Anonymous Monetarist

Once upon a time...

2011-04-29T11:11:00.009-05:00

Time for bed son.

But you promised me a story Daddy!

Yes I did…

There once was a country called America.

It was started by a bunch of rich white guys who were upset about their taxes.

Eventually they became the most powerful country in the world when the rest of the powerful countries darn near destroyed themselves.

The rich and powerful Americans saw a lot of opportunity to plunder the planet. They stopped a lot of other countries from developing self-sufficiency through either war or debt. Their wars were fought to make the other peoples free. The debt was created to make the other peoples prosperous.

It was called free market capitalism and democracy and it was good.

But then there was a war that America lost. The war was very expensive and the American people didn’t approve of it.

So rich and powerful Americans had to change the way they used war and debt to plunder.

They started to use debt to make their own people more prosperous and to make wars less messy.

But the wars were very expensive and their prosperous people became more and more indebted to their prosperity.

Prosperity got out of control and the free market crashed.

So the rich and powerful Americans created more debt and launched more wars.

But the free market crashed again.

So the rich and powerful Americans decided that the free market had to be abandoned in order to save it. They created all the debt they could in order to protect their riches and their power. Eventually they couldn’t afford the wars. Eventually they couldn’t afford the debt.

The people became very upset.

And a bunch of rich folks, not just, but mostly, white men (guess that’s progress!), became very very upset about their taxes.

THE END.

Is that all Daddy?

What happened to America?

Well son, that’s exactly what folks began to ask themselves.

But the real America was less of a place than an ideal and lots of folks in lots of other countries aspired to that same ideal.

So America went global as did their prosperity. And although times in the old country might be hard right now at least we have a chance to pursue the American dream.

Now it’s time to go to sleep son you need to be well rested for your exam tomorrow if you want to join the cadre.

Sweet dreams.

To each according to their eligibility... for each according to their greed.

2011-04-23T09:56:00.014-05:00

You got no time for the messenger,
got no regard for the thing that you don't understand,
you got no fear of the underdog,
that's why you will not survive!
-Billy Joel

The Oracle at Eccles will bless us mere surplus eaters with transparency this week er scratch that will bless us with unveiling the latest in a series of Jedi mind tricks.

‘You don’t need to see our collateral.’

‘This is not the monetization that you are looking for.’

‘Go about your recovery.’

‘Move along.’

After all it can’t be monetization if it is only temporary unlike death and taxes which unless we apply some semblance of egalitarianism to the latter will result in the economic forecast, the least for the most, of the former.

And golly don’t expect us to keep track of the collateral folks, seriously we’re still using Windows 95. And it is hard to get that stuff onto floppies. Would you care for a nice game of Pong?

But let us all raise our liquidity chalices Nancy Capitalists to the Glee-shaped Recovery! Let us cheer the depreciating scrip and the magnificence of America’s wealth exporting machine!

Nothin’ but blue skies…. waitaminnit…

Thefiscaltimes.com: ‘According to the Census Bureau households paid $2.2 trillion in taxes in 2010 and received $2.3 trillion in some kind of government support. 59% of the 309 million Americans in this country got at least one federal benefit in 2009 according to the Census Bureau. Government cash handouts accounted for 79% of household growth since 2007.’

All this whilst wealth inequality is approaching levels last seen since, gee I don't know, the Tyler's Rebellion of 1381?

No wonder 84% want no change to Medicare. No wonder a majority favor increased spending over decreased spending. In fact the only majority for decreased spending is for foreign aid (YouGov poll). McClatchey-Marist recently reported that almost 70% oppose raising the federal debt limit - however 80 percent, including 70% of the teabaggers, oppose cutting Medicare or Medicaid to deal with the budget deficit. Good luck with that.

Where you sit is where you stand.

But you are going to need to stand for something America lest you fall for anything.

Perhaps it is appropriate that a narcissistic, egomanic, borderline pathological, deadbeat shill is at the top of the leader board in the Republican sweepstakes.

Every day in every way this s#$ is starting to resemble a bad science fiction movie from the 70s.

Let’s investigate the oil price Barry? Hint , google Eccles. Let’s arm the mudžahedin against a bad guy? Sure... worked pretty good last time! Let’s bring down insurance costs by giving Big Pharma a half a trillion bucks worth of new premiums? Brilliant! Let’s make the banking system solvent by shoving trillions of bad speculative bets into the rabbithole? Outstanding!

But above all let’s get the spokesperson for the supranational star chamber to better articulate the psych-ops that will keep those shoppers happy and ignore this slow train-wreck of a Great Depression by refuting, negating, and verily daring them to believe their lying ojos….

And at no time will his hands leave his arms.

To each according to their eligibility... for each according to their greed.

The truths you hold to be most dear are lies told to you by liars.

2011-04-16T11:01:00.015-05:00

‘Afterward he measured a thousand; and it was a river that I could not pass over: for the waters were risen, waters to swim in, a river that could not be passed over. And he said unto me, Son of man, hast thou seen this?’ – Ezekiel 47:5-6

‘There’s blood in the streets, it’s up to my ankles.’- Jim Morrison

‘The iron never lies to you.’ –Henry Rollins

As I sit here in my new office (purchased at 30% off 1998 prices …viva la recovery!) getting ready to spend a full Saturday perusing charts - for whatever reason - the Spirit is movin’ this fella to a lonely bray into the wilderness of the blogosphere yet again. Please excuse the indulgent and self-centered segue gentle reader but a recent article illuminating the consequence of the ‘manufacture of contempt’ oft-referenced here has left me scratching my curmudgeon keppe.

About a week ago a group called GlobeScan asked 12,884 folks nestled in 25 different countries whither they agreed or disagreed with the statement that ‘the free market is the best system on which to base the future of the world.’

In 2002, despite the tulip er dot-com crash, 80% of Americans stated that they either strongly agreed or somewhat agreed that the free market was the best economic system for the future which, not surprisingly, was the highest percentage of any country.

That percentage is now down to 59%, less than Brazil (68%) and less than China(67%).

But that’s not all!

A majority of our youth, per the American Red Cross, approve of torturing or even killing captured enemies.

And to round out this trifecta of tyranny…

59% of adults, per McClatchy-Marist, believe that those who publish confidential or secret U.S. documents should be prosecuted. 22% think it is a ‘good thing’.

Oh shining city upon a hill whose beacon light guides freedom-loving people everywhere, you knew Daniel Ellsberg, Daniel Ellsberg was a friend of yours… Bradley E. Manning you’re no Daniel Ellsberg.

Life, liberty and the pursuit of justice…you’ve been punked.

How in the frak did we get here? Was it the ideological institualization of stupid… the crazy- hole, Big Lie, co-opting of regular folks’ inner monologues so that they would vote against their self-interests?

Was it the incessant worshipping of all things military? Fly-bys,and medals of honor,and colour presentations at every single sporting event of note, wars of choice with a roulette wheel supporting our ‘tribes with flags’ du jour … Eisenhower no doubt for many years has been convulsing in his tomb.

Was it the full-out psych-ops perpetrated by our solons to keep the shoppers happy? Employment improvement through division causing derision, retail improvement through survivor bias causing folks to contemplate their lyin’ eyes, magical deflators applying Potemkin lipstick to an economy of craters?

Perhaps all to some measure.

Eras have markers, signifying events, as it were, that although part of the scenery at the time become a sentence or two that future history texts are built on.

For my demographic -give or take a couple weeks am the very last of the boomer generation- the snippet of our times is best elucidated by the epigram of ‘ failure to liquidate the insolvent banksters, to apply the acid-bath of price discovery, to effect the principles of capitalism long espoused by the plutocracy, to rich folks’ bad speculative bets… has liquidated a large part of the productive economy.’

It is the wellspring of derision marking the inflection that, to be gentle, will for some future student be seen as the ‘transition’ of the American empire.

The solutions are quite simple hence the arguments made by the aristocracy are by necessity so complex. Failure to stand for, and embrace, the simple is why we fall for the complex.

As an example, if the markets are the dataset of humanity, then given the ridiculous complexity of the latter, theories on the former must be comparably so.

And yet the methodology that generates…

AUDJPY sell
AUDUSD buy
AUDCAD sell
AUDCHF buy/sell
CADCHF buy/sell
CADJPY buy/sell
EURAUD sell
EURGBP buy/sell
EURJPY sell
EURUSD buy/sell
EURCAD sell
EURCHF buy/sell
GBPCHF sell
GBPJPY sell
GBPUSD buy/sell
GBPAUD sell
GBPCAD buy/sell
NZDJPY buy/sell
NZDUSD buy
NZDCHF buy
USDCAD buy/sell
USDJPY buy/sell
ZC buy/sell
CL3 buy
GX buy/sell
YM buy
DX buy/sell
GC3 buy
ES buy
SI3 buy
ZS sell
ZB buy
ZW buy

… with proprietary linked entry stops and exit stops and limits (for next Sunday-Monday trading) works to the utter bafflement of the adherents of the failed-theory of randomwalking.

The Book of Books states that the Kingdom of Heaven belongs to those who are like … children.

Indeed.

My eight year old has a better sense of things then the bloviating publicans and libs.

Unfortunately the simple children will become complex adults. And verily, complexity for complexity’s sake is most certainly the road to perdition.

Although the truths you hold to be most dear are lies told to you by liars, much like Rollins’ iron which never lies… neither do the charts.

So back to ‘em.

AM out.

It's Raining Ben! Hallelujah! It's Raining Ben!

2010-11-04T08:43:00.017-05:00

"Note to Fed -namby-pamby won't allow you to realize your goals,"
-David Ader, CRT Capital

Bloomberg: Bernanke said resuming large-scale asset purchases should boost economic growth through larger borrowing costs and higher stock prices and that concerns about the strategy are "overstated". 'This approach eased financial conditions in the past', Bernanke said.

(Bea.gov): Personal income decreased $16.8 billion, or 0.1 percent… Personal current transfer receipts decreased $21.5 billion in September, in contrast to an increase of $35.1 billion in August. The September change reflected the effects of unemployment compensation legislation, which reduced emergency unemployment insurance benefits by $25.5 billion at an annual rate in September, after boosting benefits by $20.5 billion in August…Real disposable income decreased 0.3 percent in September, in contrast to an increase of 0.2 percent in August.

Quelle surprise! The demand restoration project is still not working. Hoocoodanode?

Once again, here are the top ten reasons why this ends in tears or (hopefully not) fireworks...

10. Nancy Capitalists in a Sovereign Democracy that are Hell Bent to Seek Rent.
9. Although we walk through the Valley of Debt we fear 'No Easing'.
8. Socialized Guts will lead to diminished glories.
7. Failure to liquidate the insolvent banksters has led to the liquidation of a large part of the productive economy.A taxpayer financed bailout of rich folks' bad speculative bets has resulted in zombie banks and zombie customers... a fiscal tide that lifts no boats.
6. The cold hard fact of our age is that the bankrupt ideology of the rich that had greatly succeeded in drafting the inner monologue of regular folks so that they would vote against their self-interests is colliding head-on with a Mr. Market that is a bit pissed off that we've inflated it out of the business cycle for the last quarter century.
5. Mr. Hand's strong dollar policy is the chimera of currency debasement masquerading as America's wealth exporting machine that is regularly promulgated by our leaders as an exceptional example of America's resiliency.
4. Yes Virginia, there is no collateral.
3. The government is 'all in' and can't pull out.
2. Employment, inflation, productivity, GDP, and other sundry stats are massaged into irrelevance ... the markets are rigged.
1. After World War 2, our blessed leaders, impressed by German 'organizational' skills crafted a policy of manufacture of consent.Over time these techniques moved to the economic realm in an attempt to manufacture content.Federales now risk the manufacture of contempt, for it is only a Great Depression if they say it is.

Bernanke institutionalizes the concept of PPT, tinfoil hat comrades?, as the pablum narrative collectively shrugs. The continuation of QE1 is estimated as the equivalent of cutting the fed funds rate by three quarters of a percentage point, per the Fed, and even double this amount would result in no more than a .2 percentage point drop in the unemployment rate by 2011, per Macroeconomic Advisers.

One neither need have stayed at a Holiday Inn Express last night nor need have worn a Sherlock Holmes costume on Halloween to deduce that The Fed's mandate of reducing unemployment is unattainable.

What then of the fabled stratagem of 'price stability'? Stability where? A special sauce applied to the trillions of bad meatballs at the insolvent banks where the excess reserves are nothing but DIP financing for a generational workout? That's the deflationary chasm that has already been disappeared from the ojos of us mere mortals - QSPEs and VIEs existing only in the realm of the Google Cache. Stability through debasing our standard of living for a Potemkin recovery where the commons can enjoy prices declining in things they want but can't afford and prices rising in things they need but can barely afford? Ah, say our solons, stability per the pablum narrative description of Federales Psych ops, the clever chestnut of 'portfolio balance'. The Divine Might of Wizards through buying bonds will increase the 'demand' for those hell bent to seek rent in equities, thus trickling household wealth and the resultant spending to the surplus eaters.

But households only have about 7 trillion in equities and if you calculate equities going up 10% from here that translates into about one-quarter of one percent of GDP.

As the Oracle of Eccles goes on his speaking tour over the next few days what will be said is, given the slack in the economy we have to do something... we have the technology to reduce this portfolio... Washington needs to get its' house in order... and the world needs a vibrant and growing America.

What won't be said is @#$%^#$#%$% I pray for the day when I can declare victory and walk away.

And the Nancy Capitalists with their chalice of confidence raised toward liquidity's faucet chortle, 'It's Raining Ben! Hallelujah! It's Raining Ben!'

Squircling the drain, the name for our pain?... the inculcation of disdain.

2010-10-20T09:12:00.014-05:00

Two generations from the denouement of the summer of love and we've portmanteaued from the counter culture to the culture counter. Today's political discourse akin to the fellas at Stuckey's rippin' on anything that isn't white and male or subservient to same. The grizzly MILVF's, (Mom's I'd Like to Vote For) today's surrogate for dingbat housewife, the cynical pablum narrative akin to the hot meal waiting with scotch properly poured.

It's a feedback loop that doesn't stop giving. Besmirch the stupidity and the authors of same use such accusations as proof of their legitimacy. And the press? Trapped in the hell of cognitive dissonance. This just in... the science of ambulation but first a special report from a momma whose back was broken when yonder crack was stepped on.

In my life no matter what the pursuit there has always been a line of intellectual demarcation best described as retail and wholesale. Perhaps it is conceit to suggest that the chasm between the two seems wider than I've ever perceived but verily if stupid is as stupid does, the wholesale product has transcended the continuum of criminally stupid or stupidly criminal.

Economically we seem damned to exacerbate this Potemkin recovery into something that not even the Divine Might of Wizards can transmogrify. The Great Game as a scum scrum for the crumbs. The unarmed combatants staring at their impotent swords of currencies like Black Knights. Even if reality were to declare the 'fight is mine' the solons would proclaim it to be naught but a flesh wound as they launched the middle class, their chests as cannons, at the great whale of deflation.

Politically, the devils in red dresses, manchurian candidates of the fear industrial complex whose denizens are uniformly hell bent to seek rent, employing 'common' wisdom for the 'common' man for purposes of anything but the commons. Verily, they will hand power to the elites in a way that will beggar credulity all the while being incredulous at any treatises of reasons that might suggest contrary.

Not only must the windfall apples be reserved for the more equal of brainworkers but the tree of egality must be refreshed with the blood of your standard of living.

After World War 2, our blessed leaders, impressed by German 'organizational' skills crafted a policy of manufacture of consent.Over time these techniques moved to the economic realm in an attempt to manufacture content.Federales now risk the manufacture of contempt, for it is only a Great Depression if they say it is.(AM Rule #1)

Squircling the drain, the name for our pain?... the inculcation of disdain.

*%&$^# Eh what the hell.... Honey? Where's my scotch!

Sipping sweet ambrosia from the skull cap of the common man.

2010-10-14T09:22:00.028-05:00

'Bernanke and his ilk are not just trying to boost the US economy, they are trying to salvage their reputations and theories. The crime is that they are savaging average Americans and have bet the country in a desperate attempt to prove that they know best.'
-Bill King, the King Report 10/14/2010

'The effect of QE2 on interest rates could be small and limited to an announcement effect...many believe that the effect on output or employment would be small...unlikely to stimulate aggregate demand...little effect on aggregate demand implies a corresponding small effect on output and, hence employment. QE2 could have adverse effects.'
-Federal Reserve Bank of St. Louis

'The folks at the Fed are frozen in fear. They don't know what to do.'
-Chris Whalen

'But they that will be rich fall into temptation and a snare, and into many foolish and hurtful lusts, which drown men in destruction and perdition. For the love of money is the root of all evil...'
- 1 Timothy 6:9-10

'There hath no temptation taken you but such as is common to man...'
- 1 Corinthians 10:13

'Don't Task Don't Smell', the central plank of the 'I Can't Believe it's Not Capitalism Plan', has given us Sugar Mountain, where stupidity is cupidity.

Ringfencing the multitude through financial pulchritude is but Federales psych ops, masquerading debasement as growth, as the plutocracy sips sweet ambrosia from the skull cap of the common man.

Phat, Plummed and Cupid is no way to go through strife son. Mr. Hand's strong dollar policy is the chimera of currency debasement masquerading as America's wealth exporting machine that is regularly promulgated by our leaders as an exceptional example of America's resiliency(AM Rule #5). Timmy G even takes credit for the creation of the 'strong dollar' policy.'Nuff said!

As the epigram, 'Yes Virginia , there is no collateral' becomes an accepted norm, as the metaphorical fork in the middle of the road er scratch that kicked can hangs with horsehair, the splinter of our disconnect in the deep bosom of our equity buried is proclaimed by the Federales as nothing but a thorn discovered as they fervently hope not to be cast to the lions.

Is it Back to the Future of folly and bubbles or Fade to Back as we peer down the chasm of the black diamond demographic? Building a bridge to nowhere is at least doing something, but please don't peer down dear citizens lest ye randomwalkers realize the gravity of our situation.

The Oracle at Eccles and assembled throngs of Nancy Capitalists beseech their models that show 100% chance of 'no fail' when the money is easy and free to deliver them like Aesop's Shepherd so when the masses see that which healed them, they will pardon and not attack.

Golden goose or scrambled eggs?

The answer it would seem as we destroy our standard of living to create a Potemkin recovery, is both, in an ever increasing divergent measure.

The insouciance of elites and the Antoinette economy.

Verily, let them eat debt.

Fed for the people, chasing Bennie's steeple, gathereth the reapers.

2010-10-08T08:49:00.028-05:00

'As we have been asserting, the FED continues to apply QE, despite it official announcement that Q.E 1.0 ended two quarters ago. For the week ended on Wednesday, the Fed balance sheet increased $9.358B due to the monetization of $7.390B of Treasury notes and an increase of $2.248B of 'assets denominated in foreign currencies' (footnote #13; currency swaps?)'
-The King Report, Issue 3856, October 8,2010

...He that gathereth not with me scattereth...
- Matthew 12:30

Faced with the surplus eaters rubbing sus ojos Bernanke had to fire up the psych ops jets after the Jackholios shrimpfest.

The Diving Might of Wizards again on display, gangbanging the string framed as many easings away, the levers of debasement screened whilst shadowfoxing the fray, all in the blind hope that we can avoid anchors aweigh.

"Bennie-boy, whaddaya say there pal of mine ?"

"You know Mr. Market, I've been watching you.
And I know you've been watching me.
You watch me! I know!"

"So, Bennie, what are you gettin' at?"

"Mr. Market, my friend!
How would you like to pump me up the curve?"

"I know you wanna pump me, Market!"

"And you know that I know that you know
that I know that you wanna pump me!"

"Now I'm gonna leverage up,
and when I do, start pumpin'!"

And yet there is dissension in the chattering class of Nancy Capitalists, who with their chalice of confidence half-empty, parry like duck and rabbit.

'Fiscal Stimulus! Monetary Stimulus!'

'Fiscal Stimulus! Monetary Stimulus!'

'Monetary Stimulus!'

Pause

'Fiscal Stimulus!'

Verily they are all despicable. The struggle of virtue and vice is writ large as the debate between deflationistas and debasionistas. The former pines for reason before farce, the latter embraces the tragedy.

The Oracle at Eccles contemplating Rallye's mend at Recession's end scratch that Depression's bend.

To QE, or not to QE: that is the question:
Whether 'tis nobler in the markets to suffer
The slings and arrows of outrageous fortune,
Or to halt QE against a sea of troubles,
And by opposing end the rally?

To short: to buy;
No more; and by buy to say we end
The heart-burn of the thousand little trades
That this office is heir to, 'tis a consummation
Devoutly to be wish'd.

The butterfly wings of the banksters reflected back by the synarchy of the squatters reflected back by the imperfection of collateral liens reflected back by the political palliative of misdirection through scapegoating.

Now is the splinter of our disconnect
Made glorious summer by this sun of Ben;
And all the clouds that lour'd upon our house
In the deep bosom of our equity buried.

At this point at the end of the trend - 2009 low besting the 2002 low breaking a line of lower lows from 1897 up- our prosperity is now in the hands of Fleck's battle of unarmed combatants (currencies) where the U.S. is the dealer (reserve), at least for the near term.

It is not so much a race to the bottom as it is a pace to a bottom. QE2 can't sail until Euroland hits the rocks again. We can't let their upcoming crisis go to waste.

In choosing 'prophetic' models with a track record of failure we are mortgaging the ability to be masters of our fate. To foresee a future that rhymes with a past is not, as the pablum narrative whines, to refute self-determination but ironically such recognition would harness the same to shape the unknown to a more benevolent conclusion.

Deficits do matter, belief in a random deliverance is foolish, better to accept a mandatory across the board cut and employ a fair and flat tax.

Free market statistics that are transparent and real allow the free market to allocate resources productively and intelligently.

Creative destruction is the progenitor and the instigator of the wealth creating mechanism of capitalism.

Empires are not eternal. The hard fought blessings of liberty are secured by the prudent not the profligate.

Years from now all this, and most assuredly more, will be obvious and this chapter in history, marked by excesses and folly, will be seen as similar to the ones preceding.

Fed for the people, chasing Bennie's steeple, gathereth the reapers.

We will kick the can until the can kicks us.

"Bennie-boy, whaddaya say there pal of mine ?"

10/10/10 : Stay Safe my Friends

2010-10-05T08:54:00.019-05:00

CNN : August 22, 2006
Michael Scheuer, who once headed the CIA's bin Laden unit, says bin Laden has been given permission by a young cleric in Saudi Arabia authorizing al Qaeda to "use nuclear weapons against the United States ... capping the casualties at 10 million."

"He's had an approval, a religious approval for 10 million deaths?" I (Christiane Amanpour) asked him.

"Yes," Scheuer responded.

Terrorism, Vigilance and the Limits of the War on Terror, Stratfor.com, October 5, 2010
'The current warning is a perfect example of the problem. We do not know what intelligence the U.S. government received that prompted the warning, and I suspect that the public descriptions of the intelligence do not reveal everything that the government knows. We do know that a German citizen was arrested in Afghanistan in July and has allegedly provided information regarding this threat, but there are likely other sources contributing to the warning, since the U.S. government considered the intelligence sufficient to cause concern. The Obama administration leaked on Saturday that it might issue the warning, and indeed it did.

The government did not recommend that Americans not travel to Europe. That would have affected the economy and infuriated Europeans. Leaving tourism aside, since tourism season is largely over, a lot of business is transacted by Americans in Europe. The government simply suggested vigilance. Short of barring travel, there was nothing effective the government could do. So it shifted the burden to travelers. If no attack occurs, nothing is lost. If an attack occurs, the government can point to the warning and the advice. Those hurt or killed would not have been vigilant.

I do not mean to belittle the U.S. government on this. Having picked up the intelligence it can warn the public or not. The public has a right to know, and the government is bound by law and executive order to provide threat information. But the reason that its advice is so vague is that there is no better advice to give.

The alert serves another purpose beyond alerting the public. It communicates to the attackers that their attack has been detected if not penetrated, and that the risks of the attack have pyramided. Since these are most likely suicide attackers not expecting to live through the attack, the danger is not in death. It is that the Americans or the Europeans might have sufficient intelligence available to thwart the attack. From the terrorist point of view, losing attackers to death or capture while failing to inflict damage is the worst of all possible scenarios. Trained operatives are scarce, and like any strategic weapon they must be husbanded and, when used, cause maximum damage. When the attackers do not know what Western intelligence knows, their risk of failure is increased along with the incentive to cancel the attack. A government warning, therefore, can prevent an attack.'

Deseret News: Sept. 6, 2009
'It was Daniel J. Hill who converted to Islam as a young U.S. Army paratrooper stationed in Beirut in 1958. It was Hill who learned fluent Arabic. It was Hill who joined the Mujahedeen Freedom Fighters in Afghanistan and fought the Soviet invasion there in the 1980s. It was Hill who personally met Osama bin Laden. It was Hill who used information from Islamic extremists to warn Rescorla that terrorists would use the underground parking garage for a car bomb attack on the World Trade Center. It was Hill who asked the U.S. government to assist him in an assassination attempt on bin Laden in 1998 (the request was rejected). And it was Hill who warned the FBI just weeks before Sept. 11, 2001, that his Mideast contacts told him "something big" was about to happen in the United States, in New York, Washington, D.C., or Philadelphia — maybe all three...Hill said the next terrorist attack will involve suitcase nuclear bombs that will be detonated in small, low-flying two-seater private airplanes manned by men hanging onto the belief that, like the 9/11 hijackers, they are about to die as martyrs and enter paradise.'

When I was very young I had a recurring dream.

My bedroom was always pitch dark and I slept by the window. In my dream I would be awakened by a sliver of bright light that made the bottom of my window shade glow.

Pulling up the shade I would see children playing in a blazing dazzle of white, I wanted to join them but couldn't leave my bed ... my last thought before waking up with a smile and feeling great, this must be heaven.

Would be nice if heaven were a place where 'nothing ever happens' or you could get yourself ' a little piece of heaven, waiting for the time when Earth shall be as one' as some of our modern bards have opined- where you could play a slow game with your friends as careless as a child.

Trouble with today is there may be too many folks rushing to get to heaven.

From a micro-view, personally and professionally, and from a macro-view, politically and economically, once again, it feels like the Buddha is in the middle of the road with a flak jacket on and fork extended.

The last time this fella's thoughts turned to scenes most desolate was back in October 2009. Did you know that Germany most probably foiled a terrorist strike planned for October 11th, 2009? The warnings from the terrorist B-team, that within two weeks of the German election on a Sunday there would be a strike bigger than 9/11 ... had Germany security knocking down doors throughout the country, rounding up the usual suspects and busting up a 10 person cell in the bosom of where the 9/11 attacks were planned.

Sunday October 11th, 2009 had symbolic significance because 70 years ago on that date a German physicist alerted the Americans as to the possibility of atomic weaponry.

Did you know that 'terrorist' plots uncovered in the US, and publicized around that time(10/09), reported that officials were saying the suspects had dozens of contacts stateside that may have been complicit? The Federales, were purportedly,'watching' them.

With that premise in mind, the shapes illuminated on my cave wall are most certainly not for family viewing.

Per Ockham's Razor the most symbolic date, 10/10/10, for 10 million, is the most likely date, if in fact, something is going to happen.

My trade? Sell 10/10/10 and buy a weekend out in a 'far' 'burb for the kids.

Looking forward to returning to the Great City on the Lake. Fervently hope it will be exactly in the same condition as left.

Stay safe my friends.

The greatest part of mankind have no other reason for their opinions than that they are in fashion.

2010-09-30T12:07:00.018-05:00

'To say of what is that is not, or of what is not that it is, is false; while to say of what is that it is, and of what is not that is not, is true.' -Aristotle

'The greatest part of mankind have no other reason for their opinions than that they are in fashion.' -Samuel Johnson

'A man can get to love shit if his livelihood depends on it, if his happiness is involved.' -Henry Miller

'Free your mind.' -Morpheus

Just for giggles took a look at the Investment Company Institutes Long term Mutual Fund Flows Historical Data at http://www.ici.org/pdf/flows_data_2010.pdf

April 2009 through August 2009 : 55.832 billion in
September 2009 through December 2009 : 23.271 billion out
January 2010 through April 2010 : 39.131 billion in
May 2010 through September 2010 : 72.958 billion out

So since April 2009 we have net approx... 1 billion out. With the week ended 9/22/2010 being 1.9 billion out that means we broke even (from April 2009) a few days ago.

Bwahahahahahahaha!

You just have to hand it to 'em. When it was clear to many of us discerning folk that the wheels were going to come off hard, the silver lining perceived was that sobriety and propriety would return. In fact the exact opposite has occurred. The Federales turned the psych ops up to 11, the plutocracy expounding the Big Lie in a manner and scope that has truly beggared the imagination of us mere surplus eaters.

Lies of course have consequences. When this ends is known to no one. How it ends seems fairly clear. The denouement of the trusted, the sound of great applause lauding folly, and then a long period of silence.

In many ways it is the age old story of Emperors and Pirates, deflation being the Jolly Roger, and a headlong drive into oblivion with the argument that forcing the issue will resolve it. Rummy's chestnut of "If you can't solve a problem, make it bigger' is exemplified by replacing mojo with POMO and the fraudulent conveyance that is gubmint statistics.

But there are unknown unknowns.

What we do not know that we don't know is how the continuing liquidation of Main Street and bifurcation of America will interact with the bankrupt ideology of the rich that had greatly succeeded in drafting the inner monologue of regular folks so that they would vote against their self interests and are trying to do it again.

What we do not know we don't know is what the long finger of instability from the Hand will ultimately do to the markets and the economy that are still the home of the brave but alas are now a different land.

The Pump and Happenstance that is the bedrock of Nancy Capitalism is killin' Sam, the wafting asset values per debasement lubricating sovereign democrats that are hell bent to seek rent.

The elitist insouciance of thanking the heavens for the bank bailouts as Bernanke promises to monetize cows to increase the price of milk is manufacturing a chasm of contempt at recession's end... er scratch that... depression's bend.

Eventually something's got to give.

With arms extended, if it may please the court, I present the real unemployment rate in this country.

Over 30%.

Have been following (http://cwcs.ysu.edu/resources/cwcs-projects/defacto) for awhile ... kids say the damnedest things don't they?... and what is germane for historical purposes is that the defacto rate of 30% is actually 5 percentage points higher than the worse unemployment levels experienced in the Great Depression Volume 1. In addition, at least per this fella's research,the defacto rate is the most similar measurement to the metric used back then which was as follows: individuals who had at some time worked in an occupation in which they earned money or the equivalent, or in which they assisted in the production of marketable goods, whom were unemployed. The only caveat is that back then, in some instances, 14 and 15 year olds were included in the unemployment rate.

Let me tell you why you're here gentle reader. You're here because you know something. What you know you can't explain, but you feel it. You've felt it your entire life, that there's something wrong with the world. You don't know what it is, but it's there, like a splinter in your mind, driving you mad. It is this feeling that has brought you to me. Do you know what I'm talking about?

It is the splinter of our disconnect.

Free your mind.

Hey... do you think we can export to them? Does Mars need bonds? Bwahhahahahaha...

2010-09-28T09:00:00.018-05:00

Guardian : Is the United Nations about to appoint Malaysian astrophysicist Mazlan Othman as the ambassador to extraterrestrial intelligences? Yesterday, the Sunday Times published an article claiming that Othman is expected to announce her proposed new role at a meeting of the Royal Society next week. According to the article, the plan to make Othman and the UN's Office for Outer Space Affairs which she heads, the first point of contact will be debated by UN scientific advisors before heading to the general assembly. Turns out though that the newspaper, and dozens of other media outlets that rewrote the same story, may have jumped to some conclusions. Today, Othman emailed The Guardian, "It sounds really cool but I have to deny it."

