Friday, October 31, 2008
With the U.S. Presidential election coming next week - and the waves of emotion that drive the supporters and opponents of the two major candidates - now would be a great time to take a step back from the agit-prop being spun out by both sides and look for the deeper drivers of why people become so passionate about politics.
The Socionomics Institute has set up a special "Election Headquarters" on their website complete with a video clip of Robert Prechter talking about election cycles, an interview and a dicsussion of "Polarization and Politics."
Take some time today or this weekend and check it out. It is much-needed medicine to help you fight off the memes being sold to you by politicians and advertisers.
Thursday, October 30, 2008
Tuesday, October 28, 2008
How about that for a blast to the upside? I wonder how many shorts got crushed today? Judging from the furious buying panic, I would guess a lot of folks had to cover today.
For those of you who are drinking that special Buffet-Bernanke-Paulson Kool-Aid that's being peddled by the mainstream financial press, I went out to Yahoo! finance and downloaded their historical price data for the DJIA (click here to see for yourself). I calculated percentage change per day and peeled off the Top 20 Percentage Up Days for the DJIA since 1928 below (excluding today):
Notice anything? With the exception of the snap-back rally after Black Monday in October of 1987 and the big rally from a couple weeks back (and today, of course), the biggest up days all happened during the massive bear market during the Great Depression. They are called bear trap rallies for a reason.
I don't mean to be a total buzzkill for those of you still long equities, just passing along a few facts. Perspective can be a very useful tool...
Monday, October 27, 2008
Below is an article from Elliott Wave International, posted with permission. This is the kind of perspective to keep in mind when your broker or the geniuses on CNBC keep telling you "now is a great time to buy!" Remember - brokers, bankers and advertisers are trying to infect your mind with memes that do their bidding - counter it with memes that inoculate your mind against them.
The usual caveat - I am a proud affiliate of EWI. I do get a small credit the first time someone signs up for free to receive EWI's free products and analyses. If this bothers you, please still go to the Elliott Wave site by directly typing it into the address bar - it won't carry my tracking number.
I don't care about the credit. I do care about getting this information out there to the doers, to the producers, to the men and women who will be building up this country after the great collapse has come and gone. That is what is important, so please take a few minutes, click over to EWI and read this report.
Has Cash Been King for the Past 10 Years?
If you're like most investors, you've been nearly brainwashed with conventional market "wisdom" that stocks are the best way to grow your portfolio.
You would be crazy not to have your money in the markets, right?
But when markets drop, as we've seen in this credit crisis, it's amazing how quickly the story changes.
Steve Hochberg and Pete Kendall, editors of Elliott Wave International's Financial Forecast, challenged the notion of stocks' superiority years before this latest downturn.
Learn how cash has been king – and will remain so – far longer than the latest news headlines may have you believe in this free excerpt from Elliott Wave International's Credit Crisis Survival Kit.
Elliott Wave International has also made the full Credit Crisis Survival Kit available free for a limited time. In addition to this excerpt, it contains 14 other articles, reports, and videos that reveal how to survive and prosper during the credit crisis. Visit EWI to download the kit, free.
Cash's Invisible Reign Made Visible
[excerpted from Elliott Wave Financial Forecast, August 2008]
With respect to cash and its status as the preeminent financial asset, however, we are starting to wonder if investors will ever come around to our point of view, which, as we explained in the March special section, is that there are times when "the phrase 'focus on the long term' means "get out and wait.'" As we also pointed out, the last eight years are clearly one of these times, as cash has outperformed all three major stock averages over this period. A July 3 USA Today article shows how this outlook is actually becoming more farsighted as the bear market intensifies:
3-month Treasuries Beat S&P 500 for past 10 Years
The article says, "Investors who bought stocks for the long run are finding out just how long the long run can be." But the farther back in time cash's dominance stretches and the rockier the stock market gets, the farther investors seem to move from ever taking anything off the table. After stating that "there can be times, long times, when stocks won't beat T-bills," a professor and popular buy-and-hold advocate is cited as "optimistic that the next 10 years will be better than the past decade." In March EWFF stated, "Cash will continue to outperform until stocks are no longer fashionable." There is no sign that such a condition is even close to happening.
It's somewhat amazing that cash is not capturing anyone's fancy because a tremendous society-wide thirst for cash is spreading fast. "In a deflation," the Elliott Wave Financial Forecast has stated, "Rule No. 1 is to unload everything that isn't nailed down. Rule No. 2 is to sell whatever everything remaining is nailed to." The banking system is surely deflating, because, echoing Elliott Wave Financial Forecast's wording again, "Desperate American Banks Are Selling Everything That Isn't Nailed Down." SunTrust is selling its stock in Coca-Cola, an asset the bank held for 90 years. Merrill Lynch sold its founding stake in Bloomberg as well as various other subsidiaries.
