Path of Maximum Frustration

OK, Congress played “Kick The Can” and passed a higher debt limit while sweeping the ‘problem’ under a “committee rug” of “Real Soon Now” … expecting that would prevent the (expected) stock market plummet if they “failed to raise the debt limit”.

What these clowns failed to understand is that the stock market takes “The Path of Maximum Frustration”. IF you expect it to do something, it will most often do exactly the opposite (or whatever will frustrate the largest number of players).

There are valid reasons for this. Not the least of which is that folks will have placed bets in the direction of their expectations, and that leaves few folks to MAKE that expectation happen on the news. (So, for example, if folks expect the Dow to rise, so everyone listening to the news has already bought the Dow, who is left to buy more and make it rise more?…)

No, we’ve not (yet) had a down 1000 point day… instead we’re having a “death of a 1000 cuts” series. Why? “Why, don’t ask why, down that path lies insanity and ruin. -E.M.Smith”… So, exploring why:

The Bank of New York began discouraging big withdrawals (the news presenter was a bit indistinct and I’ve not had time to dig out a news print reference, but I think he said they had started to charge for large withdrawals). The Euro Zone is (Gasp!) suddenly discovered to be a basket case with both systemic and banking risks (as though we didn’t know already…) and the latest financial numbers show an economy in the USA that is barely sputtering along.

“When in danger, when in doubt, run in circles, scream and shout! EVERYBODY PANIC OUT!!!”

(I don’t know if that’s an original with me, or not. The first sentence I lifted from someone else, but the second add on bit I think is mine… Tracking attribution sometimes takes more brain cells than it’s worth ;-)

So we’re back in ‘run for the exit’ mode. Watch out for Gold to have margin call impact (as folks sell what has profit in it to fund the margin calls on their losing bets). The news of economic stagnation turning to downturn (‘double dip’ ‘double dip’ ‘double dip’…. that mind numbing mantra of a year ago, finally feared to show up now…) has raised the specter of diminished demand: So commodities have had a sell off.

I’m now stopped out of metals positions (platinum et. al.) other than a small position in GLTR that is a basket with gold, silver, platinum, and palladium in it. I’ll be making a sell / keep decision on that over the weekend. Mostly in $USD (but I’ve been there for a while now) and with a few ‘core’ holdings.

The winner, oddly, has been TLT bonds. This is a ‘Risk Off’ trade and folks run for “safety” and even after our Theatre Of The Absurd Congress the US Bond is seen as ‘safe’ (oddly, despite part of the ‘issues’ being the threatened AAA downgrade even WITH the borrowing / spending lid lifted… due to the fear of too much debt to GDP ratio… FINALLY the rating agencies start to notice that more credit cards is NOT the same as more income… At any rate, “watch this space” as a Democrats vs Rating Agencies food fight develops) But, until then, folks are dumping stocks, Euros, commodities, you name it.

WHERE can you put the cash you get from that?

The “usual answers” were the Euro Zone and Yen. But the Bank Of Japan has started Yen intervention (so time to be out of Yen… don’t fight a central bank, wait for them to get tired of the game…) and the Euro Zone Banks are ‘not your friends’ right now. The only other traditional “risk off” parking spot is US Bonds (that are once again being made available in large quantities with $2.4 Trillion or so of issuance soon to be available…)

What A Mess.

So it’s Duck and Cover Redux.

Later tonight I’ll add the “charts” to this story that show how to read those tea leaves. I’ll also do the analysis over the weekend to figure out if this is a ‘buy the dip’ moment or a “Never try to catch a falling knife” moment… for now, I’d not be buying…

