Tuesday, November 30, 2010

"Freezing" Government Worker Pay - More Illusion

Various media reports: "Obama announced a two-year pay freeze for federal workers, saving up to $5 billion in two years, and $28 billion in five."

Very creative fuzzy math. Saving money by freezing (as in staying the same) as opposed to cutting. Hmmmm. This is like the shopaholic saying she saved $4,000 by not buying a $5,000 handbag and instead buying another for $1,000. Nice try federal number conjurers. lol.

These gov't workers should be thankful they aren't being rounded up for conference room meetings and being let go en masse as has already happened countless times in the private sector.

Our fiscal woes are in the trillions of dollars range, Uncle Sam should be cutting jobs through direct firings and attrition. The sums "saved" through this "freeze" are paltry.

$28 bln in 5 years?? The Fed is spending more than that a month through its money counterfeiting operations (POMO) to keep the bond and stock markets afloat.

The "bigwigs" just don't grasp the situation preferring to err on the side of kicking the can down the road. One of these days they will be forced into draconian cutting, but it will be too late. Perhaps that day is already here, yet they are still trying to resist with token fixes.

Monday, November 29, 2010

The Madness of Society (or, austerity American style)

"Retail therapy" junkies. I know most won't watch this because it's a challenge to those who choose to believe the great lie of "consumerism". For those who choose not to be ignorant, it's a pretty good little video.

Hedging Time (If you have a lot at risk)

Predictability of these markets is completely skewed by POMO and other printing related activity in Europe. The stock market should have taken some hard lumps already (logically speaking) but remains in a fairly tight trading range. There is no logic to these markets. What appears to defy sense and sensibility is the rule in the financial markets. Are we going to see a rally in stocks Monday on a bailout of the Irish bankers even with Spain and Portugal waiting in the wings? Futures appear to be saying 'yes' this morning.

Insurance will cost you a bit but is still wise. Being net flat and immune from volatility might not be so bad. Anyway, we know the sobering reality of outperformance - mostly accomplished though access to inside info networks. No access? You're nothing more than a follower of those who have the real edge and access (people who get in before everyone else at cheaper cost basis). Sure, you could have some tried and true methodologies, and to that I will always say, 'go with what has worked'. But in general, as if this were a surprise, the secret sauce of some of the masters of the universe is to rig up a system where they and a few friends can get the info in order to get an edge. I told you "social' networking is useful. You never know who's going to fly into your web especially when taken to the extreme. lol. Now, some these networks are coming undone and there will be some chaos. It's like taking the bag of chips away from the fat kid without warning. Suddenly the blind man is told not to use his cane. Angst ensues on what to do next. All the more reason to be well hedged. 

The insiders have been making a bee line for the exits, but they can be as wrong as anyone else especially when it starts to look like a herd of insiders, or anything on the move. Yes, it could be one giant head fake, but I wouldn't be completely dismissive of activity that sees insider selling at all time highs. Still, no dramatic short calls here, no calls to be in 99% cash. Hedge. No contrarian calls to go net long and buy into weakness (at this point). This even applies to metals holdings whether physical or paper. Hedge.

Maybe if gold were to take a big dump, it would be the buying opportunity of a lifetime. Could you imagine what would happen to existing gold markets if a shortage of physical emerged if the paper price went up in flames to the point that buyers stepped in to buy by the ton? rofl. Talk about paradigm shifts.

Monday, November 22, 2010

Here's Something I wrote in 2007

I stumbled upon it today in the Seeking Alpha archives. This disaster is still on going with more fun and games to come.
"The Dow was up 76 on Wednesday, but looming in the background is subbbbbbbprimmmmme. I just can't believe the denial that's out there from the pundits who say this isn't going to spread into other areas of the credit market.
The denial is not just unbelievable, but shocking given how fat, and happy everyone was in the credit universe before the bottom fell out in January. I'm not known for making sweeping and alarmist pronouncements, but folks - this is a DISASTER"

Special TSA Message

Banning The Truth

Sunday, November 21, 2010

Jim Rogers: Ireland should go bankrupt!

Green Mountain Coffee ($GMCR)

This tweet appeared on the stream:
RT @paulwoll: Interesting Open Interest on March $40S for $GMCR was 651 but someone bought 12,605 contracts Friday?.... Hmmmmmm
Hmmm indeed. Someone appears to be bullish on GMCR. The stock surged 10% to $33.38 after hours Friday on a smaller than expected accounting restatement. It has a gap to fill up toward the $38 level. In the past there has been on going babble about it being taken over. Yes, it's been a rough ride for players in this stock, but perhaps better times are ahead?


Here's an annoying tweet from someone who shall remain nameless: "I'm more scared of the Plummers (sic) buying and selling gold"

First, what's a plumMer? Someone who eats plums? I am only familiar with plumBers who have come to my house and have fixed things (when their liquid version, "Liquid Plumr," fails). If the plumbers (with their plumbers' cracks and all) are buying and selling gold, I say, 'good for them'.

