Thursday, September 30, 2010

Massive Pain Coming For The States............ A MUST WATCH VIDEO

Meredith Whitney Warns Of Massive Pain Coming For The States, 80K Layoffs On Wall Street

Meredith Whitney may not be ahead of the curve on this -- folks have been warning about this for awhile -- but it's significant that one of the most visible analysts on the street is warning about the economic health of the states and the systemic risk they pose to the economy. She predicts they'll need bailouts, but not sure they're really going to happen, given that it would require conservatives in states like Texas and Nebraska to vote for money to California and Michigan. Seems implausible.

She's also warning of major risk to the banks after this quarter, as housing weakens again. She sees 80,000 in Wall Street layoffs.
 
HERE IS THE LINK TO THE VIDEO CLIP WHERE SHE EXPLAINS HER THINKING;
 
http://www.youtube.com/watch?v=09ujR5IBoFs&feature=player_embedded

BY THE WAY I HAVE REPORTED ON THIS FOR YEARS, AS THE HOUSING CRISIS CAME TO A HEAD IT WAS OBVIOUS TO ME THAT THE JIG WAS UP FOR THE STATES WHERE REAL ESTATE  PRICES PUSHED PROPERTY TAX REVENUE STRAIGHT UP AND LEADERSHIP THOUGHT IT WOULD LAST FOREVER.  
 
THIS ALL ENDS MUCH WORSE THAN ANYONE BELIEVES OR HOPES IT WILL! 
 
AT THESE PRICES AND WITH ALL OF THE FUNDAMENTAL ILL WINDS CLEARLY BLOWING SOUTH FOR THE FINANCIAL AND REAL ESTATE SECTORS, I WOULD SELL EQUITIES AHEAD OF THE CROWD OVER THE NEXT FEW WEEKS IF NOT RIGHT NOW. A LOT OF PEOPLE ARE ABOUT TO LOSE A LOT OF MONEY AGAIN. DON'T LET IT BE YOU! 

THE MOST IMPORTANT CHART YOU MAY EVER SEE.............VERY IMPORTANT!

THE MOST IMPORTANT CHART YOU MAY EVER SEE

GOLD REPRESENTS AN HONEST STORE OF VALUE, DOLLARS DO NOT. 

WHAT DOES THIS SAY ABOUT YOUR RETIREMENT PORTFOLIO?  YOU SHOULD REALLY THINK ABOUT THIS QUESTION AND YOU HAD BETTER COME TO AN HONEST DEFINITIVE ANSWER THAT RESONATES WITH REALITY OR YOUR GOING TO LOSE A LOT MORE MONEY.

THIS CHART SAYS IT ALL!

For every ounce of gold, you can now buy more than five times the amount of stocks you could have ten years ago, as shown below.
 
WHICH MEANS THAT THE DOLLAR HAS LOST VALUE AT AN ENORMOUS RATE, WHICH IS A FACT THAT OUR GOVERNMENT WOULD RATHER HIDE FROM YOU. ON THE OTHER HAND GOLD HAS INCREASED ITS VALUE AND PURCHASING POWER, ENORMOUSLY OVER THIS PERIOD OF TIME.  
 
SO THE STOCK MARKET IS A TERRIBLE INVESTMENT WHEN COMPARED TO GOLD, JUST THINK IF STOCKS ARE BASICALLY EVEN OR SLIGHTLY DOWN BUT YOU CAN NOW BUY FIVE TIMES AS MUCH STOCK WITH AN EQUAL INVESTMENT IN GOLD 10 YEARS AGO........... A LIGHT BULB SHOULD BE COMING ON RIGHT ABOUT NOW I HOPE.
 
BOTH SILVER AND GOLD WILL CONTINUE THEIR CLIMB, THEY ARE BOTH STILL EXCELLENT INVESTMENTS.
 
 
chart of the day, s&p 500 in gold, 1971-2010, sept 2010
 
Since one picture is worth a thousand words, here is the price of gold over the last five years in six of the world's major currencies of the developed nations.
 
BELOW GOLD IS PRICED IN SIX CURRENCIES TO DEMONSTRATE RELATIVE VALUE. EVERY MAJOR CURRENCY IS FAILING, RELATIVE TO GOLD.
 
 
Think Gold Is Making A Move? Here's The Metal That's Really On Fire, Hi Ho Silver!

While everyone is focused on gold's massive surge, the reality is there is another precious metal outperforming the yellow one. Silver is shooting up too, with its rise at 29% for 2010. That beats gold's 20% rise for the year thus far.

chart of the day, gold to silver ratio, 2008-2010

 

Gold is going much higher..............

Gold is going much higher; forget gold $1300, It's going to $3000

Just because we hit that that big round-numbered milestone of $1300/oz this morning, don't think that we're at the peak of a gold bubble.

It may be overbought on a near-term technical basis, but gold — now on the precipice of breaking above $1,300/oz — is likely to remain in this secular uptrend for quite a while longer.

We're talking years. We're still talking $3,000/oz. Gold has made this transition this year away from being a strict commodity towards a role befitting a monetary metal that is no government's liability. Look at what is happening around the world.

The Fed is openly contemplating a round of quantitative easing. So is the Bank of England. The Bank of Japan's latest unsterilized intervention effort to reverse or at least stem some of the yen's strength was quantitative easing in a different form. The Swiss National Bank has spent countless of resources to prevent the franc from firming and now some Asian countries, and even Brazil, are thinking about taking similar actions. The ECB already jeopardized the sanctity of its balance sheet during the height of the Eurozone debt crisis this spring.

No country wants a strong currency. All we have seen this year, and the past few years in fact, is a series of rolling bear markets in various currencies which is why gold has managed to hit new highs against a whole host of FX units this year. Just as an equity market strategist will always be focused on breadth, the same can be said in reference to bullion. And make no mistake, this latest leg up in gold has not been speculative at all — real long-term money, from what we are hearing, is coming into the bullion market.

When you look at gold in real items, or normalized by the money supply (U.S. or global), you can see that we have a way to go to get to the old highs of nearly three decades ago. When you look at what prior bubbles did across asset classes, you can also see that
this bull market in bullion also has a way to go before it even enters a manic stage, let alone bubble territory.

ACTUALLY CORRUPT, SPENDTHRIFT GOVERNMENTS CAN'T AFFORD A STRONG CURRENCY! ANY ONE THAT SAYS OTHERWISE IS A FOOL!

Important Facts About The Deindustrialization Of America That Will Make You Weep............. A MUST READ

Important Facts About The Deindustrialization Of America That Will Make You Weep

The United States is rapidly becoming the very first "post-industrial" nation on the globe.

All great economic empires eventually become fat and lazy and squander the great wealth that their forefathers have left them, but the pace at which America is accomplishing this is absolutely amazing. It was America that was at the forefront of the industrial revolution.
It was America that showed the world how to mass produce everything from automobiles to televisions to airplanes. It was the great American manufacturing base that crushed Germany and Japan in World War II. But now we are witnessing the deindustrialization of America.
Tens of thousands of factories have left the United States in the past decade alone. Millions upon millions of manufacturing jobs have been lost in the same time period. The United States has become a nation that consumes everything in sight and yet produces increasingly little.

Do you know what our biggest export is today? Waste paper.

Yes, trash is the number one thing that we ship out to the rest of the world as we voraciously blow our money on whatever the rest of the world wants to sell to us.

The United States has become bloated and spoiled and our economy is now just a shadow of what it once was. Once upon a time America could literally outproduce the rest of the world combined. Today that is no longer true, but Americans sure do consume more than anyone else in the world. If the deindustrialization of America continues at this current pace, what possible kind of a future are we going to be leaving to our children?

Any great nation throughout history has been great at making things. So if the United States continues to allow its manufacturing base to erode at a staggering pace how in the world can the U.S. continue to consider itself to be a great nation?

We have created the biggest debt bubble in the history of the world in an effort to maintain a very high standard of living, but the current state of affairs is not anywhere close to sustainable. Every single month America does into more debt and every single month America gets poorer.

So what happens when the debt bubble pops?

The deindustrialization of the United States should be a top concern for every man, woman and child in the country.

But sadly, economically speaking, most Americans do not have any idea what is going on around them.

Here Then are Some Important Facts That Americans Should be Aware of;

The United States has

lost approximately 42,400 factories since 2001

About 75 percent of those factories employed over 500 people when they were in operation.

