And The Next Hoffa Will Be?



Jimmy Riddle Hoffa

"The cavalry arrived in Lower Manhattan. Representatives from no fewer than 15 of the country's largest labor unions joined the Occupy Wall Street protesters for a mass rally and march today in New York City."

Source: ABC



"The cycle will likely bring unions back to strength as fear and anger 'drives the herd closer together'."

Random Roving, November 24, 2009

Who will be the "Hoffa" of this era?

The Crash Course - The Book

Way back in April 2009, I highly encouraged everyone to view Chris Martenson's "Crash Course".  Martenson has just released a book on the same topic.  I devoured it this weekend.  He's done an amazing job of quantifying the status of numerous key elements affecting our small world. I highly recommend reading it.

The Crash Course can be viewed at:
http://www.chrismartenson.com/

Rendezvous With Destiny

“There is a mysterious cycle in human events. To some generations, much is given. Of other generations, much is expected. This Generation has a rendezvous with destiny.” 
Franklin D. Roosevelt

Passing Along The Cancer

In "The Daily Reckoning" newsletter, Addison Wiggin, makes this great comparions to what our politicians are doing with the country's financial future.

"Imagine for a moment that you've chosen to smoke cigarettes all your life. You've ignored the warnings about them that appear all around you. Then, eventually, and unfortunately, you get diagnosed with lung cancer. Luckily, you've caught the disease in its very early stages. The doctor presents you with two choices. First, you can enter chemotherapy. The road to recovery, the doctor tells you, will be harsh. You'll suffer extreme nausea. You'll hardly be able to swallow from the ulcers you develop in your mouth. In short, you'll go through hell in an attempt to beat the disease. But because you caught the disease after the first symptoms appeared, you have a high chance at a full recovery.  The doctor also offers a second alternative. He's worked out a deal that allows you to rid yourself of the disease instantly. No pain. No suffering. No hell. All you have to do is agree to give the disease to your 2-year-old grandson."

Boudreaux & Mbah Maridjan

When I read this story, I couldn't help but think of my friend Boudreaux.  Why is it that we refuse to listen to the alerts?  Is it like the car alarm in the mall parking lot?  Is it the boy that cried wolf?

"Even after an eruption alert was issued and most villagers on the slopes of Java's Mount Merapi had been evacuated, 83-year old Mbah (grandfather) Maridjan stayed put. The spiritual guardian of the mountain, his battle to tame one of Indonesia's most active volcanoes ended on Wednesday when he was buried by the mountain's thick ash.  He was reportedly found dead in a prayer position in his house, as rescuers also dug out more than two dozen more victims in the area - many who had also refused to leave.  In the wake of the eruption, houses and fields were left blanketed in thick, white ash, while leaves had been singed off trees.  Villagers say they will mourn the loss of a respected elder who was as important to them as the mountain itself."

Source: BBC

Eruption alerts are everywhere and the sheeple continue to graze with no concern.

Sooner Or Later

"There is no means of avoiding the final collapse of a boom brought on by credit and fiat monetary expansion. The only question is whether the crisis should come sooner in the form of a recession or later as a final and total catastrophe of depression as the currency systems crumble.”
Ludwig von Mises

The Challenge Of The Weatherman

"So often people make the observation that we can't tell what the weather is going to be tomorrow so how can you possibly say anything about what the weather is going to be like in three months. Well obviously you can't.  Seasons change.  So it's not a question of having a rainy day today and a sunny day tomorrow.  It's the broader shift.  You can't predict the breaking of each wave on the seashore.  You can't predict the tides. You see what I mean.  This is looking more broadly at changes.  When you refocus your field of vision, not on the breaking events today and tomorrow, but on a longer term field of view, these changes become pretty clear."
Neil Howe, Author, "The Fourth Turning" (Interview with Jim Puplava)

