Where Have All The Pictures Gone?

Remember my post of March 1, 2009 showing all the media coverage of economic based social unrest? http://tedbits.blogspot.com/2009/03/coming-to-city-near-you.html

Since then there has been nothing. What do you think? Did everyone suddenly get happy? Is there Censorship? Does the press not cover riots and protests anymore?

Something happened to the people of the world during March 2009...

It is not that there aren't things for people to be upset about, they are just not taking to the streets or, if they are, the pictures aren't getting out:

2009.12.06 Radio Liberty: "Workers at Russia's Molot arms plant haven't seen their salaries in nearly six months. Unable to meet payroll, management has resorted to passing out food parcels to its increasingly angry and desperate employees." "This is partially related to the devaluation of the ruble and the accompanying rise in inflation. The buying power of workers has fallen approximately 40 percent. We don't see this situation improving."

2009.12.09 AFP: "GENEVA (AFP) – Unemployment in Switzerland soared to a five-year high ..." "The Swiss government said last week that it would halve from next year its quotas of permits for workers from outside Europe in a bid to curb unemployment."

2009.12.07 Washington, D.C. - infoZine - "The global financial crisis is having a devastating impact on families in emerging Europe and Central Asia, with the risk of the region giving back a fifth of the poverty reduction gains of the past decade, according to a new World Bank report. By 2010, there could be over 10 million more poor people in the region, and close to an additional 25 million more who were almost middle class but now just above the poverty line with the potential of losing their homes, jobs, and basic services."

2009.12.07 New York Times - "BANGALORE, India — In the United States and Europe, people worry that their well-paying, high-skill jobs will be, in a word, “Bangalored” — shipped off to India."

2009.12.08 The Vancouver Sun - "Financial markets tumbled on Tuesday as credit rating agencies slashed Greece and Dubai government-related debt and contemplated the potential debt rating downgrades of the United States and U.K., as both countries struggle to deal with large fiscal imbalances and accumulated debt that have resulted from the global crisis. "Anybody who thinks we are through this credit collapse is delusional," said David Rosenberg, chief economist and strategist at Gluskin Sheff in Toronto. "It is ongoing."

2009.12.09 Bloomberg - "Greece’s socialist government, elected in October, plans to cut the budget deficit to 9.1 percent of GDP next year from 12.7 percent this year. In contrast, Ireland’s Finance Minister Brian Lenihan will announce plans today to cut spending by 6 percent in the face of the worst recession in Ireland’s modern history." “There’s certainly an element of panic and hysteria,” said Peter Dixon, an economist at Commerzbank AG in London. “The ECB will bend over backwards to ensure that one of the countries within its orbit doesn’t default."

2009.11.07 New York Daily News - "President Obama signed a $24 billion economic stimulus bill into law... The law provides another 14 weeks of benefits to all out-of-work people who have exhausted their benefits... in states where the jobless rate is 8.5% or more get an additional six weeks. The extra 20 weeks could push the maximum a person in a high unemployment state could receive to 99 weeks, the most in history."

HERE ARE SOME PICTURES FROM THE FEDERAL RESERVE DECEMBER 2009 MARKET REPORT (Click to enlarge):


No social unrest in the US because the government continues to subsidize unemployed workers. Now you can get benefits for almost a full two years. The unemployed are staying unemployed longer than any time in US history.







Of concern is the fact that even with continued extensions of unemployment benefits, continuing claims are dropping. Since total unemployment has not improved and continuing claims are falling, this can only mean people are falling through the US social safety net.

The Value of Lost Data

As quoted from the UK London Times (November 29, 2009):

"SCIENTISTS at the University of East Anglia (UEA) have admitted throwing away much of the raw temperature data on which their predictions of global warming are based. It means that other academics are not able to check basic calculations said to show a long-term rise in temperature over the past 150 years. The UEA’s Climatic Research Unit (CRU) was forced to reveal the loss following requests for the data under Freedom of Information legislation."

Fortunately, we no longer need the data because everyone accepts that global warming is occuring but the technique here can now be used in Copenhagen.

The plan is for Developed countries to emit less greenhouse gases in the future while Developing countries will be allowed to emit more. The idea being that at some point in the future, all countries will have contributed the same amout of greenhouse gases into the environment and then we will have another meeting.

Since developed countries have contributed the most green house gases and therefore have all the historical data, they will be in charge of keeping score going forward.

