Sunday, December 20, 2009

Mish on America's recession diet

Mish's Global Economic Trend Analysis: Cereal ... It's What's For Dinner:
"Rising popularity of cereal among those looking for a cheap meal combined with plunging ingredient costs to boost the second-quarter profit of Cheerios maker General Mills Inc. 50 percent."

Thursday, December 17, 2009

Newspeak mot du jour: nothing is more expected than the unexpected

The fresh thin lustre on last week's rosy unemployment numbers has hardly set when today's news sober us up with an "unexpected rise in unemplyment". Oh la la, the unexpected! Now who would have thought!

Running "unexpected" in Google Trends, we notice an, um, unexpected trend in the media, with many gems over the last year announcing unexpected February new home sales, Retail sales fall unexpectedly in March, Retail sales dip unexpectedly, jobless claims rise (in August), Consumer confidence unexpectedly falls in Sept., New home sales unexpectedly tumble (October) , and the more recent New jobless claims fall unexpectedly to 457K.

Things were never so unexpected!

This picture is worth a thousand words, assuming each of these words has more value than the inflated "unexpected" (the media mentions of the word are on the lower pane):

Monday, December 14, 2009

It's NEVER the right time to discuss top sovereign-ratings changes, and pass the borek please

Moody's: Still too soon to discuss top sovereign-ratings changes - MarketWatch:
"While several Aaa-rated countries have 'lost altitude' within their current ratings category, many countries lower down the ratings ladder have shown better-than-expected resilience to the economic crisis. In fact, Chile, Brazil, China, Hong Kong, Peru, Turkey, Indonesia have all received ratings upgrades during 2009."
Oh, so it's like credit rating inflation? Everybody else gets an upgrade instead of downgrading the elephant in the room?

Turkey is a nice one. Wikipedia tells us Turkey has taken a hit like everybody else - budget deficit swelling 13X and GDP shrinking by a record 13.8%. The Economist talked about Turkey's unemployment as "putting Turkey among the economies worst hit by the global recession." The IMF expects Turkish economy to shrink 5% in 2009.

But - but - not a single Turkish bank has gone under. OMG, here, take an upgrade for that, you resilient you!

No offense, but do you suppose there ever will be a proper time to discuss downgrades? It's just such an inappropriate topic.

Saturday, December 12, 2009

Obama vs. Bush - Evil still Exists vs. Evil does Exist

Tuesday, December 8, 2009

Kali Yuga Here We Come

oftwominds quotes BusinessWeek (Dec. 16), in an interesting commentary:
"Almost half (46%) of 2,148 consumers surveyed recently said they weren't confident they could come up with $2,000 within a month in a crisis--from savings, family, friends, credit cards or other sources.

Even among those earning $100,000 to $149,000 a year. almost 25% doubted they could raise it, according to the survey conducted by research firm TNS with academics from Harvard Business School and Dartmouth College.

'We wanted to know if people could fix a broken car or furnace,' says Harvard finance professor Peter Tufano, who adds that most studies he has seen measure 'how much cash people have... not how much they can access.'

The survey results surprised him. 'The ability to cope with emergencies is much less strong than we might have thought.'"

Monday, November 30, 2009

"When the proles do appear brandishing pitchforks at the doors of Park Avenue"

Alice Schroeder, columnist, a former managing director at Morgan Stanley, talks about Goldman execs getting pistol permits. Interesting column for other reasons too - a use of the curtain metaphore (is it time for a Wizard of Oz remake?) and of the Orwellian/Bolshevik Proles. Talk about pitchfork-brandishing mobs of proles - on Bloomberg? Indeed, so many things have come to pass.

Arming Goldman With Pistols Against Public (Alice Schroeder on
"He tried to buy a house elsewhere without attracting attention as the financial crisis unfolded in 2007, a move that was foiled by the New York Post. Then, Blankfein got permission from the local authorities to install a security gate at his house two months before Bear Stearns Cos. collapsed.

This is the kind of foresight that Goldman Sachs is justly famous for. Blankfein somehow anticipated the persecution complex his fellow bankers would soon suffer. Surely, though, this man who can afford to surround himself with a private army of security guards isn’t sleeping with the key to a gun safe under his pillow. The thought is just too bizarre to be true.

So maybe other senior people at Goldman Sachs have gone out and bought guns, and they know something. But what?"

Nassim Nicholas Taleb Withdraws from Wordly Life

When I grow up, I want to be just like Nassim Taleb - The renounciate trader. I love this guy. I get this guy. I hope I get his trades.

Nassim Nicholas Taleb: Good Bye!:
"No news, no press, no Davos, no suit-and-tie fraudsters, no fools. I need to withdraw as immediately as possible into the Platonic quiet of my library, work on my next book, find solace in science and philosophy, and mull the next step. I will also structure trades with my Universa friends to bet on the next mistake by Bernanke, Summers, and Geithner. I will only (briefly) emerge from my hiatus when the publishers force me to do so upon the publication of the paperback edition of The Black Swan"

Friday, November 27, 2009

Dude, Where's My Ambien?

Two weeks ago Harvard professor Elizabeth Warren, who's been heading up the congressional panel overseeing bailout money spending was interviewed on PBS. In her answer to the first question, Warren pointed out that while the catastrophe was stopped, the underlying Wall Street regulations aren't changing. In her words,
"nobody goes to bed now and worried that, when we wake up tomorrow morning—that—that markets will have disappeared"
This was aired on Friday, Nov. 13. Two weeks later we had the Dubai scare. The timing, the geo-location (western banks financing the middle east) and market segment (commercial real estate) of the Dubai event match the coordinates in recent warnings by Roubini and Prechter. Also, as one commentator has mentioned, large construction projects are where economies go to die. Commentators were enlisted to scribe duty out of their holiday vacations. Can you blame anyone for losing sleep?

No, markets have not disappeared. But two weeks after her worthy interview aired, I'll bet an Emirate Dinar Ms. Warren would have rephrased her "Not Losing Sleep Over Disappearing Markets" if she was to be interviewed today.

This is how much things have shifted in two weeks.

Sunday, November 22, 2009

Upadana's Role in the Mortgage Crisis

An article in LA Times covers research on the effect of moral beliefs and emotional background on defaulting on a home loan.
"When push comes to shoving your loved ones out the door, Bob Hunt of Keller Williams O.C. Coastal Realty in San Clemente says the moral duty to protect your family outweighs the moral duty to repay the loan.

'Promise keeping is not the highest moral value,' said Hunt, who before his real estate career taught ethics and logic at the University of Redlands. 'If I promised to lend you my gun and you are now in a clearly dangerous psychotic stage, breaking my promise would be the right thing to do, not the wrong thing.'"
Another interesting aspect that comes up is the opportunity to measure attachment, a loaded term in the Hindu tradition and one of the causes of human suffering in Buddhism (Wikipedia on Upadana):
There are some interesting variables. For example, although the biggest determinant is equity shortfall, another major consideration is people's attachment to their homes, with folks who bought more than five years ago far less likely to default.
Interesting hat, thanks to the housing crisis, attachment and the suffering it causes can be so scientifically measured.

Friday, November 20, 2009

Who John Paulson Consulted With before Going for Gold

John Paulson - Wikipedia, the free encyclopedia:
"Paulson & Co., Inc. had assets under management (as of June 1, 2007) of $12.5 billion (95% from institutions), which leapt to $36 billion as of November 2008. Under his direction, Paulson & Co has capitalized on the problems in the foreclosure and mortgage backed securities (MBS) markets. In 2008 he decided to start a new fund that would capitalize on Wall Street's capital problems by lending money to investment banks and other hedge funds currently feeling the pressure of the more than $345 billion of write downs resulting from under-performing assets linked to the housing market. On May 15, 2008, Paulson & Co., which bought 50 million shares of Yahoo stock during the first quarter of 2008, said it is supporting Carl Icahn on a proxy fight to replace Yahoo's board. In early 2008, the firm hired former Federal Reserve Chairman Alan Greenspan."

How To Survive The Coming Global Economic Collapse

How To Survive The Coming Global Economic Collapse: Not just for the Argentina text... it's great, and reminded me of my very own hyperinflation traumas. But the image of Mad Max in the article above was even better. I was waiting for these images to come up. Ready for Bartertown?