Folks wanting to see them now can look at the last Wall Street Week posting (under the WSW category at the right) and look at the 5 year chart at the bottom. For a while now I’ve pointed out it said ‘near a top’. Then look at the shorter term charts and notice that the 1 year shows a roll down already in progress and the 10 day shows a plunge. IMHO, we’re most likely entering more than a ‘correction’ (that is 10% down) and are headed into a ‘bear market’ (20% down or more) and likely to be of some depth. Why? (don’t ask…) Exploring why: Most likely as the Socialism Shiny Thing mindset continues to feed the Arrogance Of Authority into thinking THEY are in control of the economy (both of Euro Zone and the USA) and they will continue to try to “push a rope” via monetary policy and attempting to power a ‘recover’ via ‘reflation of a bubble’ (or in this case, 2 or 3 bubbles…)

Full analysis will have to wait until I’m “off work” tonight or maybe even to Saturday. Until then, take what comfort you can in cash. (But WHO’s cash? Euro dodgy… Yen Central Bank intervention risk… $US Spendulus… Even the Kiwi has started a dive on the commodity sell off and that puts suspicion on the other commodity currencies of Looney, Aussie, etc. For now, I’m using $US as it is my ‘home currency’ and with BOJ doing intervention, the Swiss might well follow. Perhaps it’s time to explore British Pounds again ;-)

Until then, “enjoy the ride” even if it’s likely to be a volatile one. If you can’t sell positions, you can still hedge them (though hedging an already dropped position can just lock in the drop, so you have to decide if we’re done dropping, or not… I’m going more for ‘be in cash’ than for ‘be hedged’, but the best hedge is likely an options position. Rising volatility will make your options worth more even if the bet direction was wrong, so softens the exit from a ‘wrong way bet’ in a hedging strategy. If anyone really wants to more know about that, I can put together an explanation this weekend, so ‘let me know’.)

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
This entry was posted in Economics - Trading - and Money, Political Current Events and tagged , . Bookmark the permalink.

44 Responses to Path of Maximum Frustration

  1. David says:

    Dear E.M.

    Thank you for all your posts. Kick the can they did, and spend all 3 trillion before his term is up I expect the “first citizen” to do. My meager savings are in IBonds mostly, having sold most of my Gold at $1540, so I will not be playing in this market at all, but I appreciate the perspective. BTW the Bank you were referring to is charging accounts that have more then 20 million, ie, negative interest. (I think that was the amount)

    Do you think that this is 1931 (deepening of the depression) all over again? I think for a time cash is king again, and as many many billions of “stimulus”went down the black hole of debt, I wonder who will win this collision between inflation and deflation, as both mega ships are picking up speed.

    Did you do a post somewhere on your new job? I must have missed it as I was on the road for three weeks. At any rate I hope you enjoy it and I wish you greqt success.

  2. David says:

    BTW, it is almost 4 am on the west coast, so it must be time for you to have some go juice before work, so have a great day.

  3. dearieme says:

    I smiled when someone described the GBP as the cleanest shirt in the dirties basket.

  4. Pseudo-scientific evidence of a H-filled Sun (SSM), oscillating solar neutrinos, and CO2-induced global warming (AGW) are vanishing as stock markets in the once “Free West” collapse, and we learn that:

    1.) Henry Kissinger himself made the agreement in 1971 with leaders of the Communist Block of nations to end the US Apollo Missions, “the space race”, and to unite nations [1] against a “common enemy” (Man-Made Global Climate Change) to avoid the possibility that the entire world might be vaporized as Hiroshima was on 6 Aug 1945;

    2.) Richard Nixon was selected to be the “fall guy” for this decision too [2], but Nixon started to implement the decision on 5 Jan 1972 [3] before arriving in China with Henry Kissinger on 21 Feb 1972 to make the “official” agreement.

    1. See addendum (page 9)

    Click to access 20110722_Climategate_Roots.pdf

    2. Video Summary of Richard Nixon

    http://www.history.com/topics/richard-m-nixon/audio

    3. http://claudelafleur.qc.ca/Nomoredreams.html

  5. PhilJourdan says:

    Nothing of revelations for me here, but a lot of affirmation of my concerns. Thanks for backing me up. I have hunkered down and intend to wait it out. However that may be a long time since the deal demonstrates no one in DC is serious about the deficit.

    The only thing saving the US right now is the faltering economies of Europe! The English Pound is starting to look good again.

