Saturday, February 25, 2006


One thing for sure, in a raging bull mkt you see consolidation and buyouts,and now you can add that to rising pressures of price. SO whom would be themost logical candidates for that should be found.

We ALL know the GOV stats are tainted, ACcute OBS piece points some of themout. Glaring and obvious is the reasons behind it all the motivation, SSpayments. The GOV found another way to screw its subjects.If taxes collected are not going to be used properly (SO MUCH GOV waste andCASH MISSING??), and such our GOV has abandoned the COnstitution in itsefforts to be like the ROman Empire, knowing that SS checks would be 70%more if CPI stated properly, I must ask myself why even bother postinganything coming from the BLS? SO if the TAX system is not fair, and usedimproperly, one could argue our income tax system is also unconstitutional.
Listen to this: you don't believe me why don't you ask the IRS yourself? That's righthere is a little fun interactive tax game you can play at home, simply callup the IRS Request line at 1-800-829-1040, friendly IRS agents are on handto answer your every tax question so why don't you ask them this simplequestion. "Am I as a resident of the state of [State] obligated by law topay tax on income derived exclusively from wages earned within the 50 statesand if so please site the law or statute which says I am so obligated?" If you get an answer to this question please share it with me at[].
The IRS never did tell me what law obligates me topay tax on my domestic earnings so if they tell you I would love to hear theanswer.So how did this whole Tax scandal get started? It was caused by war timetaxes such as the Victory Tax that Congress passed to pay for the greatWorld Wars. The Victory Tax was phased out by congress following the war,but nobody seems to have bothered telling that to the IRS who continuallydemands money from US Citizens. And to who does this Federal Income taxmoney go? Many of you think it goes to the Federal Government, well itdoesn't. If you have ever owed Federal Income and have paid for your Taxdebt with a check look to see who cashed your check, it wasn't Uncle Sam itwas the Federal Reserve Bank. The Federal Reserve Bank may have beenempowered by congress to control our money (another unconstitutional act)but only congress has the power to collect and levy taxes, and the FederalReserve is not even a public organization, no audit has ever been done ofthe Federal Reserve, so what does the Federal Reserve do with all of our taxdollars? The lend it to our government and drag the country deeper anddeeper into debt. So what can you do to fight the Fed? Become educated,great websites like and are greatresources for any individual who wishes to learn more about how the IRSreally is commiting wholesale fraud against the US People. site shut down!! well is it or isntit?WHO has the right to declare war, did we ever declare war on IRAQ? where2,500 soldies have died? did the American public become numb, dumbed down, and beleiveeverything told to them by the LIARS? Where is the public debate?

Thursday, February 23, 2006

WAKE UP LEMMINGS WTF is going on here, OR you KNOW what is going on! ANother secret BUSH deal! Spying illegally (against US Constitution) and cutting secret deals, NO BID contracts with BUSH CRONIES, new emminent domain laws, new harsher BAnkruptcy laws, lip service to oil crisis (he wouldn't even mandate better gas milage!!)

My friends, have we lost more than we can ever gain back? The ability for GOV to STEAL your property if you dont pay your property taxes, and the illegality of income taxes in general. We end up the POLICEMAN OF THE WORLD and living in the US POLICE STATE. WHERE are the real leaders hiding?

Living in a bankrupt country is the LEAST of our troubles.

Now while we do a good job f'ing up things here, the world economies meaning Asia (China and JApan mostly) have SAVINGS in which to replace capital equipment and invest for increased productivity to remain the DOMINANT WORLD EXPORTING POWERS.

WHile here in the US, we are back to Depression ERA NEGATIVE SAVINGS RATE, HOCK up to eyeballs with 71% of GDP consumer spending! Could we get any more imbalanced?

ANY cutback in Consumer spending will have DIRE consequences for US economy and that of the worlds. Even though Chinese consumption is rising, it cannot replace that of the US.

THis merry-go-round of ILLUSION of a US fit and healthy could be lifted come end of MArch as US $$$ are NO longer needed for OIL purchases with opening of IRAN OIL Bourus which will ONLY except EURO'S for OIL!!!

AS our stock market of 30 industrials marches higher, it does so without the biggest companies or with broad support as % of companies near 52 week highs falls and those 20% or more below increases!!! JUST as happened as we reached the bull market top in March of 2000.

WILL MARCH mark the top again? You should not run and hide, but would be prudent to raise some CASH just in case we at least see first 10% CORRECTION in OLD cyclical bull.