Now on CNBC: Gold as money

I wouldn't waste a keyboard click on quoting once again an analyst that values gold at $x000 - if it came from an alarmist newsletter promo. But tracking the movement of gold as a trend in public consciousness, the source for this broadcast is interesting:

CNBC Stock Blog — Gold's Money Value is $4,000-$11,000: Strategist — Market News - CNBC Stock Blog -
"Rickards said he’s been bullish on gold for a while and said he sees gold rising to $2,000 an ounce “without breaking a sweat” in 2010. “That’s on fundamentals without treating it as money,” he added."

Thursday, November 19, 2009

U.S. Mint to Resume Selling Some Gold Coins
"EW YORK—Demand for gold coins and bars, already strong as the price of gold sets records, could rise as the U.S. Mint is set to resume selling certain types of gold coins Dec. 3.

Last year, the Mint had to halt sales of half-, quarter- and tenth-ounce coins because of a shortage of blank coins. It now has enough supply to do so.

'The demand is strong, but we also need to have the blanks to be able to do it,' spokesman Michael White said."

Wednesday, November 18, 2009

Obama joins Roubini in "W" recession scenario

It took months (and some Chinese wisdom) for Roubini's "W" model, an apocalyptic prophecy, to travel the international synapses from the lunatic fringe of NY University professors, through Wall street columnists, to The Man of Hope himself.

Obama: Too much debt could fuel double-dip recession (Reuters):
"BEIJING, Nov 18 (Reuters) - President Barack Obama gave his sternest warning yet about the need to contain rising U.S. deficits, saying on Wednesday that if government debt were to pile up too much, it could lead to a double-dip recession."
Well, can we double-dip? Yes We Can!

Oh, the Unexpected (Newspeak dept.)

Housing Starts in U.S. Unexpectedly Plunge 11% (Update2) -
"Nov. 18 (Bloomberg) -- Builders in October unexpectedly broke ground on fewer U.S. houses as the sales outlook darkened with the looming expiration of a government tax credit and mounting joblessness."
Who could have known? The future not ours to see.

Tuesday, November 17, 2009


Every day, analysts compare this crisis to others. This is a cycle that presumably affects the economy. Analysts wax poetic comparing cycles to the seasons of the year, waves of the sea, what have you.

On one level, it's so true. On another, waxing poetic about repeating waves and the cosmic order is a poor excuse for addiction, especially after having been repeatedly faced with the dire consequences.
"It's a law of nature", mumbled the drunk, laying his head on a rock under the bridge. "What goes up, must come down".

Monday, November 16, 2009

Investing in US CDS: $2.5K buys $1 Million

America Is An Over Indebted Profligate Spoiled Nation In Decline: Tech Ticker, Yahoo! Finance:
"The U.S., at least, won't actually default, says Ortel, but as our situation worsens, the value of credit default swaps (insurance against default) should rise. So Ortel continues to recommend CDSs to his clients.

5-year credit default swaps on U.S. soverign debt currently trade for about 25 basis points (which means it costs $25K per $10M of notional value). How does that compare to other countries or states?

* Japan = 72 bps
* United Kingdom = 56 bps
* Germany = 21 bps
* California = 177 bps
* New York = 85 bps"

Ernie Harburg: Yes, The Wizard of Oz is About The Gold Standard

"What do you make of it?" asked my radical, sweetly gullible friend many years ago, emailing me "Smithy"'s wonderful "Wizards of Money" over a slow modem. As I turned my critical powers on the anonymous collection of recordings, I was bewildered. The preposterous ideas about money creation, spoken by an anonymous voice, sounded like a broadcast from the lunatic fringe. It didn't boost their credibility that early on, they advanced the claim that the Wizard of Oz book is really a modern fable on money creation and the gold standard. At the time, this seemed as plausible as stating that the House on Pooh Corner is a modern fable on the housing crisis. Even today, in unnerves me to find the good old MP3's are hosted in a folder inside a Chaos Astrology website.

But I do have a taste for preposterous ideas. Years later, I was grateful for pondering those presented in the Wizards of Money. They was helpful in preparing me me for the financial crisis that was still in the making. In 2009, when I realized that, I started wondering if that part about the Oz symbolism story had a grain of truth in it.

Wikipedia acknowledges that "Some scholars have theorized" about symbolism in the Wizard of Oz, but places that theory outside the consensus. But today the non-consensual theory is vindicated. In a day so fittingly marked by energetic gold movement, a KPFA special featured an interview with Ernie Harburg - son of Yip Harburg, the blacklisted Wizard of Oz's composer. Harburg tells this
"But it had this underlay of political symbolism to it that the farmer—the scarecrow was the farmer. He thought he was dumb, but he really wasn’t; he had a brain. And the tin woodman was the result—was the laborer in the factories. With one accident after another, he was totally reduced to a tin man with no heart, alright, on an assembly line. And the cowardly lion was William Jennings Bryan, who kept trying—was a big politician at that time, promising to make the world over with the gold standard, you know? And the wizard, who was a humbug type, was the Wall Street finances, and the wicked witch was probably the railroads, but I’m not sure. Alright?"

The End of a Six Thousand Year Elliott Wave Cycle : MarketClub Trader’s Blog

When thoughts previously relegated to the lunatic fringe (such as the end of civilization in hyperinflation and peak everything) move on to appear in MSM out of the mouths of respectable talking heads, I guess it makes room for new stuff.

MarketClub Trader’s Blog:
"Clearly the decline of the Roman Empire was a down turn economically, but it pales in comparison to one that occurred over 24 centuries earlier. That was the Global Flood. The earth’s population at that time could have been hundreds of millions, perhaps even over a billion, but was reduced to 8 people. From an Elliott Wave point of view, this constitutes the end of a super-millennial second wave. In essence, it was almost a double bottom from a population standpoint. But apparently, a major reason for the multi-decade exercise of building the ark was to force Noah and his family to learn about and preserve as much of the technology of that era as they possibly could. The long life spans for those sixteen hundred years prior to the flood had resulted in an explosion of technology. (Gen. 4:21-22) Therefore, after the Flood, as the Super-Millennial third wave began, technological advancement was able to build on previous knowledge, albeit not as rapidly as before, due to the shortening human lifespan."

Click through to see some cool graphs with The Flood on the left end, and Fibonacci leaps up to the present.

Thursday, November 12, 2009

China: We Will Unpeg Yuan From Dollar

China central bank hints at change to yuan policy - MarketWatch:
"HONG KONG (MarketWatch) -- China's central bank has made a rare change in wording on its exchange-rate policy ahead of President Barack Obama's maiden visit next week, admitting upward pressures on the yuan from surging capital inflows and a weakening U.S. dollar.

The People's Bank of China said in its quarterly policy report released Wednesday that it will consider 'changes in international capital flows and the trends of major currencies' in its exchange-rate policy, according to reports.

That's a phrase it hadn't previously used and has attracted wide attention, and was widely seen as a hint it could let the yuan begin to appreciate again."

Wednesday, November 11, 2009

Newsweek on Buy Gold Spam

Can Texting Make You Richer and Healthier? | Newsweek Voices - Daniel Gross |
"The ability to blast messages to large numbers of people at very little cost has been a boon to marketers, although it is frequently inefficient and always annoying. The overwhelming majority of customers brush off the pitches, reminders, come-ons, exhortations—Subscribe to our magazine! Stop Nancy Pelosi! Buy gold!—that arrive via e-mail and text message."

Tuesday, November 10, 2009

Mad as Hell

Kali and anger - they go well together. This blog post looks into the missing anger in the Great Recession.

In the old movie "Network", a TV anchors flips out on air and encourages viewers from Atlanta to Baton Rouge to open their windows and scream: "I'm mad as Hell and I'm not going to take it anymore!" (more below the embedded clip)

I got reminded of this recently when listening to the wonderful rant of Karl Denninger, "The Ticker Guy"'s blog radio boradcast last week (if you're short on time, fast-forward to 14:00):

Not surprising that we don't get this from MSM. It's more surprising that few in the radical media have picked up on this stuff. The stuff is all around: see, an excellent "viral citizen agitprop" website. Critical analysts with a wide variety of credentials are shouting till they're hoarse - from blogs and from international conferences alike - and being interviewed on a regular basis in the NY governor's Bloomberg TV. At the same time, direct action activists such as The Yes Men (which I love), Democracy Now! and KPFA miss the mark, miss the boat by under-covering the current wave of social injustice and social protest.

