in October, also stronger than the 0.7 percent rise economists expected. It followed a 1.3 percent increase in September and was the seventh consecutive month that sales at the wholesale level have risen. [This would be terrific news…if we made anything here! Oops! The line we have been searching for is right below us…wanna read a line of shit? Here it is!]

Steadily rising sales should help encourage businesses to restock shelves, increase production and bolster a broad recovery. The worry is the rebound could still falter if consumer spending, which accounts for 70 percent of economic activity, slumps in the face of continued high unemployment. [Um, there’s another ‘disturbing’ factor at work with that 70% of the economy figure they keep beating us over the head with…do you recall what it is? I didn’t think so. Here it is, of that 70% of the economy, only 20% of the population accounts for 80% of that spending and yeah, that 20% is just who you think it is, the ‘richest 20 %’ Does it look to you like out ‘economic model’ is broken? It sure looks busted to me!]

Wholesale inventories are goods held by distributors who generally buy from manufacturers and sell to retailers. They make up about 25 percent of all business stockpiles. Factories hold another third of inventories and retailers hold the rest. [So the ‘uptick’ in wholesale inventories is essentially meaningless if retailers aren’t drawing that inventory down.]

Even with the slight rise, wholesale inventories at a seasonally adjusted $326.1 billion were still 13.5 percent below the year-ago level. Still, the October increase marked the first gain since a 0.7 percent rise in August 2008. [Um, there you have it good citizen, a lot of crowing about ‘nuthin’.]

With the rise in sales outpacing the rise in inventories, the inventory to sales ratio slipped to 1.16. That means it would take 1.16 months to deplete existing inventories at the October sales pace. It marked the seventh consecutive month that the inventory-to-sales ratio has fallen. [This number is likely ‘thin’ because everybody knows the consumer is broke and nothing has been done to alter that fact.]

Economists are hoping that inventory rebuilding will provide a key support to economic growth in the current quarter. The overall economy, as measured by the gross domestic product, rose at an annual rate of 2.8 percent in the July-September quarter, the first increase after a record four straight quarterly declines. [Most concur that the 2.8% GDP growth is due to governmental stimulus measures and not ‘real’ economic activity…tax receipts are way off and spell certain doom for many communities across the nation.]

A switch to rebuilding stockpiles could trigger higher factory production and economic growth. [Show me the customers, which can only be done after you show them the paychecks! ‘Switch to rebuilding stockpiles indeed!’ Welcome to Wall Street where the Happy Talk never stops and neither does the denial of reality!]

But consumer spending remains a concern. The unemployment rate dipped to 10 percent in November, down slightly from a 26-year high of 10.2 percent set in October.

Do you really believe the unemployment rate dropped in November? Worse good citizen, the BLS even ‘re-visited’ September’s and October’s numbers and essentially ‘cut them in half’. There is no basis in reality for doing this, what we’re seeing is ‘political expedience’ at its worst!

Politicians have become so used to molding the data to fit the desired outcome that they think the public is so totally disconnected from a reality that continually bites them on the ass that they can lie without getting caught, a mistake that is always fatal.

It is hard to tell if it is a ‘net positive’ that this is the article that ‘disappeared’ from the NY Times story list, although it was there most of the day.

I think Mr. Michaelson said it best the other day in his column, something needs to be done and a ballot box has no part in it…it’s well beyond that.

Thanks for letting me inside your head,

Gegner

Market Economy

Greetings good citizen,

The Stupidity Index closed down 104 points today and markets around the globe closed lower as well. What do you suppose accounts for this ‘lockstep’ phenomenon? I don’t have a good answer, just a sneaking suspicion that it has something to do with a single band of tightly knit criminals.

Markets that move in concert are easier to manage/manipulate than they are in the messy ‘real world.’

If any of you have been paying attention it will come as no surprise that the markets are falling while the Dollar is rising…the mystery, however, remains the same. There isn’t a good reason for the dollar to rise any more than there is a rational reason for ‘gold’ (a.k.a. ‘real money’) to lose $70 in two days.

If these events supposedly represent ‘rational markets’ then we’ve got serious problems because what we’re really seeing here is the opinion of a couple of empty-headed assholes. There isn’t a single ‘concrete’ reason for the US dollar to appreciate in value any more than the ‘fantasy land’ surrounding gold has any basis in reality. Both phenomena represent ‘abuses’ of the true purpose/value of money.

Anyway, let us proceed to tonight’s offering

Wall Street Slips as Dollar Picks Up Strength

By MATTHEW SALTMARSH
Published: December 8, 2009

Investors from Asia to Europe to Wall Street sent shares lower on Tuesday, confronted by an economic recovery that still has a ways to go. [What’s this? Are we seeing an admission that things aren’t 100% peachy keen? The ‘recovery’, more than six months in the making, still has farther to go! WTF…look as closely as you like, read every word twice because nowhere in this article will you find anything even resembling an apology. If you were ‘mislead’ by all of the ‘rah, rah, sis boom-ba!’ it’s not the media’s fault but your own! You ‘misinterpreted’ what the pervasive Pollyanna’s of Prosperity were telling you, you silly goose!]

The dollar continued to strengthen against the euro, which in turn was pushing down commodity prices, most notably gold and oil. [As I comment above, gold has been harder hit than oil has…but there’s a semi-obvious reason for that related to the ‘utility’ of the two substances…]

In late morning trading on Wall Street, the Dow Jones industrial average was down 76 points or 0.73 percent, while the broader Standard & Poor’s 500 stock-index dropped 7.23 points or 0.66 percent. [This piece was indeed culled earlier in the trading day, the markets dipped 111 points by 3:00 O’clock this afternoon but recovered a few points before the close.]

With little guidance this week, shareholders have been are trying to determine where the economy is headed while also preparing for the end of the year. Washington will report retail sales for November on Friday, which could provide another snapshot of holiday sales. [Um, while we have government bureaus for just about everything, it strikes me as a it peculiar to have the retail sector report to a Washington bureau to obtain a tabulation of monthly results.]

On Tuesday, 3M, the diversified manufacturer, forecast earnings this year, excluding items, of $4.50 t0 $4.55 a share. That was less than the forecast of $4.57 a share. And the McDonald’s Corporation, the fast-food restaurant chain, reported that sales at restaurants in the United States dipped in November for a second consecutive month. [Um, this could be a major problem good citizen because we have an entire generation that appears to be incapable of cooking for themselves…it is unknown at this point whether this bizarre phenomenon is by accident or by design.]

In Europe, credit fears related to Dubai and Greece sent markets sharply lower and pushed up the price of safe German government bonds as investors sought shelter in quality assets. [Could the ‘unraveling’ of certain unstable markets be driving investors into ‘liquid’ safe havens such as the world’s ‘reserve currency’?]

Fitch Ratings on Tuesday cut Greece’s debt rating to BBB+ with a negative outlook, the latest blow to the troubled euro-zone country, driving Greek bond prices and banking shares lower as investors started to fret about the possibility of a default.