'Until such time as planet Earth learns to export to Mars, every national surplus must be offset somewhere else with a matching deficit.'
-Jim Stanford

'And pray that there's intelligent life somewhere up in space, 'Cause there's bugger all down here on Earth.'
-Monty Python

'Where's the kaboom? There was supposed to be an earth-shattering kaboom!'
-Marvin the Martian

'The US Airforce assures me that UFO's pose no threat to National Security.'
-President John F Kennedy

"I looked out the window and saw this white light.It was zigzagging around. I went up to the pilot and said,Have you ever seen anything like that? He was shocked and he said, "Nope." And I said to him: "Let's follow it!" We followed it for several minutes. It was a bright white light.We followed it to Bakersfield, and all of a sudden to our utter amazement it went straight up into the heavens. When I got off the plane I told Nancy all about it."
-President Ronald Reagen (Describing his 1974 UFO encounter to veteran newsman Norman C. Miller, then Washington bureau chief for the Wall Street Journal.)

'I'm not at liberty to discuss the governments knowledge of extraterrestrial UFO's at this time. I am still personally being briefed on the subject"
-President Richard M. Nixon

"The phenomenon of UFOs does exist, and it must be treated seriously."
-Mikhail Gorbachev

From the UK Telegraph:

Aliens have landed on earth, infiltrated British and American nuclear missile sites and sabotaged weapons, according to US Air Force officers.

The beings have repeated their efforts in the US and have been active since 1948, the men said, and accused the respective governments of trying to keep the information secret.

The unlikely claims were compiled by six former US airmen and another member of the military who interviewed or researched the evidence of 120 ex-military personnel.

The information they have collected suggests that aliens could have landed on Earth as recently as seven years ago.

The men's aim is to press the two governments to recognise the long-standing extra-terrestrial visits as fact.

They are to be presented on Monday 27 September at a meeting in Washington.

One of the men, Capt Robert Salas, said: "The US Air Force is lying about the national security implications of unidentified aerial objects at nuclear bases and we can prove it."

He said said he witnessed such an event first-hand on March 16, 1967, at Malmstrom Air Force Base in Montana which housed Minuteman nuclear missiles.

Capt Salas continued: "I was on duty when an object came over and hovered directly over the site.

"The missiles shut down - 10 Minuteman missiles. And the same thing happened at another site a week later. There's a strong interest in our missiles by these objects, wherever they come from. I personally think they're not from planet Earth."

Others claim to have seen similar activity in the UK.

Col Charles Halt said he saw a UFO at the former military base RAF Bentwaters, near Ipswich, 30 years ago, during which he saw beams of light fired into the base then heard on the military radio that aliens had landed inside the nuclear storage area.

He said: "I believe that the security services of both the United States and the United Kingdom have attempted - both then and now - to subvert the significance of what occurred at RAF Bentwaters by the use of well-practised methods of disinformation."

The site was then the base of the US 81st Tactical Fighter Wing.

Capt Bruce Fenstermacher, a former US Air Force officer, also claims he saw a cigar-shaped UFO hovering above a nuclear base in Wyoming in 1976.

Story #2

Six retired officers and one former non-commissioned officer claim to have gathered witness testimonies from more than 120 military personnel revealing the infiltration of nuclear sites by aliens as recently as 2003.

In some cases, nuclear missiles supposedly malfunctioned while a disc-shaped object hovered nearby.

Captain Robert Salas, a former Intercontinental Ballistic Missile Launch officer, said he was on duty during one missile disruption incident at Malmstrom Air Force Base in Montana in 1967.

“An object came over and hovered directly over the site,” he said.

“The missiles shut down – 10 Minuteman missiles. And the same thing happened at another site a week later. There’s a strong interest in our missiles by these objects, wherever they come from.

“I personally think they’re not from planet Earth.”

He said he was ordered to never discuss it: “The US Air Force is lying about the national security implications of unidentified aerial objects at nuclear bases and we can prove it.”

Colonel Charles Halt said he watched Unidentified Flying Objects directing beams of light into RAF Bentwaters airbase near Ipswich and heard on the radio that they landed in the nuclear weapons storage area.

Col Halt said: “I believe that the security services of both the United States and the United Kingdom have attempted – both then and now – to subvert the significance of what occurred at RAF Bentwaters by the use of well-practised methods of disinformation.”

Story #3

The group of officers said they would distribute declassified government documents on Monday that would prove there had been alien interference at nuclear weapons sites stretching back to 1948.

Robert Hastings, a long-time UFO researcher, who collated the information, said at a press conference in Washington that “this planet is being visited by beings from another world who for whatever reason have taken an interest in the nuclear arms race”.

He claimed to have gathered witness testimony from more than 120 military personnel showing infiltration of nuclear sites. Six retired officers and one former NCO spoke of their personal experiences.

In some cases, nuclear missiles supposedly malfunctioned while a disc-shaped object hovered nearby. Although the officers produced fresh affidavits detailing their experiences, the incidents, many of them the 1960s, had previously been publicised by UFO enthusiasts. Some of them were first disclosed decades ago.

Mr Hastings stated that beings from UFOs had also tinkered with Soviet nuclear weapons and speculated that the aliens had been seeking to send “a sign to Washington and Moscow that we are playing with fire”.

Captain Robert Salas, a former US Air Force Inter-continental Ballistic Missile Launch officer, said he was on duty during one missile disruption incident at Malmstrom Air Force Base in Montana in 1967 when a “large glowing, pulsating red oval shaped object” hovered over the front gate.

He then noticed that the Minuteman missiles he was overseeing had shut down. “The indicators for all or nearly all 10 missiles showed as red-coloured ’fault’ lights, which meant that the missiles were disabled and could not be launched.”

He said he was ordered not to discuss the matter but was never given an explanation by his superior officers.

In another case in Britain, Colonel Charles Halt said that in 1980 he watched a UFO directing beams of light down into the RAF Bentwaters airbase near Ipswich.

His security team “observed a light that looked like a large eye, red in colour, moving through the trees”. After a few minutes “this object began dripping something that looked like molten metal. A short while later it broke into several smaller, white-coloured objects which flew away in all directions.”

Sceptics pointed out that there was a lighthouse nearby but Col Halt maintains that the objects were “extraterrestrial in origin” and that “the security services of both the US and the UK have attempted – both then and now – to subvert the significance” of what happened near Ipswich.

Sacred Profanities, Bonfire of the Banalities, Fiscal er Psych Op Insanities ... It's a madhouse.

2010-09-25T09:51:00.026-05:00

'Make the lie big, make it simple, keep saying it, and eventually they will believe it.'
-Adolph Hitler

'There are a lot of people who lie and get away with it, and that's just a fact.'
-Donald Rumsfeld

'Repetition does not transform a lie into a truth.'
-Franklin D. Roosevelt

'During times of universal deceit, telling the truth becomes a revolutionary act. Political language. . . is designed to make lies sound truthful.'
-George Orwell

'The first casualty of war is not truth, but perspective. Once that's gone, truth, like compassion, reason, and all the other virtues, wanders around like a wounded orphan.'
- Ente Grillenhaft

'The 1st panacea of a mismanaged nation is inflation of the currency; the 2nd is war. Both bring a temporary prosperity; a permanent ruin.'
-Ernest Hemingway

'I just want you to know that, when we talk about war, we're really talking about peace.'
-George W. Bush

"We're not going to monetize the debt."
-Ben Bernanke

'We are never deceived; we deceive ourselves.'
-Johann Wolfgang von Goethe

Left the Cubs game at the earliest point, (fourth inning - they were being clubbed by the Cardinals), that this fella has ever remembered abdicating his first row seat. But stayed long enough to listen (covertly) to a group of VIPs discuss their plans on renovating Wrigley, how the ivy was loosely covered under the declarations of the National Registry, how any modifications would need to keep up the appearance that things really hadn't been changed much, and how perceptions needed to be handled both in Washington and Clark & Addison whilst maximizing revenue.

True profanity to the ears of a worshiper at the shrine of futility.

And also a fractal writ large of the daily Vaudevillian interplay of the comics (WSJ and FT). Verily, 'tis a war against the future.

The dividing lines have been drawn, on one side are the Naysaying Nabobs of Nancy Capitalism that, with beige books extended, are unwavering in their dogma that Chairman Ben will perpetually liquefy their chalice of confidence, and on the other side are the few the proud, the misfits... the Atticus Finchs that believe that reality is the tail risk. With arms extended they proclaim : We are not idealists to believe firmly in the integrity of our economic system. That’s no ideal to us. That is a living, working reality! Now we are confident that you Mr. Market will review without passion the evidence that you have heard, come to a decision, and will uh, uh, well, uh ...

Then they stop and scratch their head and say ... the government is all in isn't it?

The Office of Economic Influence headed by the Oracle at Eccles like all progenitors of psych ops has to, by necessity, weigh whether the harm done through their deception offsets the good that same, purportedly, will accomplish.

Continual disinformation can result in damaging blowback, and most certainly the denouement of the trusted is a high-priority target to be avoided lest the surplus eaters start to believe their lyin' ojos and reject the Divine Might of Wizards.

As Napolean once opined : 'There are but two powers in the world, the sword and the mind. In the long run the sword is always beaten by the mind.' The horsehair splintering for the Federales cum Svengalis is to negate the cycles and learn from the historical chestnut that in 1929 the top 1% of households represented 44.2% of wealth and in 1933 they represented 33.3%.

Psychological operations are planned operations to convey selected information and indicators to audiences in order to influence their emotions, motives, objective reasoning, and ultimately their behavior.

If inflation expectations are unanchored, then a severe recession can lead to a deflationary spiral. The logic is as follows: In the early stage of recession, the emergence of slack causes the inflation rate to dip. The resulting lower inflation rate prompts people to reduce their future inflation expectations. Continued economic slack causes the inflation rate to fall still further. If the recession is severe and long enough, this process eventually will cause prices to fall and then spiral lower and lower, resulting in ever-faster deflation rates.

And much like 'modifying' the ivy on the walls at Wrigley deflation is true profanity to the ears of a worshiper at the shrine of liquidity.

The struggle of virtue and vice is writ large as the debate between deflationistas and debasinistas. Ones' lens depends on what one means by ones' ends. The deflationistias mean that deflation is the midwife of hyperinflation. The debasinistas pray that familiarity breeds content and not contempt.

So tell me Morpheus how can they camouflage debasement in a no-stimulus zeitgeist?

Friday's King Report:

'The Fed did a major juicing of the system by adding $11.059B for the week ending on Wednesday. More importantly, the Fed’s balance lost only $361m of MBS. It’s inconceivable that the Fed received $10+B of interest or principal prepayments on its $1.09 trillion of MBS in one week.

The Fed monetized $10.461B of Treasuries. The NY Fed has done $20.887B of POMOs, which are Treasury monetizations. There is a POMO scheduled for today as well as Tuesday and Thursday of next week. (http://www.newyorkfed.org/markets/pomo/display/index.cfm?showmore=1&opertype=orig)

The size of POMOs has increased the past two weeks. So the Fed is on pace to monetize $30+B of Treasuries for September. This is almost a 34% yield on its $1.09 trillion MBS portfolio – less the amount of principal repayments, which we don’t know because the Fed won’t tell anyone.(http://www.newyorkfed.org/markets/agency_agencymbs_faq.html)

The latest H.4.1 shows the Fed is monetizing Treasuries far in excess of the decline in MBS value. We’d love to see proof that principal repayments and interest in 1 year can be 34% of a MBS portfolio. Ergo, the Fed is monetizing Treasuries far in excess of its stated monetization of MBS interest and principal prepayments. The Fed has increased its QE 1.0 activity.

As we keep screaming, QE 1.0 has not ended despite official proclamation that it had. The bottom line is Bernanke and the Fed have been lying about the scope and nature of it - QE/debt monetization.'

Thanks for the Red pill Mr. King.

Damn dirty apes.

It's a madhouse.

The United States of America LLC

2010-09-18T10:19:00.011-05:00

'Fearful people are more dependent, more easily manipulated and controlled, more susceptible to deceptively simple, strong, tough measures and hard-line postures. They may accept and even welcome repression if it promises to relieve their insecurities.'
- George Gerbner

Liberalism is the belief in the importance of equality and liberty. It promulgates reason as the primary source for legitimacy and authority. It stands in direct opposition to religion endorsed by the state, and plutocracy, the modern equivalent of absolute monarchy and the Divine Right of Kings.

The American Revolution (can you hear me Mr. Teabag?) promulgated liberal philosophy as their justification in rising up against the Crown.

Civil rights, individual liberties, the peaceful coexistence of different lifestyles and interests, where the common good can be achieved on the battlefield of dialogue, where power is not concentrated, and mutual respect and tolerance are exhorted... that's liberalism folks.

The antithesis of liberalism is elite theory where the windfall apples need be reserved for the more equal brain workers.

And what is conservatism?

As Robert Eccleshall once opined : 'It is the persistent image of society as a command structure in which the responsibilities of leadership can be exercised within the framework of a strong state manifested in divine-right royalism.'

Deference to authority, traditional institutions, an opposition to modernism, a yearning for the 'good old days', and advocacy of minimalistic change is the bedrock of conservative opinion.

British Psychologist Glenn Wilson stated per his book, 'The Psychology of Conservatism' (1973), that a general factor underlying conservative beliefs is "fear of uncertainty."

To apply these categories, ontologically, to today's conservative and liberal is challenging to say the least.

A conservative president embarking on nation building with the aplomb of a bong-addicted college liberal? Hey we didn't put up that Mission Accomplished sign, we have no idea how it got there. Democracy is on the march dude!

A liberal president advocating Potemkin health reform, approximately a third a trillion to the insurance industry over 10 years, decried by conservatives, whose last president prescribed 8 trillion in unfunded benefits, as socialism? The same president lauding nearly a hundred billion in weapons as a jobs creation program?

An ubiquitous bankster friendly policy, (although to be fair Bush just gave Paulson the keys, Barry Dunham actually had a stronger hand on the rudder) where trillions in rich folks' bad speculative bets were swept under the FASB? And a continuing national discourse squabbling about nickels as the banksters steal gold bars out the back?

The liberal welfare state? Who's zoomin' whom? Welfare is most certainly not just for liberals in the United States of America LLC.

And our popular uprising du jour, crying for NIMBY libertarianism, denouncing the welfare state, save of course for the payments they are entitled to receive, and sickened by the socialism er fascism er well whatever ism 'tis is ... don't get all high-falootin' on me ya book-reading left coast effete... all we know is we don't like it!

It is curious though that few if any of the Tea-baggin' crowd would describe themselves as liberal and yet they seem to be drawn from the well of classic liberalism, as were our Founding Fathers, opposing elitism which ironically the ideology of the rich have conflated for them as today's liberalism.

The end-game of their protestations, most probably, coalescing around the next American Demagogue, the Manchurian Mountain Mama who will, in this fella's humble opinion if she gets in, deliver the state to the elites in a fashion that will beggar credulity.

Now, a lot of folks don't think she has a chance and if the moment occurs when it appears that she does enough of a counter-movement will arise... but please, my progressive friends, keep this in mind, we elected Nixon to his first term right after the 'Summer of Love'.

Repost and Add-on : Destroy this invisible government ... dissolve the unholy alliance between business and corrupt politics ...wink

2010-09-16T09:59:00.026-05:00

'Don't believe everything you breathe
Someone keeps sayin I'm insane to complain
Forces of evil in a bozo nightmare
'Cause one's got a weasel and the other's got a flag
You can't write if you can't relate
Trade the cash for the beef for the body for the hate.'
-Beck

You see I may be a Christian but I am also a capitalist. And I will defend our capitalist system against all enemies unless there's a way to profit from its' demise.'
-Stephen Colbert

'Your motto is God,guns,guts,and American.'-CNN interviewer

'Actually its' God, guns,guts,and American pick-up trucks.' -Missouri car dealer that is giving away free AK-47s with purchase of a truck

'Some might wonder why God is included in a motto that also includes guns.'-CNN interviewer

'You don't have a problem with God do you?'-Missouri car dealer

Originally posted December 17, 2009 with brief add-on:

Populism is best defined as the juxtaposition of "the people" with "the elites". Its' flag has been hoisted by the left and the right, the irrational and the rational, and its manifestation per the prevailing zeitgeist is often appropriated by a demagogue.

For Ben Tillman, African Americans were the scourge of white society; for James Michael Curley, Anglo-Saxons were the bane of the browbeaten Irish; and for Joseph McCarthy, liberal elites(commies) were an evil upon America. They all fought on behalf of and for the protection of the 'good way of life.' - they all fought against that which stood in opposition to a presumed American norm.

To borrow liberally from Sigmund Neumann's, 'The Steadfast Rules of the Demagogue', and Douglas Walton's,'One-Sided Arguments: A Dialectical Analysis of Bias' : the most recognizable traits of a demagogue are the simplicity of message content and an entirely unilateral point-of-view presentation - summarized as unidimensionality.

The demagogue appeals to the crowd and commonly adds the logical fallacies of appeals to pity, appeals to reverence and appeals to personality as well as other rhetorical devices such as omission not for literary elegance or brevity but rather for gain, influence and deception. The demagogue is anti-Aristotelian, in that rhetoric is not seen as the counterpart of the dialectic -instead, there is no desire to reconcile using opposing views but rather the demagogue presents a view in opposition to some Other. The Other is responsible for cultural and social upheaval, the Other is to blame for all current adverse conditions and "we" the true Americans, in opposition, need to uphold all that is good.

The demagogue capitalizes on vulnerabilities due to ignorance and fear.

The first Populist party in America called itself the Greenback Party. It opposed the shift from greenbacks, paper money issued after the American Civil War, to a bullion based standard. Its platform supported an income tax, an eight hour day, and called for allowing women to vote. After 1884 it was no longer a force in American politics.

The Populist party in the United States came about in the 1892 election. Its' platform called for the abolition of national banks, a graduated income tax, civil service reform, direct election of Senators, a working day of eight hours, and the nationalization of telegraphs, telephones and railroads. This party was gestated for economic reasons namely the desire to repeal the gold standard to counter high deflation in agricultural prices. The party was co-opted by the Democratic Party of 1896 and never recovered from its' defeat.

The platform of the Progressive Party of 1912, formed by Theodore Roosevelt, was 'to destroy this invisible Government, to dissolve the unholy alliance between business and corrupt politics [it]... is the first task of statesmanship of the day.' The platform called for women's suffrage, recall of judicial decisions, easier amendment of the U.S. Constitution, social welfare legislation for women and children, workers' compensation, limited injunctions in strikes, farm relief, revision of banking to assure an elastic currency, required health insurance in industry, new inheritance taxes and income taxes, improvement of inland waterways, and limitation of naval armaments. The Progressive Party did poorly in the 1914 elections and faded away.

The United States Progressive Party of 1924 was a continuation of the Progressive Party of 1912, after gaining only 17% of the popular vote in the 1924 elections it disbanded.

The last true populist party was Huey Long's 'Share our Wealth' movement begun during the Great Depression. Its' platform was:

'No person would be allowed to accumulate a personal net worth of more than 100 to 300 times the average family fortune, which would limit personal assets to between $1.5 million and $5 million. Income taxes would be levied to ensure this. Annual capital levy taxes would be assessed on all persons with a net worth exceeding $1 million.

Every family was to be furnished with a homestead allowance of not less than one-third the average family wealth of the country. Every family was to be guaranteed an annual family income of at least $2,000 to $2,500, or not less than one-third of the average annual family income in the United States. Yearly income, however, cannot exceed more than 100 to 300 times the size of the average family income.

An old-age pension would be made available for all persons over 60.

To balance agricultural production, the government will preserve/store surplus. This is made so no food is wasted.

Veterans are paid what they are owed.

Education and training for all children to be equal in opportunity in all schools, colleges, universities, and other institutions for training in the professions and vocations of life.

The raising of revenue and taxes for the support of this program was to come from the reduction of swollen fortunes from the top, as well as for the support of public works to give employment whenever there may be any slackening necessary in private enterprise.'

Huey Long's slogan was 'Every Man a King'. The movement died with his assassination.

Not every demagogue is a populist and not every populist is a demagogue, but when the two combine it is often combustible. The most salient example would be the conspiracist scapegoating in Germany promulgated as national socialist populism and articulated by a failed painter who did not become a German citizen until 1932.

Fast-forward to today( 12/17/09):

Rasmussen Reports : 'In a three-way Generic Ballot test, the latest Rasmussen Reports national telephone survey finds Democrats attracting 36% of the vote. The Tea Party candidate picks up 23%, and Republicans finish third at 18%. Another 22% are undecided. Among voters not affiliated with either major party, the Tea Party comes out on top. Thirty-three percent (33%) prefer the Tea Party candidate, and 30% are undecided. Twenty-five percent (25%) would vote for a Democrat, and just 12% prefer the GOP. Among Republican voters, 39% say they’d vote for the GOP candidate, but 33% favor the Tea Party option.'

And what is the platform of this nascent political movement?

Limited government, fiscal restraint, opposition to further stimulus spending and a determination to push back against "a federal government that is too big, too intrusive and all-too-eager to seize power from the states." Repeal the death tax, implement a flat tax, keep the internet tax-free, control the border, support free trade, personal accounts instead of social security, school choice, medicare reform, healthcare reform etc...

A populist movement with 21st century characteristics. It will most probably be co-opted by one of the established parties.

It may even marry up with a demagogue.

LA Times : Obama's new Gallup Poll job approval number is 47%. Last month it was 53%.

The new CNN/Opinion Research Poll shows Palin now at 46% favorable.

Move along nothing to see here.

Wink.

Add-on (09/16/10)

Obviously the Manchurian Mountain Mama is continuing to gain steam. What seemed obvious to this fella is becoming more generally observed. Reading Heilemann and Halperin's 'Game Change' as well as other anecdotal accounts of Lady Palin suggest that we truly are about to live in even more 'interesting times'. At the risk of being cataloged at a future date let me add one final riposte to this once and future candidate, in the language that a regina pravus might understand:

'These six things doth the LORD hate: yea, seven are an abomination unto him:
A proud look, a lying tongue, and hands that shed innocent blood,
An heart that deviseth wicked imaginations, feet that be swift in running to mischief,
A false witness that speaketh lies, and he that soweth discord among brethren.'
- Proverbs 6:16-19

Electile dysfunction, Nancy Capitalists sans compunction, raconteuring with gumption...damn dirty apes.

2010-09-10T10:07:00.019-05:00

Chris Whalen says that 'The income foregone by individual and corporate savers and transferred to the banks is something closer to $600 billion annually or nearly $1 trillion in total.'

You mean that the failure to liquidate the insolvent banksters, to dip rich folks' bad speculative bets into the acid bath of price discovery, has liquidated a large part of the productive economy?

Seriously hoocoodanode?

Just for the heck of it asked Senor Google how many hits on the intertubes come up for say QSPE and Wells Fargo over the last three months... answer? ... 7! And one was from me per ZH blog on 04/09/2010! My oh my Alice. If 1.7 trillion or so worth less than 50 cents on the dollar can vanish down the randomwalkers' rabbithole without even a gasp verily anything is possible.

Mark Pittman is convulsing in his tomb.

At no time do their hands leave their arms folks; the middle class for their next trick as the 'vanishing bird' smashed at the bottom of the now empty cage.

Just for chuckles, prithee what are the comics saying today?

Deutsche dilutes itself 30% cause Basel might make 'em not count the secret capital?

Donaudampfschiffahrtsgesellschaftskapitän preparing for River Styx!

SEC reignites that 'investigation' into Lehman's fraudulent conveyance mimicry cause Dickie Fuld won't stop griping?

'The lights are growing dim Otto. I know a life of crime has led me to this sorry fate, and yet, I blame society. Society made me what I am.'
- Duke (Repo Man)

Motorcycle Cop: Whatcha got in the trunk?
J. Frank Parnell: Oh... You don't wanna look in there.
(Repo Man)

In the GM IPO the carservatorship's (patent still pending) total equity of $23.9 billion includes $30.2 billion of goodwill? From Government Motors to Goodwill Motors?

My God...it's full of cars.

Equities drift up 'cause, after levering, the Federales hedge fund at Eccles spins about 50 billion from straw to maw this past week?

I couldn't do that. Could you do that? Why can they do it? Who are those guys?

BLS pulls a number out of their tailbone (why even fabricate an effort eh? gosh just one hour a week constitutes part-time employment dontchaknow), half of all youngsters are unemployed, deceleration widespread, plutocracy warns that the arsonists may burn again if the waterfall (tax cuts) are turned off, the repubs who chortled that when Obama was coming in that the subpoenas will fly (what? did somebody do something wrong?) are now threatening that, vuja de, if they get in the subpoenas will fly and Feddie Mac is introducing ... wait for it... minimal down payments, lower minimum credit stores, no appraisals and no mortgage insurance!!!

Have you left no sense of decency?

Electile dysfunction, Nancy Capitalists sans compunction, raconteuring with gumption.

Damn dirty apes...

The hardest button to button, meatballs for nuttin, fiscal mcguffins versus a contrarian somethin'

2010-09-03T10:14:00.009-05:00

When Timmy G went to Euroland to pitch stress tests for what ailed 'em was it a set-up? After all, it is not so much a race to the bottom as it is a pace to a bottom. QE2 can't sail until Euroland hits the rocks again. We can't let their upcoming crisis go to waste.

If the U.S. stress tests were I.Q. tests, the EU tests were, in comparison, measuring sanity... as in over the long term only the insane would believe them.

For example did you know that part of most all big German banks balance sheets' consists of 'secret capital' (seriously that is what it is called) - loans from the state with non-disclosed terms. You didn't? Why, cause it's secret folks!

An example of German efficiency , they don't have to fight transparency all the way to the Supremes.

Sniffing down the banksters' rathole has already started on the Continent and believe you me, our national security apparatus, scratch that, the rating agencies, will step in whenever the planners and thinkers cast the 'appropriate' runes.

Ha! Mr .Money, one might say, the Federales could never plan so well. Certainly though they do plan, everyone does, as they paint themselves into the corner of the round-roomed recovery, fervently they beseech the Rhyming Gods to let the second easing mouse get the cheese. 'Tis but the matter of timing the trap.

Be that as it may ...let me interrupt this rant for something completely different.

It seems all the rage now to talk about depression, exhort the birth death model, and parse the cornucopia of fraudulence conveyance that is government statistics, with the only positive spin imaginable being some version of ' I may be going to hell in a bucket, babe. but at least I'm enjoying the ride.'

Yes, surprise, surprise, the demand restoration project is not working yet. And?

Let me spin a contrarian tale, the silver in the clouds of this approaching storm.

If you're going through hell, verily 'tis only one option, keep going.

When change is afoot you have two choices, you can either grab the surfboard and ride the wave or you can let it crash over you.

Do not count on government to save you, look in the mirror for your salvation.

I assure you that the majority of citizens on this planet do not have such an advantage.

As horrible as this will feel, in hindsight something wonderful is about to happen.

America needs to get its' mojo back, one citizen at a time.

Don't be afraid.

Let's face it, as Americans we collectively think history does not apply to us or at least we have mastered it- we have grown up as the dominant power, we have basked in the fruits of that glory.

As such we, the citizenry, although troubled still ache to believe that this is temporary, a transient blip, happy days soon will be here again...policies flowing from on high will mimic that optimism and in doing so will underestimate (at least 'officially') the dilemma and prolong the process.

My entire life have always rallied against the tyranny of petty knowledge. Folks that wield their 'secrets' like a club have always generated intense vitriol from this fella. Knowledge is nothing more than an acquired thing. You can learn anything if you put your mind to it. How? Just do it. Why? Because you can.

Now, more than ever in my generation's lifetime,a broad intelligence is critical. We have stuffed the pig on the scales of fate. Through our desire to be prophets we have ceased to be makers of our own fate. On a macro level but not for the individual.

Despite all the digital ink spent on the failings of America, especially in light of the ‘I Can’t Believe it’s not Capitalism’ Plan generated in response to the ‘What Just Happened Crisis’… hope is not dead, progress has not been outlawed, justice is not forbidden, and evolution is not off the table.

The fire of liberty exists, the embers of truth still glow. As long as one voice stands to speak truth to power,the dream of this country lives and can be expressed by each and every one of us.

We are Americans dammit, and that word, yes, still has noble meaning.

There is one blessing fostered upon Americans that can't be denied. We can reinvent ourselves. We are not beholden to anything other than our imagination, we can make out of clay what our minds and our hands desire. They can only take from us what we abrogate; they can only lie to us if we refuse to put in the work to know the truth.

It is not a question of being part of the solution or part of the problem. Change does not have to be consistent with someone else’s plan. Change comes from within. To make a difference outwardly one must first find that difference within.

Get off your ass America, over the long-term if you will it to be, your future is so bright, we'll all be shorting shades.

The hardest button to button, meatballs for nuttin, fiscal mcguffins versus a contrarian somethin'

Believe it and you will be it.

At Fed's End. Hoist with their own petar; and 't shall go hard. The world as bard, as they play their last card.

2010-08-28T07:40:00.039-05:00

The boomer generation has born witness to the greatest private misallocation of capital in the modern era, dot-com, followed by the greatest public misallocation of capital in the modern era, blutarsky interest rates and banksters too bankrupt to go broke.

As we continue our walk through the fiscal wilderness it is fitting that 40 days and 40 nights (80 years) brings us 1932-2012. (1929-2009 being just a coincidence, of course.)

What shall we call the next generation? The busted?

The rhyming of the greatest separation of wealth since 1928 brings the spectre of the first full-blown deflationary episode post-WW2 to the forefront once again. The prevailing chestnut that deflation will result in depression is for the most part, per the historical record, nonsense. Worldwide, over the last couple centuries, there were 65 episodes of deflation without depression and 21 of depression without deflation, 65 of 73 deflation episodes had no depression, and 8 of 29 depression episodes had no deflation. Nearly 90% of the episodes with deflation did not have depression. (Atkeson&Kehoe, 2004)

Of course back then we had sound money not found money.

Deflation and depression were interlinked in GD1 of course, but not quite the way most folks believe it was. Inflation expectations were well anchored in GD1 and the black diamond in CPI to mark the onset of that crisis was symmetrical to the pop in CPI in the late 30s. Hyperinflation did not ensue because the 'deflation' more rightly should have been called disinflation, and of course deflation is the midwife of hyperinflation (caught you cribbin' Mr. Edwards.) The disinflation of the 30s was reversed with a 40% currency devaluation, the belief in wizards was strong and well met.

The empirical point to consider though is that this Great Depression is occurring in a sovereign that has the world's reserve currency with a national security apparatus that includes the rating agencies. A volatile mix of mischief that allows folks to not only dispel the administration of medicine but promote the advocacy of alchemy while bloviating on how deflation is truly the hemlock of the people, well at least some of the people.

How does this end? To the sound of great applause, folly's denouement ... and then a long period of silence.

In many ways it is the age old story of Emperors and Pirates, deflation being the Jolly Roger, and a headlong drive into oblivion with the argument that forcing the issue will resolve it. Rummy's chestnut of "If you can't solve a problem, make it bigger."

Methinks the Federales have one 'futile and stupid gesture' brewing to can-kick the ebbing empire, guns and butter redux, although this time perhaps more appropriately phrased as buns and gutter. Ultimately regaled, for those of more modest deportment, as Financial Pornography 101 : Gangbanging a String.

The Fed will end, 2016 is circled on my calendar, hoist with their own petar; and 't shall go hard. The world as bard, as they play their last card.

Financial Pulchritude, Ringfence the Multitude, Federales with Attitude, Brother can you spare a Rhyme?

2010-08-24T12:02:00.007-05:00

"The worst is over without a doubt."
"American labor may now look to the future with confidence"
"We have hit bottom and are on the upswing"
- James J. Davis Secretary of Labor. (June,Aug,Sept 1930 respectively)

"In other periods of depression, it has always been possible to see some things which were solid and upon which you could base hope, but as I look about, I now see nothing to give ground to hope-nothing of man."
- Former President Calvin Coolidge, (1933)

'He that trusteth in his riches shall fall; but the righteous shall flourish as a branch.'
- Proverbs 11:28

In 1929 the top 0.1% of Americans had a combined income equal to the bottom 42%.

In 2004, the top 0.1% of Americans had a combined pre-tax income of the poorest 120 million people (approximately 40%.)