Meanwhile, "Americans are selling prized possessions online and at flea markets at alarming rates." Pawnshops and auction sites are booming. At Craigslist.org, the number of for-sale listings soared 70% in eight months. This fits with our review of Craigslist's prospects when it was getting started in 2005: "This is just the set-up phase. Once the global garage sale really gets rolling, truly astounding volumes of dirt-cheap goods will be available on-line and elsewhere." The global garage sale is on. The chart of the U.S. savings rate shows that the bull market in cash has come to life.
A 30-year downtrend in savings rates ended at minus 2.3% in August 2005. In May 2008, the savings rate skyrocketed to 5%. This jolt may be somewhat overstated due to the arrival of the government's stimulus checks, but the burst should be the start of a critical new mindset among consumers. When the government showered the economy with $600 checks, many did something they never would have thought of through most of the bull market: They put the money in the bank, which is exactly what the administration did not want. In fact, federal, state and local governments are desperate for the tax revenue that a little ripple-effect spending would have generated.
According to the National Conference of State Legislatures, states must close a $40 billion shortfall in the current fiscal year. "The problem today is that tax revenue is vanishing," says a story about the sudden appearance of the worst fiscal crisis in New York since 1975. Even cities like East Hampton, New York, where someone paid $103 million for an oceanfront house last year, are out of money. "Nobody understands how it happened," says one resident. The pages of this newsletter show otherwise. If we are right, a deflationary decline is depleting and destroying cash flows in novel new ways that no one alive has experienced before.
The previous analysis was excerpted from Elliott Wave International's Credit Crisis Survival Kit. The kit, featuring 15 free resources to help you survive and prosper during the credit crisis, is available free. Visit EWI to download the kit, free.
I could dwell on the continued weakness in the equity markets, but why bother? It's rough on the Masters of the Universe when their cheap credit is choked off and all their pricing models are starting to prove not worthless - but actually detrimental to understanding the grim picture.
I could dwell on the banking collapse and solvency crises in Ukraine, Hungary, Iceland, Pakistan, et al and talk about how that instability could magnify the problems here in the U.S., but again, why bother? The countries on the periphery are going to collapse. Period. They won't go away. In some cases they may even weather the storm better than the U.S., but as major players on global economic action and as a destination for investment capital - they are off the map for the next few years. And if you are an American living in one of those places, get ready to be scapegoated. I hope you have an exit route scoped out.
We could talk about how the collapsing price of oil is going to devastate the huge buildout in capacity that has been planned. All that off-shore oil, all that stranded gas, all that technology to revive old oil fields - the money to fund it has dried up and blown away like a fart in the wind. You have lived to see world Peak Oil. Never again will the world produce as much as it did in the last year. Oil production will revive after this coming collapse, but by then the decline curve will be so steep that all the investment in the world won't reverse it. Welcome to Peak Oil and it arrived at $60/barrel. But why talk about that? The implications are years off. We'll all have much bigger things to worry about - especially those of us in the U.S. if the world stops selling us the stuff once the reality of the federal insolvency becomes apparent. Right now, everyone is working on faith. Hopefully it will last a little longer.
We could talk about the election, even, though I try to steer clear of specific U.S. political races. I regard it as an exercise in futility, bread and circuses while Rome burns, to mix metaphors on you. It won't matter who wins office - the Republic is bankrupt. Vote for whom you like least. Four years from now the winner in November will quite possibly exit office the most reviled President in U.S. history.
Up And At 'Em
Instead of the news issues of the day - let's focus on you. Most specifically, let's focus on that segment of you who loves to read news all day long and "stay informed." I'm included in that bunch along with many of you out there.
The days of just reading along with the news are rapidly coming to a close. We will all be living history - soon. I suggest to you that it is more important now to grow a few tomato plants inside your house or apartment than it is to watch the commentators on CNBC jabber.
It is more important to practice a trade like firearm repair, or electrician, or plumber, or permaculture farmer, or diesel engine repairman, or biodiesel producer or something - anything - that actually produces something.
A life mediated by computers and paperwork will no longer be an option for about 90% of the current white collar workforce. We are no longer spectators. We are all on this ride together.
Be a producer. Be a doer.
Good luck. God help us all and God save the Republic. He is about the only one who can, now.
Friday, October 24, 2008
Please read Charles Hugh Smith's latest. Right now.The Company Store, Debt and Serfdom
...Most astonishingly, the Ministry has succeeded in diverting the nation's attention from the Company store/debt-serf realities to a bogus "debate" over "socialism" and "capitalism." As Michael Hudson has pointed out, the rentier class which owns the mortgages, loans and credit card debt is not capitalist at all; it is essentially medieval in structure. It takes no risks, creates no innovations, invests no capital in new enterprises or indeed, performs any classical capitalist functions at all.
It simply indebts the serfs, convinces them via doublespeak, propaganda and phony statistics that they are still gloriously "middle class" (that is, obscuring or reifying their true nature as mere miserable debt serfs) and then sits back and collects the interest and profits which the debt serfs will be struggling to pay until their last breath...
"Have another round and up & down cocktail (coffee and Prozac) - You're gonna need it today - and have several slices of pie for breakfast...that may help, too.