A day earlier, the rating agency Standard & Poor’s had warned about a downgrade of Greece, whose Socialist government is struggling to cap its budget deficit. [Remember Greece had some serious civil unrest issues and that was BEFORE things went down the tubes. The Socialists aren’t the problem in Greece, it’s the ‘fuck you, pay me’ capitalists that are screwing them up!]

Meanwhile, Moody’s, another credit rating firm, further cut its ratings on six Dubai state-linked companies because it said that it cannot assume the government will stand behind their debts, The Associated Press reported. [I hope you all noticed that these same, largely criminal credit rating agencies also made the news today…for their crimes going completely unpunished.]

The downgrades by Moody’s Investors Service come as Dubai seeks to distance itself from at least $80 billion of loans — and perhaps far more — racked up by companies it created in recent years to expand Dubai’s global clout.

Lenders up until recently had assumed Dubai’s many state-linked companies had implicit government backing. Dubai officials have since made clear no such promise exists. [Fat lot of good ‘denial’ did here in the US.]

“It’s a macro story that’s making investors cautious,” said Stefan de Schutter, asset manager at Alpha Trading in Frankfurt. “They are worried that banks that hold debt from Dubai or Greece will be hit hard.”

He added that the markets did not appear to be entering a sustained decline, or bear phase, but rather investors were reacting to day-to-day developments and thin trading conditions were exacerbating moves. [Understand what this means good citizen, it means almost no one ‘trusts’ the markets and they feel investing is too dangerous because too few players hold all the cards…it’s like sitting down at a poker table knowing that you’re the mark.]

In London, the FTSE 100 shed 1.7 percent, and the DAX was off 1.8 percent in Frankfurt.

Greek stocks and government bonds tumbled on mounting concern the nation may struggle to meet its debt commitments as public finances deteriorate.

The benchmark Athens Stock Exchange General Index dropped 4.9 percent. The yield on the benchmark 10-year Greek government bond note surged and the spread — or difference in yield — with the German 10-year bond widened to 216 basis points as investors moved into safer assets like German bonds.

The spread had been as wide as 300 basis points in March, before narrowing to 108 basis point in August and then moving out again.

The Dubai financial market index closed down 6.1 percent with losses led by banks like Emirates NBD.

In Asia, the Nikkei-225 closed down 0.3 percent and the Hong Kong Hang Seng index lost 1.2 percent.

In Britain, the giant retailer Tesco retreated 2.7 percent. It said third-quarter sales at stores open at least a year in Britain gained 2.8 percent, excluding fuel and value-added tax. That compared with the advance of 3.1 percent in the second quarter.

Elsewhere, data showed that industrial production in Germany dropped 1.8 percent in October on a month earlier.

The interesting observation here is the criminals aren’t ready to ‘retreat’ and collect their ill-gotten gains. The markets are plenty high and there will be enough to go around when it’s time to sell.

Perhaps more bizarrely is the observation that Jesse shares with us about insider selling still being strong during the rally back to the 10,000 mark.

Why are these insiders selling every share they can get their hands on? Is it because they know their shares are extremely over-valued? The whole damn stock market is over-valued and the price to earnings ratio reflects that…but that was before we had taxpayer money propping up share prices.

Something that will also be revealed later as not being illegal…although it should be.

The more you scratch the surface here good citizen, the more obvious it becomes that this was neither an accident or a coincidence…it’s a criminal conspiracy and the criminals are getting away with it.

The people we elected to uphold the law have failed to do their job…what remains is if their resignation will suffice or should these people be prosecuted and ‘punished’ alongside those they failed to prosecute?

This isn’t a ‘game’ good citizen, this is survival and if we fail to get it right, we all suffer.

Time to afflict the comfortable and comfort the afflicted.

Thanks for letting me inside your head,

Gegner

Forked tongues

Greetings good citizen,

I hope everyone had a lovely weekend, we experienced the first snowfall of the season (just a dusting) here North of Boston and it snowed a little more earlier this evening. I guess that’s the ugly reality of winter, once it starts snowing it doesn’t stop and if it rains on top of the snow it only makes things worse.

While many fret over ‘global warming’ we only had one ‘heat wave’ in Boston this summer and I was, er, restricted to my (hospital) bed (freezing my ass off) for the entire time. Add that to a spring that was so wet most crops rotted in the fields due to lack of sunshine and you’ve captured the general mood of the nation good citizen.

Things are grim and getting grimmer…except for the damn ‘Stupidity Index’ and I suspect that is frightening more people than it’s providing ‘cover’ for.

Anyway, tonight’s offering is yet another example of a corporate owned media spewing ‘happy talk’ that has zero basis in fact.

U.S. Forecasts Smaller Loss From Bailout of Banks

By JACKIE CALMES
Published: December 6, 2009

WASHINGTON — The Treasury Department expects to recover all but $42 billion of the $370 billion it has lent to ailing companies since the financial crisis began last year, with the portion lent to banks actually showing a slight profit, according to a new Treasury report. [What $370 billion was this? The Tarp was $700 billion and the ‘total’ tally of funds either lent or guaranteed by the ‘Treasury/Taxpayer’ is roughly $24 Trillion, so what’s this psycho-babble about only losing $42 billion? This thing is only just getting started so it’s a little early to be estimating losses…]

[The caption beneath an accompanying photo of GW Bush said:]

The bank bailout has been unpopular since it was created in October 2008 by former President George W. Bush and (the, by that time, Democratically controlled) Congress. [WTF! Clarification: Gegner is neither a Republican nor a Democrat, Gegner is an Anarchist who believes in ‘rules without rulers!’ The elimination of the individual from the decision making process IS tyranny!]

Treasury officials said the government had lost roughly $30 billion to the insurance giant American International Group. The new assessment of the $700 billion bailout program, provided by two Treasury officials on Sunday ahead of a report to Congress on Monday, is vastly improved from the Obama administration’s estimates last summer of $341 billion in potential losses from the Troubled Asset Relief Program. That figure anticipated more financial troubles requiring intervention. [Um, wait a minute Slim, Obama didn’t take office until January of this year…yes Summer is over but it looks like they are talking about the year before the administration came to power…which would be pretty freaky.]

The [unidentified] officials said the government could ultimately lose $100 billion more from the bailout program in new loans to banks, aid to troubled homeowners and credit to small businesses. [Which is really bad news considering ‘the government’ when framed this way, means you and me…not Biff & Buffy Fatcat.]

Still, the new estimates would lower the administration’s deficit forecast for this fiscal year, which began in October, to about $1.3 trillion, from $1.5 trillion. [The ‘qualifier’ here is ‘optimistically speaking’…a lot of things have to go exceedingly well to achieve that $200 billion dollar savings…and it looks a lot tougher to hit when phrased that way, doesn’t it?]

The report could tamp down some of the public anger directed against both parties over the bailouts. [More unwarranted optimism] Congressional leaders are already planning to use some of the program’s money for economic stimulus and job creation. [Although not one of them has a clue how to go about it.]

