Sleepwalking Into The Abyss

As it was in 2008, Walmart and the stock market (S&P)

Converging - to the downside.

Only because real people can barely afford to eat.

So unfortunately, it's that time again, for everyone to WAKE THE FUCK UP.

Or, just sit still and get annihilated.

I realize that we are all being slowly euthanized by a lethal concoction of Central Bank dopium, laced with junk food and junk culture, cut and distributed by Wall Street front running bots, and blown straight up our asses by the media, but it's incumbent upon us to lift ourselves from this dopium induced coma to figure out what the hell is going on, before it's too late...

Who Wants A Millunaire?

Zerohedge just warned us that the U.S. faces a major outflow of millunaires due to the likely inevitable tax hikes resulting from the fiscal cliff calamity besieging Washington.  Not surprisingly, my take on these events is not quite the same as the catastrophic result the Lost Boys are predicting.  Let's look at this issue from another angle, where would all of these millunaires go and who would want them?  What are the criteria these Atlas-like "great men" should seek in their new very fortunate-to-have-them domicile?

The High Cost of Conformity: All Now, Nothing Later

I just took this picture of tonight's full moon with Jupiter.  I took it with a point-and-shoot on full digital zoom, so it's clearly an optical illusion.  Someone can probably explain why the moon appears relatively small and Jupiter very large - unfortunately I can't.

This scene got me thinking about Elliot Wave Theory which I recently dubbed "financial astrology"...

Irrational Exuberance

Apple: Market Leader.  Five Down, Three Up.  Trend is down.

Yesterday, Zerohedge showed bullish speculative positioning at multi-year record long going into year end. Today they kindly reminded us that the market has fully decoupled from economic reality. Bear in mind that the ECRI leading index includes the stock market as a leading indicator, meaning if the market was not going up, the ECRI would already be going down. As you see from that ZH chart, the market has a habit of converging to the downside with economic reality - as it did in 2008 and 2011.  Like I said before, the party is already over, so all we are doing now is waiting for Wall Street to come down off of Dr. Bernankenstein's latest dopium fix...

BTFD: High Stakes Game

Bears would say we broke down through the lower trend line of a (bearish) rising wedge and now we are re-testing the underside of the trend line on a low volume (low conviction), oversold, short-covering spike.  The obligatory last kiss goodbye.  Bulls would say we are about to retake that lower trendline, like the last two times, and then power to a new high.  You know where I stand.  The market is now back to being overbought (Mclellan Oscillator), so if that trend line is not taken back soon, someone is going to be changing their underwear.  Bulls would counter that Wall Street is desperate to keep this shit show levitated through year end, bonus time.  To which I will say that they have to deal with the four horsemen of 2012...

Sovereign Debt, The New Subprime

I just watched this commencement speech by Michael Burry who was one of the speculators that made millions off of the subprime crisis.  The UCLA dork introducing him starts out by saying that Queen Elizabeth asked the London School of Economics why nobody predicted the 2008 financial crisis.  Then he goes on to say that  Burry was one of the few people who actually foresaw the crisis.  I am sure being a Professor in the Economics Department, the introducer desperately needs to believe that "no one saw the collapse coming",  however, unfortunately it's all complete bullshit of course, because everyone knew in the latter stages of that era that the housing boom was going to end very badly.  But like deer in headlights,  everyone essentially froze up and pretended that the unsustainable  would continue indefinitely.  Sound familiar?...

A Conspiracy of Dunces

In case other countries are wondering how American workers became Third World wage slaves in their own country - below are step-by-step instructions.
(Warning: Do Not Try This At Home):

The Real Economy

Dow Transports represent the real economy i.e. that part of the economy not sponsored by Central Banksters and political game show hosts.  Let's ask them what they think about this shit show:

Fiddling While Rome Burns

"The significant problems we face today cannot be solved at the same level of thinking we were at when we created them"  - Albert Einstein

Is there any doubt at this juncture that U.S. politics have devolved into a thoroughly buffoonish farce?  In addition to this morally corrupt fiscal cliff debate over precisely how best to bankrupt the nation's grandchildren, now the lamestream media at the behest of the party of hate and war, is fixating on the "talking points" surrounding the Benghazi embassy attack...