If, in the event Developed countries don't like the score going forward, they will simply lose their data and calculate events as they see fit.

After all, it is one of the worlds most greatest diplomats that said, "those that vote decide nothing; those that count the votes decide everything".

Look it up....

How to Transfer Wealth

I just picked a bank at random and retrieved these figures for 12/1/2009:

For savers: 12 month Certificate of Deposit: 1.25 % return
For borrowers: Credit Card Interest Charged: 19.99% ; 30 Year Home Mortgage: 4.875%
20 Year Home Equity Loan: 6.49%

So it would seem banks would be lending lots of money because the rate at which they pay versus the rate at which they charge is really big. They should be making tons of money!
But they are not lending because even though the spread is huge, there is a risk free way for them to make even more money.

STEP (1): The US Federal Reserve bank creates money out of thin air and makes it available to preferred banks at near 0% interest.

STEP (2): Preferred banks borrow money from the Fed at 0%.

STEP (3): The Preferred banks use this money to buy US Treasury certificates that yield more than 0%. Example: 10yr yield is greater than 4%.

STEP (4): US government pays the interest to the preferred banks using Taxpayer dollars.

WHY BANKS DON’T LEND:
So… if you were a bank, why would you ever lend any money to individuals when you can lend it to the US government who will in turn take money from its citizens to pay you back. All this accomplished by using money that doesn’t really exist which you borrowed at 0% interest.

WHY AN ASSET BUBBLE IS FORMING:
Shaving a couple of interest points from the US government can get boring after a while. So, why not take some of that money and start buying domestic and foreign stocks. After all, the money is free and you, plus other banks, will all start buying and pump up the stock market creating a “herd mentality”. Maybe even get your friends at the FED to buy index futures with additionally manufactured dollars to really accelerate the rise in the stock markets.

WHEN WILL FED INTEREST RATES RISE?:
Never. What has been created is a massive “carry trade” at an unprecedented scale that can never be unwound. Besides, in the old days the FED raised rates so banks, in turn, would raise rates to cool down the economy by making credit tighter. Credit is already tight at 0% so there is no need to raise rates because it would have no effect.

WON’T ALL THIS MONEY CREATION CAUSE INFLATION AND REQUIRE THE FED TO RAISE RATES?:

No. We are in a well hidden deflationary spiral. As more and more individuals have less and less money because it is being taken away from them or they are jobless, local prices will fall- eventually resulting in labor rate parity world wide.

When people can’t afford things the price naturally falls. This is why the US housing market is not done falling and won’t stop until median home prices begin to align with median incomes.

Imported goods will become more expensive and therefore appear inflated but that is just currency effect without change in real prices. However, imports will slow because no one can buy them- eventually resulting in global economies becoming regional. That is- local goods, produced locally and consumed locally.

And besides, the FED is not really creating money because the money is not being allowed to fully enter the economy. We are simply point shaving here and the preferred banks only have to pay back the principle (0% interest rate effect) or even if they default- who cares the money didn't really exist in the first place!

My Healthcare Solution For The U.S.

I wrote this back in July and never posted it. Time to weigh in...

(A) There is nothing wrong with health care in the United States. The Healthcare debate is about money.

(B) Today in the U.S., whether you can pay for it or not, everyone gets some form of healthcare.

(C) With US population growth near zero, the healthcare costs of the U.S. will be basically flat plus inflation in the future.

(D) There are three "costs" that occur within the healthcare system that do not contribute to healing and prevention. (1) Fraud, (2) Poor Productivity, (3) Insurance Company Profits. All three of these must be eliminated which further ensures point (C) above will be true.

(E) Fraud and Poor Productivity can be eliminated through the use of Information Technology provided some effort is put into business process re-engineering.

(F) Insurance companies would be required to operate at zero profit plus investment recap for their health insurance units. They can also leverage their back office operations with their other "for profit" insurance units (auto, home, etc.) to gain some economic advantages.

(G) Since Federal and State governments of the U.S. already provide more than 50% of the health care insurance coverage already, a government provided insurance option can be provided for those not wishing to buy private insurance. Government insurance programs for the poor and aged would continue as they do today.

(H) Those who remain uninsured, consume healthcare services and then refuse to pay for those services will be pressed into community service at healthcare institutions until their debt is repaid.

(I) Businesses may provide insurance coverage for their employees and/or self-insure as a means of retaining talent.

(J) Second amendment rights will ensure the government won't ration health care because the American people won't stand for it. The politicians will lose their jobs or worse.