Of course, the government’s potential losses extend beyond the Treasury program. The Federal Reserve, for example, still holds a trillion-dollar portfolio of mortgage-backed securities whose market value is unknown.

The improved picture of the Treasury program is the result of higher-than-expected returns on the loans and the fact that, as the financial sector has recovered from its free fall last year, the government has not had to use much more of its $700 billion in lending authority this year, according to the Treasury officials, who declined to be identified as discussing the report before it was presented to Congress. [I don’t know about you but the whole damn thing looks like a ‘strategic leak’ (read ‘intentional misdirection’) to me.]

Last week, Bank of America became the latest big bank to say that it was raising private capital and would soon repay its $45 billion bailout loan. Once that payment is made, Citigroup will be the last big bank tethered to the state. [Um, notice how there is zero mention of the ‘shellac’ing’ the taxpayer took on these so-call ‘preferred stocks’ the got in exchange for ‘interest free’ loans from John & Jane Q Public…]

The estimated $42 billion in losses is a net figure that accounts for some profits to offset the losses. The Treasury officials said the government had lost about $60 billion, roughly half to Chrysler and General Motors and the other half to the insurance giant American International Group. [Some of you will remember how AIG was going to sell itself to a private equity firm for $40 billion…right before the government (Hank Paulson) stepped in with $80 Billion from you and me…and now they’re into us for what…$120 billion? Probably more…]

But the government is projecting a $19 billion profit and perhaps more on the $245 billion lent to banks, through interest, dividends and the sale of warrants the government received as collateral. [Wait a minute Slim…here they go again, we, the taxpayers, are on the hook for $24 Trillion dollars…so a $19 billion ‘profit’ is actually ‘chickenfeed’ and more like chicken shit.]

Aside from the rare good news for the federal deficit, the latest bailout accounting could have political and legislative ramifications.

Politically, the Treasury program has been unpopular ever since it was created in October 2008 by former President George W. Bush and a Congress controlled by Democrats. It has grown only more reviled over time as a symbol for many Americans of the government’s perceived favoritism toward Wall Street, which is making money, over Main Street, which continues to struggle and shed jobs. [Only ‘perceived’ good citizen? You don’t suppose Mr. Calmes’ job is hanging in the balance here, do you?]

An anti-Washington anger is disturbing both parties as they approach a midterm election year, and some Republican lawmakers have drawn primary opponents largely because of their votes last year in favor of the bailout program. [Wouldn’t possibly have anything to do with their persistent obstructionism and their complete failure to act in the public’s interest, would it?]

It was unclear how that climate might be altered as taxpayers realize they did not actually lose $700 billion to help big banks. At most, the Treasury officials said, the ultimate losses will be one-fifth of that amount and probably less. [This is ‘moving the goal posts’ big time! The public got screwed on both sides of the bailout and now they’re back to using ‘creative accounting’ in a feeble attempt to turn a pig’s ear into a silk purse! Again, good citizen, I remind you that this is nowhere near being over…if anything, it’s only getting started!]

Democrats in Congress have already decided to divert about $70 billion from what is left in the bailout fund to the cost of additional road-building and other construction projects, credit to small businesses and further aid to state and local governments. [A much larger problem than this exercise in wishful thinking acknowledges…]

The administration had wanted to dedicate unspent bailout money to the deficit but signaled to Congressional leaders late last week that it would not oppose their plans. President Obama is expected to touch on those ideas and others in an economic speech on Tuesday. [Just one more ‘dangerous’ (and reckless) ‘about face’ for the Obama Administration.]

The bailout program is due to expire at the end of the year, but the Treasury has indicated it will use the authority it was granted by Congress to extend it into 2010. [Um, is anyone else wondering why we bother to elect a ‘president’?]

The Treasury secretary, Timothy F. Geithner, testified last week to a Senate committee that “nothing would make me happier than to end this as quickly as possible,” but he added, “we’re not quite there yet.” [What Timmy is really waiting for is the day he steps out of the limelight and into the Shadows known as Goldman Sachs, never to be heard from again.]

Mr. Geithner, who has become the administration’s lightning rod for anger among both liberal Democrats and conservative Republicans, said “there are parts of the system that are still very damaged” — in banking, housing, commercial real estate and credit-starved small businesses. [So why aren’t you and Ben doing anything to help these crucial sectors of the economy? Is it because the only place where the US remains ‘competitive’ is in ‘financial products’…even if they do blow up?]

He said the administration would propose within weeks when and how to end the program safely. [You know and I know that HE KNOWS this isn’t over, they aren’t ‘ending’ anything, they’ve simply run out the clock, the crap is about to hit the rotational device and the only thing left to do is stand clear!]

At that hearing, he hinted at the Treasury’s improved forecast for the program, saying “we’re going to be able to return very, very substantial amounts of money to address the critical economic needs, long-term fiscal needs, of this country.” [What is this retard babbling about? Isn’t he supposed to say ‘Hocus Pocus’ either before or after making these wildass claims?]

That prediction contrasts with the administration’s planning soon after Mr. Obama took office in January. Fearing that additional bank failures could exhaust the entire $700 billion fund, they proposed up to $500 billion more in federal lending authority in the administration’s first budget in February.

Instead, just $7 billion more in bailout money has gone out to banks since Mr. Obama became president, making a second loan authorization unnecessary. Meanwhile, banks have raised 16 times as much, $114 billion, in private capital, according to the Treasury. {Um, again, I didn’t see no ‘hocus pocus’…nor should there be as there was no magic involved…the gun and the mask have even become optional in case you’re wondering where that $114 billion came from.]

Since the Treasury subjected big banks to “stress tests” last winter to determine how much private capital they must raise to withstand future financial shocks, the financial institutions have been eager to do so, in order to repay the government and thereby exit the Treasury’s rescue program — not least to escape the restrictions on executive compensation that come with it.

Mr. Geithner now says that banks will repay $175 billion by the end of next year. To date, counting Bank of America’s promised payment, banks have repaid $116 billion, according to the Treasury. Also, in coming weeks the Treasury will sell more of the government’s bank warrants to investors.

At last look the Dow was up but the S&P and the Nasdaq were down…and that was a couple of hours before the close. All three European exchanges closed in negative territory…I could go look but it wouldn’t matter. Market performance tells as much as the ‘happy talk’ in this article does, would that it were!

Perhaps more disturbing is the growing reliance on ‘happy talk’ and ‘positive thinking’ while both fly in the face of actual conditions.

In fact, if you want to see some grim realities you can visit this link over at Financial Armageddon or this story over at Jesse’s Crossroads Café.

Me…this crisis is still very ‘fixable’ but the first step towards putting our species back on the right track is to wrest control of our nations from the self-interested bootlickers who have sold us out for their own enrichment…a la ‘Adam Smith’.

Personal greed seldom ends well for anyone, especially the society that fails to stop it.

Thanks for letting me inside your head,

Gegner

You know how they grow mushrooms, don't you?

