Mother of all carry trades

Quick one re Media Matters:  I don't really follow these guys, I just took note of who pays the bills, but today I saw a news item and went to the site.  I read a paragraph and realized I should return to teaching writing.

Media should opt out of forwarding Lieberman's dubious public option claims

October 28, 2009 2:41 pm ET — 44 Comments

Media outlets continue to uncritically report Sen. Joe Lieberman's (I-CT) statement that he will oppose cloture for the Senate health care reform bill because he believes the opt-out public option provision Senate Majority Leader Harry Reid has said will be included in the bill would increase the national debt and burden the taxpayers.

The media should stop reporting Sen. Lieberman's opinion or, at least, attack him for his opinion regarding something he has read and no one else has. This is an example of Media Matters pretend critical review of the media: SILENCE ALL CONTRARY OPINION, SIEG HIEL!

I know you think this is not a compositional problem, but it is, if you are a fan of propaganda. This is an absurdly heavy handed bark, not a sneaky spin. I guess morons just grunt and scratch at this big news. So much for wasting time there. I suppose the congregation likes to believe the sermons directed at it are objective even if they could never make such an analysis.

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The poster translates as 

Victorious or Bolshevism

Even the NAZIs knew when to stop. Anyway, for news that matters, that you can do something about:

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I dabble in currencies, gold, etc and picked the dollar for its recent rebound, for a little while, so I  understand the game of the carry trade. It sounds clever, see below, but you better guess right. The current snap in the consensus opinion about currencies may create a monstrous ripple.  Again, we are on a cliff:

Professor Nouriel Roubini said today, speaking via satellite to a conference in Cape Town.

“We have the mother of all carry trades,” said Roubini, who predicted the banking crisis that spurred more than $1.6 trillion of asset writedowns and credit losses at financial companies worldwide since 2007. “Everybody’s playing the same game, and this game is becoming dangerous.”

In the carry trade, investors borrow in a currency of a nation to purchase assets in another country where returns are higher. The risk in such transactions is that currency-market moves may erase profits.

Benchmark interest rates of 0.1 percent in Japan and as low as zero in the U.S. make the yen and dollar favored targets for investors seeking to fund carry trades.

This all starts to hurt your head; my view is to just worry all the time.  This should help.

Another "TRUST" destroyed by Congress: Medicare

First, from Bob (I give up trying to work this embed thing) 


http://www.youtube.com/watch_popup?v=G44NCvNDLfc


This is the second time I have watched the representative.  He is my choice for the next president, the old guard being of no value. He knows what he is saying and can form coherent thoughts; I wonder if his associates understand what he is saying?  


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I have an advantage over most, I got sick early. I got mine; that fits with the new America. Good luck to you.


 Below, you can see why Obama wants to kill off older people. Now, it all makes sense.


Note that defense spending is now less than Medicare.


When I started studying the end of America as a student, the Social Security Trust Fund actually existed.  It was a trust that the government set up to help the people, though it had its socialistic element of forced contribution.  


This projection puts a recent comment by one of those Democratic talking heads. The logic being used was we had to have a socialized plan because it is too expensive (TO GOVERNMENT) the way we are going.  Tomorrow, I will publish a table showing private insurance makes very little return on income and some of the sectors are negative. This is what the government wants to improve. The eternal:   ???????  


Actually, it is not hard to figure out, if you read history. First, tyrants take control of medical care, then guns, then schools. Done. In our case, the medical care grab also involves a huge sack of money that the government does not have. You can bet it will absorb all that insurance money, spend it, then promise to pay medical care out of the general fund with the coming funny money. Except, Congress will not participate, of course, who I am sure will continue to use AIG.  


The Democratic Congress could not leave a pile of money alone, so it no longer exists. Gone. If I did that with a trust or escrow company, the politically correct thing to do is have me arrested, but I am not Congress.  


Since all these thieves are voted back in, we, the people, are responsible. You can't keep blaming the hacks, if they keep getting voted in.  You have to act or take part of the responsibility, as well as buy silver in a few weeks. 


A very young Prince Charles once said in an interview, I would say in the early 70's, something that bothered me, so I kept in mind, it went something like:  "The people get the government they deserve."


The Medicare Trust Fund, sent in by Irene:

Medicare Trust Fund

Source:  Office of the Actuary for Medicare. 

Hoven's Index for October 26, 2009

Medicare expenditures (% GDP) in 2008:  3.2%.

Projected for 2035:  7.3%.

Projected in 75 years:  11.4%.

Source:  Office of the Actuary for Medicare. 

Total Defense expenditures (% GDP) for the years 2004-2007:  4.0%.

Sunday: The deflationary argument

Furthermore

Let me know if this embed things doesn't work.

Or, gold won't go up

So, it may be that we can take off our aluminum caps, or, at least, I can.

Below, find the interesting analysis from the bond side that the fear of inflation is premature.

I did some homework and most sources think of inflation as price increases, not currency devaluation, which can lead to price increases.

For example, England devalued the pound in 1992 and there was no inflation because there was already a recession and there was spare capacity.

When the dollar devalues, this raises prices, on imports. However, this does not seem to be "inflation" per se nor need cause it. I have to work on this and its Saturday night.

In all events, you can count on the decreasing value of the dollar. This can lead to inflation and even the contrarian, here, thinks is will come.

The article from which the excerpt below was taken, click on the title, indicates you have to look at the bond market, which in NY is larger than the equities market, and traders are not in a selling cycle. Now, they can be wrong, but they are specialists and have nice cars.


...

