Friday, September 24, 2010

"'Nobody's Doing Nothin' - America Is Finished"

 
This guy is upset about the apathy in the US.  Beware of curse.  Anyway, the guy is speaking from the heart and he represents a large and rapidly growing segment of US society.

Wednesday, August 11, 2010

Cameras in Cars is Just Another Indicator of Tyranny

America, if you let this one go through, you deserve what you are going to get.

Come on guys. This isn't about government "helping" you.

Powerful people are tempted beyond their ability to restrain themselves. This is the structure of tyranny shaping up all around you.

God destroyed the Tower of Babylon and gave us diverse languages because humans can't handle positions of obscene power consolidation.

This won't end well. No historical or spiritual or logical reference point can argue that this is a good thing. Naked body scanners, RFID chips, global currency, gene splicing and ownership of life as property, wars of terror, bailing out the bankers with trillions ... isn't this all just part of the same eerie trend towards consolidation of power away from the 99% and towards the 1%.



Are we going to rely on the 1% to "help" us when they own the whole world? This is really silly.

A man on the moon looking at us reading the mainstream media would have a decade long belly laugh at how stupid we are to accept this "help" from the bankers and globalist elites. With "help" like that, who needs slavery?

- Tate Ulsaker

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Proposed Law Would Put Video Cameras In CarsPosted by Swtnlovabl on August 10, 2010 at 10:16pm


View Swtnlovabl's blog

.SACRAMENTO (CBS13) ―

Lawmakers are considering controversial new legislation this week that would allow vehicles to be equipped with dashboard cameras to record the moments leading up to accidents.

The proposed law, AB1942, would promote safer driving habits and reduce accidents by permitting video recorders to be installed on the windshield.
The bill currently allows devices to record video, audio, how fast and which direction the vehicle is traveling, a history of where your car has been, steering and brake performance and seat belt usage.

The devices would record in a continuous loop and would only save information if there is unusual vehicle motion or a crash. They could also be capable of transmitting the information to a central control center the moment of the accident.

Proponents say there are enough safety measures to avoid an invasion of privacy, but others call the proposal a huge overreach of government power.

"Having devices like that, I think infringes on our privacy," said Patricia Lewis. "We have less of that as it is."

The American Civil Liberties Union said they are not opposed to the bill, but have a number of issues they would like to see addressed, including making sure the video monitor is the property of the car owner and ensuring the technology has an on-and-off switch.

Sunday, August 08, 2010




Economy Heading into Hyperinflatinoary GREATER Depression

John Williams of Shadowstats pushes Helicopter Ben Bernanke aside and gives us some meaty truth to nourish our minds.

All of the below text comes from the original article.  I only added the pictures.

Cheers, Tate


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http://www.marketoracle.co.uk/Article7540.html

Economy Heading for a Systemic Collapse into Hyperinflationary Great Depression


Economics / Great Depression II

Aug 05, 2010 - 02:29 PM



By: The_Energy_Report





When Fed Chairman Ben Bernanke admits to seeing an "unusually uncertain" economy ahead, it's pretty terrifying to imagine what he's really thinking. What John Williams envisions—and he's by no means looking to the far horizon—is a systemic collapse, a hyperinflationary great depression and the cessation of normal commerce. Despite that bleak outlook, however, when the economist and editor of ShadowStats.com sat down for this exclusive Energy Report interview, he also had some good news.





The Energy Report: A few months back, John, you said, "if you strangle liquidity you always contract an economy and deliberately or not, liquidity is being strangled, resulting in sharp declines in consumer credit, commercial and industrial loans." Does this mean it would spur more economic growth if banks actually started lending?



John Williams: It sure wouldn't hurt. We're still seeing contractions in liquidity, and that's adjusted for inflation. In real terms, M3 money supply is down almost 8% year-over-year. It's the sharpest fall in the post -World War II era. It's not so much the depth of the decline in the liquidity or the duration, but the fact that the liquidity turns negative year-over-year that signals the economy turning down.



We had the signal in December of 2009 indicating intensification of the downturn, in this case, within six to nine months. We're in that timeframe now and see softening numbers. People are talking about a weaker economy. Even Mr. Bernanke has described the economy as "unusually uncertain" in terms of its outlook. Wording like that from the Fed is a pretty good indication that something's afoot.



TER: Why is M3 still contracting?



JW: Just as you noted, the banks are not lending. The money the Fed put into the system in terms of buying mortgage-backed securities from the banks and trying to help bank liquidity ended up back with the Fed as excess reserves. We have well over $1 trillion there; had the banks loaned that money in the normal stream of commerce, it would have added more than $10 trillion to the broad money supply, which otherwise is up around $14 trillion. That certainly would have had some inflationary impact if not in terms of actual business activity. You can't always get the economy to grow by pushing money into it. Sometimes it's like pushing on a string.



TER: And you say that a contracting money supply is a sure sign of trouble?



JW: When it contracts year-over-year adjusted for inflation, that's a signal for a downturn or an intensified downturn. It happens every time. Squeeze liquidity and business activity contracts.



