Ron Paul

Nicely done..RP for president?

Hah!

My sentiments exactly:

Finally, 61.8 fib hit on ES

Buzz buzz, whir whir..ahh forgettaboutit.

The scary actual U.S. government debt - The Globe and Mail

The scary actual U.S. government debt - The Globe and Mail

Boston University economist Laurence Kotlikoff says U.S. government debt is not $13.5-trillion (U.S.), which is 60 per cent of current gross domestic product, as global investors and American taxpayers think, but rather 14-fold higher: $200-trillion – 840 per cent of current GDP. “Let’s get real,” Prof. Kotlikoff says. “The U.S. is bankrupt.”

Writing in the September issue of Finance and Development, a journal of the International Monetary Fund, Prof. Kotlikoff says the IMF itself has quietly confirmed that the U.S. is in terrible fiscal trouble – far worse than the Washington-based lender of last resort has previously acknowledged. “The U.S. fiscal gap is huge,” the IMF asserted in a June report. “Closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP.”

This sum is equal to all current U.S. federal taxes combined. The consequences of the IMF’s fiscal fix, a doubling of federal taxes in perpetuity, would be appalling – and possibly worse than appalling.

Prof. Kotlikoff says: “The IMF is saying that, to close this fiscal gap [by taxation], would require an immediate and permanent doubling of our personal income taxes, our corporate taxes and all other federal taxes.

“America’s fiscal gap is enormous – so massive that closing it appears impossible without immediate and radical reforms to its health care, tax and Social Security systems – as well as military and other discretionary spending cuts.”

More here.



Oh, and I've shared this with a few friends and family just to make sure the kool-aid wasn't entering their consciousness.  Read more at the Interactive Map of Global Debt

"The Ben Bernank"

Bahahaha!

Good bye...

This is our beloved Kira who passed away suddenly after dental surgery yesterday. Pretty tough going around here as a result..she was our "shadow" for the last 10 years and to say that she will be missed is a tremendous understatement..  :(

Two great videos

Via the Big Picture blog:

Mohammad El-Erian interview

I dunno, this guy just seems so rational to me ;)  Anyways, key point in this interview is this excerpt highlighted by Business Insider:


"7:25 The bond market is pricing in a buyer with a printing press, so it is not a leading indicator."

Where the logic behind this statement can be applied to this chart:

That said, I'm not 100% sold on the idea that the 10 year bond yield is useless as a leading indicator, just that the spread shown in this comparison chart between the SPX and the TNX is not as dramatic as it might appear.  The gap will be closed, the only question is how.

Ambrose in typical form...

This time on the headline du jour, "Currency Wars are necessary if all else fails"


"This is a dangerous moment for the world, and may backfire against the US itself. We are already starting to see the same sort of rush into oil and resources that played such havoc in mid-2008, and may have been a key trigger for the Great Recession. There is a risk that this commodity shock will hit before QE stimulus filters through.

And while the French deny that they are in talks with China over the creation of a new currency regime, I heard French finance minister Christine Lagarde say in person at a meeting in Italy that France would use its G20 presidency to push for an alternative to the dollar. She specifically cited the “Bancor”, the idea floated by Keynes in the 1940s for a commodity currency priced off a basket of metals. The US risks gambling away the “exorbitant privilege” it has enjoyed for two thirds of a century as currency hegemon.

Yet the surplus states have most to lose if this brinkmanship tips into commercial war. They must know this, but what we are witnessing may run deeper than a calculus of advantage. Was it naïve to think that Confucian Asia and the old democracies of the Atlantic seaboard can share an open global trading system?"

FYI

Jim Grant

Great interview with Jim Grant..

You can hear the panic...

Just listen to this.  Perhaps we are finally past the denial stage?  Step on the QE gas pedal is the ONLY proposed solution.



Denninger says this on QE:
QE is in fact DEFLATIONARY, as all such programs in fact exchange interest-paying debt for cash, which bears no coupon.  It is therefore deflationary, not inflationary, and you both know it and are lying about your intentions and actions in this regard.  It can only be inflationary if the cash injected can make its "turns" in the banking system.  But in a debt-saturated economy, and we are in one, such is impossible and as such the removal of that coupon from the economy serves to deflate, not inflate.