By Jon Nadler         Oct 23 2009 11:27AM

...On the theory and debate front, more of the same. Namely, that among all the screams about inflation -as in, here & now- are at least five years premature, and possibly wrong to begin with. Marketwatch's Mark Hulbert sees it this way: "Now, for an opposing point of view. I argued in several recent columns that bonds are particularly vulnerable at current levels, which -- if true -- means that interest rates are likely to go higher. This was for any of a number of reasons, one of which is that inflation is likely to accelerate in coming years. I still believe that. The problem is that I am hardly alone in worrying about inflation. On the contrast, seemingly everyone I talk to these days shares these concerns. This in turn suggests that these inflationary expectations are already reflected in bond prices. And, yet, bonds continue to trade at lofty levels, which is not consistent with high inflation expectations. What do bond traders know that the rest of us don't? It could be that the answer is "nothing," of course. As we saw during the euphoria leading up to the market top in 2007, as well as during the buildup of the Internet bubble during the late 1990s, no group is immune from group think and collective denial. Still, we should never be too cavalier in believing that we know something that the market doesn't. The graveyards on Wall Street are filled with those who had such arrogance. This is especially good advice when it comes to the bond market, which is by far the largest in the world -- much larger than the stock market, in fact. Some of the world's biggest institutional investors, along with many of the brightest minds on Wall Street, follow this market meticulously every day, hanging on every basis-point change in yields. If there were some factor out there that makes bond prices obviously overvalued at current levels, it's a good bet that traders would be selling bonds in droves. That's why I think it's important to take seriously the notion that bonds are not overvalued right now, even though I have previously argued to the contrary. That, in effect, means taking seriously the notion that inflation and interest rates are not likely to go higher anytime soon. One of the more cogent recent analyses of the subject was conducted earlier this week by Joseph Kalish, a senior macro strategist at Ned Davis Research, the institutional research firm. Kalish provided several reasons to expect inflation risks to be low over the intermediate term of less than five years: Excess capacity. Kalish says that any of a number of factors point to high levels of excess capacity in the economy right now -- everything from the unemployment rate to industrial capacity utilization rates to commercial real-estate vacancy rates. Those factors put "downward pressure on the inflation rate," he points out. Cyclical factors. Kalish points out that "following every recession in the postwar period, the inflation rate has fallen." Slower debt growth. The federal government's total debt may have mushroomed over the last couple of years, but this has been more than counterbalanced by deleveraging in the private sector. "Historically," Kalish points out, "when debt growth has been below trend, the inflation rate has declined." High real interest rates. Nominal interest rates may be low, but real interest rates (the difference between long-term Treasury yields and the consumer price index) are at abnormally high levels right now, according to Kalish. High real interest rates "tend to discourage the use of debt and, therefore, excess consumption and investment, which puts downward pressure on the inflation rate." What about higher commodity prices, such as for oil (which is at a 52-week high) and gold (which is at an all-time high)? Kalish acknowledges that they are a concern. But not overwhelmingly so: "Changes in commodity prices have only explained about 18% of the growth in the CPI one year later." To be sure, Kalish acknowledges, inflation is a big risk for the longer-term, which he defines to be further than five years into the future. Over periods less than that, however, his analysis suggests that inflation will remain low. Is there a way of squaring Kalish's arguments with the contrarian-based conclusion that bonds are vulnerable to a decline? I think there is, since his arguments apply to the longer term of up to five years and contrarian analysis is, at best, a short-term trading tool (applying to the next three months, at most). A view that integrates both perspectives would be that, short-term, bonds may have gotten ahead of themselves, relative to their long-term trend. But their resultant short-term vulnerability would not necessarily mean that their overall trend for the next few years will also be down."

I didn't say it

From Seeking Alpha.  I got the picture, seems perfect: 

The Greatest Depression Is Coming

204 comments

October 17, 2009    

Good times will not be returning any time soon.

We continue to lose jobs month over month. And, while the statistics being released are showing a slow down, this is basically a fabrication. There are thousands of people falling off of unemployment compensation each week — none of them are reflected in the official numbers. Shadowstats.com estimates unemployment is above 20%. Take it for what you will, but these numbers are rapidly approaching the unemployment rate during the last well known depression.

Credit is contracting. The last decade in America has seen credit, or debt, however you want to look at it, essentially become a second income. No more. The banks may be getting billions in loans, but for the individual on the street, credit is frozen. Couple this with the loss of primary income streams and you have a lot of people with no money for even essential goods.

Foreclosures continue to mount. In addition to the foreclosures of the last 2 years, we have millions more in play right now, regardless of the mortgage programs the government institutes. Job Loss + Credit Contraction means there is no way millions of people will be able to make their monthly payments. Nowadays, once you lose your job, you aren’t going to have an easy time finding a new one that adequately services personal debt. In real terms housing prices are not done dropping. There are some conservative down-side estimates that say an additional 15% is likely. But, what if they are underestimating? What if it turns out to be 30%, or more? If we are in a depression, the downside is huge. Japanese real estate lost 80% (adjusted for inflation) in the 1990’s (and so did their stock market!). In some parts of the country, home owners would probably agree that the 45% their homes have already lost would constitute a depression.

Debt defaults keep rising. Bank of America just released their numbers and lost upwards of $2 billion dollars, due in part, to credit card defaults. This is not the sign of a healthy consumer. When a consumer defaults on a credit card, that is leading indicator that they will not get easy credit if they need it in the future. A default in 2009 is a big red flag for lenders. Empirically, this seems like it may be a leading indicator for continued credit contraction on the consumer side.

Small businesses are getting hit hard. Small business is the engine that runs the entire economy, employing around 70% of the workforce. Right now, they have no access to loans, and the consumer is drying up. To survive, they’ve had to cut costs significantly. The next step will be to cut jobs. Many have already resorted to letting people go. As much as owners may not want to let go of their people, they realize they have no choice at this point. Incidentally, many major corporations showing “better than expected” results employed these same strategies. But, the businesses themselves, not necessarily by choice, are perpetuating the negative feedback loop. As they lay off employees, more consumer income is destroyed, leading to fewer revenues across the board for a majority of businesses, big and small.

