Wave 2

"Wave 2 should regenerate substantial feelings of optimism. At its peak, the Fed will appear to have saved the banking system, and investors will be convinced that the bear market is behind us."
The Elliott Wave Theorist - April 18, 2009

For a technical perspective, review The Point of Recognition.

For a psychological perspective, review The Return To Normal.

"The door to the last great selling opportunity is wide open at the moment." Elliott Wave Theorist 8-27-09

Organized Chaos

I was working on the laptop out on the back patio today and noticed this excellent example of organized chaos. While the team appears in total chaos, they very efficiently achieving their objective of transporting a piece of dog food (100x their weight) across the patio (15 ft.) in ten minutes. Very impressive. I only witnessed one brawl between two ants. In true Darwinian fashion, the larger one took care of the smaller one. It must have been union versus non-union!

Wouldn't it be incredible if the Senate and Congress worked as efficiently as these little critters!!

Have The Sheeple Awoken?

The mass social mood continues to shift. Have the sheeple awoken? I argue that it's still just the nerdy white folk.

The Point of Recognition

"And this time there will be no mistake about the next wave down. It will be a "third of a third," also known as the point of recognition."

Elliott Wave International

What's Another 2 Trillion To The Great Grandchildren?

Was anybody surprised that we just mysteriously spent another $2 trillion. As my neighbor said last night, "we have now spent our great grandchildren's money!". There is no way for this to end pretty my friends.

The NY Times reports:
http://www.nytimes.com/2009/08/26/business/economy/26deficit.html?bl&ex=1251432000&en=7d1bba04578a733a&ei=5087%0A

The Bear Comparison

The summary below is sourced from Weiss Research Inc. It provides a nice comparison of our recent contraction to others in the pasts. Note the largest market correction and what event occurred to reverse it.

The Return to Normal?

Watching the news lately brought me back to this diagram. Are we at the "return to normal"?

Ron Paul On Free Markets

Congressman Ron Paul - "Texas Straight Talk" column (Paul's House of Representatives website 8/18/09):

"The free market is a naturally occurring phenomenon that can't be eliminated by governments, not even totalitarian ones like the former Soviet Union. It can be regulated, over-taxed and manipulated until it is driven underground. Lately it has been wrongly accused of doing so many things it just doesn't do, that are really the fault of crony corporatism and convoluted government policies that brought on the crisis. Too many people equate the free market with big business doing whatever it wants, but that is not the free market. Unconstitutional taxpayer funded bailouts are what allow giant corporations to run roughshod over the economy. The free market is what puts them out of business when they misbehave."

"The free market is you and your neighbors working hard to produce what you produce, and exchanging goods and services voluntarily, in mutually agreeable arrangements. The free market is about respecting property rights and contracts. It is not about building up oligarchs and monopolies and confiscatory tax theft - these are creatures of government."

"We must watch out when government comes up with interventionist solutions to interventionist problems. The root of our problems lie in interventionism. Trusting the free market is the solution."

Inflation, Deflation, or Goldilocks

This recent article in the WSJ presents a nice portfolio approach to the future potential economic outcomes.



Entire article:
http://www.careerjournal.com/article/SB124847825820080351.html


A prior rove on the topic:
http://randomroving.blogspot.com/2008/10/four-potential-outcomes.html

Inheritance and Borrowing

"We do not inherit the Earth from our ancestors, we borrow it from our children."
Native American Proverb

This concept can be translated down to our country. We do not inherit our country from our ancestors, we borrow it from our children. This puts our country's current fiscal situation in full perspective.

The Oracle, The Butterfly, and Greenback Omissions

The Oracle spreads some more wisdom:

"The United States economy is now out of the emergency room and appears to be on a slow path to recovery. But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself."

"To understand this threat, we need to look at where we stand historically. If we leave aside the war-impacted years of 1942 to 1946, the largest annual deficit the United States has incurred since 1920 was 6 percent of gross domestic product. This fiscal year, though, the deficit will rise to about 13 percent of G.D.P., more than twice the non-wartime record. In dollars, that equates to a staggering $1.8 trillion. Fiscally, we are in uncharted territory."

"Because of this gigantic deficit, our country’s “net debt” (that is, the amount held publicly) is mushrooming. During this fiscal year, it will increase more than one percentage point per month, climbing to about 56 percent of G.D.P. from 41 percent. Admittedly, other countries, like Japan and Italy, have far higher ratios and no one can know the precise level of net debt to G.D.P. at which the United States will lose its reputation for financial integrity. But a few more years like this one and we will find out."

Excerpt from Warren Buffet in the New York Times.
Full article:
http://www.nytimes.com/2009/08/19/opinion/19buffett.html

The Goal Of The Bullrider

I've had many conversations with the angry mob lately and I continue to use my analogy of the bullrider. I argue that the president can't control or change the cycle, dictators can't, and we as individuals can't. But, we can protect, plan, and adjust for the next phase of the cycle. We should focus on "staying on the bull" for the 8 seconds and give up on the dream of taming the bull and riding him for many minutes or hours. That is simply unrealistic. The bull is untrainable, and we're best focusing our energy and time on making the best of our 8 seconds of the ride. Turn off MSNBC and FOX, and focus on what makes you the best 8 second rider!

"No person or agency can manipulate the markets, at least not for more than a day or two." Robert Prechter
http://www.outlookprofit.com/article.aspx?261102

A Demonstration of Democracy

Back in February, I commented on this mad, mad, mad world. The anger continues to rise. So far, it's just the angry white nerdy guys (note the smile on his face).

This video sums up the current mood. The senator calmly says "we've just had a demonstration of democracy, okay." I feel much better now!
http://www.youtube.com/watch?v=rytLJWaJff8

First Iraq, then the bailout, then the 201k, then healthcare, and then?????

U.S. Fed Inc.

The recent news regarding the U.S. Postal Service makes one think really hard on whether we want the government controlling our medical sector. I surmise that the mail business is pretty straight forward. You are able the track the volume of mail being delivered which should then provide the ability to grow or contract the operation as needed and in a timely fashion. It's definitely not rocket science.

Fox news reports:
"Government budget woes, the efficiency of the Internet and the staggering volume of junk mail have rightfully buried the U.S. Postal Service, say environmental groups and budget analysts who call the mail delivery model built on the Pony Express no longer viable in the 21st century."

"Nearly 700 post offices around the country are scheduled for potential closure and consolidation by the independent Postal Regulatory Commission. In a document presented to a House subcommittee last week, the near-bankrupt U.S. Postal Service also called for reducing service from six to five days a week."

The Shipping Metric

I've never read or known much about the shipping business. Read the article in the link below and see a unique view of shipping as an economic metric:
http://www.elliottwave.com/freeupdates/archives/2009/07/30/Baltic-Dry-Index-Does-the-Rally-Mean--The-Worst-Is-Over-.aspx