In
the last few weeks much has been said about how the US economy, after
nearly collapsing in the Lehman aftermath has staged a gradual, if
painful and very slow improvement in the last 3 years. Sure enough,
After jobs peaked at an all time high of 138 million in January 2008,
they then tumbled to a depression low of 129.2 million in February 2010
and beginning in September 2010 have posted 24 consecutive months of
growth, rising to 133.5 million last month: a 4.25 million trough to, so far peak.
Not bad. What, however, has received little discussion by either
presidential candidate, primarily because it is largely a byproduct of
both Republican and Democratic action, is what can be seen on the chart
below courtesy of Diapason Securities, namely the New Normal angle of
debt increase, which from merely steep, has mutated into beyond acute. What
one can see is that the public cost of "normalization", aka the Trade
Off of the new normal is an additional $4.25 trilion in debt over and
above where the previous historic trendline would put total US debt,
just under $12 trillion. Instead total debt is now $16.2 trillion. Oddly enough, this translates to precisely $1,000,000 per job gained or saved from the first (and certainly not last) post-crisis trough: yet
another fact that will not be mentioned in either the mainstream press
or any presidential debate, as sadly trading off record amounts of
public debt for new jobs is the only game left in town for either
party. The World's Largest Money-Laundering Machine: The Federal Reserve
The
essence of money-laundering is that fraudulent or illegally derived
assets and income are recycled into legitimate enterprises.
That is the entire Federal Reserve project in a nutshell. Dodgy
mortgages, phantom claims and phantom assets, are recycled via Fed
purchase and "retired" to its opaque balance sheet. In exchange, the Fed
gives cash to the owners of the phantom assets, cash which is
fundamentally a claim on the future earnings and productivity of
American citizens. Some might argue that the global drug mafia are the
largest money-launderers in the world, and this might be correct. But
$1.1 trillion is seriously monumental laundering, and now the Fed will
be laundering another $480 billion a year in perpetuity, until it has
laundered the entire portfolio of phantom mortgages and claims. The
rule of law is dead in the U.S. It "cost too much" to the financial
sector that rules the State, the Central Bank and thus the nation.
Once the Fed has laundered all the phantom assets into cash assets and
driven wages down another notch, then the process of transforming a
nation of owners into a nation of serfs can be completed.Here's the Fed's policy in plain English: Debt-serfdom is good because it enriches the banks. All hail debt-serfdom, our goal and our god!
Keep Your Eyes Off The European Cash-Flow Ball
The
biggest headlines (and refutations) have been saved for the struggling
nations of Europe's periphery. Top-down, this makes sense as
PPP-weighted PMIs show Europe notably decoupling (badly) from the rest
of the world - with periphery and eurozone-ex-periphery having resynced
at these lower levels. This convergence (down) of the core with the
periphery is not good news but what is more concerning is that while
many investors have assumed the 'pricing' of risk assets in the
periphery relative to the core is due mostly to 'contagion', there is in
fact a massive fundamental divide between the core and periphery's corporate debt credit quality.
With ECB's OMT apparently removing much of the systemic risk premium
(though we are clear on our views of this short-term LTRO-esque
reaction), the idiosyncratic risk differential between Core and Periphery credit quality is large and getting larger.
It seems the need for simultaneous private and public deleveraging in
the periphery - especially in Spain - is as critical as ever.Decline, Decay, Denial, Delusion, And Despair...
The majority
of Americans seem OK with just waddling through life, accepting the
lies and misinformation blasted from the boob tube and their various
iGadgets by their owners, gorging themselves to death on
Twinkies and Cheetos, paying 15% interest on their $10,000 rolling
credit card balance, and growing ever more dependent on the
welfare/warfare state to provide and protect them from accepting
personal responsibility for their lives. A minority of critical
thinking people have chosen to question everything they see and hear
being spewed at us by the propagandist mainstream media. What do 'we, the people' want? As it seems the entitlement “free shit” mentality permeates our culture. The question is whether we will stand idly by, fiddling with our gadgets, tweeting about Honey Boo Boo, or will we regain our sense of duty to the future generations of this country. From The SEC To Goldman Sachs In One Easy Step: The Revolving Door Farce Full Frontal
This particular news from Goldman and the SEC needs absolutely no introduction, explanation, or conclusion. It is, as Homer J. Simpson would say, "a tidy little package."- GOLDMAN HIRES EX-SEC INVESTMENT MGMT CHIEF BUDDY DONOHUE: MEMO
- GOLDMAN NAMES DONOHUE GENERAL COUNSEL OF GSAM INVESTMENT COS
As Online Retailers Launch Vendor Financing, Is Apple Credit Corp Imminent?