The Middle Class is holding on for dear life. If small business drives jobs and production, it is the middle class that drives consumption. And the middle class is getting hammered for all of the reasons mentioned above. Many middle class families are realizing, or will realize very soon, that their lifestyle choices are going to need changes. Cut out the gym and take a jog instead. Why pay $100 for cable when you can get similar, if not better, news and movies online for $30 a month? Is organic really necessary at the grocery store when one can save 30% buying the regular stuff we grew up on? Do I really need to get a new car when my 2005 Explorer is just fine? Why go out and spend $100 when dinner and a movie at home a couple of Fridays a month saves enough money to pay the electric bill? These and other questions are going through the collective mind of middle class America. They are desperately trying to avoid becoming a member of working or under class America. The initial step to maintain stability is the same as with small businesses - cut spending.

Visualize a car engine. When there is enough motor oil, the pistons are firing up and down rapidly and the system runs efficiently. When the oil dries up, the engine begins to deteriorate. It’ll go for a little while longer. And it’ll become much more violent and volatile each time it fires. Invariably the engine seizes up and fails.

What we see in many aspects of the system right now are pistons that are firing violently. First a crash in the stock market. Then trillions in bailouts. Then an historic and massive stock market swing in the other direction. We see individuals speaking out in public, on the airwaves and on personal blogs en masse about one topic or another. Whether it is rep-on-Obama or dem-on-Bush bashing, there are extreme levels of divisiveness and heated, sometimes violent clashes. The system is moving into extreme peaks and troughs at a much more rapid pace now than anytime in the last 50 or more years.

We are in the opening stages of the Greatest Depression, a term coined by Trends Forecast founder Gerald Celente. The next stage, as Mr. Celente has said, will be “like nothing we've ever seen in our life time.”

Welcome to the Greatest Depression.

Disclosure: Short BAC

One never knows what will happen, but one can read the signs, like  leaves turning color.  

All manner of hypothesis is possible. We look at past markets and so on for a clue. But, keep in mind we just may in a very different track rights now. We have that 150 PE, you recall. All I can say is if you like stocks, don't like many of them.  

I see gold and oil coming down a bit. The leverage people ran into gold recently to grab some value, but the experts think it is oversold. If gold settles back, that is the time to stock up on gold or silver, followed by cans of yams. Again, if this is all poppycock (I never used that word before), you will have saved some money.  If it is 50% accurate, you will be prepared. 

Rght now, the market is the inverse of the USD. Remarkably so. One analyst said the dollar was reacting to the market. I don't know. I tend to think the market reacts to the dollar. In any event, we are at a 1.50 ratio with the EU which has been called a "disaster," so may see the dollar being supported (market goes down.)

Once the fed steps in to raise rates, probably next year, the game changes again. 

All this may be confusing, but the mega-trend is turning a bright yellow and orange on the trees.  So, what do we do?  I suspect the answer is not to spend a few trillion more.  The sad thing is, history suggests we need a war. I never before people thought like that, now I do.

Message or messenger

My brother sent this along.  Its message grows on you. It complements the theme of this blog = substance > form.  







PERCEPTION  


Washington, DC Metro Station on a cold January morning in 2007: A man with a violin played six Bach pieces for about 45 minutes. During that time approx. 2 thousand people went through the station, most of them on their way to work.. After 3 minutes a middle aged man noticed there was a musician playing. He slowed his pace and stopped for a few seconds and then hurried to meet his schedule.

4 minutes later:   The violinist received his first dollar: a woman threw the money in the hat and, without stopping, continued to walk.

 6 minutes:   A young man leaned against the wall to listen to him, then looked at his watch and started to walk again.

10 minutes:   A 3-year old boy stopped but his mother tugged him along hurriedly. The kid stopped to look at the violinist again, but the mother pushed hard and the child continued to walk, turning his head all the time. This action was repeated by several other children. Every parent, without exception, forced their children to move on quickly.

45 minutes:   The musician played continuously.  Only 6 people stopped and listened for a short while. About 20 gave money but continued to walk at their normal pace.  The man collected a total of $32.

1 hour:   He finished playing and silence took over. No one noticed. No one applauded, nor was there any recognition.

  
The violinist was Joshua Bell.  He played one of the most intricate pieces ever written, with a violin worth $3.5 million dollars. Two days before Joshua Bell sold out a theater in Boston where the seats averaged $100.


I can assure you a few dozen passerby have Bell on an album and would jump at the chance to go to the Kennedy Center to hear him. Hundreds would claim to be afficionados of classical music.  Talk about swine flu.


There is genius and beauty passing us by everyday, but we wait to be told what we can like.  We are told what to believe and not to be concerned with what is real.




http://www.youtube.com/watch?v=myq8upzJDJc

Dollar is not money

Bob sent me an article that had him thinking. Since he is sort of a banker and conservative by profession and nature, I looked at the article carefully. Perhaps, Livingston states the obvious, but perspective is everything. When looking at "money" think "volume."

President James A. Garfield said, "Whoever controls the volume of money in any country is absolute master of all industry and commerce."

Sure, we have a fiat currency, but what does that really mean?

The Myth of Taxpayers’ Money

October 12, 2009 by Bob Livingston

Taxpayers’ money is the definition of an overworked term. We could teach Goebels a thing or two!

When ALL the writers refer to "taxpayers’ money," they think that our taxes are "taxpayers’ money" and they are trying to tell the public that the government "wastes taxpayers’ money" and they actually believe this nonsense.

Now to set this illusion in concrete, the Internal Revenue Service (IRS) does reduce the numbers (money) in our checking accounts when we authorize them to do so via our 1040 tax return.

But no one ever asks where the numbers (money) go when deleted from our checking accounts. These numbers (money) do not go to Washington as taxes to pay anything. They go into the cyberspace of the IRS computers.