In 1929 the top 1% of households represented 44.2% of wealth and in 1933 they represented 33.3%. On the second data point hangs the prophetic sword with horsehair splintering over the Oracle at Eccles.

As of 2007, the top 1% of households owned 42.7% of all financial wealth (total net worth minus the value of one's home.) The bottom 80% percent? Just 7%.

As of 2007, income inequality in the United States was at an all-time high for the past 95 years, with the top .01% (yes, that is one-hundredth of one percent) receiving 6% of all U.S. wages.

In 1928, the top 10 percent of earners received 49.29 percent of total income. In 2007, the top 10 percent of earners garnered 49.74 percent.

In 1928, the top 1 percent of earners received 23.94 percent of income. In 2007, the top 1 percent took home 23.5 percent.

And the lessons learned by our blessed leaders concerning this Great Depression? Prices cannot go down and wealth inequality needs to tick up. An assemblage of price-distorting wizards locked arm-in-arm struggling to defeat the creative destruction blizzard. The insouciance of elites and the Antoinette economy. Exhibit thyself to a public that may hiss thee, bemoan the solons. Let them eat debt!

Quis custodiet ipsos custodes? said the Roman poet Juvenal. Who will guard the guards themselves?

Why, pronounce our modern day guards, we will. Trust us but don't task us lest you see trust in us lost to your peril.

'Don't Task Don't Smell', the central plank of the 'I Can't Believe it's Not Capitalism Plan' has given us Sugar Mountain, where stupidity is cupidity.

The cold hard fact of our age is that the bankrupt ideology of the rich that had greatly succeeded in drafting the inner monologue of regular folks so that they would vote against their self-interests is colliding head-on with a Mr. Market that is a bit pissed off that we've inflated it out of the business cycle for the last quarter century. (AM Rule #6)

After World War 2, our blessed leaders, impressed by German 'organizational' skills crafted a policy of manufacture of consent.Over time these techniques moved to the economic realm in an attempt to manufacture content.Federales now risk the manufacture of contempt, for it is only a Great Depression if they say it is. (AM Rule #1)

Truly we need a hero or it is generation zero.

Financial Pulchritude, Ringfence the Multitude, Federales with Attitude, Brother can you spare a Rhyme?

Phat, Plummed and Cupid is no way to go through strife son.

The splinter of our disconnect. Fade to back.

2010-08-15T10:37:00.046-05:00

Scene 1:

6 year old daughter had been misbehaving during the course of a day. Wife did the old 'wait until your father comes home.' When I arrived home just as the wife was about to regale me with the little one's transgressions, my daughter 'waved her off' and walked towards me with arms extended to support her point; 'Daddy I am still just a little girl, I am going to make mistakes.'

Scene 2:

Driving home from my wife's parents the other night.
She notices that our son (4yrs) was playing with a toy...

Mom: Is that your toy?

Son: No Mama, Grandpa and Nana said I could have it for a week.

AM: I think he is making that up.

Son : (Pause) I changed my mind.

Son: Its' craziness Mama.

Wife: What's craziness ?

Son: Its' craziness when you take a toy that doesn't belong to you.

Son : (Pause)

Son : And I'm a crazy man Mama.

Scene 3:

'Now is the winter of our discontent
Made glorious summer by this sun of York;
And all the clouds that lour'd upon our house
In the deep bosom of the ocean buried.'
- William Shakespeare (Richard III),

Fade to Back:

'There are two mistakes one can make along the road to truth -- not going all the way, and not starting."
-Buddha

The first two above are from my children but it is a fractal of the Federales for most certainly crazy men do make mistakes.

The crystallizing mistake of our age, the crime of the century writ large, the splinter of our disconnect... is this epigram: failure to liquidate the insolvent banksters, to dip rich folks' bad speculative bets into the acid bath of price discovery, has liquidated a large part of the productive economy. And so the blast beat of the cyclic drum plays on as we fade to back.

The American Empire came to a fork in the road and instead of taking it we morphed it into a can.

A quarter century of being prophets of our fate, of the Great Moderation, scratch that the Great Modification, of deficits not mattering, of models over history, is serving up the middle class as a burnt offering and may result in our not being masters of our intermediate future as we black diamond towards the denouement of the trusted.

Just got back from a Colorado Springs conference and had the 'same conversation' once again this time with the cab driver. A decade out from California, the fella was a luxury real estate developer, and he shared two stories which characterizes our zeitgeist.

The first is that of a former client who has a 25 million dollar home (well that was what they paid for it) with several million in equity. They would like to refinance with the bank but they can't because the bank has absolutely no idea how to value it, couldn't even give 'em a number or a range.

The second is that this cabdriving victim of the misallocation of productive capital plans to stock up on guns and ammo and, offering the caveat of 'don't laugh with what I'm going to tell you Mr. Stranger in the back seat', has plans to go to Alaska with a portable home (I forget the indigenous term) to live of the land.

Being a contrarian, I suggested to him that his conversation was one that had been oft-repeated as of late (he agreed his associates were all chortling the same) and suggested that if we do get shaked and baked either through gravity dislocations (astro stuff), history relocations (war following financial crisis), or popular sniping (the manufacture of contempt for it is only a Great Depression if they say it is) the big cities will probably be the safest place to be...

After all, if the s$&% comes down do you really want to be out in the hinterlands with every other fella loaded to bare? Sounds like Mad Max to me.

If I knew the way would most probably share it, but he who has a crystal ball most certainly ends up with a mouthful of broken glass.

This I feel to be true... it is a Great Depression but with different characteristics than our First. You can read the intro to this blog as well as the inception date, your humble blogger dropped the tagline of the Great Depression of 2007 prior to the Noblesse Oblige even calling the recession.

In GD1 what was a fella to do? Collect cigarette butts on the street, sit on the porch, listen to the radio, or mayhaps go down to the Bowery and get in trouble?

Now the choices are a cornucopia of low-cost to no-cost diversion. Juvenal would be proud. Watch a movie , read a book, read a paper, or listen to music all for free via the intertubes and collect the government check. All until that zombie movie comes to your local cineplex entitled 99 Weeks Later.

Among the empirical evidence of our current dilemma are current unemployment levels being empirically worse than the worse levels of the Great Depression Volume 1 - if we apply the same measurement metric. Seriously, you can look it up!

Another nugget is the comparable extremes met in the separation of wealth in 1928 and 2007, which has actually upticked through 2010. B.S. Bernanke certainly did learn the 'lessons' of GD1, did he not?

My trading sensei berated me a few days ago in my commenting that this is GD2, with the bromide 'look at all the affluence around us!' My reply was have you ever read newspapers from 1930 and 1931? - Internally I verbalized Hemingway's chestnut...'{there are two ways a man goes broke}, slowly,and then all at once.' Once upon a rhyme is a'comin.

Here in Cook County homes over $500,000 are not to be foreclosed on (add-on : >$500K foreclosures represent about 1% of total per The King Report), the banks don't want to take the hit, the overextended upper middle class with horsehair splintering probably choosing to go to Disneyland (or Nordstrom's?) as they squat in their hut and dream of... I don't know... joining the cab driver in Alaska?

With the upper echelons of America contributing a disproportionate share of consumer spending, and their primary asset frozen in the ember of a 13-16 year downtrend where the buyers are lower and the sellers are higher (most probably chemically since the securitization market for jumbo has gone dumbo) the cyclic clock is ticking, the alarm anticipated, that will start wholesale regurgitation to flippers who will counterintuititively drag the 'cancer clearing' out as the fast money waits for the the Groundhog Day bounce back of the ever-imminent recovery right around the corner of a round room.

A generational circle smirk as it were.

And with trillions of meatballs thrown at the problem, the reserves at the Fed being nothing more than a dip financing for a generational workout, private demand is down ticking for the first time since 1928? Viva la V-shaped scratch that seeds abounding scratch that nascent scratch that unusually uncertain recovery!

If the inflection point between inflation and deflation is believing in wizards or believing your lying eyes the Oracle at Eccles better fire up the jets prior to meeting with the Jackholios cause people are squinting at the eye chart and rubbing sus ojos.

Now is the splinter of our disconnect
Made glorious summer by this sun of Ben;
And all the clouds that lour'd upon our house
In the deep bosom of our equity buried.

Fade to Back.

All good things must come to an end ... or perhaps a new beginning.

2010-05-16T09:18:00.048-05:00

Fractal-based theories of market behavior explain discontinuous movements such as the May Trix Flash Crash.

As opposed to supposing that the bubbles in your portfolio are as random as the bubbles in your soda pop, a fractal approach concedes that bubbles are a certainty.

'Fundamentals' most certainly do matter although the use of the term is not what the conventional wisdom perceives.

Even a cursory examination of modern financial history would seem to consign the squawk of randomwalk to the febrile dustbin of history and yet the arrogance of unlimited self-determinism and the mastery of man above all motivates adherence to the ex-theory.

Like lemmings herded to discontinuous chasm after chasm, markets move in memoriam much to the prevailing wisdom's opprobrium.

For your humble blogger Mandelbrot was an eye-opener, but John Needham was the closer.

Over the last week I have automated a spreadsheet based on a 'fractal' theory where upon entering high, low, open, and close as well as ONE other indicator (proprietary from Needham), buy and sell orders can be triggered in ALL liquid markets, and quite successfully I might add.

Applying what Mr. Needham has taught in 'face-to-face' sessions and postulating as to what he will unveil in his foreshadowed 'next stages', have on this fella's spreadsheet clearly, and empirically, separated the winners from the 'sinners'.

Stunning, brilliant, simple, elegant, and in direct opposition to most every financial model known to man.

Now, gentle reader, you might ask why not publicise it Mr. Money, become rich and famous, dye your eyebrows and hair black, and become a billionaire, or at least write a book?

Well, the humble reply is as follows: 1) the entries in this blog do publicize it and have directed folks to Mr. Needham's website thedanielcode.com, however to truly appreciate his teachings one must attend a tutorial and he is coming to the States this summer ; 2) fame is way, way, overrated and I've already made enough coin for both myself and my children to be comfortable; 3) I've earned my grey hair thank you very much; 4) money is the root of all evil and should be treated with respect much like a weapon and a drug, it is so very hard to make abundance in in this world and not at the end of the day be a complete a&$%ole and 5) all I care about is feeding the kids, and from time to time the extended family, feeding a book would be torture.

And yet this is damn entertaining, and sharing, albeit anonymously, is caring.

The purpose of this blog was in part to figure it 'out', believing' it' to be 'it', with the understanding that it was much easier to make 'it' than to invest 'it'.

Now that I'm firmly ensconced into a future where I'm in 'it' to mint 'it' , the purpose of this blog is called into question.

So...will ponder that. Thoughts for now are that future entries may be limited, if any, and that the future focus will, predominantly, be on the premise that according to fractal theory 'self-similarity occurs on all scales' as well as an exploration of the more subtle concept of self-affinity which refers to a fractal whose pieces are scaled by different amounts in the x- and y-directions.

All good things must come to an end ...or perhaps a new beginning.

There is a difference between knowing the path and walking the path.

To be mindful is a discontinuous process, our senses allow us a glimpse at the perfect form (truth) but that view can often be distorted by the flickering fire of perception that illuminates the shapes we perceive to believe.

Peace.

MathTerror... we're sorry but the numbers you've reached have been logically disconnected

2010-05-12T08:40:00.028-05:00

'We are the fools of Europe'
-Bild Magazine

'History is a set of lies agreed upon.'
-Napolean

'And you will know the truth, and the truth will make you free.'
- John 8:32

WSJ : The European Union picked 440 billion euros as the size of the rescue fund because the sum of 440 billion euros and 60 billion euros available initially from an EU emergency fund "sounds nice", a European Commission official said with half a smile. Even better, said another, when the IMF's portion is included, the bailout would be rendered by the American press as $1 trillion.

Forbes: In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy. “It’s not based on any particular data point,” said a Treasury spokeswoman, “We just wanted to choose a really large number.”

And that folks is the new Goldilocks world economy in the new normal - wild ass guesses promulgated to save civilization on the basis of 'sounds just right.'

Better to guess up than fess up I suppose.

Snarkiness is running aground on the shores of institutionalized fraudulent conveyance that is becoming so ridiculous that one can only stare in Gaga'd disbelief...

To wit, WSJ: 'April marked the 27th consecutive month in which small businesses either shed more or the same number of jobs that they added, according to a monthly survey to be released Tuesday by the National Federation of Independent Business, a trade group in Washington, D.C. Since July 2008, employment per firm has fallen steadily each quarter, logging the largest reductions in the survey's 35-year history. Going forward, more small-business owners say they plan to eliminate jobs compared with those that expect to create new jobs over the next three months. The latest study was conducted during the month of April and reflects responses from 2,197 U.S. small-business owners.'

Compare and contrast that with the Bureau of Laborious Statistics Birth Death Model creating 188,000 small business jobs....

Oh but it gets even wackier..

Monday's The King Report : 'For April the fabricators at the BLS have ‘men, 16 years of age and older’ gaining 456,000 jobs. But ‘women, 16 years of age and older’ gained only 94k jobs. This is impossible!!! This is the fourth straight month of impractical imbalance of job gains between the sexes.'

To wit, as mentioned here on March 8th : "the Federales Household Survey showed that this month (Feb.) the category of 'Men 16 years and older' accounted for 297,000 of the 308,000 jobs gain and last month (Jan.) 'Women 20 years and older' produced 529,000 of the 541,000 jobs gain. Dude, stats happen! Don't blame the soothsaya."

Last month the King report revealed, 'Once again we see chicanery in the March Employment because the Household Survey shows a gain of 264k jobs but ‘Men 20 years & over’ accounted for a 290k job gain. ‘Women 20 years & over’ lost 42k jobs. This is absurd!'

What will be the title of the April Household Survey? 'Stats from Mars, B$%#*&@t from Venus?'

Well they didn't choose that appellation although well they should have especially in light of yet another tragedy- per Reuters; 'The Agriculture Department said 39.68 million people, or 1 in 8 Americans, were enrolled for food stamps during February, an increase of 260,000 from January.'

Sadness layered upon madness served up to a hamster-wheeled populace.

And those of us that cry for reason before farce are left to muse until the dancing stops.

The road ahead seeming to fork between destroy the middle class now (wafting asset values with the gentle lubricant of debasement) or destroy the middle class later (deflation being the midwife of hyperinflation where the path to $5000 gold goes through $500.)

A burnt offering to the tribes and their machinations.

The Black Swan, when it isn't being blamed for its' prescience, synthesized as the hope upon hope of just muddling through.

I fear that we will see things in the near term that we would have never ever imagined could ever happen.

Unless of course Santa Claus, the Easter Bunny, the Tooth Fairy, and a requisite choir of angles, descends down to present us with fusion, teleportation, room temperature superconductors or the like to further enable the game...

Someday this war is gonna end.

MathTerror... we're sorry but the numbers you've reached have been logically disconnected..

Randomwalkin's not pinin', Barclays, 'tis whinin, the cycles are dinin', the fractals divinin'

2010-05-11T06:44:00.034-05:00

Do we blame the umbrella for the rain?

Do we blame the parka for the snow?

Do we blame the roof and the walls for the storm?

Well if one is an advocate and sycophant of the ex-theory, randomwalking, a pristine and inviolate thesis that has been disproven this last century to the tune of a gazillion-squared, I guess one does indict the forenamed suspects for their obvious culpability.

In the WSJ, lead right section C, the pablum narrative to end all pablum narratives, the silliest, most inane, and flat-out stupid article that these eyes have witnessed in a long long time.

'Did a Big Bet Help Trigger 'Black Swan' Stock Swoon' is the title.. the randomwalkers' version of 'And how long sir have you beaten your wife?'

Universa Investments, a fund that bets to win on discontinuous market movements, where Nicholas Taleb is an advisor, and Benoit Mandelbrot is considered to be a visionary (a sentiment also shared by your humble blogger)... is being blamed for the 'flash crash'!

You have to be f&%$*&g kiddin' me!

The article details how Universa made a big bet, a whoppin' $7.5 million for 50,000 options, that would have paid off about $4 billion should the S&P 500 stock index fall to 800 in June. Admitting that the trade was not 'out of character' for the fund and that 'on any other day' the option contracts 'might have briefly hurt stock prices' the Wall Street Journal then lays out in a breathless array, conclusive evidence, in an attempt to brand Universa as the most likely culprit in a crash that all credible models insist should have never happened.

'The trade may have played a key role', 'traders on the other side of the transaction' led to 'selling to offset some of the risk', then, as the market fell 'those declines are likely to have forced even more hedging ' creating a 'tsunami', a 'tidal wave of selling into a market already on the edge' and 'a blast of orders' causing exchanges to be 'clogged', and causing individual stocks to 'collapse'.

'The working theory among traders and others (others??) involved in the exchange meltdown is that the "Black Swan" -linked fund may have contributed to a Black Swan moment, a rare, unforeseen event that can have devastating consequences.'

Pay no attention folks that the working theory that all our blessed mathematical models are based on emphatically states that the rare and unforeseen can be foreseen to never occur.

And so if it pleases the court (of public opinion) we shall cast the accused into the waters and if she floats she is clearly a witch... may God have mercy on her soul.

Or one can make another argument. Hours before the panic began, selling volume was unusually heavy. The selling of stocks was at its highest since the day the market reopened after the Sept 11 terror attacks. The Universa trade along with likely dozen of other trades across the market, led to a cascade of selling in the futures markets. As the trading volume soared, data systems across the stock market began to get clogged. With the high frequency funds either selling or pulling out of the market, Wall Street brokerage firms pulling back and the NYSE stock exchange temporarily halting trading on some stocks, offers to buy stocks vanished from underneath the market.

'Universa alone couldn't have caused the market meltdown", said Mark Spitznagel, Universa's founder. "We had reached a critical point in the market, and it was poised to collapse.'

Well that's a very convincing counter-argument but here's the thing... I am quoting from the same article.

Edward R. Murrow is convulsing in his tomb.

So why wasn't the headline 'Ex-theory fails again. Universa profits from discontinous market movement'?

Well aside from the obvious reason, one might note from reading between the lines that Barclays most certainly falls under the auspices of the aforementioned 'others' and in part, or perhaps in whole, the enabler for this hatchet job. Universa placed their order on Barclays trading desks, Barclays was selling hard, and a market data feed at Barclays that delivers data on "buy" and "sell" orders went down, although a backup data system purportedly went 'immediately online'. Although Barclays disingenuously 'declined to comment' for the article, their head of electronic trading is cited once and the bank is named seven other times in this missive, suggesting someone over there was squawking and deflecting.

The sentence in this trash worth considering is the brief citation to Taleb's fame referencing his thesis that 'unlikely events in the financial markets are far more likely than most investors believe.'

If quantum theory is correct there is an alternate plane of reality where their Wall Street Journal would expand upon this assertion in the following manner.

Randomwalkin's not pinin'! It's passed on! This theory is no more! It has ceased to be! It's expired and gone to meet 'is maker! 'It's a stiff! Bereft of life, it rests in peace! If you hadn't nailed it to the masses it'd be pushing up the daisies! It's metabolic processes are now 'istory! It's off the twig! It's kicked the bucket, it's shuffled off 'is mortal coil, run down the curtain and joined the bleedin' choir invisible!! THIS IS AN EX-THEORY!!'

Natural law is based upon a "fractioning" of a larger structure into smaller structures that have not only the features of the larger structure but if scaled up will look identical to the larger structure. Mandelbrot showed this scalability by graphing long-term financial data that appeared to be discontinuous on logarithmic paper revealing a fractal relationship in markets.

Per Benoit: 'Price changes are not independent of each other.My heresy is a different, fractal kind of statistical relationship, a "long memory." Why this should be is not certain; but one can speculate. Whatever the explanation, we can confirm the phenomenon exists- and it contradicts the random-walk model. Contrary to orthodoxy, price changes are very far from following the bell curve. Such theory predicts that index swings of more than 7 percent should come once every 300,000 years; in fact, the twentieth century saw forty-eight such days.(Over 50 now!) Truly, a calamitous era that insists on flaunting all predictions. Or perhaps, our assumptions are wrong.'

Mandelbrot discerned that markets exhibit a wild trait of abrupt change or discontinuity. This hierarchy of turbulence, a pattern that scales up and down with time, he describes as the Noah Effect - catastrophic, but transient. This Noah Effect is seen in the market's discontinuity : this is the pillar of fractal geometry.

The market's second wild trait - almost-cycles- he describes as prefigured in the story of the prophetic dreams of Joseph, a biblical tale of pattern recognition or long-term dependence. The Joseph effect is the influence of a long-term memory through which the past continues to influence the present.

Per Benoit: ' But how exactly do these two effects- Noah and Joseph, dependence and discontinuity - interact in markets? Answer: At least one market mechanism I identified naturally leads to the other. Suppose, for instance, that you have an "almost-trend" emerging in a stock price: a few weeks, say, in which a stock price rises seven days out of ten. The pattern must eventually break up, of course; otherwise, it would be a real trend that you could bet on continuing a few weeks, and hope to make some real money. But when the "almost-trend" finally does break, it can do so rapidly. A sudden lurch downward, perhaps. A discontinuity. Or, in the terms of the Biblical metaphor, a Noah Effect produced by Joseph-style dependence.

For some real-world examples, think about investment bubbles. They seem calamitous -but they happen all the time. Conventional economics tells us they are aberrations, "irrational" deviations from the norm, caused by a rapacious speculator, mass greed, or some other unpleasant factor. But under certain circumstances they can be entirely rational and flow from the entwined effects of long-term dependence and discontinuity.

The distribution of price changes in a financial market scales. Given that event X has happened, what are the odds that Y will happen next? With financial prices, scaling means that the odds of a massive price movement given a large one are akin to those of a large movement given a merely sizable one. Such is the confusion of scaling. It makes decisions difficult, prediction perilous, and bubbles a certainty.'

Wolf pack a circlin', Febrile piiggies at the troughs, Greek skies are going to fear up, as they task the Keynesian whores

2010-05-10T09:29:00.022-05:00

There are few sights more terrifying to a father than watching ones' young child claw at his throat, in duress, struggling to gather a breath. This scenario played out for your humbled blogger as my son's peanut/tree nut allergy flared up in full force after a family outing yesterday. Fortunately we had the necessary medicines, benadryl and an EpiPen, which did stabilize him as an ambulance quickly arrived to whisk us to the Children's Hospital Emergency Room. The missus and I had notified our family that our son did have this allergy and folks had agreed to put any desserts or foods that contained such ingredients out of reach, but the soon-to-be 4 year old is in the 100% percentile on height and is developing a commanding reach. Even given our best intentions he must have spied a tasty dessert and indulged himself. The solution is clear, if a function carries any foodstuffs with allergic ingredients we just can't bring the family and we're going to have to put an alert bracelet on him.

Consider though, gentle reader, the following analogy where his nut allergy is our financial crisis. In that scenario most certainly the parents would have been chagrined by the duress. However these parents would have resolved to first consider how debilitating all different types of nuts might be and then would have resolved to put the 'nut buffet' on a table and pretend that the table in fact did not exist. If however one tenacious fella at the family function named Market did, vaingloriously, begin to pontificate on the disappeared table still in plain sight, then the parents would have assuaged him with a team of physicians at the ready with limitless medicine at their disposal. Further, they would have argued that the very sight of the flotilla of remedies would, by themselves, dissuade the deleterious effect of the allergy and lastly, that the table of nuts was in fact required for a balanced diet notwithstanding the potential knock-on effects that as previously stated would be tightly monitored...

The child is safe with us! No worries...

In reading about the latest Nancy Capitalist exercise in can-kicking, Le Tarp, the oh so fine print suggests that the implementation of the European bazooka (or better yet hookah) is contingent upon the need to go through 'the parliamentary procedure' in the relevant member states.

Good luck with that!

As the preliminary results of Germany's North Rhine-Westphalia's elections come in suggesting legislative gridlock, one wonders if we will be blessed with a redux of Paulson, er I meant Trichet on bended knee, in front of Merkel?

Wolf pack a circlin', Febrile piiggies at the troughs, Greek skies are going to fear up, as they task the Keynesian whores.

Those who fail to learn from history may be doomed to repeat it but those that purportedly have learned the lessons, but now proclaim they are masters of their fate and that this time is in fact different, are doubly damned.

The thing that hath been, is that which shall be; and that which is done that which shall be done; and there is no new thing under the sun.

2010-05-08T05:43:00.048-05:00

'For in much wisdom is much grief: and he that increaseth knowledge increaseth sorrow. Sorrow is better than laughter: for by the sadness of the countenance the heart is made better. The heart of the wise is in the house of mourning but the heart of the fools is in the house of mirth. For wisdom is a defence, and money is a defence, but the excellency of knowledge is, that wisdom giveth life to them that have it. For God shall bring every work into judgment, with every secret thing, whether it be good, or whether it be evil.'
-Ecclesiastes 1:18, 7:3-4, 12:14

5am central time on a Saturday with Barron's, just delivered, in hand.

The dots on the cover; 'expect a bottom soon', 'bull will regain his footing', 'make money on Old World's woes', 'flock to the dollar', 'get very defensive'.

Inside Honest Abe channels Bill King (proprietor of the best daily newsletter on the planet), Santoli does his typical if-but, the letters to the Editor beat up on Goldie, there's some pablum hand-wringing on the 'Flash Crash', and an interesting chart comparing this 'recovery' to past recoveries.

The 2 year percentage change of the S&P from the market bottoms of October 1974, August 1982,December 1987, October 1990, and October 2002 were 67%, 62%, 57%,36% and 44% respectively. Currently we stand at 64% from the March 2009 low.

The number of 5% plus corrections during these previous recoveries were 3,3,6,6, and 3 respectively.

Currently, we stand at 5.

The gist of the jibe?

Steady as she goes, pay no attention that the market action this week was, per every 'established' financial model, absolutely impossible. Choose mirth over sorrow.

Your humble blogger would rather mourn the loss of all rationality.

Back when I was a pup and making my way in this world came across counsel that had been the editor of the Harvard Law Review. Would watch this fella give a deposition and as he did, as his 'subject' offered up a lengthy word in rebuttal, he would take that word, and on his yellow legal pad he would proceed to jot down every four letter word that he could create from the lengthy one, all while continuing the deposition. Freaky brilliant he was and one bit of advice he shared that always stuck with me was 'imagine your future self, what advice would he give your current self?'.

This anecdote came to mind when a commentator to a previous post asked me 'Could you do a post for the young, or those with enough fire in the belly to try something new, about what industries/jobs look interesting going forward?'

Most all of us want a glimpse into the future, but counter intuitively our arrogance regarding our dominion over our environment dismisses our ability to perceive tomorrow.

We are fooled by self-determination over ingemination, viewing the past as more primitive than similar, and the future as more unique than repetitive.

So to answer the 'going forward' query made would offer to the next generation the most penitent apology.

For my generation 'it' started with Reagan, ideology ascendant over reality, we could grow out of deficits, we could cut taxes, and providence would trickle down. True there were remedies called for after Carter, most certainly, but the mantra became inviolate and was taken to the extremes that provided the germination of the crisis we are living through now. This 'ideology of the rich' hallmarked by folks voting against their self-interest given the inculcation that someday they too would be rich or at least entitled to it, was accompanied by an 'ends justifying the means' mentality that morphed the political 'manufacture of consent' into an economic 'manufacture of content', i.e., the slow and insidious debasing of almost every government statistic to maintain the illusion of prosperity. It is no coincidence that we have had bubbles and crashes over the last decade, for ephemeral undertakings and their resultant creative destruction would seem to go hand in hand with a Potemkin prosperity.

Now we stand at a crux; deficits without end, income growth due to government transfers and temporarily pumped by counterproductive government policies, an eroding tax base with increasing? GDP , an unemployment level empirically WORSE than the WORSE levels of the Great Depression, a fervent desire to obviate the requisite and inevitable creative destruction of scores upon scores of festering bad speculative bets ... and a perpetual motion machine in Washington that seems hell bent to legislate bigger shovels to dig out of a hole.

The models of course say that recovery is 100% assured. Unfortunately the models also were 100% sure that the 'What Just Happened Crisis' could never happen and neither could the May Trix 'Flash Crash'.

Perhaps our assumptions are wrong.

In choosing 'prophetic' models with a track record of failure we are mortgaging the ability to be masters of our fate. To foresee a future that rhymes with a past is not, as the pablum narrative whines, to refute self-determination but ironically such recognition would harness the same to shape the unknown to a more benevolent conclusion.

Deficits do matter, belief in a random deliverance is foolish, better to accept a mandatory across the board cut and employ a fair and flat tax.

Free market statistics that are transparent and real allow the free market to allocate resources productively and intelligently.

Creative destruction is the progenitor and the instigator of the wealth creating mechanism of capitalism.

Empires are not eternal. The hard fought blessings of liberty are secured by the prudent not the profligate.

Years from now all this, and most assuredly more, will be obvious and this chapter in history, marked by excesses and folly, will be seen as similar to the ones preceding.

There is nothing random about that.

A V-shaped 'Discovery' : the shape of things to come...Silly randomwalker, May Trix ain't for kids...

2010-05-07T10:47:00.029-05:00

May Trix, a fitting foreshadowing of the denouement of the trusted, a reminder that the 'I Can't Believe it's not Capitalism' plan has not completely resolved the 'What Just Happened' Crisis; verily, some quarters, including this one, think our 'solution' has worsened the problem.

May Trix... A V-shaped 'Discovery': the shape of things to come.

The pablum narrative will probably focus on : (NY Times) In Washington, Treasury officials began combing market tapes for answers. By the evening they still had not gotten to the bottom of it, but they discovered some aberrations — market blips — in trading coming out of Chicago… As of about 6 p.m., all the officials knew was that there had been what one called “a huge, anomalous, unexplained surge in selling, it looks like in Chicago, at about 2:45.” The source remained unknown, but it had apparently set off algorithmic trading strategies, which in turn rippled across everything, pushing trading out of whack and feeding on itself — until it started to reverse...

And yet...

Fil Zucchi at Minyanville:

'Since everyone has an opinion on yesterday's 5 minute plunge, let me offer this:

•We've oft discussed that a tell-tale sign of risk withdrawal is a rising JPY/USD
•Currency movements are measured in 1/100 of a cent
•Between 10:50 and 14:00 yesterday, the JPY/USD rose 307 bps.; that's the kind of move people usually position for over a year period, not 3 hours
•Between 14:00 and 14:10 the JPY/USD gained another 100 bps. ; the S&P 500 (SPX) fell a modest 6 points in that time frame
•The plunge in the equity markets began in earnest at 14:10, after traders were already disorderly buying JPY/USD
• After 14:10 the JPY/USD gained another 150 bps. And that's when the SPX went into a tail-spin

Interpret the data as you wish, but the JPY/USD signaled crash-like risk aversion before the SPX went off the cliff. Maybe panic caused a "fat finger", but to these tired eyes, the selling was no mistake.'

Oh ye crazed randomwalkers, no doubt some revisionist rationale will be provided as to why the models don't, can't, and won't explain this latest 'reality' show.

The initial mongering (PHD and the like) crowd will hold up as a sticks-and-glue proof, that the bubbles in your soda pop do in fact explain the bubbles in your portfolio, something called the Generalized Auto-Regressive Conditional Heteroskedasticity Model and its variations. Seriously, you can look it up!

My retort? Got fractals?

What has been will be again, what has been done will be done again; there is nothing new under the sun.

The Band of the Hand can only create a Potemkin demand...

As in, the Atlanta Fed confirming that the major contributor to income growth during the past several months has been transfer payments.

As in, that birth death model... it ain't payin' no taxes!

Bread and Circuses divert folks from staring at the 'chickenless' pot...

As in , no Fed audit, no breakin' up the banks, but hey we might limit ATM fees to 50 cents!

And soon coming to the cineplex near you, the horror film, 99 Weeks Later.

They will inflate until they can’t. Inflation rewards those that have their wealth first. All roads lead to deflation. The stock market will bottom when no one cares. Much like the aristocracy when the barbarians are at the gates… you save the silver (banks) first. They will destroy the village (dollar and markets) in order to save it. After the deflation is overwhelmed, the West will never be the same.