It is FOGGY here this AM as I post this, I only hope the fog is lifting from your perception of how things really are.

Not only is this country headed in wrong direction, and the GULF between rich and poor growing, but should something happen to pull rug out from under this economy, we are in mcuh worse shape than before to handle it. WHAT, will they CUT interest rates to STIMULATE economy? SURE........maybe we'll have a real estate boom!


Wednesday, February 22, 2006


February 20, 2006
Since Benjamin Bernanke’s nomination by President Bush to succeed Alan Greenspan at the helm of the Federal Reserve, it has been widely reported that Bernanke had fixed his earlier professional career as a professor of economics upon the study of the cause or causes of the 1930s Great Depression, with the intent to make sure that this will never happen again.
At a conference in 2002 honoring Milton Friedman’s 90th birthday, he expressed contrition on behalf of the Federal Reserve: "Regarding the Great Depression, you are right, we [The Fed] did it. We are very sorry. But thanks to you, we won’t do it again."
Wondering about Mr. Bernanke’s academic research, we took a closer look at his earlier writings and contemporary speeches. We learned that he did "groundbreaking research on how declining asset prices and weakened banks can choke off new lending and economic growth, and how the mistakes of the Federal Reserve compounded the catastrophe."
America’s Great Depression was by far the greatest economic and financial disaster in history. Yet it strikes us that the discussion in the United States has been stuck in the assertion that the Fed’s failure to ease its reins fast enough was key to the savage asset and price deflation that followed during the 1930s.
The question of what may have gone wrong during the prior boom to cause the Depression has always been discarded as beside the point, with the argument that the extraordinary price stability prevailing in the 1920s represented conclusive evidence of the absence of any inflationary influences.
For most American economists, the verdict of Milton Friedman and A.J. Schwartz at the end of their Monetary History of the United States, 1867–1960, published in 1963, about the causes of the Great Depression, is virtual dogma. And so it is for Mr. Bernanke. To quote Friedman:
The stock market boom and the afterglow of concern with World War I inflation have led to a widespread belief that the 1920s were a period of inflation and that the collapse from 1929–1933 were a reaction to that. In fact, the 1920s were, if anything, a time of relative deflation: From 1923–1929 — to compare peak years of business cycles and to avoid distortions from cyclical influences — wholesale prices fell at the rate of 1% per year and the stock of money rose at the annual rate of 4% per year, which is roughly the rate required to match expansion of output. The business cycle expansion from 1927–1929 was the first since 1881–1893 during which wholesale prices fell, even if only a trifle, and there has been none since.
The monetary collapse from 1929–1933 was not an inevitable consequence of what had gone on before. It was the result of the policies followed during those years. As already noted, alternative policies that could have halted the monetary debacle were available throughout those years. Though the Federal Reserve proclaimed that it was following an easy monetary policy, in fact, it followed an exceedingly tight monetary policy.
The 1920s were, indeed, a period of extraordinary price stability. In particular, under the influence of Milton Friedman, it became axiomatic for American policymakers and economists that the Depression must consequently have had its causes in the policies pursued after the stock market crash. One of the consequences of this generally accepted verdict has been a total lack of interest to probe more deeply into the intricacies of the boom phase. As a result, knowledge about eventual abnormalities during this phase is generally abysmal, even among leading American economists.
Actually, the Fed moved quite fast in light of earlier experience, slashing its discount rate from 6% to 2.5% within one year. The first steep fall of stock prices lasted little more than two weeks, from Oct. 24 to Nov. 13, 1929, from where it sharply recovered until April 1930.
After a pretty stable first half of 1930, during which stock prices rallied strongly, the economy suddenly slumped in the second half, even though the broad money supply had barely budged. As the following table shows, this sudden slump occurred across all demand components. To quote Joseph Schumpeter: "Business operations contracted in the midst of a plentiful supply of ‘money.’"
With the euphoria about a "New Era" for the U.S. economy still virulent after the stock market crash, a quick recovery was generally expected. What strikingly differentiated this downturn from all forerunners was the sudden, sharp slump in consumer spending. Yet it was taken for granted that the Fed’s rapid rate cuts would usher in economic revival.
A truly dramatic change in economic activity, and also in expectations, only began with the banking crisis of November–December 1930, acting to reduce the money supply. Escalating bank failures principally had their reason in declining market values of foreign, corporate and real estate bonds ravaging the banks’ capital and lending power. The question is why asset prices fell — because of tight money or due to rising risk premiums as the quality of bonds began to be questioned?
It is the great merit of the proponents of Austrian theory to have uncovered and shown that the borrowing and spending excesses driving a boom may, with or without inflation, exert harmful economic and financial effects other than just a rising inflation rate — actually, more harmful effects….
