Sunday, February 28, 2010

Conversion of The Standard of Living

"The next few years will be full of challenges for investors, and for anyone who is seeking to maintain their present living standard. The good news is that a more frugal approach, which most of us will be forced to adopt, does not necessarily mean a major decline in the quality of our lives. When we have less money to spend, we will discover that the best things in life cannot be measured with money. Perhaps golfers will find pleasure in gardening, or luxury yacht owners will become keen fishermen. We will all have a great chance for remaking our lives in creative ways. We are likely to have more time on our hands, and many of us will rediscover some forgotten aspects of living that really matter, and bring a rich texture to life."
Michael Hampton, AKA Dr.Bubb - February 10, 2010

The entire article:

"It ain't all bad....."
Random Roving - October 1, 2008

Saturday, February 27, 2010

College Chaos

It was a busy week of protesting on college campuses.

"Bay Area students, faculty and organizers revving up for a series of protests and rallies next week over fee increases and cutbacks to public education condemned the destruction and violence at UC Berkeley late Thursday by demonstrators promoting the March 4th events. What started as a nighttime, open-air dance party in Upper Sproul Plaza with up to 200 people quickly soured into a riot as protesters vandalized a vacant university building and then lit trash cans on fire and clashed with police on Telegraph Avenue."
Source: San Francisco Chronicle

"Anger boiled over on the University of California San Diego campus Friday, where students took over the chancellor's office for several hours to protest the hanging of a noose in a campus library. Students wearing red handkerchiefs over their faces blocked the doors to Chancellor Marye Anne Fox's offices for hours, while more students inside chanted ''Real pain, real change.'"
Source: The New York Times

"College campuses will continue to "heat up". The younger generation is awaking to the fact that their parents squandered their future."
Random Roving, January 1, 2010

The Future/Present of Mapping

All know that I love maps and make a living with them. This appears to be the present/future:

Friday, February 26, 2010

The Depth of The River

"The average of expectations is typically greater than the expectation of averages (Don't cross a river because it is on average 4 feet deep)."
Nassim Taleb

Thursday, February 25, 2010

Ice Cold Inflation

I've made many posts in the past regarding the challenges in Iceland. I continue to like the "layering of an onion" as a great metaphor for the economic contraction that continues to unfold. The "outer layer", being the most exposed, gets impacted first. The impact on the "inner layers" depends on the depth of the contraction.

The chart below indicates how quickly inflation can rear it's ugly head.

Wednesday, February 24, 2010

The Mood of The Herd

"The crowd is the perceived leader, but it comprises nothing but followers. When there is no leader to set the course, the herd cues only off itself, making the mood of the herd the only factor directing its actions."
Elliott Wave International, Elliott Wave Theorist - 2/11/10

Tuesday, February 23, 2010

Wealth Preservation - The Road Ahead

The 80's and 90's were all about wealth accumulation. Now with a change of cycle, one must ask the question, "how do I preserve what I have?".

"The question that remains, if you get out of stocks and property, how do you hold your wealth? I favor a risk-averse approach. I would not hold debt instruments, and I would steer clear of most stocks, and be very suspicious of high dividend stocks, which may find it tough to maintain cash flow for dividend payments, if their cash flows wane in a shrinking economy. We are coming into a time when "cash will be king" once again. But cash must be held in sensible currencies, and in safe institutions. I would avoid stashing money in currencies of debtor countries which may be headed towards default. And bonds of those countries are even worse, since capital values will fall, if they indulge in aggressive money printing. This leaves the savings nations, like China and some other countries in Asia (like Singapore), and some special cases, like Norway, which have little or no debt, and big oil savings. I have some money held in US dollars for the time being, since that currency is benefiting from an unwind of dollar-carry trades as stocks and other assets are sold. We saw a similar upthrust in the dollar, when de-leveraging hit in 2008. When the dollar begins to falter, and commodities begin to bottom out, I may consider moving more deeply into the currencies of commodity exporting countries, like Canada and Australia. Even now, I continue to hold a decent part of my cash in C$. There is certainly a role for Gold in a low risk portfolio, since it can be regarded as the only "currency" which is not someone's else's liability. As long as it is held safely in physical form, there is zero risk of a credit default. You are not relying on someone's willingness to pay, or their vagaries of cash flows from tax collections or volatile business activities. I will take some risk, but it will be in a measured way involving a minor part of my portfolio in leveraged instruments like puts on the general indices and volatile junior mining shares. This way, I aim to protect the bulk of my portfolio, by leaving it invested in save haven instruments, but I may still be able to grow the size of my portfolio, by investing a minor part of the total portfolio in high-geared "bets" when opportunities appear."
Michael Hampton, AKA Dr.Bubb - February 10, 2010