All this is Orwellian doublethink.

Facts:  The dollar is a myth. Oh, I know that we have green strips of paper in our pockets that we believe are dollars. The numbers on the green strips of paper are our "dollars." So what we "spend" every day are the numbers or the symbols on our green strips of paper.

Now if the government "wastes our tax dollars," what do they waste? Do they waste the numbers or computer symbols called dollars? How is it possible in the realm of reality to spend or waste numbers that can be created to infinity? What absurd nonsense!

Please, we should memorize this! Anything that can be created to infinity cannot be "spent” or “wasted." To spend or to waste implies to exhaust or use up. These money symbols (numbers) that we think of every day as money have no substance in reality. We as individuals do "spend" numbers, but ours are limited. Therefore, we can use the term spend or debt as it relates to anything except the Federal Government and their symbiotic partners, the banks.

So what does the IRS do? They reduce our consumption by reducing the numbers in our checking accounts. It is a system of economic regulation to conceal the fraud that modern money is numbers created without limit by government/bankers.

What else does this Orwellian system do? It transfers wealth to the "money creators." How does a government make war on its own people? We said that modern money is numbers or symbols which can be created to infinity. Hold on to your hat! Theft through fiat occurs when the VOLUME of numbers (money) exceeds the production of goods and services. This is called inflation. So, the government makes war on its own people by increasing the volume of money.

Individuals, cities, counties and states cannot increase their money supply (more numbers) by creating more. Only the Federal Government in symbiotic relationship with the banks has this monopolistic power. When this monopoly creates inflation it reduces the exchange value of all "dollars" in savings and circulation. Where does this reduction in savings and dollar assets go? It goes to the money creators, the people who increased the volume of money (numbers) into the system. Nobody controls the VOLUME of money except the money creators.

How do they get away with this? The answer is the ignorance of the people. Through the manipulation of economic classes and racial conflict and the military industrial complex, the money creators generate a constant clamor for higher volumes of money, small percentages of which are dispensed back to the poorer classes. The poor people get a crumb and they are happy.

Social Security and Medicare are created with excess money (numbers) volume. They are Ponzi schemes.

What makes this system work even for a day? It’s a confidence system. Most people still believe that it is honest and that it will last even though their store of value and the purchasing power of their "money" decrease constantly.

The other reason that the system of fiat works for periods of time is that the VOLUME of money is regulated through taxation. Estate taxes, income taxes and all other taxes reduce the volume of money which extends the system. When the volume of money is expanded, there must be a serious way to keep reducing the volume. Taxes and wars extinguish the excess volume of money. Do we have taxes? Do we have perpetual wars? Wars don’t cost money; they extinguish surplus volumes of money. Wars would not be possible without fiat.

Modern money is witchcraft, but it can be understood in terms of volume whether it is gold or fiat.

President James A. Garfield said, "Whoever controls the volume of money in any country is absolute master of all industry and commerce."

Sol

From Irene.  She notes that the sun may affect our weather.

Defense

I mentioned I would look into some defensive moves. I will do so below.  After my last PE heart attack, several people have tried to calm me down. 


I suppose one could be more sanguine, but only if you are sure your home is earthquake proof. That would mean, if you wish to stay in stocks, only look at low PE ratios, especially if there are dividends. When the washout comes, you will want to be in real companies.


For example, AT&T  (NYSE: T) will be around in the future.  It has a PE ratio of 12 and a dividend of 6%.  That's not bad.


I don't know how fast the dollar will depreciate, the inflation rate right now is near 0, so who knows if a rising AT&T is actually a positive investment.  You may be going sideways regarding purchasing power, but have to pay taxes, which will increase quickly, on the paper profit. 

An aside to show why we are doomed:  the inflation rate is near zero so there will be no cost of living increases for social security recipients this year.  There is a law about this. Anyway, socialists think in terms of yearly increases in salary and benefits, being used to think in terms of being wage slaves, so the administration is asking Congress for a $250 check to be sent to social security recipients.  There is no logic to this, of course, it is just sticking it to the man, I guess. This freebie:  $12,000,000,000, just chump change, these days. Why? Because people ought to get a raise, its normal.  Eve of Destruction

If you are suffering from inertia and can't see exchanging a cotton paper for a metal, one thing you can do to protect stock investments is to buy QID.  I bought these as a speculation, but they would even make more sense if you already have stocks.


QID is an EFT, sort of a make-believe investment, that changes in value as the its target product changes. There are EFTs on just about anything that moves. The QID is designed to react inversely, at twice the speed, as the QQQ. Got that?  

QQQ 

Hide links within definitions

Definition

The Nasdaq 100 Index Tracking Stock. The QQQ is anExchange Traded Fund which allows investors to essentiallyinvest in all of the stocks that make up the Nasdaq 100 in asingle security.

OK, if the NASDAQ goes up (QQQ), the QID goes down twice as fast. The opposite is true, which I what I am betting on and you should to, if you are keeping your stocks, as is there is a high downside risk in the market right now, recall the average  PE ratio is 150 and we have returned to 10,000 on the Dow, not in PE ratios.  


If things take off, which I cannot imagine, you lost a little on the QID, but not much while your stocks are happy. 


If things do crash, then you cash in your QID when you think things are done; then you could buy QQQ for upside moves.   


If you are invested in the U.S. game board, then this is a protection, as well as a way to make short and mid-term gains as things gyrate. 




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Of note, conspiracy theorists, who seem to be right all the time now, say stay out of gold EFTs as there is concern there actually isn't enough gold being held to cover the EFTs.  That is,  gold EFTs are a ponzi scheme. Since gold is leased and the big banks, various countries, and the FED are involved, I would bet on that side of the table. There is a drive to keep the price of gold down and risk is being taken to do so, if that risk fails - OMG.