Slowly at First, Then All at Once

I showed recently that my blog stats have been ticking inexorably higher throughout this year, starting last May.  I honestly had hoped and believed that this blog and its underlying message would have gone viral by this juncture.  Actually well before this point.  That said, it should come as no surprise to any of us that the Point of Recognition will exactly coincide with the global markets collapse, once again coming a day late and many dollars short. 

You Have a Choice of the Blue Pill or The Blue Pill  

The fact that full Ponzi recognition has not yet occurred, is overwhelming proof that the vast majority of people on this planet - or should I say those with decent income - are totally bought in to and sold out to the Globalized Ponzi Scheme.  This confirms the axiom that it's easier to fool a million people, than it is to fool ten, especially when they are stewed in junk food and junk culture.  Maintaining this grand delusion is the job of commercial media outlets which have wholeheartedly embraced the sugar coated infotainment format to spoon feed a pablum hungry aging population desperate to believe that the status quo is infinitely sustainable.  As I pointed out recently, this willful ignorance by the average citizen and all of our policy leaders, comes at a very steep cost at this late juncture.  Had we woken up to the inherent unsustainability of this model years ago, we could have taken action to mitigate the effects of its collapse by adopting a more sustainable model.  In choosing the path of pure self-delusion and wishful thinking we have found lethal new ways to ever-inflate the credit bubble, ensuring a massively destructive outcome...

Crossing The Rubicon

[Update: November 15th, 2012]

Just as it was in 2008, WalMart is the last stock to roll over; now in free fall...  Today, they announced a disappointing revenue forecast.  When people can no longer afford the cheap junk sold at WalMart, then you know the Ponzi is unwinding...

[Original Post: November 14th, 2012]
All of the bearish newsletters and blogs I follow are debating whether or not we crossed the rubicon today.  I am firmly in the "yes" camp, but I will let the charts do the talking.  Of course all of the mainstream finance related sites remain firmly oblivious, and on the money shows everyone is still talking about which are the best stocks to buy at this juncture.  The most interesting analysis is from the Elliot Wave types who see this as a "third of a third" event meaning a third wave down at all degrees of trend.  If that is the case, and we should know soon enough, then this indeed is the point of no return.  The reason we can't say definitively that we have crossed the rubicon, is because obviously Wall Street remains firmly oblivious at this juncture.  When they wake up to the fact that the next 1000+ Dow points are down v.s. up, then it will be front page news.  Suffice to say, the level of complacency at this juncture is the biggest reason to be bearish, because it means everyone is still buying the dip and therefore there is plenty of scope for panic when they realize that everyone is on the same side of the boat...

Survival of the Least Fit

Good News: 

If We keep Borrowing, We Can Avoid The Fiscal Cliff

I have no idea if the game show hosts in government will come up with a plan to avoid the fiscal cliff.  However, I do know that every minute they waste trying to figure out how to keep the supply of money flowing to special interest groups, is more time taken away from fixing the real problems.  Between campaigning non-stop, and figuring out how to plunder the nation's grandchildren, there is barely time left over to check NFL highlights.

Un-Civilization

[Update: November 12, 2012]
"...The Moochers Prevailed"
The right wing is really pissed off.  They thought it was their turn at the public trough so they are now going over the top bat shit.  A billion dollars on the Romneybot and nothing to show for it.  I just read this propaganda piece written by the Von Mises Institute of Canada, where exactly as I predicted below, he labels the American 47% as the "moochers".  The irony of a guy from Canada which has far greater social benefits than the U.S., calling American workers "moochers" cannot be overstated.  You can't even buy the truth at this point in time.  Willful ignorance is the siren song for the child-like dunces running amok in the Idiocracy.  Just wait until these hardcore disinformers realize that there is no one left to exploit.  What will they do then, make an honest living?  Unfortunately, they don't know how... 

[Original Post: November 9th, 2012]
Wow.  This last election is really bringing out the bile.  The level of societal acrimony is rising daily.  

No surprise, Republicans are enraged that Obama got re-elected after the $1 billion dollars they wasted on their transformer Romney Robot.  I don't even think they can sell him for scrap at this point.  And of course, the party of hate and war has unlimited reservoirs of rage to vent against the mythical "47%" of Americans who apparently are dragging this country down - you know, the "takers", "spongers" and "dependents".  