The entire article:

Monday, February 22, 2010

Extreme Bulldozing

It seems like yesterday that I was discussing extremes. Men flying planes into IRS buildings. College professors shooting people because they didn't get tenure. Well how do you like this guy. He bulldozed his own home in Moscow, Ohio so that the bank couldn't get it in foreclosure. Wow!

"Like many people, Terry Hoskins has had troubles with his bank. But his solution to foreclosure might be unique. Hoskins said he's been in a struggle with RiverHills Bank over his Clermont County home for nearly a decade, a struggle that was coming to an end as the bank began foreclosure proceedings on his $350,000 home. "When I see I owe $160,000 on a home valued at $350,000, and someone decides they want to take it – no, I wasn't going to stand for that, so I took it down," Hoskins said. Hoskins said the Internal Revenue Service placed liens on his carpet store and commercial property on state Route 125 after his brother, a one-time business partner, sued him. The bank claimed his home as collateral, Hoskins said, and went after both his residential and commercial properties. "The average homeowner that can't afford an attorney or can fight as long as we have, they don't stand a chance," he said. Hoskins said he'd gotten a $170,000 offer from someone to pay off the house, but the bank refused, saying they could get more from selling it in foreclosure. Hoskins told News 5's Courtis Fuller that he issued the bank an ultimatum. "I'll tear it down before I let you take it," Hoskins told them. And that's exactly what Hoskins did. The Moscow man used a bulldozer two weeks ago to level the home he'd built, and the sprawling country home is now rubble, buried under a coating of snow."
Source: WLWT Cincinnati

Sunday, February 21, 2010

Paying The Piper

"In 2010-13, they will be getting hit with the bill from the lavish years, through increased taxes and the loss of millions of jobs. Economies which became excessively consumer-oriented are going to be forced to slim down. Meantime, governments have been reluctant to tighten their belts, and are trying to restore "the old normal", by borrowing money aggressively, and spending it recklessly on poorly-designed stimulus programs. The foreign holders of dollar, sterling, and euro debts, will try to get the taxpayers to foot the bills for the excesses of their banks and the governments. But there is an increasing risk that taxpayers will revolt, and refuse to pay the full amount of those debts. We have already seen a rejection like this already in Iceland, and it seems this sort of drama will soon be played out in Greece, and the other PIGS countries in Europe, and also in many American states. Eventually, the larger economies of the UK and the US may also face the same problems, when debtors begin to reject lending fresh money to over-stretched sovereign borrowers."
Michael Hampton, AKA Dr.Bubb - February 10, 2010

The entire article:

Saturday, February 20, 2010

Mortgage Facts Part 2

On 2/14/10, I made a post regarding the upcoming mortgage crisis Part II. This chart presents a much clearer picture. I hope that the media warns everyone before the next storm arrives!!

Friday, February 19, 2010

Not The "V" or the "W", But The "Y"