Ruff times

Howard J. Ruff has a new book coming out about getting by in the age of Obamanomics.  On his web page, click on the title, he has a free chapter. You can get the book, too.


He seems to be one of those who can back away from the death of what we know and adapt and profit from the coming socialism.  


I will invest what little I have to profit from blood in the streets, but that's it. Time for the highway.  If you read Chapter 5, below, you will see there is not much for me here anyway, as old people will be drained off. I seem to be old to the brave new world. I guess it makes sense to let the old ones die off because they can identify fascism.

HOW TO PROSPER IN THE AGE OF OBAMANOMICS: 

A Ruff Plan for Hard Times Ahead 

BY 

HOWARD J. RUFF 

CHAPTER 5 

THE PHONY SOCIALIST HEALTH-CARE CRISIS: 

 The Biggest Power-Grab of All 

A government that is big enough to give you all you want is big enough to take it all

away.—Barry Goldwater

We are inevitably following the rest of the world into the fetid swamps of a massive

national health-care (sick care?) program. It will dwarf all current expenditures on Social

Security, Medicare, and Medicaid by trillions of dollars—and they are already burying us! It’s

the ultimate socialist grab for power.

The average politically ignorant American who ignores or knows nothing about history

will say, “Why not? Other countries do it? Why not us?”

Why not? For the simple reason that it doesn’t work in other countries and it won’t work

here.

The consequence of national health-care will be rationing. When we discover we can’t

afford to do everything that was promised, we will have to ration it by price and time. The only

way for Obama to keep his promises about the lower cost of health-care is by price controls,

which will make it cheaper, yes, but you’ll have to wait in line for service, often for months.

Seniors will be denied care that costs too much, like chemotherapy or heart-bypass surgery.

All the health-care promises that are being made are impossible to keep. Some

government agency will determine whether or not it is cost effective to use an expensive new

drug or procedure that might cure you, but if in their cold-blooded opinion it costs too much, you 

will not be allowed to buy it personally at any price. Bureaucrats alone, not doctors, will make

those life-and-death decisions.

Soon your family doctor will give up the health-care business because he can’t cope with

all the government forms, he’ll be swamped by trying to help too many patients, and the

government keeps underpaying him. He will have to work harder for less money, so who could

blame him for quitting?

The doctor shortage will only get worse when fewer and fewer students are willing to

become doctors because it’s not worth the return on investment medical school requires.

Sick Care 

Honestly, we’re not really talking about health-care; we’re talking about “sick care,” even

in America. Our system isn’t designed to keep you healthy; even our current system only helps

you if you get sick or injured.

It’s like laws against guns. People buy guns to protect themselves because the police will

only help you if a crime has already been committed. Law enforcement will do little or nothing

to help prevent the crime.

It’s the same thing with your doctor. How many of you have ever gone to your doctor for

a serious health checkup—to find out if you have a problem that could be treated in its early

stages? Some of us do, but most don’t. Maybe that’s because health insurance has trouble paying

for it.

Lessons from Canada 

A U.S. national health-care program will mimic Canada’s, where patients needing urgent

treatment or surgery often have to wait for months—or they go to America, if they can afford it.

In Canada and several European countries, it is against the law to get around the national

health-care system by paying a private practitioner. You have no choice, unless you are rich

enough to go to America.

Dennis Gartman makes the following points in his newsletter,

www.thegartmanletter.com. He says:

If you think government-controlled health-care is a good idea, consider this: 

In the U.S. 93 percent of those diagnosed with diabetes receive treatment 

within six months. In Canada, only 43 percent do! 

For those seniors needing hip and knee replacement, 43 percent of Canadians 

get it done in six months ... in the U.S., 90 percent do  

In the U.S. there are 71 MRI or CT scanners available per every million 

people. In Canada, there are but 18.

Heaven help you if you have something really wrong in Canada. If that’s the case, you’ll run

south of the border faster than you can reach a specialist anywhere there.

I don’t want some nameless bureaucrat deciding who gets to live or die in the name of his

scientific and federal orthodoxy. Obama and the majority in Congress are planning bureaucrat

rationing for our future, and senior citizens will suffer the most. As a senior, I have a target on

my back.

Obama’s Assault on Seniors 

As this is written, legislation now being rammed through Congress—HR-3200 and

Senate Health Committee Bill—will pressure the elderly to end their life prematurely and doom

baby-boomers to painful later years.

Democrats in Congress want to pay for the $1.6 trillion health bill with new taxes and a

$500-billion cut to Medicare. The Congressional budget office estimates only one percent of

Medicare cuts will come from “reform” aimed at eliminating fraud, waste, and abuse. That

means the other 99 percent has to come from cutting benefits.

Comparative Effectiveness Research 

The assault against seniors began with the stimulus package that became law in February,

2009. Slipped into the bill was substantial funding for “Comparative Effectiveness” research,

which means “limiting care based on the patient’s age.” The cost of treatment (about $50,000 a

year) is divided by the number of years that the patient is likely to benefit. In Britain, the formula

leads to denying life-extending treatment for elderly patients who have fewer years to benefit

from care than younger patients.

When Comparative Effectiveness appeared in the stimulus bill, Representative Charles

Boustany, Jr. (R:LA), a heart surgeon, warned that it would lead to “denying seniors with

expensive illnesses any life-giving care.” He and Senator John Kyl (R:AZ) proposed to no avail

amendments which would have barred the federal government from using the research to

eliminate treatments for the elderly or to deny care based on age.

Nancy Pelosi and White House Budget Chief, Peter Orszag, asked Congress to delegate

its authority over Medicare to a newly created body within the executive branch. This was

obviously designed to circumvent the democratic process and avoid accountability to the public

for cuts in benefits.

Medicare Cutbacks 

Medicare is running out of money. The problem is there are too many seniors compared

with the smaller number of workers supporting the system with payroll taxes. Inevitably, less

money and more patients will necessitate rationing.