Martenson's Status Report

An update from Chris Martenson:
"By my analysis, we are not yet on the final path to recovery, and there are one or more financial 'breaks' coming in the future. Underlying structural weaknesses have not been resolved, and the kick-the-can-down-the-road plan is going to encounter a hard wall in the not-too-distant future. When the next moment of discontinuity finally arrives, events will unfold much more rapidly than most people expect. My work centers on figuring out which macro trends are in play and then helping people to adjust accordingly. Based on trends in fiscal and monetary policy, I began advising accumulation of gold and silver in 2003 and 2004. I shorted homebuilder stocks beginning in 2006 and ending in 2008. These were not ‘great' calls; they were simply spotting trends in play, one beginning and one certain to end, and then taking appropriate actions based on those trends. We happen to live in a non-linear world; a core concept of the Crash Course. But far too many people expect events to unfold in a more or less orderly manner, with plenty of time to adjust along the way. In other words, linearly. The world does not always cooperate, and my concern rests on the observation that we still face the convergence of multiple trends, each of which alone has the power to permanently transform our economic landscape and standards of living. Three such trends (out of the many I track) that will shape our immediate future are: Peak Oil, Sovereign insolvency, and Currency debasement.  Individually, these worry me quite a bit; collectively, they have my full attention."

The entire article:
http://financialsense.com/contributors/chris-martenson/prediction-things-may-unravel-faster-than-you-think

Tectonic Monetary Shift

"The most pressing macro-observation I’d like to make – an observation that’s critical for investors to understand (though most don’t or won’t) – is that the tectonic monetary shift now underway is truly global in nature. And it’s not going to be over until a new and markedly different monetary regime has been implemented."
Casey Research

Kangaroo Court

"In times like these politics gets very crazy. The public forgets how misled and confused it is and develops vicious certainties that do not necessarily jibe with reality. The public becomes a mob and democracy turns into a kangaroo court, which is to say: a mockery of the rule of law. I suspect we'll see a correlation of turbulence in politics and markets as the weeks pound forward toward Halloween. By election day, democracy itself will be in disrepute and the streets will run with mad dogs. When this sucker goes down (to paraphrase a past president) it's going to be like a fire in a circus tent. Don't expect much from the clowns' bucket brigade. We'll be lucky if they don't toss gasoline into the grandstands."
James Kunstler, Author, "The Long Emergency"

Entire Article:
http://kunstler.com/blog/2010/08/the-queasy-season.html

The Power of The Limbic System

"The answer, of course, is that the bubble hijacked people's reasoning faculties. As Chapter 8 of 'The Wave Principle of Human Social Behavior' explains, this is how social mood works. The desires and despairs of the non-rational limbic system are always in control, but it takes the extreme behavior of a bubble and collapse to reveal the driving force that is social mood. Still in control, social mood is now inducing people to believe that the crash has come and gone."
Steve Hochberg, Elliott Wave International

Doom-Mongers

"Those who cautioned against rising debt levels were dismissed as doom-mongers; after all, asset prices were rising even faster, so balance-sheets looked healthy. And with the economy buoyant, debtors could afford to meet their interest payments without defaulting. In short, it paid to borrow and it paid to lend. Like alcohol, a debt boom tends to induce euphoria. Traders and investors saw the asset-price rises it brought with it as proof of their brilliance; central banks and governments thought that rising markets and higher tax revenues attested to the soundness of their policies. Debt increased at every level, from consumers to companies to banks to whole countries.  "
Source: The Economist

"This historic unfolding event can be examined and observed on many scales: individuals, cities, counties, states, regions, countries, and continents. The weakest stumble first."
Random Roving - February 3, 2009

It Only Takes Two To Contango

"People seem to take for granted that financial values can be created endlessly seemingly out of nowhere and pile up to the moon. Turn the direction around and mention that financial values can disappear into nowhere, and they insist that it is not possible. “The money has to go somewhere…It just moves from stocks to bonds to money funds... For every buyer, there is a seller, so the money just changes hands.” That is true of the money, but it’s not true of the values...For prices of assets to fall, it takes only one seller and one buyer who agree that the former value of an asset was too high. If a million other people own it, then their net worth goes down even though they did nothing. Two investors made it happen by transacting, and the rest of the investors made it happen by choosing not to disagree with their price. Financial values can disappear through a decrease in prices for any type of investment asset, including bonds, stocks and land.  Anyone who watches the stock or commodity markets closely has seen this phenomenon on a small scale many times. Whenever a market “gaps” up or down on an opening, it simply registers a new value on the first trade, which can be conducted by as few as two people. It did not take everyone’s action to make it happen, just most people’s inaction on the other side.  A similar dynamic holds in the creation and destruction of credit. Let’s suppose that a lender starts with a million dollars and the borrower starts with zero. Upon extending the loan, the borrower possesses the million dollars, yet the lender feels that he still owns the million dollars that he lent out. If anyone asks the lender what he is worth, he says, “a million dollars,” and shows the note to prove it. Because of this conviction, there is, in the minds of the debtor and the creditor combined, two million dollars worth of value where before there was only one. When the lender calls in the debt and the borrower pays it, he gets back his million dollars. If the borrower can’t pay it, the value of the note goes to zero. Either way, the extra value disappears."
Vadim Pokhlebkin, Elliott Wave International