"The best we can hope for is to delay the inevitable, and/or to make a very severe recession or depression as quick and painless as possible. Recent actions by political leadership and monetary authorities in the US and the UK have delayed the most severe part of the recession. But the cost has been high, and the eventual downturn may be worse than if they had taken different actions or simply done nothing. My expectation is that the next economic downturn will come quickly starting about mid-year, and those who fail to prepare will be blindsided, and suffer a very large loss of wealth. The time to make preparations is when confidence is high, and the cost of preparations is low, because fear has receeded. After a strong nine months rally in global stocks (which by the way, I forecast back in March as the market was turning up), there is now widespread denial of problems, and huge complacency. Preparations can be made now, and hedges put in place, at a low and bearable cost. The basic problem that I see is two-fold: Too much debt, and widespread malinvestments. There is no longer a reasonable balance between the funds needed to service the debts and the cash flows generated by investments. The severity of the problem is masked, but only temporarily, by ultra-low interest rates. Even with the low rates, debts are continuing to default, and the number of troubled loans is increasing. When the inevitable rise in rates comes without a big rebound in earnings and cash flow, debt problems will multiply, and the financial sector will seize up with another severe credit crisis."
Michael Hampton, AKA Dr.Bubb - February 10, 2010

The entire article:

Thursday, February 18, 2010

Fighting The Tide

"The long, rambling rant posted on a website eerily reflected the angry populist sentiments that have swept the country in the past year. In it, a Joe Stack inveighed against intrusive Big Brother government, corrupt corporate giants, irrational taxes, as well as the "puppet" George Bush. 'I choose not to pretend that business as usual won't continue,' he wrote. 'I have just had enough. I can only hope that the numbers quickly get too big to be white washed and ignored that the American zombies wake up and revolt.' And then Stack apparently got in a Piper Cherokee PA-28 at about 9:40 a.m. at an airport in suburban Austin, Texas, and flew the plane into a commercial building housing an IRS office, killing himself, seriously injuring two people on the ground and starting a conflagration that lasted several hours."

"As this cycle continues downward, it will be important to know what you believe in. You will be challenged to stand up for what you believe in whatever that is."
Random Roving - November 6, 2009 - "The Man Under The Hood"

In Joe Stack's mind, he knew what he believed in and he stood up for extreme decision and approach I might say. Another coward that decided to take the innocent out with him.

Last week it was a professor at University of Alabama Birmingham that was upset about not obtaining tenure. This week, it's a software engineer flying a private plane into the IRS building in Austin. My friends, this phase of the cycle is about extremes. Extreme financials, extreme human behavior, extreme religion, extreme opinions and beliefs, and some might even say extreme weather.

"The mob will get even more angry. Beware of the angry white American man carrying the Bible."
Random Roving - January 1, 2010

"I know I’m hardly the first one to decide I have had all I can stand. It has always been a myth that people have stopped dying for their freedom in this country, and it isn’t limited to the blacks, and poor immigrants. I know there have been countless before me and there are sure to be as many after."
Joe Stack's Final Statement

"When the tide lowers, we'll see who's been skinnydipping."
Warren Buffet

The Media & The Mob

The media is catching on, but "late to the party" as always. More perspective relating to Evan Bayh's announcment.

"As voter polls continue to show a rising tide of resentment for congressional incumbents, Indiana's Evan Bayh became the latest official to announce he will not seek re-election."
PBS Newshour - February 16, 2010

"Anti-incumbent, anti-government sentiment permeates the air. A lot can change in the next nine months, but the current political pendulum seems to be swinging against the incumbent Democratic majority and towards a purified, conservative Republican party."

The Daily Campus

What they don't realize is that the angry mob is "swinging the pendulum" at whoever is in office despite their political party. Team Red is missing the point. The same phenomenom that put Obama in office also put "Centerfold Boy" Brown in office. The angry mob wants anyone BUT who currently holds the office.

"The wrath of angry voters has had a decidedly bipartisan impact, with recent retirement announcements coming from Republican Rep. Lincoln Diaz-Balart and other Republican House members from Michigan, Indiana, Arkansas and Arizona."
CBS News

"I used to think that a whole generation of new, young voters would be disillusioned if Barack Obama was not elected president. Now I think those same new, young voters are becoming disillusioned because he is president--and he hasn't delivered on changing the way Washington works."
US News & World Reports

"National swings between the two parties are amplified by politicians' natural tendency to stay put when things are going well and retire when the political climate looks stormy."
Andrew Gelman -

"There is clearly more such mayhem to come, and Congress and financial authorities of every stripe are hard at work preparing the tar and feathers. A big bear market in social mood always attaches itself to the reputations of those who rose highest in the preceding advance."
Robert Prechter - January 2009

"It's interesting to watch "the shift" occur live. After crossing a significant inflection point in the year 2000, we have seen a downward trend in mass social mood. Aligned with this shift, we've seen many witch hunts. Suddenly there are witches everywhere!
Random Roving - October 20, 2009 - "Witches In Edinburgh"

"The angry mob is seeking culprits. The game of politics is hot as ever. Rush Limbaugh has resurfaced as the Republican hero. Obama is now to blame for this whole crisis. Those with financial losses are seeking someone to blame."