THESE JOBS ARE NEVER COMING BACK! AND THE COMPETITIVE PRESSURES THAT LED TO THE LOSS OF THESE JOBS ALSO PUSHES WAGES VFOR THE REMAING JOBS LOWER.

Dell Inc. has announced plans to dramatically expand its operations in China with an investment of over $100 billion over the next decade.

Dell has announced that it will be closing its last large U.S. manufacturing facility in Winston-Salem, North Carolina. Approximately 900 more jobs will be lost.

In 2008, 1.2 billion cellphones were sold worldwide. So how many of them were manufactured inside the United States?

Zero.

If our trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.


As of the end of July, the trade deficit with China had risen 18 percent compared to the same time period a year ago.

The United States has lost a total of about 5.5 million manufacturing jobs since October 2000. About 10 million total jobs in the same period.

From 1999 to 2008, employment at the foreign affiliates of US parent companies increased an astounding 30 percent to 10.1 million. IN CASE YOU WONDERED WHERE ALL THE JOBS WENT!

In 1959, manufacturing represented 28 percent of U.S. economic output. In 2008, it represented 11.5 percent.

Ford Motor Company recently announced the closure of a factory that produces the Ford Ranger in St. Paul, Minnesota.

Approximately 750 good paying middle class jobs are going to be lost because making Ford Rangers in Minnesota does not fit in with Ford's new "global" manufacturing strategy.

THE TIDE OF JOB LOSSES IS NOT TURNING.......

As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time less than 12 million Americans were employed in manufacturing was in 1941.

In America today, consumption accounts for 70 percent of GDP. Of this 70 percent, over half is spent on services.

The United States has lost a whopping 32 percent of its manufacturing jobs since the year 2000.

In 2001, the United States ranked fourth in the world in per capita broadband Internet use.

Today it ranks 15th.


Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.

Printed circuit boards are used in tens of thousands of different products.

Asia now produces 84 percent of them worldwide.

The United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States.

One prominent economist is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

The Census Bureau says 43.6 million Americans are now living in poverty, which is the highest number of poor Americans in the 51 years that records have been kept.

Questions we all must Answer;

So how many tens of thousands more factories do we need to lose before we do something about it?

How many millions more Americans are going to become unemployed before we all admit that we have a very, very serious problem on our hands?

How many more trillions of dollars are going to leave the country before we realize that we are losing wealth at a pace that is killing our economy?

How many once great manufacturing cities are going to become rotting war zones like Detroit before we understand that

we are committing national economic suicide?

The deindustrialization of America is a national crisis. It needs to be treated like one.

America is in deep, deep trouble folks. It is time to wake up.


A Recovery That Looks Like Recession..........

A Recovery That Looks Like Recession

Comstock

For some strange reason a number of economists and strategists seen on TV and quoted in the press maintain that the exceedingly weak recovery we are now undergoing is really a "normal" or "average" recovery.

Nothing could be further from the truth. This is not our opinion, but is based on fact. We have taken eight major economic indicators and compared them to where we are now as compared to the economic peak 33 months ago. We did the same for the equivalent time periods for the prior two business cycles, using dates designated by the National Bureau of Economic Research. We did not use surveys, opinions or diffusion indexes, but relied on basic economic indicators related to employment, income, consumption, production, housing and capital expenditures.

The results are very clear that

the current recovery is far weaker than the prior two expansionary periods, which themselves were below the average for post-war recoveries. The results are outlined as follows. Remember, for each indicator we are showing the change over 31-to-33 months after the cyclical peak for the economy.

1) GDP was up 5.3% and 5.7% at this point in the last two cycles, and is

now down 1.3%

2) New home sales were down 8% and up 31%;

now down 42%.

3) Industrial production was up 3% and 1%;

now down 7%.

4) Retail sales were up 9% and 12%;

now down 4%.

5) Payroll employment was flat and down 2%;

now down 5%.

6) Personal income was up 11% and 7%;

now up only 2%.

7) New orders for durable goods were up 5% and 6%;

now down 22%.

8) Initial weekly unemployment claims were down 5% and 9%;

now up 34%.

The facts speak for themselves.

The current recovery is far weaker than the prior two, which themselves were weaker than the average for post-war expansions. Moreover, as we discussed in previous comments, even this sub-par recovery has been losing steam in recent months. That is why six months ago the discussion centered on when and how the economic stimulus would be removed, whereas now all of the talk is about another round of quantitative easing (QE2).

Does anyone really think that the probability of QE2 a full 33 months after the economy peaked and 15 months after it bottomed is really saying anything positive for the economy or the stock market?

The current market seems based on the same delusionary views that prevailed at the tops of early 2000 and late 2007.

In our view the economy will continue to disappoint for some time to come. That is not being discounted at current market levels.

US Government and Financial Elites Deceive Us

US Government and Financial Elites Deceive Us

By Ron Robins

The US government and financial elites are in many ways deceitful. Directly and indirectly, they promote debt and consumption as a drug dealer promotes cocaine.

Drugged by manipulated and low interest rates, Americans believed the message of the US government, the Federal Reserve and Wall Street propaganda that affluence was forever and that all they needed was a credit card and stocks for a heavenly life. From massive hidden government debt and massaged statistics to Enron style bank accounting and securities' frauds, these institutions deceive us.

The deceit comes in many guises. One of the greatest deceits is the masking of huge future financial problems associated with US government debt. Professor Laurence J. Kotlikoff, Professor of Economics at Boston University, says the US, and even IMF data, reveal that the US is already bankrupt. That is due to its unfunded Medicare, Medicaid, Social Security, defense and other liabilities totalling $202 trillion, or over fourteen times the annual US gross domestic product (GDP) of a little over $14 trillion.

Americans are also deceived by the reported US government budget deficits. The 2009 deficit was advertised as $1.417 trillion. But John Williams at shadowstats.com says
the US government's own figures show that using the same accounting methods that businesses are required to use reveals an enormous $4.3 trillion 2009 deficit. That is the real accounting deficit and equal to about 30 per cent of US GDP. To cover it would mean an immediate doubling or more of US taxes!

Professor Kotlikoff says what America urgently needs is financial and policy 'heart surgery,' and not the Band-aid solutions recently passed on healthcare and financial reform. Otherwise, he says, hyperinflation will eventually rule.
But the US government and their Wall Street cohorts continue to ignore such insightful calls to action, thereby continuing to deceive the public of the seriousness of the issue.

Most government statistics are somewhat deceitful too. Every US government in recent times, whether it was the administrations of Bill Clinton, the Bush's or Barack Obama, has allowed the US Bureau of Labor Statistics (BLS) to massage its statistics that, funnily enough, after revisions, almost always show the US economy to be doing better than before.
One wonders if it might also have something to do with the head of the BLS always being a political appointee.

The consumer price index (CPI), unemployment rates and gross domestic product (GDP), undergo almost continual 'refinement' making comparisons with previous periods often impossible.

Another deceit of the financial elites is the valuing today of some bank and financial assets at virtually whatever the banks feel they are worth.

How would you like to up the value of your home from $500,000 to $800,000 because the software you wrote for your computer model said it was ok to do so? Welcome to Bank Finance 101.

US Congressional leaders and banks in April 2009 effectively forced the Financial Accounting Standards Board (FASB)—which governs US accounting reporting standards—to adjust its rules on how some bank assets are valued.
The resulting changes to FASB's rules gave banks the ability to value certain assets however they wanted to. This meant they were able to revise the values of some assets higher. Subsequently and miraculously, bank stocks rose and banks showed big profits after previous huge losses.

But residential and commercial foreclosures continue to grow and real estate asset values are either stagnant or again falling. Hence, due to the FASB ruling and other government actions—too many to detail here—the real asset value of most banks is probably much lower than reported. Therefore, they are fictional and probably deceitful. The US government, financial elites, and many astute investors know this too.

The Federal Reserve likes to make statements that help guide the direction of individuals and businesses' economic actions. For many years, their intent or remarks were akin to real estate sales people saying that it is always a good time to buy. Individuals and businesses believing in the Fed's infallibility—and luring them with ultra low interest rates—purchased homes and expanded their businesses, only to later realize that they had been led down the path to major losses. In fact, evidence could suggest they were sacrificial lambs in order to maintain an appearance of economic growth that the Fed was desperate to create. Thus, the Fed is guilty of deceit too.