It has always intrigued us how the U.S. economy and its financial system could virtually collapse in the early 1930s if they were in healthy conditions. To explain the rapid collapse with slow rate cuts after 1929 has always struck us as bizarre. For such a collapse to happen, an economy and financial system must have been in terrible shape.
Friedrich Hayek wrote, in Econometrica (April 1934), that the events after 1927 led to the Depression in the United States. The specific events, according to our findings, were the boom-busts of the equity and associated consumption bubbles.
It has been typical of recessions in all industrial countries that consumption has always acted as a stabilizer, while investment and construction turn down. In 1930 and the following years, for the first time, the opposite happened. As the artificial stimulus to consumer spending from the equity boom vanished, slumping consumer spending drastically aggravated the downturn. It is our long-held view that this was one main cause of the Depression’s severity.
The second massive drag came from a highly fragile financial system, which had funded the asset bubble through disproportionately large purchases of corporate bonds, loans on securities and real estate loans.
As asset prices slumped and the economy sharply slowed, the credit pyramid collapsed. It took just three years to wipe out all of the credit inflation of 1922–1929. Total bank loans and the investments of commercial banks at end-1932 stood at a lower figure than during the recession of 1920–21.
We have recapitulated Japan’s and America’s past disastrous bubble experiences in order to make three things poignantly clear: First, all asset bubbles are the product of credit inflation; second, the two worst bubble experiences in history have developed against the backdrop of virtual price stability; and third, both central banks made their obvious crucial mistake in focusing on low inflation rates and ignoring ongoing credit and asset inflation.
To this, we want finally to add a fourth point: America’s credit inflation since 2000 is the worst in history, as measured by credit growth relative to GDP growth. In essence, the Greenspan Fed replaced the prior bad equity bubble with a much bigger and much worse housing bubble.
The specific effects of credit inflation on the economy and the price system depend on the places where the credit deluge enters the economy. In Japan’s case, it grossly overexpanded construction and business fixed investment. In the U.S. case of the 1920s, it overexpanded consumer spending. Today, the unsustainable excesses are concentrated in consumption and housing.
There is a widespread perception that the U.S. economy under the Greenspan Fed has gained unprecedented steadiness. In actual fact, U.S. economic activity has become dependent as never before on rising house prices facilitating unbridled consumer borrowing. This may temporarily create a semblance of economic stability and strength. The reality is an extremely vulnerable economy and financial system.
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February 10, 2006
Americans spent $US 42 Billion more than they earned last year. That turned the annual US savings ratio negative, it fell to minus 0.5 per cent last year. This is the first time the US savings ratio has gone negative for an entire year since way back in 1932 and 1933 when the US was struggling to cope with the Great Depression. In December 2005, US consumer spending rose by a bigger-than-expected 0.9 percent while incomes were up by just 0.4 percent. That forced the savings rate down for the month to a negative 0.7 percent. The US national savings rate has been negative in eight of the last nine months. This shows that economically as well as financially, Americans are back in the situation they were in the "dirty thirties". Only the US welfare state, which didn't exist in 1932-33, disguises this fact. What also disguises it is the huge increase in Treasury borrowing. They can't tax, to do so would break the façade….
To "cover" for UNFUNDED promises amounting to $US 51 TRILLION that close to 100 million Americans count on, Congress could raise taxes in the US by that amount over the next 25 years. That is additional taxes piled on top of all the present ones. Were that to happen, it would condemn all younger Americans to being serfs for their retiring elders. It is only the productive who can pay taxes out of their current production. The unproductive leave no present economic goods to tax.
The alternative is piling these unfunded promises on top of what the US Treasury already owes. Having the US Treasury borrow this additional money will make the Federal Government crash under the weight of its debts while leaving unsolved how even the interest payable on this debt can be paid.
The last solution, deep cuts in government expenditures, is the only real economic solution. But that will leave these nearly 100 million older Americans destitute. They will become destitute because they have next to no individual private savings accumulated over a lifetime with which to sustain themselves. An enormous human crisis is on the horizon. The past generations of politicians got away with it. They all retired before this crisis arrived. It is the present day politicians who will have to face the music. The crisis will arrive while they are in office and there is no "magical" solution to the economic problem….
There is an immense crisis over the horizon. It is rolling towards us all, especially towards the USA. We are nearly at the end of the line. The STATE is financially bankrupt and has liabilities it can't cover. If you stand with some property held free and clear of debt and with Gold and Silver coin - you'll make it.
Ó 2006 – The Privateer

Saturday, February 18, 2006


The insurgency has had a devastating impact on Iraq's economy, with the oil industry suffering $6.25 billion in losses in 2005 as a result of sabotage to infrastructure and lost export revenues, Oil Ministry spokesman Assem Jihad said Saturday.