On occasion, we've had recessions without a preceding downturn in the money supply. And sometimes, the money supply has turned positive but the economy has not followed—again, pushing on the string. Expanding money supply has led to upturns as well, so the Feds had to give it a try to stimulate the economy. But the one sure signal is the downturn. You don't get it often but it's very powerful when you do.



We're beginning to see the data break. Some unusual factors have been at work. I expect an accelerating pace of downturn in the next couple of months. The numbers will turn sharply worse. Consensus estimates are already moving in that direction and most everything will follow. Industrial production is still up but retail sales have been falling. Payroll numbers have been flat when you take out the effects of the census hiring. Those employment numbers will turn down in the next month or two, providing an important indicator of renewed economic contraction.



So we'll see how it develops, but we're at that turning point. It is happening as we speak. At the end of July, we got an estimate of the second quarter GDP, where the pace of annualized growth slowed to 2.4%. The early GDP estimates are very heavily guessed at, so most of the time you don't know if you're getting a positive or a negative number. You get a margin of error of plus or minus 3% around the early reporting. That happens also to be about average growth.



Nevertheless, on a quarter-to quarter-basis, I think we'll see GDP down again in the third quarter. With the bulk of the reported GDP in the first half due to inventory building, the stage for renewed contraction has been set. By then we'll find the consensus pretty much in the camp that we're in a double-dip recession. The popular press will describe it as a double dip, but we never had a recovery. Actually, this is just a very protracted, very deep downturn that has had a pattern of falling off a cliff, bottoming out, having a little bit of bump due to stimulus and then turning down again. Sort of shaped like the path of a novice skier going down a jump for the first time. Speeding sharply down the hill, he goes up in the air and starts spinning wildly as he tries to figure out which end is up with his skis. Then he takes a pretty bad tumble. We're beginning to spin in the air.



TER: But we've been in recession for three years now?



JW: The second leg that I'm talking about is the one now underway as we get to the middle of 2010. December 2007 is when this recession officially started, although I contend that it started earlier in 2007. At any rate, the economy plunged through 2008 and well into 2009. The numbers were pretty much bottom-bouncing during the second half of 2009. The auto deals and the homebuyer deals added a little spike to the growth pattern, but that growth was stolen from the future. It didn't create new demand.



Let me just clarify a bit. Recession, at least traditionally, was defined as two consecutive quarters of contracting real GDP growth adjusted for inflation. The National Bureau of Economic Research, the defining authority as to whether we're in a recession, will deny it, but at one time they used that general guideline as well. They've always used other numbers, too, such as employment and industrial production, trying to time the beginning or the end of a recession to a particular month. Significantly they did not call an end to this recession. They said it was too early to call, but I think they had a pretty good sense of what was going to happen. So what we're seeing now just looks like an ongoing deep recession. The next down leg is going to be particularly painful and I'm afraid particularly protracted.



TER: Can the governments pull any more stimulus levers yet this year?



JW: Oh, I think they'll try, but nothing much they can do will have anything other than short-term impact. If they write everyone a check, people go out and buy things. That would give the economy a quick boost but do nothing to change the underlying fundamentals or to correct the structural problems in this recession. Those are tied to the lack of robust growth in consumer income.



TER: So consumer income is a key factor.



JW: Absolutely. If you put in housing that's related to the consumer, that's three-quarters of the GDP. The average household is not staying ahead of inflation, and unless income grows faster than inflation, the economy won't grow faster than inflation—and that means that GDP is not growing. Income sustains consumption. When income grows, consumption grows. The only way to have sustainable long-term economic growth is to have healthy growth in income. You can buy some short-term economic growth, though, without growth in income, through debt expansion, which is what Greenspan tried.






Most of the growth we'd seen in the last decade prior to this downturn was due to debt expansion. The debt structures have pretty much been put through the wringer and consumers are not expanding credit, generally because it's not available to them. Absent debt expansion and/or significant growth in income, no way can the consumer expand personal consumption. You have to address employment, quality of jobs.



TER: You're suggesting that problems with the quality of jobs, if not the quantity, goes back to Greenspan—before the recession kicked in.



JW: Yes. A lot of high-paying jobs have been lost to offshore competition, to U.S. companies moving facilities offshore and to outsourcing offshore. That's been the primary driver of declining household income.



TER: We no longer really have the option of expanding the debt and it's doubtful that even short-term stimulus will have much impact. Looking at this next leg down against that backdrop, what projections would you make about unemployment, housing prices, GDP as we look through the end of 2010 and into '11?



JW: Unemployment will be a lot worse than most people expect. Housing will continue to suffer in terms of weak demand. But in this crazy, almost perverse circumstance, the renewed weakness to a large extent will help push us into higher inflation. Real estate tends to do better with higher inflation, but it's not going to be a happy circumstance for anyone.