Just because a guy or gal gets their hands dirty on the job doesn't mean they are any less sophisticated as an investor compared to some banker, VC type or day trader. I know of some wealthy plumbers who have built thriving businesses that provide real world and essential services and create jobs with livable wages. Plumbers are no less entrepreneurial than the people that VCs chase after.

I don't mean for this to be a lengthy tome to the plumbers of the world, but to merely point out the ridiculous preconceived notions that people have about who is buying or selling an asset and whether it's a sign of frothiness in the market (or to be scared). In fact, I'd seriously consider the investing style of a successful small business owner over the cretins who are either working for Wall Street or who worship that cadre of the Armani wearing walking dead.

Suicide before 1/1/11 to Escape Estate Taxes

I've written about this in the recent past. And now the Wall Street Journal has come to realize that some folks are contemplating death before the New Year to escape the prospect of resuming, hefty estate taxes in 2012. Is suicide the answer? The Journal reports:

"Welcome to the macabre world of estate planning 2010, where such questions are relevant. They stem from the fact that this year there is no estate tax, but on Jan. 1, 2011, it snaps back with a low $1 million exemption per individual, down from $3.5 million in 2009, and a 55% top rate, up from 45%. (By the way, the answer to the question is "yes": A suicide won't affect federal estate taxes and inheritances, though it can affect insurance payouts.)
The return of the estate tax in 2011 presents dilemmas even more gruesome than those of a year ago, when taxpayers clung to life past Jan. 1, 2010, to escape death duties their estates would have owed in 2009. This year, by contrast, the tax code is giving taxpayers an incentive not to live but to die—saving heirs as much as 55 cents of tax on a dollar of assets.
Resolution is nowhere in sight, although Congress is expected to raise the 2011 exemption at some point. The Bush tax-cut extension has lawmakers so tied up that they have pushed the estate tax to a back burner. According to BNA's Daily Tax Report, Senate Finance Committee Chairman Max Baucus (D., Mont.) said on Nov. 16, "We're barely talking about it, let alone ready to make a decision." 
Yes, this is downright kooky stuff. Kooky and true.
"Although some have joked about "throwing Momma from the train" before 2011, attorney Joshua Rubenstein of Katten Muchin Rosenman in New York believes a greater danger is tax-motivated suicides: "Most people don't kill their relatives, but I'm afraid that moms and dads who are already sick will quietly kill themselves."
The Bible teaches that the "love" of money is the root of all evil. But in our society it is really that money itself is the root of all evil. Whether we wish to admit it or not, we are slaves to money. It controls our lives from something as simple as having to put a quarter in a parking meter (or face towing and a huge fine) to needing money for every purchase whether necessity or luxury. And now money is even motivating some to take their own lives to protect hard earned assets. Astonishing.

Link to Journal story

Monday, November 15, 2010

Linkfest: 11/15/10

22 Luminaries (And Dick Bove) Sign Open Letter To Fed Demanding End Of QE2

Retail sales up more than expected in October; largest gain in seven months, propelled by surge in retail sales

Empire State Manufacturing Index Plunges Thanks To Collapse In New Orders by @

Top Analyst Upgrades and Downgrades (AKAM, MT, COP, DYN, EP, GBL, LLNW, MON, PVH, RAX, SLW, CODE, UNH, UNP, WLP)

Caterpillar in $7.6 Billion Deal for Bucyrus

EMC Gobbles Up Isilon (ISLN, EMC)

Dollar Firmer on European Fiscal Woes | Credit Writedowns -

The mother-of-all MERS fixes

Ron Paul trains his sights on Bernanke:

Rangel House Ethics Trial Opens: Rep. Charles Rangel of New York headed the House's tax-writing committee but ac...

Sunday, November 14, 2010

The Federal Reserve is Laundering Money

How to Make the Dollar Sound Again

The gold naysayers and top callers are fools, plain and simple. None of those gold haters come close to the mega mind of Jim Grant of Grant's Interest Rate Observer. I interviewed him a number of times on air at WBBR in NY. He makes some great points in this NY Times Op/Ed.

Carnage Alert?

No, not the whole market, but in Potash ($POT) as $BHP has withdrawn its $40 bln offer. This may impact other ag related names like Mosaic (MOS) and Agrium (AGU) to name a few. POT closed at just above $139 on Friday, the offer was pegged at $130 on a per share basis. When the attempteddeal materialized over the summer it seemed like it would be bested by another suitor, but no other bid ever materialized. Over the last few weeks POT started to deflate as the Canadian government would offer no support to BHP's offer which to many seemed like a low ball bid.

In the long run, BHP will be judged to be penny wise and pound foolish. Potash is a key piece of the puzzle in agriculture and Potash just happens to be number one in the business of providing potash. POT will only grow stronger over time. Chain Saw Al Dunlap, notorious in the1990's for prepping companies for sale, once told me, "everything is for sale except for your dog and your wife". Had BHP offered a blowout bid closer to $200, it's quite likely the Canadian government would have looked the other way. Yes, everything can be put up for sale, everyone does have a price.

Edit: As of about 9 e.t. POT is down about $1. There's still a belief that another bid could emerge.