The Congressional Budget Office wants to inch up the eligibility age one month per year

until it reaches age 70 in 2043. Wealthy seniors may also be required to pay more.

Until now, Medicare has made living to a ripe old age a good value. ObamaCare will

undo that. Already, in Oregon, the state denies some elderly cancer patients care that would

extend their lives. Instead, the state pays for “physician-assisted-suicide counseling.”

The House bill being pushed by the President ensures seniors are given end-of-life

options, including refusing them care when state law allows it. On page 425 of the Health-care

Bill under consideration by the House of Representatives, it says in black and white that

everyone on Social Security (which includes all senior citizens and Social Security recipients)

will go to mandatory counseling every five years to learn (among other things) about how to

choose a way to end your suffering and your life.

The Inescapable Truth 

Americans need to see past the Washington lies. Health-care reform leads to only one

place—bigger government, higher taxes, and health-care rationing.  The facts are: the only way

to slash $500 billion from Medicare is to drastically cut health-care for seniors; care will be

denied based on age; the oldest and sickest will be cut first; and paying for your own care, if you

can afford it, will not even be an option.

If you are over 65, be afraid.

Be very afraid!

If you think health-care is expensive now, wait until it’s free.

150 and 40%

Two Items:

I have lived with PE ratios as bedfellow since I was 18.  It is a fine snapshot of price of a stock vs. earnings in the last year.  It could go off in the next year, but you know what you are looking at with a PE ratio. It is a thermometer. You have to guess about next year.

I don't care if you have no idea what a PE ratio is, just look at the graph. You know something BIG is happening. It would be great if this were a picture of your bank account, but I doubt it is.  Rather, it is an average of the PE ratio of the entire S&P 500 bundle of stocks. 

OK, you may say. What? Why are you turning red?

If a stock has a PE ration of 10, this is great because recent history shows the price of the stock divided by earnings is 10, which means the stock price is really low.  If you can find a low PE ratio in a solid company, that is great. A good buy, especially if it has a nice dividend. That is the old days.

If you find a PE ration over, say, 25, that company had better be really hot, like MS or GOOG, back in the day. Hot companies, in the sense of growing sales like crazy, not attracting investors. Like when computers were a new industry. 

Once you hit 75, you are in idiot range. If you buy a 75 PE you are betting the company will come out with the next iPod, if not, you are an idiot.  I recently bought a put (a bet down) on a silver mine, CDE, a tough thing to do these days of panic buying, because it has a PE of 82. I don't care how popular silver is, you still have idiots distorting things. If gold falters, as I think it must, crash goes the speculative balloon. On the down side, the market has more liquidity than I do. So, I have to hope this happens soon. Anyway, I digress. 

Now, take all 500 S & P companies and average them together. Essentially, this is America.

You can see the resulting PE zone broke apart in the 1990s. The average tried to come back, but this year, the ink is off the page.  I have never seen anything like this except for the money supply numbers, for the last year, and the Mann global warming hockey stick, both real bizarre distortions of reality. Both dangerous beyond understanding. Trust me, this is terrifying. 

What the graph means is idiots are pushing up the market without any concern for value. They are ignoring earnings. The PE ratio, if there is any mathematical laws in the universe, has to collapse. It won't be nice.  If you have a 401 (k), move over to metals.  Now.  

I look at this graph and sell every stock I own.  Actually, I did already, but you know what I mean. I am in a double impact EFT putting the index. (HUH) Bascially, when everything collapses, I make twice as much money on the collapse.  I don't think this is bad bet. The risk/reward ratio is absurdly tempting. Blood in the streets and all that.

I am putting the dollar and long in silver, though I suspect a correction is at hand (I bet on it). 

So, get out of everything.  I know I sound boring, but I am trying to save a few lives. 

I am not normal, so I making bets to build a nest egg; normal people are being set up for the biggest equity blast of, well, in my knowledge. The government is going to fix its stupidity by creating a massive change in the dollar and in assets. Indeed, there is an argument there is more money in existence than can buy everything, but I digress. 

Do something.

Now for some more pleasant news.  We are candidates for hyperinflation; we graduated to fit the model.  You can thank our government for this, on the way out the door to buy silver.  By the way, for those of you around here, the shop on Caroline sells "junk" silver bags.  Not a bad idea on the next dip. Not a bad idea right now. 

Junk silver is made up of pre-1984 American coins.  Yes, they had value, still do at about 12 times the face value. These will be great if it is the endtime. 

When you go in, notice the silver serving dishes scattered on the floor. They are actively buying anything from anybody.  Now, you know why.

Item 2

Hayman Advisors: History shows Hyperinflation occurs when deficit exceeds 40% of GDP

By Editor's Picks

Published: October 09, 2009

---

FY 2009 deficit turned out to be just over 40% of outlays. According to research highlighted by Hayman Advisors in their October Letter, the fact that such a sizeable share of government spending is being financed with borrowed money has, historically at least, been a harbinger of trouble ahead:

There have been 28 episodes of hyperinflation of national economies in the 20th century, with 20 occurring after 1980. Peter Bernholz (Professor Emeritus of Economics in the Center for Economics and Business (WWZ) at the University of Basel, Switzerland) has spent his career examining the intertwined worlds of politics and economics with special attention given to money. In his most recent book, Monetary Regimes and Inflation: History, Economic and Political Relationships, Bernholz analyzes the 12 largest episodes of hyperinflations - all of which were caused by financing huge public budget deficits through money creation. His conclusion: the tipping point for hyperinflation occurs when the government's deficit exceed 40% of its expenditures.

Perfect

I wrote up quite a bit, then realized the point of this entry is a perfect summation of what is going on. So, here it is. I can't make things any clearer.

Don't forget, the theme of this blog is to listen to the message, not make judgments based on the messenger. Please, don't prove my thesis a valid one, here.