The government is effectively bankrupt. Using GAAP accounting principles, the annual deficit is running in the range of $4 trillion to $5 trillion. That's beyond containment. The government can't cover it with taxes. They'd still be in deficit if they took 100% of personal income and corporate profits. They'd also still be in deficit if they cut every penny of government spending except for Social Security and Medicare. Washington lacks the will to slash its social programs severely, to change its approach to ever bigger government. The only option left going forward is for the government eventually to print the money for the obligations it cannot otherwise cover, which sets up a hyperinflation.



All of what I just described was already in place when the systemic solvency crisis broke. Before this crisis the government was effectively bankrupt. In response to the crisis, the government may have gone beyond what it had to do, but you err on the side of conservatism when you're trying to prevent a systemic collapse. That was a real risk. It still is. Irrespective of the politics of big government spending, quantitative easing, renewed bailing out of banks, whatever is involved, I'd argue that the government still will do whatever it takes to prevent a systemic collapse. That last series of actions had the effect of rapidly exploding the deficit. In just a year, we went from something under $500 billion in official reporting, on a cash basis as opposed to GAAP basis, to something close to $1.5 trillion.



TER: How big will that deficit grow in this second painful and protracted period?



JW: I can't give you a hard number, but I can tell you this. The markets came into this year on consensus projections that we'd have positive economic growth. Forecasts for the federal deficit, treasury funding, banking system solvency, etc. all were based on assumptions of recovery, of positive growth. Those assumptions presumably still underlie what I consider to be an irrational stock market.



But those projections and assumptions were wrong. We're going to have negative growth. The downturn will intensify. We're not in recovery. We have states on the brink of bankruptcy. The federal government isn't going to let California or New York or Illinois collapse. Those are threats to the systemic survival. They're also going to spend a lot more to support people on unemployment. Again, putting aside election year politics and such, the banking industry will need further bailout as solvency issues come to a head again. The federal deficit is going to balloon. It's going to blow up much worse than any formulas would give you, and Treasury funding needs will explode.



TER: Clearly you see us spiraling out of control.



JW: We've been talking about an economic recession, but we are headed for something far worse. I define a depression as a 10% peak-to-trough contraction in the economy. In terms of the broad economy, we're not down 10% in GDP yet. So while we're not formally in depression, we're certainly seeing it in a number of indicators and I think we'll be in a depression, with GDP down 10%, in the near future.



A contraction greater than 25% peak-to-trough puts you in a great depression. That is what I envision, but we'll be taken there by hyperinflation and a resultant cessation of normal commerce.



TER: Hyperinflation means different things to different people. How do you define it?



JW: My definition has been and will remain very simple. When the largest-denomination note in circulation—the $100 bill in the case of the U.S. dollar—has the same value as toilet paper, you have a hyperinflation. You saw that in the Weimar Republic. People papered their walls with money.



TER: I think you've said that the only reason that Zimbabwe's economy survived is because they started using dollars as black market currency.



JW: But you don't have anything like that in the United States as a backup. We're going to have a much rougher time in the U.S., of all places, than they had in Zimbabwe. Zimbabwe was able to function because people could exchange the local currency into dollars, and then buy things with the dollars, so the economy continued to function. Without some kind of a backup system, as the currency becomes worthless you'll see disruptions to key supply chains. When people don't have food, you end up in very dangerous circumstances.



TER: Do you see any real potential for precious metals or another currency as a backup?



JW: Well, yes. I think they will become a backup fairly quickly, but we don't have any widely developed black market for another currency at this point because the dollar remains the world's reserve currency. All sorts of things may develop that we don't anticipate. What will be used to cover for the dollar? Gold and silver? The precious metals are limited in supply and not widely held by the population in general. Hard currency from Canada or Australia? That wouldn't be in wide circulation, at least not early on. I think a barter system is where it will go until the currency system is stabilized, but the currency system can't stabilize until the government's fiscal house is in order.



There's no sense in setting up a currency on a gold standard if you can't live within your means, because you'd just end up going through successive devaluations against gold. So whatever's done to set up a new currency system will have to be in general conjunction with the overhaul of the government's fiscal condition. But in the interim, something of a barter system would evolve. Even that, though, is something that may take six months to get stabilized.



TER: It's hard to imagine.



JW: In the Weimar Republic, you could go into a fine restaurant one evening and enjoy its most expensive bottle of wine with a nice dinner. You'd probably negotiate the price before you sat down, because the price would be higher by the time you finished dinner. By the next morning the empty wine bottle would be worth more as scrap glass than it had been worth as an expensive bottle of wine the night before. That's how rapidly things change in a hyperinflation.



But we have a circumstance that did not exist in the Weimar Republic. Our society is heavily dependent on electronic cash. Say you have a credit card with a $10,000 limit. In hyperinflation, that $10,000 might be enough to buy you a loaf of bread.



TER: There's not even enough physical cash running around anywhere in the United States that actually represents what goes back and forth electronically. If you can't use your debit card, how do you pay for your coffee at Starbucks? And how will companies and banks adjust?