There were 186 attacks on Iraqi oil installations last year, during which insurgents killed 47 oil engineers, technicians and workers, as well as 100 police protecting pipelines and other oil facilities, Jihad said.

Most of the sabotage took place in the northern oil installations, preventing Iraq from exporting around 400,000 barrels a day from its northern oil fields via the Turkish port of Ceyhan.
Iraq produces around 2 million barrels per day from its southern and northern oil fields, down by about 800,000 from levels before the 2003 U.S.-led invasion.

Iraq's crude oil exports — almost all of which are now from the south — run at around 1.4 million barrels per day, also down about 800,000 from prewar levels.

Since Saddam's fall, insurgents have routinely attacked oil infrastructure in a bid to derail American-backed reconstruction efforts.

**Bush's "war for oil" has backfired. Oil before Iraq war was near $20, now near $60 up 3 fold! I knew the guy was a genius.

The laggard (DOW) is now the leader with a flow of funds seeking supposed SAFE MONEY investments in large caps tocks. As reported before the rise is coming with less than stellar buying power and breadth.

DELL another leader fell by the wayside as it slid to new 52 week low after warning of slower growth. INTC sits near 52 wk low also.

As we approach March, month of market top in 2000, it is possible history repeats.


Wednesday, February 15, 2006


How easy to manipulate 30 stocks? but buying pressure is nowhere near whaty it should be if this move meant anything.

Henry To does a great job describing what divergences exist


Saturday, February 11, 2006


My business is doing rather well (office furn) so I have not seen a smidge of trouble at this level. I didn't see it in 2000 top either until a large quote got canceled by e-commerce company.

Broad money supply (M3) dipped $1.8 billion (slowing?) above Credit Bubble Report

We have inversion of yields (most predictable of REcessions)

We have negative savings rate (last seen in Depression)

SLowing consumer credit, topped housing prices, declining cash outs.

1.1 GDP (lowest since last Recession.

We have atypical earnings season with lots of warnings and the LEADERS are dropping like flies GOOG INTC etc.

SPX profits now led by Energy firms, if OIL drops on slowing consumption (why would that be?)

41 month old cyclical bull (stretching it time wise)

Bullish plurality still record unbroken weekly. LOW VIX. LOW cash in mutual funds. 8,000 hedge funds searching for a trade or one to unwind, watch for pick up in volatility.

Leadership in market? which group? some money flowing into Dow 30 big caps.

Yields on 10 yr treasuries at high end of trading range near 4.6%.

Bush LYING about cutting deficits in HALF by 2009 ??? LOL how so? Approaching debt limits allowed.

Investors are not ready for nor do they anticipate any kind of equity accident in 2006, let us hope the overwhelming majority are right.......from a contrarian stand point this is an accident waiting to happen.


Sunday, February 05, 2006


Take out MEW (shown above in chart) you gotta see the picture I see. GDP 1.1 as Gov shown, at that manipulated.

First time negative savings since Great Depression, earnings not keeping up with inflation, int rates rising, corporations NOT investing but buying shares back inflating earnings, EARNINGS WARNINGS and MISSES not on the rise.

To this backdrop we have historic bullishness.

We have ingredients that son't guarantee accident but that set the stage for one. 41 months long cyclical bull, generals fading, market rise held by mid cap and small cap issues.

Productivity went NEGATIVE.

30 yr bonds to be reissued will supply cause sharp rise in rates?


Saturday, February 04, 2006


Broad money supply (M3) jumped $20.1 billion (week of Jan. 23) to a record $10.274 Trillion. Over the past 36 weeks, M3 has inflated $649 billion, or 9.7% annualized. Over 52 weeks, M3 has expanded 8.0%, with M3-less Money Funds up 8.4%.

(doug noland

Earnings disappointments and higher rates…

The Mortgage Bankers Association Purchase Applications Index dropped 8.0% last week. Purchase Applications were down 2.3% from one year ago, with dollar volume up 2.6%. Refi applications fell 1.5%. The average new Purchase mortgage rose modestly to $230,600, while the average ARM slipped to $335,500.