As we have been saying for over a year now, there are two key issues (one of which follows logically from the other) that central bankers are banging their heads against: the increasing scarcity of money good-assets, i.e., credible collateral, that can be pledged in exchange for debt at both the private and public level, and the collapsing cash flows at the corporate and household level (both incidentally direct artifacts of ubiquitous central planning and central banker intervention). This, among various other reasons chief among which is the parallel collapse in CapEx and R&D spending at the corporate level, is the main reason for the now secular decline in corporate revenues, which in turn will impact corporate profitability for years to come (now that the easy cost cuts have been made and firms have no choice but to cut into the muscle), and why any expectations that currency dilution will transform into higher profits in a time when input costs rise far more aggressively than revenues, are merely pipe dreams, as is the market's obsession with expanding PE multiples. Perhaps the best confirmation that the much needed cash flows continue to not materialize, is the news that first Amazon, and now Google, are slowly migrating to a model of vendor financing, whereby they provide credit to their product and service vendors to stimulate top line growth. And while this may boost AMZN and GOOG stock price briefly, all it indicates is what we have all know for a long time: the US consumer is once again tapped out, and is unwilling and/or unable to spend money at the rate needed to justify either the forecast S&P earnings or the applied multiple, confirming fundamentals are even more disjointed from market surreality than previously expected.The Race To A Cashless Society
Eric De Groot at Eric De Groot - 49 minutes ago
The race to a cashless society, a system intended to hide the monetary sins
of and increase taxable cash flow for big brother, wanders into new
territory with each passing day. A cash budget (cash based accounting)
used to be the preferred method to manage and control household budgets.
Cash, however, offers no external profit outside the institution that
issues it. ...
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content, and more! ]]
Calif. governor takes action as gasoline prices hit new all-time high
Eric De Groot at Eric De Groot - 2 hours ago
The public sector institutes so many rules and regulations, also known as
barriers to entry to capital, that it doesn't take much distruption of
supply to create painful shortages. One has to at least appreciate the
irony in the "save me government" cries shortly after the crisis.
Headline: Calif. governor takes action as gasoline prices hit new
all-time...
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content, and more! ]]
Life Follows Cycles, The Coming History Lesson Will Not Be Unique
Eric De Groot at Eric De Groot - 3 hours ago
Humanity has been struggling against/(living with) the aspirations of big
brother since the birth of culture and society. The interests of big
brother (minority) and humanity are not always compatable. Thomas
Jefferson revealed this inherent incompatability through his famous
observation, The tree of liberty must be refreshed from time to time with
the...
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content, and more! ]]
Video: Apple (AAPL) Seems To Have Peaked
Admin at Marc Faber Blog - 3 hours ago
Related: Apple (AAPL)
*
Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
I Only Buy China When It Collapses
Admin at Jim Rogers Blog - 3 hours ago
China is going to be the next great country in the world.
I was violently and vehemently telling people not to buy China when it was
going up in 2007. I only buy China when it collapses. - in CNBC
*Jim Rogers is an author, financial commentator and successful
international investor. He has been frequently featured in Time, The New
York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The
Financial Times and is a regular guest on Bloomberg and CNBC.*China Sums Up US Financial Innovation: "Smart Kids Picking People's Pockets Is Not Very Good"
When
fringe-blogs highlight the reality of the US banking system and its
financial engineering as nothing but overly complex three-card-Monte,
it can be shrugged off; but when the head of China's sovereign wealth fund (yes the same one that will bail the world out) notes that the JPMorgan loss highlights a system that has become too complex, perhaps some should listen. As Bloomberg BusinessWeek reports,
Gao Xiqing of CIC stated that "I think we do need to slow down a
little bit instead of rushing up to all these fancy derivatives." The
fact that the 'whale' loss was not a rogue trader but a systemic
decision gone wrong on weak risk management of an overly-complex
position was "the single most revealing thing" to Gao as he expressed concern about a society in which "all the best engineers are engineering financial products."