JW: You're not going to have electronic payments that are in-barter equivalent that I can foresee. That would be a fairly sophisticated system and the needs are going to be immediate. When hyperinflation starts to break, it can unfold in a matter of weeks, months. You'll need to be able to handle things rapidly. Frankly I think the system will tend to break down. It's not a happy circumstance. How will a small company get its goods to people? There might be blackouts. Who's going to get the fuel to the power plants?



TER: And to the gas stations for the cars for people who still have jobs?



JW: Yup. It will get very difficult. Society won't run as we're used to it. People will find a way, but it's going to take a little while for that to stabilize.



In an electronic society it's going to take some creative thinking by businesses. I'm sure some people will figure out some ways to accommodate these changes, but it's going to be a painful, costly process that won't be conducive to normal revenue flows—at least not as measured in inflation-adjusted dollars.



TER: I'm almost afraid to ask, but how will the stock markets fare when the system breaks down?



JW: Stocks generally tend to reflect inflation, since revenues and profits are in inflated dollars. If you look at stock prices adjusted for inflation, you can have a bear market as well as a bull market. But these are not going to be good economic times. So I think we're going to have a real bad stock market adjusted for inflation. I'd stay out of stocks in the U.S. With the U.S. markets in serious trouble, the rest of the world probably will see lower stock prices as well, but they're not going to have the hyperinflation.



TER: What will plunge us into this abyss? And when?



JW: I think the odds are extremely high that we'll see it break within the next year. I would put it six months to a year, outside. We're getting extraordinary protestations from other central banks about the U.S. finances, its solvency, risk of the dollar. Before the current crisis you never would have heard any central banker making such comments. As this breaks, it's going to be obvious that the U.S. is moving to debase its dollar. It'll have no option to do otherwise. I would fully expect some foreign holders looking to dump the Treasuries. With the dollar plunging, the Treasury won't be able to get the funding that it needs from a practical standpoint in the open markets.



The Fed will come in to salvage that situation, becoming the lender of last resort to the Treasury—literally monetizing the Treasury debt. The Fed might have a couple different ways to address the dollar situation, from raising interest rates to direct intervention, slapping on currency controls. I can't tell you exactly how it's going to go. But you'll have an environment that's effectively creating a perfect storm for the U.S. dollar. I hate to use the term but it's a good one.



Heavy dollar selling will be exceptionally inflationary. Oil prices will spike in response to the weakness in the dollar. Oil is a primary commodity that drives consumer inflation; that's how you can have inflation in a recession. The traditional wisdom is that strong demand against limited supply causes inflation, but you can also have inflation due to commodity price distortions, which is what we had back in '73 and what we've seen over the last year or so.



Most of the recent volatility in the CPI has been due to swings in oil prices, which have been directly tied to swings in the value of the U.S. dollar. About $7 trillion in liquid dollar assets that overhang the market outside the U.S. could be dumped overnight. We're going to be seeing a lot of pressure to accept that back in our system, and it will be very inflationary. The Fed's options will be limited, but again I'd expect them to try and maintain systemic solvency.



So what we end up with is a circumstance where the dollar is under heavy selling pressure. People will feel the squeeze on their inflation-adjusted income with much higher prices for gasoline and fuel oil. The route to the monetary inflation will take hold from the Fed's direct monetization of Treasury debt. As we discussed earlier, the mortgage-backed securities taken off the bank balance sheets have generally gone to excess reserves and are sitting with the Fed. That hasn't been inflationary so far because it hasn't gone into the money supply.



TER: How do we get through this, John?



JW: If there's no solution for the system—and I don't see one; I think it just has to run its course—there still is good news. We as individuals have ways of protecting ourselves, our families, our friends, our businesses—whatever is important to us. To do that we have to preserve the value of our wealth and assets in order to ride out the storm. As terrible as it will be, it will end. A time will come when things become self-righting and the people who have been able to survive will be able to do some extraordinary things.



TER: And what do you advocate in terms of individuals preserving wealth and assets?



JW: Hold some gold, silver, precious metals. I'm talking physical possession. Preferably coins because coins, sovereign coins, are recognized as such. They don't have liquidity issues. Having some assets outside the U.S., and certainly some assets outside the U.S. dollar, is a good thing. I like the Australian dollar, the Canadian dollar, the Swiss franc in particular. They won't suffer the same hyperinflation in Australia, Canada and Switzerland as we do in the U.S., so those currencies will tend to act as ways of preserving wealth. Over time real estate is a traditional store of wealth, but it's not portable and sometimes it's not liquid.



If I'm right about what's going to unfold, a significant shift in government is possible; suppose the government moved so far to the left where maybe private ownership of property was not allowed. Having a lot of assets in real estate under those circumstances might not be so good. I think generally real estate is a good bet but you also have to consider the risks. Use common sense. Think through different things that could happen.