  6. Pascvaks says:

    The Boobtube is aglow with “frustration” and “hopelessness”. Pathetic ‘Falling Europe’ is falling in the gutter, again. Things ain’t too good anywhichaway you look. El Presidente and his worthless overpaid advisors don’t know what to do and they’re saying they can’t do anything anyway. (Really not sure how they came to that conclusion.) Congress is full of insects and vermin, as always, so no help there. The Big Boys and Girls on Wall Street can make money out of thin air, as always, so they’re not interested in doing anything for anyone except themselves. Per Drudge, kids and adults alike are running wild stealing everything and anything they can get their hands on, as always.

    Well…. it occures to me that there’s one strategy that hasn’t been considered and approached by any of our fearless leaders. And it really ought to be. Everytime we get in a war, a BIG One, we’re unprepared and flatfooted. Everytime the war is over we demobalize and “plan” for fighting it all over again with bigger and better things. So, when the next one comes, as it always does, we’re sort’a prepared to fight the last war but not the one we find ourselves in now. The same holds true with economic policy and social welfare plans and programs. We’re always living in the past.

    When the NEW recession or depression comes, and it always does (oh, yes, we’re in one, aren’t we;-), we’re in a pickle because we’re overweight, out of shape, not prepared and the “weapons” we have were all designed to to fight the last recession or depression. What to do? The US and every other economy worth more than the current Greek economy has to dismantle all the ‘Bright Ideas and Giveaways” constructed since the last Depression that are just too expensive to continue paying for, no matter who’s ox is gored, or which fat cat doesn’t get his government check. And there’s a few zillion federal and state regulations that ought to go up in a nice fire too. (Or be “temporearly suspended for 10 years or so”.

    Sorry! Recessions and Depressions are caused by too much too soon from a bunch of lazy stupid greedy politicians who don’t think or plan for tomorrow. Time for a diet and some exercise America, this is WAR! All for one, and one for all! It’s a shame we don’t have at least one political party with a majority in at least one house of Congress, or a President who wasn’t trying to just get re-elected, to stop the stupidity. Where did we get these two mirror-image-do-nothing-worthless-excuses for Parties we have today? Maybe it’s time to put you know “Who” back in the “Pledge”? (And suspend a few million laws, and burn every Federal and State regulation that imposes a ‘cost’ on the economy?)

    Hummmmmm… nothing you can do El Presidente? How about Nothing You Want To Do?

  7. George says:

    The Bank of New York began discouraging big withdrawals (the news presenter was a bit indistinct and I’ve not had time to dig out a news print reference, but I think he said they had started to charge for large withdrawals).

    No, bank of NY Mellon are charging for large DEPOSITS, not withdrawals. They are, in effect, charging negative interest. If you make a large deposit with them, they are going to charge you for holding it:

    http://www.cnbc.com/id/44019510

    There is a huge difference between charging for withdrawals and charging for deposits with completely different economic implications. Charging for deposits would be seen as the ultimate response to a *deflationary* condition.

  8. H.R. says:

    @PhilJourdan

    “However that may be a long time since the deal demonstrates no one in DC is serious about the deficit.

    I’m seeing it a bout the same. The long-time ruling class in DC (Republicrats and Demlicans) showed no concern for the deficit or debt as evidenced by the deal.

    During the “crisis” all. I heard were talking heads discussing that “the markets are unsettled because there is no deal. The markets just want a deal.”
    Perhaps I was seeing things but what I observed was that whenever the news of the day was the the prez & the dims were getting stymied, the market rose and whenever it looked like the repubs would settle, the market would dip a little. My impression was that the market (and the public via polls) were in the mood to see the real problems get addressed. That mood is rare.
    After the deal, it seemed to me that the smart money decided that “the deal” will make the US the next Greece and it was time to make like a hockey team and get the puck out.

    Eh… maybe I was just seeing what I wanted to see. You know how that can go.

