Friday, November 11, 2011

Penn State and Financial Stagnation go hand in hand

Happy Veterans Day. But today should be no different than any other day. We should be thanking and supporting our Vets everyday! The red carpet should be rolled out all of the time for those who commit to potentially to losing their lives in order that we may live comfortably, yet so many vets end up being neglected in favor of generations of people whose only aspiration has been to take advantage of the government dole.  It's another of the glaring distortions that surround us.
The Penn State tragedy is a reflection of what our society is becoming, or has already become. It is clear that certain people with lots of power will seek to change the rules to suit their needs. PSU and its apparently impudent (to say the least) coverup of unspeakable acts by certain people demonstrates yet again that a group of psychopaths will stop at nothing to protect their valued interests - in this case, $50 mln a year from sports to the college. They will turn a blind eye to wrongs in order to keep on doing what they think is best. Could the allegations be true that a host of donors were provided prostitute young boys? I don't know whether to puke or cry. Actually, it makes me very angry; this horrible behavior is symptomatic of a troubling trend: institutions can be gutted and corrupted from the inside by a core group of people who think they are above the law. They will throw all decency and common good out the window to advance their agendas. They will stop at nothing unless they are caught.  By, the way, a DA is tied to this and has been missing for a number of years following revelations then that something awful was going on.

This is a cancer that is tearing away at the fabric of society. Yes, if you feel funny, or strange about what's going on in the world and can't exactly pin it down, it's because bad things are happening to systems we once held dear. Most people either don't or won't connect the dots, or they idolize seemingly unstoppable franchises and give no consideration that anything could be awry. They smell a whiff of smoke and then ignore it not knowing they are surrounded by flames. At PSU Joe Patero was worshiped and idolized. Why, there was a protest about Joe's termination – really an indirect show of support for child rape if you really think about it. On the tv news an anchor asks a reporter after a report about the mess at Penn, whether they will win the next game with such heavy burden on the players. Is that what really matters – who wins next – but never mind about the rape(s) of young boys?!

How does this have a connection to finance? Let's take the Fed as one example. It is worshiped by a cadre of economists and by many participants in the media who would die for the chance to throw softball questions at the Benank. In the meantime, the Fed in believing it can defy all financial laws known to man over the past 6,000 years does as it pleases, even if it means taking on trillions in worthless assets. The Fed provided a secret $16 trillion to mainly European banks to keep them alive, its chairman has lied under oath to Congress during testimony (see various You Tube videoes. key words: Bernanke liar). Yet it commits these acts with, thus far, impunity. My friend and sports columnist Evan Weiner calls the worship of athletic figures "jock sniffing". In the case of the Fed, there are many who are apparently in the mode of Bernanke underwear sniffing! 

Let's go a step further. Someday someone will look back at what happened in 21st century American society. It will be an anthropological investigation. One take away, that I can easily imagine, is that a connection will be made between societal decay and the decay of paper money since this movie has already happened in the past. In the present order of things, central banks have no choice but to print more currency even if it means the ultimate destruction of their institution and currency. This is what is now playing out at a questionably sovereign nation near you. This will be a glaring piece of history for future generations to look back on.

Late 19th century presidential campaigners used to talk and debate the subject  of the 'honor' of American money (see a William Mckinley recording of a speech he delivered in 1896), because as a growing nation honor of money was important in dealing with dominant trading partners who conducted business through a gold standard. That honor is long gone. As the fabric of society is rent in two through shady practices – whether at a college, or a central bank, the treasury, a polarized Congress, Fannie Freddie, Countrywide, BofA, etc. – it's only natural that our currency's buying power is continually eroded. When society believes a series of lies and looks the other when aberrant behavior is committed and accepted, it's easier to understand why there is systemic decay

Once upon a time there was the desire to do the right thing: bust some of the most powerful business interests in the world (eg. Standard Oil and the rest of the 'trusts'). Today the too big, with failure added to the equation as opposed to a then thriving Standard Oil, are being allowed to live-on and in some cases to grow even larger (eg. JP Morgan) and are being supported through generous money infusions courtesy of the increasingly burdened tax payer who struggles to make ends meet or who may suddenly face a meltdown financial situation, but with no bailout available to them.

