Replaying 1929: Business, Financial, and earth change news

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A Word About Your Bottom

OK, here we are, morning of July 8, a date that was popping out of the predictive linguistics and the astroecon work as potentially significant -- at least short-term.  As events have turned out, the price of gold has taken a good 'thwacking', no doubt because of the happy-talk around the G8 meeting, which we'll get to in a moment, as well as reports that GM may be close to a 'break-through on an electric car', so maybe that part of the Dow will not be wiped from the books just year.

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The arrival of the Chevy Volt in showrooms in September can be interpreted two ways.  On the one hand, it's a darned good thing that the engineers actually have something that might make sense - we'll have a better handle on what when final specs come out.  OR, the other way to interpret it is that the Volt is a sideshow to change the focus away from the underlying financial condition of GM.  I don't particularly much care, one way or the other, although I've been in the market for a 40-50 MPH American-made car for what seems like forever.  (More on hybrids in this morning's Coping section below.)

 

The timing also likely a response to the recent increases in the price of oil, although oil (not to mention gold and silver, and a host of other commodities) have fallen while the G8 is underway and the world waits for more about the Iranian nuclear stand-off.

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But, GM and Oil are not the whole story, by any stretch, as we survey the economy and wonder just what lays ahead. 

 

There's a very interesting technical problem which my friend Robin Landry pointed out in a Monday chat.  We've still got a major line in the sand at Dow 10,984 to deal with. 

 

On the docket today, we've got an Uncle Ben speech coming up, the G8 endorsing cutting emissions by half by 2050 (if there's anyone left, by then, but you go first) and Siemens whacking 16,750 jobs.

 

The futures opening lower should not come as a surprise, but we may see that 'line in the sand' tested.

 

The confusing part, as Landry explains, is that if you look at a picture of the Dow (click here for a one year chart), it looks like the January low was higher than the March low.  "But it's not," explained Landry.  "Look at the intraday numbers."

 

Sure enough, the January low was 11,508.74 and the March low was 11,650.44.

 

A quick study of Landry's remarks shows that in Elliott wave terms, the conclusion of the first leg down from the October '07 all time high (ATH) concluded 1 down.  That being the case, the 'bounce' was from the January low to the Feb highs for an 'a' , down to the March lows for a 'b', and then completing 'c' with the May peak. 

 

What we've been going through, he says is another 'one down" and because we have taken out the January 11,508.764 low.

 

So what does this portend for Landry's Dow 10,984 line in the sand?  Not a happy picture if the current decline is anything like 'normal'.

 

The top of the market, in October of 2007 on a closing basis seems to be around 14,164. while the January low was about 11,971.  Call it 2,193 points.

 

Next, we would multiply that times 1.618 (a reasonable Fibonacci multiplier, and common in third-leg moves.  That gives us 3,548.  We tuck that away as a possible target for the end of the third wave down.

 

But from where?  The Wave 2 bounce high. May 19, 13,028.

 

Then we subtract our 3,548 from that peak, and guess (it's only that and THIS IS NOT TRADING ADVICE) that the low for the present move could reasonably be in the 9,479 range.

 

But that's when the technical problems really begin.  Because if we get down that low, we will have taken out support at 10,984 (which could be toast this week anyway), and the support at 10,000 could be gone shortly, not to mention the support at 9,700, although that seems like it would have a decent chance of holding.

 

In any event, if I were still playing with paper assets, which I'm not, a move down to 9,700 should lead to a late summer rally to the 11,229 area before the collapse to the 7,400 area (or lower) in the Mother of All Crashes in October.

 

Linguistically, that one looks dodgy as hell, though, because things just keep sliding until well into 2009 and then we get a global coastal event.

 

There, how does your bottom feel now?

 

Speaking of the GCE

Say, I know you're skeptical of the long term linguistic stuff (at least you should be as it's not an 'anointed branch of science".  BUT, did you happen to catch the New Scientist article that says "Greenland meltwater will take slow wave around globe..."

 

Pencil it in on your calendar for Q2 '09 on the present timeline...  Got a garden above the new high tide line to come?  Well, how about designing a floating garden, then?