And so...the wheels on the bus go round and round...right off the cliff.

Green box alert!

Beep beep.  Whirr Whirr

Your guess is as good as mine...

I'm bearish..but hey...that means squat!

SPX

Interesting...

CHOP CHOP CHOP

Karl sure has a way with words...his latest missive:


When the market starts to act like this - when there's this "invisible hand" that magically levitates things, when people resort to disseminating outright liesabout the market or specific companies and do so to counteract actual bad news that would otherwise result in moves down, it is a sign of desperation - there are people with money and power who are on the wrong side of the bet and they are willing to deceive you and rip you off outright to avoid being the one with the bag.


Read more here.

And one more chart for today:

Today's developments

First, the TSX:

Nasdaq:

And the Russell 2000:

Nasdaq-TNX update

The divergence grows...

Nasdaq

Picking on the Nasdaq this AM as it is the market leader.  I'm positioned with a few shorts and some Vix.  Suppose I'm trying to be cute and pick a top..as there could be one more push up, but I'm willing to wait for a correction or something more given the evidence.  Stops are right above that green box.

From the "War Games" files..

FFSAKES - what a WOPR of a story - maybe it's really PETA targeting the chicken and beef factories?  ;)

From Zero Hedge:

"One of the most interesting stories in the last few days, has little to do with finance and economics (at least right now), but arguably very much to do with geopolitics. A fascinating report which cites computer security experts claims that the recent uber-cryptic malware worm Stuxnet is nothing less than a weapon designed to infiltrate industrial systems, and based on attack patterns, the ultimate object of Stuxnet may be none other than Iran's Busher nuclear reactor, which could be targetted for destruction without absolutely any military intervention. Has modern warfare just become obsolete courtesy of a computer virus?"

Read more here.

20 Signs That The Economic Collapse Has Already Begun For One Out Of Every Seven Americans

20 Signs That The Economic Collapse Has Already Begun For One Out Of Every Seven Americans

"How anyone can look at those numbers and think that things are about to 'get better' absolutely boggles the mind.

It is time to wake up.

Things are not going to get better.

Things are only going to get worse.

The United States is rapidly becoming a nation where poverty is absolutely rampant.

As poverty continues to spread, crime will not be far behind."

Click the above link for the complete, depressing, list.

SPX - TNX Correlation

I was inspired to look at this via Karl's post tonight.  Thought I should follow up and get an appreciation for it myself.

Note that there are times where false signals are given, which is to say that the Treasury Yield is actually signalling higher prices when in fact they fall.


Update:  Mish has a similar post found here.

Charts

Haven't posted in a while, I've been watching, but too busy with other aspects of my life to comment. Here are some things that I am watching:

SPX - bit of a stretch perhaps:

Gold - definitely due for some form of pullback.  The nature of which will determine how to proceed.  Rally is looking strong, and weak at the same time.  $1215 is the key level - this is gap support now.

Silver - this has been a very profitable trade for me, and I exited 50% of my positions on Friday.  Things are hot enough that it could blast higher, but the ascent is quite steep and needs to consolidate / correct before another launch IMHO.

VIX - supports my SPX analysis with a E wave under throw:

TSX - Doink!  We'll see how this goes.

Gonzalo Lira: How Hyperinflation Will Happen

Hyperinflation!

Gonzalo Lira: How Hyperinflation Will Happen: "The Global Depression we are in is being exacerbated by the very measures being used to fix it—stimulus is putting pressure on Treasuries, which are being shored up by the Fed. This obviously cannot have a happy ending. Therefore, the smart money prepares for what it believes is going to happen next.�"

Part II is here.


Oh, and another great article from tonight:


"The structural bear market has not reached the end. We have long said that the de-bubbling process would end only when equities became very cheap and revulsion in equities as an asset class hangs in the air like a fog. The problem remains more of excess valuation within the US rather than Europe, but that will not prevent the bear market hurting other cheaper markets as much. We will return to the valuation nadir last seen in 1982 with the S&P bottoming around 450 (see chart below)."

More after the jump...

More sunshine..

"The Congressional Budget Office (CBO) forecasts the U.S. budget deficit will hit $1.3 trillion this year. An astronomical figure, to be sure, but that’s lower than was projected in March. It’s also less than last year’s record $1.41 trillion deficit, which was close to 10% of GDP.