Why fraudclosure is such a BIG deal

This is on the Harrison site. He picked it up from the Ritholz site. This is great stuff, only slightly dated from late October.

Janet Tavakoli on Bank Foreclosure Fraud from David Fry on Vimeo.

Saturday, November 13, 2010

Ha! A new breakfast cereal!

Cheaper powdered milk not included. 

NIA President: Beware of Massive Food Inflation

The truth is somewhere between the NIA's crazy forecast and what the modest government inflation figures show. Get ready to pay a LOT more.

Surely you don't believe the government's cheeky little CPI data that says inflation is running below 2%. That data is held in check to keep Social Security cost of living increases low (or at 0 the last two years). Real inflation is actually running at about 5%.

Wow -- Check Out How Blatantly Our Government Misled Us With The October Jobs Numbers!

Remember last Friday's payrolls numbers--the ones that blew away expectations about the number of jobs created and got everyone talking about recovery again? Well, even at the time those payroll numbers were confusing, because the other part of the jobs report--the "household survey"--showed yet another crappy number.
But by pointing to the crappy household number and...

Read more: http://www.businessinsider.com/wow-check-out-how-blatantly-our-government-misled-us-with-the-october-jobs-numbers-2010-11#ixzz15AyBylwV

Bill Murphy of Gata discusses the drop in gold's price

Friday, November 12, 2010

Quantitative Easing Explained

Linkage 11/12/10

Shanghai Market Drops 5.2%

Ireland Bailout in the Works?

PIIGS CDS Hit All Time Wides

Janet Tavakoli on Foreclosure Fraud $$

Coal India in Talks With Peabody, Massey Energy to Buy Stakes in Mines

Pilots and passengers rail at new airport patdowns

Wendy's / Arby's Reports Loss For Third Quarter

Icahn ups Dynegy stake, offers $2 billion credit line

Tina Brown: "I shall now be in the editor-in-chief’s chair at both The Daily Beast and Newsweek."

Unfazed by setbacks, Obama is claiming a stronger hand and closer ties with nations at the G-20 summit: -EC

A Deep Dive Into The Employment Numbers Show They're A Lot Weaker Than You Think

Facebook Is Launching Email On Monday by @

Thursday, November 11, 2010

This is a must read article

Say bye, bye soon to the rule of law and basic due process. Remember the Magna Carta of 1215? Those land barons were just a bunch of dummies . Let the despots live on. Retroactive forgiveness for law breakers. Gotta love it. Of course, this is really a travesty in waiting. Could retroactive MERS forgiveness really happen? Has our society sunk thus low? Click below link:


Very ugly week so far in Muni Land

I mean bad. As far as I know, the Fed is not buying Muni bonds, yet. Here are some very ugly charts to look at.http://clearstation.etrade.com/cgi-bin/bbs?post_id=9552993&Refer=

Wednesday, November 10, 2010

Linkage 11/10/10

No let-up for Irish debt; pressure grows

MBA: Mortgage Purchase Applications Increase slightly last week

New Zillow Report Warns Of Unprecedented Decline In Home Prices, No Hints Of Stabilization by @

Rumblings of inflation grow louder

World economy faces 'difficult and dangerous times' warns Mervyn King

Chinese Deregulation Of Gold Will Make The Bears Look Even More Foolish

$GM Q3 EPS of $1.20, revenues of $34.1B. expects to be profitable for 2010

Initial Jobless Claims for 11/6: 435K, vs. Cons. 450K; Continuing Claims: 4.301M $$

September Trade Balance -$44 bln vs -$44.8 bln consensus; August revised to -$46.5 bln from -$46.3 bln

Sainsbury, Wal-Mart's Asda Bet on Last Luxury Christmas in U.K. $WMT

China Trade Surplus Grows to $27 Billion

Google Gives Staff 10% Raises, Bonuses

RIM's BlackBerry Playbook Tablet Will Cost "Under" $500 $RIMM $AAPL by @

Target Black Friday ad leaked: 40-inch 1080p HDTV for $298

Tuesday, November 9, 2010

Market Volatility

Today is why I favor physical holding of metals, not paper trading. Best to buy your gold or silver, lock it up somewhere, take it out every so often to admire its looks and then lock it back up. No worries. Far better than looking at a red trading screen. Today's action is why I smile politely at the ETF players while thinking they're playing with fire. I am at stage in life where winning a debate on financial matters is no longer important. Paper trading is as much an illusion as thinking the dollar is sound, hard money. lol.
Did you know that the GLD ETF has a NAV in the record low 97% range? That means it is going to have to buy a ton, or 200 of gold. What shinanigans. 

When you own your own metals (whether in coin or bullion form) you own it and you can be assured that in this environment it's going to go higher.  What? Some will say that no one knows future outcomes. That's a load of bull cookies. One can know the outcome of the direction of metals; it's baked into over 2500 years of history. Gold has always been there and always shall be there. Outcomes are known in many ways. To say one can't know the future of metals is like saying the outcome of putting one's hand on a burning stove flame is unknowable. Yet we all know for sure the hand will be burned. Drive a car at 100 mph into a solid brick wall? The outcome is assuredly blunt force trauma to internal organs. Well, you get the picture. I feel the doubters on metals are fooling themselves - deep down they know the ultimate outcome of this ongoing and unfolding story.