In 1982 S&P bottomed at 6.6 P/E, a 15% earnings yield...

In 1974 S&P bottomed at 7.9 P/E, a 12.66% earnings yield...

In 1932 S&P bottomed at 5.6 P/E, a 17.86% earnings yield...

And 2012 is 40 days and 40 nights from 1932 dontchaknow...

History ingeminates and the truths you hold to be most dear are lies told to you by liars.

Public risk-fakin less private risk-takin' equals history ingeminatin' and crisis reanimatin'

2010-05-06T08:01:00.045-05:00

'The job before Congress is to bring the fear of God back to Wall Street. '
-James Grant

'Statutory directors, board members, and controlling shareholders of Brazilian banks have their entire net worth at stake if their banks fail. All their personal assets are frozen for the duration of the liquidation process and may be used to cover any shortfall.'
Bruno Rocha, Dynamo Capital

'Clowns to the left of me, Jokers to the right'
- Gerry Rafferty

Don't know what to make of the financial reform bill.

All things being equal though my empirical thesis until proven wrong is that its' not merely a matter of 'fool me once, don't fool me twice', its' more accurately described by can we please please stop the f$%&*g 'serial fool machine' and resultant perpetual enabling of the 'greater fool' pablum narrative?

Consumer protection looks like it will be treated like witness protection...squirreled from sight.

Fed Audit? Will probably qualify for a social security retirement benefit that won't exist by the time we see the 'fraudulent conveyance' of the Eccles ledgers. Sure that the assemblage of tribes, our noble plutocracy, will fight it all the way to the Supremes... wonder how that will turn out...

Once upon a time we had leaders, yes they had their draw backs, they objectified and subjectified their brother because of melanin production ( and treated the sisters poorly too regardless of same) and if it wasn't for a burdensome tax rate they probably would have remained a British territory ad infinitum, but still they provided some intellectual heft to the rights of the individual versus the state and the role of each within society.

Who are their progenitors? Who will advocate sense over the senseless?

As an example of what would make sense please consider this plan from Wilbur Ross:

"My proposal is that lenders who agree to downsize a mortgage to today's values be given the following deal, regardless of whether the mortgage was in default or not:

• First, the federal government would guarantee one third of the reduced mortgage. This would give the lender an asset [that can be sold] at par and therefore provide liquidity to the mortgage market.

• Second, the lender -- in return for reducing the mortgage principal amount -- would get one-half of the appreciation on the first resale, until the lender had recouped the forgiven principal, without interest.

• The government would get one-fourth of the appreciation up to the same cap, on the first resale, as a form of insurance premium.

• And the homeowner would get one-fourth of the appreciation back to the original principal amount -- and 100 percent of any further appreciation."

Seems pretty simple doesn't it? 'Twould be a few paragraph attachment to the title. Not saying the plan is perfect, but it is a step in the sensible direction of risk-takin' not risk-fakin'.

Let me guess though what would happen if this made it to the Hill. Repubs would decry the nanny state, lobbyists would say it would curtail bank lending, and Libs would trumpet it and than negotiate all the teeth away with the Repubs...

Any financial reform that constitutes public risk-fakin less private risk-takin' equals history ingeminatin' and crisis reanimatin'.

Consider the 'resolution authority' being bandied about. Here's another common-sense idea, apply the Brazilian solution (see quote above). The left and right would spout the same Kabuki but Brazil came through the 'What Just Happened Crisis' fairly well didn't they?

Now their system certainly is far from perfect, the state takes much too much of a heavy hand, yet they do have a thriving banking sector, per heritage.org, the 10 largest domestic banks account for more than 60 percent of total assets. Three of the top 10 banks are foreign-owned. The two largest state-owned banks control about 25 percent of total assets.The government currently is allowed to take shares in struggling banks through the two largest state-owned banks, and a Credit Guarantee Fund introduced in March 2009 provides state guarantees on bank certificates of deposit.

Again not perfect but too big too bail and too big too fail becomes less germane when its' you lose you booze.

When its' your skin in the game its' blame mio not Rio.

And speaking of blame, looks like this weekend will be focusing on public versus private risk as the Germans choose between Mark it Gyro or Cough up Euro. Per a commentary from Adam Tooze in yesterday's FT, the May 9th North Rhine-Westphalia election may result in legislative gridlock.

He notes that as a share of local GDP, the debts of German states such as Berlin, Bremen or Sachsen-Anhalt are four to six times worse than California!

Can you imagine California voting to bail out Greece?

Per Reuters, the many potential triggers for an expanded crisis include ...any signs that Athens or donor nations are backing away.

Pair Merkel saying the European Project itself is at risk with an oft-quoted gem (on this blog at least) from Martin Armstrong :

'It was the financial war between European nations attacking each other's bond markets openly shorting them that led to all of Europe defaulting on their debt. Even Britain went into a moratorium suspending debt payments. This is what put the pressure on capital flows sending waves of capital to the United States that to some degree was kind of like the capital flow to Japan into 1989. This put tremendous pressure upon the dollar driving it to new record highs that were misread by the politicians who did not understand capital flow. They responded with Smoot-Hawley misreading the entire set of facts.'

How does one say ingeminate in German?

Absolving the rater, Goldie as Satyr, 99 weeks later ... dude! don't be such a hater!

2010-05-02T09:25:00.063-05:00

A google news search of 'GDP Commerce Department' yields 26,600 hits. A google news search of 'GDI Commerce Department' yields 19 unique hits ?!?!

And to the best of my ability, it appears that none of the 19 'hits' even discusses GDI?

How about the blogosphere? 1460 hits for the former selection this last week and ZERO hits for the latter?

For the heck of it went to the gubmint web page but they aren't showin' it and I guess the inability to calculate it for myself shows the limitation of my bachelor degree.

Maybe I shouldn't be so hard on myself...

John Williams (via King Report) on Q1 GDP reliability: 'Given the lack of meaningful data available for the "advance" estimate of first-quarter 2010 economic activity, the Bureau of Economic Analysis will not attempt even to guesstimate the Gross National Product (GNP) or Gross Domestic Income (GDI) for first-quarter 2010 until next month’s (May 27th) "second" estimate, or first revision, of the first-quarter GDP.'

Ominous portent? But wait there's more...

Consumer Metrics Institute (via King Report): 'If the sampling period had shifted to two weeks earlier, the reported GDP number would have been 4.4%, substantially higher. However, if the sampling period had shifted to two weeks later, the GDP growth rate would have been only 2.0%, less than half the reading from only 4 weeks earlier. This is the sign of an economy in rapid transition.'

This morning's King Report : 'When we told a hedge fund consultant that PPI is accelerating at a record pace, he reminded us the Ministry of Truth has the GDP Implicit Deflator at a five decades low! For over a decade we have moaned that PPI understates true inflationary pressure and CPI greatly understates inflation due to OER, hedonics, sampling, geometric weighting and any of the numerous other schemes that have been implied over the past 20 years or so. CPI is constructed to not show inflation. If the US government beancounters employed a realistic inflation metric, there would be no GDP gain. If the US government employed accurate inflation metrics, there would be little or no GDP growth since 1999. Then we would have harmony with the negative job and income growth of the past decade.If not for OER, the CPI would wipe out GDP growth in Q1 – and this includes all the hokey CPI chicanery that understates inflation.'

What would I do without my red pills, Morpheus?

But gosh so many experts rely on GDP, and its obvious that the recovery is (still) nascent right? There's no need to empirically argue otherwise is there?

Experts are also trying to offer a narrative as to what motivated our 'I Can't Believe it's not Capitalism' Plan: too much leverage, OTC derivatives, lax regulation', lax underwritin'. All true no doubt. Seriously doubt though that 'charges' will be brought up on all the culprits contributing to this litany of woe. Whom amongst the banksters would not be charged and whom of the 'chargers' could even approximate chastity?

For example, shouldn't the SEC investigate this?

Huffington Post (March 2004 FOMC Minutes): 'As top Federal Reserve officials debated whether there was a housing bubble and what to do about it, then-Chairman Alan Greenspan argued that the dissent should be kept secret so that the Fed wouldn't lose control of the debate to people less well-informed than themselves. "We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand," Greenspan said, according to the transcripts of a March 2004 meeting…'

And while you're at it SEC how about indicting Yellen as a co-conspirator?

By Jim Grant
Grant's Interest Rate Observer
December 2, 2005

'Former Fed governor Laurence H. Meyer, in a 2003 talk at the Federal Reserve Bank of St. Louis, described a telltale exchange on the subject of how to define[price/financial] stability. The scene was Meyer's first FOMC meeting, in July 1996, and governor Janet Yellen was making the case for inflation targeting; she said she would aim for 2%. Greenspan replied that the Federal Reserve had a mandate to foster stable prices, not rising ones. To which Yellen rejoined that the Fed also had a mandate to promote full employment. To hear her tell it, a small positive rate of currency depreciation is a necessary lubricant for economic growth (not so, according to a survey of 133 economists over 50 years, produced in 2002 by Stanley Fischer et al.)

"Janet then seized the initiative", Meyer related,"asking the chairman how he would define price stability. Greenspan tried to get away with his vague definition; 'Price stability is the state in which expected changes in the general price level do not effectively alter business or household decisions.' But Yellen pressed him and asked him if he could put a number on that. Remarkably, the chairman agreed, and said he preferred zero inflation, correctly measured. Janet asked him if he could settle for 2% incorrectly measured."

Meyer finished his story;

During a go-around on the topic, only a few Committee members preferred a target of zero, and the consensus was very strong for a 2% target. The chairman ended up summarizing the discussions 'an agreement for 2%' but he cautioned members not to reveal that such a discussion took place.'

Most certainly acknowledge that connecting the dots and ascribing consequences to actions is too challenging for the MSM comics but golly might it not be considered preventative medicine to at least glimpse at the similarities between the late 20's and the late oughts? 40 'days' and 40 'nights' from 1932 to 2012 dontchaknow....

(Posted on Sept 5, 2009)
The two most trenchant similarities of the two periods? - 1) Pre- and post Glass Steagel and perhaps not coincidentally, 2) The top 0.01 percent of earners in the US are now taking home six percent of all the income, higher than the 1920s peak of five percent, and a whopping six-fold increase since the start of the Reagan administration, when the top 0.01 percent earned one percent of all the income. There is no consensus among economists on whether large disparities in income lead to economic disruption, but it is hard to ignore the correlation between rising income inequality and the onset of economic crisis. The last time the US saw similar differences in income was in 1928 and 1929, just before the start of the Great Depression.

Fast-forward to today and some PHD per a tucked-away paragraph in the comics:

'The top 1% held 34.6% of all national wealth in 2007, by Dec.31, 2009 they held 35.6%. Meanwhile, the share of national wealth held by the bottom 90% fell to 25% from 27%.'

That's creative destruction 21st century style folks!

Any other lessons to be ignored?

'It was the financial war between European nations attacking each other's bond markets openly shorting them that led to all of Europe defaulting on their debt. Even Britain went into a moratorium suspending debt payments. This is what put the pressure on capital flows sending waves of capital to the United States that to some degree was kind of like the capital flow to Japan into 1989. This put tremendous pressure upon the dollar driving it to new record highs that were misread by the politicians who did not understand capital flow. They responded with Smoot-Hawley misreading the entire set of facts.' -Martin Armstrong

Beware the Trojan Hoax! (The new 100 billion plus bailout notwithstanding.)

Well golly that's scary but just too complicated for J6P ... we need to break it down into pellet form, offer a tonic for the pain that is the 'new normal' and in classic American style, we need a villian...

U.S. vs. Goldie is the Amerikan version of Yukos vs. Russia. Greedy until proven guilty? Better to adjudicate against the participants of the circus then to put the microscope on the folks that baked all the bread. Of them an example must be made, as the pablum narrative falls squarely in line with mob justice. Decimus Iunius Iuvenalis (Juvenal) for SEC chairman!

Actually the Goldie fracas is entirely more discomfiting than a simple plutocratic sacrifice to the hamster-wheeled populace, it is a small glimpse behind a curtain exposing a conspiracy of silence and an assemblage of tribes and machinations that frankly your humble blogger tries his best to not stare too hard at. Its' too damn frustrating, best to just raise your kids with love and kindness than become embittered by the revelations that the truths one holds to be most dear are lies told to you by liars.

And of course, blogging is cheaper than therapy.

Would appear that Goldie is having trouble getting their 'club' membership renewed. Now any settlement from the SEC will involve a sign-off by Justice. Pay no attention that DoJ has not sought any information from Goldie nor have they interviewed any people currently working for Goldie just focus on the word CRIMINAL puh-leeze. For they are as the Washington Post reports 'casting a wider net'... and believe you me that does not mean they are going to charge the derivatives king J.P. Morgan ...oh no!

We need the bookmark for this era, else how can we turn the page and start afresh? Stakes are much higher this time, so someone needs to be 'unmade', you can't just squeeze a family member to get a confession, a la Milken. If Goldie is 'taken out', won't every single soul on the planet herald that as the denouement of the 'What Just Happened Crisis'? If Goldie is, by some mind-boggling turn of events, found innocent by an impartial jury then who could possibly be guilty if the biggest baddest bankster ain't? Goldie is trying to get ahead of this but for your humble blogger something feels wrong, like a glitich in the matrix so to speak. Upon further reflection, would be shocked if the case made it to a jury and frankly given the ominous undertones of between-the-line reading now think the odds favor Goldie being whacked.

But who cares about Goldie? Live by the sword, die by the sword. Its' 'just desserts', 'had it comin' and all that...

While we are it, who cares about free markets? Who cares about a free press? Freedom is for those that can afford it and if you haven't noticed this is the age of austerity, well at least for some folks...Don't forget that old chestnut of... how does democracy end? To the sound of thunderous applause. Maybe we should stop clapping.

When Holder says 'We're here not to win cases, but to do justice' it reminds your humble blogger of a failing bank stating' Nothing to see here. Move along.' or an ideological news slash entertainment channel proclaiming that they are 'fair and balanced'.

You bray it? You ain't it.

Per quantum mechanics there exist an alternative reality where the acid bath of ' proof of an intent to defraud' would be applied to the custodes, all the banksters, and the comedy that is government statistics.

One last rant...

Consumer spending up! Goes to show the power of proper role models, be your own corportocracy writ large. American schemer and synarchy for all. A nation of squatters with revolving credit.

We should fear the austere. Revolving credit spins ever more slowly without evolving incomes. The economic horror movie coming to the local cineplex? 99 weeks later.

Absolving the rater, Goldie as satyr, 99 weeks later ... dude! don't be such a hater!

Failborger, Failborger, Chit,Chit, No bailout? Choke.

2010-04-29T08:09:00.071-05:00

'You're out of order! You're out of order! The whole trial is out of order! They're out of order! It's just a show! It's a show! It's "Let's Make A Deal"! "Let's Make A Deal"!'
-Arthur Kirkland

Since the players are looking to beat the casino, the dealers are watching the players. The box men are watching the dealers. The floor men are watching the box men. The pit bosses are watching the floor men. The shift bosses are watching the pit bosses. The casino manager is watching the shift bosses. I'm watching the casino manager. And the eye-in-the-sky is watching us all. Back home, they would have put me in jail for what I'm doing. Here, they're giving me awards.
-Ace Rothstein

'Well I am certainly wiser than this man. It is only too likely that neither of us has any knowledge to boast of; but he thinks that he knows something which he does not know, whereas I am quite conscious of my ignorance. At any rate it seems that I am wiser than he is to this small extent, that I do not think that I know what I do not know.'
-Socrates

'Instead of rating the man by his performances, we rate too frequently the performances by the man.'
-Samuel Johnson

New York Post via The King Report
By Paul Tharp

'A 90-percent tax on all bonuses in banking and financial services to a quadrupling of dividend taxes on portfolios, to 40 percent...a bedroom in the country's fabled seaside villas will get hit with a 20 percent surcharge -- on top of property taxes that will triple...The new laws forbid cash transactions above $2,000 at businesses, requiring they be paid with checks or credit cards under the threat of seizing shops for violations. Athens also will start paying whistle-blowers a 10-percent bounty on all cash recovered from tax cheats and clawbacks from secret banks abroad...tax breaks are being abolished...the self- employed who'll have to forfeit their long-held income tax rates of as low as 5 percent. They'll now have to pay 40 percent on incomes above about $52,000. ...Any household making more than $82,500 will pay a 40-percent tax, and those with income over $130,000 will pay a new top rate of 45 percent, each amounting to a 5-percent jump. Only those making $15,600 and under will escape the tax ax.'

The above is a description of the reasonable austerity measures that Greece will be expected to implement.

Good luck with that. What is Greek for 'Bazooka meet doom-cycle?'.

Dance recital for a young-un this morning so watching the baby until the sitter arrives...this disclosure for purposes of explaining why your humble blogger had Hee-Haw on without the sound muted.

Anywho caught some kommentator clutching a venti and asking a union leader that was organizing a demonstration outside Wall Street why he was being so... gosh golly... negative?

Can't we all just get along?

I mean, golly gee, the aphorism 'Failure to liquidate the insolvent banksters has led to the liquidation of a large part of the productive economy. A taxpayer financed bailout of rich folks' bad speculative bets has resulted in zombie banks and zombie customers... a fiscal tide that lifts no boats' is well...so...2009! The banks need our support brother cause the demand restoration project ain't workin' yet!

On March 30th your humble blogger posted: 'Soon the debate will fall on the continuum of a double-dip caused by the counterproductive populism of bankster bashing versus the political palliative of misdirection through scapegoating.'

Cue Goldie Scoldie Show Trial puh-lease.

Heard about Ritholz's commentary on Goldie through Honest Abe in Barron's...

He makes 1 point, 'The claim Paulson & Co. were long $200 million dollars when they were actually short is a material misrepresentation — that’s Rule 10b-5, and its a no brainer. The rest is gravy.'

My understanding was that the equity tranche was not part of the final deal, so not sure what the point is. The reference to Paulson being long was conditional, in some initial memo. Yes? Was it in the final structure? Don't think so. That's damn weak stuff. Folks didn't read the final deal? Seriously?

The late great Mark Pittman once wryly noted that almost no one in the media knew what yield was. What do you think the odds are that these same folks have any clue as to how a structured offering is circled?

What other point does Ritholz make?

'What you don’t see are all the emails, depositions, interrogations, phone taps, etc. that the prosecutors know about and GS does not'. Uh.. well neither does Ritholz, so again, what is the point?

For folks that have never participated in a structured bond offering, who never saw the gurus whip up iterations on the back of napkins, who never witnessed slivers of equity being presented as burnt offerings to the rating agency Gods, the current pablum narrative would appear to be unassailable.

Now I wasn't privy to this deal getting circled but will hazard a guess as to what the equity tranche (Paulson going long in the intial) was all about...

Paulson was more than willing to put down a sliver of equity in order to secure the AAA, but once it was confirmed that the rating agencies would give the pixie dust lipstick without it, it went buh-bye...

The ratings agencies are the enemies of the people, the rest was 'enabled' noise.

The 'selection' process on almost any comparable structured product was a reverse engineering of the rating agencies 'models' that had been tinkered over time in collusion with their fee-paying clients for the end goal of getting the AAA on the selected pig.

Will Goldie be found greedy before guilty by an impartial jury? That first assumes you can get an impartial jury, but yeh sure why not? The whole system was guilty of this. This was the game.

However if every other bankster is not brought up on similar charges than this episode is nothing more than a political diversion, the political palliative of misdirection through scapegoating in order to quell the 'counterproductive' populism of bankster bashing.

'Nuff said.

Isn't it curious though that the MSM is highlighting emails of 'French to English' translated puns while giving short shrift to the rating agencies' billowing inferno of melting, not smoking, guns?

S&P employee (2006): “Rating agencies continue to create an even bigger monster — the CDO market. Let’s hope we are all wealthy and retired by the time this house of cards falters.”

S&P employee(2006): “We rate every deal. It could be structured by cows and we would rate it.”

Moody employee(2006): “I am getting serious pushback from Goldman on a deal that they want to go to market with today."

Moody employee(2006): "They’ve become so beholden to their top issuers for revenue they have all developed a kind of Stockholm syndrome which they mistakenly tag as Customer Value creation."

Oh and get this, as the FT reports today: 'The terms of the CDO contracts highlight how lucrative these instruments were for the agencies, with annual pay-outs of up to $50,000 made to track deals. Ratings surveillance fees are still being paid on CDOs that have suffered "an event of default" ...even toxic CDOs can continue to exist for many years.'

Seriously you can't make this stuff up! These folks are like arsonists who push for the bomb-making material and then, after planting the bombs and lighting the fuses, extort the firemen and get a tax on the water.

Isn't it curious that the accepted 'political' dimension of the SEC's motivations on Goldie was to strengthen financial reform and not obfuscate the hand-slapping being enacted upon the rating agencies on the Hill? A financial reform bill that says nothing, sees nothing, and does nothing about the rating agencies? Yes, I know you're shocked by that.

Isn't it curious that the Grecian, Spanish and Portuguese downgrades were coincident with the purported cessation of our debt monetization? Now that's a real strong dollar policy folks.

As once posted way back when in December 2008 : 'If we can accomplish the Houidini-esque stunt of funding this debt at manageable levels it will only be by literally defining AAA as anything American (i.e. if America becomes AA then literally AA is the new AAA, with the assumption that the reasons for our 'downgrade' would serve as deleterious to all others, except maybe Mr. Gold.)

I believe this vision is playing out. We are the last canary, and the biggest domino. But given the magic of our reserve currency, our 'downgrade' will only occur within the context of the world being downgraded first.'

That is the magic of our reserve currency and the elixir of the rating agencies, ensconced safely on our shores, a fact that is truly in the national security interest of the United States.

At no time do their hands leave their arms.

Trojan Hoaxin', show-trial boastin , and Nancy Capitalist roastin'... don't be the sucker.

2010-04-28T07:10:00.040-05:00

It does not and should not matter whether ACA was aware of who was going short or who was going long. Applying fiduciary standards to market-makers doesn't fly either. Parsing how 'sophisticated' a sophisticated investor really is ... holds no water.

Sole authority versus designing/selecting, sophisticated versus 'less-sophisticated', losing money versus couldn't dump the 's&*t', ...ah the stuff with which show trials are made.

The metaphorical perp walk and the enabling pablum narrative solvent of cleansing with the, of course, obligatory turning of the page.

Consider if you will, Deutsche 's proclamation that they have nothing to fear (never a good sign) : 'Both the long and short investors were given the opportunity to select the specific collateral to which they were seeking exposure and mutually agreed on the CDO portfolio.{The bank} said it did not use third-party collateral managers, which eliminated the potential for deception with respect to the role of such a manager.'

And compare this to a 'salient' point from the FT: 'When Mr. Levin asked whether an internal memo saying the CDO's composition had been agreed by ACA and Goldman was accurate, Mr. Tourre said, It's not very accurate...It could have been more accurate. He admitted he should have added that Paulson & Co. and IKB, a German bank that invested in the deal , had also participated in the CDO's creation - a crucial point in the regulators' complaints.'

Well, your humble blogger doesn't think the SEC is complaining that Goldie didn't disclose that IKB participated in the CDO creation for the SEC is rewriting its' mandate to protect what is allegedly an un-sophisticated sophisticated investor, but it is interesting that this representation of a finely parsed point that could help the SEC with a - harumphh- impartial jury is basically representing Deutsche's defense less the 'objective' third party 'deception-enablin' collateral manager.

Whatever...

In my limited dealings with Goldie and the like the principal question to ask was always, 'Where am I getting screwed?'. Because I hate to break it to you folks... that is the essence of capitalism. Screw or be screwed. Personal disclaimer: this fella chose quality over quantity, a process initiated when Morgan tried to backstab my sponsor by replacing him with me - and I walked much to utter astonishment and chagrin of my bond team - but the aphorism that if you can't find the sucker at the table, its' you...is the bedrock of our economic system.

If the case against Goldie is not a 'sad joke' as suggested in a previous post, then every other big bankster on the planet should be brought up on similar charges. Full stop.

In truth, the sucker here is apparent, and that sucker would be you gentle reader.

If Goldie was the pit boss, the accuser of same, the pontificating politico and her cohorts, was in fact the House. The fraudulent conveyan' , Nancy Capitalist enablin', Federales, abetted and abided the 'everything must go' free-market fire sale that spawned a multitude of pit bosses that were hell bent to seek rent.

Without prudent regulation, Marx, not Groucho was right.

Well we could always reinstate Glass-Steagal Mr. Levin... oh that's right, you voted to repeal that in '99 didn't you?

The magician's ability to get folks to ask the wrong questions belies the need for coherent answers, and we are fast approaching magic hour in the Bananarama Republic.

Financial reform derailed because Buffet is calling on his ~$50,000 investment in Ben Nelson to obviate the ~8 billion in collateral he would need to put up for the ~5 billion dollar premium he pocketed?

Rend it like Buffet!

A Grecian downgrade right after the enemies of the people, the rating agencies, got wrist-slapped on the hill and curiously timed with the purported cessation of our debt monetization?

News breaks with the cycles and the cynics...

I've always held firm to the thesis that deflation is the midwife to hyperinflation. A real deflation, not just disinflation, requires liquidity evaporation due to multiple sovereign crises, where the backstop is called into question.

Deflation is the dollar bid, hyper-inflation is the downgrade of America's citizenry commensurate with a currency devaluation.

Would suggest that the quantity of liquidity evaporation will very much define the quality of any hyper-inflation.

We have a free skate while there are troubles in Euroland (should stretch over months not weeks) and then we'll find out just how thin our ice really is.

Don't let the sucker at the ice-skate stand be you.

Soapbox : Those that fail to stand for something will fall for anything

2010-04-24T09:05:00.026-05:00

Is this soapbox steady?.... harumph....

Ideology is the devil and ego is the enabler.

When folks don't let facts get in the way of a good argument, they are not making an argument they are proselytizing.

If the right can rally around a flip-flopper from Massachusetts (Romney) given that they questioned the patriotism of a war hero (Kerry) and applied the same appellation, then they can also fall for the next American demagogue, the Manchurian Mountain Mama.

If the elected left (Barry Dunham) can effectuate an insurance friendly health 'reform' and support an ubiquitous bankster friendly bailout than they deserve to be painted with the same corporatocracy brush that they purportedly have spent their careers 'fighting'.

If folks that trumpeted the merits of a free market can just as thunderously trumpet the merits of its' demise (Nancy Capitalists) than they most certainly will insure that the blessings of liberty and her entrepreneurial spoils will neither be afforded to them nor their forebears.

The strength of our democracy is the rule of law and the equality of all men and women under it. The strength of our financial system is prudent regulation and a free market that rewards winners and pins losers. The strength of our state is to promote domestic tranquility and the general welfare by assisting the disadvantaged so that they may have the opportunity to secure blessings for themselves and their posterity.

Greedy before guilty does not protect the innocent and it does not promote the chaste.

Those that fail to stand for something will fall for anything.

Money is not Speech, Corporations are not People, and Fee Speech is not Free Speech

2010-04-22T09:36:00.017-05:00

'Hold everybody accountable? Ridiculous!'
- W. Edwards Deming

'I repeat... that all power is a trust; that we are accountable for its exercise; that from the people and for the people all springs, and all must exist.'
- Benjamin Disraeli

'No we're not the same
Cause we don't know the game
What we need is awareness, we can't get careless
You say what is this?
My beloved lets get down to business
Fight the Power.'
-Public Enemy

'The Financial Crisis Inquiry Commission, the body set up by Congress to examine the cause of the system-wide credit crunch, said yesterday that it would use its legal powers for the first time to force Moody's, the credit rating agency, to produce documents.'
-FT 04/22/2010

'If they can get you asking the wrong questions, they don't have to worry about the answers.'
- Thomas Pynchon

'The two enemies of the people are criminals and government, so let us tie the second down with the chains of the Constitution so the second will not become the legalized version of the first.'
-Thomas Jefferson

The rating agencies are the enemies of the people.

Once upon a time I sat down in front of the agencies. Had an exclusive to place a'third'a billion face of a rather unique asset class. In order to get the buy side to bite, of course, we needed a rating.

It is not in any way embellishment to state that the work done by the agencies on this deal was so amateurish, so ephemeral, that a high school student with the toolkit of 'opposable thumbs and frontal lobes' could have coaxed Senor Google into producing a superior report.

Ultimately the squints created a white paper and slicks in my biz waved it around industry conferences as if it were gospel.

Of course the gospel was built on the bell curve and the curve was based on assumptions.

While seers like Taleb and Mandelbrot have shown that it is the flight of an arrow and that reality is the tail risk, the coin flippers have heretofore admitted no more than hey... it's a modified coin flip and our assumptions, which we provided to you in the King's English, why they're free speech babe!

But verily, Money is not Speech, Corporations are not People,and Fee Speech is not Free Speech.

Shame that there isn't a smoking gun.

Waitaminnit ...

by Jesse Eisinger Oct 15 2008
Portfolio Magazine

In December 1997, J.p. Morgan closed on its first big credit-derivatives deal, the Broad Indexed Secured Trust Offering, or Bistro for short. Insurance companies and banks, the initial customers, were enthusiastic, snapping it up in just two weeks. The deal was enormous for the time, off-loading more than $9.7 billion of J.P. Morgan’s exposure. Morgan had succeeded in reducing its balance-sheet risk and was able to free up capital to buy its stock back.

J.P. Morgan would go on to launch a credit- derivatives assembly line, becoming the Henry Ford of the new financial market.

Bistro “was the most sublime piece of financial engineering that was ever developed. It was breathtaking in terms of beauty and elegance,” says Satyajit Das, a risk consultant and the author of Traders, Guns, and Money, a financial history. But “in many ways,” Das adds, “J.P. Morgan created Frankenstein’s monster.”

For J.P. Morgan, Bistro worked wonderfully. But even in that first deal, the weaknesses in structured finance and credit derivatives that would come to the fore in the 2007 credit-market crash were already there.

Despite its blue-chip assets, Bistro didn’t perform pristinely. The initial slice, the equity layer that Morgan retained as a cushion against trouble, was so thin that it couldn’t weather even one default from one of the bigger companies in the bundle. That ultimately happened, wiping the slice out entirely. The investors who were one notch up, in what’s called the mezzanine layer, lost money as well. Even the buyers of the top-rated tranches, which were thought to be rock solid, had to endure bumpy periods before they got their money back.

During that first major deal, the credit-rating agencies, which were supposed to be impartial, were already deeply enmeshed in the give-and-take of the process.

A former Morgan banker who helped create Bistro recalls that Standard & Poor’s was giving the bank a tough time. The rating firm would run the deal through its models, and “each time, it came up with disastrous results. We did some tinkering and all of a sudden, it could rate the deal,” the banker says.

AM Here: Tinkering!

What an innocuous word for fraud.

Move along nothing to see here.

In defense of the Banksters(?), incensed by the pranksters ... where the hell is the Hankster?

2010-04-21T09:25:00.049-05:00

'The SEC didn't have ... the mindset to be a prudential regulator.'
-Mary Schapiro, Chairman of the SEC

'To me the SEC is utterly irrelevant. It is the federal fig leaf over the securities market. Bring back Joe Kennedy ... bring back free markets ... get rid of these people.'
- James Grant

'The new normal is not sub par economic growth. The new normal is the roll back of free markets.'
-Russell Napier

'The examination staff at the SEC's district office in Fort Worth, Texas reviewed the Stanford Group's operations in 1997, concluded that its sale of certificates of deposit likely constituted a Ponzi scheme, and referred the matter to SEC enforcement staff. Mr. Stanford kept on selling his seemingly too-good-to-be-true CDs, so SEC examiners investigated again in 1998, 2002 and 2004. Each time, they concluded that the Stanford operation was a probable Ponzi scheme and urged SEC action. Each time, the enforcement staff failed to act…'
-WSJ.com

'I have spoken to the heads of various Wall Street equity derivative trading desks and every single one of the senior managers told me that Bernie Madoff was a fraud. Of course no one wants undue career risk by sticking their head up and saying that the emperor isn't wearing any clothes. As a result of this case several careers on Wall Street and in Europe will be ruined. Therefore, I have not signed nor put my name on this report. I am worried about the personal safety of myself and my family.'
-Harry Markopolos in 2005.