But yes, if you listen closely today, you should be able to hear the doors of Economic Hell creaking open today another notch..."
The world continues to get more and more interesting. This morning our friends on CNBC had their best "stern visages" on discussing how the futures markets are locked limit down for open. Oil and gold are collapsing as worries on demand and as the leveraged money that had bet on them is forced to unwind.
Then we get all kinds of news being used to describe the world's plunge into anger, xenophobia and destruction of the old order:Russian Default Risk Soars: LTCM Repeat Play - "...There is now no safe haven globally other than a deeply indebted U.S. government." That unfortunately appears to be the very sad state of affairs...
Libor for Overnight Dollars Rises as Recession Concern Mounts - The cost of borrowing in dollars overnight in London rose as the increased likelihood of a global recession spurred banks to hoard cash even after policy makers pumped record amounts of the U.S. currency into financial markets....
Delivery failures plague Treasury market - ...Chronic failures can increase illiquidity problems in the market and expose market participants to losses in the event of counterparty insolvency, according to the New York Fed...
AIG may need more cash due to restructuring - ...[the] crux of the problem was declines in the market value of its credit default swaps, requiring it to post more and more collateral. [ CEO Edward Liddy] stressed that AIG was working to rid itself of thorny liabilities that drove $25 billion in losses over the past three quarters, and had shut down the financial products unit that was the source of the losses...
And this is not even discussing things like the potential defaults in Iceland, the bankruptcy of Pakistan, the potential unrest looming in countries like Saudi Arabia and Venezuela as the plunge in oil revenues puts the squeeze on the social programs used to buy off the masses.
This crisis is still unfolding. If you are not prepared, well, good luck with all that. I am still not ready to give firm advice as we don't know how it will shake out totally - but get your head right, reconnect with friends and family and get old school in your thinking about work, about life, about debt and about your community.
Thursday, October 23, 2008
PAUL SOLMAN: We sat down with Taleb and the man he calls his mentor, mathematician Benoit Mandelbrot, pioneer of fractal geometry and chaos theory. And even more than feeling vindicated, they're both scared.
NASSIM NICHOLAS TALEB: I don't know if we're entering the most difficult period since -- not since the Great Depression, since the American Revolution.
PAUL SOLMAN: The most serious situation we've been in since the American Revolution?
NASSIM NICHOLAS TALEB: Yes.
PAUL SOLMAN: Professor Mandelbrot, can that possibly be true?
BENOIT MANDELBROT, Mathematician: It's very serious.
PAUL SOLMAN: More serious than the Great Depression, possibly?
BENOIT MANDELBROT: Possibly. I hope not...
Hat tip John Robb over at Globalguerrillas for the link
Wednesday, October 22, 2008
One of these catchy little quotes is really going to spark some anger and possibly violence as the records of these finance titans are gone over with a fine-tooth comb. I am waiting for that "let them eat cake" moment.S&P Officials: We'd Do a Deal 'Structured by Cows'
by Scott Cohn, CNBC
In a hearing today before the House Oversight Committee, the credit rating agencies are being portrayed as profit-hungry institutions that would give any deal their blessing for the right price.
Case in point: this instant message exchange between two unidentified Standard & Poor's officials about a mortgage-backed security deal on 4/5/2007:
Official #1: Btw (by the way) that deal is ridiculous.
Official #2: I know right...model def (definitely) does not capture half the risk.
Official #1: We should not be rating it.
Official #2: We rate every deal. It could be structured by cows and we would rate it...
Now might be a great time to reread Mish's screed on how it is Time to Break Up the Rating Cartel. Not that it will matter much in the coming years. I don't expect we'll be seeing a lot of exotic finance products - at least any originating in New York.
Tuesday, October 21, 2008
Those who would create the memes that glom onto your mind, be it for getting you to buy a certain kind of soap or life insurance, or go to war, or root for a sports team - they are a wily bunch and know their craft very, very well. Be aware of this when you consume information out there, be it from newspaper, forum posting or television.
I wonder who really wrote the speech? What group disseminated it? Huh. Fun to get an occasional peek behind the curtain, if nothing else.
Hat tip to George Ure over at UrbanSurvival for this doozy.
I am still of the strong opinion that the Great Collapse here in the U.S. will follow the example set by the Argentine economic crisis of 1999-2002 and the continuing aftershocks, such as:Argentine Bonds, Stocks Plunge on Pension Takeover Speculation
by Drew Benson and Bill Faries, Bloomberg
Oct. 21 (Bloomberg) -- Argentine bonds soared above 24 percent and stocks sank the most in a decade on speculation the government will seize private pension funds and use the assets to stave off the second default this decade.
President Cristina Fernandez de Kirchner will unveil a new pension fund plan at 4 p.m. New York time today, the country's social security administration said in a statement. Fernandez will nationalize the system, giving the government control of $29 billion in retirement accounts, La Nacion reported, citing government officials it didn't identify.
