We know who you are and we saw what you did

The political world before the Internet was a world where corrupt leaders could spin the truth about what they were up to and grow fat on the spoils. I have two words for them: The Internet!

The Internet is an alternate and relatively infinite source of information accessible by the masses. Think you have a secret hand shake for your secret society where you can keep inside secrets from the masses and dole out high priced expert knowledge like the stone masons of old? Guess what… someone will put your handshake on the net and we can all see it.

It appears you; our leaders, are a little behind the curve on that reality and don’t realize your actions are now under scrutiny. Yah, we know who you are and we saw what you did! Like little kids who think mommy can’t see you, you cheat while we watch and lie to our faces, fully believing we can’t see what you’ve done. But for that fact alone you should all be swept from office. you are dinosaurs; the information age has passed you by.

Mr. Obama, if there were ever a time in history when our government wanted to foment a tax revolt, it is now. Not only are you forcing people like myself who lived within our means, to buy a fabulous house for someone else, now you are going to extend that order to cover second mortgages; equity withdrawals that went for new swimming pools, fabulous vacations, Hummers, jet skis and the like. All things which I do not own but you are now forcing me to buy for Ass Hats who partied like the credit train would never end.

They couldn’t afford any of it in the first place but the fabulous house they purchased by lying on their mortgage applications allowed them to take out huge equity loans to live like royalty, at least until they couldn’t service the debt anymore. Those irresponsible Ass Hats partied like they were celebrities and lived the ‘Good Life’ while more fiscally responsible types watched and ate oatmeal, safe in the knowledge that that sort of foolishness was bound to end badly.

So now you propose to take away my oatmeal, so those Ass Hats can keep their Hum-Vs, marble countertops and speed boats? Are you out of you fucking mind? And do you really believe we don't know it is all an effort to maintain an income stream for the bankers and corperations who caused this mess?

We fought one revolution for similar reasons, remember? Do you really think it won’t happen again? Do you really think people who saved their money will gladly hand it over to pay for the bad acts of the irresponsible so they can go on living the 'Good Life' at our expense?

Mr. Obama, spit out your gum and pay attention in class, wake up and smell the coffee, hang up and drive, or all of the above. Honest responsible people do not want to live in a country where the lazy and unproductive, the dishonest and irresponsible are rewarded while those of us who know that it will take hard work and saving to become an economically viable nation again are forced against our will to hand over our money to fund the further destruction of our economy. This to keep the Ass Hats in the continued luxury they did not earn.

I am outraged!

Pray To God And Pass The Ammunition

Anyone try to buy a gun recently? How about ammunition?
I heard rumors from members of a small investment group I belong to, with members spread across the US, that gun shows in their local areas were jamb packed, and if you stood outside you would see folks carrying out cases of ammunition or cardboard boxes containing new rifles. The head of our group who is a fairly well know financial advisor and a generally conservative guy went to a gun show close to Del Rey Beach, FL and reported the same thing. He himself, not a gun guy, bought three guns, which now makes him technically a gun guy.

Anyway, my point being that just like the sudden and quiet disappearance of gold from retail dealer shelves starting last August, guns and ammo are now becoming scarce. Many people are citing Obama’s anti-assault rifle sentiment and an expected Clinton-esqe style ban on assault rifles.

It’s true; you will play havoc finding an AR-15 and the 5.56 NATO rounds they use or the AK 47 and corresponding ammunition. Go ahead, call around and check. But I don’t believe it is all Obama’s anti-gun sentiment behind this push.

More to the point, people seem edgy and just a little jumpy, seemingly waiting for something that has yet to be defined. This could have something to do with the increase in the sale of all guns and ammo now taking place. You can still get many hand guns and other rifles but they are being bought up in record numbers. Also, all across the country there is a massive spike in carry permit applications, something not under threat by the Obama administration.

I myself went to the gun show in Palmetto, Florida last month to see if the rumors were true about record crowds swooping down like locusts, buying everything in sight.

