We The Sheeplez- The Coming Economic Collapse.."A Nation Of Sheep Ruled By Wolves" Thomas Jefferson

June 30, 2011, at 6:32 pm
by Jim Sinclair

Jim Sinclair’s Commentary

Here is the latest from John Williams’ ShadowStats.com.

- Real Disposable Income on Track for Second-Quarter Contraction
- An Unlikely U.S. Default Would Hit Dollar and Accelerate Inflation
- New Action to Depress Officially Reported Inflation?
“No. 376: General Update”
http://www.shadowstats.com

Federal Withholding Tax Data Says The US Is Already In A Recession
Lee Adler, The Wall Street Examiner | Jun. 29, 2011, 9:35 AM
I like tracking withholding taxes because they are one of the only economic barometers that we can follow virtually in real time on a daily basis. The charts below contain daily data through June 23.
The first chart shows this year and last year superimposed on one another. The blue shaded line is this year. The brown shaded line is last year at the same time date. That this year has had gains versus last year most of the time as indicated by the spread between the two lines. However, that has begun to change in recent weeks, with this year no longer showing material gains versus last year.

I was wondering how much of the gain was due to inflation, so I calculated the year to year difference and then adjusted it by the government’s employment cost index annual rate of change. That measure has been running consistently running around 2%, which is lower than the CPI (surprise, surprise, surprise). The resulting chart is below.
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Jim Sinclair’s Commentary

That means they are broke! You think the euro has problems? Hang on.
Maybe Illinois will inquire about opting out of the Union of the United States. Then Illinois can print the Chicago Rupee.
Illinois out of money for income tax refunds

State owes businesses $620 million in income tax refunds dating to 2009
By DOUG FINKE (doug.finke@sj-r.com)
Posted Jun 28, 2011 @ 10:02 PM
SPRINGFIELD — With the start of a new budget year just two days away, thousands of Illinois businesses are still waiting for state income tax refunds dating back to 2009.
The Illinois Department of Revenue said Tuesday it would end the fiscal year June 30 still owing about $620 million in business income tax refunds. As of June 21, the department still owed 7,572 business income tax refunds, although spokeswoman Sue Hofer said the number by the end of the month would be lower because some since have been paid.
The oldest of the overdue refunds goes back to April or May of 2009, she said. The average amount of the refunds owed is $104,000. Hofer said refunds less than $5,000 have been paid.
“There is not enough money in the Income Tax Refund Fund,” Hofer said in explaining the delays.
The Income Tax Refund Fund is set up to provide sufficient money each year to cover refunds. State law determines the amount set aside annually.
This is not the first year that fund has fallen short. According to the audit, the funds for businesses and individual refunds combined ended fiscal 2010 with a $1.380 billion deficit and fiscal 2009 with a $949.3 million deficit.
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Jim Sinclair’s Commentary

Positive PR on non-offensive good ole QE when it is ending. Why?

Fed’s Bullard: QE effective proxy for rate cuts
By Mark Felsenthal
ST. LOUIS | Thu Jun 30, 2011 7:21pm EDT
(Reuters) – Large-scale bond buying can be an effective monetary policy substitute when the Federal Reserve runs out of room to cut interest rates, a top official of the U.S. central bank said on Thursday.
Speaking on the final day of the Fed’s latest bond-buying initiative, James Bullard, president of the St. Louis Federal Reserve Bank, pronounced the purchases, which have totaled $2.3 trillion in all, successful in easing financial conditions.
“This experience shows that monetary policy can be eased aggressively even when the policy rate is near zero,” he said at a St. Louis Fed conference evaluating quantitative easing.
Bullard qualified his assessment by saying the effects of bond buying on reviving the economy are harder to evaluate and have been clouded by shocks, including disruptions from the Japanese earthquake and European debt problems.
The Federal Reserve exhausted its conventional tools when it cut short-term interest rates to near zero in December 2008.
Since then the Fed has sought to provide an additional boost to the economy via two asset-buying programs — with the second program dubbed QE2 — effectively showering the banking system with money to try to spur lending. Economists call this tactic quantitative easing.
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Jim Sinclair’s Commentary

Releasing oil from storage is going to cure what? Do you think we have some systemic problems?