"It's horrible," said Jaime Valdivia, who manages $1 billion of assets for Emerging Sovereign Group in New York. "We're going back to the dark ages. Not even in times of the worst financial stress did the government ever think about taking over the private pension system..."
Makes you wonder, when the elites in the U.S. finally wake up, or, as is more likely, are forced to acknowledge the debt tsunami that is washing over the country, will the feds be able to ignore that huge pot of money sitting out in IRAs, Roth IRAs, 401(k) plan accounts, etc.? All that cash, ready to be gathered up, for the Good of the People, of course, exchanged for new government bonds and the cash disbursed to the many bondholders, such as China, Japan, Europe, etc. - nah, they wouldn't ever do that, right? That's as crazy as saying that the Bush Administration would preside over the natioinalization of the banking industry or something like that.
I strongly recommend reading the Wikipedia account of the Argentine crisis. This was a developed nation that cratered due to a debt crisis. The federal government defaulted on their foreign bonds (forcing debt holders to suck it up and take new bonds at 30 cents on the dollar) and enacted a wide variety of measures to halt runs on the banking system, forcing many formerly middle class men and women into cardboard-collecting poverty and barter.
At the very least, it provides a real-world example of what can happen when debt and stupidity overtake the spending habits of a country and its people.
Monday, October 20, 2008
BlackLight Power claims their 1 and 50 kW power generators have passed validation studies. If this turns out to be accurate, then get ready for the destruction of the macro-power utility along with the macro-finance entities.
From the Press Release:
“Our experiments on the BlackLight technology have demonstrated that within the range of measurement errors the significant energy generated, which is 100 times the energy that could be attributed to measurement error, cannot be explained by other known sources like combustion or nuclear energy,” says Dr. Jansson, professor of engineering at Rowan University. “The ability to generate such tremendous power in this controlled process demonstrates that the claim by BlackLight Power that it is able to demonstrate repeatable heat experiments based on their technology can be replicated by independent scientists.”
The BLP process continues to be replicated and validated by independent scientists and has received interest from financial institutions and power utility plant operators around the world. BLP plans on licensing its technologies.
This will be opening up a whole new arena for sustainable "resilient communities" or "rhizome communities" and further eat away at the foundation of the Big Iron world of industrialized Western economies.
Might add their website to your list of weekly or monthly drop-ins - there is a lot of money and talent behind this firm.
As faithful readers know, I am a proponent of using the socionomic model to help evaluate your macro and (at times) micro level decisions when it comes to things like career/work decisions, deciding where to live, catching trends early for helping inform entrepreneurial decisions, etc. Plus, it is very useful in helping you figure out whether or not your decisions are being swept up as part of the emotional tide or if they are anchored to the facts as you know them.
One drawback to implementing socionomics has been the lack of a solid suite of "social mood" measurements. The latest issue of Progress in Socionomics provides some good news for those of us wanting better gauges to social mood than the blunt hammer of the stock market:National Election Study to Measure Social Mood
Out of 1,100 proposed questions for a study on voting behavior, the American National Election Studies (ANES) has decided to include several questions based on a formal proposal from the Socionomics Foundation. The Foundation recommended that the researchers pay particular attention to how mood influences voter preference...
This quarter's Progress also has some interesting short articles on outstanding work done by analyst Mark Galasiewski in predicting violence trends in Beirut and a report on a study of emotions and mood.
Whatever awaits the U.S. and the world on the other side of this Great Collapse, we will need sharper tools to deal with it. I firmly believe socionomics is one of those tools. If you get the time, read up on the concept or watch History's Hidden Engine - an outstanding documentary on the subject.
This quote has been on my mind quite a bit as I watch the various factions of the Powers That Be scurry around to attempt and save the current fractional reserve banking/fiat currency/debt slavery system that is crumbling around them, much like the temple crashing down about Sampson.
"After us, the deluge. I care not what happens when I am dead and gone." - Madame Pompadour, quoted while France was on the verge of economic collapse.
Officialdom, the elites, whatever label you want to put on them seems mono-focused on shoring up a decayed system and to hell with any alternatives. The eerie lack of in-depth discussion over consequences of this bailout and zero discussion over trying out alternative socio-economic system seems to indicate they are gambling it all on one final throw of the dice and if their policies loot the treasury of the Republic and leave the country barren of working capital for generations to come -so be it, they'll be flying their ass to Monaco and living off the interest from their Cayman Islands bank account.
Nothing I can do about it, just an observation. I remarked some time ago that either the U.S. has been cursed with the dumbest generation of political and financial elites ever unleashed on the planet, or they all know that a huge asteroid is coming our way and are encouraging us all to party it up before the inevitable. Sadly, I think the answer is that they are incompetent, disconnected and vile.
Cold Turkey for Thanksgiving
Something to ponder. Forty million Americans currently take sleeping pills, anti-anxiety medications, anti-psychotics, etc., but as this crisis grinds on and more and more white collar jobs are lost, what happens to these junkies?