I arrived to see a line of people snaking around the building, waiting to get in. It was Super bowl Sunday, what were they all doing here? I thought to myself. The show, much smaller than the Tampa show, was packed. There was a dealer building AR-15s from modular components to-order right there, so I stopped to ask questions. An older gentleman was purchasing a small AR-15 with all the trimmings, laser sight, optics and what have you. He was well dressed, didn’t question the price and had little or no clue about guns, or so I gathered from his questions to the vender. I later saw this man, who with the help of another was carrying two cases of 5.56 ammunition or about 2000 rounds.
So what gives?
Trouble says I…

People are not only angry about the careless bailout gifts to the ultra rich classes of their yet to be, hard earned money, but are now dealing with a sharp increase in organized gang violence and other random acts of criminal behavior.

Remember the Rodney King riots or Hurricane Katrina aftermath? Katrina was probably the ultimate lesson for average people, not only displaying what happens in a breakdown of the social system and the speed at which anarchy develops, but the impotence of their own, (once imagined) omnipotent government. The now looming breakdown, due to lack of funds, of our local governments promises to be very similar to New Orleans after Katrina. As with the Rodney King riots and the Katrina aftermath, simply being seen holding a gun was often enough to make you appear less like prey. This might account for some purchases, but not all. Some, like the individuals who shot at rescue helicopters might have other ideas.

Given the chatter I’m hearing about outrage over the bailouts and the massive level of taxation people are bracing for to pay for them, I fear a more confrontational possibility. If you didn’t catch Rick Santelli on CNBC from the trading floor of the NY Stock Exchange last week, he seemed angry and so did others on the floor within earshot who loudly proclaimed agreement with his rant. He half jokingly said he was organizing a Tea Party on Lake Michigan in July. I found that he is not the only one. There are other Tea Parties planned, which leads me to ask, what is planned that we don’t know about or aren’t yet hearing of?
Guns, anger, lost homes and jobs, hunger and dis-enfranchisement ad up to the possibility of bad things…very bad things.

WTF?

Has anyone been paying attention to the financial headlines the past few weeks?
Corporations missing their profit targets, still more declaring bankruptcy and many more announcing thousands upon thousands of layoffs! Add to this the strange story of Mr. Madoff (pronounced ‘made off’) who ‘made off’ with tens of $ Billions of investor’s money. As one person observed ‘There’s never just one cockroach… You know there is more of that sort of news coming.

Under the weight of this avalanche of horrible financial news, U.S. markets continue to rally…WTF!

China’s own major stock market, the HANG SENG continues to rise also, when in the face of China’s current economic crisis it should be falling like a fat man from a high dive. China is a communist country, its leaders can suppress information that they don’t particularly like, such as hundreds upon hundreds of factories shutting down leaving tens of thousands at a stroke unemployed with no safety net. Violence has ensued and there are rumors leaking out that more is brewing as the situation worsens. Conditions in China are deteriorating rapidly and their stock market is still rising…WTF?

A few have pointed to manipulation, I rather think the game is over and the big boyz who once moved markets are feeding on one another in a last ditch effort to obtain one more fix before their stash runs dry. So addicted to $ Billions that they shake with withdrawal tremors at the mere mention of no more money. At this they threaten and cajole congress and the senate for handouts of the highly addictive substance - money. Just hand it over, go quietly and no one will declare martial law. That’s the real story. We (those of us who are not filthy rich) are the victims of unauthorized rear entry by those who gamed the system and became obese on the wealth they accumulated. Some, who became fabulously wealthy, like Mr. Madoff by simple fraud. Small investors are probably not being targeted by big investors so much as just getting caught in the crossfire as they resort to eating one another.

Back to my point: The shear weight of horrible financial news is becoming too heavy to bear. Big players have been propping up the markets by cramming flimsy sticks under these boulders of bad news, hoping to buy just a little more time to play one more hand. There is nothing strong enough left to prop up the weight of bad news. It’s now far too heavy. The reality is, the economic damage is done, we have crossed the point of no return and we are now in a financial death spiral. When the spin doctors can no longer convince us the patient is just sleeping, world markets will come down with a deafening crack. How close are we? Closer than you think.