Today's intraday downdraft is due to a change in the silver margin requirement at the CME from $5k to $6500. Further reason to buy imo. For each dollar uptick in the price of silver, JP Morgan and HSBC, the silver short henchmen and RICO suit recipients, lose a few billion dollars. So the best thing to do is a little scare to bring the price down. What next? criminalization of owning metals? confiscation? Keep your seat belts fastened.

China downgrades U.S. again

Dagong credit of China downgrades U.S. again to A+ from AA. http://bit.ly/cYYheu

"In essence, the U.S. government's move to devalue the dollar indicates its solvency is on the brink of collapse," said the report.

"Analysis shows that the crisis confronting the U.S. cannot be ultimately resolved through currency depreciation. On the contrary, it is likely that an overall crisis might be triggered by the U.S. government’s policy to continuously depreciate the U.S. dollar against the will of creditors."

"Dagong believes that the occurrence and development process of the credit crisis in the U.S. resulted from the long-standing accumulation of the contradictions in its economic system; the U.S. debt burden can be relieved only to a certain extent through large-scale printing and issuance of the U.S. dollar; however the consequent decline of the U.S. dollar status and national credit will block the debt revenue channel which is vital to the existence of the United States to a greater extent. The potential overall crisis in the world resulting from the U.S. dollar depreciation will increase the uncertainty of the U.S. economic recovery. Under the circumstances that none of the economic factors influencing the U.S. economy has turned better explicitly it is possible that the U.S. will continue to expand the use of its loose monetary policy, damaging the interests the creditors. Therefore, given the current situation, the United States may face much unpredictable risks in solvency in the coming one to two years. Accordingly, Dagong assigns negative outlook on both local and foreign currency sovereign credit ratings of the United States."


EXCLUSIVE! Yahoo! on KKR Radar

Ben Davies - Gold & Silver Experiencing Mini Parabola

General Motors Earnings Preview: Another Quarter in the Black?

Today's Economic Data Highlights

A Missile Was Launched Off The Coast Of California Yesterday, And Nobody Knows Who Did It by @

Danone in Talks Over Bottled-Water Unit

DealBook: Chevron to Buy Atlas Energy for $3 Billion

UPDATE: Oil price hits two-year high...

Carnival cruise ship passengers stuck without heat, hot water, toilets or hot food after engine room fire

Monday, November 8, 2010

Get ready for electrocution news as Copper soars

Copper is at about $4/pound, or back to near record highs, riding on the coattails of the rise in gold and silver.

You know what this means. Stupid criminals are going to try to steal copper. Without heavy duty rubber gloves and a simple voltage detector that you can by for $25 bucks at Home Depot, you're gonna be seeing stories about fried thieves.

Not long ago a guy got killed in LA for trying to pull copper out of an electrical box on the street. They also climb around in subways and either get toasted or fall and get run over all in the pursuit of copper.

Crime never pays.

Those flying metals

GOLD BREAKS ALL RECORDS, $1,409.00 OZ. I won't tell you "I told you so", but maybe I should? I wrote a whole book on the subject of metals and their increasing value due to the fact that all fiat currencies, like the dollar, eventually die. We will soon see $1600 and higher for gold - maybe within a few months. $30 an ounce for silver soon is a given. Copper is close to $4 and eventual new highs. Longer term, gold at $10,000 is becoming a more mainstream prediction. Silver in the hundreds of dollars per ounce is a certainty if gold goes to the moon. 

The only thing that might stop the surge in metals is if Ben Bernanke shuts off the printing press. Even then it' s probably too late since the monetary damage has already been done and is very deep. Without the heroin fix that QE is, the banking system would rapidly collapse, which would still doom the dollar. Our financial system is a mine field with pockets of black holes. It's a no win situation. 

I was a history major in college and found the decline of empires quite interesting. So naturally it would be a no brainer to deduce years later when writing the book that with the death of nations would come the deaths of their money. In the cases of dead empires, the greatest example being Rome, there was a common thread: maintaining empires has always been an expensive and ultimately bankrupting proposition. Add a welfare state, moral decay, an increasing tax levy, etc., and voila  - death of an empire, the destruction of its medium of exchange.

The death knell for Roman money, as Rome was overwhelmed by debt, was its watered down coinage to a state of plentiful but worthless bronze planchets. There were so many that even to this day, 2000 years later, you can buy certain Roman coins for next to nothing. The U.S. experiment is running aground due to huge deficit spending and the unprecedented provision of artificial support of its bond market resulting in massive creation of dollars backed by nothing. It still amazes me that there are many who ignore the past and believe that eventually everything will come out ok and that there shall be no long term repercussions from the actions taken by the U.S. government and the Federal Reserve. With the increasingly rapid ascent of both metals and a smorgasbord of other commodities, we're seeing that the offenders of bad national financial stewardship cannot commit their deeds with impunity and that there are consequences. 