 

Two-Faced Leaders Department

Ah, the more things change, the more they stay the same, eh?  Two prime examples of how people in power often forget that actions speak louder than words include the report that "US exports to Iran increase in Bush years: US Export to Iran increase even as Bush talked tough on sanctions/"

 

Then we have Bush's cross-pond pal Gordon (sell gold at the bottom) Brown, who just this weekend was chastising regular Brits for "wasting food" and then this poor excuse for a leader has an "eight-course  dinner before food crisis talks"

 

Not that I'm the only one pointing out these stories, but somehow on the MSM (MainStreamMedia), the stories are kept separated, because as we all remember from back in the day when I was teaching a broadcast journalism internship (CMU 367), stories presented in semi-random fashion is 'defensible', but presenting a couple of stories that are related and show stupidity/arrogance/distain for humans/elitist behavior, are not necessarily commentary.  I'd offer that it's contextually accurate reporting of a larger story.  Pass me the goose liver pâté' would you?

 

A similarly incensed UK reader also sees through the (pardon this, it's early) "Brown stuff":

"Today Gordon Brown came out and blamed our shrinking household budgets on waste and too much spending. This is like smacking someone in the mouth with a baseball bat and then blaming their broken teeth on the fact they weren't wearing a sports mouth guard ! The guy has absolutely no credibility whatsoever, which is exactly how things are supposed to be :)

I also think this may be of interest you. I don't know if it is present in the US, but there is a charity in the UK called "Common Purpose" which is having a bit of light shone on it....

Always ready to take the bait, especially when an organization talks about what sounds like it could be interpreted power grabbing, we went off looking for headlines about the outfit.  Sure enough, there's a recent report headlined "Is 'Common Purpose' controlling Britain?"

 

But wait!  Common Purpose is a charity.  We read on and discover on their website that:

"Common Purpose programmes produce people who lead beyond their authority and can produce change beyond their direct circle of control."

Teaching people to "lead beyond their authority"?  Hmmm...not sure I'm comfortable with that.

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This brings up an interesting point, I've been pondering of late:  Don't know if you've noticed, but there seem to be growing numbers of 'one-worlder' kind of groups that are trying to cut their own bigger slice of 'influence pie" as global problems cross borders. 

 

Next time you read about the uber-rich gathering at Davos, a thinking person might justifiably wonder what those build-a-burger types are talking about behind their closed doors that's so secret that their proceedings aren't shared globally.  Makes me wonder.

 

Holding of secret meetings, secretly moving money around and influencing things behind the scenes, trying to manipulate the outcome of future news events beyond government inspection/control as well as public access - well, that could be interpreted as terrorism.  Soft terrorism, but the 't' word nonetheless.

 

Makes you wonder if the battle's not already lost: We live in a country where police agencies spy of peaceniks, but those upper-crust secret societies.  The get a pass.  Yet in some cases they actively promote their vision of a future which runs directly contrary to a clear read of the Constitution.  It's usually for some partisan/industrial purpose like tearing down our borders, restricting our housing, and making self-sufficiency unattainable for millions. 

 

Land of equality?  Get a grip.  You need to reread George Orwell's Animal House.  "All animals are equal, but some animals are more equal than others..."   Armed with lots of money and powerful these influence groups are above suspicion or inspection and as I see it, they are likely every bit as dangerous as hard terrorism  in that underlying their "lofty" goals are more power for them and less for us the people. 

 

Hard tribute under hard terrorism  is 'believe as I do, or die'.  Soft tribute under soft terrorism is 'pay us this portion on all your labors' and 'taxes' on all your hard-earned property, or we'll take it all back. 

 

In the end, it's all submission to power.  Just one sort is sanctioned, the other not. Like making explosives is illegal, yet patenting Life itself...well...that's OK, as long as you pay royalties.  Another word for 'tribute'.

 

Bye Bye Middle Class

An MSNBC video essay worth clicking through.

 

Deaths in Flu Test

This is kinda scary - giving homeless people an experimental bird flu vaccine and then having people die?  Not  here, but in Poland...

 

 

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Coping: Milling About

I've become very fond lately of working in metal.  A reader sends this along:

"George love the site. I am a machinist-tool maker and cnc programmer here in south Florida.

Since I cut my teeth for several years on Bridgeports and Warner Swayse mills and lathes I loved seeing you doing your own metal work .

IMPRESSIVE. How about a picture on the final product.

Also you might want to look at www.mscdirect.com  for some of your tool needs.