And, that's the good news.

As the deficit grows so does the national debt, which is currently more than $13.3 trillion, according to official figures.

But the situation is actually much, much worse, according to Boston University economics professor Laurence Kotlikoff.

“Forget the official debt,” he tells Aaron in this clip. The “real” deficit - including non-budgetary items like unfunded liabilities of Medicare, Medicaid, Social Security and the defense budget - is actually $202 trillion, the professor and author calculates; or 15 times the “official" numbers.

“Congress has engaged in Enron accounting,” says Kotlikoff, who recently penned an op-ed for Bloomberg entitled: The U.S. Is Bankrupt and We Don't Even Know It."

More here...

Are you ready?

Ambrose nails it in his usual style. This quote should scare the snot out of the "long only" crowd:

"'This has been one of the most interesting days in finance ever,' said Andrew Roberts, head of credit at RBS. 'We are right at the tipping point. Yields are about to collapse even further, equities are about to turn over. The end game approaches, probably in next few weeks.'"

Hard-nosed Fed sends global markets reeling - Telegraph

Awesome

Armageddon!

Well, more opinions on some form of outcome..albeit from yet another gold bug.

Must watch

Saw it via Karl Denninger`s site.  Karl Bass:

Laf

Rosie!

This man is SHARP.  The end game is here..and I still have no idea if the collapse will be in nominal or real terms.  AARRRGGH!

Canadian Pension Issues

Oh please, the economy here is rocking. There is no way these companies won't increase their contributions! And besides, a 50% haircut is nothing for all these baby boomers with 80% of their wealth in real estate (only goes up!) and on average, less than $30K in RRSPs (what, me worry?). 

Workers in big pension plan could soon face cuts in benefits - thestar.com: "“If there is no additional negotiated contributions as of Sept.1, then members of the plan with that employer will go on to a benefit scale that is up to 50 per cent of what they are accruing on a future basis,” Hanley said in an interview."

It's Karl!

Yummy fractals courtesy of Karl Denninger:

Chart for end of July

Will this pattern hold?  Should know by the end of the month..

Everyone wonders this type of thing...

I read Schroedinger's Cat in 1994.  You can learn more of it, and quantum physics here:

http://en.wikipedia.org/wiki/Schrödinger's_cat

http://www.phobe.com/s_cat/s_cat.html

Fascinating clip follows:

'Nuff said

Jesse's CafeAmericain: Should the Fed Buy Gold At $5,000 per Ounce? Should Mexico Go to a De Facto Silver Standard?

Run, don't walk to read this piece from Jesse's:

Should the Fed Buy Gold At $5,000 per Ounce? Should Mexico Go to a De Facto Silver Standard?

Market Thoughts and Analysis: US Dollar Count Updates

Thanks Dark for the heads up on this post from BINVE over at Market thoughts and analysis. Absolutely in line with my thinking. The only thing I would add is that "Stagflation" could easily become a hyperinflationary depression as described in this must read piece by the venerable John Williams at Shawdowstats.com.

Here an excerpt from BINV's fantastic post:

Market Thoughts and Analysis: US Dollar Count Updates:

"I do think that most inflationists discount the amount of debt that is collapsing (even though most deflationists use measures like M2 and M3, which have a lot of non-monetary components to prove their point) while at the same time most deflationists discount the amount of monetary inflation the Fed can generate (they argue that the Fed creating base money is like pushing on a string because the banks don't have to lend, even though I am many others have pointed out that the Fed has gone around the banking system and has started monetizing private sector debt directly, which is a trend that is likely to increase not decrease). Most people on either side of the debate is not considering strong evidence that both forces are significant."

And here is a section from John William's post, HYPERINFLATION SPECIAL REPORT:

"The U.S. economy is in an intensifying inflationary recession that eventually will evolve into a hyperinflationary great depression. Hyperinflation could be experienced as early as 2010, if not before, and likely no more than a decade down the road. The U.S. government and Federal Reserve already have committed the system to this course through the easy politics of a bottomless pocketbook, the servicing of big-moneyed special interests, and gross mismanagement.