'Obviously, first of all, this conversation never took place … OK? You know, you don’t have to be too brilliant with these guys, because you don’t have to be. The guys … ask a zillion different questions and we look at them sometimes and we laugh, and we say are you guys writing a book? These guys they work for five years at the commission then they become a compliance manager at a hedge fund now'.
-Madoff on a 2005 conference call telling colleagues how to dodge the SEC.

'This s%*t would be really interesting if we weren't in the middle of it.'
—Barack Obama

At first blush the SEC's civil case against Goldie looked like an institutional he-said, she-said.

A second read concludes it is a joke.

Either the folks at the SEC are stupidly criminal or criminally stupid ... a more appropriate servin' would be to charge themselves as well as their co-conspirators in silence and blindness... the fraudulent conveyan' , Nancy Capitalist enablin', Federales that are exhuming the epigram that without prudent regulation Marx, not Groucho, was right.

Ms. Schapiro when a progressive bankster-baitin' anonymous ranconteur takes Goldie's side against your pablum narrative 'bringin' them to justice' you know that we've jumped the capitalist shark and are rappelling our way right down the sovereign democratic rabbithole.

Mary, Mary, to be contrary, how does your mandate go?
For public secs and retail vests?
Or institutions too stupid for d'oh?

Failure to liquidate the insolvent banksters has led to the liquidation of a large part of the productive economy.A taxpayer financed bailout of rich folks' bad speculative bets has resulted in zombie banks and zombie customers... a fiscal tide that lifts no boats.(AM Rule #7)

The stress tests which were truly an I.Q. test, and squeezing the squints, set the stage for a generational workout.

Now extend and pretend is the proposed means to mend.

Why audit the Fed, or question the strong dollar policy which is a chimera of wealth transfer, or consider that in the land of the brave we've honed off the free?

Let's pick the winners and stick the sinners, after all the man on the street needs that metaphorical perp walk so we can turn the page and start afresh.

The magician's ability to get folks to ask the wrong questions belies the need for coherent answers.

In defense of the Banksters(?), incensed by the pranksters ... where the hell is the Hankster?

Can't wait to see Hanky Panky get on the stand and do an Admiral Poindexter.

This s%*t would be really interesting if we weren't in the middle of it.

Kenneth, what is the frequency? The randomwalkers are underestimating the gravity of our situation.

2010-04-18T12:06:00.054-05:00

'Let's now examine the more conceptually difficult case of the Tacoma Narrows Bridge. The surprise here is that the wind was steady. If the wind was blowing at constant velocity, why did it shake the bridge back and forth? The answer is a little complicated. Based on film footage and after-the-fact wind tunnel experiments, it appears that two different mechanisms were involved.

The first mechanism was the one responsible for the initial, relatively weak vibrations, and it involved resonance. As the wind moved over the bridge, it began acting like a kite or an airplane wing. It established swirling patterns of air flow around itself, of the kind that you can see in a moving cloud of smoke. As one of these swirls moved off of the bridge, there was an abrupt change in air pressure, which resulted in an up or down force on the bridge. We see something similar when a flag flaps in the wind, except that the flag's surface is usually vertical. This back-and-forth sequence of forces is exactly the kind of periodic driving force that would excite a resonance. The faster the wind, the more quickly the swirls would get across the bridge, and the higher the frequency of the driving force would be. At just the right velocity, the frequency would be the right one to excite the resonance. The wind-tunnel models, however, show that the pattern of vibration of the bridge excited by this mechanism would have been a different one than the one that finally destroyed the bridge.

The bridge was probably destroyed by a different mechanism, in which its vibrations at its own natural frequency of 0.2 Hz set up an alternating pattern of wind gusts in the air immediately around it, which then increased the amplitude of the bridge's vibrations. This vicious cycle fed upon itself, increasing the amplitude of the vibrations until the bridge finally collapsed.'
-lightandmatter.com

Wiki: ' On October 4, 1986, as Dan Rather was walking along Park Avenue in Manhattan to his apartment, he was attacked and punched from behind by a man who demanded to know, "Kenneth, what is the frequency?", while a second assailant also chased and beat him. As the assailant pummeled and kicked Rather, he kept repeating the question over and over again.The incident and Rather's account led some to doubt the veracity of Rather's story, although the doorman and building supervisor who rescued Rather fully confirmed his version of events. '

'Waves are a way in which energy is transferred from place to place without the transfer of matter. The energy is carried from place to place in the form of a disturbance. Waves, which move through matter, are called mechanical waves. They require an elastic material medium through which to pass. Examples of matter waves are water waves at the beach and sound waves moving through the air. Waves, which do not require a material medium, are called electromagnetic waves. Examples of electromagnetic waves are light and radio waves. The wave-like behavior exhibited under certain conditions by particles like electrons are called matter waves.'
-web.me.com/dtrapp/ePhysics.f/WDwaves.html

'The tides are caused by the gravitational forces on Earth exerted by the moon and sun. These “tidal forces” are not the total gravitational forces exerted by the sun and moon on Earth, but the difference between these gravitational forces over the surface of the planet. It may seem counterintuitive, but the gravitational forces of the moon and sun tug at the oceans primarily on the horizontal tangent and not the vertical plane to the Earth’s surface. This is partly why the high tide lags — also referred to as the lunitidal interval. This tugging produces a tidal “bulge” or area of higher sea level on the ocean’s surface. As Earth rotates eastward on its axis, water moves into this bulge, which produces a flood tide, and eventually a high tide. As Earth continues to rotate, we move into an area of below-normal sea level or nodes, which produce an ebb tide, eventually reaching low tide. The slack tide is when the tide is not coming in or going out. During a full as well as new moon, the sun and moon are aligned, producing strong tidal forces on the Earth. This is also referred to as spring tide, even though it doesn’t have anything to do with the spring season. These are the highest and lowest tides of the month. During the moon’s quarter phases, the gravitational forces of the moon and the sun are perpendicular to each other. Nearly canceling each other’s tidal forces out, the result is smaller high and low tides. This is referred to as neap tide. Earth’s orbit around the sun is really an ellipse, a shape that can be thought of as a “stretched out” circle or an oval. Tides are enhanced when Earth is at perihelion, when the whole planet comes closest to the sun. When we look at the tide tables, you should remember that these are only predicted values utilizing gravitational forces. During El Niño events, actual tides can be up to one foot higher due to thermal expansion of the water column. Storms can also affect sea level. Low atmospheric pressure associated with storms can allow ocean waters to expand, resulting in a temporary increase in sea level. Strong winds can cause additional elevation of sea level due to storm surges. Water is about 800 times denser than air. Waves and tides contain a great deal more potential kinetic energy than the winds for the same area or footprint.'
-John Lindsey

'How much energy do you think it takes to move the oceans? And what do you think it effects when it passes onto land?'
-John Needham (paraphrased)

'Research carried out by William Schulz of the United States Geological Survey in Denver, Colorado, and colleagues, {has concluded} that atmospheric tides are responsible for causing landslides...They discovered that the movements of the rubble were in sync with ‘atmospheric tides’ - daily highs and lows in atmospheric pressure that are excited by changing exposure to the Sun’s rays and by the Moon’s gravitational pull.'
-Nature News

'The two days on either side of the new lunar month represent most of the positive returns on equity markets for the next four weeks.'
- Macquarie Securities

'We find strong empirical support in favor of a geomagnetic–storm effect in stock returns after controlling for market seasonals and other environmental and behavioral factors. Unusually high levels of geomagnetic activity have a negative, statistically and economically significant effect on the following week’s stock returns for all US stock market indices. {There is} evidence of substantially higher returns around the world during periods of quiet geomagnetic activity.'
-Federal Reserve Bank of Atlanta

'The year ahead appears to us to contain the most powerful planetary alignments in centuries, not just decades.At the recent NCGR conference in Cambridge, Mass., an astrologer said they checked back for sky patterns a thousand years and another piped up that they had looked back Ten Thousand years and neither had seen this one’s match! It would be considered a ‘done deal’ or a high probability that World Markets will Crash again during 2010. We will do everything but guarantee you that stocks will crash worldwide within three months of August first (that is between May 1 and November 1.'
-Arch Crawford

Well the Goldie imbroglio looks interesting, an institutional he-said she-said with ACA, but it would seem to this humble blogger that the folks not on trial are the ones that created the environment where the yield pigs were voraciously sniffing any and all troughs, namely the Federal Reserve and their low interest rate, Nancy Capitalist enablin', 'everything must go' free-market fire sale.

But examining causes and actions and connecting dots to consequences is just too complex. 'Tis much easier to obviate the Casus Foederis for a Casus Belli, allowing our blessed leaders to initiate metaphorical perp walks and enabling the pablum narrative solvent of cleansing and the, of course, obligatory turning of the page ....

One upside is that this does weaken the efficient market theory, that is, solons able to efficiently rig most any market to their benefit. Not that efficient market theory and its sauntering corollary random-walk needed much debunking, a trip to that antiquated warehouse, the library, or its' 21st century equivalent, Senor Google, offer ample empirical evidence that such foolish notions belong in the dustbin , not the acknowledged tome, of history.

What were the odds that the SEC would charge Goldie, not work out an 'agreement' a priori, and goodness me not at least give a courtesy call so Goldie could short themselves? Considerable no doubt.

But no more considerable than the odds of a Gaussian distribution explaining market movements. Of bubbles in your soda diagnosing bubbles in your portfolio. Of dice playing describing the nature of the dice itself much less the gamblers with same.

The progenitors of alternate theories have been largely ignored; the adherents to the ex-theory randomly maintaining that paradigms cannot be abandoned no matter how shaky, unsatisfactory models cannot be discontinued no matter how broken.

The logical progression of thought that adhering to a broken thesis in part precludes one from considering alternative schemas is a self-reinforcing loop of delusion.

But it did not have to be so...

There was a brief moment, of a few months, half a century ago, where an economic Einstein named Benoit Mandelbrot proved that discontinous market movements, allowable under random-walk to the probabilistic tune of a gazillion-squared, can be scientifically explained ... albeit in non-Gaussian terms.

This breakthrough however proved not only market movements but also that it was too difficult for folks to accept that which leaned into the wind of their strongly held self-perceptions.

So the fractal basis of market movements was relegated to an interesting thesis and its' proponents forced into the corner of proving a negative, rather than affirming a negative.

The debate continues today, folks that search for the underlying fractal pattern being asked if they are going to 'hang it up' if the market doesn't do this or that....

Never though will the naysayers put their theories under the empirical microscope to consider the odds, to fathom the impossibility, of random walk theory within the context of market movements of the last century or even the last few decades.

Consider, gentle reader, the premise from a different direction. If the markets are the data-set of humanity, if the markets are in effect expressing the nature of man, then does it not seem reasonable that the natural law, oft-repeated by traders of old, in fact both guides the nature of man and markets?

Is it snips and snails, and puppy dogs tails or for the gentler side, sugar and spice and all things nice?

As likely a random collection as anything else...

No, we, that is you and I, are made up of energy, energy that is described by its wave-particle duality. We vibrate and as such have a frequency, a wavelength, a harmonic, an energy signature...Seriously, you can look it up!

Now undoubtedly there is randomness on a micro scale, you are for example choosing to read this, but on a macro scale there are cycles, interactions if you will, between other waves, harmonics, energy sigs etc...

In fact I might, controversially , advance that you are reading this entry because mayhaps we both vibrate in a similar fashion!

That is where the substance of the Macquarie Securities quote and the Federal Reserve Bank of Atlanta quote at the top of this post find its' origins...

That is why fellas like Arch Crawford have such an amazing record in sleuthing out turning points, almost always nailing the inflection, and usually nailing the direction.

The wave-particle duality inherent within the natural law has a fractal basis. This is expressed for linear systems, as but one example, by the superposition principle, the net response at a given place and time caused by two or more stimuli is the sum of the responses which would have been caused by each stimulus individually. It is further expressed, by Mandelbrot's assertion, that fractals are objects or quantities that display self-similarity on all scales. It is confusingly expressed in truly gobbledygook form with convoluted sentences like, 'The complex spaciotemporal patterns of atmospheric flows that result from the cooperative existence of fluctuations ranging in size from millimetres to thousands of kilometres are found to exhibit long-range spacial and temporal correlations. These correlations are manifested as the self-similar fractal geometry of the global cloud cover pattern and the inverse power-law form for the atmospheric eddy energy spectrum'.

Clearly the last fella is too advanced for our language.

What is not however too terribly advanced is that Mandelbrot discovered that power laws, a relationship between two quantities where the number or frequency of an object or event varies as a power of some attribute of that object, squares the broken circle of random-walk theory. It explains the heretofore unexplainable market movements of recent vintage. He was able to show that discontinuous market movements exhibited scalability, i.e., fractal behavior, when plotted on engineering graph paper - the kind with logarithmic scales in both directions. This was prima facie evidence of a power law behavior within markets. Power law merely describes the nature of a logarithm. The logarithm of a number to a given base {base 10 describes of course what most of us are familiar with)is the power or exponent to which the base must be raised in order to produce the number.

Power laws exist in nature, for example, gravity weakens by the inverse power of two with distance. Power laws describe the distribution of income in the upper reaches of society. Power laws also apply to the price movements of many financial instruments. Power law distributions allow for many more price swings than would the bell curve and this 'new paradigm' fits the data for many price series.

Power laws relate planetary structures to harmonic constructs ... in Kepler's harmonic mode of thought, the temporal primal intervals of the orbital periods must be raised to the second intervallic power, and the spatial primal intervals of the major axes must be raised to the third intervallic power. This means a power ratio of 2 : 3, i.e. the fifth, the most important interval after the octave.

As further advanced by Hartmut Warm, the order and movement of the planets in our solar system corresponds very accurately to simple geometrical figures and musical intervals, although in a different way than assumed in conventional concepts. One of the keys for an explanation is to be found in the analysis of the harmonical arrangement in the semiminor axes of the elliptical orbits, whereas earlier models and calculations were based on the semimajor axes. He concludes that, thus the ancient notion of a “harmony of the spheres” and especially the fundamental ideas of Johannes Kepler have been confirmed for the first time, and this in a manner that can principally be verified by everyone.

These harmonical arrangements are fractals of the Danielcode ratios, advanced by John Needham, who has an empirically exact method to trade the fractals discussed by Mandelbrot and that are the basis of natural law.

For your humble blogger, this preponderance of evidence, especially, in the canucklehead vernacular of Bubblevision, the 'actionable' dimension of John Needham's DanielCode, lends disturbing credence to Archie Crawford's prognostications and the potential Tacoma Bridge run-on effects of the waves coming to a planet near you.

Earthquakes, volcanoes and ? Oh my!

Clearly, the randomwalkers are underestimating the gravity of our situation.

Kenneth, what is the frequency?

Or more soberly,

Kenny? OMG!

Got fractals?

Hemlock as libation in Reflation Nation . The Reimagining of Capitalism

2010-04-15T09:47:00.028-05:00

'I've abandoned free-market principles to save the free-market system ... I am sorry we're having to do it'
-George W. Bush, December 16, 2008

'The new normal is not sub par economic growth. The new normal is the roll back of free markets.'
-Russell Napier, yesterday

'Nothing that says' FED couldn't buy more MBS. FED won't 'monetize debt'.
- Ben Bernanke, yesterday

'They have spoken words, swearing falsely in making a covenant: thus judgment springeth up as hemlock in the furrows of the field.'
- Hosea 10:4

Above the fold, today's WSJ : 'Evidence Mounts of Strong Recovery.'

The evidence?

First, retail sales.

But pay no attention to the little tidbit that the Commerce Department put out in their Dec. 11 release: "Special Notice -- The advance estimates in this report are the first estimates from a new sample. The new sample for the Advance Monthly Retail Trade Survey is selected about once every two and a half years."

What a shock that retail sales have been trumpeted ever since this 'new sample' has been implemented.

And what was the new sample?

Out of 5,300 retailers and restaurants sampled, only half of those in November were also sampled in October. The other half were brand new to the survey!

Might one suppose that a number of companies that weren't questioned were ex-companies?

Might one suppose that the brand new spankin' companies to this survey were chosen with some purpose in mind?

Ya think?

It's like diagnosing the health of a fish whilst only observing the severed head.

The article goes on though to highlight one glorious example of the evidenced strong recovery:

'The rebound is benefiting Robert Mayfield, owner of five Dairy Queen restaurants around Austin, Texas, where he recently launched a new five-dollar deal including a quarter pound burger, fries, a drink and a small Blizzard dessert. The response was tremendous, said Robert.'

Seriously WSJ? How could you not comment on the land rush to get the Jalapeño triple stacked at Whataburger? And what about Daisy Mae trumpeting that the very berry pancakes at IHOP are going like .. er hotcakes! Its' a V-creped recovery!

That's a round mound of reboundin' recovery in the service sector eh?

Of course the WSJ also cites the rising financial markets as prima facie not to mention the new efforts to forgive mortgage debts....

Every day and in every way this s%&t is starting to resemble a bad science fiction movie from the 70s.

And segueing from fiction and dead fish we have Jaime 'Whine on you Crazy' Dimon seeing not a wolf at the door but a big bad recovery. Considered by many as a good bankster (oxymoronic?) his endless opprobrium to any and all (perceived) anti-bankster slash populist slash counter-productive initiatives on the Hill is only matched by his delirium in staying in front of the currently dyked creative destruction wave that would too expose his grand enterprise as being too bankrupt to go broke...

Mr. Dimon's rising optimism, states the WSJ in the top of the fold headline Section C, 'The Day the Banks Turned the Corner', is triggered partly by a show of hands in meetings where he asks how many of youze entrepreneurial guys plan to hire more?

"20%, 30%, 40% raise their hands" Jamie D gushes. And then to fun-house mirror the quixotic anecdote referenced in the Page 1 article above, the WSJ goes on to highlight one of the (presumed) hand raisers:

'John Sang Wilbur organizes summertime ski, snowboard and Spanish-language instruction trips to Argentina {and} expects business to increase 35% ... Mr. Wilbur scrambled to get a new business credit card last year when the issuer of his old card stopped extending credit. He found a new issuer but soon plans to switch to a cheaper card from J.P. Morgan's Chase unit.'

Viva la recovery!

Pay no attention folks to the facts that J.P. Morgan's loan levels are stagnant, retail banking has swung to a net loss and mortgage default rates are rising.

Oh and please completely ignore the off-balance crap like QSPEs and VIEs. If the QSPEs alone ($574,000,000,000 on 06/30/09) are valued in aggregate at less than 77% of par then Jaime's Tier One is Tier None.

And my oh my just don't think about the fact that if junior-lien home mortgages were fairly valued J.P Morgan would have to be 'forced' to take money from a TARP 2.0 that 'it didn't need.'

Instead, gentle reader, please concentrate on the plum that is the 55% surge in quarterly profit which had 75% of its' origin in the investment banking operation- home of the bankster's 'potemkin solvency trifecta' :a 79 trillion derivatives book (mark to necessity), the MSR bucketshop (mark to farce), and the avalanching yield curve (mark it zero).

Hemlock as libation in Reflation Nation .

The Reimagining of Capitalism.

The windfall apples need be reserved for the more equal brainworkers.

2010-04-13T09:09:00.046-05:00

Butch Cassidy: Do you believe I'm broke already?
Etta Place: Why is there never any money, Butch?
Butch Cassidy: Well, I swear, Etta, I don't know. I've been working like a dog all my life and I can't get a penny ahead.
Etta Place: Sundance says it's because you're a soft touch, and always taking expensive vacations, and buying drinks for everyone, and you're a rotten gambler.
Butch Cassidy: Well that might have something to do with it.

{There are two ways a man goes broke}, 'slowly,and then all at once'.
-Ernest Hemmingway

'There was a crime. There was a victim. And there is punishment.'
-Rusty Sabich

'There is no sadder sight than a young pessimist.'
-Mark Twain

"Comrades! You do not imagine, I hope, that we pigs are doing this in a spirit of selfishness and privilege? Many of us actually dislike milk and apples. I dislike them myself. Our sole object in taking these things is to preserve our health. Milk and apples (this has been proved by Science, comrades) contain substances absolutely necessary to the well-being of a pig. We pigs are brainworkers. The whole management and organization of this farm depend on us. Day and night we are watching over your welfare. It is for your sake that we drink that milk and eat those apples. Do not imagine, comrades, that leadership is a pleasure. On the contrary, it is a deep and heavy responsibility. No one believes more firmly than Comrade Napoleon that all animals are equal. He would be only too happy to let you make your decisions for yourselves. But sometimes you might make the wrong decisions, comrades, and then where should we be? The importance of keeping the pigs in good health was all too obvious. So it was agreed without further argument that the milk and the windfall apples (and also the main crop of apples when they ripened) should be reserved for the pigs alone."
-Squealer (Animal Farm)

APRIL 13, 2010, 7:31 AM ET
blogs.wsj.com

By Kathleen Madigan

Economists may be debating when the recession ended, but small business owners report little pick up in their sales or confidence in March, according to a report released Tuesday. The weak readings explain why small businesses remain reluctant to hire.

The Small Business Optimism Index lost 1.2 points to 86.8 in March, said the National Federation of Independent Business.

The NFIB noted that nine of the 10 components declined or failed to contribute to an increase in the top-line index. The lone improvement came in the subindex covering expected business conditions. It rose 1 percentage point to -8%.

The report said 34% of respondents said “weak sales” were their top business problem. The subindex on earnings trends fell 4 points to 43%, and sales expectations subindex dropped 3 points to -3% in March.

The drop in confidence among small business owners comes as economists are debating when the recession ended. The National Bureau of Economic Research said Monday it was still “premature” to set a date for the economy’s trough. The NFIB reports suggest that while the overall economy is growing, pockets of pessimism remain.

AM Here : Holding the comics up to the light tis clear that the NBER believes that 'Employment, inflation, productivity, GDP, and other sundry stats are massaged into irrelevance' (AM Rule #2), as evidenced by their commentary that 'in examining the behavior of domestic production, we consider not only the conventional product-side GDP estimates, but also the conceptually equivalent income-side GDI estimates.'

As previously mentioned on this blog :

(King Report)Per John Williams: Gross Domestic Income (GDI)" is the theoretical equivalent to the GDP, but it is not followed by the popular press. Where GDP reflects the consumption side of the economy, GDI reflects the offsetting income side. When the series estimates do not equal each other, which almost always is the case, the difference is added to or subtracted from the GDI as a "statistical discrepancy."

Although the BEA touts the GDP as the more accurate measure, the GDI is relatively free of the monthly political targeting the GDP goes through.

"Gross National Product (GNP)" is the broadest measure of the U.S. economy published by the BEA. Once the headline number, now it is rarely followed by the popular media. GDP is the GNP net of trade in factor income (interest and dividend payments).

GNP growth usually is weaker than GDP growth for net-debtor nations.

Games played with money flows between the United States and the rest of the world tends to mute that impact on the reporting of U.S. GDP growth.

The Street, US government and financial media reported and followed GNP until 1987 because at that time the US turned from a net creditor to a net debtor; and GNP sank on the outflows of cash.

GDI fell far more sharply in the teeth of the recession, dropping at a 7.3% annual rate in the fourth quarter of 2008, and 7.7% in the first quarter of 2009. GDP, in comparison, fell by 5.4% and 6.4%. Moreover, while GDP showed the economy began to grow in last year’s third quarter, GDI showed it continued to contract.

AM here:Or in other words: 'Mr. Hand's strong dollar policy is the chimera of currency debasement masquerading as America's wealth exporting machine that is regularly promulgated by our leaders as an exceptional example of America's resiliency.' (AM Rule #5)

A rose by any other name doth smell less sweet. Rosy numbers and numbers rasa. GDI is an elephant in the womb. As is unemployment. Unemployment levels and changes thereof also play a major part in defining expansions and recessions. We all know that reported unemployment numbers are skewed but what is absolutely never reported in the MSM is that empirically employment levels are now WORSE than the WORSE levels of the Great Depression Volume 1.

During the First Great Depression the Unemployment Rate peaked at 23.53% in 1932, 24.75% in 1933 and 21.6% in 1934.( Source :U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1957)

Back in those days, before the Federales massaged the relevancy of statistics into the pablum narrative rabbithole it was pretty simple to calculate the unemployment rate.

In 1932 there were 12,060,000 unemployed out of a labor force of 51,250,000, returning 23.53%.

In 1933 there were 12,830,000 unemployed out of a labor force of 51,840,000, returning 24.75%.

In 1934 there were 11,340,000 unemployed out of a labor force of 53,140,000, returning 21.60%.

Of course back then the labor force grew, now we bid the unemployed adieu.

And back then the labor force was 'defined' a tad differently.

From the Congressional Research Service's : The Labor Market during the Great Depression and the Current Recession.

The 1940 census of the population was the first statistical undertaking to include questions on the labor force defined as persons who are employed or without jobs but actively seeking work within a prescribed period of time. Before then, the 1930 census of the population, the 1937 census of unemployment, and the occasional survey conducted in various states and cities utilized a very different concept—the “gainful worker”—that is, individuals who had at some time worked in an occupation in which they earned money or the equivalent, or in which they assisted in the production of marketable goods.

With passage of the Fair Labor Standards Act (FLSA) in 1938,the age limit for employment in manufacturing industries was raised to 16 years, which effectively reduced the number of job opportunities for young persons. This, in turn, might have prompted some teenagers to refrain from entering the workforce and instead, remain voluntarily in school after reaching age 14.

The increase in unemployment was greatest among young workers. The number of unemployed 14 to 24 year olds rose by 251% between 1930 and 1940. The Fair Labor Standards Act (which prohibited 14-and 15-year-olds from working for manufacturers) effectively limited the job options of the very youngest workers as well.

AM here : Was under the impression that in the First Great Depression the Unemployment Rate counted everyone over the age of 16 that did not have a job. In a previous entry had stated: In 1916 the Child Labor Act passed, setting a national minimum age of 14 in industries producing nonagricultural goods for interstate commerce or for export and the Keating-Owen Act passed, forbidding the transportation among states of products of factories, shops or canneries employing children under 14 years of age, of mines employing children under 16 years of age, and the products of any of these employing children under 16 who worked at night or more than eight hours a day.

It would appear though that prior to 1938, there were a lot of unemployed 14 and 15 year olds that were included in the unemployment rate.

That makes the following study even more frightening.

It speaks for itself: the first column represents 12/07 and the second column represents 12/09.

Center for Working-Class Studies at Youngstown State University

DE-FACTO UNEMPLOYMENT RATE

Officially Unemployed 4.9%, 10.0%
Marginally Attached .8%, 1.5%
Discouraged 02%, .05%
Underemployed 3.1%, 6.0%
Excess disability 6.0%, 6.0%
Government programs 4.0%, 4.0%
Subtotal 18.52%, 28.35%

Definitions:

Officially Unemployed- Persons who worked less than one hour during the nationally determined reference period (one week), looked for during this period, and were available for work during this period.

Latent Job Candidates

Marginally attached workers - Persons not in the labor force who want and are available for work and who have looked for a job sometime in prior 12 months (or since the end of their last job if they held one within the past 12 months), but were not counted as unemployed because they had not searched for work in the four weeks preceding the survey.

Discouraged workers - Persons not is labor force who want are available for a job and who have looked for work sometime in the past 12 months (or since the end of their last job if they held one within the past 12 months)
Underemployed -Persons who would like to work full-time but are not able to do so for economic reasons such as unavailability of full-time work or reduced demand for hours by current employer

Excess disability - Persons who are excluded from labor force because of sick leave or early retirement

Government Programs - Persons receiving government subsidized or government provided programs. For example, low wage workers receiving Earned Income Tax Credits

These estimates may be low given what has happened in the economy and the lack of current data. For example, individuals going to colleges and universities have increased dramatically during the current recession/regional depression but are not counted as part of labor market

AM here: Kids say the damnedest things don't they?

And its' the kids that we should be worried about, the nascent buster generation, the potential generation zero.

A German trading partner, who had recently returned from a trip to the Fatherland, told me that he has noticed several changes lately : 1) Not as many big cars on highways most new purchases seem to be for smaller and cheaper vehicles ; 2) Almost obsessive focus on economy and finance ... dominates small talk; 3) A general malaise on the big picture but satisfaction on ones' current situation with more focus on simple pleasures ... summarized by a 'could be worse' attitude... is that todays' optimism?

The truth sublime Mr. Twain, for your humble blogger hears the same pessimism among the youth here.

The Anglo version of Donaudampfschiffahrtsgesellschaftskapitän preparing for River Styx?

There was a crime (banksters too bankrupt to go broke), there is a victim (those not members of the Nancy Capitalist Club) and there is punishment (a DeadHead Economy as we navigate the black diamond demographic slope on the backside of Sugar Mountain).

There is no serotonin boost to being pessimistic, would much rather trumpet hope and short despair. But dismissing realities and ignoring history does not elicit an empirical conclusion that we'll avoid repeating what looks to be a quantum can of whoop ass reversion to the MEAN.

The importance of keeping the pigs in good health was all too obvious to our top-down strategerizin' Federales.

So it was agreed without further argument that the milk and the windfall apples (and also the main crop of apples when they ripened) should be reserved for the pigs alone.

But the band of The Hand can only conjure a Potemkin demand. Organic wage growth, absent for the last decade, comes from ... wait for it ... the productive allocation of capital when a free market pins winners and chooses losers.

That's why small business are crying give me customers or give me debt. But, no debt for you! the windfall apples need be reserved for the more equal brainworkers!

Phat, Plummed and Cupid is no way to go through strife Mr. Hand.

The insouciance of elites and the Antoinette economy...

This ends in tears or (hopefully not) fireworks.

News flash: the noblesse oblige have determined that unspecified mistakes were made. Alfred Bernhard Nobel is convulsing in his tomb.

2010-04-12T09:33:00.039-05:00

"For unto whomsoever much is given, of him shall be much required: and to whom men have committed much, of him they will ask the more."
-Luke 12:48

"To be sure, if noblesse oblige, royalty must do so still more".
- F.A. Kemble

'The price of greatness is responsibility.'
-Winston Churchill

'With great power, comes great responsibility'
-Spider Man's uncle

The fella was insufferable.

A PHD who spent the majority of his time either tomcattin' or moaning about his latest pending grant application while sponging and/or co-opting funds from relatives. Always bemoaning his lot, he would in haughty fashion continually proclaim to those who might indulge him that he was too ADVANCED to take a job that might horror upon horrors, pay the rent for his family.

The best I could tell, his only contribution to society was intermittent book reports on groundbreaking fare such as 'smoking is bad for you.'

What made it worse was that he was my sister-in-law's husband.

So at family gatherings inevitably would get sucked into a conversation with him where your humble blogger would carefully parse out my conversation in exchange for his long-winded and often logically incoherent responses that would inevitably end in his metaphorically patting me on the head and acknowledging that I was kind of clever given that I 'only had a bachelor's degree.'

Sheesh....

He's long gone now, thank goodness, exposed for his imbroglios, but at least one smile-inducing memory remains.

At one family soirée as the assembled gathered for a group photo he took the reins to organize folks for the shot and as all watched struggled mightily to figure out how to operate the Kodak.

In a loud voice, I cracked, 'Looks like you're too ADVANCED for that camera eh?'

The unbridled howls from the clan almost mitigated the aggregated unbearableness of past interactions.

Thought of the poor sop as I caught the brief article on page 2 of the Weekend FT on the inaugural meeting of the Institute for New Economic Thinking.

Organized by Soros, it included five Nobel prizewinners, and its' landmark conclusion was that the financial and economic crisis had exposed fatal flaws in the subject of economics and that ideas were urgently needed to keep economics relevant.

Raheally??? Go on....

The conference participants could neither agree on the cause of the crisis nor the necessary remedies....

BWAHAHAHAHAHAHAHAHAHAHAHA!

News flash: the noblesse oblige have determined that unspecified mistakes were made.