Wall Street seems guilty of many major deceits. Even though firms such as Goldman Sachs knew of the enormous potential losses associated with mortgage backed securities (MBS), they continued selling them anyway. Furthermore, with such massive and recognized possible fraudulent MBS and related securities involving Wall Street and the banks,
where are the prosecutions? Is deception involved here too?

The Securities Exchange Commission (SEC) and the US Justice Department might be just a little deceitful as well by being too close to Wall Street operators and thus minimising sentences to those on Wall Street found guilty of financial crimes. Three judges implied this in their recent remarks in cases involving Wall Street shenanigans. (See "US Judges Sound Off on Bank Settlements," The New York Times, August 23.)

Increasingly, Americans and people all over the world are realizing that the US government and its financial elites have been deceitful in many ways. The deceit includes: masking the reality and consequences of an unsustainable government debt spiral; statistical adjustments that make the economy look better; accounting standards changed to make banks appear solvent when they may not be; promoting excessive debt as the salvation for the populace; and probably unprecedented, unprosecuted, financial deception by some Wall Street elites.

In the US, democracy does not always equal honesty and integrity. Financial dealings are not all truthful. Fraud seems to go unpunished and punishment does not fit the crime. Welcome to the Land of the Free where deceit is alive and well in the US government, the Federal Reserve and on Wall Street.

WITH ARTICLES LIKE THIS APPEARING ON A FAIRLY REGULAR BASIS NOW, YOU CAN COUNT ON THE ECONOMY TO HAVE A REALLY LONG TOUGH STRETCH IN ORDER TO RIGHT ITSELF AND OVER COME WHAT IT HAS BROUGHT ON ITSELF BY ALL THE EXCESSIVE GREED AND DECEPTION.

Wednesday, September 29, 2010

IMPORTANT ECONOMIC AND FINANCIAL THOUGHTS, QUESTIONS AND QUOTES..............

Y

ou only get out of life what you put into it. Nothing great is achieved easily or effortlessly. Knowing what you want in life and then having the right mix of patience and preparation will make the difference between success and failure. Once you understand that, anything and everything you desire is within your reach.

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"The first stage of fascism should more appropriately be called Corporatism because it is a merger of State and corporate power"

Benito Mussolini (1883-1945), Fascist Dictator of Italy

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The truth is that being realistic isn't the same as being pessimistic and I would bet on the prepared realists over the blind optimists every time.

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The system only knows how to keep on trying to perpetuate itself, even as it slowly degrades over time.

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The notion that infinite growth can persist in a finite biosphere is dead wrong. And we may already have reached a point of no return.

CURRENT MAINSTREAM ECONOMIC THINKING IS BOTH UNSUSTAINABLE AND UNSTABLE.

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Two great quotes from Acclaimed economist Manfred Max-Neef;

The economy is to serve the people, not the people to serve the economy

Manfred Max-Neef

A second, more catastrophic crisis is unavoidable because our economic model is "dramatically poisonous. Greed is the dominant value today in the world and as long as that persists, we're done!

Manfred Max-Neef

He doesn't just mean done economically, he means done as a species.

Going beyond facts and figures to describe economics, his philosophy is based on a macro-world view, where he accounts for the biosphere, human creativity, security and happiness, and life in all of its manifestations.

He reveals that the majority of economists have great knowledge, more than ever before, but they lack understanding. The two differ as, "knowledge is a function of science, whereas understanding is holistic," Using the metaphor of love to simplify: we may read and accumulate great knowledge about love, but we can never fully understand it until we fall in love and experience it.

His philosophy of humanizing economics, or "Barefoot Economics," stems from spending years living in and studying the culture of poverty to better understand the economics of it. He concludes that the poverty culture has entirely different principles than our modern culture, where they must depend on enormous creativity, cooperation and solidarity of people. In poverty, "you cannot be an idiot if you want to survive," he quipped.

He believes the economy will "catastrophically" self-correct and a new model must emerge with principles to humanize the economy in balance with the biosphere.

HE IS ABSOLUTELY CORRECT! TOO MANY ARE EDUCATED FAR BEYOND THEIR GENETIC CAPACITY TO UNDERSTAND. JUST BECAUSE YOUR DADDY IS RICH AND KNOWS EVERYONE DOEN'T MEAN YOU SHOULD GO TO HARVARD! AND IT IS MOST LIKELY THAT YOU WILL STILL BE A DOLT WHEN YOU GRADUATE.

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POLITICIANS AND DIAPERS NEED TO BE CHANGED OFTEN.

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Money is not the prime commodity in our lives.... time is.


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What we need is balanced budgets, sound money and financial discipline.

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Investors are chasing yields and it is the worst possible thing they could do right now.

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Most Americans believe that government policy makers and the Fed have the current situation financially under control, when nothing could be further from the truth.

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Political chaos will translate into extreme volatility and a highly unpredictable stock market. So if you think you're "mad as hell" now, "you ain't seen nuthin' yet!"

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Highly leveraged economies, particularly those in which continual rollover of short-term debt is sustained only by confidence in relatively illiquid underlying assets, seldom survive forever, particularly if leverage continues to grow unchecked.

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Nation States accounting for two-thirds of the global economy are either holding down their exchange rates by direct intervention or steering currencies lower in an attempt to shift problems on to somebody else, each with their own plausible justification. Nothing like this has been seen since the 1930s.

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MR. VOLCKER ON SMARTASS WALL STREET NOTIONS..........

"Normal distribution curves — if I would submit to you — do not exist in financial markets. Its not that they are fat tails, they don't exist. I keep hearing about fat tails, and Jesus, it's only supposed to occur every 100 years, and it appears every 10 years."

Former Federal Reserve Chairman Paul Volcker

Former Fed Chair Paul Volcker ditched his prepared remarks at a Federal Reserve of Chicago event last week and in its stead, he opened fire on all of the corruption in banking and on Wall Street.

VOLCKER ON;

Banking:

Investment banks became "trading machines instead of investment banks [leading to] encroachment on the territory of commercial banks, and commercial banks encroached on the territory of others in a way that couldn't easily be managed by the old supervisory system."

Financial system:

"The financial system is broken. We can use that term in late 2008, and I think it's fair to still use the term unfortunately. We know that parts of it are absolutely broken…"

Business schools:

I think that was the general philosophy that markets are efficient and self correcting and we don't have to worry about them too much.

Central banks and the Fed:

"Central banks became…maybe a little too infatuated with their own skills and authority because they found secrets to price stability…I think its fair to say there was a certain neglect of supervisory responsibilities" [nonfeasance]

On procyclicality:

"It's the hardest thing as a regulator in my opinion…when things are really going well, the economy is going well, the market is not disturbed, but you see developments in an institution or in markets that is potentially destabilizing, doing something about it is extremely difficult.

Risk management:

"Markets that are prone to excesses in one direction or another are not simply managed under the assumption that we can assume that everybody follows a normal distribution curve.

Derivatives:

"I've heard so many stories about how important" derivatives are but "there doesn't seem to be much doubt that the creation of derivatives has far exceeded any pressing need for hedging."

Money market funds:

"Money market funds have encroached so much on the banking market. They are nothing, in my view, but a regulatory arbitrage.

The Fed and Dodd-Frank:

Volcker said it was a "miracle" that despite all the criticism aimed at the Fed the central bank "came out with enhanced regulatory authorities rather than reduced regulatory authorities."

"We live in an amazing world. Everybody has big budget deficits and big easy money but somehow the world as a whole cannot fully employ itself,"

Former Federal Reserve Chairman Paul Volcker

If this guy was in charge of Fin Reg, the market would be appreciably healthier over the long run. So why isn't he in charge?

IF YOU WANT TO PRETEND THAT YOU ARE THE BEST AND BRIGHTEST THEN YOU REALLY OUGHT TO ACT LIKE IT!

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The U.S. Federal government will spend-spend-spend on all sort of needless projects, but deflation is much stronger anything the government can do. Therefore, no matter how much the U.S. spends, there is no way to escape from a Japan-style Lost Decade (or two) of stagnant growth and systemic deflation.

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After January 2, 2011, America will have a lame duck president and a gridlock that will keep congress from creating any further damage. This will only be the beginning as people vent their anger at Wall Street and banking and its den of thieves. This tidal wave of rejection will really manifest itself when the elitist insiders collapse the stock and bond markets as the lack of solutions becomes obvious to all.