The U.S. has no way of avoiding a financial Armageddon. Bankrupt sovereign states most commonly use the currency printing press as a solution to not having enough money to cover their obligations. The alternative would be for the U.S. to renege on its existing debt and obligations, a solution for modern sovereign states rarely seen outside of governments overthrown in revolution, and a solution with no happier ending than simply printing the needed money. With the creation of massive amounts of new fiat (not backed by gold) dollars will come the eventual complete collapse of the value of the U.S. dollar and related dollar-denominated paper assets."


What say ye!?!  It's hard to resist the urge to sell everything and build a bunker that is "off the grid".  Don't get me wrong, I want to believe we can transition through this period in a (mostly) cordial manner..so I'll hope for the best..while planning for the worst.

The Real Kiss of Death

I've been saying something along these lines for quite a while. What initially inspired me was Martin Armstrong (unofficial site here) and his description of capital flows in his writing.  Of critical importance was the observation that currencies and markets show distinct signals when they rise and fall. This is most pertinent in this article.  Fascinating stuff...

"The real kiss of death for the stock market is when the stocks and the
U.S. Dollar decline simultaneously. Remember when the dollar declines
the stock markets are supposed to inflate and trade higher. Therefore,
if the U.S. Dollar and the major stock market indexes decline together
that is telling us a much larger problem is taking place. The major
problem would be deflation to the highest degree. During the 2009 rally
the saving grace for the stock market and the leading catalyst was that
the declining U.S. Dollar. As the dollar dropped most stocks and
commodities inflated much higher. Just look at how the leading
commodity stocks such as Freeport McMoRan Copper & Gold INC
(NYSE:FCX), United States Steel Corp (NYSE:X), and Rio Tinto plc
(NYSE:RTP) traded in 2009. These stocks soared on the back of the
weaker U.S. Dollar. Since the dollar rally in 2010 these leading
companies have struggled greatly.

When the major stock market indexes decline with the dollar and gold
use caution because this is a signal that cannot easily be fixed.
Deflation is a very powerful force that few understand. Over the past
100 years in the stock markets it has been inflation that has propped
the stock markets, housing markets and the price of a movie theater
ticket higher. When the market can no longer inflate on the back of the
weaker U.S. Dollar beware."

The Real Kiss of Death - FocalEquity

Doink!

Yes, as the good crew over at Anna's Hot Option Babe would say, DOINK or really close to it!

FYI - You could count this up move a lot of different ways, such as an a-b-c then A-B-C or 1-2-3 but I'm just not that "special".  =)

NOTHING TO SEE HERE

50 reasons to BUY BUY BUY this market.  Easy..right?

#50) In 2010 the U.S. government is projected to issue almost as much new debt as the rest of the governments of the world combined.

#49) It is being projected that the U.S. government will have a budget deficit of approximately 1.6 trillion dollars in 2010.

#48) If you went out and spent one dollar every single second, it would take you more than 31,000 years to spend a trillion dollars.

#47) In fact, if y ou spent one million dollars every single day since the birth of Christ, you still would not have spent one trillion dollars by now.

#46) Total U.S. government debt is now up to 90 percent of gross domestic product.

#45) Total credit market debt in the United States, including government, corporate and personal debt, has reached 360 percent of GDP.

#44) U.S. corporate income tax receipts were down 55% (to $138 billion) for the year ending September 30th, 2009.

#43) There are now 8 counties in the state of California that have unemployment rates of over 20 percent.

#42) In the area around Sacramento, California there is one closed business for every six that are still open.

#41) In February, there were 5.5 unemployed Americans for every job opening.

#40) According to a Pew Research Center study, approximately 37% of all Americans between the ages of 18 and 29 have either been unemployed or underemployed at some point during the recession.

#39) More than 40% of those employed in the United States are now working in low-wage service jobs.

#38) According to one new survey, 24% of American workers say that they have postponed their planned retirement age in the past year.

#37) Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008. Not only that, more Americans filed for bankruptcy in March 2010 than during any month since U.S. bankruptcy law was tightened in October 2005.

#36) Mortgage purchase applications in the United States are down nearly 40 percent from a month ago to their lowest level since April of 1997.

#35) RealtyTrac has announced that foreclosure filings in the U.S. established an all time record for the second consecutive year in 2009.