Greetings good citizen,

How about that unemployment report, huh? It really makes you wonder just what the folks at the Bureau of Labor Statistics are smoking, doesn’t it? On one hand we have REAL claims for new benefits logging in at over 500,000 A FUCKING WEEK, then we get a MONTHLY total, derived from a ‘phone survey’ that says we’re only down 11,000 jobs…does it look to you like SOMEBODY has fallen down on the job here?

I mean WHERE the hell did those telemarketers call to get that kind of a screwball figure? It sure as hell wasn’t in the United States!

How ‘unrealistic’ is the 11,000 figure? Well, that’s what tonight’s offering shows us…the number is so unbelievable that even the investors aren’t buying it…and we know they will buy just about anything regardless of how outlandish!

(Um, the ‘Stupidity index’ actually closed in positive territory today, it was up 20…)

Wall Street Gives Up Gains From Jobs Report

By DAVID JOLLY
Published: December 4, 2009

After surging more than 1 percent on a better-than-expected jobs report, shares on Wall Street fell back. [It WAS up a lot more than twenty early in today’s trading.]

At noon, shares were mixed with the Dow Jones industrial average in negative territory.

The Dow Jones industrial average was down 14.51 points or 0.14 percent in late morning trading. The Standard & Poor’s 500-stock index and the Nasdaq were both flat.

The Labor Department said in Washington that the United States lost 11,000 jobs in November, less than a tenth of the roughly 125,000 job losses economists had been expecting. The unemployment rate improved to 10 percent from 10.2 percent in October. [What’s REALLY bizarre here good citizen is that there are NO freaking jobs in the paper OR on the internet, so our 11,000 losses certainly weren’t ‘offset’ by a hiring binge.]

While companies are still shedding workers, the pace was the best since the recession began in December 2007, and suggested to some ‘anal-ysts’ that the economy is headed toward recovery. [There will be no recovery until hiring returns and workers, those ‘paycheck peasants’ get a stiff wage increase! Anyone who claims otherwise is talking out of their ‘anus’.]

Jeffrey Saut, chief investment strategist for Raymond James, characterized the November job-loss number as “an outlier.” [No kidding Sherlock! What was your first clue?]

“There’s no doubt the traders on Wall Street want to see the recession is in the rear-view mirror,” he said, “but I wouldn’t be surprised to see the jobless rate ticking up again in the months ahead.” [Here’s a toughie because the ‘unemployment number’ will probably remain ‘stable’…what’s going to ‘rise’ is the number of people that are permanently eliminated from the workforce as they exhaust their benefits.]

Unemployment, he added, is a lagging indicator, so investors who wait for the labor market to turn around have historically missed out on major market gains. [This will prove to be one of those ‘exceptions’ because the ‘real’ economy has not improved, even a little.]

Lawrence Glazer, managing partner at Mayflower Advisors in Boston, said would-be stock buyers remained somewhat cautious, despite the surprising if not downright alarming data.

“Investors are still seeing a yawning chasm divergence between Wall Street’s gains and Main Street’s malaise,” he said. “The market has been anticipating better data all along. The question hasn’t been ‘is the market pricing in a recovery,’ but ‘is the market pricing in too big of a recovery.’ ” [For the first time in history the banking sector is drawing cash out of the Treasury and betting it in the stock markets…this is reckless beyond Wall Streets wildest dreams! The US is being destroyed before our eyes!]

Mr. Glazer said institutional investors had already begun to close positions and did not want to be reshuffling portfolios toward the end of the year, damping the effect of the positive surprise.

In other economic news, the Commerce Department reported that orders to American factories unexpectedly rose 0.6 percent in October, which was better than the flat reading that economists had expected. [snip]

What ‘American Factories’ are they talking about and are those factories even in the US? Mexico is part of America and so is Canada, fuckin’ chiselers! If you don’t get that then ask why the weasels didn’t say US factories?

Don’t let the bastards put you to sleep, there was definitely ‘something wrong’ with today’s survey…like it was cut short.

It really pisses me off to see these pixel pushing assholes trying to pull a fast one on the general public like the ‘American Factories’ example. Anywhere in the Western Hemisphere is ‘America’ but only the 50 States are in the US.

The assholes didn’t tell you US factory orders were up because those ‘American Factories’ aren’t in the US (or they would have said so!)

Okay, a couple of deep breaths…that’s better. While it’s better to be ‘pissed off’ than ‘pissed on’, neither state of mind is particularly productive.

It is both bizarre and dangerous beyond belief good citizen to ‘play’ with the public like this! The weekly unemployment figures have remained at a steady 500,000 a week since BEFORE the crisis began.

They are messing with us because, as I have pointed out many times before, there isn’t a damn thing we can do about it!

Until we ‘resist’ being exploited, our situation will not improve. It is not time to ‘change tyrants’; it is time to crush tyranny wherever it exists!

Thanks for letting me inside your head,

Gegner

Hyper-Inflation Bulletin!

Greetings good citizen,

The ‘Stupidity index’ traded sideways for most of the day, then broke sharply lower at the end of the trading day, closing out down 86 points. Um, markets around the globe behaved likewise, again, for no discernable reason.

Since the stock market only tells you how the already rich are fairing we will once again put it behind us as we press on with more relevant issues.

And what could be more relevant than not one but two ‘flash updates’ from John Williams over at Shadow government statistics!

Hyperinflation Special Report
(Update 2010) Subscription required December 2nd, 2009

• Economy and Financial System Face Eventual Great Collapse
• Government and Fed Actions Have Narrowed Hyperinflationary Great Depression Timing to Next Five Years
• High Risk of Ultimate Dollar Crisis Unfolding in Year Ahead [You can’t blame Mr. Williams for not being bolder, this crisis is dragging on much longer than many of us though possible…which, sadly, proves the criminal nature of the event!]

No. 262: U.S. GAAP Accounting Delayed,
Employment Report Outlook
Subscription required December 2nd, 2009
• Treasury Delays 2009 GAAP Statement for Two Months
• Employment Conditions Remain Bleak

As you are all well aware, the so-called economic ‘recovery’, as well as the associated rise in the stock markets are due largely to, er, ‘overly creative’ accounting standards.

Were the public made aware of the true state of the economy, there would be riots coast to coast. (And this is AFTER some 25 Trillion (taxpayer) dollars have been, er, ‘sunk’ into the banking system in another failed attempt to ‘save’ capitalism for the second time in less than a hundred years!)

If that news wasn’t bad enough, you’re going to LOVE tonight’s second offering where you once again get to puzzle over just who is concerned that we will leave them ‘high and dry’…They HAVE TO BE defense contractors!

Afghans and Pakistanis Concerned Over U.S. Plan

By SABRINA TAVERNISE and CARLOTTA GALL
Published: December 2, 2009

ISLAMABAD, Pakistan — President Obama’s timetable for American forces in Afghanistan rattled nerves in that country and in Pakistan on Wednesday, as American diplomats worked to convince the two countries at the center of the president’s war strategy that the United States would not cut and run. [Say fucking WHAT?!! Are these assholes really trying to tell us that their governments couldn’t stand if not for the US military? And because they’re ‘chicken’ we have to spend our treasure and the lives of our young people in a vain effort to prop up their corrupt government? It simply doesn’t get more ‘insane’ than that!]