Today my parents are covered by US government provided medicare and they buy additional insurance ("medicare supplement") from a private insurer to cover things that Medicare does not provide. What is wrong with that for all US citizens?

You see, if the arguments could be reduced to the facts and points above, we could make progress. But there are groups at work who are positioning the legislation such that their real agenda can be carried out later. And it is these groups for which the common citizens are most afraid and why protests are mounting:


#1) The anti-population crowd that believes there are too many people already and that death should be hastened for the unproductive and reproduction should be curtailed. Their basis lies in the belief that the planet's biggest problem is people.


#2) The anti-capitalist crowd who believes that anything that provides equal opportunity without equal outcomes must be eliminated.


#3) The anti-freedom crowd who believe that they know what is best for people and plan to use the provision or denial of healthcare to control people.

#4) The usual suspects that create massive legislative works in order to enrich themselves, their friends, or people who helped them get elected in the last election.

Federal Reserve concerned about its own solvency

Took a vacation from blogging for 2 months but the latest FOMC report from the Federal Reserve has gotten me back in action. Pretty short read. The whole text can be found here: http://federalreserve.gov/newsevents/press/monetary/20091104a.htm

Federal Reserve people are like scared ducks in a pond. They look calm on the surface but underneath the water they are paddling furiously. That's why you need to really look at what they are saying in these reports because it all sounds quite benign. It isn't.

"In order to promote a smooth transition in markets, the Committee will gradually slow the pace of its purchases of both agency debt and agency mortgage-backed securities and anticipates that these transactions will be executed by the end of the first quarter of 2010."

Agency debt is one of the reasons the financial collapse started. Agency debt is created by surrogates of the US Government created by the US Government. The US Government has taken no action AT ALL conerning US Sponsored Agencies, their policies, practices nor the legislation that mandates their actions and behavior. Everything that has caused the intial problem has continued, unabated, and even somewhat augmented by stimulus activity.

The Federal Reserve bank is basically saying in their report, "We've been buying your crap to keep you afloat. While we were risking our own solvency, you did nothing. Starting 2Q10, you are on your own".

===> If you are in the US and most of your holdings/cash are US dollars, you probably need to find an entry point to buy more gold. The price of gold is not going up. The value of the dollar is going down which makes it look like gold is expensive. We are just getting started.

Connecting the Dots on Electricity

As a blogger since 2004, this is going to be my most important post. The service I try to provide you, my readers, is taking a series of complex data points and embodying them in a story that makes you think. What I offer is simple: Entertainment and Insight.

Something big is about to happen with electricity and it is going to happen soon.

I have selected 3 videos about electricity from TED.COM. Watch them in sequence and tell me if you connect the dots the way I do.

VIDEO #1:
Concept: Shai Agassi wants to put you behind the wheel of an electric car -- but he doesn't want you to sacrifice convenience (or cash) to do it.
What To Watch For: This not about an "invention". This is about a fundamentally new business model for the consumer of automobiles, the auto industry itself and the companies that provide energy.
http://www.ted.com/talks/lang/eng/shai_agassi_on_electric_cars.html


VIDEO #2:
Concept: Eric Giler has a plan to beam electric power through the air to wirelessly power your laptop or recharge your car. You may never plug in again.
What To Watch For: The live demonstration on stage. It works.
http://www.ted.com/talks/eric_giler_demos_wireless_electricity.html


VIDEO #3:
Concept: John La Grou, a long-time electronics inventor, audio designer and entrepreneur, wants to save lives and energy with a new, smarter type of electrical outlet.
What To Watch For: This is the answer to how we can consume electricity for new things (like cars) without increasing our total consumption of electricity. It works.
http://www.ted.com/talks/lang/eng/john_la_grou_plugs_smart_power_outlets_1.html


THE FUTURE IS "BRIGHT":

The last 200 years of human development has been immeasureably accelerated due to cheap and plentiful sources of energy. Cheap compared to doing the work manually or with donkeys-> 1 Barrell of oil = 5.8 million BTUs = 23,200 hours of human labor (agricultural standard). Because energy is so cheap, we have been able to do almost everything with practically nothing. This transformed modern society.