OK, enough with the whole fiat currency death meme. It's embedded in history. This pesky problem (for many) with metals going higher should come as no surprise. Every generation thinks its more clever than the last, but this present society is, or will find that maybe the smarties of today really aren't all that smart, but have been lucky to prosper from what historically has been a shaky fiat foundation. For now, we can still spend our dollars for all sorts of things - both necessities and goodies - but deep down I have a bad feeling about how things are going to end up. 

One other thing I'd like to point out about today. The rise in metals is coming on a day when the stock market is lower. That's a disconnect. The usual pattern has been that QE floats many boats - both stocks and metals. Not today. This will need close watching.  If gold is rising as a currency in its own right - why that would be quite a nightmare on Elm Street for the Fed. This rise in  metals today comes even as the dollar is a little higher. That's a second big disconnect. It's an indication that it's a buyers market in metals and that investors are voting thumbs down to the global monetary system where all currencies are fiat. 

Palin actually gets it on QE


By Economic Policy Journal
In a keynote speech in Phoenix, Sarah Palin targeted the Fed. She said, in part:
I’m deeply concerned about the Federal Reserve’s plans to buy up anywhere from $600 billion to as much as $1 trillion of government securities. The technical term for it is “quantitative easing.” It means our government is pumping money into the banking system by buying up treasury bonds. And where, you may ask, are we getting the money to pay for all this? We’re printing it out of thin air
The Fed hopes doing this may buy us a little temporary economic growth by supplying banks with extra cash which they could then lend out to businesses. But it’s far from certain this will even work. After all, the problem isn’t that banks don’t have enough cash on hand – it’s that they don’t want to lend it out, because they don’t trust the current economic climate.

From the options market Casino

Via Andrew Wilkinson. an old contact from my CNBC days.

Human Genome Sciences, Inc.  (HGSI) – Shares in biotechnology company Human Genome Sciences are down 3.95% this afternoon at $25.23 as of 3:15 pm, but one options trader populating the December contract today is positioning for the stock to rebound ahead of a key FDA decision on its lupus drug treatment, Benlysta. A preliminary FDA review is set for release in one week, while an advisory panel with outside experts is scheduled to provide their input before the FDA provides a final ruling by December 9, 2010. The optimistic options player is well positioned to benefit from a strong rally in the biotech firm’s shares should approval of the lupus treatment become a reality. The trader purchased 5,000 calls at the December $26 strike for a premium of $4.30 each, and sold the same number of calls at the higher December $32 strike at a premium of $1.36 apiece. Net premium paid for the spread amounts to $2.94 per contract. Thus, the investor makes money if Human Genome’s shares reverse course and rally 14.7% over the current price of $25.23 to surpass the effective breakeven point to the upside at $28.94 by expiration day. The call-spreader stands ready to amass maximum potential profits of $3.06 per contract if shares jump 26.8% to trade above $32.00 by December expiration. Options implied volatility on the biotechnology company is up 12.1% at 141.59% as of 3:30 pm, and will likely continue to ascend ahead of the FDA’s critical ruling.

Indian Point 2 Nuclear Plant Explosion

Here's a good Monday morning pick me up.

There was a fire and explosion at the Indian Point 2 nuclear power plant along the Hudson in Westchester county about 25 miles north of New York city. The explosion is said by local media to have involved a primary transformer that converts high voltage generated by the nuclear plant to a lower level for distribution of power to area transmission lines. The Indian Point 2 reactor will remain shutdown while the transformer is repaired,

No release of radiation was reported by plant operator Entergy Corp (ETR). A spokesman quoted by Lohud.com said  "It's a major piece of equipment, and it'll take some time to understand what happened.".

Your blogger lives not far from this plant. As usual everything is a big secret. A reporter who tried to gain access to the plant was told by an Indian Point security worker to leave the area. The local fire department near the plant responded, but arrived to locked gates and were not permitted access. By that point the fire was said to have been contained by the plant's operator.

Indian Point 3, another reactor on the site, remains operational. Indian Point 1 has been offline and mothballed for years.

Indian Point generates a good chunk of electricity for Westchester and New York city. Its foes have tried for years to have it shutdown due to its close proximity to major population centers and its location over an earthquake fault line.

Friday, November 5, 2010

I am Bullish on Many Things

I know some of you think I'm a negative perma bear from the funny farm. But this is not really true.  I am bullish in many ways. Let's take a lookee.

On stocks. I have fully come around on the notion of quantitative easing and its effect on the stock market. It has been positive at least point-wise  for the major stock indexes.  Today the Dow was up over 200 points. Nice gains (though priced in gold, the Dow was actually down by about 2% Thursday). I expect that stocks, not adjusted for inflation, will benefit from QE and eventual hyperinflation.
As I mentioned, anyone for Dow 20,000 or higher due to an artificial boost in corporate numbers from inflation?