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Foreigners own approximately 30% of our outstanding debt. But, we have been relying on them to purchase almost 40% of our new issuance. We will need to issue $3 trillion of new debt in the next two years. Foreigners see that we are on a course that isn't sustainable. They know that the Fed will attempt to monetize our debt and weaken the USD over time. At 2.5% interest rates, foreigners will accumulate massive losses as the USD depreciates. They will not accept these low rates for much longer. It is a confidence game. As they lose confidence in our ability to confront our debt issues, rates will be forced higher.

The only thing that could possibly keep foreigners buying our debt would be higher interest rates. Our economy is so saturated with debt from top to bottom, that an increase in interest rates of only 2% would have a devastating impact on our economy.

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So here we stand, two years after the worldwide financial system came within a few hours of imploding, and nothing has changed. Wall Street is still calling the shots. The political hacks that supposedly run this country have kneeled down before their insolvent Masters of the Universe. Bennie Bernanke has chosen to save his Wall Street masters and throw grandma under the bus. By keeping interest rates at zero, buying up trillions in toxic mortgages, and printing money as fast as his printing presses can operate, Bennie has birthed the bastard child of the mother of all bubbles. The chart below clearly shows the birth of this bastard. It is a distant cousin of the internet bubble bastard. Despite interest rates at or near all-time lows across the yield curve, money has poured into Treasury bonds. This makes no sense, as interest rates can't go much lower. A small increase in rates will produce large losses for investors at these rates.

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As quantitative easing again gets underway the failure of QE1 becomes more obvious. The crisis worsens and the illusion of any recovery is light years away. Over the past three years trillions of dollars have been thrown down a rat hole to bail out banking, Wall Street, insurance and selected elitist entities.

We will never know the exact total, because the privately owned Federal Reserve makes its own rules. Everything they do is a state secret. The five successful quarters were only a mirage. The funds have been vaporized among lending and financial institutions worldwide. There has been no accounting and there never will be as long as the Fed is not audited and investigated.

We are in a depression and have been for quite some time. Massive injections of liquidity do not work, they have never worked they only masked what was really happening. You cannot resurrect an insolvent country in a system that is corrupt with even more corruption.

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HOW EMPIRES FAIL

"As for financial markets, we have come full circle to the concept of financial fragility in economies with massive indebtedness. All too often, periods of heavy borrowing can take place in a bubble and last for a surprisingly long time. But highly leveraged economies, particularly those in which continual rollover of short-term debt is sustained only by confidence in relatively illiquid underlying assets, seldom survive forever, particularly if leverage continues to grow unchecked.

"This time may seem different, but all too often a deeper look shows it is not. Encouragingly, history does point to warning signs that policy makers can look at to assess risk – if only they do not become too drunk with their credit bubble – fueled success and say, as their predecessors have for centuries, "This time is different."

Rogoff and Reinhart

A tipping point is reached when the government debt exceeds 90% of GDP. US government debt is currently at 93% of GDP. One year from now it will exceed 100% of GDP.

The bastard child of the mother of all bubbles has jumped out a window on the hundredth floor of a NYC mega bank. As he passes the 50th floor, economists like Paul Krugman ask him how is he doing? He says great, SO FAR. We all know what happens next. SPLAT!!!!

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IF THE RECOVERY IS REAL THEN WHY IS ANOTHER ROUND OF QUANTITATIVE EASING NECESSARY?

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OFFICIAL GOVERNMENT ECONOMIC METRICS ARE DESIGNED AND FORMULATED TO DO TWO THINGS; OBSCURE THE TRUTH AND FOOL THE MASSES.

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WALL STREET AND POLITICOS OF ALL STRIPES LIKE TO REFER TO THEMSELVES AS "THE BEST AND THE BRIGHTEST" I GUESS THEY MEAN THAT IRONICALLY!

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NOTHING IS GOING TO CHANGE UNTIL "WE THE PEOPLE" MAKE IT CHANGE AND UNINFORMED PEOPLE THAT DON'T REALLY UNDERSTAND WHAT NEEDS TO CHANGE OR HOW BADLY THAT IT NEEDS TO CHANGE HAVE A HARD TIME CHANGING ANYTHING AT ALL. THEY JUST WHINE, CALL EACH OTHER NAMES AND ARGUE A LOT!

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BANKS ARE SIMPLY PRETENDING THAT THEIR BALANCE SHEET VALUATIONS ARE IN LINE WITH REAL WORLD VALUATIONS. WHEN THIS IS FORCED TO AN END THE COLLAPSE WILL BE MASSIVE AND TO MAKE MATTERS EVEN WORSE THE FEDERAL RESERVE IS NOW THE ONLY THING SUPPORTING THE TREASURY MARKETS MAKING THEIR VALUATIONS AS DELUSIONAL AND FALSE AS THE BANKS BALANCE SHEETS ARE. WHEN THIS TIDAL WAVE OF LIES HITS THE MARKETS EVERYTHING WILL COME TUMBLING DOWN.

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GRADUAL RESOURCE DEPLETION, TRADE WARS AND COMMODITY PRICE INFLATION ARE ALL COMING, THERE IS NO QUESTION ABOUT IT. THE ONLY QUESTIONS ARE WHEN AND TO WHAT DEGREE. MY BELIEF BASED ON THE HISTORICAL RECORD AND CURRENT FUNDAMENTALS IS THAT IT WILL PROBABLY BE THE MOST EXPLOSIVE, COMPETITIVE RESOURCE GRAB IN HISTORY. IT WILL LEAD TO THE FAILURE OF NATIONS AND WARS ON A SCALE NEVER SEEN BEFORE, THE LEVELS OF SOVEREIGN DEBT WILL EXACERBATE THE ENTIRE EPISODE. HISTORY, NOT MY OPINION SAYS THIS DOES NOT END WELL.

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FOR HOW MUCH LONGER CAN THE GOVERNMENT, THE FED AND THE MEDIA PROMISE AND PROMOTE SOMETHING THAT ISN'T HAPPENING AND IS UNLIKELY TO EVER HAPPEN,WITHOUT MAJOR CHANGES TO THE WAY ALL THREE OF THESE GROUPS DO BUSINESS. FIRST THE TRUTH MUST MATTER FAR MORE THAN THEIR CORRUPT AGENDAS AND WE ARE A VERY LONG WAY FROM THAT EVER TAKING PLACE. TO ME THAT MAKES IT VERY CLEAR THAT A GREAT DEAL OF PAIN AND SUFFERING LIES AHEAD FOR AMERICA.

AS LONG AS WE CONTINUE TO SUPPORT THE LIE OF DEBT AND DEBT BASED SOLUTIONS,NOTHING WILL BE HEADED IN THE RIGHT DIRECTION FOR VERY LONG. A TRUE RECOVERY CAN'T BE MANUFACTURED OUT OF HOPE, OPTIMISM AND POLITICAL RHETORIC, IT CAN ONLY BE BUILT ON A FOUNDATION OF LEADERSHIP BASED ON THE FACTS AND REALITY, A REALITY THAT WE ARE CURRENTLY IGNORING.

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QUANTITATIVE EASING 2 IS ABSOLUTELY NECESSARY IF THE FED WANTS TO KEEP THE ILLUSION OF RECOVERY AND OUR STRUGGLING ECONOMY ALIVE. THERE IS NO RECOVERY, IMAGINARY OR OTHERWISE WITHOUT THE GOVERNMENTS CONTINUED MASSIVE INPUT OF DOLLARS INTO OUR BROKEN SYSTEM. I AM NOT SUGGESTING THAT I APPROVE OF THIS TYPE OF MEDDLING OR THINKING, JUST THAT IT IS ABSOLUTELY NECESSARY TO KEEP A VERY HARSH REALITY AT BAY.

BY CHOOSING TO KEEP SUPPORTING DELUSION IN THIS MANNER OUR LEADERSHIP IS ENSURING THAT FUTURE OUTCOMES WILL BE MUCH MORE HARSH THAN DOING EVEN NOTHING WOULD ALLOW. WE EITHER PAY FOR OUR SINS NOW OR WE PAY A MUCH HIGHER COST LATER AND RISK TIPPING OVER THE WHOLE SYSTEM.

THOSE IN POWER DON'T CARE ABOUT THE FUTURE ANY FURTHER THAN THEY SEE THEMSELVES BEING IN POWER. THIS IS THE FAILURE OF OUR SYSTEM, AND THIS FLAW IS ELUDING MOST AND DESTROYING 235 YEARS OF HARD WORK AND SACRIFICE BY SO MANY.