The good news is that limitless, cheap electrical power will remain with us. According to Ray Kurzweil , "We also see an exponential progression in the use of solar energy," he said. "It is doubling now every two years. Doubling every two years means multiplying by 1,000 in 20 years. At that rate we'll meet 100 percent of our energy needs in 20 years. [with solar power]"

In summary:

1. The new business model for private transportation has been defined and some country somewhere will adopt it.
2. The ability to transmit electricity wirelessly has been proven, it will now be perfected.
3. The rate of progression of solar power is an exponential curve.
4. Legacy forms of energy production are requiring more and more energy to produce energy due to "high grading"
5. Smart outlets are a bridging technology providing safety and extraordinary savings.

My New Corvette

Probably wouldn't spend the money to own a Corvette but you must admit it is a great looking sports car with a colorful history. Because I am a US Citizen and therefore part of owner of General Motors, I will be one of the first in line to take advantage of the latest offer of a free test drive

More details coming on September 14, but here is what we know now (from above hotlink):

Details of GM's new Satisfaction Guarantee:

· Offer covers 2009 and 2010 Model Year Chevys, Buicks, GMCs and Cadillacs (except medium duty trucks)

· Customers (one per household) can return their vehicle between 31 and 60 days with less than 4,000 miles

· Customers will be informed in writing before they buy the vehicle of the terms of the Satisfaction Guarantee

· Customers must take delivery by Nov. 30

· The Satisfaction Guarantee covers the vehicle purchase price and sales tax, but not other add-ons like accessories, negative equity on a trade-in or other fees; other restrictions apply

· Leased vehicles are not included

· More details are available beginning Monday, Sept. 14, online at [Chevy][Buick][Cadillac][GMC].com/guarantee

Simple Truths

Too Big To Fail:
HISTORY: The US Government (USG) coined this phrase to apply to US based, multinational financial institutions whom upon failure, would trigger a systematic collapse of society as we know it. In addition, the USG was also sending a strong message to the rest of the world that America is "too big to fail".
IMPLICATIONS: The rest of the world will bail out the US since they cannot afford the alternative.

Convert Debt to Equity:
HISTORY: Rather than the USG "loan" money to "too big to fail" multinationals, it purchased equity (normally preferred shares) in target companies. When the auto companies went bankrupt, the USG wiped out the debt holders, drove the share price to zero, but converted the value of the company to "new equity shares" which it doled out to its political supporters.
IMPLICATIONS: Therefore "debts" whether they be financial or poltical are paid off in equity. China holds $2 Trillion in US treasuries and federal reserve notes. Since we cannot pay them off and will not risk a default, the USG will give Alaska to China.

Who Gets the "First Mover Advantage":
HISTORY: Demographics in developed countries show that there are more and more older citizens and less and less younger citizens as a percentage.
IMPLICATIONS: There will be less and less younger people wanting to buy my stocks, bonds, real estate and other things therefore my nest egg will shrink due to simple supply and demand. So older people (the majority) will vote in politicians who take from the young to give to the old.
IMPLICATIONS 2: In order for the young people to stop getting squeezed by older people there will be a systematic process by which older people are removed from existence and their assets transferred to those who weren't going to buy them in the first place. This process is referred to as "healthcare reform".

Maxine on Bailouts

*** This post has been removed since the facts are in dispute ***

Thank you to my commentators who have sent disputed evidence. All comments have been removed as well.

Tedbits

Pledge Allegiance To Debt

I pledge allegiance to America's debt, and to the Chinese government that lends us money. And to the interest, for which we pay, compoundable, with higher taxes and lower pay until the day we die.

This is worth a visit: http://defeatthedebt.com/

Watch the TV commerical:

Highlights from the 2009.Q2 FDIC Report

The only thing better than reading reports from The Fed is the quarterly FDIC report:

http://www2.fdic.gov/qbp/2009jun/qbp.pdf

Here is the highlights with pithy comments by me (in red):

INSURED INSTITUTION PERFORMANCE
1) Higher Loss Provisions Lead to a $3.7 Billion Net Loss

"Are you low balling the provisions to remain solvent?"

2) More Than One in Four Institutions Are Unprofitable

"That's 2,048 banks! Yikes...25%"

3) Charge-Offs and Noncurrent Loans Continue to Rise

"Meaning... things are getting worse and you are low balling #1 above."
4) Net Interest Margins Show Modest Improvement

"Duh... You borrow at near 0% and lend at much higher rates"
5) Industry Assets Decline by $238 Billion

"People are taking their money out of the banks"

Now for some scary graphs.