Which leads me to another bullish aspect of myself. I am bullish on nutty Ben Bernanke's efforts to devalue the dollar and cause prices to rise. It's neat that various corners of the market's are already looking forward to QE3. #3 will likely be dollar printing to rescue the banks (so ding, ding I am bullish on lack of moral hazard and more bailouts too! ).  Fitch on Thursday downgraded the whole MBS sector. Banks have said fraudclosure is like a flesh found with the problem largely contained.  You will soon see that it is not. When my blood sugar levels surged to 1000 earlier this spring I was fortunate that none of the blood vessels in my head exploded. That would have taken me out. It is great to live in a time to see all of this crazy you-know-what play out. So i remain bullish on life in general having almost lost it earlier this year and late last year when I had the blood poisoning (don't know if I ever mentioned that).

The specter of QE to infinity keeps me bullish on metals.The metals and all commodities are a daily referendum on the dollar's power. I don't view metals in the context of being a hedge against inflation, but as an indictment against fiat currency.

I am also bullish on the rare earth metals (the metals you can't easily pronounce). China is already withholding them.

That should be bullish for tv sales. But most people don't realize the little mining operation that makes up a tv, so they probably won't go out and buy one until they need it.  They will pay more than they should. So I am bullish on people eventually overpaying for home electronics.

I am bullish on old people. Time is an enemy to everyone of us. We're all getting older. I guarantee that 10 years from now we will all be ten years older. heh. This is truly significant. The great demographic makeup of the country in the 1950's that spurred growth is about a complete opposite today. So I am a bull on prospects for an aging population and the $200 trillion in social outlays that will have to be made, if promises are kept.

I am bullish on bread.  $10 loaves of bread will be a reality in our lifetimes. Too bad there are no Wonder Bread futures. All dollar based commodities are going higher as long as Ben Berserk-nanke continues to devalue through QE. I don't have a 20 year chart of wheat, but I've been watching it for that long. To my recollection wheat has had a tendency to rise in the months after serious volcanic eruptions. Enough ejecta (there I've gone and said it - EJECTA) into the atmosphere screws up the weather and crops. Volcanoes have been in the news recently.

That leads me to be bullish on pumice stone supplies. With volcanoes popping off all over the world, this particular stone will be widely available. Thus I remain a bull on the pedicure business, since Pumice is used to remove dry skin from the feet. (a bad joke)

I am bullish on stuff. A good wheel barrow might come in handy as the new 21st century wallet. Good, tradable stuff might be worth something more than present face value. (sadly, only half joking)

I've been early on crude, but I remain bullish there too. $5 gasoline I see as probable next year, at least on the West Coast. That would mean $4 gasoline back east.  crude is up $5 this week into the high 80's putting $100 (conservative call) crude back on the table. OPECers want $100 crude, Russia (the largest exporter) will likely see production diminish in the years ahead. China and Russia and other countries will enter into contracts with each other that will not be using the dollar. There could even be a little extra spending by business and industry now that Crap & Trade and other onerous legislation appear dead with the new Republican majority in the House (though unemployment and weak residential real estate (think glut) will still keep the consumer, 2/3rds of the economy, stymied). Remember MEW (mortgage equity withdrawal) ahh, those were the good old days. Won't be back for a few generations 

I am bullish on coal. While Odrama was on a fast track to killing the industry, the republicans may slow him down.  But China is a bigger reason to be bullish.  They are importers of the stuff, with such a voracious appetite for coal that one wonders if you can order some Moo Goo Gui Pan with a side of steamed coal. $150/ton for the coking coal used in steel making is a ... well a steal.

I am bullish on off the grid power generation. If you can afford it, a whole house generator powered by natural gas will be worth the money. Even a small generator will be worth it to have around.  If you're out in the sticks and in a colder northern climate, it's always good to have a kerosine heater available. I foresee less reliability in the power grid medium term. Propane tanks are good to have on hand for grill cooking even in winter. I once locked myself out of the house on a cold winter day. I warmed myself with the grill on the deck. lol.

I am bullish on bearish currency pairs. Yuan, Euro, Yen.. all going down together. They won't let the U.S. get an upper hand in trade by the dollar devaluation. US competitors will all print and do other cooky things to stay competitive.

That leads me to be bullish on trade wars. QE not only unlocks door #1 to dollar destruction, but it opens up door #2 to all  out trade wars, tariffs,etc. 2011 is gonna be a fun one.

I am bullish on being bearish about housing. Only the specter of all out multi million percent hyperinflation will lift housing prices. Buying a home is unaffordable to most people now, it will eventually become impossible for almost all non owners. Wages won't keep pace with hyperinflation. there is also too much inventory.

Ultimately, I am bullish on America. Even though the banking cabal is stealing from your grand children by getting the Fed to expand its balance sheet by the trillions by buying worthless assets at face value (who will buy worthless paper for even 1 cent on the dollar?), the people of this nation are the greatest asset. Yes, I believe we're headed for tougher times, maybe a messy societal reset, but it's the people who will eventually rise to the occasion and save the day. 