  9. Pascvaks says:

    We could always have a Recall Election I guess. We could recall every elected politician and judge and let in some fresh air for a few years.

    Think it would help if we all dressed up like American Indians and marched on every state capital and the D. of C.? Maybe if we threw them in the Potomac too? Or buried them in ant hills up to their necks?

  10. George says:

    “We could always have a Recall Election I guess. ”

    No, you can’t. Federal lawmakers can not be “recalled”.

  11. George says:

    You can remove a federal lawmaker from office if they commit a crime through the process of impeachment but you can’t get rid of them just because you no longer like them. You have to wait for their term to end and the next election to come around.

  12. George says:

    This is bad news:

    The jobless rate declined as 193,000 people left the labor force and the number of unemployed dropped by 156,000. The share of the eligible population holding a job declined to 58.1 percent, the lowest since July 1983.

    Basically only 60% of the population that can work, is working. Add to that the fact that only 50% of wage earners pay any net federal income tax. and we have only about 30% of the people in this country paying any taxes.

  13. Pascvaks says:

    @George
    That’s all just a matter of “interpretation”. You know, like what the meaning of “is” is? As spineless and currupt as these people are, I’m sure they won’t argue with a “Jury of their Peers” or even a “Lynch Blogmob”. Would you? Tar and feathers just seems like a waste of good resources.

    Excuse me, I know I’ve got a turkey tail feather around here somewhere. Geeeeeeronimo!!!

  14. H.R. says:

    @George
    “This is bad news: [George gives bad news]”

    I heard the “jobless rate declined” being reported as good news on drive-time radio this morning. Amazing!

  15. George says:

    See, that is the major problem with this nation. The majority of people get their news on that top of the hour drive-time commute radio broadcast they listen to for traffic reports. That is pretty much all the news most people get. That short broadcast doesn’t have the time to report that the reason the jobless rate went down was because people gave up looking for a job and in the US, when you quit looking for a job, you are no longer “unemployed”. You are apparently on extended vacation.

    The economy created only 117,000 jobs. It takes the creation of about twice that, about 200,000 jobs to keep up with normal work force growth from population grown and immigration. Anything less than 200,000 jobs and you get no net increase in workforce participation. Also, we have a history recently of over reporting these numbers only to have them revised downward later so nobody actually believes this 117,000 number. What will the “revised” number look like in a few weeks time?

  16. PhilJourdan says:

    George @ 5 August 2011 at 3:30 pm

    I agree. One bank does not an economy make, but should it be a trend, that is very disconcerting.

    @ 5 August 2011 at 3:37 pm
    yes they can. it depends upon the state.

  17. George B says:

    Nope. Federal lawmakers can not be removed regardless of state law. It would require an amendment to the constitution.

  18. George says:

    State laws do not apply in the case of holders of federal office except in the case of how to replace someone who has, for whatever reason, left office.

    A state can not remove a sitting Representative of Senator, only that house of Congress has the authority to do that. There is no provision for any member of the federal government to be recalled, state laws notwithstanding.

  19. H.R. says:

    I’m bummed out because my Google-fu concurs with George. Once you’ve elected a congress/senate-critter, the constituents are pretty much stuck with the rep until the next election.

    (While googling the topic, I ran across a great line by Benjamin Franklin to the effect that the usual way to remove an official from office was by assassination – admittedly quick and effective – but he preferred that the new country (ahem) adopt a more procedural approach. That guy was a real corker!)

  20. PhilJourdan says:

    H.R. – I use Bing. ;)

    George – What bing gets you is although none ever has been, there is no legal precedence against it. http://www.uscitizensassociation.com/pdfs/Recalling%20U.S.%20Senators%20and%20Congressmen.pdf

    In addition, the author of that piece cites the 10th amendment indicating it is up to the states. I guess we will not know until someone tries to recall one of them.

  21. George says:

    States may set whatever recall procedures they wish for state lawmakers, only the US Constitution applies to federal lawmakers. There is no provision in the US Constitution for the recall of a legislator or President. It would have to apply equally to all members in the body.