#34) According to RealtyTrac, foreclosure filings were reported on 367,056 properties in March 2010, an increase of nearly 19 percent from February, an increase of nearly 8 percent from March 2009 and the highest monthly total since RealtyTrac began issuing its report in January 2005.

#33) In Pinellas and Pasco counties, which include St. Petersburg, Florida and the suburbs to the north, there are 34,000 open foreclosure cases. Ten years ago, there were only about 4,000.

#32) In California’s Central Valley, 1 out of every 16 homes is in some phase of foreclosure.

#31) The Mortgage Bankers Association recently announced that more than 10 percent of all U.S. homeowners with a mortgage had missed at least one payment during the January to March time period. That was a record high and up from 9.1 percent a year ago.

#30) U.S. banks repossessed nearly 258,000 homes nationwide in the first quarter of 2010, a 35 percent jump from the first quarter of 2009.

#29) For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.

#28) More than 24% of all homes with mortgages in the United States were underwater as of the end of 2009.

#27) U.S. commercial property values are down approximately 40 percent since 2007 and currently 18 percent of all office space in the United States is sitting vacant.

#26) Defaults on apartment building mortgages held by U.S. banks climbed to a record 4.6 percent in the first quarter of 2010. That was almost twice the level of a year earlier.

#25) In 2009, U.S. banks posted their sharpest decline in private lending since 1942.

#24) New York state has delayed paying bills totalling $2.5 billion as a short-term way of staying solvent but officials are warning that its cash crunch could soon get even worse.

#23) To make up for a projected 2010 budget shortfall of $280 million, Detroit issued $250 million of 20-year municipal notes in March. The bond issuance followed on the heels of a warning from Detroit officials that if its financial state didn’t improve, it could be forced to declare bankruptcy.

#22) The National League of Cities says that municipal governments will probably come up between $56 billion and $83 billion short between now and 2012.

#21) Half a dozen cash-poor U.S. states have announced that they are delaying their tax refund checks.

#20) Two university professors recently calculated that the combined unfunded pension liability for all 50 U.S. states is 3.2 trillion dollars.

#19) According to EconomicPolicyJournal.com, 32 U.S. states have already run out of funds to make unemployment benefit payments and so the federal government has been supplying these states with funds so that they can make their payments to the unemployed.

#18) This most recession has erased 8 million private sector jobs in the United States.

#17) Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of 2010.

#16) U.S. government-provided benefits (including Social Security, unemployment insurance, food stamps and other programs) rose to a record high during the first three months of 2010.

#15) 39.68 million Americans are now on food stamps, which represents a new all-time record. But things look like they are going to get even worse. The U.S. Department of Agriculture is forecasting that enrollment in the food stamp program will exceed 43 million Americans in 2011.

#14) Phoenix, Arizona features an astounding annual car theft rate of 57,000 vehicles and has become the new “Car Theft Capital of the World”.

#13) U.S. law enforcement authorities claim that there are now over 1 million members of criminal gangs inside the country. These 1 million gang members are responsible for up to 80% of the crimes committed in the United States each year.

#12) The U.S. health care system was already facing a shortage of approximately 150,000 doctors in the next decade or so, but thanks to the health care “reform” bill passed by Congress, that number could swell by several hundred thousand more.

#11) According to an analysis by the Congressional Joint Committee on Taxation the health care “reform” bill will generate $409.2 billion in additional taxes on the American people by 2019.

#10) The Dow Jones Industrial Average just experienced the worst May it has seen since 1940.

#9) In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.

#8) Approximately 40% of all retail spending currently comes from the 20% of American households that have the highest incomes.

#7) According to economists Thomas Piketty and Emmanuel Saez, two-thirds of income increases in the U.S. between 2002 and 2007 went to the wealthiest 1% of all Americans.

#6) The bottom 40 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.

#5) If you only make the minimum payment each and every time, a $6,000 credit card bill can end up costing you over $30,000 (depending on the interest rate).

#4) According to a new report based on U.S. Census Bureau data, only 26 percent of American teens between the ages of 16 and 19 had jobs in late 2009 which represents a record low since statistics began to be kept back in 1948.

#3) According to a National Foundation for Credit Counseling survey, only 58% of those in “Generation Y” pay their monthly bills on time.