Random Roving - March 7, 2009 - "The Blame Game"

Wednesday, February 17, 2010

A Note For Lent

by Father David Kirk

A preface about Lent:
People “give up” things during lent:
Pizza, beer, lobster, whatever.
But does it move us closer to God,
Closer to one another, to ourselves?
Maybe what we should work on at Lent
Leaving behind frustrations, fears,
Cultural attitudes
Which box in others.
To see temporary setbacks as permanent
To escalate disappointment into catastrophe
To experience problems as insurmountable.
To try to see other possibilities
When things don’t go as we had hoped or planned.
Sometimes I set myself up to feel like a failure
Or to feel badly
About things I cannot control;
And I get out of this only by deciding
That if things can’t be one way,
Well, maybe they can be another.
Its possible, I think, even for me,
To still make inner changes,
To move old emotional garbage out
To see the world in a whole new way,
To come closer to God.
So I’m not sure what I’m giving up this Lent
But I think its
I think I learned this attitude
At an early age,
As a lonely adolescent,
As a young man whose people die young,
Whose sister died of alcoholism.
But God keeps seeking me, the lost lamb,
And in intervening in my life
Converting all these things into HOPE.
So I put all hopelessness on the altar
As a sacrifice to faith and joy.

As God Lives in me, I determine who I am.
[Mark 9:14-29]

*Reposted from Ash Wednesday 2009

Tuesday, February 16, 2010

Another One Runs From The Mob

Regarding Evan Bayh's retirement announcement, the Washington Post reports: "Republicans aren't buying it, saying he and fellow Democrats sense that voters will be after their heads this fall."

"Politicians ratings will continue to fall aligning with a continued decline in mass social mood. Incumbents beware."
Random Roving - January 1, 2010

When I made the above statement back on the first of the year, I had no idea that the long term incumbents would start retiring. I assumed that their confidence and ego would drive them toward shocking defeat. This recent trend of "self inflicted loss" sends an even stronger message. The mob is really angry, and they don't want any part of it.

"When the tide is rising, we're happy participants, but when it lowers we seek someone other than ourselves to blame."
Random Roving - March 7, 2009

Monday, February 15, 2010

Larry's Wisdom

"When everything is coming your way, you're in the wrong lane."
Larry The Cable Guy


Sunday, February 14, 2010

The Mortgage Facts

Most take for granted what they hear from the media and what is regurgitated from their friends and peers. It's very rare that data is presented and examined in the media. Usually it's broad statements that are usually explaining why events happened in the past. Politics are the same way. I still remember Ross Perot holding up his chart of the U.S. debt and speaking of that "sucking sound"! It was refreshing to see a politician present some real data and discuss a solution.

Casey Research presents the chart below. It confirms that we are in a "default lull" of the adjustable rate mortgages (ARM's). April 2010 will kick off the next round of chaos. June 2011 could be the peak. Buckle your chinstraps!
Source: Casey Research

Saturday, February 13, 2010

The Recovery of Virtues

"And in a way, I have my own thoughts about that because I’m basically a cheerful person, and in my own way I’m also an optimistic person. I’m not really a doomy-gloomy guy. And I would leave you with this thought: that the American people have historically been a generous, brave, forward looking, resourceful group, and we’ve shown great courage in the face of adversity before. I think we’ve become kind of a somewhat sloppy and complacent people in the last 25 years or so, but it doesn’t mean we can’t recover a lot of those virtues that are really part of the fiber of our national character. It’s still there and can still be recovered, and I think we’re going to be able to do that. It’s not going to be true for every place and everyone, but I think that’s going to help us a lot. So I have a lot of faith just in our national character, and the better angels of our nature, as Abraham Lincoln said.“
"The Long Emergency", James Howard Kunstler

Friday, February 12, 2010

The Debt Ring of Fire

I heard about this chart on Puplava's radio show. It provides an interesting two dimensional look at debt.