Summing up the entire ethos of US financial innovation he concluded:
"You have all the smartest kids to design these products, the only purpose of which is to get money out of other people’s pockets, that is not very good."California Wakes Up To Another Record High Gas Price
Gas
stations across California - from San Diego to San Francisco - are
seeing increasing price-sensitivity by drivers with lines at the
'cheapest' and empty lots at the priciest. It seems yet another weekend
of hyperinflating gas prices has pushed the until-now seemingly
uncaring-at-the-margin gasoline-'user' to seek out rationally lowest
prices. Credit card caps at pumps are also causing problems as the
typical SUV-driving soccer-mom needs multiple lines to fill up the
family people-mover. Gas prices rose 5c on average over the weekend alone to an all-time record high price of $4.668 (for Regular) - up 86c (or 22%) in a year and 12% in a week.Double, Double, Toil And Trouble
As
we all await the next, next, next meeting of the European Finance
Ministers and our eyes are turned to Spain and what machinations are
going to be brought to our attention, we wonder if actual decisions are going to actually be forthcoming.
These people “applaud and hail and congratulate” each other on various
non-accomplishments and they tap dance on the world’s stage as if each
and every problem is not only solved but light years behind them while
there are giant dificulties to their forefront that are
largely ignored in the continuing attempt to obscure everyone’s field
of vision. We remain skeptical however; we can see just fine thank you and it is not the poppy fields of Oz at which we stare.Daily US Opening News And Market Re-Cap: October 8
Risk averse sentiment dominate the session, as market participants looked forward to the latest European finance ministers meeting who are due to discuss Spain’s finances, as well as Greece, which is yet to formalise spending cuts in order to receive the next aid tranche. Reports that China's economic growth is expected to have slowed to 7.5% in Q3 from 7.6% in Q2 weighed on basic materials and industrials stocks. The World Bank cut its 2012 GDP forecast for China to 7.7% from 8.2%; 2013 to 8.1% from 8.6%. Uncertainty surrounding the never-ending sovereign debt crisis in Europe weighed on financials, and in turn translated into lower 3m EURUSD cross currency basis. Peripheral bond yields rose, with Italy underperforming, ahead of the supply later on in the week. Going forward, given the Columbus Day holiday across the pond, trade volumes are expected to be below the average.Frontrunning: October 8
- Italy rejects need for EU control (FT)
- ‘Worst US quarterly earnings since 2009’ (FT)
- Chinese firm helps Iran spy on citizens (Reuters)
- World Bank cuts East Asia GDP outlook, flags China risks (Reuters)
- Foxconn factory rolls on in spite of strike (China Daily)
- Economic recovery ‘on the ropes’ (FT)
- Japan Tries Cars That Make the Mini Look Maxi (Businessweek)
- Euro Finance Chiefs to Give Positive Greece Statement, Rehn Says (Bloomberg)
- Romney attacks drones policy (FT)
- Euro zone mulls 20 billion euro separate budget (Reuters)
- Hong Kong’s Leung Seeks Turnaround With Economy Focus (Bloomberg)
- RBA Keeps Some Documents Private in Securency Bribe Probe (Bloomberg)
- India Inflation to Remain at 7.5%-8% Till Early 2013 (WSJ)
Overnight Sentiment: European Grumbles With US Semi-Closed
Usually on semi-US holidays such as today, when bonds are closed but equities left to the whims of vacuum tubes, equities do their mysterious ramp and never look back. So far today, however, this has failed to happen with futures at lows, driven by a noticeably weak EURUSD, which has traded down nearly 100 pips from the Friday late day ramp close, currently at 1.2940. It is unclear what has spooked the Euro so far, although all signs point to, as they did 2 months ago, the Spanish lack of willingness to throw in the towel and demand a bailout, thus easing conditions for everyone else if not for Spain PM Rajoy. Today's main event will be European finance ministers meeting in Luxembourg to discuss the recent Spanish economic transformation efforts as well as an attempt to accelerate banking cooperation and implement a banking regulator - something which is needed for the ESM to monetize bank debt, and