Having said all that, there are still some positives! The truth does come out in other forms. Societal decay is yet another reason why gold (and silver) will be the future best friends of those who are wise enough to buy it now. Mankind has wavered back and forth in history between fiat currency and hard money. It's been an evolutionary process of trial and error. The latest iteration of money in the form of fiat dollar hegemony supported by fractional reserve banking is corrupt to the core. Such a system has enabled adding debt on top of debt through the creation of magic money, backed by nothing. It's a process that works well at first and arguably fostered a certain level of prosperity, but as the system has become debt laden, the original prosperity is being reclaimed. A few examples to consider: stagnant wages over the long term, falling dollar buying power, higher prices, the destruction of once thriving residential RE – to name a few.

Looking way back: people who either held gold, or who had British pound reserves were able to back our fledgeling nation over 200 years ago because they had resources that were seen as real money (though eventually the pound would go the way of the nickel Hershey bar as in another paper disaster). Yes the continentals may have hyper inflated, but people managed to live through that period, thanks to an underpinning to the monetary system at the time, which was gold. That meme is now repeating itself in real time in Europe. The day is rapidly approaching when faith will be lost in the euro.  It happened quickly to continentals a few hundred years ago – the sudden worthless of them, and it can happen just as quickly to euros and, I might add, dollars too.

There isn't an actual war on America soil today, but there is a war that we are losing involving what our society permits one class of society to do over the rest. Banking and other powerful corporate interests operate, or give the impression, that they operate without the need to abide by the laws that are in place for the rest of society. The above the law people have it good, but it's coming at a high cost to everyone else. These above the law interests have also had Congress create laws to their advantage. They have influenced our FASB to create phony rules to benefit their books. Who here paid zero tax after making money last year? GE is the poster child for this sort of behavior as it was legally able to take advantage of rules that the rest of don't enjoy. That's the sort of hijinx that betrays an unbalanced and broken society.

I blab to much, but you get the picture. It's not boy rape that has been committed by the select in the world of finance (unless one is a member of that questionable Bohemian Grove thing that involves terrible accusations involving rich men and youngters), but financial rape has been committed and in one way or another for all of us it has been a hands on the ankles-on going experience. And no, Joe Paterno won't be there to cover it up. With a quadrillion dollars, or more in derivatives surrounding the world of finance like a school of piranha fish and trillions in debts, something is going to give and then we will know and experience more than we want to know.

Hope springs eternal on Wall Street. The rearranging of the deck chairs in Greece, and to a lesser extent in Italy, is providing market relief. Wall Street is even cheered that Iran could step into the picture and provide money to Greece. WTF? Things are getting a bit frothy to the upside. I know some smart people who jumped into SPY a few days ago, have booked nice profits, and have cleared positions ahead of the weekend.
Remember the episode in the original Star Trek where Spock senses the sudden death of an all Vulcan crew on a star ship? If you briefly twitched this morning, perhaps you sensed the sudden terminations of 1,066 Mann Financial (MF) employees. Everything is being liquidated at Mann.

Crude seems intent of going to $100 and probably higher, not because of demand, but due to Middle East tensions.

GOLD – Up about $30. Bear attack yesterday followed by more accumulation today. Smart buyers. is strong up over $6. 

Apple – I warned of trouble if it could not hold above $400. It didn;t and now it is at $383. When I see a new buy signal there I will let you know.

Green Mountain – a sure disappointment as it has literally undergone a 2 for 1 stock split the hard way. Dead cat bouncing today with a $3 gain.

Here's an interesting little antidote about Thansgiving:
There's no inflation? From Bloomberg:
``A meal for 10 people on the holiday, which falls on Nov. 24 this year, will rise to $49.20 from $43.47 last year, the biggest increase since 1990, based on foods traditionally served including stuffing and pumpkin pie, the farm group said today in a release. Turkey was the most expensive and had the biggest gain, with a 16-pound bird up 22 percent at $21.57. ''

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