There's only one problem with that self-deluded hypothesis, which is that the average American has far fewer social benefits, a much weaker safety net and overall works harder and longer hours than their counterparts in every other developed country.  How can these "47%" dependents be such an economic drag when Canada or Sweden or Germany or Australia has higher minimal wage, better welfare, better medical, better social security and better unemployment insurance?  And by the way, all of the aforementioned countries are outperforming the U.S. at this juncture.  Of course, this line of Ayn Randism is just self-serving bullshit.  

Willful Ignorance Is The Last Refuge Of The Idiocracy

As I stated in my last post, "A World Without Money", I am still staggered by the willingness of otherwise seemingly intelligent people to overlook the implications of this impending fiasco, even though the risk we face today is ten times what it was in 2008.  For Wall Street, the major difference between then and now is that back in 2008, Wall Street had figured out how to make massive profits by shorting the subprime market (i.e. their own customers), therefore there was a vested interest in spreading "increased awareness" of the subprime issue to expedite profit realization, as everyone piled onto the same trade.  This time around, there is no easy short trade, because Global Central banks are implicitly on the other side of every risk trade.  Hedge funds have underperformed for two years now, because they can't get an edge on this liquidity inflated market.  And if they can't make any money off it, then it's off their radar.  Of course, the other half of Wall Street is fat and happy heads down in the Central Bank feed bag making money off of the various carry trades enabled by 0% interest rates.

Beyond Wall Street, I have to assume that most people were heavily traumatized by the events of 2008 and therefore don't even want to ponder our current situation.  Whenever I bring up the issues I've raised on this blog, most people don't want to even discuss it.  Few will even attempt to debate, most just say they hope I am wrong.  From a Baby Boomer's standpoint at or near retirement, the idea of another meltdown is unthinkable...

A World Without Money

Last night, I inadvertently started watching a propaganda piece called "The World Without US" - a documentary exploring the implications of a withdrawal of the U.S. military from the world stage.  It featured my favourite NeoCon entertainer, Niall Ferguson.  After about :15 minutes of that garbage, I finally got it - those morons actually think all of "this" is sustainable !  Wow - another overconfident Harvard buffoon who can't do basic math or face reality, big surprise.

Unfortunately, the major threat facing the planet is not A World Without Military Blunders, the major threat to the planet is A World Without Money...

Interesting Times Have Arrived

Yesterday, the Hindenburg Omen was triggered.  It's a technical signal indicating a major divergence between the number of stocks at or near new highs v.s. the number of stocks making new lows.  The Hindenburg Omen has preceded every major crash of the past 30 years, with only a couple of situations where it didn't trigger or triggered a false positive.  In other words it's a necessary but not sufficient condition for a market 'event'.  I view it as the sign of an unhealthy market in which fewer and fewer stocks are holding up the market, until eventually there is no place left to hide.  (Bob Lang on RM.com indicated the signal was fired, although I have not been able to confirm by another source).

Deflation #Winning !

Deflation is stalking this economy relentlessly.  This article confirms that paradoxically, the "deflation pulse" has intensified ever since the Fed announced "QE Eternity".  Key markers are the strength in the dollar and weakness in commodities.  In other words, the Fed's hope for reflation is stalling.  Wall Street of course, has been trained like Pavlov's dog and therefore assumed that reflation would axiomatically occur, no questions asked.  So they took the Fed announcement in September as the latest opportunity to pile into risk assets, especially stocks, as financial leverage indicated by margin levels, reached a 16 month high.  

Captain Titanic

 

Congratulations to the new very old Captain of the Titanic.  When Obama took office his first term, he had nothing to lose.  The economy was in shambles, the markets were down 60% and overall confidence was low.  Today, four years later, he has nothing to gain.  The market is at a multi-year high running on fumes and he has once again bullshitted his way to another election victory, by making hollow promises he has no ability to keep.

The markets celebrated today (below) by tanking unceremoniously, across the board and breaking down through the key trend line on heavy volume.  Wall Street has figured out that taxes next year will be higher than they are this year, so they are taking profits ASAP.  Last one out is a rotten egg.  