Alfred Bernhard Nobel is convulsing in his tomb.

Our blessed intelligentsia are at a loss in attempting to provide a summation of our 'I Can't Believe It's not Capitalism' plan in response to the 'What just Happened' crisis?

They just can't noodle the fact that we are Paying it Backwards, the next generation paying us to paper over the inevitable creative destruction that must occur and that will occur, which will inevitably lead to a DeadHead Economy as we navigate the black diamond demographic slope on the backside of Sugar Mountain?

It escapes them that the cold hard fact of our age is that the bankrupt ideology of the rich that had greatly succeeded in drafting the inner monologue of regular folks so that they would vote against their self-interests is colliding head-on with a Mr. Market that is a bit pissed off that we've inflated it out of the business cycle for the last quarter century? (AM Rule #6)

They just can't fathom that after World War 2, our blessed leaders, impressed by German 'organizational' skills crafted a policy of manufacture of consent; over time these techniques moved to the economic realm in an attempt to manufacture content; and now the Federales risk the manufacture of contempt, for it is only a Great Depression if they say it is? (AM Rule #1)

They are oblivious to the calamity that Mr. Hand's strong dollar policy is in fact a chimera of currency debasement masquerading as America's wealth exporting machine that is regularly promulgated by our leaders as an exceptional example of America's resiliency?(AM Rule #5)

No epiphany about the bane articulated by 'Nancy Capitalists in a Sovereign Democracy that are Hell Bent to Seek Rent', no insight in reference to the scourge that 'although we walk through the Valley of Debt we fear No Easing', no commentary on the riff that 'Socialized Guts will lead to diminished glories'?

And not a peep on how a flat tax and an across the board 20% cut would balance our budget lest we be 'pushed' down the fiscal stairs?

Not a whisper about dipping the banks in the acid bath of price discovery so that the organic phoenix of creative destruction can lift all of us up to a brighter future thereby avoiding the likely trip down 'generation zero' gulch?

How about a hushed acknowledgement that removing the profit element from health care would, horror upon horrors, allow us to join the rest of the civilized world so we can bypass being eternally cajoled by the idiot box to 'ask our doctors'?

Methinks they are too ADVANCED for our dilemma.

But what do I know, I only have a bachelor's degree....

Be vewy vewy quiet or you'll be bupkes, ehehehehehehe

2010-04-09T08:25:00.033-05:00

'I have spoken to the heads of various Wall Street equity derivative trading desks and every single one of the senior managers told me that Bernie Madoff was a fraud. Of course no one wants undue career risk by sticking their head up and saying that the emperor isn't wearing any clothes.'
-Harry Markopolos in 2005.

'As long as the music is playing, you've got to get up and dance.'
-Chuck Prince

'You know, Paul, Reagan proved deficits don't matter'
-Dick Cheney to Paul O'Neill (a month later Cheney told O'Neill he was fired)

'To the ordinary guy, all this is a bunch of gobbledygook. But out of the gobbledygook comes a very clear thing: You can't trust the government; you can't believe what they say; and you can't rely on their judgment; and the implicit infallibility of presidents, which has been an accepted thing in America, is badly hurt by this, because it shows that people do things the President wants to do even though it's wrong, and the President can be wrong.'
-Haldeman to Nixon on Daniel Ellsberg's release of classified documents concerning a Pentagon study of US government decision making about the Vietnam War that came to be known as the Pentagon Papers.

WIKI : Ellsberg later claimed that after his trial ended, Watergate prosecutor William H. Merrill informed him of an aborted plot by Liddy and the "plumbers" to have 12 Cuban-Americans who had previously worked for the CIA to "totally incapacitate" Ellsberg as he appeared at a public rally, though it is unclear whether that meant to assassinate Ellsberg or merely to hospitalize him.

'Well, I had been consulting for the government, and this is now ’64, for about six years at that point, since ’58, in particular since ’59: Eisenhower, Kennedy, and now Johnson. And I had seen a lot of classified material by this time—I mean, tens of thousands of pages—and had been in a position to compare it with what was being said to the public. The public is lied to every day by the President, by his spokespeople, by his officers. If you can’t handle the thought that the President lies to the public for all kinds of reasons, you couldn’t stay in the government at that level, or you’re made aware of it, a week. … The fact is Presidents rarely say the whole truth—essentially, never say the whole truth—of what they expect and what they’re doing and what they believe and why they’re doing it and rarely refrain from lying, actually, about these matters.'
-Daniel Ellsberg

WIKI: Sibel Deniz Edmonds is a Turkish-American former FBI translator and founder of the National Security Whistleblowers Coalition (NSWBC). Edmonds was fired from her position as a language specialist at the FBI's Washington Field Office in March, 2002, after she accused a colleague of covering up illicit activity involving foreign nationals, alleging serious acts of security breaches, cover-ups, and intentional blocking of intelligence which, she contended, presented a danger to the United States' security. Since that time, court proceedings on her whistleblower claims have been blocked by the assertion of State Secrets Privilege.

Regarding 9/11

She alleges that the FBI received information in April 2001, from Behrooz Sarshar, one of its Farsi translators, that Osama Bin Laden was planning attacks on 4-5 cities with planes, some of the people were already in the country and the attacks would happen in a few months.

Regarding nuclear proliferation and official corruption

She alleges that she found evidence that people in the FBI, the State Department, the RAND corporation, the Pentagon, and Congress were recruited by a Turkish and Israeli-run criminal intelligence network, with connections to Pakistan and Saudi Arabia, to steal nuclear weapons secrets.

She alleges that the FBI has a case file, 203A-WF-210023, detailing evidence of this.

She alleges that one high-ranking member of the State Department was selling classified information to Washington-based agents of the Republic of Turkey, who were in turn selling these secrets on the black market.

'The few who understand the system, will either be so interested from it's profits or so dependant on it's favors, that there will be no opposition from that class.'
-Rothschild Brothers of London, 1863

'I have never seen more Senators express discontent with their jobs....I think the major cause is that, deep down in our hearts, we have been accomplices in doing something terrible and unforgivable to our wonderful country. Deep down in our heart, we know that we have given our children a legacy of bankruptcy. We have defrauded our country to get ourselves elected.'
— John Danforth (R-Mo)

'It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.'
— Henry Ford

'By this means government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.'
— John Maynard Keynes

'Give me control of a nation's money and I care not who makes it's laws'
—Mayer Amschel Bauer Rothschild

A long-held belief of your humble blogger when presented with, most often in the presence of alcohol, 'proof' of some conspiracy, is that at the end of the day all conspiracy falls under the same auspices.... the conspiracy of silence.

The secret is, at the end of the day, there are no secrets. Power and privilege afford a sensibility which typically involves keeping your neck in, your shoes polished, and your mouth shut.

Of course when someone violates the Federales Omertà, when someone dares to disregard the code of 'u è surdu, orbu e taci, campa cent'anni 'mpaci' ("He who is deaf, blind, and silent will live a hundred years in peace"), then of them an example must be made.

Even though hard and difficult truths can not be enunciated plainly that does not mean that the architects of the pablum narrative and the enablers thereof are totally unawares of their obfuscation and completely unsympathetic to the principals they espouse (but do not follow), and sometimes, much akin to the robber barons of old, they toss doubloons of disambiguation, from their carriages, to us humble folk.

But to get to these 'clues' sometimes you have to hold the MSM comics up to the light with magnifying glass and indignity extended.

To wit: Sycophantic Lawrence Summers stating,'There's a quiet depression in small business.'

And why?

Just connect the dots of the Federales having staff at each of the major banksters to monitor asset levels on a daily basis with the revelation? that the Mayan Long Count will probably expire before ZIRP does.

This Great Cycle of tight credit for homeowners and small businesses and the 'lingering' housing downturn keeps spinning chiefly because the asset levels being monitored and perpetually obfuscated by our blessed squints are sucking the capitalist 'love' right outta the middle class room.

But who in the MSM will beat the drum that the banskters are too bankrupt to go broke, and the consequences thereof?

Who will articulate again and again, who will pound the table, that the suffering and pain that is unfolding like a slow motion car crash is directly attributable to the ring-fencing of rich folks bad speculative bets? Who among the Amerikantura will call out the Nancy Capitalists as being antithetical to the American dream, as wholly unpatriotic, and dare one even suggest ... subversive? Socializing the downside and piratizing the upside is a national security threat and is for its' victims nothing short of domestic terrorism.

Can you imagine someone at Smells Fargo, a bankster coven heralded as one of the strongest that in reality is the granddaddy of insolvency, coming out and saying, 'We aren't just insolvent, we aren't just double secret insolvent we are cosmic s%*t sandwich insolvent..., hell we could gulp down another TARP whole and still be gurgling for oxygen. I mean seriously folks we got 1.7 trillion in QSPE and I'd be damned if I could find a handful of that crap that would realistically be 90% of par (maybe the quadruple A stuff) and brother the whole boatload would have to get to 94% to not wipe out in total our Tier One Kapital. We are Tier None. We've shuffled off the mortal coil, run down the curtain and joined the bleedin' choir invisible!! THIS IS AN EX-BANK!!'

No one wants to be Markopolis, Ellsberg or Edmonds. Everyone within the silent conspiracy knows that they must be vewy vewy quiet or they'll be bupkes, ehehehehehehe...

What we need is a hero, or it's generation zero.

Patriot.Optimist.Outraged. Father.Skeptic.Survivor. Raconteur.

2010-04-08T10:07:00.014-05:00

As your humble blogger hunkers down to give unto Caesar what is Caesar's, thought I would take a brief moment to share with y'all some thoughts about this blog and its' author's motivations.

The purpose is to create a scrapbook to organize both thoughts and to develop personal knowledge. Motivated by Faber when he wrote about how it was critical to create some type of organizational system since without it you would forget most of what you've read.

The term anonymous monetarist comes from pursuing money despite college-inculcated progressive leanings and well, it also rhymes!

There will never be advertising on this site, it will not be committed to any commercial purpose although some type of future philanthropy is quite possible, there will never be a 'book', and it will always be divorced from ego through anonymity although admittedly comments made usually provide some measure of serotonin boost.

For my entire life have always rallied against the tyranny of petty knowledge. Folks that wield their 'secrets' like a club have always generated intense vitriol from this fella. Knowledge is nothing more than an acquired thing. You can learn anything if you put your mind to it. How? Just do it. Why? Because you can.

Now, more than ever in my generation's lifetime, financial intelligence is critical. We have stuffed the pig on the scales of fate. Through our desire to be prophets we have ceased to be makers of our own fate.

Despite all the digital ink spent on the failings of America, especially in light of the ‘I Can’t Believe it’s not Capitalism’ Plan generated in response to the ‘What Just Happened Crisis’… hope is not dead, progress has not been outlawed, justice is not forbidden, and evolution is not off the table.

The fire of liberty exists, the embers of truth still glow. As long as one voice stands to speak truth to power, to speak in a fashion that even Mom can understand, the dream of this country lives and can be expressed by each and every one of us.

We are Americans damnit, and that word, yes, still has noble meaning.

We all share the ability to make from clay what our hearts and our minds desire. They can only take from us what we abrogate; they can only lie to us if we refuse to put in the work to know the truth.

Will fight to my last breath to defend this country I love, and the ideal it embodies, and will always support the patriots that get it, and say it, and repeat it.

It is not a question of being part of the solution or part of the problem. Change does not have to be consistent with someone else’s plan. Change comes from within. To make a difference outwardly one must first find that difference within.

Those that fail to stand for something will fall for anything.

Take a stand.

Free your mind.

Make proud those that gave their lives, defending the ideal that allows you to possess the opportunity to be free…

A generation busted by liquidity lusted, the foreshadowed truth? denouement of the trusted ...

2010-04-07T09:12:00.031-05:00

'A senator asked then Treasury Secretary Henry Paulson whether the "well paid officials and directors of the mortgage companies" should be held accountable. Paulson replied," "I'm not looking for scapegoats."
- Grant's 04/02/10

'Spotted curbside in downtown Washington: Hank Paulson, tanned from a recent trip to Argentina, huddling over a BlackBerry he still is getting acquainted with. As Treasury secretary, he refused to use a BlackBerry, preferring phone calls to email, but he has now succumbed.'
- WSJ Heard on the Street 04/07/10

Paulson tells us in 'On the Brink' that he doesn’t write things down or use email, so the entire book was done from his “facility” for memory.
-marketminder.com

Folks that live in a world of plausible deniability never commit anything to writing.

Deceit and subterfuge are merely precautionary measures. No need to question whether anything said by a person is true or whether the speaker would ever need to stand behind it. The temptation to obtain stuff in writing or have conversations recorded for later use in proving the truth is obviated.

Emails are denounced as cold and impersonal. The conspiracy of silence is the lingua franca.

The Federales 'Wise Guys' realize that those that go 'oobatz get pinched', and that there is never a good time 'to eat alone' lest one becomes 'guests of the state'.

One can only imagine though what the emails of the bureaucratic 'cafones and poveretts' at BLS might one day reveal: they seem to have foregone even making a semblance of precautionary effort as they paint the Potemkin economic village with an 'ever diminishing' credible brush ..

To wit, as mentioned here on March 8th : "the Federales Household Survey showed that this month the category of 'Men 16 years and older' accounted for 297,000 of the 308,000 jobs gain and last month 'Women 20 years and older' produced 529,000 of the 541,000 jobs gain. Dude, stats happen! Don't blame the soothsaya."

And now as relayed by the venerable Bill King :'Once again we see chicanery in the March Employment because the Household Survey shows a gain of 264k jobs but ‘Men 20 years & over’ accounted for a 290k job gain. ‘Women 20 years & over’ lost 42k jobs. This is absurd!'

What will be the title of the April Household Survey? 'Stats from Mars, B$%#*&@t from Venus?'

Pay no attention folks to the fact that the Birth-Death added 81K while ADP subtracted 112K small-business positions. Pay no heed to Gallup reporting the underemployment rate is now over 20%.

Unemployment levels are empirically higher than they were during the worst years of the Great Depression (you can look it up!) but signs of recovery are all around us dontchaknow...

We've tossed trillion of meatballs on to the fire to fuel this V-shaped, scratch that, nascent, scratch that, 'seeds abounding' recovery and yet just a teensy-weensy rate increase might cause the markets to crash!

You, gentle reader, know your humble blogger's take as to the why and wherefores of our blessed custodes paranoia that there are deflationary 'elephants in the womb':'Failure to liquidate the insolvent banksters has led to the liquidation of a large part of the productive economy.A taxpayer financed bailout of rich folks' bad speculative bets has resulted in zombie banks and zombie customers... a fiscal tide that lifts no boats.' (AM Rule #7)

In today's WSJ, yet another example, a listing of the amount of level 3 assets at the major banksters:

J.P Morgan Chase : 130,400,000,000
Bank of America : 103,600,000,000
Citigroup: 96,900,000,000
Goldman Sachs : 46,500,000,000
Maorgan Stanley: 43,200,000,000

WSJ of course mistakes the trees for the forest, describing the toxicity of 'one part of bank balance sheets' while ignoring the fetid swamp that is the 'other part'- the part that if you imbibe of the pablum narrative swill has been Voldemorted out of existence... namely QSPEs and VIEs.

First though, noticed that Smells Fargo was not in the WSJ's top 5 (above)...

For a good laugh I jumped to their 2009 summary (are you ready for this?):

Smells Fargo Level 3 Assets:

Beginning balance at January 1, 2009 (securities owned) : 10,183,000!
Ending balance at December 1, 2009 : 2,068,000!

Oh my stars and quarters!

Un-fricking believable it is. No wonder Warren is cozy with them, truly they can 'bend it' like Buffett. Google(Advanced) search "level 3 assets" and you get 523,000 hits. Google(Advanced) search "QSPE" and you get 41,000 hits. Get folks to ask the wrong questions...

If Level 3 is the elephant in the womb, QSPEs (and VIEs) are truly the elephant in the tomb, a graveyard of lost generational growth, as we pay it backwards... the trillion or so of meatballs at the Reserve nothing more than DIP financing for a generational workout.

For your perusal, once again, a delineation as to the pervasiveness of the rot...

Smells Fargo

Total Qualifying Special Purpose Entities(09/30/09): $1,796,209,000,000

Citigroup

Total Qualifying Special Purpose Entities(06/30/09): $828,300,000,000

J.P. Morgan

Total Qualifying Special Purpose Entities(06/30/09): $574,000,000,000

After a cursory scrubbing of Bank of America and Goldie just couldn't come up with an accurate QSPE count. These numbers do not count the billions upon billions of VIEs.

If this generation was the boomer will the next be called the busted?

A generation busted by liquidity lusted, the foreshadowed truth? denouement of the trusted ...

Or to put it another way ..

After World War 2, our blessed leaders, impressed by German 'organizational' skills crafted a policy of manufacture of consent.Over time these techniques moved to the economic realm in an attempt to manufacture content.Federales now risk the manufacture of contempt, for it is only a Great Depression if they say it is. (AM Rule #1)

Administrative note

2010-04-01T12:05:00.004-05:00

Travelling again.

Off the grid until middle of next week.

Fare thee well.

Random Walk, R.I.P... Look, matey, I know a dead theory when I see one, and I'm looking at one right now.

2010-04-01T08:35:00.039-05:00

'It's not pinin'! It's passed on! This theory is no more! It has ceased to be! It's expired and gone to meet 'is maker! 'It's a stiff! Bereft of life, it rests in peace! If you hadn't nailed it to the masses it'd be pushing up the daisies! It's metabolic processes are now 'istory! It's off the twig! It's kicked the bucket, it's shuffled off 'is mortal coil, run down the curtain and joined the bleedin' choir invisibile!! THIS IS AN EX-THEORY!!'

FT
By Tony Jackson
March 29,2010

... markets are only efficient - if indeed they are - in respect of information held by outsiders. But fair value accounting changes the behaviour of insiders - those running the firms - who have different information. To that extent, fundamentals affect prices, but prices also affect fundamentals.

Such an argument might seem surprising from the bone-dry Chicago school, home of Eugene Fama, the father of the efficient market hypothesis. Indeed, Professor Haresh Sapra of Chicago's Booth School of Business is at pains to stress he is not claiming that anyone is acting irrationally here.

This should not surprise us. As Thomas Kuhn, the philosopher of science, showed 50 years ago, scientists will not abandon a paradigm, however shaky it is, until a satisfactory new one comes along. For to work outside the paradigm is to abandon science.

In the quasi-science of economics, or even accounting, something similar applies. However broken the model, it must be maintained until an economic Newton or Einstein invents a better. It could be a long wait.

AM here: No need to abandon science Tony, in fact all you need do is embrace it. For in fact the efficient market hypothesis anchored by random-walk has been debunked, disproved, and lampooned. It has run down the curtain and joined the bleedin' choir invisible.

The satisfactory new paradigm? Why that which has been advanced by Benoit Mandelbrot, the Fractal Man, Sterling Professor Emeritus of Mathematical Sciences at Yale University and a Fellow Emeritus at IBM's Thomas J. Watson University.

Seriously Tony, you can look it up!

And when you do implement that indispensable toolkit of opposable thumbs and frontal lobes in the service of Senor Google here, dear sir, is what you will find:

You will find that when examining price records, you will typically find a different distribution than the bell curve bandied about by the high priests of random walk.

You will find a power law relationship. Power laws exist in nature, for example, gravity weakens by the inverse power of two with distance. Power laws describe the distribution of income in the upper reaches of society. Power laws also apply to the price movements of many financial instruments. Power law distributions allow for many more price swings than would the bell curve and this 'new paradigm' fits the data for many price series.

Mandelbrot first provided evidence to this almost 50 years ago, in 1962, when he showed that a century's worth of cotton price movements did not fit the bell curve, there were too many large tails due too far too many big price swings, and these tails followed a power law.

In Mandelbrot's book, 'The Misbehavior of Markets : A Fractal View of Financial Turbulence' he references how Warren Buffet once jested that he would like to fund university chairs in the Efficient Market Hypothesis, so that the professors would train even more misguided financiers whose money he could win. He called the orthodox theory "foolish" and plain wrong. Yet none of its proponents "has ever said he was wrong, no matter how many thousands of students he sent forth misinstructed. Apparently, a reluctance to recant, and thereby to demystify the priesthood, is not limited to theologians."

Clearly reality is the tail risk.

The new paradigm Benjamin is fractals.

Natural law is based upon a "fractioning" of a larger structure into smaller structures that have not only the features of the larger structure but if scaled up will look identical to the larger structure. Mandelbrot showed this scalability by graphing long-term financial data that appeared to be discontinuous on logarithmic paper revealing a fractal relationship in markets.

Per Benoit: 'Price changes are not independent of each other.My heresy is a different, fractal kind of statistical relationship, a "long memory." Why this should be is not certain; but one can speculate. Whatever the explanation, we can confirm the phenomenon exists- and it contradicts the random-walk model. Contrary to orthodoxy, price changes are very far from following the bell curve. Such theory predicts that index swings of more than 7 percent should come once every 300,000 years; in fact, the twentieth century saw forty-eight such days. Truly, a calamitous era that insists on flaunting all predictions. Or perhaps, our assumptions are wrong.'

Mandelbrot discerned that markets exhibit a wild trait of abrupt change or discontinuity. This hierarchy of turbulence, a pattern that scales up and down with time, he describes as the Noah Effect - catastrophic, but transient. This Noah Effect is seen in the market's discontinuity : this is the pillar of fractal geometry.

The market's second wild trait - almost-cycles- he describes as prefigured in the story of the prophetic dreams of Joseph, a biblical tale of pattern recognition or long-term dependence. The Joseph effect is the influence of a long-term memory through which the past continues to influence the present.

Per Benoit: ' But how exactly do these two effects- Noah and Joseph, dependence and discontinuity - interact in markets? Answer: At least one market mechanism I identified naturally leads to the other. Suppose, for instance, that you have an "almost-trend" emerging in a stock price: a few weeks, say, in which a stock price rises seven days out of ten. The pattern must eventually break up, of course; otherwise, it would be a real trend that you could bet on continuing a few weeks, and hope to make some real money. But when the "almost-trend" finally does break, it can do so rapidly. A sudden lurch downward, perhaps. A discontinuity. Or, in the terms of the Biblical metaphor, a Noah Effect produced by Joseph-style dependence.

For some real-world examples, think about investment bubbles. They seem calamitous -but they happen all the time. Conventional economics tells us they are aberrations, "irrational" deviations from the norm, caused by a rapacious speculator, mass greed, or some other unpleasant factor. But under certain circumstances they can be entirely rational and flow from the entwined effects of long-term dependence and discontinuity.

The distribution of price changes in a financial market scales. Given that event X has happened, what are the odds that Y will happen next? With financial prices, scaling means that the odds of a massive price movement given a large one are akin to those of a large movement given a merely sizable one. Such is the confusion of scaling. It makes decisions difficult, prediction perilous, and bubbles a certainty.'

Ah but to channel a canucklehead on Bubblevision, 'Dear Anonymous Monetarist, is it actionable?'

The answer gentle reader is, Quite so! Although some methods are more equal than others.

If you were to venture into a non-descript office building and saunter into a non-descript office where the flickering tube lighting dimly illuminated the visage of the billionaire in a baseball cap with mismatched shirt and tie upon yonder bookcase you might spy some esoteric tomes laying out all manner of twists on the theme fractal...

Great coffee table fare, especially those without names on the binders, with authors such as Baumring, Lynch, Gregorius, Balliett, Johndro, Raphael, Councel, Whiteham, Foster and Bayer ... Novels usually obtained from dusty storefronts.

Bits and pieces are garnered and applied to some method usually resulting in vast longitudinal charts with squiggles and wiggles and a fair amount of confirmation bias.

One of the most advanced practitioners of these arts is the venerable Jeffery Cooper of Minyanville, a Gann student and Swing trader.

Gann is a launching point in consideration/confirmation that random walk is meant for history's dustbin, but he only scratched the surface.

Mandelbrot completely refuted random walk but it was too hard for folks to accept; hence Mr. Jackson's lament for a new paradigm.

But there is one fellow who can give you the tools to trade this half-century old theory of fractals.

His name is John Needham. The website is www.thedanielcode.com.

Check it out and follow the trades posted the night before each trading day.

Believe what your eyes see.

Think outside the cave!

Elephants in the Womb

2010-03-30T09:37:00.041-05:00

'Ask yourself whether the dream of heaven and greatness should be waiting for us in our graves - or whether it should be ours here and now and on this earth.' -Ayn Rand

'I may be going to hell in a bucket, babe, But at least I'm enjoying the ride.'
-Grateful Dead

'And the LORD said to him, Go through the midst of the city...and set a mark on the foreheads of the men that sigh and that cry for all the abominations that be done in the midst thereof. And to the others he said in mine hearing, Go ye after him through the city, and smite: let not your eye spare, neither have ye pity.'
Ezekiel 9:4-5

Sighing and crying it is then!

Doing a quick peek at the WSJ, FT and Barrons that had stacked up while on holiday for a week, one wonders why there isn't a Comic Code Authority regulating same, for their content is clearly inappropriate for more impressionable readers.

The pablum narrative is certainly striking up the band; banks returning to profitability, GDP ramping, and the consumer spending, as all signs of a V-shaped, scratch that, nascent, scratch that, oxymoronic jobless recovery.

Ah the banks. Soon the debate will fall on the continuum of a double-dip caused by the counterproductive populism of bankster bashing versus the political palliative of misdirection through scapegoating. Like most debates in today's public arena, the magician's ability to get folks to ask the wrong questions belies the need for coherent answers.

The name of the real game is this : 'Failure to liquidate the insolvent banksters has led to the liquidation of a large part of the productive economy.A taxpayer financed bailout of rich folks' bad speculative bets has resulted in zombie banks and zombie customers... a fiscal tide that lifts no boats.' (AM Rule #7)

At no time do their hands leave their arms folks; the middle class for their next trick as the 'vanishing bird' smashed at the bottom of the now empty cage.

How smashed you ask?

Well turn the page back to ancient history, say April 12, 2009, when the FT reported: 'Many, including the IMF, expect total global credit losses to approach $4,000bn as the economic slowdown means that more traditional forms of lending become toxic. Assuming banks account for three quarters of losses, and they have already torched $915bn, according to Bloomberg, that equates to 14-odd years of revenues.'

It was around this time that the Federales proclaimed the writedowns will be discontinued until morale improves.

And yet much like the old chestnuts of 'page views not profits', and 'deficits don't matter', the kicking the can , ostrich-arsed, 'don't look at the marks behind the curtain' approach won't and can't change the facts on the ground.

That truth being the banksters are still too bankrupt too go broke.

How broke you ask?

Here's a real simple example. Consider just the off-balance QSPE of three of the too-big-to-jail banks:

Smells Fargo

Total Qualifying Special Purpose Entities(09/30/09): $1,796,209,000,000
Total On Balance Sheet Assets(Grant's 03/19/10): $1,262,354,000,000
Total Tier 1 Capital as a % of QSPE : 5.2%

Citigroup

Total Qualifying Special Purpose Entities(06/30/09): $828,300,000,000
Total On Balance Sheet Assets(Grant's 03/19/10): $1,856,646,000,000
Total Tier 1 Capital as a % of QSPE : 15.3%

J.P. Morgan

Total Qualifying Special Purpose Entities(06/30/09): $574,000,000,000
Total On Balance Sheet Assets(Grant's 03/19/10):$2,031,989,000,000
Total Tier 1 Capital as a % of QSPE : 23.2%

So in other words, not counting the VIEs (Variable Interest Entities), which are also held off-balance, if Smells Fargo's QSPE's are, in actuality, worth less than 94% of par then they have no Tier 1 Capital, using the 'fingers and toes' accounting method. Considering that Florida and California is at least 20% of their book, do we need to elaborate further? A mark on Citigroup's QSPE of 85% or less and J.P. Morgan's of 77% or less and it's Tier None for them also. Pay no attention to the FDIC marks behind the curtain folks! Securitizations are not like snowflakes because each are unique but rather because they all melt fast when the heat of observation is applied.

And the other two 'news items', GDP ramping and the consumer spending, implying 'champagne wishes and caviar dreams'? In ancient times the headline was GDI not GDP. Why? Well because GDI counts the total income in the economy while GDP measures the output of the economy as the sum of expenditures — consumption, plus investment plus government spending plus net exports.

WSJ blog
By Justin Lahart
3/19/2010

In theory, the two measures should equal one another, in practice they don’t quite, and Mr. Nalewaik, a Fed Economist presenting a paper Friday at the Brookings Panel on Economic Activity, argues that GDI is the better of the two.

He finds that when the Commerce Department’s Bureau of Economic Analysis revises its national income and product accounts, GDP figures move more closely inline with GDI. GDI also appears to have a stronger correlation with other economic indicators, and its recent movement around turning points suggests it more closely tracks the economy.

He notes that GDI fell far more sharply in the teeth of the recession, dropping at a 7.3% annual rate in the fourth quarter of 2008, and 7.7% in the first quarter of 2009. GDP, in comparison, fell by 5.4% and 6.4%. Moreover, while GDP showed the economy began to grow in last year’s third quarter, GDI showed it continued to contract.

(Zip-a-dee-boohah Mr. Grant. -AM)

(Fourth-quarter GDI figures aren’t yet available.)

“[T]he latest downturn was likely substantially worse than the current GDP… estimates show,” he writes. “Output likely decelerated sooner, fell at a faster pace at the height of the downturn, and recovered less quickly than is reflected in GDP… and in conventional wisdom.”

'Mr. Hand's strong dollar policy is the chimera of currency debasement masquerading as America's wealth exporting machine that is regularly promulgated by our leaders as an exceptional example of America's resiliency.' (AM Rule #5)

But wait what about the savings rate decreasing, it's all good right?

Only one glitch, incomes did not increase.

From the venerable Peter Atwater at Minyanville:

'As I type, mortgage delinquencies exceed 14% while credit card delinquencies are closer to 6%. And owner-occupied mortgage delinquencies now exceed non-owner-occupied delinquencies. (And, for what its worth, home equity and second mortgage delinquency levels are far below first mortgages.)

Those in the financial-services industry argue that consumers are acting irrationally. Of late, I'm not so sure. I think consumers may, in fact, be acting rationally irrational, making what appear to be the correct decisions for the short term while completely ignoring their long-term consequences.

While likely to make me unpopular within the Beltway, I think a lot of the behavioral change is a function of two new phenomena: the constant vilifying of the banks as well as Washington's seemingly endless desire to facilitate mortgage modifications to underwater mortgage borrowers.

While not suggesting either is right or wrong, both actions invite delinquency if not outright strategic default. And the higher the overall rate of delinquency, the higher the likelihood of some kind of "negotiated" settlement. To mix my metaphors, one quacking goose may be shot, but a cacophony of squeaky wheels will ultimately be greased.

At least, looking at the data, that's what underwater American homeowners are clearly betting.

In the meantime though, the payments that would otherwise be put in the mail to Countrywide and other mortgage lenders, are being used to pay down credit card debt at unprecedented levels and being spent on living expenses including, per a recent Wall Street Journal article, season tickets to Disneyland and Carnival cruises. Call me a skeptic but I don't think it's any coincidence that we've seen an improvement in consumer spending coincident with a rise in mortgage delinquencies.

(And lets insert here, to be clear, that with double-digit unemployment, a significant portion of the reprioritization of payments are out of sheer necessity.)

Consumers are acting rationally irrational.'

Or as previously written on this blog:

'Extend and pretend is the proposed means to mend. Pay no attention to the marks behind the curtain. What ever the banks want to show they show.

The Nancy Capitalists proclaim its' all good, and we all should support that which brings recovery home.

But a storm is being created.

What they fail to realize is that they are corrupting, not supporting the American Dream; through their desire to be prophets they have ceased to be makers of their own fate.

The American Dream is becoming the American Scheme as moral hazard is writ large.

With Mr. & Mrs. America feeling no compunction to walk away from their home if their neighbor does it, with the neverending Federales policy of exalting drunks and punishing the sober, with the phrase 'the whole thing's a Ponzi' being uttered by even the most ardent of conservatives at family functions - life is imitating the arts of the elites.'