IN MY OPINION WE DON'T HAVE MANY PEOPLE IN OUR ENTIRE POLITICAL SYSTEM THAT ARE WORTH A TINKERS DAMN. FIRST THEY CORRUPTED THE SYSTEM AND NOW THE BROKEN SYSTEM CORRUPTS THEM. OUR SO CALLED LEADERS, DON'T HAVE TO COME UP WITH REAL SOLUTIONS, THEY SIMPLY THROW MONEY AT THEIR PROBLEMS AND DO THE BIDDING OF THEIR CORPORATE MASTERS. THEY DON'T EVEN HAVE TO ANSWER TO "WE THE PEOPLE ," ANYMORE.

THEY PRETEND WE MATTER NO MORE! AND ANYONE WHO GETS IN THE PARTY BOSSES WAY IS MARGINALIZED IN VERY UGLY WAYS. THE TRUTH IS A COMPLETELY UNWANTED ORPHAN IN AMERICAN POLITICS AND LEADERSHIP IS AKIN TO HOGS AT A FEED TROUGH!

UNTIL WE CHANGE THIS, WHICH WILL TAKE ENORMOUS COURAGE, UNDERSTANDING, SUFFERING, AND TIME, AMERICA DOES NOT HAVE A CHANCE AND OUR STANDARD OF LIVING WILL BE DECREASING WHILE THE COMPLEXITY AND SEVERITY OF OUR PROBLEMS CONTINUES TO INCREASE.

SO WITHOUT MASSIVE AND CONTINUED INJECTIONS OF ADDITIONAL STIMULUS OUR ECONOMY WILL COLLAPSE. WHILE EACH PASSING ROUND OF STIMULUS WILL BE LESS AND LESS EFFECTIVE BECAUSE IN A DECLINING OR MARGINAL ENVIRONMENT IT TAKES MORE AND MORE TO ENCOURAGE BUSINESS OWNERS AND INVESTORS TO ACT. YOU CAN FOOL PEOPLE FOR A WHILE BUT EVENTUALLY AND IN THE END MOST ACT IN THEIR OWN BEST INTEREST AND THEIR WILL BE NOTHING THAT THE FED CAN DO TO PUT OUR ECONOMY BACK TOGETHER AGAIN. TIME, FUNDAMENTAL REALITIES AND THE TRUTH WILL WIN IN THE END!

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An Interactive Global Public Debt Clock

The Global Public Debt Clock provides a graphic perspective on an important and much discussed global economic issue.

Global public debt for 2010 is close to $40 trillion

and is predicted to rise to over $42 trillion in 2011. In 2009, global debt was just under $37 trillion:

-US public debt is currently at $8.5 trillion, 58 % of GDP. It is predicted to rise to $9.5 trillion in 2011, which will be 63.1% of GDP.

-Japan's public debt is currently $10.6 trillion, 196.1% of its GDP

-Greece's public debt is currently $374.6 billion, 127.8% of its GDP.

-Chinese public debt is approximately $949 billion, 17.3% of its GDP.

AN AWESOME TOOL AT THIS LINK;

http://buttonwood.economist.com/content/gdc

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WHY WE WORK, THIS IS PRETTY AWESOME.

It's A Dad's Life

http://www.linkedin.com/share?viewLink=&sid=s125283654&url=http%3A%2F%2Ft%2Eco%2FzpgBUkh&urlhash=vwOx&pk=member-home&poster=20407707&uid=5391318617390329856&trk=NUS_UNIU_SHARE-pic

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AN AWESOME SLIDE SHOW PRESENTATION BY A LEGENDARY BOND TRADER.

Jeff Gundlach's Complete Guide To The Inevitable American Debt Default


http://www.businessinsider.com/jeff-gundlachs-complete-guide-to-the-inevitable-american-default-2010-7#-1

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Europe's problems are not going away.

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American finance and economics have turned into a cesspool.

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America is in a state of financial and economic collapse that will stretch out over years.

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Europe is headed into further financial trouble and those problems will effect bond and share markets worldwide.

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The public realizes that much of our economic system has become insolvent and they are very unhappy about it. Any effort to revive consumption will be futile.

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The only thing that could possibly keep foreigners buying our debt would be higher interest rates. Our economy is so saturated with debt from top to bottom, that an increase in interest rates of only 2% would have a devastating impact on our economy.

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The federal budget is on a collision course with calamity. Foreign wars, pork-barrel spending, the expansion of entitlements, the age wave of retiring baby boomers, and a global rise in interest rates make federal budgetary policies unsustainable.

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The economic dreamers of the world are not worried about reality or our debt. They say pile it on. We are America. We are the most powerful nation in the history of the world. We can obliterate any enemy with the push of a button. Why do we need to worry about debt?

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Continued deficits will have substantial economic consequences once the savings rate fails to increase in an adequate amount to absorb the new issuance, and particularly if foreign central banks do not pick up the slack. We're not there for now, but it's important not to assume that the current period of stable and even deflationary price pressures is some sort of structural feature of the economy that will allow us to run deficits indefinitely.

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Since chronic current-account deficits result from a nation spending more than it earns, stringent domestic belt-tightening is the only cure. When the dollar was tied to fixed exchange rates, politicians were willing to administer the needed castor oil, because the alternative was to make up for the trade shortfall by paying out reserves, and this would cause immediate economic pain — from high interest rates, for example. But now there is no discipline, only global monetary chaos as foreign central banks run their own printing presses at ever faster speeds to sop up the tidal wave of dollars coming from the Federal Reserve.

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The U.S. government is quite literally out of control.

I'm not talking about a government which shows an almost total disregard for the U.S. Constitution. I'm not talking about elitist politicians in Congress who think they know what's best for you, who think it's their job to take care of you from cradle to grave, whether you like it or not. I'm not even talking about an administration whose policies sometimes appear to have more in common with the command and control societies of Benito Mussolini or Karl Marx than they do with the freedom loving societies of Thomas Jefferson and James Madison.

No, what I'm talking about is a government whose fiscal finances are a mess. I'm talking about a government that, because of these policies, thinks nothing of spending what it does not have, of committing to obligations that it can not possibly keep, and then trying to stick someone else with the bill.

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MARKET REVIEW

It is definitely a bull market in bull. Caveat Emptor!

Cash is quickly becoming a hot potato, and spending it before it loses more purchasing power is becoming a priority. Everyone is clamoring to get something that can't lose value, but most are seeking the shelter of gold and silver.

We have a new world order where China and India are buying gold on every dip, where the West faces an ageing crisis, and where the sovereign states of

the US, Japan, and most of Western Europe have public debt trajectories near or beyond the point of no return.

The managers of all four reserve currencies are playing fast and loose: the Fed is clipping the dollar; the Bank of England is clipping sterling; the European Central Bank is buying the bonds of EMU debtors to stave off insolvency, something it vowed never to do just months ago; and the Bank of Japan has just carried out two trillion yen of "unsterilized" intervention.

13 states had unemployment rates above 10% in August, as opposed to 11 the previous month.

Nevada had the worst rate for the fourth month in a row, at a record high of 14.4%, up from 14.3% in July. Michigan followed with 13.1% unemployment, unchanged from the prior rate, and California was third with a 12.4% rate, an increase from 12.3% in July. A total of 27 states reported higher unemployment rates in August, nearly double the 14 that saw increases in July.

Warren Buffet: We're Still In A Recession Based On Any Common Sense.

Legendary bond investor Jeff Gundlach continues warning of deflation as the economy sputters.

The Consumer Confidence Index fell 4.7 points in September to 48.5. Both the current conditions and expectations series declined during the month, and the labor market components of the survey weakened.

Stocks are down over the past 10 years. Real estate is down hard over the last five years. Commodities are down sharply over the last two years. Instead of spiking to double digits, bond yields are hugging the ground. M3, which is now calculated only by private economists, is down nicely over the past year. And of course money velocity is moribund: Society has looked into the debt abyss and decided enough is enough with the debt-based consumer economy.

So, deflationary forces still prevail. In other words, Helicopter Ben can do nothing about massive deleveraging.

Cutting the deficit that is supporting the consumer economy will directly depress gross domestic product.

TALK ABOUT A ROCK AND A HARD PLACE!