The Only Way Forward

I just read this Der Spiegel article saying that Total Capitalism Destroyed America.  Exactly.  "Total Capitalism" aka. Supply Side Economics destroyed America.  That said, Total Socialism has likewise destroyed much of Europe.  I am not going to pen a long winded article defending that statement, when all we need to do is turn to the front page of any newspaper to see in real-time the clusterfuck that has become Europe.  And of course, total Communism killed Communism.  It turns out that people don't want to work for free - go figure.  Meanwhile in China, total Fascism is killing Fascism, as anarchy is on deck for the Middle Kingdom...

The Party of War Gets Monkey Hammered

Full disclosure: Since I can't vote, I make bets instead.  I lost a lot of money betting against the incumbent last night, because historically, the incumbent loses U.S. elections in a bad economy.  Not so last night.  Meanwhile, I told my American wife she needs to write in Ron Paul or I am moving back to Canada.  So she voted for Obama.  Women...

Here is why in my non-political view I lost money last night or otherwise why the Republican Party just threw away what should have been a cake walk election.

Both Sides Against The Middle

Some Facts that unfortunately were left out of the recent election campaign:
Q: Which one of these two candidates has a plan to reduce the debt     A:  neither.
Q: Which one has a plan to even slow the growth in the debt?  A: neither
Q: Which one has even discussed a plan on how to staunch the decline in middle class income (above)?

A: Suffice to say that Romney's Bain Capital and other vulture capitalist firms were an overwhelming driver of the middle class liquidation.  Meanwhile, Obama & Co. turned a blind eye to the carnage that occurred on their watch.  In addition, Obama did nothing to reform Wall Street after 2008, which is by far his largest failure as President.  

Q: How many jobs were created during Obama's term?  A: 5 million
Q: How much did National debt increase under Obama? A: $5 trillion
Q: How much did each job cost?  A: $1 million ($5 trillion/5 million)
Q: What was the most honest statement made in the entire election? A: Joe Biden who said that "The Middle Class was Buried in the last 4 years".  I guess he looked at the chart above and decided to tell it like it is.  His own party laughed it off as a "gaffe".
That's what the truth represents in American politics - a big gaffe.

The real (rhetorical) question is how did all of these lamestream media buffoons jointly decide to turn their backs on the most important issues of the day and otherwise convert the entire election into a reality tv  circus?  The answer is in the $800 million spent on campaign ads which lined the pockets of the various media whores.  It used to be that the media were the watchdogs of democracy - those days are long gone.  Media loyalty is now paid for up front, in cash.

Last Question:
Who would you rather have as President, a guy who is expert at outsourcing jobs and industries and played a direct major role in the outsourcing of the United States.  Or a guy who let Wall Street off the hook for 2008 and who also thinks that spending $1 million per job is evidence of a good economic track record ?

We don't know which Harvard educated buffoon is going to win this election (results coming in as I write), but judging from the chart above, we know who already lost.

Canadian Real Estate Collapse (Probability: 99.999%)

Just to prove that the Idiocracy is in no way a strictly American phenomenon, let's look up North to my home country where the Real Estate boom is finally coming to its predictable bad ending.  This article in the Vancouver Sun says the situation is "eerily similar to the U.S. circa 2006".  No shit.  Unfortunately, that's not the real problem.  The real problem is that it's not 2006.

The Idiocracy Is Waking Up

No sooner had I penned my diatribe on the Climate Change denialists, than BusinessWeek of all publications bludgeoned the Idiocracy with its own piece on inconvenient reality (below).  All it took was sinking half of New Jersey and NYC under water.  As I said in my rant, one day they will magically decide to switch from non-belief to grudging acceptance even though the underlying facts have been largely the same all along.  Granted I assumed it would take a few more Sandy's, Irene's, and Katrina's to ground and pound the Idiocracy into final submission.  So this forces a major paradigm in thinking, because BusinessWeek is obviously a conservative mainstream publication.  As we see, the buffoonish over-confidence of the Idiocracy is merely a thin facade of willful ignorance that crumbles at a moment's notice.  This should come as no surprise given that the comfort seeker's of the day change their beliefs like a 13 year old girl changes her blouse.  Therefore as over-confidence yields to trepidation, it will be only a matter of time before we reach the Point of Recognition.  Each round of revelations will expose yet more decadence, further eroding confidence.  It's only a matter of time before there is common acknowledgement that the country is bankrupt and can no longer afford military bases in 140 countries and never-ending military blunders.  But the underwear will get truly stained when the frogs in boiling water, stewed in a hot gumbo of junk food and junk culture, wake up to the fact that their real incomes, now back at 1996 levels, are falling into oblivion, and that the country's key jobs, industries and intellectual property have been permanently given away to foreign countries. The ignition spark will be the dawning realization of having elected yet another game show host President who can't manage his way out of a paper bag. At that point, all hell will break loose.