It appears that the U.S. is right in the middle.

The entire article:

Wednesday, February 10, 2010

A Lenten Request

Archbishop Gregory Michael Aymond, the current metropolitan archbishop of the New Orleans Archdiocese, today made a plea to Pope Benedict to postpone Lent for a month for the New Orleans area. The Archbishop stated "if you agree to this request, we will serve a 50 day Lent." The Vatican has not made a response regarding the request. The Archbishop further stated "We have served penance for 43 years with the Saints. Please let this party extend one more month!"

P.S. Just kidding of course!

Tuesday, February 9, 2010

When The Saints Go Marching In

My buddy and loyal Saints fan, "Big E", just sent me this one. Sooooo good!

Congratulations Mayor Mitch

Amongst "Who Dat Mania" this past weekend, a new mayor was elected in my hometown of New Orleans. With a significant margin of victory, Mitch Landrieu was elected to be the next mayor of New Orleans. Despite your politics, all can rest easy that honesty, integrity, work ethic, and balance will enter the office in May. With tough times likely ahead, someone that can bring the "haves" and "have nots" together will be important. Congratulations and good luck Mitch.

Sunday, February 7, 2010

A Who Dat WOW!!!!

What a Superbowl! What a finish! What a pick 6! What an amazing night for New Orleans. Drew Brees proved to be a champion today.

My favorite shot of the night.

I have to post one last time my best prediction in the history of this little blog.

"Saints win the Superbowl in 2010!!!"

Random Roving - October 1, 2008




Saturday, February 6, 2010

The Saints - I Remember

Now is a great moment to reflect on the Saints franchise history. Many great memories for me despite the many defeats.