Entire article: http://www.elliottwave.com/freeupdates/archives/2010/08/16/Deflation-How-Does-It-Affect-Asset-Values.aspx

You Are Here

Maybe it's the "geologist in me", but when I'm touring somewhere I always love the map with the "you are here" arrow. It quickly gives you a reference point and spatial context. Now sometimes on a long hike, I hate those maps because they quickly inform you that your current location is far from your ultimate destination!

I've presented the chart below several times. I was reviewing it again this morning and find the quotes from President Hoover so interesting. Was he in denial, dishonest, or a good leader attempting to keep the sheeple from stampeding. I don't know. I would guess that he was "in the know" and was attempting to stop the stampede. Unfortunately herding mammals move "in mass" and one individual usually can't stop the stampede.

I've annotated the chart with my own "you are here" arrow. I've referred to what I call the "head fake" before. On October 8, 2009 I made a detailed post on the topic and that prediction was dead on. The last market rally was exactly that. It lures us back it. The "Kool-Aid" was poured for one last drink. I believe that the final sprint has occurred.

Unfortunately for our 401-k's, but fortunately for mankind's future, I believe that we are in a downward slide until at least 2012. A likely bottom might even be in 2016. But, at the bottom, we experience our "great awakening". Stayed tuned mon amis.

Kuntsler's What Is It

"A number of things are going on in our society that can be described with precision. We've generated too many future claims on wealth that does not exist and has poor prospects of ever being generated. That's what unpayable debt is. We have such a mighty mountain of it that the Federal Reserve can "create" new digital dollars until the cows come home (and learn how to play chamber music), but they will never create enough new money to outpace the disappearance of existing notional money in the form of welshed-on loans. Hence, money will continue to disappear out of the economic system indefinitely, citizens will grow poorer steadily, companies will go out of business, and governments at all levels will not have money to do what they have been organized to do. This compressive deflationary collapse is not the kind of cyclical "downturn" that we are familiar with during the two-hundred-year-long adventure with industrial expansion - that is, the kind of cyclical downturn caused by the usual exhalations of markets attempting to adjust the flows of supply and demand. This is a structural implosion of markets that have been functionally destroyed by pervasive fraud and swindling in the absence of real productive activity."
James Kunster, "What Is it"

An Update On The Headfake

On February 28, 2009, I made a post about the "head fake".  The timing of the call for the rally was quite good....three days prior.  The "head fake" could be approaching the end.  In Elliott Wave terms, the "C wave" is upon us.  From now to November should be a rocky road.  The election "hocus pocus" could present some facades and confusion.  Stay focused on the data.

Dow Jones Industrial Average (2006-2010)

The Third Depression

"Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as “depressions” at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31. Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline — on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.  We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense."
Paul Krugman
Source: The New York Times

The entire article:
http://www.nytimes.com/2010/06/28/opinion/28krugman.html

Shadow Boxing The Facts

Shadow boxing is a technique that boxers use in training where they throw punches at the air. Its purpose is to increase muscle strength and to work on rhythm. Sometimes I wonder if the Fed isn't shadowboxing with the sheeple.

Shadowstats.com is a website dedicated to providing accurate data related to publically released government data. Over recent years, many metrics such as the consumer price index (CPI) and unemployment have had there definitions and formulas changed. This presents a great challenge when analyzing data on a historical basis. It's no longer "apples to apples". Often we like to compare a current cycle with one in the past. For instance, in the past two years, many have made comparisons to the Great Depression. If these metrics are not calculated the same way, then the comparisons are worthless.

Below are two graphs created by Shadowstats. Note the difference between accuracy and what is reported by the government and the media.

Note that real unemployment is much worse than being reported.

Note that the CPI formula was changed during Clinton's term.