Most importantly, build up a store of supplies, more than you would normally consume over a couple of months, particularly food and water, canned goods. Having those goods can save your life in a number of ways. You'd have food to eat, and if you have extra you can use it to barter. I met a guy who'd been through hyperinflation and found for purposes of the barter system those airline-size bottles of high-quality scotch proved quite valuable. Buy things that you would otherwise consume and rotate your inventory. Don't go out buying all sorts of things you'll never use. Keep what makes sense to you and your circumstances. Make sure you have things that are stable. Not too perishable.



I had a professor at Dartmouth who'd lived for a while in a hyperinflationary environment that devolved into a barter system. He told a story about how his father had traded his shirt for a can of sardines. He decided to eat the sardines, which was a mistake because they had gone bad. But nonetheless that can of sardines had taken on monetary value. So when you look to trade things you want to be careful what you're doing.



TER: How long does a hyperinflation environment typically last?



JW: I guess it depends on how comfortable people can be in the environment. It went on for a couple of years in Zimbabwe, but they were able to function. Here, in a system that can't function well with it, it's not going to last too long. You won't have a usable currency. It's likely a barter system would evolve, and if it became stable and functioned well, it could last for a while. People don't want to starve. If that's a real risk, they will take action to protect themselves. We may have rioting in the streets. The government might declare martial law. If people can live comfortably with hyperinflation it would tend to linger. The more difficult things are, the faster people will move to remedy it.



TER: Well on that note is there anything that we can do as voting citizens to turn this around? Or minimize the impact?



JW: If things break slowly enough that people can see what's coming and respond, tremendous change may result from what comes out of elections. Incumbents are going to have a rough time. The circumstance is open for the development of a major third party that could knock out either the Republicans or the Democrats as a second party. Over time, pocketbook issues tend to dominate elections. If things are going well, if people are prosperous, they ignore the corruption in political circles as being just part of the system. But when they're hurting, they turn out the bastards and look to put in some change. We sure need change. I can tell you that. It's not just one party. Both major parties have an equal share of guilt in what's unfolding. . .whichever one is in power keeps making it worse.



TER: Not very happy thoughts, John, but we appreciate your insights and look forward to talking with you again as we move through these trying times.



Walter J. "John" Williams, is a Baby Boomer who has been a private consulting economist and a specialist in government economic reporting for more than 25 years, working with individuals and Fortune 500 companies alike. He received his AB in economics, ***** laude, from Dartmouth College in 1971, and earned his MBA from Dartmouth's Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. John, whose early work prompted him to study economic reporting and interview key government officials involved in the process, also surveyed business economists for their thinking about the quality of government statistics. What he learned led to front page stories in the New York Times and Investor's Business Daily, considerable coverage in the broadcast media and a joint meeting with representatives of all the government's statistical agencies. Despite a number of changes to the system since those days, he says that government reporting has deteriorated sharply in the last decade or so. On the bright side, it keeps John and his economic consultancy, Shadow Government Statistics, in the limelight. His analyses and commentaries have been featured widely in the popular domestic and international media.



Want to read more exclusive Energy Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Expert Insights page.

DISCLOSURE:

1) Brian Sylvester and Karen Roche of The Energy Report conducted this interview. They personally and/or their families own shares of the companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Energy Report: None.

3) Greg Gordon: See Morgan Stanley disclosure that follows.*



*The information and opinions in Morgan Stanley Research were prepared by Morgan Stanley & Co. Incorporated, and/or Morgan Stanley C.T.V.M. S.A. As used in this disclosure section, "Morgan Stanley" includes Morgan Stanley & Co. Incorporated, Morgan Stanley C.T.V.M. S.A. and their affiliates as necessary.



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Marc Faber shows Robert Prechter a thing or two about global economic analysis


In criticism of Precter's Simpleton Analyses.


Prechter is a technical analyst. In other words, he uses past statistical trends to project a future prediction. This is fine when fundamentals remain constant. But fundamentals are anything but constant.
Prechter's genius is to see the future using the rear view mirror. If we are driving in a mostly straight line, this works fine and is often better than nothing when you can't simply see the future through the front window.


 
But in our times of total flux, re-vamping, tumultuous and upside-down spinning fundamentals, the likes of Prechter are rendering themselves into fools of the highest order.
Here is Prechter's biggest mistake made simple - He thinks that the dollar is a constant. All his models hold blind faith in the value of the dollar. Likewise, he thinks that energy and mineral availability will continue along as if the earth has unlimited capacity to feed forever growth projections moving forward. Although he didn't say this explicitly, his charting formulas imply this knuckleheaded way of thinking.
Who is he kidding?






To date, we have seen no less than 10,000 baseless fiat currencies die the value death in world history. And among those 10,000, guess how many held value over time? That's right - ZERO! Prechter is a fool to think the dollar is going to magically hover forever holding value as the Fed prints trillions from thin air to bail out the bankers.

Guys like Faber are are on the hard-core fundamentals that drive economies in flux. Prechter's simpleton analysis is useless in these times.


Cheers, Tate Ulsaker



======================

 
Faber: Prechter's Right on Dow 1,000 but Dollar Will Be Worthless


Friday, 06 Aug 2010 08:12 AM


Article Font Size


By: Julie Crawshaw


"The Gloom, Boom and Doom Report" publisher Marc Faber says analyst Robert Prechter is right about a lot of things, but a rising dollar isn't one of them.