It's like they reversed roles - 3 days after unemployment soared to 10.2%, Democracy Now! could only find an economist at Societe Generale (!) to comment on it:
“It is obviously psychologically damaging. And I think it is likely to go up a little bit further, given that we’re already at 10.2 percent and the type of growth and the type of employment trends that we anticipate over the next few months. You know, it is quite possible that we might even test the post-war record high of 10.8 percent at some point early next year.”

Psychologically damaging? if this was being uttered by a Goldman Sachs exec or a GM manager, wouldn't leftists scream murder? And likely to go up a little bit further? someone, please tell Amy Goldman about, which claims the real unemployment rate is 22%.

In past crises, activists were ready to capture the spirit of the time - seize the time to support the needy with advice and organizational help, and rally them to create social pressure. But that world is gone. We now live in a strange kind of world where radicals downplay the estimates of public misery and side with The Man's stats. Where is the "anger that brings change"? The vacuum is filled by financial analysts attacking The System with populist slogans.

One thing is good about this. I like my revolutionaries to give me good investment tips.

(Another example of stuff that makes financial commentary sound like the people's progressive voice comes from Gold Radio: Mike 'Mish' Shedlock on mortgages on

Sunday, November 8, 2009

GoldMoney + iPhone = new modern currency?

From GoldMoney Services and Rates - Payments:

"Pay Gold & Silver on Your iPhone

You can make gold and silver payments from your iPhone while on the go. The application is one of the first electronic finance software programs that has been written for the iPhone, and the first mobile application that allows the direct exchange of bullion between individuals and businesses.

The GoldMoney iPhone exchange application is available for purchase and download through Apple's iTunes app store for US$9.99."

Friday, November 6, 2009

Bank of India on Inflation as Tax

The author/investor Michael Clark brings this:
"India’s central bank Governor Duvvuri Subbarao described inflation as a “regressive tax,” justifying his steps yesterday to start withdrawing the monetary stimulus as price pressures build. “As far as public policy is concerned, it has a commitment to insulate the poor from inflation - it’s the prime consideration for the Reserve Bank of India and the government.”"
We used to hear this from radicals, then from contrarians, from MSM, and now... from bank governors?
Protecting the poor from inflation, indeed! Damn those socialist bank governors!

Professor, Don't Come Knocking on MY Log Cabin's Door

Kitco - Commentaries - Jon Nadler:
"'Mr. Roubini, the economist who predicted the global economic crisis, said a forecast by investor Jim Rogers that gold will double to at least $2,000 an ounce is “utter nonsense.” There is no inflation or “near-depression” to drive gold prices that high, Roubini said today at the Inside Commodities Conference in New York. If a severe depression came to pass, with investors buying canned goods and hiding out in log cabins, “maybe you want some gold in that scenario,” Roubini said."

Thursday, November 5, 2009

The Revolution Will Not Be Refinanced

Market Observation - Michael Panzner 11.05.2009:
"The Labor Department today reported that nonfarm productivity rose 9.5% in the third quarter, the fastest pace in six years. Boosted by lower than expected labor costs, the bigger-than-expected jump was widely hailed as positive by economists and stock traders. Huh? In a debt-challenged, consumer-dependent economy like ours, where a growing number of Americans are struggling to get by, the fact that businesses continue to benefit from squeezing wages and cutting jobs would seem to be the recipe for social unrest and revolution, not a return to economic good fortune."
Funny I should hear about revolution from a veteran investor in, not from KPFA.

Prophet of the Eternal Crash

Bob Prechter's Bloomberg Interviews over the years were arranged to create a cool (McLuhan-cool, not iPhone-cool) multimedia presentation that respects the viewer's intelligence. The promotional materials of the Elliot Wave Institute are often a cut above the others. As a fellow marketer, I find they are the rare investment advisory service that succeeds in projecting some self-respect to me. That make them actually intriguing and a joy to read. Small wonder that the Elliot guys are an object of imitation.

Yes, Prechter intrigues me. Other investment gurus I may want to have a beer or party with (on the road to nowhere), but Prechter I would like to do the Vulkan mind meld with. Like me, he is a Mensan and like me, an obsessive bear. Unlike me, he has professional background in psychology and in economics and plenty of research to back his gut feeling - which has been predicting a bearish market since the 70's. All I had was a deep mistrust of The Man. It led me to the same bearish predictions since the 70's but I had no diplomas to back my ill gut feeling. So you see son, you need to study.

I love Prechter's thinking that external events are not a cause of behavior but its result. On the personal domain, psychology (and criminology) teaches us that "I had no choice", "I was just following orders", "the devil made me do it" and "look what you made me do" (thanks, RAW) are signs of consciousness in distress. But on the social domain, we do not apply the lessons of psychology and accept that external events are indeed a cause. Does this mean we accept that our society is made of individuals in distress? In the domain of economy, we chart and expect the herd behavior - it is what we call a trend.

The other night I mentioned this idea to a psychologist friend, and it reminded her of Roosevelt's "we have nothing to fear but fear itself". Yes, this understanding is the way of the leader, the therapist and the guru. We all have heard the cliche that our world is sick, but few realize it is true, in the clinical sense. Gurus, however, have always taught that. And now, after being inspired by some Prechter reading, I watch the talking heads on TV pointing to some graph and am acutely aware that these graphs are literally charting the steps of the lemming dance down the slippery slope.

But if, like Prechter, your predictions are constantly bearish about all and every thing, what's the difference between an enlightened guru, a direct action anti-globalization activist and my late grandmother? They all have a deep truth to share but provide vague timing and hazy details. In contrast, the shrewd "no future / Kali yuga" investor wants to know not that society is going down - we do, it will, and get over it already - but when to short it, so that we can be richer than the other lemmings and go down in style (or help the other lemmings if you are compassionately inclined).

And watching this series of TV interviews done along the last couple of turbulent years, it seems to me Prechter's is an unfortunately uniform dark perspective, always thinly veiled by the same thin Vulkan half-smile. How sad it must be, being the prophet of the eternal crash! It seems one has to become familiar with his fin-du-siecle mood, read it like tea leaves, and subtract his prevailing melancholy from his public appearances to divulge the news items from it. Like a guru's asistant who, upon seeing his guru sad one day, rushes out and sells all his stocks, perhaps those familiar with the pervading Prechterian darkness, Prechter's comments can be useful for timing.

Besides, I don't get how he can suggest viewing stocks in gold terms because it is "real money" - and almost in the same breath leave it out of the short list of "hard assets". At that moment, I could almost swear that behind the suit there lives a habitual nay-sayer yet more misanthropic than even myself. Those smart pessimists are such a nuisance. I stick to my bricks. For now. If worst comes to worst I will have them fashioned into a thick ghetto-style chain around my neck. We'll see who's darker when we hit bottom and hear the bell ring!

Prechter a bear on gold? Not quite.

A bear on gold when the rest are bullish - The Globe and Mail:

"But saying Mr. Prechter is bearish on gold may be putting it too strongly. The bearish label may have fit in past years but in a September interview with Financial Sense News Hour host Jim Puplava, he seemed to soften his stance somewhat.

Mr. Puplava asked if he wished he had changed anything in the second edition due out this month for his bestselling 2002 book, Conquer the Crash (all that's new is the addition of over 150 pages containing Elliott Wave Theorist commentary from 2003 to 2007 and updated lists of U.S. financial institutions and contact services). He replied:

“If I were to reconsider one comment it is the idea that gold would have difficulties during the [deflationary period] ….there was so much inflation from 2002 to 2008 that it ignited all the markets, most of which have since collapsed …. But gold is [now] holding up. It went up the least relative to everything else and so it's probably going to hold up pretty well during the deflationary drop. But I think it's going to disappoint the people who think its going to $5,000 or $10,000 an ounce. That may happen after deflation is over.”"

Aw shucks. It's not gonna reach $5000? that's considered bearish these days?

Profit `Not Satanic,’ Barclays Says

Profit `Not Satanic,’ Barclays Says, After Goldman Invokes Jesus -
"Nov. 4 (Bloomberg) -- Barclays Plc Chief Executive Officer John Varley stood at the wooden lectern in St. Martin-in-the- Fields on London’s Trafalgar Square last night and told the packed pews of the church that “profit is not satanic.”"
1 - The issue at hand isn't profit; it's interest.
2 - Greed isn't a deadly sin? (It's actually #3).
3 - According to the vedas, greed is Tamasic (the lowly element).