Remaining ever bullish, JimK

Expect another 20% drop in Housing: A. Gary Shilling

Gary Shilling holds the distinction of being right about the first financial Tsunami. He sees more Tsunamis ahead. He is warning of big, further downside in housing:

"A further 20%
drop in U.S. house prices due to huge
excess inventories of over 2 million
and foreclosure delays may push
underwater homeowners from 23%
of mortgagors to 40% and precipitate
a self-feeding spiral of walkaway
homeowners and nosedive in
consumer spending. Other
roadblocks on the deleveraging
highway may include a crisis in U.S.
commercial real estate."

He further states,
"Homebuilders (unfavorable). Massive inventories, enhanced by further foreclosures, are likely to depress existing home prices by another 20%. This and the resulting weak sales will hurt homebuilders. The flatness in these stocks as the S&P 500 rose in recent months is ominous. Implement with individual equities or ETFs."

Put that in your pipe and smoke it. Shilling is not as well known as Roubini, but Shilling is more often correct.

The UNemployment Wheel Keeps on Turning


The government announced Friday that 151,000 jobs were added in the economy in October, as the unemployment rate stayed at 9.6 percent.

18.3% is the unemployment number if job leavers, those out of the workforce, were added, according to Zerohedge.

Labor Force Participation Rate Drops To 25 Year Low, At 64.5%
The average duration of unemployment went from 33.3 weeks to 33.9

Bottom line: Improved payrolls, but overall remains hard to find a job.

Thursday, November 4, 2010

White House to Cave on Tax Cuts? Dow rises over 200.

The White House is now saying it is open to extending all the Bush-era tax cuts, remains against extending them permanently.
Benzinga says the Bush tax cuts would be akin to another $500-$700 in QE. Total cost of all Bush tax cuts. $3.7 trillion.
The Stock Rally Is Going Into Overdrive, As Obama Admits He Will Cave On Tax Cuts. Gold is now up $45 at $1382.

Keeping Bush Tax cuts akin to Tarp 3!  No hope for the poor dollar.

FED holding of treasurys will surpass China AT THE END OF THE MONTH

[link to www.zerohedge.com]

As is all too well known by now, starting over the next few days, the Fed will commence purchasing $75 billion in Treasury securities monthly until the end of June, and will buy an additional $35 billion in Treasurys to make up for declining holdings of MBS (due to repurchases).

What is certain is that on June 30, the Fed's balance sheet will have $2.68 trillion (or more) in holdings, of which $1.77 trillion will be in Treasurys, compared to the $840 billion today. What is also certain is that the Fed will not be able to stop there. Which is why we have extended the projection period through January 2012. At that point the Fed will hold $2.6 trillion in US Treasuries, or roughly 25% of total US marketable debt at that point.

Incidentally, nowhere do we assume that the Fed will have launched QE 3, 4, and so forth, over the next 12 months, even though we now estimate the probability of America becoming an exponentially self-monetizing, Weimar-type case study in hyperinflation at over 50%.

Silver Hits $25 Tonight

But could it double to $50 in a few months time? A big short squeeze could be underway. Read more here

Wednesday, November 3, 2010

A 26 Point Dow Gain

When all was said and done today, the Dow eked out a small rise -- indicative of the magic powers of QE. I suppose we've become somewhat jaded about money. At first blush $600 bln in announced asset purchase plans by the Fed seemed to be a non starter (smallish) and the Dow fell. But on second thought, the market managed to recover. $600 bln is $600 bln after all, and we all know that in the end the Fed will print unlimited dollars to buy the stuff that its buying.  So it was, have no fear, Bernanke is still here, and thus the marginally higher stock market.  I think I smell 11,250 in the cards, assuming something doesn't blow up.

Denver Voters Reject Plan to Track Space Aliens

From AP

Denver residents have jettisoned a plan to officially track space aliens.
The proposal defeated soundly Tuesday night would have established a commission to track extraterrestrials. It also would have allowed residents to post their observations on Denver's city Web page
and report sightings.
Early results show Denver residents voted 106,776-20,162 against the proposal.
The Denver man who proposed the measure, Jeff Peckman, says the government is tracking alien sightings but refuses to make the reports public. Peckman is a meditation instructor and promoter of new technology, including something he says reduces the "chaos of electromagnetic fields."
Peckman contends opponents greatly inflated the commission's projected cost.
He previously proposed an unsuccessful ordinance requiring the city to offer stress-reduction measures.

The Despicable Campaign of Kenneth Zebrowski, Jr.

This blog does not usually venture into the realm of politics unless there's a big Wall street angle. But sometimes exceptions must be made.

The dirtiest political campaign of 2010 did not occur in Delaware (home of Christine O' Donnell). While the gloves came off in California in the Boxer-Fiorina race and for the governorship of the state in which Brown bulldozed Whitman, neither of the races degraded into total nuclear mudslinging. One could make a convincing argument that dirty campaigning nearly scraped the bottom of the barrel in the Senate races in Nevada and West Virginia, but still not dirty enough.

At the end of the day the worst campaigning of 2010 was for a seat in the New York state Assembly's 94th district. That's an area of a hundred thousand people in the small County of Rockland, about 30 miles north of New York city. Yes, an obscure state assembly seat.