Of course, not everyone gets it yet, especially cynical old fucks whose only goal is to continue plundering the planet and their grandchildren to maintain their morally bankrupt lifestyle at all costs.  Wait until the Lost Boys of the Idiocracy are released into the wild, then these geriatrics will finally confront the Frankenmonster they have created.

Yes, it's time for Friday night charts...

President of The Grand Delusion

This is an open letter to Obamney and Robama the next President of the United States.

As you know, there are significant problems facing the United States at this juncture, so I wanted to take this opportunity to point out the key issues.

The biggest problem with the United States right now is people like you
Both of you (and most others) seem to be under the  ongoing delusion that the current way of life is scalable and sustainable even though you have been warned several times and several ways that it's neither.  In general the Westernized consumption-oriented lifestyle is no longer sustainable, as indicated by total debt levels approaching several multiples of GDP across all Western nations, all of which are attempting desperately to maintain the status quo.

More specific to the U.S., this belief that the country can at the same time cut taxes to the lowest level of any Western nation, fund a Social Security and Medicare deficit, and increase or maintain military spending at wartime levels indefinitely, is totally unfounded.  This entire package of foolishness is bundled under the aegis of Supply Side Economics aka. Trickle Down economics aka. Voodoo Economics.  With effective tax rates down around 20%, the delusion of being able to cut tax rates further to grow the economy enough to offset the direct reduction in tax revenue, is mathematically impossible i.e. requiring a 5:1 growth multiplier.  This strategy has been deployed for 30 years now.  Thirty years ago, the national debt was $1 trillion, today it's $16 trillion.  That's a 9% compound annual growth rate in debt in an economy growing at 2%.  Does that sound sustainable to you?  If it does, then you are not qualified to be a 3rd grade teacher, much less President.

Some Things Have To Go
In a Democracy, that means a little bit of everything has to go.  Right now, the U.S. is borrowing 8% of GDP to garner a growth rate of 2%.  We live in the largest credit expansion in human history which explains why interest rates remain at historically low levels i.e. there is a lot of money in very few hands and that money is seeking a return on capital.  In the days to come that desire for a return on capital will morph into a desire for a return of capital at which point historically low interest rates will revert to the mean or above and then the ability to sustain unlimited deficits will be substantially curtailed.  Even if the U.S. is capped at its current debt level, elimination of the deficit implies an 8% reduction in GDP assuming a 1:1 multiplier.  If one factors in a collapsed credit and stock market, that multiplier will grow exponentially.  Which means a lot more things will go.

Just to recap history: for most of the last century, the U.S. and other Western nations were in the unique position of having advanced economies with steady growth.  Now however, the rest of the world wants what we have and they are willing to work a lot harder than us, to obtain our standard of living.  Therefore in a world competing for scarce resources, mathematically that means their standard of living will rise and ours will fall.  Granted, we have used every device known to man to forestall this equalization, not the least of which was borrowing from poor countries to prop up our bloated standard of living at their expense.  However, only a fool would assume that they will go along with that program indefinitely, when they realize we have no capacity to repay them on prior loans much less new ones.

In summary, I don't expect two power hungry megalomaniacs to heed these facts and logic.  I also realize that we live in a society that is programmed to want ever more materialism,  money, and power, which means that neither of you has any plan that would include adopting a lifestyle involving accepting less.  Therefore, according to the law of diminishing returns of debt which we see playing out in real time, whoever wins this next election will find out the hard way that there is a lot more to being a leader than a winning smile and a set of constantly recycled campaign slogans.  In short, it's very likely that this next election will have two losers instead of just one.

Another Inconvenient Reality

No blog or conspiracy theorist could conjure up a more ironic scenario than a hurricane that works its way all the way up the East Coast and deposits its greatest impact on downtown Manhattan aka. The Financial District aka. Wall Street.