Tuesday, November 3, 2009

Bartlett on Arithmetic, Population, and Energy

Monday, November 2, 2009

Jobs in Recoveries

Jesse's Café Américain:
"The current state of economics is most remarkable for its arrogant complacency in the face of two failed bubbles, a near systemic failure, a pseudo-scientific perversion of mathematics exposed, and an incredible capacity for spin and self-delusion. The people wish to believe, and Wall Street and the government economists are all too willing to tell them whatever they wish to hear, for a variety of motives. And there is an army of salesmen and lobbyists and econo-whores touting this fraud around the clock."

But the most remarkable thingy here is the chart. Go look at it now.

Michael Mauboussin's Think Twice

Michael Mauboussin's Think Twice: Harnessing the Power of Counterintuition Is Short but Sweet -- Seeking Alpha:
"All components of the human body are optimized for the ancestral environment of millennia ago. This has implications in most areas of science - Economist Arthur De Vany writes about how it affects our ideal diet and fitness regimens on his Evolutionary Fitness blog.

Michael Mauboussin's book Think Twice: Harnessing the Power of Counterintuition explores the implications with regard to decision-making - particularly investment decisions. The thesis of the book is that 'smart people make poor decisions because they have the same factory settings on their mental software as the rest of us, and that mental software isn't designed to cope with many of today's problems.' Think stone age era settings. But it's possible to think carefully (twice) and adjust for these shortcomings."

GLD a major holder of gold

Paul Tudor Jones: Gold's Undervalued (Seeking Alpha):
"Tudor then presented these amazing facts: 'The trailing 12-month ETF accumulation has 'bought' the equivalent of 25% of new mine production consistently since the beginning of the year. By year-end 2009, the total ETF gold position will hold 3% of global available supplies, making ETFs the sixth largest holder of gold in the world.'"

When was the last time in Gold's 5,000 year history that there was a major holder of Gold around which was not an empire that can be conquered or a bank that can be nationalized or outlawed? Oh, wait. GLD actually could be.

Friday, October 30, 2009

Roubini, Faber in Bloomberg's Top 5 "Market Oracle" list

RGE - Bloomberg Reports Roubini in Good Company as Investor with Most Wisdom:
"Billionaire investor Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., is regarded as the best assessor of financial markets by a plurality of almost one-fourth of respondents to the quarterly poll of investors, traders and analysts who subscribe to the Bloomberg terminal.

The closest runner-up, Bill Gross, the founder and co- chief investment officer of Pacific Investment Management Co., is chosen by 16 percent. Billionaire investor George Soros gets 10 percent, followed by Nouriel Roubini, the New York University professor who in 2006 predicted the financial crisis, and Marc Faber, publisher of the Gloom, Boom & Doom Report.

Fewer than 1 in 10 cited Federal Reserve Chairman Ben Bernanke, despite high marks for his performance as a central banker. Only 3 percent pick Alan Greenspan, the former Fed chairman."

Thursday, October 29, 2009

Central Banks Buying Gold
"Central banks were net buyers in the second quarter for the first time since at least 2000, according to the World Gold Council."

Wednesday, October 28, 2009

Economy NewSpeak term of the day: Unexpectedly

U.S. Economy: New-Home Sales Drop as End of Tax Credit Looms -
"Sales of new U.S. homes unexpectedly fell in September as the end of a tax credit for first-time homebuyers approached, highlighting the importance of government aid to the emerging economic recovery."

Unexpectedly.. as the end of a tax credit approached?

Who would have guessed.

Mish: A multi-year top could be in

Mish's Global Economic Trend Analysis:
"The important point in above chart is that the move up from the March low is likely a correction, not the start of a new bull market. That information alone is worth far more than any details as to how the market may decline from here. Many patterns are still in play.

Depending on the index, you can count these moves off the bottom as a simple A-B-C correction as shown, or as an A-B-C-D-E wedge. We'll know which one was correct in hindsight, but both suggest stocks will eventually make new lows - either sooner (in 2010) or later. A multi-year top could be in. Fundamentally, it should be in."

Tuesday, October 27, 2009

Investing in Bad Karma

Vice Fund by USA Mutuals:
"Our rigorous focus on aerospace/defense, gaming, tobacco and alcoholic beverages has given us experience navigating within them"

Sunday, October 18, 2009

The Daily Bail and the heist

I was looking at old videos in The Daily Bail, a bailuot-centric media archive containing "Bailout News, Opinion & Analysis". Built in web 2.0 spirit, it seems to be more a clearinghouse of embedded links than a content web site (their video email alert service looks promising). At first glance I wondered it if's just another AdSense operation with no real pretensions. But at second glance I noticed there were no Google ads in the page. At the third glance I noticed their suggestion to email material to congressmen and call Geitner's office and fax. That's where I started actually reading the text. It stars "If you wish to help the cause" without mentioning what is that cause being referred to, but then the last line says:
Our only realistic chance of stopping the heist will come as a result of the effort that we all put into this endeavor
Some call it a coup, some a robbery, but propaganda-wise, I like heist better. I used to like "banksters" but it sounded a little old. Perhaps in the age of Mafia Wars games, where via iPhone people enlist their friends and family to by guns and rob the neighborhood grocery store, "banksters" just doesn't carry a connotation that's sufficiently negative.

Wednesday, October 14, 2009

Many Home Buyers Delusional About Market | Financial Advisor Update | Financial Articles & Investing News |

Many Home Buyers Delusional About Market | Financial Advisor Update | Financial Articles & Investing News |
"One question had astounding results. The average expectation for annual gains in house value over the next 10 years was 11.2%. That would mean that, in 10 years the average of expectations was a gain of 189%: Buy a house worth $200,000 today and in 10 years it will be worth $578,000.

Compare that to the 10-year interval leading up to the peak price in June 2006. Using the Case-Shiller Composite-10 Index, the average value for a $200,000 house in June 1996 rose to $323,271 by June 2006. Talk about bubble mentality."

Thursday, October 8, 2009

The demise of the dollar - Fisk in The Independent

Journalist Robert Fisk on the demise of the dollar, talks about recent negotiation regarding oil-for-Euros or oil-for-Yuans. But some missed his last paragraph:
"Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq."

Saturday, October 3, 2009

Is Another October Surprise in the Works? -- Seeking Alpha

Is Another October Surprise in the Works? -- Seeking Alpha: "The mountain started shaking in the summer of 1929 and by autumn panic gripped the markets, resulting in a 2-day, 23% sell-off in the DJIA. By the middle of November 1929, the DJIA had lost 40% of its value.

What happened next is crucial to understanding what is happening right now. The market then made a valiant attempt to rally, bringing back many investors from the sidelines as the Dow mounted a furious charge into 1930. However, the rally didn’t stick, conditions worsened and by the time 1932 rolled around the venerable index had lost 89% of its value. It would take 25 years for the Dow to recover that lost value in nominal terms."

Friday, October 2, 2009

GOLD VS CURRENCY - Recession tv

Kali Yuga Education TV

Wednesday, September 30, 2009

The Rising Power of Financial Blog Zero Hedge - Money 2009 -- New York Magazine

The Rising Power of Financial Blog Zero Hedge - Money 2009 -- New York Magazine:
"The Dow Zero Insurgency - The nothing-can-be-believed chaos of the financial crisis created a golden opportunity for a blog run by a mysterious ex-hedge-funder with a dodgy past and conspiracy theories to burn."
Oh, how brave mainstream media is! An attack on a blog that criticizes Goldman Sachs! Thank God for the first amendment.

Tuesday, September 29, 2009

Pimco's CEO on the Return of the old ways of thinking

Mohamed El-Erian, chief executive and co-chief investment officer of Pimco, in FT (registration required):
"Today’s lack of appropriate anchoring frameworks appears to be exacerbating short-termism. The issue goes well beyond the still-limited appreciation of the multi-year realignment of the global economy, which is gaining momentum. It also relates to tendencies well-documented by behavioural economists – such as framing the problem wrongly and refusing to question past approaches.

Given all this, we would be all well advised to follow the admonition of Mervyn King. Last month, the governor of the Bank of England stated bluntly: “It’s the level, stupid – it’s not the growth rates, it’s the levels that matter here.” Investors have not yet accepted his insight that the absolute levels of income, debt, wealth and unemployment, not just the rates of change, are what matters today. They need to, and soon."