I believe that early in 2011 the real fireworks will begin.

In spite of stimulus of various kinds the economy will falter and unemployment will continue to grow. The plight of what is really going on in the country and the world will become more obvious to the public via talk radio and the Internet. Government, Wall Street and banking will get little or no public support. The Fed will start to run into major opposition from foreigners in the funding of our debt. As the lender of last resort, the injections of capital needed will grow exponentially.

People will become more and more disillusioned with the incompetence and growing impotence of the Fed and the administration. The public will become more and more enraged.

Weekly data points

1) B52 Ben cleared for another takeoff, US$ index near 9 month low, commodity prices higher, gold at record high, inflation expectations rise, this can't end well
2) Jobless Claims stay weak
3) NAHB holds at 18 mo low
4) New Home Sales a hair above 47 yr low and prices near 7 yr low
5) Single family permits drop, more drag for construction
6) Refi's at 6 week low, purchases at 3 week low.
7) PIG debt concerns continue to grow
8) ABC confidence falls to 6 week low

Those counting on a timely resurgence in home valuations ignore the fundamentals of supply and demand at their own peril.

Gold has made the transition this year away from being a strict commodity towards a role befitting a monetary metal that is no government's liability.

We've been in a historically low rate environment for years now. This is no different than what occurred in Japan in the 90′s. The law of diminishing returns has already sunk its teeth into the U.S. economy.

QE2 isn't going to work in this environment, it is going to make every structural problem much worse and every short term problem is going to become a harder to solve long term problem.

All in all, it's been proven that QE has little to no impact on the real economy. It does not boost lending and it does not boost aggregate demand.

The problems here remain with the real economy. Ben Bernanke believes he can induce a "wealth effect" by making risk assets more attractive, however, without real underlying improvement in the economy there is no long-term gain to be had here. Investors who buy risk assets based on the misconception that QE will fix the real economy will surely find out that real end demand remains weak regardless of QE intervention. Without real underlying economic improvement any bid in risk assets will certainly be temporary.

There is very little evidence showing that QE will improve real economic conditions.

The Fed continues to tinker with various tools that simply paper over our problems. At the end of the day, we must see an increase in aggregate demand that leads to higher corporate revenues that leads to hiring that leads to real economic recovery. If you're banking on QE to generate real end demand you're mistaken.

This economy is addicted to stimulus, and with gridlock likely after November congress won't be able to pass stimulus bills to save the market. How long do you think it will be until the market prices this into it's thinking?

The question for the U.S., Western Europe and the developed world is really what's going to happens over the next 20 years. Are things going to be better in the next 20 years than they are today?

We're at a point where short run thinking has run out of time in the U.S. So it's not a question of can patch things up in another year with another stimulus, bail out the banks or anything like that, it's actually how do you get things in better shape over the next 20 years.

Perpetual growth and globalization mean just one thing for the future, a malthusian struggle for resources.


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It is likely that the Republican Party will regain control of the House of Representatives. Fifteen US Senate seats are now in play. October is known for its surprises. I wish I could predict what is coming at US/ us first. An Israeli (US) attack on Iran, Gaza, Jordan, Syria…? A major stock market "correction" of greater than 20%? A significant downward spiral of the Dollar revaluation to other world currencies? An outbreak of war on the Korean peninsula? The Federal Reserve being forced to purchase all the failed rollovers of maturing US government debt instruments? Inflation? Deflation? What will become the rock foundation for this elusive recovery? Will we see any changes for the better?

I TH*NK about a hymn that we just sang in church: "Upon this solid rock I stand…

all other things are sinking sand… all other things are sinking sand." Sinking sand? Humm… Time will tell…

I'm Fred Cederholm and I've been thinking. You should be thinking, too.

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Anger itself does more harm than the condition which aroused anger.

Samurai maxim

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"Some people spend an entire lifetime wondering if they made a difference. The Marines don't have that problem."

President Ronald Reagan, 1985
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"Failure is the path of least persistence."

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"We're surrounded. That simplifies the problem."

Lt. Gen. Lewis B. "Chesty" Puller, USMC

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"Come on, you sons of b*****! Do you want to live forever?"

GySgt Daniel Daly, USMC
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"Our Country won't go on forever, if we stay soft as we are now. "

Lt. Gen. Lewis B. "Chesty" Puller, USMC

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"We're not retreating, Hell! We're just attacking in a different direction!"

Gen. Oliver Smith, USMC

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"Capitalism without failure is like religion without sin—it just doesn't work."

Allan Meltzer

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"Hard pressed on my right. My center is yielding. Impossible to maneuver. Situation excellent. I am attacking!"

Ferdinand Foch

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"All right, they're on our left, they're on our right, they're in front of us, they're behind us...they can't get away this time"

Lt. Gen. Lewis B. "Chesty" Puller, USMC

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"There are not enough chinamen in the world to stop a fully armed Marine regiment from going where ever they want to go"

Lt. Gen. Lewis B. "Chesty" Puller, USMC

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Honor, Valor and Sacrifice. Semper Fi !

ECONOMIC BITS AND PIECES............

THIS IS AN AWESOME VIDEO ABOUT WHAT QUANTS DO.

Quants: The Alchemists of Wall Street

http://www.youtube.com/watch?v=ed2FWNWwE3I
 

THE KEYNESIAN / U.S. DOLLAR ERA IS OVER..........

Obama, the Congressional Democrats, and their Keynesian-Friedmanite mentors should face up to the fact that they have

overstayed their welcome as financial managers of the U.S. and the world. Pseudo-theorizing on the non-existent benefits of currency devaluation has grown threadbare. Blackmailing surplus countries and slapping the losses on them -- while the orgy continues in the deficit country -- is a counter-productive strategy. It is bound to fail. It may force China to fix the value of the yuan, not in U.S. dollars but in gold ounces. That will be the last nail in the coffin of the once mighty U.S. dollar, to make it ready to join the Continental, the assignat, the Reichsmark, and the Zimbabwe dollar in the cemetery of worthless fiat currencies.

A QUESTION WORTH ASKING...........

So the irony is that we have many millions of people investing everything that they have in order to survive the breaking of impossible to keep government promises, by buying investments that radically increase their risk exposure to the breaking of these impossible to keep government promises.

Does that make sense?

Or should we be doing just the opposite and seeking out strategies where the worse the situation gets, the better our investment strategy performs? So that we seek financial security by offsetting our risks instead of doubling down on them as we currently are.

DOES ANY ONE REALLY THINK THIS IS SUSTAINABLE OR SMART?

THE MORE THE FED PRINTS THE MORE CERTAIN ECONOMIC FAILURE BECOMES.........

The more the Fed prints, the more it encourages the Federal government to "stimulate"—id est, go further into debt in an attempt to grow the economy out of this Depression by way of fiscal spending. Right now, 25¢ of every dollar of tax receipts goes to pay interest on the fiscal debt. How long before 50¢ of every dollar goes to pay interest? 100¢ of every dollar? Is that when the fiscal debt finally becomes insurmountable?

Or will there be a Moment of Clarity in the markets? Will there come a day when the bond markets collectively realize that Treasuries will never ever be repaid—cannot be repaid? And when that day comes, when that Moment of Clarity falls on the markets, will it spark a panic?

Such a panic would lead—inexorably—to a flight to safety in actual, physical commodities, which would then result in a massive hyperinflation that would kill the dollar dead.

What is most important is, that no one knows when such a Moment of Clarity will occur—but there is absolutely no doubt that it will occur. Inevitably, unavoidably: Treasury bonds are bound to collapse, triggering the sequence of events described above.

If people no longer trust dollars as a medium of exchange and Treasuries as stores of value, where will they go? They will leave both and go to something else—commodities. And when that day comes, people will do anything to get out of the dollar and Treasuries, and into something that is stable in terms of value storage and medium of exchange.

Yearly fiscal deficits of 10% of GDP per year are simply unsustainable. I don't care what argument you make, deficits of this ever-increasing size will lead to an eventual collapse of the economy.

 

MISSION IMPOSSIBLE...........

The Federal Reserve has abandoned both of its mandates

—to fight inflation and to maintain full employment—in favor of its new mantra: Maintaining aggregate asset price levels. Whatever it takes. This means essentially inflating asset price levels back to pre-Depression levels.