Oh, I failed, yesterday, trying to get a good copy embedded and have no idea if it worked here.  If not, you can click on the title and go to Youtube.





===

I said I would say what I was doing re investments, but that will dilute the message. Just let me add, if followed what I said regarding DDS, it is probably time to take your profits. The next shoe to drop is the commercial real estate market.

Indeed, the market will become a nightmare. You can have a stock going up and lose money because the dollar is devalued. Go to Canada and buy some money.

Last Call?

To all my friends:  Please read the following. Don't skim; it is alright if you lips move.


Please take all the time required to read the article below. If you like, look up Turk's lectures on Youtube (4 videos).  He is my source for picking silver over gold, but either is a necessary purchase now. He spoke last year, as I recall, but the events to worry about  are current.


We have arrived at one of those words to the wise times. It is time to act. 


If things do not turn out as bad as forewarned, you have a good investment to fight off inflation.  If they turn out as bad as predicted, if you do not act, well, you may be in the apple and pencil business.  If you do act and the implosion occurs, you have scored the hit of a lifetime.


It is easy to wander off muttering "gold bug" or "conspiracy nut," but that is not a position.  


You figure out the risk/reward logic. Also, put aside purely technical analysis, such as "Gold has doubled in the last few years, so it won't go up much." This logic does not belong to current conditions. 


Quicksummary: we are at a technical top in the stock market and gold (silver follows a week later and is a better leverage for investment, sez me).  Both will drop; both will come back for the rest of the year. Gold may hit 1250 by the end. The drop is soon, the recovery is soon and will be nice for a few months, all in all. Don't be fooled. Also, don't forget much of increase in the price in gold and silver comes from the collapse of the dollar's purchasing power. 


Next year, the center not only doesn't hold, it gyrates beyond recognition. Before that time, you had better be out of the dollar.  A great place to be is silver. (This is my two cents) Again, this is not hysteria, read the article from Kitco, the leading gurus in metals. see Kitco.com. Read how analysis are openly talking about the end times.


I bought the Financial Times (England), yesterday, because of an article on the front page:  Asia ties to slow decline of dollar.  Think about that - Asia is trying to save us because if, when, we go down the drain, the whole tub of water goes down the drain. The Asian central banks went into the market two days ago to STOP the appreciation of their own currencies. Understand?  They are trying to stop their own progress against the dollar, which is collapsing. If the continue knocking off the dollar, then their main customer vanishes. The problem is, investors are not easily overwhelmed by government stop gap measures. 


That's it.  Won't say anymore, but I will act next week.  I don't care if I go down 10% by moving early, if the alternative is exposure to chaos. Also, I don't have much to invest, so don't think this move is only for the wealthy.  This is a survival move which is far more important to we mere mortals than the fat cats.  