In Afghanistan, Foreign Minister Rangin Dadfar Spanta, the only minister who commented on the speech, said the announcement that American troops could begin leaving in 18 months served as a kind of shock therapy, but caused anxiety. “Can we do it?” he asked. “That is the main question. This is not done in a moment. It is a process.” [Said the man as he grabbed another bag of cash ‘aid’ from his government ‘handler’.]

In Pakistan, Mr. Obama’s declaration fed longstanding fears that America would abruptly withdraw, leaving Pakistan to fend for itself. [Um, excuse me but did we all of a sudden ‘forget’ Pakistan is a nuclear armed nation? What’s this ‘fend for itself’ shit? Who the hell is defending our nation from the predator multi-nationals? Who is defending the American people from our broken and corrupt justice system?]

Many in Islamabad, Pakistan’s capital, argued that the short timetable diminished any incentive for Pakistan to cut ties to Taliban militants who were its allies in the past, and whom Pakistan might want to use to shape a friendly government in Afghanistan after the American withdrawal. [And what’s the point in staying, given this point of view?]

“The most serious issue, as far as we see it, is the exit date,” said a senior Pakistani security official who spoke anonymously because he was not allowed to speak publicly. “It will have serious implications.” [Yep, when the Yanks leave, they tend to take all of that money with them, which makes it much harder to bribe people…]

Though American officials went out of their way to brief senior leaders of both countries before Mr. Obama’s speech, many of the people whose support will be crucial to carrying out the strategy — lower-ranking politicians and military or intelligence officials — did not receive briefings.

Leaders in both countries, at least publicly, offered near silence or only a tepid embrace of the Obama plan on Wednesday. President Asif Ali Zardari of Pakistan, who has been lashed in the Pakistani media for being too close to the United States, did not comment on the speech. Neither did President Hamid Karzai of Afghanistan, who has been smarting ever since he was forced to accept that he did not win the presidential election outright. [There’s a pair that beats a full house good citizen, it’s all the more reason to pack our kids up and bring them home…there is no ‘win’ to be had here.]

In Afghanistan, a statement from the presidential palace noted only that the government welcomed Mr. Obama’s new strategy for the support it offered in development and training for Afghan institutions and in protecting the Afghan people. It also commended the plan for the recognition that terrorists were operating in the region beyond Afghanistan’s borders in Pakistan.

That acknowledgment was precisely what offended many in Pakistan, where the official reaction was limited to a short statement issued by the Foreign Office welcoming Mr. Obama’s “reaffirmation of partnership.” [?]

Politicians, analysts and media commentators, meanwhile, filled the void with skepticism, concern or outright rejection of the Obama plan, and particularly its timetable. [Does anyone wonder why? Didn’t we elect Mr. Obama because he promised to end the stinking war? While it looks like he will keep that promise, I don’t think any of us imagined it would take his entire first (and looking like only) term. I dunno about the rest of you but I’ll never vote for him again. ‘Disappointed’ doesn’t even begin to describe my feelings…and I very much ‘don’t approve’.]

“Is it in Pakistan’s interest to antagonize the Afghan Taliban now, if they will be in power two or three years down the road?” said Ahmed Rashid, author of “Descent Into Chaos,” explaining the thinking in Pakistani political and military circles. “Will the Americans actually deliver after the withdrawal, when the value of Pakistan decreases?” [This is a little ‘cryptic’ isn’t it? Just what are we being asked to ‘deliver’ besides peace?]

Pakistani analysts and security officials expressed skepticism that the United States would be able to achieve in 18 months what it had failed to do in eight years, and they said they considered the military buildup to be more resources poured into what was essentially a losing strategy.

“Pakistanis are not convinced that another military surge will address the issue,” said Maleeha Lodhi, a former Pakistani ambassador to the United States. “This is bombs and bullets bereft of a political strategy.” [Um, the Pakistanis apparently didn’t get the memo because the surge is merely code for highly illegal ‘assassination squads’. Why is the use of assassins ‘illegal’ in war? Truth be told good citizen, assassins would eliminate the need for expensive invasions and endless occupations. You could shrink the Pentagon down to where it could be drown in a Dixie cup, that’s why such a ‘practical approach’ goes against the ‘conventions of warfare’.]

Pakistan is a prickly ally, harboring deep suspicions of American efforts in a region it believes the United States betrayed in the 1980s, when it stopped all aid after the Soviet Union’s withdrawal from Afghanistan. Afghanistan then collapsed into civil war, with more than a million refugees pouring into Pakistan, and Al Qaeda set up shop in Afghanistan once the Taliban seized control. [Given those damning accusations, that pipeline is looking more ‘real’ by the minute…but here we are, back to the no blood for oil stance!]

Today, Pakistan’s relationship with the United States remains fraught, with much of it taking place out of the public eye. The United States runs a program of covert airstrikes that it does not acknowledge publicly. It is one of the only tools available to Mr. Obama in Pakistan, but its use is costly as it inflames Pakistani public opinion. [There’s a beaut! Make it look like poor Barry is launching those damn predators personally! Flipping that rock over, they are operating with his ‘approval’, which is close to the same thing. Makes you wonder how ‘stupid’ is going to end the war doing stupid shit like that?]

While Mr. Obama has sought to highlight America’s contribution to Pakistan — it is the third largest recipient of American aid, after Israel and Egypt — the support goes largely unnoticed inside the country, because Pakistan’s leaders shrink from talking about it, out of fear the government will become a target of the rabidly anti-American media. [How worried should we be about allies we have to buy? The moment we take our foot off of their neck they’re going to go right back to business as usual so why the hell should we give a fuck? You know one thing for certain, we’re there for all of the wrong reasons.]

As if to illustrate the point, as cool as the government embrace of the Obama speech was, an opposition politician criticized the government for not publicly registering its displeasure with parts of the speech.

Newspapers struck a skeptical tone. One daily, The News, acknowledged in an editorial that Mr. Obama was trying to change the substance of American-Pakistani relations, but said that the trust deficit was so deep that “it is unlikely that Islamabad will be more attentive to an apparently war-weary U.S. and NATO than it was to a fire-breathing Bush administration eight years ago.”

The lack of trust permeates the relationship. Pakistani military officials say that the United States does not warn them when it moves troops on the Afghan side, leaving holes in areas that Pakistani militants know about, but Pakistan does not.

“At times, we come to know about it through militants’ intercepts,” said the Pakistani security official. “This is embarrassing.” [I guess there’s two sides to that coin, we probably don’t tell them because we want the holes to be empty when our boys come back…]

The official said the Taliban would use the exit date to “bide time, continue with the pin-prick strategy and wait it out until the Americans leave.” [The more you read this article, the more ‘interchangeable’ the word Taliban becomes with the term Republican!]

