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Last week FOFOA posted a long article on the coming devaluation of the dollar and how it might play out. He thinks it will be sprung on us without warning -- sooner rather than later:
The point is that during times of transition, surprises are always the order of the day. We have a crazy-out-of-control government that has given in to the temptation of printing its way out of this mess. The deflationists view this as an exercise in futility, while the inflationists say that you cannot print these amounts of dollars without it affecting the markets sooner or later. A few cunning analysts are hedging their bets saying we will see another deflationary collapse first, followed by a bout of high inflation. But nearly all of the pundits who are still predicting "doom" have lengthened their horizon to several years to make way for the slow speed at which this train is tumbling down the tracks. Frankly, I'm not buying it. Call me contrarian, but I say that when the rubber band breaks this time it will snap back with a speed and fury that will make your head spin. In fact, I think that the longer this drags out (and I'm only talking weeks and months now), the more abrupt the correction will be. Both the 38 year timeline and the 96 year timeline have created an imbalance in the fractional reserve system that has gone parabolic in the last decade. I am talking about gold. No, the price of gold has not gone parabolic, but the ratio of available gold to outstanding paper currency HAS gone parabolic. The central banks of the world are well aware of this. It is why they have slowly, inconspicuously changed from net sellers into net buyers. This gradual shift is extremely significant, because as net sellers they were supporting their own fiat regime. But now as net buyers, they, as a group, are stressing it. Why would they do this unless they knew it was about to reset?
Read MoreWall Street has long been a street of myths, pretty much propelled by an overwhelming belief that the path of both the economy and the stock market is one directional--inevitably up. Tumultuous periods, such as the crash of 1987 and the dot.com bubble of the early 2000s, and the economic and stock market debacle of the past two years demonstrate that such thinking is hogwash. Alexander Pope once wrote, "Some people will never learn anything because they understand everything too soon." The way I figure it, those ivory tower financial experts, namely the heads-in-the-cloud members of the sunshine fraternity who would have you believe the economic freefall is unquestionably over and that a meaningful economic recovery will be in full force before year end, would surely fit Pope's description.
Read MoreIt is the mission to show you, dear reader, that the financial world you inhabit, a world vouched-for in dulcet Midwestern tones by actor-spokesmen you recognize and trust, a world inhabited by honest brokers looking after your money, brokers who interact through self-regulating exchanges overseen by diligent regulators, themselves overseen by elected politicians looking out for their constituents, themselves challenged by an adversarial free press maintaining a critical posture towards it all, is in fact a “world that has been pulled over your eyes, to blind you from the truth.” It doesn’t exist: it is a socially constructed reality designed to keep you complacent as you feed your savings to the machine.
Read MoreI find it strange that stocks go up ostensibly on account of Meredith Whitney's bull call on Goldman and a handful other bailed-out financial firms. I find that strange not only because nothing really changed inside the vaults of these institutions -the level of toxicity remains , say, elevated-, but also because Whitney simultaneously provides the worst unemployment prediction emanating to date from a "serious" finance source: 15%. U3, that is. Which would, if you allow me the back on the envelope, take U6 to around 30%, and Shadowstats' alternate U6 likely between 35% and 40%. If Whitney's right, the US economy would fall into what can only be called a pitch black hole.
That said, I also find it strange that people take Whitney to task for raising her bank targets. All she does is recognize that taxpayer bailouts may have impoverished the general population, but that they at the same time have opened up banks to huge new and additional profits. Which will raise their stock. Temporarily. Which is precisely the sort of information Whitney's clients seek from her. Whether she will be able to predict the right moment to get out again is another story. Certainly, a generous majority of those who bought in today don't stand much of a chance of picking that moment correctly. But Meredith works for the rich and fortunate, not for the rest of us. If she can go on TV in the expectation of "talking up" a stock for a profit, I think she probably will. I personally find her choices morally questionable, but if that were the main criterion for assessing and rejecting the financial "in-the-know", or the political for that matter, we can all come up with a virtually endless list of people who should be kicked around and out. You'd have no financial system left, and no government either.
Read MoreMy family and I are moving. Across an ocean. Large upheavals for the entire lot of us. Leaving friends and an indolent but simply honest way of life will be challenging for children and parents alike. But this is no time for regret as the die has proverbially been cast. As a result, I've had little time to write - much to my chagrin - hence the spartan posting of late, as the practical details associated with sifting and sorting more than a decade-and-a-half of accumulated shite and entrenched life that seemingly must (and now as I edit this, has) found its way into boxes and crates before floating across the azure, and hopefully placid sea.
Read MoreWe are dancing around the idea that there are no classes in America. We, as a country and a culture are clinging doggedly to the manufactured myth of American equality. But the truth keeps raising its ugly and inconvenient head and intruding on our consensual hallucination. We have manufactured an elite. At first, it was an open elite, with the GI Bill educated vets from WWII being added to the old guard, then the college-educated boomers came in and swelled the ranks to the bursting point. So we have a well-off, educated, and smugly self-satisfied upper class of prius liberals and hummer neocons looking down their noses at the unwashed workers and trying desperately to figure of means of barring the door so that they can keep the gains that they have clawed out of an unequal system.
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Discussion of the 50% Retracement Rule,
potential future price levels, time studies, key dates, Fibonacci, Gann, Astro numbers, Robert Rhea's Great Depression analysis.
Goldman Sachs is not the only Wall Street firm taking an ex-employee to court with the charge of theft of trade secrets in the form of valuable, proprietary trading code. Swiss bank UBS AG confirmed Monday that it filed papers in March charging three ex-employees with “misappropriation of trade secrets.” The “misappropriation” included 25,000 lines of source code used in UBS’s “trade secret algorithmic trading programs,” according to documents submitted with the New York State Supreme Court. The bank is charging three former employees in the firm’s algorithmic trading group of having “collectively coordinated and planned together” to move to new jobs at New York-based Jefferies & Company while still technically in the employee of UBS, taking with them UBS trade secrets, breaching their employment contracts and fiduciary duties and resulting in unfair competition.
Read MoreBy now, almost everyone agrees that California government is seriously dysfunctional. The state suffers from a grave fiscal crisis, extraordinarily high taxation (which, however, is still not enough to finance the state's exorbitant spending), overregulation, and numerous other problems. "Governator" Arnold Schwarzenegger has been no more able to curb these tendencies than his much-reviled Democratic predecessor, Gray Davis. Steven Greenhut suggests that California's problems are structural, not merely the result of bad decisions by individual politicians. He argues that the Golden State's people would be better off if it was broken up into three or four separate smaller states. The idea of partitioning California is not a new one; but it has never been more timely. While I don't necessarily endorse Greenhut's specific proposal, I do agree with the general argument that California's problems stem partly from its excessive size. With some 38 million people, California has about one-eighth of the nation's population.
Normally, the ability to "vote with your feet" is one of the strongest checks on dysfunctional state policies, a point John McGinnis and I discussed in this article. If a state government has poor economic policies, excessive taxes, or bad public services, taxpayers will tend to migrate elsewhere, putting pressure on the state to clean up its act. That, for example, is what happened with my own home state of Massachusetts when it lost population to southern and western states in the 1970s and early 80s. Even if the poorly performing state government doesn't shape up, at least migration will reduce the number of people who have to put up with it.
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