    State legislatures have no authority over the US House of Representatives or the US Senate. A state legislature may not rule that a federal legislator or President be removed from office. The only recourse is impeachment or expulsion by the house of Congress concerned.

    http://en.wikipedia.org/wiki/Expulsion_from_the_United_States_Congress

    But, if an expelled member of Congress is re-elected to a new Congress, the expulsion from the previous Congress does not apply. So a legislator can be expelled by Congress and re-elected the next Congress.

    States really can’t do a lot when it comes to elected members of the Federal government. The Congress would ignore any recall from a state and refuse to seat any replacement.

  22. boballab says:

    Until then, take what comfort you can in cash. (But WHO’s cash? Euro dodgy… Yen Central Bank intervention risk… $US Spendulus… Even the Kiwi has started a dive on the commodity sell off and that puts suspicion on the other commodity currencies of Looney, Aussie, etc. For now, I’m using $US as it is my ‘home currency’ and with BOJ doing intervention, the Swiss might well follow. Perhaps it’s time to explore British Pounds again ;-)

    Might I suggest the Zimbabwe Dollar. The conversion rate is still good but how long will that last with Obama in charge?

  23. boballab says:

    Here is an interview with Jim Rogers, the guy that co founded the Quantum Fund with George Soros:

    He is predicting an upcoming 30 year bull market for agriculture like we saw in the Gold market

  24. boballab says:

    To EM and All

    Things will be very interesting come Monday morning on Wall Street:

    S&P Cuts US Credit Rating For First Time In Modern History

    By Min Zeng and Stephen L. Bernard
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Standard & Poor’s took the unprecedented step of downgrading the U.S. government’s “AAA” sovereign credit rating Friday in a move that could send shock waves through global financial markets and potentially undermine world economic growth.

    In a press release, S&P, cut its top-notch long-term credit rating for the U.S. Treasury’s debt to AA+ with a negative outlook. It is the first time in modern history that one of the three main ratings firms has stripped the U.S. of its coveted AAA rating.

    S&P warned last month that if the U.S. government didn’t approve a credible medium-term plan to shrink its fiscal shortfall, it would downgrade the rating even if Congress approved a debt deal that raised the Treasury’s borrowing limit. On Tuesday, just in time for a deadline to avoid default, U.S. lawmakers passed a bill increasing the U.S. debt ceiling by $2.1 trillion. However, the amount of planned quid-pro-quo deficit cuts ran to $2.4 trillion, well short of the $4 trillion that S&P had suggested was needed to put the nation’s fiscal house in order.
    http://online.wsj.com/article/BT-CO-20110805-718118.html

  25. Scarlet Pumpernickel says:

    Is the next ramp the running out of food one?

    http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=djia&insttype=&freq=1&show=&time=9

    By the way, the drop looks a bit like May 2010. Might get a sucker rally. We already have a short term double top. So either we will go up a bit, then keep going down towards 3000-4000 or run up to 14000 first to make a mega double top before falling down towards 3000-4000 which is the point where all this stupid borrowing started which inflated the market…

  26. George says:

    Cloward and Piven are proud today.

    On another note, I find this probably an impeachable offense:

    http://www.foxnews.com/us/2011/08/05/americas-third-wardid-us-cut-deal-with-sinaloa-cartel

    Not only did the Obama arm the Sinaloa cartel, they enabled the smuggling of tons of drugs by the cartel in exchange for information on rivals.

    So the Obama administration armed them, enabled them to smuggle drugs into the US, and busted their competition. It would seem that the Obama administration had its very own cartel. Now I wonder how much Sinaloa money made it into Obama’s campaign coffers.

  27. R. Shearer says:

    S&P downgrades US debt rating.

    I didn’t expect TLT to rise as high as it did, but now TBT ought to rally for awhile.

  28. E.M.Smith says:

    So many good comments about such a mess.

    As I awoke at 4 am today, and it is now after Midnight, I don’t know when I’ll get the WSW posting done, but it is my ‘first up’ for Saturday (along with catch up on some of the financial news I’ve recorded by not watched).