#2) During the first quarter of 2010, the total number of loans that are at least three months past due in the United States increased for the 16th consecutive quarter.

#1) According to the Tax Foundation’s Microsimulation Model, to erase the 2010 U.S. budget deficit, the U.S. Congress would have to multiply each tax rate by 2.4. Thus, the 10 percent rate would be 24 percent, the 15 percent rate would be 36 percent, and the 35 percent rate would have to be 85 percent.

Weekend charts and stuff

First up today, GLD, sporting an island reversal. Notice the island reversals.  If this one resolves upwards, it will target the gap which will also give us a pretty bullish intermediate bias.  No guarantees tho,especially with a failed pattern in the recent past :

A look at the 60m /ES chart:

The ES 4hr chart:

The dollar, looking poised for a launch:

Daily SPX - kiss back to the broken expanding triangle and then dump?

SPX 60m chart, oscillators look pegged, clear view of target zone:

And finally, a great video from the Elliot Trader over at youtube.  I'd recommend subscribing to him via this link:

Good vid on Gold

Saw this over @ Jesse's:

SPX Gap Close

Now, are there any bears left?

Meredith!

Oh, butterflies and birdies and green blades of grass on a sunny day.  Until Meredith the evil witch of economic fundamentals comes along and delivers a shiticane of reality.  GOT TO LOVE HER.

Legal noose tightens on Europe's monetary union – Telegraph Blogs

Legal noose tightens on Europe's monetary union – Telegraph Blogs

Yikes! How can one really "buy and hold" in this market when items such as this are bubbling under the surface?

"Contrary to general belief, Germany’s eurosceptic professors have not abandoned their legal efforts to block the EU rescues for European banks exposed to Greek debt, and since May 7 for banks exposed to debt from Spain, Portugal, and Ireland as well.

Should they succeed, of course, the eurozone risks disintegration within days, and perhaps hours. I am not sure that investors in New York, London, Tokyo, Beijing, or indeed Frankfurt quite understand this."

SPX and gold update

What I'm watching...retest to the broken support line then down?  If not, I think we are going to get a bear slaughter!

And gold..down to 1170-ish then we'll see what is in store:

I am looking to accumulate wheat related investments based on this breakout:

Niall Ferguson

Great video..good 'ol inflation vs. deflation discussion..

Exponential Money in a Finite World

Great read that clearly demonstrates the unsustainable path we are on as a result of our choice of monetary systems.

"Repeating an opening sentence, our choices now are to either evolve a new economic model that is compatible with limited physical resources, or risk a catastrophic failure of our monetary system, and with it the basis for civilization as we know it today. I wish this collision between a finite planet and an exponential money system was far off in the future. Alas, it is certainly within the lifetime of people alive today, and likely already upon us."

ASPO - Exponential Money in a Finite World - Jul. 6, 2010 - Blogs at Chris Martenson

Go Iceland

Must watch...saw it over on Jesse's:

Weekend charts

Lawn chairs and popcorn are ready..let's see how this plays out:

Who knows?  This has as much validity as any chart out there I suppose:

Gold...

And the big picture...

1932 redux?

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

Thank goodness the media is here to prop up everyone's spirits. The full on lies and ostrich-like tendencies of the likes of CNBC, CNN, CBC, BBC are putting legions of otherwise responsible citizens of the western world into these markets with no idea what beacons.

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

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

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

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

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

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

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

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

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

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

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

Falsie x2

These anomalies are almost hilarious. Can't someone investigate this and just "clean it up".  The noise is irritating :)

Eric De Groot: State pension system near collapse

Eric De Groot: State pension system near collapse

Ouch...and only 46 of 50 states have a budget problem on par with Greece. Nothing to see here!

Great read from the boys at Zero Hedge

The BIS seems to be playing hardball here:

BIS Blasts Fed's ZIRP Policy, Warns About Negative Side Effects From Extended Low Interest Rates

Updating the charts..

Based on the action today, I'm having another look at things.  Weak weak weak...and if it stays this way, this option may play out.  Target shown is for wave 3.

And another update..bit of a close up on the 4hr chart:

XAU - gold/silver sector

Robin Griffiths

Great interview found here:

Robin Griffiths

Key points - Turn point is July 26 in his opinion, rally up to about 1150, but not above, then ugliness throughout the rest of the year and next.