-I was too young to remember the John Gilliam kickoff return
-I remember tiny Howard Stephens (#22)
-I remember Danny Abramowicz's consecutive catches
-I remember Archie Who
-I remember Ed Hargett and Billy Kilmer
-I remember Earl Campbell's pulled hamstring run
-I remember Wes Chandler's leaping catches
-I remember running down the carpeted ramps in the Dome
-I remember BOTH of Steve Bartkowski's final 10 second hail mary's..."trips right"
-I remember "I hate the Falcons"
-I remember Archie's minus 41 yard goal line fumble against Da Bears
-I remember walking down Claiborne holding my dad's hand on the way to Tulane Stadium
-I remember the halftime shows at Tulane Stadium. Do you remember the cannon that injured some of the performers? Or the skydivers?
-I remember the "beer backpacks" and "Jax beer right chea"
-I remember Crazy George
-I remember Bum and "the hat"....and Wade too
-I remember my sister and I putting ice on our blue jeans because it was so hot in Tulane Stadium
-I remember Danny Abramowicz running into the camera
-I remember Ricky Jackson's near death car crash and his famous quote "It's hard to keep a vet under 100!"
-I remember Tom Dempsey's kick. My dad's friend behind us was pacing saying "there's no way that he's going to make it! He made it! He made it!"
-I remember the Saints doubloons in the gameday programs
-I remember the Falcons 62-7 victory. My dad wouldn't let us leave early!
-I remember the Saints glasses you would get with a "fill up" at the Shell station
-I remember the first night in the Superdome
-I remember "the wave"
-I remember Al Dodd
-I remember the smell of Dome Dogs
-I remember the 8-8 year. Manning, Myers, Childs, Galbreath, and Muncie go to the Pro Bowl
-I remember meeting Archie Manning outside the locker room with Coach Dick Nolan after the first Falcons "last 10 second Hail Mary".
-I remember eating at Archie and Danny's restaurant on Veterans
-I remember riding the school bus and picking up Abramowicz's kids every morning
-I remember 1-15
-I remember my high school football coach, the former Saint, Errol Linden
-I remember Abramowicz saying to me "do you have a frog in your pocket?"
-I remember "Thunder" and "Lighting"
-I remember the Plaza, Loge, and the Terrace
-I remember the Tulane Stadium popcorn
-I remember watching Coach Nolan chain smoke on our front porch the day Mecom fired him
-I remember "woulda coulda shoulda"
-I remember "Jawn" Forcade and "the scabs"
-I remember when Archie slammed his helmet on the turf and it broke into pieces
-I remember Gumbo sleeping on the sidelines
-I remember the training facility on David Drive
-I remember Buddy D and his lisp
-I remember Wayne Mack
-I remember "the defense" with Mills, Jackson, Johnson, and Swilling...the Dome Patrol
-I remember "The Snake", Kenny Stabler, in a Saints uniform
-I remember Ditka
-I remember Tom Fears, J.D. Roberts, and John North
-I remember Hank Stram, "the suit", and the rolled up paper
-I remember very little of Haslett
-I remember John Mecom
-I remember my dad selling his extra ticket outside Tulane Stadium for "beer money"
-I remember jogging down the levee past Abramowicz
-I remember Joe Federspiel
-I remember parking the car in front yards uptown near Tulane Stadium
-I remember the "Benson Boogie"
-I remember "Do The Dalton"
-I remember Turley going crazy.....and those tattoos
-I remember "Johnny The Trench" cursing on the way home from the games.....the first time I heard the word "asshole"!
-I remember Bobby Hebert couldn't throw the long ball
-I remember Dombrowski
-I remember Deuce
-I remember booing the Saints and the Aints
-I remember ET Martin on the quick slant
-I remember when I went to bed at halftime and my dad told me the next morning that we blew the 28 point lead to Stabler and the Raiders...1979
-I remember Montana's 2 minute drill all too well
-I remember Reggie's flip in Chicago
-I remember the blood on Butkus' uniform in Tulane Stadium
-I remember Jim Finks
-I remember John Taylor's 200+ yard receiving game on MNF
-I remember Jim Henderson's game analysis
-I remember Ricky's post-game interviews....especially the one "in the locker"
-I remember playing a high school game in Tulane Stadium and thinking of Archie
-I remember giving the Bucs their 1st win
-I remember the 1st round draft choice for a kicker/punter...Erxleben
-I remember Bobby Scott
-I remember seeing Fran Tarkenton scramble
-I remember U2 and Green Day
-I remember Jim Everett, Richard Todd, and Dave Wilson
-I remember Mel Gray on the returns
-I remember Conrad Dobler and the mustache
-I remember the free NFL footballs from the Nolans
-I remember the Drew Brees "arrow accuracy" YouTube video
-I remember Jumpy Geathers
-I remember Tinker Owens
-I remember Archie on WWL
-I remember Larry, but no hands
-I remember Stan Brock
-I remember Jerry Romig on the PA
-I remember the playoff losses
-I remember Jack Del Rio
-I remember dominating Brady and the Pats
-I remember Coach Nolan calling me a "candy ass"
-I remember Gil Fenerty (OMG, I listed a Blue Jay!)
-I remember George Rogers
-I remember Joe's cell phone call
-I remember Willie Roaf
-I remember playing a high school game in the Superdome and thinking of Archie
-I remember Steve Walsh and Danny Wuerfful
-I remember seeing Jim Taylor run down the levee with two tree trunks for legs
-I remember Charlton Heston in "Number One"
-I remember Reuben
-I remember Mora's "we suck"
-I remember the Katrina Dome
-I remember sitting up in the coaches suite with my dad......and the great parking pass!
-I remember Waymer's picks
-I remember Rich Mauti's returns
-I remember that Aaron Brooks didn't quite have it
-I remember The Aints and the bags
-I remember Hokie
-I remember Morton. How did we ever let him go? To the Falcons?!?
-I remember Bob Pollard and Doug Atkins
-I remember Coach Nolan saying "what business do you have bringing my daughter home at 1 in the morning!"
-I remember the Saints in Tiger Stadium
-I remember Benson's threats to move
-I remember Derland Moore
-I remember the 7 touchdowns by 7 different players against Eli
-I remember Favre "on the ground"

43 years of history. Lets see if this history can be consummated into victory today!