more articles by Roger Wiegand

Short Term Gold: Up, Down, Or Sideways? By Roger Wiegand        Oct 9 2009 9:22AM www.webeatthestreet.com Technically, it appears our daily most active December, 2009 Gold Futures are approaching a top this Thursday morning in a normal Elliot Wave set of five waves. We have been forecasting the key numbers to be 1032.50 and 1050.00. Earlier this week, we cracked the 1032.50 barrier, held and moved higher in this rally. Today as we write at 1030AM New York time, those gold futures opened at 1042.70, had a trading low of 1037.80 and a high of 1049.70. While anything  can happen, we expect a gold top is near for this rally; FOR THE SHORTER TERM. In another related forecast we said gold would probably find a new low on Friday, October 10, 2009. Should today prove to be the top of wave five up, then Friday might produce a new A wave, of the ABC normal correction, down to support.  With so much buying pressure on gold and the US Dollar showing steady weakness, we suspect gold will trade in a choppy sideways channel for our ABC mild correction followed by the next 46 day gold cycle of bottom to top to bottom. This is the last 2009 main event for gold and silver. The most significant gold events are to crack the 1050 gold sound barrier  and hold followed by a potential to a new break-away rocket-rally toward 1250-1260; our long ago high December futures trading forecast for 2009. Do we see a new cycle to 1250? I think I can see it very clearly. Months ago, the large stock index markets were showing us technicals signaling a substantial smash this fall. We called the stock index top for 9-15-09 and it turned out 9-21 to 9-22 was the event. Since those reports, the S&P has been generally hanging around 1050, which we also predicted. Keep in mind when a pivot reversal arrives they can fool us and extend beyond cycle dates. This then usually produces normal double tops before the selling. Reversals can in fact show a sloppy triple top to further confound the traders. Mainstream shares, if they are going to correct at least 10-12% this month, better get busy and get it over with or else our normal, annual rally date for them beginning November 1 could get pushed forward in time. If this happens the cycles for 2010 will be affected and delayed as well. Gold Bull is angry and really pawing the ground; more so now than ever. Drastic abuse of currency and bond markets to “Save The System” by central bankers, the Federal Reserve, US Treasury and their foreign helpers are all in cahoots to save old paradigms gone for good. Unsubstantiated and denied rumors of a foreign cabal conspiring to trade oil in a basket of currencies excluding the dollar rocked the currency boat this week. We cannot be sure but our motto says, “Where there’s smoke, there’s fire.” Those alleged monetary leaders and authorities are after power and money. This is just normal unbridled greed as they anxiously strive to ease the dollar down slowly reducing their massive debts by inflating them away. These guys and gals have no other choices. They have no way out. In their view, if they can ease the dollar down over years and let gold ease up over years, they win. This supposedly prevents major monetary accidents of the kind Germany endured in 1921-1922 with hyperinflation. This is really tricky stuff and we say they screw it up. Now, however, very responsible and mainstream analysts are saying the H word-HYPERINFLATION. This event is not your garden variety Jimmy Carter mess with prime at 21%, this is pure mayhem and a cataclysmic game-changing event with the potential to bring down governments. One of our favorites from Asia was on Bloomberg TV two weeks ago and flat out told the audience it ends with an implosion. He told us this means no more markets, no more trading, and no more Bloomberg, which really raised some eyebrows. This man is highly respected and revered as a successful fund manager and predictor of financial events world-wide. Normally, those kinds of statements are never uttered on mainstream media and if they are they usually end with that person getting fired; pronto. We watch this stuff closely and read huge piles of info each week as that is our job. These radical comments were previously confined to nut-job websites. Not any more. I can’t remember the others but there have been four or five other top guys saying similar things. Weekly Gold Shows An Entry To New Rally Era. See the price pop above the red dotted line in the upper right hand corner? This signals the rally beginning on our forecast.  Earlier, we see a very bullish inverted head and shoulders from April, 2008 to September, 2009. Daily charts are for shorter cycles and represent shorter term trading action. When we see a move like the one shown above on a weekly chart, this is serious stuff. It becomes even more serious and definitive when you see a similar move on the monthly charts. Our best analysis comes from interpretation of a grouping of charts; not just one or two. If we can reconcile the moves in currencies, bonds, stock indexes, gold and silver and other commodities, we can see the real hard core trends. One or two charts could be maybes. Ten of them cannot be denied. Now let’s see how the gold trading fits with silver and the precious metal shares. Silver Signals Long Consistent Rise From Double Bottom A Year Ago. Cash silver is a little behind gold in wave counts. However, it trades faster and will catch-up. Silver follows gold on the larger picture but can be a week or two behind or ahead of gold in primary moves. This is the cash chart but  the December daily futures chart is advancing toward wave five. Our previous highs for silver before the 2008 fall smash were trading at $21.50-22.50.  Before we see those numbers again we must rally to $19.50-19.67, correct and then revisit $21.50. After $21.50 the next move is toward $25-$26 followed by $30.00. XAU Shares Broke Out Above Moving Averages And Two Channel Lines. Next XAU resistance is 180. (Note price cluster October, 2008 to January, 2009). Our Summary Shows An Impending Top With Following Price Rebound. Gold for 2010 can be forecast technically within wider limits. This wider dimension must consider radical problems produced by higher inflation, more central authority mistakes, trip-wires from foreign events, and the measure of rising fear among the Sheeple. All of these factors come into the gold price mix. However, we can offer a conservative measure for gold prices at $1325 in February and $1375 in April, 2010. Silver could touch $21.50 in February and $26-$30 in April for the spring high. Keep in mind the big stock indexes we forecast to rally from November to May, 2010 with one correction in February. This will fool the herd into believing all is well. It is not. But, precious metals shares and other commodities will enjoy rallies from next month through April, too. However, next spring we forecast a bolt of lightening hits almost all markets in June-July, 2010 after May sinks into the abyss. This is the cycle where several very severe problems hit us in real estate, banking, credit, government failures and who knows what from the Middle East. Many view this pre-May cycle as the last chance to sell into strength within the main stock markets. Precious metals, after that time should go their own rally way. Finally We See Mr. Dollar Sinking To The Celler. Steadily Losing Value. Since US Dollar represents the reserve currency for 85% of the world, moves are glacial. Here we note a list of negatives telling us the dollar sinks much further. (1) Price is beneath all moving averages. (2) Price is under three channel line failures. (3) PMO momentum is turning down. (3)We know the Federal Reserve is buying our own bonds as they cannot be sold. (4) We know the unreported quantity of dollars being printed is extraordinary. (5) We know the holders of dollars and bonds dearly wish they did not own them and in fact are shedding them at rapid clip. (6) We know on the streets of foreign nations, vendors prefer currencies other than the dollar. (7) We know nations like Canada, Australia and Switzerland are struggling to prevent their own currencies from becoming too expensive as the US Dollar (opposite trade) sinks and drives theirs higher. We could go on and on but you get the picture. We say a lot of this stuff is inevitable but some of it may never happen. However, just as in the FDR’s 1930’s, governments make the same mistakes over-and-over again. We think Greater Depression II lasts from 2009 until the next world war. Some tell us it ends in 2017. War is sadly the ultimate economic weapon to find depression exit relief. This, we would not wish on any one. Read American and world history from 1776 to the present. This is what we get; all over again. Financials crashed in fall 2008 with Lehman. Recovery began with TARP in May, 2009: During October, 2009 we’re ending a dead cat bounce with a selling event later this month. Precious metals and their shares are toppy on this October 8, 2009, for the shorter term. Beginning October 31 most all trends can reverse and moves to rallies. Keep in mind, if you own paid for stuff it will most likely remain in your hands; not in somebody else’s. That includes gold and silver. Do not get tangled-up in daily noise. Keep studying the larger view and buy precious metals after each profit-taking correction. Headwinds are building into an economic hurricane. Take care of business right now. My dire fall prediction might surprise us and arrive a little later. Selling is now. But next summer could be the larger crash. Time is short. Personally, I can see unbelievable opportunities to trade that we would never see again for many years. Turn these problems into opportunities. Those on the right side of the trade might get rich. Those on the other side are just victims. Stay Alert. – Traderrog Roger Wiegand Editor Trader Tracks Newsletter The Jay & Rog Blog at webeatthestreet.com **** Roger Wiegand is Editor of Trader Tracks Newsletter for gold, silver and energy traders. Roger provides recommendations for short and longer term traditional stock shares, futures and commodities trading with specifics for individual trades. See webeatthestreet.com for more information. Contact Claudio Bassi, at Trader Tracks New York City publishing offices for an introductory 30-day trial subscription for only US$49.00.  This is half the monthly rate our subscribers pay. Call us at 718-457-1426 Monday through Friday, 9:00am to 4:30pm (EST). You can also e-mail Claudio at cbassi@miningstocks.com for more information.