Wikipedia: The Pacific Investment Management Company, LLC (PIMCO), is an investment company and runs the Total Return fund, the world’s largest bond fund. Founded in 1971 in Newport Beach, California, with just US$12 million in assets under management at the time, it is now owned by Allianz, a global insurance company based in Munich, Germany.

Mohamed A. El-Erian is PIMCO's chief executive officer and co-chief investment officer along with co-founder William “Bill” Gross. Gross manages PIMCO's Total Return Fund, which has over $150 billion under management. As of March 31, 2009, PIMCO in total had over US$756 billion in assets under management and more than 1,200 employees.

On May 16, 2007, former Federal Reserve Chairman Alan Greenspan was hired as a special consultant by PIMCO and he will participate in PIMCO’s quarterly economic forums and speak privately with the bond manager about Fed interest rate policy.

El-Erian rose through the ranks of the International Monetary Fund to become a deputy director. He left in 1997 and worked as a managing director at Salomon Smith Barney until joining PIMCO, a unit of Munich-based insurer Allianz SE. El-Erian’s name was put forward in 2004 to be the IMF’s managing director. In October 2008, El-Erian won the Financial Times Goldman Sachs Business Book of the Year for When Markets Collide.

Friday, September 25, 2009

oftwominds: Housing, Leverage, the Dollar and Purchasing Power

Of Two Minds quoting Harun I. :
"It is not under-education or an inability to think critically which part people from their money, it is their uncontrolled emotions. Faced with purchasing a house which they know is unaffordable or choosing to rent they will not bother to run the comparison as long as it is their dream and 'someone' told them they could. Had grumpy old Mr. Critical Thought been allowed to show up and run a spread sheet or put the numbers into Quicken they (the cold, emotionless reality of the numbers) would have irrefutably deprived them of their 'dream'.

This drama plays out everyday at different levels across the spectrum of human psychology, the food you should not eat because you are morbidly obese, the years-old but never used exercise equipment in the garage, the spouse or partner who is abusive but you can't leave, the dress, shoes, house, boat, car you have to buy but cannot afford, the candidates we vote for because we like the way they part their hair. The inconsistencies, contradictions and convolutions are endless and mind-boggling to the point of madness to the observer."

"10-12 months to three digit oil"

Thursday, September 24, 2009

Housing Has not Bottomed if It Were Priced in Gold

If Housing Were Priced in Gold -- Seeking Alpha:

"That is, if gold continues rising and housing continues declining, then it is certainly possible that the median house price could fall to 100 ounces of gold--a mere 20% of its 2005 peak."

Excellent chart. The housing/gold ratio's rate-of-change line is a surprisingly straight-forward downtrend.

Wednesday, September 23, 2009

BLS Jobs Numbers Contradict BLS Jobs Numbers -- Seeking Alpha

Jeff Nielson in Seeking Alpha dissects a propaganda piece:
"However, I recently begin looking at a different report – reported by the same BLS – that releases the same data, but on a state-by-state basis. I was motivated to do so after reading the unmitigated drivel in a recent article from the Financial Times which was analyzing the U.S. jobs reports. The following statement caught my eye:

Although U.S. joblessness has shown signs of easing nationally in recent months, it continues to accelerate at the state level.

In other words, the oxymoron which the Financial Times (and the rest of the propaganda-machine) is trying to pass-off is that the United States has two, entirely separate economies. There is the “national” economy - where the propaganda-machine assures us “the recession is over”, then there is the separate, state-by-state economy, where the “recession” continues to get worse."

Tuesday, September 22, 2009

"Too Big For Society" / UK - Turner tells bankers to focus on core roles:
"Lord Turner made a robust defence on Tuesday night of his allegations that the “swollen” financial services sector has grown too big for society.

Before an audience of bankers, the head of the City regulator said banks had to focus on essential economic functions if they were to regain society’s trust."

Monday, September 21, 2009

Monetarist Theory as Apologia

SAlbert Kessler, Chairman, Appenzeller Business Press AG - Inflation versus Deflation.pdf:
This is yet another point that Friedman doesn’t seem to deal with. He postulates that a steady-state central bank that feeds just a little money into the economy would prove efficient and productive. What is lost in Friedman’s argument is why he feels the need to justify central banking at all. In the end, the monetarist argument seems more of an apologia for central banking than a considered analysis of what really occurs in an economy that offers up a money monopoly to a handful of individuals.

"Banks are a Pyramid Scheme"

Web of Debt author Ellen Brown on debt money, why money is collapsing and why central banks need adult supervision:
"Brown: Our money is an illusion. Except for coins, which compose only one ten-thousandth of the money supply, all of our money today consists of debt to private banks. Banks always take back more money in principal and interest than they put into the money supply as principal, making the system basically a pyramid scheme. After 300 years, this scheme has spread around the world and has now reached its mathematical limits."

Sunday, September 20, 2009

Smoking gun of the Rally?

Funding a Rally Extension -- Seeking Alpha
"As we have seen with the permanent open market operations (POMO), it appears that much of the stock market ramp (at least for the first half of the 2009 rally) was demonstrably accomplished with POMO funds paid to primary dealers that plowed the money into stocks. We have also correlated large increases in bank non-borrowed excess reserves (green in chart below) with stock market ramps. The chart from the previous post is updated here:"

Roubini and Taleb: Government's Socialization of Losses Is Destroying the Real Economy

Washington's Blog:
"Roubini has previously written:

We're essentially continuing a system where profits are privatized and...losses socialized.

Now Nassim Nicholas Taleb is saying the same thing:

After finishing The Black Swan, I realized there was a cancer. The cancer was a huge buildup of risk-taking based on the lack of understanding of reality. The second problem is the hidden risk with new financial products. And the third is the interdependence among financial institutions."

Saturday, September 19, 2009

Boston Globe: A "Minsky" Moment?

Why capitalism fails - The Boston Globe:
"“Minsky” was shorthand for Hyman Minsky, a hitherto obscure macroeconomist who died over a decade ago. Many economists had never heard of him when the crisis struck, and he remains a shadowy figure in the profession. But lately he has begun emerging as perhaps the most prescient big-picture thinker about what, exactly, we are going through. A contrarian amid the conformity of postwar America, an expert in the then-unfashionable subfields of finance and crisis, Minsky was one economist who saw what was coming. He predicted, decades ago, almost exactly the kind of meltdown that recently hammered the global economy."

Thursday, September 17, 2009

Study: Europe the richest region in the world

EUobserver / Crisis makes Europe the richest region in the world, study says:
"Europe has emerged as the richest region in the world, pushing North America, where wealth has declined by more than 20 percent due to the economic crisis, off the top spot, a study has shown.

The world's richest also feel the recession biting, especially in North America, where the financial crisis first unfolded a year ago, reveals a survey on global wealth carried out by the Boston Consulting Group, a global management consulting firm.

North America's wealth, measured in assets under management, plummeted by 21.8 percent, the steepest decline in the world. A lesser fall was registered in Europe, where assets shrunk by 5.8 percent compared to last year, down to €22.2 trillion – a quarter of the globe's total wealth."

Spinned Job Data

Revisions, Revisions - Adam Hayes -- Seeking Alpha:

"The government is playing a little game with the investing public when it comes to jobs data (and others like GDP etc. - but let's focus on the jobs data). Simply, the survey of economists will produce some consensus target number and then the 'actual' number will come in slightly better. The market sees this as green shoots and.. RALLY! However more times than not if you look at the REVISION - that is the adjustment to the previous release of this data to reflect what it actually should've been - is usually a bunch worse!"

Tuesday, September 8, 2009

Peter J. Wallison: The Fed Can’t Monitor ‘Systemic Risk’

The stuff that five years ago was only coming from conspiracy theorists is now fit to print in Wall Street Journal:
Peter J. Wallison: The Fed Can’t Monitor ‘Systemic Risk’
"Using the financial crisis as a pretext, the Obama administration is determined to enact massive financial regulatory reforms this year. But the centerpiece of its proposal—putting the Fed in charge of regulating or monitoring systemic risk—is a serious error.