The Obama administration has tried to offset Pakistani concerns with a package of long-term security guarantees, trade benefits, upgraded military equipment and greater regional cooperation with India. But a Pakistani official said details had not been made public because the offer had yet to be accepted. [Why is the standard ‘peace offering’ always more instruments of war? When will we smarten up and stop providing the weapons that keep putting our own military at risk? I guess we won’t smarten up until we start to put practical considerations ahead of the private individual’s profit margin.]

The Pakistani military sees India as the biggest threat in the region and is frustrated that the United States does not seem to acknowledge that. The disconnect has been a major irritant in relations, particularly as Indian influence in Afghanistan grows. [Where does this shit end? You definitely don’t want to put yourself in the position of playing ‘king maker’, deposing your ‘ally’s’ enemy in exchange for loyalty…because when push comes to shove, there can only be one king, and the only acceptable candidate for that gig is imaginary!]


“This is where Pakistan’s trust of the U.S. could very dramatically increase,” Mr. Rashid said, “if it became known the Americans were trying to get the Indians to become more flexible.” [That is so ‘not happening’ that it’s best not to go there at all.]

In Afghanistan, the worries were closer to home. American withdrawal could spell immediate disaster for the exceptionally weak central government of Mr. Karzai, and Mr. Spanta, the foreign minister, said he had submitted a proposal to secure long-term American assistance that close allies like Egypt and Israel currently received. [Naturally, securing a pipeline to the Baltic would guarantee that happens…but it’s also much easier said than done.]

In Kabul, an increase in troops was generally seen as a gesture of welcome strength. Yet in the south, where the civilian cost has been highest and there is a deep weariness of the war, the mood has been generally against the increase, since many fear it would cost the lives of more civilians.

A senior security official who has been tracking Al Qaeda praised Mr. Obama’s plan, saying a surge of forces could undercut the insurgency in six months, since many of the Taliban were ready to negotiate and could be persuaded to swap sides. [Um, don’t those guys ‘swap sides’ at the drop of a hat in the first place? Isn’t that what provided us with an ‘easy victory’ the first time?]

“They need the Americans money ,” he said, referring to the Afghan security forces.

Afghanistan and Pakistan drew different conclusions from Mr. Obama’s speech. Mr. Spanta, who met with Ambassador Karl W. Eikenberry on Wednesday, praised Mr. Obama’s direct reference to havens in Pakistan. “It is a tremendous change and progress,” he said, adding that it was first time Afghans had heard such words from an American president.

But the Pakistani intelligence official saw it differently, arguing that Pakistan had carried out two military campaigns this year, reclaiming large areas of territory from the Taliban.

“It is very disappointing,” he said. “It was unfair to dump Al Qaeda on Pakistan.”

The question to be asked here good citizen is where would Al Qaeda be if the US wasn’t there? It’s a huge ‘tell’ good citizen that security in our ports or our other commercial goods distribution systems hasn’t improved much in the…what is it now, nine years since 9/11.

It’s a more interesting question to ask ‘why’ we are still in Afghanistan, what are we supposed to be accomplishing? Is this simply ‘political theater’ where politicians use the danger of attack to fill their campaign war chests from the pockets of defense contractors? This is why we’re going ‘broke’ good citizen…we the people are being madly overcharged for what the military often ‘gives away’ to our allies.

Then there is the deeply disturbing issue of the primary reason we elected ‘Uncle Tom’ to the presidency. He promised to end the war…in the end he promised a lot of things that he hasn’t made good on.

And I guess he’ll resort to relying on that old standby, the public’s ‘short memory’.

Um, the bullshit has been flying so fast for so long that the public can’t forget if a politician said it, it must be a lie! That’s the corner the Republican’s have painted all politicians into.

Back in the 60’s, during the civil rights movement, the biggest insult you could throw at a man of color was to call him an Uncle Tom.

It’s an old story and I never read it. If I’m not mistaken it was written by the same woman who wrote ‘Little Women’, Harriet Beecher Stowe.

What did Uncle Tom do that was so upsetting? Tom carried water for the man…Tom was a slave and he liked it. Never lifted a finger to help his fellow slaves and he never did anything to free himself or his family from the multiple injustices of slavery.

Uncle Tom was a disgrace…he was a ‘good slave’ and those are words that should never be true of any living being, black or not.

Well, I’ve seen Mr. Obama ‘carry water’ for both Wall Street and the fat cats that want to profit off of Middle Eastern oil at the expense of your sons and daughters lives.

In my book, that makes the President just like every other president before him, an Uncle Tom who is a disgrace to the entire human race.

Thanks for letting me inside your head,

Gegner

Madness!

Greetings good citizen,

The stupidity index gained a few points this morning before it dropped into negative territory, where it pretty much stayed…all by its lonesome, until after the close. The Dow closed down 18.9 points, the S&P was up a fraction and (thank heavens for technology) the Nasdaq closed up a few points.

But, like yesterday, it was not the market’s performance that disturbed me, it was er, ‘non-headline news that I found troubling.

Tonight’s abbreviated first offering is from none other than Henry CK Liu:

The folly of deregulation
By Henry C K Liu

On October 7, 2009, the United States House of Representatives Committee on Financial Services at long last held a public hearing on "Reform of the Over-the-Counter (OTC) Derivative Market: Limiting Risk and Ensuring Fairness".

OTC derivatives are contracts executed outside the regulated exchange environment whose values depend on (or derive from) the values of underlying assets, reference rates or indexes. Market participants use these instruments to perform a wide variety of useful risk management functions. The Bank of International Settlement (BIS) reports that the notional value of all outstanding OTC derivative contracts ending June 2009 was US$49.2 trillion worldwide against a 2009 world gross domestic product (GDP) of $65.6 trillion.

Stop right there! 2007 world GDP was 53 trillion dollars, Um we all know the global economy ‘shrunk’ over the past two years so how the fuck did it grow to 65 trillion dollars!

The only ‘logical’ explanation here is inflation (which has been reported to be ‘negative’) $12 freaking TRILLION DOLLARS worth to be precise!

How the fuck does global GDP increase $12 trillion dollars when the planet’s largest consumer population has slashed trillions in net income from our economy? WTF is this, magic? We have 18 million unemployed in the US and our GDP went up 3.5%…for no discernable reason!

So, there’s no inflation and ‘somehow’ world GDP went up while payrolls around the world are shrinking? There’s something very wrong with this picture good citizen.

Someone’s going to get stuffed but good and you can bet it won’t be those who so ‘richly’ deserve it.

Moving along we arrive at tonight’s second offering for yet another look at an ‘extreme outcome’… [Hat tip: Some Assembly Required]

The Consequences of Underemployment
by: Tom Lindmark December 01, 2009

The next time you hear a politician talk about the number of jobs saved or created by the stimulus package or listen to a commentator on CNBC talking about the improving labor market, hark back to this story. It’s from the WSJ and it’s the unfortunate reality that isn’t and maybe can’t be addressed.

