Wednesday, November 03, 2010


The following quotation is at least partly spurious; see comments
I know no safe depository of the ultimate powers of the society but the people themselves; and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion by education. This is the true corrective of abuses of constitutional power.

- Thomas Jefferson, letter to William Charles Jarvis, September 28, 1820


C.P. Snow best summarized the three laws of Thermodynamics (fourth added posthumously):

0. This is the Game: you’re here, you are part of the system
1. You Can’t Win: you can’t get more energy out of the system than you put into it.
2. You Can’t Break Even: any transfer of energy will result in some waste of energy unless a temperature of absolute zero can be achieved.
3. You Can’t Get Out of the Game: you cannot achieve absolute zero.


The Secret of Oz

A Message to the American people : A Janet Tavakoli Video

Janet Tavakoli Warns Of A Gold Super Spike: "Congress Must Act Immediately To Abolish Credit Default Swaps On The United States"

Quantitative Easing Explained
Probably the greatest video I have ever seen.

QE2: It's the Federal Debt, Stupid!
Friday 12 November 2010
by: Ellen Brown, t r u t h o u t | News Analysis


Stockman on Bloomberg TV
David Stockman sums things up very nicely:. "I think the Fed is injecting high grade monetary heroin into the financial system of the world, and one of these days it is going to kill the patient."

There is a principle which is a bar against all information, which is proof against all arguments and which cannot fail to keep a man in everlasting ignorance—that principle is contempt prior to investigation. (Herbert Spencer)

Salbuchi - Global Financial Collapse - Part 1

Salbuchi - Global Financial Collapse - Part 2

Civilizations proceed from bondage to spiritual faith;
from spiritual faith to courage;
from courage to liberty;
from liberty to abundance;
from abundance to selfishness;
from selfishness to apathy;
from apathy to dependency;
and from dependency back to bondage.

Tom Woods Archives

Nullification: Interview with a Zombie

America’s biggest — and only major — jobs program is the U.S. military.

The Money Masters: who REALLY rules the world

The Fraud Started At the Very Top: With Government Leaders

Between May 1999 and May 2009, employment in the private sector sector only rose by 1.1%, by far the lowest 10-year increase in the post-depression period.

It’s impossible to overstate how bad this is. Basically speaking, the private sector job machine has almost completely stalled over the past ten years

"The first casualty of War is Truth"

Bill Gross: Bernanke Running a Bigger Ponzi Scheme than Charles Ponzi

Defense spending means that the government is pulling away resources from the uses determined by the market and instead using them to buy weapons and supplies and to pay for soldiers and other military personnel. In standard economic models, defense spending is a direct drain on the economy, reducing efficiency, slowing growth and costing jobs.

The american people are stupid, declining education levels and their behavior indicate that.

This doesn't mean they are not good hearted and hard working. One can be stupid and still be an honest and wonderful person.

These are different principles. Its incredibly stupid to keep flipping back and forth between two groups who demonstrate quite clearly that they don't give a crap about the citizenry. I fully understand why the founding fathers wanted to restrict voting to the educated "elite."

We had made that idea obsolete when we created a first tier public education program throughout the majority of the U.S. However, the dismantling of a good public system over the past 30 years by paranoid religious and political crackpots have driven us back to a completely ignorant electorate and an extremely ignorant corrupt group of individuals representing the ignorant electorate in government; exactly what the founders feared. ‎

"The great thing about Democracy is that it gives every voter a chance to do something stupid." -Art Spander


03 November 2010

FX Update: Bring it on, Ben!

John J. Hardy, FX Consultant, Saxo Bank

The US mid-term election will go down as the most significant mid-term election in the modern era, but that was already expected and the results were relatively in-line with expectations. Now it’s time for Ben to bring it on.

Bring it on, Ben!

So, Ben, let’s get this thing over with and let’s test how this market is positioned for what you have to say today.

We’re tired of speculating and gaming what you may or may not write in today’s statement and how many billions of dollars you might conjure into existence on a monthly basis for the next year or more.

Bring it on: let’s watch another wave of monetary policy history crash over us as you pull out the hammer and close your lips around another batch of coffin nails – ready to grasp the first nail to drive into the soon sealed coffin of Keynesian economics and then another in the coffin of fractional reserve banking and perhaps another into the coffin of fiat currencies.

Oh, it’s all the same coffin?

Fine – it will go quicker that way. Just remember to save a few nails for the millions of coffins of pensions and savings: for all of the responsible people who didn’t join in on the credit bonanza of the last few decades and spent their lives scrimping and saving.

Let’s devalue their savings and nuke the US currency rather than go the quicker and more just road of default, shall we? Extend and pretend is the Fed’s motto, after all. Just watch out for those new crazies on the Hill that are starting to bang on the doors of the Eccles building.

Will they break in and cart you off before you’ve finished your final magnum opus – the end of the US dollar and the US economy?

Bring it on, Ben: take us that much nearer to the denouement of 100 years of US Federal Reserve. There won’t be a second hundred years. The final countdown starts now.