As I always say, do your own research.

http://www.shadowstats.com/

Historical Relationships and 1/3, 2/3's

"This will in turn then put the market at great risk of a far more devastating decline than most anyone anticipates. The bottom line is that the Phase II decline is lurking and there is analysis and there are tools to help understand how the setup is unfolding. Just as I warned about the decline into 2002, the extended 4-year cycle into the 2007 top and even the 2008 top in commodities, few listened but later wished they had. You have been warned!"
Tim Wood, CPA - June 25, 2010

Source: Financial Sense Online, Tim Wood, CPA
Ever since the rally out of the March 2009 low began, I have maintained that it has been a bear market rally. All the while, the politicians think that their printing spree, bailout plans and stimulus packages have put a bottom in the economy. I continue to hear the talking heads on "CNBS" cheering on the public, and in their eyes all they can see is the so-called "double dip" recession. I’m sorry folks, but this is not a double dip recession. According to my analysis we have entered a global debt crisis in association with K-wave winter. Besides the purging of debt from the system, a by-product of K-wave winter is that we have also entered global bear markets in stocks and commodities. Based on my analysis, the rallies that began in early 2009 have not been associated with a recovery, but rather a reprieve of the ongoing deflationary forces of K-wave winter.

In accordance with Dow theory, bull and bear markets are divided into three phases with each of these phases separated by important counter-trend moves. The counter-trend moves separating these phases are very deceiving because people perceive them as being a resumption of the previously established longer term move rather than a counter-trend move within the newly established trend.

In the current case, most people perceive the 2009 low as THE bottom and the advance that has followed the March 2009 low as being a resumption of the advance that carried the markets into the 2007 highs. Based on the ongoing evidence associated with my analysis, this is not true. According to my analysis, 2007 marked the top of the 33 year longer-term bull market that ran between 1974 and 2007. Also according to my research the rally that has followed the 2009 low has been the deceitful counter-trend move that will ultimately prove to separate Phase I from Phase II of the much longer-term secular bear market. Historically, Phase II declines are the most devastating and I see no evidence that this time will be any different. I have discovered a very specific "DNA Marker" that has been associated with every major stock market top since the inception of the Dow Jones Industrial Average in 1896. When all of the pieces of this DNA Marker are in place, the market will be at great risk of the resumption of the ongoing secular bear market and the decline into the Phase II low. Virtually no one understands the destruction that will follow in the wake of the Phase II decline. It is the reckoning of the seriousness of the situation associated with Phase II declines that make them so devastating.

As was seen during the Phase I decline, everyone will again turn to the government to "fix" the problem. Funny thing is, the government was instrumental in causing the problem in the first place. Furthermore, the appearance that the government created the bottom in 2009 is an elusion. The government does not know any more about fixing the economy than they do about fixing the oil leak in the Gulf. All the government can do is spend more money and create more red tape. The best thing that could happen would be for the government to stand back and let the free markets do what they will eventually do anyway. Based on the historical relationships between long-term secular bull and bear markets, the bear markets tend to run about one third the duration of the preceding bull market. Thus, with us less than 3 years from the 2007 high, this secular bear market has much further to run. Based on the historical relationships a bottom is not likely due until late in the current decade. For more on historical bull and bear market relationships please refer to the April 30th Market Observation.

From a Dow theory perspective, the bullish primary trend change associated with the bear market rally still remains intact. According to Dow theory, confirmation of a primary trend change requires a joint move above or below a previous secondary high or low point. This has not yet occurred. But, when it does and if the DNA Marker that I have identified at every major top since 1896 is also confirmed, then at that time the DNA Marker will serve to validate Dow theory. This will in turn then put the market at great risk of a far more devastating decline than most anyone anticipates. The bottom line is that the Phase II decline is lurking and there is analysis and there are tools to help understand how the setup is unfolding. Just as I warned about the decline into 2002, the extended 4-year cycle into the 2007 top and even the 2008 top in commodities, few listened but later wished they had. You have been warned!

Prechter's Perspective

"The greatest extreme in positive social mood in centuries has led to the greatest expansion of credit in history. The level of outstanding debt is unsustainable and will be unserviceable and unpayable in the deepest depression in 300 years. The trend toward negative social mood that has been in progress since 2000 and which is about to accelerate will continue to curtail lending and lead to a tidal wave of defaults and a terrific deflation. The amount of outstanding credit today is so large that systemwide defaults could lead to as much as an 80-90% decline in the volume of dollar-denominated credits worldwide. Prices of everything, including corporate shares, would fall to reflect this change in the total supply of credit. In such an environment, surviving dollars and dollar credits, representing the denominator of the DJIA, will rise in value, and the Dow-along with everything else not used as money - will fall in dollar price."
Robert Prechter, Elliott Wave Theorist - May 2010