In the mean time, while we watch world markets spit in the face of reality and rocket upward we can only ask ourselves, WTF?

Welcome to the USSA

Welcome to the USSA
(United Socialist States of America)

To become a citizen put your mark of indenture on the loan bailout application below and prepare for a new life of Soviet style luxury!

The fiscally responsible need not apply.

Any person from this point onward found to have personal savings in an amount greater than 1 months estimated living expenses shall be faced with confiscation of excess funds and sentenced to mandatory re-education. Confiscated funds will be redistributed to the needy and more deserving among us such as Ford Motor Company, General Motors, etc…, so that they may continue to build state of the art vehicles for the United Socialist Peoples of America. This will guarantee the Manufacturers future ability to demand appropriately high prices for the large SUVs so desperately needed by the proletariat I mean citizen.

The resulting transactions will further guarantee the ability of banks to function normally offering generous financing to those of you who can barely afford it for the purchase of things you don’t need and can, in all reasonable circumstances, live without.

Welcome to the dawn of the new Peoples Paradise, where workers will be rewarded for servitude with a roof over their heads as long as they continue to make the payments on the generous new 100 year mortgages that bankers in their infinite beneficence have structured for your family’s financial security. This all in consideration of your future motivation to work hard to guarantee your continued employment, at the end of which, upon your early retirement at 95 you will be converted to pill form and fed to younger party members so that they may continue the noble dream.

It’s the end if the world as we know it part II…

Before I get to the end of the world let me comment on recent stock market events.
Mish Shedlock at http://globaleconomicanalysis.blogspot.com/ wrote a post a day or two before the last DOW rally that a look at Elliot Wave theory would suggest another sharp move up on the DOW then another fall . Nice call Mish! That rise came right away.

Gold:
Gold has been in a downward trend lately, erasing recent gains. It looks set to test its September lows which broke below $750. per once. We could see a major sell off down to the $500. level or lower if panic selling takes hold. I don’t like gold at these prices as they are historically high and jumping in here leaves little cushion for down- turns. Personally I’m on the sidelines waiting for a much lower entry point.

The End of Civilized Society
What makes America unique is it is a group of united states or small countries, if you will. All working together in co-operation. It’s unprecedented in world history. The European Union is an attempt at duplicating this success and we are flattered.
Keep in mind though that co-operation of this sort is so rare that finding similar examples in history is practically impossible.

We are on the cusp of letting it all go. Anyone who’s been divorced can tell you when it comes apart you can’t put it back together the way it was, if at all.

Many states are facing shrinking tax revenues now which will only worsen. Property taxes were the first to dry up. Sales taxes are drying up now as are income taxes. The big three.

You only have to dial 911 in an emergency to appreciate some of the critical services these taxes pay for. Police, fire, road maintenance, the list goes on. What happens when the police don’t come or your house burns and no fire fighters show up? Many would ask how schools would remain open or parks and community services for that matter. The basic perks of socio-economic co-operation. A rapid breakdown in the quality of life in your town, I answer.

As police leave for better paying prospects or are let go due to shrinking budgets, less law enforcement results, less law enforcement more crime.
Something I remember from the 1970s is the quality of officers on the local police forces. Mostly I encountered small minded bullies and crooks with badges in the suburban Seattle neighborhood where I grew up. I could go on with examples but you get the picture. It promises to be worse this time.

The most notable condition of the 70s I remember was crime in my neighborhood. We used to leave our keys in the car and our front door unlocked. Then the economic downturn came and we had our car stolen and more than one time we woke to find a stranger in our house. Drug sales became part of the scenery and the crime that followed it. This too will come again but a higher octane version this time around I’m afraid.