Other than Colts fans, Falcons Fans, and Archie, how can anyone NOT root for the Saints??

"On January 23, 1971, just four years after they drafted him, the New Orleans Saints traded Billy Kilmer to the Washington Redskins. As a Saints fan and Kilmer fan, I was torn. At age eight, I made the decision to start rooting for the Redskins as my "backup" team just in case the Saints didn't make the playoffs. Well, that turned out to be a great strategy! P.S. After Joe Gibbs left the Redskins, I lost touch with the team and picked the Colts up as my new "backup" team when Jim Mora arrived. The later arrival of my fellow New Orleanian, Peyton Manning, sealed the deal. But remember I predict a Super Bowl victory for the Saints next season!"
Random Roving - November 7, 2008

Thursday, February 4, 2010

Dr. Paul's Latest Perspective

''The truth is that Americans are still losing jobs, the Fed is still inflating, and more regulations are in the works that will prevent jobs and productivity from coming back. We are on this trajectory for the long haul. The claim has been made many times that this administration has only had a year to clean up the mess of the last administration. I wish they would at least get started! Instead of reversing course, they are maintaining Bush's policies full speed ahead. They are even keeping the Bush-appointee in charge of the Federal Reserve! They are not even making token efforts at change in economic policy. And for all the talk of transparency, we hear that some powerful senators will do all they can to block a simple audit of the powerful and secretive Federal Reserve. We have been on a disastrous course for a long time. The money supply has doubled in the last year, our debt is unsustainable, the value of the dollar is going to continue its drop, and those Americans who understand where we are headed feel helpless and held hostage by foolish policy makers in Washington. When the bills finally come due and the dollar stops working we are in for some real social, economic and political chaos. That is, unless we take some major steps now to allow for a peaceful transition in the future.''
Dr. Ron Paul

The Wide Disparity

"The wide disparity between the hope of investor expectations and the reality of economic strength shows that the great bear market, already ten years old, remains in its early stages. As the next leg down matures, hope will turn to despair, and it will become impossible to ignore the persistence of the economic contraction."
Elliott Wave International - January 29, 2010

Babysitting The Politicians

"The great issue, this friendly critic added, is debt. The public knows this; Congress and the White House do not. 'To me the Republicans are as rotten as the Democrats' in terms of spending. 'Almost.' 'I hope we have big changes in 2010,' the friend said. Only significant loss will force the president to focus on spending. 'To heal our country we need to get the arrogance out of the White House and the elitists out of the Congress. We need tough love. We need a real adult in the White House because we don't have adults in the Congress.'"
Peggy Noonan's Friend

Source: The Wall Street Journal

Wednesday, February 3, 2010

Butt Of The Joke

"Are we going to get an elephant or a donkey? Either way, we get a butt!"
Gerald Celente

Dr. Paul On Solutions

"We’re indeed stuck between a rock and a hard place, and we don’t talk about how we got here; we talk about how we are going to patch it up. The solutions proposed so far – stimulus packages, bailouts and interest rate cuts – just amount to printing more money, which will lead to greater currency devaluation, contribute to the rising cost of living, and further squeeze the middle class and our senior citizens."
Ron Paul – 8/2008

Tuesday, February 2, 2010

Ian Gordon's DJIA 1000 Prediction

A Bear's Bear: We're Only At The Beginning of the Collapse
Source: BRIAN MILNER, April 2, 2009

Anyone wondering what a bear's bear sounds like need only spend some time with Ian Gordon, a Vancouver-based investment adviser and market historian whose genial nature seems at odds with his decidedly grim outlook. Basing his views on an interpretation of market cycles going back more than 200 years, the president of Long Wave Analytics has been consistently accurate in his forecasts in recent years. And if he is right now, much worse is yet to come.