Lose your job, lose your insurance, lose your junk, what then? Coming down off of these high-powered meds is ugly - and they may not get the advice needed on getting clean. Think about what kinds of decisions these people will be making...
Just be alert. Have your ready kit reviewed, have your head together.
Thursday, October 16, 2008
I'm off to Austin, Texas for a weekend of golf, football and a drink or three. I figure this may be my last outing for awhile if conditions continue to deteriorate. No time like the present to take a few days off. We'll reconvene on Monday and continue navigating our way through this tsunami of change.
Tuesday, October 14, 2008
For those of you who like "big picture" type of stories and theories, check this out:War and Sunspot Cycles: A Form of Electromagnetic Pollution
by Buryl Payne PhD, Epoch Times
TV, cell phone towers, power lines, and house appliances—while they make our lives more convenient, they also contribute to polluting our electromagnetic atmosphere. A growing number of scientists, health care professionals, and concerned citizens argue that these invisible frequencies are responsible for a host of various health problems. Meanwhile, the largest polluter has gone unnoticed: the sun. At certain times, the sun’s activity can also aggravate mental health problems...
Just something to ponder. For those of you following along with Fabius Maximus' occasional review of sunspots and climate change as relates to national security, this might be of interest.
Monday, October 13, 2008
We have a big rise in stock market "values" all over the world as this week begins. It'll be fun for a few days or weeks, as the initial bowel-loosening fear is internalized and the "rescue packages" are implemented. Then, as the reality of the coming devastation of consumer balance sheets becomes apparent, we can all get back to the business of fear.
Now that we know the main drivers of this crisis - credit collapse, a rotten support structure of mortgages tied to wildly over"valued" homes in the U.S. and Europe and credit card debt that can never be repaid, and Construction and Real Estate Loans that are malignant tumors on the balance sheets of regional banks - let's take a moment and step back.
We've talked tactics here at FutureJacked, discussed the need to build your own networked tribes, the need to arm yourself with non-mainstream data points (hence the constant urging to read George Ure or Robert Prechter or the rant-prone Jim Kunstler) and, most importantly, the need to get your head ready for change and avoid getting suckered by the Chump Phase of the transition crisis or losing your head when the world panics.
When disaster strikes, when conditions change suddenly and blast the expectations of the majority of folks into dust, most of our fellow citizens will, at first, be locked in denial and fear. A prepared few will be more than happy to come along and give these shocked people a plan and reason for living. Nothing new in this assessment, but I do want to put this bug in your ear. We need to start thinking NOW about the mental weapons and defenses against the coming blitzkrieg against your brain.
The Ultimate Sanction
Socionomic theory, a model I find useful (while all the while remaining completely aware that the map or model is not the territory itself), indicates that the coming years will be rife with anger, xenophobia, secessionist movements, cults, gang wars, civil wars, terrorist bombings, scams and cons. This is the fire that will burn hot on the deadwood that accumulated in the long years of positive mood and prosperity - a prosperity that was at first quite real, but that degenerated into a Xanax-fueled, debt-enabled faux prosperity built on fraud, lies and wishes.
Of the many movements that will sweep our culture, the many memes that will be spread like a virus into your mind and into the minds of your children, you can expect the vast majority of ideas to be rather detrimental to both community and individual. It's a rare meme that allows or encourages its host to be strong, independent and self-actualizing.
Love her or hate her, Ayn Rand fleshed out a concept that you can store in your brain for the coming hard times. She called it the sanction of the victim, and it may be summed up as "evil requires the sanction of the victim." Individuals participate in evil because the memes that have infected their minds drive them to it, or at least justify it.
When someone comes along and tries to sell you another bailout plan or portrays himself/herself as the next great political savior, view what he or she is selling through the lens of this concepts that evil requires the sanction of the victim. React accordingly.
A Time for Solutions
No matter how grim the economic situation may seem in the coming months and years, this is actually a time to begin getting optimistic. Finally, the insanity, the perverse behaviors, the self-destructive decadence sold to the world - it is coming to its howling conclusion.
We can now begin to look forward. We can stop harping on the disgusting spectacle of bread and circuses that the Republic has sunk to for its pleasures and begin laying the foundations for a new system. For those of you outside the U.S., the same obtains - while the washout is only beginning, now is the time to be surveying the ground and, once all hope seems lost, be ready to move with vigor and confidence to build anew.
This Second American Revolution, this coming World Revolution, starts one mind at a time. I'm not advocating violence at all. I am advocating changing your mind about what is important, changing your mind about what signals you allow into your brain from media and government and advertisers, changing your mind about what is right and changing your mind about how your community should work.
This is not me buying into a bunch of stale leftist ideology. This is me saying that as Americans, it is time to remember our history. To dig into our past, to discard the bad, to revitalize the good.
- Read a history of President Jackson and his fight against the Second Bank of the United States - and don't just accept modern interpretations - read his thoughts on this great issue. Try to understand the root causes, not just be satisfied with some superficial fluff piece.
- Read the Anti-Federalist Papers and think about their concerns and ponder the state of the Republic today versus the worries of these thinkers from two centuries back.
