Thursday, September 5, 2013

Kamikaze, The Sequel

Wartime vividly demonstrates the character of individuals and peoples.  These characteristics may be less obvious in peacetime but memes developed over thousands of years tend to strongly persist unless and until wiped out by human or other natural forces.

World War II gave the world a big-show demonstrating the unique sense of self-sacrifice running through the Japanese character.   While stories have dramatically featured the act of Seppuku through the ages, nothing quite drives home the spectacle aspect of Nipponese suicide as the image of the kamikaze pilot careening to certain death in hopes of claiming some explosive flaming victory and honor for the life sacrificed.

Kamikaze emerged as a tactic when reason indicated foregone outcome of World War II.   Today, we are witnessing a national-scope Kamikaze theater as Japan tries to unleash and ignite inflation to wash away the spreading, darkening, dishonorable stain of profound Loss due to decades of wildly imprudent debt expansion.  Japan's dynamic government+financial empire may now be symbolized as a screaming earthbound kamikaze plane, bearing all the nation's citizens as sacrificial passengers.  Incoming!

The impact of Kamikaze fighting was uncertain in its opening act.  As preventive and corrective action improved the threat was contained.  Once again, we cannot be sure of the impact as Japan races to commit financial suicide.  One hopes that our own powers that be can see the falling plane aimed right at our financial munitions cache and have solid preparation in place to deflect or meet it.

Sunday, July 28, 2013

Do Sports Signal Market Reversals?

A number of respected market observers say that the true, "internal" top of the Big Bull Market that started in 1981 occurred in 1998.  1998 also marked the end of the Chicago Bulls' hoops dynasty, one of the greatest ever witnessed in all of sports.  Their reversal down in 1999 was truly dramatic.  The market fibrillated until 2000 when the bubble popped, and its reversal was dramatic as well.

Now here we are in 2013.  My hometown San Francisco Giants have won two World Series' in the last three years.  This year, however, they are about as snakebit or bad a baseball team as you'll ever see and it's quite possible they'll finish the year with the worst MLB record.  Quite a dramatic reversal. Since the busted stock bubble that bottomed in 2002/3, the Federal Reserve has been on quite a campaign to pump up debt levels to levitate the market.  Especially since March 2009.  There are plenty of signs that this effort is losing effectiveness and is increasingly precarious. \

In the vein of past is prolog and history rhymes, make a mental note that the Giants' relatively short fling at the top of baseball has a certain poetic rhyme factor with the Federal Reserve's post-bubble bubble attempt at a bull market encore, that will appear to be a relatively brief historical footnote once it has turned.   The key reversal of the Giants' fortunes is in.   Will the market do the same?

Thursday, July 18, 2013

Savers Bail out the US Government, Get No Thanks

This article in ZeroHedge : should confirm the heat under your collar if you (attempt to) save in this central-bank-planned economy.

It's no secret Uncle Sam spends WAY BEYOND our collective means (for our benefit, right?) year after year and has piled up a super-impressive growing national regret of debt that is fast approaching $20T Trillion dolores.  Ben Bernanke just said this week in testimony to Congress that if he slowed down printing money ("not literally") the "economy would tank".  Oh, "tank" is an arcane econometric term meaning in the crapper, for the rest of us.

Since Uncle Sammie can't possibly afford to pay ANY interest on the swelling national regret, his handler, Bro Ben and the Federal Reserve (hey, that's a catchy band name!), has held rates at about zero for years with a snazzy policy vehicle called the ZIRP (zero interest rate policy).  It doesn't take much power of observation to see that your savings or money market accounts are getting zip nada as long as you ride the ZIRP.  In total, it's calculated that over the years the ZIRP has taken over $10T Trillion dolores out of the pockets of savers.  A lot of that is money that USG would have had to pay us savers if there were freely functioning exchange and securities markets.

Now I don't recall that any politicians ever asked the millions of savers if they would mind floating an extra bunch of irresponsible overspending, or bailing out the TBTF Banksters with all the niceties including record bonuses etc.  I don't recall that anything has been offered as a make-good down the road, you know, like some kind of savings bond where we get ZIRP for the first five years and then SIRP (some interest rate policy) for the next five to recognize our sacrifice to the coffers of the Reckless and Endangering.

There should be a Tomb to the Unknown Saver after all the ashes of Great(er) Depression II have blown away.  Somehow I doubt that will happen, but don't lose heart; there will be plenty of statues and BUSTS of the Central Banking Hero of All Time, Bro Ben.   I hear they are a great investment already.

Wednesday, July 10, 2013

Training America's Secret Police

If true as reported, a recent article by McClatchy on the Obama administration's "Insider Threat Program" is a deeply troubling harbinger of dark doings in the Land of the Free, Finks.

On the surface, it is bad enough that the administration directs Federal employees to snitch on each other based on unscientific observation of almost random behaviors.  Where did you go on your vacation?   Did you just make a new friend?

If this garbage policy takes hold and the feddies develop strong finking habits, first on each other, all of our futures can be compromised.   About 1 in 12 of all jobs in the USA is Federal.  That makes it possible for a zombie 4F - Future Federal Fink Force - to capriciously and maliciously monitor every citizen.