Can you explain how your thesis works?
I sort of extended Kondratieff's economic cycle into something far bigger than he had ever intended. [Nikolai Kondratieff was a Soviet economist who concluded in the 1920s that capitalist economies endure recurring booms and busts over long cycles running up to 60 years.] I quickly discovered that it was very easy to recognize exactly where you were in the cycle.

You divide the cycle into the four seasons of the year and say that right now we're at the beginning of a long winter. Why is that?
I consider the seasons to be very appropriate. The present cycle started in '49. The spring started with the bear market ending that year. Spring ended in '66, when that bull market topped in June, with the Dow just under 1,000. ... Spring is the rebirth of the economy, and stocks perform as the economy performs.

And what happens when spring turns to summer?
We have always had an inflation in the summer of the cycle. The reason is that there was always a war. And it was always financed through paper money printing. In the first cycle - and I'm using the U.S. - it was the War of 1812. In the second cycle, it was the U.S. Civil War. In the third, it was the [First] World War and in the fourth cycle, it was the Vietnam War. When I started to write about this in '98, I knew exactly that we were in the autumn bull market [which always follows], and I knew that, given the massive increase in stock prices up to that point in time, we were much closer to the end than the beginning. Which obviously leads us to winter. When the stock market peaks - you can go back to the 1873 stock market peak or 1929 or 2000 - you go into the Kondatriev winter. The winter is really the death of the economy, because debt has to be taken out of the system. And that's what's occurring now. I could anticipate all this simply by looking at all the previous cycles, knowing that the stock market peak would be the indication that we were going into the winter and that the debt bubble would burst.

So why didn't this happen back in 2000 when tech stocks blew up?
Because [then Fed chairman Alan] Greenspan wouldn't let it. He brought interest rates down to 1 per cent [by 2004] and flooded the banking system with money.

Where do we sit now?
We're only really at the beginnings of this massive collapse of the debt structure. Much as the central banks are trying to feed money into the system, the collapse basically takes money out faster than they can put it in.

So all those government efforts to remedy the problems are going to come to naught?
My own feeling is it could be the end of paper money. ... The central banks and the treasuries' response to all this is to just continue to increase the debt. They're trying to get the credit lines open again, but I ask myself: Who's there who can actually take up the loans?

But the markets appear to be rebounding. How do you explain this?
In '29, the [market] peak was on Sept. 3, when the Dow hit 381. The first crash bottomed on Nov. 14, 48 per cent below the point from whence it had begun. Then you got a massive rally [because of government monetary intervention]. Into April, 1930, it recovered [almost] 50 per cent.I think we're very much at that same point again ... where people think that the government is starting to control the problems.

What about the argument that another depression is unlikely, because of all the economic, fiscal and social measures designed to prevent such a nightmare from reoccurring?
I just don't think that those measures are going to work. The U.S. consumer is absolutely tapped out, and that's who you have to depend on for your economy.

So it would be wrong to assume you're advocating a heavy weighting in stocks?
There's a time to be in stocks and there's a time to be in gold. When you're in one, it's because the other doesn't work. In this kind of environment, the only thing that has ever made sense is gold, because people will be so scared of anything else.

Based on your interpretation of Kondratieff theory, when do we see spring again?
The last spring really only started after the [Second World] War, and the war basically stopped the Depression. This time, the United States is in a much more difficult position. Going into the last Depression, it was far and away the world's largest creditor nation. Today, it's the world's largest debtor nation. So its efforts to try to overcome the effects of the Depression are going to be offset somewhat by its ability to borrow.

Getting back to the market, you obviously don't see this as anything more than another bear rally.
Ultimately, the stock market has to reflect the reality of the economy. If we were to emulate 1929-32 in the stock market, that would be an 89-per-cent loss in stock prices. I have a target for the Dow of 1,000 points at the bottom.

Boy, you're going to be a barrel of laughs Tuesday at a Night with the Bears (the Toronto event is sold out).
Having written about this and studied it, I honestly wish it wouldn't happen.

Do you ever depress yourself?
I do. But I hope that I've prepared myself and those that I've advised to basically look after themselves in the best way they can, given what we could see was going to happen.


Monday, February 1, 2010

Heeding The Council

"I never heed the council of my fears."
General George S. Patton