The FDIC can only cover 60% of the failing loans. So they are hoping that 100% don't fail? Which means they are in no position to insure your bank deposits in total if there was a "run on the banks". That's a pretty good indication that the 8,195 insured financial institutions in the United States are approaching insolvency and their primary insurer, the FDIC, is technically bankrupt.

Problem institutions were increasing >20% per quarter for 2 years! If this continues, by 2010 more than half of all insured US financial institutions will be listed as "problem". If this isn't the tipping point for the whole US financial system then simply wait till 2011 when we reach 100% problem institutions.

US Children Fund GM-CHINA Deal

"SHANGHAI (Reuters) - General Motors said on Sunday it has agreed to set up a light commercial vehicle production venture with major Chinese automaker FAW Group, with total investment of 2 billion yuan ($293 million)."

A bankrupt company taking money from the US government; money which the US government acquires by selling US debt to the Chinese whereby the future generations of the Americans are left to pay the interest.

Debt is future consumption pulled forward to the present. The result is less consumption in the future or default because--- nothing is growing faster than debt.

Chatter

I may have been a year too soon but the chatter is building again. Beware. Prepare.
If this is wrong what is the worst that can happen? You squirrel away 3 months of living expenses in your floorboards that could have been in a financial investment earning 0.05%.

People don't prepare because they are afraid of looking foolish.

http://tedbits.blogspot.com/2008/10/bank-holidays.html

Greenback Emissions

I heard someone say we are too worried about greenhouse emissions and better start worrying about greenback emissions! Jeez, I wish I could think of clever lines like this.

Anyway, his comment reminded me that I haven't written about something that I think is very important.

The Federal Reserve and the US Treasury have been placing well timed trades in the S&P Futures markets since early March. Some of this you can see on the balance sheet of the Fed. Some you can't because it is being held off-balance sheet.

Such futures action makes it look like the stock market is going to go up. This results is really smart people front running this trend and less smart people putting money in the market driven by herd mentality.

At some point this will stop. Further, at some point those positions may have to be unwound.

What do you think will happen then?

Now that you read this please remember that any information that follows is neither a solicitation to buy or sell securities. The writer of this article may or may not own such securities at the time you are reading this article. And, don't be a complete idiot-- do your own research before you buy financial instruments of any kind.

Sold Out

Before you read on please remember that any information that follows is neither a solicitation to buy or sell securities. The writer of this article may or may not own such securities at the time you are reading this article. And, don't be a complete idiot-- do your own research before you buy financial instruments of any kind.

Since some of you may have been following along from the market report I gave on March 20 (http://tedbits.blogspot.com/2009/03/bulldog-returns.html), I wanted to let you know that as of today, I am completely sold out of the above holdings and related equities. Signals were clear as of the first week of August that the market was weakening and I systematically tightened up my "stops". Over the past few weeks I have been taking money off the table and as of today, I am completely out. It was a great run.

I still believe in the China Recovery/Commodity Strategy but will not buy back in until I see a good 10%-15% retrenchment from current levels. My short position on the US Dollar is now closed and I am neutral on the dollar at this point. I like gold at $880/oz.

Other things I am watching:

Blackstone (BX) after it goes ex-dividend. Would love to see this at $10/share and probably start nibbling at $12.

China Battery (CBAK) at about $2.50/share.

And of course GLD, UDN, DBB, DBC, DBO after proper retracement.

For a speculative trade consider Image Sensing Systems, inc. (ISNS). Be very careful though because this stock is thinly traded. I am hoping for some institutional investors to move in on this one and send it to the stratosphere. I continue to have a minor position in ISNS.

It is possible that we will form a double bottom (http://tedbits.blogspot.com/2009/04/decoupling-double-bottom.html) because uncertainty is reoccurring in the financial markets as commercial real estate loans are defaulting.

Lastly, I must say I am getting more and more confused about inflation vs. deflation. I really believe we are heading for inflation if you've followed previous posts. However, I have read some compelling cases for deflation from reputable sources. The most clever point I read was a prediction for inflation in necessities and deflation in discretionary purchases. Ever since I read this it convinced me that this is probably our future.

Oxygen

If you are a regular vistor, I hope you noticed that often times you can read about something here in my blogs about 3 to 6 months before it becomes news. I am not a psychic. Trends and patterns are obvious and how this world works is quite predictable.

Here is the next topic to watch for: Oxygen

You see, global warming is getting old. And after 11 years of cooling temperatures the polls are showing "it isn't selling" anymore.