OTC derivatives, Build America to expand muni debt capacity(a good idea??), pension shortfalls, are yet more examples of the elephants in the womb.

When wise folks say that you should be your own central bank, are they doing a Barkley? Being your own corporatocracy may be rationally irrational but life liberty and synarchy for all is one hell of a way to go through life son.

On that path most assuredly the devil will be paid his due.

It won't matter until it does.

And when it does...

When we get off Sugar Mountain...

Oh mama!

Administrative note

2010-03-18T11:27:00.006-05:00

Going on holiday abroad.

Will be off the grid for a week.

Fare thee well.

The light that burns twice as bright burns for half as long

2010-03-18T10:06:00.020-05:00

'Proud of yourself, little man? Not very sporting to fire on an unarmed opponent. I thought you were supposed to be good. Aren't you the "good" man? C'mon ..... Show me what you're made of.'
-Batty

Today's FT:

A US bank regulator joined financial executives yesterday in calling for changes to consumer protection rules proposed...

'In every case consumer protection has the edge and will trump safety and soundness and I think that is backwards' said John Dugan, comptroller of the currency,{the bill uses} insufficiently 'preemption', the mechanism where federal regulators overrule state counterparts. Andrew Pincus, a lawyer who has advised the US Chamber of Commerce, argued this week that small business would face a 'significant diminution of credit' if the Dodd bill is made law.

AM here: *@%*@!*$%... Nancy Capitalists in a Sovereign Democracy that are Hell Bent to Seek Rent.(Rule#10)

The Dodd bill, whatever watered-down, beaten-down, version makes it through the captured sausage grinder, most certainly does pose systemic risk. The risk that a credit card application or bill or a mortgage application or statement or any other consumer finance product might, horror upon horror, be written in plain English and be comprised of one or two descriptive pages as opposed to twenty or thirty. A risk to a system held far apart from the system you reside in gentle reader.

What oh what will the banksters do if they are forced to engage in a simple, and shudder, transparent transaction! Why the walls of Jericho would fall upon the cursed consumer!

Analogously what would the banksters and other motley corporate structures do if they weren't allowed to run two sets of books like the Cosa Nostra? What would happen to our fragile nascent recovery if the Oracle of Eccles is not divined as the capo di tutti capi?

The cafones and poveretts, for whom the books are always closed have been told 'col tempo la foglia digelso diventa seta'.

Trust us but don't task us lest you see trust in us lost to your peril, whine the custodes.

WIKI: After his arrest, the mafioso Giovanni Brusca described the ceremony in which he was formally made a full member of Cosa Nostra. In 1976 he was invited to a "banquet" at a country house. He was brought into a room where several mafiosi were sitting around a table upon which sat a pistol, a dagger and an image of a saint. They questioned his commitment and his feelings regarding criminality and murder (despite his already having a history of such acts). When he affirmed himself, Salvatore Riina, then the most powerful boss of Cosa Nostra, took a needle and pricked Brusca's finger. Brusca smeared his blood on the image of the saint, which he held in his cupped hands as Riina set it alight. As Brusca juggled the burning image in his hands, Riina said to him: "If you betray Cosa Nostra, your flesh will burn like this saint."

AM here : The light that burns twice as bright burns for half as long. And Indy, per every real world statistic that you can empirically squeeze out of the pablum narrative toothpaste, it doth appear that the fire is going out.

Toil and trouble, a bullisht bubble, the cops at the door? Hey, hey, stock's goin' double!

2010-03-17T09:04:00.025-05:00

Up is down.

Black is white.

And if you argue with that they question your patriotism.

That was my favorite little ditty for the Bush administration. As the pablum narrative trumpets the madness of cowards (i.e. Nancy Capitalists that socialize the downside and piratize the upside), your humble blogger wonders exactly where did we jump the shark?

Nixon & Carter were certainly bizarre in their own respects but the Reagan administration really seemed to get the bizarro universe ball rolling. Remember Ollie North being willing to do a G. Gordon Liddy? Remember John Poindexter, he of the photographic memory, testifying under oath that he didn't 'recall' or 'remember' 184 times? Remember how ultimately they just blamed a corpse(Casey)?

I'm sure most folks don't have a clue as to what I'm referring to, and if you're a kid in Texas ... most certainly you won't!

Clinton, the kid from Hope, and his whore-mongering buddy Dickie Morris triangulated themselves into reforming welfare and balancing budgets ... perhaps that was the first sign that we had shifted into some alternate plane of political reality. A liberal boomer that leaves a liberal legacy of what ... parental leave?

Incurious George took the 'bizarro universe' to an art form though. Staffing Justice with lawyers from fourth-rate universities, putting wolves in charge of hen houses ( i.e. department heads that had spent their entire life fighting against the regulations they were supposed to now enforce), passing budget busters like Medicare Part D which added oh about 8 trillion in unfunded liabilities to your kids and grandkids, and launching a war in Iraq run with the aplomb of a bong-addicted college liberal. Hey we didn't put up that Mission Accomplished sign, we have no idea how it got there. Democracy is on the march dude!

Yes Bush passed tax cuts and bailed out Wall Street ... fiscal prudence aside, that is what a conservative is supposed to do.

Now to the current president. As a fierce social liberal (and fiscal conservative ... duality of life dontchaknow) well I guess the best I can say that all us social liberals have thus far is a t-shirt that says 'I voted for Barack Obama but I got Barry Dunham.'

An ubiquitous bankster friendly policy from the enabling Federales ... check.

An insurance friendly 'health reform' initiative ... check.

You want to reform the 'health' industry Barry? Public option or forget it. And while you are at it get rid of those 'ask your doctor' commercials. 336 BILLION to the insurance industry over 10 years is porn not reform. Spare us the Chuck Yeager 'defense is a jobs program' antimatter incarnation that the 'health reform' plan is a jobs program. We need wealth reform not some Potemkin health reform. Apply the doctrine of capitalism where it belongs ... liquidating and ring-fencing rich folks' bad speculative bets that if allowed to continue roaming the earth in a zombified state will continue to liquidate the productive economy. Health reform falls under 'promote the general welfare', given your background there is no need to email you the constitution in hopes that you might read it, is there?

Up is down.

Down is up.

And we all know that the Oracle at Eccles has junk in the trunk.

Toil and trouble, a bullisht bubble, the cops at the door? Hey, hey, stock's goin' double!

It won't matter until it does.

And when it does...

Oh mama!

I want the Black French guy I voted for.

Happy Pi Day, Beware the Ides, Et tu, Brute?... tis sinusoidal time

2010-03-14T18:39:00.056-05:00

'Pi Day is celebrated by math enthusiasts around the world on March 14th.
With the use of computers, Pi has been calculated to over 1 trillion digits past the decimal. Pi is an irrational and transcendental number meaning it will continue infinitely without repeating.'
- piday.org

'Nitpickers please note that originally the Ides of March was not necessarily March 15th but rather the period March 13th to 17th. Later…..Roman calendar makers would save on tablets and papyrus by designating the Ides to occur on the 15th of March, May, July and October. In other months, it was the 13th.'
-Art Cashin

'Gann advised analysts to keep track of the strongest harmonies of the solar fundamental both from the zero point of the vernal equinox and from the zero point of each major pivot, explaining the subject in visual terms by reference to the geometry of the circle. He perhaps left it for his more sophisticated readers to conclude that the division of time periods and price movements into eights in fact related to the properties of the musical octave, to the properties of sound. The same may be said of the importance he attached to the seventh unit of a series, in that it can be held to represent the final tone of a given octave.'
-Alexander Goulden

'The two days on either side of the new lunar month represent most of the positive returns on equity markets for the next four weeks.'
- Macquarie Securities

'We find strong empirical support in favor of a geomagnetic–storm effect in stock returns after controlling for market seasonals and other environmental and behavioral factors. Unusually high levels of geomagnetic activity have a negative, statistically and economically significant effect on the following week’s stock returns for all US stock market indices. {There is} evidence of substantially higher returns around the world during periods of quiet geomagnetic activity.'
-Federal Reserve Bank of Atlanta

'It has been found in a great number of tests that the mean motion of the sun is the correct motion to be observed.'
- Sepharial

The Holy Bible is 'The Book of Books.'
-W.D. Gann

'Robert was a great believer in Astrology because he had found this great science referred to so many times in the Holy Bible. He had made notes as he read the Bible at different times where it referred to Astrology or the signs in the heavens and was thoroughly convinced that the influence of the heavenly bodies govern our lives. Robert knew that the Bible was replete with references that the heavens ruled. He had read where it said: 'Discern the end from the beginning, where Jesus said, "I will judge you in the place of your nativity.'
-W.D. Gann, Tunnel Through the Air

'With a boulder on my shoulder, feelin' kinda older,
I tripped the merry-go-round
With this very unpleasin', sneezin' and wheezin,
the calliope crashed to the ground
Blinded by the light, wrapped up like a deuce, another runner in the night
Blinded by the light
Mama always told me not to look into the eye's of the sun
But mama, that's where the fun is'
-Manfred Mann

WSJ
By Eleanor Laise
March 13, 2010

Mr. Sornette, 52 years old, is the director of the Financial Crisis Observatory at the Swiss Federal Institute of Technology in Zurich, or as he calls it, "the MIT of Europe." Late last year, he launched the bubble experiment by identifying four developing bubbles and forecasting when they'll peak.

His predictions are locked away in encrypted files that can't be altered, to be revealed only when the forecasted bubble peaks have passed, on May 1.

Mr. Sornette says that his observatory can track tens of thousands of stocks, bonds, and other securities. The term "observatory" is also meant to underscore his scientific, quantitative approach to studying bubbles.

Mr. Sornette works with a handful of postdoctoral fellows and senior researchers, sifting through data on an institute supercomputer called "Brutus."

Nassim Taleb, who popularized the term "black swan" to describe extreme events that are highly unpredictable, is well acquainted with Mr. Sornette's work but still doesn't believe that any models can be used to make precise predictions. However, he says that Mr. Sornette's work, which is rooted in disciplines distinct from traditional economic models, "is vastly more useful to me than anything else in economic.

With a Ph.D. in physical sciences, Mr. Sornette worked on methods to predict the rupture of pressure tanks on European Ariane rockets in the early 1990s. He realized that the tanks didn't just rupture without warning. Mr. Sornette was able to identify patterns in acoustic emissions, which are waves produced by stressed materials, that had some predictive power.

Realizing that financial crashes are somewhat like market "ruptures," he became interested in studying market fluctuations. "It was an act of faith" to apply the type of work he was doing on the rockets' tanks to the markets, he says. "You make this stupid analogy, which can sometimes be very productive."

AM here : The productivity of stupid analogies? Roger that.

Over the weekend had the pleasure of an extended conversation with a nationally known smartypants. Suggested to him that if someone had, a couple years ago, told me that one could glean understanding of the markets through the knowledge of the Bible, a guitar, and a sailboat, I would have had a less than cordial retort.

His reply? 'I figured that out early on.'

Lucky him... although have always believed that when the student is ready the teacher will arrive did not expect the coursework to be so challenging... truth would appear to be dynamic not linear and it is a process of unlearning.

To believe that the 'natural law' guides both the flower and the star system, to reconcile that with the bloodied determinism of an entrepreneurial Irishman, is to embrace a thesis that is antithetical.

And yet...

Sacred geometry and fourth dimensional constructs of the markets seem a bit wild until one considers that it was Einstein that postulated the concept of a single spacetime continuum. Einstein's special relativity treats space and time as components of a four-dimensional manifold.

In the Old Testament time was traditionally regarded as a medium for the passage of predestined events. For Einstein, the past is a set of events that can send light signals to the observer, and the future is a set of events to which the observer can send light signals. Light is a wave and a particle.

And fourth dimensional market math? The fourth degree being an angle? What's the big deal with only 4 dimensions when string theory and M theory predict that physical space in general has in fact 10 and 11 dimensions respectively.

Wack-a-doodle-doo.

So let's revisit Professor's Sornette's epiphany again : 'You make this stupid analogy, which can sometimes be very productive', and let's try to get a little stupid...

Previous postings on this blog have suggested what reverence your blogger holds for the Fractal Man, Professor Mandelbrot. Fractals are objects or quantities that display self-similarity ON ALL SCALES.

It stands to reason then that glimpses of the 'natural law' can then be discerned by observing with one's senses this 'self-similarity'.

Or to quote Ian Fleming, 'Once is happenstance. twice is coincidence. Three times is enemy action.'

Several postings on this blog have examined such 'coincidences' ... here is another:

John Needham's Danielcode theory suggests that fast markets often retrace 29.7%. Now that's certainly an outlier proposition, and if shown empirically would suggest it is not the tail waggin' the dog i.e., working because folks believe it works.

Although the longitudinal data set in support of this retracement is being developed let us suggest it as a theory and see if perhaps there is any fractal or 'self-similarity' existing for this unremarkable 29.7.

29.7 is the orbit of Saturn in earth years. Saturn (referred to by the Ancients as Cronus or Kronos) was the Roman Deity of Time. This is where the term chronology comes from.

The synodial month, the average length of a month, is 29.7.

1335, blessed time in the book of Daniel, when divided by 45 (where 45 is 1/8th of a circle or 45 degrees) is 29.7.

One of Dewey's most common cycles is 2.96 years. Interchangeable per the fungibility of the decimal point in sacred geometry.

The frequency ratio of A as you ascend by a perfect fifth is 27/8 the inverse ratio of 8/27 (29.63%). Frequency has an inverse relationship to the concept of wavelength.

The orbital velocity of Mercury (in astro terms the communicator and trickster, e.g. 'retracement in fast markets') is 29.7 miles per second.

The nearest distance of the elliptical orbit of Pluto to the sun is 29.7 AU.

Do these coincidences mean anything? Maybe not. But consider this. For the majority of market participants, random walk is the holy grail. But this Gospel suggests that the probability of the market movements that have occurred in recent memory, and the movements your humble blogger expects to see in the future, come in at a modest, oh let's see... fingers and toes ... gazillion squared.

Maybe our dearly held assumptions are wrong.

Maybe reality is the tail risk.

Think outside the cave.

These are the voyages of the starship Nancy Capitalism; to explore new outrages, to geek out new strife and new rationalizations, to boldly go ...

2010-03-12T09:28:00.030-06:00

'The lights are growing dim Otto. I know a life of crime has led me to this sorry fate, and yet, I blame society. Society made me what I am.'
- Duke (Repo Man)

Motorcycle Cop: Whatcha got in the trunk?
J. Frank Parnell: Oh... You don't wanna look in there.
(Repo Man)

'Sensors show there something's there, Captain.'
-Spock

'Lehman Brothers' liquidity was a mirage. The firm said in early September 2008 that it had liquidity of $41 billion. The {bankruptcy examiner's} report says it had shrunk to just $2 billion two days later.'
-WSJ Heard on the Street

'People don't drink the sand because they're thirsty. They drink the sand because they don't know the difference.'
-President Andrew Shepherd

'Reading through the thousands and thousands of pages of Valukas' report has proven...quite entertaining. After having first uncovered the Repo 105 accounting gimmick, and E&Y (and, in a normal society, Tim Geithner) coffin nail, we are convinced that this is just the tip of the iceberg, and sure enough, as we read along, more stunners come to light. We will update .... with new discoveries, but for now, we present the episode of the Fenway Tri-Party Repo Market Clusterf%$* ("FTPRMC"), The Part Where Lehman Lied To Its Shareholders, And The SEC Gets The Middle Finger (Again), and the parable of Ben Bernanke's And His Scale Of 0 To 100 Of Systemic F%*$%dupedness.'
-Zero Hedge

These are the voyages of the starship Nancy Capitalism; to explore new outrages, to geek out new strife and new rationalizations, to boldly go where no pablum narrative has gone before.

Chances are if you're reading this post you're also a ZH reader so won't belabor the pins they are currently pushing into the Lehman pablum narrative voodoo doll.

Suffice to say, mistakes were made.

Mistakes, oh gentle reader, that would not be so graciously afforded to us common folk.

You see, if you or I, were to have a small business, with small creditors, and were then perchance to happen upon misfortune, say insolvency, then creating transactions out of whole cloth would not be an accounting gimmick or a balance sheet irregularity...

Verily, you or I, would be welcomed by the stilettos of opposing counsel doing a 'fraudulent conveyance' dance on our collective noggins.

But you see, in the Land of the Elites, the straw man of 'ordinary course of business' is raised up the Nancy Capitalism flagpole. It is, sardonically, a moving argument in the context that fraudulent conveyance has been institutionalized by GAAP, the SEC, the rating agencies, and their enablers.

If only there was some way for us gentle folks to comprehend such meanderings...

PhysOrg.com
March 10, 2010
By Robert Sanders

An analysis of more than 70,000 galaxies by University of California, Berkeley, University of Zurich and Princeton University physicists demonstrates that the universe - at least up to a distance of 3.5 billion light years from Earth - plays by the rules set out 95 years ago by Albert Einstein in his General Theory of Relativity.

By calculating the clustering of these galaxies, which stretch nearly one-third of the way to the edge of the universe, and analyzing their velocities and distortion from intervening material, the researchers have shown that Einstein's theory explains the nearby universe better than alternative theories of gravity.

One major implication of the new study is that the existence of dark matter is the most likely explanation for the observation that galaxies and galaxy clusters move as if under the influence of some unseen mass, in addition to the stars astronomers observe.

Einstein's General Theory of Relativity holds that gravity warps space and time, which means that light bends as it passes near a massive object, such as the core of a galaxy. The theory has been validated numerous times on the scale of the solar system, but tests on a galactic or cosmic scale have been inconclusive.

These tests do not tell astronomers the actual identity of dark matter or dark energy. That can only be determined by other types of observations, such as direct detection experiments.

AM Here : Methinks you get the gist of my jibe. In the shadow banking system, only the occasional direct detection experiment
(bankruptcy examiner's report) can provide the actual identity of the dark matter, the unseen mass, that is exerting its' influence on our observable economic universe.

We all see, and are all experiencing, the distortions from this intervening material.

Nancy Capitalists in a Sovereign Democracy that are Hell Bent to Seek Rent. (AM Rule #10)

To stretch the analogy to a more chilling conclusion, dark matter accounts for the vast majority of the mass in the observable universe. Only future direct detection experiments / bankruptcy examiner reports / Fed Audits will truly tell us how far down the quantum rabbithole we are.

Or in other words , yes Virginia there is no collateral. (AM Rule #4)

Less Bad is Good until Less Good is Bad or as Barnum would opine...Snap!... you've been had

2010-03-11T09:03:00.023-06:00

'Hit the engine
but she ain't turnin'.
We're the same sad story
that's a fact
One step up and two steps back.'
-Bruce Springsteen

'Better read it first, for if one drinks much from a bottle marked "Poison", it's almost certain to disagree with one sooner or later.'
-Alice

'Like strength is felt from hope and from despair.'
-Homer (not Simpson folks!)

'If they can get you asking the wrong questions, they don't have to worry about the answers.'
- Thomas Pynchon

'The Black Swan is a sucker's problem.'
-Nassim Taleb

Addition through subtraction is a solution that ignores the problem.

Let's increase the 'inflation target', let's increase the 'optimal unemployment rate', let's increase the first-time unemployment claims threshold that, hope upon hope, represents underlying job growth...

Anything that falls under 'less bad is good' becomes leading, anything that falls under 'less good is bad' becomes lagging; tis easy to ignore the fleas on the dog if all you trumpet is the hopeful wagging.

Once upon a time, a nationally known smartypants on an island told me that THEY would keep the bulls and bears off balance as THEY went from room to room in the burning building putting out fires.

Truth that.

That is what the code word 'trading range' really means.

Analysts opining that we all will be 'surprised by the market's strength' is code for the Federales winning, i.e., these folks are embracing the tragedy.

Analysts that suggest a 'crash is inevitable' are pining for reason before farce.

Vice before virtue, farce before reason, the question vexing? Duck or Rabbit Season?

The answer both ... in due time.

Hobbes first law of nature is that every man ought to endeavour peace, as far as he has hope of obtaining it; and when he cannot obtain it, that he may seek and use all helps and advantages of war.

The dollar is the bullet, the Fed is the weapon. The key to the gun cabinet is for Members Only.

At this point at the end of the trend - 2009 low besting the 2002 low breaking a line of lower lows from 1897 up- our prosperity is now in the hands of Fleck's battle of unarmed combatants (currencies) where the U.S. is the dealer (reserve), at least for the near term.

We speak of a mild outcome to all this, a new normal, as we stuff the pig on the scale of fate. We are so far down the rabbit hole Alice, so arse over tit, that it is quite plausible that the power law being applied here is masquerading mild as wild as well as its' converse.

What if the mild prognostication is deflation or hyperinflation with either A cascading to B or B cascading to A?

What if the Black Swan is just, hope upon hope, muddling through?

A picture shrieks a thousand slurs ; this reversion ain't just mean, 'tis sadistic

2010-03-10T09:11:00.035-06:00

'I want a doctor to take your picture
So I can look at you from inside as well
I'm turning Japanese
I think I'm turning Japanese
I really think so'
-The Vapors

'The price is wrong, bitch!'
-Happy Gilmore

'Time wounds all heels.'
-John Lennon

'Deflation is the midwife of hyperinflation.'
-Anonymous Monetarist

'For a moment there, I thought we were in trouble'
-Butch Cassidy

'In the long run we are all dead.'
-John Maynard Keynes

Holy financial porn Fatman!

The chart above in yesterday's WSJ is as nasty, if not more so, than anything that even Doug Short has put out.

A picture shrieks a thousand slurs; this reversion ain't just mean, 'tis sadistic.

This graphic, double entendre intended, accompanied an article in the Whoa! Shill Journal that featured, the venerable Robert Schiller (no wonder I saw fear in his eyes in his last Bloomberg interview), and some cat who states that 'the market should spend a good portion of time trading below fair value, to match the time it spends trading above fair value.'

Now that's a chilling thought -rather somber fare from the opus of Nancy Capitalism.

If only there was someone who could present a more bullisht picture, some authoritative voice that could offer succor that pitchforks, torches, and wheelbarrows aren't the most appropriate 'stocks' for the long run...

Mr. Siegel I presume?

"My research shows that the common P/E is 18.5" when the economy is coming out of a recession, Siegel says.

The way he looks at it, the market now is trading at about 14.5 times forecast 2010 profits, making it cheap compared with the typical P/E of 18.5.

If stocks rise to 18.5 times profits, the S&P 500 could rise to 1400 this year, a 23% gain from today's level, he notes. "We could easily see 10% to 12% stock returns with low inflation" in future years, he says.

Whew, don't know about you but I feel relieved, Schiller is just calculating PE wrong. No worries!

Waitaminnit...

By JEREMY J. SIEGEL
FEBRUARY 25, 2009
Wall Street Journal

S&P adds together, dollar for dollar, the large losses of a few firms to the profits of healthy firms without any regard to the market weight of the firm in the S&P 500. If they instead weight each firm's earnings by its relative market weight, identical to how they calculate returns on the S&P 500, the earnings picture becomes far brighter.

A simple example can illustrate S&P's error. Suppose on a given day the only price changes in the S&P 500 are that the largest stock, Exxon-Mobil, rose 10% in price and the smallest stock, Jones Apparel Group, fell 10%. Would S&P report that the S&P 500 was unchanged that day? Of course not. Exxon-Mobil has a market weight of over 5% in the S&P 500, while the weight of Jones Apparel is less than .04%, so that the return on Exxon-Mobil is weighted 1,381 times the return on Jones Apparel. In fact, a 10% rise in Exxon-Mobil's price would boost the S&P 500 by 4.64 index points, while the same fall in Jones Apparel would have no impact since the change is far less than the one-hundredth of one point to which the index is routinely rounded.

Yet when S&P calculates earnings, these market weights are ignored. If, for example, Exxon-Mobil earned $10 billion while Jones Apparel lost $10 billion, S&P would simply add these earnings together to compute the aggregate earnings of its index, ignoring the vast discrepancy in the relative weights on these firms. Although the average investor holds 1,381 times as much stock in Exxon-Mobil as in Jones Apparel, S&P would say that that portfolio has no earnings and hence an "infinite" P/E ratio. These incorrect calculations are producing an extraordinarily low reported level of earnings, high P/E ratios, and the reported fourth-quarter "loss."

As the fourth-quarter earnings season draws to a close, there are an estimated 80 companies in the S&P 500 with 2008 losses totaling about $240 billion. Under S&P's methodology, these firms are subtracting more than $27 per share from index earnings although they represent only 6.4% of weight in the index. S&P's unweighted methodology produces a dismal estimate of $39.73 for aggregate earnings last year.

If one applies market weights to each firm's earnings using the same procedure that S&P employs to compute returns, the results yield a more accurate view of the current profit picture.

AM here:Guess we now know the way Siegel 'looks' at it. Couldn't believe this tripe when I first read it. It took all of a few seconds of rubbing a couple of brain cells together to generate the obvious retort. The methodology of computing S&P earnings is only valuable in the context of the constancy of such methodology over a long duration. Taking a snapshot utilizing a different method tells you nothing lest you perform that calculation over the long-term and then compare your snapshot with historical results using the same methodology. In other words using a new methodology to come up with a PE of 20 needs to be understood within the context of using that same methodology to come up with PEs at say historical troughs...

Clearly, Jeremy Siegel is a witless hack.

He should be ashamed of himself as should the WSJ.

Here's a little bit of background on this fella ...

WIKI: Jeremy Siegel was famously bullish in 2000 just as the stock market was collapsing. In a BusinessWeek interview in May 2000 when asked whether valuation measures indicated the stock market was overvalued he replied: {Have we learned anything over the past 50 years? When we compare a 100 years' PE's, we're going through the Great Depression, a banking collapse, and all the rest. Have we learned how to prevent a banking collapse? A Great Depression? I would say, yes, we've had incredible success. Have we been in the longest economic expansion in history? I would say yes. Are earnings of the top companies growing at the fastest rate that they ever have, far faster than the peaks that you mentioned in the past? Yes."}

At the 2006 Berkshire Hathaway annual meeting, Berkshire Vice Chairman Charlie Munger called Siegel "demented" for "comparing apples to elephants" in making future predictions.

Siegel's personal, for-profit website, jeremysiegel.com, is highly atypical among academic professors. In addition, Siegel has not published any peer-reviewed academic works over the past decade.

AM here : Mr. Siegel you are officially in the Anonymous Monetarist Hall of Shame.

Phat, Plummed and Cupid is no way to go through strife son

2010-03-09T08:47:00.015-06:00

By Kathleen Madigan
blogs.wsj.com
March 9, 2010, 7:32 EST

The Small Business Optimism Index lost 1.3 points to 88.0 last month, reported the National Federation of Independent Business in a press release Tuesday. The NFIB noted that only two of 10 components posted gains last month.

The subindex covering expected business conditions dropped 10 points to a -9 reading, and sales expectations dropped three points to zero.

AM here : Zero point Zero? Oh ye quivering throngs of bullisht Nancy Capitalists with liquidity chalices extended, thou doth proclaim that we can bypass the consumer, mayhaps even bypass the small businessperson, but verily can we also bypass reason?

The Demand Restoration Project is not working yet. Your money Mr. Federales has no velocity here for the band of The Hand can only conjure a Potemkin demand. Organic wage growth, absent for the last decade, comes from ... wait for it ... the productive allocation of capital when a free market pins winners and chooses losers. (AM Rule #8)

Phat, Plummed and Cupid is no way to go through strife son.

Failure to liquidate the insolvent banksters has led to the liquidation of a large part of the productive economy.A taxpayer financed bailout of rich folks' bad speculative bets has resulted in zombie banks and zombie customers... a fiscal tide that lifts no boats. (AM Rule #7)

Barry, as one Chicago liberal to another, here's a suggestion. Screw health reform, what we need is wealth reform. Loading up the banks with a trillion meatballs is nothing more than DIP financing for a generational workout. A year after the Devil's Peek (S&P 666) and the banksters are still too bloody bankrupt to go broke? Top-down crisis management has resulted in an obese obscenity poised on a flagpole in a windstorm. And make no mistake Mr. Dunham, it is always brightest before dusk ... the storm is approaching.

The cold hard fact of our age is that the bankrupt ideology of the rich that had greatly succeeded in drafting the inner monologue of regular folks so that they would vote against their self-interests is colliding head-on with a Mr. Market that is a bit pissed off that we've inflated it out of the business cycle for the last quarter century. (AM Rule #6)

Either you're a hero Barry or its' generation zero...

blogs.abcnews.com
March 08, 2010 6:20 PM
By Byron Wolf

President Obama and Democrats launched a campaign to vilify insurance companies in the final stretch of their health reform effort.

Republicans, meanwhile, pointed out that those very same insurance companies would get huge checks from the government if health reform is enacted.

“(Health Insurers) will keep on doing this for as long as they can get away with it. This is no secret,” the president said. “They're telling their investors this – ‘We are in the money. We are going to keep on making big profits even though a lot of folks are going to be put under hardship,’” the President told supporters at a stop in Pennsylvania today.

HHS Secretary Kathleen Sebelius, meanwhile, wrote to insurance company executives demanding that they justify premium hikes.

Neither mentioned that the Senate health reform bill, which is the basis for Democrats' last best chance at comprehensive reform, would give the insurance companies millions of new customers required by law to buy health insurance. It would also require insurers to cover everyone, regardless of age, gender or pre-existing condition.

To help pay for the new insurance requirements the government would give to people money to buy insurance - $336 billion over the next ten years. That money, ultimately, would have to go to... drum roll... insurance companies.

AM here: The bold pap of a road map exchanged for the insouciance of elites and the Antoinette economy.

And soon coming to the pablum narrative near you, the oft-proclaimed 'counterproductive' populism that will stall the V-Shaped, scratch that, nascent, scratch that, oxymoronic jobless recovery.

Exhibit thyself to a public that may hiss thee, bemoan the solons. Let them eat debt!

Quis custodiet ipsos custodes? said the Roman poet Juvenal. Who will guard the guards themselves?

Why, pronounce our modern day guards, we will. Trust us but don't task us lest you see trust in us lost to your peril.

Don't Task Don't Smell, the central plank of the 'I Can't Believe it's Not Capitalism Plan' has given us Sugar Mountain, where stupidity is cupidity.

Buckle up citizens, the Deadhead Economy awaits on the other side of this black diamond demographic slope.

On the bright side, 2017-2018 will be a once-in-a-generation opportunity for the value investor!

Street jiggin' in hopes of J6P piggin'.. and the fringe?...it be wiggin

2010-03-08T11:24:00.019-06:00

Street getting jiggy with it.

Just a matter of time donchaknow until Ma and Pa Kettle are willing to bet that farm again. MSM peppering them with the pablum narrative that the nascent recovery is becoming more and more secure each and every day... how can you not brothers and sisters invest for the long term? Profits set to ramp, earnings set to launch ... now is the time! Get on board or get left behind.

Leading or lagging? Most assuredly quite nagging... as angels of proprietary are being swamped by the institutional diktat against sobriety.

And please o ye analyticus ursinus don't beleaguer us, howl the Nancy Capitalists, with inconvenient truths such as seasonal adjustments or past revisions or government intervention distorting statistics.

Seriously, so what if the Federales Household Survey showed that this month the category of 'Men 16 years and older' accounted for 297,000 of the 308,000 jobs gain and last month 'Women 20 years and older' produced 529,000 of the 541,000 jobs gain.

Dude, stats happen! Don't blame the soothsaya.

Street jiggin' in hopes of J6P piggin'.. and the fringe?...it be wiggin!

Crawford Perspectives
March 8th
By Arch Crawford

On February 1, we wrote here “Either three days of accelerating ‘scary’ drops will appear soon, to finalize this decline, or markets will meander…”. Immediately following, a sharp drop materialized culminating with the low during the day of February 5. And this: “Whether a seasonally higher April or May peak is in the cards remains a debatable issue and the cycles need not be rushed into a premature judgment.” Yep, still debatable!