FT Alphaville- Guest post: El-Erian on a disappointing G20 compromise

Another must read from Mohamad El-Erian:

FT Alphaville-Guest post: El-Erian on a disappointing G20 compromise

Showdown: U.S. Sends Warships to Confront Iran | zero hedge

Showdown: U.S. Sends Warships to Confront Iran | zero hedge

The Sorry State of Europe...and..the...US

RBS tells clients to prepare for "monster" money printing by the Federal Reserve - Telegraph

If QE about to shift into overdrive, the stock market is going to rip higher IMHO. It will not pay to have money in savings..you will be eaten by inflation. On the flipside, if the QE experiment comes to an abrupt halt, perhaps due to the shifting political tide in the US, then a severe deflation is in the cards. These are critical times for investors seeking to preserve their wealth. Much more from Ambrose Evans-Pritchard follows:

RBS tells clients to prepare for "monster" money printing by the Federal Reserve - Telegraph:

"The ECRI leading indicator produced by the Economic Cycle Research Institute plummeted yet again last week to -6.9, pointing to contraction in the US by the end of the year. It is dropping faster that at any time in the post-War era.
The latest data from the CPB Netherlands Bureau shows that world trade slid 1.7pc in May, with the biggest fall in Asia. The Baltic Dry Index measuring freight rates on bulk goods has dropped 40pc in a month. This is a volatile index that can be distorted by the supply of new ships, but those who watch it as an early warning signal for China and commodities are nervous.

Andrew Roberts, credit chief at RBS, is advising clients to read the Bernanke text very closely (http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021121/default.htm)
because the Fed is soon going to have to the pull the lever on 'monster' quantitative easing (QE)'.

We cannot stress enough how strongly we believe that a cliff-edge may be around the corner, for the global banking system (particularly in Europe) and for the global economy. Think the unthinkable,' he said in a note to investors."

Drawing board...

Couple of charts that I'm working on:

First, the 4hr chart:

Daily chart:

Interesting chart

From X-trends..

Ugh

This guy offers his rendition of what I did to myself this week..enjoy!

Symmetry

Nice look to it..we'll see if it pans out.  Good luck!

Yuan Falls Most Since December 2008 - Bloomberg

But that's not supposed to happen! Everyone is thinking the Yuan will rise. CBC radio said this last night. Problem is, Europe is China's largest trading partner, NOT the US.

Europe has been implementing austerity measures, meaning they will exit this recession (depression) first...so China is moving their currency into position to re-align with this outcome.

This is speculation of course, as one day's movement does not make a viable trend, but it is logical!

Yuan Falls Most Since December 2008 - Bloomberg

Germany and France examine 'two-tier' euro - Telegraph

Germany and France examine 'two-tier' euro - Telegraph

OK! I need everyone's input on this one. It's bothered me for some time, and I "think" I instinctively know the answer, but here it is:

If quantitative easing goes ahead full steam, forcing interest rates to stay low, resulting in the precipitous devaluation of currencies, what is the stock market going to do? I'm pretty certain what gold and silver will do..but what about the markets!?!?   If the bond vigilantes liquidate, where will they park their money?


 Leave a comment with your thoughts!

UPDATE:  Some good analysis on this topic follows here: http://humblestudentofthemarkets.blogspot.com/2010/06/inflation-vs-deflation-revisited.html

California on 'verge of system failure’ - The Globe and Mail

California on 'verge of system failure’ - The Globe and Mail

Those "in the know" are not surprised by this at all, the awakening of the general public will have predictable results for the fabric of society.

Gold reclaims its currency status as the global system unravels

Ambrose Evans-Pritchard spells it out in his usual gripping prose:

Gold reclaims its currency status as the global system unravels

Some interesting stories for this fine Father's Day

Happy fathers day to all the dads!  Wish I had better news today..but it's whats on the menu:

Roubini: China's Yuan Revaluation Could Backfire On The U.S.

U.S. Treasuries face test from China's yuan move

11 U.S. Battleships Cross Suez Canal Into Red Sea

US Ceding Parts of Arizona to Criminal Cross-Border Activity