The same thing happended in the 1970's and 1980's when the big thing was the "next ice age" that was soon coming. During these decades temperatures were actually warming.

Whether warming or cooling, it seems we just can't get the world to buy into the catastrophe of dramatic climate change. We can't generate enough fear.

Now there is something brewing that will really scare people. The world is running out of oxygen. You haven't heard much about so far because we haven't figured out a way to blame human behavior. But as soon as we do, watch out.

If you are still part of the greenhouse gas crowd... remember most of the green house gases in the atmosphere are NOT man made. Here is a link to a prior posting

Merchants of Death

Here is an interesting graph. Draw your own conclusions. Click to enlarge.

Inflation Unwind?

Because I am short the US Dollar, I watch US Treasury auctions very carefully. They continue to be under subscribed requiring "Primary Dealers" to buy what is unsold. This is the downside of the normally positive edge you get for being crowned a Primary Dealer.

The problem I see is that the amounts being bought month after month by these primary dealers exceed the cash on hand in the balance sheets. This means that the transactions are being conducted off balance sheet and someone is giving them the money to do the purchase. There are only two entities large enough to fund such actions: (1) the Federal Reserve itself could print the money and give it to the PDs off-balance sheet or (2) The CBO China could do it (but I doubt it).

Action (1) above is essentially quantitative easing [printing money] but being performed in a way that is invisible. This is becoming too big to unwind with annual US debt approaching $2T/year. This means inflation.

While I strongly feel that Action (1) is happening, I was is a discussion group with a fairly intelligent Conspiracy Theorist who believes Action (2) is happening. His idea is that Countries conquering other countries through war is passe'. He believes the 21st Century conquering is done by one country simply purchasing another. It is bloodless, doesn't destroy valuable assets and allows the respective economies of both countries to stay intact. He laughs when I point out that I think the US should sell Alaska to China by saying that I am only partially right. He contends that the whole country is being sold for the purpose of creating a New World Order, elimination of the United Nations, a the formation of a "Mega Country" [China US merger] which will control the world.

When I hear stories like this it makes me think my assessment of the situation is very rational. I think off-balance sheet is happening in a very big way.

Keep an eye on UDN, it is a method for US Citizens to short the dollar.

Customer Relations

This post is an addendum to:
http://tedbits.blogspot.com/2009/06/customer-segmentation-on-global-scale.html

And is based on a new article reported here: http://apnews.myway.com/article/20090728/D99NE5E00.html

Here is your bottom line:

"Obama dispatched his top economic officials - Treasury Secretary Timothy Geithner, National Economic Council Director Lawrence Summers, White House budget director Peter Orszag and Federal Reserve Chairman Ben Bernanke - to try to reassure China that the U.S. will not let deficits or inflation jeopardize the value of Chinese investments.
U.S. briefers said the president's team told the Chinese that the United States was committed to making sure the economic and monetary stimulus being used to fight the recession did not fuel inflation.

The Chinese, who have the largest foreign holdings of U.S. Treasury debt at $801.5 billion, have been expressing worries that soaring deficits could spark inflation or a sudden drop in the value of the dollar, thus jeopardizing their investments. Chinese officials said those concerns were raised during Monday's talks."


What do you think happened? Vote here with your reply:

(A) The Chinese accepted the words of the US government officials because they like fancy speeches and are enamored with clever Americans.
(b) The Chinese asked for and got financial concessions (like inflation protection) for their $800+B investment
(c) The US offered to sell Alaska (after all the US is not using it for anything) to the Chinese for all the US Dollars held by the Central Bank of China and the retirement of all US Debt held by the Chinese
(d) The US Government told China that they (China) were really screwed because we plan to crash the dollar and not pay on any of the debt. [Known as the Argentina Solution]


You can reply anonymously, so let's hear your vote.

Cowboy and Street Thug

FINE PRINT: What follows is a work of fiction. Any references to persons, legal entities or governments (living or dead or undead) is purely coincidental. The following is for entertainment purposes only. Any information that follows is neither a solicitation to buy or sell securities. The writer of this article may or may not own such securities at the time you are reading this article. And, don't be a complete idiot-- do your own research before you buy financial instruments of any kind.

Back in March is posited the following: China and Commodities Will Recover First

It was harder to make money under the cowboy but the new guy is so predictable that this is like taking candy from a baby. No wonder Wall Street loves him and no wonder they supported his election.