The problem is the Fed itself can create systemic risk. Many scholars, for example, have argued that by keeping interest rates too low for too long the Fed created the housing bubble that gave us the current mortgage meltdown, financial crisis and recession."
Not to mention stuff that sounds like the Gemstone file (Google it yourself):
"It is one thing to set a thief to catch a thief—as President Franklin Delano Roosevelt is said to have done when he put Joe Kennedy in charge of the newly created Securities and Exchange Commission in the 1930s. But to set a thief to catch himself is quite a different matter."
P.S. - I double-checked Wikipedia - the public knowledge website does not side with the illicit substance trade allegations in the Gemstone file, but it does include an account of Joseph Kennedy's stock market ventures which isn't actually much better.
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Sunday, September 6, 2009

The Firestorm Ahead (USO)

The Firestorm Ahead | Immanuel Wallerstein:
"The general commanding the U.S. forces, Ray Odierno, is obviously extremely unhappy and is patently scheming to find excuses to reestablish a direct U.S. role. Recently, he met with Prime Minister Nouri al-Maliki of Iraq and President Masoud Barzani of the Kurdish Regional Government. Odierno sought to persuade them to permit tripartite (Iraqi/Kurdish/American) joint patrols in Mosul and other areas of northern Iraq, in order to prevent or minimize violence. They politely agreed to consider his proposal. Unfortunately for Odierno, his plan would require a formal revision of the SOFA agreement.

Originally, there was supposed to be a referendum in the beginning of July on popular approval of the SOFA agreement. The United States was afraid of losing the vote, which would have meant that all U.S. forces would have had to be out of Iraq by Dec. 31, 2010, one full year earlier than the theoretical date in the SOFA agreement.

The United States thought it was very clever in persuading al-Maliki to postpone this referendum to January 2010. Now it will be held in conjunction with the national elections. In the national elections, everyone will be seeking to obtain votes. No one is going to be campaigning in favor of a “yes” vote on the referendum. Lest this be in any doubt, al-Maliki is submitting a project to the Iraqi parliament that will permit a simple majority of “no” votes to annul the agreement. There will be a majority of “no” votes. There may even be an overwhelming majority of “no” votes. Odierno should be packing his bags now. I’ll bet he still has the illusion that he can avoid the onset of the firestorm. He can’t."

WSJ rethinking stocks

Should long-term investors load up on equities? Some pros say no -

"For at least a generation, financial professionals have urged mutual-fund investors to put more money in stocks than in bonds. The logic: Stocks power a portfolio, while bonds provide some protection.

Now some pros are questioning that conventional wisdom. After last year's stock crash, and ahead of a potentially weak economic recovery, they're arguing that bonds and alternative asset classes such as commodities deserve more weight."

Better late than never.

Thursday, September 3, 2009

Hong Kong moves gold reserves from London

Hong Kong recalls gold reserves from London - MarketWatch:
"Hong Kong is pulling all its physical gold holdings from depositories in London, transferring them to a high-security depository newly built at the city's airport, in a move that won praise from local traders Thursday."

Wednesday, September 2, 2009

To keep grain prices down, limit the market

David Fry can get mad - and rightfully so. Excellent analysis on the recent limitations imposed on funds. So this is the government plan to keep grain prices down?

The CFTC Is Needlessly Breaking Good Products -- Seeking Alpha:
"DBC (PowerShares DB Commodity Tracking Fund) and DBA (PowerShares DB Agricultural Fund) are in the news as the CFTC (Commodity Futures Trading Corporation) has revoked the position limit exemption for these funds. They have also intimidated the issuers of UNG (United States Natural Gas Fund) into not issuing more shares to meet demand, essentially breaking the issue as an effective product and needlessly costing investors a fortune. In the case of UNG, this is part of a government effort to squash speculation in energy markets, always a politically correct or populist thing to do."

Tuesday, September 1, 2009

Scientists Ponder Engineering Earth

With a shining record in the fields of food, health and safety, humanity finally stumbles on the final solution: diverting the rays of the sun. Everything could apparently be great if we could only shut off the sun.

A fitting illustration of lunacy and hubris for the Kali Yuga - the age of darkness. The next project, we suppose, would be to re-engineer life so it does not require photo-synthesis.

Tamaso ma jyotir gamaya...

BBC NEWS | Science & Environment | Engineering Earth 'is feasible':
"Such approaches could be effective, the authors said in their report.
But they also stressed that the potential of geo-engineering should not divert governments away from their efforts to reduce carbon emissions.
Suggestions range from having giant mirrors in space to erecting giant CO2 scrubbers that would 'clean' the air.
Such engineering projects could either remove carbon dioxide or reflect the Sun's rays away from the planet"

Washington Admits to Peak Oil - Washington Knows The Truth: Peak Oil and Natural Gas:

"Projected production, as you can see, is suddenly shriveling up. From 107.5 million b/d of oil projected for 2030 in 2007, to 102.9 million b/d in 2008, to this year’s meager expectation for 93.1 million. That’s a drop of 13.4% in only two years, and posits production growth of only 11.6 million b/d (14.2%) from 2006 levels.

If that isn’t an admission that the era of Peak Oil is upon us, what is?"

Great Peak Oil chart

Peak Oil: A Reality or a Lie? -- Seeking Alpha:
"Still not convinced about ‘Peak Oil’? Then review Figure 2 which charts the expected combined flow rates for crude oil, lease condensates and Canadian Oil Sands. As you can see from the grey shaded area, production is about to decline by roughly 5 million barrels per day by 2012."
BTW, the Chinese just bought into Canadian oil sands.

Monday, August 31, 2009

a left-wing radical, poet, religious fanatic, forex trader

From the InformedTrades forum:
"as i trade the forex market, Lord,
allow me to recall
that this is for your magno-glory not mine,
that my main objective
is to make myself a more
effective servant,
more able goodness to spread,
more influential in my struggle for justice."

"Recent Concentration of Volume in Financial Stocks: Coordinated Capital Infusion?"

Recent Concentration of Volume in Financial Stocks: Coordinated Capital Infusion? | The Big Picture:
"My best guess? We’re seeing a massive infusion of capital into very troubled financial institutions, no doubt aided by short covering and the participation of program traders and proprietary daytrading firms. Where is the capital coming from? Why has it poured in so suddenly (the really large infusions began in early August)? Why is it coming in at such a pace that it is dominating NYSE volume? Zero Hedge rightly wonders why this hasn’t triggered alarms at the exchange. And why is it happening with only the weakest financial institutions?

If you were the government and you saw that these institutions were on the verge of a major fail, with billions of taxpayer dollars at risk, I’m not sure you’d announce that to the world. Nor, at this point politically, could you ask for yet another bailout package. But you would only pour money into those stocks at a frantic pace (capable of detection) if you perceived a dire need for the capital.

I’m not inclined toward conspiracy theories, but it’s difficult to imagine a scenario in which this is not a (frighteningly necessary) coordinated capital infusion, with taxpayer dollars ultimately at work in financial markets."
In the old country, in what's now longingly called "the happy days", just before a national banking system failed and inflation went triple-digit, we used to call this "making a run". on Paulson

Todd S. Purdum on Henry Paulson | "And with that Paulson ducked into the private bathroom adjoining his office, closed the big paneled door, and audibly, violently, and repeatedly threw up. He emerged a moment later as if nothing had happened, but in a few minutes he did the same thing all over again. I asked if he wouldn’t rather stop, and resume our conversation another time. “That’s O.K.,” he said. “I’m just going to go through this all. I won’t remember it. You know, I barely remember the details now.”


watching him over many months, it was hard not to be impressed by the resolve with which this moderate old-line Republican—a man with a threshold faith in the wisdom of markets—became the greatest economic interventionist of his generation."

Saturday, August 29, 2009

Spot The Contrarian, or: How To Watch TV

This is a great example of how "contrarian" and "mainstream" analysts may look like on TV. TrimTabs' Charles Biderman has built a formidable fact-tracking system and managed it for years; but his data is no match to the interview skills of his mainstream counterparts, who nonchalantly brush him off - almost as if he was some conspiracy buff with no shred of evidence. In fact, TrimTab's data seems to have given warning signals where some others did not.

In research described in Prof. Dan Arieli's "Predictably Irrational", it was found that people follow the advice of financial advisors based on their self-confidence, not on their results - in fact, sometimes contrary to their results.
Volunteers were more likely to buy advice from confident advisers (such as the 100% adviser from above) than those who spread out their percentages. What’s more, this tendency led advisors to make their advice more and more precise in subsequent rounds – but not more accurate.