The spread between 2 and 10-year yields moved 7 bps to an inverted 5 bps.

Slumping productivity and rising wage costs…

January 31 – Bloomberg (Alison Fitzgerald): “The U.S. government plans to borrow $188 billion from January to March, the most ever for a single quarter, as the Treasury sells 30-year bonds for the first time since 2001 to meet demand for longer-term debt.”

Bubble Economy Watch:

December Average Hourly Earnings were up 3.3% from the year ago period, the strongest y-o-y increase since February 2003.

February 2 – (Gary Rosenberger): “Recruiters are reporting a pop on the job front in January as companies squeezed the hiring trigger following a cautious December, with anecdotal accounts covering a range from modest, steady growth to “fun times are back.” Taken together, the comments suggest January job formation took something beyond a modest bounce higher, with all recruiters interviewed reporting increases in permanent placement. In some high-skill categories, like accounting, employers are running into a tight labor pool and increasing wage pressures…” (Gary Rosenberger’s new provides his excellent work on a subscription basis)

Under Greenspan’s stewardship of the world’s reserve currency and dominant Credit system, global imbalances went to unparalleled and unmanageable extremes. Nonetheless, The Crowd today showers Alan Greenspan with praise and glorifies his accomplishments.

I don’t believe Credit cycles should or can be prolonged indefinitely, so I naturally scoff at notions of Greenspan’s greatness. To nurture a system of unrestrained Credit and speculation is to jeopardize the market pricing mechanism. To abrogate the business cycle is to undermine a capitalistic system. To accommodate and prolong Credit booms is to ensure a problematic evolution of risk assessment and Embracement, not to mention deep structural economic impairment. To actively reduce uncertainty is to inflate expectations, and to guarantee liquidity is to promote market excess. From Main Street to wall street, there is too much faith in the capabilities - and too little appreciation of the limitations - of monetary policy. From the corporate board room to the Halls of Congress, there is a mistaken belief that recessions can and should now be avoided.

Never have so many had their expectations rise to lofty levels – the type of elevated expectations that leads to disappointment and disillusionment. For now, we have global competitors for limited energy and commodity resources liquefied like never before.

The Essence of the Ongoing Greenspan Era is one of an historic Credit Bubble. His legacy should be based upon future circumstances and developments with respect to this Bubble and not how things appeared the afternoon he paraded out the door.


Friday, February 03, 2006


Economists aren't expecting a recession. But since consumers account for more than two-thirds of the nation's economic output, the health of American wage earners is a central question mark hanging over this year's economy.
Other parts of the economy may help pick up the slack. With the world economy expanding, exports should contribute solidly to gross domestic product (
GDP' name=c1>SEARCHNews News Photos Images Web' name=c3>
GDP). And many economists expect to see businesses invest more of their record profits in new equipment and facilities.

**THOSE record profits have instead been used to buyback stock


UNemployment drops to 4.7%, no change in workweek, wages up .4% (spending much higher so net loss) employee costs rising (inflationary) with no advance in workweek, did people just drop out of job search?

4.7% might make big Ben keep raising rates to at least 5% INFLATIONARY pressures building no matter what CNBC idiots say. KUDLOW LEESMAN perma bulls love the data, even though job creation fell short of expected 250K

GOOG back under $400 and AMZN reeling this AM the generals continue to falter, with 4 years under its belt, this cyclical bull is just about out of steam IMHO.

Has oil topped? has gold topped? or what is $570 gold saying?

2 days in last week or so we had triple digit down days, with generals falling down I fell when you look back you will say "gee why didnt I heed these early warnings?"

The bed is neither too soft nor hard, and it isn't just right.


Wednesday, February 01, 2006


Fallen Generals, way OFF their 52 week highs.

MSFT, INTC, DELL, GE, GM GOOG WMT AND a host of others. MIsses by C, DD and Alcoa.

In the god old days, such a scenario would seem to abet hysterical selling, but on the day after GOOG'S 60 pt AH drop and miss, market ignored, guess it liked BUsh speach?

We have influx of money beginning of each month....and plenty who still see only blue skies and every drop is buying binge, as the VIX TRIN CPC dither to a wilt....showing no weakness or fear, all is good. SO it appears.

But with the leaders, the GEnerals lagging we are led by the enlisted men and this my friends along with only 15% of stocks within 2% of their highs has some more to go, but as I watch rates continue to climb and fell they will go higher, I DO NOT LIKE the end of the road picture I see.