Kenneth Zebrowski, Jr., a democrat incumbent had waged what had been a respectable campaign against Republican challenger Frank Sparaco. It looked like Zebrowski would be a shoe-in having the incumbent's advantage and would continue on being a small voice among many fish in Albany.

But apparently someone got uncomfortable in Zebrowski's party and lobbed a political bomb into the lap of the local paper in late October, accusing Sparaco of taking money from members of the mob.  Sparaco was quick to deny the accusations. Here's a Journal News video:

In spite of the denial the accusations would continue to haunt Sparaco. Worse, Zebrowski stood idly by and did nothing to discredit the charges. To make matters worse, the Zebrowski campaign sent a flyer to potential voters just a few days before the election that featured illustrated bullet holes and an accusation the Sparaco's biological father, who left the family when Sparaco was 9-months old, was a mafia hit man!

I've never seen anything like this in our local community and am hard pressed to recall dirtier politics on a nationwide basis. Unfortunately, character assassination is a mainstay of the American political scene; it started long before our lifetimes. The most egregious early example I can recall dates back to the Presidential campaign of 1828 when Rachel Jackson died of a heart attack shortly after bigamy accusations flew over a botched divorce years before. Mrs. Jackson just could not deal with the stress. Those accusations 182 years ago dealt with issues involving candidate Andrew Jackson and his wife and no one else. .

Fast forwarding to 2010, my local community, in this mere Assembly race, has been subjected to a new low in character assassination: The sins of the father. Since when did it become necessary for the parents of a political candidate to be squeaky clean, especially in the case of Sparaco where the father was estranged from the family since he was a baby? It's just ridiculous.

Earlier today, Zebrowski was interviewed on the local radio station about this dirty race. Amazingly, he denied being involved in any of the dirty tricks. He essentially blamed his party. Could this really be true? Could his party actually send out fliers and disseminate information of the sort I have described without his blessing, or the blessing of someone within his campaign? If so, he should leave his party and disavow any association with the democrats. If it is found that he had any involment in conjuring up the scandalous accusations, he should resign.

This race again convinces me that politicians are generally the lowest common denominator in society, Sparaco lost, but in the end is the best man for not stooping to the level of Zebrowski's "friends".  

No Big Fed Surpises

Fed funds stays at 0 to .25. As for purchases: Fed To Buy $600B More Of Long-Term Tsys By End Of 2Q '11. Well see how this plays out. Already gold is taking a dump.

$600 meellion.. errr, 600 beellion, as someone joked, is not huge in the grand scheme of things. But readers of this blog already know the dirty little secret: The Fed today or at anytime cannot say what it will really do. That we know will be QE to infinity into the trillions.

2:15 ET - Be There or Be Square

That's the time the Fed announcement comes out. QE2 and how much is on the minds of many. I haven't had much to say as we await this event. I've outlined a few lines of reasoning on the how the markets may react to different scenarios, but for everyone it's a big guess.  One thing I left out. If they do QE w/salad bar - could make for real fire works!

Meg Whitman

Consider the $170, or so million dollars she spent to try buy the Governor's  mansion in California a mere ding to her net worth.  Forbes estimated her fortune to be in the range of about $1.4 bln earlier this year. So what's a mere almost $200 million? Let's just say she won't be needing to eat Kraft Mac and Cheese for dinner any time soon (unless she really likes the stuff).

With a population of around 36 million, the former eBay CEO spent the equivalent of about $5 person in California.  If only registered voters in the state are factored (17 million), Whitman spent $10 to woo their votes. She actually captured only about 2.6 million actual votes (as of early Wednesday), or 41% of the total, meaning each of those votes theoretically cost $65. LOL. Lesson learned: Money not only can't buy you love, but it also can't buy you the California governor's mansion.
Whitman, it's said, out spent her winning opponent - Jerry Brown - by a factor of nearly 10 to 1. But to be fair, outside groups spent heavily in support of Brown.

Monday, November 1, 2010

SEC Investigating Deal Between JPMorgan and Hedge Fund Magnetar

 The Securities and Exchange Commission is investigating whether JPMorgan Chase allowed a hedge fund to improperly select assets for a $1.1 billion deal backed by subprime mortgages, according to people familiar with the probe.
Called "Squared" and completed in May 2007, the deal was a collateralized debt obligation, or CDO, made up of pieces of other.... (read more by clicking here)

Ambac: More of the same market Bull Cookies

Word this morning that monoline insurer Ambac is going to file a prepackaged chapter 13 bankruptcy. Ambac has been unable to raise much needed capital. Ambac's stock is down 30%. Options trade on this stock, and last week there was heavy put volume, or bets that Ambac would fall.  So as usual there were people who knew something was up.  Will our worthless SEC investigate?? I'm not holding my breath.

China PMI Boosts the Markets Again

You'll recall that the leg up in the markets since September got its start with strong China PMI data.

LONDON (AP) -- World stock markets rose modestly Monday following a fairly strong Chinese manufacturing survey -- but trading was subdued as investors waited to see how much additional monetary easing the Federal Reserve might deliver at its meeting later this week. Read more..