Prechter, who forecasts markets using Elliot Waves, Fibonacci numbers and socioeconomic trends, says the Dow could hit 1,000.


"Prechter is right when says that when manias come to an end, prices tend to retreat to where the mania started,” Faber told CNBC. “So from this point of view, a Dow Jones at 1,000 should not be excluded."


However, Faber takes issue with Prechter's view that surviving "dollars and dollar credits, representing the denominator of the DJIA, will rise in value, and the Dow — along with everything else used as money — will fall in dollar price."


"The question here is really, with the Dow below 1,000, what kind of dollars — and especially what kind of dollar credits — will survive," Faber said.


"It is safe to assume that almost all banks in the world, and almost all governments, will be bust."


Faber concurs with Prechter that a complete credit collapse is in the offing, but differs from him on when this will happen.

"It is likely that if the Dow where to fall by more than 20 percent from the present level there would be further massive fiscal and monetary stimulus packages — not just in the U.S. but worldwide," says Faber.


"These economic policy measures would likely fail to boost economic activity in the U.S. but could support asset markets.”


Former Federal Reserve Chairman Alan Greenspan said the slowing economic recovery in the U.S. feels like a “quasi-recession” and the economy might contract again if home prices decline, Bloomberg reports.
“We’re in a pause in a recovery, a modest recovery, but a pause in the modest recovery feels like a quasi-recession,” Greenspan said in an interview on NBC’s “Meet the Press.”


***

Friday, July 09, 2010

Proof of Coming Economic Storm

Proof of Coming Economic Storm
 
A keyword search on Google News just this minute retrieved 5,917 results, indicating an active contemporary economic discussion on the issue as it relates to our current trends away from the boom, towards the bust.
 
Click on the text to see source articles where the text was found.
 
I see storm clouds on the horizon.  Economic storms are typically followed by social and political ones.
 
Cheers,
Tate
 
 

Thursday, July 08, 2010

Asymmetrical Capital Markets is another form of  profitable terrorism for the United States of America today.
Interesting to read in the below article about how national security and capital markets are being considered in terms of asymmetrical warfare.  And who are the capital markets terrorists then if it isn't our own SEC and COT and COMEX and CBOT, etc... who are enabling the likes of Goldman Sachs and JP Morgan to make and break markets that they both invent and then corrupt and then short sale?  The pot is calling the kettle black when the US is worried about capital markets based asymmetrical warfare.  I would guess that their interest is purely to keep out competitors.  It is like the drug trade... The DEA and FBI and CIA arrange the arrest of all competing drug lords who don't pay their cut while US military planes fly thousands of tons of the stuff around every year, even getting caught by the media and no investigation.  Just google that for loads of credible proof in the mainstream media and from our own congressmen, and insider whistle blowers etc... .  

Back to the subject of "capital markets terrorism", apparently loads of consultants are rising to the increased demand by various tentacles within US national security interests for dominating / playing upon / raking in obscene profits through market manipulations under the guise of "national security".  At least that is my take on all this.  As the article suggests below, these guys are involved in war gaming scenarios where for example in the below, Russia starts hypothetically trading oil in gold denominated rubbles as a strategy for taking down the dollar.  I say more power to the Russians if they pull off a gold alternative to the dollar and force all energy sales into that currency.  People who trade with Russia would then increasingly keep more and more of their available currency in that gold rouble which isn't hyperinflating and then Iran would be emboldened to follow suit, then China.  That would vacuum the demand for the dollar pretty quickly.  More power to the Russkies if they manage to destroy the dollar with a commodities based currency, because we all benefit world-wide when the private money printer class gets it in the neck. 
Cheers,
Tate Ulsaker
===========
Chris Whalen interviewed Jim Rickards for his IRA Newsletter. The discussion dealt with the fragility of the US dollar, and the possibility of the creation of a gold backed currency that could topple the US dollar as the world's reserve currency. Here are some snippets from that interview:
The IRA: Thank you for taking the time to talk with us. We previewed this interview yesterday on CNBC in a discussion with Ian Bremmer of Eurasia Group and Nouriel Roubini. We wanted to talk to you today about the global economy and the dollar. You may have seen our reference last week ("Country Risk: The World According to Robert Rubin (Updated)", June 29, 2010) to the new borrowing rights that the International Monetary Fund has created at the behest of the inflationist tendency in the White House.

Rickards: My day job is working with funds and banks, but by night I focus on the geopolitical implications of the global macroeconomic outlook....The people who can speak to a three-star general about asymmetrical warfare and then turn around and speak to a swap counterparty about collateral issues are few and far between. At Omnis we are finding more and more call for just this type of expertise. When credit default swaps are taking down Greece and you realize that Greece is a NATO ally, the reason for interest in financials by the security community is obvious.