I hope that you also have a Machinist Handbook in the latest edition this is the best price for it I could find.

Keep it comin' Bro,,,,,you are the man.

A nice 'little' 2,704 page reference book for the shop.  While you're there, the "machine Shop Training Course" (Vols 1&2) by Jones is good, not to mention Machine Shop Trade Secrets by Harvey.

 

I will have to shoot more pictures around the shop one of these days...

 

Profitable Prius

Here's a great email since we've been talking about gas mileage (or the lack thereof) lately:

:"Hi George,

Thought you would like to know.............I bought a Prius in '05 for pick-up and delivery in my business. I paid $22,000 for it then, everyone said I was nuts. Well I got a phone call from my salesman the other day asking me to come in and see what I could do with the Prius for a trade in. I was intrigued, as I thought the Toyota folks could pretty much write their own ticket for these cars. So, I went in just for giggles. The jokers offered me $21,435 plus a pro-rated refund of the extra warranties I had. That was even before I chose a new vehicle. I didn't do it but, man is this a crazy time or what? I have had absolutely no problems with the car and except for oil changes no maintenance expenses. Basically, with savings on gas and maintenance over my previous vehicle, I have driven the last three years for free."

Yeah...it's all good.  I advised my younger sister to get one a long while back...

"Did I ever say thank you thank you thank you for suggesting I look into getting a Prius when I asked for your brotherly advice almost five years ago? I still love my little car. Thank you thank you thank you."

It's cool - it's what the brother does...call's 'em like he sees 'um.  What's the plural of Prius, by the way, Prii?

Future Jobs

Simple answer here:

"I read the site every day and love all the great info, when I talk about it with friends and family, they all have no idea how bad things might get. If things get as bad as they might, what employment fields will be safe? Just curious to get your take on things in the labor market."

As I explained to Peoplenomics subscribers last week, you really need three levels of skill.  Think of it as a high level skill which will be in demand as long as operating systems are up, a second-level skill set that would be in demand in the middle to late 1800's, and a low level skill like foraging/food gathering.

 

Alternative Retirement Plan Ready?

Yep, sorry about the losses in your 401(k) and all, but I told you it was coming long ago and that getting into sustainable farm/ranch/homesteading was a hedge, right?  Now comes this CNN report "Pension Plans suffer huge losses".

 

If the MOAC's happens in October, then your pension fund could fall by another 34% from where it is now, or likely more, especially if the fund holds any liar's paper in a failed attempt to 'juice' performance.  And that's if Dow 7,400 holds this fall, which I sure as heck wouldn't bet on.

 

Foxes Demand Chicken House Duty

Yet another reader worries about the moves to get independent regulators out of the financial markets and replace them with the money printers....

 

Coming up is a July 10 presentation where the Fed and Treasury will make the case for their agencies being allowed a massive power-grab.  In the words of a reader:

"We are about to lose some freedoms, if we do not respond very quickly. I believe in prayer. We can influence the outcome of the following takeover if we pray and if we immediately contact our senators and representatives to let them know we oppose it. "

A good summary of the power grab/ "overhaul" is in a USA Today article from earlier this year.

 

That said, it may be too late.  A memorandum of understanding between the Fed and the SEC was signed yesterday and got little attention:

"Securities and Exchange Commission Chairman Christopher Cox and Board of Governors of the Federal Reserve System Chairman Ben Bernanke today signed a memorandum of understanding (MOU) between the two agencies that will deepen their information sharing and cooperation, permitting both agencies to better perform their responsibilities.

Under the MOU between the two agencies, the SEC and the Board would share information and cooperate across a number of important areas of common interest, including anti-money laundering, bank brokerage activities under the Gramm-Leach-Bliley Act, clearance and settlement in the banking and securities industries, and the regulation of transfer agents. The MOU specifically covers bank holding companies and so-called Consolidated Supervised Entities that own securities firms. It builds on and formalizes the long-standing cooperative arrangements between the SEC and the Board, as well as the more recent cooperation on matters including banking and investment banking capital and liquidity following the Board's emergency opening of credit facilities to primary dealers.

"I am pleased with this agreement," said Federal Reserve Board Chairman Ben Bernanke. "It formalizes and strengthens the ongoing cooperation between our two agencies to enhance the stability of the financial system. I look forward to continuing this productive collaboration with Chairman Cox and his staff."