- Read President Eisenhower's Farewell Address. Think about his words.
- Grow a garden, no matter where you live. This is a much more revolutionary act than you think...
- Turn off the TV
- Be prepared, always...
Something is Coming
None of us know what is in store for our culture, our society, our Republic, our world. One thing we all know now, whether consciously or not, and that is kiddie time is over. The years of living like drunken adolescents is coming to an end. Time to sober up. Time to man up. Time to build a world worthy of what we can become.
Saturday, October 11, 2008
A world credit crisis is boiling over, and now this:World Bank Under Cyber Siege in 'Unprecedented Crisis'
By Richard Behar, Fox News
The World Bank Group's computer network — one of the largest repositories of sensitive data about the economies of every nation — has been raided repeatedly by outsiders for more than a year, FOX News has learned.
It is still not known how much information was stolen. But sources inside the bank confirm that servers in the institution's highly-restricted treasury unit were deeply penetrated with spy software last April. Invaders also had full access to the rest of the bank's network for nearly a month in June and July...
Watch for the blowback from this. What was stolen from earlier hacks? What other financial systems are vulnerable? Could this have come at a worse time?
Friday, October 10, 2008
I have an experiment plan to finish today, so bounce on over to these links for ongoing coverage of the initial phases of the Great Collapse. Remember, we are way, way early here folks. Also, it might be time for you to revisit your Gambler's Analysis of your situation, just to make sure you have it firmly in your head...Complacency and Panic
by Charles Hugh Smith
...Where everyone else seems to see a consensus of panic and hence a bottom, I see massive, widespread near-universal complacency, which means the bottom is nowhere in sight. The only panic I see is in our fearless leaders Paulson and Bernanke, which also doesn't bode well for the future...Portent
Just click the link. You'll see what I mean...
Grain Shipments Stalled in Credit Drought
by John Greenwood, Financial Post
...Before cargoes can be loaded at port, buyers typically must produce proof they are good for the money. But more deals are falling through as sellers decide they don't trust the financial institution named in the buyer's letter of credit, analysts said.
"There's all kinds of stuff stacked up on docks right now that can't be shipped because people can't get letters of credit," said Bill Gary, president of Commodity Information Systems in Oklahoma City. "The problem is not demand, and it's not supply because we have plenty of supply. It's finding anyone who can come up with the credit to buy..."
And of course George Ure's daily data dump is always worth your time.
Beware this month, friends. Be prepared.
Thursday, October 9, 2008
I owe you some in-depth posting. It may have to way until the weekend.
Until then, remember that Psychology Matters and watch how the following stories play out over the coming days and weeks:
Iceland takes over biggest bank, PM urges calm - Iceland seized control of its biggest bank on Thursday and halted all trade on its stock market as the prime minister urged people to remain calm in the face of a financial meltdown...
FutureJacked Comment: Iceland is the U.S. in microcosm. Too much debt, not enough resources to service the debt. Collapse ensues. They whored themselves to the Russians. Watch for similar deals in the next year between the current crop of supergeniuses in D.C. and the Chinese...
U.S. Treasury May Buy Stakes in Banks Within Weeks - The government is planning to buy stakes in a wide range of banks within weeks as the credit freeze increasingly threatens to tip the U.S. economy into a deep recession...
FutureJacked Comment: They continue to trot out Warren Buffett. He's held up as a big supporter of the next awesome Paulson Plan in this article as well. You'll know we are near a bottom when Warren Buffett is a reviled figure, portrayed as a shark by the media. And oh yeah, uh, Hank, just how are you going to parcel out that cash to the banks? Who get's to decide who lives and dies? By what criteria? I plan to check out the resumes of the bank chiefs who DO get Paulson money. I wonder how many will be Goldman Sachs alums...It's a great time to be afraid - Fear is getting a bad rap in the market these days, which is a shame because it's a basic instinct that deserves respect. We often hear that greed is the way to go when markets trade down, but that's not quite right. Fear works, too. Fear clarifies. Fear is good...
FutureJacked Comment: The sheer socionomic juiciness of this column brings a tear to my eye. There will be pleny more tears in the weeks to come.
Beware this month, friends. Be prepared.
Wednesday, October 8, 2008
Listening to the mainstream talking heads on the financial shows would be amusing, if it wasn't so ugly out there. The desperation in their voices as they talk about "restoring confidence" is taking on a religious tone - if we just pray hard enough, the Great Oz will miracle money into everyone's bank accounts and the massive indebtedness of the Western world, contracting credit as banks actually begin taking their underwriting seriously again, the grossly overexpanded services "industry," the massive investments in suburbs 60 miles from the urban job centers - all this will go away.
This latest flurry of "bold moves" may actually harm confidence. A 50 basis point drop in the Fed Funds rate! Only 150 more to zero! The U.K. is pissing money down a rathole, the same as the U.S. and the rest of Europe - what a great idea! Iceland has signed up to become an economic colony of Russia - great news!