something which Germany has been firmly against from day one. Additionally, a day ahead of Merkel's visit to German (where she will be protected by 6-7,000 cops), the ministers are likely to make a positive statement on Greece’s progress toward austerity targets, according to European viceroy Olli Rehn said. In other overnight news, German Industrial Production saw a -0.5% decline, which was modestly better than the -0.6% expected. Over in Asia, China reopened from its 1 week Golden Week hibernation with the SHCOMP down -0.56% to 20.76.42 following a small bounce in the China HSBC Services PMI to 54.3 from 52 in August, and with average house prices rising for a 4th month in a row, and even more repo operations by the PBOC, the result is that the market's ungrounded hopium for an immediate PBOC liquidity injection was taken away pushing regional markets lower.Today’s Items:
Michael Pento believes that the true
employment situation, not just in the US, but around the world, will
force investors around the world into buying precious metals. With
only 114,000 jobs created in September, that is far below the FED’s
public statement that additional 250,000 jobs are needed each month
before the FED would change its monetary policy stance. Michael Pento
goes on to say that bonds will be a loser and that hard assets have a
long history keeping pace with inflation.
Labor Secretary Hilda Solis, following in
the foot steps of Holder, has made some interesting claims that were not
true. 1. She claimed that the 86,000 upward revision in jobs was
from the private sector, when, in fact, they were government jobs. 2.
The 0.3 percentage drop from 8.1 to 7.8 percent even have the mainstream
media questioning the number. When she was questioned about it by the
press, Hilda stated she was insulted. Well, Hilda, we are insulted by
this in-your-face manipulation that people on both sides of the isle
are questioning. Of course, Hilda stated that “We are all Americans, whether you are legalized or not.”
Here are a few reasons…
1. Shadow inventory is far greater than it was during the go-go years,
2. Demographic factors; in that, the older population are going for scaled down houses.
3. Policy-making in Washington and by the Federal Reserve
1. Shadow inventory is far greater than it was during the go-go years,
2. Demographic factors; in that, the older population are going for scaled down houses.
3. Policy-making in Washington and by the Federal Reserve
Next…
Critical Economic Issues Obama and Romney Avoided in the Debate
http://theeconomiccollapseblog.com
Critical Economic Issues Obama and Romney Avoided in the Debate
http://theeconomiccollapseblog.com
Here are a few items that were not mentioned a single time during the debate…
1. Ben Bernanke
2. The Federal Reserve
3. Quantitative Easing
4. Derivatives
5. The millions of jobs shipped overseas
6. The dollar being rejected as the World reserve currency by other nations.
1. Ben Bernanke
2. The Federal Reserve
3. Quantitative Easing
4. Derivatives
5. The millions of jobs shipped overseas
6. The dollar being rejected as the World reserve currency by other nations.
Next…
Mayor Proposes Shutting Down Soup Kitchens TO Deal With Homeless Problem
http://losangeles.cbslocal.com
Mayor Proposes Shutting Down Soup Kitchens TO Deal With Homeless Problem
http://losangeles.cbslocal.com
Eric Bever, Mayor of Costa Rica,
California, proposed the idea of shutting down soup kitchens; so that,
his city will not look attractive to homeless people. Needless to
say, clients and people at the soup kitchen were stunned at the lack of
humanity that this bastard has shown. Nearly half of those at the
soup kitchens are low income seniors; thus, it appears this
compassionate mayor wants seniors dead. So, the question is, how
many other California mayors are thinking the same thing?
Some people can bounce back from a tough
event, while others never quite seem to get their mojo back. Here are
five things you can do to be more resilient:
1. Choose to be a survivor.
2. View setbacks as temporary.
3. Think out of the oh-no box.
4. Have healthy habits to begin with.
5. Don’t go it alone.
1. Choose to be a survivor.
2. View setbacks as temporary.
3. Think out of the oh-no box.
4. Have healthy habits to begin with.
5. Don’t go it alone.
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