Everything the Fed has been doing since September 2008 has been in the service of this goal. The MBS buys, the alphabet-soup of liquidity windows, QE, now QE-lite, QE2 soon to come—

the Fed is hell-bent on maintaining the bubble it created between 1987 and 2007.

Since September 2008, the way the Fed achieved this goal was by effectively nationalizing private debt, and turning it into public debt—one look at the Fed balance sheet is enough to convince any skeptic.

This means that all the bad debt accumulated during the last two-and-a-half decades have been effectively turned into Treasuries.

In a termite-riddled house, no one can predict when the house will collapse—but we all know that it will collapse. Everybody knows that the current levels of treasury debt cannot be repaid. So it's not a question of if—the damage has been done, and it is irreparable. It is now simply just a question of when and how the moment of collapse arrives



WARREN BUFFETT SPEAKS..........

The NBER. said this week that the-- recession officially ended back in June of last year.

BUFFETT: Well, they define it differently. But I-- I mean, I-- I define it-- I think we're in a recession until real per capita G.D.P. gets back to where it was-- before. That is not the way the National Bureau of Economic Research measures it. But I will tell you that to any-- on any common sense def-- definition, the average American is below where he was before or his family, in terms of real income, GDP.

We're still in a recession. And-- and we're not gonna be out of it for awhile.

OFFICIAL GOVERNMENT ECONOMIC METRICS ARE DESIGNED AND FORMULATED TO DO TWO THINGS; OBSCURE THE TRUTH AND FOOL THE MASSES!

 

WE THE PEOPLE MUST ARISE............

The powers that are feeding on the middle class American citizen rely on our weakness and disorganization. They revel in our feelings of powerlessness. They present a face of overwhelming force. However, they are weak- they are few, and they depend on their ability to use fiat currency to pay labor and then steal it back through government action.

ALL of their actions require Fractional Reserve Currency systems. They all require taxation and large bureaucracies. As long as "We the People", allow others to have power and control over our actions, we will wear the chains of slavery.

Make no mistake- it is OUR inaction and acquiesence that makes their power possible. It will therefore only be our action that sets us free once more. We have to say no, knowing that the repercussions may be dire.

 

SOPHISTICATED INDIVIDUALS GET IT........

Few believe the economy is recovering, with only one in six of those surveyed describing it as expanding, according to a global quarterly poll of 1,408 investors, analysts and traders who are Bloomberg subscribers. Forty-one percent aren't convinced the financial situation is stable and say further turbulence is likely.

Europe is seen as a weak link in the world economy. More than three-quarters of those surveyed see a risk that the eurozone may dissolve eventually, and more than 20 percent of those describe such a threat as looming.

Among asset classes, commodities have gained the most in popularity among investors since the last poll. About one in three of those surveyed said commodities will offer the highest return over the next year. In June, 23 percent said that.

Government bonds are seen as the worst investment for the coming year. Almost half of those polled said they felt that way, up from 36 percent in June.

The most undervalued and best place to invest right now are developed countries, blue-chip equities with good dividend yields and a good dividend growth rate.

 

THE LEVEL OF OUR DELUSION...........

Americas public debt — if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked into the cake through 2015 —

will soon reach $18 trillion. That's a Greece-scale 120 percent of gross domestic product, and fairly screams out for austerity and sacrifice.

The day of national reckoning has arrived. We will not have a conventional business recovery now, but rather a long hangover of debt liquidation and downsizing.

 

MORE ABOUT OUR UNSUSTAINABLE DEBT..........

The national debt now stands at $13.4 trillion. According to the 10-year budget projections of the Obama administration,

the nation will rack up another $8 trillion in debt by 2020 — and that's pretty much a best-case scenario. The Congressional Budget Office projects $9.8 trillion in cumulative deficits by then; the non-partisan Concord Coalition says $15.2 trillion. All estimates are insufficiently pessimistic because none of them question the economic assumptions underpinning the Obama forecast.

One assumption of these forecasts looks outdated already — 3.4 percent average economic growth between now and 2020, roughly equal to the Internet-fueled economic expansion of the Clinton administration.

What would happen if, in recognition of the significant impediments to the economy's growth like continued consumer indebtedness and a collapsing real estate market, we assumed annual growth of only 2.4 percent annually and a mild recession later in the decade? According to estimates prepared for me by Chmura Economics & Analytics, a Richmond-based economic consulting firm, the annual deficit would soar from $1 trillion a year under the Obama scenario to $1.7 trillion a year by 2020. The national debt would hit $29 trillion.

Alternatively, what would happen if interest rates climbed to levels seen as recently as 1990 – ten percent on 10-Year Treasury bonds — as some reputable economists think could happen by 2020?

According to Chmura's calculations, the annual deficit would shoot to $2.7 trillion a year, and the national debt to $32 trillion.

And that's just ten years out. The age wave slams ashore in the following decade; hordes of boomers will run up Medicare and Medicaid expenditures. Then, around 2023, the Social Security administration will start drawing down its $4.3 trillion trust fund over a period of some 15 years, adding hundreds of billions of dollars yearly to the sums that Treasury will have to borrow in the capital markets. As if that weren't bad enough, aging countries around the globe, from Japan and China to the U.S., Canada, Italy, France and Germany will be saving less. The global capital glut, as Fed Chairman Ben Bernanke calls it, will become a global capital shortage.

Interest rates will shoot higher.

Meanwhile, a major nation like Japan, Italy or Spain likely will default on its debt, sparking a flight from sovereign debt — including that of the U.S. — driving rates even higher. Absent truly wrenching changes to tax and spending policies that neither U.S. political party appears willing to make, this financial armegeddon is all but inevitable

BASED ON CURRENT REALITY AND MOST OF THE FACTS THAT PEOPLE WOULD RATHER IGNORE RIGHT NOW, AND WITH JUST A LITTLE RATIONAL THINKING THROWN IN, MOST ANYONE CAN SEE THAT THESE SCENARIOS LAID OUT ABOVE ARE ALL, ALL BUT GUARANTEED. AS A MATTER OF FACT, I WOULD SUGGEST THAT WE WILL BE VERY LUCKY IF IT IS ONLY AS BAD AS WHAT IS OUTLINED ABOVE.

EVERY ASSUMTION OF FINANCIAL AND ECONOMIC PLANNERS ARE GOING TO BE PROVED TO BE ABSOLUTE FOLLY OVER THE NEXT DECADE AS EVERY DEBT AND GROWTH BASED PARADIGM FAILS COMPLETELY.

HUMAN NATURE HAS MOST PEOPLE LOOKING THE WRONG WAY AS WE GET SET TO CROSS THIS STRETCH OF TIME AND THE BUS THAT IS COMING THE OTHER WAY HAS NO BRAKES........... OUR COMPLETE LACK OF LEADERSHIP IS GOING TO GET US FLATTENED AND SAYING THAT IT CAN'T HAPPEN WILL NOT LESSEN THE BLOW!!

 

A POLITICAL TIME LINE.............

Stage 1:

The Dems just put the nail in their coffin by confirming they are wimps, refusing to force the GOP to filibuster the Bush tax cuts for America's richest.

Stage 2:

The GOP takes over the House, expanding its war to destroy Obama with its new policy of "complete gridlock," even "shutting down government."

Stage 3:

Obama goes lame-duck.

Stage 4:

The GOP wins back the White House and Senate in 2012. Health care returns to insurers. Free market financial deregulation returns.

Stage 5:

Under the new president, Wall Street's insatiable greed triggers the catastrophic third meltdown of the 21st century Shiller predicted, with defaults on dollar-denominated debt.

Stage 6:

The Second American Revolution explodes into a brutal full-scale class war rebelling against the out-of-touch, out-of-control greedy conspiracy-of-the-rich now running America.

Stage 7:

Domestic class warfare is compounded by Pentagon's prediction that by 2020 "an ancient pattern of desperate, all-out wars over food, water, and energy supplies would emerge" worldwide and "warfare is defining human life."

What's behind our 2010-2020 countdown? It became obvious after reading the brilliant but bleak "Decadence of Election 2010" report by Prof. Peter Morici, former chief economist at the International Trade Commission.

He sees no hope from America's political parties, just a dark scenario ahead.

I HAVE BEEN TALKING ABOUT THESE POSSIBILITIES FOR OVER A DECADE AND FEW WOULD LISTEN. NOW IT IS ON OUR DOOR STEP AND THERE MAY BE LITTLE WE CAN DO. WE HAVE TO TRY, BUT IN REALITY THINGS ARE VERY GRIM AND PROBABLY WILL GET VERY UGLY AS IN MASSIVE SOCIAL UNREST AND ECONOMIC COLLAPSE BEFORE THIS IS OVER.