The story talks about a few Americans that have seen their world turned upside down by the recession. Here is one family’s experience:

After being laid off by the New Jersey battery plant in 2006, Mr. Crane took a job stocking shelves at Costco (COST) in the fall of 2006. His pay was $10.76 an hour — the same money he earned when he was hired by Delco in 1983, just out of high school. “It’s sad,” says Mr. Crane, who had been earning about $28 per hour at Delco, before overtime.

In late 2007, he took a job at Lowe’s (LOW) while working at a series of fast-food jobs on the side, as well as a stint at Pathmark supermarket. He still works at Lowe’s, earning $15.96 an hour selling lawnmowers, outdoor furniture and Christmas ornaments. At night, he pumps gas at a Quick Check for $13.70 an hour.

Typically, he works between 61 and 63 hours per week. It wouldn’t be so bad, he says, if the hours were consecutive. But with the gap between jobs, he can only sleep a few hours a night now — sometimes just an hour. Last week, he managed to clock 87 hours and barely saw his son.

Mr. Crane was a heavy equipment operator at a Delco plant earning more than $100,000 a year when he was laid off. [Um, this is pretty extreme considering the true ‘average wage’ for a working male here in the US is right around $30,000 a year…half of all men make more and half make less…which is more ‘typical’ than Mr. Crane’s $100k working a ‘blue-collar’ job. Just to give you an idea of how ‘extreme’ we’re talking here, Mr. Crane’s $100k put him in the top 20% of earners…also known as ‘paycheck peasants’; which is what he has truly become.]

This is the sort of thing that I suspect you like I see every day. People who have seen their standards of living slashed and now work just to survive with little hope of better days ahead. [Uh, You KNOW Mr. Crane has a better chance of meeting God than he has of getting his cushy union job back, that bad boy is gone for good!]

There is an emerging consensus that somehow, someway the government needs to expand the amount of money it collects in order to deal with a deficit that some consider out of control. Honest pundits readily concede that the only way that can be accomplished is to tax more and to tax broadly. That may be a truism from an abstract policy perspective but the reality is that the stones from which those would extract more money are indeed truly quite dry. [You know and I know that taxation is not how the government raises more money, our pal Hill Billy (Clinton) pumped up the economy to the point that he balanced the Federal Budget, not ‘for real’ but he was able to stop digging the hole deeper, an accomplishment in itself. We’ve never faced the problem we’re facing now, where we owe and import so much that it isn’t possible to get ahead of it like they used to.]

Workers like Mr. Crane have no capacity to absorb more calls on their earning capacity whether through higher taxes of any form or sort, increased health insurance premiums or taxes either overt or covert on energy usage. They exist on a razor's edge with no margin for error or any change in the amount of money they now willingly pay. [Yes, good citizen, this is a rare piece that raises issues my readers are already familiar with…]

Americans, no matter how dire the situation may have appeared in the past, have always forged ahead on the assumption that their lot would improve through their own efforts. I’m not certain that hopeful outlook prevails any longer and to the extent that it has diminished the door is being opened to radical social change. People with little faith in the future, particularly those who feel that something has been taken from them, are most prone to favor radical social reordering. How that plays out in a country as individualistic as the U.S. is a question open to a lot of speculation.

The situation with underemployment did not arise solely from the recession. It is the product of a conscious decision of a large portion of corporate America to outsource jobs to less expensive locals. On its face, it made business sense at least from a short-term perspective. Long-term, it may turn out to be a decision of colossal negative implications for those who profited including the political class that traded its obligation to protect the populace for campaign cash. [Pauperizing your own society is NEVER a good idea, even on a short-term basis. Strangely, those who have done us in think they can ‘escape’ by leaving the country…reality says there’s nowhere to run, nowhere to hide.]

Consider Mr. Crane’s current ambitions as you ponder the implications of underemployment. Men and women with this view of the future tend to listen attentively to promises for a better tomorrow no matter how radical the road plan for getting there might be.

Mr. Crane no longer sees his new life as temporary. He no longer dreams of going and fixing equipment at the factory and operating big machines.

“My new goal is to become a manager at Lowe’s,” he says. “That will pay $17 an hour. I’m hoping this happens in the next couple of years, by the time my son is in high school.”

At least Mr. Crane has woken up to the fact that he can’t keep putting in 80-hour weeks without his health suffering. Worse, job performance suffers as well.

Our Mr. Crane was either an extremely frugal individual and he banked a goodly percentage of his former pay or he has suffered some serious setbacks in his family’s lifestyle. Most of us wouldn’t survive a fifty-plus percent pay cut without having to sell off assets at stiff losses.

To ‘re-cap’ we have the criminal conspiracy that operates above the law manipulating the numbers so vigorously they have produced inexplicable outcomes. Then we have a ‘not so average’ citizen kicked severely in the gonads by cutbacks in the automotive industry…which brings us to our final offering and the ‘fuck job’ perpetrated upon the ‘buy and hold’ long term investor… [Hat tip: Jesse’s crossroads café]

America's Lost Decade in Equities

For the first time since the 1930's this decade represents negative returns for the SP500. Remarkably this chart represents nominal total returns. [Follow link to view chart]

Adjusted for the weaker dollar and inflation, the 'buy and hold' philosophy, especially for those nearing their retirements, has been a disaster. But it has been great times for speculators and insiders and the productive economy.

Part of the problem is with the 401k concept as a supplement if not replacement for pensions and savings, as well as portfolios for educational purposes. Their implementation offers too few choices for the average person. Do you wish to buy corporate stocks or corporate bonds? Or money market funds where the value is not guaranteed? Short term Treasuries, if you are fortunate.

The piling into corporate bonds in the US today may be in part driven by this lack of genuine choice, the seeking for 'conservative choices' and is setting up the many for staggering losses in the event that stagflation does indeed occur. Bond funds are no safe havens.

Two tax reforms, or at least stimulus, that the US might consider is increasing the annual allowance of $3,000 which the taxpayer may claim from prior capital losses against current income. The amount has been the same for many years, and an increase would help the average person clean their books up a bit. A second program might be stimulus, in allowing the average person to take for example $10,000 out of their IRA or 401k tax free for one time.

The Reformer [Guess who?] will not do anything that does not benefit Wall Street, but if the US wishes to obtain some serious reforms in its financial system there is a rich ground to sow the seeds of renewal, given the neglect and abuse of the last twenty years.

The banks must be restrained, and the financial system reformed, and balance restored to the economy before there can be any sustained recovery.

Any of you old enough to remember can still hear Saint Ronnie promising us that we we’re all going to be millionaires if we’d just feed our 401k’s as much as we could spare! Understand, the goal wasn’t to make YOU rich, it was a way to pump a steady stream of cash into Wall Street…and the fucks used your retirement money to send your job overseas…talk about ‘double fucked!’.

I’m not crying because I never fell for that bullshit…I don’t have a 401k so I didn’t get screwed. Flipping that rock over, I know people that have lost millions!