I expect a big pop up today in U.S. equity markets, if for no other reason than to bleed off some of this oversold condition we find ourselves in. That said, when mass psychology turns negative (as socionomics says happens in waves - optimism and pessimism tugging back and forth) then these bold actions will be interpreted as panicky moves by frightened incompetents, instead of the bold moves of financial geniuses, as they are being marketed at present.
Six years ago, this was described by Bob Prechter in his book Conquer the Crash:
...In an envirnoment of pessimism, corporations likewise reduce borrowing for expansion and acquisition, fearing the burden more than they believe in the opportunity. Consumers adopt a defensive strategy at such times by opting to save and conserve rather than to borrow, invest and spend. Anything the Fed does in such a climate will be seen through the lens of cynicism and fear. In such a mental state, people will interpret Fed actions differently from the way that they did when they were inclined toward confidence and hope..."
- Conquer the Crash, 1st edition, 2002, page 129
We shall see. Keep your eyes on Europe, especially this ugly mess in Iceland. We are early in this crisis. Anyone telling you "we are in the 8th inning" needs to put down the kool-aid and start paying attention to the real world.
Tuesday, October 7, 2008
The U.S. equity markets cratered again, today. Credit markets remain in panic mode. The TED spread is still awful.
All this, after the Masters of the Universe, the geniuses at the Fed and the "limitless" funding injected by Congress, Treasury, et al, after all the "confidence building measures" - the markets are still signalling collapse.
It's here folks. You must be nimble. You must think old school about problems, about life, about what is truly valuable - and triage your situation accordingly.
We aren't close to What Comes Next, but we are in the transition period.
There will be blood.
Make sure it ain't yours.
Monday, October 6, 2008
In the U.S., the big trends of the 20th and early 21st centuries began in California. They continue to lead the way into the Great Collapse...
California Hopes Washington Brings Credit Relief - ...Gov. Schwarzenegger said that if the state couldn't borrow on its own, it would again "go to the federal government and ask for help." He had sent U.S. Treasury Secretary Henry Paulson a letter Thursday warning that California might have to seek $7 billion in emergency federal loans until liquidity is restored in credit markets...
Credit crunch puts California governments in a corner - With credit markets all but paralyzed and state and local governments unable to borrow money, California officials joined calls Thursday for quick approval of a financial bailout plan working its way through Congress.The warnings were stark, including suggestions that operating funds to pay state workers, teachers or even healthcare workers could dry up in the weeks ahead...
Something to ponder is the impact of a cratering economy on the social fabric of the United States. 80 years ago, just before the Great Depression began, the U.S. was a relatively homogeneous society of disciplined citizens, trained and ready to listen to their leaders. As Jim Kunstler puts it -
...Even at this point, the current crack-up in world finance makes the 1929 crash and the events of the 1930s look in comparison like an orderly small town auction of somebody's grandmother's effects. Back in that sepia day, America had plenty of everything except ready cash. We had, especially, plenty of our own oil, and -- you're not going to believe this but it's true -- the stuff was selling for as little as ten cents a barrel, it was so abundant. And yet still, America in the 1930s plunged into a dark depression of inactivity, loss of confidence, and impoverishment.
This time around, things could get more disorderly. Personally, I think we may be beyond the reach even of fascist authoritarianism, because unlike the programmed industrial masses of the 1930s, we are unused to regimentation, to lining up at the factory gates and the movie theaters. Back then, society was so regimented that everybody wore uniforms in-and-out of the military. Look at movies from the 1930s. Every man-jack wore either a necktie and hat or overalls. The industrial masses behaved like termites. Once unemployment hit, they were waiting to be told what to do, to line up for something. It worked fabulously for Hitler, who took every advantage of this mentality. Luckily, the US went for Roosevelt (both FDR and Hitler entered office the same winter of 1933, by the way). FDR was more like everybody's kindly Uncle Frank, and his reassuring persona enabled Americans to suck up their bad luck and altered circumstances. Many of them retreated to the family farm (which still existed then) and waited things out -- and, anyway, the melodrama of the Great Depression soon resolved in the Second World War when Hitler's love of regimentation led him into military misadventure. He shouldn't have picked a fight with someone who had so much petroleum -- end-of-story.
With a country riven by various factions, with anger rising and the potential for significant armed activities to be carried out en masse in California and the rest of the "American" Southwest (also known as Northwest Mexico to those who would support a modern reconquista) as well as the strong position of gangs in all major (and minor) U.S. cities, I would strongly urge you to think about the consequences of, as Fabius Maximus puts it - "No coins, no COIN" and what that means to where you and your family live and work...
Beware this month, friends. Be prepared.
The next two weeks will tell the tale, in my opinion. The fact that you see so many talking heads bleating about "the need to restore confidence" shows that the Ponzi Scheme is collapsing. The fraud that is fractional reserve banking is collapsing upon itself, taking the current world economic system down with it.