US mid-term election makes history

The results are not fully tallied, but the US elections resulted in one of the most significant mid-presidential term power shifts in US history, with a tea party-controlled Republican party sweeping to a new convincing majority in the House of Representative, gaining at least 60 seats, and gaining a number of seats in the Senate as well, though no majority.

Considering where we were coming into the election, however, the victory is relatively in-line with expectations, and considering the momentum the Republicans were riding in recent weeks, the results might be considered slightly disappointing for Republicans. As far as market reactions to the news – it is obvious who holds real power over the markets and the US economy these days – not Obama, not Congress or the Tea Party.

Elections? Bah, Humbug – what is Bernanke doing over at the Fed….?

So now what?

Now we have two and a half months of a lame duck Congress, which will have to deal with the most pressing issue on the docket: the Bush tax cuts and whether they should be extended.

We should also watch for how the Republican establishment assimilates its new, firebrand Tea Party contingent and what kind of intentions are broadcast ahead of the actual assumption of power.

Remember that the Republican victory is not significant enough to allow Congress to pass new legislation unless they can get the president on their side, since his veto power requires a two-thirds majority over-ride.

What we can likely expect is two years of very ugly politics, mud-slinging and what some have called guerilla warfare as Republicans go about attacking some of the Obama administrations existing programs - the very unpopular health care legislation in particular - in indirect ways.

It won’t be pretty, and the unfortunate thing will be if it drags everyone lower and US’ confidence with it. This is a significant risk.

The new Congress – what to watch for

What the new US Congress should focus on from January onward is putting a stop to the Fed’s printing press.

We will have our nose to the ground on this issue: so far, Ron Paul – a real libertarian but officially a member of the Republican Party – has been the only politician speaking out against the Fed (in fact, he penned a great book called End the Fed for those who are interested).

But now, Mr. Paul, who is only one of the 435 representatives in the House, will find his support enlarged by at least a couple of orders of magnitude by like-minded Tea Partiers and his own son Rand Paul even won a Senate seat in Kentucky.

The big risk for the nation is that this faction focuses its ire and firepower on the Obama administration and ignores the 16,000-pound elephant in the room – Ben Bernanke’s Fed.

Two other issues that will be most pressing for the future fiscal viability of the US and the value of its currency: the degree to which the Congress is able or not able to discuss a realistic winding down of the budget and its’ two largest items: defense spending and, most importantly, entitlement spending (Medicare and Social Security).

If no one is willing to take on the latter hot potato in particular, then the ugly, force-it-down-the-throat correction to the US econmoy will be play in the years to come rather than a solution that starts with austerity and sacrifice now.

In other news…

It’s almost sad to watch the market trying to react to the pathetically small delta in ADP employment. (Hey – there was a +37k revision for October!).

In other news, the Australian Housing Bubble watch is getting interesting with last night’s September Building Approvals data swooning an ugly -6.6% month-on-month, though the service industry survey stopped falling in October, so that balanced it out somewhat.

Watch out for the Retail Sales data out of Australia tonight.

Looking ahead

We’ll be back in the wake of the FOMC meeting with further comments on its outcome and our (hopefully not quickly devaluing) two cents on the situation. Watch out for the important ISM non-manufacturing data out shortly as well.

The pound is spiking higher lately – and the pound has normally been a fellow traveler of the USD because of the similarities of non-existent rates, QE-ready central banks, and ugly twin deficits. Is this a leading indicator on the USD’s potential post-FOMC or a red herring?

Economic Data Highlights

* US Weekly ABC Consumer Confidence rose to -46 vs. -47 expected and -47 last week
* UK Oct. BRC Shop Price Index rose 2.2% YoY vs. 1.9% in Sep.
* Australia Sep. Building Approvals fell -6.6% MoM and -11.6% YoY vs. 0.0%/-3.7% expected, respectively and vs. +4.2% last year
* China Oct. Non-manufacturing PMI out at 60.5 vs. 61.7 in Sep.
* China Oct. HSBC Services PMI out at 56.4 vs. 55.2 in Sep.
* Switzerland Sep. Retail Sales out at +3.8% YoY vs. +0.1% in Aug.
* UK Oct. Services out at 53.2 vs. 52.6 expected and 52.8 in Sep.
* US Oct. Challenger Job Cuts fell -31.8% YoY vs. -44.1% in Sep.
* US Oct. ADP Employment Change out at +43k vs. +20k expected and -2k in Sep.

Upcoming Economic Calendar Highlights

* US Oct. ISM Non-manufacturing (1400)
* US Sep. Factory Orders (1400)
* US Weekly DoE Crude Oil and Product Inventories (1430)
* Switzerland SNB’s Jordan to Speak (1615)
* US Oct. Domestic/Total Vehicle Sales (2100)
* New Zealand Q3 Unemployment Rate/Employment Change (2145)
* Australia Sep. Trade Balance (0030)
* Australia Sep. Retail Sales (0030)
* Japan BoJ’s Shirakawa to Speak (0230)


Weiner Says: "Deal With It!"



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