 

OUR NEGLIGENT PRESIDENT..............

WINSTON CHURCHILL once moaned about the long, dishonourable tradition in politics that sees commerce as a cow to be milked or a dangerous tiger to be shot.

Businesses are the generators of the wealth on which incomes, taxation and all else depends; "the strong horse that pulls the whole cart", as Churchill put it. No sane leader of a country would want businesspeople to think that he was against them, especially at a time when confidence is essential for the recovery.

From this perspective, Barack Obama already has a lot to answer for. A president who does so little to counter the idea that he dislikes business is, self-evidently, a worryingly negligent chief executive.

The evidence that American business thinks the president does not understand Main Street is mounting. A Bloomberg survey this week found that three-quarters of American investors believe he is against business.

The Economist has lost count of the number of

prominent chief executives, many of them Democrats, who complain privately that the president does not understand their trade—that he treats them merely as adornments at photocalls and uses teleprompters to talk to them; that he shows scant interest in their views on which tax cuts would persuade them to hire people; that his team is woefully short of anyone who has had to meet a payroll (there are fewer businesspeople in this White House than in any recent administration); and that regulatory uncertainty is hampering their willingness to invest.

 

DERIVATIVES..........

In today's casino economy, you don't need the permission of a company like BP (or a homeowner in Florida, or a country like Greece) to place a bet on their debt. You don't need to put any money down to back your losses. And there's no limit to how many times you can wager on the same outcome: A company may have only taken out $1 million in loans, but scores of banks, hedge funds and other financial players might cumulatively wager $100 million on whether or not the company will pay off that single million on time. That's why, if a behemoth as large as BP goes under, it can cause losses beyond its own liabilities: Derivatives now comprise a virtually unregulated shadow economy that is 100 times larger than the federal budget.

 

RETURN TO GOLD..............

America has nothing to lose and a lot to gain by playing the gold card before other countries do first. The prodigal son, repentant, could return to his father, symbolized by the American Constitution, who is ready to forgive and embrace him. Not only will the opening the U.S. Mint to gold, as demanded by the Constitution, restore the government to fiscal sanity and financial health; it will also bring confidence back to the international monetary system.

BUT IS THERE ENOUGH GOLD IN THE WORLD FOR A RUSH BACK TO THE SANITY OF GOLD. I FOR ONE KNOW WE MUST DO SOMETHING, BUT A RETURN TO GOLD MIGHT CAUSE AS MANY PROBLEMS AS IT SOLVES AND THE PRICE OF GOLD WOULD CERTAINLY SKYROCKET.

 

Think Israel Is Going To Bomb Iran? Then This Is The Fund For You


Fund manager Randy Slifka is currently designing a fund to take advantage of the potential gains of a strike by Israel on Iran, according to Fortune's Dan Primack.

The investment is labeled as a "

geopolitical volatility fund," called GeoVol, and is designed as a hedging instrument for investors concerned about such a scenario. The fund would also pay out 20% of profits to Israelis in the event of an attack, according to its promotional materials.

The fund is to be invested in a wide array of asset classes and

its target value is $500 million. It's not clear what, exactly, it's investing in, but you could surmise that oil, water, and defense-related instruments are high on the list.

 

MONEY MANAGER KEN FISHER IS A COMPLETE IDIOT.........

Some great fighting words form

money manager Ken Fisher.

Bloomberg:

Fisher said the concept of a "new normal" is "idiotic," pitting him against

money managers including Mohamed El-Erian, the CEO of Pacific Investment Management Co., which coined the term to describe a world of high unemployment, more regulation, and the shrinking importance of the U.S. in the global economy. ABSOLUTELY CORRECT, THERE IS NO DOUBT ABOUT THIS!

"We are chimpanzees with no memory," Fisher said at the Forbes Global CEO Conference in Sydney. "The next 10 years are going to be just as good as the 1990s. The problems in this current environment we think are so different, and so new and so unique. It's the same stupid old normal we've always had. We've got a great future."

Of course, Fisher has long been bullish, and he got hammered during the last downturn.

TALKING HIS BOOK AND SELLING MORE BULLSHIT THAT GOT HIS CLIENTS KILLED DURING THE LAST CRASH AND OVER THE PAST DECADE. THIS MAN IS A DANGEROUS FOOL. BLIND ADHERENCE TO LONG HELD BELIEFS AND PRINCIPLES WILL GET YOU KILLED WHEN THINGS CHANGE. THIS GUY KNOWS ONE TUNE AND THE BAND STOPPED PLAYING IT LONG AGO.

I GUESS THE WORLD IS GOING TO LET AMERICA PRINT DOLLARS FOREVER AND SIT ON THE BEACH HUMMING BE HAPPY WHILE THE DOLLARS VALUE GOES TO NOTHING. GREAT FUTURE INDEED!

THIS GUY IS STUPID AND BLIND JUST LIKE GREENSPAN WAS AND STILL IS , THEY BOTH NEED TO HAVE 80% OF THEIR EGO'S REMOVED JUST TO BE EGOTISTICAL ASSHOLES. HE MAKES MONEY OFF OF DOING A HUGE VOLUME IN COLLECTING CLIENT FEES, NOT BECAUSE HE GIVES GOOD ADVICE.



LEADERSHIP AND THE CHURCH ARE ASLEEP IN AMERICA...........

"Because thou sayest, I am rich, and increased with goods, and have need of nothing; and knowest not that thou art wretched, and miserable, and poor, and blind, and naked." Revelation 3:17

This is the heart of Christ's rebuke of the church at Laodicea,

the "lukewarm" church of the last days. This is an evangelical church for its candlestick is still in place, but it has become a neutral church, "neither cold nor hot". The reason for its tepid witness is because it has become "rich,and increased with goods," comfortable in a culture which tends to equate material prosperity with success and God's favor. It may have acquired large and beautiful facilities, developed special programs of many kinds, featured a variety of musicians and other artists, and even gained a measure of political power. Yet, Christ calls it poor and blind and naked!

Large successful congregations can easily lead to a compromising biblical standards of doctrine and practice.

"Woe to them that are at ease in Zion," the prophet warned in Amos 6:1. Note that the Lord began His letter to the Laodicean church by identifying Himself as "the Amen, the faithful and true witness, the beginning of the creation of God" Revelation 3:14

This strongly suggests that a major reason for the development of such complacency in a large church (or a small church, for that matter)

is neglect of these three doctrines--the sufficiency of Christ, the inerrant authority of God's Word, and the special creation of all things by God.

The letter to this church ends with the sad picture of Christ standing at its door, seeking admission. "He that hath an ear, let him hear what the Spirit saith unto the churches"

Scientists and educators profess to be searching for the truth, and many religions and philosophies profess to have the truth, but all truth worth seeking comes from only one source, the one true living God of the Bible. Only he is God, all others are false. To look for Truth anywhere else is to be "ever learning, and never able to come to the knowledge of the complete truth of God." Truth is found in God the Father, God the Son, and God the Spirit. "When he, the Spirit of truth, is come, he will guide you into all truth" (John 16:13).

Since our earthly being is not totally immersed in Heaven and God's presence and our current reality obscures God making him seem distant, we are more easily "self contained" and self-centered. This has led to much of mankind thinking that he is in charge and that he can take care of himself. It is the biggest problem in America today!

CHRIST IS KNOCKING, HAS BEEN KNOCKING, ON THE HEARTS OF INDIVIDUAL AMERICANS, THE HEARTS OF AMERICAN LEADERS AND THE COLLECTIVE HEART OF OUR NATION AND OUR VERY TROUBLED WORLD. TIME GROWS SHORT, AND STILL MOST ARE IGNORING HIS EFFORT, REJECTING HIM AND TRYING TO SUCCEED BY THEIR OWN RULES. AMERICA WILL NEVER BE AS GREAT A NATION AS WE ONCE WERE, UNLESS THERE IS SURRENDER AND REVIVAL IN THE HEARTS OF HER LEADERS AND PEOPLE. GOD WAS THE ONLY ANSWER THE FOUNDING FATHERS NEEDED AND HE IS STILL THE ONLY ANSWER AMERICA NEEDS TODAY!