New San Francisco bridge built in China to be shipped to US
First, China made cut-price clothes and knick-knacks. Then it learned how to make mobile phones and iPads. Now it is making a 2,050ft-long bridge spanning the San Francisco bay.
By Malcolm Moore, Shanghai
11:32AM BST 28 Jun 2011
Next month, four enormous steel skeletons, the last of the 12 segments of the bridge, will be shipped 6,500 miles from Shanghai to San Francisco before being assembled on site.
The bridge, which will connect San Francisco to Oakland on the other side of the bay, is a sign of how China has moved on from building roads and ports in Africa and the developing world and is now aggressively bidding for, and winning, major construction and engineering projects in the United States and Europe.
After building forests of skyscrapers in Beijing and Shanghai, showpiece buildings like the Bird’s Nest stadium and the Guangzhou Opera House, and a high-speed rail network that is the envy of the world, Chinese construction companies are flush with cash and confidence. This week, Wen Jiabao, the Chinese premier, lobbied David Cameron to give the contract for the UK’s new high speed rail link to a Chinese company.
According to Engineering News Record, five of the world’s top 10 contractors, in terms of revenue, are now Chinese, with likes of China State Construction Engineering Group (CSCEC) overtaking established American giants like Bechtel.
CSCEC has already built seven schools in the US, apartment blocks in Washington DC and New York and is in the middle of building a 4,000-room casino in Atlantic City. In New York, it has won contracts to renovate the subway system, build a new metro platform near Yankee stadium, and refurbish the Alexander Hamilton Bridge over the Harlem river.
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So Much For That Japanese Recovery: Large Manufacturer Confidence Plummets

Submitted by Tyler Durden on 06/30/2011 21:08 -0400

So much for the Japanese renaissance which somehow is supposed to lead to a surge in Q3 US GDP growth. Following yesterday's surprisingly strong factory production growth rate of +5.7% (the second highest in history), every economist (and Joe LaVorgna), was already shifting their strawman from declining energy costs (which are now back to early June levels courtesy of the IEA idiocy), to Japan as the last bastion of growth. Alas, the just released Tankan quarterly index of large manufacturer confidence has confirmed that the rumors of Japan's economic reincarnation have been greatly exaggerated after it dropped by the most since the Lehman collapse, plunging from +6 in March to -9, well below the economist (and Joe LaVorgna) consensus of -7. From Bloomberg: "Forecasts by Panasonic Corp. (6752) and Hitachi Ltd. for weaker earnings have added to signs of depressed demand. Monetary tightening by Asian economies grappling with inflation means that Japanese companies also can’t count on customers within the region for boosting sales. “The global economy is starting to slow, heightening uncertainties about its future direction,” Ryutaro Kono, chief economist at BNP Paribas in Tokyo, said before the report. “The downside risks to China and other emerging economies seem to be on the rise." In other words, the global economic growth is impacting Japan, and it is not the Japanese slowdown that is impairing some mythical global growth story. Of course, by the time the economist (and Joe LaVorgna) pool figures this out, QE 3 will be well on its way.

Guest Post: Deconstructing Algos, Part 2: Leveraging Chaos Into High-Frequency Arbitrage Opportunities

Submitted by Tyler Durden on 07/01/2011 00:21 -0400

The recent elegant explanation for the activities of the HFT algos by Nanex seems likely to be a better one than the analysis that follows, as it answers the all-important question--why? In the following analysis we will look a little bit at how, but most or our interpretation of the results is coloured by the Nanex explanation. It explains why so many trades happen outside the bid-ask spread, particularly as the bid and ask prices are moving rapidly. They are scalping fractions of pennies from some poor fool who has data more than a few ms old. As this is the reason, the method of choosing bid and ask prices pales in significance next to the methodology of stuffing the orders. This methodology I know nothing about and will not address. This article will address how to use this stuffing to create endless opportunities for arbitrage. The principal advantage discussed in the Nanex report is stuffing the market with so many orders that competitors have trouble seeing the present state of the market. Whenever such inefficiencies are created, an arbitraging opportunity may also be created. One method of creating arbitrage opportunities is through manipulation of time. We are accustomed to thinking of information flow as instantaneous, but it is limited by the speed of light. How might HFT take advantage of this?