Yes there is an Internal Threat in the USA, and it starts at the top.

Tuesday, June 11, 2013

Fascism: Life of the Parties

Political actors and too-big-to-fail business, the unholy alliance.  We are living what the framers of the Republic warned about and Eisenhower so eloquently reminded.   It's all too easy to experience government unaccountability at the local level first-hand.   Laws can be manipulated, a gullible public misled, but the most insidious statism occurs in the administrative domain.  I am not surprised that privacy-invading, constitution-breaking depredations at the Federal level are commensurate with its resources including the power of its private sector financial, communication, sick-care and defense enablers.

Sadly, we are witnessing a macabre war-on-freedom - as the 'developed' world entrenches itself in another incarnation of Fascism, the corrupt collusion of large powerful government and private organizations. This,  only a few decades after the enormous sacrifices of previous generations to ostensibly root Fascism out.  The losers, again, are ordinary folk who misplace their trust in government that is not their friend.

Humans give the lie to Lamarck over and over. Our political ‘learnings’ do not assimilate in DNA.  So we must speak out, rise up again. Smokey Bear, where are you when we need you most?  "Only YOOOUUUUU can prevent fascism."

Tuesday, June 4, 2013

Farmer Green's Horse and the New Real Estate Bubble

The New York Times had this to say today on the reason for the recent run-up in real estate prices --

Well, well.  This high-finance chicanery reminds me of a classic story --

Farmer Brown was walking by Farmer Green's farm one day and noticed a very fine looking mare in the side pen. He stopped to admire the horse and then decided he would ask Farmer Green what he wanted for the horse. Farmer Green said he would part with the horse for $50. Farmer Brown thought it was a steal so he paid the $50 and took the horse home. A week later, Farmer Green is walking past Farmer Brown's place and sees the mare in his side yard. Farmer Green thinks to himself that he was crazy to part with such a fine horse so he approaches Farmer Brown to buy the horse back. Farmer Brown says he'll sell the horse to Farmer Green for $100. Farmer Green hands over the $100 and takes the mare home with him. Another week passes and Farmer Brown is once again walking past Farmer Green's place and sees the mare, regrets selling her, and pays Farmer Green $150 to buy back the mare. A month passes and Farmer Green is passing Farmer Brown's farm and can find no sign of the mare so he goes up to the door of the farmhouse. Farmer Brown comes to the door and Farmer Green asks, "Where is the mare?" Farmer Brown responds that he sold the mare to someone from the city who was passing and wanted to buy her. Farmer Green admonished him saying, "How could you sell her. We were making a pretty good living off that horse!" 

Rebecca Liming
, Indianapolis, IN, as published by Prairie Home Companion:

Back to our regular programming --

If you are a too-big-to-fail zombie banking institution with access to almost limitless zero-interest cash from Big Brother Bank of Federal Reserve, and you happen to hold a huge mess of stinking below-market real-estate assets, what could be better than closing down the public market and trading these assets up with your bankster colleagues across the street?  Suddenly your balance sheet looks a WHOLE LOT BETTER!  An occasional public sale at the marked-up price is all the validation you need.  BRILLIANT.

Today's 1% Solution:
"nequaquam sumere possis prius publicum commodum" - Never give the public an opportunity if you can preempt it.

What Could the Federal Reserve Learn from the BLM?

Fire Season is here, and merits reflection.  Today's images are of the 1988 Yellowstone Fire, a spectacular consequence of Bureau of Land Management fire management policy.  

For many years, the BLM had a policy of suppressing wildfires.  In the Western USA, wildfire is an essential part of Nature's cycle.  Suppressing smaller fires may have made sense for National Park attendance and other economic interests, but the policy upset Nature's balance by building up a huge unsustainable supply of brush and under-story fuel.   When it finally ignited, the results were super-sized.

For many years, the Federal Reserve has demonstrated a policy of suppressing (the appearance of) economic corrections by continuously expanding debt; facilitating the Federal Government's expansion and expenditure far in excess of its income.  In a functioning market-based economy, cyclical expansion and contraction is normal.  Contractions clear out excess/bad inventory and debt, setting the stage for a new expansion.  The Fed has been busy attempting to suppress corrections, upsetting this natural cycle.  A couple of times (2000, 2008) the correction genie got part way out of the bottle.  Each episode was an excuse to use monetary policy to further accelerate inflation/reflation of debt to suppress future market corrections.

AFTER the 1988 Yellowstone fire, BLM modified its forestry policies to allow for more frequent and more widespread wildfires to keep the fuel supply from growing to epic proportion.   All of us lost a huge part of Yellowstone before common sense guided bureaucratic policy.

The Fed, together with its global central banking associates, has built up the greatest and ugliest debt pile in known history.  Some day, that pile will ignite.  And when it does, the financial markets and the economy are going to burn like Yellowstone in 1988.  I have given up on hoping that central bankers would learn from BLM's experience.  They are determined to repeat it.  Those responsible for the great coming Financial Fire of the 21st Century may be chastised but otherwise will continue to prosper.  The rest of us will get to share the ashes for a long, long time.