Um, Jesse’s heart is in the right place but a vast majority of small companies have never offered 401k’s. I believe the estimated participation rate is still below 40% and that isn’t enough to ‘stimulate’ the economy as most people who have them have tapped them already. There simply isn’t $10,000 to take out or the accounts are ‘dormant’ because neither the company nor the worker can afford to contribute to them anymore.

This naturally brings us full circle with the issue of what does our corporate sector owe us regarding our future economic security. Are we idiots to slave our lives away, making the ungrateful rich while they have no obligation to us?

As we often encounter, the way things should be are not the way things are…and we have to wonder why? How do employers continue to shirk their responsibilities? Is THAT what all of those ‘campaign contributions are all about?

Anyway,

Thanks for letting me inside your head,

Gegner

Chumped

Greetings good citizen,

Today the ‘stupidity index’ surged 120 points at the open and once again…parked there. It jiggled and wiggled all day and closed up at 126 points.

Once again, there is no concrete reason why the market would gain 126 points, it just did.

While it is normally my reaction to hunt down the official explanation for the market’s behavior, I decided that one frightening bit of news deserved another…

So we arrive at tonight’s offering [Hat tip: Jesse’s Crossroads café ]

Going the Way of AIG with Dollar Holders as Patsies

The Guidotti-Greenspan rule states that a nation's reserves should equal short-term (one-year or less maturity) external (foreign) debt, implying a ratio of reserves-to-short term debt of 1. The rationale is that countries should have enough reserves to resist a massive withdrawal of short term foreign capital. [What do you suppose the odds are that the US has reserves on hand equal to our ‘short-term foreign debt?]

The rule is named after Pablo Guidotti – Argentine former deputy minister of finance – and Alan Greenspan –former chairman of the Federal Reserve Board of the United States. Guidotti first stated the rule in a G-33 seminar in 1999, while Greenspan widely publicized it in a speech at the World Bank (Greenspan, 1999)

Guzman Calafell and Padilla del Bosque (2002) found that the ratio of reserves to external debt is a relevant predictor of an external crisis.

This is an interesting application of the Greenspan-Guidotti Rule by Porter Stansberry below because it includes the value of the gold at market prices, as well as the oil in the Strategic Petroleum Reserve, and all the foreign reserves on the books of the US against the total foreign debt owed in using the Greenspan-Guidotti rule for its default assessment.

Those who argue for a stronger dollar because of deflation due to domestic credit destruction overlook the reality of the yawning imbalance of US debt to external creditors, and the need to deal with it without writing it off like a home mortgage.

Yes, the US has lots of buildings, and minerals in the ground, and forests and proprietary software, and overpriced financial assets, and tranches of dodgy mortgages to sell. We are discussing AAA liquid assets here, without significant counterparty risk. Those peddling US debt instruments to Asia these days are getting a very cold reception.

What Porter Stansberry says is valid, with the important exception that the US still owns the world's reserve currency. Otherwise it would be well on its way to a hyperinflationary climax.

This is why we do not expect the default to be like the Lehman Brothers over-weekend implosion, nor as dramatic as the crisis in Dubai, or more historically the failure of the post-Soviet Russia. The US is too big to fail.

The dollar will devalue to unexpected lows, not with a bang but a whimper. [Um, it’s not going to go over well with the poor majority, in fact, they will take it rather badly…]

More AIG than Lehman, with high profile big-talking executives, self-serving accounting, bonuses to the perpetrators, de facto bailout and subsidies from frightened central bankers, and all that until the rest of the world can adjust. The US will most likely wallow in stagflation until it can get itself together again, barring a global conflict. [Where do you suppose they’ll fight this time? I’m willing to bet Europe won’t be the next battleground…]

There are structural issues for sure. The US is still the consumer of the world's export products, especially manufactured goods. The problem is that they are paying for it with paper that is increasingly worthless. And it is militarily the only remaining superpower. [And that only lasts as long as we have the money to support our very expensive military! When the dollar is worth nothing, our military won’t be worth anything either.]

Do not expect this to be a straightforward default. The US money center banks are wielding weapons of financial mass destruction, and are not afraid of gooning it up in the markets for real products, as they still exercise significant pricing power. [Kind of amazing really but that ‘pricing power’ is shrinking by the minute as the dollar spirals to its death because there’s nothing but ‘air’ behind it…and its not even hot!]

”It may be our currency, but it's your problem.'' John Connolly, Treasury Secretary, in response to European anger at the 1971 US gold default.

So, it will take time for the exporting nations to grow their domestic markets, and to find new customers at home and abroad. It will take time for the nations to agree on a new currency regime, as the US has now pulled the rug out from under them once again with the quantitative easing of the dollar. But that adjustment effort is now well underway. With regard to change, "It is not necessary to change. Your survival is not mandatory." - W. Edwards Deming [Again it is ‘assumed’ that the huge swath of humanity that has found itself suddenly priced out of existence will quietly kill themselves rather than embark on a rampage that will destroy everything in their path! These fools ‘rouse the giant’ at their own peril!]

The downside of structural change after a long decline is that once it occurs, it is difficult to obtain one's prior reputation and position. [It’s even harder to do once you’re dead…]

"When governments go bankrupt it's called "a default." Currency speculators figured out how to accurately predict when a country would default. Two well-known economists - Alan Greenspan and Pablo Guidotti - published the secret formula in a 1999 academic paper. That's why the formula is called the Greenspan-Guidotti rule.

The rule states: To avoid a default, countries should maintain hard currency reserves equal to at least 100% of their short-term foreign debt maturities. The world's largest money management firm, PIMCO, explains the rule this way: "The minimum benchmark of reserves equal to at least 100% of short-term external debt is known as the Greenspan-Guidotti rule. Greenspan-Guidotti is perhaps the single concept of reserve adequacy that has the most adherents and empirical support." [Um, this could be Billy-boy talking his book again but I tend to doubt it…]

The principle behind the rule is simple. If you can't pay off all of your foreign debts in the next 12 months, you're a terrible credit risk. Speculators are going to target your bonds and your currency, making it impossible to refinance your debts. A default is assured.

So how does America rank on the Greenspan-Guidotti scale? It's a guaranteed default.

The U.S. holds gold, oil, and foreign currency in reserve. The U.S. has 8,133.5 metric tonnes of gold (it is the world's largest holder). That's 16,267,000 pounds. At current dollar values, it's worth around $300 billion. The U.S. strategic petroleum reserve shows a current total position of 725 million barrels. At current dollar prices, that's roughly $58 billion worth of oil. And according to the IMF, the U.S. has $136 billion in foreign currency reserves. So altogether... that's around $500 billion of reserves. Our short-term foreign debts are far bigger."

Porter Stansberry, The bankruptcy of the United States is now certain

Posted by Jesse at 10:56 AM

At the end of the day there’s a certain ‘poetic justice’ to the idea that ‘speculative investors’ will drive this nation, which was founded by their fathers, into the ground.

If I don’t miss my guess, these ‘speculators’ will be branded as criminals, tried and executed for crimes against humanity…because in the end, it’s not about competition at all, it’s about caring for society…all of society.

Thanks for letting me inside your head,

Gegner