The Bradley Model goes down from now to late September as the astronomic pressure grows more and more deleterious into the most powerful major alignment we have ever seen. Zimmer in Vienna (Amanita) calculated the Bradley back 200 years and has seen nothing so potentially damaging.

At the recent NCGR conference in Cambridge, Mass., another astrologer said they checked back for sky patterns a thousand years and another piped up that they had looked back Ten Thousand years and neither had seen this one’s match!

One need not be particularly “superstitious” to take minimal precautions in these challenging times. The Mormons are required to hold 2 years worth of food and water in their homes. What do THEY know? The HOPI say that this fifth destruction of the world will be by Earthquakes this time. With the events of recent days, maybe one should head for some high ground… but NOT with ‘overhanging’ ground.'

AM here: 'Tis a good thing that us Moderns with our fancy models and prophetic prognostications based on random-walk and fundamental analysis don't believe in this kind of stuff eh? Golly gee so what if the orthodoxy predicts that index swings of more than 7 percent should come once every 300,000 years. So what if the twentieth century saw forty-eight such days.

So what?

Anonymous Monetarist Mailbag : Viewer Mail

2010-03-06T09:41:00.012-06:00

(An exchange with a reader is detailed below. Am interested in any Gann adherents offering further commentary - most especially any folks that might wish to delve into the esoteric and cosmological aspects of the following Gann quote when referencing the United States Steel Name Chart:

'The basic number or low point, for example 9, the lowest digit on U.S. Steel, and its vibrations according to its name, all cause slight variations at times from other stocks, because each stock works according to its own base, beginning point, numbers and name.' )

Anonymous said @ March 6, 2010 5:53 AM

Needham has stated Mr Gann was a fraud...He also recently stated JCN (Webmaster) Mar 06, 2010 - 1:22am GMT

10 hours ago - Don't get hung up on Gann. It's mostly bunkum and the good stuff comes from Sepharial in any event.

But just to clarify. Gann worked on both stocks and commodities. His base was what he called the 1X1 line. Gann charts have some very particular properties, most notable of which is that time and price were measured on an equal scale. So if price went up 1 point (or $) in one day it would be holding the 1X1 line. He also used 1X3 (the angle on the triangle), 1X2; 1X4 and 1X8 lines.

The original meaning of "Time and Price" squared meant an equal move on both chart axis. So a market that moved 150 points in 150 days was said to "square" time and price.

Almost all charting programs have some form of Gann lines or Gann "fans" that create these lines, but as programmers and traders almost entirely fail to understand Gann's methodology; all but 1 of the Gann tools are wrong (including Genesis). Check out his website forum and view for yourself the hypocrite who looks to fool all.

Anonymous Monetarist said @ March 6, 2010 9:17 AM

Yes Anonymous,

Very familiar with John's analysis.
To expand upon your point using Mr. Needham's prescient observations:

'Gann's simplest teachings held that these angles would measure markets in a predetermined ratio such as 1X1 where price would move 1 'unit' for every 'unit' of time. Other popular Gann angles were 1X4 and 1X8 being angles on the square and the special 1X3 lines, angles on the triangles.

Gann's background in freemasonry and Sepharial's books 'The Silver Key' and 'Kabala of Numbers' are essential reading for a deeper understanding of Gann's work.

Gann's opinion of market turns occurring when 'time and price are squared' is referring to the point on an angle where market price coincides with 1X1 or other angle.

This 'point on an angle' could be an important numerological sequence from Sepharial.

It could also be a time fractal from the astrological chart ruling the market in question.

Gann's discovery 'that markets move in fractals of 1/8th of the previous price range' should be a dominant plank of his claim to fame.

Markets still use 1/8th fractals of previous ranges as their boundaries (and 1/3rds).

For Gann these ratios were as far as he developed his price sequencing. For the Danielcode they are the base ratios.

The most common of Gann's time cycles were astrological cycles.

Gann's teachings hold that the high before the high and the low before the low were paramount chart points.

Danielcode market time can be measured from two points, the high and the high after the high. If we are seeking a high we usually measure from the low or the low after the low.

All markets have their own "vibration", what WD Gann called the "Law of Vibrations". So each market has an identifiable signature or vibration. Gann, who was much dependant on Sepharial for his market insights, thought that vibration came from each market's birth number ie its horoscope. In Sepharial's "Silver Key" he shows a horoscope of the “birth” date and time of the New York Stock Exchange and the first trade of a number of stocks on that exchange. He ascribes the NYSE signature vibration to those calculations.

Of course, most of that is nonsense and the true number or vibration for NYSE is the sum of its parts. If you run a best fit regression for every stock on NYSE and give them an exponential weighting, then take the mean of that rating, you will have the true vibration of NYSE.

Strangely it is not far from what Sepharial calculated 90 years ago with his birth charts!

Many have dedicated large parts of their life in the search for the twin Grails of trading: price and time. That they are the same thing juxtaposed on different axis is not a new concept. WD Gann, under the tutelage of his mentor, the British astrologer and numerologist “Sepharial” advanced this proposition in 1935. But Sepharial camouflaged his observations by claiming that they were related to astrological cycles. Indeed they are, but he scrupulously avoided saying that all of these cycles are of Biblical origin. What do you think the wise men, sages and prophets of Biblical time were looking at on those myriad of long nights as they sat outside their tents? They observed the stars and the heavens. And they wrote down, sometimes in code and sometimes openly, the great cycles of the heavenly orbs. Sepharial used that knowledge but fudged naming the source because it wasn’t cool'

Anonymous Monetarist said @ March 6, 2010 9:18 AM

Now Anonymous,

Pretty sure you know all of this given your familiarity with Needham however other readers might be curious enough to continue their exploration on this subject and I would urge them to do so...

To be mindful is a discontinuous process, our senses allow us a glimpse at the perfect form (truth) but that view can often be distorted by the flickering fire of perception that illuminates the shapes we perceive to believe...

Or to quote the venerable Gann expert and Swing trader Jeff Cooper, 'Is there a sacred geometry weaving through time and price or is the market a random walk? It seems to me if there is any threshold of geometry which runs through the market then all math leads to Rome. Number is as number does.'

As a last bit, continuing Jeff's ' Number is as number does' comment...

Gann did a Col. Jessup saying we couldn't handle the truth... and as such he never directly articulated his beliefs...in that sense, yes he was a fraud, albeit a clever one relying on the insight of some clever folks.

Where did you go Joe? A nation bids its unemployed adieu in this Great Depression

2010-03-05T09:34:00.061-06:00

'Now Main Street's whitewashed windows and vacant stores
Seems like there ain't nobody wants to come down here no more
They're closing down the textile mill across the railroad tracks
Foreman says these jobs are going boys and they ain't coming back to your hometown'
-Bruce Springsteen

'Although he may not always recognize his bondage, modern man lives under a tyranny of numbers.'
-Nicholas Eberstadt

'There was a young man from Trinity,
Who solved the square root of infinity.
While counting the digits,
He was seized by the fidgets,
Dropped science, and took up divinity.'
-Unknown Author

The Ancients used mathematics in order to try and understand the world around them.

Us Moderns use it to obfuscate.

First, let's agree on the basics.

The labor force is the number of people aged 16 or older who are either working or looking for work and the size of the labor force depends on two factors. The first is the size of the population, which is determined by rates of birth, immigration, and death. The second is the labor force participation rate—the percent of the population that is working or actively seeking employment.

From bls.gov : Excluded are persons under 16 years of age, all persons confined to institutions such as nursing homes and prisons, and persons on active duty in the Armed Forces. The labor force is made up of the employed and the unemployed. The remainder—those who have no job and are not looking for one—are counted as "not in the labor force." Many who are not in the labor force are going to school or are retired. Family responsibilities keep others out of the labor force. People with jobs are employed, people who do not have jobs and are looking for jobs are unemployed, and people who meet neither labor market test are not in the labor force.

Now, let's break down the numbers from when this secular bear started in 2000 to the February 2010 report (data from http://www.bls.gov/web/cpseea1.pdf):

In the year 2000:

Civilian noninstitutional population : 212,577,000
Civilian labor force : 142,583,000
Civilian labor force particpation rate : 67.1%
Number of employed : 136,891,000
Percent of Population : 64.4%
Number of unemployed : 5,692,000
Percent of Labor Force : 4.0%
Not in the labor force : 69,994,000

Let's compare that to February 2010:

Civilian noninstitutional population : 235,998,000
Civilian labor force : 153,512,000
Civilian labor force particpation rate : 64.8%
Number of employed : 138,641,000
Percent of Population : 58.5%
Number of unemployed : 14,871,000
Percent of Labor Force : 9.7%
Not in the labor force : 83,487,000

Holy denominator of doom oh ye bullisht throngs!

13 million people, over the last decade, have neither jobs nor any desire to look for one?

That's greater than the total increase of the civilian labor force!

But the boomer generation(and by the way what are we going to call the next one? the 'buster' generation?), those 74 million from 1946 to 1964, they ain't retiring en masse yet...

Oh golly I guess they are all going back to school to learn new skills for the global economy. But wait... according to the 2000 census there were 76.6 million students enrolled in schools from kindergarten on. Out of this total 17.5 million were enrolled in post-secondary (college including graduate school.) Assuming the 2010 census doesn't report that an epidemic of forty and fifty somethings are joining the beer-bonging caste that is today's 'enseignement supérieur' in an entirely stealth fashion, 'going to school' seems to be a specious explanation...

Where did you go Joe? A nation bids its unemployed adieu in this Great Depression.

The Northern Trust stated on January 10,2006 in its' report, Noteworthy Aspects About the Participation Rate (2000-2005),'there is no conclusive research explaining the reasons for the downward trend.'...

Or as Alice said when stuck in the rabbit's room 'there's no room for me to grow up anymore here.'

Hypocrisy, Punditry, Legacy, Destiny, Synchrony

2010-03-04T10:18:00.031-06:00

HYPOCRISY

goingconcern.com

In late 2004, the Federal Reserve Board, Federal Deposit Insurance Corporation and the Office of Thrift Supervision decided that asset-backed commercial paper put into special purpose vehicles known as conduits would not have to be consolidated for purposes of calculating capital requirements. And the regulators decided that banks need only reserve against 10 percent of the amounts put into conduits even when they guaranteed that investors would be repaid if there were a run on the conduits. Previously, securitizations typically put investors on the hook for that risk.

The research, originally published in May 2009 but revised in late January and entitled “Securitization without Risk Transfer,” found that the amount of subprime assets securitized through such vehicles soared in the wake of the exemption, even though the liquidity guarantees extended to investors meant that little or no risk had been transferred to them.

“Regulation should either treat off-balance-sheet activities with recourse as on-balance sheet for capital requirement and accounting disclosure purposes, or, require that off-balance sheet activities do not have recourse to bank balance sheets,” the authors, Viral V. Acharya and Philipp Schnabl of New York University and Gustavo Suarez of the Federal Reserve, conclude. “The current treatment appears to be a recipe for disaster, from the standpoint of transparency as well as capital adequacy of the financial intermediation sector as a whole.”

PUNDITRY

American Securitization Forum:

The role that securitization has assumed in providing both consumers and businesses with credit is striking with currently over $12 trillion of outstanding securitized assets, including mortgage-backed securities, asset-backed securities and asset-backed commercial paper.

ComplianceWeek.com
April 8, 2008

FASB Chairman Robert Herz said the concept has been so stretched in recent years he “wholeheartedly” endorses elimination of QSPEs. “The crescendo has been the latest round of very problematic assets securitized using this approach,” he said, involving “hundreds of billions, if not trillions, of dollars in assets.”

LEGACY

Smells Fargo 09/30/09

Total Qualifying Special Purpose Entities: $1,796,209,000,000

Citigroup 06/30/09

Total Qualifying Special Purpose Entities: $828,300,000,000

J.P. Morgan 06/30/09

Total Qualifying Special Purpose Entities: $574,000,000,000

Goldman Sachs? Oh hell, you tell me... trying to get clarity on their book is like lookin' for celibacy in a house of ill repute.

Oh and don't forget the grandaddy of all blackholios, FANRON...

On Christmas Eve Timmy G popped the cap and a week later Fannie wound up all of their QSPE trust funds bringing about 2,500,000,000,000 back on their balance sheets!

DESTINY

Countdown to Convergence
Date: 2010-03-01
Garp.com (Global Association of Risk Professionals)

By Lamoreaux, Matthew G

In November, FASB and the LASB reaffirmed their commitment to a 2006 Memorandum of Understanding (MoU) that outlines major convergence projects scheduled for completion by June 2011.

(June 2011? -AM)

For two major accounting standard setters to complete such a ... project in less than two years would be unprecedented. The June 2011 deadline, however, has been affirmed by the Group of 20 (G-20) leaders; former Federal Reserve Chairman Paul Volcker, who chairs the President's Economic Recovery Advisory Board; the SEC; and the Financial Crisis Advisory Group that was set up to advise FASB and the IASB on how they should respond to the financial crisis.

FASB's main change was the elimination of qualifying special- purpose entities, or QSPEs. Eliminating the QSPE requirements potentially could cause many entities applying U.S. GAAP to retain more assets and liabilities in their statement of financial position.

SYNCHRONY

WIKI:

In 1981 Armstrong formed Princeton Economics and, in 1998, he established a hedge fund in partnership with Magnum Global Investments.

During that time he developed a financial prediction model called the "pi-cycle model" and published long term forecasts which are still monitored by the financial press. In the United Kingdom, for example, a popular financial magazine Money Week published an article on Martin Armstrong on March 27, 2007, titled "The strange case of the jailed market genius". In that article they highlighted the model had predicted a major top in financial markets for February 27, 2007, with the next major bottom being June 18, 2011.

(June 2011? Move along nothing to see here. THEY will NEVER let that happen... right? -AM)

Silly Rabbit, Risk is for Bids ... or, Take the Red Pill

2010-03-04T08:35:00.016-06:00

Thursday March 4, 2010 – Issue 3709
The King Report

The ISM Non-Manufacturing was better than expected. The Employment component jumped 4 points.

But the seasonal adjustment is .946. This means the non adjusted data is divided by .946, which boosts the number. The adjustment for the index is .94. In the coming months seasonal adjustments will work against the ISM Non-Manufacturing Indexes.

Next month it will be 1.033 and in April 1.069. May is 1.055 and June is 1.085.

(For the rest of the year we have: .967 in July, .984 in August, 1.004 in September, 1.002 in October, .982 in November and .961 in December. That of course is unless they change their methodology! -AM)

Government intervention has corrupted the seasonal adjusting process. When the government stimulates the economy in a period of historically lower activity, seasonal adjusting boosts the data further. But there is another reason that the ISM, PMI and the BLS keep overstating employment and economic activity. In the surveying process there is no allowance or adjusting for firms that go out of business.

For example: Take three firms of approximately the same size that are surveyed firms. One goes bust. Some of its orders and employees flow to the other entities. When the remaining firms are surveyed they will report a boost in activity and employment – even though aggregate employment has declined. If the scuttled firm had 100 employees and just 20 employees find jobs at the two other firms, real employment would have declined by 80 but in the surveying, two firms would report employment gains and the firm that disappeared won’t be counted. They same is true for production and orders.

(They cut you in half while you're smilin' ear to ear. It's magic! Follow the white rabbit. -AM)

A Hand up Man's Back?, Those 'certain' will laugh, and yet... look above, a Cosmic Spirograph

2010-03-02T08:43:00.056-06:00

'I believe I can see the future
Cause I repeat the same routine
I think I used to have a purpose
But then again
That might have been a dream'
- Trent Reznor

'We may become the makers of our fate when we have ceased to pose as its prophets. If you know that things are bound to happen whatever you do, then you may feel free to give up the fight against them.'
-Karl R. Popper

'Freedom of choice
Is what you got
Freedom from choice
Is what you want'
-Devo

'There is no fate but what we make for ourselves.'
-Kyle Reese

'Is there a sacred geometry weaving through time and price or is the market a random walk? It seems to me if there is any threshold of geometry which runs through the market then all math leads to Rome. Number is as number does.'
- Jeff Cooper

The scene in the university's financial aid office looked like a siege. Holding the notice in my hand while standing in front of a harried staff member I asked why I had been summoned to 'meet' with a financial counselor. 'Please take a seat and wait to be called' was mumbled but there were no seats and judging from the faces of folks that were coming out of the 'Pink Floydish' assemblage of doors was quite certain that I did not want to know the answer to my query.

Soon enough my number was up ... literally. The counselor in a quiet voice explained that due to new requirements from the Reagan administration anyone making over ~$4000 a year was judged as ineligible for the majority of available student aid programs. Considering that I had come to university with only $500 in my pocket and was working over 40 hours a week my princely annual recompense of ~$4500 had counter intuitively spelled my financial doom.

My first introduction to trickle down economics.

The snapshot of the resignation on my 'counselor's' face as she broke the news is a visceral memory. In the middle of her pronouncement that my college career was effectively over she was interrupted by a knock on the door and left the room for a moment.

My eyes met the top left hand corner of the room and my brain shouted, 'Think you stupid son of a bitch. Think damnit....'

Don't know how long she was out of the room but when she returned I was in tears. 'I can't go home' I blubbered, 'my father will beat the hell out of me. He is an abusive alcoholic.' BS worthy of an Academy Award.

An hour later was on the phone with my Dad, who was the antithesis of what I had described to the counselor, 'Son if anyone calls me from your school I promise I will be the most obnoxious most vile fellow they have ever talked to.'

I qualified for continuing to receive financial aid under a special circumstances 'hardship' exemption.

10 years later was on the third floor of my house waiting for a phone call from Southwestern Bell Telephone Company. Had spent the last year researching and filing a local and inter exchange tariff and negotiating the interconnection agreement with the incumbent LEC. My liaison with Bell was calling congratulating me that my tariff and interconnection agreement had been approved by the public service commission and that all that was left was a pittance necessary for a 'deposit' in order to initiate services as a competing local exchange carrier.

Trouble was, the monies requested were more than equal to the aggregate after-tax income I had earned in my life.

Unawares as to whether my voice was betraying my trembling hands and beating heart, I said, ' Well certainly do appreciate your call and recognize your need to ask for a deposit. However per your tariff if a customer has had services with you for over a year and if they have paid their bills on time then you are required not to ask for a deposit if additional services are ordered. In fact, this line I'm talking to you on has been established under my company for 13 months and if you check your records you'll see the bill was always paid on time.'

The rep chuckled and said he would call back, which he did to notify me that no deposit would be required.

So I ask you gentle reader was it the sun, and the moon, and the planets that guided my path or was it the luck of a determined Irishman and the random distribution of fate?

What is the Truth?

Is it the flip of a coin, a Bachelier Universe, or the flight of an arrow, a Mandelbrotian universe?

Or is there a third way?

As a former counsel once said to me, there's your story, there's the other side's story and then there is THE story.

Or more appropriate to this posting, as opined by the venerable Jeff Cooper, 'Is there a sacred geometry weaving through time and price or is the market a random walk? It seems to me if there is any threshold of geometry which runs through the market then all math leads to Rome.'

If the truly wise man knows nothing is Truth the process of unlearning?

As mentioned in my last post,

'ah, but there is a fly in the cosmic ointment, Kepler's assertion that the radii of the spheres accurately corresponds to the distances between the planets and his discovery of a 'congruence' between musical intervals and planetary relationships, the modern proof of Pythagorean tenets, has been dismissed in part due to the lack of a rigorous demonstration that such a relationship is not anything more than a random distribution.

Wouldn't it be nice if say there was a theory that offered to us that the formation of our planetary system was guided by the influence, or force, that led to the arrangement of orbital velocities in such a way that, with a 99%+ certainty, there is an explicit correspondence to the numerical relationships of musical/harmonic intervals?'

In what may be a seminal tome by Hartmut Warm entitled, Die Signatur der Sphären (Signature of the Celestial Spheres), the author claims that:

'The order and movement of the planets in our solar system corresponds very accurately to simple geometrical figures and musical intervals, although in a different way than assumed in conventional concepts. One of the keys for an explanation is to be found in the analysis of the harmonical arrangement in the semiminor axes of the elliptical orbits, whereas earlier models and calculations were based on the semimajor axes.'

In reviewing Kepler's work Herr Warm asks 'whether and how strong the assumed planetary harmonies differ from a random distribution. In a series of numerical proportions, which can be derived from parameters like distance, velocity etc., you will always find several that come close to musical intervals like 2/1, 3/2 etc.' and concludes that upon examining Kepler's planetary harmonies 'we can see that there is no deviation from a random distribution. But Kepler can be excused in his failure to properly elaborate his basic ideas, because the probability calculus was unknown in his time.'

If you've made it this far gentle reader, it's time to buckle up....

'Thus the mentioned analyses seem to explain why modern astronomy refuses the concept of a “harmony of the spheres" (Kepler's notions concerning these ideas are described in the scientific literature as “daydreams” or the like.) But as yet nobody – at least to the author's knowledge – has attempted to include the semiminor axes into consideration. At a certain point in time each planet in its revolution around the Sun has exactly the distance of its semiminor axis b from the central star. The velocity of the planet at this point almost precisely equals the arithmetical mean of the extreme velocities (which occur at the aphelion and the perihelion, i.e. at the farthest and the nearest points of a planet on its elliptical orbit around the Sun). If we put the velocity at the distances of the semiminor axes and that in the aphelion into correlation, we find a highly significant correspondence with musical intervals.

Now 13 of 17 possible correlations lie near or very near to the musical intervals. If we employ statistical methods of calculation, this accumulation can appear only with a probability of 1/10,000 (if we take into account, that there are about 10 possibilities to constitute relations from the different parameters mentioned above, the resulting probability still is only 1/1000).

Thus the ancient notion of a “harmony of the spheres” and especially the fundamental ideas of Johannes Kepler have been confirmed for the first time, and this in a manner that can principally be verified by everyone.

It is not a genuine proof, because this is something the probability calculus will never be able to deliver. Nevertheless we can state in other words, that at the formation of our planetary system there must have been an influence, or force, which with a probability of at least 99.9 % led to an arrangement of orbital velocities that corresponds to the numerical relationships of musical-harmonic intervals.'

Flight of the arrow baby! And if one were to tie a string to that arrow?

The pictures above are what Herr Warm describes as 'Raumgeraden, or link lines (i.e. the imaginary connecting lines between two planets within a fixed period where one can see the geometrical forming principle repeating itself.'

The description of the pictures starting from the bottom and working up are as follows:

1) Raumgeraden (link lines) between Venus and Earth, continually plotted in 3-day periods (1000x). Scale in million km. Sun in the centre of the co-ordinate plane. About eight years. © Keplerstern Verlag

2) Raumgeraden (link lines) between Jupiter and Uranus, continually plotted in periods of 60.781 days (1000x), total space of time 166.4 years. © Keplerstern Verlag

3) Mars-Jupiter Raumgeraden (link lines) at Mars/Uranus conjunctions (1000x), starting on 22-09-2001, total space of time 1923.88 years (selective enlargement 3/1). © Keplerstern Verlag

4) Earth-Jupiter Raumgeraden (link lines) at Earth/Uranus conjunctions, (750x), starting on 11-08-2000, total space of time 759.03 years (selective enlargement 10/6). © Keplerstern Verlag

5) (The purty one in color..) Neptune from Saturn-centered view at Jupiter/Neptune-conjunctions, 700x. total space of time approx. 8947 years. © Keplerstern Verlag

For more info please check out www.keplerstern.com. An English translation of Herr Warm's book should be available summer of 2010.

Très cool.

Think outside the cave!

Circle smirking, taking the fifth, Kepler and Needham and Gann and Pyth

2010-03-01T09:46:00.052-06:00

'After these things the word of the Lord came to Abram in a vision... “Look toward heaven, and number the stars, if you are able to number them.” Then he said to him, “So shall your offspring be.” And he said to him, “I am the Lord who brought you out from Ur of the Chaldeans to give you this land to possess.” But he said, “O Lord God, how am I to know that I shall possess it?” He said to him, “Bring me a heifer three years old, a female goat three years old, a ram three years old, a turtledove, and a young pigeon.” And he brought him all these, cut them in half, and laid each half over against the other. But he did not cut the birds in half.'
Genesis 15

'In Kepler's fifth book, the astronomical part, he presents his great harmonic discovery: the realization of musical harmonies through the movements of the planets. After first musically examining the distances and orbital periods of the planets from various viewpoints, and obtaining no satisfying results, he then examines the angular velocities of the planets, as an observer on the sun would perceive them, and establishes that these velocities, at the perihelion and aphelion of each planet, when positioned on the monochord, yield the most beautiful musical harmonies-for each individual planet as well as for the various planets compared with one another. This result also applies to the outer planets discovered later, as calculated in modern times; it appears to be a universally valid principle of the structure of our solar system. If one is aware of this, and has pursued the many other typical harmonic analyses in Harmonice Mundi, then one will see the mathematical result of this work by Kepler, namely his famous Third Law, through entirely different eyes. This law states that the squares of the orbital periods are proportional to the cubes of the major axes. This means, in Kepler's harmonic mode of thought, that the temporal primal intervals of the orbital periods must be raised to the second intervallic power, and the spatial primal intervals of the major axes must be raised to the third intervallic power. This means a power ratio of 2 : 3, i.e. the fifth, the most important interval after the octave!'
-Hans Kayser

'Edward Dewey asserted that seemingly unrelated time series often had similar cycles/periods present and that when they did the phase of these cycles was mostly very similar (cycle synchrony). He also said that there were many cycles with periods that were related by powers or products of 2 and 3.'
-Wiki

'In 1923, Gann said markets move in threes and twos.'
-John Needham

As previously stated on this blog:

'29.7%, 44.5%, 59.3% and 89% are retracement levels per Mr. Needham's {thedanielcode.com} theories. Expressed in fractions, 59.3% and 89% are 16/27 and 8/9. These fractions can be seen on the picture of the 'Pythagoras guitar' above. The inverse ratios of 9/8 and 27/16 are the frequency ratios of D and A as they relate to the fundamental tone of C.

The major scale based on C (fundamental tone) obtained from Pythagorean tuning is based on a stack of perfect fifths each tuned in the ratio 3:2 the next simplest ratio after 2:1 which is the ratio of an octave.

The frequency ratios of D and A as you ascend by perfect fifths are 9/4 and 27/8 respectively. These two fractions are the inverse ratios of 4/9(44.44%) and 8/27(29.63%).'

AM here: The ancients' belief in the 'music of the spheres' was reintroduced to the modern age by Johannes Kepler. During his life man knew of only six planets and Kepler proposed that the distance relationships could be understood in terms of five Platonic solids. 'Kepler then discovered that when these solids are placed inside each other so that the outer sphere around one solid is also the inner sphere inside the next, the radii of the spheres accurately correspond to the distances between the planets' says Hans Kayser, described as a 20th century Phythagorean Master, who also has, for Gann students, a rather fascination description of Kepler's pursuits:

'Kepler's first approach to this subject was geometric. When one attempts to assemble regular three-dimensional solids from equilateral polygons, it becomes apparent that only five such solids are possible. From equilateral triangles, three solids can be built: the tetrahedron from four, the octahedron from eight, and the icosahedron from twenty triangles. From squares, only the cube can be built, and finally the pentagon-dodecahedron can be built from twelve pentagons. These five solids were first described by Plato, and are therefore called the “Platonic solids”. Now each solid can be placed inside a sphere, so that all the corners of the solid touch the surface of the sphere on the inside; and another sphere can be placed inside each solid, so that the sphere's surface is tangent to the center of each surface of the solid from the inside.'

AM here: Focus on the bolded excerpt of that last sentence for a moment, consider that the corners of the simplest solid touching the surface of a circle would trace out a square, and compare this to Gann's most mysterious declaration : 'Within the circle forms the square, there is an inner circle and an inner square, as well as an outer square and an outer circle which prove the Fourth Dimension in working out price movements.'

As noted Gann expert Daniel Ferrera points out, the inner square is an exact musical octave of the larger outer square.

Now let's look at the second part of that last sentence from Kayser, 'the sphere's surface is tangent to the center of each surface of the solid from the inside.'

When considering a fourth dimensional view of the markets, agreement upon the first two dimensions being time and price is widely shared. Also the interchangeability of time and price, namely time and price being the same albeit on different axis, is commonly held. For those that peek into the esoteric the general consensus is that the third dimension is volume.

The fourth dimension? Well, one way to conceptualize it is to consider volume to be merely a cross-section of the fourth dimension.

For example, Mr. Needham states(and when reading the following please note that the retracement levels stated above, 29.7%, 44.5%, 59.3% and 89%, are what is being referred to with the term binomials):

'When we look at normal charts, they are representing 3 degrees on the linear plane. Price on the vertical axis, time on the horizontal axis and volume. These are the 3 degrees that most see.

Gann talked about a "4th Degree" and the 4th Degree is "An Angle". My Regression Channels are an angle and hence a derivative of the 4th Degree.

When we advance our knowledge of the Danielcode time and price ratios, we can conceptualise that rather than using these ratios on the linear plane, which gives us the blue line targets, red line retracements and DC time cycles, we can actually place them as an arc rather than a straight line. From this process we get the DC "Binomials" which I have written about occasionally. With the Binomials we are working in the 4th Degree, so the markets are coming "out" or going "in" to the linear charts. You can see the Binomials and the 4th Degree on a CAD-CAM program, but it is tedious as the software is not available to code sequential data points.

The fixed points in the Regression Channel are derived from the Binomials, so to some extent, the {long term charts I create} are just a 2 dimensional view of the Binomials. But they are a linear extrapolation as opposed to the tangents and arcs that express the DC Binomials.'

AM here: Now let's consider the works of Jerome Baumring author of, among other tomes: 'Gann Harmony, The Law of Vibration'.

As relayed by Brad Stewart of the Sacred Science Institute, 'Vertical = vector radius of price. Horizontal = vector radius of time. Diagonal angles tell you what stage of growth you are in. Tangent of curves show support levels. Gnomonic growth = harmonic composition. Waves are directional force fields(vectors). Slope of vector is its vibratory rate.'

AM here: Indulge me for one more moment and travel back to the dusty days of Trig and please recall that Tan θ = Opposite/Adjacent, Cos θ = Adj/Hyp, and Sin θ = Opp/Hyp (see right triangle above).

The second picture (above) is a unit circle. Cribbing from an old bbc.uk article:

The unit circle is simply a circle whose centre is on the Cartesian origin (0,0), and whose radius is 1.

The most interesting thing about the unit circle, as far as trigonometry is concerned, is that it gives us the values of sine and cosine for any angle.

Measure the angle θ between the x-axis of the Cartesian plane and a line that extends from the origin. Now, here's the really interesting thing; the sine of the angle is equal to the y-coordinate of the point on the unit circle where the line crosses, and the cosine of the angle is equal to the x-coordinate. This is true for any line extending from the origin.

Why is this? Well, the line segment from the origin to the point where it crosses the unit circle forms the hypotenuse of a right-angled triangle. Because the radius of the circle is 1, the length of the hypotenuse is likewise 1.

Sin θ = Opposite

Cos θ = Adjacent

Tan θ = Opposite/Adjacent

In other words:

Sin θ = y

Cos θ = x

Tan θ = y/x

AM here: So tying the strings together as it were, if x is time and y is price, and the tangent is support and resistance, as advocated by both Needham and Baumring, or in sacred geometry terms the form/volume, then the inverse tangent is the fourth dimension, an angle.

Circle smirking, taking the fifth, Kepler and Needham and Gann and Pyth.

Ah, but there is a fly in the cosmic ointment, Kepler's assertion that the radii of the spheres accurately corresponds to the distances between the planets and his discovery of a 'congruence' between musical intervals and planetary relationships, the modern proof of Pythagorean tenets, has been dismissed in part due to the lack of a rigorous demonstration that such a relationship is not anything more than a random distribution.

Wouldn't it be nice if say there was a theory that offered to us that the formation of our planetary system was guided by the influence, or force, that led to the arrangement of orbital velocities in such a way that, with a 99%+ certainty, there is an explicit correspondence to the numerical relationships of musical/harmonic intervals?

Stay 'tuned' for my next posting.

Time and space/price and form.... oh my!