The cowboy operated under UN Resolution 1441 and there was no doubt what the end game would be: If the United Nations was to have any credibility then American blood would have to be sacrificed. He wasn't a smooth talker but there was no doubt about his willingness to step into the street for a gun fight. UN Resolution 1441 authorized military action against IRAQ and he took it.

Today we have the new guy. And, we have IRAN. Everthing was fine with a the December 2009 deadline on nuclear ambitions but the new guy decided to publicly move the deadline up to September. There is no UN Resolution that IRAN comply with this on any date! We are mano y mano now baby!

What happens in September?

(a) Will IRAN suddenly capitulate to the United States?

(b) Will the US attack IRAN, without a UN Resolution allowing such, because they didn't meet the September deadline ?

(c) Will the US have its surrogate ISREAL attack IRAN so the US can save face?

(d) Will IRAN ignore the US demand thus allowing a smoother talker of nuance, to point out the differences between cultural calendars and timekeeping that were no doubt at the heart of a timing snafu?

Given that (a) isn't going to happen all the remaining options are financially destablizing with a commensurate "flight to safety" to follow. With US Treasuries increasingly doubtful as "safe" given US government insolvency, some money will go into commodities and China. The dollar will collapse either because the US cannot fund another war, properly pay its surrogates, and/or lose its standing as a world leader.

I continue to like DBA, DBB, DBC, DBO, FXI and GLD.

Computer Pgm To Manipulate Markets Stolen!

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

PROCEEDINGS BEFORE MAGISTRATE JUDGE KEVIN N. FOX,
UNITED STATES DISTRICT COURT


What follows is an excerpt from page 8...lines 3 through 7...

3 activity. In addition, because of the way this software
4 interfaces with the various markets and exchanges, the bank
5 has raised a possibility that there is a danger that
6 somebody who knew how to use this program could use it to
7 manipulate markets in unfair ways.


I am not a lawyer but I play one in the blogosphere. So let me interpret this testimony and then ask some hypothetical questions (which have nothing to do with the case).

FACT: Plaintiff has stated, as a fact, that the program can be used to manipulate the market in unfair ways.


QUESTIONS:

1. How would you define manipulate?
2. Does Goldman Sachs' use of the program constitute manipulation?
3. Would not such manipulation affect the market both during and after the fact of the program's use in both direct and indirect ways?
4. How would you define fair?
5. Does Goldman Sachs' use the program to manipulate the markets unfairly? (this is like asking have you stopped beating your spouse)
6. Is there a qualified, independent body that examines Goldman's use of the program to ensure compliance and absence of malfeasance?

Full text of testimony is posted on SCRIBD here is a convenient link: http://zerohedge.blogspot.com/2009/07/aleynikov-transcript.html

California won't accept their own IOUs?

The US state of California, formerly the 7th largest economy in the world began issuing IOU ("I Owe You") certificates to people and businesses that they couldn't pay because they didn't have enough money. The IOU's are technically registered warrants meaning that they are convertible to legal tender.

Here's the irony: Let's say you were a contractor and did some construction work on state owned building. The state government will give you a registered warrant (IOU) that means they will pay you at a later date. However, if you hold CA Registered Warrants and want to use them pay any bill you owe to the state like taxes, licenses or workers compensation insurance, California will not accept their own warrants in return.

Don't believe me? search their own site: http://www.ca.gov/

How to make money on cap and trade

Cap and trade (of anything) is the next financial bubble. One thing is true about all bubbles (ask the Dutch about tulips) and that is: "the first in, win" and the last out get screwed.

Cap and trade sets of up a market for trading greenhouse gas "allowances". This means that there will be a market for futures and futures markets will also provide the opportunity for index type investments. Those investing in all these vehicles will seek to hedge their upside and/or downside risk providing for the creation of collateralized obligations and offsetting credit default swaps.

Sound familiar? This is Financial institution's dream come true- a gift from the US Gov.

My point is... get in now... establish your position...and don't be greedy. When wall street and the USGov team up, you've got to be "in the game".

If you make a ton of money you won't care that your electric bill grew by 50%, US manufacturing completely shut down, and gasoline is $8.00 a gallon. In fact, you will facilitate the whole process by being one of those individual investors that is helping provide liquidity to those efforts to remake America.

The informed will make money, the poor will get tax credit offsets and those in the middle and those frozen in the headlights will foot the bill.