The IRA: As we have said before, we note an increased interest in financial markets by members of the security community. If you go through the contract awards for SEC and the bank regulatory agencies you will see some names that are most often seen in the defense community.

Rickards: ....At the same time the national security community needs to understand capital markets because the security of nations is being undermined by fiscal policies and credit default swaps as we've seen in Greece. My firm is comfortable processing information in both directions; helping the national security community understand markets and helping capital markets participants understand geopolitics.

The IRA: ....But many of the "issues" facing regulators in better attacking problems in the financial markets involve process issues, not decision about the desired result. When our political class becomes so dissolute that their behavior threatens national security, it raises some issues that Americans are not used to dealing with.

Rickards: Agreed. To give you a sense of how much interest there is in financial matters in the national security community, I recently headed a panel at a program sponsored by the Johns Hopkins Applied Physics Laboratory.....The topic of my paper was a hypothetical press release issued by the Russian central bank announcing the creation of a new, gold-back currency. In the hypothetical, the Russians also announce that exports of energy and other natural resources will have to be made in this new "gold ruble." The Russians would become a market maker in gold and effectively control the marginal price of gold transactions. This is basically a plan for taking down the dollar.

The IRA: It is an entirely plausible scenario. The Russians could establish a "gold" price for oil and then the paper currencies would trade at a discount. Thanks to the lack of leadership in Washington by either party, the U.S. is quite vulnerable to the creation of a gold-backed or commodity-backed currency.....As a senior Fed official told us, look at the period since the 1990s. Count how many quarters we have not had either fiscal stimulus or accommodative interest rates by the Fed to maintain the illusion of growth.

Rickards: Precisely. But what is interesting is that a couple of days ago, we saw the arrest of this seemingly hapless Russian spy gang....one subject that got a lot of reaction from Moscow was gold. Whatever these people were collecting for the Russians, the information about gold was of great interest.....The paper I did is getting written up all over the web. But the fact that the information on gold touched a nerve in Moscow confirms my view about their intentions toward the dollar.

The IRA: Well it is so obvious. We interviewed David Kotok of Cumberland Advisers last month, some of which will appear in Chris Whalen's upcoming book. Kotok just published a bullish book on Europe, Invest in Europe Now, and Kotok is even more bullish today. As he puts it, the Greeks gave the Germans a 20% currency devaluation. Kotok thinks that the crisis in Europe will eventually force the EU to fully integrate. But we speak to insiders with precisely the opposite view, who say the Europeans do not have a grip on the financial problems. Does the EU emerge stronger from the crisis?

Rickards: I agree with the view that says the EU gets stronger. I keep reminding people that the European Central Bank and the 16 members of the monetary system have over 10,000 tons of gold. They have more gold that the U.S. Treasury. We have just over 8,100 tons ourselves. If the EU were to go to even a partial reserve coverage with gold, say 20% backing, it would put Europe at an enormous advantage. They have enough gold today to set a target and make a two-way market in gold. I think that the first major currency bloc that goes to gold will dominate the financial world because it will become the only currency anybody will want.....

The IRA: This is the idiocy of the U.S. position. We have set ourselves up as an easy target for our enemies. It is astounding that the Chinese have not been more aggressive in selling dollars. Maybe they are going to manage our downfall gently.

Rickards: ....The Japanese and Chinese are both influenced by Zen which, in Western jargon, is really about optionality.....Instead of committing yourself to a binary decision, you create a fan of probabilities and look for your openings. So in that sense, if you think of it in options space, the Chinese are probably content to play the American paper game with the dollar, but all the while preparing for the day when the dollar collapses completely.

The IRA: Americans are convinced that it cannot happen here, the greatest nation on earth. Reminds us of France after WWI. Same degree of self-delusion. And no reaction by U.S. officials to the Chinese and Russia gold purchases?

Rickards: The Russians do not hide their purchases of gold.....The Chinese have been more surreptitious in their purchases but even they have announced the reserves doubled in recent years....they are buying from internal, captive producers. And they pay below market prices because even paying $800 per ounce still gives their miners a tremendous profit. Between 2004 and 2008, China almost doubled the gold stocks of Peoples Bank of China, but they bought it through other state agencies to keep it off their books.

To read the entire interview with Jim Rickards which is contained in the piece Paper Gold vs the Dollar? CLICK HERE.



To hear the recent King World News interview with Jim Rickards CLICK HERE.



To hear the recent King World News interview with Chris Whalen CLICK HERE.



Eric King
KingWorldNews.com
To return to BLOG click here.

Tuesday, July 06, 2010

We Are Entering Another Great Depression - UK Telegraph

Here it is, another mainstream news article, the UK Telegraph says we are entering another Great Depression.

 

The big one that we have been watching unfold for 10-years looks to be very close to us again.

 

Will they print more trillions to prolong a few more months (this is called “stimulus”)?

 

Or will the correction actually come in full force this time?

 

The debt is the gauge to follow.  Unprecedented historic never-before seen public /private / corporate debts need to be corrected / cleansed / brought back in line with reality.

 

For the short term, being in precious metals and out of paper is an excellent position to be in when this happens.