Maybe, just maybe, The Powers That Be can "restore" enough confidence to keep the banking system (relatively) intact. If they can't, then get ready to throw out every economic text book you've ever read. A brave new world will be upon us. Might want to instead read up on the French Revolution. That will give you more insight into what is coming.
Also, we did a couple of posts on the Argentine Crash here a Futurejacked last year. Might be a good time to review them:
George Ure over at UrbanSurvival is thinking that the settlement of Fannie Mae and Freddie Mac trades (to determine recovery value) may act as crash trigger here in the U.S. George is plugged in to all sorts of insiders, so he may be onto something there.
I call it a crash trigger, as I think the socionomic model applies quite well to the current environment - an endogenously driven market where news stories are used to "explain" deeper processes.
Either way, it won't matter. A world system-ending crash is still ahead of us, barring a miracle.
Beware this month, friends. Be prepared.
Sunday, October 5, 2008
We interrupt this coverage of the ongoing Great Collapse to bring you one more Sign of the Apocalypse. My Missouri Tigers pummeled Nebraska, in Lincoln, for the first time in 30 long, long, long years.
Friday, October 3, 2008
Well, they did it.
I think this was a watershed moment in America. I think this was the first time in decades that the thinking part of the public was roused from their apathy in large numbers. The vast majority opposes this plan. If, as I expect, the economy still crashes, the simple memes that will be released can be summed up as:
- "They" lied to "us"
- Main Street gave Wall Street $700 Billion, the market crashed anyway and the bankers got to offload toxic waste on the taxpayer
- I lost my home and that banker get's to keep his
You can build a lot of rage on simple foundations like that...
Yes, those of us that opposed the bill lost out, but this issue has helped crystallize a lot of unease out there. This bill won't help Main Street directly. It may save some of the banks (actually, it will save Chinese owners of a lot of toxic mortgage securities, who can now transfer it to U.S. subsidiaries and then dump it on the U.S. Treasury) but to sell this thing, The Powers That Be had to really hype this bill and expectations are now too high for the ugly reality coming.
Next week could be horrendous. The credit markets continue to seize up.
Beware this month. Be prepared.
Thursday, October 2, 2008
The following is offered as a public service for those of you following along with the Credit Crisis at home. Pull out your pennies (what else you gonna use them for these days?) and play along with the pundits at CNBC, CNN, Bloomberg, the U.S. Treasury and the U.S. Congress.
Just click on the image and print. You'll be yelling "Bingo!" in no time.
Feel free to pass it along.
Good luck and God help the Republic...
The art of memeering (planting thought virii and seeing what takes root in the popular conscience through media - both traditional and non-traditional like online message boards, email chains, etc.) is interesting to watch in action.
This "rescue plan" is a very interesting case in point. The crisis appeared to rush up on the elites and catch at least most of them unprepared to spread the memes needed to shift public opinion. We can leave the whole theory that this is all just part of standard Shock Doctrine for another day.
They let the whole "bailout" tag linger too long to the point where it remains a key tag for this cynical power grab/necessary evil.
But watching the Senate "debate" last night and CNBC this morning, the elites seem to be getting their shit together and are trying to rapidly grow memes like:
- We have suffered an Economic Pearl Harbor!
- This is a bailout of Main Street, not Wall Street
- This is a financial rescue plan, not a bailout
- You will not be able to get a loan, small businesses won't be able to make payroll
- Car sales suffered because of this credit uncertainty
- The big drop in the DJIA on Monday was solely because of the House of Representatives' failure to pass the plan
These seem to be the core themes due to their endless repetition, but you may have spotted more.
What To Watch For
If the House votes this down again, then we may enter into hardball territory. Don't be shocked if a few banks use this as an excuse to "temporarily" shut their doors as part of some emergency bank holiday. They are scared to death and they may give the Congress folk a taste of what they say is to come. The blowback from such a tactic would be huge and unknowable.
I still expect the House to cave. I still expect it to not make a damn bit of difference.
Beware October, friends. Be prepared.
Wednesday, October 1, 2008
The Senate passed the Great Plan To Save The World tonight, 75 yeas to 24 nays.Andrew Jackson is rolling in his grave.
Well, they are half way there. The House will probably cave on Friday. Then we shall see.
If nothing else, The Powers That Be will have one less propaganda tool to use ("if only you'd passed the bailout bill, no crash would have occurred!").
Beware October, Friends. Be prepared.
Chew on this item (hat tip to Calculated Risk) and keep an eye on the markets today.
National Debt to Exceed $10 Trillion Tomorrow
It now looks like the National Debt will be over $10 Trillion tomorrow.
As of Sept 29th, the debt was $9,945,578,231,981.59
The surge in the National Debt over the last two weeks has been because of the Supplementary Financing Program (SFP) with the Treasury raising cash for the Fed's liquidity initiatives (announced a couple of weeks ago).Today the Treasury sold $45 billion in 15 day Cash Management Bills that are all for the Fed. Tomorrow the Treasury will sell $50 billion in 42 day bills also for the Fed. And that Wednesday auction should put the National Debt over the $10 Trillion mark (we will know on Thursday)...