Gangs are now much more prevalent than they were in the 70s. They proliferated through the 90s and as city dwellers can attest, they are a much larger threat now than before. In the absence of law enforcement, gangs will only get worse, carving out wider spheres of influence with the most criminally psychotic individuals rising to the top and controlling their fiefdoms as tyrants or warlords.

A dark vision of the future?
Fiefdoms are the most common political structures in history. Mistrust of outsiders will always contribute to this kind of social structure. Gang style hierarchies built on brutality, greed and a lust for power over others, over generations will build to monarchies. These seldom grow into what we would call democracy. In fact the global co-operation we now enjoy is so fragile once broken it may go missing for many generations.
We are now facing a breakdown of our system and the loss of co-operation among countries, states cities businesses and individuals. And the road to Fascism is not much further.

How will governments deal with the impending loss of tax income and social decay on the back of the largest public bailout of private firms in recorded history?
Raise taxes.

During the Roosevelt administration the tax rate reached 73% leading to the largest black market in American history, and a Soviet style decay of domestic markets, workmanship and industry. Why work at all when your government takes it all away?

If you thought the quality of 70s era cars and ‘made in America’ everything was horrible (and it was) wait and see what comes out of this mess.

We are in for rough times. Don’t get me started on peak oil. Oil will probably drop to $50. per barrel but won’t stay there forever. Even with a pullback in demand driven by recession we are still close to peak production with Mexico and Canada dropping off as world suppliers fast. Petroleum is part of nearly everything we use in the modern world.

How screwed are we now?

It’s the end if the world as we know it…

Congratulations, you are present to witness the end of the world, the end of the world as we know it.

The stock market crash has started in earnest and world wide panic has set in as a result. Not that I didn’t expect this, but it came more suddenly and swiftly than I thought possible.

In 1907 J.P. Morgan engineered a bail out of the U.S. banking system that was eerily similar to this event but on a smaller scale. History will show that the current crisis started 100 years later almost to the month (November 2007) from that narrowly averted, long ago event. But this time, no joy. We don’t have Mr. Morgan with us anymore, and we are in deep shit.

Let’s take a look at our situation:

Americans are on the hook for $850 Billon more than the massive debt that we already couldn’t pay due to the hastily cobbled together bailout. A new bailout proposal is taking shape at this moment that will reach the House and Senate in mid November 2008. Who cares how much it will be, we can’t afford it.

Germany is working on a bail out that may reach $400 Billion. It seems world governments will soon own or control all commerce. The free market is dead, it will be sorely missed.

Stock markets around the world plunged last week with the DOW shedding 22% in a week long orgy of panic selling. Gold rallied for a short time but then got caught up in the viral infection of fear. The gold market is opaque but I’m guessing much of the selling there is to raise fast cash to cover margin calls in the derivatives markets. There may be more of this to come as many shadow investments unwind to the tune of perhaps hundreds of trillions of dollars. No one can say how much for sure but the possibilities are frightening.

UBS and Credit Suisse Banks, the two largest businesses in Switzerland are in big trouble due in part to their exposure to derivatives, and may not be around much longer. The implications for Switzerland and the Franc are bad. The two banks are together far lager than total Swiss GDP. Their failure will crush the Franc, historically the world’s most stable currency and formerly a safe haven in turbulent times.

So where does one put his money? U.S. dollars for now. At least until the world notices the flood of spanking new printed greenbacks that will be printed and circulated faster than the ink can dry. The U.S economic fundamentals alone should knee-cap the dollar but for the moment it’s the hot game in town, but only for the moment. Sentiment here may turn on a dime.

Anyone try to buy gold coins or bars at your local dealer lately? It can’t be done. Physical gold has been swept off of the shelves by frightened Americans since at least August and now is drying up globally. Paper gold will see deep selling in an effort to raise cash to cover stock and derivatives margin calls. Physical gold will most likely be swept up for a short time in this panic as spot gold falls bellow the mid $700 range or perhaps lower.