"This agreement represents a valuable coordination of the roles of the SEC and the Fed in our capital markets," said SEC Chairman Cox. "Years ago, when the dividing lines between commercial and investment banking were bright, the high level of coordination we are establishing today was not a priority for the U.S. government. But today, the interconnectedness of mortgage and lending markets, credit derivatives, securitizations, and counterparty relationships requires the U.S. government to adopt a more coherent and coordinated approach. Just as with our similar arrangement with the CFTC, this agreement will permit the expanded sharing of information on a confidential basis, and help ensure that regulated entities receive a coherent message from Uncle Sam. This is smart government. We look forward to enhancing our collaborative relationship with the Fed within the formal framework covered by the agreement."

The MOU will improve the ability of the SEC to perform its role as primary supervisor of Consolidated Supervised Entities and Primary Dealers, and improve the ability of the Federal Reserve to perform its role in overseeing the stability of the financial system. The importance of this deepened cooperation is highlighted by the recent stress in the financial markets affecting commercial and investment banks, as well as many other market participants.

The SEC recently entered into a similar MOU with the Commodity Futures Trading Commission. An agreement between the SEC and the Department of Labor is anticipated later this summer."

In a nutshell (or is that a nut house?) here's what's going on as I see it:

• Government is now in the business of maintaining 'financial order' in markets.  Ergo, the link up between the money printers and the stock monitors.

• The bottom line of this seems likely to be perpetuating badly run companies that are too big to fail because they could cause systemic risk.  That would be where to pour your money - if you can figure out who's on St. Ben's and St. Hank's "they will be saved" list.

• The flip side is that the markets become (more so than now) totally rigged.  Of course you knew that, right?

Simple enough, huh?  Trade accordingly.

 

Oh, and if you try to exit the game of stocks by rolling into Treasury TIPS don't reflect true inflation rates say critics. 

 

Well, duh!  That's because the government 'rolls it's own' to some extent with the numbers, which is why food prices go up 50% and military retirement and social security go up how much?

 

And you wonder why I have this "No Incumbents!" mentality going?  I'm planning to write in Jesse Ventura for President in November.  The corpgov candidates should just go meet up at the local IHOP - which is where all the waffling belongs, does it not?

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"Live on $10,000" Updated

There's now a single-page website devoted to my little ebook "How to Live on $10,000 a year (or less) at www.liveontenthousand.com.  Yep - still possible.  I also took a bit of additional material that was pertinent from recent issues of Peoplenomics and included them.  The whole thing runs about 65 pages, but it gives you a vision of how to not only live on the aforementioned dollar amount, but also how to migrate up the economic foodchain if you make a little more than that and do some active savings...  Click here for the page with more details on it.

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Last week's report is here.    For back issues of this site, click here.  (Goes back to 1997!)

 

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Monday July 7, 2008

LHC: Pop-up Thermometers, and a 61st Anniversary

Maybe it comes from reading the predictive linguistics, or maybe it's because as a kid I was always fascinated with science fiction (a fine starting point for economics), but whatever the reason, I've got a pet theory that I'm going to share with you that makes for interesting speculation and an amusing way to start a post-holiday Monday.

 

As you know, the Large Hadron Collider is about to be turned on at CERN, perhaps even this week.  If you look at the schedule, today scientists should be tuning the cryogenics of the world's biggest linear accelerator.  Think really, really big magnets.

 

Officially, LHC's position is that its operation will pose no danger to the planet.  You're supposed to be comforted when you read that the LHC's Safety Assessment Group says "It's safe":

"LSAG reaffirms and extends the conclusions of the 2003 report that LHC collisions present no danger and that there are no reasons for concern. Whatever the LHC will do, Nature has already done many times over during the lifetime of the Earth and other astronomical bodies. The LSAG report has been reviewed and endorsed by CERN’s Scientific Policy Committee, a group of external scientists that advises CERN’s governing body, its Council."

Honestly, I'm not at all worried about the safety of the LHC - but something else is bothering me; think really really big magnetics.

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Unless you've read a fair bit about UFO's, you may not realize that in 1952 there was a huge swarm of UFO's around major world capitols, including Washington D.C.  This incident describers in some detail at Wikipedia (link) involved seven UFO's, radar tracking, and hundreds of observers, i