    Thanks to all for the pointers to things of interest (such as the S&P downgrade) … that has just GOT to frost some shorts of congress critters who were strong-armed into voting for the Son-Of-Porkulus bill as “to not vote for it would risk a downgrade”…

    BTW, per folks on Wall Street making money no matter which way things move: One of my major goals here is to show have the average Joe and Jane can do that at home, too… So as we’re now officially ‘rolled over’ the bias shifts to holding short positions and hedging during upside moves (rather than being net long and hedging downside moves). Cover shorts in deep dips, (or hedge them) then re-establish the shorts as priced touch the SMA stack from below.

    It really doesn’t matter which way the market is moving, only that it moves…

    Lets see… November 2012 is how many months away… Sept, Oct, plus 12… So only 14 months and some days?

    It will be interesting watching the present crop run on the basis of “Lousiest job figures ever, loss of AAA rating, busted economy, crap dollar, more debt than God could ever pay off, “Entitlement Checks” that can’t pay the bills”…. Oh, and probably higher tax rates too…

    Yeah, “that’s the ticket”…

    And the truly sad part is that capitalism and markets do a dandy job of fixing those things if just left alone and with Sovereign Risk removed…

  29. boballab says:

    EM:

    Remember when Turbo Tax Timmah stepped away from his printing press long enough to announce this:

    Geithner: No Risk U.S. Will Lose AAA Credit Rating

    http://video.foxbusiness.com/v/4651704/geithner-no-risk-us-will-lose-aaa-credit-rating/?playlist_id=87185

  30. David says:

    “It will be interesting watching the present crop run on the basis of “Lousiest job figures ever, loss of AAA rating, busted economy, crap dollar, more debt than God could ever pay off, “Entitlement Checks” that can’t pay the bills”…. Oh, and probably higher tax rates too…”

    The progressive answer is to blame Bush, and blame the terrorist Tea Party. Now this should be a sucidal strgedy, but in conjunction with this, floating billions to the progressives in “shovel ready” jobs, all performed by Unions, they will buy many votes.

    While at the store yesterday an agiatated 80 year old woman came up to my wife and started a conversation about polotics and the budget ceiling. Basically she said that all those “born again” Tea Party conservatives wanted to thow old people on the street, and did not care if the country collapsed. They were “preventing Obama from being FDR.”

    In 14 more months of this we will be more poor, and more dependent on the hand the feeds us then ever, and most of those being fed will still not know the “free” poison being ingested in every scrap of destroyed middle class, self perpetuating dependency, fed them. The Dems are doing now to the entire country, what they have been doing to the black population for the past 45 years, convincing them they are victims and owed,

    The thing is, the next poor bastard in charge will be in a very dire situation, far worse then what Obama inherited. It is a nip and tuck race for the next 14 months to see if the world can ween itself off the dollar and how long the US and world extend and pretend can go. However fiscal responability alone will only deepen the crisis, just as a heroin addict feels the pain when he withdraws. But there will be billions and billions of govt mandated programs to be reversed, thousands of business laws to be reversed, (This includes local and state govt shutting down building with excessive regulations and fees) and most important, an energy policy that if not full stop reversed, the economy has no chance of recovery through fiscal policy alone. (Indeed without an complete change of our education policy/culture, we may be in serious trouble also.

    So, IMV, the Tea party better all stay on message, promise nothing but pain in withdraw from the reckless overspending, and constantly explain how the way out is through undoing govt shackels on the free market and a “free the energy” policy, and somehow articulate that without all three, govt austerity, freedom to the market and business, inexpensive energy, , nothing will work on its own, and at the same time communicate how very minimal needs, food, water, a sheltered bed, minimal medicine, and all this should be set up so that for every additional dollar worth of contribution given by a charity, 50 cents worth of govt aid can be withdrawn, and explain why this is all that the govt can and should offer in the cheapest way possible as an emergency for those who can not find work. To run on the promise that one can fix things by fiscal austerity alone, wnd without tremendous pain, is to invite an incredible backlash when this alone fails. Better to run on the truth and lose, then win on a false represention of what we are headed for.