 

For the long term, being as self reliant as possible when it comes to food, energy, security is also an excellent position of strength as systems of all kind become unreliable.

 

Cheers,

Tate

 

 

 

=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-

 

 

Telegraph.co.uk

 

With the US trapped in depression, this really is starting to feel like 1932

The US workforce shrank by 652,000 in June, one of the sharpest contractions ever. The rate of hourly earnings fell 0.1pc. Wages are flirting with deflation.

 

By Ambrose Evans-Pritchard
Published: 9:33PM BST 04 Jul 2010

135 Comments

People queue for a job fair in New York

People queue for a job fair in New York. The share of the US working-age population with jobs in June fell from 58.7pc to 58.5pc. The ratio was 63pc three years ago. Photo: EPA

"The economy is still in the gravitational pull of the Great Recession," said Robert Reich, former US labour secretary. "All the booster rockets for getting us beyond it are failing."

 

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·         Buy-to-let: rents rise for first time in three months

·         Eurozone falls into deflation as M3 money supply shrinks

·         Wages fall at fastest rate since records began

·         Deflation: workers face more pay freezes as prices fall at sharpest rate since 1933

Ambrose Evans-Pritchard: Comment

"Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing," he said.

California is tightening faster than Greece. State workers have seen a 14pc fall in earnings this year due to forced furloughs. Governor Arnold Schwarzenegger is cutting pay for 200,000 state workers to the minimum wage of $7.25 an hour to cover his $19bn (£15bn) deficit.

Can Illinois be far behind? The state has a deficit of $12bn and is $5bn in arrears to schools, nursing homes, child care centres, and prisons. "It is getting worse every single day," said state comptroller Daniel Hynes. "We are not paying bills for absolutely essential services. That is obscene."

Roughly a million Americans have dropped out of the jobs market altogether over the past two months. That is the only reason why the headline unemployment rate is not exploding to a post-war high.

Let us be honest. The US is still trapped in depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP.

The share of the US working-age population with jobs in June actually fell from 58.7pc to 58.5pc. This is the real stress indicator. The ratio was 63pc three years ago. Eight million jobs have been lost.

The average time needed to find a job has risen to a record 35.2 weeks. Nothing like this has been seen before in the post-war era. Jeff Weninger, of Harris Private Bank, said this compares with a peak of 21.2 weeks in the Volcker recession of the early 1980s.

"Legions of individuals have been left with stale skills, and little prospect of finding meaningful work, and benefits that are being exhausted. By our math the crop of people who are unemployed but not receiving a check amounts to 9.2m."

Republicans on Capitol Hill are filibustering a bill to extend the dole for up to 1.2m jobless facing an imminent cut-off. Dean Heller from Vermont called them "hobos". This really is starting to feel like 1932.

Washington's fiscal stimulus is draining away. It peaked in the first quarter, yet even then the economy eked out a growth rate of just 2.7pc. This compares with 5.1pc, 9.3pc, 8.1pc and 8.5pc in the four quarters coming off recession in the early 1980s.

The housing market is already crumbling as government props are pulled away. The expiry of homebuyers' tax credit led to a 30pc fall in the number of buyers signing contracts in May. "It is cataclysmic," said David Bloom from HSBC.

Federal tax rises are automatically baked into the pie. The Congressional Budget Office said fiscal policy will swing from
a net +2pc of GDP to -2pc by late 2011. The states and counties may have to cut as much as $180bn.

Investors are starting to chew over the awful possibility that America's recovery will stall just as Asia hits the buffers. China's manufacturing index has been falling since January, with a downward lurch in June to 50.4, just above the break-even line of 50. Momentum seems to be flagging everywhere, whether in Australian building permits, Turkish exports, or Japanese industrial output.

On Friday, Jacques Cailloux from RBS put out a "double-dip alert" for Europe. "The risk is rising fast. Absent an effective policy intervention to tackle the debt crisis on the periphery over coming months, the European economy will double dip in 2011," he said.

It is obvious what that policy should be for Europe, America, and Japan. If budgets are to shrink in an orderly fashion over several years – as they must, to avoid sovereign debt spirals – then central banks will have to cushion the blow keeping monetary policy ultra-loose for as long it takes.

The Fed is already eyeing the printing press again. "It's appropriate to think about what we would do under a deflationary scenario," said Dennis Lockhart for the Atlanta Fed. His colleague Kevin Warsh said the pros and cons of purchasing more bonds should be subject to "strict scrutiny", a comment I took as confirmation that the Fed Board is arguing internally about QE2.

Perhaps naively, I still think central banks have the tools to head off disaster. The question is whether they will do so fast enough, or even whether they wish to resist the chorus of 1930s liquidation taking charge of the debate. Last week the Bank for International Settlements called for combined fiscal and monetary tightening, lending its great authority to the forces of debt-deflation and mass unemployment. If even the BIS has lost the plot, God help us.

 

ArkBuilders

Monitoring Crashes / Finding Soul-utions