These findings are troublesome. Because though confidence and accuracy sometimes go hand-in-hand, they don’t necessarily do so. And when we want confident advisors, some will exaggerate to give us what we want. Maybe this is why so many pundits on TV for example exaggerate their certainty? (our emphasis - KYI)
Watch it now:

How does one appear more self-confident? Perhaps by repeatedly addressing the interviewer using her first name, as does TheStreet's Mr. Insanata. Perhaps by framing one's predictions with clear, round numbers. Disclosure: I used to publish my columns in a print publication co-owned by TheStreet myself, though I never met Mr. Insanata or his editors.

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Pace of Insider Sales Continues to Escalate

Ockham Research on Seeking Alpha
"Thus far, the bearishness of insiders over the last four months has led to some missed gains thanks to the continued rally. However, instead of regaining their faith in this market, insiders are digging in their heels on the bearish side of trades. Readers can come to their own conclusions about the implications of such a strong and defined trend, but the CEO of TrimTabs certainly has an opinion.

“The best-informed market participants are sending a clear signal that the party on Wall Street is going to end soon…

Investors who think the U.S. economy is recovering are going to get a big shock this fall. Companies and corporate insiders are signaling that the economy is in much worse shape than conventional wisdom believes.”– Charles Biderman CEO of TrimTabs Investment Research"

Tuesday, August 25, 2009

Michael D. Intriligator and R. Kyle Martin: The Rise and Fall of Artificial Wealth

Michael D. Intriligator and R. Kyle Martin: The Rise and Fall of Artificial Wealth

Good all-around article, though it never mentions the underlying politics and sources of the trends. As a result, it sees Obama's direction as an error... not as a predictable and sustained policy.

Welcome to Wave 2

Foreclosure Woes Spreading To Good Borrowers In Unexpected States:
"Amid record levels of home foreclosures nationwide, there are worrying signs that the foreclosure crisis could be spreading to parts of the country that had previously been relatively unscathed."

Court Orders Fed to Disclose Emergency Loan Details

Court Rules Federal Reserve Must Disclose Emergency Loan Details:
"The Federal Reserve has been ordered to reveal the names of companies that received emergency loans during the financial crisis, after losing a Freedom of Information Act lawsuit brought by Bloomberg News. (Check out Bloomberg's full story here.)"
Will we get a list of companies whose cumulative problems run up to $2tn? If this list includes banks with solvency problems, this might have legal significance, as some banking situations are covered in specially enacted laws.

Tuesday, August 18, 2009

IMF: Turnaround 'will not be simple'

BBC NEWS | IMF: Turnaround 'will not be simple':

The recession had "left deep scars, which will affect both supply and demand for many years to come" said IMF chief economist, Olivier Blanchard.

His comments came after Japan this week followed France and Germany is seeing their economies return to growth.

In this latest report, Mr Blanchard predicted that global output may also remain lower than it had been before the crisis.

Countries must rebalance their economies to make it sustainable, Mr Blanchard said.

Economies dominated by consumption - such as the US - would have to focus more on exports, while Asia turned more to imports, he said.

In other words, the turnaround hinges on Indians lining up to buy Fords?

Seems like he told us to curb our enthusiasm, but the press tells what the public wants to hear:

Monday, August 17, 2009

Income Equality "Truly Amazing"

Income Inequality Is At An All-Time High: STUDY
As of 2007, the top decile of American earners, Saez writes, pulled in 49.7 percent of total wages, a level that's "higher than any other year since 1917 and even surpasses 1928, the peak of stock market bubble in the 'roaring" 1920s.'"As of 2007, the top decile of American earners, Saez writes, pulled in 49.7 percent of total wages, a level that's "higher than any other year since 1917 and even surpasses 1928, the peak of stock market bubble in the 'roaring" 1920s.'"

On his blog, Nobel prize-winning economist and New York Times columnist Paul Krugman called the numbers "truly amazing."
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Thursday, August 13, 2009

Fourth Branch of Government

Received from a friend:

Amazingly, mainstream media (David Wessel, an award-winning journalist for the Wall Street Journal) prints what we understood years ago:
the Fed has now become the "fourth branch of government," raising and spending vast sums of money with little oversight from elected officials. He notes that Congress, which is elected and has authority under the constitution to raise and spend money, has raised $700 billion to resolve the banking crisis. The Federal Reserve has allocated more than $1 trillion.

Wessel drives this key point well: enormous power has been give to a small number of people who were not chosen by the citizens.

The following is from a less mainstream source - on the hill, Audit of Federal Reserve gains momentum while
Not surprisingly, Federal Reserve Chairman Ben Bernanke has spoken out strongly against legislative efforts to force an audit (of Fed actions -- me). Testifying before the House Financial Services Committee, Bernanke claimed such a review would "compromise independence." He added that if the GAO was to make judgments about the Fed's policy decisions, it would effectively amount to a "takeover of policy" by the Congress and such scrutiny would be "highly destructive to the stability of the financial system."
It's interesting to hear Spitzer's voice again - back from the dead. Democrat Eliot Spitzer, the former governor and attorney-general of New York, recently called the Fed "a ponzi scheme" on MSNBC As attorney general of NY Spitzer played an important part in a tobacco-trail-reminiscent attempt to challenge the legality of mortgages - using existing laws prohibiting predatory lending. Soon after coming up with the idea of ptosecuting the banks. a sex scandal involving him was uncovered and he resigned. Then the banks were bailed out. Not implying anything - just sayin'.
Spitzer has also been highly critical of the government's role in bailing out AIG, calling for an immediate government inquiry and alleging that institutions such as AIG and Goldman Sachs, "continue to absorb enormous sums of taxpayer support without either demonstrating the genuine need for such support or altering their behavior after receiving it."
Goldman Sachs / AIG was a legally interesting situation. It's interesting to see Spitzer still has the instincts of an attorney general. Good Guy.

My friend remarks:
Could this spell the end for the American financial system as we know it? The answer would determine weather you wish to short the entire US economy or not.

Wednesday, July 29, 2009

2005 Podcast of Terry Burnham, author of Mean Markets and Lizard Brains

An interview with Dr. Terry Burnham, author of Mean Markets and Lizard Brains. Talks about some research that proves that people's timing is mostly wrong, and why.

Use the streaming link - the download's broken.

Wednesday, July 15, 2009

Working time

Working time - Wikipedia, the free encyclopedia

The Kapauku people of Papua think it is bad luck to work two consecutive days. The !Kung Bushmen work just two-and-a-half days per week, rarely more than six hours per day. [20]

The work week in Samoa is approximately 30 hours[21], and though average annual Samoan cash income is relatively low, by some measures, the Samoan standard of living and quality of life are quite goo"

The NPA (Non-Prosecution Agreements) Scandal

If you were shocked to read WST's report that AIG practices were being directly monitored by a prosecutor-appointed rep as it was sinking, then you heard nothin' yet. California Lawyer Magazine exposes the yet-more-shocking procedural detail of what seems to be a wholesale practice.

We at KYI do not cry foul, but we do point to the dangers of value investing in a reality of continued lack of transparency at the highest levels. Systemic support for concealing practices (while and after the crash of a company) means the end of value investing - such companies can only be considered as "black boxes" and if you insist on investing in black boxes I don't see how anything but technical analysis could mean anything at all.

"[WSJ's AIG story on AIG being monitored while it was going downhill] opened a window on a little-known practice of the Bush administration's DOJ following the 2002 indictment of Arthur Andersen [Enron]—and its subsequent collapse. Indicting the corporate entity had led to the loss of some 85,000 jobs worldwide, and it sent shock waves through corporate America. So between 2002 and 2009 federal prosecutors stepped back, reaching 103 agreements to defer or forgo prosecuting corporations, compared to just 11 such agreements from 1992 to 2001.

The DOJ describes the agreements as a middle ground between declining to prosecute and formally charging a corporation. DPAs usually are accompanied by a charging document that is withdrawn after a period of probation. Non-prosecution agreements (NPAs) are private contracts not filed with a court.

Corporate monitors, according to the DOJ, were enlisted in 40 percent of the more recent pretrial agreements. Often former prosecutors or judges, they are selected by the government, paid by the company, and report to both as an independent third party. According to Lawrence D. Finder, a partner in Houston's Haynes and Boone and a former federal prosecutor, their role is anomalous: 'There is no client, so there's no fiduciary duty and no attorney-client privilege,' he says."

Wells Fargo Bank Sues Itself

Wells Fargo Bank Sues Itself

They're losing it.