Fear is rampant and physical gold demand is very high. For this reason gold will probably see a neck breaking reversal upward once the Margin calls have wiped out enough derivatives players and their corresponding margin calls.
From there the sky is the limit for gold. Timing this will be tricky though as things from here start to move faster.

Watch for World governments to attempt to restrict trading or ownership of gold. As taxation suffocates Americans and other countries for that matter we will see a Soviet size Black Market emerge with citizens sheltering what little they have left from ‘The Man’ in the form of gold or silver.

Prices for Major assets will sink for perhaps a decade due to the unwinding of derivatives (the bursting of the bubble if you will) and a resulting over printing of world currencies will undermine currency values resulting in inflation and simultaneous deflation world wide. Ultimately gold and silver may become the black market currency of choice and real estate will be over for a long time.

In Part II of The end of the world I will discuss the effects of evaporating tax revenues, black markets, and the coming social breakdown.

Aliens in the desert and other scary stories

I’m sitting here in the southern desert wilderness of Arizona, parked in a 40 foot motor home contemplating my navel.
After passing through Roswell, NM and Meteor Crater, in Arizona I thought I might sit out under the stars and watch for aliens to land and pay us a visit.

I’m here to say, the aliens have landed! I saw them. While inside Grand Canyon state park I suddenly found myself surrounded by aliens, some of the worst sort – French, you know, from France!
My wife is also an alien – from Norway, a much better sort if you ask me.

Aliens exist and they have landed in the U.S. and are at this moment clogging our highways in their ‘Cruise America’ rental RVs, booking up all the available camping spaces and buying up everything that isn’t tied down. This while looking down upon us newly poor third world Americans with pity as they easily part with relatively small amounts of their superior currencies.
I hate them!

While traveling across the southern U.S. we had occasion to stop at a number of private and state parks only to find our neighbors were predominately from Europe. Nowhere so much as here, at the Grand Canyon. American tourist are solidly in the minority here as languages’ spoken around us seem to be mostly foreign (not English).

America is on sale and foreigners are buying, at least for now. Many that I have visited with seem blissfully unaware that there own economies are approaching the abyss as we speak. Many countries in the E.U. are beginning to choke as America, (the largest consumer nation on Earth) has gone into vapor lock. Their currencies’ nominally higher values are actually helping to drag their foreign economies closer to the edge, threatening them with an economic ‘Smack Down’ of epic proportions.

Some of these euphoric foreign spenders are even buying real estate in the US on the cheap, or so they think. This has the effect of temporarily arresting our current housing free-fall here but only fractionally.

I predict more pain abroad as foreigners find it is not poor America crashing but the whole global economy. I foresee a stiffer downturn, here and abroad as these same foreign real estate investors discover that they tried to catch a falling knife, (purchasing American real estate in free-fall) and then try to liquidate their investments when they discover their mistake then find they are trying to exit at the same time everyone else is. It won’t be pretty.

I see this beginning probably in July, as even now real estate values here and abroad are increasing their downward velocity and unemployment figures are on the rise in most industrialized nations. It’s only a matter of time before this affects their currencies. Lets face it, one fiat currency is as good as the next, because they have no real value except what the printers of said same claim they have.
Lets pause and think about that for a minute………..
Scary isn’t it?

Many other countries have worse housing markets and shakier economies than we in the U.S., and derivatives are ubiquitous and far reaching, so far wreaking havoc as far away as a small town in northern Norway. Many foreign banks and fund managers invested in CDOs and the like, and the real damage will prove to be more vast and far reaching than anyone has told you. Many more banks will fail and some countries will as well!

My advice to foreign visitors: Quit buying stuff you don’t need. Get back in your flying saucers, or whatever you flew here in and go home, save your Euros, (you’re going to need them soon) buy gold and quit taking so much malevolent glee in America’s pain. After all you won’t want us point and laughing as you loose an arm and a leg. It is wise to remember we are all in this together and for reasons too numerous to name things are going to get much, much worse, for all of us.
Vern