  31. Pascvaks says:

    @David
    Watch the Middle. If it’s too late, nothing will seem to really change in the next few weeks and all will then be really lost. In an ideal world, those currently responsible for running our Ship of State would all be swept from office, thrown overboard, in the next election; both Democrats and Republicans, Senators and Representatives with two or more terms, and our (please Lord, please!) one term only Big Bad Sugar Daddy in the WH. The message AA+ sends loud and clear is that New Deal and Great Society socialism and micromanagement are CANCER! Now we sit and wonder, was anyone listening?

  32. Richard Ilfeld says:

    “It will be interesting watching the present crop run on the basis of “Lousiest job figures ever, loss of AAA rating, busted economy, crap dollar, more debt than God could ever pay off, “Entitlement Checks” that can’t pay the bills”…. Oh, and probably higher tax rates too…”

    Also – “watch the middle”

    There are three ways to run an election.
    1. I’ m great – Vote For Me and My policies.
    2. The other guy is pond Slime, I’m less so, vote for me and policies be damned.

    There is a third way that we havn’t seen here since, oh, 1860.
    3. We face an existential question as a nation, and nothing else matters. vote for me because of my view on this.

    Such elections run on quite different tracks, and engage the population in ways we’ve not often seen here. They have been common in Israel.

    A Token EVERYONE in the electorate can think they understand, like loss of a credit rating (simple to explain, “The teacher gave us a lower grade”) is a precondition of an existential election and we may now have one.

    Think “The Union Must Be Preserved”, or “Hamas is trying to kill us”.

    FInd a way to express the token – win the day, change the country.

    Or we all find a way to profit in bankruptcy. Hell, lawyers do it all the time.

  33. adolfogiurfa says:

    Privitize, privitize and privitize…that´s the answer. As it was done in Chile, where a private retirement pensions´s system was gradually apllied to new generations of workers (“AFP” system: “Private pensions system”), and where even highways are built by private investors. Such a change would put all numbers in blue, if agreed. It is not a matter of cutting or disappearing entitlements but making them a positive way of building up capital instead of losing it for nothing…or just in exchange of votes. The problem is that you are just a disguised capitalist country while the majority of people depends of government for its daily living: Really a socialist country, with mounstrous state owned corporations, like NASA or the ineffably green EPA.

  34. George says:

    The interesting thing to watch going forward is what happens with states like California and Illinois. Both of those states are heavily dependent on federal cash for a lot of things. If that teat goes dry, those states go under.

    The majority of the funding for MediCal, for example, comes from the federal government. If those funding sources are cut off, California will be forced to fund its own programs and not, in effect, tax the citizens of the other 49 states for them. That is going to cause a very rude awakening in a lot of states.

  35. TGSG says:

    Monday should be interesting. I see Saudi Arabia’s market fell 5% or so. Not prepared to bug out nor do I think it’s time yet, and too scared to invest right now. I think the big boys believe they have more quivers in their arrows. A hard rain is going to fall I fear. Not sure a large enough majority see the way out yet but given a big enough voice and a bit of time I think we can pull out of this tailspin. I hope and pray we do anyway.

  36. boballab says:

    Here is two good videos of a Tea Party Terrorist:

  37. boballab says:

    OMG you guys should see the tweets from David Burge aka Iowahawk:

    iowahawkblog David Burge
    2009: Standard & Poor’s Raises Texas’ Credit Ratings to AA+ bit.ly/p4pIVl
    10 hours ago

    iowahawkblog David Burge
    You know who else inherited an economy from George Bush? Rick Perry.
    23 hours ago

    iowahawkblog David Burge
    You know what else Obama inherited from Bush? a AAA credit rating.
    23 hours ago

    iowahawkblog David Burge
    Breaking: President calls FreeCreditReport.com; gets hung up on
    23 hours ago
    http://twitter.com/#!/iowahawkblog

  38. The updated and renamed historical (1045-2011) review of events that produced Chimategate: “The Bilderberg Sun, Climategate & Economic Crisis” is now available at the old link:

    http://dl.dropbox.com/u/10640850/20110722_Climategate_Roots.doc

  39. Sera says:

    @boballob

    I laughed my ass off when he wrote about “investing in the Sterno and harmonica sectors”.