Monday, July 13, 2009

Bloomberg News

The complete show

If you're going to watch one hour of TV about the economy this month, this should be it.

Nouriel Roubini (born on March 29, 1959) is a professor of economics at the Stern School of Business, New York University and chairman of RGE Monitor, an economic consultancy firm. After receiving his B.A. in Political Economics from Bocconi University and his doctorate in international economics from Harvard University, he began academic research and policy-making by teaching at Yale while also spending time at the International Monetary Fund (IMF), the Federal Reserve, World Bank and Bank of Israel. Much of his early studies were focused on emerging-market countries. During President Bill Clinton’s administration he was a senior economist for the Council of Economic Advisers later moving to the United States Treasury Department as a senior adviser to Timothy Geithner who is now Treasury Secretary.

Fortune magazine, in 2008, wrote that "in 2005 Roubini said home prices were riding a speculative wave that would soon sink the economy. Back then the professor was called a Cassandra. Now he's a sage."

In September, 2006, he warned to a skeptical IMF that "the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession." He also foresaw "homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt." The New York Times labeled him "Dr. Doom." In hindsight, IMF economist Prakash Loungani has called him "a prophet."

Because his descriptions of the current economic crisis have proven to be accurate, he is today a major figure in the U.S. and international debate about the economy and spends much of his time shuttling between meetings with central bank governors and finance ministers in Europe and Asia."[2]. Although he is ranked only 410th in terms of lifetime academic citations, Prospect Magazine in January, 2009, voted him #2 on its "list of the world’s 100 greatest living public intellectuals." He has recently appeared before Congress, the Council on Foreign Relations and the World Economic Forum at Davos. He was recently named "Bocconiano dell'Anno", the most important Alumni award of Bocconi University.

Nouriel Roubini was born in Istanbul, Turkey, on March 29, 1959. The child of Iranian Jewish parents, his family moved to Tehran, Iran, when he was two. He later lived in Israel and Italy to attend college and moved to the United States to pursue his business doctorate in international economics at Harvard University. He is currently a U.S. citizen and speaks English, Farsi, Italian, and Hebrew.

Roubini spent one year at the Hebrew University of Jerusalem before moving to Italy and receiving his B.A., summa cum laude, in Economics from the Bocconi University (Milan) in 1982. He received his Ph.D. in international economics from Harvard University in 1988. According to his academic advisor, Jeffrey Sachs, he was unusual in his talent with both mathematics and intuitive understanding of economic institutions.

For much of the 1990s, Roubini combined academic research and policy-making by teaching at Yale and then in New York, while also spending time at the International Monetary Fund, the Federal Reserve, World Bank and Bank of Israel. Currently, he is a professor at the Stern School of Business at New York University.

He spent much of his time working on emerging-market blowouts in Asia and Latin America which helped him spot the looming disaster in the U.S. "I’ve been studying emerging markets for 20 years, and saw the same signs in the U.S. that I saw in them, which was that we were in a massive credit bubble," he said.

By 1998 he had attracted the attention of President Bill Clinton’s administration, joining it first as a senior economist in the White House Council of Economic Advisers and then moving to the Treasury department as a senior adviser to Timothy Geithner, then the undersecretary for international affairs and now Treasury secretary in the Obama administration.

Roubini returned to the IMF in 2001 as a visiting scholar while it battled a financial meltdown in Argentina. He co-wrote a book on saving bankrupt economies entitled Bailouts or Bail-ins? and opened his own consulting firm.

Saturday, July 11, 2009

Nuriel Roubini on TV: Animal Spirits

Bloomberg special edition with Roubini

Preview: Roubini on "Animal Spirits"

Roubini: put it in cash (and on socializing the losses)

Roubini Jan. 09 on employment
"It is pretty bleak"

Major Banks Stop Honoring State Of California IOUs -

"Despite pressure from the state treasurer, JPMorgan Chase & Co., Bank of America Corp., and Wells Fargo & Co. and other major banks planned to stick to their plans and not honor California's warrants after Friday. State Treasurer Bill Lockyer announced Citigroup Inc. agreed to a one-week extension through July 17."

Thursday, July 9, 2009

BBC NEWS | Europe | World powers accept warming limit

"Developed and developing nations have agreed that global temperatures should not rise more than 2C above 1900 levels, a G8 summit declaration says."
Of course they did. Their graph shows we are now at +.7 C from 1900, so that means we just awarded ourselves with a license to do twice as bad as we've done so far.

Note that, like in many news articles in this day and age, no differing opinion is presented that may dent the official, self-congratulatory tone.

Treasury Works on 'Plan C' To Fend Off Lingering Threats -
"Informally known as Plan C, the internal project is focused on vexing problems such as the distressed commercial real estate markets, the high rate of delinquencies among homeowners, and the struggles of community and regional banks, said government sources familiar with the effort."

Wednesday, July 8, 2009

The Fed is Buying Treasurys

Gabor hits Send: The Fed is Buying Treasurys:
"In an unprecendented move [significant but not unprecedented - KYI*], the United States Federal Reserve is now buying US Treasury government bonds (source 1, source 2). The debt issued by the US government is being bought by the US Federal Reserve. Instead of lending money from others, the government is printing money to finance its spending. Printing money could massively devalue the dollar in the long term."

The US government has to finance everything it does either through taxes or by loaning money from others.

The US government can't issue new money to finance their undertakings.
Only the Fed can issue new money, but it's not supposed to just give the gvmt the money it wants.

KYI: Normally, the US government loans money from China or individuals. But those aren't giving the US money anymore. Instead, the Fed is printing new money and handing it to the government.

Well, this puts last month's "economic plan" in a new light. The Fed gets to control banks, then the Fed agrees to finance the government's debt. Power has never been so transparent.
Some will argue the Fed is acting like a lender twisting the US government.

Friday, July 3, 2009

Tally Hits 52 as Regulators Close 7 Banks -

For my friends who think it's half over - this is from today:
"State regulators closed six banks in Illinois and one in Texas, raising the number of bank failures in the U.S. to 52 this year. The seizures were the most in a single day during the financial crisis.

The Federal Deposit Insurance Corp. said the closures of First State Bank of Winchester, John Warner Bank, Rock River Bank, Elizabeth State Bank, First National Bank of Danville, Founders Bank and Millennium State Bank of Texas are estimated to cost the FDIC $314.3 million."

Wednesday, July 1, 2009

Video - Viewpoints: Soros on Obama and Ailing Banks -

WSJ: Viewpoints: Soros on Obama and Ailing Banks 6/30/2009

Hungarian-born billionaire forex speculator George Soros talks to WSJ Deputy Managing Editor Alan Murray about how the Obama administration went about restabilizing the banks. He talks about the fear of "nationalization" that stopped re-capitalizing the banks. He talks about the treasury as possible an "underwriter" instead of a lender. Soros complains of being left out of the picture when so much money is being given to banks... and perhaps of burdening the taxpayer when one could use Soros money instead (this is Soros's brand of populism if I "read" the guy correctly). His Eoropean-style smooth remarks still underline the fact that the Obama administration does not even represent capitalist interests anymore, but rather the very small group of banks led and fed by the Fed.

Monday, June 29, 2009

Operation completed

June 1
Clip: Kurdistan begins oil export

June 29
"Oil giants scramble for Iraq's vast reserves in televised contract auction"

June 30
BBC: US troops are withdrawing from towns and cities in Iraq, six years after the invasion, having formally handed over security duties to new Iraqi forces.

Sunday, June 28, 2009

Chinese Gold Moves Set Stage for Price Spike -- Seeking Alpha

Seeking Alpha:
"It is interesting to hear a senior economic researcher from the Chinese Communist Party calling for bigger gold purchases by China to diversify away from the US dollar, whose devaluation looks inevitable with the printing of money to finance deficits."

Friday, June 26, 2009

Is China Preparing to Buy Gold? -- Seeking Alpha

Is China Preparing to Buy Gold? -- Seeking Alpha: "China should buy more gold because the U.S. dollar is poised for a fall and the metal is needed to support the greater international role envisaged for the yuan, a senior researcher with the ruling Communist Party said on Thursday."

Most alarming three words of the week

Gold, Green and the Fate of the Dollar -- Seeking Alpha: "So my strategy is, spread it around: BUY SOME FARMLAND, high-quality oil stocks, and of course, precious metals."