------------- I hate long posts but if you want to know how this all going to work:

I read the legislation, so let me bottom line it for:

1. Each year the USGov decides how much "man made" greenhouse gases can be introduced into the atmosphere by citizens and companys for which the USGov has jurisdiction (call this "the allowance").
2. Some of "the allowance" is allocated to citizens and companys. They will not get enough of "the allowance" to actually operate in a given year.
3. The rest of "the allowance" is given to Agencies of the USGOV or Non-Governmental Organizations who do not actually emit greenhouse gases but can "sell" their portion of "the allowance" to those that have been "underallocated". They will no doubt sell 100% of their "allowance" because they don't need an allowance to begin with. Get it?
4. The combination of 1, 2 and 3 above are a simple formula for taxing everyone in line #2.
5. These taxes are then either (1) passed on to the consumer or (2) avoided by curtailing production in the US [loss of jobs].
6. While reduction in greenhouse gas emissions can be measured, the affect on global warming cannot since there are too many other variables at play. Hence, the success at raising taxes is a certainty; the reduction in global warming is not.
7. Only Western Europe and the US are pursuing these policies. China and India are not since they have several billion people to keep happy.

We need a failure Czar

The US government has 15 "Czars" in the executive branch ("Car Czar", "Compensation Czar", etc.). I would much prefer "Car Pope" or "Compensation Pope" so we could presume some degree of infallibility when they speak Ex Cathedra.

Speaking of infallibility. If "we learn from our mistakes", don't you think that failure is too important to leave to chance?

If I am "too big to fail"; does that mean I am "too big to learn"?

And speaking of education, wasn't it Benjamin Franklin, that great British separatist who noted, "The only thing more expensive than education, is ignorance"!

But I disagree. Ignorance is the domain of the innocent (ex: little children). We are really talking about stupidity and stupidity comes with experience.

This is why "History Repeats Itself" or better-- People repeat history.

So now I offer you some history about what happens when there are too many Czars with too much power, who answer to no one:

• In January 1905, an incident known as "Bloody Sunday" occurred when Father Gapon led an enormous crowd to the Winter Palace in Saint Petersburg to present a petition to the tsar. When the procession reached the palace, the national police force opened fire on the crowd, killing hundreds. The people were so aroused over the massacre that a general strike was declared demanding a change in government. This marked the beginning of the revolution and the country was paralyzed and politicians grew desperate to keep their positions of power.
• Rumors where then circulated that food and fuel would soon be in short supply and inflation was mounting. Strikes increased among formerly self-sufficient citizens who were forced to take low-paid, government jobs mostly in the military. The media, typically friendly to the government, feared for their existence and spread public distrust of the regime so that they would be seen on the side of the people who, by now, had organized themselves into well-armed regional militias.

It didn't go well for the Tsar; so what can we learn from his mistakes:

1. Don't allow the people to arm themselves,
2. Maintain control of the media,
3. Get the bankers on your side by giving them lots of money,
4. Don't leave community organizing to chance, fully fund it so you can control it,
5. Make sure the people are less afraid of you and more afraid of something else (like pensions, flu, healthcare) -- maintain "rock star" status if you can (see point 2 for help),
6. Find your semi literate, mystic Grigory Rasputin equivalent before it is too late.

Customer Segmentation on a Global Scale

If you are an important customer, you expect special treatment. And you should get it. It is good for you as the buyer and it is good for the seller.

Most "good" customers are those that drive volume purchases. The seller usually offers a discount to the buyer and, in turn, the buyer buys large volumes. Both buyer and seller win.

Sometimes the key customer doesn't get a discount but rather some other consideration. Perhaps a rebate to be delivered at a later time. Perhaps preferential treatment that is hard to value but valuable none-the-less because it is not available to "lesser" customers.

China is the United States' most important customer when it comes to buying US government debt.

Why did Pelosi go to China? Why did Geithner go to China? Who will be next to pay a "sales call" to this most revered customer of US Debt.

Have you or your broker or your pension or your 401K bought any treasury bills lately. Do you think they (you) are getting the same deal as China? Are we all paying the same price? Are we all getting the same advertised, published return on investment?

What am I thinking here? I am quite sure we are all paying the same price and we are all getting the same benefits regardless of who is big and who is small. I mean after all, isn't it really all about fairness and a "level playing field"?

When is the next auction, I heard they are serving General Tso's Chicken....

BTW you've got to watch this if you like General Tso' Chicken...
http://www.ted.com/talks/jennifer_8_lee_looks_for_general_tso.html