  40. Scarlet Pumpernickel says:

  41. adolfogiurfa says:

    @Scarlet Pumpernickel:

    As the chinese philosopher said: “Just wait seated at your front and you´ll see the corpse of your enemy passing by” (Confucius)
    For anyone of us wishing to own more, say one to or three million bucks, it´s just crazy.
    Thus, cancer cells begin to think that it´s the time for them to get rid of the dictatorship of the One and only God (for them inmortal): The Brain, and so they conspire and manage to succeed…..but, in doing so, the body that keeps themselves alive dies…….

  42. E.M.Smith says:

    @David:

    “Blame Bush” may have worked for the first 100 days, but when it’s year three, well, even the dumbest of the dumb know that “it’s his watch now”…

    And when the average Joe and Jane are either “Tea Party Sympathizers” or look over at the Tea Party sympathizers they know and see Granny and Gramps… well, trying to smear them is just failing to pass the giggle test…

    That’s just lethal to a smear campaign…

    A good friend is a well respected mid-level manager at a well known company. When folks try to smear the Tea Party (his more ‘liberal’ friends… and he’s pretty liberal himself…) he asks them: “Have you ever met someone from the Tea Party?”. The answer is always “no”. He then says “What policy of theirs is so bad? Or what have they done that was against the law?” In the painful silence that then usually follows, he points out that a lot of their policies match those of John Kennedy… (The friend is a rather old long time Democrat who has refused to change parties, but personally remembers the Kennedy Years…) At that point, the “smear” attempts usualy come to an abrupt end.

    “Spend withing your means” and “stop playing political games” resonates with a lot of folks on all sides…

    IMHO, the Greek / Italy / Spain “crunch” will likely “focus the mind” of those Tea Party Bashers… and others… They are headed down the same road we are, but a lot faster… and a lot further along…

    The markets are setting up for a terrible opening Monday, and Europe is looking lousy too. The “surprise” on the Dimocrat side (as they bought the fantasy that this ‘kick the can’ would avoid a downgrade and a market drop) will be fun to watch…

    @Pascvaks:

    Bingo! Now we learn who’s eyes were opened and who’s PO’ed enough to do something…

    @Richard Ilfeld:

    Well said…

    Watch TBT and UDN for “how to profit from” the issues. Once the panic ends, bonds will ‘have issues’ and TBT will rise. As the dollar drops, UDN rises (though it is largely ‘vs the Euro… so may have some issues too). As an alternative FXS and FXF and potentialy even FXB can be alternatives.

    Just pick your entry point well…

    @Adolfo:

    Sadly, I have seen no cases where a people learns from the historical facts, but instead they must go through the collapse to learn it… I would love for us to be the first “existence proof” of an alternative way to learn.

    @George:

    Well, there’s a reason I’ve got a job in a state with no income tax and not in Kalifornia…

    @Boballab:

    Golly, I’d not seen your post prior to my Kennedy comment… I suspect that the meme ‘has legs’…

  43. PhilJourdan says:

    At one time I would have gotten outraged at Kerry, BiteMe, Pelosi, Axelrod wing trying to blame the Tea Party for their own sins. But EM points out, it has gotten old. A lot of allegations of violence and racism, yet nothing documented. Nothing, in this age when everyone has a video camera on their hip! They have forgotten that you cannot fool all the people all of the time. But perhaps they are just trying to fool some of the people all of their time – their base.

    Blaming the Tea Party with lies is not going to get the AAA rating back. S&P said it simply. Something must be done about spending. And the deal reached by the politicians in DC did nothing to address that issue.

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